STATE OF MICHIGAN

DEPARTMENT OF ATTORNEY GENERAL

P.O. BOX 30755

L

ANSING, MICHIGAN 48909

DANA NESSEL

ATTORNEY GENERAL

January 6, 2022

Ms. Lisa Felice

Executive Secretary

Michigan Public Service Commission

7109 West Saginaw Highway

Lansing, MI 48917

Dear Ms. Felice:

Re:

MPSC Case No. U-20629, U-20630 and U-21150

In the matter, on the Commission’s own motion, to establish a workgroup to review the

service quality and reliability standards for electric distribution systems and to recommend

potential improvements to the standards.

In the matter, on the Commission’s own motion, to establish a workgroup to review the

Technical Standards for Electric Service and to recommend potential improvements to the

standards.

In the matter, on the Commission’s own motion, to propose revisions to the rules

governing consumer standards and billing practices of electric and natural gas utilities

regulated in accordance with 1919 PA 419, as amended; 1939 PA 3, as amended; and 1965 PA

380.

In its November 4, 2021, order in Case Nos. U-20629, U-20630, and U-21150, the

Commission requested comments from interested parties regarding the proposed

service quality and reliability standards, and also proposed revisions to rules

governing consumer standards and billing practices of electric and natural gas

utilities. The proposed service quality and reliability standards include customer

bills credits when electric utilities fail to meet specified levels of performance and

the provision for an incentive mechanism to encourage electric utilities to improve

the level of performance of the electric distribution system.

The Attorney General (AG) is pleased to provide comments that will assist the

Commission in finalizing the aforementioned standards and rules. The overriding

objective of the Attorney General is that the reliability and service quality of the

electric distribution system of Michigan utilities must improve from current levels

and there should be an urgency to achieve significant performance improvement. In

that regard, paramount in the Attorney General’s comments below are the

principles that standards and rules must be fair and reasonable to both customers

and utilities, and that the failure to achieve the stated standards and service

quality levels has financial consequences for the utilities or cooperatives under the

commission’s jurisdiction.

The Attorney General’s comments below pertain to those sections of the service

quality and reliability standards filed with the November 4, 2021 Commission order

in Case No. U-20629. Reference to utility or utilities also includes cooperatives

under the commission’s jurisdiction.

PART 1: GENERAL PROVISIONS

PART 2: UNACCEPTABLE LEVELS OF PERFORMANCE

The Attorney General does not agree with the proposed revisions to Part 1 and Part

2 of the Service Quality and Reliability Standards for Electric Distribution Systems.

As expressed in her August 27, 2020 comments (attached to these comments), the

creation of the gray sky conditions creates a greater restoration time for customers

than the prior rules that contain just normal and catastrophic conditions. In fact,

since these prior comments, it appears that the problem identified by the Attorney

General has worsened in these new revised rules. In addition, no rule has been

included to address the protecting customers in the event of a major disaster such

as the discussed in the National Association of State Utility Consumer Advocates

2019-01 resolution. A disaster preparedness plan on how the utilities plan to

respond and work with the cities, townships, police, consumer advocates, and

community groups in their territories is also needed in these rules.

As to the outage credits, the Attorney General believes the amount is still not

sufficient to address the cost incurred by customers following an electric outage. As

expressed in her prior comments in this docket and others, the outage credits need

to be automatic and the amount the credit doesn’t properly take into account all the

costs incurred by customers. The Attorney General provided a snapshot of costs

incurred by customers as a result of the summer outages and believes that the

Commission should conduct further investigation into the proper amount of the

credit. The development of a disaster relief fund, as suggested by the Attorney

General, would also help alleviate some of the burdens experienced by customers

following a lengthy electric outage. The Commission can make an addition to Part I

and create R 460.704. In R 460.704 the Commission could create the authority to

create disaster preparedness plans and require utilities to file within 6 months of

these rules being adopted to address such plans before the Commission.

