House Introduced Bill 6128

HOUSE BILL No. 6128

May 23, 2002, Introduced by Rep. Kowall and referred to the Committee on Energy and Technology.

A bill to amend 1939 PA 3, entitled

"An act to provide for the regulation and control of public util-
ities and other services affected with a public interest within
this state; to provide for alternative energy suppliers; to pro-
vide 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 cer-
tain 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 facili-
ties; 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 reme-
dies and penalties; and to repeal acts and parts of acts,"

(MCL 460.1 to 460.10cc) by adding sections 9, 9a, 9b, 9c, 9d, 9e,

9f, and 9g.

07525'02 SAT 2

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1
SEC. 9. (1) SECTIONS 9 THROUGH 9G SHALL BE KNOWN AND MAY BE

2
CITED AS THE "NATURAL GAS CUSTOMER CHOICE ACT".

3
(2) THE PURPOSE OF SECTIONS 9 THROUGH 9G IS TO DO ALL OF THE

4
FOLLOWING:

5
(A) TO ENSURE THAT ALL RETAIL CUSTOMERS IN THIS STATE HAVE A

6
CHOICE OF NATURAL GAS SUPPLIERS.

7
(B) TO ALLOW AND ENCOURAGE THE COMMISSION TO FOSTER COMPETI-

8
TION IN THIS STATE IN THE PROVISION OF NATURAL GAS SUPPLY AND

9
MAINTAIN REGULATION OF NATURAL GAS SUPPLY FOR CUSTOMERS WHO CON-

10
TINUE TO CHOOSE SUPPLY FROM INCUMBENT NATURAL GAS UTILITIES.

11
(C) TO ENCOURAGE THE ENTRANCE INTO THE MARKETPLACE OF RELI-

12
ABLE ALTERNATIVE NATURAL GAS SUPPLIERS.

13
(D) TO ENSURE THAT ALL PERSONS IN THIS STATE ARE AFFORDED

14
SAFE, RELIABLE NATURAL GAS AT A REASONABLE RATE.

15
(E) TO IMPROVE THE OPPORTUNITIES FOR ECONOMIC DEVELOPMENT IN

16
THIS STATE AND TO PROMOTE FINANCIALLY HEALTHY AND COMPETITIVE

17
UTILITIES IN THIS STATE.

18
(F) TO AUTHORIZE THE COMMISSION TO ESTABLISH A FUNDING MECH-

19
ANISM FOR NATURAL GAS UTILITIES AND ALTERNATIVE GAS SUPPLIERS TO

20
CARRY OUT AN EDUCATIONAL CHOICE PROGRAM FOR CUSTOMERS.

21
(3) AS USED IN SECTIONS 9 THROUGH 9G:

