Michigan Public Service Commission finalizes avoided cost rates for Consumers Energy

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The Michigan Public Service Commission (MPSC) issued a ruling finalizing the rates and standard contract terms that Consumers Energy Co., one of Michigan’s largest investor-owned utilities, must pay for energy and capacity from solar energy facilities and other independent power producers under the Public Utility Regulatory Policies Act (PURPA).

The MPSC originally determined Consumers’ avoided cost rates in an order issued last November, but was reviewing additional feedback provided by the solar industry, Consumers Energy and other stakeholders. Under federal law, these costs must be at or below the cost the utility would pay to buy power on the market or generate from its own portfolio. The MPSC also ruled that it will revisit a range of related issues in Consumers’ pending Integrated Resource Plan (IRP) proceeding that will be concluded sometime next year.


Following is a statement on today’s ruling from Sean Gallagher, vice president of state affairs for the Solar Energy Industries Association (SEIA):

“The MPSC’s ruling provides much-needed certainty in the Michigan solar market, which has experienced delayed project development and a lack of substantial solar industry investment. With these rates in place, Consumers Energy can begin investing in cost-effective solar projects to the benefit of its customers. However, there is still more work to do, and how the MPSC rules on Consumers’ Integrated Resource Plan will play a big role in determining the future of clean energy in Michigan.”

With 118 megawatts (MW) installed, enough solar energy to power 18,500 homes, Michigan ranks 33rd in the country for installed solar capacity. Today’s decision paves the way for a dramatic increase in installed solar capacity in Michigan. Michigan’s solar market is forecast to add 605 MW of solar over the next five years, a 347 percent growth rate, the 5th largest percentage growth of any state. These forecasts could grow substantially, depending on the MPSC’s ruling on Consumers Energy’s IRP.

— Solar Builder magazine

Michigan solar market gains new level of certainty after commission ruling

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Progress continues to come in the Midwest solar industry. What many Midwest markets lack in higher, conducive rates, they are starting to gain in certainty. The Michigan Public Service Commission issued an order setting rates for renewable energy developers from Consumers Energy that will create the certainty necessary to spur private investments and new growth in solar energy, while ensuring utility customers’ electricity rates don’t increase.

“The Commission adopted a strong methodology that reflects the value solar provides to Michigan during peak periods,” said Margrethe Kearney, senior staff attorney with the Environmental Law & Policy Center in Grand Rapids, Mich. “This decision makes Michigan more attractive for renewable energy development at no additional cost to ratepayers.”

The Commission has adopted new avoided cost rates that Consumers Energy must pay to renewable energy facilities in Michigan for the power those facilities supply to the grid. This completes Michigan’s first update in 25 years of the approach utilities must take under federal law to compensate the owners of qualified clean energy facilities.

You can read the order here.

Solar industry officials hailed this announcement saying it can help make Michigan a leader in Midwest solar.
“The Commission correctly recognized the significant long-term value of solar to Michigan, and the need to update old rules to capture that value,” said Rick Umoff, Director of State Affairs for the Solar Energy Industries Association (SEIA). “Solar companies can now ratchet up investment in Michigan’s economy, creating well-paying jobs and providing clean reliable energy to the state.”

Advocates also celebrated the news.

“The Commission’s decision to enable a level playing field for clean energy will launch a new wave of solar development in Michigan,” said Becky Stanfield, senior director of western states at Vote Solar. “Michigan’s leadership demonstrates to regulators and lawmakers across the country how to attract private investments, build a clean energy economy, and create local jobs that can’t be outsourced.”

Special Report: How to Make Money in the Midwest

The Public Utility Regulatory Policies Act (PURPA) was enacted in 1978 to encourage renewable energy development, reduce reliance on fossil fuels, and promote energy independence. It requires utilities to purchase energy from small qualified cogeneration and renewable energy providers and establishes what are known as “avoided costs” and “must-buy prices” that utilities pay to small renewable energy providers. Since its inception, PURPA has spurred more than 16 GW of cumulative capacity across the country.

In June, the Commission established avoided cost calculations based on the costs of energy and capacity from new natural gas facilities, creating an even playing field for independent developers of qualified clean energy projects. The order also simplifies the development and financing process for small projects by establishing 20-year contracts at a standard rate for projects up to 2 megawatts in size. Previously only projects up to 100 kilowatts were eligible.

— Solar Builder magazine

DTE Energy to start 750 kW project in Romulus, Michigan

DTE Energy, the largest developer of solar energy projects in Michigan, has begun construction of an array in Romulus that will operate by the end of the year.

DTE EnergyThe new facility on Citrin Drive near I-94 and Middlebelt Road will comprise more than 2,700 solar panels on property owned by the Morton Terminal Land Holdings, LLC. The solar installation will have capacity to generate 750 kW of electricity – enough to power 125 homes.

DTE Energy will construct, operate and maintain the solar array for 20 years.

“Solar is an important piece of DTE Energy’s renewable portfolio that will help us provide cleaner, affordable energy to the customers we serve,” said Irene Dimitry, DTE Energy’s vice president of Business & Development.

Dimitry added that projects such as the Romulus facility have helped DTE Energy meet a state mandate requiring electric utilities to supply 10 percent of their electricity from renewable energy sources by 2015.

The project is part of SolarCurrents, a pilot program launched in 2009. DTE Energy has installed nearly 10 MW of solar energy across 22 sites in Southeastern Michigan including projects at Ford Motor Co. headquarters in Dearborn and Monroe Community College in Monroe.

“DTE Energy continues to explore large-scale solar energy projects as a cost-effective way to add solar energy to Michigan’sgeneration mix,” said Dimitry, adding that a number of new solar energy projects are in development.

DTE Energy’s entire renewable energy portfolio including wind and biomass is now capable of generating nearly 1,000 megawatts of electricity, enough to power 400,000 homes. The portfolio includes facilities owned and operated by DTE Energy, along with contracts to purchase power from facilities owned and operated by third-party developers in Michigan.

— Solar Builder magazine