January 18, 2022
It’s a new year, and this is 2022’s first edition of the monthly MPSC Spotlight. We’re marking the occasion with a look back at 2021. We are also providing a recap of our recent visit to the Upper Peninsula for a public hearing on Upper Michigan Energy Resources Corp.’s integrated resource plan (IRP), along with information on recent Commission orders on a Consumers Energy Co. rate case and new special electricity rates for electric vehicle manufacturers and other high-tech industrial customers.
MPSC marks 2021 with strengthened focus on reliability and consumer protections
Boosting electricity reliability dominated 2021 as the MPSC pushed utilities to strengthen the power grid to withstand challenges after millions of Michiganders dealt with power outages from increasingly severe weather brought about by climate change.
The Commission took steps to tackle the reliability issue head on, launching an ongoing examination of reliability challenges and solutions. The Commission also held a technical conference to explore updated data and best practices to inform next steps and held public hearings on updates to rules and technical standards, including raising customer outage credits from $25 to $35, with an additional $2 per hour beyond acceptable thresholds, and making the credits automatic. And the Commission approved additional spending on tree trimming and line clearing for the state’s two largest electric utilities, DTE Electric Co. and Consumers Energy Co., to address fallen trees and branches, the leading cause of outages in Michigan.
In other highlights from 2021, the MPSC:
- Welcomed new Commissioner Katherine Peretick, appointed by Gov. Gretchen Whitmer on Jan. 4 to fill the remainder of former Commissioner Sally Talberg’s term, and reappointed by the governor on July 3 for a term ending July 2, 2027.
- Launched a new public database to provide data on utility customer shutoffs and protections in Michigan to help inform policy decisions and best direct financial assistance and other resources to those in need.
- Worked with federal partners to help expand broadband options in Michigan through the Federal Communications Commission’s Rural Digital Opportunity Fund and help qualifying households connect with financial assistance through the FCC’s Emergency Broadband Benefit.
There’s much more work that the MPSC accomplished in 2021. Read more highlights in the MPSC’s 2021 year in review.
MPSC visits western U.P. to talk energy, hear input on UMERC’s IRP
Commissioners and MPSC Staff members headed to Iron Mountain in the Upper Peninsula on Jan. 11 to hold an in-person public hearing on a western U.P. utility’s integrated resource plan (IRP) for providing electric service and to meet with local residents to talk about energy issues facing residents and businesses in Dickinson County and elsewhere.
The MPSC took public comment during the evening at Bay College West Campus in Iron Mountain and appreciated the chance to hear from local residents and ratepayers as the Commission weighs Upper Michigan Energy Resources Corp.’s proposed IRP, which is the utility’s long-range projection for how it will provide reliable electricity service over a 20-year period.
The Commissioners and Staff also toured Verso Corp.’s Quinnesec Mill, which produces coated graphic paper and other paper products, employs 420 people and is one of the area’s largest energy users. Commissioners sat down with Norway City Manager Ray Anderson and the city’s electric utility supervisor Scott Hegy to talk about the city’s new electric vehicle charger, the strong role hydroelectricity plays in powering the city of Norway, and other issues. Commissioners also met with representatives from the regional economic development group InvestUP and the Iron Mountain Daily News.
Visits like these across the state give the MPSC the chance to hear from and speak with people and organizations impacted by the significant energy issues Commissioners must balance amid Michigan’s ongoing energy transition — encompassing the reliability, safety and affordability of energy and telecommunications core to the MPSC’s mission.
MPSC approves $27M electric rate increase for Consumers Energy, a substantial reduction from what the company sought
The MPSC on Dec. 22 approved a significantly reduced rate increase of just over $27 million for Consumers Energy Co.'s electric operations, representing a nearly 88% reduction from the $225 million the company requested in Case No. U-20963. The approved rates include a $27.2 million reduction in depreciation costs agreed to by the parties and approved by the Commission in Case No. U-20849.
A typical residential customer who uses 500 kilowatt hours of electricity per month will see an increase of 59 cents (0.64%) on their bill starting this month.
