The Michigan Public Service Commission (PSC) lifted a hold on the implementation of new avoided cost rates that Consumers Energy must pay independent power producers, such as solar providers, under the federal Public Utility Regulatory Policies Act (PURPA).
Solar advocates said the ruling, an update to the rates and standard contract terms established in November 2017 under PURPA, will make the state more attractive for clean energy investments. The ruling ends a hold that the PSC established last December to give commissioners time to consider rehearing petitions and final decisions on the rate.
Also on Friday, regulators authorized two voluntary green pricing programs for Consumers that will allow customers to specify that a certain portion of their electricity be generated by renewable energy. The programs include residential and commercial full-service customers.
Consumers Energy plans to get more than 40% of its power from renewable energy and storage by 2040, and the recent PSC rulings could enable greater renewable energy adoption among its ratepayers.
The utility said a specific plan for the 2040 goals will be released as part of its integrated resource plan, a separate proceeding pending before the PSC.
"[H]ow the MPSC rules on Consumers' Integrated Resource Plan will play a big role in determining the future of clean energy in Michigan," Sean Gallagher, vice president of state affairs for Solar Energy Industries Association, said in a statement.
However, Friday's PURPA decision "provides much-needed certainty" to the state's solar market, Gallagher said, citing project development delays and a lack of substantial investment from the industry.
The commission's November 2017 order established 20-year contracts at a standard rate for small projects of up to 2 MW, which distributed solar proponents said simplified development and financing process. Previously qualified project sizes were much smaller, capped at 100 kW. That order was the first change to the structure of Michigan’s avoided cost payments, in almost 30 years.
The new avoided cost, the sum of capacity and energy costs that represent how much a utility would need to pay to produce its own energy, is $117,203 per megawatt-year or $140,505 per zonal resource credit year.
The PSC has other pending PURPA cases, including one for investor-owned utility DTE Energy.