But the MPSC won't be officially imposing this until 2022 at the earliest, and is setting up a separate proceeding to further hash out how much that requirement should be or what should be assigned to each electric provider.
The MPSC didn't have the information it needed Friday to make those sorts of decisions. But by 2018, MPSC Chair Sally TALBERG said the new standard for local generation -- otherwise known as the Local Clearing Requirement (LCR) -- would be established and known, to tee up implementation by 2022.
Talberg said having a LCR apply to all providers comes from a federal requirement that a certain amount of energy needs to come from within the region.
"I think there's kind of an equity question, about who should be contributing to that, but there's also a reliability question," Talberg said.
The LCR has become the latest battleground for electric choice advocates.
At the center of the LCR issue is how to meet electric capacity requirements for the bulk of the Lower Peninsula, which comprises one of the zones in which the LCR applies. Part of meeting the capacity requirement involves a certain amount of electric generation that must physically be located in that zone, otherwise known as the LCR, which is set across the zone.
Other electric capacity can be imported from out of state, but transmission lines can only transport so much power. Many AE suppliers who serve electric choice customers here import power from other states or buy it on the open market, but there are still some that have generation here in the state.
But choice advocates see MPSC's consideration of a LCR on their companies as a back-door way to force them to buy power from DTE Energy and Consumers Energy, when they might otherwise buy more power from outside the state to fill their customers' needs.
Rep. Gary GLENN (R-Larkin Twp.) and other choice advocates have said provisions requiring AE suppliers to meet the LCR were specifically left out of the energy legislation, and they've charged the MPSC with overstepping its bounds by putting it back in.
Talberg said Friday the LCR provision was not left out of the energy legislation, as it had been portrayed by choice advocates -- and as they continued to maintain, even after what Talberg said Friday.
According to the MPSC, the energy law provides a definition of the LCR and requires the MPSC, in order to determine capacity obligations, to request technical assistance from the Midcontinent Independent System Operator (MISO) in "determining the local clearing requirement."
The MPSC made very clear in its public statements Friday it believes it is legally correct in what it did, after some spent the week openly wondering if the MPSC was out of line.
Electric choice advocates still see it much differently. Energy Choice Now, which lists a number of schools, businesses and others that "denounced" the MPSC Friday, said the MPSC "intentionally ignores language and legislative intent from the newly passed Michigan energy law."
"The MPSC believes it has the authority to insert (local clearing requirement or LCR) language in the form of a rule to Michigan's new energy law," said Maureen McNulty SAXTON, spokesperson for Energy Choice Now, in a statement. "But they don't have that authority, not today and not in 2022, when penalties and repercussions would hit electricity suppliers. The Legislature made clear that it was not including an LCR in Michigan's energy law."
Glenn Friday said what the MPSC did was kick the can down the road and said he'd like to craft a legislative response to expressly prohibit any sort of LCR being imposed upon the AE suppliers. He also said if the MPSC imposes this "choice-killing rule" it's going to end up in court.
The utilities and a lawmaker who played a big role in crafting the new energy law said the MPSC was doing its job.
DTE spokesperson Stephanie BERES said the MPSC has the "authority to direct and implement the law" and said Friday's order allows the MPSC to "thoroughly examine" how the LCR is implemented.
Consumers spokesperson Katie CAREY said, "We believe it's the responsibility of all energy providers to ensure they have secured adequate capacity to serve their customers."
And Sen. Mike NOFS (R-Battle Creek), a major architect of the new energy law, said Friday's decision "is all about ensuring that energy providers are accountable to their customers for the long-term reliability of their energy supply."
Another key lawmaker in the electric choice debate, Sen. Mike SHIRKEY (R-Clarklake) said he looked forward to hearing about Friday's "decision."
"Regardless, it results in casting a shadow of uncertainty on both our Michigan-based utilities and AESs. And in the fast-paced, rapid-technology advancing field of energy, uncertainty is not welcome. It hinders our ability to be competitive across many fronts," Shirkey said.
He added that layering LCRs on the top of regional authorities brings into question whether Michigan is getting "full value" of being a member of a regional transmission organization, "which is not inexpensive."
The MPSC, in its order Friday, was setting the standards for how electric providers will demonstrate to the MPSC they have the capacity to meet the needs of customers looking four years into the future. The MPSC, under the new energy legislation that went into effect earlier this year, was tasked with developing this process.
The first cycle will require DTE, Consumers and other providers how they're going to do this through at least 2021.
All providers have to do that -- whether it's DTE and Consumers or these AE suppliers -- which the MPSC acknowledged is a "new requirement" and may mean "some providers have to alter their business models in order to comply."
However, the MPSC believes it's balancing the needs of electric choice customers and ensuring the reliability of the grid through this approach, which gives the AE suppliers four years to comply with the LCR.