1st Draft
Integrated Resource Plan (IRP) Filing Requirements
Application Instructions for Integrated Resource Plan filing
These application instructions apply to an electric utility application for Integrated Resource Plan under the provisions of MCL 460.6t. The application shall be consistent with these instructions, with each item labeled as set forth below. Any additional information considered relevant by the applicant may also be included in the application.
1)Schedule
A utility shall coordinate with the Commission Staff in advance of filing its IRP application to avoid resource challenges with IRP applications being filed at the same time as IRP applications filed by other utilities. A utility may be requested to delay its IRP application in order to preserve a 21day spacing between IRP applications.
MCL 460.6t(3) specifies that the initial IRP applications be filed within two years of the effective date of the act and also requires the Commission to issue an order establishing filing deadlines. The proposed initial IRP application filing deadlines are:
I)Upper Peninsula Power Company: May1, 2018 (or earlier as requested)
II)Indiana Michigan Power Company: December 14, 2018 (to align with Indiana)
III)Consumers Energy: January 4, 2019 (or earlier date if requested and spaced at least 21 days apart from other IRP cases)
IV)Wisconsin Electric Power Company: January 25, 2019
V)Northern States Power Company Wisconsin (Xcel): February 15, 2019 (to align with Minnesota)
VI)Alpena Power Company: March 8, 2019
VII)UMERC: March 29, 2019
VIII)DTE Electric: April 19, 2019
Following the initial IRP applications, the utilities shall comply with all future filing deadlines directed by the Commission and shall continue to coordinate with Staff to schedule its future IRP application filing dates.
2)Filing Announcement:
In order to facilitate the scheduling and preparation of IRP proceedings, any utility intending to file an IRP shall file a Filing Announcement (FA), in a new docket, at least 30 calendar days prior to the proposed filing of the case. The FA, along with a proof of service, shall be served on the Michigan Public Service Commission (Commission) and all parties granted intervention in the utility’s last IRP case, and the utility’s last rate case. If the IRP described in the FA is not filed within 120 days after filing of the FA, the FA will be considered withdrawn. If a certificate of necessity (CON) is also being filed, the same FA would serve as the FA required for the CON.
I)The Filing Announcement shall include:
a) Statement of intent to file an IRP
b) Estimated date of filing
c) Information related to any stakeholder engagement meetings that have already taken place or are scheduled to take place.
d)Information related to any CON application that would be filed with the utility’s IRP.
The Commission may, if necessary, order a delay in filing an application to establish a 21-day spacing between filings. The “Filing Announcement” is submitted at least 30 calendar days prior to the IRP application, thus providing the Commission with sufficient time to issue an order regarding the 21-day spacing if it so chooses.
II)Pre-filling RFP
Each electric utility whose rates are regulated by the commission shall issue a request for proposals to provide any new supply-side generation capacity resources needed to serve the utility’s reasonably projected electric load, applicable planning reserve margin, and local clearing requirement for its customers in this state and customers the utility serves in other states during the initial 3-year planning period to be considered in each integrated resource plan to be filed, as outlined in MCL 460.6t.
a)Documentation supporting the RFP process that took place shall be included with the IRP application.
b)The RFP process undertaken by the utility is subject to audit by the Staff.
c)The application shall include evidence that the pre-filing RFP process was conducted in a manner consistent with MPSC code of conduct, and applicable state, federal, and MPSC rules.
IV)The utility’s Quinquennial IRP filings shall demonstrate compliance with MCL 460.6t and include the following items:
a)Letter of transmittal expressing commitment to the approved preferred resource plan and resource acquisition strategy and signed by an officer of the utility having the authority to bind and commit the utility to the resource acquisition strategy;
b)Technical volume(s) that fully describe and document the utility’s analysis and decisions in
selecting its preferred resource plan and resource acquisition strategy.
c)The data and information requested in the MPSC’s IRP Filing Requirements included herein.
d) Any other information deemed relevant by the applicant.
1)Stakeholder Process.
Stakeholder engagement early in the development of the IRP is encouraged, to (1) Educate stakeholders on utility plans; (2) Improve transparency of utility decision making process for resource planning; (3) Create opportunity to provide feedback to the utility on its resource plan; (4) Encourage robust and informed dialogue on resource decisions; and (5) Reduce utility regulatory risk by building understanding and support for utility resource decisions. The utility may choose to incorporate some, or all, of the stakeholder input in its analysis and decision-making for the Quinquennial IRP filing.
I)Pre IRP filing:
In the year prior to the Quinquennial IRP filing, each electric utility shall consider hosting Quinquennial update workshops with stakeholders.
a)The purpose of the pre filling workshop(s) is to ensure that stakeholders have the opportunity to provide input and to stay informed regarding the:
iAssumptions, scenarios, and sensitivities.
iiProgress of Utility’s the IRP process.
iiiPlans for implementation of selected resource strategy.
