Legislative Analysis
Phone: (517) 373-8080
INTEGRATED RESOURCE PLANS
http://www.house.mi.gov/hfa
Senate Bill 502 as enacted Analysis available at
Public Act 231 of 2023 http://www.legislature.mi.gov
Sponsor: Sen. Sue Shink
House Committee: Energy, Communications, and Technology
Senate Committee: Energy and Environment
Complete to 2-5-24
SUMMARY:
Senate Bill 502 amends 1939 PA 3, which is the enabling act for the Michigan Public Service
Commission (MPSC), largely to revise certain requirements for electric utilities’ integrated
resource plans (IRPs). An IRP is a multiyear plan describing how a utility will provide reliable
and cost-effective service to customers under current market and regulatory conditions as well
as under modeled scenarios. 1 The bill also increases amounts committed to the attorney general
and consumer advocacy groups for participation in utility cost recovery proceedings and
provides requirements concerning MPSC public engagement. The bill is part of a package of
energy-related bills that includes Senate Bills 271, 273, 277, and 519 and House Bills 5120
and 5121. Senate Bill 502 makes some technical changes (not described below) to reflect
changes made by those bills. The bill will take effect February 13, 2024.
Integrated resource plans
The bill requires an IRP to include all of the following (in addition to other requirements under
the act):
• An analysis of how the electric utility’s plan complies with all of the following
provisions of the Clean and Renewable Energy and Energy Waste Reduction Act:
o The renewable energy plan requirements and goals of section 28. 2
o The clean energy requirements of section 51. 3
o The energy waste reduction measures in section 77. 4
o The energy storage target of section 101. 5
• The projected long-term forecast of greenhouse gas emissions and other pollutants
from power generated or purchased by the electric utility. The electric utility may
include details on the broader emissions impact of shifting to electrification of
transportation, buildings, and industries.
• If a plan includes the construction of a new natural-gas-fired generation facility, an
environmental justice impact analysis that includes a review of the reasonably
anticipated environmental justice impacts for the plan and an analysis of whether the
1
For a description of integrated resource planning (from 2017), see: https://www.michigan.gov/mpsc/-
/media/Project/Websites/mpsc/consumer/info/briefs/IRP_Issue_Brief_V2_12-20-17.pdf
2
http://legislature.mi.gov/doc.aspx?mcl-460-1028 (amended by SB 271, http://legislature.mi.gov/doc.aspx?2023-
SB-0271).
3
Added by Senate Bill 271.
4
http://legislature.mi.gov/doc.aspx?mcl-460-1077 (amended by SB 273, http://legislature.mi.gov/doc.aspx?2023-
SB-0273).
5
Added by Senate Bill 271.
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 facility complies with the requirements for clean energy systems of the Clean and
Renewable Energy and Energy Waste Reduction Act.
• If a plan proposes retiring or retaining one or more fossil fuel peaking plants in an
environmental justice community, a review of the reasonably anticipated
environmental justice impacts for each generation facility.
The bill requires the MPSC, in reviewing an IRP, to request an advisory opinion from the
Department of Environment, Great Lakes, and Energy (EGLE) regarding the following (in
addition to topics already required):
• The potential impacts of proposed energy generation resources and of any prudent and
feasible alternatives identified by EGLE on whether the IRP makes adequate progress
toward achieving the clean energy standard established in the Clean and Renewable
Energy and Energy Waste Reduction Act.
• The potential impacts of the IRP and of any prudent and feasible alternatives identified
by EGLE on whether the IRP makes adequate progress toward the economywide
virtual elimination of greenhouse gas emissions in Michigan by 2050.
• Whether the IRP, in comparison to any prudent and feasible alternatives, makes
adequate progress toward the elimination of adverse effects on human health due to
power generation in Michigan.
• Whether the IRP, in comparison to any prudent and feasible alternatives, adequately
reduces harms to the health, safety, and welfare of individuals in environmental justice
communities.
The bill removes a provision that previously required a utility to include in its integrated
resource plan details regarding its plan to eliminate energy waste.
