March 4, 2008, Introduced by Senators BARCIA, KAHN, BROWN, KUIPERS, HARDIMAN, PAPPAGEORGE, RICHARDVILLE, GLEASON and ALLEN and referred to the Committee on Energy Policy and Public Utilities.
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 460.10cc) by adding section 6q.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 6q. (1) As used in this section:
(a) "Gasifier" means a facility located in this state that
produces synthetic or methanized synthetic gas from carbon-based
feedstock, including, but not limited to, coal, petroleum coke,
wood, biomass, and other agricultural products.
(b) "IGCC facility" means an integrated gasification combined
cycle plant located in this state that produces synthetic or
methanized synthetic gas from carbon-based feedstock, including,
but not limited to, coal, petroleum coke, wood, biomass, and other
agricultural products, and uses that synthetic gas to generate
electricity. An IGCC facility includes the transmission lines and
facilities, gas transportation lines and facilities, and associated
property and equipment employed specifically to serve that
facility.
(c) "Pilot IGCC facility" means a facility described in
subsection (2).
(d) "Qualified contract" means a contract for a period of not
greater than 30 years for the sale of substitute natural gas or
electric power to a public utility. The commission may approve a
contract for a period of greater than 30 years as a qualified
contract upon a showing that the longer period is required by a
lender or a state or federal loan or grant program.
(e) "Qualified cost" means any cost incurred by a public
utility in purchasing substitute natural gas or electric power
under a qualified contract.
(f) "Qualified order" means a final and irrevocable order
issued by the commission that approves a qualified contract adopted
in accordance with this section.
(g) "Substitute natural gas" means pipeline quality synthetic
methane gas produced by an IGCC facility or a gasifier that is
capable of being used for any of the following:
(i) To generate electric power to be sold to electric utilities
in this state for resale to their customers in this state.
(ii) To supply gas utility service to customers in this state.
(iii) As a fuel to generate electric power to supply electric
utility service to customers in this state.
(2) Notwithstanding any other law to the contrary, in order to
encourage electric utilities to participate as investors in the
pilot IGCC facility, the commission shall implement procedures to
provide for both of the following:
(a) Assurances, through the issuance of a final order prior to
the commencement of construction, authorizing each electric utility
investing at least 20% of the total cost of the pilot IGCC facility
to recover from customers the utility's fractional share of the
costs reasonably and prudently incurred in connection with the
development, construction, operation, and maintenance of the pilot
IGCC facility.
(b) Inclusion of the electric utility's fractional share of
the electric power generated by the IGCC facility toward any
renewable portfolio standard for that utility.
(3) A utility seeking to recover the costs described in this
section shall apply to the commission for approval of a cost
recovery mechanism in the manner determined by the commission. A
cost recovery mechanism proposed by an electric utility under this
subsection may be based on actual or forecasted data. If forecasted
data are used, the cost recovery mechanism shall contain a
reconciliation mechanism to correct for any variance between the
forecasted costs and the actual costs.
(4) The commission may provide, in addition to incentives
described in this section, any other incentives for electric
utilities that participate as investors in the pilot IGCC facility
that the commission considers prudent.
(5) Notwithstanding any other law to the contrary, in order to
encourage electric and gas utilities to enter into long-term supply
contracts for the purchase of substitute natural gas or electric
power produced by an IGCC facility or a gasifier, the commission
may issue a qualified order that approves the terms of a qualified
contract and authorizes the recovery of qualified costs by a
utility from its customers.
(6) A qualified order issued under this section may not be
rescinded, nullified, or modified in a manner that reduces or
otherwise impairs the value of a qualified contract.
(7) Notwithstanding any other law to the contrary, if the
commission approves a qualified contract for the purchase of
substitute natural gas or electric power generated in connection
with the production of substitute natural gas, the commission shall
allow the utility to recover the following costs on a timely basis
throughout the term of the qualified contract:
(a) All costs incurred in connection with and resulting from
the utility's purchases under the contract, including the cost of
the substitute natural gas or electric power and related costs for
generation, transmission, transportation, and storage services.
(b) All costs the utility incurs in obtaining replacement gas
or electric power if the seller fails to deliver substitute natural
gas or electric power required to be delivered under the qualified
contract, including the price of the replacement gas or electric
power and the related transportation, transmission, storage, and
hedging costs, to the extent that those costs are not paid by the
seller.
(c) Upon petition by the utility, any other costs that the
commission finds are reasonably necessary in association with the
qualified contract.
(8) Any costs recovered under subsection (7) shall be in
addition to the recovery of other costs.