April 23, 2014, Introduced by Rep. Stamas 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 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 section 11 (MCL 460.11), as added by 2008 PA 286.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec.
11. (1) This subsection applies beginning January 1,
2009.
Except as otherwise provided in
this subsection, the
commission shall phase in electric rates equal to the cost of
providing service to each customer class over a period of 5 years
from
the effective date of the amendatory act that added this
section.
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. The cost of
providing service to each customer class shall be based on the
allocation of production-related and transmission costs based on
using the 50-25-25 method of cost allocation. The commission may
modify this method to better ensure rates are equal to the cost of
service if this method does not result in a greater amount of
production-related and transmission costs allocated to primary
customers.
(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. A proposal filed by an affected
electric utility shall meet all 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 if this method does not result in a greater
amount of production-related and transmission cost allocated to
primary customers.
(b) Explore different methods for encouraging energy-intensive
industrial customers to locate or maintain their operations in this
state, while maintaining affordable rates for residential customers
to better ensure rates are equal to the cost of service.
(c) Within the primary and secondary classes, encourage the
attraction and retention of industrial customers to better ensure
rates are equal to the cost of service.
(4) The scope of a proceeding under subsection (3) is limited
to examining cost allocation and rate design methods used to set
rates for each affected electric utility that filed a proposal
under subsection (3). The commission shall, within 180 days after a
proposal is filed under subsection (3), issue a final order
adopting the cost allocation methods and rate design methods
considered appropriate by the commission and fixing a date for the
establishment of rates consistent with those cost allocation
methods and rate design methods, which date shall not be later than
December 1, 2015.
(5) A utility may file other rate applications during the
pendency of a proceeding under subsection (3). If an affected
electric utility files a rate application before December 1, 2014,
the commission may close and consolidate the proceedings with
another case so long as a final order can be implemented by
December 1, 2015.
(6) (3)
Notwithstanding any other provision
of this act, the
commission may establish eligible low-income customer or eligible
senior citizen customer rates. Upon filing of a rate increase
request, a utility shall include proposed eligible low-income
customer and eligible senior citizen customer rates and a method to
allocate the revenue shortfall attributed to the implementation of
those rates upon all customer classes. As used in this subsection,
"eligible low-income customer" and "eligible senior citizen
customer" mean those terms as defined in section 10t.
(7) (4)
Notwithstanding any other provision
of this section,
the commission shall establish rate schedules which ensure that
public and private schools, universities, and community colleges
are charged retail electric rates that reflect the actual cost of
providing
service to those customers. Not later than 90 days after
the
effective date of the amendatory act that added this section,
electric
Electric utilities regulated under this section shall file
with the commission tariffs to ensure that public and private
schools, universities, and community colleges are charged electric
rates as provided in this subsection.
(8) (5)
Subsections (1) to (4) (7) apply
only to electric
utilities with 1,000,000 or more retail customers in this state.
(9) For electric utilities with less than 1,000,000 retail
customers, the commission may commence a proceeding to examine cost
allocation methods and rate design methods used to set rates.
(10) (6)
This subsection applies beginning January 1, 2009.
The commission shall approve rates equal to the cost of providing
service to customers of electric utilities serving less than
1,000,000 retail customers in this state. The rates shall be
approved by the commission in each utility's first general rate
case
filed after passage of the amendatory act that added this
section.
2008 PA 286. If, in the judgment of the commission, the
impact of imposing cost of service rates on customers of a utility
would have a material impact, the commission may approve an order
that implements those rates over a suitable number of years. The
commission shall ensure that any impact on rates due to the cost of
service requirement in this subsection is not more than 2.5% per
year.
(11) (7)
The commission shall annually
retain an independent
consultant to verify that the requirements of this section are
being satisfied for each electric utility. The costs of this
service shall be recoverable in the utility's electric rates. This
subsection does not apply after December 31, 2015.