Advanced Energy Perspectives

This post originally appeared in the Michigan EIBC blog.

This year has seen some of the most significant moves yet to realize cleaner energy in Michigan. Now, customers of Michigan’s largest utility, DTE Energy, will find it easier to “go green” due to a settlement between DTE and groups including the Michigan Energy Innovation Business Council (Michigan EIBC) and Advanced Energy Economy (AEE). The settlement improves DTE’s voluntary green pricing program — in which companies from GM to the Detroit Zoo, as well as residential customers, can subscribe directly to wind and solar projects — by making it more affordable and more competitive.

Although 2021 is only halfway through, state utility regulators and regional grid operators have had their hands full considering issues at the cutting edge of the energy transition. How can utilities develop resource plans that align with state policy goals? How do all those mobile batteries in the growing fleet of electric vehicles (EVs) get integrated with the grid? How can customers be helped to make smarter energy decisions? These questions and more are on the docket in 2021, and Advanced Energy Economy has been tracking how regulators are tackling these complex issues. Even just halfway in, the regulatory trends from across the country suggest that 2021 will be another transformational year for advanced energy.

Last week, the Indiana Utility Regulatory Commission (IURC) issued its final order in a proceeding to examine Duke Energy Indiana’s coal-fired unit commitment decisions during the Fall of 2019. While the IURC ultimately declined to order Duke to refund customers for the financial losses it knowingly incurred, the Commission rightly acknowledged that today’s changing energy landscape has complicated the way coal plants should operate. AEE had hoped that the IURC would go further to protect customers from the financial harm caused by Duke’s uneconomic operating practices, but the Commission did push Duke to move toward a better decision-making process for future commitment decisions. With those now under a bit more scrutiny, we look forward to working with Duke on the alternatives we proposed to help the utility give up its costly coal addiction in its 2021 Integrated Resource Plan.

Over the past several months, our Indiana team has been intervening in a proceeding before the Indiana Utility Regulatory Commission (IURC) to examine Duke Energy Indiana’s coal self-commitment practices. Self-commitment refers to a process by which a utility instructs the regional market within which it operates – in this case, the Midcontinent Independent System Operator (MISO) – to dispatch the utility’s own resource unit regardless of whether or not it is the cheapest available at the time. Many vertically integrated utilities have been using this mechanism to run their expensive coal plants more frequently than economics would otherwise dictate. They do this because it is not their shareholders who suffer financial losses, but rather their captive ratepayers: When the cost to operate these units exceeds the market clearing price, utilities pass along the difference to customers, in part through fuel adjustment clause proceedings. AEE is working to curb this self-serving utility practice.

In August, we published our list of the top 10 utility regulation trends of 2020, so far. With a tumultuous 2020 largely in the rearview mirror, we now look back on the 10 trends that defined the utility regulatory arena this year. It is difficult to overstate the influence COVID has had on virtually every facet of the energy sector – and utilities were no exception. Nor is it possible to ignore the impact that extreme weather events have had on utility planning and operations. On top of that, the outcome of the presidential election promises to shape the federal energy regulatory landscape for years to come. Because of – or  perhaps in spite of – these transformational shifts, advanced energy is well-positioned for continued growth in 2021.