Bill Text: MI HB5760 | 2011-2012 | 96th Legislature | Introduced

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Bill Title: Energy; alternative sources; renewable portfolio standard; increase to 30% by 2025. Amends secs. 27, 31 & 47 of 2008 PA 295 (MCL 460.1027 et seq.).

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2012-07-18 - Printed Bill Filed 06/15/2012 [HB5760 Detail]

Download: Michigan-2011-HB5760-Introduced.html

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HOUSE BILL No. 5760

 

June 14, 2012, Introduced by Rep. Olumba and referred to the Committee on Energy and Technology.

 

     A bill to amend 2008 PA 295, entitled

 

"Clean, renewable, and efficient energy act,"

 

by amending sections 27, 31, and 47 (MCL 460.1027, 460.1031, and

 

460.1047).

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 27. (1) Subject to sections 31 and 45, and in addition to

 

the requirements of subsection (3), an electric provider that is an

 

electric utility with 1,000,000 or more retail customers in this

 

state as of January 1, 2008 shall achieve a renewable energy

 

capacity portfolio of not less than the following:

 

     (a) For an electric provider with more than 1,000,000 but less

 

than 2,000,000 retail electric customers in this state on January

 

1, 2008, a renewable energy capacity portfolio of 200 megawatts by

 

December 31, 2013, and 500 584 megawatts by December 31, 2015, and

 

1,080 megawatts by December 31, 2025.

 

     (b) For an electric provider with more than 2,000,000 retail

 

electric customers in this state on January 1, 2008, a renewable

 

energy capacity portfolio of 300 megawatts by December 31, 2013,

 

and 600 megawatts by December 31, 2015, and 1,100 megawatts by

 

December 31, 2025.

 

     (2) An electric provider's renewable energy capacity portfolio

 

shall be calculated by adding the following:

 

     (a) The nameplate capacity in megawatts of renewable energy

 

systems owned by the electric provider that were not in commercial

 

operation before the effective date of this act October 6, 2008.

 

     (b) The capacity in megawatts of renewable energy that the

 

electric provider is entitled to purchase under contracts that were

 

not in effect before the effective date of this act October 6,

 

2008.

 

     (3) Subject to sections 31 and 45, an electric provider shall

 

achieve a renewable energy credit portfolio as follows:

 

     (a) In 2012, 2013, 2014, and 2015, a renewable energy credit

 

portfolio based on the sum of the following:

 

     (i) The number of renewable energy credits from electricity

 

generated in the 1-year period preceding the effective date of this

 

act October 6, 2008 that would have been transferred to the

 

electric provider pursuant to section 35(1), if this act had been

 

in effect during that 1-year period.

 

     (ii) The number of renewable energy credits equal to the number

 

of megawatt hours of electricity produced or obtained by the

 

electric provider in the 1-year period preceding the effective date

 

of this act October 6, 2008 from renewable energy systems for which

 

recovery in electric rates was approved on the effective date of

 

this act as of October 6, 2008.

 

     (iii) Renewable energy credits in an amount calculated as

 

follows:

 

     (A) Taking into account the number of renewable energy credits

 

under subparagraphs (i) and (ii), determine the number of additional

 

renewable energy credits that the electric provider would need to

 

reach a 10% renewable energy credit portfolio in that year equal to

 

10% of the number of megawatt hours provided by the electric

 

provider in that year as determined subject to section 21(2)(b).

 

     (B) Multiply the number under sub-subparagraph (A) by 20% for

 

2012, 33% for 2013, 50% for 2014, and 100% for 2015.

 

     (b) In 2016 and each year thereafter through 2024, maintain a

 

renewable energy credit portfolio that consists of at least the

 

same number of renewable energy credits as were required in 2015

 

under subdivision (a).

 

     (c) In 2025, a renewable energy credit portfolio based on the

 

sum of the following:

 

     (i) The total number of renewable energy credits under

 

subdivision (a)(i) and (ii).

