Bill Text: MI SB0437 | 2015-2016 | 98th Legislature | Introduced
Bill Title: Public utilities; electric utilities; electric utility's integrated resource plan and customer choice provisions; modify. Amends title & secs. 6a, 6j, 6s, 10, 10a, 10f, 10p, 10r & 10t of 1939 PA 3 (MCL 460.6a et seq.); adds sec. 6t & repeals sec. 6e of 1939 PA 3 (MCL 460.6e).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2016-12-28 - Assigned Pa 0341'16 [SB0437 Detail]
Download: Michigan-2015-SB0437-Introduced.html
SENATE BILL No. 437
July 1, 2015, Introduced by Senator NOFS and referred to the Committee on Energy and Technology.
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 the title and sections 6a, 6j, 6s, 10, 10a, 10f, 10p,
10r, and 10t (MCL 460.6a, 460.6j, 460.6s, 460.10, 460.10a, 460.10f,
460.10p, 460.10r, and 460.10t), the title as amended by 2005 PA
190, sections 6a, 10, 10a, 10p, and 10r as amended and section 6s
as added by 2008 PA 286, section 6j as amended by 1987 PA 81, and
sections 10f and 10t as added by 2000 PA 141, and by adding section
6t; and to repeal acts and parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
TITLE
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.
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 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 before the adoption of filing forms and
instructions
pursuant to under 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 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 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, 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 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 10 months from 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 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 10-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 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 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 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 does
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) The commission may approve a revenue decoupling mechanism
for a natural gas or electric utility that adjusts for increases or
decreases in actual sales volumes compared to the projected levels
used in the natural gas or electric utilities' most recent rate
case. In determining the revenue decoupling mechanism for a
utility, the commission shall give deference to the proposed
revenue decoupling mechanism submitted by the utility. The
commission may approve a revenue decoupling mechanism that is not
submitted by a utility if the commission determines that the
revenue decoupling mechanism is reasonable and prudent.
(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.
Sec. 6j. (1) As used in this act:
(a) "Power supply cost recovery clause" means a clause in the
electric
rates or rate schedule of a an
electric utility which that
permits the monthly adjustment of rates for power supply to allow
the utility to recover the booked costs, including transportation
costs, reclamation costs, and disposal and reprocessing costs, of
fuel burned by the utility for electric generation and the booked
costs of purchased and net interchanged power transactions by the
utility incurred under reasonable and prudent policies and
practices.
(b) "Power supply cost recovery factor" means that element of
the rates to be charged for electric service to reflect power
supply costs incurred by an electric utility and made pursuant to a
power supply cost recovery clause incorporated in the rates or rate
schedule of an electric utility.
(2)
Pursuant to its authority under this act, the The public
service commission may incorporate a power supply cost recovery
clause
in the electric rates or rate schedule of a an electric
utility. ,
but is not required to do so. Any
order incorporating a
power supply cost recovery clause shall be as a result of a hearing
solely on the question of the inclusion of the clause in the rates
or
rate schedule. , which A
hearing under this subsection shall
be
conducted as a contested case pursuant to chapter 4 of the
administrative
procedures act of 1969, Act No. 306 of the Public
Acts
of 1969, being sections 24.271 to 24.287 of the Michigan
Compiled
Laws, 1969 PA 306, MCL 24.271
to 24.287, or, pursuant to
subsection (18), as a result of a general rate case. Any order
incorporating a power supply cost recovery clause shall replace and
rescind any previous fuel cost adjustment clause or purchased and
net interchanged power adjustment clause incorporated in the
electric rates of the utility upon the effective date of the first
power supply cost recovery factor authorized for the utility under
its power supply cost recovery clause.
(3) In order to implement the power supply cost recovery
clause
established pursuant to under
subsection (2), a an electric
utility annually shall file, pursuant to procedures established by
the commission, if any, a complete power supply cost recovery plan
describing the expected sources of electric power supply and
changes in the cost of power supply anticipated over a future 12-
month period specified by the commission and requesting for each of
those 12 months a specific power supply cost recovery factor. The
plan
shall be filed not less later
than 3 months before the
beginning of the 12-month period covered by the plan. The plan
shall describe all major contracts and power supply arrangements
entered into by the utility for providing power supply during the
specified 12-month period. The description of the major contracts
and arrangements shall include the price of fuel, the duration of
the contract or arrangement, and an explanation or description of
any other term or provision as required by the commission. The plan
shall also include the utility's evaluation of the reasonableness
and prudence of its decisions to provide power supply in the manner
described in the plan, in light of its existing sources of
electrical generation, and an explanation of the actions taken by
the utility to minimize the cost of fuel to the utility.
(4)
In order to implement the a
power supply cost recovery
clause
established pursuant to under
subsection (2), a an electric
utility shall file, contemporaneously with the power supply cost
recovery plan required by subsection (3), a 5-year forecast of the
power supply requirements of its customers, its anticipated sources
of supply, and projections of power supply costs, in light of its
existing sources of electrical generation and sources of electrical
generation
under construction. The forecast shall include a all of
the following:
(a) A description of all relevant major contracts and power
supply
arrangements entered into or contemplated by the utility. ,
and
such
(b) A demonstration that the utility has adequate resources to
meet any reserve margin required by law.
(c)
Any other information as the
commission may require.
(5)
If a an electric utility files a power supply cost
recovery plan and a 5-year forecast as provided in subsections (3)
and (4), the commission shall conduct a proceeding, to be known as
a power supply and cost review, for the purpose of evaluating the
reasonableness and prudence of the power supply cost recovery plan
filed
by a utility pursuant to under
subsection (3), and
establishing the power supply cost recovery factors to implement a
power supply cost recovery clause incorporated in the electric
rates or rate schedule of the utility. The power supply and cost
review shall be conducted as a contested case pursuant to chapter 4
of
the administrative procedures act of 1969, Act No. 306 of the
Public
Acts of 1969.1969 PA 306, MCL
24.271 to 24.287.
(6) In its final order in a power supply and cost review, the
commission shall evaluate the reasonableness and prudence of the
decisions underlying the power supply cost recovery plan filed by
the
an electric utility pursuant to under subsection
(3), and shall
approve, disapprove, or amend the power supply cost recovery plan
accordingly. In evaluating the decisions underlying the power
supply cost recovery plan, the commission shall consider the cost
and availability of the electrical generation available to the
utility; the cost of short-term firm purchases available to the
utility; the availability of interruptible service; the ability of
the utility to reduce or to eliminate any firm sales to out-of-
state customers if the utility is not a multi-state utility whose
firm sales are subject to other regulatory authority; whether the
utility has taken all appropriate actions to minimize the cost of
fuel; and other relevant factors. The commission shall approve,
reject, or amend the 12 monthly power supply cost recovery factors
requested by the utility in its power supply cost recovery plan.
The factors shall not reflect items the commission could reasonably
anticipate would be disallowed under subsection (13). The factors
ordered shall be described in fixed dollar amounts per unit of
electricity, but may include specific amounts contingent on future
events.
(7) In its final order in a power supply and cost review, the
commission shall evaluate the decisions underlying the 5-year
forecast
filed by a an electric utility pursuant to under
subsection (4). The commission may also indicate any cost items in
the 5-year forecast that, on the basis of present evidence, the
commission would be unlikely to permit the utility to recover from
its customers in rates, rate schedules, or power supply cost
recovery factors established in the future.
(8) The commission, on its own motion or the motion of any
party, may make a finding and enter a temporary order granting
approval or partial approval of a power supply cost recovery plan
in a power supply and cost recovery review, after first having
given notice to the parties to the review, and after having
afforded to the parties to the review a reasonable opportunity for
a
full and complete hearing. A temporary order made pursuant to
under
this subsection shall be is considered
a final order for
purposes of judicial review.
(9) If the commission has made a final or temporary order in a
power
supply and cost review, the an
electric utility may each
month incorporate in its rates for the period covered by the order
any amounts up to the power supply cost recovery factors permitted
in that order. If the commission has not made a final or temporary
order
within 3 months of after the submission of a complete power
supply cost recovery plan, or by the beginning of the period
covered in the plan, whichever comes later, or if a temporary order
has expired without being extended or replaced, then pending an
order
which that determines the power supply cost recovery factors,
a utility may each month adjust its rates to incorporate all or a
part of the power supply cost recovery factors requested in its
plan. Any amounts collected under the power supply cost recovery
factors
before the commission makes its final order shall be is
subject to prompt refund with interest to the extent that the total
amounts collected exceed the total amounts determined in the
commission's final order to be reasonable and prudent for the same
period of time.
(10)
Not less later than 3 months before the beginning of the
third
quarter of the 12-month period , the described
in subsection
(3), an electric utility may file a revised power supply cost
recovery
plan which shall cover that
covers the remainder of the
12-month period. Upon receipt of the revised power supply cost
recovery plan, the commission shall reopen the power supply and
cost review. In addition, the commission may reopen the power
supply and cost review on its own motion or on the showing of good
cause by any party if at least 6 months have elapsed since the
utility submitted its complete filing and if there are at least 60
days remaining in the 12-month period under consideration. A
reopened power supply and cost review shall be conducted as a
contested case pursuant to chapter 4 of the administrative
procedures
act of 1969, Act No. 306 of the Public Acts of 1969,
1969 PA 306, MCL 24.271 to 24.287, and in accordance with
subsections (3), (6), (8), and (9).
