Bill Text: MI HB5447 | 2011-2012 | 96th Legislature | Introduced

---

Bill Title: Energy; alternative sources; renewable energy and energy optimization standards; repeal. Amends secs. 47 & 89 of 2008 PA 295 (MCL 460.1047 & 460.1089) & repeals secs. 27, 77 & 81 of 2008 PA 295 (MCL 460.1027 et seq.).

Spectrum: Partisan Bill (Republican 10-0)

Status: (Introduced - Dead) 2012-03-01 - Printed Bill Filed 03/01/2012 [HB5447 Detail]

Download: Michigan-2011-HB5447-Introduced.html

---

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HOUSE BILL No. 5447

 

February 29, 2012, Introduced by Reps. Franz, Bumstead, Shirkey, Agema, Genetski, McMillin, Yonker, Huuki, Goike and Muxlow and referred to the Committee on Energy and Technology.

 

     A bill to amend 2008 PA 295, entitled

 

"Clean, renewable, and efficient energy act,"

 

by amending sections 47 and 89 (MCL 460.1047 and 460.1089); and to

 

repeal acts and parts of acts.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 47. (1) Subject to the retail rate impact limits under

 

section 45, the commission shall consider all actual costs

 

reasonably and prudently incurred in good faith before the

 

effective date of the amendatory act that repealed section 27 to

 

implement a commission-approved renewable energy plan by an

 

electric provider whose rates are regulated by the commission to be

 

a cost of service to be recovered by the electric provider. Subject

 

to the retail rate impact limits under section 45, an electric

 

provider whose rates are regulated by the commission shall recover

 

through its retail electric rates all of the electric provider's

 

incremental costs of compliance during the 20-year period beginning

 

when the electric provider's plan is approved by the commission and

 

all reasonable and prudent ongoing costs of compliance during and

 

after that period. The recovery shall include, but is not limited

 

to, the electric provider's authorized rate of return on equity for

 

costs approved under this section, which shall remain fixed at the

 

rate of return and debt to equity ratio that was in effect in the

 

electric provider's base rates when the electric provider's

 

renewable energy plan was approved.

 

     (2) Incremental costs of compliance shall be calculated as

 

follows:

 

     (a) Determine the sum of the following costs to the extent

 

those costs are reasonable and prudent, incurred before the

 

effective date of the amendatory act that repealed section 27, and

 

not already approved for recovery in electric rates as of the

 

effective date of this act October 6, 2008:

 

     (i) Capital, operating, and maintenance costs of renewable

 

energy systems or advanced cleaner energy systems, including

 

property taxes, insurance, and return on equity associated with an

 

electric provider's renewable energy systems or advanced cleaner

 

energy systems, including the electric provider's renewable energy

 

portfolio established to achieve compliance with the renewable

 

energy standards and any additional renewable energy systems or

 

advanced cleaner energy systems, that are built or acquired by the

 

electric provider to maintain compliance with the renewable energy

 

standards during the 20-year period beginning when the electric

 

provider's plan is approved by the commission.

 

     (ii) Financing costs attributable to capital, operating, and

 

maintenance costs of capital facilities associated with renewable

 

energy systems or advanced cleaner energy systems used to meet the

 

renewable energy standard.

 

     (iii) Costs that are not otherwise recoverable in rates approved

 

by the federal energy regulatory commission and that are related to

 

the infrastructure required to bring renewable energy systems or

 

advanced cleaner energy systems used to achieve compliance with the

 

renewable energy standards on to the transmission system, including

 

interconnection and substation costs for renewable energy systems

 

or advanced cleaner energy systems used to meet the renewable

 

energy standard.

 

     (iv) Ancillary service costs determined by the commission to be

 

necessarily incurred to ensure the quality and reliability of

 

renewable energy or advanced cleaner energy used to meet the

 

renewable energy standards, regardless of the ownership of a

 

renewable energy system or advanced cleaner energy technology.

 

     (v) Except to the extent the costs are allocated under a

 

different subparagraph, all of the following:

 

     (A) The costs of renewable energy credits purchased under this

 

act.

 

     (B) The costs of contracts described in section 33(1).

 

     (vi) Expenses incurred as a result of state or federal

 

governmental actions related to renewable energy systems or

 

advanced cleaner energy systems attributable to the renewable

 

energy standards, including changes in tax or other law.

 

     (vii) Any additional electric provider costs determined by the

 

commission to be necessarily incurred to ensure the quality and

 

reliability of renewable energy or advanced cleaner energy used to

 

meet the renewable energy standards.

 

     (b) Subtract from the sum of costs not already included in

 

electric rates determined under subdivision (a) the sum of the

 

following revenues:

 

     (i) Revenue derived from the sale of environmental attributes

 

associated with the generation of renewable energy or advanced

 

cleaner energy systems attributable to the renewable energy

 

standards. Such revenue shall not be considered in determining

 

power supply cost recovery factors under section 6j of 1939 PA 3,

 

MCL 460.6j.

