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Financial Incentives/Disincentives

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MI Power Grid Optimizing Grid Investments & Performance StampActivities for this workgroup have not yet commenced. If you wish to be notified when this workgroup becomes active, please be sure to subscribe to the listserv below.

Utility companies make money by earning a return on investments in new infrastructure, like power plants, poles, and wires. By pursuing alternatives to utility-owned infrastructure, such as power purchase agreements, reducing customer energy use through efficiency measures, or shifting energy use to times when electricity costs less to produce, there may be cost savings. Financial incentives provide an ability for utilities and customers to share in these savings, while disincentives may be appropriate if utilities are unable to achieve an expected level of performance.

Actions to Date

  • MPSC Performance Based Regulation report (April 2018)
  • Power purchase agreement financial incentive mechanism approved in Consumers Energy Integrated Resource Plan (U-20165), pending in UPPCO Integrated Resource Plan (MCL 460.6t(15))
  • Demand response incentives considered in pending Consumers Energy, DTE demand response reconciliation cases (MCL 460.1075; MCL 460.6x)
  • Energy waste reduction incentives allowed and approved under 2008 PA 295 (MCL 460.1075; MCL 460.6x)

Next Steps

  • Participate in Consumers Energy collaborative discussion coming out of U-20134 regarding performance-based regulation
  • Work with stakeholders to analyze and evaluate appropriate incentive/disincentive methodologies, including: 
    • Shared Savings Mechanism and other incentives for demand response and energy waste reduction
    • Power purchase agreement incentive options

Related MPSC Case(s)

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