Michigan Shares Thoughts on NSPM and OpenBCA Tool

Q&A with Luke Dennin, MI Public Service Commission Fellow

(Continued from NESP News, June 2025)

Phase I Recap

To support the development of the OpenBCA Tool, the project team convened four Michigan-stakeholder events: two stakeholder meetings and two technical subgroup sessions. These engagements were designed to build foundational understanding, gather input, and begin shaping the model’s core structure.

The project kicked off with an overview of the Commission Order that initiated the OpenBCA Tool, outlining the tool’s purpose, project phases, and the importance of stakeholder input. (See a summary table describing the tool’s range of applications.) Subsequent technical subgroup sessions focused on the model’s core structure – data types, equations, and methodologies – while intentionally avoiding specific inputs at this stage. In the second stakeholder meeting, the team clarified the tool’s intended use, shared a project update, and introduced the BCA Impacts Methodology matrix, walking through examples to illustrate how each impact is broken down into equations and variables. 

Thanks to the thoughtful input from Commission Staff and the BCA Tool Collaborative, the project is now moving into Phase II, to fully develop the analytical backend that offers methodological options for calculating both utility and non-utility system impacts, including methods for use by Michigan. Following Phase II, the team will shift its attention to building the user interface and integration layer, drawing on further stakeholder feedback to guide design decisions.

Q&A with Luke Dennin, U.S. DOE Fellow, MI PSC

NESP invited MI PSC to answer four questions about its engagement in the development of the OpenBCA Tool, and its vision for how it, along with other analyses, can support the Commission’s decision-making in utility investments in DERs, and potentially other resources. Many thanks to Luke for sharing these thoughtful responses!

Q1: How does Michigan expect to use the OpenBCA Tool? 

Michigan envisions using the OpenBCA Tool as both a practical resource and a significant step forward in the application of BCA to utility system decision-making. The state is increasingly turning to BCA to understand which utility investments are cost-effective and deliver the greatest overall value to the electric system and its customers. However, in many cases, BCA modeling remains largely opaque. Analyses are often conducted using proprietary tools or by third-party contractors, making it difficult for interested parties to scrutinize key assumptions, input data, and the treatment of different value streams.

The OpenBCA Tool offers a meaningful shift. As an open-access and user-friendly model, it is poised to foster more transparent and inclusive assessments and conversations about the benefits and costs of DER projects. While some technical barriers will remain due to the tool’s necessary rigor and complexity, open-access modeling enables peer review, sensitivity testing, and a better understanding of how results respond to different assumptions or preferences. This enhanced transparency supports more democratic, data-driven decision-making in a utility system that is growing more complex with each new DER technology.

From a procedural standpoint, the OpenBCA Tool is already positioned to play a central role in Michigan’s regulatory processes. In Case U-20898, the MPSC ordered that BCA for DER pilot projects must adhere to a defined set of principles and specifications, informed by an extensive interested party process and guided by the NSPM[1]. While the order does not mandate the use of a specific tool, the Commission launched a collaborative to develop a spreadsheet-based or similar open-source tool to serve as the standard platform for these analyses. Staff expects the OpenBCA Tool to be uniquely capable of meeting these standards with the level of rigor, clarity, and flexibility they require. As a result, the tool is expected to be used in utility DER pilot programs at a minimum, with potential for broader application in the future. Although the full scope of future adoption is uncertain, the OpenBCA Tool could emerge as a common platform for DER-related BCA, supporting utilities, regulators, and other interested parties in making more informed and transparent decisions within an increasingly dynamic energy landscape.

Q2: What lessons might other states take from Michigan’s progress?

One of the most important lessons from Michigan’s experience is the value of doing the qualitative groundwork early—specifically, by engaging with the principles and guidelines laid out in the NSPM and working through key subjective decisions in advance. Michigan undertook a rigorous, multi-year process to understand the foundational concepts in BCA for DERs and to make clear, deliberate choices about how those concepts should be applied for the state[2]. Establishing these standards upfront—before diving into the technical modeling—helped ensure a shared understanding of how the technical details contribute to the higher-level goals.

A strong example is the definition of a Jurisdiction-Specific Test (JST). The NSPM emphasizes that each jurisdiction should define its own primary test based on its unique policy goals. In Michigan’s case, this led to the adoption of a Societal Cost Test (SCT) as the JST. This approach reflects a recognition that DERs have impacts not only on the utility system but also on host customers and broader society—including environmental, public health, and reliability- and resilience-related benefits. Other jurisdictions may arrive at different conclusions. For instance, a state primarily focused on ratepayer impacts might adopt a Utility Cost Test (UCT), as the value streams in this category are limited to the utility system and are the drivers of customer rates. Both choices are valid; the key is defining the JST to be grounded in state-level priorities and policies and ensuring transparency for all interested parties.

Michigan’s approach also highlights the importance of resolving other subjective modeling decisions early as well. For example, Michigan Staff supported the use of a lower, social discount rate to better reflect long-term societal impacts, while utilities advocated for a higher rate aligned with the weighted average cost of capital. Addressing these differing perspectives within a formal regulatory proceeding has been crucial to establishing clarity and managing expectations before modeling begins.

Another important lesson is recognizing both the strengths and limitations of BCA. While Michigan is increasingly using BCA to inform DER and other utility investment decisions, there is broad understanding that a project being cost-effective is not, on its own, a sufficient reason to proceed. Cost-effectiveness is just one component of a broader decision-making framework—alongside considerations such as rate impacts and distributional effects. Ensuring that electricity remains affordable and that the benefits and costs of DERs are fairly distributed across all customers remains a key priority.

