Bill Text: MI HB5865 | 2017-2018 | 99th Legislature | Introduced

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Bill Title: Public utilities; electric utilities; establishment of microgrids; provide for. Amends sec. 10a of 1939 PA 3 (MCL 460.10a).

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2018-04-25 - Bill Electronically Reproduced 04/24/2018 [HB5865 Detail]

Download: Michigan-2017-HB5865-Introduced.html

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HOUSE BILL No. 5865

 

 

April 24, 2018, Introduced by Reps. Johnson, Rabhi, Barrett, Dianda and Glenn 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 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 section 10a (MCL 460.10a), as amended by 2016 PA 341.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 10a. (1) The commission shall issue orders establishing

 

the rates, terms, and conditions of service that allow retail

 

customers to take service from an alternative electric supplier.

 

The orders shall must do all of the following:

 

     (a) Except as otherwise provided in this section, provide that

 

no more than 10% of an electric utility's average weather-adjusted

 

retail sales for the preceding calendar year may take service from

 

an alternative electric supplier at any time.

 

     (b) Set forth procedures necessary to allocate the amount of

 

load that will be allowed to be served by alternative electric

 

suppliers, through the use of annual energy allotments awarded on a

 

calendar year basis. If the sales of a utility are less in a

 

subsequent year or if the energy usage of a customer receiving

 

electric service from an alternative electric supplier exceeds its

 

annual energy allotment for that facility, that customer shall not

 

be forced to purchase electricity from a utility, but may purchase

 

electricity from an alternative electric supplier for that facility

 

during that calendar year.

 

     (c) Notwithstanding any other provision of this section,

 

provide that, if the commission determines that less than 10% of an

 

electric utility's average weather-adjusted retail sales for the

 

preceding calendar year is taking service from alternative electric

 

suppliers, the commission shall set as a cap on the weather-

 

adjusted retail sales that may take service from an alternative

 

electric supplier, for the current calendar year and 5 subsequent

 

calendar years, the percentage amount of weather-adjusted retail

sales for the preceding calendar year rounded up to the nearest

 

whole percentage. If the cap is not adjusted for 6 consecutive

 

calendar years, the cap shall return returns to 10% in the calendar

 

year following that sixth consecutive calendar year. If a utility

 

that serves less than 200,000 customers in this state has not had

 

any load served by an alternative electric supplier in the

 

preceding 4 years, the commission shall adjust the cap in

 

accordance with this provision for no more than 2 consecutive

 

calendar years.

 

     (d) Notwithstanding any other provision of this section,

 

customers seeking to expand usage at a facility that has been

 

continuously served through an alternative electric supplier since

 

April 1, 2008 shall be permitted to may purchase electricity from

 

an alternative electric supplier for both the existing and any

 

expanded load at that facility as well as any new facility

 

constructed or acquired after October 6, 2008 that is similar in

 

nature if the customer owns more than 50% of the new facility.

 

     (e) Provide that for an existing facility that is receiving

 

100% of its electric service from an alternative electric supplier

 

on or after the effective date of the amendatory act that added

 

section 6t, April 20, 2017, the owner of that facility may purchase

 

electricity from an alternative electric supplier, regardless of

 

whether the sales exceed 10% of the servicing electric utility's

 

average weather-adjusted retail sales, for both the existing

 

electric choice load at that facility and any expanded load arising

 

after the effective date of the amendatory act that added section

 

6t April 20, 2017 at that facility as well as any new facility that

is similar in nature to the existing facility, that is constructed

 

or acquired by the customer on a site contiguous to the existing

 

site or on a site that would be contiguous to an existing site in

 

the absence of an existing public right-of-way, and the customer

 

owns more than 50% of that facility. This subdivision does not

 

authorize or permit an existing facility being served by an

 

electric utility on standard tariff service on the effective date

 

of the amendatory act that added section 6t April 20, 2017 to be

 

served by an alternative electric supplier.