 

     (ii) Taking into account the number of renewable energy credits

 

under subparagraph (i), the number of additional renewable energy

 

credits that the electric provider needs to reach a renewable

 

energy credit portfolio in that year equal to 30% of the number of

 

megawatt hours of electricity provided by the electric provider in

 

that year as determined subject to section 21(2)(b).

 

     (d) In 2026 and each year thereafter, maintain a renewable

 

energy credit portfolio that consists of at least the same number

 

of renewable energy credits as were required in 2025 under

 

subdivision (c).

 

     (4) An electric provider's renewable energy credit portfolio

 

shall be calculated as follows:

 

     (a) Determine the number of renewable energy credits used to

 

comply with this subpart during the applicable year.

 

     (b) Divide by 1 of the following at the option of the electric

 

provider as specified in its renewable energy plan:

 

     (i) The number of weather-normalized megawatt hours of

 

electricity sold by the electric provider during the previous year

 

to retail customers in this state.

 

     (ii) The average number of megawatt hours of electricity sold

 

by the electric provider annually during the previous 3 years to

 

retail customers in this state.

 

     (c) Multiply the quotient under subdivision (b) by 100.

 

     (5) Subject to subsection (6), each electric provider shall

 

meet the renewable energy credit standards with renewable energy

 

credits obtained by 1 or more of the following means:

 

     (a) Generating electricity from renewable energy systems for

 

sale to retail customers.

 

     (b) Purchasing or otherwise acquiring renewable energy credits

 

with or without the associated renewable energy.

 

     (6) An electric provider may substitute energy optimization

 

credits, advanced cleaner energy credits with or without the

 

associated advanced cleaner energy, or a combination thereof for

 

renewable energy credits otherwise required to meet the renewable

 

energy credit standards if the substitution is approved by the

 

commission. However, commission approval is not required to

 

substitute advanced cleaner energy from industrial cogeneration for

 

renewable energy credits. The commission shall not approve a

 

substitution unless the commission determines that the substitution

 

is cost-effective compared to other sources of renewable energy

 

credits and, if the substitution involves advanced cleaner energy

 

credits, that the advanced cleaner energy system provides carbon

 

dioxide emissions benefits. In determining whether the substitution

 

of advanced cleaner energy credits is cost-effective, the

 

commission shall include as part of the costs of the system the

 

environmental costs attributed to the advanced cleaner energy

 

system, including the costs of environmental control equipment or

 

greenhouse gas constraints or taxes. The commission's

 

determinations shall be made after a contested case hearing that

 

includes consultation with the department of environmental quality

 

on the issue of carbon dioxide emissions benefits, if relevant, and

 

environmental costs.

 

     (7) Under subsection (6), energy optimization credits,

 

advanced cleaner energy credits, or a combination thereof shall not

 

be used by a provider to meet more than 10% of the renewable energy

 

credit standards. Advanced cleaner energy from advanced cleaner

 

energy systems in existence on January 1, 2008 shall not be used by

 

a provider to meet more than 70% of this 10% limit. This 10% limit

 

does not apply to advanced cleaner energy credits from plasma arc

 

gasification.

 

     (8) Substitutions under subsection (6) shall be made at the

 

following rates per renewable energy credit:

 

     (a) One energy optimization credit.

 

     (b) One advanced cleaner energy credit from plasma arc

 

gasification or industrial cogeneration.

 

     (c) Ten advanced cleaner energy credits other than from plasma

 

arc gasification or industrial cogeneration.

 

     Sec. 31. (1) Upon petition by an electric provider, the

 

commission may for good cause grant 2 extensions an extension of

 

the 2015 2025 renewable energy standard deadline under section 27.

 

Each The extension shall be for up to 1 year.

