In 2022, as part of a multi-year MI Power Grid Initiative initiative focused on maximizing the benefits of the transition to clean, distributed energy resources, the Michigan Public Service Commission directed specified Michigan electric utilities to file a proposal for a benefit-cost analysis (BCA) framework for use in evaluating prospective pilot programs. In February 2023, DTE Electric Company and Consumers Energy filed a BCA proposal, and in April 2023, the Commission requested stakeholder comments on that proposal.
In June 23 comments, Policy Integrity made several recommendations to ensure that the BCA framework would be useful for properly weighting environmental impacts associated with proposed pilots and maximizing net benefits, including that the test ultimately adopted should incorporate Michigan’s decarbonization policy with greater specificity; the addition of specific elements that are needed to meaningfully prioritize equity or environmental justice; the need for the framework recognize the materiality of non-greenhouse gas emissions; the need for a clearly articulated baseline, especially for evaluating emissions impacts, which can be positive or negative; the need for the framework to consider emissions other than those that are the product of combustion; that the framework should specify that net benefits are to be maximized; that the framework should require that, wherever possible, impacts be at a minimum quantified and if at all possible monetized; that the framework should require the monetization of greenhouse gas emissions based on the Social Cost of Greenhouse Gases; that the framework require the use of a discount rate that is appropriate for costs and benefits that will accrue to future generations, which is typically lower than a utility’s weighted average cost of capital; and that the framework incorporate a defensible methodology for evaluating greenhouse gas emissions associated with natural gas usage where applicable.