May 20, 2015, Introduced by Reps. Price, Glenn, Lucido, Lane and Byrd and referred to the Committee on Energy Policy.
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 10h and 10i (MCL 460.10h and 460.10i), as
added by 2000 PA 142.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 10h. As used in this act:
(a) "Assignee" means an individual, corporation, or other
legally recognized entity to which an interest in securitization
property is transferred.
(b) "Commission" means the Michigan public service commission.
in
the department of consumer and industry services.
(c) "Electric utility" means that term as defined in section 2
of the electric transmission line certification act, 1995 PA 30,
MCL 460.562.
(d) "Financing order" means an order of the commission
approving the issuance of securitization bonds and the creation of
securitization charges and any corresponding utility rate
reductions.
(e) "Financing party" means a holder of securitization bonds,
including trustees, collateral agents, and other persons acting for
the benefit of the holder.
(f) "Nonbypassable charge" means a charge in a financing order
payable by a customer receiving standard tariff service to an
electric
utility or its assignees or successors. regardless of the
identity
of the customer's electric generation supplier.
(g) "Qualified costs" means an electric utility's regulatory
assets as determined by the commission, adjusted by the applicable
portion of related investment tax credits, plus any costs that the
commission determines that the electric utility would be unlikely
to collect in a competitive market, including, but not limited to,
retail open access implementation costs and the costs of a
commission approved restructuring, buyout or buy-down of a power
purchase contract, together with the costs of issuing, supporting,
and servicing securitization bonds and any costs of retiring and
refunding the electric utility's existing debt and equity
securities in connection with the issuance of securitization bonds.
Qualified costs include taxes related to the recovery of
securitization charges.
(h) "Securitization bonds" means bonds, debentures, notes,
certificates of participation, certificates of a beneficial
interest, certificates of ownership, or other evidences of
indebtedness that are issued by an electric utility, its
successors, or an assignee under a financing order, that have a
term of not more than 15 years, and that are secured by or payable
from securitization property. If certificates of participation,
certificates of a beneficial interest, or certificates of ownership
are issued, references in this act to principal, interest, or
premium shall refer to comparable amounts under those certificates.
(i) "Securitization charges" means nonbypassable amounts to be
charged for the use or availability of electric services, approved
by the commission under a financing order to fully recover
qualified costs, that shall be collected by an electric utility,
its successors, an assignee, or other collection agents as provided
for in the financing order.
(j) "Securitization property" means the property described in
section 10j.
(k) "Standard tariff service" means that term as defined in
section 10a.
Sec. 10i. (1) Upon the application of an electric utility, if
the commission finds that the net present value of the revenues to
be collected under the financing order is less than the amount that
would be recovered over the remaining life of the qualified costs
using conventional financing methods and that the financing order
is consistent with the standards in subsection (2), the commission
shall issue a financing order to allow the utility to recover
qualified costs. An electric utility shall apply for a financing
order to finance the unrecovered book value of and demolition costs
associated with retiring any electric generation facility after the
effective date of the 2015 amendatory act that amended this
section.
(2) In a financing order, the commission shall ensure all of
the following:
(a) That the proceeds of the securitization bonds are used
solely for the purposes of the refinancing or retirement of debt or
equity.
(b) That securitization provides tangible and quantifiable
benefits to customers of the electric utility.
(c) That the expected structuring and expected pricing of the
securitization bonds will result in the lowest securitization
charges consistent with market conditions and the terms of the
financing order.
(d) That the amount securitized does not exceed the net
present value of the revenue requirement over the life of the
proposed securitization bonds associated with the qualified costs
sought to be securitized.
(e) That a customer taking service from an alternative
electric supplier will not be assessed any charge relating to the
retirement of any electric generation facility.
(3) The financing order shall detail the amount of qualified
costs to be recovered and the period over which the securitization
charges are to be recovered, not to exceed 15 years.
(4) A financing order is effective in accordance with its
terms, and the financing order, together with the securitization
charges
authorized in the order, shall be is irrevocable and not
subject to reduction, impairment, or adjustment by further action
of the commission, except as provided under section 10k(3).
(5) Stocks, bonds, notes, or other evidence of indebtedness
issued
under a financing order of the commission shall be are
binding in accordance with their terms notwithstanding that the
order of the commission is later vacated, modified, or otherwise
held to be invalid in whole or in part.
(6) The commission shall after an expedited contested case
proceeding issue a financing order or an order rejecting the
application for a financing order no later than 90 days after the
electric utility files its application.
(7) A financing order is only subject to rehearing by the
commission on the motion of the applicant for securitization.
(8) Notwithstanding any other provision of law, a financing
order may be reviewed by the court of appeals upon a filing by a
party to the commission proceeding within 30 days after the
financing order is issued. All appeals of a financing order shall
be heard and determined as expeditiously as possible with lawful
precedence over other matters. Review on appeal shall be based
solely on the record before the commission and briefs to the court
and shall be limited to whether the financing order conforms to the
constitution and laws of this state and the United States and is
within the authority of the commission under this act.
(9) At the request of an electric utility, the commission may
adopt a financing order providing for retiring and refunding
securitization bonds if the commission finds that the future
securitization charges required to service the new securitization
bonds, including transaction costs, will be less than the future
securitization charges required to service the securitization bonds
being refunded. On the retirement of the refunded securitization
bonds, the commission shall adjust the related securitization
charges accordingly.
(10)
The commission shall have the authority to may retain
financial or legal services to assist in issuance of a financing
order and to require the electric utility to pay the cost of the
services. The payments shall be included as qualified costs defined
in section 10h(g).
Enacting section 1. This amendatory act takes effect 90 days
after the date it is enacted into law.