Moreover, the standards define the unacceptable level if service is not restored or

the response to a wire down is not achieved in a set number of hours for at least

90% of the affected customers or incidents. As written, the standards do not provide

for a maximum acceptable service restoration time or response time for the

remaining 10% of the power outages and wire-down situations. The remaining 10%

is often the source of most customers complains when it takes several days or weeks

for customers to have electric service restored. The Commission should remove the

gray sky condition as discussed above and create maximum acceptable service

restorations times or response times. If the Commission adopts the proposed rules,

then the Attorney General recommends that the Commission establish the following

maximum service levels:

R460.722(a) All weather conditions – AG Recommendation: Maximum

restoration time within 4 days (96 hours) for 100% of all customers experiencing

sustained interruptions. No more than 50 exceptions above 96 hours will be

acceptable within a calendar year for unusual and difficult service restoration

situations.

R460.722(b) Catastrophic conditions – AG Recommendation: Maximum

restoration time within 7 days (168 hours) for 100% of all customers experiencing

sustained interruptions. No more than 100 exceptions above 168 hours will be

acceptable within a calendar year for unusual and difficult service restoration

situations.

R460.722(c) Gray Sky conditions – AG Recommendation: Maximum restoration

time within 5 days (120 hours) for 100% of all customers experiencing sustained

interruptions. No more than 50 exceptions above 120 hours will be acceptable

within a calendar year for unusual and difficult service restoration situations.

R460.722(d) Normal conditions – AG Recommendation: Maximum restoration

time within 3 days (72 hours) for 100% of all customers experiencing sustained

interruptions. No more than 10 exceptions above 72 hours will be acceptable within

a calendar year for unusual and difficult service restoration situations.

R460.723(1) Wire Down all conditions – AG Recommendation: Maximum

response time within 240 minutes (4 hours) for 100% of all first responder wire-

down notifications.

R460.723(2) Wire Down Non-Metropolitan area – AG Recommendation:

Maximum response time within 360 minutes (6 hours) for 100% of all first

responder wire-down notifications.

R460.724(b) New Service Installation – AG Recommendation: Maximum

installation time for new service requests within 30 business days.

PART 3: RECORDS AND REPORTS

R460.732 Annual report contents. AG Recommendations:

Subpart (b) through (g), should also require that the utility identify and explain all

situations where service restoration and service levels exceeded the maximum

acceptable level.

Subpart (i) through (l), should be revised to include the threshold hours for

reporting customer credits recommended by the Attorney General in section

R460.744 below.

Subpart (m), the requirement for electric utilities with 1 million or more customers

to list the 10 worst performing circuits could be very limited given the hundreds of

circuits operated by the large electric utilities. This requirement should be changed

to the top 20% worst performing circuits.

Subpart (n), the requirement for electric utilities and cooperatives with less than 1

million customers to list the worst performing 1% of circuits could be very limited

given the number of circuits operated by the large electric utilities. This

requirement should be changed to the top 10% worst performing circuits.

Subpart (q), the requirement to report the number of CELID cases for indices

CELID8hours, CELID24hours, and CELID48hours excludes reporting of other

cases between CELID8hours and 48hours and any cases longer than 48 hours. The

requirement should be changed to report cases between CELID8hours and 48 hours

in 8-hour increments and also cases above 48 hours in total.

PART 4: FINANCIAL INCENTIVES AND CUSTOMER ACCOMMODATIONS

R 460.741 Approval of incentive and penalties by the commission.

AG Recommendation: This section should be revised to add penalties to be assessed

to utilities if they fail to meet a threshold level of performance or repeatedly fail to

achieve the minimum performance standards established in R 460.722, R 460.723,

R 460.724, and R 460.151(2)(a) and (b). It is critical to create an incentive and

penalty mechanism that is symmetrical. In the approved customer rates, electric

utilities recover the cost to operate and maintain distribution facilities, including

repair costs, in order for the utilities to provide the level of service defined in the

aforementioned standards. Furthermore, electric utilities recover the cost of capital

investments, including a return on those investments. If some or all of the service

and the reliability standards are not met repeatedly year after year, customers are

not receiving the expected value for costs paid and included in rates.

