Michigan PSC approves DTE Electric for 325 MW of extra renewables

The Michigan Public Service Commission on Sept. 23 approved a June 30 application from the DTE Electric subsidiary of DTE Energy (NYSE: DTE) for approval of an amended renewable energy plan (REP) under the state’s Act 295 law.

Harry O. Stansell, Manager of Business Development, Renewable Energy for DTE Electric, had during the case provided an overview of, and rationale for, the company’s amended plan. Stansell testified that the federal production tax credit (PTC) and investment tax credit (ITC) for renewable energy projects were extended in 2015. Because of the tax credit extensions, DTE Electric found it reasonable and prudent to file an amended REP that incorporates more renewable energy than the 10% mandate under Act 295.

Stansell explained that the PTC value is $0.023 per kilowatt-hour (kWh) of electricity produced from wind energy for ten years after a project is placed in service. Stansell testified that for a 150-MW wind farm, assuming construction commences in 2016, the customer savings would be $160 to $190 million. If a wind farm is started in 2017, it would still qualify for 80% of the PTC resulting in customer savings of $130 to $150 million.

Stansell testified that DTE Electric’s amended REP includes two 150-MW wind farms, one of which should begin construction in 2016, thus qualifying for 100% of the PTC. The other wind farm should come on line in 2020 and qualify for 60% of the PTC. Stansell also testified that the amended REP includes 25 MW of company-owned solar projects to be constructed between 2017 and 2019, all of which will qualify for a 30% ITC.

DTE Electric’s amended REP includes 1,375 MW of nameplate capacity of renewable and advanced cleaner energy systems. Of that capacity, DTE Electric will own 751 MW of wind facilities and 91 MW of solar systems. Stansell testified that DTE Electric’s amended REP meets the renewable energy goals under Act 295 and that the company expects to remain in compliance with the renewable energy standard through 2029.

Geoffrey C. Crandall, principal and Vice-President of MSB Energy Associates Inc., testified in this case on behalf of the Great Lakes Renewable Energy Association (GLREA). Crandall said the commission should approve DTE Electric’s proposal to add additional wind and solar resources to its REP. But Crandall also said that DTE Electric needs to take more robust steps to accelerate the addition of more renewable resources, especially in light of the company’s plans to close 11 of 17 coal units by 2023. Crandall testified that DTE Electric needs to begin planning now for how it intends to replace the capacity from its retired units, suggesting that this planning should take place in both the company’s next Power Supply Cost Recovery (PSCR) plan proceeding and the company’s next REP case in 2017.

Crandall further testified that DTE Electric provided no information on whether an additional 325 MW of renewable energy was a reasonable amount to add to its portfolio. According to Mr. Crandall, the typical constraints to adding renewables, namely limited need for more capacity and the operational impacts from increased intermittent resources, do not apply here. Crandall also pointed out that the current tax incentives, which are expected to decline in the future, are a significant incentive to invest more now in additional renewable energy.

In rebuttal, Stansell pointed out that the company is proposing to add 325 MW of additional renewable capacity to its portfolio in this proceeding, and future investments in renewables will likely be driven by an integrated resource planning (IRP) process.

DTE Electric asserted that its amended REP is reasonable and prudent and in compliance with all requirements of Act 295. DTE Electric noted that its plan includes the addition of two company-owned 150-MW wind projects and an additional 25 MW of company-owned solar. These additional projects will increase DTE Electric’s renewable capacity by more than 30% above the capacity in its currently approved plan. The PSC staff and GLREA both agreed that DTE Electric’s proposal should be approved. The only contested issue in the proceeding is GLREA’s recommendation that the commission direct DTE Electric to further accelerate its development of renewable energy generation, with the company’s plans to do so reviewed in subsequent PSCR and REP proceedings.

Said the Sep. 23 PSC approval: “The Commission agrees with all of the parties that DTE Electric’s proposed amendment to its REP should be approved. The Commission also agrees with the company that GLREA’s recommendations should be rejected. While acknowledging the significant changes to the energy landscape and the fragmented nature of regulatory proceedings dealing with fuel and generation investments, the Commission has repeatedly held that PSCR proceedings are not the appropriate fora at this time for addressing additional renewable energy investments. Instead, GLREA and other parties interested in this issue should focus their efforts on biennial REP cases, or on IRP under possible new energy legislation or the certificate of need provisions under [state law], if applicable.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.