Bill Text: MI HB5902 | 2017-2018 | 99th Legislature | Engrossed
Bill Title: Public utilities; public service commission; long-term industrial load rates; allow. Amends 1939 PA 3 (MCL 460.1 - 460.11) by adding sec. 10gg.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2018-11-07 - Assigned Pa 348'18 With Immediate Effect [HB5902 Detail]
Download: Michigan-2017-HB5902-Engrossed.html
HB-5902, As Passed House, May 17, 2018
SUBSTITUTE FOR
HOUSE BILL NO. 5902
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,"
(MCL 460.1 to 460.11) by adding section 10gg.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 10gg. (1) Notwithstanding any other provision of this
act, the commission may establish long-term electricity rates for
industrial customers. An electric utility may propose a long-term
industrial load rate in a general rate case filing or in a stand-
alone proceeding. The commission shall approve the long-term
industrial load rate proposed by the electric utility if the
commission finds all of the following:
(a) The cost of service for the capacity needed to serve the
industrial customer under the proposed long-term industrial load
rate is based on 1 or more designated power supply resources.
(b) The proposed long-term industrial load rate requires the
industrial customer to enter into a contract for a term equal to
either of the following:
(i) The term of the electric utility power purchase agreement
or agreements, that must not be less than 15 years, for 1 or more
designated power supply resources if the resources are an electric
utility power purchase agreement or agreements.
(ii) The expected remaining life of 1 or more designated power
supply resources if the resources are utility-owned resources.
(c) The proposed long-term industrial load rate requires that
the industrial customer have an annual average electric demand of
at least 200 megawatts at 1 site at the time the contract for a
term is entered into, have an annual load factor of at least 75% at
the time the contract for a term is entered into, and must
demonstrate that the industrial customer would not purchase
standard tariff service from the electric utility except under the
long-term industrial load rate. The industrial customer
demonstrates that it would not purchase standard tariff service
from the electric utility except under the long-term industrial
load rate if any of the following conditions exist:
(i) The customer has available self-service power in a
quantity equal to the contract demand level.
(ii) The customer, or an entity acting on the customer's
behalf, has entered the applicable regional transmission
organization's generation interconnection queue for a new
generation resource that, if constructed, would qualify as self-
service power in a quantity equal to the contract demand level.
Entering the regional transmission organization's interconnection
queue means compliance with all applicable interconnection
application requirements, such as payment of the application fee,
disclosure of the technical requirements, payment of the definitive
planning phase studying funding deposit, demonstration of site
control, and payment of all other applicable per-megawatt fees or
deposits, as required by the regional transmission organization.
(d) The proposed long-term industrial load rate is only
available to the industrial customer for service at a site where
the industrial customer's annual average electric demand is at
least 200 megawatts at the time the contract for a term is entered
into. The contract for a term must be for a minimum of 100
megawatts of firm contracted capacity.
(e) If the resource designated in a contract executed under
the long-term industrial load rate is a utility-owned resource,
then the proposed long-term industrial load rate is based on all of
the following:
(i) The electric utility's levelized cost of capacity,
including fixed operation and maintenance expense, associated with
the designated power supply resource at the time the customer
contract is executed.
(ii) The electric utility's actual variable fuel and actual
variable operation and maintenance expense based on the customer's
actual energy consumption and associated with the designated power
supply resource.
(iii) The electric utility's actual energy and capacity market
purchases, if any, based on the customer's actual consumption. The
amount of capacity needed to serve a qualifying long-term
industrial load is based on the capacity needed by the electric
utility to comply with its regional transmission organization's
load-serving resource requirement based on the amount of
contractual firm and interruptible capacity supplied to the
industrial customer.
(f) If the designated resource associated with a contract
executed under the long-term industrial load rate is an electric
utility power purchase agreement or agreements, then the proposed
long-term industrial load rate is based on recovering all costs
associated with the designated power purchase agreement or
agreements.
(2) A long-term industrial load rate may contain other terms
and conditions proposed by the electric utility.
(3) The commission shall approve any contract for a term
proposed by an electric utility under a long-term industrial load
rate authorized under this section if there is a net benefit to the
electric utility's customers resulting from the industrial customer
taking service under the long-term industrial load rate compared to
the industrial customer not purchasing standard tariff service from
the electric utility. In determining whether a net benefit exists,
the commission may consider any benefit, including, but not limited
to, benefits to customers as a result of the following:
(a) System peak demand reduction due to ability to curtail,
engage in demand response, or participate in federal load
management programs.
(b) Avoidance of new production capacity costs and risks for
other ratepayers.
(c) Ability to reduce system costs, such as by contributing to
volt-var control.
(4) If the customer taking service under a long-term
industrial load rate will contribute to the electric utility's
fixed distribution or transmission costs that otherwise would have
been recovered from the electric utility's other customers as
compared to the customer not purchasing standard tariff service
from the electric utility, then the commission shall determine that
a net benefit exists under subsection (3).
(5) An electric utility may submit a proposal for a long-term
industrial load rate and a proposed contract for a term under the
proposed long-term industrial load rate in the same proceeding.
(6) If an electric utility proposes a long-term industrial
load rate in a stand-alone proceeding, that proceeding must be
conducted as a contested case under chapter 4 of the administrative
procedures act of 1969, 1969 PA 306, MCL 24.271 to 24.287, and must
be supported by a complete cost of service study, rate design, and
proposed tariffs reflecting the impact of the long-term industrial
load rate on other customer rates. A stand-alone proceeding filed
under this section must not be expanded to result in any changes to
the electric utility's overall revenue requirement. The commission
shall issue a final order in a stand-alone proceeding conducted
under this section no later than 270 days after an electric utility
files an application requesting approval of a long-term industrial
load rate.
(7) A contract for a term executed under a long-term
industrial load rate approved under this section is considered
reasonable and prudent for the contract's entire term.
(8) A designated power supply resource that is an electric
utility power purchase agreement or agreements may be a power
purchase agreement or agreements with an affiliate of the electric
utility.
(9) A single customer may not aggregate load from multiple
sites to meet the requirements of this section. Multiple customers
may not aggregate load to meet the requirements of this section.
(10) As used in this section:
(a) "Annual load factor" means a load factor calculated as an
average of the prior 12 monthly load factors. Each monthly load
factor must be determined by dividing the customer's actual monthly
kilowatt hours consumption by the product of the customer's monthly
maximum demand and the number of hours in the month.
(b) "Contract for a term" means an agreement executed between
an electric utility and industrial customer under a long-term
industrial load rate authorized by this section.
(c) "Electric utility power purchase agreement" means an
agreement executed between an electric utility and an electric
generation facility not owned by the electric utility for the
purchase of energy and capacity.
(d) "Long-term industrial load rate" means a rate approved by
the commission under this section.
(e) "Self-service power" means that term as defined in section
10a(4).
(f) "Site" means an industrial site or contiguous industrial
site or single commercial establishment. A site 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.
(g) "Standard tariff service" means the retail rates, terms,
and conditions of service approved by the commission for service to
customers that do not purchase power under the long-term industrial
load rate.
