April 5, 2007, Introduced by Rep. Accavitti and referred to the Committee on Energy and Technology.
A bill to establish an energy efficiency program in this
state; and to prescribe the powers and duties of certain state
agencies and officials.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the
"energy efficient Michigan act".
Sec. 3. The legislature finds all of the following:
(a) Energy efficiency is a cost-effective resource that is an
essential component of this state's energy future that ensures
affordable and reliable energy to consumers in this state.
(b) Energy efficiency in this state is a resource that is
currently underutilized.
(c) Utility investment in energy efficiency, combined with
energy efficiency codes and standards, present important
opportunities to increase this state's energy security, protect
energy consumers in this state from price volatility, preserve the
state's natural resources, and pursue an improved environment in
this state.
(d) Investment in energy efficiency by public utilities
subject to commission oversight can bring significant economic
benefits to this state.
(e) It serves the public interest to support public utility
investments in cost-effective energy efficiency by allowing
recovery of costs for reasonable and prudently incurred expenses of
energy efficiency programs.
(f) Investments in energy efficiency and implementation of
utility energy efficiency programs for economically disadvantaged
citizens of this state, in conjunction with low income
weatherization programs managed by this state, will reduce the
burden of utility costs on low income customers.
(g) Public utility investments in cost-effective energy
efficiency, combined with the adoption of efficiency codes and
standards, can provide significant reductions in greenhouse gas
emissions, regulated air emissions, water consumption, and natural
resource depletion, and can avoid or delay the need for more
expensive generation, transmission, and distribution
infrastructure.
Sec. 5. As used in this act:
(a) "Commission" means the Michigan public service commission.
(b) "Cost-effective" means that the program being evaluated
meets the total resource cost test as defined in this section.
(c) "Energy conservation" is any reduction in electric power
consumption or natural gas consumption resulting from either of the
following:
(i) Increased energy efficiency in the production,
transmission, distribution, or customer end-use applications of
electricity and natural gas.
(ii) Increased customer knowledge concerning the societal
impacts of consumption.
(d) "Energy efficiency" means measures, including energy
conservation measures, or programs that target consumer behavior,
equipment, or devices that result in a decrease in consumption of
electricity and natural gas without reducing the amount or quality
of energy services.
(e) "External costs" means costs imposed on society, but which
are not directly borne by the producer in production and delivery
activities. Due to imperfections in, or the absence of, markets,
the producer's production and pricing decisions do not account for
these costs.
(f) "Large customer" means a utility customer at a single,
contiguous field, location, or facility, regardless of the number
of meters at that field, location, or facility, with electricity
consumption greater than 7,000-megawatt hours per year or natural
gas use greater than 360,000 decatherms per year.
(g) "Load management" means measures or programs that target
equipment or devices that result in decreased peak electricity
demand or shift demand from peak to off-peak periods.
(h) "Societal cost" consists of all costs to the utility plus
all external costs which are imposed on society.
(i) "Total resource cost test" means a standard that is met
if, for an investment in energy efficiency or load management, on a
life-cycle basis the avoided supply-side monetary costs are greater
than the monetary costs of the demand-side programs borne by both
the utility and the participants and does the following:
(i) Explicitly manages the consequences of uncertainty and risk
associated with a utility's market characteristics and supply
alternatives.
(ii) Integrates the demand- and supply-side resources that
represent the least cost to society over the long term.
(iii) Explicitly weighs a broad range of resource attributes in
the evaluation of alternative resources.
(iv) Is reasonably understandable to interested persons,
including members of the general public and the commission.
(v) Involves stakeholders and nonutility expertise in utility
resource planning.
(vi) Results from a planning process within the utility which
facilitates communication and coordination among the entities
dealing with utility finances, demand forecasts, demand- and
supply-side resource evaluations, as well as other relevant
entities.
(vii) Continually monitors and develops data on the cost
effectiveness and actual productivity of conservation programs.
Sec. 7. (1) The commission shall ensure that electric and
natural gas utilities utilize cost-effective energy efficiency
investments in their energy resource portfolios.
(2) Electric and natural gas utilities shall use energy
efficiency resources to meet the following energy savings goals:
(a) Annual incremental energy savings through energy
efficiency programs equivalent to 0.3% of total annual electricity
and natural gas sales by 2008.
(b) Annual incremental energy savings through energy
efficiency programs equivalent to 0.5% of total annual electricity
and natural gas sales by 2009.
(c) Annual incremental energy savings through energy
efficiency programs equivalent to 0.75% of total annual electricity
and natural gas sales by 2010 and each year thereafter.
(3) Within 3 months of the effective date of this act, the
commission shall adopt rules specifying the procedure for utilities
to develop and submit an energy efficiency plan. Within 3 months of
adoption by the commission of rules, and biennially thereafter,
utilities shall file an energy efficiency plan with the commission.
In submitting proposed energy efficiency program plans and funding
levels to meet the savings goals adopted in this legislation, the
utility shall do all of the following:
(a) Demonstrate that their proposed level of electric or
natural gas energy efficiency program activities and funding is
consistent with the adopted electric or natural gas savings goals.
(b) Present specific proposals for programs that support new
building and appliance standards.
(c) Present a set of energy efficiency programs that include
offerings for each customer class.
(d) Demonstrate that their investments in energy efficiency
are cost effective, using the total resource cost test.
(4) Within 120 days of receiving an energy efficiency plan
from an electric or natural gas utility, the commission shall
approve, reject, or modify the submitted plan.
(5) The commission shall allow utilities to recover the
reasonable costs of investments in energy efficiency programs
implemented after the effective date of this act through a
surcharge payable by every customer of that utility. The surcharge
for any utility customer shall not exceed 1.5% of that customer's
bill, or the lower of 1.5% or $75,000.00 per year for large
customers. The commission may implement rate-making strategies for
utilities that would provide reasonable economic incentives to
encourage excellent performance in the acquisition of energy
efficiency resources through energy efficiency programs for
customers.
(6) Implementation of energy efficiency programs under this
plan shall be split between the utilities and the commission as
follows:
(a) Electric and natural gas utilities shall implement 75% of
the energy efficiency programs. Electric and natural gas utilities
shall administer energy savings incentive programs in a market-
neutral, nondiscriminatory manner but shall not offer underlying
competitive services. Each electric and natural gas utility shall
provide, through approaches such as market-based standard offer
programs, incentives sufficient for retail electric and natural gas
providers and competitive energy service providers to acquire
additional cost-effective energy efficiency according to the goals
set forth in this plan. The guidelines provide the utilities with
policy and planning guidance and do not specify the outcome of the
planning process nor mandate particular investment decisions. Each
utility's plan should be the result of that utility's unique
planning process and judgment.
(b) The commission shall implement 25% of energy efficiency
programs. The commission shall focus on targeted, market-
transformation, and educational programs that will inform customers
and provide incentives to help achieve the goals set forth in this
act.