Bill Text: MI SB0437 | 2015-2016 | 98th Legislature | Engrossed
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-Engrossed.html
SB-0437, As Passed House, December 15, 2016
HOUSE SUBSTITUTE FOR
SENATE BILL NO. 437
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, 6k, 6l, 6m, 6s, 10, 10a,
10c, 10f, 10p, 10r, 10t, 10dd, and 11 (MCL 460.6a, 460.6j, 460.6k,
460.6l, 460.6m, 460.6s, 460.10, 460.10a, 460.10c, 460.10f, 460.10p,
460.10r, 460.10t, 460.10dd, and 460.11), the title as amended by
2005 PA 190, sections 6a, 10, 10a, 10p, and 10r as amended and
sections 6s and 10dd as added by 2008 PA 286, section 6j as amended
by 1987 PA 81, section 6k as added by 1982 PA 304, section 6l as
amended and sections 10c, 10f, and 10t as added by 2000 PA 141,
section 6m as amended by 2014 PA 170, and section 11 as amended by
2014 PA 169, and by adding sections 6t, 6u, 6v, 6w, 6x, 6z, 10ee,
and 10ff; 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 powers and
duties of certain state governmental officers and entities; to
provide for the continuance, transfer, and completion of certain
matters and proceedings; to abolish automatic adjustment clauses;
to prohibit certain rate increases without notice and hearing; to
qualify residential energy conservation programs permitted under
state
law for certain federal exemption; to create a fund; to
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 utility, electric utility, or steam
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. A
utility shall coordinate with the commission staff in advance of
filing its general rate case application under this section to
avoid resource challenges with applications being filed at the same
time as applications filed under this section by other utilities.
In the case of electric utilities serving more than 1,000,000
customers in this state, the commission may, if necessary, order a
delay in filing an application to establish a 21-day spacing
between filings of electric utilities serving more than 1,000,000
customers in this state. The utility shall place in evidence facts
relied upon to support the utility's petition or application to
increase its rates and charges, or to alter, change, or amend any
rate or rate schedules. The commission shall require notice to be
given to all interested parties within the service area to be
affected, and all interested parties shall have a reasonable
opportunity for a full and complete hearing. A utility may use
projected costs and revenues for a future consecutive 12-month
period in developing its requested rates and charges. The
commission
shall notify the utility within 30 days of after filing,
whether the utility's petition or application is complete. A
petition or application is considered complete if it complies with
the rate application filing forms and instructions adopted under
subsection
(6). (8). A petition or application pending before the
commission
prior to the adoption of filing forms and instructions
pursuant
to subsection (6) shall be evaluated based upon the filing
requirements
in effect at the time the petition or application was
filed.
If the application is not complete,
the commission shall
notify the utility of all information necessary to make that filing
complete. If the commission has not notified the utility within 30
days of whether the utility's petition or application is complete,
the application is considered complete. Concurrently with filing a
complete application, or at any time after filing a complete
application, a gas utility serving fewer than 1,000,000 customers
in this state may file a motion seeking partial and immediate rate
relief. After providing notice to the interested parties within the
service area to be affected and affording interested parties a
reasonable opportunity to present written evidence and written
arguments relevant to the motion seeking partial and immediate rate
relief, the commission shall make a finding and enter an order
granting or denying partial and immediate relief within 180 days
after the motion seeking partial and immediate rate relief was
submitted. The commission has 12 months to issue a final order in a
case in which a gas utility has filed a motion seeking partial and
immediate rate relief.
(2) 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 before
the calendar date
corresponding to the start of the projected 12-month period. For
good cause, the commission may issue a temporary order preventing
or delaying a utility from implementing its proposed rates or
charges. If a utility implements increased rates or charges under
this subsection before the commission issues a final order, that
utility shall refund to customers, with interest, any portion of
the total revenues collected through application of the equal
percentage increase that exceed the total that would have been
produced by the rates or charges subsequently ordered by the
commission in its final order. The commission shall allocate any
refund
required by this section subsection
among primary customers
based upon their pro rata share of the total revenue collected
through the applicable increase, and among secondary and
residential customers in a manner to be determined by the
commission. The rate of interest for refunds shall equal 5% plus
the London interbank offered rate (LIBOR) for the appropriate time
period.
For any portion of the refund which, that, exclusive of
interest, exceeds 25% of the annual revenue increase awarded by the
commission in its final order, the rate of interest shall be the
authorized rate of return on the common stock of the utility during
the appropriate period. Any refund or interest awarded under this
subsection shall not be included, in whole or in part, in any
application
for a rate increase by a utility. Nothing in this This
subsection only applies to completed applications filed with the
commission before the effective date of the amendatory act that
added section 6t.
(3)
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, or
purchased steam 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, or
purchased
steam. The rates charged by any utility
pursuant to under
an
automatic fuel, or purchased
gas, or purchased steam 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, or purchased steam.
(4) (2)
The commission shall adopt rules
and procedures for
the filing, investigation, and hearing of petitions or applications
to increase or decrease utility rates and charges as the commission
finds necessary or appropriate to enable it to reach a final
decision with respect to petitions or applications within a period
of
12 months from time
allotted by law to issue a final order after
the filing of the complete petitions or applications. The
commission shall not authorize or approve adjustment clauses that
operate without notice and an opportunity for a full and complete
hearing,
and all such clauses shall be are
abolished. The
commission may hold a full and complete hearing to determine the
cost of fuel, purchased gas, purchased steam, or purchased power
separately from a full and complete hearing on a general rate case
and
may be held hold that
hearing concurrently with the general
rate case. The commission shall authorize a utility to recover the
cost of fuel, purchased gas, purchased steam, 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.
(5) (3)
Except as otherwise provided in
this subsection and
subsection (1), 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 10 months from after the date of the
amendment to
reach a final decision on the petition or application. If the
utility files for an extension of time, the commission shall extend
the
12-month 10-month period by the amount of additional time
requested by the utility.
(6) (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).
(7) (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
serving 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 not to
use 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.
(8) (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.
(9) (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), (10), 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.
(10) (8)
The total aggregate additional
amounts recoverable by
merchant
plants pursuant to under subsection (7) (9) in excess of
the amounts paid under the contracts shall not exceed $1,000,000.00
per month for each affected electric utility. The $1,000,000.00 per
month limit specified in this subsection shall be reviewed by the
commission upon petition of the merchant plant filed no more than
once per year and may be adjusted if the commission finds that the
eligible merchant plants reasonably and prudently incurred actual
fuel and variable operation and maintenance costs exceed the amount
that those merchant plants are paid under the contract by more than
$1,000,000.00 per month. The annual amount of the adjustments shall
not exceed a rate equal to the United States consumer price index.
An
The commission shall not make
an adjustment shall not be made by
the
commission unless each affected
merchant plant files a petition
with
the commission. As used in this subsection, "United States
consumer
price index" means the United States consumer price index
for
all urban consumers as defined and reported by the United
States
department of labor, bureau of labor statistics. If the
total aggregate amount by which the eligible merchant plants
reasonably and prudently incurred actual fuel and variable
operation and maintenance costs determined by the commission exceed
the amount that the merchant plants are paid under the contract by
more than $1,000,000.00 per month, the commission shall allocate
the additional $1,000,000.00 per month payment among the eligible
merchant plants based upon the relationship of excess costs among
the eligible merchant plants. The $1,000,000.00 limit specified in
this
subsection, as adjusted, shall does
not apply with respect to
actual fuel and variable operation and maintenance costs that are
incurred due to changes in federal or state environmental laws or
regulations
that are implemented after the effective date of the
amendatory
act that added this subsection. October
6, 2008. The
$1,000,000.00
per month payment limit under this subsection shall
does
not apply to merchant plants eligible
under subsection (7) (9)
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
Senate Bill No. 437 as amended December 15, 2016
urban consumers as defined and reported by the United States
Department of Labor, Bureau of Labor Statistics.
(11) (9)
The commission shall issue orders
to permit the
recovery
authorized under subsections (7) (9) and (8) (10) upon
petition
of the merchant plant. The merchant plant shall is not
be
required to alter or amend the existing contract with the electric
utility
in order to obtain the recovery under subsections (7) (9)
and
(8). (10). 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.
(12) Subject to subsection (13), if requested by an electric
utility with less than 200,000 customers[ in this state], the commission
shall
approve an appropriate revenue decoupling mechanism that adjusts
for decreases in actual sales compared to the projected levels used
in that utility's most recent rate case that are the result of
implemented energy waste reduction, conservation, demand-side
programs, and other waste reduction measures, if the utility first
demonstrates the following to the commission:
(a) That the projected sales forecast in the utility's most
recent rate case is reasonable.
(b) That the electric utility has achieved annual incremental
energy savings at least equal to the lesser of the following:
(i) One percent of its total annual retail electricity sales
in the previous year.
(ii) The amount of any incremental savings yielded by energy
waste reduction, conservation, demand-side programs, and other
waste reduction measures approved by the commission in that
utility's most recent integrated resource plan.
(13) The commission shall consider the aggregate revenues
attributable to revenue decoupling mechanisms, financial
incentives, and shared savings mechanisms the commission has
approved for an electric utility relative to energy waste
reduction, conservation, demand-side programs, peak load reduction,
and other waste reduction measures. The commission may approve an
alternative methodology for a revenue decoupling mechanism
authorized under subsection (12), a financial incentive authorized
under section 75 of the clean and renewable energy and energy waste
reduction act, 2008 PA 295, MCL 460.1075, or a shared savings
mechanism authorized under section 6x if the commission determines
that the resulting aggregate revenues from those mechanisms would
not result in a reasonable and cost-effective method to ensure that
investments in energy waste reduction, demand-side programs, peak
load reduction, and other waste reduction measures are not
disfavored when compared to utility supply-side investments. The
commission's consideration of an alternative methodology under this
subsection 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.
(14) Within 1 year after the effective date of the amendatory
act that added this subsection, the commission shall conduct a
study on an appropriate tariff reflecting equitable cost of service
for utility revenue requirements for customers who participate in a
Senate Bill No. 437 as amended December 15, 2016
net metering program or distributed generation program under the
clean and renewable energy and energy waste reduction act, 2008 PA
295, MCL 460.1001 to 460.1211. In any rate case filed after June 1,
2018, the commission shall approve such a tariff for inclusion in
the rates of all customers participating in a net metering or
distributed generation program under the clean and renewable energy
and energy waste reduction act, 2008 PA 295, MCL 460.1001 to
460.1211. a [tariff] established under this subsection does not
apply
to customers participating in a net metering program under the
clean and renewable energy and energy waste reduction act, 2008 PA
295, MCL 460.1001 to 460.1211, before the date that the commission
establishes A [tariff] under this subsection, who continues to
participate
in the program at their current site or facility.
(15) Except as otherwise provided in this act, "utility" and
"electric utility" do not include a municipally owned electric
utility.
(16) 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.
(c) "Steam utility" means a steam distribution company
regulated by the commission.
Sec. 6j. (1) As used in this act:
(a) "Long-term firm gas transportation" means a binding
agreement entered into between the electric utility and a natural
gas transmission provider for a set period of time to provide firm
delivery of natural gas to an electric generation facility.
(b) (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.
(c) (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
utility
shall file 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. For gas fuel supply contracts or arrangements, the
description shall include whether the supply contracts or
arrangements include long-term firm gas transportation and, if not,
an explanation of how the utility proposes to ensure reliable and
reasonably priced gas fuel supply to its generation facilities
during the specified 12-month period. 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 power supply cost recovery
clause
established pursuant to under
subsection (2), a 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
description of all relevant major contracts and power supply
arrangements
entered into or contemplated by the utility, and such
any
other information as the
commission may require.
(5)
If a an electric utility files a power supply cost
recovery
plan under subsection (3) and a 5-year forecast as
provided
in subsections (3) and under
subsection (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 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
giving notice to the parties to the review, and after having
afforded
to giving 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 for which the electric utility
would otherwise have a purchase obligation 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 commission shall determine 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 for a qualifying
facility 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 are
not be subject to
commission
reconsideration shall be is
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 is 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 both 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 The commission
shall conduct 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, and every 5 years thereafter, the
standing
committees of the house and senate that deal with public
utilities
shall review the amendatory act that added this
subsection.
Sec.
6k. (1) This section shall govern governs the initial
filing and implementation of a power supply cost recovery plan
under section 6j(3).
(2) The initial power supply cost recovery plan may be for a
period of less than 12 months and shall be filed as follows:
(a) By an electric utility subject to commission rate
jurisdiction with at least 200,000 residential customers in the
state
of Michigan, within 4 months after the effective date of this
section.by February 13, 1983.
(b) By all other electric utilities subject to commission rate
jurisdiction,
within 15 months after the effective date of this
section
by January 13, 1984 in accordance with the provisions of
this act which the commission determines to be appropriate for the
individual utility.
(3)
Notwithstanding section 6a(3), 6a(5),
until the expiration
of 3 months plus the remainder of the then current billing month
following the last day on which a utility is required to file its
first
power supply cost recovery plan pursuant to under subsection
(2), of
this section, the utility may alter its rate schedule in
accordance with an existing fuel cost adjustment clause or
purchased and net interchanged power adjustment clause. Thereafter,
the utility may make charges in excess of base rates for the cost
of
power supply pursuant only to subsections (2) and (4). of
this
section.
