AGA Survey and Statistics System; AGA-CEE Natural Gas Efficiency Programs Survey: Utility expenditures for gas efficiency programs exclude data that have not been released by participating companies at the state level; U.S. Energy Information Administration; and U.S. Department of Transportation.
Statewide Elected Officials Next Election: 2018
Rick Snyder (Rep.)Governor
Brian Calley (Rep.)Lieutenant Governor
Bill Schuette (Rep.)Attorney General
Legislature Next Election: 2018Session Dates: 1/13/2016-12/2016
Term: 4 year
Lieutenant Governor: Brian Calley
President Pro Tempore: Tonya Schuitmaker
Senate Majority Leader: Arlan Meekhof
Senate Minority Leader: Jim Ananich
Senate Member Breakdown
House of Representatives
Term: 2 year
Speaker of the House: Kevin Cotter
Speaker Pro Tempore of the House: Tom Leonard
Majority Leader: Aric Nesbitt
Minority Leader: Tim Greimel
House of Representatives Member Breakdown
Michigan Public Service Commission Commissioners: Gubernatorial appointment, Senate confirmation: 6 year termChairperson: Gubernatorial appointment: Indefinite term
Rachael Eubanks (I), Commissioner Appointed by Governor Rick Snyder in 2016; term ends in 2017
Norm Saari (R), Commissioner Appointed as Chairman by Governor Rick Snyder in 2015; term ends in 2021
Sally Talberg (I), Chair Appointed by Governor Rick Snyder in 2011; current term ends in 2019; Appointed chairman in 2016
In late 2013, Governor Rick Snyder (R-MI) laid out his vision for a “no regrets” energy future by 2025, calling for an emphasis on eliminating energy waste and focused on replacing coal with natural gas and renewable fired generation. At the time he laid out several key goals for the state’s energy policy including: adaptability, reliability, affordability and protection of the environment.
The Governor’s recommendations and goals coincided with last month’s submission of four energy reports by Michigan Public Service Commission Chairman John Quackenbush and Michigan Energy Office Director Steve Bakkal. In response to the Governor’s 2013 address on Energy and Environment, Chairman Quackenbush and Bakkal were charged with gathering information to help the state make good energy decisions. Seven public forums were held throughout the state last year for the purposes of gathering information. As a result, four reports were released on the following topics: Renewable Energy, Electric Choice, Energy Efficiency and Additional Areas.
Some highlights from the reports include:
Additional Areas Natural Gas Infrastructure In order to affordably access the state’s gas potential, hydraulic fracturing is necessary; Michigan has more storage capacity than any other state; Theoretically there is room for gas storage expansion in the state—but the economic feasibility usually depends on location and its geologic characteristics; Currently there is sufficient in-state pipeline capacity to move natural gas around the state and to satisfy demand as a whole; Currently the low price of gas and the increase in shale production provides increased incentive to use gas for applications other than heating—specifically, the state is currently experiencing a compliance push to retire and replace coal fired electric generation with natural gas fired generation.
Energy Efficiency Identifying and Quantifying Benefits and Costs of Energy Optimization Programs; Michigan law requires utilities to use the utility system resource cost test (USRCT) or utility cost test (UCT) or the Program Administrator Cost (PAC) test when evaluating EO programs; Some commenters contended that the USRCT does not take into account other identified benefits including environmental improvement or societal benefits; Commenters also pointed out that USRCT does not take into account costs experienced outside of the utility such as a customer’s investment in new EE equipment; Contained within the body of the report are additional methods for identifying and quantifying the benefits of EO programs (pages 36-45 of the full report)
Suggested Improvements to Michigan EO programs Suggested improvements include the following emerging technologies: Flue-gas heat recovery systems, CHP systems, geothermal heat pumps; Other notable suggested improvements include: providing better customer data, upgrading building codes and standards, flexibility/adaptability in programming, integrating EO with utility business models, etc.
Summary Michigan’s utilities have met or exceeded and are expected to meet near-term EO targets; EO programs have been cost-effective; Michigan has the potential to continue to achieve incremental cost-effective savings from energy efficiency.
In his 2015 State of the State address, Governor Rick Snyder promised a "special message" on energy and the environment in March. He said it will be based on previously established pillars of affordability, reliability and environmental protection. Snyder also said he's reorganizing his administration to put together under a single roof a state agency focused on energy policy, one that includes key players from the Public Service Commission, state energy office and state economic development agency.
