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PSC Agrees With Competitive Group On State Reliability Mechanism Charge True-up
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The Michigan PSC, in an electric rate case at Consumers Energy, approved changes to the true-up of the State Reliability Mechanism (SRM) charge at Consumers Energy, adopting a proposal from Energy Michigan
Energy Michigan said that the "formulaic" SRM true-up method used in most rate cases to date is flawed and creates errors in the application of the SRM charge.
Energy Michigan explained, "The basic difficulty is that under the present true-up method, the customer and the utility
can be trued up only if the customer that pays an SRM Charge in one year also pays an SRM
charge determined in a later year. But then the later SRM Charge also has to be trued up as well
in still a later year, and so on, without limit."
Energy Michigan said, "The present true-up method has not been correct in the past, is not now correct, and will
never be correct. There is no situation under the present true-up method where the customer pays and the
utility collects the amount as specified in the SRM statute MCL 460.6w."
Energy Michigan had recommended that, and the PSC adopted in its order, an individual, customer-specific SRM Charge true-up process
Energy Michigan explained that under this customer-specific process, the utility would, "[a]pply a customer-specific true-up to any customer that is assessed the SRM Charge,
which is triggered only when and if a customer is subject to the SRM Charge. Thus, if
at some time in the future a customer does pay the SRM Charge, then that customer
has to be trued up, and this can be done on an ad hoc basis for that customer without
revising present or future SRM Charges. This corrects and simplifies the SRM true-up
process and avoids the pancaking of charges and reversals from previous true-ups."
Energy Michigan explained, "As an overview, a simple method for truing up a customer is to determine the difference
between what the customer initially paid -- with projected energy market sales net of fuel --
compared to what the customer should pay with actual energy market sales net of fuel. Actuals,
once they are available, would be substituted for projections in recalculating the SRM Charge, and
the customer would be billed for, or refunded, the difference between the two calculated charges."
"Under Energy Michigan's recommendation, both the customer and the utility would be
treated fairly, and no 'gaming' of high forecasts or low forecasts would be possible. It also
eliminates another inherent error of the present formulaic method, which is that the customer does
not necessarily have the same MW capacity obligation in two different periods," Energy Michigan said
Under the order, the Commission suspended the
current formulaic true-up method and will implement a customer-specific true-up, when and if a
customer actually pays the SRM capacity charge and there is actual revenue to reconcile
As of the time of Energy Michigan's initial brief in the case in December 2025, no choice customer had been assessed a capacity
charge under the SRM
Case U-21870
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March 27, 2026
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Copyright 2026 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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