After the effective date of this
section, October 13,
1982, any revenues resulting from an existing fuel cost adjustment
clause or purchased and net interchanged power adjustment clause
and
recorded for an annual reconciliation period ending prior to
before
January 1, 1983, by an electric utility
shall be are subject
to the existing reconciliation proceeding established by the
commission for the utility. In this proceeding, the commission
shall consider the reasonableness and prudence of expenditures
charged pursuant to an existing fuel cost adjustment clause or
purchased
and net interchanged power adjustment clause after the
effective
date of this section. October
13, 1982. On and after
January 1, 1983, all fuel cost and purchased and net interchanged
power revenues received by an electric utility, whether included in
base rates or collected pursuant to a fuel or purchased and net
interchanged power adjustment clause or a power supply cost
recovery
clause, shall be are subject to annual reconciliation with
the
cost of fuel and purchased and net interchanged power. Such The
annual reconciliations shall be conducted in accordance with the
reconciliation procedures described in section 6j(12) to (18),
including the provisions for refunds, additional charges, deferral
and recovery, and shall include consideration by the commission of
the reasonableness and prudence of expenditures charged pursuant to
any fuel or purchased and net interchanged power adjustment clause
in existence during the period being reconciled. If the utility has
a lag correction provision included in its existing adjustment
clauses, the commission shall allow any adjustment to rates
attributable
to such that lag correction provision to be
implemented for the 3 billing months immediately succeeding the
final billing month in which the existing adjustment clauses as
operative.
(4) Until the commission approves or disapproves a power
supply cost recovery clause in a final commission order in a
contested
case required by section 6j(2), a utility which that had
a fuel cost adjustment clause or purchased and net interchanged
power
adjustment clause on the effective date of this section
October 13, 1982 and which has applied for a power supply cost
recovery
clause under section 6j may adjust its rates pursuant to
under section 6j(3) to (18), to include power supply cost recovery
factors.
Sec.
6l. (1) For purposes of implementing sections 6a, 6h,
6i,
6j,
and 6k, 6s, and 6t, this section and section 6m shall provide a
means of insuring equitable representation of the interests of
energy utility customers.
(2) As used in this section and section 6m:
(a) "Annual receipts" means the payments received by the fund
under
section 6m(2)(a), and (b), (c), and (d) during a
calendar
year.
(b) "Board" means the utility consumer participation board
created under subsection (3).
(c) "Commission" means the Michigan public service commission.
(d) (c)
"Department" means the
department of management and
budget.licensing and regulatory affairs.
(e) (d)
"Energy cost recovery
proceeding" means any proceeding
to establish or implement a gas cost recovery clause or a power
supply
cost recovery clause as provided in sections section 6h ,
6i,
or 6j, or 6k, to set gas cost recovery factors pursuant
to
under section 6h(17), or to set power supply cost recovery factors
pursuant
to under section 6j(18).
(f) (e)
"Energy utility" means
each electric or gas company
regulated
by the public service commission.
(g) (f)
"Fund" means the utility
consumer representation fund
created in section 6m.
(h) (g)
"Household" means a
single-family home, duplex, mobile
home, seasonal dwelling, farm home, cooperative, condominium, or
apartment
which that has normal household facilities such as a
bathroom, individual cooking facilities, and kitchen sink
facilities. Household does not include a penal or corrective
institution, or a motel, hotel, or other similar structure if used
as a transient dwelling.
(i) (h)
"Jurisdictional" means
subject to rate regulation by
the
Michigan public service commission.
(j) (i)
"Net grant proceeds"
means the annual receipts of the
fund less the amounts reserved for the attorney general's use and
the amounts expended for board expenses and operation.
(k) (j)
"Residential energy utility
consumer" or "consumer"
means a customer of an energy utility who receives utility service
for use within an individual household or an improvement reasonably
appurtenant to and normally associated with an individual
household.
(l) (k)
"Residential tariff
sales" means those sales by an
energy
utility which that are subject to residential tariffs on
file with the commission.
(m) (l) "Utility
consuming industry" means a person, sole
proprietorship, partnership, association, corporation, or other
entity
which that receives utility service ordinarily and primarily
for use in connection with the manufacture, sale, or distribution
of goods or the provision of services, but does not include a
nonprofit organization representing residential utility customers.
(3) The utility consumer participation board is created within
the department and shall exercise its powers and duties under this
act independently of the department. The procurement and related
management
functions of the commission board
shall be performed
under the direction and supervision of the department. The board
shall consist of 5 members appointed by the governor, 1 of whom
shall be chosen from 1 or more lists of qualified persons submitted
by the attorney general.
(4) For the purposes of subsection (5) only, "utility" means
an electric or gas company located in or outside of this state.
(5) Each member of the board shall meet the following
requirements:
(a) Shall be an advocate for the interests of residential
utility consumers, as demonstrated by the member's knowledge of and
support for consumer interests and concerns in general or
specifically related to utility matters.
(b) Shall not be, or shall not have been within the 5 years
preceding appointment, a member of a governing body of, or employed
in a managerial or professional or consulting capacity by a utility
or an association representing utilities; an enterprise or
professional
practice which that received over $1,500.00 in the
year preceding the appointment as a supplier of goods or services
to a utility or association representing utilities; or an
organization representing employees of such a utility, association,
enterprise,
or professional practice, or an association which that
represents such an organization.
(c) Shall not have, or shall not have had within 1 year
preceding appointment, a financial interest exceeding $1,500.00 in
a utility, an association representing utilities, or an enterprise
or
professional practice which that
received over $1,500.00 in the
year preceding the appointment as a supplier of goods or services
to a utility or association representing utilities.
(d) Shall not be an officer or director of an applicant for a
grant under section 6m.
(e)
Shall not be a member of the immediate family of a person
an
individual who would be ineligible
under subdivisions
subdivision (a), (b), (c), or (d).
(6) The members of the board shall be appointed for 2-year
terms beginning with the first day of a legislative session in an
odd-numbered year and ending on the day before the first day of the
legislative session in the next odd-numbered year or when the
members' successors are appointed, whichever occurs later. The
governor shall not appoint a member to the board for a term
commencing after the governor's term of office has ended. A vacancy
shall be filled in the same manner as the original appointment. If
the vacancy is created other than by expiration of a term, the
member shall be appointed for the balance of the unexpired term of
the member to be succeeded.
(7) The governor shall remove a member of the board if that
member is absent for any reason from either 3 consecutive board
meetings or more than 50% of the meetings held by the board in a
calendar
year. However, a person an
individual who is removed due
to absenteeism is eligible for reappointment to fill a vacancy
which
that occurs in the board membership. The governor also
shall
remove a member of the board if the member is subsequently
determined to be ineligible under subsection (5).
(8) The board shall hold bimonthly meetings and additional
meetings as necessary. A quorum consists of 3 members. A majority
vote of the members appointed and serving is necessary for a
decision. At its first meeting following the appointment of new
members, or as soon as possible after the first meeting, the board
shall elect biennially from its membership a chairperson and a
vice-chairperson.
(9) The board shall not act directly to represent the
interests of residential utility consumers except through
administration of the fund and grant program under this section.
(10)
The business which that the board may perform shall be
conducted at a public meeting of the board held in compliance with
the
open meetings act, Act No. 267 of the Public Acts of 1976,
being
sections 15.261 to 15.275 of the Michigan Compiled Laws. 1976
PA 267, MCL 15.261 to 15.275. Public notice of the time, date, and
place
of the meeting shall be given in the manner required by Act
No.
267 of the Public Acts of 1976.the
open meetings act, 1976 PA
267, MCL 15.261 to 15.275.
(11) A writing prepared, owned, used, in the possession of, or
retained by the board in the performance of an official function
shall be made available to the public in compliance with the
freedom
of information act, Act No. 442 of the Public Acts of 1976,
being
sections 15.231 to 15.246 of the Michigan Compiled Laws.1976
PA 442, MCL 15.231 to 15.246.
(12) A member of the board may be reimbursed for actual and
necessary expenses, including travel expenses to and from each
meeting held by the board, incurred in discharging the member's
duties under this section and section 6m. In addition to expense
reimbursement, a board member may receive remuneration from the
board of $100.00 per meeting attended, not to exceed $1,000.00 in a
calendar year. These limits shall be adjusted proportionately to an
adjustment in the remittance amounts under section 6m(4) to allow
for changes in the cost of living.
(13)
Until the board certifies that it is operating and ready
to
perform all duties under this act, the director of the energy
administration
created by executive directives 1976-2 and 1976-5
shall
serve as temporary administrator of the fund and exercise all
duties
and powers of the board.
Sec. 6m. (1) The utility consumer representation fund is
created as a special fund. The state treasurer shall be the
custodian of the fund and shall maintain a separate account of the
money in the fund. The money in the fund shall be invested in the
bonds, notes, and other evidences of indebtedness issued or insured
by the United States government and its agencies, and in prime
commercial paper. The state treasurer shall release money from the
fund, including interest earned, in the manner and at the time
directed by the board.
(2)
Except as provided in subsection (6), (5), each energy
utility
that has applied to the public service commission for the
initiation of an energy cost recovery proceeding shall remit to the
fund before or upon filing its initial application for that
proceeding, and on or before the first anniversary of that
application, an amount of money determined by the board in the
following manner:
(a) In the case of an energy utility company serving at least
100,000
customers in this state, an amount that bears to
$300,000.00,
multiplied its proportional
share of $900,000.00
adjusted
annually by a factor as provided in
subsection (4). , the
same
proportion as This adjusted
amount shall become the new base
amount to which the factor provided in subsection (4) is applied in
the succeeding year. A utility's proportional share shall be
calculated
by dividing the company's
jurisdictional 1981 total
operating revenues for the preceding year, as stated in its annual
report,
bear to the jurisdictional 1981 by
the total operating
revenues for the preceding year of all energy utility companies
serving at least 100,000 customers in this state. This amount shall
be made available by the board for use by the attorney general for
the
purposes described in subsection (17).(16).
(b) In the case of an energy utility company serving at least
100,000
residential customers in this state, an amount that bears
to
$300,000.00, multiplied its
proportional share of $650,000.00
adjusted
annually by a factor as provided in
subsection (4). , the
same
proportion as This adjusted
amount shall become the new base
amount to which the factor provided in subsection (4) is applied in
the succeeding year. A utility's proportional share shall be
calculated
by dividing the company's
jurisdictional 1981 gross
revenues
from residential tariff sales bear to the jurisdictional
1981
for the preceding year by the
gross revenues from residential
tariff sales for the preceding year of all energy utility companies
serving at least 100,000 residential customers in this state. This
amount
shall be used for grants under subsection (11).(10).
(c) In the case of an energy utility company serving fewer
than 100,000 customers in this state, its proportional share of
$100,000.00 adjusted annually by a factor as provided in subsection
(4). This adjusted amount shall become the new base amount to which
the factor provided in subsection (4) is applied in the succeeding
year. A utility's proportional share shall be calculated by
dividing the company's jurisdictional total operating revenues for
the preceding year, as stated in its annual report, by the total
operating revenues for the preceding year of all energy utility
companies serving fewer than 100,000 customers in this state. This
amount shall be made available by the board for use by the attorney
general for the purposes described in subsection (16).
(d) In the case of an energy utility company serving fewer
than 100,000 residential customers in this state, its proportional
share of $100,000.00 adjusted annually by a factor as provided in
subsection (4). This adjusted amount shall become the new base
amount to which the factor provided in subsection (4) is applied in
the succeeding year. A utility's proportional share shall be
calculated by dividing the company's jurisdictional gross revenues
from residential tariff sales for the preceding year by the gross
revenues from residential tariff sales for the preceding year of
all energy utility companies serving fewer than 100,000 residential
customers in this state. This amount shall be used for grants under
subsection (10).
(3) Payments made by an energy utility under subsection (2)(a)
or
(c) are operating expenses of the
utility that the public
service
commission shall permit the utility
to charge to its
customers. Payments made by a utility under subsection (2)(b) or
(d)
are operating expenses of the utility
that the public service
commission shall permit the utility to charge to its residential
customers.
(4) For purposes of subsection (2), the board shall set the
factor
shall be set by the board at a level not to exceed the
percentage increase in the index known as the consumer price index
for urban wage earners and clerical workers, select areas, all
items indexed, for the Detroit standard metropolitan statistical
area,
compiled by the bureau of labor statistics Bureau of Labor
Statistics
of the United States department of
labor, Department of
Labor, or any successor agency, that has occurred between January
1981
of the preceding year and January of the year in which the
payment is required to be made. In the event that more than 1 such
index is compiled, the index yielding the largest payment shall be
the maximum allowable factor. The board shall advise utilities of
the factor.
(5)
On or before the second and succeeding anniversaries of
its
initial application for an energy cost recovery proceeding, an
energy
utility shall remit to the board amounts equal to 5/6 of the
amounts
required under subsection (2).
(5) (6)
The remittance requirements of this
section do not
apply to an energy utility organized as a cooperative corporation
under sections 98 to 109 of 1931 PA 327, MCL 450.98 to 450.109, and
grants from the fund shall not be used to participate in an energy
cost recovery proceeding primarily affecting such a utility.
(6) (7)
In the event of a dispute between
the board and an
energy utility about the amount of payment due, the utility shall
pay the undisputed amount and, if the utility and the board cannot
agree, the board may initiate civil action in the circuit court for
Ingham
county County for recovery of the disputed amount. The
commission shall not accept or take action on an application for an
energy cost recovery proceeding from an energy utility subject to
this section that has not fully paid undisputed remittances
required by this section.
(7) (8)
The commission shall not accept or
take action on an
application for an energy cost recovery proceeding from an energy
utility subject to this section until 30 days after it has been
notified
by the board or the director of the energy administration,
if
section 6l(13) is
applicable, that the board or
the director is
ready to process grant applications, will transfer funds payable to
the attorney general immediately upon the receipt of those funds,
and will within 30 days approve grants and remit funds to qualified
grant applicants.
(8) (9)
The board may accept a gift or
grant from any source
to be deposited in the fund if the conditions or purposes of the
gift or grant are consistent with this section.
(9) (10)
The costs of operation and expenses
incurred by the
board in performing its duties under this section and section 6l,
including remuneration to board members, shall be paid from the
fund. A maximum of 5% of the annual receipts of the fund may be
budgeted and used to pay expenses other than grants made under
subsection
(11).(10).
(10) (11)
The net grant proceeds shall
finance a grant program
from which the board may award to an applicant an amount that the
board determines shall be used for the purposes set forth in this
section.