Therefore, it is necessary for customers to recover the lost value in future years in

the form of penalties imposed on the utilities by the commission. Similarly, if

utilizes achieve performance levels that exceed the stated performance levels or tied

to national average reliability performance standards, they should be rewarded

with incentive payments. Furthermore, it is necessary to begin a performance

incentive and penalty mechanism with some urgency given the under-performance

of Michigan electric utilities relative to other electric utilities in the U.S. [CUB

Utility Performance Report, 2020 Edition (CUB Report), available at:

https://d3n8a8pro7vhmx.cloudfront.net/cubofmichigan/pages/1152/attachments/original

/1602176971/CUB_of_MI_Utility_Performance_Report_2020_Edition.pdf?1602176971 ]

The Attorney General recommends the following revisions:

Rule 41.

(1) The commission may authorize an electric utility or cooperative to receive a

financial incentive if it exceeds all of the service quality and reliability standards

adopted by these rules and exceeds national average reliability performance

standards. The commission may also authorize financial penalties and

increase credits to customers as provided in these rules if an electric

utility fails to repeatedly meet one or more of the service quality and

reliability standards established in R 460.722, R 460.723, R 460.724, and R

460.151(2)(a) and (b) and national average reliability performance

standards. [Bolded text proposed by AG]

(2) A request for approval of an incentive mechanism must include financial

penalties for failing to repeatedly achieve service quality and reliability

standards and national average reliability performance standards, must be

made in either of the following proceedings, and must be conducted as a contested

case under chapter 4 of the administrative procedures act of 1969, 1969 PA 306,

MCL 24.271 to 24.288: [Bolded text proposed by AG]

(a) A rate case proceeding.

(b) A single-issue proceeding filed specifically to address adoption of an incentive

program.

(3) An electric utility or cooperative shall not file an application seeking approval of

an incentive mechanism, including financial penalties and credit increases to

customers for failing to meet threshold performance levels and for failing

to repeatedly achieve service quality and reliability standards and

national average reliability performance standards, until it has exceeded all

of the service quality and reliability standards adopted by these rules continuously

for a period of not less than within 6 months from the effective date of

implementation of the service quality and reliability standards.

[Strikethrough and addition of bolded text proposed by AG]

R 460.742 Criteria for receipt of an incentive or assessment of financial

penalties: [Bolded text proposed by the AG]

Rule 42. (1) If an electric utility or cooperative qualifies has received approval for

implementation of an previously approved incentive and financial penalty

mechanism, it shall file an application seeking authority to implement the incentive

mechanism payment and/or penalty amounts at the same time that it submits the

annual report required by R 460.732. [Strikethrough and addition of bolded text

proposed by AG]

(2) An electric utility or cooperative shall not apply for qualify to receive a financial

incentive approved by the commission unless all of the following criteria were met

during the previous 12Months calendar year: [Strikethrough and addition of

bolded text proposed by AG]

(a) All required reports have been filed in a timely manner.

(b) All required reports fully comply with the requirements as determined by the

commission.

(c) The electric utility's or cooperative’s actual performance for the year shall

have exceeded achieved an overall performance score of more than 100%

above the target level for the combined service quality and reliability

standards as defined within the incentive and penalty mechanism.

Consumer Billing Standard R 460.151(2)(a) and (b) shall also be included in

the proposed incentive and penalty mechanism. [Strikethrough and addition

of bolded text proposed by AG]

(d) The electric utility or cooperative shall have fully responded to any inquiries

about the content of the reports made by the commission or its staff in a timely

manner.

(3) The commission may impose financial penalties, as defined within the

financial incentive and penalties mechanism, for an electric utility or

cooperative failing to achieve an overall service quality and reliability

standards performance score of 100% for the year or for failing to achieve

a performance standard for three or more consecutive years. [Bolded text

proposed by AG]

The Attorney General also recommends that the commission issue guidelines to the

electric utilities and cooperatives that will guide their filing for an incentive and

penalty mechanism. The Attorney General’s proposed guidelines are outlined later

in this document.

R 460.744 (Rule 44) Customer accommodations (Bill Credits) for failure to restore

service after a sustained interruption due to gray sky and catastrophic conditions.