22
(A) "ALTERNATIVE GAS SUPPLIER" MEANS A PERSON PARTICIPATING

23
IN A NATURAL GAS UTILITY'S CUSTOMER CHOICE PROGRAM SELLING NATU-

24
RAL GAS AT UNREGULATED RATES TO RETAIL CUSTOMERS IN THIS STATE.

25
ALTERNATIVE GAS SUPPLIER DOES NOT INCLUDE A PERSON WHO PHYSICALLY

26
DELIVERS NATURAL GAS DIRECTLY TO RETAIL CUSTOMERS IN THIS STATE

07525'02 3

1
OR WHOSE RATES ARE REGULATED BY THE COMMISSION. AN ALTERNATIVE

2
GAS SUPPLIER IS NOT A PUBLIC UTILITY.

3
(B) "COMMISSION" MEANS THE MICHIGAN PUBLIC SERVICE COMMIS-

4
SION IN THE DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES.

5
(C) "FUND" MEANS THE COMPLAINT ADJUDICATION AND CONTESTED

6
CASE RESOLUTION EXPENSE FUND CREATED IN SECTION 9E.

7
(D) "NATURAL GAS UTILITY" MEANS AN INVESTOR-OWNED BUSINESS

8
ENGAGED IN THE SALE AND DISTRIBUTION OF NATURAL GAS WITHIN THIS

9
STATE WHOSE RATES ARE REGULATED BY THE COMMISSION.

10
SEC. 9A. (1) THE COMMISSION MAY ISSUE ORDERS ESTABLISHING

11
THE RATES, TERMS, AND CONDITIONS OF SERVICE THAT ALLOW THE RETAIL

12
CUSTOMERS OF A NATURAL GAS UTILITY OR PROVIDER TO CHOOSE AN

13
ALTERNATIVE GAS SUPPLIER.

14
(2) THE ORDERS ISSUED BY THE COMMISSION BEFORE THE EFFECTIVE

15
DATE OF THE AMENDATORY ACT THAT ADDED THIS SECTION THAT ALLOWED

16
CUSTOMERS TO CHOOSE AN ALTERNATIVE GAS SUPPLIER ARE IN COMPLIANCE

17
WITH THIS ACT.

18
SEC. 9B. (1) THE COMMISSION SHALL ISSUE ORDERS ESTABLISHING

19
A LICENSING PROCEDURE FOR ALL ALTERNATIVE GAS SUPPLIERS PARTICI-

20
PATING IN ANY NATURAL GAS CUSTOMER CHOICE PROGRAM APPROVED BY THE

21
COMMISSION. AN ALTERNATIVE GAS SUPPLIER SHALL NOT DO BUSINESS IN

22
THIS STATE WITHOUT FIRST RECEIVING A LICENSE UNDER THIS ACT.

23
(2) AN ALTERNATIVE GAS SUPPLIER SHALL MAINTAIN AN OFFICE

24
WITHIN THIS STATE.

25
(3) THE COMMISSION SHALL ASSURE THAT AN ALTERNATIVE GAS SUP-

26
PLIER DOING BUSINESS IN THIS STATE HAS THE NECESSARY FINANCIAL,

07525'02 4

1
MANAGERIAL, AND TECHNICAL CAPABILITIES AND REQUIRE THE SUPPLIER

2
TO MAINTAIN RECORDS THAT THE COMMISSION CONSIDERS NECESSARY.

3
