Michiganregulators are launching a new effort that could shore up state utility demandresponse programs to shave electricity use at peak times, potentially reducingthe need for new power plants.

OnMarch 29, the Michigan Public Service Commission the state's largest utilities,DTE Energy Co.subsidiary DTE Electric Co.(Case No. U-17936) and CMS EnergyCorp. subsidiary ConsumersEnergy Co. (Case No. U-18013), to provide input on howto better measure demand response, how to market it so consumers are more awareof ways to decrease their electricity use and how the PSC should provideoversight for demand response programs since they can lead to deferment ofcapital investments, among other questions.

Theutilities, as well as other interested parties that can respond to thequestions, will give guidance to the PSC on whether demand response should beconsidered alongside supply-side options for power and if reviews of efforts toget customers to sign up for demand response should be part of formal ratecases. Environmental groups like the Sierra Club have often urged regulators toconsider demand response as an alternative to new generation and a way to deferbuilding power plants and lower rates.

The order builds on preexisting demand response programsthat are designed to enable utility customers to control their energy use intimes of peak demand like hot summer days. DTE offers rates that differ basedon time of use, critical peak pricing and other pricing options to shiftconsumer behavior. Consumers Energy has time-of-use rates and in 2015 performeda commercial and industrial demand response pilot. The utility plans to offer anew demand response program in 2016, according to the order.

"TheCommission remains committed to ensuring strong education efforts by utilitiesfor [demand response] options, and to appropriate consideration and analysis ofDR programs as an alternative to new generation and to help lower costs,"the PSC said in the order.The commission currently has no requirements that utilities use a specificamount of demand response, PSC spokeswoman Judy Palnau said.

Parties must file responses to the questions by April 28.Theamount of demand response from DTE and Consumers is projected to increase from739.2 MW in 2015 to 964.3 MW in 2019, according to data submitted to the PSC bythe utilities, although those numbers do not include the impact of behavioraldemand response measures like time-of-use rates.

The Michigan Environmental Council "appreciates thatthe MPSC is looking at the issue of demand response to help reduce Michigan'soverall electricity rates," the group's policy director, James Clift, saidin an email, adding that by 2017 advanced metering will be installed in nearly90% of the state's homes and businesses. But more needs to be done, he said.

"To ensure ratepayers realize the benefits of thatsubstantial investment the MPSC needs to require Michigan utilities implementrate structures that better reflect the true cost of power throughout the yearand throughout the day," Clift said. The Michigan Environmental Councilplans to advocate that a program be established that allows consumers to accessand control data on their energy use. The group also supports a requirementthat utilities place customers in the rate design program that saves them themost money. That step could include creating "opt-in"rates where customers that can benefit the most from rates designed aroundcutting peak demand automatically opt into the demand response program after 12months of data on their usage has been collected. The council has said intestimony to the PSC that opt-in rates could cut energy demand enough to avoidthe equivalent of 1,000 MW in capacity from generation facilities.

In the same order, the PSC also told its staffto explore conducting a study that would lay out the potential for demandresponse across Michigan. In a December 2012 assessment, the FERCfound that Michigan had the highest potential for peak reduction in thecountry, according to the order.

A DTE spokeswoman said the company "shares [PSC] Chairman [Sally] Talberg's concernsregarding power plant closures and the need to explore all options to ensurethat our customers continue to have safe, reliable and affordable energy,meeting the demands of today's economy."

She added that "whileDTE has a dedicated team focusing on demand response alternatives today, theChairman's concern amplifies the need to pass comprehensive energy legislationin order to plan appropriately for future demand. We welcome the open,deliberate process the Commission has suggested, and look forward to continuedcollaboration with Chairman Talberg and the Commission staff."