(11) (12)
The board shall create and make
available to
applicants an application form. Each applicant shall indicate on
the application how the applicant meets the eligibility
requirements provided for in this section and how the applicant
proposes to use a grant from the fund to participate in 1 or more
proceedings
as authorized in subsection (17) (16) that have been or
are expected to be filed. Each applicant shall also identify on the
application any additional funds or resources, other than the grant
funds being requested, that are to be used to participate in the
proceeding for which the grant is being requested and how those
funds or resources will be utilized. The board shall receive an
application requesting a grant from the fund only from a nonprofit
organization or a unit of local government in this state. The board
shall consider only applications for grants containing proposals
that
are consistent with subsections (17) (16) and (18) (17) and
that serve the interests of residential utility consumers. For
purposes
of making grants, the board may consider protection of the
environment,
energy conservation, the
creation of employment and a
healthy
economy in the state, and energy
waste reduction, demand
response, and rate design options to encourage energy conservation,
energy waste reduction, and demand response, as well as the
maintenance of adequate energy resources. The board shall not
consider an application that primarily benefits the applicant or a
service provided or administered by the applicant. The board shall
not consider an application from a nonprofit organization if 1 of
the organization's principal interests or unifying principles is
the welfare of a utility or its investors or employees, or the
welfare of 1 or more businesses or industries, other than farms not
owned or operated by a corporation, that receive utility service
ordinarily and primarily for use in connection with the profit-
seeking manufacture, sale, or distribution of goods or services.
Mere ownership of securities by a nonprofit organization or its
members does not disqualify an application submitted by that
organization.
(12) (13)
The board shall encourage the
representation of the
interests of identifiable types of residential utility consumers
whose interests may differ, including various social and economic
classes and areas of the state, and if necessary, may make grants
to more than 1 applicant whose applications are related to a
similar issue to achieve this type of representation. In addition,
the board shall consider and balance the following criteria in
determining whether to make a grant to an applicant:
(a) Evidence of the applicant's competence, experience, and
commitment to advancing the interests of residential utility
consumers.
(b) The anticipated involvement of the attorney general in a
proceeding and whether activities of the applicant will be
duplicative or supplemental to those of the attorney general.
(c) (b)
In the case of a nongovernmental
applicant, the extent
to which the applicant is representative of or has a previous
history of advocating the interests of citizens, especially
residential utility consumers.
(d) (c)
The anticipated effect of the
proposal contained in
the application on residential utility consumers, including the
immediate and long-term impacts of the proposal.
(e) (d)
Evidence demonstrating the
potential for continuity of
effort and the development of expertise in relation to the proposal
contained in the application.
(f) (e)
The uniqueness or innovativeness of
an applicant's
position or point of view as it relates to advocating for
residential utility consumers concerning energy costs or rates, and
the probability and desirability of that position or point of view
prevailing.
(13) (14)
As an alternative to choosing
between 2 or more
applications that have similar proposals, the board may invite 2 or
more of the applicants to file jointly and award a grant to be
managed cooperatively.
(14) (15)
The board shall make disbursements
pursuant to a
grant in advance of an applicant's proposed actions as set forth in
the application if necessary to enable the applicant to initiate,
continue, or complete the proposed actions.
(15) (16)
Any notice to utility customers and
the general
public of hearings or other state proceedings in which grants from
the fund may be used shall contain a notice of the availability of
the fund and the address of the board.
(16) (17)
The annual receipts and interest
earned, less
administrative costs, may be used only for participation in
administrative
and judicial proceedings under sections 6a, 6h, 6i,
6j,
and 6k, 6s, and 6t, and in federal administrative and judicial
proceedings that directly affect the energy costs or rates paid by
Michigan
energy utilities, and in cost
allocation and rate design
proceedings
initiated under section 11(3). utility
customers in
this state. Amounts that have been in the fund more than 12 months
may
be retained in the fund for future grants, proceedings and any
unexpended money in the fund shall be reserved to fulfill the
purposes for which it was appropriated or may be returned to energy
utility companies or used to offset their future remittances in
proportion to their previous remittances to the fund, as the board
determines
and attorney general determine
will best serve the
interests of consumers.
(17) (18)
The following conditions shall apply
to all grants
from the fund:
(a) Disbursements from the fund may be used only to advocate
the
interests of residential energy utility customers or classes of
energy
utility customers, concerning
energy costs or rates and not
for representation of merely individual interests.
(b) The board shall attempt to maintain a reasonable
relationship between the payments from a particular energy utility
and the benefits to consumers of that utility.
(c) The board shall coordinate the funded activities of grant
recipients with those of the attorney general to avoid duplication
of effort, particularly as it relates to the hiring of expert
witnesses, to promote supplementation of effort, and to maximize
the number of hearings and proceedings with intervenor
participation.
(18) (19)
A recipient of a grant under
subsection (11) (10)
may use the grant only for the advancement of the proposed action
approved by the board, including, but not limited to, costs of
staff, hired consultants and counsel, and research.
(19) A recipient of a grant under subsection (10) shall
prepare for and participate in all discussions among the parties
designed to facilitate settlement or narrowing of the contested
issues before a hearing in order to minimize litigation costs for
all parties.
(20)
A recipient of a grant under subsection (11) (10) shall
file a report with the board within 90 days following the end of
the year or a shorter period for which the grant is made. The
report shall be made in a form prescribed by the board and is
subject to audit by the board. The board shall include each report
received under this subsection as part of the board's annual report
required under subsection (22). The report under this subsection
shall include the following information:
(a) An account of all grant expenditures made by the grant
recipient. Expenditures shall be reported within the following
categories:
(i) Employee and contract for services costs.
(ii) Costs of materials and supplies.
(iii) Filing fees and other costs required to effectively
represent residential utility consumers as provided in this
section.
(b) A detailed list of the regulatory issues raised by the
grant recipient and how each issue was determined by the
commission, court, or other tribunal.
(c) (b)
Any additional information
concerning uses of the
grant required by the board.
(21)
The On or before July 1 of
each year, the attorney
general shall file a report with the house and senate committees on
appropriations
within 90 days following the end of each fiscal
year.
and the house and senate
committees with jurisdiction over
energy and utility policy issues. The report shall include the
following information:
(a) An account of all expenditures made by the attorney
general
of funds money received under this section. Expenditures
shall be reported within the following categories:
(i) Employee and contract for services costs.
(ii) Costs of materials and supplies.
(iii) Filing fees and other costs required to effectively
represent utility consumers as provided in this section.
(b)
Any additional information concerning uses of the funds
money received under this section required by the committees.
(22) On or before July 1 of each calendar year, the board
shall
submit a detailed report to the legislature house and senate
committees with jurisdiction over energy and utility policy issues
regarding the discharge of duties and responsibilities under this
section and section 6l during the preceding calendar year.
(23)
By October 13, 1985, and at 3-year intervals thereafter,
a
senate committee chosen by the majority leader of the senate and
a
house committee chosen by the speaker of the house of
representatives
shall review the relationship between costs and
benefits
resulting from this section and sections 6h through 6l,
and
may recommend changes to the legislature.
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
$100,000,000.00 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.If the
application is for the construction of an electric generation
facility of 225 megawatts or more or for the construction of an
additional generating unit or units totaling 225 megawatts or more
at an existing electric generation facility submitted as required
under section 6t(13), the commission shall consolidate its
proceedings under section 6t and this section. If the commission
approves or denies an application for an electric generation
facility under this section that has been submitted as required
under section 6t(13), the provisions of this section prevail in a
conflict with section 6t.
(2) The commission may implement separate review criteria and
approval standards for electric utilities with less than 1,000,000
retail
customers who that seek a certificate of necessity for
projects
costing less than $500,000,000.00.$100,000,000.00.
(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)
Within 270 days of after the filing of an application
under this section, or, for an application for an electric
generation facility submitted as required under section 6t(13),
concurrently with a final order issued under section 6t, the
commission shall issue an order granting or denying the requested
certificate of necessity. The commission shall hold a hearing on
the application. 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 may allow
intervention by persons under the rules of practice and procedure
of the commission and shall allow intervention by existing
suppliers of electric generation capacity under subsection (13),
persons allowed to intervene in the contested case under section
6t,
and interested persons. Reasonable The commission shall permit
reasonable
discovery shall be permitted before
and during the
hearing in order to assist parties and interested persons in
obtaining evidence concerning the application, including, but not
limited to, the reasonableness and prudence of the construction,
investment, or purchase for which the certificate of necessity has
been requested. The commission shall grant the request if it
determines all of the following:
(a) That 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 under section 6t or subsection (11).
(b) The information supplied indicates that the existing or
proposed electric generation facility will comply with all
applicable state and federal environmental standards, laws, and
rules.
(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
or denying a certificate of necessity. 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.
(d) The existing or proposed electric generation facility or
proposed power purchase agreement represents the most reasonable
and prudent means of meeting the power need relative to other
resource options for meeting power demand, including energy
efficiency
programs, and electric transmission efficiencies, and
any alternative proposals submitted under this section by existing
suppliers of electric generation capacity under subsection (13) or
other intervenors.
(e) To the extent practicable, the construction or investment
in a new or existing facility 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 that is
located in a county that lies on the border with another state.
(5) The commission may 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 or alternatives to
the proposal raised by intervening parties.
(6) In a certificate of necessity under this section, the
commission shall specify the costs approved for the construction of
or significant investment in the electric generation facility, the
price approved for the purchase of the existing electric generation
facility, or the price approved for the purchase of power pursuant
to the terms of the power purchase agreement. For power purchase
agreements that an electric utility enters into with an entity that
is not affiliated with that electric utility after the effective
date of the amendatory act that added section 6t, the commission
shall consider and may authorize a financial incentive for that
utility that does not exceed the electric utility's weighted
average cost of capital.
(7) The utility shall annually file, or more frequent if
required by the commission, reports to the commission regarding the
status of any project for which a certificate of necessity has been
granted under subsection (4), including an update concerning the
cost and schedule of that project.
(8) If the commission denies any of the relief requested by an
electric utility, the electric utility may withdraw its application
or proceed with the proposed construction, purchase, investment, or
power purchase agreement without a certificate and the assurances
granted under this section.
(9) Once the electric generation facility or power purchase
agreement is considered used and useful or as otherwise provided in
subsection (12), 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. 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, if
the costs do not exceed the costs approved by the commission in the
certificate. The portion of the cost of a plant, facility, or power
purchase agreement that exceeds the cost approved by the commission
is presumed to have been incurred due to a lack of prudence. Once
the electric generation facility or power purchase agreement is
considered used and useful or as otherwise provided in subsection
(12), 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
by
a preponderance of the evidence 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
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
Senate Bill No. 437 as amended December 15, 2016
the
cost approved by the commission if the commission finds by a
preponderance
of the evidence that the costs were
prudently
incurred. The commission shall disallow costs the commission finds
have been incurred as the result of fraud, concealment, gross
mismanagement, or lack of quality controls amounting to gross
mismanagement. The commission shall also require refunds with
interest to ratepayers of any of these costs already recovered
through the electric utility's rates and charges. If the
assumptions underlying an approved certificate of necessity [, other than
a certificate of necessity approved for a power purchase agreement for the purchase of electric capacity,]
materially change, an electric utility may request, or the
commission on its own motion may initiate, a proceeding to review
whether it is reasonable and prudent to complete an unfinished
project for which a certificate of necessity has been granted. If
the commission finds that completion of the project is no longer
reasonable and prudent, the commission may modify or cancel
approval of the certificate of necessity. Except for costs the
commission finds an electric utility has incurred as the result of
fraud, concealment, gross mismanagement, or lack of quality
controls amounting to gross mismanagement, if commission approval
is modified or canceled, the commission shall not disallow
reasonable and prudent costs already incurred or committed to by
contract by an electric utility. Once the commission finds that
completion of the project is no longer reasonable and prudent, the
commission may limit future cost recovery to those costs that could
not be reasonably avoided.
(10)
Within 90 days of the effective date of the amendatory
act
that added this section, the The
commission shall adopt
standard application filing forms and instructions for use in all
requests for a certificate of necessity under this section. The
commission
may , in its discretion, modify the standard application
filing forms and instructions adopted under this section.
(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. This
subsection does not apply to an electric utility that has an
approved integrated resource plan under section 6t. 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
generation facility 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 under any renewable portfolio
standard.
(d) Projected energy efficiency program savings under any
energy efficiency program requirements and the projected costs for
that program.
(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 transmission options for the electric utility.
(12)
The commission shall may 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 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.An existing supplier of electric generation
capacity currently
producing at least 200 megawatts of firm electric generation
capacity resources located in the independent system operator's
zone in which the utility's load is served that seeks to provide
electric generation capacity resources to the utility may submit a
written proposal directly to the commission as an alternative to
the construction, investment, or purchase for which the certificate
of necessity is sought under this section. The entity submitting an
alternative proposal under this subsection has standing to
intervene and the commission shall allow reasonable discovery in
the contested case proceeding conducted under this section. In
evaluating an alternative proposal, the commission shall consider
Senate Bill No. 437 as amended December 15, 2016
the cost of the alternative proposal and the submitting entity's
qualifications, technical competence, capability, reliability,
creditworthiness, and past performance. In reviewing an
application, the commission may consider any alternative proposals
submitted under this subsection. This subsection does not limit the
ability of any other person to submit to the commission an
alternative proposal to the construction, investment, or purchase
for which a certificate of necessity is sought under this section
and to petition for and be granted leave to intervene in the
contested case proceeding conducted under this section under the
rules of practice and procedure of the commission. This subsection
does not authorize the commission to order or otherwise require an
electric utility to adopt any alternative proposal submitted under
this subsection.
(14) An order of the commission following a hearing under this
section is subject to judicial review as provided under section 28
of article VI of the state constitution of 1963 and chapter 6 of
the administrative procedures act of 1969, 1969 PA 306, MCL 24.301
to 24.306, except that the filing of a petition for review must be
filed in the court of appeals within 30 days after the order of the
commission is issued and the court shall conduct the review as
expeditiously as possible with lawful precedence over other
matters.
