Bill Text: MI SB0322 | 2013-2014 | 97th Legislature | Introduced

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Bill Title: Energy; alternative sources; renewable portfolio standard; increase for electric providers. Amends secs. 21, 27, 31, 45, 47 & 49 of 2008 PA 295 (MCL 460.1021 et seq.).

Spectrum: Partisan Bill (Democrat 7-0)

Status: (Introduced - Dead) 2013-04-17 - Referred To Committee On Energy And Technology [SB0322 Detail]

Download: Michigan-2013-SB0322-Introduced.html

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SENATE BILL No. 322

 

 

April 17, 2013, Introduced by Senators HOPGOOD, WHITMER, JOHNSON, YOUNG, WARREN, GREGORY and HOOD 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 21, 27, 31, 45, 47, and 49 (MCL 460.1021,

 

460.1027, 460.1031, 460.1045, 460.1047, and 460.1049).

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 21. (1) This section applies only to electric providers

 

whose rates are regulated by the commission.

 

     (2) Each electric provider shall file a proposed renewable

 

energy plan with the commission within 90 days after the commission

 

issues a temporary order under section 171. 191. The proposed plan

 

shall meet all of the following requirements:

 

     (a) Describe how the electric provider will meet the renewable

 

energy standards.

 

     (b) Specify whether the number of megawatt hours of

 

electricity used in the calculation of the renewable energy credit

 

portfolio will be weather-normalized or based on 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. Once the plan is approved by the commission, this option

 

shall not be changed.

 

     (c) Include the expected incremental cost of compliance with

 

the renewable energy standards for a 20-year 27-year period

 

beginning when the plan is approved by the commission. Not later

 

than 1 year after the effective date of the 2013 amendatory act

 

that amended this section, each electric provider shall file with

 

the commission a plan amendment to comply with the requirements of

 

this subdivision.

 

     (d) For an electric provider that had 1,000,000 or more retail

 

customers in this state on January 1, 2008, describe the bidding

 

process to be used by the electric provider under section 33. The

 

description shall include measures to be employed in the

 

preparation of requests for proposals and the handling and

 

evaluation of proposals received to ensure that any bidder that is

 

an affiliate of the electric utility provider is not afforded a

 

competitive advantage over any other bidder and that each bidder,

 

including any bidder that is an affiliate of the electric provider,

 

is treated in a fair and nondiscriminatory manner.

 

     (3) The proposed plan shall establish a nonvolumetric

 

mechanism for the recovery of the incremental costs of compliance

 

within the electric provider's customer rates. The revenue recovery

 

mechanism shall not result in rate impacts that exceed the monthly

 

maximum retail rate impacts specified under section 45. The revenue

 

recovery mechanism is subject to adjustment under sections 47(4)

 

and 49. A customer participating in a commission-approved voluntary

 

renewable energy program under an agreement in effect on the

 

effective date of this act October 6, 2008 shall not incur charges

 

under the revenue recovery mechanism unless except to the extent

 

that the charges under the revenue recovery mechanism exceed the

 

charges the customer is incurring for the voluntary renewable

 

energy program. In that case, the customer shall only incur the

 

difference between the charge assessed under the revenue recovery

 

mechanism and the charges the customer is incurring for the

 

voluntary renewable energy program. The limitation on charges

 

applies only during the term of the agreement, not including

 

automatic agreement renewals, or until 1 year after the effective

 

date of this act, October 6, 2009, whichever is later. Before

 

entering an agreement with a customer to participate in a

 

commission-approved voluntary renewable energy program and before

 

the last automatic monthly renewal of such an agreement that will

 

occur less than 1 year after the effective date of this act, before

 

October 6, 2009, an electric provider shall notify the customer

 

that the customer will be responsible for the full applicable

 

charges under the revenue recovery mechanism and under the

 

voluntary renewable energy program as provided under this

 

subsection.

 

     (4) If proposed by the electric provider in its proposed plan,

 

the revenue recovery mechanism shall result in an accumulation of

 

reserve funds in advance of expenditure and the creation of a

 

regulatory liability that accrues interest at the average short-

 

term borrowing rate available to the electric provider during the

 

appropriate period. If proposed by the electric provider in its

 

proposed plan, the commission shall establish a minimum balance of

 

accumulated reserve funds for the purposes of section 47(4).

 

     (5) The commission shall conduct a contested case hearing on

 

the proposed plan filed under subsection (2), pursuant to the

 

administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to

 

24.328. If a renewable energy generator files a petition to

 

intervene in the contested case in the manner prescribed by the

 

commission's rules for interventions generally, the commission

 

shall grant the petition. Subject to subsections (6) and (10),

 

after the hearing and within 90 days after the proposed plan is

 

filed with the commission, the commission shall approve, with any

 

changes consented to by the electric provider, or reject the plan.

 

     (6) The commission shall not approve an electric provider's

 

plan unless the commission determines both of the following:

 

     (a) That the plan is reasonable and prudent. In making this

 

determination, the commission shall take into consideration

 

projected costs and whether or not projected costs included in

 

prior plans were exceeded.

