November 13, 2014, Introduced by Reps. VerHeulen, Kesto, Singh, Callton, Muxlow, Foster, Schmidt, Haines and Hobbs 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 sections 6, 6s, and 10a (MCL 460.6, 460.6s, and
460.10a), section 6 as amended by 2005 PA 190 and section 6s as
added and section 10a as amended by 2008 PA 286.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 6. (1) The public service commission is vested with
complete power and jurisdiction to regulate all public utilities in
the state except a municipally owned utility, the owner of a
renewable resource power production facility as provided in section
6d, and except as otherwise restricted by law. The public service
commission is vested with the power and jurisdiction to regulate
all rates, fares, fees, charges, services, rules, conditions of
service, and all other matters pertaining to the formation,
operation, or direction of public utilities. The public service
commission is further granted the power and jurisdiction to hear
and pass upon all matters pertaining to, necessary, or incident to
the regulation of public utilities, including electric light and
power companies, whether private, corporate, or cooperative; water,
telegraph, oil, gas, and pipeline companies; motor carriers;
private wastewater treatment facilities; and all public
transportation and communication agencies other than railroads and
railroad companies.
(2) The public service commission shall consider the following
criteria when making decisions regarding the regulation of public
utilities in this state:
(a) Keeping the cost of energy or other services affordable to
households and businesses in this state, considering both the cost
of the service and any external costs.
(b) Reducing the risk and uncertainty for ratepayers,
including, but not limited to, all of the following:
(i) Risks that rates will rise in the future based on the cost
of fuel or other inputs.
(ii) Risks that capital investments will be underused,
increasing the costs allocated to ratepayers.
(iii) Risks that providing a service will result in harm to
public health and natural resources.
(c) Establishing rates that require each customer to pay that
customer's fair share of the cost of service. For electric power,
those rates should be based primarily on the type of connection to
the grid and the times at which power is used. Rates based on
classification of customer types should be replaced by rates based
on actual services provided to individual customers.
(3) (2)
A private, investor-owned
wastewater utility may apply
to the commission for rate regulation. If an application is filed
under this subsection, the commission is vested with the specific
grant of jurisdictional authority to regulate the rates, fares,
fees, and charges of private, investor-owned wastewater utilities.
As used in this subsection, "private, investor-owned wastewater
utilities" means a utility that delivers wastewater treatment
services through a sewage system and the physical assets of which
are wholly owned by an individual or group of individual
shareholders.
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 shall submit an application to the commission
seeking
a certificate of necessity for that each of the following:
(a) A power supply plan including all investments to be made
over the next 3 years to meet current and future demand for
electric generation and transmission for customers of that electric
utility. The public service commission shall establish a power
supply plan filing schedule for all electric utilities providing
electric service within this state. The commission shall require
each electric utility to file its first plan after approval of that
utility's first energy optimization plan following the effective
date of the amendatory act that added this subdivision and before
December 31, 2017. An electric utility shall submit a power supply
plan every third year after its initial filing.
(b) Any construction, investment, or purchase not included in
an application seeking a certificate of necessity under subdivision
(a), if that construction, investment, or purchase costs
$500,000,000.00 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.
(2) The commission may implement separate review criteria and
approval standards for electric utilities with less than 1,000,000
retail customers who seek a certificate of necessity for projects
costing less than $500,000,000.00.
(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 continued operation of an existing electric
generation facility and of any 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
future
power need.needs and meet the criteria set forth in
section
6(2).
(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 the filing of an application under this
section, 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 shall allow intervention by interested persons.
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 subsection (11).(10).
(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 the
utility may file to update
its
cost estimates if they those
estimates 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.
(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.
(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.
(8) (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. 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 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
the cost approved by the commission if the commission finds by a
preponderance of the evidence that the costs were prudently
incurred.
(9) (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
standard application filing forms and instructions shall specify
the methods by which a utility must evaluate and value any effects
of the proposed plan. The commission may, in its discretion, modify
the standard application filing forms and instructions adopted
under this section.
(10) (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. 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 number and type of generation technology proposed to
meet electric demand for the generation facility and the proposed
capacity of the generation facility, including projected fuel and
regulatory
costs under various reasonable scenarios .including both
of the following:
(i) (c)
Projected energy and capacity
purchased or produced by
the electric utility pursuant to any renewable portfolio standard
and any additional renewable energy capacity constructed or
proposed to meet future demand.
(ii) (d)
Projected energy efficiency program
savings under any
energy efficiency program requirements, any additional energy
efficiency investments made or proposed to meet future demand, and
the
projected costs for that program.those programs.
(c) (e)
Projected load management and
demand response savings
for the electric utility and the projected costs for those
programs.
