2019 Michigan State Reliability Mechanism Capacity Update
In December 2016, The Michigan Public Service Commission (MPSC) passed Public Act 341, which requires alternative electric suppliers (AES) like Constellation who supply power to retail customers to demonstrate that they have sufficient capacity in place to meet their capacity obligation for a four-year rolling basis.
Capacity is the component on electricity bills designed to ensure that there are enough generation resources to serve the grid on the hottest and coldest days of the year at the lowest possible cost. Public Act 341 was put in place to ensure there is enough capacity available to meet Michigan’s state-specific demands.
The bill requires an AES, such as Constellation, to demonstrate its ability to meet these capacity requirements to the state of Michigan. If the AES is not able to demonstrate that it has enough capacity to serve their customers on a 4-year rolling basis, then the supplier is responsible for purchasing capacity at the rate established by the State Reliability Mechanism (SRM). This rate differs by utility.
The MPSC’s orders for the most recent SRM capacity values for each utility are summarized in the graph below:
(1): MPSC UPPCO Order (Case U-18254)
(2): MPSC DTE Order (Case U-18248)
(3): MPSC Consumers Order (Case U-18248)
(4): MPSC Cloverland Order (Case U-18258)
(5): MPSC UMERC Order (Case U-18253)
On February 9, 2018, Constellation made an initial filing for the first four-year capacity demonstration period that ran June 2018 through May 2022.
One year later, on February 8, 2019, Constellation filed to extend the four-year rolling capacity demonstration through May 2023. An annual demonstration is required each year moving forward. Constellation was able to provide a demonstration filing to the MPSC for all the customers that we serve to cover their capacity obligation.
Can the State Reliability Mechanism (SRM) charges change?
According to Public Act 341, the SRM must be set at least one time per year. The rate has already been set for 2019, but the MPSC has the ability to change the rate more frequently than if a new rate case or Power Supply Cost Recovery filing is made by a utility. Constellation will continue to monitor any filings related to the SRM and will provide updates to customers and channel partners if a change occurs.
What’s next for 2020?
The next filing for capacity obligation will take place in February 2020 for the June 2023 through the May 2024 reporting period. Later in 2019, several months in advance of the filing, Constellation will contact customers to provide information on the capacity market and will craft a capacity strategy to their specific usage patterns for customer’s considerations.
Constellation is also active in Lansing, Michigan, monitoring Michigan energy policy to provide input on energy matters. We will keep both our customers and channel partners informed if there are any SRM policy changes that could affect customers’ energy bills.
If you’d like to stay informed about what’s happening in Michigan, please visit constellation.com/MIStrategy.
Rich Spilky, Principal, Retail Analytics
As a Principal in Retail Analytics at Constellation, Rich develops competitive and leading-edge products for industrial, commercial, and residential customers within competitive markets across the country. He has extensive knowledge and experience in leading retail electric pricing and invoicing initiatives. Rich is proficient in influencing favorable regulatory outcomes affecting the retail energy industry across local, state and federal levels.
Christian Vandercook, Business Development Manager
As a Business Development Manager at Constellation, Christian helps customers understand competitive energy markets in the state of Michigan. He helps craft strategic purchasing strategies that meet customer’s specific energy supply and efficiency needs. Christian helps assist customers of all sizes, from Fortune 100 companies to local businesses. He is based out of Constellation’s Ann Arbor, MI office.