(11)
Not more later than 45 days following after the
last day
of each billing month in which a power supply cost recovery factor
has
been applied to customers' bills, the an electric utility shall
file with the commission a detailed statement for that month of the
revenues recorded pursuant to the power supply cost recovery factor
and the allowance for cost of power supply included in the base
rates established in the latest commission order for the utility,
and the cost of power supply. The detailed statement shall be in
the manner and form prescribed by the commission. The commission
shall establish procedures for insuring that the detailed statement
is promptly verified and corrected if necessary.
(12) Not less than once a year, and not later than 3 months
after
the end of the 12-month period covered by a an electric
utility's power supply cost recovery plan, the commission shall
commence a proceeding, to be known as a power supply cost
reconciliation, as a contested case pursuant to chapter 4 of the
administrative
procedures act of 1969, Act No. 306 of the Public
Acts
of 1969. Reasonable 1969 PA
306, MCL 24.271 to 24.287. The
commission
shall permit reasonable discovery shall
be permitted
before and during the reconciliation proceeding in order to assist
parties and interested persons in obtaining evidence concerning
reconciliation issues including, but not limited to, the
reasonableness and prudence of expenditures and the amounts
collected pursuant to the clause. At the power supply cost
reconciliation the commission shall reconcile the revenues recorded
pursuant to the power supply cost recovery factors and the
allowance for cost of power supply included in the base rates
established in the latest commission order for the utility with the
amounts actually expensed and included in the cost of power supply
by the utility. The commission shall consider any issue regarding
the reasonableness and prudence of expenses for which customers
were charged if the issue was not considered adequately at a
previously conducted power supply and cost review.
(13) In its order in a power supply cost reconciliation, the
commission shall do all of the following:
(a) Disallow cost increases resulting from changes in
accounting or rate-making expense treatment not previously approved
by the commission. The commission may order the utility to pay a
penalty
of not to exceed more
than 25% of the amount improperly
collected. Costs incurred by the utility for penalty payments shall
not be charged to customers.
(b)
Disallow any capacity charges associated with power
purchased
for periods in excess of 6 months unless the utility has
obtained
the prior approval of the commission. If Not disallow the
capacity charges for any facilities if the commission has approved
capacity charges in a contract with a qualifying facility, as that
term
is defined by the federal energy
regulatory commission Federal
Energy Regulatory Commission pursuant to the public utilities
regulatory
policies act of 1978, Public Law 95-617, 92 Stat. Stat
3117,
the commission shall not disallow the capacity charges for
the
facility in the power supply cost reconciliation unless the
commission has ordered revised capacity charges upon
reconsideration
pursuant to under this subsection. A contract shall
be
is valid and binding in accordance with its terms, and
capacity
charges
paid pursuant to such a that
contract shall be are
recoverable costs of the utility for rate-making purposes
notwithstanding
that the order approving such a that
contract is
later vacated, modified, or otherwise held to be invalid in whole
or in part if the order approving the contract has not been stayed
or suspended by a competent court within 30 days after the date of
the
order, or within 30 days of the effective date of the 1987
amendatory
act that added subsection (19) by
July 29, 1987 if the
order
was issued after September 1, 1986
, and before the effective
date
of the 1987 amendatory act that added subsection (19). June
29, 1987. The scope and manner of the review of capacity charges
for a qualifying facility shall be determined by the commission.
Except as to approvals for qualifying facilities granted by the
commission
prior to before June 1, 1987, proceedings before the
commission
seeking such those approvals shall be conducted as a
contested case pursuant to chapter 4 of the administrative
procedures
act of 1969, Act No. 306 of the Public Acts of 1969.
1969 PA 306, MCL 24.271 to 24.287. The commission, upon its own
motion or upon application of any person, may reconsider its
approval of capacity charges in a contested case hearing after
passage of a period necessary for financing the qualifying
facility,
provided that:if both of
the following apply:
(i) The commission has first issued an order making a finding
based on evidence presented in a contested case that there has been
a substantial change in circumstances since the commission's
initial
approval. ; and
(ii) Such a The commission finding shall
be is set forth in a
commission order subject to immediate judicial review.
The financing period for a qualifying facility during which
previously approved capacity charges shall not be subject to
commission reconsideration shall be 17.5 years, beginning with the
date of commercial operation, for all qualifying facilities, except
that the minimum financing period before reconsideration of the
previously approved capacity charges shall be for the duration of
the
financing for a qualifying facility which that produces
electric energy by the use of biomass, waste, wood, hydroelectric,
wind, and other renewable resources, or any combination of
renewable resources, as the primary energy source.
(c) Disallow net increased costs attributable to a generating
plant outage of more than 90 days in duration unless the utility
demonstrates by clear and satisfactory evidence that the outage, or
any part of the outage, was not caused or prolonged by the
utility's negligence or by unreasonable or imprudent management.
(d) Disallow transportation costs attributable to capital
investments to develop a utility's capability to transport fuel or
relocate fuel at the utility's facilities and disallow unloading
and handling expenses incurred after receipt of fuel by the
utility.
(e) Disallow the cost of fuel purchased from an affiliated
company
to the extent that such the
fuel is more costly than fuel
of requisite quality available at or about the same time from other
suppliers with whom it would be comparably cost beneficial to deal.
(f) Disallow charges unreasonably or imprudently incurred for
fuel not taken.
(g) Disallow additional costs resulting from unreasonably or
imprudently renegotiated fuel contracts.
(h) Disallow penalty charges unreasonably or imprudently
incurred.
(i) Disallow demurrage charges.
(j) Disallow increases in charges for nuclear fuel disposal
unless the utility has received the prior approval of the
commission.
(14) In its order in a power supply cost reconciliation, the
commission
shall require a an
electric utility to refund to
customers or credit to customers' bills any net amount determined
to have been recovered over the period covered in excess of the
amounts determined to have been actually expensed by the utility
for power supply, and to have been incurred through reasonable and
prudent actions not precluded by the commission order in the power
supply
and cost review. Such The
commission shall apportion the
refunds
or credits shall be apportioned among the customers of the
utility utilizing procedures that the commission determines to be
reasonable. The commission may adopt different procedures with
respect to customers served under the various rate schedules of the
utility and may, in appropriate circumstances, order refunds or
credits in proportion to the excess amounts actually collected from
each such customer during the period covered.
(15) In its order in a power supply cost reconciliation, the
commission
shall authorize a an
electric utility to recover from
customers any net amount by which the amount determined to have
been recovered over the period covered was less than the amount
determined to have been actually expensed by the utility for power
supply, and to have been incurred through reasonable and prudent
actions not precluded by the commission order in the power supply
and cost review. For excess costs incurred through management
actions contrary to the commission's power supply and cost review
order, the commission shall authorize a utility to recover costs
incurred for power supply in the reconciliation period in excess of
the amount recovered over the period only if the utility
demonstrates by clear and convincing evidence that the excess
expenses were beyond the ability of the utility to control through
reasonable and prudent actions. For excess costs incurred through
management actions consistent with the commission's power supply
and cost review order, the commission shall authorize a utility to
recover costs incurred for power supply in the reconciliation
period in excess of the amount recovered over the period only if
the
utility demonstrates that the level of such those expenses
resulted
from reasonable and prudent management actions. Such The
amounts in excess of the amounts actually recovered by the utility
for power supply shall be apportioned among and charged to the
customers of the utility utilizing procedures that the commission
determines to be reasonable. The commission may adopt different
procedures with respect to customers served under the various rate
schedules of the utility and may, in appropriate circumstances,
order
charges to be made in proportion to the amounts which that
would
have been paid by such those
customers if the amounts in
excess of the amounts actually recovered by the utility for cost of
power supply had been included in the power supply cost recovery
factors
with respect to such those
customers during the period
covered.
Charges for such the excess amounts shall be spread over a
period that the commission determines to be appropriate.
(16)
If the commission orders refunds or credits pursuant to
under
subsection (14), or additional charges
to customers pursuant
to
under subsection (15), in its final order in a power
supply cost
reconciliation, the refunds, credits, or additional charges shall
include interest. In determining the interest included in a refund,
credit,
or additional charge pursuant to under this subsection, the
commission shall consider, to the extent material and practicable,
the time at which the excess recoveries or insufficient recoveries,
or both occurred. The commission shall determine a rate of interest
for excess recoveries, refunds, and credits equal to the greater of
the average short-term borrowing rate available to the utility
during the appropriate period, or the authorized rate of return on
the common stock of the utility during that same period. Costs
incurred by the utility for refunds and interest on refunds shall
not be charged to customers. The commission shall determine a rate
of interest for insufficient recoveries and additional charges
equal to the average short-term borrowing rate available to the
utility during the appropriate period.
(17) To avoid undue hardship or unduly burdensome or excessive
cost, the commission may do all of the following:
(a) Exempt an electric utility with fewer than 200,000
customers
in the this state of Michigan from 1 or more of the
procedural provisions of this section or may modify the filing
requirements of this section.
(b) Exempt an energy utility organized as a cooperative
corporation
pursuant to under sections 98 to 109 of Act No. 327 of
the
Public Acts of 1931, being sections 450.98 to 450.109 of the
Michigan
Compiled Laws, 1931 PA 327,
MCL 450.98 to 450.109, from 1
or more of the provisions of this section.
