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Michigan utility regulators have found middle ground between clean energy advocates and DTE Energy, settling a months-long dispute over the value of customer-owned solar power.
In a ruling Thursday, the Michigan Public Service Commission approved a new distributed generation program as part of DTE’s broader $273 million rate increase. It’s the first program approved for utility customers who install solar and send excess power to the grid as Michigan transitions from traditional net metering.
The change is a result of the state’s sweeping 2016 energy reforms, which called for utilities to replace net metering. DTE’s will be the first to take effect. The new program begins May 9, while existing net metering customers will be grandfathered for 10 years.
The dispute centered on the compensation for customers who send unused power back to the grid. Net metering credits bills at the full retail rate of power. DTE proposed compensating customers at the wholesale rate of power, along with a roughly $15 monthly fee.
Clean energy groups have maintained that the retail rate is fair, and studies have found that rooftop solar customers provide a net benefit to the grid.
The MPSC landed roughly in the middle, approving an inflow/outflow mechanism that credits customers at the “power supply component” of the retail rate minus transmission charges, or 7.5 cents for kilowatt hour.
For a standard residential installation, the MPSC expects a $15,700 installation payback to take 13.3 years. The same system under net metering would take 9.4 years, while DTE’s original proposal would have taken 17.7 years.
“It could have been a whole lot worse,” said Ariana Gonzalez, senior energy policy analyst with the Natural Resources Defense Council. The NRDC and other clean energy advocates praised the MPSC for rejecting the utility’s proposed “system access charge,” a controversial fee being pursued by utilities in other states.
DTE said in a statement it “will be evaluating the order. We believe non-private solar customers should not have to cover the cost of additional grid use and services for private solar customers.”
Michigan’s Energy Promise, a nonprofit advocacy group linked to DTE, said the ruling was positive in scaling back the amount customers are credited and “recognizing the inherent unfairness of net metering subsidies and establishing a fairer and more just framework.”
In a case summary, however, the MPSC says the new formula aligns with “cost of service principles.” The MPSC recognized arguments from both sides, saying the costs and benefits of rooftop solar would be assessed as more data is available.