Working together, our Energy Smart initiatives fulfill the energy optimization mandates of Michigan Public Act 295, signed into law in October 2008. Known as the "Clean, Renewable, and Energy Efficient Act," the purpose of the act is to reestablish utility energy efficiency programs in Michigan. The state's previous programs had been discontinued in 1996.  Public Act 295 gave the Michigan Public Service Commission (MPSC) the authority to approve or reject efficiency plan proposals. To approve a plan, the MPSC must determine that the plan meets the utility system resource cost test and is reasonable and prudent.  

Utilities must offer programs to customers in all sectors (residential, low-income, commercial and industrial).  Eligible large electric customers can design and implement an energy efficiency plan for their own facilities and, if approved by their utilities, be exempt from paying the per-meter surcharge.  The utilities may administer the programs themselves, administer the programs jointly with other providers, select a nonprofit to administer the programs, or opt to work with the MPSC-selected program administrator (the Independent Energy Optimization Program Administrator).

Energy efficiency programs are supported by customer rates via a volumetric charge for residential customers and monthly "per meter" charges for commercial and industrial customers.  Each utility specifies these charges in plans that are filed with the MPSC. To the extent feasible, the utilities must use the charges collected from each customer rate class to fund efficiency programs for that rate class. Utilities use customer rate classes to attribute costs to different categories of customers based on how those customers incur costs.

Spending for each utility ramped up from 0.75 percent of total sales revenues in 2009, 1.0 percent in 2010, 1.5 percent in 2011, and to 2.0 percent in 2012 and each year thereafter.  This is a rapid and significant change, since there were essentially no utility energy efficiency programs in Michigan in 2007.


Reports and Filings: