Priorities include:

• Accelerate conversion to LED lighting at fair cost to municipalities;
• Assure that street lighting tariffs reflect true cost and reward investments in energy-efficient lighting technologies and practices;
• Improve utility maintenance practices to reduce street light outages; and
• Support greater municipal ownership and control of street lighting infrastructure.

Activities:

• Dialog with Consumers Energy to resolve issues remaining from settlement of rate case U-20134 plus technology and management issues
• Analyze and develop options for municipalities to assume ownership or greater control of utility-owned street lighting systems

Michigan has the highest electricity prices in the Midwest and among the worst reliability records, directly impacting municipal budgets and causing broader economic development and quality of life challenges. DTE Energy and Consumers Energy have both developed distribution system maintenance plans that prioritize investments in safety and reliability. Implementation of the plans will increase municipal costs and affect services and policies. Municipalities should be involved as key stakeholders in plan development. Key issues include:

• Impact of cost recovery (“Investment Recovery Mechanism”) on electric rates, increasing costs of municipal operations and rate burden on lower-income residents.
• Impact of increased maintenance and operations activities on city infrastructure and quality of life. Examples include underground line replacement or maintenance requiring excavation of public streets and easements as well as enhanced tree trimming around overhead wires. Local governments need to be involved in planning and implementation of these efforts.
• Investments in grid modernization needed for successful implementation of municipal environmental, climate and sustainability policies, including distributed solar PV generation, electric vehicle charging infrastructure, and municipal microgrids, among others.

Both DTE and Consumers Energy proposed significant increases in distribution system investments in their respective 2018 electric rate cases, structured as additional automatic rate increases (“Investment Recovery Mechanisms” or IRMs) phasing in over 2020 and 2021. The Consumers IRM was dropped as part of the case settlement but the DTE proposal is still included in its ongoing rate case.

Regardless of how these expenditures are implemented going forward, prioritization of investments, timetables, management of project impacts, and responsibility for costs are all topics that municipalities and the utilities need to discuss to develop agreed policies and practices.

IRPs envision how the utilities will meet projected power needs through generation and conservation. The ability of municipalities to meet climate, renewable energy and/or efficiency goals will be significantly bounded by the IRPs going forward. Investor-owned utilities throughout the state are required to file IRPs, and some already have. Municipalities should participate in development, review, and implementation of the IRPs to protect their interests.

Many municipalities want to install more solar PV or other renewable, distributed generation resources to serve municipal facilities and to encourage their property owners and neighborhoods to do the same. Both Consumers Energy and DTE Energy have proposed tariff and rate changes that would decrease the value of energy fed to their grids by privately owned PV systems and would assess costly standby fees to supply energy from the grid when PV generation does not meet demand.

Separately, Consumers Energy has asked the MPSC for permission to pause its process for connecting independent renewable power facilities to Consumers’ grid, which would prevent them selling power and thus make them financially infeasible until connection was approved.

In addition, many municipalities would like to install large-scale solar PV on municipally owned land to serve their facilities in multiple locations, but current regulations prevent them from transmitting power from one location to another over the utility-owned grid.

MI-MAUI will work through the regulatory process, and directly with utilities, in favor of regulations and practices that help municipalities achieve their renewable energy goals and assure fair return on renewable energy investments. MI-MAUI will also support changes to regulations and utility practices that would support installation of municipal microgrids, which could provide more cost-effective municipal backup power and improve the financial case for installation of solar PV on municipal properties.

Many municipalities would be willing to increase their use of renewable energy if utilities provided it at competitive cost. Both DTE Energy and Consumers Energy have secured approval for “Voluntary Green Power” programs for both large and smaller customers, which are likely to be too expensive to appeal to most municipalities and agencies.

In fact, in both programs the rate customers pay will have a larger component covering costs of keeping coal and other non-renewable facilities on standby than the cost of the renewables (wind and solar) themselves. MI-MAUI will work with the utilities, the MPSC, and other stakeholders to identify green power options for communities that are more economical and do more to sunset non-renewable facilities.

The Public Utility Ratepayer Protection Act requires utilities to purchase renewably generated power from independent producers who offer it, at rates up to what it would cost them to generate the power themselves. Utilities generally try to understate this “avoided cost” so they can pay as little possible for independently generated renewable power.

DTE Electric has proposed new methodologies for calculating avoided cost that would reduce what they pay municipal generators. Cities that own generation facilities that feed power into the utility grid should work to ensure accurate and fair determination of avoided costs through MPSC review of utility PURPA filings.

Many municipalities want to encourage EV adoption and understand that availability of charging stations is a key constraint. Both DTE Energy and Consumers Energy are implementing pilot programs that the MPSC is closely monitoring.

Municipalities should be engaged directly with the utility programs, and in MPSC monitoring and future rate cases, to ensure that EV infrastructure decisions support their transportation, environmental and economic development objectives.

Local governments often struggle to get timely, accurate, and comprehensive data on energy use and costs from utilities, making it much harder to identify problems and opportunities and implement municipal energy programs. Governments need to work with utilities to develop better information systems, and potentially to support regulatory changes to improve the situation.