 

     (b) That the life-cycle cost of renewable energy acquired or

 

generated under the plan less the projected life-cycle net savings

 

associated with the provider's energy optimization plan does not

 

exceed the expected life-cycle cost of electricity generated by a

 

new conventional coal-fired facility. In determining the expected

 

life-cycle cost of electricity generated by a new conventional

 

coal-fired facility, making this determination, the commission

 

shall consider data from this state and the states of Ohio,

 

Indiana, Illinois, Wisconsin, and Minnesota, including , if

 

applicable, the life-cycle costs of the renewable energy system and

 

new conventional coal-fired facilities. When determining the life-

 

cycle costs of the renewable energy system and new conventional

 

coal-fired facilities, the commission shall use a methodology that

 

includes, but is not limited to, consideration of the value of

 

energy, capacity, and ancillary services. The commission shall also

 

consider other costs such as transmission, economic benefits, and

 

environmental costs, including, but not limited to, greenhouse gas

 

constraints or taxes. In performing its assessment, the commission

 

may utilize other available data, including national or regional

 

reports and data published by federal or state governmental

 

agencies, industry associations, and consumer groups.

 

     (7) An electric provider shall not begin recovery of the

 

incremental costs of compliance within its rates until the

 

commission has approved its proposed plan.

 

     (8) Every 2 years after initial approval of a plan under

 

subsection (5), the commission shall review the plan. The

 

commission shall conduct a contested case hearing on the plan

 

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

 

MCL 24.201 to 24.328. The annual renewable cost reconciliation

 

under section 49 for that year may be joined with the overall plan

 

review in the same contested case hearing. Subject to subsections

 

(6) and (10), after the hearing, the commission shall approve, with

 

any changes consented to by the electric provider, or reject the

 

plan and any proposed amendments to the plan.

 

     (9) If an electric provider proposes to amend its plan at a

 

time other than during the biennial review process under subsection

 

(8), the electric provider shall file the proposed amendment with

 

the commission. If the proposed amendment would modify the revenue

 

recovery mechanism, the commission shall conduct a contested case

 

hearing on the amendment pursuant to the administrative procedures

 

act of 1969, 1969 PA 306, MCL 24.201 to 24.328. The annual

 

renewable cost reconciliation under section 49 may be joined with

 

the plan amendment in the same contested case proceeding. Subject

 

to subsections (6) and (10), after the hearing and within 90 days

 

after the amendment is filed, the commission shall approve, with

 

any changes consented to by the electric provider, or reject the

 

plan and the proposed amendment or amendments to the plan.

 

     (10) If the commission rejects a proposed plan or amendment

 

under this section, the commission shall explain in writing the

 

reasons for its determination.

 

     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 megawatts by December 31, 2015.

 

     (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.

 

     (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 as determined for that year 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 2021, 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 2022, 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 22% of the number of

 

megawatt hours of electricity provided by the electric provider as

 

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

 

     (d) In 2023 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 2022 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 of the 2015 and 2

 

extensions of the 2022 renewable energy standard deadline under

 

section 27. Each extension shall be for up to 1 year.

 

     (2) If 2 extensions of the 2015 or 2 extensions of the 2022

 

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 extension of that 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 the renewable energy standard

 

otherwise required to be achieved under this subpart by that

 

deadline.

 

     (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 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.

 

     (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. 45. (1) For an electric provider whose rates are

 

regulated by the commission, the commission shall determine the

 

appropriate charges for the electric provider's tariffs that permit

 

recovery of the incremental cost of compliance subject to the

 

retail rate impact limits set forth in subsection (2).

 

     (2) An electric provider shall recover the incremental cost of

 

compliance with the renewable energy standards by an itemized

 

charge on the customer's bill for billing periods beginning not

 

earlier than 90 days after the commission approves the electric

 

provider's renewable energy plan under section 21 or 23 or

 

determines under section 25 that the plan complies with this act.

 

An electric provider shall not comply with the renewable energy

 

standards to the extent that, as determined by the commission,

 

recovery of the incremental cost of compliance will have a retail

 

rate impact that exceeds any of the following:

 

     (a) $3.00 per month per residential customer meter.

 

     (b) $16.58 per month per commercial secondary customer meter.

 

     (c) $187.50 per month per commercial primary or industrial

 

customer meter.

 

     (3) The retail rate impact limits of subsection (2) apply only

 

to the incremental costs of compliance and do not apply to costs

 

approved for recovery by the commission other than as provided in

 

this act.

 

     (4) The incremental cost of compliance shall be calculated for

 

a 20-year 27-year period beginning with approval of the renewable

 

energy plan and shall be recovered on a levelized basis.

 

     (5) In its billing statements for a residential customer, each

 

electric provider shall report to the residential customer all of

 

the following in a format consistent with other information on the

 

customer bill:

 

     (a) An itemized monthly charge, expressed in dollars and

 

cents, collected from the customer for implementing the renewable

 

energy program requirements of this act. In the first bill issued

 

after the close of the previous year, an electric provider shall

 

notify each residential customer that the customer may be entitled

 

to an income tax credit to offset some of the annual amounts

 

collected for the renewable energy program.