 

     (f) Notwithstanding any other provision of this section, any

 

customer operating an iron ore mining facility, iron ore processing

 

facility, or both, located in the Upper Peninsula of this state,

 

may purchase all or any portion of its electricity from an

 

alternative electric supplier, regardless of whether the sales

 

exceed 10% of the serving electric utility's average weather-

 

adjusted retail sales, if that customer is in compliance with the

 

terms of a settlement agreement requiring it to facilitate

 

construction of a new power plant located in the Upper Peninsula of

 

this state. A customer described in this subdivision and the

 

alternative electric supplier that provides electric service to

 

that customer are not subject to the requirements contained in the

 

amendatory act that added section 6t 2016 PA 341 and any

 

administrative regulations adopted under that amendatory act. 2016

 

PA 341. The commission's orders establishing rates, terms, and

 

conditions of retail access service issued before the effective

 

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

 

remain in effect with regard to retail open access provided under

this subdivision.

 

     (g) Provide that a customer on an enrollment queue waiting to

 

take retail open access service as of December 31, 2015 shall

 

continue on the queue and an electric utility shall add a new

 

customer to the queue if the customer's prospective alternative

 

electric supplier submits an enrollment request to the electric

 

utility. A customer shall be removed from the queue by notifying

 

the electric utility electronically or in writing.

 

     (h) Require each electric utility to file with the commission

 

not later than January 15 of each year a rank-ordered queue of all

 

customers awaiting retail open access service under subdivision

 

(g). The filing must include the estimated amount of electricity

 

used by each customer awaiting retail open access service under

 

subdivision (g). All customer-specific information contained in the

 

filing under this subdivision is exempt from release under the

 

freedom of information act, 1976 PA 442, MCL 15.231 to 15.246, and

 

the commission shall treat that information as confidential

 

information. The commission may release aggregated information as

 

part of its annual report as long as individual customer

 

information or data are not released.

 

     (i) Provide that if the prospective alternative electric

 

supplier of a customer next on the queue awaiting retail open

 

access service is notified after the effective date of the

 

amendatory act that added section 6t April 20, 2017 that less than

 

10% of an electric utility's average weather-adjusted retail sales

 

for the preceding calendar year are taking service from an

 

alternative electric supplier and that the amount of electricity

needed to serve the customer's electric load is available under the

 

10% allocation, the customer may take service from an alternative

 

electric supplier. The customer's prospective alternative electric

 

supplier shall notify the electric utility within 5 business days

 

after being notified whether the customer will take service from an

 

alternative electric supplier. If the customer's prospective

 

alternative electric supplier fails to notify the utility within 5

 

business days or if the customer chooses not to take retail open

 

access service, the customer shall be removed from the queue of

 

those awaiting retail open access service. The customer may

 

subsequently be added to the queue as a new customer under the

 

provisions of subdivision (g). A customer that elects to take

 

service from an alternative electric supplier under this

 

subdivision shall become service-ready under rules established by

 

the commission and the utility's approved retail open access

 

service tariffs.

 

     (j) Provide that the commission shall ensure if a customer is

 

notified that the customer's service from an alternative electric

 

supplier will be terminated or restricted as a result of the

 

alternative electric supplier limiting service in this state, the

 

customer has 60 days to acquire service from a different

 

alternative electric supplier. If the customer is a public entity,

 

the time to acquire services from a different alternative electric

 

supplier shall not be less than 180 days.

 

     (k) Provide that as a condition of licensure, an alternative

 

electric supplier meets all of the requirements of this act.

 

     (2) The commission shall issue orders establishing a licensing

procedure for all alternative electric suppliers. To ensure

 

adequate service to customers in this state, the commission shall

 

require that an alternative electric supplier maintain an office

 

within this state, shall assure ensure that an alternative electric

 

supplier has the necessary financial, managerial, and technical

 

capabilities, shall require that an alternative electric supplier

 

maintain records that the commission considers necessary, and shall

 

ensure an alternative electric supplier's accessibility to the

 

commission, to consumers, and to electric utilities in this state.

 

The commission also shall require alternative electric suppliers to

 

agree that they will collect and remit to local units of government

 

all applicable users, sales, and use taxes. An alternative electric

 

supplier is not required to obtain any certificate, license, or

 

authorization from the commission other than as required by this

 

act.

 

     (3) The commission shall issue orders to ensure that customers

 

in this state are not switched to another supplier or billed for

 

any services without the customer's consent.

 

     (4) This act does not prohibit or limit the right of a

 

microgrid or person to obtain self-service power and does not

 

impose a transition, implementation, exit fee, or any other similar

 

charge on self-service power. A person An entity using self-service

 

power is not an electric supplier, electric utility, or a person

 

conducting an electric utility business. As used in this

 

subsection, "self-service power" means any of the following:

 

     (a) Electricity generated and consumed at an industrial site

 

or contiguous industrial site or single commercial establishment or

single residence without the use of an electric utility's

 

transmission and distribution system.

