SENATE BILL No. 1160

February 27, 2002, Introduced by Senators SIKKEMA, SANBORN, BULLARD and

HAMMERSTROM and referred to the Committee on Technology and Energy.

A bill to amend 1939 PA 3, entitled

"An act to provide for the regulation and control of public util-

ities and other services affected with a public interest within

this state; to provide for alternative energy suppliers; to pro-

vide 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 cer-

tain 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 facili-

ties; 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 reme-

dies and penalties; and to repeal acts and parts of acts,"

by amending section 10d (MCL 460.10d), as added by 2000 PA 141.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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1 Sec. 10d. (1) Unless otherwise reduced by the commission

2 under subsection (4), the commission shall establish the

3 residential rates for each electric utility with 1,000,000 or

4 more retail customers in this state as of May 1, 2000 that will

5 result in a 5% rate reduction from the rates that were authorized

6 or in effect on May 1, 2000. Notwithstanding any other provision

7 of law or commission order, rates for each electric utility with

8 1,000,000 or more retail customers established under this subsec-

9 tion become effective on the effective date of the amendatory

10 act that added this section JUNE 5, 2000 and remain in effect

11 until December 31, 2003 and all other electric retail rates of an

12 electric utility with 1,000,000 or more retail customers autho-

13 rized or in effect as of May 1, 2000 shall remain in effect until

14 December 31, 2003, unless otherwise reduced by the commission

15 under subsection (4).

16 (2) On and after December 31, 2003, rates for an electric

17 utility with 1,000,000 or more retail customers in this state as

18 of May 1, 2000 shall not be increased until the earlier of

19 December 31, 2013 or until the commission determines, after

20 notice and hearing, that the utility meets the market test under

21 section 10f and has completed the transmission expansion provided

22 for in the plan required under section 10v. The rates for com-

23 mercial or manufacturing customers of an electric utility with

24 1,000,000 or more retail customers with annual peak demands of

25 less than 15 kilowatts shall not be increased before January 1,

26 2005. There shall be no cost shifting from customers with capped

27 rates to customers without capped rates as a result of this

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1 section. In no event shall residential rates be increased before

2 January 1, 2006 above the rates established under subsection

3 (1).

4 (3) Beginning January 1, 2004, annual return of and on capi-

5 tal expenditures in excess of depreciation levels incurred during

6 and before the time period described in subsection (2), and

7 expenses incurred as a result of changes in taxes, laws, or other

8 state or federal governmental actions incurred by electric utili-

9 ties during the period described in subsection (2), shall be

10 accrued and deferred for recovery. After notice and hearing, the

11 commission shall determine the amount of reasonable and prudent

12 costs, if any, to be recovered and the recovery period, which

13 shall not exceed 5 years, and shall not commence until after the

14 expiration of the period described in subsection (2).

15 (4) If the commission authorizes an electric utility to use

16 securitization financing under section 10i, any savings resulting

17 from securitization shall be used to reduce retail electric rates

18 from those authorized or in effect as of May 1, 2000 as required

19 under subsection (1). A rate reduction under this subsection

20 shall not be less than the 5% required under subsection (1). The

21 financing order may provide that a utility shall only issue secu-

22 ritization bonds in an amount equal to or less than requested by

23 the utility, but the commission shall not preclude the issuance

24 of an amount of securitization bonds sufficient to fund the rate

25 reduction required under section 10d(1) SUBSECTION (1).

26 (5) Except for savings assigned to the low-income and energy

27 efficiency fund pursuant to UNDER subsection (6),

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1 securitization savings greater than those used to achieve the 5%

2 rate reduction under subsection (1) shall be allocated by the

3 commission to further rate reductions or to reduce the level of

4 any charges authorized by the commission to recover an electric

5 utility's stranded costs. The commission shall allocate approved

6 securitization, transition, stranded, and other related charges

7 and credits in a manner that does not result in a reallocation of

8 cost responsibility among the different customer classes.

9 (6) If securitization savings exceed the amount needed to

10 achieve a 5% rate reduction for all customers, then, for a period

11 of 6 years, 100% of the excess savings, up to 2% of the electric

12 utility's commercial and industrial revenues, shall be allocated

13 to the low-income and energy efficiency fund administered by the

14 commission. The commission shall establish standards for the use

15 of the fund to provide shut-off and other protection for

16 low-income customers and to promote energy efficiency by all cus-

17 tomer classes. The commission shall issue a report to the legis-

18 lature and the governor every 2 years regarding the effectiveness

19 of the fund.

20 (7) Until the end of the period described in subsection (2),

21 the commission shall not authorize any fees or charges that will

22 cause the residential rate reduction required under subsection

23 (1) to be less than 5%.

24 (8) If an electric utility serving less than 1,000,000

25 retail customers in this state as of May 1, 2000 issues securiti-

26 zation bonds as allowed under this act, it shall have the same

27 rights, duties, and obligations under this section as an electric

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1 utility serving 1,000,000 or more retail customers in this state

2 as of May 1, 2000.

3 (9) The public service commission shall take the necessary

4 steps to ensure that all electrical power generating facilities

5 in this state comply with all rules, regulations, and standards

6 of the federal environmental protection agency regarding mercury

7 emissions.

8 (10) EACH ELECTRIC SUPPLIER SHALL OFFER TO ITS CUSTOMERS A

9 PROGRAM THAT WILL PROVIDE INCENTIVES THROUGH LOWER RATES FOR CUS-

10 TOMERS THAT USE THEIR ELECTRICITY USAGE DURING OFF-PEAK TIME

11 PERIODS.

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