Sustainability and Technology

MPSC annual report highlights changes to utility oversight

In first full year since enactment of state’s energy laws, commission has expanded programs to reduce energy waste.

March 15, 2019
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Wind energy contracts were among proposals that were approved to ensure reliable, cleaner sources of energy as older power coal plants retire. Courtesy Thinkstockphotos

The Michigan Public Service Commission issued its 2018 annual report last week, highlighting achievements in implementing the state’s energy laws, helping customers with heating bills and utility complaints, infrastructure renewal, tax cut refunds for ratepayers and technical assistance to expand broadband across the state.

In the first full year of enactment of the state’s energy laws — Public Acts 341 and 342 of 2016 — the commission decided its first rate case on the mandated shorter, 10-month timeline; expanded programs to reduce energy waste; approved new voluntary “green pricing” options for customers who want to take advantage of renewable energy projects; studied all electricity providers’ plans to ensure the long-term adequacy of Michigan’s power supplies; and reviewed initial integrated resource plans that look forward at all aspects of a utility’s options to meet customer needs.

The new energy laws were signed into law by former Gov. Rick Snyder and took effect in April 2017.

PA 341 updated Michigan’s energy laws relating to utility rate cases, electric choice, certificate of necessity and electric capacity resource adequacy, and establishes an integrated resource planning process. PA 342 updated Michigan’s energy laws relating to renewable energy, energy waste reduction and distributed generation, and allows utilities to implement on-bill financing programs. 

The MPSC also approved two rounds of monthly refunds on bills for customers of rate-regulated utilities attributed to the federal tax overhaul. The MPSC determined the impact of the lower corporate tax rate and ordered utilities to return the savings to customers. Ten utilities returned $379.5 million in annual savings and $233.2 million in additional credits.

Among those savings, Jackson-based Consumers Energy returned $160,219,000 in annual savings and $99,990,797 in additional credits, according to the report.

President Donald Trump signed into law the federal tax overhaul at the end of 2017. Among its many changes to federal tax law, it lowered the federal corporate income tax rate from 35 percent to 21 percent, effective Jan. 1, 2018.

Following the signing of the federal tax overhaul, the MPSC ordered all rate-regulated utilities under its jurisdiction to use “regulatory accounting treatment” to keep track of the impacts of the new law on current and deferred taxes, beginning the same time the federal tax overhaul was enacted. The MPSC indicated that it was likely to initiate contested case proceedings for each affected utility to address the impact of the federal tax overhaul on the utility’s rates.

The MPSC also asked each utility to comment on the estimated impacts of the tax law changes and to suggest a method to flow benefits back to customers. The MPSC asked for comments from other interested parties.

After reviewing the comments from utilities and interested parties, the MPSC issued an order in February 2018. This order adopts the proposal submitted by MPSC staff for returning the benefits attributable to the lower federal income tax rate.

The MPSC staff’s proposal included implementing credits to customer bills to account for lower current tax expenses and holding a separate proceeding for each utility to calculate the remaining impacts of the new tax law.

The report further highlighted several infrastructure and safety improvements the MPSC made in 2018:

  • MPSC staff conducted 959 natural gas facility inspections, investigated 14 incidents, and authorized and monitored the replacement of more than 275 miles of distribution lines through accelerated infrastructure replacement programs.

  • Commission staff worked with electric utilities and stakeholders to develop a long-term distribution planning process to better understand the condition of infrastructure, the anticipated investment in and prioritization of replacement projects and how emerging technologies will impact the distribution planning process.

  • The MPSC supported efforts to expand broadband, and nearly 64 percent of homes statewide now have access. It also worked to align the state and federal Lifeline programs and improve eligibility screening for low-income consumers. The commission estimates there are approximately 379,000 Lifeline customers in Michigan.

Other highlights

The MPSC awarded approximately $90 million in grants to 10 service organizations across the state through the Michigan Energy Assistance Program. The funding helped 94,445 low-income households with their heating bills and moving toward energy self-sufficiency.

Wind energy contracts, expanded use of demand response and energy waste reduction programs were among proposals that were approved to ensure reliable, cleaner sources of energy as older power coal plants retire.

Commission rules governing technical requirements, cybersecurity, safety and customer protection for gas, electric and telecommunications service were updated to provide increased protections for consumers and to better align with industry best practices. Changes to gas safety rules, for example, would address concerns for farm tap and master meter facilities, establish guidelines for records retention and adopt additional reporting requirements.

Several Michigan Agency for Energy divisions and sections were reincorporated into the MPSC, including information technology, administration and the aforementioned MEAP.

MPSC

The MPSC has approximately 175 full-time employees, eight divisions — Regulatory Affairs, Energy Resources, Energy Operations, Regulated Energy, Telecommunications, Customer Assistance, Administrative Services and Strategic Operations — and a staff of administrative law judges who are part of the Michigan Administrative Hearing System.

The members of the MPSC are Sally A. Talberg, chair; Norman J. Saari, commissioner; and Daniel C. Scripps, commissioner.

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