Michigan’s utility regulator is proposing that electric operators factor extended outages through their earnings.
The plan is part of a proposal for “incentive and disincentive mechanisms” to improve power reliability, according to a press release this week from the Michigan Public Service Commission (MPSC) seeking comment on the mechanisms package. The agency, which oversees energy and telecommunications companies, cited recent storms that have left more than 500,000 customers without power.
The MPSC is “considering financial mechanisms related to the time it takes utilities to restore power, including a particular focus on restoration timelines during major storms,” the media release said.
This mechanism would “connect utility revenues to reducing the duration and frequency of power outages,” the statement said.
“We share the public’s frustration with the number and length of power outages, and in particular with those who experience repeated outages,” MPSC President Dan Scripps said in a statement. “By focusing on where improvement is most needed,” they work to better connect utilities’ financial performance with their customers’ experience. Today’s actions to offer a straw proposal that links financial metrics to the duration of outages and the number of customers experiencing multiple outages each year is an important step toward that goal.”
Other proposed mechanisms include imposing penalties on electricity suppliers who record four or more cases of “sustained power outages” in a year. “Current service quality standards require that by December 2029 no more than 6 percent of a utility’s customers may experience more than 4 sustained outages and no more than 5 percent of customers after January 1, 2030,” the regulator noted.
Michigan’s two largest utilities, Consumers Energy Co. and DTE Electric, had more than 335,000 such customers last year, according to the MPSC.
He added: “Utilities would be further penalized for customers experiencing 7 or more sustained power outages. Annual reports filed by the companies indicate that DTE Electric had 16,262 such customers and Consumers Energy 19,821 in 2022 “.
Companies that are among the 10 worst-performing circuits for three or more years in the past five years would also be penalized if the proposal is approved.
The MPSC is seeking comments until September 2022.
Audit
Simultaneously, it announced that it has hired an auditor to review the distribution systems of Consumers Energy and DTE Electric. “The focus of the audit is to reduce the number and duration of outages and to identify improvements needed to increase safety, particularly with respect to the risk of public contact with downed power lines,” the MPSC said.
The nearly $1.76 million audit contract was awarded in July to Liberty Consulting Group, according to the announcement.
“Through the audit, the MPSC hopes to gain a deeper understanding of the challenges facing DTE Electric and consumers as we continue to experience increasingly frequent and severe storms so that we can develop effective solutions,” said the commissioner Katherine Peretick in a statement.
Gas price increase
Meanwhile, the MPSC approved applications from Consumers Energy and Michigan Gas Utilities Corp. on Wednesday. to increase natural gas rates.
“The Commission approved a settlement allowing Consumers Energy to raise rates by $95 million, a reduction of more than 55 percent from the initial $212 million increase sought by the Jackson utility, to address capital infrastructure improvements, technology investment and operational efficiencies. and rising financing costs,” he said in a separate press release.
“A typical residential customer using 100 ccf of natural gas per month will see a $4.20 increase on their bill, a 4.2 percent increase,” the MPSC said.
The new rate will come into effect on October 1.
Michigan Gas Utilities has also received approval to increase its total natural gas base rate collections to $9.9 million. “This amount is more than 48 percent less than the $19.1 million increase the company is seeking to fund safety and reliability improvements and cover rising materials and labor costs and impact of higher interest rates and inflation,” the MPSC said.
“A typical residential customer using 100cc of natural gas per month will see a $5.10 increase on their bill, a 6.6 percent increase,” he said.
The new rate applies on January 1, 2024.
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