Michigan Integrated Resource Plan Energy Waste Reduction working group whitepaper

June 26, 2017

  1. Legislative Charter

Under 2016 PA 341, the Energy Waste Reduction (EWR) working group was tasked with two responsibilities: 1) Section 6t(1)(a) requires the commission to conduct a statewide assessment of the achievable, technical and economic potential for energy waste reduction and, 2) Section 6t(1)(f) requires recommendations for the level of energy waste reduction included in the IRP scenarios and sensitivities.

Sec. 6t. (1) The commission shall, within 120 days of the effective date of the amendatory act that added this section and every 5 years thereafter, commence a proceeding and, in consultation with the Michigan agency for energy, the department of environmental quality, and other interested parties, do all of the following as part of the proceeding:

(a)Conduct an assessment of the potential for energy waste reduction in this state, based on what is economically and technologically feasible, as well as what is reasonably achievable.

(f) Establishthemodelingscenariosandassumptionseachelectricutilityshouldincludeinadditiontoitsownscenariosandassumptionsindevelopingitsintegratedresourceplanfiledundersubsection(3),including,butnotlimitedto,allofthefollowing:

(iii)Anysupply-sideanddemand-sideresourcesthatreasonablycouldaddressanyneedforadditionalgenerationcapacity,including,butnotlimitedto,thetypeofgenerationtechnologyforanyproposedgenerationfacility,projectedenergywastereductionsavings,andprojectedloadmanagementanddemandresponsesavings

  1. Participation:

Stakeholder engagement occurred over the course of a 3-month period with the following participants:

Natural Resources Defense Council, Midwest Energy Efficiency Alliance,

National Housing Trust, Ecoworks et al., 5 Lakes, National Regulatory Research Institute, CleaResults,

Michigan Electric and Gas Association,

Indiana Michigan Company, DTE Energy, Consumers Energy,

  1. Status of Staff’s assessment of statewide potential for energy waste reduction:

Lower Peninsula:

Limited funding and compressed timeline required staff to conduct a statewide assessment of EWR potential which built upon an existing foundation of utility-specific EWR potential studies from 2016, and a 2013 statewide EWR potential study. Over the course of three months, stakeholders were asked to make various recommendations for incorporating alternate potential study assumptions, for purposes of estimating a more aggressive achievable potential. Once these alternate assumptions were identified, stakeholders were then invited to provide staff with subsequent information and analyses, including additional modeling results which incorporated the more aggressive assumptions. Staff will use any additional analyses to inform the statewide assessment of EWR potential.

Staff is aware that additional EWR scenarios modeling is underway and results are expected by July 14, 2017.

Upper Peninsula:

Stakeholders suggested that the Upper Peninsula (UP) should have an UP- specific EWR potential assessment which better reflects the unique circumstances of this region including higher electricity prices,and dispersed population with a higher than average low-income component. With this in mind, Staff sent a request to load serving entities in the Upper Peninsula and requested load forecast and customer class specific information. Nearly all the Upper Peninsula load serving entities provided either historical or forecast load data. Using this data, CleaResult, the state contractor for Efficiency United, is developing UP-specificload forecast. CleaResult is expected to provide results by June 30, 2017. Working to develop a proposal for including this information into a scenario for UP potential.

  1. EWR stakeholder recommendations/comments for modeling assumptions and scenarios…

EWR Modeling Assumptions and Scenarios

  • EWR business as usual case should not exceed the mandated targets for electric energy savings of 1%/year and should be based upon an average cost of MWh saved. (All stakeholders.)
  • EWR should be included in modeling using a hybrid approach which incorporates EWR mandates as a net to load forecasts (currently 1%/year), and incremental EWR as a resource treated in an equivalent manner to supply side resource. Incremental EWR should be bundled by a combination of programs at various costs. (NRDC)
  • CE and DTE Energy requested flexibility in modeling EWR and recommends instead that each IRP discuss the pros/cons of particular modeling methods.
  • The model should not be arbitrarily restricted to a 35% combined goal of EWR and RE. Exceeding the combined RE and EWR goal of 35% by 2025 shall not be grounds for determining that the proposed levels of peak load reduction, RE and EWR are not reasonable and cost effective.
  • The IRP model should optimize the incremental EWR vs RE to achieve the 35% goal.

Stakeholder Engagement:

  • A robust stakeholder engagement process should be in place twelve months prior to the developing of utility IRP plans and which allow for concerns of environmental justice and low-income advocates to be addressed. Meeting accessibility (via conference call and webinar) documentation and transparency in process and meeting materials are important aspects of the stakeholder process. Best practice examples should be explored.
  • Re-establish Low-Income Work Group

Local Resource Zone 7 Modeling Scenarios

  • Business as Usual (BAU) –
  • DTE requests clarification on the meaning of “Footprint wide” in the context of the MISO footprint, and how this compares to a utility BAU case.
  • BAU case typically means a 50:50 forecast, and this is the same forecast that is requested in the Environmental Policy Scenario. How does this differ?
  • The reference to the Gulf Coast industrial production increasing is irrelevant to the Michigan utility BAU.
  • Environmental Policy -
  • Same question as above regarding the 50:50 forecast.
  • Accelerated Emerging Technologies
  • DTE supports running this scenario with optimistic cost and potential assumptions that drive these technologies to be selected economically in an IRP. This is opposed to dictating which technologies are allowed as alternatives.
  • DTE recommends leaving it up to the utility to generate its own increased demand natural gas forecast’ as described in this scenario. DTE would do this by increasing the demand for natural gas in its national model and generating the prices for energy, fuel and other commodities through a fully integrated modeling process. This is a more robust methodology than simply using higher natural gas prices as an input.
  • Increased demand and consumption called for in this scenario – how does this compare to the 50:50 forecast? DTE would prefer to specify the ‘increased demand and energy consumption’.
  • Reference to Gulf Coast is not applicable to Michigan.
  • Clarify to what extent specific unit retirements are to be a factor in this scenario and specify them more precisely.