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lansing — Community and advocacy groups are opposing a new proposal to charge all DTE and Consumers Energy customers an extra $10 a year to fund an incentive pot that rewards utilities for improved performance.
Several Michigan cities this week denounced “incentive” proposals by Michigan Public Service Commission staff, saying an estimated $23 million incentive pool for DTE and an estimated $19 million incentive pool for Consumers Energy , argued that it would collect additional money from customers who already pay higher rates to reward DTE and Consumer Energy. Consumer Energy for simply doing work.
Based on the PSC staff report, the performance metrics that utilities must meet to qualify for incentives may actually fall below the commission’s own minimum reliability standards in some cases, officials said. He made the claims in a filing this week.
Areas opposing the plan include Ann Arbor, Birmingham, Flint, Livonia, Kentwood, Pleasant Ridge and Meridian townships.
“The City of Ann Arbor opposes any mechanism that provides ‘additional’ financial rewards (such as bonuses or incentives) to electric utilities that improve reliability to a minimum level of compliance,” the city said in Thursday’s filing. stated in the document.
“This is especially true given that DTE’s own actions and choices have resulted in the worst reliability in the country, even though it was given the opportunity to secure above-average returns (which it took advantage of). No other industry rewards failure to meet basic standards, and Michigan utilities should not be an exception.”
The Michigan Civil Service Commission emphasized that the staffing plan is in the “discussion stage” and that the plan is “likely to change before being finalized based on input from participants.” Staff must hold a meeting on the plan by Feb. 12 and submit a report to the committee on the group’s findings by May 3.
Consumers Energy said in a statement Friday that it will continue to participate in the stakeholder process on performance-based pricing.
“We believe that MPSC is fair to all stakeholders and designed to achieve a common goal of improved reliability,” Consumers Energy spokeswoman Katie Carey said. I am confident that the mechanism will be adopted.”
DTE Energy did not immediately respond to a request for comment.
Reward “unacceptable performance”
As the frequency and duration of widespread power outages has increased in Michigan in recent years, the commission is considering ways to improve the reliability of the state’s power grid. Part of the analysis includes a discussion of creating disincentives for power companies (credits and refunds for customers who lose power) and incentives to encourage reliability improvements.
The staff’s “straw proposals” issued in August include potential We started asking for feedback on disincentives and incentive plans. His initial proposal received nearly 300 comments.
Staff revised Straw’s proposal in December after seeking additional input. The Dec. 19 recommendation, which was submitted for comment from interested parties and interested parties, would allow electric utilities to charge an additional $10 per year and would require certain fees established by the commission. The money will be allocated to an incentive pool that power companies can use if they meet the criteria.
The $10 fee would likely create an incentive pool of about $23 million for DTE and about $19 million for Consumers Energy, according to staff comments.
According to the proposal, incentive pools would be distributed to utilities based on factors such as reducing service interruption times and increasing the ability to restore power within 48 hours after a storm. The committee is seeking comment on other benchmarks that must be met.
Under the plan, utilities could also face potential financial penalties and disincentives for issues such as long-term poor performance lines.
But benchmarks proposed so far for incentives would not even meet the commission’s minimum standards set out in the Service Quality and Reliability Regulations, officials said in a response scheduled for Friday. insisted.
For example, state administrative regulations consider restoration of less than 90% of customer power within 48 hours of a catastrophic event to be unacceptable. But the proposed incentive matrix would give utilities incentives if 85% to 90% of their customers had power restored within 48 hours of a disaster, according to a filing from a rate fairness industry association. They will be deemed eligible to receive the money.
“In other words, the revised straw proposal would provide financial incentives for what the commission itself found to be an unacceptable level of performance,” the group said.
Michigan Reliability Comparison
Cities and other groups opposed giving incentives to power companies in a state that had the ninth-highest average home electricity rates in the nation last year and a less reliable power grid.
In 2021, Michigan ranked 6th worst in the nation for average downtime (minutes per customer). According to the Citizens Utilities Commission’s 2023 Utility Performance Report, Michigan ranked seventh worst in the nation over the five-year period from 2017 to 2021. In 2021, Michigan ranked 12th worst in the nation for annual outages per customer, according to the report.
According to the Public Service Commission’s reliability standards, less than 6% of a utility’s customers experience four or more continuous power service interruptions in a year. However, DTE reported that approximately 7% of its customers, or approximately 163,417 customers, experienced four or more interruptions in 2022, and Consumers Energy reported that 9.5%, or 173,273 customers, experienced four or more interruptions in 2022. The Consumer Affairs and Public Interest Commission reported that this occurred.
Pleasant Ridge City Manager James Brookman wrote in a letter from community leaders submitted by Michigan City. Public Utility Affairs Association.
The Michigan Public Utilities Commission argued in a filing Friday that the commission should focus on penalties, not incentives, when it comes to improving utility reliability. The group said DTE and Consumers Energy already have the highest return on equity in the Midwest without additional incentives.
The board also argued that without the right benchmarks, the plan violates the commission’s own rules regarding financial incentives. The service quality and reliability standards allow the commission to award financial incentives only if a utility “exceeds all service quality and reliability standards.”
According to the Citizens Public Works Commission, DTE indicated the commission could waive its rules to allow improvement-based incentives, but the commission cautioned against such a move.
“Lowering our standards in exchange for uncertain outcomes is wrong and unfair to ratepayers who bear the cost of this poor performance,” the Public Utilities Commission filing said. ” is stated.
eleblanc@detroitnews.com
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