(18) Notwithstanding any other provision of this act, the
commission may, upon application by an electric utility, set power
supply cost recovery factors, in a manner otherwise consistent with
this
act, in an order resulting from a general rate case. Within
120
days following the effective date of this section, By October
27, 1987, for the purpose of setting power supply cost recovery
factors, the commission shall permit an electric utility to reopen
a general rate case in which a final order was issued within 120
days
before or after the effective date of this section June 29,
1987 or to amend an application or reopen the evidentiary record in
a pending general rate case. If the commission sets power supply
cost recovery factors in an order resulting from a general rate
case, all of the following apply:
(a) The power supply cost recovery factors shall cover a
future
period of 48 months or the number of months which that
elapse until the commission orders new power supply cost recovery
factors in a general rate case, whichever is the shorter period.
(b) Annual reconciliation proceedings shall be conducted
pursuant
to under subsection (12) and if an annual reconciliation
proceeding
shows a recoverable amount pursuant to under subsection
(15), the commission shall authorize the electric utility to defer
the
amount and to accumulate interest on the amount pursuant to
under subsection (16), and in the next order resulting from a
general rate case authorize the utility to recover the amount and
interest from its customers in the manner provided in subsection
(15).
(c)
The power supply cost recovery factors shall are not
be
subject
to revision pursuant to under
subsection (10).
(19)
Five years after the effective date of the amendatory act
that
added this subsection, By
June 29, 1992, and every 5 years
thereafter,
the standing committees of the house and senate that
deal
with responsible for
legislation concerning public utilities
shall
review the amendatory act that added this subsection.effect
of 1987 PA 81.
Sec. 6s. (1) An electric utility that proposes to
construct an
electric
generation facility, make a significant investment in an
existing
electric generation facility, purchase an existing
electric
generation facility, or enter into a power purchase
agreement
for the purchase of electric capacity for a period of 6
years
or longer may submit an application to the commission seeking
a
certificate of necessity for that construction, investment, or
purchase
if that construction, investment, or purchase costs
$500,000,000.00
or more and a portion of the costs would be
allocable
to retail customers in this state. A significant
investment
in an electric generation facility includes a group of
investments
reasonably planned to be made over a multiple year
period
not to exceed 6 years for a singular purpose such as
increasing
the capacity of an existing electric generation plant.
The
commission shall not issue a certificate of necessity under
this
section for any environmental upgrades to existing electric
generation
facilities or for a renewable energy system.
(1) The commission shall, within 120 days of the effective
date of the amendatory act that added section 6t and every 4 years
thereafter, commence a proceeding to establish statewide parameters
for integrated resource plans required under subsection (2). The
commission shall, in consultation with the Michigan agency for
energy and the department of environmental quality, do all of the
following in a proceeding under this subsection:
(a) Conduct an assessment of the potential for reduction in
energy waste in this state, based on what is economically feasible,
as well as technologically feasible.
(b) Identify any new state or federal environmental standard,
law, or rule and how that standard, law, or rule would affect
electric utilities in this state.
(c) Identify any proposed state or federal environmental
standard, law, or rule that has been published in the Michigan
register or the federal register and how the proposed standard,
law, or rule would affect electric utilities in this state.
(d) Identify any required reliability standards in areas of
this state.
(e) Establish the modeling scenarios and assumptions each
electric utility must use in developing its integrated resource
plan filed under subsection (2), including all of the following:
(i) Any required reliability standards.
(ii) All applicable state and federal environmental standards,
laws, and rules identified in this subsection.
(iii) Any required investments in generation, transmission,
and distribution infrastructure.
(iv) Any supply-side and demand-side resources that could
address any need for additional generation capacity, including, but
not limited to, the type of generation technology for any proposed
generation facility, projected energy efficiency savings, and
projected load management and demand response savings.
(v) Any regional infrastructure limitations in this state.
(vi) The projected costs of different types of fuel used for
electric generation.
(f) Allow other state agencies to provide input regarding any
other regulatory requirements that should be included in modeling
scenarios or assumptions.
(g) Publish a copy of the proposed modeling scenarios and
assumptions to be used in integrated resource plans on the
commission's website.
(h) Before issuing the final modeling scenarios and
assumptions each electric utility must use in developing its
integrated resource plan, receive written comments and hold
hearings to solicit public input regarding the proposed modeling
scenarios and assumptions.
(2) Not later than 2 years after the effective date of the
amendatory act that added section 6t, each electric utility whose
rates are regulated by the commission shall file with the
commission an integrated resource plan that minimizes the net
present value of forward-looking capital and production costs while
meeting all applicable state and federal reliability and
environmental regulations and provides a long-term projection of
the utility's load obligations and a plan to meet those obligations
over the ensuing term of the plan. The commission shall establish
filing requirements for an integrated resource plan that
demonstrates how the utility will comply with requirements to
provide generation reliability, including meeting reserve margin
requirements established by the commission or a federally
authorized regional transmission system operator for a 5-year, 10-
year, and 15-year planning period.
(3) (2)
The For an electric utility
with fewer than 1,000,000
customers, the commission may implement separate filing
requirements,
review criteria, and
approval standards for electric
utilities
with less than 1,000,000 retail customers who seek a
certificate
of necessity for projects costing less than
$500,000,000.00.that differ from those established under
subsection
(2). An electric utility providing electric tariff service to
customers both in this state and in at least 1 other state may
design its integrated resource plan to cover all its customers on
that multi-state basis. If an electric utility has filed a multi-
state integrated resource plan that includes its service area in
this state with the relevant utility regulatory commission in
another state in which it provides tariff service to retail
customers, the commission shall accept that integrated resource
plan filing in this state. However, the commission may require
supplemental information if necessary to evaluate the plan. Upon
request of an electric utility, the commission may adjust the
filing dates for a multi-state integrated resource plan filing in
this state to place its review on the same timeline as other
relevant state reviews.
(3)
An electric utility submitting an application under this
section
may request 1 or more of the following:
(a)
A certificate of necessity that the power to be supplied
as
a result of the proposed construction, investment, or purchase
is
needed.
(b)
A certificate of necessity that the size, fuel type, and
other
design characteristics of the existing or proposed electric
generation
facility or the terms of the power purchase agreement
represent
the most reasonable and prudent means of meeting that
power
need.
(c)
A certificate of necessity that the price specified in the
power
purchase agreement will be recovered in rates from the
electric
utility's customers.
(d)
A certificate of necessity that the estimated purchase or
capital
costs of and the financing plan for the existing or
proposed
electric generation facility, including, but not limited
to,
the costs of siting and licensing a new facility and the
estimated
cost of power from the new or proposed electric
generation
facility, will be recoverable in rates from the electric
utility's
customers subject to subsection (4)(c).
(4) Before filing its first integrated resource plan under
this section, each electric utility whose rates are regulated by
the commission shall issue a request for proposals to provide
generation capacity resources to serve the utility's reasonably
projected electric loads and applicable reserve margins for its
customers in this state and customers the utility serves in other
states during the initial 3-year planning period to be considered
in its integrated resource plan to be filed under this section. The
request for proposals is only required before the utility's filing
of its first integrated resource plan. Responses to a request for
proposals issued under this subsection should include proposals to
provide supply side turnkey construction of generating capacity
resources, renewable generation, or capacity storage, which assets
are designed to be purchased by the utility, and may include
proposals for the sale of existing generating assets, but shall not
include proposals for demand side resources. Respondents to a
request for proposals may request that certain proprietary
information be exempt from public disclosure as allowed by the
commission. A utility that issues a request for proposals under
this subsection shall use the resulting proposals to inform its
integrated resource plan filed under this section and include those
proposals as part of its integrated resource plan. A utility is not
required to accept any proposals submitted in response to its
request for proposals.
(5) (4)
Within Not later than 270 days of the filing of an
application
after an electric utility
files an integrated resource
plan under this section, the commission shall issue an order
granting
approving or denying,
with recommended changes, the
requested
certificate of necessity. utility's
integrated resource
plan.
The commission shall hold a hearing on
the application.
integrated resource plan. The hearing shall be conducted as a
contested case pursuant to chapter 4 of the administrative
procedures
act of 1969, 1969 PA 306, MCL 24.271 to 24.287. The
commission
shall allow intervention by interested persons.
Reasonable
The commission shall request
an advisory opinion from
the department of environmental quality regarding whether the
integrated resource plan can reasonably be expected to achieve
compliance with applicable state and federal environmental
regulations, and whether the proposed integrated resource plan can
reasonably be expected to result in pollution reductions required
by applicable state or federal regulations. The commission may
invite other state agencies to provide testimony regarding other
relevant regulatory requirements related to the integrated resource
plan.
The commission shall permit reasonable discovery
shall be
permitted
before after an integrated
resource plan is filed and
during the hearing in order to assist parties and interested
persons
in obtaining evidence concerning the application,
integrated resource plan, including, but not limited to, the
reasonableness
and prudence of the construction, investment, or
purchase
for which the certificate of necessity has been requested.
plan.
The commission shall grant the
request approve the
integrated
resource plan if it determines all of the following:
(a)
That the The electric utility has demonstrated a need for
the
power that would be supplied by the existing or proposed
electric
generation facility or pursuant to the proposed power
purchase
agreement through its approved integrated resource plan
that
complies with subsection (11).investments
and resources
included in the proposed integrated resource plan.
