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Court Says Michigan PSC Lacks Authority To Impose Local Capacity Clearing Requirement On Alternative Electric Suppliers (Retail Suppliers)

July 16, 2018

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

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The State of Michigan Court of Appeals has ruled that the Michigan PSC lacks the authority to require alternative electric suppliers to meet local capacity clearing requirements

As previously reported, the MPSC, in a September 15, 2017 order, has held that MCL 460.6w authorizes it to impose a local clearing requirement on individual alternative electric suppliers.

Addressing appeals filed by Energy Michigan and ABATE, the Court of Appeals ruled that, "a review of the statute reveals that no provision of MCL 460.6w clearly and unmistakably authorizes the MPSC to impose a local clearing requirement upon individual alternative electric providers."

"We acknowledge that section 6w(8)(b) provides that each electric provider must demonstrate that it owns or has contractual rights to sufficient capacity to meet its capacity obligations as set by the appropriate independent system operator, or the MPSC, as applicable. Section 6w(8)(c) directs that '[i]n order to determine the capacity obligations,' the MPSC must 'set any required local clearing requirement and planning reserve margin requirement, consistent with federal reliability requirements,' and seek technical assistance from MISO in doing so. But although section 6w(8)(c) thus requires the MPSC to determine the local clearing requirement in order to determine capacity obligations, it does not specifically authorize the MPSC to impose the local clearing requirement upon alternative electric suppliers individually. Because the MPSC has only the authority granted to it by the Legislature by 'clear and unmistakable language,' Consumers Power Co, 460 Mich at 155-156, and because authority cannot be extended by inference, Herrick Dist Library, 293 Mich App at 582-583, we must decline the invitation to infer such additional authority upon the MPSC in this case," the Court said

"Moreover, a review of the entire statute suggests that the MPSC is obligated to apply the local clearing requirement in a manner consistent with MISO. A general principle of statutory construction is that a statute must be read as a whole, and that a seemingly ambiguous provision may thereby be clarified in the context of the whole statute. Id. Here, a review of the statute as a whole reveals that MCL 460.6w(3) directs the MPSC to establish a capacity charge that a provider must pay if it fails to satisfy the capacity obligations as required under section 6w(8). Section 6w(6), however, directs that no capacity charge be assessed against an alternative electric supplier who demonstrates that 'it can meet its capacity obligations through owned or contractual rights to any resource that the appropriate independent system operator (MISO) allows to meet the capacity obligation of the electric provider.' MCL 460.6w(6). The parties acknowledge that MISO permits an alternative electric supplier to meet its capacity obligations, including the local clearing requirement, by owning or contracting for capacity resources located outside the applicable local resource zone, and does not require each alternative electric supplier to demonstrate a proportionate share of the local clearing requirement," the Court said

"Similarly, section 6w(6) constrains the MPSC from assessing any capacity charge in a manner that 'conflicts with a federal resource adequacy tariff, when applicable,' and section 6w(8)(c) requires that the MPSC set any planning reserve margin or local clearing requirements 'consistent with federal reliability requirements.' These provisions militate against the MPSC’s imposition of any local clearing requirements beyond what MISO has established, and instead impose upon the MPSC a continuing obligation to observe MISO’s general practice of imposing local clearing requirements on a zonal, not individual, basis. Thus, reading MCL 460.6w as a whole indicates that the MPSC is directed to impose a local clearing requirement upon alternative electric suppliers in a manner consistent with MISO, and not individually upon alternative electric suppliers," the Court said

The Court reversed the PSC's order and remanded the case to the PSC for proceedings consistent with the Court's opinion

Docket No. 340600

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