(4) THE COMMISSION SHALL REQUIRE AN ALTERNATIVE GAS SUPPLIER

4
TO COLLECT AND REMIT TO LOCAL UNITS OF GOVERNMENT ALL APPLICABLE

5
USERS, SALES, AND USE TAXES IF THE NATURAL GAS UTILITY IS NOT

6
DOING SO ON BEHALF OF THE SUPPLIER.

7
SEC. 9C. (1) THE COMMISSION SHALL ISSUE ORDERS TO ENSURE

8
THAT CUSTOMERS IN THIS STATE ARE NOT SWITCHED TO ANOTHER NATURAL

9
GAS SUPPLIER OR BILLED FOR ANY SERVICES WITHOUT THE CUSTOMER'S

10
CONSENT.

11
(2) THE COMMISSION SHALL ISSUE ORDERS TO ENSURE THAT A NATU-

12
RAL GAS UTILITY OR AN ALTERNATIVE GAS SUPPLIER DOES NOT SOLICIT

13
OR ENTER INTO CONTRACTS WITH CUSTOMERS IN THIS STATE IN A MIS-

14
LEADING, FRAUDULENT, OR DECEPTIVE MANNER.

15
SEC. 9D. (1) EXCEPT FOR A VIOLATION UNDER SECTION 9C AND AS

16
OTHERWISE PROVIDED UNDER THIS SECTION, UPON A COMPLAINT OR ON THE

17
COMMISSION'S OWN MOTION, IF THE COMMISSION FINDS, AFTER NOTICE

18
AND HEARING, THAT A NATURAL GAS UTILITY OR AN ALTERNATIVE GAS

19
SUPPLIER HAS NOT COMPLIED WITH THIS ACT OR AN ORDER ISSUED UNDER

20
THIS ACT, THE COMMISSION SHALL ORDER REMEDIES AND PENALTIES AS

21
NECESSARY TO MAKE WHOLE A CUSTOMER OR OTHER PERSON WHO HAS SUF-

22
FERED DAMAGES AS A RESULT OF THE VIOLATION, INCLUDING, BUT NOT

23
LIMITED TO, 1 OR MORE OF THE FOLLOWING:

24
(A) ORDER THE NATURAL GAS UTILITY OR ALTERNATIVE GAS SUP-

25
PLIER TO PAY A FINE FOR THE FIRST OFFENSE OF NOT LESS THAN

26
$1,000.00 OR MORE THAN $20,000.00. FOR A SECOND OFFENSE, THE

27
COMMISSION SHALL ORDER THE PERSON TO PAY A FINE OF NOT LESS THAN

07525'02 5

1
$2,000.00 OR MORE THAN $40,000.00. FOR A THIRD AND ANY

2
SUBSEQUENT OFFENSE, THE COMMISSION SHALL ORDER THE PERSON TO PAY

3
A FINE OF NOT LESS THAN $5,000.00 OR MORE THAN $50,000.00.

4
(B) ORDER A REFUND TO THE CUSTOMER OF ANY EXCESS CHARGES.

5
(C) ORDER ANY OTHER REMEDIES THAT WOULD MAKE WHOLE A CUS-

6
TOMER OR PERSON HARMED, INCLUDING, BUT NOT LIMITED TO, PAYMENT OF

7
REASONABLE ATTORNEY FEES.

8
(D) REVOKE THE LICENSE OF THE ALTERNATIVE GAS SUPPLIER.

9
(E) ISSUE CEASE AND DESIST ORDERS.

