2018 Michigan Energy Capacity Update

Article by Constellation

After the passage of comprehensive energy legislation in December 2016, the Michigan Public Service Commission (MPSC) had interpreted the legislation as requiring that alternative electric suppliers must demonstrate required customer capacity four years in advance by using, at least in part, generation available from within the state lines. Any restriction requiring the purchase of capacity from in-state resources prevented cheaper capacity in other midwestern states from being available to our customers thus potentially increasing their costs. The commission stated that such a requirement ensured Michigan has a reliable supply of power.

The Michigan Court of Appeals, however, disagreed with the MPSC, and in July 2018, found that the MPSC does not have the authority to limit the area in which an alternative energy supplier could secure its capacity. The court stated that while the 2016 law may empower the Commission to require alternative electric suppliers to demonstrate enough sufficient capacity, “it does not specifically authorize the MPSC to impose local clearing requirements upon alternative electric suppliers individually”. Certain parties have sought to have the Michigan Supreme Court overturn the Court of Appeals decision, which may delay the effect of that ruling.

Constellation has been in the forefront on this issue and has led the way in working with our customers, politicians, and other organizations like Energy Michigan, Inc. and ABATE, to ensure that a competitive market is maintained in MI.  Many of the state’s companies, schools and other local businesses rely on companies like Constellation to provide them with lower electricity bills.  Constellation is supporting efforts for immediate implementation of the Court of Appeals ruling.

Constellation is prepared to work with our customers in assisting with securing their capacity through May 2024 and beyond. Along with current low energy prices, Constellation can help develop a strategy that would help maintain or reduce your annual power spend. Most importantly, because Constellation has access to ample capacity in the Midwest region to meet the MPSC capacity demonstration for many years forward, this can be done while eliminating the risk of any potential exposure to the utility SRM capacity price that is substantially higher.

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