 

     (b) Electricity generated primarily by the use of by-product

 

fuels, including waste water solids, which electricity is consumed

 

as part of a contiguous facility, with the use of an electric

 

utility's transmission and distribution system, but only if the

 

point or points of receipt of the power within the facility are not

 

greater than 3 miles distant from the point of generation.

 

     (c) A site or facility with load existing on June 5, 2000 that

 

is divided by an inland body of water or by a public highway, road,

 

or street but that otherwise meets this definition meets the

 

contiguous requirement of this subdivision regardless of whether

 

self-service power was being generated on June 5, 2000.

 

     (d) A commercial or industrial facility or single residence

 

that meets the requirements of subdivision (a) or (b) meets this

 

definition whether or not the generation facility is owned by an

 

entity different from the owner of the commercial or industrial

 

site or single residence.

 

     (5) This act does not prohibit or limit the right of a person

 

to engage in affiliate wheeling and does not impose a transition,

 

implementation, exit fee, or any other similar charge on a person

 

engaged in affiliate wheeling.

 

     (6) The rights of parties to existing contracts and agreements

 

in effect as of January 1, 2000 between electric utilities and

 

qualifying facilities, including the right to have the charges

 

recovered from the customers of an electric utility, or its

 

successor, are not abrogated, increased, or diminished by this act,

nor shall the receipt of any proceeds of the securitization bonds

 

by an electric utility be a basis for any regulatory disallowance.

 

Further, any securitization or financing order issued by the

 

commission that relates to a qualifying facility's power purchase

 

contract shall must fully consider that qualifying facility's legal

 

and financial interests.

 

     (7) A customer that elects to receive service from an

 

alternative electric supplier may subsequently provide notice to

 

the electric utility of the customer's desire to receive standard

 

tariff service from the electric utility under procedures approved

 

by the commission.

 

     (8) The commission shall authorize rates that will ensure that

 

an electric utility that offered retail open access service from

 

2002 through October 6, 2008 fully recovers its restructuring costs

 

and any associated accrued regulatory assets. This includes, but is

 

not limited to, implementation costs, stranded costs, and costs

 

authorized under section 10d(4) as it existed before October 6,

 

2008, that have been authorized for recovery by the commission in

 

orders issued before October 6, 2008. The commission shall approve

 

surcharges that will ensure full recovery of all such costs by

 

October 6, 2013.

 

     (9) Within 270 days of the effective date of the 2018

 

amendatory act that added this subsection, the commission shall

 

issue orders that allow municipally owned electric utilities,

 

electric utilities, and private entities to establish microgrids

 

within this state. The order must do all of the following:

 

     (a) Allow the establishment of microgrids to support 1 or more

critical facilities.

 

     (b) Ensure that interconnections are uniform across all

 

electric utilities and that those interconnections follow the

 

standards promulgated by the commission, which must allow for

 

microgrid operations consistent with this act.

 

     (c) Allow for the operation of microgrids during an emergency.

 

     (d) Allow microgrids to serve 1 or more facilities that are

 

not critical facilities if those facilities are electrically

 

contiguous to the critical facilities when the microgrid is in

 

island mode.

 

     (e) Prohibit electric utilities from charging standby rates to

 

microgrids owned by a person other than that electric utility.

 

     (f) Establish a process that allows an electric utility

 

customer to request that a facility is designated a critical

 

facility if the commission determines that supplying electricity to

 

that facility during an emergency is necessary for the public

 

health, safety, and welfare.

 

     (g) Require electric utilities to establish a microgrid for

 

any facilities designated as critical under subdivision (f) unless

 

a person other than that electric utility will establish the

 

microgrid.

 

     (h) Establish rates for microgrids established by electric

 

utilities and private entities. The rates established under this

 

subdivision must reflect an equitable cost of service for utility

 

revenue requirement and must not include standby charges.

 

     (i) Adopt standards for microgrids established by municipally

 

owned electric utilities, electric utilities, and private entities.

     (j) Require municipally owned electric utilities and electric

 

utilities to allow any electric utility customer to use a microgrid

 

that meets the standards adopted in subdivision (i).

