SB-0437, As Passed House, December 15, 2016

 

 

 

 

 

 

 

 

 

 

 

 

HOUSE SUBSTITUTE FOR

 

SENATE BILL NO. 437

 

 

 

 

 

 

 

 

 

 

 

 

     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 the title and sections 6a, 6j, 6k, 6l, 6m, 6s, 10, 10a,

 

10c, 10f, 10p, 10r, 10t, 10dd, and 11 (MCL 460.6a, 460.6j, 460.6k,

460.6l, 460.6m, 460.6s, 460.10, 460.10a, 460.10c, 460.10f, 460.10p,

 

460.10r, 460.10t, 460.10dd, and 460.11), the title as amended by

 

2005 PA 190, sections 6a, 10, 10a, 10p, and 10r as amended and

 

sections 6s and 10dd as added by 2008 PA 286, section 6j as amended

 

by 1987 PA 81, section 6k as added by 1982 PA 304, section 6l as

 

amended and sections 10c, 10f, and 10t as added by 2000 PA 141,

 

section 6m as amended by 2014 PA 170, and section 11 as amended by

 

2014 PA 169, and by adding sections 6t, 6u, 6v, 6w, 6x, 6z, 10ee,

 

and 10ff; and to repeal acts and parts of acts.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

TITLE

 

     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 powers and

 

duties of certain state governmental officers and entities; 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.

 

     Sec. 6a. (1) A gas or 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 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 notify the utility within 30 days of 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 (6). (8). A petition or application pending before the

 

commission prior to the adoption of filing forms and instructions

 

pursuant to subsection (6) shall be evaluated based upon the filing

 

requirements in effect at the time the petition or application was

 

filed. 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. For a

 

petition or application pending before the commission prior to the

 

effective date of the amendatory act that added this sentence, the

 

180-day period commences on the effective date of the amendatory

 

act that added this sentence. 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 prior to 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 section 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 equal 5% plus

the London interbank offered rate (LIBOR) for the appropriate time

 

period. For any portion of the refund which, 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 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 not be included, in whole or in part, in any

 

application for a rate increase by a utility. Nothing in this This

 

subsection only applies to completed applications filed with the

 

commission before the effective date of the amendatory act that

 

added section 6t.

 

     (3) This section impairs 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, or 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, or purchased gas, or

 

purchased steam. The rates charged by any utility pursuant to under

 

an automatic fuel, or purchased gas, or purchased steam adjustment

 

clause shall 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, or purchased gas, or purchased steam.

     (4) (2) 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 12 months from 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 shall be 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 be held 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.

 

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.

 

     (5) (3) 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 12-month 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 12 10 months from 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 12-month 10-month period by the amount of additional time

 

requested by the utility.

 

     (6) (4) 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 (3).(5).

 

     (7) (5) 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

 

retaining 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 which that would cause them to cease using 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) (6) Within 90 days of the effective date of the amendatory

 

act that added this subsection, the 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 , in its discretion, modify the standard

 

rate application forms and instructions adopted under this

subsection.

 

     (9) (7) 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, prior to 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 (8), (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) (8) The total aggregate additional amounts recoverable by

 

merchant plants pursuant to under subsection (7) (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 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

 

not exceed a rate equal to the United States consumer price index.

 

An The commission shall not make an adjustment shall not be made by

 

the commission unless each affected merchant plant files a petition

 

with the commission. 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. 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, shall does not apply with respect 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 the effective date of the

 

amendatory act that added this subsection. October 6, 2008. The

 

$1,000,000.00 per month payment limit under this subsection shall

 

does not apply to merchant plants eligible under subsection (7) (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

Senate Bill No. 437 as amended December 15, 2016

urban consumers as defined and reported by the United States

 

Department of Labor, Bureau of Labor Statistics.

 

     (11) (9) The commission shall issue orders to permit the

 

recovery authorized under subsections (7) (9) and (8) (10) upon

 

petition of the merchant plant. The merchant plant shall is not be

 

required to alter or amend the existing contract with the electric

 

utility in order to obtain the recovery under subsections (7) (9)

 

and (8). (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, 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

Senate Bill No. 437 as amended December 15, 2016

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.

 

     Sec. 6j. (1) As used in this act:

 

     (a) "Long-term firm gas transportation" means a binding

 

agreement entered into between the electric utility and a natural

 

gas transmission provider for a set period of time to provide firm

 

delivery of natural gas to an electric generation facility.

 

     (b) (a) "Power supply cost recovery clause" means a clause in

 

the electric rates or rate schedule of a an electric utility which

 

that permits the monthly adjustment of rates for power supply to

 

allow the utility to recover the booked costs, including

 

transportation costs, reclamation costs, and disposal and

 

reprocessing costs, of fuel burned by the utility for electric

 

generation and the booked costs of purchased and net interchanged

 

power transactions by the utility incurred under reasonable and

 

prudent policies and practices.

 

     (c) (b) "Power supply cost recovery factor" means that element

 

of the rates to be charged for electric service to reflect power

 

supply costs incurred by an electric utility and made pursuant to a

 

power supply cost recovery clause incorporated in the rates or rate

 

schedule of an electric utility.

 

     (2) Pursuant to its authority under this act, the The public

 

service commission may incorporate a power supply cost recovery

 

clause in the electric rates or rate schedule of a an electric

 

utility. , but is not required to do so. Any order incorporating a

 

power supply cost recovery clause shall be as a result of a hearing

 

solely on the question of the inclusion of the clause in the rates

or rate schedule. , which A hearing under this subsection shall be

 

conducted as a contested case pursuant to chapter 4 of the

 

administrative procedures act of 1969, Act No. 306 of the Public

 

Acts of 1969, being sections 24.271 to 24.287 of the Michigan

 

Compiled Laws, 1969 PA 306, MCL 24.271 to 24.287, or, pursuant to

 

subsection (18), as a result of a general rate case. Any order

 

incorporating a power supply cost recovery clause shall replace and

 

rescind any previous fuel cost adjustment clause or purchased and

 

net interchanged power adjustment clause incorporated in the

 

electric rates of the utility upon the effective date of the first

 

power supply cost recovery factor authorized for the utility under

 

its power supply cost recovery clause.

 

     (3) In order to implement the power supply cost recovery

 

clause established pursuant to under subsection (2), a an electric

 

utility annually shall file, pursuant to procedures established by

 

the commission, if any, a complete power supply cost recovery plan

 

describing the expected sources of electric power supply and

 

changes in the cost of power supply anticipated over a future 12-

 

month period specified by the commission and requesting for each of

 

those 12 months a specific power supply cost recovery factor. The

 

utility shall file the plan shall be filed not less later than 3

 

months before the beginning of the 12-month period covered by the

 

plan. The plan shall describe all major contracts and power supply

 

arrangements entered into by the utility for providing power supply

 

during the specified 12-month period. The description of the major

 

contracts and arrangements shall include the price of fuel, the

 

duration of the contract or arrangement, and an explanation or

description of any other term or provision as required by the

 

commission. For gas fuel supply contracts or arrangements, the

 

description shall include whether the supply contracts or

 

arrangements include long-term firm gas transportation and, if not,

 

an explanation of how the utility proposes to ensure reliable and

 

reasonably priced gas fuel supply to its generation facilities

 

during the specified 12-month period. The plan shall also include

 

the utility's evaluation of the reasonableness and prudence of its

 

decisions to provide power supply in the manner described in the

 

plan, in light of its existing sources of electrical generation,

 

and an explanation of the actions taken by the utility to minimize

 

the cost of fuel to the utility.