The act requires the MPSC to approve an IRP if it makes certain determinations, among which
is that the proposed IRP represents the most reasonable and prudent means of meeting the
utility’s energy and capacity needs. To make that determination, the MPSC is required to
consider whether the plan appropriately balances several factors. The bill adds to this
requirement the factors of affordability and overall cost-effectiveness in providing utility
service. The bill also adds the following to the determinations that, if made by the MPSC,
require approval of the IRP:
• The construction and construction maintenance of new or existing capacity resources
in Michigan meet all of the following: 6
o The construction and construction maintenance use an apprenticeship program
registered and certified with the U.S. Secretary of Labor under the federal
National Apprenticeship Act. 7
o The workers employed for the construction or construction maintenance of the
facility are paid a minimum wage standard not less than the wage and fringe
benefit rates prevailing in the locality where the work is to be performed as
6
These requirements do not apply to an independent power producer supplying power under a contract or agreement
entered into in accordance with the federal Public Utility Regulatory Policies Act (PURPA) as of February 13, 2024
(the effective date of the bill). See https://www.michigan.gov/mpsc/regulatory/electricity/renewable-energy/purpa
7
https://www.law.cornell.edu/uscode/text/29/chapter-4C
House Fiscal Agency SB 502 as enacted Page 2 of 6
 determined under 2023 PA 10 8 or 40 USC 3141 to 3148 (known as the Davis-
Bacon Act), 9 whichever provides the higher wage and fringe benefit rates.
o To the extent allowed by law, the entities performing the construction or
construction maintenance work enter into a project labor agreement or operate
under a collective bargaining agreement for the work to be performed.
• The plan is consistent with all of the following provisions of the Clean and Renewable
Energy and Energy Waste Reduction Act:
o The renewable energy plan requirements and goals of section 28.
o The clean energy requirements of section 51.
o The energy waste reduction measures in section 77.
o The energy storage target of section 101.
• The plan promotes environmental quality and public health and reasonably mitigates
adverse effects on human health due to power generation, with a priority on mitigating
impacts and prioritizing benefits to communities that are disproportionately affected
by pollution and other environmental harms.
Project labor agreement means a prehire collective bargaining agreement with one or
more labor organizations that establishes the terms and conditions of employment for
a specific construction project and does all of the following:
• Binds all contractors and subcontractors on the construction project through the
inclusion of appropriate specifications in all relevant solicitation provisions and
contract documents.
• Allows all contractors and subcontractors on the construction project to
compete for contracts and subcontracts without regard to whether they are
otherwise parties to collective bargaining agreements.
• Contains guarantees against strikes, lockouts, and similar job disruptions.
• Sets forth the effective, prompt, and mutually binding procedures for resolving
labor disputes arising during the term of the project labor agreement.
• Provides other mechanisms for labor-management cooperation on matters of
mutual interest and concern, including productivity, quality of work, safety,
and health.
• Complies with all state and federal laws, rules, and regulations.
The bill also adds energy storage facilities to provisions referencing electric generation
facilities in IRP provisions.
Required financial incentive approval
Currently, in considering an IRP, the MPSC must consider, and may authorize, a financial
incentive for a utility for power purchase agreements that a utility entered into with an entity
that is not affiliated with that utility. The financial incentive cannot exceed the utility’s
weighted average cost of capital.
8
http://legislature.mi.gov/doc.aspx?mcl-Act-10-of-2023
9
https://www.law.cornell.edu/uscode/text/40/subtitle-II/part-A/chapter-31/subchapter-IV
House Fiscal Agency SB 502 as enacted Page 3 of 6
 Under the bill, the MPSC must authorize a financial incentive for an electric provider whose
rates the MPSC regulates 10 that enters into a power purchase agreement for renewable energy
resources or a third-party contract for energy storage systems or clean energy systems with an
entity that is not affiliated with that utility. The financial incentive is calculated as the product
of contract payments in that year multiplied by the electric provider’s pretax weighted average
cost of permanent capital consisting of long-term debt obligations and equity of the electric
provider’s total capital structure as determined by the MPSC’s final order in the electric
provider’s most recent general rate case. The pretax weighted average cost of permanent
capital used in the calculation must not be fixed throughout the entire contract term at the
pretax weighted average cost of capital 11 applicable in the first year and must be updated based
on the MPSC’s final order in each succeeding general rate case for the electric provider.
The above provisions apply to all contracts entered into after June 30, 2024.