 

     (10) Not later than July 1, 2019, the commission shall issue a

 

report to the legislature evaluating the costs and benefits of

 

using microgrids to provide electric service to critical

 

facilities.

 

     (11) By December 31, 2018, the commission shall issue a report

 

to the governor and the legislature that analyzes the reliability

 

of the electric distribution systems in this state. The report must

 

include all of the following:

 

     (a) The best technical, economic, and regulatory approach to

 

ensure reliable electric service when the electric distribution

 

systems in this state are confronted with natural disasters and

 

other threats.

 

     (b) The structural, regulatory, legal, or other barriers in

 

this state to adopting those best practices identified in

 

subdivision (a).

 

     (c) The benefits and costs of those best practices identified

 

in subdivision (a).

 

     (d) The opportunities and barriers in this state to

 

implementing innovative multitechnology approaches to improve the

 

resilience, efficiency, functionality, and performance of the

 

electric distribution systems in this state.

 

     (e) Performance standards that could be adopted to improve the

 

resilience, efficiency, functionality, and performance of the

 

electric distribution systems in this state.

     (12) The commission shall convene an advisory panel to assist

 

in preparing the report under subsection (11) that consists of all

 

of the following:

 

     (a) One individual representing investor-owned electric

 

utilities.

 

     (b) One individual representing local units of government.

 

     (c) One individual representing municipally owned electric

 

utilities.

 

     (d) One individual representing cooperative electric

 

utilities.

 

     (e) One individual representing a statewide environmental

 

organization.

 

     (f) One individual representing electric consumers.

 

     (g) One individual representing the energy industry.

 

     (h) One individual representing a statewide labor

 

organization.

 

     (13) (9) As used in subsections (1) and (7):

 

     (a) "Customer" means the building or facilities served through

 

a single existing electric billing meter and does not mean the

 

person, corporation, partnership, association, governmental body,

 

or other entity owning or having possession of the building or

 

facilities.

 

     (b) "Standard tariff service" means, for each regulated

 

electric utility, the retail rates, terms, and conditions of

 

service approved by the commission for service to customers who do

 

not elect to receive generation service from alternative electric

 

suppliers.

     (14) (10) As used in this section:

 

     (a) "Affiliate" means a person or entity that directly, or

 

indirectly through 1 or more intermediates, controls, is controlled

 

by, or is under common control with another specified entity. As

 

used in this subdivision, "control" means, whether through an

 

ownership, beneficial, contractual, or equitable interest, the

 

possession, directly or indirectly, of the power to direct or to

 

cause the direction of the management or policies of a person or

 

entity or the ownership of at least 7% of an entity either directly

 

or indirectly.

 

     (b) "Affiliate wheeling" means a person's use of direct access

 

service where an electric utility delivers electricity generated at

 

a person's industrial site to that person or that person's

 

affiliate at a location, or general aggregated locations, within

 

this state that was either 1 of the following:

 

     (i) For at least 90 days during the period from January 1,

 

1996 to October 1, 1999, supplied by self-service power, but only

 

to the extent of the capacity reserved or load served by self-

 

service power during the period.

 

     (ii) Capable of being supplied by a person's cogeneration

 

capacity within this state that has had since January 1, 1996 a

 

rated capacity of 15 megawatts or less, was placed in service

 

before December 31, 1975, and has been in continuous service since

 

that date. A person engaging in affiliate wheeling is not an

 

electric supplier, an electric utility, or conducting an electric

 

utility business when a person engages in affiliate wheeling.

 

     (c) "Critical facility" includes, but it not limited to, any

hospital or medical facility that provides life support, police

 

station, fire station, water treatment plant, sewage treatment

 

plant, public shelter, correctional facility, emergency

 

coordination center, military site, residential facility for the

 

elderly, or any other facility the commission designates as

 

critical.

 

     (d) "Emergency" means whenever the macrogrid is inoperable or

 

whenever the power quality in the macrogrid is out of

 

specifications.

 

     (e) "Island mode" means that a microgrid is in a status in

 

which loads and energy resources within the microgrid are able to

 

operate but power is not exchanged with the utility-owned

 

transmission or distribution network.

 

     (f) "Microgrid" means a group of interconnected loads and

 

distributed energy resources with clearly defined electrical

 

boundaries that acts as a single controllable entity with respect

 

to the macrogrid and that connects and disconnects from the

 

macrogrid to enable it to operate in grid-connected or island mode.