 

     (4) In order to implement the power supply cost recovery

 

clause established pursuant to under subsection (2), a utility

 

shall file, contemporaneously with the power supply cost recovery

 

plan required by subsection (3), a 5-year forecast of the power

 

supply requirements of its customers, its anticipated sources of

 

supply, and projections of power supply costs, in light of its

 

existing sources of electrical generation and sources of electrical

 

generation under construction. The forecast shall include a

 

description of all relevant major contracts and power supply

 

arrangements entered into or contemplated by the utility, and such

 

any other information as the commission may require.

 

     (5) If a an electric utility files a power supply cost

 

recovery plan under subsection (3) and a 5-year forecast as

 

provided in subsections (3) and under subsection (4), the

 

commission shall conduct a proceeding, to be known as a power

supply and cost review, for the purpose of evaluating the

 

reasonableness and prudence of the power supply cost recovery plan

 

filed by a utility pursuant to under subsection (3), and

 

establishing the power supply cost recovery factors to implement a

 

power supply cost recovery clause incorporated in the electric

 

rates or rate schedule of the utility. The power supply and cost

 

review shall be conducted as a contested case pursuant to chapter 4

 

of the administrative procedures act of 1969, Act No. 306 of the

 

Public Acts of 1969.1969 PA 306, MCL 24.271 to 24.287.

 

     (6) In its final order in a power supply and cost review, the

 

commission shall evaluate the reasonableness and prudence of the

 

decisions underlying the power supply cost recovery plan filed by

 

the an electric utility pursuant to under subsection (3), and shall

 

approve, disapprove, or amend the power supply cost recovery plan

 

accordingly. In evaluating the decisions underlying the power

 

supply cost recovery plan, the commission shall consider the cost

 

and availability of the electrical generation available to the

 

utility; the cost of short-term firm purchases available to the

 

utility; the availability of interruptible service; the ability of

 

the utility to reduce or to eliminate any firm sales to out-of-

 

state customers if the utility is not a multi-state utility whose

 

firm sales are subject to other regulatory authority; whether the

 

utility has taken all appropriate actions to minimize the cost of

 

fuel; and other relevant factors. The commission shall approve,

 

reject, or amend the 12 monthly power supply cost recovery factors

 

requested by the utility in its power supply cost recovery plan.

 

The factors shall not reflect items the commission could reasonably

anticipate would be disallowed under subsection (13). The factors

 

ordered shall be described in fixed dollar amounts per unit of

 

electricity, but may include specific amounts contingent on future

 

events.

 

     (7) In its final order in a power supply and cost review, the

 

commission shall evaluate the decisions underlying the 5-year

 

forecast filed by a utility pursuant to under subsection (4). The

 

commission may also indicate any cost items in the 5-year forecast

 

that, on the basis of present evidence, the commission would be

 

unlikely to permit the utility to recover from its customers in

 

rates, rate schedules, or power supply cost recovery factors

 

established in the future.

 

     (8) The commission, on its own motion or the motion of any

 

party, may make a finding and enter a temporary order granting

 

approval or partial approval of a power supply cost recovery plan

 

in a power supply and cost recovery review, after first having

 

given giving notice to the parties to the review, and after having

 

afforded to giving the parties to the review a reasonable

 

opportunity for a full and complete hearing. A temporary order made

 

pursuant to under this subsection shall be is considered a final

 

order for purposes of judicial review.

 

     (9) If the commission has made a final or temporary order in a

 

power supply and cost review, the an electric utility may each

 

month incorporate in its rates for the period covered by the order

 

any amounts up to the power supply cost recovery factors permitted

 

in that order. If the commission has not made a final or temporary

 

order within 3 months of after the submission of a complete power

supply cost recovery plan, or by the beginning of the period

 

covered in the plan, whichever comes later, or if a temporary order

 

has expired without being extended or replaced, then pending an

 

order which that determines the power supply cost recovery factors,

 

a utility may each month adjust its rates to incorporate all or a

 

part of the power supply cost recovery factors requested in its

 

plan. Any amounts collected under the power supply cost recovery

 

factors before the commission makes its final order shall be is

 

subject to prompt refund with interest to the extent that the total

 

amounts collected exceed the total amounts determined in the

 

commission's final order to be reasonable and prudent for the same

 

period of time.

 

     (10) Not less later than 3 months before the beginning of the

 

third quarter of the 12-month period , the described in subsection

 

(3), an electric utility may file a revised power supply cost

 

recovery plan which shall cover that covers the remainder of the

 

12-month period. Upon receipt of the revised power supply cost

 

recovery plan, the commission shall reopen the power supply and

 

cost review. In addition, the commission may reopen the power

 

supply and cost review on its own motion or on the showing of good

 

cause by any party if at least 6 months have elapsed since the

 

utility submitted its complete filing and if there are at least 60

 

days remaining in the 12-month period under consideration. A

 

reopened power supply and cost review shall be conducted as a

 

contested case pursuant to chapter 4 of the administrative

 

procedures act of 1969, Act No. 306 of the Public Acts of 1969,

 

1969 PA 306, MCL 24.271 to 24.287, and in accordance with

subsections (3), (6), (8), and (9).

 

     (11) Not more later than 45 days following after the last day

 

of each billing month in which a power supply cost recovery factor

 

has been applied to customers' bills, the an electric utility shall

 

file with the commission a detailed statement for that month of the

 

revenues recorded pursuant to the power supply cost recovery factor

 

and the allowance for cost of power supply included in the base

 

rates established in the latest commission order for the utility,

 

and the cost of power supply. The detailed statement shall be in

 

the manner and form prescribed by the commission. The commission

 

shall establish procedures for insuring that the detailed statement

 

is promptly verified and corrected if necessary.

 

     (12) Not less than once a year, and not later than 3 months

 

after the end of the 12-month period covered by a an electric

 

utility's power supply cost recovery plan, the commission shall

 

commence a proceeding, to be known as a power supply cost

 

reconciliation, as a contested case pursuant to chapter 4 of the

 

administrative procedures act of 1969, Act No. 306 of the Public

 

Acts of 1969. Reasonable 1969 PA 306, MCL 24.271 to 24.287. The

 

commission shall permit reasonable discovery shall be permitted

 

before and during the reconciliation proceeding in order to assist

 

parties and interested persons in obtaining evidence concerning

 

reconciliation issues including, but not limited to, the

 

reasonableness and prudence of expenditures and the amounts

 

collected pursuant to the clause. At the power supply cost

 

reconciliation the commission shall reconcile the revenues recorded

 

pursuant to the power supply cost recovery factors and the

allowance for cost of power supply included in the base rates

 

established in the latest commission order for the utility with the

 

amounts actually expensed and included in the cost of power supply

 

by the utility. The commission shall consider any issue regarding

 

the reasonableness and prudence of expenses for which customers

 

were charged if the issue was not considered adequately at a

 

previously conducted power supply and cost review.

 

     (13) In its order in a power supply cost reconciliation, the

 

commission shall do all of the following:

 

     (a) Disallow cost increases resulting from changes in

 

accounting or rate-making expense treatment not previously approved

 

by the commission. The commission may order the utility to pay a

 

penalty of not to exceed more than 25% of the amount improperly

 

collected. Costs incurred by the utility for penalty payments shall

 

not be charged to customers.