Finally, Michigan’s experience demonstrates the importance of continuity and historical awareness. Again, the state’s BCA for DERs effort has been a multi-year process. For interested parties, staying informed about the work conducted in the past, the challenges faced in the present, and the emerging questions of the future has been essential for meaningful and sustained participation. The process is complex and evolving, but long-term engagement—along with a willingness to ask questions and learn—has been critical to the process.

Q3: What value has the collaborative process added so far?

Collaborative processes have been essential to Michigan’s progress in developing a BCA framework for DERs. From the outset, interested party engagement has been a core design principle—not an afterthought. This commitment began with the launch of the MI Power Grid initiative in 2019, which aimed to maximize the benefits of DERs[3]. In 2020, the Commission formed the New Technologies and Business Models workgroup[4], which issued a 2021 staff report recommending the development of a Michigan-specific BCA framework grounded in the NSPM[5]. Interested parties were actively involved from these earliest stages.

Collaboration deepened in 2023 when DTE Electric Company and Consumers Energy Company, working with the Michigan Electric and Gas Association (MEGA) and the Association of Businesses Advocating Tariff Equity (ABATE), submitted a proposed BCA framework[6]. Their proposal included the use of a JST defined from a societal perspective, standardized methods for assessing value streams, and guidance on evaluating pilot programs “at scale.” Interested parties—including Commission Staff and advocates—were then asked to provide feedback on the proposal, which ultimately led to subsequent decisions by the Commission on numerous key design elements[7].

This broad engagement added significant value by bringing multiple perspectives to bear on critical questions: which value streams to include, what must be monetized or otherwise quantified, and whether a standardized, spreadsheet-based BCA tool is necessary. By considering these diverse viewpoints, the Commission was able to reconcile differences and define the path forward—calling for broad inclusion of impacts, monetization where feasible, and the development of an open-access, user-friendly tool[8].

That same spirit of collaboration is now informing the BCA tool’s development[9]. E4TheFuture, ICF, Recurve, and LBNL are leading technical work, but their efforts are guided directly by input from Michigan’s interested parties—including Commission Staff, utilities, and advocates. Those engaged since the beginning of these efforts continue to have a voice, helping ensure that the tool reflects shared priorities. This inclusive process prevents the tool from becoming a “black box” or a one-sided product, instead fostering transparency, trust, and buy-in for its eventual use.

In short, collaboration has laid the foundation for a robust, inclusive, and policy-aligned BCA framework for DERs in Michigan. It is this foundation that makes the work sustainable, defensible, and ultimately implementable.

Q4: How does this work align with broader regulatory or DER trends in the state?

This work aligns closely with Michigan’s broader regulatory direction. Foundationally, the Commission’s mission is to serve the public by ensuring safe, reliable, and accessible energy (and telecommunications) services at reasonable rates[10]. This mission is especially critical now, as the state faces evolving challenges and opportunities in the energy sector. With many potential paths forward, a central question remains: which projects and programs will be most effective and impactful?

BCA provides a crucial framework to help answer that question. By evaluating alternatives in common, comparable terms, BCA enables more objective, data-driven decision-making. In a context where every dollar spent should be justified—effectively at a minimum, and optimally whenever possible—rigorous and transparent BCA tools are essential. They support decisions that can withstand scrutiny, build public confidence, and ultimately lead to better outcomes for customers across the state.

Regarding DERs, Michigan recognizes these technologies will play a major role in the future grid. DERs offer the potential to alleviate system stress, reduce emissions, improve resilience, and enable more affordable electricity. However, realizing those benefits depends on thoughtful, cost-effective deployment. This requires moving beyond enthusiasm for DERs as a concept to deliberate, strategic investment where benefits are greatest.

Energy planning always involves uncertainty—especially when investments require large upfront costs and have long-term payback horizons—but using robust BCA tools enables the state to make better-informed decisions with a higher likelihood of success. The development of Michigan’s BCA framework and the OpenBCA Tool is laying the foundation for a future where DER investments are not just numerous but meaningful—designed to deliver real, measurable value for all interested parties.

Acknowledgments: I would like to thank Tayler Becker and Carmen Wagner at the MPSC for their valuable comments.

[1] Michigan Public Service Commission. “Filing U-20898-0040.” MPSC Case No. U-20898. October 12, 2023.

[2] Michigan Public Service Commission. “Filing U-20898-0040.” MPSC Case No. U-20898. October 12, 2023.

[3] Michigan Public Service Commission. “Filing U-20645-0001.” MPSC Case No. U-20645. October 17, 2019.

[4] Michigan Public Service Commission. “Filing U-20898-0001.” MPSC Case No. U-20898. October 29, 2020.

[5] Michigan Public Service Commission Staff. “Filing U-20898-0004 – New Technologies, Business Models, and Staff Recommendations.” MPSC Case No. U-20898. January 12, 2022.

[6] DTE Electric Company & Consumers Energy Company. “Filing U-20898-0022 – Proposed Requirements and Further Guidance on Benefit-Cost Analysis for Pilot Initiatives.” MPSC Case No. U-20898. February 1, 2023.

[7] Michigan Public Service Commission. “Filing U-20898-0040.” MPSC Case No. U-20898. October 12, 2023.

[8] Michigan Public Service Commission. “Filing U-20898-0040.” MPSC Case No. U-20898. October 12, 2023.

[9]  Michigan Public Service Commission. “Filing U-20898-0044.” MPSC Case No. U-20898. November 21, 2024.

[10] Michigan Public Service Commission. Michigan Public Service Commission. Accessed May 28, 2025. https://www.michigan.gov/mpsc.