Process to establish modeling scenarios and assumptions
The act requires the MPSC to commence a proceeding to do such things (in consultation with
the Department of Environment, Great Lakes, and Energy) as assess the potential for energy
waste reduction and establish modeling scenarios and assumptions for utilities to include in
their integrated resource plans. Under previous law, this proceeding was held every five years,
beginning in August 2017. (It was last conducted in 2022.) The bill changes this to require the
process to be conducted every four years, beginning in August 2025. In developing the IRP
modeling scenarios and assumptions, the bill additionally requires consideration of projected
load impact due to electrification on the need for additional generation capacity and the
projected costs of different types of technologies used for electric generation. The bill also
requires the MPSC to do both of the following as part of the proceeding:
• Conduct an assessment of the potential for electrification of transportation, buildings,
and industries consistent with economywide elimination of greenhouse gas emissions
in Michigan, based on what is economically and technically feasible, as well as what
is reasonably achievable.
• Identify environmental justice communities.
Utility Consumer Representation Fund
The bill increases the amounts that certain energy utilities (electric and gas companies
regulated by the MPSC) that have applied to initiate an energy cost recovery proceeding must
remit to the Utility Consumer Representation Fund. These amounts are operating expenses that
can be charged to the utility’s customers.
Under the bill, each such energy utility serving at least 100,000 customers is liable for a
proportional share of a $1.8 million assessment that is allocated to the attorney general for
participation in administrative and judicial proceedings in various utility cases. Each such
energy utility serving at least 100,000 residential customers is liable for a proportional share
10
The term “electric provider” is not defined in the bill or the act. Municipally owned electric utilities are generally
not subject to MPSC regulation, and the MPSC also does not regulate the retail rates of electric cooperatives whose
rates are member-regulated. As a point of reference, if a distinction is being drawn, the section amended here otherwise
generally refers to “electric utilities,” which the act defines as entities whose transmission or distribution of electricity
the MPSC regulates under this act or 1909 PA 106, but not including a municipal utility, affiliated transmission
company, or independent transmission company.
11
Note that the reference here is not to “pretax weighted average cost of permanent capital.”
House Fiscal Agency SB 502 as enacted Page 4 of 6
 of a $2.0 million assessment that is used to support the Utility Consumer Participation Board
and application-based grants for groups that advocate on behalf of residential consumers. 12
Among other things, the act requires that proposals for the grants described above must serve
the interests of residential utility consumers. The bill adds that the interest of residential
consumers includes such things as the following:
• Considerations of utility service in Michigan.
• The reduction of greenhouse gas emissions from the utility sector.
• The protection of the following:
o Public health.
o Equitable access to energy efficiency.
o Weatherization.
o Efficient electrification measures, programs, and services.
o Clean energy technologies.
The bill requires the Utility Consumer Participation Board to encourage grant-making to
nonprofits representing environmental justice communities and communities with the highest
energy burdens.
The bill also allows money in the Utility Consumer Representation Fund to be used for
participation in administrative and judicial proceedings under sections 6w and 10i of the act 13
and under the Clean and Renewable Energy and Energy Waste Reduction Act, 14 in addition to
uses already allowed under the act.
Public engagement requirements
The bill requires the MPSC to conduct at least four public meetings, hearings, town halls, or
similar events per year in geographically dispersed areas of the state. The MPSC must set the
time, place, and procedures for public engagement at these events to take comments from low-
income residential customers, residential customers with high energy burdens, and individuals
and communities likely to be affected by the outcome of MPSC proceedings, as well as to
encourage meaningful participation by those individuals and groups. A public meeting,
hearing, town hall, or other opportunity for public engagement that the MPSC is otherwise
required to conduct under law can count toward the four-times-a-year requirement.
By June 1, 2024, the MPSC must open a proceeding to consider options for expanding
opportunities for public engagement in its decision-making processes and procedures with
respect to all of the following:
• The accessibility and transparency of the MPSC’s decision-making processes.
• Opportunities for participation in the MPSC’s decision-making processes, especially
by low-income residential customers, residential customers with high energy burdens,
and individuals and communities affected by commission decisions.
• The responsiveness of MPSC decisions to community needs and priorities.
12
The $1.8 million assessment under the bill was previously a 2017 base of $900,000, adjusted annually for inflation
beginning January 2018, and the $2.0 million assessment was previously a 2017 base of $650,000, adjusted annually
for inflation beginning January 2018. https: