Bill Text: MI HB4433 | 2019-2020 | 100th Legislature | Introduced

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Bill Title: Public utilities: rates; power to set rates for certain water and sewer authorities; grant to public service commission. Amends secs. 6 & 6a of 1939 PA 3 (MCL 460.6 & 460.6a) & adds sec. 6aa.

Spectrum: Partisan Bill (Democrat 9-0)

Status: (Introduced - Dead) 2019-04-10 - Bill Electronically Reproduced 04/09/2019 [HB4433 Detail]

Download: Michigan-2019-HB4433-Introduced.html

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HOUSE BILL No. 4433

 

 

April 9, 2019, Introduced by Reps. Hope, Cherry, Garrett, Garza, Whitsett, Hammoud, Neeley, Camilleri and Gay-Dagnogo and referred to the Committee on Local Government and Municipal Finance.

 

     A bill to amend 1939 PA 3, entitled

 

"An act to provide for the regulation and control of public and

certain private utilities and other services affected with a public

interest within this state; to provide for alternative energy

suppliers; to provide for licensing; to include municipally owned

utilities and other providers of energy under certain provisions of

this act; to create a public service commission and to prescribe

and define its powers and duties; to abolish the Michigan public

utilities commission and to confer the powers and duties vested by

law on the public service commission; to provide for the powers and

duties of certain state governmental officers and entities; to

provide for the continuance, transfer, and completion of certain

matters and proceedings; to abolish automatic adjustment clauses;

to prohibit certain rate increases without notice and hearing; to

qualify residential energy conservation programs permitted under

state law for certain federal exemption; to create a fund; to

encourage the utilization of resource recovery facilities; to

prohibit certain acts and practices of providers of energy; to

allow for the securitization of stranded costs; to reduce rates; to

provide for appeals; to provide appropriations; to declare the

effect and purpose of this act; to prescribe remedies and

penalties; and to repeal acts and parts of acts,"

 

by amending sections 6 and 6a (MCL 460.6 and 460.6a), section 6 as

amended by 2005 PA 190 and section 6a as amended by 2016 PA 341,

 

and by adding section 6aa.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 6. (1) The public service commission is vested with

 

complete power and jurisdiction to regulate all public utilities in

 

the state except a municipally owned electric or natural gas

 

utility, the owner of a renewable resource power production

 

facility as provided in section 6d, and except as otherwise

 

restricted by law. The public service commission is vested with the

 

power and jurisdiction to regulate all rates, fares, fees, charges,

 

services, rules, conditions of service, and all other matters

 

pertaining to the formation, operation, or direction of public

 

utilities. The public service commission is further granted the

 

power and jurisdiction to hear and pass upon all matters pertaining

 

to, necessary, or incident to the regulation of public utilities,

 

including electric light and power companies, whether private,

 

corporate, or cooperative; water, including municipally owned water

 

and sewage systems; telegraph, oil, gas, and pipeline companies;

 

motor carriers; private wastewater treatment facilities; and all

 

public transportation and communication agencies other than

 

railroads and railroad companies.

 

     (2) A private, investor-owned wastewater utility may apply to

 

the commission for rate regulation. If an application is filed

 

under this subsection, the commission is vested with the specific

 

grant of jurisdictional authority to regulate the rates, fares,

 

fees, and charges of private, investor-owned wastewater utilities.

 

As used in this subsection, "private, investor-owned wastewater

 

utilities" utility" means a utility that delivers wastewater

 

treatment services through a sewage system and the physical assets

 

of which are wholly owned by an individual or group of individual

 

shareholders.

 

     Sec. 6a. (1) A gas utility, electric utility, water utility,

 

or steam utility shall not increase its rates and charges or alter,

 

change, or amend any rate or rate schedules, the effect of which

 

will be to increase the cost of services to its customers, without

 

first receiving commission approval as provided in this section. A

 

utility shall coordinate with the commission staff in advance of

 

filing its general rate case application under this section to

 

avoid resource challenges with applications being filed at the same

 

time as applications filed under this section by other utilities.