 

     (2) If 2 extensions of the 2015 renewable energy standard

 

deadline have been granted to an electric provider under subsection

 

(1), upon subsequent petition by the electric provider at least 3

 

months before the expiration of the second extended deadline, the

 

commission shall, after consideration of prior extension requests

 

under this section and for good cause, establish a revised

 

renewable energy standard attainable by the electric provider. If

 

the electric provider achieves the revised renewable energy

 

standard, the provider is considered to be in compliance with this

 

subpart.

 

     (2) (3) An electric provider that makes a good faith effort to

 

spend the full amount of incremental costs of compliance as

 

outlined in its approved renewable energy plan and that complies

 

with its approved plan, subject to any approved extensions

 

extension or revisions, and, if the provider's rates are regulated

 

by the commission, makes a good-faith effort to spend the full

 

amount of the expected incremental costs of compliance as set forth

 

in the plan shall be considered to be in compliance with this

 

subpart.

 

     (3) (4) As used in this section, "good cause" includes, but is

 

not limited to, the electric provider's inability, as determined by

 

the commission, to meet a renewable energy standard because of a

 

renewable energy system feasibility limitation including, but not

 

limited to, any of the following:

 

     (a) Renewable energy system site requirements, zoning, siting,

 

land use issues, permits, including environmental permits, any

 

certificate of need necessity process under section 6s of 1939 PA

 

3, MCL 460.6s, or any other necessary governmental approvals that

 

effectively limit availability of renewable energy systems, if the

 

electric provider exercised reasonable diligence in attempting to

 

secure the necessary governmental approvals. For purposes of this

 

subdivision, "reasonable diligence" includes, but is not limited

 

to, submitting timely applications for the necessary governmental

 

approvals and making good faith efforts to ensure that the

 

applications are administratively complete and technically

 

sufficient.

 

     (b) Equipment cost or availability issues including electrical

 

equipment or renewable energy system component shortages or high

 

costs that High costs of or shortages of renewable energy system

 

components or electrical equipment if the high costs or shortages

 

effectively limit availability of renewable energy systems.

 

     (c) Cost, availability, or time requirements for electric

 

transmission and interconnection.

 

     (d) Projected or actual unfavorable electric system

 

reliability or operational impacts.

 

     (e) Labor shortages that effectively limit availability of

 

renewable energy systems.

 

     (f) An order of a court of competent jurisdiction that

 

effectively limits the availability of renewable energy systems.

 

     Sec. 47. (1) Subject to the retail rate impact limits under

 

section 45, the commission shall consider all actual costs

 

reasonably and prudently incurred in good faith to implement a

 

commission-approved renewable energy plan by an electric provider

 

whose rates are regulated by the commission to be a cost of service

 

to be recovered by the electric provider. Subject to the retail

 

rate impact limits under section 45, an electric provider whose

 

rates are regulated by the commission shall recover through its

 

retail electric rates all of the electric provider's incremental

 

costs of compliance during the 20-year period beginning when the

 

electric provider's plan is approved by the commission and all

 

reasonable and prudent ongoing costs of compliance during and after

 

that period. The recovery shall include, but is not limited to, the

 

electric provider's authorized rate of return on equity for costs

 

approved under this section, which shall remain fixed at the rate

 

of return and debt to equity ratio that was in effect in the

 

electric provider's base rates when the electric provider's

 

renewable energy plan was approved.

 

     (2) Incremental costs of compliance shall be calculated as

 

follows:

 

     (a) Determine the sum of the following costs to the extent

 

those costs are reasonable and prudent and not already approved for

 

recovery in electric rates as of the effective date of this act

 

October 6, 2008:

 

     (i) Capital, operating, and maintenance costs of renewable

 

energy systems or advanced cleaner energy systems, including

 

property taxes, insurance, and return on equity associated with an

 

electric provider's renewable energy systems or advanced cleaner

 

energy systems, including the electric provider's renewable energy

 

portfolio established to achieve compliance with the renewable

 

energy standards and any additional renewable energy systems or

 

advanced cleaner energy systems , that are built or acquired by the

 

electric provider to maintain compliance with the renewable energy

 

standards during the 20-year period beginning when the electric

 

provider's plan is approved by the commission.