[
Senate Bill No. 437 as amended December 15, 2016
]
Sec. 6t. (1) The commission shall, within 120 days of the
effective date of the amendatory act that added this section and
every 5 years thereafter, commence a proceeding and, in
consultation with the Michigan agency for energy, the department of
environmental quality, and other interested parties, do all of the
following as part of the proceeding:
(a) Conduct an assessment of the potential for energy waste
reduction in this state, based on what is economically and
technologically feasible, as well as what is reasonably achievable.
(b) Conduct an assessment for the use of demand response
programs in this state, based on what is economically and
technologically feasible, as well as what is reasonably achievable.
The assessment shall expressly account for advanced metering
infrastructure that has already been installed in this state and
seek to fully maximize potential benefits to ratepayers in lowering
utility bills.
(c) Identify significant state or federal environmental
regulations, laws, or rules and how each regulation, law, or rule
would affect electric utilities in this state.
(d) Identify any formally proposed state or federal
environmental regulation, law, or rule that has been published in
the Michigan Register or the Federal Register and how the proposed
regulation, law, or rule would affect electric utilities in this
state.
(e) Identify any required planning reserve margins and local
clearing requirements in areas of this state.
(f) Establish the modeling scenarios and assumptions each
electric utility should include in addition to its own scenarios
and assumptions in developing its integrated resource plan filed
under subsection (3), including, but not limited to, all of the
following:
(i) Any required planning reserve margins and local clearing
requirements.
(ii) All applicable state and federal environmental
regulations, laws, and rules identified in this subsection.
(iii) Any supply-side and demand-side resources that
reasonably 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
waste reduction savings, and projected load management and demand
response savings.
(iv) Any regional infrastructure limitations in this state.
(v) The projected costs of different types of fuel used for
electric generation.
(g) Allow other state agencies to provide input regarding any
other regulatory requirements that should be included in modeling
scenarios or assumptions.
(h) Publish a copy of the proposed modeling scenarios and
assumptions to be used in integrated resource plans on the
commission's website.
(i) Before issuing the final modeling scenarios and
assumptions each electric utility should include in developing its
integrated resource plan, receive written comments and hold
hearings to solicit public input regarding the proposed modeling
scenarios and assumptions.
(2) A proceeding commenced under subsection (1) shall be
completed within 120 days, and shall not be a contested case under
chapter 4 of the administrative procedures act of 1969, 1969 PA
306, MCL 24.271 to 24.287. The determination of the modeling
assumptions for integrated resource plans made under subsection (1)
is not considered a final order for purposes of judicial review.
The determinations made under subsection (1) are only subject to
judicial review as part of the final commission order approving an
integrated resource plan under this section.
(3) Not later than 2 years after the effective date of the
amendatory act that added this section, each electric utility whose
rates are regulated by the commission shall file with the
commission an integrated resource plan that provides a 5-year, 10-
year, and 15-year projection of the utility's load obligations and
a plan to meet those obligations, to meet the utility's
requirements to provide generation reliability, including meeting
planning reserve margin and local clearing requirements determined
by the commission or the appropriate independent system operator,
and to meet all applicable state and federal reliability and
environmental regulations over the ensuing term of the plan. The
commission shall issue an order establishing filing requirements,
including application forms and instructions, and filing deadlines
for an integrated resource plan filed by an electric utility whose
rates are regulated by the commission. The electric utility's plan
may include alternative modeling scenarios and assumptions in
addition to those identified under subsection (1).
(4) For an electric utility with fewer than 1,000,000
customers in this state whose rates are regulated by the
commission, the commission may issue an order implementing separate
filing requirements, review criteria, and approval standards that
differ from those established under subsection (3). 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 multistate basis.
If an electric utility has filed a multistate 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 for filing purposes in this
state. However, the commission may require supplemental information
if necessary as part of its evaluation and determination of whether
to approve the plan. Upon request of an electric utility, the
commission may adjust the filing dates for a multistate integrated
resource plan filing in this state to place its review on the same
timeline as other relevant state reviews.
(5) An integrated resource plan shall include all of the
following:
(a) A long-term forecast of the electric utility's sales and
peak demand under various reasonable scenarios.
(b) The type of generation technology proposed for a
generation facility contained in the plan and the proposed capacity
of the generation facility, including projected fuel costs under
various reasonable scenarios.
(c) Projected energy purchased or produced by the electric
utility from a renewable energy resource. If the level of renewable
energy purchased or produced is projected to drop over the planning
periods set forth in subsection (3), the electric utility must
demonstrate why the reduction is in the best interest of
ratepayers.
(d) Details regarding the utility's plan to eliminate energy
waste, including the total amount of energy waste reduction
expected to be achieved annually, the cost of the plan, and the
expected savings for its retail customers.
(e) An analysis of how the combined amounts of renewable
energy and energy waste reduction achieved under the plan compare
to the renewable energy resources and energy waste reduction goal
provided in section 1 of the clean and renewable energy and energy
waste reduction act, 2008 PA 295, MCL 460.1001. This analysis and
comparison may include renewable energy and capacity in any form,
including generating electricity from renewable energy systems for
sale to retail customers or purchasing or otherwise acquiring
renewable energy credits with or without associated renewable
energy, allowed under section 27 of the clean and renewable energy
and energy waste reduction act, 2008 PA 295, MCL 460.1027, as it
existed before the effective date of the amendatory act that added
this section.
(f) Projected load management and demand response savings for
the electric utility and the projected costs for those programs.
(g) Projected energy and capacity purchased or produced by the
electric utility from a cogeneration resource.
(h) An analysis of potential new or upgraded electric
transmission options for the electric utility.
(i) Data regarding the utility's current generation portfolio,
including the age, capacity factor, licensing status, and remaining
estimated time of operation for each facility in the portfolio.
(j) Plans for meeting current and future capacity needs with
the cost estimates for all proposed construction and major
investments, including any transmission or distribution
infrastructure that would be required to support the proposed
construction or investment, and power purchase agreements.
(k) An analysis of the cost, capacity factor, and viability of
all reasonable options available to meet projected energy and
capacity needs, including, but not limited to, existing electric
generation facilities in this state.
(l) Projected rate impact for the periods covered by the plan.
(m) How the utility will comply with all applicable state and
federal environmental regulations, laws, and rules, and the
projected costs of complying with those regulations, laws, and
rules.
(n) A forecast of the utility's peak demand and details
regarding the amount of peak demand reduction the utility expects
to achieve and the actions the utility proposes to take in order to
achieve that peak demand reduction.
(o) The projected long-term firm gas transportation contracts
or natural gas storage the electric utility will hold to provide an
adequate supply of natural gas to any new generation facility.
(6) Before filing an integrated resource plan under this
section, each electric utility whose rates are regulated by the
commission shall issue a request for proposals to provide any new
supply-side generation capacity resources needed to serve the
utility's reasonably projected electric load, applicable planning
reserve margin, and local clearing requirement 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 each
integrated resource plan to be filed under this section. An
electric utility shall define qualifying performance standards,
contract terms, technical competence, capability, reliability,
creditworthiness, past performance, and other criteria that
responses and respondents to the request for proposals must meet in
order to be considered by the utility in its integrated resource
plan to be filed under this section. 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 all of the submitted
proposals as attachments to its integrated resource plan filing
regardless of whether the proposals met the qualifying performance
standards, contract terms, technical competence, capability,
reliability, creditworthiness, past performance, or other criteria
specified for the utility's request for proposals under this
section. An existing supplier of electric generation capacity
currently producing at least 200 megawatts of firm electric
Senate Bill No. 437 as amended December 15, 2016
generation capacity resources located in the independent system
operator's zone in which the utility's load is served that seeks to
provide electric generation capacity resources to the utility may
submit a written proposal directly to the commission as an
alternative to any supply-side generation capacity resource
included in the electric utility's integrated resource plan
submitted under this section, and has standing to intervene in the
contested case proceeding conducted under this section. This
subsection does not require an entity that submits an alternative
under this subsection to submit an integrated resource plan. This
subsection does not limit the ability of any other person to submit
to the commission an alternative proposal to [any supply-side generation
capacity resource included in the electric utility's integrated resource
plan submitted] under this section and to petition for and be granted
leave
to intervene in the contested case proceeding conducted under this
section under the rules of practice and procedure of the
commission. The commission shall only consider an alternative
proposal submitted under this subsection as part of its approval
process under subsection (8). The electric utility submitting an
integrated resource plan under this section is not required to
adopt any proposals submitted under this subsection. To the extent
practicable, each electric utility is encouraged, but not required,
to partner with other electric providers in the same local resource
zone as the utility's load is served in the development of any new
supply-side generation capacity resources included as part of its
integrated resource plan.
(7) Not later than 300 days after an electric utility files an
integrated resource plan under this section, the commission shall
state if the commission has any recommended changes, and if so,
describe them in sufficient detail to allow their incorporation in
the integrated resource plan. If the commission does not recommend
changes, it shall issue a final, appealable order approving or
denying the plan filed by the electric utility. If the commission
recommends changes, the commission shall set a schedule allowing
parties at least 15 days after that recommendation to file comments
regarding those recommendations, and allowing the electric utility
at least 30 days to consider the recommended changes and submit a
revised integrated resource plan that incorporates 1 or more of the
recommended changes. If the electric utility submits a revised
integrated resource plan under this section, the commission shall
issue a final, appealable order approving the plan as revised by
the electric utility or denying the plan. The commission shall
issue a final, appealable order no later than 360 days after an
electric utility files an integrated resource plan under this
section. Up to 150 days after an electric utility makes its initial
filing, the electric utility may file to update its cost estimates
if those cost estimates have materially changed. A utility shall
not modify any other aspect of the initial filing unless the
utility withdraws and refiles the application. A utility's filing
updating its cost estimates does not extend the period for the
commission to issue an order approving or denying the integrated
resource plan. The commission shall review the integrated resource
plan in a contested case proceeding conducted 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 including electric customers of the utility,
respondents to the utility's request for proposals under this
section, or other parties approved by the commission. The
commission shall request an advisory opinion from the department of
environmental quality regarding whether any potential decrease in
emissions of sulfur dioxide, oxides of nitrogen, mercury, and
particulate matter would reasonably be expected to result if the
integrated resource plan proposed by the electric utility under
subsection (3) was approved and whether the integrated resource
plan can reasonably be expected to achieve compliance with the
regulations, laws, or rules identified in subsection (1). The
commission may take official notice of the opinion issued by the
department of environmental quality under this subsection pursuant
to R 792.10428 of the Michigan Administrative Code. Information
submitted by the department of environmental quality under this
subsection is advisory and is not binding on future determinations
by the department of environmental quality or the commission in any
proceeding or permitting process. This section does not prevent an
electric utility from applying for, or receiving, any necessary
permits from the department of environmental quality. 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 after an integrated resource plan is filed and during the
hearing in order to assist parties and interested persons in
obtaining evidence concerning the integrated resource plan,
including, but not limited to, the reasonableness and prudence of
the plan and alternatives to the plan raised by intervening
parties.
(8) The commission shall approve the integrated resource plan
under subsection (7) if the commission determines all of the
following:
(a) The proposed integrated resource plan represents the most
reasonable and prudent means of meeting the electric utility's
energy and capacity needs. To determine whether the integrated
resource plan is the most reasonable and prudent means of meeting
energy and 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 load, applicable planning reserve margin, and local
clearing requirement.
(ii) Compliance with applicable state and federal
environmental regulations.
(iii) Competitive pricing.
(iv) Reliability.
(v) Commodity price risks.
(vi) Diversity of generation supply.
(vii) Whether the proposed levels of peak load reduction and
energy waste reduction are reasonable and cost effective. Exceeding
the renewable energy resources and energy waste reduction goal in
section 1 of the clean and renewable energy and energy waste
reduction act, 2008 PA 295, MCL 460.1001, by a utility shall not,
in and of itself, be grounds for determining that the proposed
levels of peak load reduction, renewable energy, and energy waste
reduction are not reasonable and cost effective.
(b) To the extent practicable, the construction or investment
in a new or existing 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 capacity
resource that is located in a county that lies on the border with
another state.
(c) The plan meets the requirements of subsection (5).
(9) If the commission denies a utility's integrated resource
plan, the utility, within 60 days after the date of the final order
denying the integrated resource plan, may submit revisions to the
integrated resource plan to the commission for approval. The
commission shall commence a new 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
that the utility submits the revised integrated resource plan to
the commission under this subsection, the commission shall issue an
order approving or denying, with recommendations, the revised
integrated resource plan if the revisions are not substantial or
inconsistent with the original integrated resource plan filed under
this section. If the revisions are substantial or inconsistent with
the original integrated resource plan, the commission has up to 150
days to issue an order approving or denying, with recommendations,
the revised integrated resource plan.
(10) If the commission denies an electric utility's integrated
resource plan, the electric utility may proceed with a proposed
construction, purchase, investment, or power purchase agreement
contained in the integrated resource plan without the assurances
granted under this section.
(11) In approving an integrated resource plan under this
section, the commission shall specify the costs approved for the
construction of or significant investment in an electric generation
facility, the purchase of an existing electric generation facility,
the purchase of power under the terms of the power purchase
agreement, or other investments or resources used to meet energy
and capacity needs that are included in the approved integrated
resource plan. The costs for specifically identified investments,
including the costs for facilities under subsection (12), 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.
(12) Except as otherwise provided in subsection (13), for a
new electric generation facility approved in an integrated resource
plan that is to be owned by the electric utility and that is
commenced within 3 years after the commission's order approving the
plan, the commission shall finalize the approved costs for the
facility only after the utility has done all of the following and
filed the results, analysis, and recommendations with the
commission:
(a) Implemented a competitive bidding process for all major
engineering, procurement, and construction contracts associated
with the construction of the facility.
(b) Implemented a competitive bidding process that allows
third parties to submit firm and binding bids for the construction
of an electric generation facility on behalf of the utility that
would meet all of the technical, commercial, and other
specifications required by the utility for the generation facility,
such that ownership of the electric generation facility vests with
the utility no later than the date the electric generation facility
becomes commercially available.
