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Every electricity provider will have to base some capacity in MI

Sep 18, 2017

The state's utility regulator says it will require electricity providers that compete with DTE Energy and Consumers Energy to generate some of their power in Michigan, but the requirement will be implemented after 2021.

The so-called "Local Clearing Requirement (LCR)" is in addition to the requirement in the state's new energy law that those providers also prove they have access to their own generation capacity four years out.  That means they can no longer rely largely on buying electricity at auction from year-to-year to serve customers.

In drafting the new law, lawmakers sided with DTE Energy and Consumers Energy, who said allowing competitors to enter and exit the state's electricity market at will, depending on the price and availability of electricity in the marketplace, puts all customers in the state at risk of power shortages.  

Sally Talberg is Chairman of the Michigan Public Service Commission.

"The purpose of the new law is protecting reliability and making sure that we have enough electricity supplies over the long term to reliably serve Michigan businesses," says Talberg, "and this is important because of power plants closing in Michigan and around the Midwest."

Talberg says federal regulations also require about 95% of the power Michigan uses to come from Michigan gas, coal and nuclear power plants, along with state-based solar and wind, and efficiency programs.  That's to prevent a large region from becoming dependent on a cluster of power plants in one state, which could put the grid at risk of blackouts.

The decision by the MPSC sets up the process by which competing electricity providers will show state regulators that they have - or will have - access to actual generation capacity four years out.  The regulator will conduct hearings to determine the actual amount of that capacity that must come from within the state.  Buying that portion of the electricity from DTE Energy and Consumers Energy could be one way competing providers meet the LCR.

Energy Choice Now, a lobbying group for organizations that buy electricity from DTE and Consumers' competitors, issued a blistering press release after the decision. 

"MPSC Denounced - Electric Customers Betrayed" reads the heading.  From the press release:

The .....Local Clearing Requirement (LCR) .....will result in an estimated $1 billion charged to Michigan schools, grocers, colleges, religious organizations, hospitals, nursing homes, restaurants, manufacturers and many more.

 

The LCR change bolsters the bottom line of Michigan [sic] two incumbent utilities, DTE Energy and Consumers Energy, and will cripple the 10% of electric competition in the state...... This will result in ultimately killing all electric competition in Michigan.

 

Talberg says the intent is not to be anti-competition, but to ensure everyone is contributing to a reliable grid.

Consumers Energy issued a cautious statement of support for the ruling:

“Access to affordable, reliable and increasingly clean energy is essential to the way we live. Michigan's 2016 Energy Law laid out a framework that ensures access to all of these important elements of energy service. At Consumers Energy, we believe it’s the responsibility of all energy providers to ensure they have secured adequate capacity to serve their customers.  We thank the MPSC for leading a diligent, comprehensive and transparent stakeholder process to implement the 2016 energy law and we remain committed to powering Michigan’s future. The order issued today is very complex and we are evaluating it thoroughly.”