 

     (b) Disallow any capacity charges associated with power

 

purchased for periods in excess of 6 months unless the utility has

 

obtained the prior approval of the commission. If Not disallow the

 

capacity charges for any facilities for which the electric utility

 

would otherwise have a purchase obligation if the commission has

 

approved capacity charges in a contract with a qualifying facility,

 

as that term is defined by the federal energy regulatory commission

 

Federal Energy Regulatory Commission pursuant to the public

 

utilities regulatory policies act of 1978, Public Law 95-617, 92

 

Stat. Stat 3117, the commission shall not disallow the capacity

 

charges for the facility in the power supply cost reconciliation

 

unless the commission has ordered revised capacity charges upon

reconsideration pursuant to under this subsection. A contract shall

 

be is valid and binding in accordance with its terms, and capacity

 

charges paid pursuant to such a that contract shall be are

 

recoverable costs of the utility for rate-making purposes

 

notwithstanding that the order approving such a that contract is

 

later vacated, modified, or otherwise held to be invalid in whole

 

or in part if the order approving the contract has not been stayed

 

or suspended by a competent court within 30 days after the date of

 

the order, or within 30 days of the effective date of the 1987

 

amendatory act that added subsection (19) by July 29, 1987 if the

 

order was issued after September 1, 1986 , and before the effective

 

date of the 1987 amendatory act that added subsection (19). June

 

29, 1987. The commission shall determine the scope and manner of

 

the review of capacity charges for a qualifying facility. shall be

 

determined by the commission. Except as to approvals for qualifying

 

facilities granted by the commission prior to before June 1, 1987,

 

proceedings before the commission seeking such those approvals

 

shall be conducted as a contested case pursuant to chapter 4 of the

 

administrative procedures act of 1969, Act No. 306 of the Public

 

Acts of 1969. 1969 PA 306, MCL 24.271 to 24.287. The commission,

 

upon its own motion or upon application of any person, may

 

reconsider its approval of capacity charges for a qualifying

 

facility in a contested case hearing after passage of a period

 

necessary for financing the qualifying facility, provided that:if

 

both of the following apply:

 

     (i) The commission has first issued an order making a finding

 

based on evidence presented in a contested case that there has been

a substantial change in circumstances since the commission's

 

initial approval. ; and

 

     (ii) Such a The commission finding shall be is set forth in a

 

commission order subject to immediate judicial review.

 

     The financing period for a qualifying facility during which

 

previously approved capacity charges shall are not be subject to

 

commission reconsideration shall be is 17.5 years, beginning with

 

the date of commercial operation, for all qualifying facilities,

 

except that the minimum financing period before reconsideration of

 

the previously approved capacity charges shall be is for the

 

duration of the financing for a qualifying facility which that

 

produces electric energy by the use of biomass, waste, wood,

 

hydroelectric, wind, and other renewable resources, or any

 

combination of renewable resources, as the primary energy source.

 

     (c) Disallow net increased costs attributable to a generating

 

plant outage of more than 90 days in duration unless the utility

 

demonstrates by clear and satisfactory evidence that the outage, or

 

any part of the outage, was not caused or prolonged by the

 

utility's negligence or by unreasonable or imprudent management.

 

     (d) Disallow transportation costs attributable to capital

 

investments to develop a utility's capability to transport fuel or

 

relocate fuel at the utility's facilities and disallow unloading

 

and handling expenses incurred after receipt of fuel by the

 

utility.

 

     (e) Disallow the cost of fuel purchased from an affiliated

 

company to the extent that such the fuel is more costly than fuel

 

of requisite quality available at or about the same time from other

suppliers with whom it would be comparably cost beneficial to deal.

 

     (f) Disallow charges unreasonably or imprudently incurred for

 

fuel not taken.

 

     (g) Disallow additional costs resulting from unreasonably or

 

imprudently renegotiated fuel contracts.

 

     (h) Disallow penalty charges unreasonably or imprudently

 

incurred.

 

     (i) Disallow demurrage charges.

 

     (j) Disallow increases in charges for nuclear fuel disposal

 

unless the utility has received the prior approval of the

 

commission.

 

     (14) In its order in a power supply cost reconciliation, the

 

commission shall require a an electric utility to refund to

 

customers or credit to customers' bills any net amount determined

 

to have been recovered over the period covered in excess of the

 

amounts determined to have been actually expensed by the utility

 

for power supply, and to have been incurred through reasonable and

 

prudent actions not precluded by the commission order in the power

 

supply and cost review. Such The commission shall apportion the

 

refunds or credits shall be apportioned among the customers of the

 

utility utilizing procedures that the commission determines to be

 

reasonable. The commission may adopt different procedures with

 

respect to customers served under the various rate schedules of the

 

utility and may, in appropriate circumstances, order refunds or

 

credits in proportion to the excess amounts actually collected from

 

each such customer during the period covered.

 

     (15) In its order in a power supply cost reconciliation, the

commission shall authorize a an electric utility to recover from

 

customers any net amount by which the amount determined to have

 

been recovered over the period covered was less than the amount

 

determined to have been actually expensed by the utility for power

 

supply, and to have been incurred through reasonable and prudent

 

actions not precluded by the commission order in the power supply

 

and cost review. For excess costs incurred through management

 

actions contrary to the commission's power supply and cost review

 

order, the commission shall authorize a utility to recover costs

 

incurred for power supply in the reconciliation period in excess of

 

the amount recovered over the period only if the utility

 

demonstrates by clear and convincing evidence that the excess

 

expenses were beyond the ability of the utility to control through

 

reasonable and prudent actions. For excess costs incurred through

 

management actions consistent with the commission's power supply

 

and cost review order, the commission shall authorize a utility to

 

recover costs incurred for power supply in the reconciliation

 

period in excess of the amount recovered over the period only if

 

the utility demonstrates that the level of such those expenses

 

resulted from reasonable and prudent management actions. Such The

 

amounts in excess of the amounts actually recovered by the utility

 

for power supply shall be apportioned among and charged to the

 

customers of the utility utilizing procedures that the commission

 

determines to be reasonable. The commission may adopt different

 

procedures with respect to customers served under the various rate

 

schedules of the utility and may, in appropriate circumstances,

 

order charges to be made in proportion to the amounts which that

would have been paid by such those customers if the amounts in

 

excess of the amounts actually recovered by the utility for cost of

 

power supply had been included in the power supply cost recovery

 

factors with respect to such those customers during the period

 

covered. Charges for such the excess amounts shall be spread over a

 

period that the commission determines to be appropriate.

 

     (16) If the commission orders refunds or credits pursuant to

 

under subsection (14), or additional charges to customers pursuant

 

to under subsection (15), in its final order in a power supply cost

 

reconciliation, the refunds, credits, or additional charges shall

 

include interest. In determining the interest included in a refund,

 

credit, or additional charge pursuant to under this subsection, the

 

commission shall consider, to the extent material and practicable,

 

the time at which the excess recoveries or insufficient recoveries,

 

or both occurred. The commission shall determine a rate of interest

 

for excess recoveries, refunds, and credits equal to the greater of

 

the average short-term borrowing rate available to the utility

 

during the appropriate period, or the authorized rate of return on

 

the common stock of the utility during that same period. Costs

 

incurred by the utility for refunds and interest on refunds shall

 

not be charged to customers. The commission shall determine a rate

 

of interest for insufficient recoveries and additional charges

 

equal to the average short-term borrowing rate available to the

 

utility during the appropriate period.

 

     (17) To avoid undue hardship or unduly burdensome or excessive

 

cost, the commission may do both of the following:

 

     (a) Exempt an electric utility with fewer than 200,000

customers in the this state of Michigan from 1 or more of the

 

procedural provisions of this section or may modify the filing

 

requirements of this section.