 

     (ii) Interest on regulatory liabilities.

 

     (iii) Tax credits specifically designed to promote renewable

 

energy or advanced cleaner energy.

 

     (iv) Revenue derived from the provision of renewable energy or

 

advanced cleaner energy to retail electric customers subject to a

 

power supply cost recovery clause under section 6j of 1939 PA 3,

 

MCL 460.6j, of an electric provider whose rates are regulated by

 

the commission. After providing an opportunity for a contested case

 

hearing for an electric provider whose rates are regulated by the

 

commission, the commission shall annually establish a price per

 

megawatt hour. In addition, an electric provider whose rates are

 

regulated by the commission may at any time petition the commission

 

to revise the price. In setting the price per megawatt hour under

 

this subparagraph, the commission shall consider factors including,

 

but not limited to, projected capacity, energy, maintenance, and

 

operating costs; information filed under section 6j of 1939 PA 3,

 

MCL 460.6j; and information from wholesale markets, including, but

 

not limited to, locational marginal pricing. This price shall be

 

multiplied by the sum of the number of megawatt hours of renewable

 

energy and the number of megawatt hours of advanced cleaner energy

 

used to maintain compliance with the renewable energy standard. The

 

product shall be considered a booked cost of purchased and net

 

interchanged power transactions under section 6j of 1939 PA 3, MCL

 

460.6j. For energy purchased by such an electric provider under a

 

renewable energy contract or advanced cleaner energy contract, the

 

price shall be the lower of the amount established by the

 

commission or the actual price paid and shall be multiplied by the

 

number of megawatt hours of renewable energy or advanced cleaner

 

energy purchased. The resulting value shall be considered a booked

 

cost of purchased and net interchanged power under section 6j of

 

1939 PA 3, MCL 460.6j.

 

     (v) Revenue from wholesale renewable energy sales and advanced

 

cleaner energy sales. Such revenue shall not be considered in

 

determining power supply cost recovery factors under section 6j of

 

1939 PA 3, MCL 460.6j.

 

     (vi) Any additional electric provider revenue considered by the

 

commission to be attributable to the renewable energy standards.

 

     (vii) Any revenues recovered in rates for renewable energy

 

costs that are included under subdivision (a).

 

     (3) The commission shall authorize an electric provider whose

 

rates are regulated by the commission to spend in any given month

 

more to comply with this act and implement an approved renewable

 

energy plan than the revenue actually generated by the revenue

 

recovery mechanism. An electric provider whose rates are regulated

 

by the commission shall recover its commission approved pre-tax

 

rate of return on regulatory assets during the appropriate period.

 

An electric provider whose rates are regulated by the commission

 

shall record interest on regulatory liabilities at the average

 

short-term borrowing rate available to the electric provider during

 

the appropriate period. Any regulatory assets or liabilities

 

resulting from the recovery costs of renewable energy or advanced

 

cleaner energy attributable to renewable energy standards through

 

the power supply cost recovery clause under section 6j of 1939 PA

 

3, MCL 460.6j, shall continue to be reconciled under that section.

 

     (4) If an electric provider's incremental costs of compliance

 

in any given month during the 20-year period beginning when the

 

electric provider's plan is approved by the commission are in

 

excess of the revenue recovery mechanism as adjusted under section

 

49 and in excess of the balance of any accumulated reserve funds,

 

subject to the minimum balance established under section 21, the

 

electric provider shall immediately notify the commission. The

 

commission shall promptly commence a contested case hearing

 

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

 

MCL 24.201 to 24.328, and modify the revenue recovery mechanism so

 

that the minimum balance is restored. However, if the commission

 

determines that recovery of the incremental costs of compliance

 

would otherwise exceed the maximum retail rate impacts specified

 

under section 45, it shall set the revenue recovery mechanism for

 

that electric provider to correspond to the maximum retail rate

 

impacts. Excess costs shall be accrued and deferred for recovery.

 

Not later than the expiration of the 20-year period beginning when

 

the electric provider's plan is approved by the commission, for an

 

electric provider whose rates are regulated by the commission, the

 

commission shall determine the amount of deferred costs to be

 

recovered under the revenue recovery mechanism and the recovery

 

period, which shall not extend more than 5 years beyond the

 

expiration of the 20-year period beginning when the electric

 

provider's plan is approved by the commission. The recovery of

 

excess costs shall be proportional to the retail rate impact limits

 

in section 45 for each customer class. The recovery of excess costs

 

alone, or, if begun before the expiration of the 20-year period, in

 

combination with the recovery of incremental costs of compliance

 

under the revenue recovery mechanism, shall not exceed the retail

 

rate impact limits of section 45 for each customer class.

