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