Michigan Won't Require Retail Suppliers To Meet Locational Capacity Requirement Through 2021, Opens Case To Set Locational Capacity Starting in 2022

The Michigan PSC, in an order on the capacity demonstration process, ruled that LSEs, including retail suppliers, will not need to meet a locational capacity requirement for the period 2018-2021, but opened a new proceeding to determine the allocation of the forward locational requirement starting in 2022

The PSC affirmed its prior order (see story here) that it is authorized under statute to adopt a locational requirement and allocate such requirements among LSEs

However, the PSC said that a more robust record is needed to set and allocate the locational requirements

"Thus, the Commission declines to set an individual allocation of the forward locational requirement for the 2018/19 through 2021/22 planning years. Instead, the Commission is adopting the calculation methodology to set the zonal forward locational requirement, as proposed by the Staff, discussed in the technical conferences, and clarified in MISO’s August 15 comments, for the 2018/2019 through 2021/2022 planning years. The Commission intends to open a new docket for the purpose of making a determination on the methodology to set a forward locational requirement for the 2022/2023 planning year and subsequent planning years, and to examine the methodology for determining the PRMR [planning reserve margin requirement ] starting with the 2022/2023 planning year as well," the PSC said

"[A]llowing for more time before a forward locational requirement is implemented, and making decisions about how the requirement is determined through a more formal proceeding, is justified. In a new docket which will be opened in the near future, the Commission will seek additional information to establish the methodology and mechanics for determining an allocation of the forward locational requirement. For example, in potentially looking at an incremental requirement, the time period covered (starting and ending dates), load forecasts, how to determine what plant retirements to factor into the projected need, and what capacity additions should be considered, would all need to be determined. Allocations among providers would also be an issue with any methodology. In examining an approach where shares of a forward requirement would be allocated among providers, determination of projected future needs, how allocations should take place, and in what amounts, would all be crucial. These are just some of the issues that will need to be considered in the upcoming case, and the Commission looks forward to robust participation from interested parties," the PSC said

The PSC otherwise adopted a capacity demonstration framework, requiring retail suppliers to show compliance four years forward

Of note, the PSC will only allow the MISO capacity auction to be used for 5% of the showing in the out years

The PSC also said that, "Once the Commission has determined that the capacity demonstration made by an electric provider is sufficient, it shall not be re-litigated or 'trued-up' in the interim years. If, subsequent to its initial satisfactory capacity demonstration, an electric provider experiences an unforeseen significant outage at one of its generation assets, or has an unforeseen variation in its total load obligations, these matters will be settled in the auction without penalty."

Utility capacity showings will be due in the December prior to the prompt year; retail suppliers showings will be due in February of the prompt year

Case No. U-18197