Michigan Public Service Commission lifts suspension of avoided costs for Consumers Energy
The Michigan Public Service Commission (MPSC) recently lifted a suspension on avoided costs that Consumers Energy Co.’s pays to independent power producers under the Public Utility Regulatory Policies Act of 1978 (PURPA), which had been on hold since last December.
The updated amounts were on hold to resolve questions raised by consumers and other stakeholders. The case was first filed in May 2016. Consumers’ avoided capacity cost is $117,203 per megawatt-year or $140,505 per zonal resource credit year.
The order also clarifies terms of the utility’s standard offer tariff.
Avoided costs under PURPA have not been recalculated in nearly 30 years for utilities that negotiated long-term contracts with qualifying facilities. PURPA requires the commission to establish how much a utility is obligated to pay the owner of a small electric production or cogeneration facility for the power it produces. The avoided cost equals the amount it would cost the utility to produce the energy itself and is the sum of capacity and energy costs.
In a second case, MPSC answered PURPA questions it had posed to stakeholders in a February order. The commission ruled that a utility’s integrated resource plan (IRP) will be used to determine yearly capacity needs and that a commission review of changes to a utility’s 10-year capacity forecast is needed to reset capacity prices.