(c) Demonstrated to the commission that the finalized costs
for the new electric generation facility are not significantly
higher than the initially approved costs under subsection (11). If
the finalized costs are found to be significantly higher than the
initially approved costs, the commission shall review and approve
the proposed costs if the commission determines those costs are
reasonable and prudent.
(13) If the capacity resource under subsection (12) is for the
construction of an electric generation facility of 225 megawatts or
more or for the construction of an additional generating unit or
units totaling 225 megawatts or more at an existing electric
generation facility, the utility shall submit an application to the
commission seeking a certificate of necessity under section 6s.
(14) An electric utility shall annually, or more frequently if
required by the commission, file reports to the commission
regarding the status of any projects included in the initial 3-year
period of an integrated resource plan approved under subsection
(7).
(15) For power purchase agreements that a utility enters into
after the effective date of the amendatory act that added this
section with an entity that is not affiliated with that utility,
the commission shall consider and may authorize a financial
incentive for that utility that does not exceed the utility's
weighted average cost of capital.
(16) 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.
(17) The commission shall include in an electric utility's
retail rates all reasonable and prudent costs specified under
subsections (11) and (12) that have been incurred to implement an
integrated resource plan approved by the commission. The commission
shall not disallow recovery of costs an electric utility incurs in
implementing an approved integrated resource plan, if the costs do
not exceed the costs approved by the commission under subsections
(11) and (12). 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, power purchase agreement, or other investment in a
resource that meets a demonstrated need for capacity that exceeds
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 the cost approved by
the commission if the commission finds by a preponderance of the
evidence that the costs are reasonable and prudent. The commission
shall disallow costs the commission finds have been incurred as the
result of fraud, concealment, gross mismanagement, or lack of
quality controls amounting to gross mismanagement. The commission
shall also require refunds with interest to ratepayers of any of
these costs already recovered through the electric utility's rates
and charges. If the assumptions underlying an approved integrated
resource plan materially change, or if the commission believes it
is unlikely that a project or program will become commercially
operational, an electric utility may request, or the commission on
its own motion may initiate, a proceeding to review whether it is
reasonable and prudent to complete an unfinished project or program
included in an approved integrated resource plan. If the commission
finds that completion of the project or program is no longer
reasonable and prudent, the commission may modify or cancel
approval of the project or program and unincurred costs in the
electric utility's integrated resource plan. Except for costs the
commission finds an electric utility has incurred as the result of
fraud, concealment, gross mismanagement, or lack of quality
controls amounting to gross mismanagement, if commission approval
is modified or canceled, the commission shall not disallow
reasonable and prudent costs already incurred or committed to by
contract by an electric utility. Once the commission finds that
completion of the project or program is no longer reasonable and
prudent, the commission may limit future cost recovery to those
costs that could not be reasonably avoided.
(18) The commission may 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 may recognize, accrue, and defer the allowance for
funds used during construction.
(19) An electric utility may seek to amend an approved
integrated resource plan. Except as otherwise provided under this
subsection, the commission shall consider the amendments under the
same process and standards that govern the review and approval of a
revised integrated resource plan under subsection (9). The
commission may order an electric utility that seeks to amend an
approved integrated resource plan under this subsection to file a
plan review under subsection (21).
(20) An electric utility shall file an application for review
of its integrated resource plan not later than 5 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. A commission order approving a plan
review has the same effect as an order approving an integrated
resource plan.
(21) The commission may, on its own motion or at the request
of the electric utility, 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.
(22) As used in this section, "long-term firm gas
transportation" means a binding agreement entered into between the
electric utility and a natural gas transmission provider for a set
period of time to provide firm delivery of natural gas to an
electric generation facility.
Sec. 6u. (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 whose rates are regulated by the
commission, and other interested parties regarding performance-
based regulation, under which a utility's authorized rate of return
would depend on the utility achieving targeted policy outcomes.
(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) In reviewing various performance-based regulation systems,
the commission shall evaluate, but not be limited to, all of the
following factors:
(a) Methods for estimating the revenue needed by a utility
during a multiyear 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) Methods to increase 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 extended payback periods.
(c) Options for establishing incentives and penalties that
pertain to issues such as customer satisfaction, safety,
reliability, environmental impact, and social obligations.
(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.
(4) Not later than 1 year 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.
(5) This section does not limit the commission's authority to
authorize performance-based regulation.
Sec. 6v. (1) Notwithstanding any existing power purchase
agreement, the commission shall, at least every 5 years, conduct a
proceeding, as a contested case pursuant to chapter 4 of the
administrative procedures act of 1969, 1969 PA 306, MCL 24.271 to
24.287, to reevaluate the procedures and rates schedules including
avoided cost rates, as originally established by the commission in
an order dated March 17, 1981 in case no. U-6798, to implement
title II, section 210, of the public utility regulatory policies
act of 1978, as it relates to qualifying facilities from which
utilities in this state have an obligation to purchase energy and
capacity. Nothing in this section supersedes the provisions of
PURPA or the Federal Energy Regulatory Commission's regulations and
orders implementing PURPA.
(2) In setting rates for avoided costs, the commission shall
take into consideration the factors regarding avoided costs set
forth in PURPA and the Federal Energy Regulatory Commission's
regulations and orders implementing PURPA.
(3) After an initial contested case under subsection (1), for
a utility serving less than 1,000,000 electric customers in this
state, the commission may conduct any periodic reevaluations of the
procedures, rate schedules, and avoided cost rates for that utility
using notice and comment procedures instead of a full contested
case. The commission shall conduct the periodic reevaluation in a
contested case under chapter 4 of the administrative procedures act
of 1969, 1969 PA 306, MCL 24.271 to 24.287, if a qualifying
facility files a comment disputing the utility filing and
requesting a contested case.
(4) An order issued by the commission under subsection (1)
shall do all of the following:
(a) Ensure that the rates for purchases by an electric utility
from, and rates for sales to, a qualifying facility shall, over the
term of a contract, be just and reasonable and in the public
interest, as defined by PURPA.
(b) Ensure that an electric utility does not discriminate
against a qualifying facility with respect to the conditions or
price for provision of maintenance power, backup power,
interruptible power, and supplementary power or for any other
service.
(c) Require that any prices charged by an electric utility for
maintenance power, backup power, interruptible power, and
supplementary power and all other such services are cost-based and
just and reasonable.
(d) Establish a schedule of avoided cost price updates for
each electric utility.
(e) Require electric utilities to publish on their websites
template contracts for power purchase agreements for qualifying
facilities of less than 3 megawatts that need not include terms for
either price or duration of the contract. The terms of a template
contract published under this subsection are not binding on either
an electric utility or a qualifying facility and may be negotiated
and altered upon agreement between an electric utility and a
qualifying facility.
(5) Within 1 year after the effective date of the amendatory
act that added this section, and every 2 years thereafter, the
commission shall issue a report to the Michigan agency for energy
and the standing committees of the senate and house of
representatives with primary responsibility for energy and
environmental issues. The report shall provide a description and
status of qualifying facilities in this state, the current status
of power purchase agreements of each qualifying facility, and the
commission's efforts to comply with the requirements of PURPA.
(6) As used in this section:
(a) "Avoided costs" means that term as defined in 18 CFR
292.101.
(b) "Backup power" means electric energy or capacity supplied
by an electric utility to replace electric energy ordinarily
generated by a qualifying facility's own electric generation
equipment during an unscheduled outage of the qualifying facility.
(c) "Maintenance power" means electric energy or capacity
supplied by an electric utility during scheduled outages of the
qualifying facility.
(d) "PURPA" means title II, section 210, of the public utility
regulatory policies act of 1978.
(e) "Qualifying facility" or "facilities" means qualifying
cogeneration facilities or qualifying small power production
facilities from which an electric utility within this state has an
obligation to purchase energy and capacity within the meaning of
sections 201 and 210 of PURPA, 16 USC 796 and 824a-3, and
associated federal regulations and orders.
(f) "Supplementary power" means electric energy or capacity
supplied by an electric utility, regularly used by a qualifying
facility in addition to the electric energy or capacity that the
qualifying facility generates.
Sec. 6w. (1) If the appropriate independent system operator
receives approval from the Federal Energy Regulatory Commission to
implement a resource adequacy tariff that provides for a capacity
forward auction, and includes the option for a state to implement a
prevailing state compensation mechanism for capacity, then the
commission shall examine whether the prevailing state compensation
mechanism would be more cost-effective, reasonable, and prudent
than the capacity forward auction for this state before the
commission may order the prevailing state compensation mechanism to
be implemented in any utility service territory in which the
prevailing state compensation mechanism is not yet effective.
Before the commission orders the implementation of the prevailing
state compensation mechanism in 1 or more utility service
territories, the commission shall hold a contested case hearing
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, alternative electric suppliers,
and customers of alternative electric suppliers and the utility
under consideration. At the conclusion of the proceeding, the
commission shall make a finding for each utility service territory
under consideration, based on clear and convincing evidence, as to
whether or not the prevailing state compensation mechanism would be
more cost-effective, reasonable, and prudent than the use of the
capacity forward auction for this state in meeting the local
clearing requirement and the planning reserve margin requirement.
The contested case must be scheduled for completion by December 1
before the independent system operator's capacity forward auction
for this state, and the commission's decision shall identify which
utility service territories will be subject to the prevailing state
compensation mechanism. If the commission implements the prevailing
state compensation mechanism, it shall implement the prevailing
state compensation mechanism for a minimum of 4 consecutive
planning years unless such period conflicts with the federal
tariff. The commission shall establish the charge as a capacity
charge under subsection (3) and determine that charge consistent
with the approved resource adequacy tariff of the appropriate
independent system operator.
(2) If the appropriate independent system operator receives
approval from the Federal Energy Regulatory Commission to implement
a resource adequacy tariff that provides for a capacity forward
auction, and does not include the option for a state to implement a
prevailing state compensation mechanism for capacity, then the
commission shall examine whether a state reliability mechanism
established under subsection (8) would be more cost-effective,
reasonable, and prudent than the capacity forward auction for this
state before the commission may order the state reliability
mechanism to be implemented in any utility service territory.
Before the commission orders the implementation of the state
reliability mechanism in 1 or more utility service territories, the
commission shall hold a contested case hearing 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, alternative electric suppliers, and customers
of alternative electric suppliers and the utility under
consideration. At the conclusion of the proceeding, the commission
shall make a finding for each utility service territory under
consideration, based on clear and convincing evidence, as to
whether or not the state reliability mechanism would be more cost-
effective, reasonable, and prudent than the use of the capacity
forward auction for this state in meeting the local clearing
requirement and the planning reserve margin requirement. The
contested case must be scheduled for completion by December 1
before the independent system operator's capacity forward auction
for this state, and the commission's decision shall identify which
utility service territories will be subject to the state
reliability mechanism. If, by September 30, 2017, the Federal
Energy Regulatory Commission does not put into effect a resource
adequacy tariff that includes a capacity forward auction or a
prevailing state compensation mechanism, then the commission shall
establish a state reliability mechanism under subsection (8). The
commission may commence a proceeding before October 1 if the
commission believes orderly administration would be enabled by
doing so. If the commission implements a state reliability
mechanism, it shall be for a minimum of 4 consecutive planning
years beginning in the upcoming planning year. A state reliability
charge must be established in the same manner as a capacity charge
under subsection (3) and be determined consistent with subsection
(8).
(3) After the effective date of the amendatory act that added
section 6t, the commission shall establish a capacity charge as
provided in this section. A determination of a capacity charge must
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, after providing interested persons with notice and a
reasonable opportunity for a full and complete hearing and conclude
by December 1 of each year. The commission shall allow intervention
by interested persons, alternative electric suppliers, and
customers of alternative electric suppliers and the utility under
consideration. The commission shall provide notice to the public of
the single capacity charge as determined for each territory. No new
capacity charge is required to be paid before June 1, 2018. The
capacity charge must be applied to alternative electric load that
is not exempt as set forth under subsections (6) and (7). If the
commission elects to implement a capacity forward auction for this
state as set forth in subsection (1) or (2), then a capacity charge
shall not apply beginning in the first year that the capacity
forward auction for this state is effective. In order to ensure
that noncapacity electric generation services are not included in
the capacity charge, in determining the capacity charge, the
commission shall do both of the following and ensure that the
resulting capacity charge does not differ for full service load and
alternative electric supplier load:
(a) For the applicable term of the capacity charge, include
the capacity-related generation costs included in the utility's
base rates, surcharges, and power supply cost recovery factors,
regardless of whether those costs result from utility ownership of
the capacity resources or the purchase or lease of the capacity
resource from a third party.
(b) For the applicable term of the capacity charge, subtract
Senate Bill No. 437 as amended December 15, 2016
all non-capacity-related electric generation costs, including, but
not limited to, costs previously set for recovery through net
stranded cost recovery and securitization and the projected
revenues, net of projected fuel costs, from all of the following:
(i) All energy market sales.
(ii) Off-system energy sales.
(iii) Ancillary services sales.
(iv) Energy sales under unit-specific bilateral contracts.
(4) The commission shall provide for a true-up mechanism that
results in a utility charge or credit for the difference between
the projected net revenues described in subsection (3) and the
actual net revenues reflected in the capacity charge. The true-up
shall be reflected in the capacity charge in the subsequent year.
The methodology used to set the capacity charge shall be the same
methodology used in the true-up for the applicable planning year.
(5) Not less than once every year, the commission shall review
or amend the capacity charge in all subsequent rate cases, power
supply cost recovery cases, or separate proceedings established for
that purpose.
(6) A capacity charge shall not be assessed for any portion of
capacity obligations for each planning year for which an
alternative electric supplier can demonstrate that it can meet its
capacity obligations through owned or contractual rights to any
resource that the appropriate independent system operator allows to
meet the capacity obligation of the electric provider. The
preceding sentence shall not be applied in any way that conflicts
with [a federal] resource adequacy tariff, when applicable. Any electric
provider that has previously demonstrated that it can meet all or a
portion of its capacity obligations shall give notice to the
commission by September 1 of the year 4 years before the beginning
of the applicable planning year if it does not expect to meet that
capacity obligation and instead expects to pay a capacity charge.
