Bill Text: MI HB4093 | 2017-2018 | 99th Legislature | Introduced

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Bill Title: Public utilities; natural gas utilities; infrastructure expansion investment costs for certain underserved or unserved areas; allow natural gas utilities to recover. Amends 1939 PA 3 (MCL 460.1 - 460.11) by adding sec. 9u & repeals sec. 9u.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2017-01-31 - Bill Electronically Reproduced 01/26/2017 [HB4093 Detail]

Download: Michigan-2017-HB4093-Introduced.html

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HOUSE BILL No. 4093

 

 

January 26, 2017, Introduced by Rep. Roberts 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,"

 

(MCL 460.1 to 460.11) by adding section 9u; and to repeal acts and

 

parts of acts.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 9u. (1) A natural gas utility may file an infrastructure

 

expansion investment plan with the commission to provide the

 

natural gas infrastructure necessary to serve unserved or

 

underserved areas. The amount a natural gas utility spends annually

 

on an infrastructure expansion investment plan under this section

 

must not exceed $5,000,000.00 or 25% of that utility's annual

 

spending on replacing cast iron, unprotected steel, and vintage

 

plastic pipe, whichever is greater. An infrastructure expansion

 

investment plan filed under this section must include all of the

 

following:

 

     (a) A 1-year plan that projects infrastructure investment

 

related to infrastructure expansion into unserved or underserved

 

areas.

 

     (b) A proposed infrastructure expansion recovery mechanism

 

that provides for the recovery of the incremental revenue

 

requirement associated with the infrastructure expansion

 

investment.

 

     (c) All expected costs and benefits associated with proposed

 

investments, demonstrating that those investments will augment or

 

enhance any customer attachment programs authorized by the

 

commission and support the natural gas utility's ability to reach

 

unserved or underserved areas or to provide adequate capacity for

 

demand growth in currently unserved or underserved areas. In

demonstrating the benefits of the proposed investments, a utility

 

shall identify all of the following:

 

     (i) The projected number of customers that will be provided

 

access or increased access to natural gas service by the proposed

 

investment.

 

     (ii) The projected natural gas demand or growth in demand

 

generated by the proposed investment.

 

     (iii) Any economic impacts of the proposed investment,

 

including projected customer fuel cost savings.

 

     (iv) Any impacts the proposed investment may have on the

 

reliability of natural gas service in this state.

 

     (d) An investment projection of natural gas infrastructure

 

expansion investment up to 5 years in duration proposed to be

 

recovered in future consecutive infrastructure expansion recovery

 

mechanisms.

 

     (2) Within 180 days after the filing of an infrastructure

 

expansion investment plan under subsection (1), the commission

 

shall evaluate the reasonableness and prudence of the plan,

 

including any proposed infrastructure expansion recovery mechanism,

 

and shall issue an order that approves, disapproves, or amends the

 

infrastructure expansion investment plan and the infrastructure

 

expansion recovery mechanism. The commission shall conduct the

 

review of a natural gas utility's plan as a contested hearing

 

pursuant to chapter 4 of the administrative procedures act of 1969,

 

1969 PA 306, MCL 24.271 to 24.287. In issuing an order under this

 

subsection, the commission shall also give consideration to and

 

make all necessary determinations in order to meet the requirements

of 1929 PA 69, MCL 460.501 to 460.506.

 

     (3) A natural gas utility may implement charges pursuant to an

 

infrastructure expansion recovery mechanism in the manner approved

 

in an infrastructure expansion investment plan. A natural gas

 

utility whose infrastructure expansion investment plan is approved

 

by the commission under subsection (2) shall record incremental

 

rate base items to ensure the ability to illustrate incremental

 

rate base totals on a monthly basis, using specially designated

 

subaccounts when possible.

 

     (4) In its final order in a proceeding conducted under

 

subsection (2), the commission shall evaluate the decisions

 

underlying the investment projection filed by a natural gas utility

 

as part of the infrastructure expansion investment plan. The

 

commission may also indicate any cost items in the investment

 

projection that, on the basis of present evidence, the commission

 

would be unlikely to permit the natural gas utility to recover from

 

its customers in rates, rate schedules, or infrastructure expansion

 

investment plans established in the future.

