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Chiding Utilities, Michigan PSC Says Determining How LSEs May Demonstrate Capacity Compliance Shall Be Addressed Via Technical Conference Process, Not Rate Cases

May 10, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Michigan PSC affirmed that determining how load serving entities, including retail suppliers, are able to demonstrate compliance with certain statutory capacity requirements shall be addressed in the PSC's previously adopted technical conference process, not utility rate cases nor cases addressing the establishment of a State Reliability Mechanism (SRM).

In an order issued yesterday, the PSC said that, "The Commission is concerned that Consumers Energy Company (Consumers) and DTE Electric Company (DTE Electric) have, in their recently-filed applications in their SRM cases and in their currently-pending general electric rate cases, filed testimony pertaining to these capacity demonstration issues and are seeking in those proceedings to adjudicate what may be counted in the capacity demonstration determinations to be made by the Commission."

"While the Commission recognizes Consumers and DTE Electric may have been attempting to keep options open in various cases to address these issues, the Commission finds that the use of an adjudicative proceeding to resolve these issues is misplaced. Every regulated electric utility, AES, cooperative electric utility, and municipally-owned electric utility will be required by Section 6w(8) of Act 341, MCL 460.6w(8) to demonstrate that it owns or has contractual rights to sufficient capacity to meet its capacity obligations under the law. The Commission has determined that technical conferences, rather than piecemeal litigation that cannot involve all of the affected energy providers at the same time, are a sounder method to determine this issue," the PSC said

"The collaborative effort to be followed in the technical conferences established in the March 10 order avoids piecemeal adjudications, involves all affected providers in the same forum, and promotes adoption of a uniform format for the Commission to use in analyzing whether an electric provider of any type has met its obligation to demonstrate that it owns or has contractual rights to sufficient capacity for the planning year beginning four years after the beginning of the current planning year," the PSC said

Additionally, the PSC said that, "The Commission endeavors to clarify that while Consumers and DTE Electric have included positions on issues related to the term and amount of their SRM capacity charges in Case No. U-18322 for Consumers and Case No. U-18255 for DTE Electric, these issues belong in the utilities’ SRM cases, not their currently pending rate cases. Additionally, the Commission also intends to provide guidance to both ALJ Eyster and ALJ Feldman that they need not address SRM issues in Case Nos. U-18255 and U-18322."

"Having clarified that establishment of the format for the capacity demonstration process shall be handled solely in the Case No. U-18197 resource adequacy docket via technical conferences, made clear that these issues are not to be decided in the open SRM or electric rate cases, and directed that certain of the SRM capacity charge issues shall not be litigated in the pending electric rate cases for Consumers and DTE Electric, the Commission turns to the task of providing further direction regarding the Commission’s expectations of the stakeholders participating in the technical conferences and the timetable for those participants to complete the tasks described in the remainder of this order," the PSC said

First, the Commission said that the stakeholders should be given an immediate opportunity to provide comments and reply comments regarding the following threshold issues:

1. Should the schedule laid out in Section 6w(8), MCL 460.6w(8) for capacity demonstrations be adhered to, or should any of these deadlines be adjusted as allowed under Section 6w(10), MCL 460.6w(10) to ensure proper alignment with MISO’s procedures and requirements? If a stakeholder recommends that the dates should be adjusted, please describe what revisions should be made.

2. Should there be a uniform methodology for capacity demonstration, both among types of providers (investor-owned utilities, rural electric cooperatives, municipally-owned utilities, and AESs) and among service territories?

3. Should there be a 'locational requirement' for resources used to satisfy capacity obligations, and if so, should individual load serving entities (LSEs) be required to demonstrate a share of the overall locational requirement?

The PSC has scheduled technical conferences for June 8, 29 and 30 and July 10 so stakeholders can try to reach consensus on how to structure the capacity demonstration process.

The Commission has determined that on August 1, 2017, the Staff shall file and broadly distribute a Staff Report and Recommendations regarding the accomplishments achieved during the technical conferences. The Staff shall also fully and fairly explain any unresolved issues that remain for the Commission’s consideration. Parties will be able to file comments on the Staff report

Following the Commission’s review of the Staff Report and Recommendations, the initial comments, and the reply comments, the Commission intends to issue an order at the regularly scheduled Commission meeting on September 28, 2017, that will make the final determinations required by Section 6w of Act 341, MCL 460.6w for establishment of the capacity demonstration process required under the SRM provisions of Act 341.

Case No. U-18239 et. al.

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