The capacity charge in the utility service territory must be paid
for the portion of its load taking service from the alternative
electric supplier not covered by capacity as set forth in this
subsection during the period that any such capacity charge is
effective.
(7) An electric provider shall provide capacity to meet the
capacity obligation for the portion of that load taking service
from an alternative electric supplier in the electric provider's
service territory that is covered by the capacity charge during the
period that any such capacity charge is effective. The alternative
electric supplier has the obligation to provide capacity for the
portion of the load for which the alternative electric supplier has
demonstrated an ability to meet its capacity obligations. If an
alternative electric supplier ceases to provide service for a
portion or all of its load, it shall allow, at a cost no higher
than the determined capacity charge, the assignment of any right to
that capacity in the applicable planning year to whatever electric
provider accepts that load.
(8) If a state reliability mechanism is required to be
established under subsection (2), the commission shall do all of
the following:
(a) Require, by December 1 of each year, that each electric
utility demonstrate to the commission, in a format determined by
the commission, that for the planning year beginning 4 years after
the beginning of the current planning year, the electric utility
owns or has contractual rights to sufficient capacity to meet its
capacity obligations as set by the appropriate independent system
operator, or commission, as applicable.
(b) Require, by the seventh business day of February each
year, that each alternative electric supplier, cooperative electric
utility, or municipally owned electric utility demonstrate to the
commission, in a format determined by the commission, that for the
planning year beginning 4 years after the beginning of the current
planning year, the alternative electric supplier, cooperative
electric utility, or municipally owned electric utility owns or has
contractual rights to sufficient capacity to meet its capacity
obligations as set by the appropriate independent system operator,
or commission, as applicable. One or more municipally owned
electric utilities may aggregate their capacity resources that are
located in the same local resource zone to meet the requirements of
this subdivision. One or more cooperative electric utilities may
aggregate their capacity resources that are located in the same
local resource zone to meet the requirements of this subdivision. A
cooperative or municipally owned electric utility may meet the
requirements of this subdivision through any resource, including a
resource acquired through a capacity forward auction, that the
appropriate independent system operator allows to qualify for
meeting the local clearing requirement. A cooperative or
municipally owned electric utility's payment of an auction price
related to a capacity deficiency as part of a capacity forward
auction conducted by the appropriate independent system operator
does not by itself satisfy the resource adequacy requirements of
this section unless the appropriate independent system operator can
directly tie that provider's payment to a capacity resource that
meets the requirements of this subsection. By the seventh business
day of February in 2018, an alternative electric supplier shall
demonstrate to the commission, in a format determined by the
commission, that for the planning year beginning June 1, 2018, and
the subsequent 3 planning years, the alternative electric supplier
owns or has contractual rights to sufficient capacity to meet its
capacity obligations as set by the appropriate independent system
operator, or commission, as applicable. If the commission finds an
electric provider has failed to demonstrate it can meet a portion
or all of its capacity obligation, the commission shall do all of
the following:
(i) For alternative electric load, require the payment of a
capacity charge that is determined, assessed, and applied in the
same manner as under subsection (3) for that portion of the load
not covered as set forth in subsections (6) and (7). If a capacity
charge is required to be paid under this subdivision in the
planning year beginning June 1, 2018 or any of the 3 subsequent
planning years, the capacity charge is applicable for each of those
planning years.
(ii) For a cooperative or municipally owned electric utility,
recommend to the attorney general that suit be brought consistent
with the provisions of subsection (9) to require that procurement.
(iii) For an electric utility, require any audits and
reporting as the commission considers necessary to determine if
sufficient capacity is procured. If an electric utility fails to
meet its capacity obligations, the commission may assess
appropriate and reasonable fines, penalties, and customer refunds
under this act.
(c) In order to determine the capacity obligations, request
that the appropriate independent system operator provide technical
assistance in determining the local clearing requirement and
planning reserve margin requirement. If the appropriate independent
system operator declines, or has not made a determination by
October 1 of that year, the commission shall set any required local
clearing requirement and planning reserve margin requirement,
consistent with federal reliability requirements.
(d) In order to determine if resources put forward will meet
such federal reliability requirements, request technical assistance
from the appropriate independent system operator to assist with
assessing resources to ensure that any resources will meet federal
reliability requirements. If the technical assistance is rendered,
the commission shall accept the appropriate independent system
operator's determinations unless it finds adequate justification to
deviate from the determinations related to the qualification of
resources. If the appropriate independent system operator declines,
or has not made a determination by February 28, the commission
shall make those determinations.
(9) The attorney general or any customer of a municipally
owned electric utility or cooperative electric utility may commence
a civil action for injunctive relief against that municipally owned
electric utility or cooperative electric utility if the municipally
owned electric utility or cooperative electric utility fails to
meet the applicable requirements of subsection (8)(b). The attorney
general or customer shall commence an action under this subsection
in the circuit court for the county in which the principal office
of the municipally owned electric utility or cooperative electric
utility is located. The attorney general or customer shall not file
an action under this subsection unless the attorney general or
customer gives the municipally owned electric utility or
cooperative electric utility at least 60 days' written notice of
the intent to sue, the basis for the suit, and the relief sought.
Within 30 days after the municipally owned electric utility or
cooperative electric utility receives written notice of the intent
to sue, the municipally owned electric utility or cooperative
electric utility and the attorney general or customer shall meet
and make a good-faith attempt to determine if there is a credible
basis for the action. The municipally owned electric utility or
cooperative electric utility shall take all reasonable and prudent
steps necessary to comply with the applicable requirements of
subsection (8)(b) within 90 days after the meeting if there is a
credible basis for the action. If the parties do not agree as to
whether there is a credible basis for the action, the attorney
general or customer may proceed to file the suit.
(10) The commission shall adjust the dates under this section
if needed to ensure proper alignment with the appropriate
independent system operator's procedures and requirements. However,
Senate Bill No. 437 as amended December 15, 2016
any changes to the dates in this section must ensure that providers
still meet applicable reliability requirements. The commission
shall not permit a capacity charge to be assessed under this
section for any year in which it has elected the capacity forward
auction instead of the prevailing state compensation mechanism or
the state reliability mechanism.
(11) Nothing in this act shall prevent the commission from
determining a generation capacity charge under the reliability
assurance agreement, rate schedule FERC No. 44 of the independent
system operator known as PJM Interconnection, LLC, as approved by
the Federal Energy Regulatory Commission in docket no. ER10-2710 or
similar successor tariff.
(12) As used in this section:
(a) "Appropriate independent system operator" means the
Midcontinent Independent System Operator.
(b) "Capacity forward auction" means an auction-based resource
adequacy construct and the associated tariffs developed by the
appropriate independent system operator for at least a portion of
this state for 3 [years forward or more.]
(c) "Electric provider" means any of the following:
(i) Any person or entity that is regulated by the commission
for the purpose of selling electricity to retail customers in this
state.
(ii) A municipally owned electric utility in this state.
(iii) A cooperative electric utility in this state.
(iv) An alternative electric supplier licensed under section
10a.
(d) "Local clearing requirement" means the amount of capacity
resources required to be in the local resource zone in which the
electric provider's demand is served to ensure reliability in that
zone as determined by the appropriate independent system operator
for the local resource zone in which the electric provider's demand
is served and by the commission under subsection (8).
(e) "Planning reserve margin requirement" means the amount of
capacity equal to the forecasted coincident peak demand that occurs
when the appropriate independent system operator footprint peak
demand occurs plus a reserve margin that meets an acceptable loss
of load expectation as set by the commission or the appropriate
independent system operator under subsection (8).
(f) "Planning year" means June 1 through the following May 31
of each year.
(g) "Prevailing state compensation mechanism" means an option
for a state to elect a prevailing compensation rate for capacity
consistent with the requirements of the appropriate independent
system operator's resource adequacy tariff.
(h) "State reliability mechanism" means a plan adopted by the
commission in the absence of a prevailing state compensation
mechanism to ensure reliability of the electric grid in this state
consistent with subsection (8).
Sec. 6x. (1) Subject to section 6a(13), in order to ensure
equivalent consideration of energy waste reduction resources within
the integrated resource planning process, the commission shall by
January 1, 2021 authorize a shared savings mechanism for an
electric utility to the extent that the electric utility has not
otherwise capitalized the costs of the energy waste reduction,
conservation, demand reduction, and other waste reduction measures.
(2) For an electric utility that achieves annual electric
energy savings of at least 1% but not greater than 1.25% of its
total annual weather-adjusted retail sales in megawatt hours in the
previous calendar year, the shared savings incentive shall be 25%
of the net benefits validated as a result of the programs
implemented by the electric utility related to energy waste
reduction, conservation, demand reduction, and other waste
reduction. A shared savings mechanism authorized under this
subsection shall not exceed 15% of the electric utility's
expenditures associated with implementing energy waste reduction
programs for the calendar year in which the shared savings
mechanism was authorized. The commission shall determine net
benefits by calculating the net present value of the lifetime
avoided utility costs that are projected from the utility's energy
waste reduction programs implemented in a calendar year less the
utility expenditures associated with implementing the energy waste
reduction program in that calendar year, including all overhead and
administrative costs. The commission shall calculate net present
value by using a discount rate of the utility's weighted average
cost of capital in that calendar year.
(3) For an electric utility that achieves annual electric
energy savings of greater than 1.25% but not greater than 1.5% of
the total annual weather-adjusted retail sales in megawatt hours in
the previous calendar year, the shared savings incentive shall be
27.5% of the net benefits validated as a result of the programs
implemented by the electric utility related to energy waste
reduction, conservation, demand reduction, and other waste
reduction. A shared savings mechanism authorized under this
subsection shall not exceed 17.5% of the electric utility's
expenditures associated with implementing energy waste reduction
programs for the calendar year in which the shared savings
mechanism was authorized. The commission shall determine net
benefits by calculating the net present value of the lifetime
avoided utility costs that are projected from the utility's energy
waste reduction programs implemented in a calendar year less the
utility expenditures associated with implementing the energy waste
reduction program in that calendar year, including all overhead and
administrative costs. The commission shall calculate net present
value by using a discount rate of the utility's weighted average
cost of capital in that calendar year.
(4) For an electric utility that achieves annual electric
energy savings greater than 1.5% of the total annual weather-
adjusted retail sales in megawatt hours in the previous calendar
year, the shared savings incentive shall be 30% of the net benefits
validated as a result of the programs implemented by the electric
utility related to energy waste reduction, conservation, demand
reduction, and other waste reduction. A shared savings mechanism
authorized under this subsection shall not exceed 20% of the
electric utility's expenditures associated with implementing energy
waste reduction programs for the calendar year in which the shared
savings mechanism was authorized. The commission shall determine
net benefits by calculating the net present value of the lifetime
avoided utility costs that are projected from the utility's energy
waste reduction programs implemented in a calendar year less the
utility expenditures associated with implementing the energy waste
reduction program in that calendar year, including all overhead and
administrative costs. The commission shall calculate net present
value by using a discount rate of the utility's weighted average
cost of capital in that calendar year.
Sec. 6z. (1) A covered utility shall not discontinue utility
service to a geographic area that the covered utility serves
without first filing an abandonment application with the commission
and obtaining approval from the commission to discontinue that
service after notice and a contested case proceeding. The
commission shall not approve any abandonment application filed
under this section unless the commission determines that there is
clear and convincing evidence that all affected customers would
have access to affordable, reliable, and safe utility service from
an alternative source. A covered utility does not have to file an
abandonment application under this section if utility service is
being discontinued to a specific parcel or parcels to enable
another covered utility to provide service that the other covered
utility is legally permitted to provide. As used in this
subsection, "covered utility" means any of the following:
(a) A cooperative electric utility subject to the commission's
jurisdiction for its service area, distribution performance
standards, and quality of service.
(b) A rural gas cooperative.
(c) An electric utility, natural gas utility, or steam utility
subject to the commission's rate-making jurisdiction.
(2) Not less than 30 days after an electric utility files a
proposal to retire an electric generating plant with a regional
transmission organization, the utility shall provide that proposal
in its entirety to the commission.
(3) Not less than 60 days before an electric utility applies
to the operating reliability subcommittee of the North American
Electric Reliability Corporation for approval of a proposal to
revise an existing load balancing authority, the electric utility
shall do both of the following:
(a) File with the commission a full and complete report of the
proposed revision.
(b) Serve a copy of the report required to be filed with the
commission under subdivision (a) on all other electric utilities in
this state.
Sec.
10. (1) Sections 10 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. If the sales of
a utility are less in a subsequent year or if the energy usage of a
customer receiving electric service from an alternative electric
supplier exceeds its annual energy allotment for that facility,
that customer shall not be forced to purchase electricity from a
utility, but may purchase electricity from an alternative electric
supplier for that facility during that calendar year.
(c) Notwithstanding any other provision of this section,
provide that, if the commission determines that less than 10% of an
electric utility's average weather-adjusted retail sales for the
preceding calendar year is taking service from alternative electric
suppliers, the commission shall set as a cap on the weather-
adjusted retail sales that may take service from an alternative
electric supplier, for the current calendar year and 5 subsequent
Senate Bill No. 437 as amended December 15, 2016
calendar years, the percentage amount of [weather-adjusted] retail sales
for
the preceding calendar year rounded up to the nearest whole
percentage. If the cap is not adjusted for 6 consecutive calendar
years, the cap shall return to 10% in the calendar year following
that sixth consecutive calendar year. If a utility that serves less
than 200,000 customers in this state has not had any load served by
an alternative electric supplier in the preceding 4 years, the
commission shall adjust the cap in accordance with this provision
for no more than 2 consecutive calendar years.
