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Mich. regulators approve Consumers Energy EV pilot

Consumers Energy Co. will launch Michigan's first electric vehicle infrastructure pilot program.

The Michigan Public Service Commission on Jan. 9 approved the three-year, $10 million initiative as part of a broader settlement that results in the CMS Energy Corp. subsidiary seeing its electric base rates cut by $24 million. The PowerMIDrive pilot program will support the growing electric vehicle market in Michigan through new rates, rebates and customer education, regulators said.

During the commission's Jan. 9 meeting, Commissioner Norman Saari called the pilot program a "thoughtful, collaborative and forward-looking approach to examine how future transportation in Michigan will be part of a national and international movement towards electrification."

The program includes a rate to encourage drivers to charge their electric vehicles between 7 p.m. and 6 a.m. Residential electric vehicle drivers who sign up for the nighttime rate will be offered a $500 rebate for each vehicle. Consumers Energy will also offer $5,000 rebates for chargers installed in public areas such as workplaces and multiunit dwellings, and up to $70,000 in rebates for the installation of a direct-current fast charger.

The commission separately allowed Consumers Energy to recover the electric vehicle pilot program costs over five years through a deferred accounting mechanism. In a news release, the commission said the mechanism is an incentive for the utility to support electric vehicle charger placement throughout Michigan, avoid expensive future capital infrastructure investments when electric vehicle use is anticipated to grow and educate consumers about the benefits of off-peak charging.

The approved settlement agreement calls for Consumers Energy to hold stakeholder meetings the first half of 2019 to get feedback on the program and to provide updates on program design decisions.

The case kicked off in May 2018 when Consumers Energy asked regulators to raise its retail electric rates by $58 million to help cover ongoing investments. The utility and other stakeholders, including the Natural Resources Defense Council, Michigan Energy Innovation Business Council and commission staff, later came to a settlement agreement on the request.

Commission Chairman Sally Talberg on Jan. 9 called attention to the "innovative nature" of the settlement agreement.

"It prioritizes the modernization of our infrastructure, it charts a new path for an electric vehicle program and provides an opportunity for the commission and stakeholders to engage in a discussion on performance-based ratemaking outside of a contested case," she said.

The deal cuts Consumers Energy's base electric rates by $24 million. At the same time, the utility is ending its "Credit A" negative surcharge for electric customers set by regulators to account for federal tax reform. That credit amounted to around $123 million, so the rate decrease and end of the credit result in Consumers Energy getting a net revenue increase of roughly $99 million.

With the new rates, a residential customer who uses 500 kWh a month will see their monthly bill increase by $1.62. The rates took effect Jan. 10.

As part of the settlement agreement, Consumers Energy agreed to spend in 2019 at least $200 million annually on its electric distribution reliability capital program and $53 million annually on clearing vegetation and trimming trees around distribution lines. The utility will also give commission staff regular updates on its spending and an annual report on investments in both areas. (Michigan PSC Case No. U-20134)