 

     (5) A natural gas utility whose infrastructure expansion

 

investment plan and infrastructure expansion recovery mechanism is

 

approved under subsection (2) shall annually file with the

 

commission an infrastructure expansion recovery mechanism

 

reconciliation. Within 180 days after the date the natural gas

 

utility files a reconciliation under this subsection, the

 

commission shall review the filing in a contested hearing conducted

 

pursuant to chapter 4 of the administrative procedures act of 1969,

 

1969 PA 306, MCL 24.271 to 24.287. In a reconciliation under this

subsection, the commission shall review the implementation of the

 

infrastructure expansion investment plan to determine if the

 

natural gas utility extended service to the unserved or underserved

 

areas identified in the plan and compare the actual investment made

 

by the natural gas utility with the investment approved in the plan

 

under subsection (2). The commission shall adjust the

 

infrastructure investment recovery mechanism to reflect the actual

 

levels of investment made by the natural gas utility. However, if

 

the actual amount of investment exceeds the amount approved in the

 

plan, a natural gas utility may recover the excess costs if the

 

natural gas utility demonstrates the reasonableness and prudence of

 

those costs in a subsequent proceeding conducted under subsection

 

(2) or as part of a general gas rate application.

 

     (6) This section does not do any of the following:

 

     (a) Prohibit a natural gas utility from filing a general gas

 

rate application.

 

     (b) Inhibit the commission's authority to approve rate

 

adjustment mechanisms for natural gas or electric utilities or

 

utility customer attachment programs.

 

     (c) Prohibit the commission from approving an infrastructure

 

expansion investment plan and infrastructure expansion recovery

 

mechanism as part of a general gas rate application.

 

     (7) The commission may promulgate administrative rules

 

pursuant to the administrative procedures act of 1969, 1969 PA 306,

 

MCL 24.201 to 24.328, for the processing of any proceeding required

 

under this section.

 

     (8) As used in this section:

     (a) "Incremental rate base" means the level of rate base above

 

the higher of either the rate base level reflected in the natural

 

gas utility's most recent general gas rate case or the level of

 

rate base recorded at the year ending before the start of the plan

 

year.

 

     (b) "Incremental revenue requirement" means the incremental

 

revenue required to recover the costs associated with

 

infrastructure expansion investment that consists of all of the

 

following:

 

     (i) The rate of return on the incremental rate base, using the

 

rate of return approved by the commission in the most recent

 

general gas rate case for the natural gas utility.

 

     (ii) The annual depreciation expense associated with the

 

incremental rate base.

 

     (iii) The annual incremental property tax associated with the

 

incremental rate base.

 

     (iv) Net of the incremental allowance for funds used during

 

construction.

 

     (c) "Infrastructure expansion investment" means investment in

 

planning, developing, acquiring, and constructing any natural gas

 

pipeline or facilities, not including service lines, necessary to

 

the transmission and distribution of natural gas to an unserved or

 

underserved area. Infrastructure expansion investment does not

 

include either of the following:

 

     (i) Investments in planning, developing, acquiring, and

 

constructing any natural gas pipeline or facilities to provide

 

natural gas service to customers that are not located in the

unserved or underserved area on the effective date of the

 

amendatory act that added this section.

 

     (ii) Customer service connection charges or fees.

 

     (d) "Infrastructure expansion recovery mechanism" means the

 

element of rates to be charged for natural gas service to each

 

meter to reflect the incremental revenue requirement associated

 

with an infrastructure expansion investment plan approved under

 

subsection (2).

 

     (e) "Natural gas utility" means an investor-owned business

 

engaged in the sale and distribution of natural gas in this state

 

whose rates are regulated by the commission.

 

     (f) "Unserved or underserved area" means an area in this state

 

lacking adequate natural gas pipeline infrastructure to meet the

 

demand of existing or potential end-use customers.

 

     (9) This section is repealed effective 10 years after the

 

effective date of the amendatory act that added this section.

 

     Enacting section 1. This amendatory act takes effect 90 days

 

after the date it is enacted into law.