1. M ICHIGAN P UBLIC S ERVICE C OMMISSION Energy Optimization Plans 2011 Biennial Review Pre-Filing Update Rob Ozar, Manager Energy Optimization Section March 28, 2011 WELCOME

2. M ICHIGAN P UBLIC S ERVICE C OMMISSION When EO Plans Expire (1) If the current EO Plan expires in the calendar year of the biennial plan review… Then the provider shall propose at least a 2 year extension of the plan (2) If the current plan expires in the calendar year immediately following the year of the biennial review… Then the provider shall propose at least a one- year extension of the plan (3) If the current energy optimization plan expires two years beyond the year of the biennial review… Then the provider shall file an updated plan.

3. M ICHIGAN P UBLIC S ERVICE C OMMISSION EO Plan Filing Requirements Propose a set of EO programs for each customer class Specify necessary funding levels Describe how EO program costs will be recovered Ensure funds collected from each customer rate class are spent on EO programs for that particular rate class (to the extent feasible) Demonstrate that the proposed EO programs and funding is sufficient to achieve applicable EO standards.

4. M ICHIGAN P UBLIC S ERVICE C OMMISSION EO Plan Filing Requirements Specify whether the calculation of incremental energy savings will be weather-normalized or based on the average number of megawatt hours of electricity sold annually during the previous three years Demonstrate that the proposed EO programs will be cost-effective Provide for the practical and effective administration of the proposed EO programs Provide for a process to obtain an independent expert evaluation of the actual EO programs' savings.

5. M ICHIGAN P UBLIC S ERVICE C OMMISSION Low Income The level of low income residential funding may be established on the basis of the specific characteristics of the provider ’ s service territory. The allocation of low income residential funding to electric self-directed customers within the commercial or industrial rate classes may be based upon a retail revenue allocator if a significant portion of the rate class has opted to self-direct.

6. M ICHIGAN P UBLIC S ERVICE C OMMISSION EO Approval Process Notice of intent to file plan/plan review 30 days prior to scheduled filing date. Staff intent is to see completion of the Commission Order process prior to December 31 st, 2011.

7. EO Plan Approval Process MUNICIPALS Include the scheduled surcharges and revenues in the plan filing for verification that the plan is within the revenue caps for residential and C&I customers. Staff requests the provider hold a public hearing sufficiently before the plan filing so that public comments can be filed simultaneously with the plan filing. No Commission Hearing if public comments are filed by the provider; Staff report/recommendation and Commission Order M ICHIGAN P UBLIC S ERVICE C OMMISSION

8. Natural gas energy optimization credits cannot be substituted for renewable energy credits as described in section 27 of the Act, nor substituted for electric energy optimization credits. EO Credits M ICHIGAN P UBLIC S ERVICE C OMMISSION

9. Sec. 91. (1) Except for section 89(6), sections 71 to 89 do not apply to a provider that pays the following percentage of total utility sales revenues, including electricity or natural gas commodity costs, each year to an independent energy optimization program administrator selected by the commission: (a) In 2009, 0.75% of total retail sales revenues for 2007. (b) In 2010, 1.0% of total retail sales revenues for 2008. (c) In 2011, 1.5% of total retail sales revenues for 2009. (d) In 2012 and each year thereafter, 2.0% of total retail sales revenues for the 2 years preceding. Section (71) Filing Requirements Section (73) Commission Approval Process Section (75) Financial Incentive Section (77) Incremental Energy Savings Targets Section (79) Advanced Cleaner Energy Systems Section (81) Alternative Energy Optimization Standards Section (83) Energy Optimization Credits and Carry Forward Section (85) Transferability of Energy Optimization Credits Section (87) Energy Optimization Credit Certification and Tracking Section (89) Revenue Caps and Spending Caps M ICHIGAN P UBLIC S ERVICE C OMMISSION

10. Please explain the extent of the MPSC review of EO annual reports from the MOEUs, and what the results are used for. What are the penalties – financial or otherwise – if an MOEU has not achieved its annual energy (kWh) goals outlined in its EO plan? Or has not achieved cost-effectiveness? If an MOEU is interested in joining Efficiency United starting in 2012, what does the MPSC need submitted by the September 1, 2011 filing date? Utility questions related to Energy Optimization plan filing and Efficiency United M ICHIGAN P UBLIC S ERVICE C OMMISSION

11. How are utilities invoiced for participation in Efficiency United? Is it monthly, quarterly, annually? Is it for an amount equivalent to the maximum annual spending allowed by 2008 PA 295? What is the maximum amount (in % of utility surcharges) that Efficiency United can use for program administration? Is it limited to 3% similar to the utility- administered programs? If a utility is participating in Efficiency United, and their annual energy optimization (kWh) goal is achieved early, or is achieved with less funding than the spending cap, what happens? Is there a refund to the utility (customers)? Does the program continue until excess funding is gone? Does the State or Efficiency United keep the funding? Questions Continued M ICHIGAN P UBLIC S ERVICE C OMMISSION

12. Questions Continued If a utility is participating in Efficiency United, and the State contractor does not achieve their annual energy optimization (kWh) goal what happens? Is there a refund to the utility (customers)? What guarantees are there that a utility ’ s funds contributed to Efficiency United will be entirely spent on programs in that utility ’ s service territory? Is there any risk that funds submitted to the Efficiency United can be reallocated by the State for other purposes (e.g., budget deficits)? M ICHIGAN P UBLIC S ERVICE C OMMISSION