MPSC Licensing Issues
Energy Regulatory Partnership ProgramAbuja, Nigeria
July 14-18, 2008
Presented by Robert W. Kehres
Discussion Points
• Transmission Lines
• Alternative Electric Suppliers
• Certificates of Public Convenience and Necessity
• Rule 411 -- Service Area Disputes between existing Electric Utilities
Act 30 of 1995
• After a disputed effort by Consumers Energy Company to construct a major transmission line, the Legislature granted the Commission authority to approve the siting of major and non-major transmission lines
• The MPSC has had only two such applications – one was granted and one was rejectede
Requirements of the Act
• Transmission line case cannot be filed until the company has held public hearings in each municipality
• Adequate notice must be given to affected areas.
• Application must identify a route and at least one alternative route
• Application must be cost beneficial
Alternative Electric Suppliers
• Commission’s initial effort to open the market to AESs was struck down by the courts
• Act 141 granted the Commission authority to open energy markets to AESs
• Markets had to be opened by January 1, 2002
• Utilities had to be provided full recovery of stranded costs
AES Requirements
• Commission established licensing procedure by order
• AESs must maintain an office in Michigan
• MPSC had to examine the AES’s managerial, financial, and technical capabilities.
• AESs must maintain adequate records and agree to collect taxes
Certificates of Public Convenience and Necessity
• Act 69 of 1929• No public utility shall begin construction of
any utility plant or render service for the purpose of carrying on a local business in any place where another utility is conducting a similar business without obtaining from the Commission a certificate of public convenience and necessity
CPCN Requirements
• Franchise from the municipality
• Notice to municipalities and other utilities
• Public hearing to consider– Adequacy of existing service– Investment by the utility– Benefits to be achieved– Effect on rates– Other factors
Rule 411
• An administrative rule to govern which of two or more utilities serving one area should be permitted to serve a customer in the area
• This is not an AES situation
• This is all about having only one company’s distribution facilities in one area
Rule 411
• Customer preference is not necessarily a controlling factor
• Weight is given to the provision of service by a utility to the location in the past
• Weight is also given to the distance that facilities must be extended
• Goal is to eliminate redundant facilities, which only add to all customers’ costs
• Also, safety is always a concern