(d) (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 October
6, 2008 that is similar in
nature if the customer owns more than 50% of the new facility.
(e) Provide that for an existing facility that is receiving
100% of its electric service from an alternative electric supplier
on or after the effective date of the amendatory act that added
section 6t, the owner of that facility may purchase electricity
from an alternative electric supplier, regardless of whether the
sales exceed 10% of the servicing electric utility's average
weather-adjusted retail sales, for both the existing electric
choice load at that facility and any expanded load arising after
the effective date of the amendatory act that added section 6t at
that facility as well as any new facility that is similar in nature
to the existing facility, that is constructed or acquired by the
customer on a site contiguous to the existing site or on a site
that would be contiguous to an existing site in the absence of an
existing public right-of-way, and the customer owns more than 50%
of that facility. This subdivision does not authorize or permit an
existing facility being served by an electric utility on standard
tariff service on the effective date of the amendatory act that
added section 6t to be served by an alternative electric supplier.
(f) (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 that customer
is in compliance with the terms of a settlement agreement requiring
it to facilitate construction of a new power plant located in the
Upper Peninsula of this state. A customer described in this
subdivision and the alternative electric supplier that provides
electric service to that customer are not subject to the
requirements contained in the amendatory act that added section 6t
and any administrative regulations adopted under that amendatory
act. The commission's orders establishing rates, terms, and
conditions of retail access service issued before the effective
date of the amendatory act that added section 6t remain in effect
with regard to retail open access provided under this subdivision.
(g) Provide that a customer on an enrollment queue waiting to
take retail open access service as of December 31, 2015 shall
continue on the queue and an electric utility shall add a new
customer to the queue if the customer's prospective alternative
electric supplier submits an enrollment request to the electric
utility. A customer shall be removed from the queue by notifying
the electric utility electronically or in writing.
(h) Require each electric utility to file with the commission
not later than January 15 of each year a rank-ordered queue of all
customers awaiting retail open access service under subdivision
(g). The filing must include the estimated amount of electricity
used by each customer awaiting retail open access service under
subdivision (g). All customer-specific information contained in the
filing under this subdivision is exempt from release under the
freedom of information act, 1976 PA 442, MCL 15.231 to 15.246, and
the commission shall treat that information as confidential
information. The commission may release aggregated information as
part of its annual report as long as individual customer
information or data are not released.
(i) Provide that if the prospective alternative electric
supplier of a customer next on the queue awaiting retail open
access service is notified after the effective date of the
amendatory act that added section 6t that less than 10% of an
electric utility's average weather-adjusted retail sales for the
preceding calendar year are taking service from an alternative
electric supplier and that the amount of electricity needed to
serve the customer's electric load is available under the 10%
Senate Bill No. 437 as amended December 15, 2016
allocation, the customer may take service from an alternative
electric supplier. The customer's prospective alternative electric
supplier shall notify the electric utility within 5 business days
after being notified whether the customer will take service from an
alternative electric supplier. If the customer's prospective
alternative electric supplier fails to notify the utility within 5
business days or if the customer chooses not to take retail open
access service, the customer shall be removed from the queue of
those awaiting retail open access service. The customer may
subsequently be added to the queue as a new customer under the
provisions of subdivision [(g)]. A customer that elects to take
service from an alternative electric supplier under this
subdivision shall become service-ready under rules established by
the commission and the utility's approved retail open access
service tariffs.
(j) Provide that the commission shall ensure if a customer is
notified that the customer's service from an alternative electric
supplier will be terminated or restricted as a result of the
alternative electric supplier limiting service in this state, the
customer has 60 days to acquire service from a different
alternative electric supplier. If the customer is a public entity,
the time to acquire services from a different alternative electric
supplier shall not be less than 180 days.
(k) Provide that as a condition of licensure, an alternative
electric supplier meets all of the requirements of this act.
(2) The commission shall issue orders establishing a licensing
procedure for all alternative electric suppliers. To ensure
adequate service to customers in this state, the commission shall
require that an alternative electric supplier maintain an office
within this state, shall assure that an alternative electric
supplier has the necessary financial, managerial, and technical
capabilities, 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) The commission shall issue orders to ensure that customers
in this state are not switched to another supplier or billed for
any services without the customer's consent.
(4)
No later than December 2, 2000, the commission shall
establish
a code of conduct that shall apply 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 utility's regulated and
unregulated
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 applicable to
electric
utilities and alternative electric suppliers consistent
with
section 10, this section, and sections 10b through 10cc.
(5)
An electric utility may offer its customers an appliance
service
program. 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.
(6)
A utility offering a program under subsection (5) 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.
(7)
All costs directly attributable to an appliance service
program
allowed under subsection (5) 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.
(8)
A utility may include charges for its appliance service
program
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).
(b)
A customer's regulated utility service is not terminated
for
nonpayment of the appliance service program portion 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.
(9)
In marketing its appliance service program 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
upon request within 2 business days. The customer list
shall
be provided in the same electronic format as such 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)
when personnel employed at a utility's call center provide
appliance
service program marketing information to a prospective
customer.
(c)
Prior to 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 10 days after
enrollment
to
cancel his or her appliance service program contract without
penalty.
(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.
(d)
The utility name and logo may be used to market the
appliance
service program provided that the program is not marketed
in
conjunction with a regulated service. To the extent that 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.
(10)
This section does not prohibit the commission from
requiring
a utility to include revenues from an appliance service
program
in establishing base rates. If the commission includes the
revenues
of an appliance service 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.
(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.
(4) (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.
(5) (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.
(6) (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.
(7) (15)
A customer who that elects
to receive service from an
alternative electric supplier may subsequently provide notice to
the electric utility of the customer's desire to receive standard
tariff service from the electric utility under procedures approved
by
the commission. 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.
(8) (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.
(9) (17)
As used in subsections (1) and (15):(7):
(a) "Customer" means the building or facilities served through
a single existing electric billing meter and does not mean the
person, corporation, partnership, association, governmental body,
or other entity owning or having possession of the building or
facilities.
(b) "Standard tariff service" means, for each regulated
electric utility, the retail rates, terms, and conditions of
service approved by the commission for service to customers who do
not elect to receive generation service from alternative electric
suppliers.
(10) As used in this section:
(a) "Affiliate" means a person or entity that directly, or
indirectly through 1 or more intermediates, controls, is controlled
by, or is under common control with another specified entity. As
used in this subdivision, "control" means, whether through an
ownership, beneficial, contractual, or equitable interest, the
possession, directly or indirectly, of the power to direct or to
cause the direction of the management or policies of a person or
entity or the ownership of at least 7% of an entity either directly
or indirectly.
(b) "Affiliate wheeling" means a person's use of direct access
service where an electric utility delivers electricity generated at
a person's industrial site to that person or that person's
affiliate at a location, or general aggregated locations, within
this state that was either 1 of the following:
(i) For at least 90 days during the period from January 1,
1996 to October 1, 1999, supplied by self-service power, but only
to the extent of the capacity reserved or load served by self-
service power during the period.
(ii) Capable of being supplied by a person's cogeneration
capacity within this state that has had since January 1, 1996 a
rated capacity of 15 megawatts or less, was placed in service
before December 31, 1975, and has been in continuous service since
that date. A person engaging in affiliate wheeling is not an
electric supplier, an electric utility, or conducting an electric
utility business when a person engages in affiliate wheeling.
Sec. 10c. (1) Except for a violation under section 10a(3) and
as otherwise provided under this section, upon a complaint or on
the commission's own motion, if the commission finds, after notice
and hearing, that an electric utility or an alternative electric
supplier has not complied with a provision or order issued under
sections
10 through 10bb, 10ee, or
that a natural gas utility has
not complied with a provision or order issued under section 10ee,
the
commission shall order such any
remedies and penalties as
necessary
to make whole a customer or other person who that has
suffered damages as a result of the violation, including, but not
limited to, 1 or more of the following:
(a) Order the electric utility, natural gas utility, or
alternative electric supplier to pay a fine for the first offense
of not less than $1,000.00 or more than $20,000.00. For a second
offense, the commission shall order the person to pay a fine of not
less than $2,000.00 or more than $40,000.00. For a third and any
subsequent offense, the commission shall order the person to pay a
fine of not less than $5,000.00 or more than $50,000.00.
(b) Order a refund to the customer of any excess charges.
(c) Order any other remedies that would make whole a person
harmed, including, but not limited to, payment of reasonable
attorney fees.
(d) Revoke the license of the alternative electric supplier if
the commission finds a pattern of violations.
(e) Issue cease and desist orders.
(2) Upon a complaint or the commission's own motion, the
commission may conduct a contested case to review allegations of a
violation under section 10a(3).
(3) If the commission finds that a person has violated section
10a(3), the commission shall order remedies and penalties to
protect
customers and other persons who that
have suffered damages
as a result of the violation, including, but not limited to, 1 or
more of the following:
(a) Order the person to pay a fine for the first offense of
not less than $20,000.00 or more than $30,000.00. For a second and
any subsequent offense, the commission shall order the person to
pay a fine of not less than $30,000.00 or more than $50,000.00. If
the commission finds that the second or any of the subsequent
offenses were knowingly made in violation of section 10a(3), the
commission shall order the person to pay a fine of not more than
$70,000.00. Each unauthorized action made in violation of section
10a(3)
shall be is a separate offense under this subdivision.
(b) Order an unauthorized supplier to refund to the customer
any amount greater than the customer would have paid to an
authorized supplier.
(c) Order an unauthorized supplier to reimburse an authorized
supplier an amount equal to the amount paid by the customer that
should have been paid to the authorized supplier.
(d) Order the refund of any amounts paid by the customer for
unauthorized services.
(e) Order a portion between 10% to 50% of the fine ordered
under
subdivision (a) be paid directly to the customer who that
suffered the violation under section 10a(3).
(f) If the person is licensed under this act, revoke the
license if the commission finds a pattern of violations of section
10a(3).
(g) Issue cease and desist orders.
(4) Notwithstanding subsection (3), a fine shall not be
imposed for a violation of section 10a(3) if the supplier has
otherwise fully complied with section 10a(3) and shows that the
violation
was an unintentional and bona fide error which that
occurred notwithstanding the maintenance of procedures reasonably
adopted to avoid the error. Examples of a bona fide error include
clerical, calculation, computer malfunction, programming, or
printing errors. An error in legal judgment with respect to a
supplier's obligations under section 10a(3) is not a bona fide
error. The burden of proving that a violation was an unintentional
and bona fide error is on the supplier.
(5) If the commission finds that a party's position in a
complaint filed under subsection (2) is frivolous, the commission
shall award to the prevailing party their costs, including
reasonable attorney fees, against the nonprevailing party and their
attorney.
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 provides 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 a 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 commission shall develop
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 Michigan
agency for energy 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 renewable energy and energy waste reduction 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
described in section 205 of the clean and renewable energy and
energy waste reduction act, 2008 PA 295, MCL 460.1205, 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,
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.
Sec.
10dd. (1) For the fiscal year ending September 30, 2009,
2017, there is appropriated to the commission from the assessments
imposed under 1972 PA 299, MCL 460.111 to 460.120, the amount of
$2,500,000.00
$1,950,000.00 to hire 25.0 13 full-time equated
positions to implement the provisions of the amendatory act that
added
this section 6t.
(2) For the fiscal year ending September 30, 2017, there is
appropriated to the attorney general from the assessments imposed
under 1972 PA 299, MCL 460.111 to 460.120, the amount of
$150,000.00 to hire 1.0 full-time equated position to implement the
provisions of the amendatory act that added section 6t.
(3) For the fiscal year ending September 30, 2017, there is
appropriated to the Michigan administrative hearing system from the
assessments imposed under 1972 PA 299, MCL 460.111 to 460.120, the
amount of $600,000.00 to hire 4.0 full-time equated positions to
implement the provisions of the amendatory act that added section
6t.
(4) For the fiscal year ending September 30, 2017, there is
appropriated to the department of environmental quality from the
assessments imposed under 1972 PA 299, MCL 460.111 to 460.120, the
amount of $150,000.00 to hire 1.0 full-time equated position to
implement the provisions of the amendatory act that added section
6t.
(5) For the fiscal year ending September 30, 2017, there is
appropriated to the Michigan agency for energy from the assessments
imposed under 1972 PA 299, MCL 460.111 to 460.120, the amount of
$260,000.00 to hire 2.0 full-time equated positions to implement
the provisions of the amendatory act that added section 6t.
Sec. 10ee. (1) The commission shall establish a code of
conduct that applies to all utilities. The code of conduct shall
include, but is not limited to, measures to prevent cross-
subsidization, preferential treatment, and, except as otherwise
provided under this section, information sharing, between a
utility's regulated electric, steam, or natural gas services and
unregulated programs and services, whether those services are
provided by the utility or the utility's affiliated entities. The
code of conduct established under this section is also applicable
to electric utilities and alternative electric suppliers consistent
with sections 10 through 10cc.
(2) A utility may offer its customers value-added programs and
services if those programs or services do not harm the public
interest by unduly restraining trade or competition in an
unregulated market.
(3) Assets of a utility may be used in the operation of an
unregulated value-added program or service if the unregulated
value-added program or service compensates the utility as provided
under this section for the proportional use of the assets of the
utility. Except as otherwise provided in subsection (11), assets
include the use of the utility's name and logo.
(4) A utility shall notify the commission of its intent to
offer its customers value-added programs and services before
offering those programs to its customers.
(5) The commission may initiate informal proceedings to
determine if any program or service offered under this section
potentially violates subsection (2) or (3). If the commission
determines that a potential violation exists, the commission shall
conduct formal proceedings to determine whether a violation has
occurred and order corrective actions under this act. An informal
proceeding allowed under this subsection is not required as a
prerequisite to a formal complaint.
(6) A utility offering a value-added program or service under
this section shall do all of the following:
(a) Provide the commission with written notice and a
description of any newly offered value-added program or service.
(b) 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 or
service.