 

     (b) Exempt an energy utility organized as a cooperative

 

corporation pursuant to under sections 98 to 109 of Act No. 327 of

 

the Public Acts of 1931, being sections 450.98 to 450.109 of the

 

Michigan Compiled Laws, 1931 PA 327, MCL 450.98 to 450.109, from 1

 

or more of the provisions of this section.

 

     (18) Notwithstanding any other provision of this act, the

 

commission may, upon application by an electric utility, set power

 

supply cost recovery factors, in a manner otherwise consistent with

 

this act, in an order resulting from a general rate case. Within

 

120 days following the effective date of this section, By October

 

27, 1987, for the purpose of setting power supply cost recovery

 

factors, the commission shall permit an electric utility to reopen

 

a general rate case in which a final order was issued within 120

 

days before or after the effective date of this section June 29,

 

1987 or to amend an application or reopen the evidentiary record in

 

a pending general rate case. If the commission sets power supply

 

cost recovery factors in an order resulting from a general rate

 

case, all of the following apply:

 

     (a) The power supply cost recovery factors shall cover a

 

future period of 48 months or the number of months which that

 

elapse until the commission orders new power supply cost recovery

 

factors in a general rate case, whichever is the shorter period.

 

     (b) Annual The commission shall conduct annual reconciliation

 

proceedings shall be conducted pursuant to under subsection (12)

and if an annual reconciliation proceeding shows a recoverable

 

amount pursuant to under subsection (15), the commission shall

 

authorize the electric utility to defer the amount and to

 

accumulate interest on the amount pursuant to under subsection

 

(16), and in the next order resulting from a general rate case

 

authorize the utility to recover the amount and interest from its

 

customers in the manner provided in subsection (15).

 

     (c) The power supply cost recovery factors shall are not be

 

subject to revision pursuant to under subsection (10).

 

     (19) Five years after the effective date of the amendatory act

 

that added this subsection, and every 5 years thereafter, the

 

standing committees of the house and senate that deal with public

 

utilities shall review the amendatory act that added this

 

subsection.

 

     Sec. 6k. (1) This section shall govern governs the initial

 

filing and implementation of a power supply cost recovery plan

 

under section 6j(3).

 

     (2) The initial power supply cost recovery plan may be for a

 

period of less than 12 months and shall be filed as follows:

 

     (a) By an electric utility subject to commission rate

 

jurisdiction with at least 200,000 residential customers in the

 

state of Michigan, within 4 months after the effective date of this

 

section.by February 13, 1983.

 

     (b) By all other electric utilities subject to commission rate

 

jurisdiction, within 15 months after the effective date of this

 

section by January 13, 1984 in accordance with the provisions of

 

this act which the commission determines to be appropriate for the

individual utility.

 

     (3) Notwithstanding section 6a(3), 6a(5), until the expiration

 

of 3 months plus the remainder of the then current billing month

 

following the last day on which a utility is required to file its

 

first power supply cost recovery plan pursuant to under subsection

 

(2), of this section, the utility may alter its rate schedule in

 

accordance with an existing fuel cost adjustment clause or

 

purchased and net interchanged power adjustment clause. Thereafter,

 

the utility may make charges in excess of base rates for the cost

 

of power supply pursuant only to subsections (2) and (4). of this

 

section. After the effective date of this section, October 13,

 

1982, any revenues resulting from an existing fuel cost adjustment

 

clause or purchased and net interchanged power adjustment clause

 

and recorded for an annual reconciliation period ending prior to

 

before January 1, 1983, by an electric utility shall be are subject

 

to the existing reconciliation proceeding established by the

 

commission for the utility. In this proceeding, the commission

 

shall consider the reasonableness and prudence of expenditures

 

charged pursuant to an existing fuel cost adjustment clause or

 

purchased and net interchanged power adjustment clause after the

 

effective date of this section. October 13, 1982. On and after

 

January 1, 1983, all fuel cost and purchased and net interchanged

 

power revenues received by an electric utility, whether included in

 

base rates or collected pursuant to a fuel or purchased and net

 

interchanged power adjustment clause or a power supply cost

 

recovery clause, shall be are subject to annual reconciliation with

 

the cost of fuel and purchased and net interchanged power. Such The

annual reconciliations shall be conducted in accordance with the

 

reconciliation procedures described in section 6j(12) to (18),

 

including the provisions for refunds, additional charges, deferral

 

and recovery, and shall include consideration by the commission of

 

the reasonableness and prudence of expenditures charged pursuant to

 

any fuel or purchased and net interchanged power adjustment clause

 

in existence during the period being reconciled. If the utility has

 

a lag correction provision included in its existing adjustment

 

clauses, the commission shall allow any adjustment to rates

 

attributable to such that lag correction provision to be

 

implemented for the 3 billing months immediately succeeding the

 

final billing month in which the existing adjustment clauses as

 

operative.

 

     (4) Until the commission approves or disapproves a power

 

supply cost recovery clause in a final commission order in a

 

contested case required by section 6j(2), a utility which that had

 

a fuel cost adjustment clause or purchased and net interchanged

 

power adjustment clause on the effective date of this section

 

October 13, 1982 and which has applied for a power supply cost

 

recovery clause under section 6j may adjust its rates pursuant to

 

under section 6j(3) to (18), to include power supply cost recovery

 

factors.

 

     Sec. 6l. (1) For purposes of implementing sections 6a, 6h, 6i,

 

6j, and 6k, 6s, and 6t, this section and section 6m shall provide a

 

means of insuring equitable representation of the interests of

 

energy utility customers.

 

     (2) As used in this section and section 6m:

     (a) "Annual receipts" means the payments received by the fund

 

under section 6m(2)(a), and (b), (c), and (d) during a calendar

 

year.

 

     (b) "Board" means the utility consumer participation board

 

created under subsection (3).

 

     (c) "Commission" means the Michigan public service commission.

 

     (d) (c) "Department" means the department of management and

 

budget.licensing and regulatory affairs.

 

     (e) (d) "Energy cost recovery proceeding" means any proceeding

 

to establish or implement a gas cost recovery clause or a power

 

supply cost recovery clause as provided in sections section 6h ,

 

6i, or 6j, or 6k, to set gas cost recovery factors pursuant to

 

under section 6h(17), or to set power supply cost recovery factors

 

pursuant to under section 6j(18).

 

     (f) (e) "Energy utility" means each electric or gas company

 

regulated by the public service commission.

 

     (g) (f) "Fund" means the utility consumer representation fund

 

created in section 6m.

 

     (h) (g) "Household" means a single-family home, duplex, mobile

 

home, seasonal dwelling, farm home, cooperative, condominium, or

 

apartment which that has normal household facilities such as a

 

bathroom, individual cooking facilities, and kitchen sink

 

facilities. Household does not include a penal or corrective

 

institution, or a motel, hotel, or other similar structure if used

 

as a transient dwelling.

 

     (i) (h) "Jurisdictional" means subject to rate regulation by

 

the Michigan public service commission.

     (j) (i) "Net grant proceeds" means the annual receipts of the

 

fund less the amounts reserved for the attorney general's use and

 

the amounts expended for board expenses and operation.

 

     (k) (j) "Residential energy utility consumer" or "consumer"

 

means a customer of an energy utility who receives utility service

 

for use within an individual household or an improvement reasonably

 

appurtenant to and normally associated with an individual

 

household.

 

     (l) (k) "Residential tariff sales" means those sales by an

 

energy utility which that are subject to residential tariffs on

 

file with the commission.

