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Energy-Efficiency Funds and Demand Response Programs, Michigan

Updated July 2007

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 revenue is intended to amount to over $40 million per year, but federal customers are not eligible for any of these programs currently (Summer, 2007).

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 on all kWh 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.

The PJM Interconnection (PJM), a regional transmission organization (RTO), offers two demand response programs that may be attractive to federal facilities:

  • The Emergency Load Response Program 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") or $0.50/kWh, whichever is greater, 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 provide a load reduction. Retail electricity customers may participate through any PJM Member (for example, their electricity provider) or directly, by registering as a Special Member with PJM.
  • The Economic Load Response Program allows electricity users to provide load reductions in exchange for a payment based on hourly wholesale electricity prices. As with the PJM emergency program, participation is fully voluntary. Program participants have the choice of two options: the Day-Ahead or Real-Time Option. 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. 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. 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.

In both the emergency and economic programs, participants can provide load reductions either through curtailing electricity use or operating on-site generation.

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.