Michigan's Existing Grid Infrastructure Test, Explained
Michigan PSC wants new grid builds to beat upgrades to existing grid infrastructure. What the proposal says, what it does not, and what to watch.
The Michigan Public Service Commission has proposed that a utility asking to build new grid assets first show the new build is more reasonable than getting more out of existing grid infrastructure. It is a recommendation to the Legislature, not a rule. Nothing in it changes what a Michigan utility must buy today. It does show where the Commission wants the burden of proof to sit if lawmakers act.
The proposal sits in a letter dated July 16, 2026, signed by Chair Dan Scripps and addressed to Governor Gretchen Whitmer in reply to her June 17 request. The Commission announced the recommendations in an August 10 news release describing them as actions “the Michigan legislature could take to tackle energy affordability.”
What the existing grid infrastructure test says
The letter files its first recommendations under a heading about utilities’ capital bias. Recommendation 2 is titled “Use more before you build more.” It has a transmission half and a distribution half.
Transmission. For certificate applications under Public Act 30 of 1995, the Commission recommends requiring transmission utilities “to demonstrate that they are making efficient use of the existing grid, including use of advanced conductors and grid enhancing technologies, in order to demonstrate the need for any new lines.” That would include a cost/benefit analysis of the new line against improving the performance of existing assets. Applicants would also have to consider existing rights of way and grid-enhancing technologies paired with upgrades to or rebuilds of existing infrastructure.
Distribution. The Commission recommends requiring distribution utilities to raise utilization of the existing grid, and allowing the MPSC to “incorporate utilization metrics into the consideration of utility cost recovery requests for capital investments.” The letter says this would be similar to legislation enacted in Virginia earlier this year.
The decision test that ties both halves together reads: “approval of the new build asset should require a demonstration that it is more reasonable than the improvement of, or enhancement to, existing assets.” New rights-of-way acquisition would face a similar standard.
That is a comparison test, not a ban. It does not prohibit new lines, substations or feeders. It asks the utility to show its work.
The ratemaking piece that sits next to it
Recommendation 1 asks the Legislature to let the Commission set multi-year rate plans “coupled with earnings tied to utility performance on core reliability and affordability metrics.” The letter notes that Michigan law currently lets utilities file for a rate increase every 12 months.
The two recommendations point the same direction. One would reward performance over spending; the other would make spending justify itself against the installed base. The letter lists 19 legislative recommendations in all, across utility capital bias, unnecessary costs, competition and customer assistance. The first two bear most directly on grid equipment. A later recommendation, on integrated resource planning, also asks for greater consideration of transmission, again including advanced conductors, grid-enhancing technologies and existing rights of way.
What it does not establish
Read carefully, the documents support less than a headline might suggest:
- It is not law. The letter recommends legislation. Its release says the Commission looks forward to working with the Legislature. Check the Michigan Legislature for an enacted bill before treating any of it as binding.
- It is not a forecast. Neither document predicts fewer new lines, more reconductoring orders or a shift in what Michigan utilities buy. Any change in project mix is a possibility to watch, not a measured outcome.
- It does not define the utilization metric. The letter does not say how distribution utilization would be measured or weighted in cost recovery. That detail would come from legislation and later Commission proceedings.
What equipment buyers should watch
If something like recommendation 2 is enacted, the paperwork behind a capital request changes before the purchase order does. For utility planners and the suppliers who serve them, that suggests a few questions to track:
- Alternatives analysis in certificate filings. Does the next Public Act 30 transmission application include a documented comparison against advanced conductors, dynamic line ratings or other grid-enhancing options? We cover how to read those evaluations in Advanced Transmission Technology: Evaluation Before Procurement.
- How distribution utilization is defined. A metric based on feeder or transformer loading would bear on replacement and upsizing decisions differently than one based on system-wide averages. Watch for the definition, not the label.
- Rate case evidence. Capital requests may start carrying utilization justifications alongside reliability ones. Our guide to reading utility rate cases as a procurement signal explains why a requested amount is not an equipment order.
- Timing. A multi-year rate plan would change when capital programs get approved, which can matter more to order timing than the size of the program.
For a related look at how utility capital is shifting toward the distribution system, see The 2026 Shift: Why Utility Spend Is Moving Down to the Distribution Grid. Any state’s version of a use-existing-assets test needs to be read in its own enacted text.
The bottom line
The Michigan PSC has put a clear test on the table: a new grid asset should be shown more reasonable than improving existing grid infrastructure, and distribution utilization could enter cost recovery decisions. Until the Legislature acts, it is a proposal. Buyers and suppliers who track Michigan capital plans should watch for an implementing bill and, if one passes, for how the utilization metric is defined.
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Related Reading
- Advanced Transmission Technology: Evaluation Before Procurement. How to separate proposal language from an operative buying requirement.
- PJM’s Order 881 Go-Live: What AAR Changes for Procurement. Why ratings rules are not the same as dynamic line rating purchases.
- Utility Rate Case Procurement: What $9.2B Misses. Reading rate cases as an equipment demand signal.
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