The Michigan Public Service Commission is seeking input on proposals establishing financial penalties for utilities that don’t meet thresholds for getting power back on and incentives for reduced outages and faster restoration of services.
Financial Incentives and Disincentives Workgroup:
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- The Commission launched the workgroup in 2023 as part of its work to improve reliability of Michigan’s power grid.
- The workgroup was tasked with developing reliability and safety metrics and financial incentives and penalties for utilities to improve their performance in keeping the power on and reducing the number and duration of outages.
- The goal of the penalties and incentives is to establish new baselines for performance, financial consequences for not meeting standards, and incentives for exceeding requirements.
The Commission is seeking comments from interested parties on proposals that would:
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- Establish penalties if a utility’s 3-year system average interruption duration index, or SAIDI (excluding major event days) increases by 5% or more, and an incentive if this measure improves by 10% or more. SAIDI measures the average duration of outages.
- Establish similar penalties and incentives around SAIDI metrics including all weather events. Utilities would be assessed penalties for not meeting 5-year performance goals and incentives for exceeding them by 10% or more. This includes measuring the average duration of outages after major storms.
- Assess a penalty for utilities that do not restore service to 90% of customers within 48 hours of a catastrophic storm (defined as a storm that results in 10% or more of customers losing power), as now required by the MPSC’s Service Quality and Reliability Standards, and incentives if a utility restores more than 90% within 48 hours.
- Assess a penalty if a utility doesn’t restore service to 95% of customers within 72 hours of a catastrophic storm, as well as an incentive for besting 95%.
- Assess a penalty if a utility doesn’t restore service to 90% of customers within 24 hours after gray-sky weather that results in between 1% and 10% of customers losing power.
- Establish a penalty if 6% or more of a utility’s customers experience four or more outages per year, and an incentive if fewer than 6% of customers meet that threshold.
- Assess a penalty if one of a utility’s top 10 worst-performing circuits repeats in the list of worst circuits within 5 years.
Interested parties are encouraged to file comments on the revised proposal by 5 p.m. July 12, 2024, with replies due by 5 p.m. Aug. 23, 2024. Comments may be filed electronically in the case docket or sent by email to mpscedockets@michigan.gov or by mail to Executive Secretary, Michigan Public Service Commission, 7109 W. Saginaw Highway, Lansing, MI 48917. Comments should reference Case No. U-21400.
