The Michigan Public Service Commission (MPSC) approved requests by the state’s two largest electric utilities to provide special rates to help attract and retain advanced manufacturing in the state.
The MPSC on Wednesday, Dec. 22, approved requests by DTE Electric and Consumers Energy to provide more competitive rates for high-volume industrial customers as part of an effort to ensure Michigan can compete with other states when companies look for sites to build facilities for producing electric vehicles, related components including batteries and semiconductors, and other advanced manufacturing.
Consumers Energy and DTE Electric filed applications in November for approval of rates geared toward attracting large, unique and energy-intensive companies involved in electric vehicle, electric battery storage, semiconductor/chip and other high-tech manufacturing, and supporting current Michigan manufacturers, including those in the auto industry that are preparing for major transformation as the vehicles they produce will increasingly be powered by electricity.
The approval of these economic development rates follows the signing by Gov. Gretchen Whitmer on Monday, Dec. 20, of bipartisan legislation to provide $1 billion in incentives for the Michigan Department of Labor and Economic Opportunity’s new Strategic Outreach and Attraction Reservoir (SOAR) to lure major high-tech manufacturing to the state.
Consumers Energy in its application said the company is aware of 10 projects that are actively considering locating in Michigan, representing nearly $65 billion in potential investment and about 21,000 new jobs.
Consumers proposed a new large economic development (LED) tariff designed to attract new high-tech manufacturers, similar to two rates the company already is approved to offer — its long-term industrial load retention rate and energy-intensive primary rate. Consumers argued that, instead of negotiating rates with individual companies, the new category of rates for energy-intensive electric users will offer a competitive rate on incremental electric load with a minimum of 35 megawatts (MW) for a minimum contract term of 15 years.
The commission also approved DTE Electric’s application to implement a new XL high load factor rate to offer competitive rates to new advanced manufacturers or existing manufacturers, such as auto companies shifting their product lines to support the growing demand for electric vehicles.
DTE Electric’s application said the rate will be limited to large-volume new and existing customers adding incremental electric load of a minimum contract capacity of 50 MW and a minimum contract term of 15 years.
Per Consumers’ and DTE Electric’s applications, the special rates are based on the marginal cost of serving these new, unique and energy-intensive loads, and the customers on this rate will be responsible for their share of transmission and distribution system costs, as well as surcharges. These rates would not impact any existing rates or result in higher costs for other classes of customers, including smaller industrial or commercial users or residential customers.
Special rates such as this cannot, under Michigan law, result in higher costs or rates for other customers, a key factor the MPSC considered in weighing the applications.
Because the commission found approving the applications made by Consumers and DTE Electric would not result in an increase in the cost of service for any existing customer, the commission found it appropriate to issue ex parte orders.