(b) The electric utility has demonstrated that the investments
and resources included in the proposed integrated resource plan
would be sufficient to provide the capacity necessary to serve the
utility's reasonably projected electric loads and applicable
reserve margins.
(c) (b)
The information supplied indicates
that the existing
or
proposed electric generation facility proposed integrated
resource plan and the resources contained in the plan will comply
with all applicable state and federal environmental standards,
laws, and rules.
(d) (c)
The estimated cost of power from the
existing or
proposed electric generation facility or the price of power
specified in the proposed power purchase agreement is reasonable.
The commission shall find that the cost is reasonable if, in the
construction or investment in a new or existing facility, to the
extent it is commercially practicable, the estimated costs are the
result of competitively bid engineering, procurement, and
construction contracts, or in a power purchase agreement, the cost
is the result of a competitive solicitation. Up to 150 days after
an electric utility makes its initial filing, it may file to update
its cost estimates if they have materially changed. No other aspect
of the initial filing may be modified unless the application is
withdrawn and refiled. A utility's filing updating its cost
estimates does not extend the period for the commission to issue an
order
granting approving or denying a certificate of necessity. the
integrated resource plan. An affiliate of an electric utility that
serves customers in this state and at least 1 other state may
participate in the competitive bidding to provide engineering,
procurement, and construction services to that electric utility for
a project covered by this section.
(e) (d)
The existing or proposed
electric generation facility
or
proposed power purchase agreement proposed
integrated resource
plan represents the most reasonable and prudent means of meeting
the
power need capacity needs relative to other resource options
for
meeting power demand, including energy efficiency programs and
electric
transmission efficiencies.capacity
needs, including energy
efficiency programs, demand side management, and transmission
efficiencies. To determine whether the integrated resource plan is
the most reasonable and prudent means of meeting capacity needs,
the commission shall consider whether the plan appropriately
balances all of the following factors:
(i) Resource adequacy and capacity to serve anticipated peak
electric loads and reserve margin requirements.
(ii) Compliance with applicable state and federal
environmental regulations.
(iii) Competitive pricing.
(iv) Reliability.
(v) Commodity price risks.
(vi) Diversity of generation supply.
(f) (e)
To the extent practicable, the
construction or
investment
in a new or existing facility capacity
resource in this
state is completed using a workforce composed of residents of this
state as determined by the commission. This subdivision does not
apply
to a facility capacity
resource that is located in a county
that lies on the border with another state.
(6) (5)
The commission may shall consider
any other costs or
information
related to the costs associated with the power that
would
be supplied by the existing or proposed electric generation
facility
or pursuant to the proposed purchase agreement proposed
integrated
resource plan or alternatives to the proposal
plan
raised by intervening parties, which may include electric
customers, potential resource suppliers of the utility's proposed
integrated resource plan, any regional transmission organization
serving any portion of the utility's service area, the attorney
general of this state, or any other parties approved by the
commission.
(7) (6)
In a certificate of necessity approving an integrated
resource plan under this section, the commission shall specify the
costs approved for the construction of or significant investment in
the
an electric generation facility, the price approved for
the
purchase
of the an existing electric generation facility, or the
price
approved for the a purchase of power pursuant to under the
terms of the power purchase agreement, or the costs associated with
other investments or resources used to meet capacity needs that are
included in the approved integrated resource plan. For power
purchase agreements that a utility enters into with an entity that
is not affiliated with that utility after the effective date of the
amendatory act that added section 6t, the commission may authorize
a rate of return that does not exceed the utility's weighted
average cost of capital. The costs for specifically identified
investments included in an approved integrated resource plan that
are commenced within 3 years after the commission's order approving
the initial plan, amended plan, or plan review are considered
reasonable and prudent for cost recovery purposes.
(8) (7)
The An electric utility shall annually, file, or more
frequent
frequently if required by the commission, file reports
to
the
commission regarding the status of any project for which a
certificate
of necessity an integrated
resource plan that has been
granted
approved under subsection (4), (5), including
an update
concerning
the cost and schedule of that project.any projects
included in the integrated resource plan.
(9) (8)
If the commission denies any of
the relief requested
by
an electric utility, an
electric utility's integrated resource
plan, the electric utility may withdraw its application or proceed
with
the a proposed construction, purchase, investment, or
power
purchase agreement contained in the withdrawn integrated resource
plan
without a certificate and the
assurances granted under this
section. If the commission denies the utility's integrated resource
plan but the utility accepts the commission's recommendations
regarding the integrated resource plan, the integrated resource
plan is considered approved as modified by the utility consistent
with the commission's recommendations.
(10) If the commission denies a utility's integrated resource
plan, and the utility does not accept the commission's
recommendations regarding the denied integrated resource plan under
subsection (9), the utility, within 30 days after the date of the
final order denying the integrated resource plan, may submit a
revised integrated resource plan to the commission for approval.
The commission shall commence a contested case hearing under
chapter 4 of the administrative procedures act of 1969, 1969 PA
306, MCL 24.271 to 24.287. Not later than 90 days after the date on
which the utility submits the revised integrated resource plan to
the commission, the commission shall issue a final order approving
or denying, with recommendations, the revised integrated resource
plan.
(11) Notwithstanding any other provision of law, an order by
the commission approving an integrated resource plan may be
reviewed by the court of appeals upon a filing by a party to the
commission proceeding within 30 days after the order is issued. All
appeals of the order shall be heard and determined as expeditiously
as possible with lawful precedence over other matters. Review on
appeal shall be based solely on the record before the commission
and briefs to the court and is limited to whether the order
conforms to the constitution and laws of this state and the United
States and is within the authority of the commission under this
act.
(12) (9)
Once the electric generation facility or power
purchase
agreement is considered used and useful or as otherwise
provided
in subsection (12), the The commission shall include in an
electric utility's retail rates all reasonable and prudent costs
for
an electric generation facility or power purchase agreement for
which
a certificate of necessity has been granted. an integrated
resource plan approved by the commission. The commission shall not
disallow recovery of costs an electric utility incurs in
constructing,
investing in, or purchasing an electric generation
facility
or in purchasing power pursuant to a power purchase
agreement
for which a certificate of necessity has been granted,
implementing an approved integrated resource plan, if the costs do
not
exceed the costs approved by the commission in the certificate.
Once
the electric generation facility or power purchase agreement
is
considered used and useful or as otherwise provided in
subsection
(12), the under subsection
(7). The commission shall
include in the electric utility's retail rates costs actually
incurred by the electric utility that exceed the costs approved by
the commission only if the commission finds that the additional
costs are reasonable and prudent. If the actual costs incurred by
the electric utility exceed the costs approved by the commission,
the electric utility has the burden of proving by a preponderance
of the evidence that the costs are reasonable and prudent. The
portion
of the cost of a plant, facility, or power purchase
agreement, which
or other investment in a
resource that meets a
demonstrated need for capacity that exceeds 110% of the cost
approved by the commission is presumed to have been incurred due to
a lack of prudence. The commission may include any or all of the
portion of the cost in excess of 110% of the cost approved by the
commission if the commission finds by a preponderance of the
evidence that the costs were prudently incurred.
(13) (10)
Within 90 days of after the
effective date of the
amendatory
act that added this section
6t, the commission shall
adopt standard application filing forms and instructions for use in
all
requests for a certificate of necessity an integrated resource
plan under this section. The commission may, in its discretion,
modify the standard application filing forms and instructions
adopted under this section.
(14) (11)
The commission shall establish
standards for an
integrated
resource plan that shall be filed by an electric utility
requesting
a certificate of necessity under
this section. An
integrated resource plan shall include all of the following:
(a) A long-term forecast of the electric utility's load growth
under various reasonable scenarios.
(b)
The type of generation technology proposed for the a
generation facility contained in the plan and the proposed capacity
of the generation facility, including projected fuel and regulatory
costs under various reasonable scenarios.
(c) Projected energy and capacity purchased or produced by the
electric
utility pursuant to any renewable portfolio standard.from
a clean energy resource.
(d)
Projected energy efficiency program savings under any
energy
efficiency program requirements and the projected costs for
that
program.Details regarding the
utility's plan to eliminate
energy waste, including the total amount of waste reduction
expected to be achieved annually, the cost of the plan, and the
expected savings for its retail customers.
(e) Projected load management and demand response savings for
the electric utility and the projected costs for those programs.
(f) An analysis of the availability and costs of other
electric resources that could defer, displace, or partially
displace the proposed generation facility or purchased power
agreement. ,
including additional renewable energy, energy
efficiency
programs, load management, and demand response, beyond
those
amounts contained in subdivisions (c) to (e).
(g)
Electric An analysis of
potential new or upgraded electric
transmission options for the electric utility.
(h) Data regarding the utility's current generation portfolio
including the age, licensing status, and remaining estimated time
of operation for each facility in the portfolio.
(i) Plans for meeting current and future capacity needs with
cost estimates for all proposed construction, major investments,
and power purchase agreements.
(j) An analysis of the cost, capacity factor, and viability of
all generation options available to meet projected capacity needs.
(k) Projected economic and environmental threats that could
impact rates and the delivery of service.
(l) Projected rate impact for the periods covered by the plan.
(m) How the utility will comply with all applicable state and
federal environmental standards, laws, and rules.