The rate increase will fund Consumers efforts to improve system reliability, which is a key priority of the Commission after a season of significant power outages from increasingly severe storms as Michigan’s climate changes. The Commission approved more than $200 million for targeted reliability improvements and increased tree trimming and line clearing so that Consumers’ entire system is cleared every 7 years.
The Commission, however, disallowed several costs the company sought, including:
- $128 million in 2021 and 2022 capital costs for the company’s Washtenaw Solar Energy Project near Ann Arbor. The Commission disallowed the projected costs citing a lack of specific evidence in Consumers' filing but noted that the contracts were approved by the Commission Nov. 18. The Commission said it would be more appropriate to review the costs in Consumers' next general rate case.
- $49 million in costs for the utility's vehicle fleet, finding that the company failed to demonstrate that historic spending was reasonable and prudent.
- $25.7 million in contingency budgeting for several capital expense projections for 2021 and 2022, noting the Commission's longstanding opposition to including uncertain contingency costs in customer rates is unjust and unreasonable.
- $24 million for the acquisition and development of future company-owned solar projects, finding the costs speculative and without certainty the properties will be used to provide utility service and may provide the utility with an unreasonable advantage over third-party project developers.
Commission approves special rates designed to attract, retain EV plants and other high-tech manufacturing
Recognizing the need for utilities to be able to offer rates competitive with other states, the MPSC authorized Consumers Energy Co. and DTE Electric Co. to provide special reduced electricity rates for high-volume industrial customers such as electric vehicle manufacturers.
The special rates are designed to help attract and retain makers of EVs, related components such as batteries and semiconductors, and other advanced manufacturing that’s uniquely energy intensive. The rates were approved the same week Gov. Gretchen Whitmer signed bipartisan legislation to provide $1 billion in incentives through the Michigan Department of Labor and Economic Opportunity’s new Strategic Outreach and Attraction Reservoir, or SOAR, to lure major high-tech manufacturing to the state.
Rates for both utilities will require qualifying manufacturers to have minimum electric loads and contract terms of at least 15 years. In its application, Consumers Energy said it was aware of 10 projects eying locations in Michigan representing a nearly $65 billion in potential investment and an estimated 21,000 new jobs.
Special rates such as this cannot, under Michigan law, result in higher costs or rates for other customers, a key factor the Commission considered in weighing the application. Because the Commission found that approving the applications made by Consumers and DTE Electric would not result in an increase in the cost of service for any existing customer, the Commission found it appropriate to issue ex parte orders.
Decisions released at the MPSC’s Dec. 22 meeting
Here’s information on some of the other orders the Commission approved Dec. 22:
- The MPSC approved a settlement agreement permitting a rate increase of $1.25 million for Alpena Power Co. that also establishes new tariffs, including first-time tariffs for distributed generation, efficient electric heating, and EVs (Case No. U-21045). A typical residential customer using 500 kilowatt hours of electricity per month will see an increase in their monthly bill of $3.99 (6.03%) beginning this month. The agreement requires Alpena Power to make a one-time donation for low-income utility bill assistance and work with MPSC staff to develop pilot programs for expanded use of EV charging stations and a distribution system plan. The utility will be authorized to earn an overall rate of return of 5.52%, including a rate of return of 9.85% on common equity, with a revised power supply cost recovery base rate of 73.34 mills.
- The MPSC formally adopted changes to its gas safety standards ruleset that make minor changes to the Michigan rules to better conform with federal rules (Case No. U-20903).
For more about orders approved Dec. 22, check out the MPSC’s news release.
Have a utility complaint, or need help with your utility service? We’re here to help. Submit your complaint or inquiry online or call 800-292-9555.
Tune in to our next regularly scheduled virtual commission meeting on Jan. 20, 2022, at 1:30 p.m.
The mission of the Michigan Public Service Commission is to serve the public by ensuring safe, reliable, and accessible energy and telecommunications services at reasonable rates.