MPSC Ruling Protects DTE Ratepayers from Fermi 3 Fiasco, for now…

(Originally published December 31, 2015 on

Great news!! On December 11, 2015, the Michigan Public Service Commission (MPSC) issued a decisive ruling in Case No. U-17767 (in particular, see pages 36-39 of the Order) which completely rejected DTE Electric Company’s request for reimbursement from DTE customers for the $102 million which the utility budgeted to complete a federal license application to construct and operate a potential Fermi 3 Nuclear Power Plant in Southeast Michigan.

Congratulations and many thanks to the legal Intervenors (including Michigan Environmental Council (MEC), Natural Resources Defense Council (NRDC), Sierra Club (SC), Environmental Law & Policy Center (ELPC), Public Law Resource Center (PLRC), and others) for achieving a great victory in a year-long rate case brought before the Public Service Commissioners in Lansing. Although the MPSC did approve DTE’s application for a utility customer rate increase (also called cost recovery or rate relief), the ruling struck down DTE’s attempt to charge ratepayers for a nuclear power plant that does not and may never exist.

The MPSC’s Order U-17767 effectively prohibits DTE from unleashing a form of Construction Work in Progress (CWIP) financing to recover expenditures for the Fermi project’s first stage, that is, the federal license (COL) application. Although this year the U.S. NRC approved and issued a Fermi 3 license to DTE, the utility has not publicly committed to building the uranium-fueled plant and has not filed for a Certificate of Need from the MPSC in order to add the new electric power generation facility to the rate base.

However, lest we become complacent about Fermi 3, there is a big caveat in the MPSC’s ruling. The MPSC Order (see pages 36-39) reminds us clearly that CWIP financing is legal and available in the State of Michigan through the MPSC’s Certificate of Need process. Therefore, DTE may eventually seek to recover all accrued expenditures related to the Fermi 3 construction project, including the licensing costs, through a CWIP financing scheme sanctioned by the MPSC. Construction Work in Progress (CWIP) is a financing tool which utility companies use to profitably recover costs of large, new projects in advance of completion and prior to receiving any certification of usability.

Additionally of concern, the MPSC Order points out that DTE’s federal license for Fermi 3 has no expiration date and is a transferable, salable asset. Look out, folks. Further, know that DTE Electric Company values having the option to expand its existing Fermi 2 atomic reactor facility in Southeast Michigan and is currently engaged in a contested license renewal application to operate Fermi 2 until 2045. DTE has indicated that the nuclear option is important for its strategic, long-term planning and portfolio diversification, even while it does not need or intend to build the new Fermi 3 plant in order to comply with federal requirements for implementing greenhouse gas emissions reductions by 2030.

Noteworthy, DTE and GE-Hitachi recently announced a joint agreement to continue working together to advance the design of the unprecedented, newly-approved ESBWR atomic fission reactor, which would serve as the reference for the Fermi 3 project. Meanwhile, based on recent economic data from the Vogtle nuclear project in Georgia and North Anna 3 proposal in Virginia as well as the independent assessment of expert analysts, it is now reasonable to estimate that Fermi 3 would cost DTE ratepayers at least twenty billion dollars just for construction, not including the cost of operation or decommissioning. No wonder DTE is the only utility company in the Midwest actively pursuing a potential new nuclear reactor.

Thus, our fight goes on, and indeed, another coalition of legal Intervenors is challenging the Fermi 3 construction and operating license through the federal court system. So, therefore, let’s continue to work hard to ensure that the State of Michigan transitions from coal to renewables and not more deeply into the uranium/plutonium fuel cycle. Michiganders can do better than that. Together, we can create a truly Pure Michigan powered by 100% renewable energy by 2050.

David Schonberger
Ann Arbor, MI

Board Member; Legal/Legislative Committee Chair, Alliance to Halt Fermi 3 (ATHF3)

Leave a Reply

Your email address will not be published. Required fields are marked *