SB-0437, As Passed Senate, 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