May 24, 2018, Introduced by Reps. Reilly, Glenn and Johnson 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 section 6a (MCL 460.6a), as amended by 2016 PA 341.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 6a. (1) A gas utility, electric utility, or steam utility
shall not increase its rates and charges or alter, change, or amend
any rate or rate schedules, the effect of which will be to increase
the cost of services to its customers, without first receiving
commission approval as provided in this section. A utility shall
coordinate with the commission staff in advance of filing its
general rate case application under this section to avoid resource
challenges with applications being filed at the same time as
applications filed under this section by other utilities. In the
case of electric utilities serving more than 1,000,000 customers in
this state, the commission may, if necessary, order a delay in
filing an application to establish a 21-day spacing between filings
of electric utilities serving more than 1,000,000 customers in this
state. The utility shall place in evidence facts relied upon to
support the utility's petition or application to increase its rates
and charges, or to alter, change, or amend any rate or rate
schedules. The commission shall require notice to be given to all
interested parties within the service area to be affected, and all
interested
parties shall must have a reasonable opportunity for a
full
and complete hearing. A utility may use projected costs and
revenues
for a future consecutive 12-month period in developing its
requested
rates and charges. The
commission shall use a utility's
actual cost of providing service during a historical test year
adjusted only for known and measurable changes in establishing that
utility's rates and charges. The commission shall notify the
utility
within 30 days after filing , whether
the utility's
petition or application is complete. A petition or application is
considered complete if it complies with the rate application filing
forms and instructions adopted under subsection (8). If the
application is not complete, the commission shall notify the
utility of all information necessary to make that filing complete.
If the commission has not notified the utility within 30 days of
whether the utility's petition or application is complete, the
application is considered complete. Concurrently with filing a
complete application, or at any time after filing a complete
application, a gas utility serving fewer than 1,000,000 customers
in this state may file a motion seeking partial and immediate rate
relief. After providing notice to the interested parties within the
service area to be affected and affording interested parties a
reasonable opportunity to present written evidence and written
arguments relevant to the motion seeking partial and immediate rate
relief, the commission shall make a finding and enter an order
granting or denying partial and immediate relief within 180 days
after the motion seeking partial and immediate rate relief was
submitted. The commission has 12 months to issue a final order in a
case in which a gas utility has filed a motion seeking partial and
immediate rate relief.
(2) If the commission has not issued an order within 180 days
of the filing of a complete application, the utility may implement
up to the amount of the proposed annual rate request through equal
percentage
increases or decreases applied to all base rates. If the
utility
uses projected costs and revenues for a future period in
developing
its requested rates and charges, the utility may not
implement
the equal percentage increases or decreases before the
calendar
date corresponding to the start of the projected 12-month
period.
For good cause, the commission may
issue a temporary order
preventing or delaying a utility from implementing its proposed
rates or charges. If a utility implements increased rates or
charges under this subsection before the commission issues a final
order, that utility shall refund to customers, with interest, any
portion of the total revenues collected through application of the
equal percentage increase that exceed the total that would have
been produced by the rates or charges subsequently ordered by the
commission in its final order. The commission shall allocate any
refund required by this subsection among primary customers based
upon their pro rata share of the total revenue collected through
the applicable increase, and among secondary and residential
customers in a manner to be determined by the commission. The rate
of
interest for refunds shall must
equal 5% plus the London
interbank offered rate (LIBOR) for the appropriate time period. For
any portion of the refund that, exclusive of interest, exceeds 25%
of the annual revenue increase awarded by the commission in its
final
order, the rate of interest shall be is the authorized rate
of return on the common stock of the utility during the appropriate
period.
Any refund or interest awarded under this subsection shall
must not be included, in whole or in part, in any application for a
rate increase by a utility. This subsection only applies to
completed
applications filed with the commission before the
effective
date of the amendatory act that added section 6t.April
20, 2017.
(3) This section does not impair the commission's ability to
issue a show cause order as part of its rate-making authority. An
alteration or amendment in rates or rate schedules applied for by a
public utility that will not result in an increase in the cost of
service to its customers may be authorized and approved without
notice or hearing. There shall be no increase in rates based upon
changes in cost of fuel, purchased gas, or purchased steam unless
notice has been given within the service area to be affected, and
there has been an opportunity for a full and complete hearing on
the cost of fuel, purchased gas, or purchased steam. The rates
charged by any utility under an automatic fuel, purchased gas, or
purchased
steam adjustment clause shall must
not be altered,
changed, or amended unless notice has been given within the service
area to be affected, and there has been an opportunity for a full
and complete hearing on the cost of the fuel, purchased gas, or
purchased steam.
