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A Michigan administrative law judge has recommended the state Public Service Commission reject DTE Energy Co.’s proposal for a fee on residential solar-energy generators for accessing the power grid, and backed the commission’s staff recommendation to pay individual small solar customers for providing excess electricity back to the grid.

The recommendation, issued by Judge Sally Wallace, was a partial victory for both solar advocates and DTE. The three-member MPSC is expected to vote on the DTE rate case that includes the solar rates in early May.

Both sides are expected to file additional comments to the MPSC about the judge’s recommended order, which is part of the normal utility rate case process. DTE and other interested parties typically file responses to administrative law judge recommendations, and the PSC does not have to follow them.

The MPSC said in a statement: “The commission will consider the administrative law judge’s findings and conclusions, along with the full evidentiary record, as it addresses this and other issues in DTE Electric’s rate case.”

Wallace issued her recommended order Wednesday in DTE’s overall rate proposal, which the Detroit energy company proposed in July 2018. The 318-page opinion also recommends nearly all the rate increase request of $328 million, which includes a $13 million proposal for an electric vehicle pilot charging station program. The rate increase is $196 million lower than it would have been because of federal tax reform, DTE said.

DTE’s requested rate increase would raise the average residential bill by about 9 percent, or $9.42; 4.3 percent for many commercial users; and 4.5 percent for schools, colleges and universities. The rates, if approved by the commission, would take effect in May. DTE has said it needs the increased rates to continue to improve its distribution and generation system.

In a statement Thursday, DTE said: “We are thoroughly evaluating the Administrative Law Judge’s recommendations in preparation for filing our response. This is the next step in the rate case process where all parties in the case can file a response to the (judge’s) recommendations.”

For private solar energy producers, Wallace’s order was a mixed bag. Solar power supporters had asked the commission and court to eliminate the solar access fee and maintain higher, retail rates paid to solar power producers for excess electricity they put back on the grid.

Wallace recommended against DTE’s proposed system access fee, which would have charged solar producers an average of $12.50 per month, or about $150 annually, for use of the utility grid.

But Wallace’s recommended order also would lower the rate the solar producers are currently paid for excess electricity provided back to DTE and the grid. Currently, solar producers are paid retail rates, about 13 to 14 cents per kilowatt hour.

DTE’s proposal would have lowered those rates to about 2 to 4 cents per kwh. Wallace adopted MPSC’s staff recommendation of about 8 to 9 cents per kwh.

Under the state’s 2016 energy law and MPSC regulations, the new solar excess electricity rates, if approved by the commission, would apply only to new solar customers. The current 3,100-plus solar producers are grandfathered in with the old retail rates for the next 10 years.

DTE, Consumers Energy Co. and other utilities maintain that the solar customers, which have been covered under an old state program called “net metering,” are subsidized by other ratepayers for using the grid. Solar advocates dispute that contention.

DTE argues that the solar access charge is cost-based, and it is required because “utility infrastructure costs would remain unrecovered and be shifted onto the remaining traditional customers without the additional SAC charge.”

Becky Stanfield, senior director for Midwest states at Vote Solar, a nonprofit solar advocacy group, expressed disappointment that the judge didn’t maintain higher rates.

“DTE’s proposal to charge solar customers a punitive monthly fee was unfair and did not comport with the law,” Stanfield said in a statement. “We’re glad Judge Wallace recognized that fact and rejected DTE’s attempt to impose arbitrary fees on its customers. At the same time, we’re disappointed that the recommended order would only partially credit solar customers for the full value their solar provides to the grid.”

Stanfield said DTE’s proposed rate program would cost the average residential solar customer $500 a year, including the grid charge of about $150 annually.

Solar advocates have argued that solar energy producers should receive retail rates for power they sell because they produce the power at peak times, when electricity is most expensive for all customers, and return the excess electricity to the grid, where it is then purchased at retail rates by other customers.

Overall, Wallace’s solar rate order is a compromise between what DTE wanted at 2 to 4 cents per kwh and the 12 to 13 cents per kwh currently paid to solar producers. The net effect would cut payments by about $175 per year rather than about $350 annually, according to a Crain’s analysis of figures in Wallace’s order.

Solar and environmental advocates also contend that utilities benefit from solar producers because the companies use less coal and natural gas to generate electricity, which lowers carbon emissions and harmful effects to public health and the environment.

Overall, Wallace’s solar rate order is a compromise between what DTE wanted at 2-4 cents per kwh and the 12-13 cents per kwh currently paid to solar producers. The net effect will cut payments by about $175 per year rather than about $350 annually, according to a Crain’s analysis of Wallace’s order.

In 2017, renewable energy projects increased by 28 percent in 2017, a trend of increasing numbers the past decade, according to a report issued in February by the Michigan Public Service Commission.

Some 695 Michiganders started producing their own electricity in 2017 — 93 percent of them solar energy projects — increasing the numbers to about 3,277 people participating in renewable energy, said the commission’s 9th annual Distributed Generation Program Report.

Formerly known as the net metering program, the distributed generation program allows customers to produce their own energy and use the savings to reduce their electric bills. Total electricity capacity increased by 35 percent in 2017 to 29,571 kilowatts, which represents only 0.03 percent of Michigan’s total retail electricity sales.

State energy law approved in 2016 mandated MPSC develop a plan to move from the net metering program to distributed generation. Net metering allows customers with solar panels or wind turbines, which have projects under 20 kilowatts, to receive a credit for excess electricity they produce.

Under an April order by the MPSC, customer electricity generation sent to the grid will now be reimbursed at the utility’s own avoided cost, or wholesale rates utilities purchase on auction through MISO, the regional energy management system. On the other hand, customer purchases of electricity from utilities would be priced at the full retail rate.

Total solar in Michigan is estimated to grow from 15.9 megawatts in 2016 to 144.6 megawatts in 2022, MPSC said. Residential solar installations is expected to grow from 3.2 megawatts in 2017 to 25 megawatts in 2021. Commercial and community solar are expected to grow from 10 megawatts in 2017 to 35 megawatts in 2021.

However, utility solar installations are expected to peak at about 87.3 megawatts in 2017 and slowly decline each year to 70.1 megawatts in 2021.