AG Comment/Recommendation: The proposed restoration time to trigger bill

credits to customers is set at 96 hours for catastrophic conditions or twice the stated

time of 48 hours established in the performance standards defined in R 460.722.

Similarly, for grey sky conditions, the proposed restoration time to trigger bill

credits to customers is set at 48 hours or twice the stated time of 24 hours

established in the performance standards defined in R 460.722. This doubling of

the restoration time to trigger bill credits is unjust and unfair to customers. If the

standards of performance in R 460.722 are appropriate and reasonable, then it is

appropriate to use those same standards to trigger bill credits to customers when

those performance levels are not met. Therefore, the Attorney General recommends

that the performance levels to trigger bill credits to customers be set at the same

levels as those established in R 460.722 and to eliminate the gray sky condition.

R 460.745 (Rule 45) Customer accommodations (Bill Credits) for failure to restore

service after a sustained interruption during normal conditions.

AG Comment/Recommendation: The proposed restoration time to trigger bill

credits to customers is set at 16 hours or twice the stated time of 8 hours in the

performance standards defined in R 460.722. This doubling of the restoration time

is unjust and unfair to customers. If the standards of performance in R 460.722 are

appropriate and reasonable, then it is appropriate to use those same standards to

trigger bill credits to customers when those performance levels are not met.

Therefore, the Attorney General recommends that the performance levels to trigger

bill credits to customers be set at the same levels as those established in R 460.722.

R 460.746 Customer accommodations (Bill Credits) for repetitive interruptions.

AG Comment/Recommendation: The proposed number of repetitive interruptions to

trigger bill credits to customers is set at 6 instead of the stated number of 4

interruptions in the performance standards defined in R 460.722. The higher

number of repetitive power interruptions is unjust and unfair to customers. If the

standard of performance in R 460.722 is appropriate and reasonable, then it is

appropriate to use the same number of power interruptions to trigger bill credits to

customers when that performance level is not met. Therefore, the Attorney General

recommends that the performance level to trigger bill credits to customers be set at

the same level established in R 460.722.

The Attorney General also recommends that the commission make it clear that any

bill credits paid by the utilities will not be recoverable in future rate cases.

PART 5: WAIVER AND EXCEPTIONS

R 460.751 Waivers and exceptions by electric utilities.

(3) An electric utility or cooperative need not meet the standards or grant the

credits required by parts 2 and 4 of these rules under any of the following

circumstances:

(a) The problem was caused by the customer.

(b) There was a work stoppage or other work action by the electric utility's or

cooperative’s employees, beyond the control of the electric utility or cooperative,

that caused a significant reduction in employee hours worked.

(c) The problem was caused by an "act of God." The term "act of God" means an

event due to extraordinary natural causes so exceptionally unanticipated and

widespread within the utility service area, and devoid of human agency that

reasonable care would not avoid the consequences and includes any of the following:

[Bolded text proposed by AG]

(i) Flood.

(ii) Tornado.

(iii) Earthquake.

(iv) Fire caused by other than the utility or cooperative, its employees or

agents. [Bolded text proposed by AG]

(d) The problem was due to a major system failure attributable to, but not limited

to,

any of the following:

(i) An accident caused by other than the utility or cooperative, its employees

or agents. [Bolded text proposed by AG]

(ii) A man-made disaster caused by other than the utility or cooperative, its

employees or agents. [Bolded text proposed by AG]

(iii) A terrorist attack.

(iv) An act of war.

(v) A pandemic preventing the utility, or cooperative, from performing

service restorations from a power outage. [Bolded text proposed by AG]

CONSUMER STANDARDS AND BILLING PRACTICES

The Attorney General’s comment below pertain to those sections of the consumer

standards and billing practices filed with the November 4, 2021 Commission order

in Case No. U-21150

AG Comment/Recommendation: The proposed service quality and reliability

standards removed subpart (a), (b) and (c) from Rule 460.724 with the intent to

transfer those standards to the consumer standards and billing practices Rule

460.151. It appears that R 460.724 (c) was inadvertently not transferred.

Therefore, the Attorney General recommends that this standard be added to R

460.151(2)(b) to read as follows: “An electric utility shall have a complaint response

factor of 90% or more within 3 business days.”