(n) A forecast of the utility's peak demand and details
regarding how the utility proposes to reduce peak demand.
(15)
(12) The commission shall allow financing interest cost
recovery in an electric utility's base rates on construction work
in progress for capital improvements approved under this section
prior to the assets being considered used and useful. Regardless of
whether or not the commission authorizes base rate treatment for
construction work in progress financing interest expense, an
electric
utility shall be allowed to may
recognize, accrue, and
defer the allowance for funds used during construction related to
equity capital.
(13)
As used in this section, "renewable energy system" means
that
term as defined in the clean, renewable, and efficient energy
act.
(16) An electric utility may seek amendments to an approved
integrated resource plan. The commission shall consider the
amendments under the same process and standards that govern the
review and approval of an integrated resource plan.
(17) An electric utility shall file an application for review
of its integrated resource plan not later than 3 years after the
effective date of the most recent commission order approving a
plan, a plan amendment, or a plan review. The commission shall
consider a plan review under the same process and standards
established in this section for review and approval of an
integrated resource plan.
(18) The commission may order an electric utility to file a
plan review. The department of environmental quality may request
the commission to order a plan review to address material changes
in environmental regulations and requirements that occur after the
commission's approval of an integrated resource plan. An electric
utility must file a plan review within 270 days after the
commission orders the utility to file a plan review.
Sec. 6t. (1) Not later than 90 days after the effective date
of the amendatory act that added this section, the commission shall
commence a study in collaboration with representatives of each
customer class, utilities with 1,000,000 or more retail customers
in this state, and other interested parties to consider the
adoption of performance-based regulation, under which a utility's
profits would depend on the utility achieving targeted policy
outcomes. The overall goal of performance-based regulation is to
foster greater innovation and investment by the utility industry in
this state, in light of the aging utility infrastructure in this
state and demands on the utilities with regard to the environment
and climate.
(2) In the study required under this section, the commission
shall review performance-based regulation systems that have been
implemented in another state or country, including, but not limited
to, the RIIO (revenue = incentives + innovation + outputs) model
utilized in the United Kingdom.
(3) A performance-based regulation system shall include, but
not be limited to, the following factors:
(a) A method for estimating the revenue needed by a utility
during a multi-year pricing period, and a fair return, that uses
forecasts of efficient total expenditures by the utility instead of
distinguishing between operating and capital costs.
(b) An increase in the length of time between rate cases, to
provide utilities with more opportunity to retain cost savings
without the threat of imminent rate adjustments, and to encourage
utilities to make investments that have payback periods longer than
5 years.
(c) Performance incentives established at the outset of a rate
period that pertain to issues such as customer satisfaction,
safety, reliability, conditions for connection, environmental
impact, and social obligations. Based on a utility's performance
regarding those incentives, a utility may receive financial rewards
or penalties that adjust its base revenue.
(d) Profit-sharing provisions that can spread efficiency gains
among consumers and utility shareholders and can reduce the degree
of downside risk associated with attempts at innovation.
(e) The use of utility-drafted business plans based on the
factors described in subdivisions (a) to (d) and informed by
consultation with environmental groups, consumer advocates,
government officials, and third-party service providers. A business
plan would include proposals for base revenue, various outcomes of
interest that will be pursued, the metrics that will be used to
gauge the achievement of those outcomes, and the methods that would
be used to manage uncertainty during the extended price control
period.
(4) Not later than 180 days after the effective date of the
amendatory act that added this section, the commission shall report
and make recommendations in writing to the legislature and governor
based on the result of the study conducted under this section.
Sec.
10. (1) Sections 10 This
section and sections 10a through
10bb
shall be known and may be cited as the "customer choice and
"electricity reliability act".
(2) The purpose of sections 10a through 10bb is to do all of
the following:
(a)
To ensure that all retail customers in this state of
electric
power have a choice of electric suppliers.
(b)
To allow and encourage the Michigan public service
commission
to foster competition in this state in the provision of
electric
supply and maintain regulation of electric supply for
customers
who continue to choose supply from incumbent electric
utilities.
(c)
To encourage the development and construction of merchant
plants
which will diversify the ownership of electric generation in
this
state.
(a) (d)
To ensure that all persons in this
state are afforded
safe,
reliable electric power at a reasonable competitive rate.
(b) (e)
To improve the opportunities for
economic development
in this state and to promote financially healthy and competitive
utilities in this state.
(c) (f)
To maintain, foster, and encourage
robust, reliable,
and economic generation, distribution, and transmission systems to
provide this state's electric suppliers and generators an
opportunity to access regional sources of generation and wholesale
power markets and to ensure a reliable supply of electricity in
this state.
Sec. 10a. (1) The commission shall issue orders establishing
the
rates, terms, and conditions of service that allow all retail
customers
of an electric utility or provider to choose to take
service from an alternative electric supplier. The orders shall do
all of the following:
(a)
Provide 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 administer and 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. , and shall provide, among other
things,
that existing customers who are taking electric service
from
an alternative electric supplier at a facility on the
effective
date of the amendatory act that added this subdivision
shall
be given an allocated annual energy allotment for that
service
at that facility, that customers seeking to expand usage at
a
facility served through an alternative electric supplier will be
given
next priority, with the remaining available load, if any,
allocated
on a first-come first-served basis. The procedures shall
also
provide how customer facilities will be defined for the
purpose
of assigning the annual energy allotments to be allocated
under
this section. The commission shall not allocate additional
annual
energy allotments at any time when the total annual energy
allotments
for the utility's distribution service territory is
greater
than 10% of the utility's weather-adjusted retail sales in
the
calendar year preceding the date of allocation. The annual
energy allotment awarded under this subdivision shall be used by
the commission to determine the eligibility of a customer to
receive service from an alternative electric supplier under
subdivision (d). 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,
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 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 the effective date of the amendatory
act
that added this subdivision that is similar in nature if the
customer
owns more than 50% of the new facility.
(c) (d)
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, shall be permitted to 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 the utility
agrees or if that customer and utility have entered into a
settlement agreement allowing the customer to purchase from an
alternative electric supplier.
(d) Provide that a customer that is taking service from an
alternative electric supplier on January 1, 2015 may elect to
continue to take service from an alternative electric supplier.
Except as provided in subdivision (e), beginning on the effective
date of the amendatory act that added section 6t, only customers
who are taking service from an alternative electric supplier on
January 1, 2015 are eligible to take service from an alternative
electric supplier. Not later than December 15, 2015, each customer
that is taking service from an alternative electric supplier shall
provide written notice to the electric utility that provides that
customer with distribution services. The written notice shall state
whether the customer will remain with an alternative electric
supplier or whether that customer intends to return to standard
tariff service with the electric utility upon the termination of
the customer's electricity supply contract with an alternative
electric supplier. If a customer intends to return to standard
tariff service, the customer shall include with the notice the date
that the customer intends to return to standard tariff service.
(e) Provide that a customer on a list awaiting retail open
access service on January 1, 2015 may elect to continue to remain
on the list to take service from an alternative electric supplier
if that service becomes available. Not later than December 15,
2015, each customer qualified to receive service under this
subdivision shall provide written notice to the electric utility
that provides that customer with distribution services. The written
notice shall state whether the customer will remain on the list of
customers qualified to receive retail open access service.
(f) Require each utility to file with the commission no later
than January 15, 2016 a list of all customers that have made an
election to be eligible for retail open access service under
subdivision (d) or (e). The filing must include the estimated
amount of electricity used by each customer.
(g) Provide that customers seeking to expand usage at a
facility that is served by an alternative electric supplier 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 the effective date of
the amendatory act that added section 6t that is similar in nature
if the customer owns more than 50% of the new facility, regardless
of whether the sales exceed 10% of the serving electric utility's
average weather-adjusted retail sales.
(h) Provide that a customer receiving 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. If a customer that was
receiving service from an alternative electric supplier on the
effective date of the amendatory act that added section 6t
subsequently elects to return to electric supply service from the
electric utility, that customer is no longer eligible to receive
electric supply service from an alternative electric supplier. A
customer that elects to continue to receive electric supply service
from an alternative electric supplier after providing a utility the
notice required under subdivision (d) may return to standard tariff
service from an electric utility if they provide the electric
utility 3 years' advance written notice of the intent to return to
standard tariff service. A notice of the intent to return to
standard tariff service under this subdivision is irrevocable. The
electric utility may waive any or part of this notice requirement
for any customer returning to standard tariff service. If a
customer returns to the utility for electric supply service without
providing 3 years' advance notice, any incremental costs, including
but not limited to, capacity, energy, ancillary services,
distribution service, and transmission service, associated with the
return of the customer shall not be borne by any other customer of
the electric utility or by the electric utility. If the return of a
customer that did not provide 3 years' advance notice to the
electric utility creates additional costs or impairs reliability,
the commission may establish tariff provisions or other terms and
conditions to assign those costs or impairments of reliability to
the returning customer.
(i) Provide that if the customer next on the list awaiting
retail open access service is notified that less than 10% of an
electric utility's average weather-adjusted retail sales for the
preceding calendar year is taking service from an alternative
electric supplier, the customer 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. The orders shall also
provide that if the customer next on the list awaiting retail open
access service refuses to take service from an alternative electric
supplier within 7 days after being notified that less than 10% of
an electric utility's average weather-adjusted retail sales for the
preceding calendar year is taking service from an alternative
electric supplier, that customer will be removed from the list and
is not eligible to receive electric generation service from an
alternative electric supplier.
