SB-1502, As Passed Senate, December 2, 2010

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 1502

     A bill to amend 2008 PA 295, entitled

"Clean, renewable, and efficient energy act,"

by amending section 93 (MCL 460.1093).

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 93. (1) An eligible primary or secondary electric

customer is exempt from charges the customer would otherwise incur

as an electric customer under section 89 or 91 if the customer

files with its electric provider and implements a self-directed

energy optimization plan as provided in this section.

     (2) Eligibility requirements for the exemption under

subsection (1) are as follows:Subject to subsection (3), an

electric customer is not eligible under subsection (1) unless it is

a commercial or industrial electric customer and meets all of the

following requirements:

     (a) In 2009 or 2010, the customer must have had an annual peak

demand in the preceding year of at least 2 megawatts at each site

to be covered by the self-directed plan or 10 megawatts in the

aggregate at all sites to be covered by the plan.

     (b) In 2011, 2012, or 2013, the customer or customers must

have had an annual peak demand in the preceding year of at least 1

megawatt at each site to be covered by the self-directed plan or 5

megawatts in the aggregate at all sites to be covered by the plan.

     (c) In 2014 or any year thereafter, the customer or customers

must have had an annual peak demand in the preceding year of at

least 1 megawatt in the aggregate at all sites to be covered by the

self-directed plan.

     (3) The eligibility requirements of subsection (2) do not

apply to a commercial or industrial customer that installs or

modifies an electric energy efficiency improvement under a property

assessed clean energy program pursuant to the property assessed

clean energy act.

(4) (3) The commission shall by order establish the rates,

terms, and conditions of service for customers related to this

subpart.

(5) (4) The commission shall by order do all of the following:

     (a) Require a customer to utilize the services of an energy

optimization service company to develop and implement a self-

directed plan. This subdivision does not apply to a customer that

had an annual peak demand in the preceding year of at least 2

megawatts at each site to be covered by the self-directed plan or

10 megawatts in the aggregate at all sites to be covered by the

self-directed plan.

     (b) Provide a mechanism to recover from customers under

subdivision (a) the costs for provider level review and evaluation.

     (c) Provide a mechanism to cover the costs of the low income

energy optimization program under section 89.

(6) (5) All of the following apply to a self-directed energy

optimization plan under subsection (1):

     (a) The self-directed plan shall be a multiyear plan for an

ongoing energy optimization program.

     (b) The self-directed plan shall provide for aggregate energy

savings that for each year meet or exceed the energy optimization

performance standards based on the electricity purchases in the

previous year for the site or sites covered by the self-directed

plan.

     (c) Under the self-directed plan, energy optimization shall be

calculated based on annual electricity usage. Annual electricity

usage shall be normalized so that none of the following are

included in the calculation of the percentage of incremental energy

savings:

     (i) Changes in electricity usage because of changes in business

activity levels not attributable to energy optimization.

     (ii) Changes in electricity usage because of the installation,

operation, or testing of pollution control equipment.

     (d) The self-directed plan shall specify whether electricity

usage will be weather-normalized or based on the average number of

megawatt hours of electricity sold by the electric provider

annually during the previous 3 years to retail customers in this

state. Once the self-directed plan is submitted to the provider,

this option shall not be changed.

     (e) The self-directed plan shall outline how the customer

intends to achieve the incremental energy savings specified in the

self-directed plan.

(7) (6) A self-directed energy optimization plan shall be

incorporated into the relevant electric provider's energy

optimization plan. The self-directed plan and information submitted

by the customer under subsection (9) (10) are confidential and

exempt from disclosure under the freedom of information act, 1976

PA 442, MCL 15.231 to 15.246. Projected energy savings from

measures implemented under a self-directed plan shall be attributed

to the relevant provider's energy optimization programs for the

purposes of determining annual incremental energy savings achieved

by the provider under section 77 or 81, as applicable.

(8) (7) Once a customer begins to implement a self-directed

plan at a site covered by the self-directed plan, that site is

exempt from energy optimization program charges under section 89 or

91 and is not eligible to participate in the relevant electric

provider's energy optimization programs.

(9) (8) A customer implementing a self-directed energy

optimization plan under this section shall annually submit to the

customer's electric provider every 2 years a brief report

documenting the energy efficiency measures taken under the self-

directed plan during that 2-year period, the previous year, and the

corresponding energy savings that will result. The report shall

provide sufficient information for the provider and the commission

to monitor progress toward the goals in the self-directed plan and

to develop reliable estimates of the energy savings that are being

achieved from self-directed plans. A customer shall promptly notify

the provider if the customer fails to achieve incremental energy

savings as set forth in its self-directed plan for a year that will

be the first year covered by the next biannual report. The customer

report shall indicate the level of incremental energy savings

achieved for the year covered by the report and whether that level

of incremental energy savings meets the goal set forth in the

customer's self-directed plan. If a customer submitting a report or

notice under this subsection wishes to amend its self-directed

plan, the customer shall submit with the report or notice an

amended self-directed plan. A report under this subsection shall be

accompanied by an affidavit from a knowledgeable official of the

customer that the information in the report is true and correct to

the best of the official's knowledge and belief. If the customer

has retained an independent energy optimization service company,

the requirements of this subsection shall be met by the energy

optimization service company.

(10) (9) An electric provider shall provide an annual report

to the commission that identifies customers implementing self-

directed energy optimization plans and summarizes the results

achieved cumulatively under those self-directed plans. The

commission may request additional information from the electric

provider. If the commission has sufficient reason to believe the

information is inaccurate or incomplete, it may request additional

information from the customer to ensure accuracy of the report.

(11) (10) If the commission determines after a contested case

hearing that the minimum energy optimization goals under subsection

(5)(b) (6)(b) have not been achieved at the sites covered by a

self-directed plan, in aggregate, the commission shall order the

customer or customers collectively to pay to this state an amount

calculated as follows:

     (a) Determine the proportion of the shortfall in achieving the

minimum energy optimization goals under subsection (5)(b) (6)(b).

     (b) Multiply the figure under subdivision (a) by the energy

optimization charges from which the customer or customers

collectively were exempt under subsection (1).

     (c) Multiply the product under subdivision (b) by a number not

less than 1 or greater than 2, as determined by the commission

based on the reasons for failure to meet the minimum energy

optimization goals.

(12) (11) If a customer has submitted a self-directed plan to

an electric provider, the customer, the customer's energy

optimization service company, if applicable, or the electric

provider shall provide a copy of the self-directed plan to the

commission upon request.

(13) (12) By September 1, 2010, following a public hearing,

the commission shall establish an approval process for energy

optimization service companies. The approval process shall ensure

that energy optimization service companies have the expertise,

resources, and business practices to reliably provide energy

optimization services that meet the requirements of this section.

The commission may adopt by reference the past or current standards

of a national or regional certification or licensing program for

energy optimization service companies. However, the approval

process shall also provide an opportunity for energy optimization

service companies that are not recognized by such a program to be

approved by posting a bond in an amount determined by the

commission and meeting any other requirements adopted by the

commission for the purposes of this subsection. The approval

process for energy optimization service companies shall require

adherence to a code of conduct governing the relationship between

energy optimization service companies and electric providers.

(14) (13) The department of energy, labor, and economic growth

shall maintain on the department's website a list of energy

optimization service companies approved under subsection (12) (13).

     Enacting section 1. This amendatory act does not take effect

unless House Bill No. 5640 of the 95th Legislature is enacted into

law.