Michigan PSC Approves Rate Increase, Calls for Measurable Improvements on Grid Equity
Lansing, MI – On Friday, March 1st, 2024, the Michigan Public Service Commission (MPSC) released its final decision in the Consumers Energy 2024 rate case. In its decision, the MPSC approved a rate increase of just over $92 million, less than half of Consumers Energy’s originally requested $216 million. The MPSC approved a return on equity of 9.9% and rate of return of 5.86%.
The Clean Energy Organizations (CEOs), consisting of the Environmental Law and Policy Center, the Ecology Center, Vote Solar, and Union of Concerned Scientists commend the Commission’s mandate for measurable grid equity assessments, and summaries of environmental justice and equity considerations in future rate cases. However, the CEOs advocate for further addressing affordability by shifting focus to return on equity, which remains at 9.9%, one of the highest return on equities in the Midwest.
One of the key decisions of the case is the Commission’s directive for the Company to perform innovative energy justice and reliability analyses in future rate cases as recommended by the CEO and MPSC staff. These analyses, similarly required by the MPSC’s decision in DTE’s 2023 rate case, offer an improved approach to understanding grid equity within the utilities’ service territory. The methods include the use of regression analysis, a tool used in social science that can aid understanding and assessment of how utility reliability performance affects customers differently.
The Commission also directed the Company to file a comprehensive transportation electrification plan later this year as part of its ongoing electric vehicle programs, in addition to other analyses of EV charging loads to evaluate whether current rate structures are appropriate for different types of charging infrastructure. The transportation electrification plan will need to evaluate the costs and benefits to the Company of increased EV adoption, which will help to determine how much spending on infrastructure might be warranted to help facilitate a transition to EVs.
Other important additions to future rate cases include more detailed environmental justice analyses on community vulnerability, facilitating access to GIS system data, and mandating engagement with local communities and stakeholders in distribution grid planning. These measures will allow the MPSC, stakeholders, and the public to better evaluate utility proposals in future rate cases on critical topics such as environmental justice, grid equity, and reliability.
Will Kenworthy, Midwest Regulatory Director at Vote Solar, said:
“All customers, regardless of where they live, deserve safe, reliable, and affordable electric service. The Commission’s action today adopts important recommendations regarding the advancement of grid equity. The analysis of reliability in environmental justice communities requires an apples-to-apples comparison that takes into account differences around the type of grid that serves each community. This analysis will help Consumers Energy to plan their investments and operations in a way that ensures that grid modernization and reliability improvements serve all customers equitably.”
Daniel Abrams, Associate Attorney at the Environmental Law & Policy Center, said:
“CEO applauds the steps the Commission took today to advance environmental justice and grid equity in Michigan. In particular, we welcome the Commision’s directive to track the impact of spending on low-income customers.”
James Gignac, Midwest Senior Policy Manager at Union of Concerned Scientists, said:
“Under today’s order, the MPSC is demonstrating its ongoing commitment to require utilities to better integrate data and analysis of how their electric grid plans and investment proposals can serve customers more equitably. Based on the expert testimony in this case, the Commission ordered a robust set of measures aimed at improving the safety, reliability, and security of electric service for all customers, including lower-income households and medically vulnerable customers.”
Charles Griffith, Climate and Energy Program Director at the Ecology Center, said:
“With transportation now a leading source of emissions in the state and country, it is imperative that our utilities engage in planning to ensure our grid is prepared for the EV transition, and that their investments help to speed up that transition rather than slow it down. We applaud the Commission for ordering a comprehensive transportation electrification plan be completed early this summer, along with additional analyses of consumer EV charging use to ensure the Company has the right programs and rate structures in place to encourage a transition to clean, electric transportation.”