Nessel offers plan to address Michigan’s frequent power outages
Following a call out from the Michigan Public Service Commission (MPSC) for comments on how to address Michigan’s energy reliability woes, Michigan Attorney General Dana Nessel has submitted her own proposal on how to reduce the frequency and duration of power outages.
In comments filed with the commission on Sept. 22, Nessel asked for clarity as to whether proposed reliability incentives and penalties would apply to electrical cooperatives. She also reiterated her disagreement on the set amount for outage credits provided to customers experiencing outages, as well as the various parameters for restoration under different weather conditions.
The commission, which regulates energy companies in the state, increased power outage credits in March, raising them to $35 plus an additional $35 for each additional day of outages.
Outage credits would be paid out automatically after 96 hours without power during catastrophic conditions, defined as a utility having 10% or more of its customers without power; after 48 hours during gray sky conditions affecting between 1% and 10% of a utility’s customers, and after 16 hours during normal conditions.
In her comments, Nessel recommended key objectives for a properly designed performance incentive and penalty mechanism, including:
- The system should be focused on the electrical distribution issues that utilities and customers are currently facing.
- Performance measures should be simplistic and limited to a dozen or less.
- Incentives and rewards should be linked to and reflect the revenue collected by utilities.
- Industry comparisons, realistic and achievable performance metrics for the mechanism, limits to rewards and incentives, as well as a recommendation against dead bands in the mechanism.
Alongside commenting on the commission’s own reliability mechanism, Nessel proposed a system of her own, known as the Service Improvement Incentive Mechanism.
This mechanism includes proposed performance measures alongside proposed restoration timelines. According to a statement from Nessel’s office, this proposal is designed to be straightforward, quickly implemented and built upon over time and improved as data is collected. This mechanism was also proposed during DTE and Consumers Energy’s most recent rate cases.
“Service reliability should be a foundational function of our utilities, but the data and experiences of Michigan residents show we must have stronger oversight mechanisms to focus these businesses on their responsibility for reliability,” Nessel said.
“We’ve invested an incredible amount of time, alongside our experts, in developing the Service Improvement Incentive Mechanism and it’s time the MPSC adopt it into practice. Utility customers in Michigan deserve to know their utility corporations are working toward reliable service, and every indication says that will require government and regulatory accountability,” Nessel said.