 

In the case of electric utilities serving more than 1,000,000

 

customers in this state, the commission may, if necessary, order a

 

delay in filing an application to establish a 21-day spacing

 

between filings of electric utilities serving more than 1,000,000

 

customers in this state. The utility shall place in evidence facts

 

relied upon to support the utility's petition or application to

 

increase its rates and charges, or to alter, change, or amend any

 

rate or rate schedules. The commission shall require notice to be

 

given to all interested parties within the service area to be

 

affected, and all interested parties shall have a reasonable

 

opportunity for a full and complete hearing. A utility may use

 

projected costs and revenues for a future consecutive 12-month

 

period in developing its requested rates and charges. The

 

commission shall notify the utility within 30 days after filing,

whether the utility's petition or application is complete. A

 

petition or application is considered complete if it complies with

 

the rate application filing forms and instructions adopted under

 

subsection (8). If the application is not complete, the commission

 

shall notify the utility of all information necessary to make that

 

filing complete. If the commission has not notified the utility

 

within 30 days of whether the utility's petition or application is

 

complete, the application is considered complete. Concurrently with

 

filing a complete application, or at any time after filing a

 

complete application, a gas utility serving fewer than 1,000,000

 

customers in this state may file a motion seeking partial and

 

immediate rate relief. After providing notice to the interested

 

parties within the service area to be affected and affording

 

interested parties a reasonable opportunity to present written

 

evidence and written arguments relevant to the motion seeking

 

partial and immediate rate relief, the commission shall make a

 

finding and enter an order granting or denying partial and

 

immediate relief within 180 days after the motion seeking partial

 

and immediate rate relief was submitted. The commission has 12

 

months to issue a final order in a case in which a gas utility has

 

filed a motion seeking partial and immediate rate relief.

 

     (2) If the commission has not issued an order within 180 days

 

of the filing of a complete application, the utility may implement

 

up to the amount of the proposed annual rate request through equal

 

percentage increases or decreases applied to all base rates. If the

 

utility uses projected costs and revenues for a future period in

 

developing its requested rates and charges, the utility may not

implement the equal percentage increases or decreases before the

 

calendar date corresponding to the start of the projected 12-month

 

period. For good cause, the commission may issue a temporary order

 

preventing or delaying a utility from implementing its proposed

 

rates or charges. If a utility implements increased rates or

 

charges under this subsection before the commission issues a final

 

order, that utility shall refund to customers, with interest, any

 

portion of the total revenues collected through application of the

 

equal percentage increase that exceed the total that would have

 

been produced by the rates or charges subsequently ordered by the

 

commission in its final order. The commission shall allocate any

 

refund required by this subsection among primary customers based

 

upon their pro rata share of the total revenue collected through

 

the applicable increase, and among secondary and residential

 

customers in a manner to be determined by the commission. The rate

 

of interest for refunds shall equal 5% plus the London interbank

 

offered rate (LIBOR) for the appropriate time period. For any

 

portion of the refund that, exclusive of interest, exceeds 25% of

 

the annual revenue increase awarded by the commission in its final

 

order, the rate of interest shall be the authorized rate of return

 

on the common stock of the utility during the appropriate period.

 

Any refund or interest awarded under this subsection shall not be

 

included, in whole or in part, in any application for a rate

 

increase by a utility. This subsection only applies to completed

 

applications filed with the commission before the effective date of

 

the amendatory act that added section 6t.April 20, 2017.

