Licensing and Regulatory Affairs
FOR IMMEDIATE RELEASE Dec. 20, 2018
Commission also approves PURPA methodologies, maintains Lifeline credit
LANSING, Mich. – The Michigan Public Service Commission (MPSC) today formally adopted six sets of rules governing utilities, including measures addressing natural gas safety, cybersecurity, on-bill financing, electrical technical standards, and telecommunications.
The rules were developed in an open and transparent stakeholder process with opportunities for public input. The Joint Committee on Administrative Rules (JCAR) granted final review waivers for the rule sets earlier this month, clearing the way for the Commission’s approvals.
All but the telecommunications rules go into effect seven days after they’re filed with the Secretary of State’s office.
Natural gas pipeline safety: Changes to Gas Safety rules will improve and enhance programs to make Michigan’s natural gas infrastructure safer (Case No. U-17826) by addressing concerns for farm tap and master meter facilities, establishing guidelines for records retention, and adopting additional reporting requirements. The rules also facilitate Michigan meeting new mandated standards and guidelines that are adopted by the federal Pipeline and Hazardous Materials Safety Administration (PHMSA).
Cybersecurity reporting, protections: The Technical Standards for Electric Service will now include provisions for reporting cybersecurity breaches and protecting utility infrastructure (Case Nos. U-18043 and U-18203). Investor-owned and cooperative utilities must provide the MPSC with annual reports on programs and planning, descriptions of employee training, and notifications as soon as a cyber incident that results in a loss of service, financial harm, or breach of sensitive business or customer data is detected. For an Issue Brief on cybersecurity rules, click here.
Code of Conduct for value-added programs: The new rules for all utilities and alternative electric suppliers (AESs) are intended to prevent cross-subsidization, preferential treatment, and information sharing between a utility’s regulated and unregulated services and programs (Case No. U-18361) to avoid restraining trade or competition. The Code of Conduct rules clarify how utilities will be able to offer “value-added programs and services” to customers through an affiliate or third party, under certain conditions pursuant to PA 341 of 2016. For an Issue Brief on the Code of Conduct rules, click here.
Customer on-bill financing for improvements: The Consumer Standards and Billing Practices for Electric and Natural Gas Service will now allow residential utility customers to finance the costs for energy waste reduction projects through their monthly utility bills if their utility offers such a program (Case No. U-20152). Some examples of projects that may qualify for on-bill financing: adding insulation; building upgrades; heating, ventilation, and air conditioning improvements; or installing a renewable energy system.
Telecommunications provisions: Two sets of rules are being readopted under the Michigan Telecommunications Act. The Unbundled Network Element and Local Interconnection Services rules (Case No. U-20160) outline how incumbent local exchange carriers provide unbundled network elements and local interconnection services to other providers. The quality standards will be effective April 19, 2019. The Basic Local Exchange Service Customer Migration rules (Case No. U-20161) govern the timely transfer of phone customers from one provider to another. The migration rules will be effective June 17, 2019.
PURPA cases decided for DTE, I&M, NSP, and UMERC
The Commission announced avoided cost rulings in three PURPA electric utility cases and granted a rehearing in a fourth.
Many Public Utilities Regulatory Policies Act contracts between small, independent renewable energy and cogeneration facilities and the utilities to which they sell their power are expiring. The Commission since 2016 has undertaken a review of the methodologies used to establish avoided cost to account for significant changes in the utility landscape over the more than two decades since original avoided costs were established.
Although PURPA is a federal law, the MPSC has the authority in Michigan to establish how much a utility is obligated to pay for power from qualified facilities. The payment is known as the avoided cost, which is how much a utility would have to pay to produce the energy itself.
The Commission recognized that a “one size fits all” approach may not be the most prudent way forward given different operating characteristics of the state’s utilities.
DTE Electric was granted a rehearing (Case No. U-18091) based on the Commission’s acknowledgement that new information is available since the MPSC approved in April the utility’s certificate of need for a new natural gas-fueled plant in East China Township. DTE can base its avoided cost on the new plant instead of calculating avoided cost based a proxy plant, as the Commission had previously ordered. The Commission also revised the standard offer tariff cap to 550 kilowatts.
Indiana Michigan Power Co. (I&M) must file updated energy forecasts to be used in developing an avoided energy cost, and supporting evidence on a 10-year capacity need planning horizon (Case No. U-18092). The Commission also said I&M’s avoided cost will be reviewed on a biennial basis, the standard offer term should be five, 10, 15 or 20 years, and the standard offer cap should be 550 kilowatts.
Northern States Power Co. (NSP) was approved to use the MPSC Staff’s hybrid proxy methodology to calculate avoided costs of energy and capacity with the first five years fixed and a variable rate thereafter (Case No. U-18093). Based on the approved five-year planning horizon, NSP does not have a need for additional capacity but must address long-term capacity needs in its IRP filing. The utility must conduct a biennial review of avoided costs. Its standard offer term was set at five, 10, 15 or 20 years, and its standard offer cap at 550 kilowatts.
Upper Michigan Energy Resources Corp.’s (UMERC) avoided cost for the first five years of a contract will be based on a fixed forecasted rate based on UMERC’s two new gas-fired generation plants, then it will be switched to a variable MISO market rate for energy and capacity (Case No. U-18095). The Commission also set UMERC’s standard offer term at five, 10, 15 or 20 years and standard offer cap at 550 kilowatts, and ordered a biennial review of avoided costs. No avoided cost methodology will be adopted for Wisconsin Electric Power Company (WEPCO), which has one customer in Michigan, the Tilden Mining Co. WEPCO’s contract with Tilden expires in 2019.
Lifeline discounts, eligibility remain the same
There will be no change in the monthly discount for low-income customers and seniors who qualify for basic voice telephone service under the Lifeline program.
The Commission ordered providers of residential basic local telephone exchange service in Michigan to continue to offer a monthly discount of $8.25 to low-income customers and $12.35 to low-income senior customers (Case No. U-20335).
In its ruling today, the Commission clarified whether eligibility or the subsidy amounts would be affected by changes in the federal reimbursement through the 2016 Lifeline Modernization Order. The Commission concluded that the providers shall continue to offer the Michigan Lifeline discount under Section 316(5) of the Michigan Telecommunications Act. The MPSC also ruled that providers subject to Commission orders mandating a $2 Lifeline discount shall continue to comply, so some qualifying low-income customers will get a total discount of $10.25.
The state criteria for qualifying for Lifeline are Medicaid, food stamps, supplemental security income, federal housing assistance, low-income home energy assistance (LIHEAP), free school lunch, temporary assistance for needy families; and 150 percent of the federal poverty level.
To look up cases from today’s meeting, access the eDockets filing system here.
DISCLAIMER: This document was prepared to aid the public’s understanding of certain matters before the Commission and is not intended to modify, supplement, or be a substitute for the Commission’s orders. The Commission’s orders are the official action of the Commission.
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