 

     (m) (l) "Utility consuming industry" means a person, sole

 

proprietorship, partnership, association, corporation, or other

 

entity which that receives utility service ordinarily and primarily

 

for use in connection with the manufacture, sale, or distribution

 

of goods or the provision of services, but does not include a

 

nonprofit organization representing residential utility customers.

 

     (3) The utility consumer participation board is created within

 

the department and shall exercise its powers and duties under this

 

act independently of the department. The procurement and related

 

management functions of the commission board shall be performed

 

under the direction and supervision of the department. The board

 

shall consist of 5 members appointed by the governor, 1 of whom

 

shall be chosen from 1 or more lists of qualified persons submitted

 

by the attorney general.

 

     (4) For the purposes of subsection (5) only, "utility" means

 

an electric or gas company located in or outside of this state.

     (5) Each member of the board shall meet the following

 

requirements:

 

     (a) Shall be an advocate for the interests of residential

 

utility consumers, as demonstrated by the member's knowledge of and

 

support for consumer interests and concerns in general or

 

specifically related to utility matters.

 

     (b) Shall not be, or shall not have been within the 5 years

 

preceding appointment, a member of a governing body of, or employed

 

in a managerial or professional or consulting capacity by a utility

 

or an association representing utilities; an enterprise or

 

professional practice which that received over $1,500.00 in the

 

year preceding the appointment as a supplier of goods or services

 

to a utility or association representing utilities; or an

 

organization representing employees of such a utility, association,

 

enterprise, or professional practice, or an association which that

 

represents such an organization.

 

     (c) Shall not have, or shall not have had within 1 year

 

preceding appointment, a financial interest exceeding $1,500.00 in

 

a utility, an association representing utilities, or an enterprise

 

or professional practice which that received over $1,500.00 in the

 

year preceding the appointment as a supplier of goods or services

 

to a utility or association representing utilities.

 

     (d) Shall not be an officer or director of an applicant for a

 

grant under section 6m.

 

     (e) Shall not be a member of the immediate family of a person

 

an individual who would be ineligible under subdivisions

 

subdivision (a), (b), (c), or (d).

     (6) The members of the board shall be appointed for 2-year

 

terms beginning with the first day of a legislative session in an

 

odd-numbered year and ending on the day before the first day of the

 

legislative session in the next odd-numbered year or when the

 

members' successors are appointed, whichever occurs later. The

 

governor shall not appoint a member to the board for a term

 

commencing after the governor's term of office has ended. A vacancy

 

shall be filled in the same manner as the original appointment. If

 

the vacancy is created other than by expiration of a term, the

 

member shall be appointed for the balance of the unexpired term of

 

the member to be succeeded.

 

     (7) The governor shall remove a member of the board if that

 

member is absent for any reason from either 3 consecutive board

 

meetings or more than 50% of the meetings held by the board in a

 

calendar year. However, a person an individual who is removed due

 

to absenteeism is eligible for reappointment to fill a vacancy

 

which that occurs in the board membership. The governor also shall

 

remove a member of the board if the member is subsequently

 

determined to be ineligible under subsection (5).

 

     (8) The board shall hold bimonthly meetings and additional

 

meetings as necessary. A quorum consists of 3 members. A majority

 

vote of the members appointed and serving is necessary for a

 

decision. At its first meeting following the appointment of new

 

members, or as soon as possible after the first meeting, the board

 

shall elect biennially from its membership a chairperson and a

 

vice-chairperson.

 

     (9) The board shall not act directly to represent the

interests of residential utility consumers except through

 

administration of the fund and grant program under this section.

 

     (10) The business which that the board may perform shall be

 

conducted at a public meeting of the board held in compliance with

 

the open meetings act, Act No. 267 of the Public Acts of 1976,

 

being sections 15.261 to 15.275 of the Michigan Compiled Laws. 1976

 

PA 267, MCL 15.261 to 15.275. Public notice of the time, date, and

 

place of the meeting shall be given in the manner required by Act

 

No. 267 of the Public Acts of 1976.the open meetings act, 1976 PA

 

267, MCL 15.261 to 15.275.

 

     (11) A writing prepared, owned, used, in the possession of, or

 

retained by the board in the performance of an official function

 

shall be made available to the public in compliance with the

 

freedom of information act, Act No. 442 of the Public Acts of 1976,

 

being sections 15.231 to 15.246 of the Michigan Compiled Laws.1976

 

PA 442, MCL 15.231 to 15.246.

 

     (12) A member of the board may be reimbursed for actual and

 

necessary expenses, including travel expenses to and from each

 

meeting held by the board, incurred in discharging the member's

 

duties under this section and section 6m. In addition to expense

 

reimbursement, a board member may receive remuneration from the

 

board of $100.00 per meeting attended, not to exceed $1,000.00 in a

 

calendar year. These limits shall be adjusted proportionately to an

 

adjustment in the remittance amounts under section 6m(4) to allow

 

for changes in the cost of living.

 

     (13) Until the board certifies that it is operating and ready

 

to perform all duties under this act, the director of the energy

administration created by executive directives 1976-2 and 1976-5

 

shall serve as temporary administrator of the fund and exercise all

 

duties and powers of the board.

 

     Sec. 6m. (1) The utility consumer representation fund is

 

created as a special fund. The state treasurer shall be the

 

custodian of the fund and shall maintain a separate account of the

 

money in the fund. The money in the fund shall be invested in the

 

bonds, notes, and other evidences of indebtedness issued or insured

 

by the United States government and its agencies, and in prime

 

commercial paper. The state treasurer shall release money from the

 

fund, including interest earned, in the manner and at the time

 

directed by the board.

 

     (2) Except as provided in subsection (6), (5), each energy

 

utility that has applied to the public service commission for the

 

initiation of an energy cost recovery proceeding shall remit to the

 

fund before or upon filing its initial application for that

 

proceeding, and on or before the first anniversary of that

 

application, an amount of money determined by the board in the

 

following manner:

 

     (a) In the case of an energy utility company serving at least

 

100,000 customers in this state, an amount that bears to

 

$300,000.00, multiplied its proportional share of $900,000.00

 

adjusted annually by a factor as provided in subsection (4). , the

 

same proportion as This adjusted amount shall become the new base

 

amount to which the factor provided in subsection (4) is applied in

 

the succeeding year. A utility's proportional share shall be

 

calculated by dividing the company's jurisdictional 1981 total

operating revenues for the preceding year, as stated in its annual

 

report, bear to the jurisdictional 1981 by the total operating

 

revenues for the preceding year of all energy utility companies

 

serving at least 100,000 customers in this state. This amount shall

 

be made available by the board for use by the attorney general for

 

the purposes described in subsection (17).(16).

 

     (b) In the case of an energy utility company serving at least

 

100,000 residential customers in this state, an amount that bears

 

to $300,000.00, multiplied its proportional share of $650,000.00

 

adjusted annually by a factor as provided in subsection (4). , the

 

same proportion as This adjusted amount shall become the new base

 

amount to which the factor provided in subsection (4) is applied in

 

the succeeding year. A utility's proportional share shall be

 

calculated by dividing the company's jurisdictional 1981 gross

 

revenues from residential tariff sales bear to the jurisdictional

 

1981 for the preceding year by the gross revenues from residential

 

tariff sales for the preceding year of all energy utility companies

 

serving at least 100,000 residential customers in this state. This

 

amount shall be used for grants under subsection (11).(10).

