U-21870

Key events and submissions in this proceeding include:

- The company filed written testimony and exhibits in support of its rate relief and other requests concurrently with its application. These materials provide details on the relief being sought and support the company's proposals 1, 1.
- The test year for the proposed rate adjustment is projected to end April 30, 2027 1, 1.
- Consumers Energy scheduled a customer outreach event for June 26, 2025, from 4 p.m. to 7:30 p.m. at Martin Luther King Jr. Recreation Center, 1107 Adrian Street, Jackson, Michigan 49201, to inform customers of the rate case and gather feedback 2.
- Reference is made to a Michigan Public Service Commission order dated March 21, 2025, in Case No. U-21585, which set requirements for this rate case filing 2.
- The company reserves the right to revise or amend its requested relief depending on the progress of hearings, issuance of relevant orders, or occurrence of material events 1, 1.

These milestones reflect both procedural filings and scheduled public engagement related to the rate case.

Michigan Public Service Commission Docket U-21870 centers on Consumers Energy Company's electric distribution system, with a focus on system reliability, outage management, cost recovery for extraordinary storm events, and operational improvements.

Key elements include:
- Review and improvement of outage cause classification. Consumers Energy is reducing use of imprecise codes like "weather" and "unknown" and benchmarking its performance against peer utilities. The company is implementing new quality assurance and control processes and consolidating its dispatch operations. These efforts aim to improve outage data accuracy and restoration planning, with process changes and benchmarking expected to be completed by the end of 2025 1.
- Consideration of deferred accounting for extraordinary storm costs. The docket discusses practices in other states (e.g., New Jersey, South Carolina) and outlines scenarios for deferral and recovery of storm restoration expenses, subject to reasonableness and prudence review by the Commission 1.
- Investment in reliability and asset management tools. Projects like the Asset Performance Management (APM) tool and metro modernization are intended to optimize reliability, prioritize critical projects, and reduce costs by improving asset health monitoring and maintenance practices 1, 1.
- Reporting requirements. The company is required to track and report reliability metrics such as SAIDI, SAIFI, and CAIDI, using standardized methods, to measure performance against its historical data rather than for national benchmarking 1.

Overall, U-21870 is a comprehensive regulatory review and planning docket addressing Consumers Energy’s strategies for improving electric distribution system reliability, cost management, and regulatory compliance.

The docket identifies several key areas of growth and the main considerations associated with each:

1. Industrial Sector Growth and Utility Infrastructure
- There is significant growth in the industrial sector, leading to increased demand for utilities and infrastructure. 87 percent of industry guild members report that resource shortages, including those with utilities, have compromised project timelines.
- Key considerations:
- Electric power capacity is the most significant factor impacting site selection for industrial customers, with 98 percent of guild members agreeing it will significantly affect project success.
- The availability of development-ready sites with sufficient infrastructure is critical; 82 percent strongly agree this is the top location driver.
- Utilities and infrastructure upgrades often require 24 to 36 months, which does not align with many companies' desired plant startup timelines.
- The electric grid is under stress due to high energy demands from sectors like electric vehicles and semiconductors, causing project delays and transformer shortages, with wait times up to 36 months.
- Communities are advised to prepare sites and infrastructure in advance to attract new jobs and investment, as lack of capacity can quickly eliminate locations from consideration 1.

2. Generation Resource Shifts and Reliability Planning
- With retirements of major generation units (such as Campbell units 1, 2, and 3), the company is replacing capacity through:
- Growth in solar generation assets
- Increased demand response and energy waste reduction programs
- Acquisitions (e.g., Covert plant)
- Battery energy storage systems (BESS), with contracts for 400 MW of projects executed
- Addition of zonal resource credits via solicitations
- Key considerations:
- Maintaining resource adequacy and reliability post-retirement of major plants
- Timely execution of new capacity projects and integration into the grid
- Alignment with regulatory approvals and settlement agreements 1.

3. Data Accuracy and Outage Management
- The company is improving how it identifies and classifies outage causes, moving away from broad "weather" or "unknown" codes.
- Key considerations:
- Benchmarking against peer utilities to identify best practices
- Implementing new quality assurance and control processes for more accurate real-time outage categorization
- Accurate data is essential for effective resource planning and reliability improvements 1.

4. Renewable Energy Portfolio Expansion
- New legislation (PA 235 of 2023) sets a renewable energy target of 50% by 2030, driving further investment in wind and solar resources.
- Key considerations:
- Integration of 2,800 MW wind and 1,000 MW solar above previous plans
- Utilizing renewable assets from anywhere in the MISO footprint
- Ensuring that renewable energy investments provide customer value through market participation and renewable energy credits 1.

