Dive Brief:
Consumers Energy on Thursday filed a settlement with Michigan regulators to address the more than 3 GW of qualifying facilities (QF) in the state waiting for rate compensation under federal law.
The resolution would place 584 MW of renewable energy projects under contract by Sept. 1, 2023, with an aim to connect 150 MW per year until then, so long as its “commercially reasonable” to do so, the utility said in its filing. It would also put to rest “numerous outstanding complaint cases and other proceedings” stemming from renewables developers over their right to connect to the utility’s system under the Public Utilities Regulatory Policies Act (PURPA).
Conflict between the utility and solar developers has been ongoing. Renewables groups pushed the utility to pay qualifying facilities what they said was due and Consumers pushed back. The state’s PURPA framework “forces our customers to pay for unnecessary energy and capacity at a higher price,” Katie Carey, director of media communications at Consumers told Utility Dive at the time. The settlement also addresses this tension, making QF power prices more consistent with the market, which Carey said is about a 30% to 50% difference.
Dive Insight:
Competitive pricing for renewables has escalated tensions between utilities and third party developers, and PURPA implementation is one avenue where power providers have continuously butted heads in the midst of a clean energy wave.
SEIA and Cypress filed complaints against Consumers in April, arguing that the utility’s proposed integrated resource plan did not meaningfully address the qualifying facilities already under development in the state waiting for connection approval.
Under PURPA, the utility needs to compensate those projects for the power they supply to the grid, but Consumers at the time said it was “overwhelmed” by the 1,744 applications pending in its interconnection queue.
For that reason, the utility filed a request with the Public Service Commission that would have waived the timeline for interconnecting projects waiting for rate compensation from Consumers.
Solar developers complained this move was unfair to qualifying facilities, some of which had been under development for two years and the PSC ruled against the utility April 10.
“Consumers’ assertion that it was caught off guard by the increased volume of interconnection applications and has been unable to keep pace processing larger project applications is concerning, given the lengthy proceeding to reset PURPA avoided costs and the company’s knowledge of trends in renewable energy technology,” the commission said in its ruling.
But after months of negotiations with SEIA and Cypress, the utility has settled on an agreement that creates “a new and more affordable PURPA framework.” The settlement will also allow utilities to move toward a competitive bidding framework for solar, limiting “the amount of unneeded generation our customers would purchase under the outdated PURPA framework,” she said.
The settlement “can clear the PURPA queue and achieve the best possible outcomes for renewable energy developers and investors,” Sean Gallagher, Vice President of State Affairs at SEIA said in a statement.
Developers “have invested millions in solar projects in the state,” Cypress Executive Vice President of Development Noah Hyte told Utility Dive in an email. “This filing will finally allow many of those projects to move forward, saving ratepayers money and driving competition and innovation, while bringing hundreds of new jobs, millions of dollars in lease payments to Michigan farmers, and new property tax revenue for rural communities.”
The majority of solar developers, representing 3,300 MW, have signed on to the agreement.
The Public Service Commission in June approved Consumers’ IRP, which eliminates the utility’s coal-fired generation entirely by 2023, reduces emissions 90% by 2040 and would add an additional 5 GW of solar by 2030, through a competitive bidding process.
