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Energy-Intensive Industrial Rate Workgroup Steve Bakkal Michigan Economic Development Corporation November 18, 2014.

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Presentation on theme: "Energy-Intensive Industrial Rate Workgroup Steve Bakkal Michigan Economic Development Corporation November 18, 2014."— Presentation transcript:

1 Energy-Intensive Industrial Rate Workgroup Steve Bakkal Michigan Economic Development Corporation November 18, 2014

2 On December 19, 2013, Governor Snyder held a media roundtable outlining his vision for a "no regrets" energy future by roundtable

3 Objective of Workgroup: Develop non-legislative options that can reduce electric rates for energy intensive companies, abiding by existing policies and cost-of-service principals.

4 Generally, for energy-intensive companies, energy costs are significant portion of company's operating costs. This can apply for small and large users. For these companies, energy costs are one of the top factors used for investment and location decisions. Applies to existing businesses in Michigan and those interested in locating in Michigan. Why focus on energy-intensive businesses?

5 Deliverable – Inform Decision Makers: A final report of options that will be used to inform the Governor, legislative staff, MPSC, and stakeholders. This report will detail how various options will impact all ratepayers. Final report will be issued by the workgroup and should not be construed as being reviewed or approved by MPSC commissioners

6 Workgroup Scope Workgroup is not replacing existing regulatory process or procedures. Focused on cost allocation, rate design, and other rate options that can be implemented without new legislation.

7 The workgroup is chaired by Steve Bakkal (MEDC) and consist of participants representing: (2) Large utilities (1)Small utility (1) Regulated Co-op (2) Legislature (house and senate staff) (2) MPSC staff (Up to 10) Energy intensive business customers representing broad range of industries and geographic locations Workgroup Participants

8 Workgroup Selection Process Held information session at MPSC offices on March 24 th, 2014. Utility, legislative, and MPSC staff selected with direct outreach Business customers nominated themselves or other businesses by 5pm March 31, 2014 on Businesses were asked to submit the -Brief description of relevant experience/general knowledge of topics and the regulatory process. -Knowledge of respective industry needs, challenges. Members selected were contacted directly by April 2, 2014 and posted on under the Workgroup

9 Commitment to meet with the workgroup bi-weekly on Mondays @ 9:00am in Lansing or by phone starting April 7 th through end of May. Active participants at the meetings, offering suggestions and providing input from own company experience and industry peers. Members encouraged to get input from peers, associations, industry experts, etc. outside of meetings if necessary. Businesses Customer Participant Roles & Expectations

10 MEDC & MPSC Steve Bakkal – MEDC Steve McLean - MPSC Dan Blair – MPSC Business Customers Mike Binion - Gerdau Special Steel North America David Stoner - United States Steel Corp George Andraos - Ford Motor Company Steve Brooks - Verso Paper Corp Keith Tyson Kenebrew - Dow Chemical Company Gerrit Reepmeyer - Severstal North America Jennifer Steiner - Burner - Marathon Petroleum Daniel Voss - General Motors Company Richard Nelson - Praxair, Inc. Rod Williamson - Dow Corning Corporation Utility Representatives Don Stanczak – DTE Stephen Stubleski – CMS Jim Ault - MEGA Kim Molitor - Wolverine Power Legislative Staff Greg Moore – Senate Dan Dundas - House Workgroup Members

11 Workgroup Timing March 13 th – Press Release announcing workgroup process and meeting at MPSC March 31 st – Deadline for business customer nominations April 2 nd – Workgroup members announced April 7 th - May 19 th – Workgroup meetings at MPSC May 30 th - June 20 th – Develop draft outline & report July 7th– Post draft report online for public comment July 21 th – Comment period closed August 12th– Issued final report

12 Utilize a 4CP 100% demand electricity production cost allocator to better reflect cost causation Provide a tariff for time-based rates Explore energy cost allocation and collection that reflect seasonal cost variations Explore rate designs that appropriately compensate customers with loads that can be curtailed during peak periods Calculate load factors as 12 month averages Recovery of surcharges allocated and collected in accordance with all of the cost of service principles outlined in the report should be explored Full report and recommendations available on, “workgroup” tab on Workgroup Recommendations…

13 Implementation Options Two Options Utility companies files rate case with new cost allocation or rate design method generated from workgroup MPSC commences a proceeding for each utility to examine cost allocation and rate design methods (PA169 of 2014). New rate established no later than Dec 1, 2015. Workgroup report can be used to inform MPSC.

14 Questions Steve Bakkal Michigan Economic Development Corporation 517-241-8030

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