(d) (f)
An analysis of the availability and
costs of other
electric resources that could replace, defer, displace, or
partially
displace the any proposed or
existing generation facility
or
purchased power agreement. , including Those resources may
include additional renewable energy, energy efficiency programs,
load management, and demand response, beyond those amounts
contained
in subdivisions (c) (b) to (e).(c).
(e) (g)
Electric transmission options for
the electric
utility.
(f) All investments necessary to meet current and anticipated
power supply for the next 20 years.
(11) The commission shall establish a process for developing
alternative scenarios to meet future demand to be modeled by the
utility. That process shall include the submission of proposed
scenarios by intervening parties and a requirement for the utility
to include analysis of at least a portion of those alternative
scenarios as part of the utility's integrated resource plan.
(12) The commission shall 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 is allowed to recognize, accrue, and
defer the allowance for funds used during construction related to
equity capital.
(13) An electric utility shall not spend more than
$10,000,000.00 on planning, engineering, and preparing a cost
estimation before seeking a certificate of necessity under
subsection (1).
(14) (13)
As used in this section,
"renewable energy system"
means that term as defined in section 11 of the clean, renewable,
and efficient energy act, 2008 PA 295, MCL 460.1011.
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 an
alternative electric supplier. The orders shall do all of the
following:
(a) 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
October 6, 2008 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,
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.
(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 purchase all or any portion of its that
customer's electricity from an alternative electric supplier,
regardless of whether the sales exceed 10% of the serving electric
utility's average weather-adjusted retail sales.
(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 The commission shall
establish
a code of conduct that shall apply applies 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
applies 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 the
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 Before 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 has 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 If 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.
(12) This act does not prohibit or limit the right of a
microgrid or 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 An
entity 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.
(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.
(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.
(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. The procedures in place
for each electric utility as of January 1, 2008 that set forth the
terms
pursuant to under 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.
(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.
(17) Within 270 days of the effective date of the amendatory
act that added this subsection, the commission shall issue orders
that allow municipally owned electric utilities, electric
utilities, and private entities to establish microgrids within this
state. The order shall do all of the following:
(a) Allow the establishment of microgrids to support 1 or more
critical facilities.
(b) Ensure that interconnections are uniform across all
electric utilities and that those interconnections follow the
standards promulgated by the commission, which shall allow for
microgrid operations consistent with this act.
(c) Allow for the operation of microgrids during an emergency.
(d) Allow microgrids to serve 1 or more facilities that are
not critical facilities if those facilities are electrically
contiguous to the critical facilities when the microgrid is in
island mode.
(18) Not later than July 1, 2016, the commission shall issue a
report to the legislature evaluating the costs and benefits of
using microgrids to provide electric service to critical
facilities.
(19) By December 31, 2015, the commission shall issue a report
to the governor and the legislature that analyzes the reliability
of the electric distribution systems in this state. The report
shall include all of the following:
(a) The best technical, economic, and regulatory approach to
ensure reliable electric service when the electric distribution
systems in this state are confronted with natural disasters and
other threats.
(b) The structural, regulatory, legal, or other barriers in
this state to adopting those best practices identified in
subdivision (a).
(c) The benefits and costs of those best practices identified
in subdivision (a).
(d) The opportunities and barriers in this state to
implementing innovative multitechnology approaches to improve the
resilience, efficiency, functionality, and performance of the
electric distribution systems in this state.
(e) Performance standards that could be adopted to improve the
resilience, efficiency, functionality, and performance of the
electric distribution systems in this state.
(20) The commission shall convene an advisory panel to assist
in preparing the report under subsection (19). The advisory panel
shall consist of all of the following:
(a) One individual representing investor-owned electric
utilities.
(b) One individual representing local units of government.
(c) One individual representing municipally owned electric
utilities.
(d) One individual representing cooperative electric
utilities.
(e) One individual representing a statewide environmental
organization.
(f) One individual representing electric consumers.
(g) One individual representing the energy industry.
(h) One individual representing a statewide labor
organization.
(21) 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.
(c) "Appliance service program" or "program" means a
subscription program for the repair and servicing of heating and
cooling systems or other appliances.
(d) "Critical facility" means any hospital, police station,
fire station, water treatment plant, sewage treatment plant, public
shelter, correctional facility, or any other facility the
commission designates as critical.
(e) "Emergency" means whenever the macrogrid is inoperable or
whenever the power quality in the macrogrid is out of
specifications.
(f) "Island mode" means that a microgrid is in a status in
which loads and energy resources within the microgrid are able to
operate but power is not exchanged with the utility-owned
transmission or distribution network.
(g) "Microgrid" means a group of interconnected loads and
distributed energy resources that acts as a single controllable
entity with respect to the macrogrid and that connects and
disconnects from the macrogrid to enable it to operate in grid-
connected or island mode.
(22) (17)
As used in subsections (1) and
(15):
(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.