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Energy Incentive Programs, Michigan

Updated October 2008

Below you will find questions and answers regarding Michigan's utility energy efficiency programs, including options for load management, demand response, and distributed energy resources, and information about state-sponsored energy efficiency programs.

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What public-purpose-funded energy efficiency programs are available in my state?

Electricity restructuring legislation in Michigan authorized the creation of a non-bypassable surcharge to fund energy assistance for low-income customers, as well as the development of energy efficiency programs that benefit all customer classes. The fund, called the Low Income and Energy Efficiency Fund, is managed by the Michigan Public Service Commission. Total fund spending was $20 million in 2007. Traditionally, funds have been limited to low-income programs but this has changed recently. Prospective federal customers should check the website for updated information on RFPs for grant funding of energy efficiency.

What utility energy efficiency programs are available to me?

There are currently no utility energy efficiency programs available to federal customers.

What load management/demand response options are available to me?

DTE (Detroit Edison) offers various interruptible rates to all its commercial and industrial customers. Electricity is discounted in exchange for interruptibility in times of system need or very high wholesale prices. Interruptible rate discounts vary from approximately 10% to 25% depending on the tariff. To participate, customers must agree to shed a minimum of 50 kW and interrupt within one hour of notification. Failure to interrupt incurs a penalty at the rate for the highest 30-minute kW demand created during the interruption period for all usage above firm demand (on top of the prescribed monthly rate). In addition, the interruptible contract capacity will be immediately reduced by the amount of failed interruption, unless it is demonstrated that failure to interrupt was beyond the customer's control.

Xcel Energy (PDF 1.17 MB) (Northern States Power) offers various interruptible options, including its Peak Controlled Service rates, which offer reduced electric costs for customers with at least 50 kW that can be curtailed upon the company's request.

Wisconsin Public Service Corp. (WPSC) provides several demand response programs:

  • WPSC offers an interruptible rider (PDF 56 KB), CP-1. Participants contract for a 200 kW or greater load reduction (with curtailability up to 600 hours/yr.) subject to WPSC's determination of either economic or emergency conditions on the grid. In exchange, the customer receives reduced rates for its monthly peak demand.

  • The On-Line Power Exchange (PDF 56 KB) program is a variant on the typical interruptible program. WPSC periodically sends participants (who must have a minimum of 500 kW to shed) an e-mail requesting curtailments for a given time and a given price. Participants respond on-line to accept the terms (including the designated baseline period and penalties for non-compliance) if they are interested in participating in the event.

  • WPSC also sponsors a Direct Control Rider (PDF 24 KB), through which it remunerates customers up to $8 per unit per summer month for the ability to control its packaged air conditioners.

Upper Peninsula Power Company offers both a standard interruptible rider, in which participants pay lower demand charges for committing to reduce their load to a firm service level (with at least one hour's notice) during events, and its On-Line Power Exchange program, which closely mirrors the program of the same name from WPSC, UPPCO's sister company (see above).

The PJM Interconnection (PJM), a regional transmission organization (RTO), offers several demand response programs, three of which may be attractive to federal customers that fall within the PJM footprint (AEP customers in southwestern Michigan):

  • The Economic Load Response program allows electricity users to provide load reductions in exchange for a payment based on hourly wholesale electricity prices. Participation is fully voluntary. Program participants have the choice of two options: the Real-Time or Day-Ahead Option. In the Real-Time Option, participants can decide at any time to provide load curtailments (with one hour notice to PJM), and receive payment based on the real-time electricity price (minus their retail rate for generation and transmission). In the Day-Ahead Option, participants submit load reduction bids (of at least 100 kW) into the day-ahead energy market. Participants whose bids are accepted are paid for their load reductions based upon the day-ahead, hourly electricity market prices (also with their generation and transmission rates subtracted). Reductions are figured based on a "customer baseline load" (CBL), essentially the average load levels for the same hours in four of the facility's previous non-responding days. Retail electricity customers can participate in the program through any existing PJM Member, such as their utility, a third-party electricity supplier, or a specialty "curtailment service provider" (CSP); they may also participate directly by becoming a "Special Member" of PJM. Regardless of which type of firm it is, the CSP will generally offer to split the revenues with the customer at a pre-determined percentage. Customers on real-time (hourly) electricity pricing can participate, but at much less attractive remuneration terms (since they are already exposed to market electricity rates).

  • The Emergency Load Response program (energy only) provides participants with a payment representing the marginal cost of power at the nearest hub on the PJM system (the locational marginal price, or "LMP") for providing load reductions when notified by PJM of a system emergency. Compliance with any load reduction request is voluntary; no penalties are assessed if a participant decides not to respond. Retail electricity customers may participate through any PJM Member (for example, their utility, third-party electricity provider, or an independent CSP) or directly, by registering as a Special Member with PJM. While the remuneration can be very high in an event, the emergency program is rarely called (only five times over the past three summers, and each time only in certain zones). However, emergency program customers may also participate in the economic program (above), as long as reductions are not credited toward both programs simultaneously.

  • PJM's Interruptible Load for Reliability (ILR) offering is an emergency "capacity" program in which participants pledge to either reduce their load by a specified amount (guaranteed load drop, GLD) or to a specific kW level (known as firm service level, FSL) within one or two hours of an event notification. Load reductions are mandatory and may occur up to ten times per year, lasting up to six hours per event. Penalties for non-compliance are substantial. Participants must register by March 2, 2009 (and should start sooner since registrations must be cleared by their third-party electricity providers and distribution utilities). Remuneration is based on the results of annual capacity auctions in various PJM regions, but ranges from about $40 to $80/kW (depending on the zone and year) through 2011-12. Most participants are also eligible to receive energy payments for actual reductions, if and when the program is called.

In all three programs, participants can provide load reductions either through curtailing electricity use or operating on-site generation consistent with local environmental regulations and permits.

What distributed energy resource options are available to me?

The Database of State Incentives for Renewable Energy (DSIRE) provides information on programs that offer incentives for renewable distributed generation. The following program may be of interest to federal customers:

The Solar Energy Demonstrations program offers grants of up to $50,000 for new 10 kW or larger solar photovoltaic systems. There is an annual solicitation of grant applications and typically two or three projects are funded each year.

Are there energy efficiency programs sponsored by the state government?

The Michigan Energy Office's Public Building Energy Efficiency program can provide federal facilities assistance with project feasibility studies and technical training.

What additional opportunities are available to me?

Federal customers also have energy efficiency opportunities available with utilities (such as Aquila) that have area-wide contracts with GSA and, by extension, all other federal agencies. Federal facilities should contact their account executive to determine the level of participation by their local utility.

NOTE: Energy efficiency funds and demand response programs are updated at least annually. Please contact the FEMP webmaster if changes are needed between updates.