The Commission issued an October 2023 Order largely adopting the utilities’ proposed BCA test, but with changes based on intervenor comments. A summary of the BCA impacts to include in Michigan’s approved BCA JST (which the commission also refers to as the “Societal Test”) is provided in the table below, highlighting which impacts were added to ensure alignment with Michigan’s applicable policies (consistent with NSPM principles), as well as direction on methodologies for accounting for impacts—whether monetization, quantitative or qualitative. The Commission also decided on a societal discount rate from 0-3%, rather than a weighted average cost of capital (WACC), as the utilities had been ordered to develop a test based on societal impacts, rather than the impacts on a utility (for which the WACC would be more appropriate)—again, consistent with NSPM guidance.

Finally, the MPSC ordered the development of a flexible and transparent spreadsheet-based tool to measure the cost-effectiveness of DER programs, through a collaborative process including commission staff, utilities, and stakeholders. It also supported the use of additional resources such as NESP’s Methods, Tools and Resources (MTR) Handbook and forthcoming guidance on conducting a Distributional Equity Analysis (see separate article).

• “A UBCA will better align energy efficiency, demand response programs, and long-term infrastructure planning with State climate and equity efforts and encourage programs that fulfill the needs of the grid and the goals of the State.
• A UBCA framework may also assist the Commission and stakeholders to identify the least-cost means to achieve Maryland policy goals…
• The purpose of the UBCA is to better inform stakeholders and the Commission about available choices that will promote the realization of State goals and policies.
• A UBCA should also increase transparency and efficiency in the assessment of energy resources.
• The UBCA should not be designed to substitute for the utilities’ independent, experienced judgment as to how to maintain safe and reliable service on utility systems.
• The goal of developing a consistent framework does not mean that the test must be identical across different DERs and utilities. There may be impacts (benefits or costs) that are unique to a given DER. Likewise, there may be impacts (benefits or costs) that are unique to a given utility.
• Additionally, the Commission does not intend to surrender its discretion by adopting an inflexible mathematical formula that would mandate the approval or rejection of a given project.”

The second and third workgroup meetings reviewed utility system impacts, current BCA practice, and the applicability of impacts to different types of DERs. The table shows the collective feedback of the workgroup and how they characterized the applicability of impacts. Facilitated discussion helped to clarify key differences.

This process helped to illustrate that a consistent BCA for all DERs does not mean the same impacts apply across all DERs, but rather that the full range of utility system impacts should be part of a BCA, with transparency about which apply or do not apply, or are considered immaterial to include.

The fourth workgroup meeting reviewed non-utility system impacts (non-USIs) – i.e., other fuels, host customer, and societal impacts – and their relevance to Maryland’s applicable priority policies and to specific DERs. Discussion included the applicability of host customer (participant) impacts to different DER types, and the importance of ensuring symmetry (NSPM Principle #3) in the accounting of both host customer costs and benefits – recognizing the challenge of monetizing certain benefits – should the workgroup decide to include host customer impacts in a proposed UBCA to the commission.