(j) Provide that an electric utility has no duty to provide
generation resource adequacy for customers receiving service from
an alternative electric supplier under this section.
(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 that an alternative electric
supplier has the necessary financial, managerial, and technical
capabilities, shall require that an alternative electric supplier
files all of its electricity supply contracts with the commission,
the price terms of which may be filed under seal, shall require
that
an alternative electric supplier maintain records which 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) As a condition of licensure, except as provided under
subsection (4), an alternative electric supplier shall by November
1 of each year demonstrate to the commission, in a format
determined by the commission, that it will be able to supply enough
dedicated, firm, and physical electric generating capacity to serve
its retail electric customers' total current peak demand including
a reasonable projection of total peak demand growth, plus the
applicable planning reserve margin requirements, for the subsequent
3 years or the term of any contract, whichever is longer.
(4) If the appropriate independent system operator, where the
alternative electric supplier's demand is served, issues a resource
adequacy forecast or similar capacity assessment report that
projects a capacity shortfall within the subsequent 2-year period,
an alternative electric supplier shall demonstrate to the
commission by November 1 of the year in which the report is issued,
in a format determined by the commission, that it will be able to
supply enough dedicated, firm, and physical electric generating
capacity to serve its retail electric customers' total current peak
demand including a reasonable projection of total peak demand
growth, plus the applicable planning reserve margin requirements
for the subsequent 5 years or the term of any contract, whichever
is longer. If the appropriate independent system operator has not
issued a resource adequacy forecast or similar capacity assessment
report for at least the subsequent 2-year period, the commission
shall make a formal request to the appropriate independent system
operator to issue a resource adequacy forecast or similar capacity
assessment report.
(5) In determining whether an alternative electric supplier
has demonstrated adequate dedicated, firm, and physical electric
generating capacity to meet the requirements of subsections (3) and
(4), the commission shall only consider the following:
(a) Capacity that is physically located in or deliverable to
the resource adequacy zone, as defined by the appropriate
independent system operator, where the alternative electric
supplier's demand is served in this state.
(b) If the alternative electric supplier relies on power
purchase contracts for any portion of its demonstration of capacity
supply under subsections (3) and (4), that the power purchase
contracts are prepaid for the periods required under subsections
(3) and (4).
(c) If the alternative electric supplier relies on capacity
that is the result of a wholesale market auction for any portion of
its demonstration of capacity supply under subsections (3) and (4),
that the market auction purchases shall not exceed 5% of the
alternative electric supplier's capacity requirements under
subsections (3) and (4).
(d) If the alternative electric supplier's capacity purchases
under subdivision (b) or (c) require the capacity to be transported
into this state, that the alternative electric supplier has the
contracted transmission capacity to import that capacity into the
resource adequacy zone, as defined by the appropriate independent
system operator, where the alternative electric supplier's demand
is served in this state.
(6) If an alternative electric supplier is unable to
demonstrate to the commission that it has procured the dedicated,
firm, and physical capacity under the requirements of subsections
(3), (4), and (5), the commission shall notify the alternative
electric supplier in writing that the alternative electric supplier
has 60 days to remedy any defects identified by the commission. If
the alternative electric supplier fails to remedy the defects
identified by the commission within 60 days, the commission shall
revoke the alternative electric supplier's license to supply
electricity and bar that alternative electric supplier from
providing electricity supply in this state for a 3-year period.
(7) The commission's consideration of an alternative electric
supplier's annual demonstration of capacity required shall be
performed under a contested case proceeding under chapter 4 of the
administrative procedures act of 1969, 1969 PA 306, MCL 24.271 to
24.287.
(8) The commission shall establish planning reserve margin
requirements under subsections (3) and (4) for all customer
electric loads served by alternative electric suppliers in this
state. The planning reserve margin requirements shall be based on
recent actual levels of peak demand plus a reasonable projection of
5-year peak demand growth, and shall be designed to ensure that the
risk of an outage in this state due to lack of electricity supply
is no more likely than once every 10 years. The planning reserve
margin requirement may take into account customer demand response
measures only if the commission determines that the demand response
measures are as reliable as firm, physical generating capacity. The
commission may elect to use the planning reserve margin requirement
set by the appropriate independent system operator.
(9) (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.
(10) (4)
No later than December 2, 2000, the The commission
shall
establish a code of conduct that shall apply applies to
all
electric utilities. The code of conduct shall include, but is not
limited to, measures to prevent cross-subsidization, information
sharing,
and preferential treatment, between a an electric
utility's regulated electric services and unregulated retail open
access services, whether those services are provided by the utility
or the utility's affiliated entities. The code of conduct
established
under this subsection shall also be is applicable to
electric utilities and alternative electric suppliers consistent
with section 10, this section, and sections 10b through 10cc.
(11) (5)
An electric utility may offer its
customers an
appliance service program and other value added programs and
services. Except as otherwise provided by this section,
the utility
shall
comply with the code of conduct established by the commission
under
subsection (4). As used in this section, "appliance service
program"
or "program" means a subscription program for the repair
and
servicing of heating and cooling systems or other appliances.
(12) (6)
A utility offering a program under
subsection (5)
(11) shall do all of the following:
(a) Locate within a separate department of the utility or
affiliate within the utility's corporate structure the personnel
responsible for the day-to-day management of the program.
(b) Maintain separate books and records for the program,
access to which shall be made available to the commission upon
request.
(c) Not promote or market the program through the use of
utility billing inserts, printed messages on the utility's billing
materials, or other promotional materials included with customers'
utility bills.
(13) (7)
All costs directly attributable to an
appliance
service
a program allowed under subsection (5) (16) shall
be
allocated to the program as required by this subsection. The direct
and indirect costs of employees, vehicles, equipment, office space,
and
other facilities used in the appliance service program shall be
allocated to the program based upon the amount of use by the
program as compared to the total use of the employees, vehicles,
equipment, office space, and other facilities. The cost of the
program shall include administrative and general expense loading to
be determined in the same manner as the utility determines
administrative and general expense loading for all of the utility's
regulated and unregulated activities. A subsidy by a utility does
not exist if costs allocated as required by this subsection do not
exceed the revenue of the program.
(14) (8)
A utility may include charges for
its appliance
service
program programs offered
under subsection (11) on its
monthly billings to its customers if the utility complies with all
of the following requirements:
(a) All costs associated with the billing process, including
the postage, envelopes, paper, and printing expenses, are allocated
as
required under subsection (7).(13).
(b) A customer's regulated utility service is not terminated
for
nonpayment of the appliance service program portion portions of
the bill.
(c) Unless the customer directs otherwise in writing, a
partial payment by a customer is applied first to the bill for
regulated service.
(15) (9)
In marketing its appliance
service a program offered
under subsection (11) to the public, a utility shall do all of the
following:
(a) The list of customers receiving regulated service from the
utility
shall be available to a provider of appliance repair
service
the program upon request within 2 business days. The
customer list shall be provided in the same electronic format as
such
that information is provided to the appliance service program.
A new customer shall be added to the customer list within 1
business day of the date the customer requested to turn on service.
(b) Appropriately allocate costs as required under subsection
(7)
(13) when personnel employed at a utility's call center
provide
appliance
service program marketing
information to a prospective
customer.
(c)
Prior to Before enrolling a customer into the program, the
utility shall inform the potential customer of all of the
following:
(i) That appliance service programs may be
available from
another provider.
(ii) That the appliance service program is not
regulated by
the commission.
(iii) That a new customer shall have has 10
days after
enrollment to cancel his or her appliance service program contract
without penalty. This cancellation period does not apply to a
utility's other value added programs and services offered under
subsection (11).
(iv) That the customer's regulated rates and conditions of
service provided by the utility are not affected by enrollment in
the program or by the decision of the customer to use the services
of
another provider of appliance repair service.a program.
(d) The utility name and logo may be used to market the
appliance
service program provided that if the
program is not
marketed
in conjunction with a regulated service. To the extent
that
If a program utilizes the utility's name and logo in
marketing
the program, the program shall include language on all material
indicating that the program is not regulated by the commission.
Costs shall not be allocated to the program for the use of the
utility's name or logo.
(16) (10)
This section does not prohibit the commission from
requiring
a utility The commission is
not required to include
revenues
from an appliance service a
program in establishing base
rates.
If the commission includes the revenues of an appliance
service
a program in determining a utility's base rates, the
commission shall also include all of the costs of the program as
determined under this section. The commission may permit a utility
to retain profits generated by a program, and the utility may use a
portion of the revenues from a program to invest in business
development of new programs and services.
(11)
Except as otherwise provided in this section, the code of
conduct
with respect to an appliance service program shall not
require
a utility to form a separate affiliate or division to
operate
an appliance service program, impose further restrictions
on
the sharing of employees, vehicles, equipment, office space, and
other
facilities, or require the utility to provide other providers
of
appliance repair service with access to utility employees,
vehicles,
equipment, office space, or other facilities.
(17) (12)
This act does not prohibit or limit
the right of a
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 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.
(18) (13)
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. 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.
(19) (14)
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, shall are not be 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 fully consider that
qualifying facility's legal and financial interests.
