Michigan supports plan that would save U.P. ratepayers approximately $7.3 million a year

July 27 2016

Contact: Judy Palnau, 517-284-8300
Agency: Michigan Agency for Energy

LANSING, Mich. – The Michigan Agency for Energy (MAE) today said it supports a plan by American Transmission Company (ATC) that would eliminate the system support resource (SSR) payment for the White Pine electric generator in the Upper Peninsula (U.P.). These SSR payments to White Pine are projected to cost U.P. ratepayers approximately $7.3 million each year.

ATC’s proposal would allow similar reliability to be provided without running the White Pine plant. White Pine is a natural gas plant that is over 60 years old. U.P. ratepayers have been paying SSR payments to keep White Pine Unit 1 operating since 2014.

In a letter to the Midcontinent Independent System Operator (MISO), the regional transmission operator that covers most of Michigan, MAE said it supports ATC’s plans to reconfigure its electric transmission system and revise its system operating guide in the northwestern U.P. The modification would return ATC’s system to the way it was configured and operated prior to 1998.

“MAE encourages MISO to accept ATC’s system reconfiguration proposal without delay, said Valerie Brader, MAE executive director.  “I applaud the problem-solving that led to this solution. I wished all stakeholders had gotten more warning early on so there would have been time to develop and implement this solution before costs started to go up and litigation was needed.”

The State has vigorously challenged the White Pine and other SSR payments in more than 20 dockets at the Federal Energy Regulatory Commission (FERC). SSR payments are made to keep an electric generator running for reliability purposes, even when it is not economically justified. MAE has also advocated for changes at MISO to lift the federally mandated veil of cost secrecy in SSR situations, and has supported recent proposals by MISO to allow more transparency at the FERC of the underlying costs on which the SSR charges are based.

SSR costs, which are passed on to ratepayers in the MISO tariff under FERC’s authority, are determined in a MISO process in which state regulators and other stakeholders are not permitted to see those costs, much less challenge them, absent expensive and lengthy litigation in Washington, D.C. Cost inputs and the associated SSR charges are not known until after SSR agreements between the generator and MISO have been signed and submitted to the FERC. By contrast, the process of MISO’s designation of a unit as an SSR is necessarily confidential because of reliability and competitive concerns.

ATC yesterday submitted its proposal to MISO as an alternative to the continued operation of the White Pine Unit 1 SSR. ATC’s proposal would modify its transmission system in the northwestern U.P. from the current network configuration to two radial configurations and make corresponding changes to its operating procedures. These changes would eliminate the need to run White Pine as an SSR unit and comply with North American Electric Reliability Corporation (NERC) reliability criteria and the MISO tariff.

Should MISO support ATC’s creative proposal, it would mean that no Michigan electric generators would be supported by SSR payments collected from customers. Otherwise, the White Pine SSR is anticipated to continue until 2020 or until an alternative solution is in place.

SSR payments for the Presque Isle Power Plant (PIPP) were ended as part of a deal negotiated with the State in 2015.  Michigan continues to litigate regarding past charges related to that agreement and the White Pine SSR at the FERC.

For more information about MAE, please visit www.michigan.gov/energy.

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