Michigan Seeks Utility Pilot Plans, Issues Guidance

In recognition of the growing interest in plug-in electric vehicles (PEVs) in the state, the Michigan Public Service Commission has released an order in which it discusses a variety of matters associated with the emergence of PEVs in Michigan and the need for related infrastructure and technology. In its decision, the commission tasked the state’s electric utilities with developing pilot programs in comportment with certain principles the commission had identified after review of a broad range of stakeholder comments. Last February, the commission initiated a proceeding in which to address PEV development issues on a statewide basis. Public input in that docket produced a series of introductory statements that laid the foundation for a collaborative inquiry into both PEVs and the use of compressed natural gas as a fuel source for motor vehicles.

As part of the review process, the commission laid out the individual positions and comments of those parties participating in the collaborative, which included the state’s large electric utilities as well as environmental groups, among others. As an example, the commission cited claims put forth by Indiana Michigan Power Company (I&M), which indicated the utility’s belief that the current rate of PEV penetration in its jurisdictional service territory did not evidence any immediate risk to grid reliability.

Nevertheless, the company had cautioned that PEV load still needs to be monitored. The utility explained that as residential clustering of electric vehicle service equipment (EVSE) on the same transformer increases, there is a rising potential for overloads. Consequently, I&M said, any PEV pilot programs should be designed to investigate such scenarios before they become an issue, with mitigation strategies devised thereto. The utility also noted that some states allow utilities to own and operate EVSE while others do not, making the issue fundamental to market development. As a reference point, I&M drew attention to the California Public Utilities Commission, which in 2016 approved $197 million in cost recovery for vehicle charging infrastructure owned and operated by regulated electric companies.

Another utility, DTE Electric Company, contended that a lack of consumer education and “range anxiety” remain the primary barriers to PEV adoption in Michigan. On the issue of rate design, DTE pointed out that it currently has five residential rate options for charging PEV vehicles at home. Of those, DTE claimed that its PEV time-of-use (TOU) rate is especially effective in incentivizing behavior and shifting charging activity to off-peak hours.

The company added that in terms of understanding grid impact, it is the utilities who have the responsibility to make sure PEVs are properly integrated with the grid, to ensure minimal cost and reliability impacts, along with safe operation of the grid. To illustrate that concept, DTE, like I&M, highlighted action in California, where integration costs for PEV load have been very low. However, remarking that load for a single PEV can be comparable to that of an entire house, DTE emphasized that proper management is necessary, particularly because of the increased demand on the grid and different usage patterns that PEVs present. With regard to residential neighborhoods in particular, and considering the impact of PEV charging clusters, DTE calculated that it would take a PEV penetration rate of approximately 25% (assuming PEV charging occurs in off-peak hours) for there to be any disturbance to its current system.

A nonutility participant in the proceeding, Greenlots, which is a provider of grid-focused PEV charging software and services, stated that fundamental economics simply will not drive sufficient private investment to get the market to where it needs to be to support current and future PEV owners and their car purchasing decisions. The group also suggested that further strain will come from the need to have a “gas station model” for fueling activity in the future, where there is currently no working business model for such functions.

Greenlots conveyed as well its opinion that it is critical that utilities own and operate PEV charging infrastructure, including PEV charging stations, as a means for accelerating the market, advancing competition and choice, and growing private investment. Greenlots further asserted that the nature of EVSE assets is “a natural extension of existing utility infrastructure … [that] fit[s] very well within the core competencies and capabilities of utilities.” A coalition of environmental advocacy groups, including the Natural Resources Defense Council, Ecology Center, Sierra Club, and the Environmental Law and Policy Center, stressed that TOU rates have already shown that they are effective in shifting load to off-peak time periods. That conclusion was premised on a study of the 340,000 PEVs operating in the service territories of California’s three largest electric utilities.

Taking cues from California as had I&M and DTE, the environmental groups recommended that any pilots established in Michigan be required to test both PEV-only TOU rates that rely on a separate meter or submeter and whole-house TOU rates that rely on a single meter, to ascertain which approach would be the most cost-effective and easiest to use. Re Deployment of Plug-In Electric Vehicle Charging Facilities, Case No. U-18368, Dec. 20, 2017 (Mich.P.S.C.).