(15)
A customer who 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. The procedures in place
for
each electric utility as of January 1, 2008 that set forth the
terms
pursuant to which a customer receiving service from an
alternative
electric supplier may return to full service from the
electric
utility are ratified and shall remain in effect and may be
amended
by the commission as needed. If an electric utility did not
have
the procedures in place as of January 1, 2008, the commission
shall
adopt those procedures.
(20) (16)
The commission shall authorize
rates that will
ensure that an electric utility that offered retail open access
service
from 2002 through the effective date of the amendatory act
that
added this subsection 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 pursuant to under section
10d(4)
as it existed prior to the effective date of the amendatory
act
that added this subsection, before
October 6, 2008, that have
been authorized for recovery by the commission in orders issued
prior
to the effective date of the amendatory act that added this
subsection.
before October 6, 2008. The commission shall approve
surcharges
that will ensure full recovery of all such costs within
5
years of the effective date of the amendatory act that added this
subsection.by October 6, 2013.
(17)
As used in subsections (1) and (15):
(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.
(21) 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) "Appliance service program" means a subscription program
for the repair and servicing of heating and cooling systems or
other appliances.
(d) "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.
(e) "Program" means an appliance service program or other
value added programs and services, or both.
(f) "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 that do
not elect to receive generation service from alternative electric
suppliers.
Sec. 10f. (1) If, After after subtracting
the average demand
for each retail customer under contract that exceeds 15% of the
utility's retail load in the relevant market, an electric utility
has commercial control over more than 30% of the generating
capacity available to serve a relevant market, the utility shall do
1 or more of the following with respect to any generation in excess
of that required to serve its firm retail sales load, including a
reasonable reserve margin:
(a) Divest a portion of its generating capacity.
(b) Sell generating capacity under a contract with a nonretail
purchaser for a term of at least 5 years.
(c) Transfer generating capacity to an independent brokering
trustee for a term of at least 5 years in blocks of at least 500
megawatts, 24 hours per day.
(2) The total generating capacity available to serve the
relevant market shall be determined by the commission and shall
equal the sum of the firm available transmission capability into
the relevant market and the aggregate generating capacity located
within the relevant market, less 1 or more of the following:
(a) If a municipal utility does not permit its retail
customers to select alternative electric suppliers, the generating
capacity owned by a municipal utility necessary to serve the retail
native load.
(b) Generating capacity dedicated to serving on-site load.
(c) The generating capacity of any multistate electric
supplier jurisdictionally assigned to customers of other states.
(3) Within 30 days after a commission determination of the
total generating capacity under subsection (2) in a relevant
market, an electric utility that exceeds the 30% limit shall file
an application with the commission for approval of a market power
mitigation plan. The commission shall approve the plan if it is
consistent with this act or require modifications to the plan to
make
it consistent with this act. The utility shall retain retains
the right to determine what specific actions to take to achieve
compliance with this section.
(4) An independent brokering trustee shall be completely
independent from and have no affiliation with the utility. The
terms of any transfer of generating capacity shall ensure that the
trustee has complete control over the marketing, pricing, and terms
of the transferred capacity for at least 5 years and shall provide
appropriate performance incentives to the trustee for marketing the
transferred capacity.
(5) Upon application to the commission by the utility, the
commission may issue an order approving a change in trustees during
the 5-year term upon a showing that a trustee has failed to market
the transferred generating capacity in a prudent and experienced
manner.
(6)
Within 1 year of the effective date of the amendatory act
that
added this section, the commission shall issue a report to the
governor
and the legislature that analyzes all aspects relating to
market
power in the Upper Peninsula of this state. The report shall
include,
but not be limited to, concentration of generating
capacity,
control of the transmission system, restrictions on the
delivery
of power, ability of new suppliers to enter the market,
and
identification of any market power problems under the existing
market
power test. Prior to issuing its report, the commission
shall
receive written comments and hold hearings to solicit public
input.
Sec. 10p. (1) Each electric utility operating in this state
shall establish an industry worker transition program that shall,
in consultation with employees or applicable collective bargaining
representatives, provide skills upgrades, apprenticeship and
training programs, voluntary separation packages consistent with
reasonable business practices, and job banks to coordinate and
assist placement of employees into comparable employment at no less
than the wage rates and substantially equivalent fringe benefits
received before the transition.
(2)
The costs resulting from subsection (1) shall include
audited and verified employee-related restructuring costs that are
incurred
as a result of the amendatory act that added this section
2000 PA 141 or as a result of prior commission restructuring
orders, including employee severance costs, employee retraining
programs, early retirement programs, outplacement programs, and
similar costs and programs, that have been approved and found to be
prudently incurred by the commission.
(3) In the event of a sale, purchase, or any other transfer of
ownership of 1 or more Michigan divisions or business units, or
generating stations or generating units, of an electric utility, to
either a third party or a utility subsidiary, the electric
utility's contract and agreements with the acquiring entity or
persons shall require all of the following for a period of at least
30 months:
(a) That the acquiring entity or persons hire a sufficient
number of nonsupervisory employees to safely and reliably operate
and maintain the station, division, or unit by making offers of
employment to the nonsupervisory workforce of the electric
utility's division, business unit, generating station, or
generating unit.
(b) That the acquiring entity or persons not employ
nonsupervisory employees from outside the electric utility's
workforce unless offers of employment have been made to all
qualified nonsupervisory employees of the acquired business unit or
facility.
(c) That the acquiring entity or persons have a dispute
resolution mechanism culminating in a final and binding decision by
a neutral third party for resolving employee complaints or disputes
over wages, fringe benefits, and working conditions.
(d) That the acquiring entity or persons offer employment at
no less than the wage rates and substantially equivalent fringe
benefits and terms and conditions of employment that are in effect
at the time of transfer of ownership of the division, business
unit, generating station, or generating unit. The wage rates and
substantially equivalent fringe benefits and terms and conditions
of employment shall continue for at least 30 months from the time
of the transfer of ownership unless the employees, or where
applicable collective bargaining representative, and the new
employer mutually agree to different terms and conditions of
employment within that 30-month period.
(4) The electric utility shall offer a transition plan to
those employees who are not offered jobs by the entity because the
entity has a need for fewer workers. If there is litigation
concerning the sale, or other transfer of ownership of the electric
utility's divisions, business units, generating stations, or
generating units, the 30-month period under subsection (3) begins
on the date the acquiring entity or persons take control or
management of the divisions, business units, generating stations,
or generating units of the electric utility.
(5) The commission shall adopt generally applicable service
quality and reliability standards for the transmission, generation,
and distribution systems of electric utilities and other entities
subject to its jurisdiction, including, but not limited to,
standards for service outages, distribution facility upgrades,
repairs and maintenance, telephone service, billing service,
operational reliability, and public and worker safety. In setting
service quality and reliability standards, the commission shall
consider safety, costs, local geography and weather, applicable
codes, national electric industry practices, sound engineering
judgment, and experience. The commission shall also include
provisions to upgrade the service quality of distribution circuits
that historically have experienced significantly below-average
performance in relationship to similar distribution circuits.
(6) Annually, each jurisdictional utility or entity shall file
its report with the commission detailing actions to be taken to
comply with the service quality and reliability standards during
the next calendar year and its performance in relation to the
service quality and reliability standards during the prior calendar
year. The annual reports shall contain that data as required by the
commission, including the estimated cost of achieving improvements
in the jurisdictional utility's or entity's performance with
respect to the service quality and reliability standards.
(7) The commission shall analyze the data to determine whether
the jurisdictional entities are properly operating and maintaining
their systems and take corrective action if needed.
(8)
The commission shall submit a report to the governor and
the
legislature by September 1, 2009. In preparing the report, the
commission
should review and consider relevant existing customer
surveys
and examine what other states have done. This report shall
include
all of the following:
(a)
An assessment of the major types of end-use customer power
quality
disturbances, including, but not limited to, voltage sags,
overvoltages,
oscillatory transients, voltage swells, distortion,
power
frequency variations, and interruptions, caused by both the
distribution
and transmission systems within this state.
(b)
An assessment of utility power plant generating cost
efficiency,
including, but not limited to, operational efficiency,
economic
generating cost efficiency, and schedules for planned and
unplanned
outages.
(c)
Current efforts employed by the commission to monitor or
enforce
standards pertaining to end-use customer power quality
disturbances
and utility power plant generating cost efficiency
either
through current practice, statute, policy, or rule.
(d)
Recommendations for use of common characteristics,
measures,
and indices to monitor power quality disturbances and
power
plant generating cost efficiency, such as expert customer
service
assessments, frequency of disturbance occurrence, duration
of
disturbance, and voltage magnitude.
(e)
Recommendations for statutory changes that would be
necessary
to enable the commission to properly monitor and enforce
standards
to optimize power plant generating cost efficiency and
minimize
power quality disturbances. These recommendations shall
include
recommendations to provide methods to ensure that this
state
can obtain optimal and cost-effective end-use customer power
quality
to attract economic development and investment into the
state.
(8) (9)
By December 31, 2009, the
commission shall , based on
its
findings in subsection (8), review
its existing rules under
this section and amend the rules, if needed, under the
administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
24.328, to implement performance standards for generation
facilities and for distribution facilities to protect end-use
customers from power quality disturbances.