II)Documentation demonstrating the stakeholder engagement process undertaken by the utility shall be included with the IRP application. Documentation may include:
iWorkshop dates
iiEvidence that notice of the workshops was provided to the public
iiiMeeting minutes
ivMeeting or workshop attendance lists
vStakeholder comments on the draft IRP
viDiscussion indicating if or how the stakeholder process influenced the IRP
III)The utility shall prepare a stakeholder report to document the outcomes of any pre-filing workshops, and shall file the reports with the Quinquennial IRP filing.
IV)Stakeholders may file comments with the Commission concerning the utility’s stakeholders report within thirty (30) days of the utility’s IRP filing or submission.
2)Risk Assessment Methodology.
The IRP application should include evidence that a thorough risk analysis was undertaken as part of the IRP. Acceptable forms of risk analysis include, but are not limited to the following:
I)Scenario analysis: For non-market-based policy instruments, such as targets, standards, or regulations, scenario analysis is one the simplest ways to explore the decision landscape under alternative futures. Modelers should strongly consider the methodological heritage of various scenario approaches, ensure consistency among scenario assumptions, and carefully consider the limitations and caveats associated with the analysis while drawing insights
II)Global sensitivity analysis: Market-based policy instruments rely on robust policy designs under uncertainty. Global sensitivity analysis should be applied wherever possible to test the robustness of model results and insights. Sensitivity analysis can help determine whether a single input parameter value, combination of parameter values, or a structural assumption built into the model are driving the results and help focus scenario analyses.
III)Stochastic optimization: Stochastic optimization should be considered when the goal is to explore optimal near-term planning strategies that hedge against future uncertainty. The curse of dimensionality limits the number of uncertain parameters that can be included, so modelers should also consider uncertainty that is omitted from the event tree.
IV)Generating near-optimal solutions: MGA can produce alternative solutions that perform well with regard to the modeled objective but are very different in decision space, it should be considered when analysts or decision makers wish to consider a wide range of alternatives. MGA can also be used to test the flexibility of the base solution within a user-specified cost range.
V)Mean-Variance portfolio Analysis:
3)Confidential information.
Transparency and the use of data that can be shared with the Commission, Staff, and intervenors is encouraged. Proprietary,confidential,andothernonpublicmaterialsusedinthedevelopmentoftheforecasts,scenarios,orotheraspectsoftheIRPshouldbepresentedinsuchawaythattheproprietaryandconfidentialnatureofthematerialsispreserved.The use of publically available data and materials is encouraged in lieu of proprietary and confidential materials whenever possible.
InclusionofspecificmaterialsintheIRPfilingmaybecontingentuponappropriateconfidentialityagreementsandprotectiveorders.Proprietary,confidential,andothernonpublicmaterialsfiledaspartoftheIRPshallbeclearlydesignatedbytheapplicantasconfidential.
Upon Staff’s request, the utility shall make available to Staff any proprietary information, analyses, modeling, or similar that the utility uses to support its filing or that the utility uses to facilitate its internal planning, modeling, decision-making, risk assessment, or similar processes. If a utility is unable to provide the requested proprietary information due to license/contractual/legal restrictions, the utility shall provide staff with verification of such restrictions.
4)Approval of Costs
1)For, the commission to specify the costs to be approved for the construction of or significant investment in an electric generation facility, the purchase of an existing electric generation facility, the purchase of power through a power purchase agreement, or other investments or resources used to meet energy and capacity needs included in an approved integrated resource plan, the following information, data, and documents shall be provided:
I)For specific supply-side resources less than 225 MW that are planned within the next three years, the following evidence shall be provided:
a)A description of the resource to include identification of plant size and type with summary level engineering/design specifications. The description should include the following:
iDescription of fuel use, both primary and back-up, and provisions for transporting and storing fuel;
iiProjected annual costs, in accordance with the breakdown specified in the FERC Uniform System of Accounts, identifying the annual depreciation on capital investment
b)Projected Annual return and income taxes on capital investment;
c) The operation and maintenance (O&M) costs over the life of the facility described as costs which are variable, in current dollars per kWh, with expenses for fuel and other items indicated separately; and costs which are fixed, in current dollars per kW;
d)Projected Property taxes;
e)The rates of escalation of cost, including:
iCapital costs;
iiO&M costs which are variable and related to fuel;
iiiO&M costs which are variable and unrelated to fuel; and
ivO&M costs which are fixed.
f)The total annual average cost per kWh at projected loads in current dollars for each year of the plan for the proposed facility;
g)Equivalent availability factors, including both scheduled and forced outage rates; (vii) Capacity factors for each year in the planning period;
h)Duty cycle (i.e., baseload, intermediate, or peaking), identifying expected hours per year of operation, number of starts per year, and cycling conditions for each year in the planning period;
i)Heat rates (efficiency) for various levels of operation;
j)Unit lifetime, both for accounting book purposes and engineering design purposes, with explanations of differences;
k)Lead time, separately identifying the estimated time required for engineering, permitting and licensing, design, construction and pre-commercial operation date testing;
l)Potential socioeconomic impacts such as employment, personal income levels, and the competitiveness and health of the marketplace economy of the state.
m)Information on the nature of the proposed supply-side resource and the costs expected to be incurred in connection therewith, including a copy of any associated contract(s) , including:
iCapital costs;
iiO&M costs which are variable and related to fuel;
iiiO&M costs which are variable and unrelated to fuel; and
iv O&M costs which are fixed.
