MECA secured a significant accomplishment for its member distribution cooperatives recently with the Michigan Public Service Commission (MPSC). MPSC delivered favorable news by addressing the applicability of outage credits to electric cooperatives.

The original order was a result of last winter’s severe ice and snowstorms that hit Michigan businesses and residents hard. It revealed an increase in the outage credit available to affected customers who endured power outages for an extended period – more than 96 hours.

The recent declaratory ruling clarified that outage credits do not apply to Michigan’s electric cooperatives, due to their “member regulated” status.

“When a private utility pays a credit to customers, it comes out of shareholder profits,” said Craig Borr, President of MECA. “Within MECA, our customers are our stakeholders and operate on a not-for-profit basis. A state-imposed outage credit system would require electric cooperatives to take dollars from a member and pay that to another member in the form of an outage credit. It would effectively create an internal subsidy. With the original proposal, it would be like penalizing one of our member-owners because they didn’t have an outage. It didn’t make sense for us.”

A Rate Matter under Member Regulation

The crux of the matter involved discussions between MECA and the MPSC staff regarding the state-imposed outage credits. These credits are typically provided by regulated electric utilities to compensate customers for the inconvenience and costs incurred during electric outages. MECA argued that, as a rate matter, the MPSC did not have the jurisdiction to impose such credits on Michigan’s electric cooperatives, which operate under member regulation.

Seeking Clarity and Petitioning for a Ruling

In April 2022, MECA proactively engaged with MPSC staff to further discuss the matter and gain insights into the applicability of outage credits to electric cooperatives, considering the MPSC’s non-regulatory role in electric rates for Michigan’s electric distribution cooperatives. After discussions with the MPSC staff, MECA filed a petition with the commission seeking a “declaratory order” to definitively determine whether outage credits should be applicable to member regulated electric cooperatives.

“Due to our business model as cooperatives, we felt strongly that these credits did not apply to us,” said Borr. “We knew it was important to have the MPSC make a formal order to clarify their original ruling.”