Dive Brief:

Michigan regulators Wednesday denied Consumers Energy's request to waive the timeline for interconnecting projects that qualify for rate compensation under the Public Utilities Regulatory Policies Act (PURPA).

On Thursday, the Michigan Public Service Commission also gave itself more time to review the utility's Integrated Resource Plan after objections were filed from the Solar Energy Industries Association (SEIA) and Cypress Creek Renewables. SEIA in its objections complained the utility did not meaningfully address the over 3 GW of qualifying PURPA facilities currently pending Consumers' approval.

The utility "will not apologize for standing up for our customers to provide them with the most affordable renewable energy that we can provide," Katie Carey, director of media communications at Consumers told Utility Dive. The PSC said it will make its final ruling on the IRP June 10, and Consumers does not intend to make any changes to its plan before then, said Carey.

Dive Insight:

Battles over PURPA rates are not new between renewables developers and utilities. Last week, a judge in Montana ruled that the state's PSC intentionally set low costs and short contracts to effectively kill small solar projects, in violation of PURPA.

In Michigan, the bulk of the qualifying facilities waiting to interconnect with Consumers are small-scale solar, with some larger solar and wind mixed in. The utility does not address connection in its IRP and continues to push back on the timeline and delay project connections set under federal law, Kevin Lucas, SEIA's Director of Rate Design, told Utility Dive.

In addition, the utility proposed changes that would limit project eligibility, shorten contract lengths and rewrite methodology for determining Consumers' avoided costs, which determine how much the utility pays those facilities for their output.

"So that's what this main argument is about is effectively trying to sidestep all of the projects that have been under development for the past two years," he said, "and to immediately move into this new regime, but with no regard to the rights of those projects that are already in the queue."

Consumers argues that it can procure cheaper renewable energy on the open market than under the 1978 law, which requires utilities to purchase power from developers at their avoided cost of energy — a measure of how much the utility would pay for other power on its system.

Consumers requested a waiver from the PSC on timelines for processing PURPA interconnection applications in January of this year, arguing that it is "overwhelmed" by an "unprecedented" number of connection applications, which reached 1,744 in 2018.

"The whole idea with these interconnections is that we want to be able to have a balanced transition to expanding renewable and distributed generation resources in Michigan," said Carey. "The position of those developers, it really forces our customers to pay for unnecessary energy and capacity at a higher price."

The commission said it finds a partial denial of the utility's request "appropriate" after reviewing the comments and objections filed under the docket.

"It is clear from Consumers' application that the company is having difficulty keeping pace with the significant increase in the number of interconnection applications it has received in 2017 and 2018," the PSC's order read.

"However, aspects of the company's application lead the Commission to believe that the difficulty, in part, is of Consumers' own making. Consumers' assertion that it was caught off guard by the increased volume of interconnection applications and has been unable to keep pace processing larger project applications is concerning, given the lengthy proceeding to reset PURPA avoided costs and the company's knowledge of trends in renewable energy technology."

The PSC had orders out in October of last year to direct the utility to move forward on those projects, but Consumers "continued to drag their feet" on the interconnection process, said Lucas.

SEIA noted that no party seeking to develop PURPA facilities in the state has supported the IRP, but the utility said it is backed by other stakeholders in the state.

"[W]hat we submitted to the Commission in March on our settlement was supported by a wide range of stakeholders including the MPSC staff, environmental groups, developers, customers and the Attorney General in Michigan," said Carey.

Consumers' IRP also calls for the retirement of two units at its coal-fired Karn Plant, capable of generating 515 MW, as well as the addition of 5,000 MW of solar throughout the 2020s, along with wind and storage, reducing emissions 80% by 2040.

"Consumers' [proposed course of action (PCA)] is a bold plan for eliminating Consumers' dependence on utility-owned coal-fired generation in favor of competitively procured renewable energy," SEIA noted in its filing. "With appropriate modifications, Consumers' ratepayers can and will benefit from Consumers' PCA in the comi​ng years."