(4) The commission shall adopt rules and procedures for the
filing, investigation, and hearing of petitions or applications to
increase or decrease utility rates and charges as the commission
finds necessary or appropriate to enable it to reach a final
decision with respect to petitions or applications within a period
of time allotted by law to issue a final order after the filing of
the complete petitions or applications. The commission shall not
authorize or approve adjustment clauses that operate without notice
and an opportunity for a full and complete hearing, and all such
clauses are abolished. The commission may hold a full and complete
hearing to determine the cost of fuel, purchased gas, purchased
steam, or purchased power separately from a full and complete
hearing on a general rate case and may hold that hearing
concurrently with the general rate case. The commission shall
authorize a utility to recover the cost of fuel, purchased gas,
purchased steam, or purchased power only to the extent that the
purchases are reasonable and prudent.
(5) Except as otherwise provided in this subsection and
subsection (1), if the commission fails to reach a final decision
with respect to a completed petition or application to increase or
decrease utility rates within the 10-month period following the
filing of the completed petition or application, the petition or
application is considered approved. If a utility makes any
significant amendment to its filing, the commission has an
additional 10 months after the date of the amendment to reach a
final decision on the petition or application. If the utility files
for an extension of time, the commission shall extend the 10-month
period by the amount of additional time requested by the utility.
(6) A utility shall not file a general rate case application
for an increase in rates earlier than 12 months after the date of
the filing of a complete prior general rate case application. A
utility may not file a new general rate case application until the
commission has issued a final order on a prior general rate case or
until the rates are approved under subsection (5).
(7) The commission shall, if requested by a gas utility,
establish load retention transportation rate schedules or approve
gas transportation contracts as required for the purpose of serving
industrial or commercial customers whose individual annual
transportation volumes exceed 500,000 decatherms on the gas
utility's system. The commission shall approve these rate schedules
or approve transportation contracts entered into by the utility in
good faith if the industrial or commercial customer has the
installed capability to use an alternative fuel or otherwise has a
viable alternative to receiving natural gas transportation service
from the utility, the customer can obtain the alternative fuel or
gas transportation from an alternative source at a price that would
cause them not to use the gas utility's system, and the customer,
as a result of their use of the system and receipt of
transportation service, makes a significant contribution to the
utility's fixed costs. The commission shall adopt accounting and
rate-making policies to ensure that the discounts associated with
the transportation rate schedules and contracts are recovered by
the gas utility through charges applicable to other customers if
the incremental costs related to the discounts are no greater than
the costs that would be passed on to those customers as the result
of a loss of the industrial or commercial customer's contribution
to a utility's fixed costs.
(8) The commission shall adopt standard rate application
filing forms and instructions for use in all general rate cases
filed by utilities whose rates are regulated by the commission. For
cooperative electric utilities whose rates are regulated by the
commission, in addition to rate applications filed under this
section, the commission shall continue to allow for rate filings
based on the cooperative's times interest earned ratio. The
commission may modify the standard rate application forms and
instructions adopted under this subsection.
(9) If, on or before January 1, 2008, a merchant plant entered
into a contract with an initial term of 20 years or more to sell
electricity to an electric utility whose rates are regulated by the
commission with 1,000,000 or more retail customers in this state
and if, before January 1, 2008, the merchant plant generated
electricity under that contract, in whole or in part, from wood or
solid wood wastes, then the merchant plant shall, upon petition by
the merchant plant, and subject to the limitation set forth in
subsection (10), recover the amount, if any, by which the merchant
plant's reasonably and prudently incurred actual fuel and variable
operation and maintenance costs exceed the amount that the merchant
plant is paid under the contract for those costs. This subsection
does not apply to landfill gas plants, hydro plants, municipal
solid waste plants, or to merchant plants engaged in litigation
against an electric utility seeking higher payments for power
delivered pursuant to contract.