(c) Maintain separate books and records for the program or
service and provide an annual report to the commission showing how
all of the utility's costs associated with the unregulated value-
added program or service were allocated to the unregulated program
or service. The annual report shall show to what extent the
utility's rates were affected by the allocations. The utility may
include this report as part of a request for rate relief.
(7) A utility offering an unregulated value-added program or
service under this section shall not promote or market the program
or service through the use of utility billing inserts, printed
messages on the utility's billing materials, or other promotional
materials included with customers' utility bills.
(8) All utility costs directly attributable to a value-added
program or service allowed under this section shall be allocated to
the program or service as required by this section. The direct and
indirect costs of all utility assets used in the operation of the
program or service shall be allocated to the program or service
based on the proportional use by the program or service as compared
to the total use of those assets by the utility. The cost of the
program or service includes 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.
(9) A utility may include charges for its value-added programs
and services offered under this section on its monthly billings to
its customers if the utility complies with all of the following:
(a) The proportional share of all costs associated with the
billing process, including the postage, envelopes, paper, and
printing expenses, are allocated as required under subsection (8).
(b) A customer's regulated utility service is not terminated
for nonpayment of the value-added program or service 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.
(10) In marketing a value-added program or service offered
under this section to the public, a utility shall do all of the
following:
(a) In the manner and to the extent allowed by commission rule
or order, provide upon request to a provider of a similar program
or service any lists of customers receiving regulated service that
the utility provides to its value-added programs or services. The
customer list shall be provided within 5 business days of the
request on a nondiscriminatory basis. A new customer shall be added
to the customer list within 1 business day of the date the customer
requests to enroll in the program or service.
(b) Appropriately allocate utility costs as required under
subsection (8) when personnel employed at a utility's call center
provide program marketing information to a prospective customer or
customer service support for program payment issues to customers
participating in a program or service offered under this section.
(c) Before enrolling a customer into the program or service
offered under this section, the utility shall inform the potential
customer of all of the following:
(i) That the program or service may be available from another
provider.
(ii) That the program or service is not regulated by the
commission.
(iii) That a new residential customer has 10 days after
enrollment to cancel his or her program or service contract without
penalty.
(iv) That the customer's regulated rates and conditions of
service provided by the utility are not affected by enrollment in
the program or service or by the decision of the customer to obtain
the program or service from another provider.
(d) The utility name and logo may be used to market programs
and services offered under this section if the utility complies
with both of the following:
(i) Does not market the program or service in conjunction with
a regulated service.
(ii) Clearly indicates on all marketing materials that the
program or service is not regulated by the commission.
(11) For programs or services directly operated by a utility,
costs shall not be allocated to the program or service for the use
of the utility's name or logo.
(12) Except as otherwise provided in this subsection, the
commission shall include only the revenues received by a utility to
recover costs directly attributable to a value-based program or
service under subsection (8) in determining a utility's base rates.
The utility shall file with the commission the percentage of
additional revenues over those that are allocated to recover costs
directly attributable to a value-added program or service under
subsection (8) that the utility wishes to include as an offset to
the utility's base rates. Following a notice and hearing, the
commission shall approve or modify the amount to be included as an
offset to the utility's base rates.
(13) Except as otherwise provided in this section, the code of
conduct shall not require a utility operating or offering a value-
added program or service under this section as part of its
regulated service to form a separate affiliate or division, 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 or
value-added programs or services with access to utility employees,
vehicles, equipment, office space, or other facilities.
(14) In addition to any penalties allowed under section 10c,
for violations of this section a utility shall pay all reasonable
costs incurred by the prevailing party.
(15) A utility that offers value-added programs or services
under this section shall file an annual report with the commission
that provides a list of its offered value-added programs and
services, the estimated market share occupied by each value-added
program and service offered by the utility, and a detailed
accounting of how the costs for the value-added programs and
services were apportioned between the utility and the value-added
programs and services. The utility shall certify to the commission
that it is complying with the requirements of this section. The
commission may conduct an audit of the books and records of the
utility and the value-added programs and services to ensure
compliance with this section.
(16) As used in this section:
(a) "Utility" means an electric, steam, or natural gas utility
regulated by the commission.
(b) "Value-added programs and services" means programs and
services that are utility or energy related, including, but not
limited to, home comfort and protection, appliance service,
building energy performance, alternative energy options, or
engineering and construction services. Value-added programs and
services do not include energy optimization or energy waste
reduction programs paid for by utility customers as part of their
regulated rates.
Sec. 10ff. (1) Effective January 1, 2017, the energy ombudsman
is established in the Michigan agency for energy. The individual
serving as energy ombudsman shall meet both of the following
requirements:
(a) Understand the rate-making process and instruments to
enable the energy ombudsman to provide rate information and track
trends related to energy costs for businesses and individuals in
this state.
(b) Possess the knowledge necessary to measure historic,
ongoing, and future energy costs for businesses and individuals in
this state based on the actions of the executive, legislative, and
judicial branches of state government.
(2) The energy ombudsman shall do all of the following:
(a) Serve as a liaison for businesses and individuals in the
state by guiding energy issues, problems, and disputes from
businesses and individuals to the appropriate entity, agency, or
venue for resolution.
(b) Monitor the activities of the commission, the Michigan
agency for energy, and other regulatory entities of this state
whose decisions affect businesses and individuals with respect to
energy and communicate those entities' decisions, policy changes,
and developments to businesses and individuals in this state. the
issues the energy ombudsman shall monitor include, but are not
limited to, all of the following:
(i) Renewable sources of energy.
(ii) Energy efficiency.
(iii) net metering.
(iv) Combined heat and power.
(v) Distributed generation.
(vi) On-bill financing.
(c) Convene regular meetings in this state to share
information and developments pertaining to energy issues, policies,
and administrative processes affecting businesses and individuals
in this state.
(d) Monitor the implementation of the code of conduct
established by the commission under section 10ee and compile and
annually publish statistics on unregulated services that are
provided by utilities and their affiliates.
Sec. 11. (1) Except as otherwise provided in this subsection,
the
commission shall phase in ensure
the establishment of electric
rates equal to the cost of providing service to each customer
class. over
a period of 5 years from October 6, 2008. If the
commission
determines that the rate impact on industrial metal
melting
customers will exceed the 2.5% limit in subsection (2), the
commission
may phase in cost-based rates for that class over a
longer
period. In establishing cost
of service rates, the
commission shall ensure that each class, or sub-class, is assessed
for its fair and equitable use of the electric grid. If the
commission determines that the impact of imposing cost of service
rates on customers of an electric utility would have a material
impact on customer rates, the commission may approve an order that
implements those rates over a suitable number of years. The
commission shall ensure that the cost of providing service to each
customer
class shall be is based on the allocation of production-
related costs based on using the 75-0-25 method of cost allocation
and
transmission costs based on using the 50-25-25 100% demand
method
of cost allocation. The commission may modify this method to
better
if it determines that this
method of cost allocation does
not ensure that rates are equal to the cost of service.
(2)
The commission shall ensure that the impact on residential
and
industrial metal melting rates due to the cost of service
requirement
in subsection (1) is no more than 2.5% per year.
(3)
Within 60 days of the effective date of the amendatory act
that
added this subsection, the commission shall commence a
proceeding
for each affected electric utility to examine cost
allocation
methods and rate design methods used to set rates. In
each
proceeding, each affected utility shall file within 60 days of
the
commencement of that proceeding a proposal to modify the
existing
cost allocation methods and rate design methods that have
been
used to set existing rates and shall provide notice to all of
that
utility's customers outlining the proposed cost allocation
methods
and rate design methods. A proposal filed by an affected
electric
utility must meet both of the following conditions:
(a)
Be consistent with subsection (1), which authorizes the
commission
to modify the 50-25-25 method of allocating production-
related
and transmission costs to better ensure rates are equal to
the
cost of service.
(b)
Explore different methods for allocation of production,
transmission,
distribution, and customer-related costs and overall
rate
design, based on cost of service, that support affordable and
competitive
electric rates for all customer classes.
(4)
The scope of a proceeding under subsection (3) is limited
to
examining cost allocation and rate design methods proposed to
set
rates for each affected electric utility that filed a proposal
under
subsection (3). The commission shall allow any interested
person
to intervene in a proceeding under subsection (3), including
on
behalf of residential utility customers. The commission shall
not
schedule a prehearing conference for the purposes of
considering
interventions until an electric utility files a
proposal
under subsection (3). Within 270 days after a proposal is
filed
under subsection (3), the commission shall issue a final
order
adopting the cost allocation methods and rate design methods
considered
appropriate by the commission and doing either of the
following:
(a)
Implementing rates consistent with those cost allocation
methods
and rate design methods.
(b)
Fixing a date for the establishment of rates consistent
with
those cost allocation methods and rate design methods, which
date
shall not be later than December 1, 2015.
(5)
A utility may file other rate applications during the
pendency
of a proceeding initiated under subsection (3). If an
affected
electric utility files a rate application before December
1,
2014, the commission may close and consolidate the proceedings
initiated
under subsection (3) with the case so long as a final
order
addressing the proceedings initiated under subsection (3) can
be
implemented by December 1, 2015.
(6)
The commission shall order the administrative law judge
presiding
over a proceeding under subsection (3) or (5) to prepare
an
interim report that the commission shall submit to the
legislature
within 150 days after proposals are filed under
subsection
(3) or in a consolidated case under subsection (5)
describing
the actions that have been taken to comply with
subsection
(3), including a summary of the record evidence and
positions
of the parties submitted to date regarding all of the
following:
(a)
A summary of proceedings that have been initiated.
(b)
The schedules adopted for those proceedings.
(c)
The cost allocation and rate design proposals made by
Senate Bill No. 437 as amended December 15, 2016
parties
to each of those proceedings.
(d)
The estimated impacts on the various customer classes of
each
of the proposals, in aggregate and for an average customer in
each
customer class.
(e)
A description of qualifications for any proposed new rate
and
estimation of the number of customers impacted by that new
rate.
(f)
A description of proposed definitions or methods that
support
affordable and competitive electric rates for all customer
classes.
(7)
Not later than 60 days before a final order is required to
be
issued under subsection (4) or in a consolidated case under
subsection
(5), the commission shall forward to the legislature the
proposal
for decision in each of the proceedings initiated under
subsection
(3) issued by the administrative law judge presiding
over
those proceedings including a summary of the evidence
presented
by the parties in the proceeding on which the
commission's
final decision must be made.
[
(2)] (8)
Notwithstanding any other provision
of this act, the
Senate Bill No. 437 as amended December 15, 2016
commission may establish eligible low-income customer or eligible
senior citizen customer rates. Upon filing of a rate increase
request, a utility shall include proposed eligible low-income
customer and eligible senior citizen customer rates and a method to
allocate the revenue shortfall attributed to the implementation of
those rates upon all customer classes. As used in this subsection,
"eligible low-income customer" and "eligible senior citizen
customer" mean those terms as defined in section 10t.
[(3)] (9) Notwithstanding
any other provision of this section,
the
commission shall establish rate schedules which that ensure
that public and private schools, universities, and community
colleges are charged retail electric rates that reflect the actual
cost of providing service to those customers. Electric utilities
regulated under this section shall file with the commission tariffs
to ensure that public and private schools, universities, and
community colleges are charged electric rates as provided in this
subsection.
(10)
Subsections (1) to (9) apply only to electric utilities
with
1,000,000 or more retail customers in this state.
(11)
Within 2 years of the effective date of the amendatory
act
that added this subsection, an electric utility serving fewer
than
120,000 retail customers in this state may file an application
with
the commission to modify the cost allocation methods and rate
design
methods used to set that utility's existing rates. Within
180
days of the effective date of the amendatory act that added
this
subsection, an electric utility serving 120,000 or more but
fewer
than 1,000,000 retail customers in this state shall file an
application
with the commission to modify the cost allocation
methods
and rate design methods used to set that utility's existing
rates.
This subsection does not apply to a cooperative electric
utility
that has elected to become member-regulated under the
electric
cooperative member-regulation act, 2008 PA 167, MCL 460.31
to
460.39. Upon receipt of an application under this subsection,
the
commission shall commence a proceeding for that electric
utility,
limited to examining and implementing any modifications to
the
cost allocation methods and rate design methods used by that
utility.
An electric utility's application must meet both of the
following
conditions:
(a)
Be consistent with the cost of providing service
provisions
of subsection (12).
(b)
Explore different methods for allocation of production,
transmission,
distribution, and customer-related costs and overall
rate
design, based on cost of service, that support affordable and
competitive
electric rates for all customer classes.
(12)
The commission shall approve rates equal to the cost of
providing
service to customers of electric utilities serving less
than
1,000,000 retail customers in this state. The rates shall be
approved
by the commission in each utility's first general rate
case
filed after passage of 2008 PA 286. If, in the judgment of the
commission,
the impact of imposing cost of service rates on
customers
of a utility would have a material impact, the commission
may
approve an order that implements those rates over a suitable
number
of years. The commission shall ensure that any impact on
rates
due to the cost of service requirement in this subsection is
not
more than 2.5% per year.
(13)
The commission shall annually retain an independent
consultant
to verify that the requirements of this section are
being
satisfied for each electric utility. The costs of this
service
shall be recoverable in the utility's electric rates. This
subsection
does not apply after December 31, 2015.
(14)
An analysis of affordable rates under this section shall
include
both of the following:
(a)
An analysis of rate impacts directly attributable to
proposed
cost allocation methods, not including expiring costs
associated
with non-base energy and non-base energy delivery that
have,
except for an expiring contract described in section 5 of the
energy
for economic development act of 2010, 2010 PA 297, MCL
460.995,
specific statutory time durations.
(b)
An analysis of the expected impact overall on customer
bills.
Enacting section 1. Sections 6c and 6e of 1939 PA 3, MCL
460.6c and 460.6e, are repealed.
Enacting section 2. This amendatory act takes effect 120 days
after the date it is enacted into law.
Enacting section 3. This amendatory act does not take effect
unless Senate Bill No. 438 of the 98th Legislature is enacted into
law.
