Michigan regulators have preliminarily accepted parts of Upper Peninsula Power Co.'s integrated resource plan, including a proposed 125-MW solar power purchase agreement, or PPA.

In a Dec. 6 order, the state Public Service Commission also recommended certain changes to the Upper Peninsula Power's, or UPPCO's, long-term plan to meet customer needs and gave the utility until just after the New Year to consider the recommendations and file a revised plan. UPPCO in a statement said it is going over the details of the interim order.

The PPA is with a facility to be built in Michigan's Upper Peninsula, with 20 MW set to come online by May 31, 2022, and the remainder by Dec. 31, 2022, according to the commission's order.

UPPCO in August said it had signed an agreement with Chandler Solar Project LLC for the purchase of renewable energy from the Chandler Solar Project to be located in Escanaba Township. Chandler Solar Project is a joint venture of Orion Renewable Energy Group and MAP Energy LLC.

In a news release, the commission said its acceptance of some aspects of the integrated resource plan is subject to a final order.

UPPCO, which serves around 52,000 customers in mostly rural areas of the Upper Peninsula, filed its plan with the commission in February. Along with the solar PPA, the plan, among other things, included proposals by UPPCO to increase its energy waste reduction goals and allow two hydroelectric facilities to operate directly in the Midcontinent ISO market.

In its integrated resource plan, UPPCO also proposed to build a 20-MW natural gas reciprocating internal combustion engine unit in the eastern part of the utility's territory to replace its existing 22.7-MW, oil-fired Portage combustion turbine unit, which suffered a "catastrophic failure" in November 2018. But the PSC in its Dec. 6 order said UPPCO should take the proposed unit out of the plan.

"To approve a new unit, the commission expects a more robust consideration of generation alternatives and associated transmission and operational reliability impacts," the commission said.

The commission also recommended that the plan no longer include a financial compensation mechanism the utility proposed as an incentive in conjunction with the solar PPA.

Regulators accepted other parts of the plan, including an increase to UPPCO's energy waste reduction goals to 1.65% of total electricity sales in 2020 and 1.75% in 2021. UPPCO had proposed a 1.5% increase but later agreed to the higher figures backed by commission staff and an administrative law judge.

The utility's proposal to allow its 3.4-MW Hoist and 8-MW McClure hydroelectric generating facilities to operate directly in the wholesale power market, which will increase the utility's capacity credits with MISO, also found acceptance by the regulators. The commission said the move would increase the reported capacity of the two units by a combined 7.6 MW and benefit customers in the form of avoided capacity cost purchases in the future.

Because the commission recommended changes to the plan, participants in the case can file comments and UPPCO can consider the suggestions and file a revised plan. Comments are due Dec. 23 and UPPCO has until Jan. 6, 2020, to consider the recommended changes and file a revised plan. The commission has until Feb. 7, 2020, to issue a final decision. (Michigan PSC Case no. U-20350)