10
(2) UPON A COMPLAINT OR THE COMMISSION'S OWN MOTION, THE

11
COMMISSION MAY CONDUCT A CONTESTED CASE TO REVIEW ALLEGATIONS OF

12
A VIOLATION UNDER SECTION 9C.

13
(3) IF THE COMMISSION FINDS THAT A PERSON HAS VIOLATED SEC-

14
TION 9C, THE COMMISSION SHALL ORDER REMEDIES AND PENALTIES TO

15
PROTECT CUSTOMERS AND OTHER PERSONS WHO HAVE SUFFERED DAMAGES AS

16
A RESULT OF THE VIOLATION, INCLUDING, BUT NOT LIMITED TO, 1 OR

17
MORE OF THE FOLLOWING:

18
(A) ORDER THE NATURAL GAS UTILITY OR ALTERNATIVE GAS SUP-

19
PLIER TO PAY A FINE FOR THE FIRST OFFENSE OF NOT LESS THAN

20
$20,000.00 OR MORE THAN $30,000.00. FOR A SECOND AND ANY SUBSE-

21
QUENT OFFENSE, THE COMMISSION SHALL ORDER THE PERSON TO PAY A

22
FINE OF NOT LESS THAN $30,000.00 OR MORE THAN $50,000.00. IF THE

23
COMMISSION FINDS THAT THE SECOND OR ANY OF THE SUBSEQUENT

24
OFFENSES WERE KNOWINGLY MADE IN VIOLATION OF SECTION 9C, THE COM-

25
MISSION SHALL ORDER THE PERSON TO PAY A FINE OF NOT MORE THAN

26
$70,000.00. EACH UNAUTHORIZED ACTION MADE IN VIOLATION OF

27
SECTION 9C SHALL BE A SEPARATE OFFENSE UNDER THIS SECTION.

07525'02 6

1
(B) ORDER A PERSON WHO VIOLATED SECTION 9C TO REFUND TO THE

2
CUSTOMER ANY AMOUNT GREATER THAN THE CUSTOMER WOULD HAVE PAID TO

3
THE CUSTOMER'S CHOSEN SUPPLIER.

4
(C) ORDER A PERSON WHO VIOLATED SECTION 9C TO REIMBURSE AN

5
AUTHORIZED SUPPLIER AN AMOUNT EQUAL TO THE AMOUNT PAID BY THE

6
CUSTOMER THAT SHOULD HAVE BEEN PAID TO THE CUSTOMER'S CHOSEN

7
SUPPLIER.

8
(D) ORDER THE REFUND OF ANY AMOUNTS PAID BY THE CUSTOMER FOR

9
UNAUTHORIZED SERVICES.

10
(E) ORDER A PORTION BETWEEN 10% TO 50% OF THE FINE ORDERED

11
UNDER SUBDIVISION (A) BE PAID DIRECTLY TO THE CUSTOMER WHO SUF-

12
FERED THE VIOLATION UNDER SECTION 9C.

13
(F) AFTER SUBTRACTING ANY AMOUNT ORDERED UNDER

14
SUBDIVISION (E), ORDER 25% OF THE REMAINING FINE ORDERED UNDER

15
SUBDIVISION (A) TO BE PAID INTO THE COMPLAINT ADJUDICATION AND

16
RESOLUTION EXPENSE FUND CREATED IN SECTION 9E.

17
(G) IF ALTERNATIVE GAS SUPPLIER LICENSED UNDER THIS ACT VIO-

18
LATES SECTION 9C, REVOKE THE LICENSE.

19
(H) ISSUE CEASE AND DESIST ORDERS.

20
(4) NOTWITHSTANDING SUBSECTION (3), A FINE SHALL NOT BE

21
IMPOSED FOR A VIOLATION OF SECTION 9C(1) IF THE SUPPLIER SHOWS

22
THAT THE VIOLATION WAS AN UNINTENTIONAL AND BONA FIDE ERROR THAT

23
OCCURRED NOTWITHSTANDING THE MAINTENANCE OF PROCEDURES REASONABLY

24
ADOPTED TO AVOID THE ERROR. EXAMPLES OF A BONA FIDE ERROR

25
INCLUDE CLERICAL, CALCULATION, COMPUTER MALFUNCTION, PROGRAMMING,

26
OR PRINTING ERRORS. AN ERROR IN LEGAL JUDGMENT WITH RESPECT TO A

27
SUPPLIER'S OBLIGATIONS UNDER SECTION 9C(1) IS NOT A BONA FIDE

07525'02 7

1
ERROR. THE SUPPLIER HAS THE BURDEN OF PROVING THAT A VIOLATION

2
OF SECTION 9C(1) WAS AN UNINTENTIONAL AND BONA FIDE ERROR.

3
(5) IF THE COMMISSION FINDS THAT A PARTY'S POSITION IN A

4
COMPLAINT FILED UNDER SUBSECTION (2) IS FRIVOLOUS, THE COMMISSION

5
SHALL AWARD TO A PREVAILING PARTY ITS COSTS, INCLUDING REASONABLE

6
ATTORNEY FEES, AGAINST A NONPREVAILING PARTY AND ITS ATTORNEY.

7
SEC. 9E. (1) THE COMPLAINT ADJUDICATION AND CONTESTED CASE

8
RESOLUTION EXPENSE FUND IS CREATED WITHIN THE DEPARTMENT OF

9
TREASURY.

10
(2) THE FUND SHALL BE ADMINISTERED BY THE COMMISSION.

