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Published in Energy

State energy regulator sees no need for panic over electricity shortages

BY Friday, July 22, 2022 12:54pm

Katherine Peretick was appointed to the Michigan Public Service Commission in 2021 for a term that expires in 2027. In that time, Michigan and other states are transitioning through a crucial moment for the energy and utility industries as hulking, centralized fossil fuel plants are displaced by clean energy technologies to cut greenhouse gas emissions.While Peretick says there is no cause for alarm over electricity shortages or rolling blackouts, she welcomes the increasing attention to the power grid and the need for careful planning during these changes. Peretick recently spoke with MiBiz about the MPSC’s role in ensuring residents and businesses aren’t unexpectedly left in the dark.

This summer has brought quite a bit of concern within Michigan and other states about the potential for electricity shortfalls, planned outages and rolling blackouts. What is causing this?

There’s certainly a lot of attention about this right now, and I think rightly so. The energy landscape is changing, and it’s important that we stay on top of that and ensuring the capacity for Michigan is one of the primary responsibilities of the MPSC.

Katherine Peretick. COURTESY PHOTO

Should we be concerned in Michigan right now? No, we are not at that point. For the state of Michigan, we have enough capacity to serve our load and our needs in the state of Michigan. We are about 600 megawatts (MW) short of generation in (our regional grid zone), but that’s well within our import limits to bring in electricity generation from surrounding states. We don’t anticipate any issues meeting our capacity limits. Another unique aspect of Michigan’s planning capacity is that we require individual load-serving entities, utilities or suppliers to demonstrate they have enough capacity four years out.

What is the MPSC doing to ensure there’s enough electricity to meet the needs of homes and businesses?

A couple of things. One of the main ways we ensure there’s enough capacity is through integrated resource planning (IRP). Our utilities are required to file these IRPs periodically to show they have enough and how they plan to meet their load. They have to show their long-term sales and demand forecasts and the proposed way they will meet that long-term forecast for sales. To approve a utility’s IRP, the commission needs to find the most reasonable and prudent means to meet energy and capacity needs and balance a multitude of requirements.

Another way is a recent capacity demonstration docket where we looked at the options that we have available for increasing capacity in the state for a multitude of different ways, such as lifting a ban on demand response aggregation, whether energy storage resources should be allowed to participate (in markets), and consider setting a four-year capacity demonstration that’s higher than (grid operator) MISO’s requirements. We also just opened (the docket) up for other ideas that our stakeholders might have.

Some large energy users and companies participate in demand response, in which they voluntarily agree to limit their power usage if needed during high-demand periods in exchange for lower rates. What does the state’s ban on demand response aggregation entail?

What we’re looking at in the capacity demonstration docket is whether we should lift the ban on demand response for retail electric customers, both individually and through aggregators. We want to understand what the challenges would be associated with potentially lifting that ban and allowing regular residential customers to participate themselves in a demand response program or through a third-party aggregator to sign up multiple residential customers. Then they could bid that into the market for a potential demand response resource.

There are challenges and concerns about whether the resources perform as they say they’re going to perform, how reliable it would be and how difficult it would be. For example, will customers actually turn down their electric usage when called upon? We want to take comments on that and understand the potential benefits and challenges.

We’re seeing some Michigan utilities, such as electric cooperatives, telling customers to conserve their energy usage during high-demand periods, like on hot summer afternoons. Is this a real risk of running short of supplies, or is this overly cautious or even an overreaction on the part of utilities?

I think it’s a good thing we’re talking about it. I think we’re not in a spot where we need to be concerned for the near term, but I think this is a really good thing for us to be talking through as a state and getting people thinking about what the future’s going to look like and planning for this reliability and resource adequacy, particularly with the changing climate we have. Summers aren’t getting any cooler. With the changing resource mixes that we’re seeing on the electric grid (to more renewables), the costs of fuel inputs and volatility of costs of fuel inputs, and decreasing costs of some of these renewable and intermittent resources, I think it’s important for us to have these conversations about: How do we ensure reliability and resource adequacy in the state?

While I think the situation in the near future is sufficient and we’re OK in the state of Michigan right now, we need to make sure we’re doing the right things in the future and we stay in the right situation and build the resources to maintain the reliability and resource adequacy that we have now.

What does taking a plant like Palisades offline mean for Michigan’s ability to produce adequate power?

That’s been in the plans; taking Palisades offline was not a surprise. That was part of the demonstration process that we went through as a state and in MISO’s north central region. That doesn’t have an effect on the numbers we’ve been seeing and the conversations we’ve been having. Palisades was 800 MW of zero emissions energy for Michigan’s electric grid, and it’s a reliable, base load steady source of power that doesn’t rely on the sun shining or the wind blowing. I’m hopeful we’ll be able to see some new nuclear developments in the future that will provide similar value to the electric grid that Palisades was able to.

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