COMMISSION GUIDELINES FOR DISTRIBUTION SYSTEM INCENTIVE AND

PENALTY MECHANISM

AG Comment/Recommendation: To guide the development of an effective incentive

and penalty mechanism that will improve the performance of the electric

distribution systems of Michigan utilities, the Attorney General proposes that the

commission direct electric utilities to file an application as soon as possible to

implement a mechanism that includes the following metrics and meets the following

guidelines.

1. Include the service quality and reliability standards in R 460.722, R 460.723, and R

460.724.

2. Include consumer standards and billing practices R 460.151(2)(a) and (b).

3. Include the utility’s annual goal to improve the SAIDI (Excl. MED).

4. Include service restoration O&M cost per incident (three‐year rolling average, including

MED).

5. Include an annual goal to reduce the number of customers who experienced one or more

power outages during the year of 1 hour or longer.

6. Include a metric to reduce the number of power outages from trees, wind & weather.

7. Include a metric to reduce the number of power outages from equipment failures.

8. Include a metric for the number of miles of line cleared annually for vegetation for LVD

and HVD circuits.

9. Include a metric to measure performance against national average reliability performance

standards.

10. Each standard, goal, or metric should have an appropriate weight as a percentage of

100%.

11. Annually the utility or cooperative would file the actual results showing how it performed

against each individual standard, goal or metric, and a scorecard showing how it

performed on an overall basis.

12. If the overall scorecard results exceed 100% of target, the utility or cooperative would be

eligible for an incentive payment for the year.

13. If the overall scorecard results are below100% of target and/or the utility fails to achieve

a performance standard level for three or more consecutive years the utility or

cooperative would be assessed a penalty amount for the year.

14. The incentive or penalty amount should be based on a percent of the revenue requirement

included in the Company’s current rates for distribution capital investments and O&M

expense in the most recent rolling five-year period.

15. Incentive payments and penalties should have reasonable maximum amounts to minimize

the impact of an unusual or unexpected outcome. These maximums should be set as a

percentage of the target amount.

16. If properly designed no deadband range for incentive or penalty payments should be

necessary. The deadband creates a cliff problem where as soon as the deadband is

exceeded a large payout or large penalty would need to be assessed.

These guidelines include the essential standards, goals and metrics to spur the

desired improvements to the electric distribution systems of the Michigan electric

utilities and cooperatives. The number of metrics should not be so few as to

prevents achievement of the desired outcomes, or so many as to water down the

essential metrics or make the performance measurement process unwieldy. The

Attorney General’s proposed guideline strike the appropriate balance.

The Attorney General reiterates its recommendation to the commission about the

necessity to define the key outlines of an effective performance incentive and

penalty mechanism with some specificity in order to have similar mechanisms

among the utilities. The commission should direct the utilities to present a

mechanism that follows the above-proposed guidelines within 6 months from the

implementation effective date of the service quality and reliability standards. The

performance incentive mechanisms filed by the utilities and cooperatives should be

refined through a collaborative process with Staff, the utilities, and other interested

parties before final commission approval.

In summary, the Attorney General looks forward to assist the Commission and

other parties participating in this difficult undertaking to reduce power outages and

improve the reliability of electric service provided by Michigan utilities.

Sincerely,

Michael E. Moody (P51985)

Assistant Attorney General

Michigan Department of Attorney General

Special Litigation Division

cc:

All Parties

STATE OF MICHIGAN

BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION

* * * * *

In the matter, on the Commission's own motion, to )

propose a revision to the rules governing consumer )

standards and billing practices of electric and

natural gas utilities regulated in accordance with

)

Case No. U-21150

1919 PA 419, as amended; 1939 PA 3, as amended )

And 1965 PA 380.

