HOUSE BILL No. 4137

 

February 4, 2009, Introduced by Rep. Gonzales and referred to the Committee on Energy and Technology.

 

     A bill to require certain providers of electric service to

 

purchase electricity from eligible electric generators; to

 

prescribe the powers and duties of certain state agencies and

 

officials; and to provide for penalties.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1. This act shall be known and may be cited as the

 

"renewable energy sources act".

 

     Sec. 3. As used in this act:

 

     (a) "Average specific yield" means the average production in

 

kilowatt hours for the first 5 years of production of a wind-

 

powered plant, less the maximum and minimum years of production,

 

divided by the rotor-swept area in square meters.

 

     (b) "Capacity" means the electrical capacity that an eligible

 

electric generator may produce during regular operations, not


 

including standby capacity.

 

     (c) "Commission" means the Michigan public service commission.

 

     (d) "Electric utility" means that term as defined in section 2

 

of the electric transmission line certification act, 1995 PA 30,

 

MCL 460.562.

 

     (e) "Eligible electric generator" means a system for the

 

generation of electricity that is fueled by a renewable fuel in

 

this state.

 

     (f) "Reasonable profit" means a profit of not less than 10%

 

but not more than 30%.

 

     (g) "Renewable fuel" means solar, hydroelectric, wind,

 

geothermal, landfill gas, sewage treatment gas, biofuel, or

 

biomass. For the purposes of this subdivision:

 

     (i) "Biofuel" means a fuel that is composed of a gas or liquid

 

which is made entirely from biomass.

 

     (ii) "Biomass" means organic waste or dedicated crops grown for

 

energy production.

 

     (h) "Small wind turbine" means any wind turbine with a rotor

 

blade swept area of no more than 2,000 square feet.

 

     Sec. 5. (1) An electric utility shall connect an eligible

 

electric generator to the utility's distribution systems not less

 

than 30 or more than 60 days after such a request by an eligible

 

electric generator. An electric utility that violates this

 

subsection is subject to a fine of not more than $100.00 per day

 

for each day that the violation continues.

 

     (2) The commission shall establish standards for the

 

interconnection of eligible electric generators with the


 

distribution systems of electric utilities. The standards shall be

 

consistent with generally accepted industry practices and

 

guidelines and shall be established to ensure the reliability of

 

electric service and the safety of customers, utility employees,

 

and the general public. The costs associated with the

 

interconnection of eligible electric generators shall be included

 

in the surcharge under subsection (4).

 

     (3) Electric utilities shall enter into power purchase

 

agreements for a term of not less than 20 years to purchase all

 

electricity from eligible electric generators in this state at the

 

following rates set by the commission:

 

     (a) For electricity generated by hydroelectric power, the rate

 

needed for development plus a reasonable profit, but not less than

 

the following:

 

     (i) $0.10 per kilowatt hour for projects with a capacity less

 

than 500 kilowatts.

 

     (ii) $0.085 per kilowatt hour for projects with a capacity of

 

at least 500 kilowatts but not greater than 10 megawatts.

 

     (iii) $0.065 per kilowatt hour for projects with a capacity

 

greater than 10 megawatts but not greater than 20 megawatts.

 

     (b) For electricity generated by landfill gas or sewage

 

treatment gas, the rate needed for development plus a reasonable

 

profit, but not less than the following:

 

     (i) $0.10 per kilowatt hour for projects with a capacity less

 

than 500 kilowatts.

 

     (ii) $0.085 per kilowatt hour for projects with a capacity

 

equal to or greater than 500 kilowatts.


 

     (c) For electricity generated by biofuel, the rate needed for

 

development plus a reasonable profit, but not less than the

 

following:

 

     (i) $0.145 per kilowatt hour for projects with a capacity less

 

than 150 kilowatts.

 

     (ii) $0.125 per kilowatt hour for projects with a capacity of

 

at least 150 kilowatts but not greater than 500 kilowatts.

 

     (iii) $0.115 per kilowatt hour for projects with a capacity

 

greater than 500 kilowatts but not greater than 5 megawatts.

 

     (iv) $0.105 per kilowatt hour for projects with a capacity

 

greater than 5 megawatts but not greater than 20 megawatts.