5. Capital Investments in Generation
- Capital investments are driven by plant safety, regulatory compliance, and reliability.
- Key considerations:
- Prioritizing investments that maintain or improve reliability and meet safety/environmental standards
- Transparent planning and reconciliation processes to ensure funds are not shifted away from critical reliability programs 1, 2.

In summary, the docket highlights industrial growth driving demand for electric capacity and development-ready sites, major shifts in generation resource planning, the need for improved outage data, aggressive renewable energy targets, and the importance of capital investments in reliability and compliance. Each area requires forward planning, timely execution, regulatory alignment, and a focus on accurate data and infrastructure readiness.

The docket discusses several financial and timeline risks and concerns:

Financial Risks:
- Consumers Energy has a significantly higher ratio of projected capital expenditure to net utility plant compared to peers, increasing its risk profile. The company’s ability to recover capital costs on a timely basis is limited, making it reliant on rate case filings for capital cost recovery. If its proposed infrastructure recovery mechanism is not approved, the risk of under-recovery or delayed recovery of invested capital increases, which could put downward pressure on key credit metrics and support a higher required return on equity (ROE) 1, 1.
- Both S&P and Moody’s consider the regulatory framework and the ability to recover costs and earn returns as key factors in credit ratings. Moody’s assigns regulatory risk a 50% weighting in its assessment of regulated utilities, highlighting the importance of a supportive regulatory environment for financial stability 1.
- The authorized ROE and equity ratio are critical for reinforcing a utility’s creditworthiness. Lower-than-average authorized returns may negatively impact investor perceptions and the company’s ability to attract capital on reasonable terms 1.
- The company faces liquidity risk if forced to rely more heavily on short-term borrowing, especially during financial market disruptions. Maintaining adequate short-term financing capacity is necessary for daily operations and to keep credit risk at a reasonable level 1.

Timeline Risks:
- The company is implementing new processes (such as improved outage classification and benchmarking) expected to be completed by the end of 2025. These initiatives are intended to improve operational data and resource planning, with process changes scheduled for completion by year-end 1.
- The proposed ramp-up to a five-year line clearing cycle for LVD systems is targeted for completion by the end of the 2030-2031 test period, after which steady-state cycle maintenance will begin. Delays or deviations from this timeline could affect reliability and risk management strategies 1.
- If alternative, slower investment glidepaths are adopted, critical reliability and resiliency programs could be nearly eliminated or reduced, significantly decreasing capital investment by $35–$50 million per year and potentially impacting system reliability by 2029 1.
- Fleet expansion investments are necessary to support workforce expansion. If not approved, there is a risk of stranded labor due to lack of equipment, which could delay infrastructure projects 1.

In summary, the docket highlights substantial financial risks related to capital cost recovery and regulatory support, as well as timeline risks associated with the implementation of operational improvements and capital investment programs.

The provided excerpts contain limited direct information about specific stakeholders in the docket and their positions on proposals. However, the following stakeholders and their general involvement can be identified:

- Michigan Municipal Association for Utility Issues (MI-MAUI): This organization is involved as a stakeholder specifically regarding streetlighting improvements. The company has engaged in ongoing collaboration with MI-MAUI, meeting multiple times in 2024 and continuing to meet bi-monthly to discuss program improvements. There is no direct statement in the excerpts about MI-MAUI being for or against any particular proposal, but the company has been receptive to their suggestions and continues collaboration as recommended by the Commission 1.

- Liberty (Consultant): Liberty performed a distribution audit and provided recommendations regarding how outage causes are identified and classified. The company acknowledged Liberty's findings and is implementing initiatives in response, such as benchmarking, process changes, and quality control. Liberty is not an adversarial stakeholder; rather, it acts as a third-party evaluator whose recommendations the company is acting upon 1.

- The Company (likely Consumers Energy): The company itself is proposing various changes, such as improvements in outage cause classification, consolidation of dispatch centers, and new quality assurance processes. The company is also proposing changes to allocation methods in rate cases, enhancements to demand response and transportation electrification programs, and continued use of deferred accounting mechanisms 1, 1, 2.

- Michigan Public Service Commission (MPSC): The Commission is the regulatory authority overseeing the docket. It has suggested continued collaboration with stakeholders like MI-MAUI and has approved or reviewed various proposals and mechanisms, such as deferred accounting and rate design changes 1, 2.

There is no explicit mention in the provided excerpts of any stakeholders specifically opposing particular proposals. The most detailed interactions described involve collaborative or consultative relationships, particularly with MI-MAUI and Liberty. The company appears to be implementing recommendations and responding positively to stakeholder input.