MPSC approves Consumers Energy’s power supply cost recovery but rejects costs related to plant outages

Michigan
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LANSING, Mich. (WLNS) — The Michigan Public Service Commission today approved Consumers Energy Co.’s reconciliation of its power supply cost recovery (PSCR) expenses and revenues for the 2018 calendar year but disallowed costs associated with two power plant shutdowns that the company had asked to recoup (Case No. U-20202). 

Consumers sought to recover about $2.6 million in replacement power costs incurred during an unplanned 20-day shutdown of its Karn power plant in Essexville in fall 2018 involving the replacement of batteries at the plant. During the shutdown, Consumers also performed other maintenance work that would prevent other future outages, avoiding power replacement costs of $966,000 for 20 days of separate shutdowns that the maintenance work would have otherwise required.  

The Commission disallowed the $2.6 million, minus the $966,000 in avoided costs associated with additional maintenance. The Commission expressed concern about flaws in Consumers’ processes and procedures for plant modifications, given shortcomings that led to the outage as outlined in the company’s root-cause analysis of the incident.  

Similarly, the Commission disallowed $47,028 in replacement power costs Consumers had sought to recoup for two outages at its Zeeland Unit 2 plant in January 2018 because low-pressure events led to inadequate supply of natural gas. The Commission noted that Consumers had dealt with low-pressure situations for a number of years at the plant and should have remedied the issue sooner. The Commission also directed Consumers to include in its next five-year PSCR plan language to evaluate fuel arrangements for cost-efficient, reliable operation of the Zeeland plant and other gas plants.  

The Commission, meanwhile, approved cost recovery of $14,045,520 for biomass merchant plants Cadillac Renewable Energy LLC; Genesee Power Station LP; Grayling Generating Station LP; Hillman Power Company LLC; TES Filer City Station LP; Viking Energy of Lincoln Inc., and Viking Energy of McBain Inc., plus $1,558,135 in uncapped environmental costs for TES Filer City. 

In addition to these biomass merchant plants, intervenors in the case included the Michigan Department of Attorney General; the Association of Businesses Advocating Tariff Equity; Midland Cogeneration Venture Limited, and the Residential Customer Group. MPSC Staff also participated.   

MPSC takes next steps as MI Power Grid initiative moves to Phase II  

The MPSC today approved several orders involving its MI Power Grid Initiative, a multi-year effort to help guide Michigan through the transition to clean, distributed energy and now moving into its second phase. The Commission:   

  • Provided direction for MPSC Staff and regulated utilities on demand response, reopening the docket in Case No. U-20348 for additional comment on the potential to allow third parties to offer demand response options to utility customers willing to shift their usage at peak consumption times with payment obtained by aggregating such savings and bidding them into wholesale electricity markets (Case No. U-20628). Demand response aggregation is currently limited to customers served by alternative energy suppliers instead of the local utility, although many utilities offer their own demand response programs.   
  • Ordered MPSC Staff to file, by Dec. 15, a straw proposal for updating the integrated resource planning (IRP) parameters to incorporate objectives Governor Whitmer laid out in her MI Healthy Climate plan in September to achieve economy-wide carbon neutrality by 2050 (Case No. U-20633).  
  • Requested stakeholders to file comments on the adoption of a definition of the term “pilot” and objective criteria for reviewing utilities’ pilot projects, in addition to directing Staff to develop an online Michigan Pilot Directory, with utilities encouraged to work with MPSC staff on its development (Case No. U-20645). 
  • Established a New Technologies and Business Models collaborative workgroup to identify and address regulatory barriers and business models to support the integration of electric vehicles, electric storage, microgrids, and other technologies, with a status report to be filed by Sept. 1, 2021, summarizing its work (Case No. U-20898) 

MSPC APPROVES MUCH OF INDIANA MICHIGAN POWER CO.’S ENERGY WASTE REDUCTION PLAN  

The MPSC approved most of Indiana Michigan Power Company’s (I&M) energy waste reduction (EWR) plan today for 2020 and 2021, but the Commission denied I&M’s request to allow the company’s Electric Energy Consumption Optimization (EECO) Program to count toward its EWR savings goals (Case No. U-20374). While the program conserves energy through automated monitoring and control of voltage levels distribution circuits, the Commission found that it is a load management technology and, without a clear demonstration of its cost-effectiveness, EECO should be excluded from EWR compliance.   

