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Mich. legislator opposes local clearing requirement considered by regulators

A Michigan legislative leader opposes an in-state resource requirement proposed by the state Public Service Commission.

A new energy law, Public Act 341, which the state adopted in 2016, authorizes the commission to design a state reliability mechanism, which ensures adequate supply of power. The commission is considering a "locational requirement" as part of the implementation of the state reliability mechanism. Each electric supplier would need to demonstrate that they have enough supply to serve their customers four years out, and a portion of that supply must come from local resources, according to a PSC staff report released on Aug. 1.

The locational requirement addresses a broader concern about enough supply in Michigan's Lower Peninsula, which is limited in the amount of capacity it can import from the regional grid managed by the Midcontinent ISO. A MISO survey released in June found that local resources in MISO Zone 7, which covers the Lower Peninsula, could be up to 1,000 MW short in meeting reliability standards and that imports are needed to fill the gap.

State Rep. Gary Glenn, chair of the House Energy Policy Committee, in an emailed statement, claims the locational requirement "threatens" electricity choice providers who compete with the state's two largest electric utilities, DTE Energy Co. subsidiary DTE Electric Co. and CMS Energy Corp. subsidiary Consumers Energy Co. The locational requirement would force the customers of alternative energy suppliers to "have to go back to the utilities," Glenn said in an interview Aug. 10.

Glenn, who represents Midland and Bay counties in central Michigan, has been a long-time advocate for competition and confirmed that he still plans to propose legislation later this year to expand choice for electric customers. Public Act 341 maintains a 10% limit on the amount of power demand within a utility's service territory that can switch to other suppliers.

The Association of Businesses Advocating Tariff Equity, a trade group representing large industrial energy users like Dow Chemical Co. who operate in Glenn's district, also urged the commission to reject the locational requirement proposed by utilities, according to July 17 comments included in the PSC's report.

Reps. Rob VerHeulen and Chris Afendoulis, who both helped craft the new energy law in 2016, also felt that the imposition of a locational requirement "violates the legislative intent of PA 341," according to a July 25 letter to the PSC.

Potential court action

If the PSC continues to proceed with its plans, Glenn said he will recommend that the House take the commission to court.

"It would require obviously a majority vote in the House to determine to do that, but I believe it rises to that level of importance that extraordinary steps are necessary to assert our policymaking authority. Energy policy should be set by the elected representatives of the people, not be appointed bureaucrats," Glenn said. "I have had no discussions with senators about this. I know there are some who would obviously agree not just with my position but the position of the PSC's attorneys."

He cited comments from PSC Assistant Attorneys General Lauren Donofrio, Bryan Brandenburg and Meredith Beidler, who recommended that the commission not set a locational requirement in the near term but phase the requirement in over five years to give suppliers time to adjust. They also shared concerns about assigning a certain percentage of the locational requirement to an individual supplier, indicating that this could leave less room for alternative suppliers to import power.

Commission response

On Aug. 8, the PSC by email said it is a "creature of statute and is bound to ensure its decisions are legally sound. No final decision has been made in this case, which is still open." The commission anticipates a final order on the locational requirement by Sept. 28, it says on its website.

When asked about alternatives to a local clearing requirement and how he would address resource adequacy issues in the state, Glenn said, "The projections now are a significant departure to the 'sky is falling' predictions we heard in 2015 and 2016. Now they said we have plenty of energy, so much that we can afford to shut a nuclear plant at Palisades."

Glenn said the House Energy Policy Committee will resume in September. He invited the three PSC assistant attorneys generals to testify, according to an Aug. 9 letter, and also instructed his staff to invite a representative from MISO. (Michigan PSC Case U-18197)