 

     (d) For electricity generated by geothermal energy plants, the

 

rate needed for development plus a reasonable profit, but not less

 

than the following:

 

     (i) $0.19 per kilowatt hour for projects with a capacity less

 

than 5 megawatts.

 

     (ii) $0.18 per kilowatt hour for projects with a capacity of at

 

least 5 megawatts but not greater than 10 megawatts.

 

     (iii) $0.115 per kilowatt hour for projects with a capacity

 

greater than 10 megawatts but not greater than 20 megawatts.

 

     (iv) $0.09 per kilowatt hour for projects with a capacity

 

greater than 20 megawatts.

 

     (e) For electricity generated by wind-powered plants, the rate

 

needed for development plus a reasonable profit, but not less than

 

the following:

 

     (i) For years 1 through 5, $0.105 per kilowatt hour.

 

     (ii) For years 6 through 20, $0.105 per kilowatt hour for


 

projects with an average specific yield less than 700 kilowatt

 

hours per square meter per year.

 

     (iii) For years 6 through 20, $0.08 per kilowatt hour for

 

projects with an average specific yield greater than 1,100 kilowatt

 

hours per square meter per year.

 

     (iv) For years 6 through 20, for projects with an average

 

specific yield greater than 700 kilowatt hours per square meter per

 

year but less than 1,100 kilowatt hours per square meter per year

 

shall be paid a rate that is a linear extrapolation between the

 

rate at 700 kilowatt hours per square meter per year to 1,100

 

kilowatt hours per square meter per year.

 

     (v) For small wind turbines, $0.25 per kilowatt hour.

 

     (f) For electricity generated by solar-powered plants, the

 

rate needed for development plus a reasonable profit, but not less

 

than the following:

 

     (i) $0.50 per kilowatt hour for free standing or open field

 

projects.

 

     (ii) $0.65 per kilowatt hour for rooftop projects with a

 

capacity less than 30 kilowatts.

 

     (iii) $0.62 per kilowatt hour for rooftop projects with a

 

capacity of at least 30 kilowatts but not greater than 100

 

kilowatts.

 

     (iv) $0.61 per kilowatt hour for rooftop projects with a

 

capacity greater than 100 kilowatts.

 

     (v) $0.71 per kilowatt hour for façade cladding projects with

 

a capacity less than 30 kilowatts.

 

     (vi) $0.68 per kilowatt hour for façade cladding projects with


 

a capacity of at least 30 kilowatts but not greater than 100

 

kilowatts.

 

     (vii) $0.67 per kilowatt hour for façade cladding projects with

 

a capacity greater than 100 kilowatts.

 

     (4) The commission shall, after notice and hearing, annually

 

approve a renewable energy factor that shall be a nonbypassable

 

surcharge payable by every customer of an alternative electric

 

supplier, cooperative electric utility, electric utility, or

 

municipal utility. The surcharge shall be payable by all customer

 

classes. The commission shall set the surcharge at a level

 

sufficient to pay the costs of electricity purchased under

 

subsection (3) and any interconnection costs under subsection (2).

 

     (5) The commission shall approve a standard contract to be

 

used in all power purchase agreements under this act. The contract

 

must include the prices paid for each kilowatt hour generated, the

 

duration of the contract, and any adjustments of those prices for

 

inflation. The commission shall provide utilities with standard

 

contracts within 3 months after the effective date of this act.

 

     (6) The commission shall review the rates in subsection (3)

 

every 2 years and adjust those rates as necessary to account for

 

inflation, assist in the profitable development of eligible

 

electric generators, prevent excessive profits for eligible

 

electric generators, and prevent unnecessary costs to ratepayers.

 

The commission shall reduce the rates in subsection (3) to reflect

 

any federal or state subsidies, tax credits, or other incentives

 

that an eligible electric generator is receiving.

 

     (7) In each of the first 2 years after the effective date of


 

this act and every 4 years thereafter, the commission shall file a

 

report with the governor and legislature that shall include all of

 

the following:

 

     (a) The number of new eligible electric generators in this

 

state and the environmental effects of the addition of those

 

generators.

 

     (b) Recommendations for legislation and changes to the rates

 

in subsection (3), if any.

 

     (c) Actions taken by the commission to implement this act.

 

     (8) Eligible electric generators shall, upon request, provide

 

the commission any information that may be relevant to the

 

commission performing its duties under this act.