MPSC APPROVES CONSUMERS ENERGY DEMAND RESPONSE RECONCILIATION  

The MPSC today approved Consumers Energy Co.’s reconciliation of its 2018 demand response (DR) program costs, resulting in an overcollection of $1,758,858 that will be refunded to customers in the utility’s next rate case (Case No. U-20563). The Commission denied a request for a financial incentive mechanism award of $2.023 million, while authorizing the company to apply its short-term borrowing interest rate to the DR regulatory liability. The Commission also directed the company to notify MPSC staff whenever the utility expects to exceed by 10% or more its DR capital spending. In addition, the Commission approved two DR pilot programs: Customed Load Control Switch demand response pilot, which is focused on electric water heaters, pool pumps, and hot tub controls, and another for residential customers with backup generators.   

MPSC APPROVES ALTERNATIVE GAS SUPPLIER LICENSE FOR RPA ENERGY INC., DBA GREEN CHOICE ENERGY  

The MPSC today approved licensing for RPA Energy Inc., which does business as Green Choice Energy, to operate as an alternative natural gas supplier in Michigan (Case No. U-20885). MPSC Staff reviewed the company’s application and determined it has the required financial, managerial and technical capabilities to serve customers in Michigan and recommended license approval. The company, which will maintain an office in Grand Rapids, provides natural gas and electricity to customers in Pennsylvania, Ohio, Illinois, Maryland, the District of Columbia, Delaware and New Jersey.  

MPSC REVOKES LIFELINE WIRELESS PHONE SERVICE PROVIDER ELIGIBILITY FOR BLUEJAY WIRELESS  

The MPSC has revoked from Blue Jay Wireless LLC its designation as an eligible telecommunications carrier for purposes of providing Lifeline discounted wireless phone service in Michigan, effective today (Case No. U-20744). Blue Jay did not respond to Commission orders despite repeated attempts over several years by the MPSC to rectify the company’s lack of compliance with federal and state telecommunications regulations governing providers of Lifeline discounted service for low-income customers. To find Lifeline providers, see the MPSC’s updated list.   

MPSC SEEKS INPUT ON IMPACT OF FERC ORDER ON IMPLEMENTATION OF PUBLIC UTILITY REGULATORY POLICIES ACT OF 1978  

The MPSC today opened a docket to seek comment from interested parties on the  impacts and implications of the Federal Energy Regulatory Commission’s (FERC) Order No. 872 on the Commission’s current implementation of the Public Utility Regulatory Policies Act (PURPA) of 1978. PURPA is a federal law, enacted amid an energy crisis, aimed at encouraging competition, conservation, reliability and efficiency in generating and delivering electricity. Comments must be filed no later than 5 p.m. Nov. 30, 2020, and replies no later than 5 p.m. Dec. 15, 2020. Written comments should be sent to:  Executive Secretary, Michigan Public Service Commission, P.O. Box 30221, Lansing, MI 48909. Electronic comments may be e-mailed to mpscedockets@michigan.gov. All comments should reference Case No. U-20905. The Commission also extended filing deadlines for a biennial review of avoided costs and associated issues for DTE Electric Co.; Northern States Power Co.; Upper Michigan Energy Resources Co., and Indiana Michigan Power Co. to April 5, 2021.  

To look up cases from today’s meeting, access the MPSC’s E-Dockets filing system.     

Watch recordings of MPSC meetings on its YouTube channel.  

For information about the MPSC, visit www.Michigan.gov/MPSC, sign up for one of its listservs, or follow the Commission on Twitter.  

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