 

     (c) In the case of an energy utility company serving fewer

 

than 100,000 customers in this state, its proportional share of

 

$100,000.00 adjusted annually by a factor as provided in subsection

 

(4). This adjusted amount shall become the new base amount to which

 

the factor provided in subsection (4) is applied in the succeeding

 

year. A utility's proportional share shall be calculated by

 

dividing the company's jurisdictional total operating revenues for

 

the preceding year, as stated in its annual report, by the total

operating revenues for the preceding year of all energy utility

 

companies serving fewer than 100,000 customers in this state. This

 

amount shall be made available by the board for use by the attorney

 

general for the purposes described in subsection (16).

 

     (d) In the case of an energy utility company serving fewer

 

than 100,000 residential customers in this state, its proportional

 

share of $100,000.00 adjusted annually by a factor as provided in

 

subsection (4). This adjusted amount shall become the new base

 

amount to which the factor provided in subsection (4) is applied in

 

the succeeding year. A utility's proportional share shall be

 

calculated by dividing the company's jurisdictional gross revenues

 

from residential tariff sales for the preceding year by the gross

 

revenues from residential tariff sales for the preceding year of

 

all energy utility companies serving fewer than 100,000 residential

 

customers in this state. This amount shall be used for grants under

 

subsection (10).

 

     (3) Payments made by an energy utility under subsection (2)(a)

 

or (c) are operating expenses of the utility that the public

 

service commission shall permit the utility to charge to its

 

customers. Payments made by a utility under subsection (2)(b) or

 

(d) are operating expenses of the utility that the public service

 

commission shall permit the utility to charge to its residential

 

customers.

 

     (4) For purposes of subsection (2), the board shall set the

 

factor shall be set by the board at a level not to exceed the

 

percentage increase in the index known as the consumer price index

 

for urban wage earners and clerical workers, select areas, all

items indexed, for the Detroit standard metropolitan statistical

 

area, compiled by the bureau of labor statistics Bureau of Labor

 

Statistics of the United States department of labor, Department of

 

Labor, or any successor agency, that has occurred between January

 

1981 of the preceding year and January of the year in which the

 

payment is required to be made. In the event that more than 1 such

 

index is compiled, the index yielding the largest payment shall be

 

the maximum allowable factor. The board shall advise utilities of

 

the factor.

 

     (5) On or before the second and succeeding anniversaries of

 

its initial application for an energy cost recovery proceeding, an

 

energy utility shall remit to the board amounts equal to 5/6 of the

 

amounts required under subsection (2).

 

     (5) (6) The remittance requirements of this section do not

 

apply to an energy utility organized as a cooperative corporation

 

under sections 98 to 109 of 1931 PA 327, MCL 450.98 to 450.109, and

 

grants from the fund shall not be used to participate in an energy

 

cost recovery proceeding primarily affecting such a utility.

 

     (6) (7) In the event of a dispute between the board and an

 

energy utility about the amount of payment due, the utility shall

 

pay the undisputed amount and, if the utility and the board cannot

 

agree, the board may initiate civil action in the circuit court for

 

Ingham county County for recovery of the disputed amount. The

 

commission shall not accept or take action on an application for an

 

energy cost recovery proceeding from an energy utility subject to

 

this section that has not fully paid undisputed remittances

 

required by this section.

     (7) (8) The commission shall not accept or take action on an

 

application for an energy cost recovery proceeding from an energy

 

utility subject to this section until 30 days after it has been

 

notified by the board or the director of the energy administration,

 

if section 6l(13) is applicable, that the board or the director is

 

ready to process grant applications, will transfer funds payable to

 

the attorney general immediately upon the receipt of those funds,

 

and will within 30 days approve grants and remit funds to qualified

 

grant applicants.

 

     (8) (9) The board may accept a gift or grant from any source

 

to be deposited in the fund if the conditions or purposes of the

 

gift or grant are consistent with this section.

 

     (9) (10) The costs of operation and expenses incurred by the

 

board in performing its duties under this section and section 6l,

 

including remuneration to board members, shall be paid from the

 

fund. A maximum of 5% of the annual receipts of the fund may be

 

budgeted and used to pay expenses other than grants made under

 

subsection (11).(10).

 

     (10) (11) The net grant proceeds shall finance a grant program

 

from which the board may award to an applicant an amount that the

 

board determines shall be used for the purposes set forth in this

 

section.

 

     (11) (12) The board shall create and make available to

 

applicants an application form. Each applicant shall indicate on

 

the application how the applicant meets the eligibility

 

requirements provided for in this section and how the applicant

 

proposes to use a grant from the fund to participate in 1 or more

proceedings as authorized in subsection (17) (16) that have been or

 

are expected to be filed. Each applicant shall also identify on the

 

application any additional funds or resources, other than the grant

 

funds being requested, that are to be used to participate in the

 

proceeding for which the grant is being requested and how those

 

funds or resources will be utilized. The board shall receive an

 

application requesting a grant from the fund only from a nonprofit

 

organization or a unit of local government in this state. The board

 

shall consider only applications for grants containing proposals

 

that are consistent with subsections (17) (16) and (18) (17) and

 

that serve the interests of residential utility consumers. For

 

purposes of making grants, the board may consider protection of the

 

environment, energy conservation, the creation of employment and a

 

healthy economy in the state, and energy waste reduction, demand

 

response, and rate design options to encourage energy conservation,

 

energy waste reduction, and demand response, as well as the

 

maintenance of adequate energy resources. The board shall not

 

consider an application that primarily benefits the applicant or a

 

service provided or administered by the applicant. The board shall

 

not consider an application from a nonprofit organization if 1 of

 

the organization's principal interests or unifying principles is

 

the welfare of a utility or its investors or employees, or the

 

welfare of 1 or more businesses or industries, other than farms not

 

owned or operated by a corporation, that receive utility service

 

ordinarily and primarily for use in connection with the profit-

 

seeking manufacture, sale, or distribution of goods or services.

 

Mere ownership of securities by a nonprofit organization or its

members does not disqualify an application submitted by that

 

organization.

 

     (12) (13) The board shall encourage the representation of the

 

interests of identifiable types of residential utility consumers

 

whose interests may differ, including various social and economic

 

classes and areas of the state, and if necessary, may make grants

 

to more than 1 applicant whose applications are related to a

 

similar issue to achieve this type of representation. In addition,

 

the board shall consider and balance the following criteria in

 

determining whether to make a grant to an applicant:

 

     (a) Evidence of the applicant's competence, experience, and

 

commitment to advancing the interests of residential utility

 

consumers.

 

     (b) The anticipated involvement of the attorney general in a

 

proceeding and whether activities of the applicant will be

 

duplicative or supplemental to those of the attorney general.

 

     (c) (b) In the case of a nongovernmental applicant, the extent

 

to which the applicant is representative of or has a previous

 

history of advocating the interests of citizens, especially

 

residential utility consumers.

 

     (d) (c) The anticipated effect of the proposal contained in

 

the application on residential utility consumers, including the

 

immediate and long-term impacts of the proposal.

 

     (e) (d) Evidence demonstrating the potential for continuity of

 

effort and the development of expertise in relation to the proposal

 

contained in the application.

 

     (f) (e) The uniqueness or innovativeness of an applicant's

position or point of view as it relates to advocating for

 

residential utility consumers concerning energy costs or rates, and

 

the probability and desirability of that position or point of view

 

prevailing.

 

     (13) (14) As an alternative to choosing between 2 or more

 

applications that have similar proposals, the board may invite 2 or

 

more of the applicants to file jointly and award a grant to be

 

managed cooperatively.

 

     (14) (15) The board shall make disbursements pursuant to a

 

grant in advance of an applicant's proposed actions as set forth in

 

the application if necessary to enable the applicant to initiate,

 

continue, or complete the proposed actions.