 

     (5) If, at the expiration of the 20-year period beginning when

 

the electric provider's plan is approved by the commission, an

 

electric provider whose rates are regulated by the commission has a

 

regulatory liability, the refund to customer classes shall be

 

proportional to the amounts paid by those customer classes under

 

the revenue recovery mechanism.

 

     (6) After achieving compliance with the renewable energy

 

standard for 2015, the actual costs reasonably and prudently

 

incurred to continue to comply with this subpart both during and

 

after the conclusion of the 20-year period beginning when the

 

electric provider's plan is approved by the commission shall be

 

considered costs of service. The commission shall determine a

 

mechanism for an electric provider whose rates are regulated by the

 

commission to recover these costs in its retail electric rates,

 

subject to the retail rate impact limits in section 45. Remaining

 

and future regulatory assets shall be recovered consistent with

 

subsections (2) and (3) and section 49.

 

     Sec. 89. (1) The commission shall allow a provider whose rates

 

are regulated by the commission to recover the actual costs of

 

implementing its approved energy optimization plan incurred before

 

the effective date of the amendatory act that repealed section 77.

 

However, costs exceeding the overall funding levels specified in

 

the energy optimization plan are not recoverable unless those costs

 

are reasonable and prudent and meet the utility system resource

 

cost test. Furthermore, costs for load management undertaken

 

pursuant to an energy optimization plan are not recoverable as

 

energy optimization program costs under this section, but may be

 

recovered as described in section 95.

 

     (2) Under subsection (1), costs shall be recovered from all

 

natural gas customers and from residential electric customers by

 

volumetric charges, from all other metered electric customers by

 

per-meter charges, and from unmetered electric customers by an

 

appropriate charge, applied to utility bills as an itemized charge.

 

     (3) For the electric primary customer rate class customers of

 

electric providers and customers of natural gas providers with an

 

aggregate annual natural gas billing demand of more than 100,000

 

decatherms or equivalent MCFs for all sites in the natural gas

 

utility's service territory, the cost recovery under subsection (1)

 

shall not exceed 1.7% of total retail sales revenue for that

 

customer class. For electric secondary customers and for

 

residential customers, the cost recovery shall not exceed 2.2% of

 

total retail sales revenue for those customer classes.

 

     (4) Upon petition by a provider whose rates are regulated by

 

the commission, the commission shall authorize the provider to

 

capitalize all energy efficiency and energy conservation equipment,

 

materials, and installation costs with an expected economic life

 

greater than 1 year incurred before the effective date of the

 

amendatory act that repealed section 77 in implementing its energy

 

optimization plan, including such costs paid to third parties, such

 

as customer rebates and customer incentives. The provider shall

 

also propose depreciation treatment with respect to its capitalized

 

costs in its energy optimization plan, and the commission shall

 

order reasonable depreciation treatment related to these

 

capitalized costs. A provider shall not capitalize payments made to

 

an independent energy optimization program administrator under

 

section 91.

 

     (5) The established funding level for low income residential

 

programs shall be provided from each customer rate class in

 

proportion to that customer rate class's funding of the provider's

 

total energy optimization programs. Charges shall be applied to

 

distribution customers regardless of the source of their

 

electricity or natural gas supply.

 

     (6) The commission shall authorize a natural gas provider that

 

spends a minimum of 0.5% of total natural gas retail sales

 

revenues, including natural gas commodity costs, in a year on

 

commission-approved energy optimization programs to implement a

 

symmetrical revenue decoupling true-up mechanism that adjusts for

 

sales volumes that are above or below the projected levels that

 

were used to determine the revenue requirement authorized in the

 

natural gas provider's most recent rate case. In determining the

 

symmetrical revenue decoupling true-up mechanism utilized for each

 

provider, the commission shall give deference to the proposed

 

mechanism submitted by the provider. The commission may approve an

 

alternative mechanism if the commission determines that the

 

alternative mechanism is reasonable and prudent. The commission

 

shall authorize the natural gas provider to decouple rates

 

regardless of whether the natural gas provider's energy

 

optimization programs are administered by the provider or an

 

independent energy optimization program administrator under section

 

91.

 

     (7) A natural gas provider or an electric provider shall not

 

spend more than the following percentage of total utility retail

 

sales revenues, including electricity or natural gas commodity

 

costs, in any year to comply with the energy optimization

 

performance standard without specific approval from the commission:

 

     (a) In 2009, 0.75% of total retail sales revenues for 2007.

 

     (b) In 2010, 1.0% of total retail sales revenues for 2008.

 

     (c) In 2011, 1.5% of total retail sales revenues for 2009.

 

     (d) In 2012 and each year thereafter, 2.0% of total retail

 

sales revenues for the 2 years preceding.

 

     Enacting section 1. Sections 27, 77, and 81 of the clean,

 

renewable, and efficient energy act, 2008 PA 295, MCL 460.1027,

 

460.1077, and 460.1081, are repealed.