With MISO Auction Changes Rejected, Michigan Seeks Comment On Adopting State Reliability Mechanism, Capacity Charges For Retail Suppliers

The Michigan Public Service Commission is seeking comment on how to proceed in light of the Federal Energy Regulatory Commission’s Feb. 2 order rejecting the Midcontinent Independent System Operator’s proposal to establish a three-year forward capacity auction specific to retail choice states.

Section 6w(2) of the recently enacted Public Act 341 of 2016 (PA 341) provides that in the absence of an approved MISO forward capacity auction and state compensation mechanism, a State Reliability Mechanism (SRM) shall address the long-term adequacy of the state’s electric generation resources.

Under the State Reliability Mechanism, by the seventh business day of February each year, each alternative electric supplier, shall demonstrate to the PSC, that for the planning year beginning 4 years after the beginning of the current planning year, the alternative electric supplier, owns or has contractual rights to sufficient capacity to meet its capacity obligations as set by the appropriate independent system operator, or PSC.

Under the State Reliability Mechanism, the PSC shall set a capacity charge imposed on alternative electric suppliers for load not covered by the demonstration of capacity required above.

The PSC's order established a comment period for recommendations from utilities and other stakeholders regarding the scope and the associated schedules for these proceedings in light of FERC’s decision, and the potential shift in focus to a State Reliability Mechanism

The PSC also suspended the schedules of previously opened dockets that were considering whether the state compensation mechanism and State Reliability Mechanism were most cost-effective, reasonable, and prudent than the MISO auction.

Case No. U-18239 et al.