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Michigan PSC Approves Utility's Renewable Power Purchase Program For Large C&I Customers

January 21, 2019

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Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The Michigan PSC has approved on a pilot basis DTE Electric Co.’s Large Customer Voluntary Green Pricing Program (Case No. U-20343).

The PSC summarized the program as follows:

• Enrollment in the Program is voluntary and allows full service customers of the Company to increase the portion of their electric usage attributable to renewable resources in 5% increments at a level beyond the renewable energy all customers receive from the Company’s generation fleet, up to 100%, allowing customers to choose a participation level that aligns with their specific preferences and objectives. The Company will provide at least 15% renewable energy under current PA 342 legislation by 2021 to all of its customers; therefore, the minimum participation match is 20% of monthly energy use, up to 100%.

• Customers will cover the cost of the Program assets approved for the phase of the program in which they sign up. Participating customers will pay a per kWh [kilowatt hour] subscription fee priced at the levelized cost of energy of the assets associated with the contracts approved for the Program. For example, if Program assets are approved at $45/MWh [megawatt hour], the customer will be billed a per kWh rate matching that approved price. The pricing for the initial contracts is expected to be below $45/MWh. Subscribers will be locked in at the subscription fee for the approved contracts when they initially subscribe for the term of their specific contract. Customers can choose 5, 10, or 20 year contract terms. If lower cost renewable energy assets are added to the Program in future phases, the rate for the newer, lower-costs assets will be included in the total program subscription fee on a weighted average basis and existing subscribers’ fees will be adjusted downward to this weighted average. If future assets are higher cost, the rate of the new assets will only apply to new subscribers. Customers will also receive a credit for energy and capacity.

• The energy credit will be based on Midcontinent Independent System Operator’s (MISO) real time hourly locational marginal price (LMP) at the generation nodes of the associated Program assets. For each kilowatt hour (kWh) subscribed, customers will receive the forecasted average of the generation weighted LMP at the nodes noted above, and will be reconciled against the actual weighted average LMP of the generation nodes by March 31 each year. The capacity credit will be equal to the Auction Clearing Price in the annual Planning Resource Auction for Zone 7 within MISO or equivalent successor, specifically using the generation node(s) capacity. The capacity credit will be updated annually. Witness Schroeder provides further detail regarding the calculation of the capacity portion of the credit in her direct testimony.

• Customers may subscribe for 5, 10, or 20 year contracts. If the customer elects to re-enroll in the Program after their agreement term ends, that customer will enroll at the subscription rate available at the time of renewal. The customer may elect to terminate their subscription after the initial year, subject to an early termination fee.

• Renewable energy credits (RECs) subscribed through the Program are retired on behalf of the subscriber and will not count toward the Company’s mandated renewable portfolio standard compliance.

• The Program’s subscription fees and credits are designed such that the customers choosing to enroll are paying the costs for and receiving the benefits of the portion of the renewable energy that they are subscribing to, thus there is no rate increase or amendment to a rate or rate schedule.

• In accordance with MCL 460.1061(a), a customer that receives at least 50% of their average monthly electricity consumption through the Program is exempt from paying surcharges for incremental costs of compliance.

In its order, the PSC noted that, "While DTE Electric has established the framework of the program, the program will not be fully operational for some time. The renewable energy assets that will be dedicated to the program are nearly two years from commercial operation; thus, the company can only provide the Commission with an estimate as to what the subscription fee for program participants will be. Because the renewable energy assets intended for the program are still being addressed in the company’s REP case, Case No. U-18232, the Commission reserves a final determination of the program’s compliance with Section 61 until the company’s next biennial review. The company’s LC-VGP [Large Customer Voluntary Green Pricing] program shall be permitted to enroll customers and operate in the interim as a pilot program."

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