11
(3) MONEY IN THE FUND AT THE CLOSE OF THE FISCAL YEAR SHALL

12
NOT LAPSE TO THE GENERAL FUND.

13
(4) THE STATE TREASURER SHALL CREDIT TO THE FUND ASSESSED

14
FINES AS PROVIDED UNDER SECTION 9D(3)(F) AND AS OTHERWISE PRO-

15
VIDED BY LAW.

16
(5) MONEY IN THE FUND SHALL BE USED BY THE COMMISSION FOR

17
ALL OF THE FOLLOWING PURPOSES:

18
(A) TO PAY FOR INDEPENDENT HEARING OFFICERS TO PRESIDE OVER

19
CUSTOMER COMPLAINT CASES PENDING BEFORE THE COMMISSION.

20
(B) TO PAY FOR TEMPORARY ADMINISTRATIVE PERSONNEL TO ASSIST

21
IN THE PREPARATION OF PROPOSALS FOR DECISION OR OTHER RECOMMENDA-

22
TIONS TO THE COMMISSION IN CUSTOMER COMPLAINT CASES.

23
(C) TO EMPLOY EXPERT WITNESSES AND OTHER CONSULTANTS IN

24
CRITICAL AREAS, INCLUDING AUDITORS, ENGINEERS, ECONOMISTS, AND

25
INFORMATION TECHNOLOGY SPECIALISTS, TO SUPPLEMENT EXISTING COM-

26
MISSION RESOURCES AS NECESSARY FOR THE COMMISSION TO COMPLETE

27
CONTESTED CASES IN A TIMELY MANNER.

07525'02 8

1
(6) INDEPENDENT HEARING OFFICERS SHALL BE APPOINTED BY THE

2
COMMISSION. THE COMMISSION'S APPOINTMENT OF AN INDEPENDENT HEAR-

3
ING OFFICER SHALL BE FOR A TERM OF 6 MONTHS, WHICH MAY BE RENEWED

4
FOR ADDITIONAL TERMS AS DETERMINED BY THE COMMISSION. EACH

5
PERSON APPOINTED AS AN INDEPENDENT HEARING OFFICER SHALL MEET ALL

6
OF THE FOLLOWING CRITERIA:

7
(A) THE PERSON SHALL BE AN ATTORNEY LICENSED TO PRACTICE LAW

8
IN THIS STATE.

9
(B) THE PERSON SHALL HAVE AT LEAST 3 YEARS' EXPERIENCE IN

10
THE RESOLUTION OF UTILITY CUSTOMER DISPUTES.

11
(C) THE PERSON SHALL NOT HAVE ANY DIRECT FINANCIAL INTEREST

12
IN A PUBLIC UTILITY, AN ALTERNATIVE ENERGY SUPPLIER AS DEFINED IN

13
SECTION 10G(A), OR AN ALTERNATIVE GAS SUPPLIER IN THIS STATE.

14
(D) DURING THE TERM OF AN APPOINTMENT, AN INDEPENDENT HEAR-

15
ING OFFICER OR ANY OTHER ATTORNEY IN THE INDEPENDENT HEARING

16
OFFICER'S LAW FIRM SHALL NOT REPRESENT OR OTHERWISE RECEIVE MONEY

17
FROM A COMPLAINANT, A PUBLIC UTILITY, AN ALTERNATIVE ENERGY SUP-

18
PLIER AS DEFINED IN SECTION 10G(A), OR AN ALTERNATIVE GAS SUP-

19
PLIER IN THIS STATE IN RETURN FOR THE PERFORMANCE OF LEGAL

20
SERVICES.

21
(7) THE COMMISSION'S CHIEF ADMINISTRATIVE LAW JUDGE SHALL

22
ASSIGN CUSTOMER COMPLAINT CASES TO INDEPENDENT HEARING OFFICERS

23
ON A CASE-BY-CASE APPOINTMENT BASIS AND SHALL SUPERVISE THE HAN-

24
DLING OF ALL CASES ADJUDICATED BY INDEPENDENT HEARING OFFICERS.

25
SEC. 9F. (1) BEFORE JANUARY 1, 2004, THE COMMISSION SHALL

26
ESTABLISH A FUNDING MECHANISM FOR NATURAL GAS UTILITIES AND

07525'02 9

1
ALTERNATIVE GAS SUPPLIERS TO CARRY OUT AN EDUCATIONAL CHOICE

2
PROGRAM FOR CUSTOMERS TO DO ALL OF THE FOLLOWING:

3
(A) INFORM CUSTOMERS OF THE CHANGES IN THE PROVISION OF NAT-

4
URAL GAS SERVICE, INCLUDING, BUT NOT LIMITED TO, THE AVAILABILITY

5
OF ALTERNATIVE GAS SUPPLIERS.

6
(B) PROVIDE ASSISTANCE TO CUSTOMERS IN UNDERSTANDING AND

7
USING THE INFORMATION TO MAKE REASONABLY INFORMED CHOICES ABOUT

8
WHICH SERVICE TO PURCHASE AND FROM WHOM TO PURCHASE IT.

9
(2) THE COMMISSION MAY COMBINE THE FUNDING MECHANISM AND

10
EDUCATIONAL CHOICE PROGRAM ESTABLISHED BY THIS SECTION WITH THE

11
FUNDING MECHANISM AND EDUCATIONAL CHOICE PROGRAM ESTABLISHED BY

12
SECTION 10R(2).

13
SEC. 9G. THE COMMISSION MAY IMPLEMENT THIS ACT THROUGH THE

14
PROMULGATION OF RULES OR THE ISSUANCE OF ORDERS.

07525'02 Final page. SAT