II)Renewables:
a)Revenue Requirement, per MCL 460.1047(2); Incremental costs of compliance shall be calculated to include the following:
iCapital, operating and maintenance costs for renewable energy systems (including property taxes and insurance for renewable energy systems).
iiFinancing costs.
iiiCosts that are not otherwise recoverable in base rates including interconnection and substation costs.
ivAncillary service costs.
vCost of purchased RECs other than those purchased for non- compliance with MCL 460.1028.
viCost of contracts per MCL460.1028(4).
viiExpenses incurred as a result of governmental action including changes in tax or other laws.
viiiAny other renewable energy related costs that are necessary to implement the 20-year plan and the renewable energy portion of the 35% goal using a combination of renewable energy and energy waste reduction.
ixSubtract revenues as identified in MCL 460.1047(2)(b) – ex. transfer price, environmental attributes, interest on regulatory liability etc.
xRecovery to include the authorized rate of return on equity, which will remain fixed at the rate of return and debt to equity ratio that was in effect in base rates when the renewable plan was approved (MCL 460.1047(1)).
b)The utility shall provide the following information in relation to renewable resourcecost recovery.
iForecast through the end of the plan period in 2029 of the non-volumetric surcharge (MCL 460.1047).
iiForecast through the end of the plan period in 2029 of the regulatory liability balance.
III)The utility shall provide the following information in relation to Demand Response Program, Energy Waste Reduction Program, and Distributed Generation ProgramCost Approval and Recovery.
For each individual program or group of programs:
- Total annual cost including:
- Annual O&M cost for each individual program
- Annual capital cost for each individual program
- Expected cost-sharing or financial incentive granted to the utility by the Commission
- Total demand reduction potential (MW)
- Maximum single event demand reduction
- Total resource capacity(MW) and type (LMR, EDR, etc.) reported to MISO
- Total energy reduction achieved (MWh)
- Customer program enrollment
5)Waivers
Electric utilities with fewer than 1,000,000 customers in this state may request a waiver to any portion of these IRP filing requirements with its IRP application. Any request for a waiver shall include a discussion and justification outlining why the waiver is warranted and in the best interest of its customers.
Electric utilities with fewer than 1,000,000 customers in this state may request approval from the Commission to file an IRP jointly with other smaller utilities. Commission approval should be sought and received prior to filing a joint IRP.
1)IRP Report and Documentation
The utility’s Quinquennial IRP filings shall include an IRP document(s) that fully describes and documents the utility’s analysis and decisions in selecting its preferred resource plan and resource acquisition strategy. To facilitate a similar format for each utility’s application, utilities are encouraged to align its report with this provided outline and include at least the following items:
I)Executive Summary:
An executive summary, suitable for distribution to the public. The executive summary shall be an informative non-technical description of the preferred resource plan and resource acquisition strategy. This document shall summarize the contents of the IRP document and shall be organized in the same order with the sections outlined below, the executive summary shall include:
a)An overview of the planning period examined in the IRP analysis and application.
b)A brief introduction describing the utility, its existing facilities, existing purchase power arrangements, existing demand-side programs, existing demand-side rates, and the goal to be achieved by its proposed course of action and implementation strategy;
c)For each rate schedule and for the total of all rate classes, the load forecasts for peak demand and for energy for the planning horizon, with and without utility demand-side resources, and a listing of the economic and demographic assumptions associated with each base load forecast in accordance with outcomes from MCL 460.6t;
d)A summary of the preferred resource plan to meet expected energy needs for the planning horizon, clearly showing the demand-side resources and supply-side resources (both renewable and non-renewable resources), including additions and retirements for each resource type, with the following performance measures:
iEstimated annual revenue requirement;
iiEstimated level of average retail rates and percentage of change from the prior year, in total and by major rate class; and
iiiEstimated company financial ratios;
ivA description of the major research projects and programs the utility will continue or commence during the implementation period.
e)Identification of critical uncertain factors affecting the preferred resource plan;
f)For existing legal mandates - emissions, RPS, energy efficiency, energy waste reduction- and approved cost recovery mechanisms- COSS allocations, prior con approvals- the following performance measures of the preferred resource plan for each year of the planning horizon:
iEstimated annual revenue requirement;
iiEstimated level of average retail rates and percentage of change from the prior year, in total and by major rate class; and
iiiEstimated company financial ratios;
ivA description of the major research projects and programs the utility will continue or commence during the implementation period.
g)Actions and initiatives to implement the resource acquisition strategy prior to the next Quinquennial IRP filing.
II)Table of Content
Shall be provided.
III)Table of Figures
Shall be provided.
IV)Introduction:
Objectives of the Integrated Resource Planning Process: The utility shall describe resource plans to satisfy at least the objectives and priorities identified in 3416t. The utility may identify and/or describe additional planning objectives that the resource plan will be designed to meet. The utility shall describe and document its additional planning objectives and its guiding principles to design alternative resource plans that satisfy all of the planning objectives and priorities.