On March 13, Governor Rick Snyder delivered an energy plan that calls for replacing generation from aging coal plants over the next decade by leaning more heavily on energy efficiency, renewables and natural gas. The plan builds on principles the Governor laid out in his 2012 plan—reliability, affordability, adaptability and environmental protection. Thought much of Snyder’s plan focuses on changes to the electric generation mix—with respect to natural gas distribution he stated the following: On the natural gas side, the commission took advantage of record-low gas prices to encourage utilities to replace our aging natural gas pipelines – especially those that are made of cast iron. For too long, we neglected our pipelines and recently, we have seen a quadrupling of leaks for some of our largest gas utilities compared to a decade ago. These programs are the right thing to do and must be continued, and accelerated as much as is economically feasible.
In 2008, Michigan enacted Public Act 295 which that requires that all rate-regulated natural gas utilities to file energy optimization programs (EO) with the Michigan Public Service Commission (MPSC).
Public Act 295 provided for utility incentives for energy efficiency. The Act states that “an energy optimization plan of a provider whose rates are regulated by the commission may authorize a commensurate financial incentive for the provider for exceeding the energy optimization performance standard. Payment of any financial incentive authorized in the EO plan is subject to the approval of the Commission. The total amount of a financial incentive shall not exceed the lesser of the following amounts: (a) 25% of the net cost reductions experienced by the provider’s customers as a result of implementation of the energy optimization plan. (b) 15% percent of the provider’s actual energy efficiency program expenditures for the year.”
In December of 2013, Governor Rick Snyder (R-MI) laid out his vision for a “no regrets” energy future by 2025. This strategy coincided with a MPSC report on the state of Michigan’s energy efficiency policy and how this policy can be improved going forward. The report concluded that Michigan’s utilities have met or exceeded and are expected to meet near-term EO targets and that Michigan has the potential to continue to achieve incremental cost-effective savings from energy efficiency.
The Strategy called for identifying and quantifying benefits and costs of Energy Optimization Programs, suggested improvements to Michigan EO programs including Flue-gas heat recovery systems, CHP systems, geothermal heat pumps, providing better customer data and upgrading building codes.
In May of 2014, State Representative Aric Nesbitt (R-MI) introduced an infrastructure expansion bill meant to facilitate natural gas service to underserved and unserved areas in the state of Michigan.
Specifically, HB 5555 would have allowed natural gas utilities to file an Infrastructure Expansion Investment Plan with the Michigan Public Service Commission to provide the natural gas infrastructure necessary to serve unserved or underserved areas in the state. Proposed expansion plans must include each of the following: (a) a 1-year plan that projects investment related to expansion (b) a proposed recovery mechanism that provides for the recovery of the incremental revenue requirement associated with expansion investments (c) all expected costs and benefits associated with the proposed investments (d) an investment projection up to 5 years in duration proposed to be recovered in future expansion recovery mechanisms. The legislation would have required the PSC to review and approve or amend propose plans within 180 days. This bill died at the close of the legislative session.
On March 5, 2015, Representative Nesbitt re-filed this expansion legislation as House Bill 4303. This bill died at the close of the legislative session.
In January 2011, the Michigan PSC adopted a settlement that establishes a main replacement program rider. The mechanism will enable SEMCO Energy to recover the incremental capital-related costs associated with the accelerated removal and replacement of cast iron and unprotected steel service lines and mains. The program expires in 5 years unless extended by order or new rate case.
In June 2012, the Commission approved a settlement in a Consumers Energy gas rate case that will fund a main replacement program at $56 million annually until the program is reviewed and spending is reset by the Commission in the utility's currently pending general rate case proceeding.
On April 16, 2013, the Michigan PSC approved an expanded gas main replacement program (MRP) and a pipeline integrity program, and the recovery of the costs of those programs, as well as the ongoing meter move-out program, through an infrastructure recovery mechanism (IRM) for DTE Gas Company. This order allowed the company to accelerate its annual pace of main replacement from 30 miles to 66 miles per year.
In May 2013, the Commission approved an expanded main replacement program proposed by SEMCO Energy Gas Company that will double the amount spent annually on the program and double the miles of main replaced annually. Coupled with its existing program, SEMCO will replace 40.6 miles of high-risk main annually. This will allow SEMCO to accelerate the installation of excess flow valves at the homes of its customers, helping to protect customers in case of a service line leak.
