Bill Text: MI HB4631 | 2015-2016 | 98th Legislature | Introduced

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Bill Title: Public utilities; electric utilities; use of securitization bonds for funding of retired generating plants; allow. Amends secs. 10h & 10i of 1939 PA 3 (MCL 460.10h & 460.10i).

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2015-05-21 - Printed Bill Filed 05/21/2015 [HB4631 Detail]

Download: Michigan-2015-HB4631-Introduced.html

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HOUSE BILL No. 4631

 

May 20, 2015, Introduced by Reps. Price, Glenn, Lucido, Lane and Byrd and referred to the Committee on Energy Policy.

 

     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

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 provide for a

restructuring of the manner in which energy is provided in this

state; 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 10h and 10i (MCL 460.10h and 460.10i), as

added by 2000 PA 142.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 10h. As used in this act:

 

     (a) "Assignee" means an individual, corporation, or other

 

legally recognized entity to which an interest in securitization

 

property is transferred.

 

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

 

in the department of consumer and industry services.

 

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

 

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

 

MCL 460.562.

 

     (d) "Financing order" means an order of the commission

 

approving the issuance of securitization bonds and the creation of

 

securitization charges and any corresponding utility rate

 

reductions.

 

     (e) "Financing party" means a holder of securitization bonds,

 

including trustees, collateral agents, and other persons acting for

 

the benefit of the holder.

 

     (f) "Nonbypassable charge" means a charge in a financing order

 

payable by a customer receiving standard tariff service to an

 

electric utility or its assignees or successors. regardless of the

 

identity of the customer's electric generation supplier.

 

     (g) "Qualified costs" means an electric utility's regulatory

 

assets as determined by the commission, adjusted by the applicable

 

portion of related investment tax credits, plus any costs that the

 

commission determines that the electric utility would be unlikely

 

to collect in a competitive market, including, but not limited to,

retail open access implementation costs and the costs of a

 

commission approved restructuring, buyout or buy-down of a power

 

purchase contract, together with the costs of issuing, supporting,

 

and servicing securitization bonds and any costs of retiring and

 

refunding the electric utility's existing debt and equity

 

securities in connection with the issuance of securitization bonds.

 

Qualified costs include taxes related to the recovery of

 

securitization charges.

 

     (h) "Securitization bonds" means bonds, debentures, notes,

 

certificates of participation, certificates of a beneficial

 

interest, certificates of ownership, or other evidences of

 

indebtedness that are issued by an electric utility, its

 

successors, or an assignee under a financing order, that have a

 

term of not more than 15 years, and that are secured by or payable

 

from securitization property. If certificates of participation,

 

certificates of a beneficial interest, or certificates of ownership

 

are issued, references in this act to principal, interest, or

 

premium shall refer to comparable amounts under those certificates.

 

     (i) "Securitization charges" means nonbypassable amounts to be

 

charged for the use or availability of electric services, approved

 

by the commission under a financing order to fully recover

 

qualified costs, that shall be collected by an electric utility,

 

its successors, an assignee, or other collection agents as provided

 

for in the financing order.

 

     (j) "Securitization property" means the property described in

 

section 10j.

 

     (k) "Standard tariff service" means that term as defined in

section 10a.

 

     Sec. 10i. (1) Upon the application of an electric utility, if

 

the commission finds that the net present value of the revenues to

 

be collected under the financing order is less than the amount that

 

would be recovered over the remaining life of the qualified costs

 

using conventional financing methods and that the financing order

 

is consistent with the standards in subsection (2), the commission

 

shall issue a financing order to allow the utility to recover

 

qualified costs. An electric utility shall apply for a financing

 

order to finance the unrecovered book value of and demolition costs

 

associated with retiring any electric generation facility after the

 

effective date of the 2015 amendatory act that amended this

 

section.

 

     (2) In a financing order, the commission shall ensure all of

 

the following:

 

     (a) That the proceeds of the securitization bonds are used

 

solely for the purposes of the refinancing or retirement of debt or

 

equity.

 

     (b) That securitization provides tangible and quantifiable

 

benefits to customers of the electric utility.

 

     (c) That the expected structuring and expected pricing of the

 

securitization bonds will result in the lowest securitization

 

charges consistent with market conditions and the terms of the

 

financing order.

 

     (d) That the amount securitized does not exceed the net

 

present value of the revenue requirement over the life of the

 

proposed securitization bonds associated with the qualified costs

sought to be securitized.

 

     (e) That a customer taking service from an alternative

 

electric supplier will not be assessed any charge relating to the

 

retirement of any electric generation facility.

 

     (3) The financing order shall detail the amount of qualified

 

costs to be recovered and the period over which the securitization

 

charges are to be recovered, not to exceed 15 years.

 

     (4) A financing order is effective in accordance with its

 

terms, and the financing order, together with the securitization

 

charges authorized in the order, shall be is irrevocable and not

 

subject to reduction, impairment, or adjustment by further action

 

of the commission, except as provided under section 10k(3).

 

     (5) Stocks, bonds, notes, or other evidence of indebtedness

 

issued under a financing order of the commission shall be are

 

binding in accordance with their terms notwithstanding that the

 

order of the commission is later vacated, modified, or otherwise

 

held to be invalid in whole or in part.

 

     (6) The commission shall after an expedited contested case

 

proceeding issue a financing order or an order rejecting the

 

application for a financing order no later than 90 days after the

 

electric utility files its application.

 

     (7) A financing order is only subject to rehearing by the

 

commission on the motion of the applicant for securitization.

 

     (8) Notwithstanding any other provision of law, a financing

 

order may be reviewed by the court of appeals upon a filing by a

 

party to the commission proceeding within 30 days after the

 

financing order is issued. All appeals of a financing order shall

be heard and determined as expeditiously as possible with lawful

 

precedence over other matters. Review on appeal shall be based

 

solely on the record before the commission and briefs to the court

 

and shall be limited to whether the financing order conforms to the

 

constitution and laws of this state and the United States and is

 

within the authority of the commission under this act.

 

     (9) At the request of an electric utility, the commission may

 

adopt a financing order providing for retiring and refunding

 

securitization bonds if the commission finds that the future

 

securitization charges required to service the new securitization

 

bonds, including transaction costs, will be less than the future

 

securitization charges required to service the securitization bonds

 

being refunded. On the retirement of the refunded securitization

 

bonds, the commission shall adjust the related securitization

 

charges accordingly.

 

     (10) The commission shall have the authority to may retain

 

financial or legal services to assist in issuance of a financing

 

order and to require the electric utility to pay the cost of the

 

services. The payments shall be included as qualified costs defined

 

in section 10h(g).

 

     Enacting section 1. This amendatory act takes effect 90 days

 

after the date it is enacted into law.