LANSING — State regulators have approved an agreement between Consumers Energy and more than a dozen interest groups that will open a solar energy program to potentially thousands more homeowners and businesses.
As part of the Michigan Public Service Commission-approved settlement agreement Thursday, the Jackson-based utility agreed to double the cap on its “distributed generation” program. A successor to what was formerly known as net metering, the program establishes guidelines and the rates at which solar-owning customers are compensated for sending excess power to the grid.
Doubling the cap from 2 percent of the utility’s average peak load to 4 percent is a win for clean energy advocates who have maintained that Consumers and other utilities undervalue customers’ excess solar power sent to the grid.
As well, the settlement slightly increases the amount that solar-generating customers are credited by eliminating transmission service costs.
Michigan Energy Innovation Business Council President Laura Sherman said several intervenors in the MPSC case have argued that the program shouldn’t include any cap on participation.
The 4 percent cap is an improvement “for those of us who want to make sure there’s a market for customers and companies to have certainty over the long term,” Sherman said.
This week’s Consumers settlement comes as Michigan experiences steady growth in the number of utility customers — both businesses and homeowners — who are installing solar to offset their power costs.
A November 2022 MPSC report showed that statewide participation in Michigan’s distributed generation program increased 37 percent in 2021, and that participation has grown each year since 2006. At the end of 2021, 14,262 utility customers generated nearly 125 megawatts of power in the program, mostly via solar energy installations. Consumers and DTE Energy customers accounted for 91 percent of the total program capacity, according to the MPSC.
Over the past year, both Consumers and DTE have inched closer to their program cap limits. Consumers currently has 8,100 category 1 customers and 300 category 2 customers that account for 80 MW of capacity. Doubling Consumers’ cap limit opens the program up to another roughly 10,000 customers.
“Consumers Energy continues to support customers who want to install rooftop solar generation,” Spokesperson Brian Wheeler said via email.
MPSC Chairperson Dan Scripps said that expanding the program cap does not pose engineering challenges, nor does it raise cross-subsidization questions that utilities have previously argued before the commission.
“We believe we are setting cost-based rates, including for distributed generation tariffs, and there’s no engineering rationale” behind not expanding the cap, Scripps told MiBiz.
Electrification, EVs and refunds
The Consumers settlement involved several components of the utility’s business, including making permanent a residential electric vehicle rebate pilot program and issuing $25 million in bill credits and financial assistance to low-income ratepayers.
The MEIBC also will be involved in developing a pilot program that aims to replace propane- and fuel oil-powered home heating systems with electric versions at roughly 2,000 Michigan households over three years. The program would likely involve rebates for customers to make the shift.
The pilot is part of a broader clean energy strategy around electrification that hopes to reduce customers’ exposure to volatile price swings in the fossil fuel market.
“These pilots are a chance to figure out what works, what doesn’t work, and how to improve programs,” Sherman said. “Propane to electric is the low-hanging fruit. It’s the most likely place we can all agree to see how it works then move to the tougher case of a natural gas customer who wants to do this. There are some really good opportunities with propane.”
Electric heat pumps, for example, are one technology that’s gaining popularity within the electrification movement, even in cold weather climates.
The electrification pilot program aims for low-income participation and also will determine the ability to leverage federal rebates and incentives through the Inflation Reduction Act.
Scripps noted that the MPSC approved a similar pilot program for Alpena Power Co.
“I think there’s been a focus and conversations through the MI Healthy Climate Plan and a number of other places around the potential electrification of heating from other fuel uses,” he said. “I think it’s a chance to look at the technology from a heating standpoint, and allows for some additional load growth for the utility, which benefits everyone.”
