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Public Service Commission okays new financial incentives workgroup

Hilda Trinidad

The Michigan Public Service Commission has taken a step toward holding power companies financially responsible for unreliable service.

During its meeting Monday, the three-member group unanimously approved the creation of a new Financial Incentives and Disincentives workgroup.

It will focus mainly on distribution performance and safety by using data like downed power lines and blackout numbers.

Commission chair Dan Scripps called it a “reliability-plus” model.

“Reliability first and foremost in terms of some of the challenges around number of outages, duration of outages, and the number of customers experiencing multiple outages. And the plus is making sure that we retain reliability even as we continue to electrify,” Scripps said.

The document outlining the commission’s duties and scope names developing metrics to determine reliability a primary focus.

“After developing metrics around distribution performance, the workgroup shall explore rate structures and the methods by which incentives and disincentives may be applied,” the case file continues.

Both Scripps and the file note performance-based regulation can entail several ideas.

Scripps said the commission has used some of those strategies in other areas, like energy waste reduction.

“We’ve been able to tier planning efforts, incentives, and then statutory minimums to achieve in some cases best in class performance around energy waste reduction programs when you look around the country,” Scripps said.

Discussions over creating the new workgroup started months before blackouts this winter left hundreds of thousands of consumers without power.

The group’s final report is due by the end of the year.

Meanwhile, the PSC also recently updated its service quality rules dealing with “unacceptable” levels of performance.

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