 

     (3) This section does not impair the commission's ability to

issue a show cause order as part of its rate-making authority. An

 

alteration or amendment in rates or rate schedules applied for by a

 

public utility that will not result in an increase in the cost of

 

service to its customers may be authorized and approved without

 

notice or hearing. There shall be no increase in rates based upon

 

changes in cost of fuel, purchased gas, or purchased steam unless

 

notice has been given within the service area to be affected, and

 

there has been an opportunity for a full and complete hearing on

 

the cost of fuel, purchased gas, or purchased steam. The rates

 

charged by any utility under an automatic fuel, purchased gas, or

 

purchased steam adjustment clause shall must not be altered,

 

changed, or amended unless notice has been given within the service

 

area to be affected, and there has been an opportunity for a full

 

and complete hearing on the cost of the fuel, purchased gas, or

 

purchased steam.

 

     (4) The commission shall adopt rules and procedures for the

 

filing, investigation, and hearing of petitions or applications to

 

increase or decrease utility rates and charges as the commission

 

finds necessary or appropriate to enable it to reach a final

 

decision with respect to petitions or applications within a period

 

of time allotted by law to issue a final order after the filing of

 

the complete petitions or applications. The commission shall not

 

authorize or approve adjustment clauses that operate without notice

 

and an opportunity for a full and complete hearing, and all such

 

clauses are abolished. The commission may hold a full and complete

 

hearing to determine the cost of fuel, purchased gas, purchased

 

steam, or purchased power separately from a full and complete

hearing on a general rate case and may hold that hearing

 

concurrently with the general rate case. The commission shall

 

authorize a utility to recover the cost of fuel, purchased gas,

 

purchased steam, or purchased power only to the extent that the

 

purchases are reasonable and prudent.

 

     (5) Except as otherwise provided in this subsection and

 

subsection (1), if the commission fails to reach a final decision

 

with respect to a completed petition or application to increase or

 

decrease utility rates within the 10-month period following the

 

filing of the completed petition or application, the petition or

 

application is considered approved. If a utility makes any

 

significant amendment to its filing, the commission has an

 

additional 10 months after the date of the amendment to reach a

 

final decision on the petition or application. If the utility files

 

for an extension of time, the commission shall extend the 10-month

 

period by the amount of additional time requested by the utility.

 

     (6) A utility shall not file a general rate case application

 

for an increase in rates earlier than 12 months after the date of

 

the filing of a complete prior general rate case application. A

 

utility may not file a new general rate case application until the

 

commission has issued a final order on a prior general rate case or

 

until the rates are approved under subsection (5).

 

     (7) The commission shall, if requested by a gas utility,

 

establish load retention transportation rate schedules or approve

 

gas transportation contracts as required for the purpose of serving

 

industrial or commercial customers whose individual annual

 

transportation volumes exceed 500,000 decatherms on the gas

utility's system. The commission shall approve these rate schedules

 

or approve transportation contracts entered into by the utility in

 

good faith if the industrial or commercial customer has the

 

installed capability to use an alternative fuel or otherwise has a

 

viable alternative to receiving natural gas transportation service

 

from the utility, the customer can obtain the alternative fuel or

 

gas transportation from an alternative source at a price that would

 

cause them not to use the gas utility's system, and the customer,

 

as a result of their use of the system and receipt of

 

transportation service, makes a significant contribution to the

 

utility's fixed costs. The commission shall adopt accounting and

 

rate-making policies to ensure that the discounts associated with

 

the transportation rate schedules and contracts are recovered by

 

the gas utility through charges applicable to other customers if

 

the incremental costs related to the discounts are no greater than

 

the costs that would be passed on to those customers as the result

 

of a loss of the industrial or commercial customer's contribution

 

to a utility's fixed costs.

 

     (8) The commission shall adopt standard rate application

 

filing forms and instructions for use in all general rate cases

 

filed by utilities whose rates are regulated by the commission. For

 

cooperative electric utilities whose rates are regulated by the

 

commission, in addition to rate applications filed under this

 

section, the commission shall continue to allow for rate filings

 

based on the cooperative's times interest earned ratio. The

 

commission may modify the standard rate application forms and

 

instructions adopted under this subsection.

