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U.S. Department of Energy Energy Efficiency and Renewable Energy

Energy Incentive Programs, Michigan

Updated November 2011

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 resulting fund, called the Low Income and Energy Efficiency Fund (LIEEF), is managed by the Michigan Public Service Commission. Prospective federal customers should check the website for updated information on RFPs for grant funding of energy efficiency.

Efficiency United administers energy efficiency programs for eleven of Michigan's gas and electric utilities. There are both prescriptive and custom incentive programs available to commercial/industrial customers of the participating utilities, though the programs differ based on the specific serving company.

Total energy efficiency funding budgeted in Michigan exceeded $100 million in 2010, including both monies from the LIEEF and the eleven Efficiency United utilities, as well as individual offerings from other utilities in the state (see below).

What utility energy efficiency programs are available to me?

DTE Energy offers efficiency incentives to both its Detroit Edison electric and MichCon gas customers. There are both prescriptive and custom programs. The prescriptive program covers a broad range of equipment types and offers per-unit rebates. The custom program offers $0.08/kWh and $4.00/Mcf of first-year savings. All incentives are capped at $150,000 per site per year for electric customers and $25,000 per site per year for gas customers.

Similar to DTE, Consumers Energy offers both prescriptive rebates for energy-efficient equipment and a custom option for anything outside of the bounds of the prescriptive program. Custom incentives are based on $0.08/kWh and $5.00/Mcf of first-year savings. The prescriptive rebates are capped at $100,000 per customer and the custom incentives at $200,000.

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

DTE Energy (Detroit Edison) offers 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 (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, 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 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, through which it remunerates customers up to $8 per unit per summer month for the ability to control their 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). UPPCO also offers a real-time pricing option for customers over 1,000 kW.

The PJM Interconnection (PJM), a regional transmission organization (RTO), offers several demand response programs. Two specific programs may be attractive to federal facilities in PJM's southwestern Michigan footprint:

  • 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 two options: The Real-Time or Day-Ahead Option.

    • The Real-Time Option allows participants to decide at any time to provide load curtailments (with one hour notice to PJM) and receive payment based on the real-time electricity price (the "locational marginal price" in DR parlance).

    • The Day-Ahead Option permits customers to 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 (the day-ahead LMP). Reductions are figured based on a customer baseline load (CBL), which is 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). 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.

  • PJM's emergency "capacity" program allows demand resources to participate in PJM's Reliability Pricing Model (RPM) forward capacity market via a CSP. 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. Remuneration is based on the results of the annual RPM capacity auctions in various PJM regions. Remuneration levels for the 2012-13 and 2013-14 PJM years (which begin June 1, 2012 and June 1, 2013, respectively) in PJM's western region (of which southwestern Michigan is a part) are as low as $6,000 per MW in 2012-13 and $10,000 in 2013-2014, compared to roughly $40,000 in 2011-12. Participants are also eligible to receive energy payments for actual reductions, though, if and when the program is called.

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

Utilities in the footprint of MISO (formerly the Midwest Independent System Operator) may enroll interested customers in any of MISO's various demand response offerings, from which they can receive payments for reducing load. Federal customers should contact their local utility representative to inquire about participation.

What distributed energy resource options are available to me?

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

Through the Solar Currents program, Detroit Edison offered its customers rebates of $2.40 per watt (DC) and production incentives of $0.11/kWh (for 20 years) for systems up to 20 kW in exchange for relinquishing their system's renewable energy credits (RECs) to the company. The program reached its 5 MW goal in 2011 and was discontinued, but a successor may be created.

Consumers Energy offers its Experimental Advanced Renewable Program, a feed-in tariff program that remunerates non-residential customers at $0.20/kWh and higher for the output of their PV systems, up to 150 kW.

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 whose utilities have area-wide supply contracts through GSA (e.g., Aquila, Detroit Edison, and MichCon), may be able to take advantage of 3rd-party financed energy efficiency projects called utility energy services contracts (UESCs). Information is available on GSA's Energy Center of Expertise Library Page. Federal facilities should contact their account executive to determine the level of each utility's participation.

PJM (see above in the demand response section) now allows energy efficiency projects to participate in its forward capacity markets, based on its Reliability Pricing Model (RPM). To be eligible, EE projects must reduce load continuously by at least 100 kW during peak summer hours, and not be dispatchable. This load reduction can be bid into PJM's annual (for three years in advance) and "residual" (nearer-term) capacity auctions, and if selected will receive the auction clearing price. Interested customers can participate through energy service companies conducting ESPCs or utilities executing utility energy services contracts (UESCs) at their sites.

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