(9) (10)
Any standards or rules developed
under this section
shall be designed to do the following, as applicable:
(a) Establish different requirements for each customer class,
whenever those different requirements are appropriate to carry out
the provisions of this section, and to reflect different load and
service characteristics of each customer class.
(b) Consider the availability and associated cost of necessary
equipment and labor required to maintain or upgrade distribution
and generating facilities.
(c) Ensure that the most cost-effective means of addressing
power quality disturbances are promoted for each utility, including
consideration of the installation of equipment or adoption of
operating practices at the end-user's location.
(d) Take into account the extent to which the benefits
associated with achieving a specified standard or improvement are
offset by the incremental capital, fuel, and operation and
maintenance expenses associated with meeting the specified standard
or improvement.
(e) Carefully consider the time frame for achieving a
specified standard, taking into account the time required to
implement needed investments or modify operating practices.
(10) (11)
The commission shall also create
benchmarks for
individual jurisdictional entities within their rate-making process
in order to accomplish the goals of this section to alleviate end-
use customer power quality disturbances and promote power plant
generating cost efficiency.
(11) (12)
The commission shall establish a
method for
gathering data from the industrial customer class to assist in
monitoring power quality and reliability standards related to
service characteristics of the industrial customer class.
(12) (13)
The commission is authorized to may levy
financial
incentives and penalties upon any jurisdictional entity which
exceeds or fails to meet the service quality and reliability
standards.
(13) (14)
As used in this section,
"jurisdictional utility" or
"jurisdictional entity" means jurisdictional regulated utility as
that term is defined in section 6q.
Sec. 10r. (1) The commission shall establish minimum standards
for the form and content of all disclosures, explanations, or sales
information disseminated by a person selling electric service to
ensure that the person provides adequate, accurate, and
understandable information about the service that enables a
customer to make an informed decision relating to the source and
type of electric service purchased. The standards shall be
developed to do all of the following:
(a) Not be unduly burdensome.
(b) Not unnecessarily delay or inhibit the initiation and
development of competition for electric generation service in any
market.
(c) Establish different requirements for disclosures,
explanations, or sales information relating to different services
or similar services to different classes of customers, whenever the
different requirements are appropriate to carry out the purposes of
this section.
(2)
The commission shall require that
, starting January 1,
2002,
all electric suppliers disclose in
standardized, uniform
format on the customer's bill with a bill insert, on customer
contracts, or, for cooperatives, in periodicals issued by an
association of rural electric cooperatives, information about the
environmental characteristics of electricity products purchased by
the customer, including all of the following:
(a) The average fuel mix, including categories for oil, gas,
coal, solar, hydroelectric, wind, biofuel, nuclear, solid waste
incineration, biomass, and other fuel sources. If a source fits
into the other category, the specific source must be disclosed. A
regional average, determined by the commission, may be used only
for that portion of the electricity purchased by the customer for
which
the fuel mix cannot be discerned. For the purposes of As used
in this subdivision, "biomass" means dedicated crops grown for
energy production and organic waste.
(b) The average emissions, in pounds per megawatt hour, sulfur
dioxide, carbon dioxide, and oxides of nitrogen. An emissions
default, determined by the commission, may be used if the regional
average fuel mix is being disclosed.
(c) The average of the high-level nuclear waste generated in
pounds per megawatt hour.
(d) The regional average fuel mix and emissions profile as
referenced in subdivisions (a), (b), and (c).
(3) The information required by subsection (2) shall be
provided no more than twice annually, and be based on a rolling
annual average. Emissions factors will be based on annual publicly
available data by generation source.
(4) All of the information required to be provided under
subsection (1) shall also be provided to the commission to be
included on the commission's internet site.
(5) The commission shall establish the Michigan renewables
energy program. The program shall be designed to inform customers
in this state of the availability and value of using renewable
energy generation and the potential of reduced pollution. The
program shall also be designed to promote the use of existing
renewable energy sources and encourage the development of new
facilities.
(6)
Within 2 years of the effective date of the amendatory act
that
added this subsection, the commission shall conduct a study
and
report to the governor and the house and senate standing
committees
with oversight of public utilities issues on the
advisability
of separating electric distribution and generation
within
electric utilities, taking into account the costs, benefits,
efficiencies
to be gained or lost, effects on customers, effects on
reliability
or quality of service, and other factors which the
commission
determines are appropriate. The report shall include,
but
is not limited to, the advisability of locating within separate
departments
of the utility the personnel responsible for the day-
to-day
management of electric distribution and generation and
maintaining
separate books and records for electric distribution
and
generation.
(7)
Two years after the effective date of the amendatory act
that
added this subsection, the commission shall conduct a study
and
report to the governor and the house and senate standing
committees
with oversight of public utilities issues on whether the
state
would benefit from the creation of a purchasing pool in which
electric
generation in this state is purchased and then resold. The
report
shall include, but is not limited to, whether the purchasing
pool
shall be a separate entity from electric utilities, the impact
of
such a pool on electric utilities' management of their
electrical
generating assets, and whether ratepayers would benefit
from
spreading the cost of new electric generation across all or a
portion
of this state.
(6) (8)
Within 270 days of the effective date of the
amendatory
act that added this subsection, By
July 3, 2009, each
electric utility regulated by the commission shall file with the
commission a plan for utilizing dispatchable customer-owned
distributed generation within the context of its integrated
resource planning process. Included in the utility's filing shall
be proposals for enrolling and compensating customers for the
utility's right to dispatch at-will the distributed generation
assets owned by those customers and provisions requiring the
customer to maintain these assets in a dispatchable condition. If
an electric utility already has programs addressing the subject of
the filing required under this subsection, the utility may refer to
and take credit for those existing programs in its proposed plan.
Sec. 10t. (1) An electric utility or alternative electric
supplier shall not shut off service to an eligible customer during
the heating season for nonpayment of a delinquent account if the
customer is an eligible senior citizen customer or if the customer
pays to the utility or supplier a monthly amount equal to 7% of the
estimated annual bill for the eligible customer and the eligible
customer demonstrates, within 14 days of requesting shutoff
protection, that he or she has applied for state or federal heating
assistance. If an arrearage exists at the time an eligible customer
applies for protection from shutoff of service during the heating
season, the utility or supplier shall permit the customer to pay
the arrearage in equal monthly installments between the date of
application and the start of the subsequent heating season.
(2) An electric utility or alternative electric supplier may
shut off service to a customer as provided in part 7 of the clean
and efficient energy act, 2008 PA 295, MCL 460.1201 to 460.1211, or
to an eligible low-income customer who does not pay the monthly
amounts required under subsection (1) after giving notice in the
manner required by rules. The utility or supplier is not required
to offer a settlement agreement to an eligible low-income customer
who fails to make the monthly payments required under subsection
(1).
(3) If a customer fails to comply with the terms and
conditions of this section, an electric utility may shut off
service on its own behalf or on behalf of an alternative electric
supplier after giving the customer a notice, by personal service or
first-class mail, that contains all of the following information:
(a) That the customer has not paid the per-meter charge under
section 207 of the clean and efficient energy act, 2008 PA 295, MCL
460.1207, or the customer has defaulted on the winter protection
plan.
(b) The nature of the default.
(c) That unless the customer makes the payments that are past
due within 10 days of the date of mailing, the utility or supplier
may shut off service.
(d) The date on or after which the utility or supplier may
shut off service, unless the customer takes appropriate action.
(e) That the customer has the right to file a complaint
disputing the claim of the utility or supplier before the date of
the proposed shutoff of service.
(f) That the customer has the right to request a hearing
before a hearing officer if the complaint cannot be otherwise
resolved and that the customer shall pay to the utility or supplier
that portion of the bill that is not in dispute within 3 days of
the date that the customer requests a hearing.
(g) That the customer has the right to represent himself or
herself, to be represented by an attorney, or to be assisted by any
other person of his or her choice in the complaint process.
(h) That the utility or supplier will not shut off service
pending the resolution of a complaint that is filed with the
utility in accordance with this section.
(i) The telephone number and address of the utility or
supplier where the customer may make inquiry, enter into a
settlement agreement, or file a complaint.
(j) That the customer should contact a social services agency
immediately if the customer believes he or she might be eligible
for emergency economic assistance.
(k) That the utility or supplier will postpone shutoff of
service if a medical emergency exists at the customer's residence.
(l) That the utility or supplier may require a deposit and
restoration charge if the supplier shuts off service for nonpayment
of a delinquent account.
(4) An electric utility is not required to shut off service
under this section to an eligible customer for nonpayment to an
alternative electric supplier.
(5) The commission shall establish an educational program to
ensure that eligible customers are informed of the requirements and
benefits of this section.
(6) As used in this section:
(a) "Eligible customer" means either an eligible low-income
customer or an eligible senior citizen customer.
(b) "Eligible low-income customer" means a customer whose
household income does not exceed 150% of the poverty level, as
published by the United States department of health and human
services, or who receives any of the following:
(i) Assistance from a state emergency relief program.
(ii) Food stamps.
(iii) Medicaid.
(c) "Eligible senior citizen customer" means a utility or
supplier customer who is 65 years of age or older and who advises
the utility of his or her eligibility.
Enacting section 1. Section 6e of 1939 PA 3, MCL 460.6e, is
repealed.
Enacting section 2. This amendatory act takes effect 90 days
after the date it is enacted into law.
