The two electricity bills, passed in December 2016 and effective in April 2017, aimed to ensure electrical system stability in Michigan by mandating all generators — across Michigan’s hybrid electricity market — maintain sufficient electricity generation capacity for four years into the future. Those utilities that do not maintain sufficient capacity resources can be subjected to fines, penalties, or made to pay refunds to their customers.
The language of public acts 341 and 342 attempts to address the reality that monopoly utilities are legally the supplier of last resort, meaning that they could be required to provide electricity for choice market customers that leave the choice system, and, therefore must maintain sufficient generation capacity to meet the needs of the choice market, as well as their customers.
Section 6w of Public Act 341 mandates the MPSC to ensure utilities meet a capacity demonstration requirement. That is, electricity providers must confirm that they have sufficient resources to meet their customer’s needs.
If alternative electricity suppliers fall short on their advance planning, PA 341 empowers the MPSC to hold public hearings to determine an appropriate capacity charge to pay for access to generation assets operated by the major utilities.
The MPSC ruled on June 25, 2017, that electricity providers in the choice market would also be required to source their electricity from in-state sources, or meet a local clearing requirement. This new expectation is expected to come fully into force in 2022. Currently, this requirement is being based in what the MPSC is terming “incremental capacity methodology,” meaning electric utilities or providers in the Lower Peninsula “must demonstrate a minimum level of local resources equivalent to 1.5% of its peak demand for planning year 2022/2023 and 3.0% of its peak demand for planning year 2023/2024.”