 

     (15) (16) Any notice to utility customers and the general

 

public of hearings or other state proceedings in which grants from

 

the fund may be used shall contain a notice of the availability of

 

the fund and the address of the board.

 

     (16) (17) The annual receipts and interest earned, less

 

administrative costs, may be used only for participation in

 

administrative and judicial proceedings under sections 6a, 6h, 6i,

 

6j, and 6k, 6s, and 6t, and in federal administrative and judicial

 

proceedings that directly affect the energy costs or rates paid by

 

Michigan energy utilities, and in cost allocation and rate design

 

proceedings initiated under section 11(3). utility customers in

 

this state. Amounts that have been in the fund more than 12 months

 

may be retained in the fund for future grants, proceedings and any

 

unexpended money in the fund shall be reserved to fulfill the

 

purposes for which it was appropriated or may be returned to energy

utility companies or used to offset their future remittances in

 

proportion to their previous remittances to the fund, as the board

 

determines and attorney general determine will best serve the

 

interests of consumers.

 

     (17) (18) The following conditions shall apply to all grants

 

from the fund:

 

     (a) Disbursements from the fund may be used only to advocate

 

the interests of residential energy utility customers or classes of

 

energy utility customers, concerning energy costs or rates and not

 

for representation of merely individual interests.

 

     (b) The board shall attempt to maintain a reasonable

 

relationship between the payments from a particular energy utility

 

and the benefits to consumers of that utility.

 

     (c) The board shall coordinate the funded activities of grant

 

recipients with those of the attorney general to avoid duplication

 

of effort, particularly as it relates to the hiring of expert

 

witnesses, to promote supplementation of effort, and to maximize

 

the number of hearings and proceedings with intervenor

 

participation.

 

     (18) (19) A recipient of a grant under subsection (11) (10)

 

may use the grant only for the advancement of the proposed action

 

approved by the board, including, but not limited to, costs of

 

staff, hired consultants and counsel, and research.

 

     (19) A recipient of a grant under subsection (10) shall

 

prepare for and participate in all discussions among the parties

 

designed to facilitate settlement or narrowing of the contested

 

issues before a hearing in order to minimize litigation costs for

all parties.

 

     (20) A recipient of a grant under subsection (11) (10) shall

 

file a report with the board within 90 days following the end of

 

the year or a shorter period for which the grant is made. The

 

report shall be made in a form prescribed by the board and is

 

subject to audit by the board. The board shall include each report

 

received under this subsection as part of the board's annual report

 

required under subsection (22). The report under this subsection

 

shall include the following information:

 

     (a) An account of all grant expenditures made by the grant

 

recipient. Expenditures shall be reported within the following

 

categories:

 

     (i) Employee and contract for services costs.

 

     (ii) Costs of materials and supplies.

 

     (iii) Filing fees and other costs required to effectively

 

represent residential utility consumers as provided in this

 

section.

 

     (b) A detailed list of the regulatory issues raised by the

 

grant recipient and how each issue was determined by the

 

commission, court, or other tribunal.

 

     (c) (b) Any additional information concerning uses of the

 

grant required by the board.

 

     (21) The On or before July 1 of each year, the attorney

 

general shall file a report with the house and senate committees on

 

appropriations within 90 days following the end of each fiscal

 

year. and the house and senate committees with jurisdiction over

 

energy and utility policy issues. The report shall include the

following information:

 

     (a) An account of all expenditures made by the attorney

 

general of funds money received under this section. Expenditures

 

shall be reported within the following categories:

 

     (i) Employee and contract for services costs.

 

     (ii) Costs of materials and supplies.

 

     (iii) Filing fees and other costs required to effectively

 

represent utility consumers as provided in this section.

 

     (b) Any additional information concerning uses of the funds

 

money received under this section required by the committees.

 

     (22) On or before July 1 of each calendar year, the board

 

shall submit a detailed report to the legislature house and senate

 

committees with jurisdiction over energy and utility policy issues

 

regarding the discharge of duties and responsibilities under this

 

section and section 6l during the preceding calendar year.

 

     (23) By October 13, 1985, and at 3-year intervals thereafter,

 

a senate committee chosen by the majority leader of the senate and

 

a house committee chosen by the speaker of the house of

 

representatives shall review the relationship between costs and

 

benefits resulting from this section and sections 6h through 6l,

 

and may recommend changes to the legislature.

 

     Sec. 6s. (1) An electric utility that proposes to construct an

 

electric generation facility, make a significant investment in an

 

existing electric generation facility, purchase an existing

 

electric generation facility, or enter into a power purchase

 

agreement for the purchase of electric capacity for a period of 6

 

years or longer may submit an application to the commission seeking

a certificate of necessity for that construction, investment, or

 

purchase if that construction, investment, or purchase costs

 

$500,000,000.00 $100,000,000.00 or more and a portion of the costs

 

would be allocable to retail customers in this state. A significant

 

investment in an electric generation facility includes a group of

 

investments reasonably planned to be made over a multiple year

 

period not to exceed 6 years for a singular purpose such as

 

increasing the capacity of an existing electric generation plant.

 

The commission shall not issue a certificate of necessity under

 

this section for any environmental upgrades to existing electric

 

generation facilities. or for a renewable energy system.If the

 

application is for the construction of an electric generation

 

facility of 225 megawatts or more or for the construction of an

 

additional generating unit or units totaling 225 megawatts or more

 

at an existing electric generation facility submitted as required

 

under section 6t(13), the commission shall consolidate its

 

proceedings under section 6t and this section. If the commission

 

approves or denies an application for an electric generation

 

facility under this section that has been submitted as required

 

under section 6t(13), the provisions of this section prevail in a

 

conflict with section 6t.

 

     (2) The commission may implement separate review criteria and

 

approval standards for electric utilities with less than 1,000,000

 

retail customers who that seek a certificate of necessity for

 

projects costing less than $500,000,000.00.$100,000,000.00.

 

     (3) An electric utility submitting an application under this

 

section may request 1 or more of the following:

     (a) A certificate of necessity that the power to be supplied

 

as a result of the proposed construction, investment, or purchase

 

is needed.

 

     (b) A certificate of necessity that the size, fuel type, and

 

other design characteristics of the existing or proposed electric

 

generation facility or the terms of the power purchase agreement

 

represent the most reasonable and prudent means of meeting that

 

power need.

 

     (c) A certificate of necessity that the price specified in the

 

power purchase agreement will be recovered in rates from the

 

electric utility's customers.

 

     (d) A certificate of necessity that the estimated purchase or

 

capital costs of and the financing plan for the existing or

 

proposed electric generation facility, including, but not limited

 

to, the costs of siting and licensing a new facility and the

 

estimated cost of power from the new or proposed electric

 

generation facility, will be recoverable in rates from the electric

 

utility's customers subject to subsection (4)(c).

 

     (4) Within 270 days of after the filing of an application

 

under this section, or, for an application for an electric

 

generation facility submitted as required under section 6t(13),

 

concurrently with a final order issued under section 6t, the

 

commission shall issue an order granting or denying the requested

 

certificate of necessity. The commission shall hold a hearing on

 

the application. The hearing 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. The commission may allow

intervention by persons under the rules of practice and procedure

 

of the commission and shall allow intervention by existing

 

suppliers of electric generation capacity under subsection (13),

 

persons allowed to intervene in the contested case under section

 

6t, and interested persons. Reasonable The commission shall permit

 

reasonable discovery shall be permitted before and during the

 

hearing in order to assist parties and interested persons in

 

obtaining evidence concerning the application, including, but not

 

limited to, the reasonableness and prudence of the construction,

 

investment, or purchase for which the certificate of necessity has

 

been requested. The commission shall grant the request if it

 

determines all of the following:

 

     (a) That the electric utility has demonstrated a need for the

 

power that would be supplied by the existing or proposed electric

 

generation facility or pursuant to the proposed power purchase

 

agreement through its approved integrated resource plan that

 

complies with under section 6t or subsection (11).