 

     (b) An itemized monthly charge, expressed in dollars and

 

cents, collected from the customer for implementing the energy

 

optimization program requirements of this act.

 

     (c) An estimated monthly savings, expressed in dollars and

 

cents, for that customer to reflect the reductions in the monthly

 

energy bill produced by the energy optimization program under this

 

act.

 

     (d) An estimated monthly savings, expressed in dollars and

 

cents, for that customer to reflect the long-term, life-cycle,

 

levelized costs of building and operating new conventional coal-

 

fired electric generating power plants avoided under this act as

 

determined by the commission.

 

     (e) The website address at which the commission's annual

 

report under section 51 is posted.

 

     (6) For the first year of the programs under this part, the

 

values reported under subsection (5) shall be estimates by the

 

commission. The values in following years shall be based on the

 

electric provider's actual customer experiences. If the electric

 

provider is unable to provide customer-specific information under

 

subsection (5)(b) or (c), it shall instead specify the state

 

average itemized charge or savings, as applicable, for residential

 

customers. The electric provider shall make this calculation based

 

on a method approved by the commission.

 

     (7) In determining long-term, life-cycle, levelized costs of

 

building and operating and acquiring nonrenewable electric

 

generating capacity and energy for the purpose of subsection

 

(5)(d), the commission shall consider historic and predicted costs

 

of financing, construction, operation, maintenance, fuel supplies,

 

environmental protection, and other appropriate elements of energy

 

production. For purposes of this comparison, the capacity of

 

avoided new conventional coal-fired electric generating facilities

 

shall be expressed in megawatts and avoided new conventional coal-

 

fired electricity generation shall be expressed in megawatt hours.

 

Avoided costs shall be measured in cents per kilowatt hour.

 

     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 27-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 27-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

 

comply with 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 comply with 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 That 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 That 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 27-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 27-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 27-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 27-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 27-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 2022, the actual costs reasonably and prudently

 

incurred to continue to comply with this subpart both during and

 

after the conclusion of the 20-year 27-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.

 

     Sec. 49. (1) This section applies only to an electric provider

 

whose rates are regulated by the commission. Concurrent with the

 

submission of each report under section 51, 51(1), the commission

 

shall commence an annual proceeding, to be known as a renewable

 

cost reconciliation, for each electric provider whose rates are

 

regulated by the commission. The renewable cost reconciliation

 

proceeding shall be conducted as a contested case pursuant to the

 

administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to

 

24.328. Reasonable discovery shall be permitted before and during

 

the reconciliation proceeding to assist in obtaining evidence

 

concerning reconciliation issues including, but not limited to, the

 

reasonableness and prudence of expenditures and the amounts

 

collected pursuant to the revenue recovery mechanism.

 

     (2) At the renewable cost reconciliation, an electric provider

 

may propose any necessary modifications of the revenue recovery

 

mechanism to ensure the electric provider's recovery of its

 

incremental cost of compliance with the renewable energy standards.

 

     (3) The commission shall reconcile the pertinent revenues

 

recorded and the allowance for the nonvolumetric revenue recovery

 

mechanism with the amounts actually expensed and projected

 

according to the electric provider's renewable energy plan. for

 

compliance. The commission shall consider any issue regarding the

 

reasonableness and prudence of expenses for which customers were

 

charged in the relevant reconciliation period. In its order, the

 

commission shall do all of the following:

 

     (a) Make a determination of an electric provider's compliance

 

with the renewable energy standards, subject to section 31.

 

     (b) Adjust the revenue recovery mechanism for the incremental

 

costs of compliance. The commission shall ensure that the retail

 

rate impacts under this renewable cost reconciliation revenue

 

recovery mechanism do not exceed the maximum retail rate impacts

 

specified under section 45. The commission shall ensure that the

 

recovery mechanism is projected to maintain a minimum balance of

 

accumulated reserve so that a regulatory asset does not accrue.

 

     (c) Establish the price per megawatt hour for renewable energy

 

and advanced cleaner energy capacity and for renewable energy and

 

advanced cleaner energy to be recovered through the power supply

 

cost recovery clause under section 6j of 1939 PA 3, MCL 460.6j, as

 

outlined in section 47(2)(b)(iv).

 

     (d) Adjust, if needed, the minimum balance of accumulated

 

reserve funds established under section 21.

 

     (4) If an electric provider has recorded a regulatory

 

liability in any given month during the 20-year 27-year period

 

beginning when the electric provider's plan is approved by the

 

commission, interest on the regulatory liability balance shall be

 

accrued at the average short-term borrowing rate available to the

 

electric provider during the appropriate period, and shall be used

 

to fund incremental costs of compliance incurred in subsequent

 

periods within the 20-year 27-year period beginning when the

 

electric provider's plan is approved by the commission.