 

     (ii) Financing costs attributable to capital, operating, and

 

maintenance costs of capital facilities associated with renewable

 

energy systems or advanced cleaner energy systems used to meet the

 

renewable energy standard.

 

     (iii) Costs that are not otherwise recoverable in rates approved

 

by the federal energy regulatory commission and that are related to

 

the infrastructure required to bring renewable energy systems or

 

advanced cleaner energy systems used to achieve compliance with the

 

renewable energy standards on to the transmission system, including

 

interconnection and substation costs for renewable energy systems

 

or advanced cleaner energy systems used to meet the renewable

 

energy standard.

 

     (iv) Ancillary service costs determined by the commission to be

 

necessarily incurred to ensure the quality and reliability of

 

renewable energy or advanced cleaner energy used to meet the

 

renewable energy standards, regardless of the ownership of a

 

renewable energy system or advanced cleaner energy technology.

 

     (v) Except to the extent the costs are allocated under a

 

different subparagraph, all of the following:

 

     (A) The costs of renewable energy credits purchased under this

 

act.

 

     (B) The costs of contracts described in section 33(1).

 

     (vi) Expenses incurred as a result of state or federal

 

governmental actions related to renewable energy systems or

 

advanced cleaner energy systems attributable to the renewable

 

energy standards, including changes in tax or other law.

 

     (vii) Any additional electric provider costs determined by the

 

commission to be necessarily incurred to ensure the quality and

 

reliability of renewable energy or advanced cleaner energy used to

 

meet the renewable energy standards.

 

     (b) Subtract from the sum of costs not already included in

 

electric rates determined under subdivision (a) the sum of the

 

following revenues:

 

     (i) Revenue derived from the sale of environmental attributes

 

associated with the generation of renewable energy or advanced

 

cleaner energy systems attributable to the renewable energy

 

standards. Such revenue shall not be considered in determining

 

power supply cost recovery factors under section 6j of 1939 PA 3,

 

MCL 460.6j.

 

     (ii) Interest on regulatory liabilities.

 

     (iii) Tax credits specifically designed to promote renewable

 

energy or advanced cleaner energy.

 

     (iv) Revenue derived from the provision of renewable energy or

 

advanced cleaner energy to retail electric customers subject to a

 

power supply cost recovery clause under section 6j of 1939 PA 3,

 

MCL 460.6j, of an electric provider whose rates are regulated by

 

the commission. After providing an opportunity for a contested case

 

hearing for an electric provider whose rates are regulated by the

 

commission, the commission shall annually establish a price per

 

megawatt hour. In addition, an An electric provider whose rates are

 

regulated by the commission may at any time petition the commission

 

to revise the price. In setting the price per megawatt hour under

 

this subparagraph, the commission shall consider factors including,

 

but not limited to, projected capacity, energy, maintenance, and

 

operating costs; information filed under section 6j of 1939 PA 3,

 

MCL 460.6j; and information from wholesale markets, including, but

 

not limited to, locational marginal pricing. This price shall be

 

multiplied by the sum of the number of megawatt hours of renewable

 

energy and the number of megawatt hours of advanced cleaner energy

 

used to maintain compliance with the renewable energy standard. The

 

product shall be considered a booked cost of purchased and net

 

interchanged power transactions under section 6j of 1939 PA 3, MCL

 

460.6j. For energy purchased by such an electric provider under a

 

renewable energy contract or advanced cleaner energy contract, the

 

price shall be the lower of the amount established by the

 

commission or the actual price paid and shall be multiplied by the

 

number of megawatt hours of renewable energy or advanced cleaner

 

energy purchased. The resulting value shall be considered a booked

 

cost of purchased and net interchanged power under section 6j of

 

1939 PA 3, MCL 460.6j.

 

     (v) Revenue from wholesale renewable energy sales and advanced

 

cleaner energy sales. Such revenue shall not be considered in

 

determining power supply cost recovery factors under section 6j of

 

1939 PA 3, MCL 460.6j.

 

     (vi) Any additional electric provider revenue considered by the

 

commission to be attributable to the renewable energy standards.