     (9) If, on or before January 1, 2008, a merchant plant entered

 

into a contract with an initial term of 20 years or more to sell

 

electricity to an electric utility whose rates are regulated by the

 

commission with 1,000,000 or more retail customers in this state

 

and if, before January 1, 2008, the merchant plant generated

 

electricity under that contract, in whole or in part, from wood or

 

solid wood wastes, then the merchant plant shall, upon petition by

 

the merchant plant, and subject to the limitation set forth in

 

subsection (10), recover the amount, if any, by which the merchant

 

plant's reasonably and prudently incurred actual fuel and variable

 

operation and maintenance costs exceed the amount that the merchant

 

plant is paid under the contract for those costs. This subsection

 

does not apply to landfill gas plants, hydro plants, municipal

 

solid waste plants, or to merchant plants engaged in litigation

 

against an electric utility seeking higher payments for power

 

delivered pursuant to contract.

 

     (10) The total aggregate additional amounts recoverable by

 

merchant plants under subsection (9) in excess of the amounts paid

 

under the contracts shall not exceed $1,000,000.00 per month for

 

each affected electric utility. The $1,000,000.00 per month limit

 

specified in this subsection shall must be reviewed by the

 

commission upon petition of the merchant plant filed no more than

 

once per year and may be adjusted if the commission finds that the

 

eligible merchant plants reasonably and prudently incurred actual

 

fuel and variable operation and maintenance costs exceed the amount

 

that those merchant plants are paid under the contract by more than

 

$1,000,000.00 per month. The annual amount of the adjustments shall

must not exceed a rate equal to the United States consumer price

 

index. Consumer Price Index. The commission shall not make an

 

adjustment unless each affected merchant plant files a petition

 

with the commission. If the total aggregate amount by which the

 

eligible merchant plants reasonably and prudently incurred actual

 

fuel and variable operation and maintenance costs determined by the

 

commission exceed the amount that the merchant plants are paid

 

under the contract by more than $1,000,000.00 per month, the

 

commission shall allocate the additional $1,000,000.00 per month

 

payment among the eligible merchant plants based upon the

 

relationship of excess costs among the eligible merchant plants.

 

The $1,000,000.00 limit specified in this subsection, as adjusted,

 

does not apply to actual fuel and variable operation and

 

maintenance costs that are incurred due to changes in federal or

 

state environmental laws or regulations that are implemented after

 

October 6, 2008. The $1,000,000.00 per month payment limit under

 

this subsection does not apply to merchant plants eligible under

 

subsection (9) whose electricity is purchased by a utility that is

 

using wood or wood waste or fuels derived from those materials for

 

fuel in their power plants. As used in this subsection, "United

 

States consumer price index" Consumer Price Index" means the United

 

States consumer price index Consumer Price Index for all urban

 

consumers as defined and reported by the United States Department

 

of Labor, Bureau of Labor Statistics.

 

     (11) The commission shall issue orders to permit the recovery

 

authorized under subsections (9) and (10) upon petition of the

 

merchant plant. The merchant plant is not required to alter or

amend the existing contract with the electric utility in order to

 

obtain the recovery under subsections (9) and (10). The commission

 

shall permit or require the electric utility whose rates are

 

regulated by the commission to recover from its ratepayers all fuel

 

and variable operation and maintenance costs that the electric

 

utility is required to pay to the merchant plant as reasonably and

 

prudently incurred costs.

 

     (12) Subject to subsection (13), if requested by an electric

 

utility with less than 200,000 customers in this state, the

 

commission shall approve an appropriate revenue decoupling

 

mechanism that adjusts for decreases in actual sales compared to

 

the projected levels used in that utility's most recent rate case

 

that are the result of implemented energy waste reduction,

 

conservation, demand-side programs, and other waste reduction

 

measures, if the utility first demonstrates the following to the

 

commission:

 

     (a) That the projected sales forecast in the utility's most

 

recent rate case is reasonable.