On April 16, 2013, the Michigan PSC approved an expanded gas main replacement program (MRP) and a pipeline integrity program, and the recovery of the costs of those programs, as well as the ongoing meter move-out program, through an infrastructure recovery mechanism (IRM) for DTE Gas Company.
On January 13, 2015, the Michigan Public Service Commission (PSC) adopted a settlement in a Consumers Energy (CE) gas base rate case (Case No. Case No. U-17643). The settlement provides for an Enhanced Infrastructure Replacement Program (EIRP). The EIRP is a twenty-five year incremental investment program to upgrade natural gas infrastructure, including approximately 540 miles of cast iron pipe. The EIRP is based on transmission and distribution integrity management principles intended to eliminate cast iron pipe and other high-risk components as identified through existing federal and state code requirements. CE projects that it will spend about $75 million per year under the EIRP.
On June 3, 2015, The Michigan Public Service Commission (MPSC) approved a settlement agreement that authorized SEMCO Energy Gas Company to extend its natural gas main replacement program (MRP) and increase its MRP surcharge, effective with the next full billing cycle. The surcharge will continue until the earlier of either the establishment of base rates in a future contested case addressing the MRP through self-implementation or Commission order, or May 30, 2020.
Under the terms of the settlement, the parties agreed that SEMCO will: o continue to annually replace 26 miles of main through the MRP and 14.6 miles under the base program, for a total of 40.6 miles of main from 2016 through 2020; o spend on average approximately $10.1 million annually for a total of $50.5 million on main replacement for 2016 through 2020; o not file any further requests for expansion, continuation, or modification of the MRP surcharge outside of a general rate case, unless there is a change in the law addressing infrastructure replacement programs; and o File an MRP planning report and MRP performance report by March 31 of each year for that year’s main replacement spending.
On November 12, 2014, DTE Gas filed an application with the Michigan PSC to further improve the overall safety and reliability of the DTE Gas distribution system by revising its Main Replacement Program (“MRP” or “Program”) to increase MRP capital expenditures by $46.9 million annually in 2016 and 2017 and increase the Infrastructure Recovery Mechanism (“IRM”) surcharge to recover the capital costs associated with the Program. This program would accelerate the company’s pace of replacement to approximately 120 miles per year. (Case No. Case No. U-17701).
On November 23, 2015, The Michigan Public Service Commission (PSC) issued a decision that modified DTE’s proposal and authorized the company to expand its Main Replacement Program in 2016 by $15.6 million above the previously-approved spending levels, and to increase spending in 2017 by $31.4 million above previously-approved spending levels, contingent upon 2016 targets being met.
Additionally, the PSC directed its Staff to meet with DTE prior to July 1, 2016, to reassess the utility's target mileage for 2016 main replacement. In reassessing the target mileage for 2016, Staff is to consider all relevant information and documents provided by the company, the authorized increase for 2016, and the fact the utility exceeded mileage targets and completed more main replacement than expected under the current MR program to date. The PSC also determined that the parties should reassess 2017 targets in a similar manner prior to July 1, 2017, and that authorization of the 2017 spending increase is subject to reduction back to 2016 levels if 2016 targets are not substantially completed.
DTE Energy owns and operates multiple public CNG stations in Michigan.
WEC Energy Corp. subsidiary Trillium CNG owns and operates stations in Kalamazoo and Detroit.
In October of 2008, Michigan enacted Public Act 295, which authorized natural gas decoupling. This legislation has been implemented through a series of Commission orders.
The Commission has approved decoupling for Michigan Consolidated Gas Company (Docket No. U-15985), Consumers Energy (Docket No. U-15986), and Michigan Gas Utilities (U-15990).
On January 13, 2015, the Michigan Public Service Commission (PSC) adopted a settlement in a Consumers Energy (CE) gas base rate case (Case No. Case No. U-17643). The adopted settlement provides for the company to implement a gas revenue decoupling mechanism (RDM) that compares weather-normalized actual revenue realized by CE to the rate case revenue by rate schedule approved in this case. The RDM would terminate upon CE's implementation of new interim or permanent rates in its next rate case, and the mechanism would need to be re-approved by the PSC.