Bill Text: MI HB5913 | 2015-2016 | 98th Legislature | Introduced
Bill Title: Public utilities; rates; recovery for lost and unaccounted-for natural gas; prohibit. Amends sec. 6a of 1939 PA 3 (MCL 460.6a).
Spectrum: Partisan Bill (Democrat 7-0)
Status: (Introduced - Dead) 2016-09-22 - Bill Electronically Reproduced 09/21/2016 [HB5913 Detail]
Download: Michigan-2015-HB5913-Introduced.html
HOUSE BILL No. 5913
September 21, 2016, Introduced by Reps. Irwin, Santana, Robinson, Pagan, Hoadley, Dianda and Gay-Dagnogo 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 section 6a (MCL 460.6a), as amended by 2008 PA 286.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 6a. (1) A gas or electric 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. 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 of 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
(6). A petition or application pending before the
commission
prior to the adoption of filing forms and instructions
pursuant
to subsection (6) shall be evaluated based upon the filing
requirements
in effect at the time the petition or application was
filed.
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. If the commission has not
issued
an order within 180 days of after
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. For a petition or application
pending
before the commission prior to the effective date of the
amendatory
act that added this sentence, the 180-day period
commences
on the effective date of the amendatory act that added
this
sentence. 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
prior to 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 section 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
which, 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. Nothing in this This
section impairs 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 or
purchased gas 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 or purchased gas. The rates
charged
by any utility pursuant to under
an automatic fuel or
purchased gas adjustment clause shall 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 or purchased gas.
(2) 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
12 months from 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 shall be are
abolished. The commission may hold a full and complete hearing to
determine the cost of fuel, purchased gas, or purchased power
separately from a full and complete hearing on a general rate case
and
may be held hold that
hearing concurrently with the general
rate case. The commission shall authorize a utility to recover the
cost of fuel, purchased gas, or purchased power only to the extent
that
the purchases are reasonable and prudent. 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.
(3) Except as otherwise provided in this subsection, 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 12-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 12 months from
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 12-month period by the amount
of additional time requested by the utility.
(4) 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 (3).
(5) 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
retaining 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 which that
would cause them to cease using 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.
(6)
Within 90 days of the effective date of the amendatory act
that
added this subsection, the 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 , in its discretion, modify the standard rate
application forms and instructions adopted under this subsection.
(7) 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, prior to 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 (8), 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.
(8) The total aggregate additional amounts recoverable by
merchant
plants pursuant to under subsection (7) 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 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
not exceed a rate equal to the United States consumer price index.
An
The commission shall not make
an adjustment shall not be made by
the
commission unless each affected
merchant plant files a petition
with
the commission. As used in this subsection, "United States
consumer
price index" means the United States consumer price index
for
all urban consumers as defined and reported by the United
States
department of labor, bureau of labor statistics. 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, shall does
not apply with respect 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 the effective date of the
amendatory
act that added this subsection. October
6, 2008. The
$1,000,000.00 per month payment limit under this subsection shall
not apply to merchant plants eligible under subsection (7) 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" means the United States consumer price index for all urban
consumers as defined and reported by the United States Department
of Labor, Bureau of Labor Statistics.
(9) The commission shall issue orders to permit the recovery
authorized under subsections (7) and (8) upon petition of the
merchant plant. The merchant plant shall not be required to alter
or amend the existing contract with the electric utility in order
to obtain the recovery under subsections (7) and (8). 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.
(10) A gas utility shall not include any expenses for lost and
unaccounted-for natural gas in an application for a rate increase.
The commission shall not allow a gas utility to recover any
expenses for lost and unaccounted-for natural gas.
(11) 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.