__________________________________________)

)

COMMENTS OF THE UTILITY JOINT COMMENTERS

Investor-owned utilities subject to the Consumer Standards and Billing Practices, herein

referred to as the Utility Joint Commenters¹(UJC), appreciate the opportunity to provide public

comments on the proposed ruleset in Case U-21150.

The UJC appreciate the time and effort that have gone into updating these rules to

provide clarity and consistency with the other pending rulesets being considered in Cases U-

20629 and U-20630. The companies also appreciate the Staff’s willingness to seek feedback and

have a constructive dialogue on the impacts the rule changes would have on customers and the

utilities.

The UJC request one revision to the proposed ruleset in Rule 43. The goal of the

proposed rule change appears to be to ensure all customers have information on getting

reconnected to utility service, in cases where confusion may arise. The utilities support this goal

and would like to ensure that the communication is provided in a timely manner for affected

¹The Utility Joint Commenter include Alpena Power, Citizens Gas Company Consumers Energy, DTE Electric,

DTE Gas, Indiana Michigan Power, Michigan Gas Utilities, Northern States Power-Wisconsin, Semco, Upper

Michigan Energy Resources Company, and Upper Peninsula Power Company.

customers. In cases where email and phone numbers are available, for example, these methods

are more timely and effective than a mailed notice through the post office. The new language

proposed in the rule under (5) for notifying customers that service has been remotely shut off and

the means to restore service should be refined to provide more clarity for the utilities of the

acceptable methods of contact and the appropriate timelines for that contact. The UJC each have

different systems and methods of contact that works best to avoid customer shut offs. Further,

some utilities have limited staff and systems and often utilize direct contact like phone calls to

communicate that service has been shut off.

The proposed revision to new (5) recognizes the inherent differences in each of the

utilities processes, but also provides a clear roadmap for the utilities to communicate the shut off

to the customer and the methods the customer can restore service. Further, the language requires

the utilities to provide contact information as opposed to a physical address as some utilities do

not have a physical address for payment, and others have multiple locations that make such a

requirement impractical. Finally, speaking directly with the utility will allow for quicker

restoration of service.

Proposed revisions to Rule 460.143(5):

5) After the utility shuts off service, no later than the fifth business day after service

was disconnected the utility will send notice to the customers that remain shut off.

The utility must notify the customer via automated or manual telephone call,

electronic mail, text message, or U.S. Mail. The notice must state that service has

been shut off, the utility’s contact information where the customer may arrange to

have service restored, and that any efforts by the customer to restore his or her own

service are unlawful and dangerous.

The UJC remains committed to reducing customer service disruptions and looks

forward to working with the Commission and Staff to that end. In support of the change,

the UJC would offer that, for Consumers Energy, of approximately an average of 138,000

disconnections annually 74% are restored within three days. DTE Electric restored 85%

of AMI customers within 2 days of interruption. Indiana Michigan Power, upon starting

remote disconnections in September 2021, achieved a 77% same-day reconnection rate in

November 2021. Upper Peninsula Power Company (UPPCO) had 74% of customers

restored on the same day or next day. This demonstrates that a large number of customers

are aware of the process to become reconnected to natural gas or electric utility service,

and the proposed change would target only those that may need the information.

The UJC notes for the record that, while the added cost to customers is not

extremely large, it is not $0. Based on size and current processes, the utilities have

varying estimates of cost for process changes. For example, for Consumers Energy to use

the method proposed by the UJC would increase O&M expenses annually by

approximately $130k and there would be one-time costs to implement of approximately

$25,000. Similarly, DTE estimates a one-time cost of $78,000 and ongoing O&M

expenses of $28,000. UPPCO estimates a one-time expense of $40,000 to implement

with minimal ongoing O&M expenses. If the changes proposed by the UJC are not

adopted and the expectation is mailed notices to every customer disconnected, these costs

would increase and information would likely be less timely.

The utilities appreciate the Commission’s consideration of the requested rule

change above to provide important flexibility for utilities to notify their customers once

remote shut off has occurred.

Sincerely,

Dated: January 6, 2022

Daniel Dundas

President

Michigan Electric and Gas Association

On behalf of the Utility Joint Commenters