Licensing and Regulatory Affairs
FOR IMMEDIATE RELEASE April 20, 2020
Michigan has seen considerable growth since 2018 in renewable energy qualifying facilities (QFs) that have projects, or are planning projects, with electric utilities, according to a Michigan Public Service Commission report released today.
The MPSC’s 2020 Report on Implementation of the Public Utility Regulatory Policies Act of 1978 (PURPA) found significant growth in the number of QFs, mainly due to agreements with Consumers Energy. Consumers has committed to interconnecting 584 megawatts of PURPA projects in Michigan, primarily solar contracts resulting from the settlement order in Consumers’ most recent PURPA compliance filing in U-20615. These additional resources will nearly triple the existing solar capacity in Michigan and promote greater use of clean energy resources throughout the state.
Under Michigan’s 2016 energy law, Public Act 341, the MPSC must issue a report every two years that provides a description and status of qualifying facilities in Michigan, the status of power purchase agreements (PPAs) for each qualifying facility, and the Commission's efforts to comply with PURPA’s requirements. PURPA is the 1978 federal law designed to encourage the development of renewable electric energy and cogeneration resources without adversely affecting the retail rates of electric utilities.
Michigan has seven investor-owned electric utilities with rates regulated by the MPSC. In addition to Consumers and DTE, they are Alpena Power Co., Indiana Michigan Power (I&M), Northern States Power-Wisconsin (NSP-W), Upper Peninsula Power Co. (UPPCO), and Upper Michigan Energy Resources Corp. (UMERC). Alpena, NSP-W, and UPPCO did not report any QFs in Michigan. The remaining four utilities report having at least one QF.
No other rate-regulated utilities have entered into PURPA contracts since the last iteration of this report.
Since the last PURPA report in 2018, the MPSC has approved avoided costs for all investor-owned utilities through multiple orders, with significant stakeholder input. A fact sheet on updated avoided costs is available here.
Public Act 341 directs the MPSC to address avoided cost and a standard offer tariff. Section 6v(4) says the Commission shall “[e]stablish a schedule of avoided cost prices updates for each electric utility.” There are several methods for calculating avoided costs, which are determined by the Commission and represent the costs the utility would have otherwise pay to generate or purchase the power itself. The avoided cost methodology must be consistent with the federal law and FERC rules and be non-discriminatory.
The settlement agreement in Case No. U-20615 resolved long-standing contract issues between Consumers and more than 40 qualified independent power producers. The agreement streamlined the PURPA framework and allowed for a limited waiver of the MPSC’s Electric Interconnection and Net Metering Standards to facilitate renewable energy project development.
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