 

     (vii) Any revenues recovered in rates for renewable energy

 

costs that are included under subdivision (a).

 

     (3) The commission shall authorize an electric provider whose

 

rates are regulated by the commission to spend in any given month

 

more to comply with this act and implement an approved renewable

 

energy plan than the revenue actually generated by the revenue

 

recovery mechanism. An electric provider whose rates are regulated

 

by the commission shall recover its commission approved pre-tax

 

rate of return on regulatory assets during the appropriate period.

 

An electric provider whose rates are regulated by the commission

 

shall record interest on regulatory liabilities at the average

 

short-term borrowing rate available to the electric provider during

 

the appropriate period. Any regulatory assets or liabilities

 

resulting from the recovery costs of renewable energy or advanced

 

cleaner energy attributable to renewable energy standards through

 

the power supply cost recovery clause under section 6j of 1939 PA

 

3, MCL 460.6j, shall continue to be reconciled under that section.

 

     (4) If an electric provider's incremental costs of compliance

 

in any given month during the 20-year period beginning when the

 

electric provider's plan is approved by the commission are in

 

excess of the revenue recovery mechanism as adjusted under section

 

49 and in excess of the balance of any accumulated reserve funds,

 

subject to the minimum balance established under section 21, the

 

electric provider shall immediately notify the commission. The

 

commission shall promptly commence a contested case hearing

 

pursuant to the administrative procedures act of 1969, 1969 PA 306,

 

MCL 24.201 to 24.328, and modify the revenue recovery mechanism so

 

that the minimum balance is restored. However, if the commission

 

determines that recovery of the incremental costs of compliance

 

would otherwise exceed the maximum retail rate impacts specified

 

under section 45, it shall set the revenue recovery mechanism for

 

that electric provider to correspond to the maximum retail rate

 

impacts. Excess costs shall be accrued and deferred for recovery.

 

Not later than the expiration of the 20-year period beginning when

 

the electric provider's plan is approved by the commission, for an

 

electric provider whose rates are regulated by the commission, the

 

commission shall determine the amount of deferred costs to be

 

recovered under the revenue recovery mechanism and the recovery

 

period, which shall not extend more than 5 years beyond the

 

expiration of the 20-year period beginning when the electric

 

provider's plan is approved by the commission. The recovery of

 

excess costs shall be proportional to the retail rate impact limits

 

in section 45 for each customer class. The recovery of excess costs

 

alone, or, if begun before the expiration of the 20-year period, in

 

combination with the recovery of incremental costs of compliance

 

under the revenue recovery mechanism, shall not exceed the retail

 

rate impact limits of section 45 for each customer class.

 

     (5) If, at the expiration of the 20-year period beginning when

 

the electric provider's plan is approved by the commission, an

 

electric provider whose rates are regulated by the commission has a

 

regulatory liability, the refund to customer classes shall be

 

proportional to the amounts paid by those customer classes under

 

the revenue recovery mechanism.

 

     (6) After achieving compliance with the renewable energy

 

standard for 2015 2025, the actual costs reasonably and prudently

 

incurred to continue to comply with this subpart both during and

 

after the conclusion of the 20-year period beginning when the

 

electric provider's plan is approved by the commission shall be

 

considered costs of service. The commission shall determine a

 

mechanism for an electric provider whose rates are regulated by the

 

commission to recover these costs in its retail electric rates,

 

subject to the retail rate impact limits in section 45. Remaining

 

and future regulatory assets shall be recovered consistent with

 

subsections (2) (3) and (3) (4) and section 49.

 

     Enacting section 1. This amendatory act does not take effect

 

unless Senate Bill No.____ or House Bill No. (request no.

 

01605'11) of the 96th Legislature is enacted into law.