Michigan regulators approve settlement in DTE’s energy plan. What it means

The Michigan Public Service Commission (MPSC) has given the green light to a settlement agreement that shapes the future of electricity for 2.3 million DTE Electric customers over the next 20 years, secures payments for low-income bill assistance and energy efficiency improvements and requires disclosure on political donations. 

The agreement will close DTE’s coal-fired Monroe power plant in 2032, three years ahead of schedule, and includes commitments to build more renewable energy and battery storage faster.

Low-income customers may be eligible for additional bill assistance and help with energy efficiency and renewables due to $38 million in funds secured for nonprofits that serve them as part of the settlement. An additional $70 million will support DTE’s low-income energy efficiency programs.

Under the new deal, customers interested in installing solar panels and selling excess energy back to the grid will have more time. The agreement increased the cap for the required purchase of excess energy from residential solar owners from 1% to 6% of the utility’s peak load.. 

Under a 2016 Michigan law, investor-owned utilities like DTE Energy and Consumers must file Integrated Resource Plans every five years to forecast customers’ power needs and lay out plans for meeting those needs reliably and affordably, with specific requirements for reporting 5-, 10- and 15-year projections. The plans impact how much we pay for electricity, how utilities will spend the money we pay, and how much pollution will result.

In addition to the expedited closure of the Monroe plant, the agreement includes:

  • The conversion of Belle River Power Plant from a coal-fired 1,270 megawatt (MW) baseload plant to a natural gas peaker plant, with a planned retirement of its diesel-fueled River Rouge and St. Clair peaker plants in 2024.
  • An acceleration in the development of renewable energy projects with a target of adding 600 MW per year in 2026, 2027, and 2028, and 1000 MW per year in 2029 and 2030. Approximately 30% will be sourced through power purchase agreements.
  • The development of electricity storage, with targets of 230 MW in 2025, 120 MW in 2027, and 430 MW in 2028. Approximately 35% of these additions will be owned by third parties.
  • An increase in energy waste reduction targets to 2% savings in 2023-2027 and a raised distributed generation cap to 6%.
  • A $38 million donation to organizations that provide utility bill assistance and home energy efficiency improvements for income-eligible households.
  • Annual disclosure of all $5,000 or more political donations made by DTE Energy Co., beginning in 2024.
  • The development of an outreach and engagement plan for DTE’s next IRP to encourage input from and participation by members of overburdened communities.

The agreement also authorizes a plan allowing DTE to continue to secure a return on its investment in its Monroe plant, which sparked criticism among some intervenors. The agreement “gives DTE the right to charge ratepayers for a profit on the Monroe coal plant for 15 years, even after it’s shut down,” John Richter, a senior policy analyst with the Great Lakes Renewable Energy Authority, one of the interveners in the case, previously told Planet Detroit.

The agreement results from intervention by 21 environmental, business, and labor organizations. Several of those groups, including the Sierra Club and Soulardarity, a Highland Park-based clean energy nonprofit, held a press conference Tuesday where they outlined key concessions of the negotiation.

Notably, the intervenors secured the $38 million allocation in low-income assistance programs, which was not part of the original plan proposed by DTE, as well as securing more than twice as much energy storage and 400 MW more renewables than what DTE had proposed.

Shuttering the Monroe plant three years early will emit 24 million tons fewer of carbon, 6,000 fewer tons of sulfur dioxide, and 7,000 fewer tons less of nitrogen oxides, according to Andrew Sarpolis of the Sierra Club. “This will have huge impacts on the incidence of respiratory diseases, public health issues, and our climate,” he said.

In a statement, DTE said it will reduce its carbon emissions by 65% in five years, 85% in nine years, 90% by 2040 and reach net zero carbon emissions by 2050 under the plan.

The intervenors also secured an earlier deadline for DTE’s next long-range plan, which must be filed in 2026; originally the deadline was 2028. 

“In 2026, we will have an ability again to look at Monroe to try to move up [the closure],” Shannon Fisk, an attorney with Earthjustice which represented Sierra Club in the case, said. 

Independent energy consultant Jackson Koeppel, who served as an expert witness and negotiator in the case, outlined clean energy advocates’ priorities that were not achieved as a part of the IRP process, including affordability for ratepayers.

“We have not done anything policy-wise in this settlement that is helping to guarantee we’re getting to that 6% of income goal outlined in the Michigan Healthy Climate Plan,” he said, referring to the state’s goal to limit the cost burden from powering and heating homes to “not more than 6 percent of annual income for low-income households.” 

Koeppel noted that affordability is a critical issue in the $622 million rate increase request now pending before the MPSC. That case was filed in January and is set to be decided by November. 

Advocates also hope to negotiate standards that empower the MPSC to consider equity, climate, and affordability in its decisions, to secure better outage compensation for customers who lose power for extended periods, to secure enabling of community solar in Michigan and remove the cap on distributed solar and batteries.

These items will require legislative action, Koeppel noted. Several bills introduced into the state Legislature this term address these issues.

“Both for the Legislature and for the commission as a regulatory agency. These issues are still very alive in the current DTE rate case. And while I am proud of the work done by our parties and all the other parties, in this case, to secure what we did, the work is by no means over.” Other details on the agreement can be found here.

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