Distributed Generation Program Implementation

*This page presents a record of the work the Commission engaged in to implement the 2016 energy laws and that current Distributed Generation information can be found on our 2023 energy legislation page.

The energy laws passed in 2016 include a new distributed generation program to replace Michigan’s existing net metering program and directs the Commission to conduct a distributed generation study and develop an equitable cost of service based distributed generation tariff for the program. The law specifies that these activities must be completed by April 20, 2018.

Under the law, the distributed generation program is for customers who install certain on-site grid-connected, renewable generation. Qualifying renewable generation projects must be no larger than 150 kW; however, methane digester generation projects as large as 550 kW may also participate. The project may generate up to 100% of a customer’s annual electricity consumption.

In July 2017, after a comment period, the Commission issued an order establishing the distributed generation program and finding that the current net metering program should continue as the interim distributed generation program until the new distributed generation program tariffs are approved in rate cases filed after June 1, 2018. The order also clarified that customers who enter the distributed generation program prior to the new distributed generation tariff effective date may continue to net meter for 10 years from the date of their enrollment.

On behalf of the Commission, the Staff convened the Distributed Generation Workgroup to primarily focus on cost of service considerations and develop the new distributed generation tariff. The Workgroup met 7 times. During the Workgroup process, Staff requested input on how to calculate cost of service for distributed generation customers and comments on its proposed distributed generation tariff and Report on the MPSC Staff Study to Develop a Cost of Service-Based Distributed Generation Program Tariff.

The Report recommends a tariff mechanism called “Inflow/Outflow.” Inflow represents the kWh delivered by the utility to the customer and Outflow represent the kWh generated by the customer’s distributed generation project and that is not used behind the meter and is exported to the distribution grid. Under the proposed Inflow/Outflow tariff, distributed generation customers pay for all Inflow electricity delivered by the utility according to their regular cost of service-based retail rate schedule. Outflow kwh receive a credit.

On February 22, 2018, the Commission issued an order finding the report to be comprehensive however, the Commission requested comments on several key issues relating to the tariff development, approval and implementation process. Please see the order for information about the process for filing comments.

In its April 18, 2018 order in Case No. U-18383, the Commission adopted a tariff based upon the inflow/outflow billing mechanism that regulated electric utilities are expected to submit in any rate case filed after June 1, 2018. A utility may file its own distributed generation tariff, if desired.

DTE Electric is the first utility to file a rate case which includes a proposed distributed generation (DG) program tariff. The proposed tariff is called Rider 18 Distributed Generation Program. As directed by the Commission in its April 18, 2018 order in MPSC Case No. U-18383, the rate case filing also included the DG tariff proposed by Staff in its Report on the MPSC Staff Study to Develop a Cost of Service-Based Distributed Generation Program Tariff. Upper Peninsula Power Company (UPPCO) has also filed a rate case with a proposed DG program tariff. The proposed tariffs will be reviewed as part of the rate case proceedings. Parties who have intervened will have an opportunity to file testimony about the tariff and may also file their own proposed tariff. Information about how to comment on a rate case without intervening on our Get Involved page . For general information about rate cases, please see the Commission’s Rate Case Issue Brief.

Rate cases are required, by law, to conclude within 10 months of the filing date. DTE Electric’s rate case (MPSC Case No. U- 20162) was filed on July 6, 2018 with an order due in early May 2019 and UPPCO’s rate case (MPSC Case No. U-20276) was filed on September 21, 2018 with an order due in late July 2019.

The distributed generation program is available to customers of Alpena Power, Consumers Energy, DTE Electric, Indiana Michigan Power, Northern States Power, Upper Peninsula Power Company, Upper Michigan Energy Resources Company and alternative electric suppliers.

Staff Leads

Julie Baldwin

Accomplishments

Held seven stakeholder workgroup meetings
Two orders issued
One round of informal comment and reply comment
Staff issued a draft DG Tariff report to the DG stakeholder workgroup
Final Staff DG Tariff filed in U-18383 docket on February 21, 2018

Additional Steps

Commission issued order establishing DG tariff April 18, 2018
Utilities include tariff with rate cases filed after June 1, 2018
DG tariff goes into effect when the tariff receives Commission approval in a utility’s rate case filed after June 1, 2018