Regulators approve 3-year electric commercial fleet program in Consumers Energy case

A Michigan Public Service Commission order in a sweeping Consumers Energy rate case last month includes a three-year pilot program to study the roll-out of electrified commercial fleet vehicles.

The $12.2 million PowerMIFleet program not only provides rebates for charging infrastructure but also hopes to give the utility a glimpse into the way commercial electric vehicles can provide grid benefits.

Depending on how they’re deployed and charged, electric vehicles on a large scale could provide benefits by charging during off-peak hours and potentially serve as a form of battery storage. Experts have said deploying commercial electric vehicles, such as in company fleets and delivery vehicles, could help jumpstart the transition to electrified transportation faster than the passenger vehicle segment. Major automakers have also spent the past year racing to develop some of the first electrified fleet vehicles.

“Consumers’ PowerMIFleet program fills a key need in supporting municipal and private fleets who want to transition to electric, including trucks, buses (and) delivery vehicles,” said Charles Griffith, climate and energy program director at the Ann Arbor-based Ecology Center. “By supporting the development of EV charging infrastructure for the emerging electric truck market, Consumers Energy customers will be able to look forward to cleaner air and more low-carbon transportation options in their communities.”

The MPSC order includes a service to help fleet managers transition to electric vehicles as well as rebates for charging equipment. The program includes $7 million for fleet charging station capital and operations and maintenance costs, $1.3 million for “resources to recruit customers and site hosts for the Program, concierge service analyses, as well as educate all customers on the benefits of EVs and managed charging,” and $3.4 million for a system to collect and analyze charging data.

Consumers spokesperson Brian Wheeler said the fleet pilot program “will encourage the development of electric vehicle charging stations for Michigan employers that have committed to electrifying their fleets.”

The fleet pilot program is modeled off of the utility’s three-year, $10 million PowerMIDrive pilot program approved a year ago, which includes rebates for various types of residential, commercial and public EV fast-charging stations as well as incentives for customers who charge during off-peak hours.

Michigan distribution generation growing

A second coalition of environmental and residential ratepayer advocates that intervened in the MPSC case called the fleet EV pilot program a “bright spot” in the MPSC’s broader order that will raise rates for electric customers by $100 million (Consumers initially sought a $254 million increase) and formalizes a program for compensating customers who install small-scale, onsite renewable energy projects.

Under state law, these programs that set compensation rates for excess customer-generated power sent back to the grid are capped at 1 percent of a utility’s average peak load. The compensation rate — or “outflow” credits — approved in the Consumers case and previously in a separate DTE Energy case is less than the retail price of electricity, which has been the rate used in net metering programs for more than a decade.

Critics say the new outflow rate, or the power supply cost less transmission, discounts the value of solar power sent back to the grid typically at peak usage times.

“In slashing outflow rates by about half, this ruling will be devastating for residential customers,” said Rob Rafson, founder of Muskegon-based Chart House Energy LLC. “If this doesn’t seem fair, that’s because it isn’t. It makes solar investment less attractive, which will cost a lot of Michigan jobs for solar developers.”

Although Consumers has disputed testimony provided by clean energy advocates on the outflow credit, the MPSC order also calls for a third-party study on the costs and benefits of distributed energy resources like rooftop solar, battery storage and electric vehicles.

Rod Williamson, executive director of the Association of Businesses Advocating Tariff Equity (ABATE), told MiBiz recently that the current outflow compensation mechanism “makes sense.” ABATE is a trade group for large energy users that regularly intervenes in MPSC cases.

“We’re open to having discussions about what the appropriate compensation is for those types of distributed generation programs, but we think it also requires a discussion around the creation of more granular residential tariff rate structures as well,” he said.

Meanwhile, ABATE and clean energy groups are united in expanding or eliminating the cap on customers who can participate in these programs. Consumers voluntarily agreed to lift its cap from 1 percent to 2 percent after meeting the program’s capacity. According to an MPSC staff report last month, participation in these utility programs grew 53 percent in 2019 with the total number of customers exceeding 8,000. Program participation has grown every year since 2006, and the latest report doesn’t account for likely growth in 2020. 

“This increase in Consumers’ (distributed generation program) cap is just a temporary fix,” the Michigan Energy Innovation Business Council said in response to the Dec. 17 MPSC order. “In 2021, the Michigan Legislature needs to step in to ensure that customers across Michigan are able to generate their own electricity.”