LANSING – The Michigan Public Service Commission took steps this week to shore up Michigan’s reserves of energy supply, approving orders that accept a settlement agreement governing Consumers Energy Co.’s long-range plans for providing electricity and seeking input from all electricity providers in Michigan and other interested stakeholders on ways to ensure Michigan continues to have the energy resources it needs, including opportunities to quickly bring new energy resources to the grid.

First, the Commission approved the settlement agreement on Consumers Energy’s integrated resource plan (IRP), the utility’s long-term forecasts for ensuring reliable service over the next 20 years. IRPs are required for regulated utilities under Michigan’s 2016 energy laws.

Highlights of the IRP settlement agreement (Case No. U-21090) include:

  • Closure of three units at the J.H. Campbell coal-fired power plant in Ottawa County’s Port Sheldon Township in 2025, resulting in a reduction in environmental pollutants as the company works to retire coal and replace it with cleaner natural gas and renewable energy resources.
  • Consumers’ purchase of the Covert Generating Station, a natural gas-fired power plant in Van Buren County’s Covert Township, in 2023, which will add 1,114 zonal resource credits (ZRCs) to the Midcontinent Independent System Operator’s (MISO) Zone 7 from PJM Interconnection, which serves southwest Michigan. MISO is the regional transmission organization that covers the greater part of Michigan, and Zone 7 covers the Lower Peninsula except for the area served by PJM. Addition of the Covert plant to MISO will boost reliability for Consumers and provide additional capacity to Zone 7 for the next MISO planning year and beyond.
  • Not accelerating to 2023 the retirement of Consumers’ D.E. Karn Generating Complex’s units 3 and 4, which run on natural gas and fuel oil. Instead, the two units would continue operating through May 2031.
  • Bringing thousands of new megawatts (MW) of solar energy capacity online in the next several years as part of the company’s plans to add about 8,000 MW of solar generation by 2040, the year by which Consumers pledges to be carbon-neutral.

Under the agreement, Consumers also will speed up deployment of energy storage resources from 2030 to 2024, aiming for 75 MW of storage by 2027 and 550 MW by 2040, and conduct two solicitations for 700 zonal resource credits of capacity from power purchase agreements with terms up to 10 years. The agreement also covers issues including the utility’s avoided cost methodology under the federal Public Utility Regulatory Policies Act of 1978, the continuation of a financial compensation mechanism incentive for power purchase agreements, and approval of regulatory asset treatment for the remaining net book value of the company’s retiring plants.

The settlement outlines added analysis for the company to include in its next IRP, including total emissions, annual particulate matter health impacts, an environmental justice screening tool, projected low-income energy efficiency participation levels, transmission import capability, and publicly available rooftop solar adoption rates. In addition, the company agrees to donate $5 million in 2022 to a fund that provides income-based energy bill assistance to Consumers Energy’s electric customers, along with $2 million in continued annual donations. These donations would be made by the company and its shareholders, and will not be recovered in rates paid by their customers.

The Commission directed MPSC Staff to include a requirement for each affected utility to consider the impacts of its proposed course of action on the resource adequacy of its own customers, the MISO LRZ or respective PJM LLC Zone, and neighboring Zones, regions, or regional transmission organizations in updated IRP filing requirements to be filed on June 30, 2022, in Case No. U-18461.

Intervenors in the case were the Association of Businesses Advocating Tariff Equity; Cadillac Renewable Energy; Citizens Utility Board of Michigan; Clean Grid Alliance; Decker Energy-Grayling; Ecology Center; Energy Michigan; Environmental Law and Policy Center of the Midwest; Genesee Power Partner; Great Lakes Renewable Energy Association; Hemlock Semiconductor Operations; Hillman Power Co.; Institute for Energy Innovation; the Michigan Department of Attorney General; Michigan Electric Transmission Co.; Michigan Energy Innovation Business Council; Michigan Environmental Council; Michigan Public Power Agency; Midland Cogeneration Venture; Natural Resources Defense Council; Residential Customer Group; Sierra Club; Tondu Corp.; Union of Concerned Scientists; Urban Core Collective; Viking Energy of Lincoln and Viking Energy of McBain; Vote Solar, and Wolverine Power Supply Cooperative. Permissive intervention was granted to the Mackinac Center for Public Policy. MPSC Staff also participated.

In a second matter, the Commission today accepted the MPSC Staff’s report that all but one of Michigan’s electric load serving entities (LSE) either owns or has contractual rights for sufficient capacity to meet its obligations four years from now, as required by Michigan law, while also seeking comment on a comprehensive menu of options to ensure sufficient resources to meet Michigan’s energy needs as the electric system continues to evolve (Case No. U-21099).

The Staff report noted concern about tightening capacity throughout zones of MISO, which covers the majority of Michigan, as well as slimming reserve margins.

The Commission noted that MISO’s 2022-2023 Planning Resource Auction found that all zones within the MISO footprint met their local clearing requirement (LCR), but local resource zones 1-7 cleared at CONE (Cost of New Entry), which for 2022-2023 is set at $236.66 per megawatt-day.

Given these concerns, the Commission requested comment from LSEs and stakeholders on matters critical to addressing capacity shortfalls and ways to bring additional capacity resources to the market to ensure reliable electricity service. The Commission seeks comment on whether the MPSC’s ban on DR aggregation for utility customers should be lifted, whether energy storage resources such as batteries should be allowed to participate simultaneously in wholesale and retail markets, whether the Commission should implement forward capacity obligations that exceed MISO requirements in upcoming capacity demonstrations or a forward LCR applicable to Michigan LSEs. The Commission also requested comments on what actions could be taken at the RTOs to improve transmission connections to neighboring areas as well as improvements to RTO markets to provide better price signals to independent generators, and any other actions the Commission could take to help develop additional in-state capacity resources.

Comments on order in Case No. U-21099 et al may be filed by 5 p.m. Aug. 1, 2022. Written comments should be mailed to Executive Secretary, Michigan Public Service Commission, P.O. Box 30221, Lansing, Michigan 48909. Electronic comments may be filed via the MPSC’s E-Dockets website or by email to [email protected]. All comments should reference Case Nos. U-21099 et al.