(10) The total aggregate additional amounts recoverable by
merchant plants under subsection (9) in excess of the amounts paid
under the contracts shall not exceed $1,000,000.00 per month for
each affected electric utility. The $1,000,000.00 per month limit
specified
in this subsection shall must
be reviewed by the
commission upon petition of the merchant plant filed no more than
once per year and may be adjusted if the commission finds that the
eligible merchant plants reasonably and prudently incurred actual
fuel and variable operation and maintenance costs exceed the amount
that those merchant plants are paid under the contract by more than
$1,000,000.00
per month. The annual amount of the adjustments shall
must not exceed a rate equal to the United States consumer price
index. The commission shall not make an adjustment unless each
affected merchant plant files a petition with the commission. If
the total aggregate amount by which the eligible merchant plants
reasonably and prudently incurred actual fuel and variable
operation and maintenance costs determined by the commission exceed
the amount that the merchant plants are paid under the contract by
more than $1,000,000.00 per month, the commission shall allocate
the additional $1,000,000.00 per month payment among the eligible
merchant plants based upon the relationship of excess costs among
the eligible merchant plants. The $1,000,000.00 limit specified in
this subsection, as adjusted, does not apply to actual fuel and
variable operation and maintenance costs that are incurred due to
changes in federal or state environmental laws or regulations that
are implemented after October 6, 2008. The $1,000,000.00 per month
payment limit under this subsection does not apply to merchant
plants eligible under subsection (9) whose electricity is purchased
by a utility that is using wood or wood waste or fuels derived from
those materials for fuel in their power plants. As used in this
subsection, "United States consumer price index" means the United
States consumer price index for all urban consumers as defined and
reported by the United States Department of Labor, Bureau of Labor
Statistics.
(11) The commission shall issue orders to permit the recovery
authorized under subsections (9) and (10) upon petition of the
merchant plant. The merchant plant is not required to alter or
amend the existing contract with the electric utility in order to
obtain the recovery under subsections (9) and (10). The commission
shall permit or require the electric utility whose rates are
regulated by the commission to recover from its ratepayers all fuel
and variable operation and maintenance costs that the electric
utility is required to pay to the merchant plant as reasonably and
prudently incurred costs.
(12) Subject to subsection (13), if requested by an electric
utility with less than 200,000 customers in this state, the
commission shall approve an appropriate revenue decoupling
mechanism that adjusts for decreases in actual sales compared to
the projected levels used in that utility's most recent rate case
that are the result of implemented energy waste reduction,
conservation, demand-side programs, and other waste reduction
measures, if the utility first demonstrates the following to the
commission:
(a) That the projected sales forecast in the utility's most
recent rate case is reasonable.
(b) That the electric utility has achieved annual incremental
energy savings at least equal to the lesser of the following:
(i) One percent of its total annual retail electricity sales
in the previous year.
(ii) The amount of any incremental savings yielded by energy
waste reduction, conservation, demand-side programs, and other
waste reduction measures approved by the commission in that
utility's most recent integrated resource plan.
(13) The commission shall consider the aggregate revenues
attributable to revenue decoupling mechanisms, financial
incentives, and shared savings mechanisms the commission has
approved for an electric utility relative to energy waste
reduction, conservation, demand-side programs, peak load reduction,
and other waste reduction measures. The commission may approve an
alternative methodology for a revenue decoupling mechanism
authorized under subsection (12), a financial incentive authorized
under section 75 of the clean and renewable energy and energy waste
reduction act, 2008 PA 295, MCL 460.1075, or a shared savings
mechanism authorized under section 6x if the commission determines
that the resulting aggregate revenues from those mechanisms would
not result in a reasonable and cost-effective method to ensure that
investments in energy waste reduction, demand-side programs, peak
load reduction, and other waste reduction measures are not
disfavored when compared to utility supply-side investments. The
commission's consideration of an alternative methodology under this
subsection 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.
(14)
Within 1 year after the effective date of the amendatory
act
that added this subsection, By
April 20, 2018, the commission
shall conduct a study on an appropriate tariff reflecting equitable
cost of service for utility revenue requirements for customers who
participate in a net metering program or distributed generation
program under the clean and renewable energy and energy waste
reduction act, 2008 PA 295, MCL 460.1001 to 460.1211. In any rate
case filed after June 1, 2018, the commission shall approve such a
tariff for inclusion in the rates of all customers participating in
a net metering or distributed generation program under the clean
and renewable energy and energy waste reduction act, 2008 PA 295,
MCL 460.1001 to 460.1211. A tariff established under this
subsection does not apply to customers participating in a net
metering program under the clean and renewable energy and energy
waste reduction act, 2008 PA 295, MCL 460.1001 to 460.1211, before
the date that the commission establishes a tariff under this
subsection, who continues to participate in the program at their
current site or facility.
(15) Except as otherwise provided in this act, "utility" and
"electric utility" do not include a municipally owned electric
utility.
(16) As used in this section:
(a) "Full and complete hearing" means a hearing that provides
interested parties a reasonable opportunity to present and cross-
examine evidence and present arguments relevant to the specific
element or elements of the request that are the subject of the
hearing.
(b) "General rate case" means a proceeding initiated by a
utility in an application filed with the commission that alleges a
revenue deficiency and requests an increase in the schedule of
rates or charges based on the utility's total cost of providing
service.
(c) "Steam utility" means a steam distribution company
regulated by the commission.