 

     (b) That the electric utility has achieved annual incremental

 

energy savings at least equal to the lesser of the following:

 

     (i) One percent of its total annual retail electricity sales

 

in the previous year.

 

     (ii) The amount of any incremental savings yielded by energy

 

waste reduction, conservation, demand-side programs, and other

 

waste reduction measures approved by the commission in that

 

utility's most recent integrated resource plan.

 

     (13) The commission shall consider the aggregate revenues

attributable to revenue decoupling mechanisms, financial

 

incentives, and shared savings mechanisms the commission has

 

approved for an electric utility relative to energy waste

 

reduction, conservation, demand-side programs, peak load reduction,

 

and other waste reduction measures. The commission may approve an

 

alternative methodology for a revenue decoupling mechanism

 

authorized under subsection (12), a financial incentive authorized

 

under section 75 of the clean and renewable energy and energy waste

 

reduction act, 2008 PA 295, MCL 460.1075, or a shared savings

 

mechanism authorized under section 6x if the commission determines

 

that the resulting aggregate revenues from those mechanisms would

 

not result in a reasonable and cost-effective method to ensure that

 

investments in energy waste reduction, demand-side programs, peak

 

load reduction, and other waste reduction measures are not

 

disfavored when compared to utility supply-side investments. The

 

commission's consideration of an alternative methodology under this

 

subsection shall be conducted as a contested case pursuant to

 

chapter 4 of the administrative procedures act of 1969, 1969 PA

 

306, MCL 24.271 to 24.287.24.288.

 

     (14) Within 1 year after the effective date of the amendatory

 

act that added this subsection, By April 20, 2018, the commission

 

shall conduct a study on an appropriate tariff reflecting equitable

 

cost of service for utility revenue requirements for customers who

 

participate in a net metering program or distributed generation

 

program under the clean and renewable energy and energy waste

 

reduction act, 2008 PA 295, MCL 460.1001 to 460.1211. In any rate

 

case filed after June 1, 2018, the commission shall approve such a

tariff for inclusion in the rates of all customers participating in

 

a net metering or distributed generation program under the clean

 

and renewable energy and energy waste reduction act, 2008 PA 295,

 

MCL 460.1001 to 460.1211. A tariff established under this

 

subsection does not apply to customers participating in a net

 

metering program under the clean and renewable energy and energy

 

waste reduction act, 2008 PA 295, MCL 460.1001 to 460.1211, before

 

the date that the commission establishes a tariff under this

 

subsection, who continues continue to participate in the program at

 

their current site or facility.

 

     (15) Except as otherwise provided in this act, "utility" and

 

"electric utility" do not include a municipally owned electric

 

utility.

 

     (16) As used in this section:

 

     (a) "Full and complete hearing" means a hearing that provides

 

interested parties a reasonable opportunity to present and cross-

 

examine evidence and present arguments relevant to the specific

 

element or elements of the request that are the subject of the

 

hearing.

 

     (b) "General rate case" means a proceeding initiated by a

 

utility in an application filed with the commission that alleges a

 

revenue deficiency and requests an increase in the schedule of

 

rates or charges based on the utility's total cost of providing

 

service.

 

     (c) "Steam utility" means a steam distribution company

 

regulated by the commission.

 

     (d) "Water utility" means a water or sewage system regulated

by the commission.

 

     Sec. 6aa. (1) The public service commission is vested with the

 

power and jurisdiction to regulate all rates, fares, fees, and

 

charges of any water or sewage system that provides water supply

 

service or sewage service, or both, in this state.

 

     (2) The public service commission shall, within 1 year after

 

the effective date of the amendatory act that added this section,

 

study the possibility of establishing a uniform system of accounts

 

for use by providers of water and sewerage service and make

 

recommendations to the governor and legislature.

 

     Enacting section 1. This amendatory act takes effect 90 days

 

after the date it is enacted into law.