Integrated Resource Planning
2016 Michigan Energy Legislation
Mike Byrne, MI Agency for Energy
Michigan Agency for Energy
The Michigan Agency for Energy’s (MAE) mission
is to advance an adaptable, affordable, reliable,
and environmentally-protective energy future
for Michigan.
What was built and when in MI
12 GW
Hydro
10 GW
8 GW
Renewable (non-hydro)
6 GW
Nuclear
4 GW
2 GW
Natural Gas
Coal
Pre 1960
1960-1969
1970-1979
1980-1989
1990-1999
2000-2009
2010-current
Reductions in Coal Capacity
CapEx Incremental Investment: Electric
$3,000,000,000
$2,500,000,000
$2,000,000,000
Distribution
$1,500,000,000
Generation
$1,000,000,000
$500,000,000
$0
2012
2013
2014
DTE Energy and Consumers Energy investment and depreciation
2015
MI Public Acts 341 and 342 of 2016
• PA 341 and PA 342 of 2016 were passed on December 15, 2016;
Governor Rick Snyder signed the bills on December 21, 2016.
– Broad, bi-partisan support
– The laws take effect 120 days after enactment (April 20, 2017).
• PA 341
– Updates current laws related to utility rate cases, electric choice,
certificate of necessity, and electric capacity resource adequacy, and
establishes integrated resource planning process.
• PA 342
– Updates current laws related to renewable energy, energy waste
reduction, and net metering/distributed generation, and allows
regulated electric and gas utilities to implement on-bill financing
programs.
Integrated Resource Plans
Sec. 6t of PA 341 requires all rate-regulated utilities to file IRPs with the
MPSC by April 20, 2019, and no less than every 5 years thereafter.
IRP Process
Standard Integrated Resource Plan Process
Statewide
Assumptions/
Scenarios
• MAE/MPSC
• 8/20/17
Start
• 12/18/17
Completion
• Every 5 years
Utilities file IRP
Hearing
Final Order
Cost Approval
• Pre-RFP
• Projects 225 MW
plus file CON too
• Meet MPSC filing
requirements
• Standing for
interested
parties
• By 4/20/19
• Contested
case
• DEQ advice
• MPSC
indicates if
it suggests
changes
within 300
days
• MPSC
approves
or denies
IRP within
360 days
• If deny,
utility
refiles
within
60 days
• Cost
finalization
• CON
provisions
225 MW plus
• Pre-approval
for recovery
(3 years)
• Off-ramps
Amendments
• Utility or
MPSC may call
for IRP
amendment
• IRP review
every 5 years
Prior to Filing an IRP
• MPSC, in consultation with MAE and DEQ, will set
statewide parameters for the IRP filings by December 18,
2017 in a non-contested collaborative proceeding.
• Electric utilities required to issue RFPs to inform any
proposals related to new electric generation facilities.
– Proposed generation projects 225 MW and above must also file
for CON, and IRP/CON review shall be consolidated.
• MPSC has the ability to set filing deadlines and
requirements.
– MPSC may authorize alternative filing requirements for small
(defined as an electric utility with fewer than 1,000,000
customers) and multi-state utilities.
IRP Review Criteria
• The MPSC must determine whether an electric utility’s IRP
is the most reasonable and prudent means of meeting
energy and capacity needs by considering whether the plan
appropriately balances all of the following:
–
–
–
–
–
–
–
Resource adequacy
Compliance with applicable environmental regulations
Competitive pricing
Reliability
Commodity price risks
Diversity of generation supply
Whether the proposed levels of peak load reduction and energy
waste reduction are reasonable and cost effective
IRP Cost Recovery Provisions
• MPSC specifies costs to comply with approved IRP
– Cost finalization for large generation projects
– 225 MW + follow CON provisions
• Costs incurred within 3 years to comply with IRP are
considered reasonable and prudent for cost recovery
purposes, and are pre-approved for recovery in
rates
– Costs incurred in excess of those authorized by MPSC must be proven
to be reasonable and prudent
– MPSC shall disallow costs incurred as a result of fraud, concealment,
gross mismanagement
– Off-ramp if assumptions underlying an approved project have
materially changed or if the MPSC believes it is unlikely that a project
will become commercially operational
Renewable Energy/EWR Goal
“As a goal, not less than 35% of this state’s electric
needs should be met through a combination of energy
waste reduction and renewable energy by 2025”
– Sec. 1(3) of PA 342
• Consistent with Governor Snyder’s goal of between
30% and 40% combined RE/EWR
• IRP provisions require utilities to demonstrate
progress toward meeting goal
Energy Waste Reduction
Financial Incentives (PA 342)/
Shared Savings Incentives (PA 341)
Energy Savings
(% Reduction in
Annual Retail Sales)
Net Customer Benefits
EWR Program
Spending
1%-1.25%
25%
15%
1.25%-1.5%
27.5%
17.5%
1.5% and Above
30%
20%
Next Steps
• “Pre-work” (2nd quarter 2017)
– Filing Requirements/Schedule
– Prepare for Parameter Setting
• Statewide Modeling (3rd & 4th quarters 2017)
– Energy Waste Reduction Potential Study
– Demand Response Potential Study
• Individual Utility IRPs (2018/19)
Thank you!
www.michigan.gov/energy