 

     (b) The information supplied indicates that the existing or

 

proposed electric generation facility will comply with all

 

applicable state and federal environmental standards, laws, and

 

rules.

 

     (c) The estimated cost of power from the existing or proposed

 

electric generation facility or the price of power specified in the

 

proposed power purchase agreement is reasonable. The commission

 

shall find that the cost is reasonable if, in the construction or

 

investment in a new or existing facility, to the extent it is

 

commercially practicable, the estimated costs are the result of

competitively bid engineering, procurement, and construction

 

contracts, or in a power purchase agreement, the cost is the result

 

of a competitive solicitation. Up to 150 days after an electric

 

utility makes its initial filing, it may file to update its cost

 

estimates if they have materially changed. No other aspect of the

 

initial filing may be modified unless the application is withdrawn

 

and refiled. A utility's filing updating its cost estimates does

 

not extend the period for the commission to issue an order granting

 

or denying a certificate of necessity. An affiliate of an electric

 

utility that serves customers in this state and at least 1 other

 

state may participate in the competitive bidding to provide

 

engineering, procurement, and construction services to that

 

electric utility for a project covered by this section.

 

     (d) The existing or proposed electric generation facility or

 

proposed power purchase agreement represents the most reasonable

 

and prudent means of meeting the power need relative to other

 

resource options for meeting power demand, including energy

 

efficiency programs, and electric transmission efficiencies, and

 

any alternative proposals submitted under this section by existing

 

suppliers of electric generation capacity under subsection (13) or

 

other intervenors.

 

     (e) To the extent practicable, the construction or investment

 

in a new or existing facility in this state is completed using a

 

workforce composed of residents of this state as determined by the

 

commission. This subdivision does not apply to a facility that is

 

located in a county that lies on the border with another state.

 

     (5) The commission may consider any other costs or information

related to the costs associated with the power that would be

 

supplied by the existing or proposed electric generation facility

 

or pursuant to the proposed purchase agreement or alternatives to

 

the proposal raised by intervening parties.

 

     (6) In a certificate of necessity under this section, the

 

commission shall specify the costs approved for the construction of

 

or significant investment in the electric generation facility, the

 

price approved for the purchase of the existing electric generation

 

facility, or the price approved for the purchase of power pursuant

 

to the terms of the power purchase agreement. For power purchase

 

agreements that an electric utility enters into with an entity that

 

is not affiliated with that electric utility after the effective

 

date of the amendatory act that added section 6t, the commission

 

shall consider and may authorize a financial incentive for that

 

utility that does not exceed the electric utility's weighted

 

average cost of capital.

 

     (7) The utility shall annually file, or more frequent if

 

required by the commission, reports to the commission regarding the

 

status of any project for which a certificate of necessity has been

 

granted under subsection (4), including an update concerning the

 

cost and schedule of that project.

 

     (8) If the commission denies any of the relief requested by an

 

electric utility, the electric utility may withdraw its application

 

or proceed with the proposed construction, purchase, investment, or

 

power purchase agreement without a certificate and the assurances

 

granted under this section.

 

     (9) Once the electric generation facility or power purchase

agreement is considered used and useful or as otherwise provided in

 

subsection (12), the commission shall include in an electric

 

utility's retail rates all reasonable and prudent costs for an

 

electric generation facility or power purchase agreement for which

 

a certificate of necessity has been granted. The commission shall

 

not disallow recovery of costs an electric utility incurs in

 

constructing, investing in, or purchasing an electric generation

 

facility or in purchasing power pursuant to a power purchase

 

agreement for which a certificate of necessity has been granted, if

 

the costs do not exceed the costs approved by the commission in the

 

certificate. The portion of the cost of a plant, facility, or power

 

purchase agreement that exceeds the cost approved by the commission

 

is presumed to have been incurred due to a lack of prudence. Once

 

the electric generation facility or power purchase agreement is

 

considered used and useful or as otherwise provided in subsection

 

(12), the commission shall include in the electric utility's retail

 

rates costs actually incurred by the electric utility that exceed

 

the costs approved by the commission only if the commission finds

 

by a preponderance of the evidence that the additional costs are

 

reasonable and prudent. If the actual costs incurred by the

 

electric utility exceed the costs approved by the commission, the

 

electric utility has the burden of proving by a preponderance of

 

the evidence that the costs are reasonable and prudent. The portion

 

of the cost of a plant, facility, or power purchase agreement which

 

exceeds 110% of the cost approved by the commission is presumed to

 

have been incurred due to a lack of prudence. The commission may

 

include any or all of the portion of the cost in excess of 110% of

Senate Bill No. 437 as amended December 15, 2016

the cost approved by the commission if the commission finds by a

 

preponderance of the evidence that the costs were prudently

 

incurred. The commission shall disallow costs the commission finds

 

have been incurred as the result of fraud, concealment, gross

 

mismanagement, or lack of quality controls amounting to gross

 

mismanagement. The commission shall also require refunds with

 

interest to ratepayers of any of these costs already recovered

 

through the electric utility's rates and charges. If the

 

assumptions underlying an approved certificate of necessity [, other than

 a certificate of necessity approved for a power purchase agreement for the purchase of electric capacity,]

 

materially change, an electric utility may request, or the

 

commission on its own motion may initiate, a proceeding to review

 

whether it is reasonable and prudent to complete an unfinished

 

project for which a certificate of necessity has been granted. If

 

the commission finds that completion of the project is no longer

 

reasonable and prudent, the commission may modify or cancel

 

approval of the certificate of necessity. Except for costs the

 

commission finds an electric utility has incurred as the result of

 

fraud, concealment, gross mismanagement, or lack of quality

 

controls amounting to gross mismanagement, if commission approval

 

is modified or canceled, the commission shall not disallow

 

reasonable and prudent costs already incurred or committed to by

 

contract by an electric utility. Once the commission finds that

 

completion of the project is no longer reasonable and prudent, the

 

commission may limit future cost recovery to those costs that could

 

not be reasonably avoided.

 

     (10) Within 90 days of the effective date of the amendatory

 

act that added this section, the The commission shall adopt

standard application filing forms and instructions for use in all

 

requests for a certificate of necessity under this section. The

 

commission may , in its discretion, modify the standard application

 

filing forms and instructions adopted under this section.

 

     (11) The commission shall establish standards for an

 

integrated resource plan that shall be filed by an electric utility

 

requesting a certificate of necessity under this section. This

 

subsection does not apply to an electric utility that has an

 

approved integrated resource plan under section 6t. An integrated

 

resource plan shall include all of the following:

 

     (a) A long-term forecast of the electric utility's load growth

 

under various reasonable scenarios.

 

     (b) The type of generation technology proposed for the

 

generation facility and the proposed capacity of the generation

 

facility, including projected fuel and regulatory costs under

 

various reasonable scenarios.

 

     (c) Projected energy and capacity purchased or produced by the

 

electric utility pursuant to under any renewable portfolio

 

standard.

 

     (d) Projected energy efficiency program savings under any

 

energy efficiency program requirements and the projected costs for

 

that program.

 

     (e) Projected load management and demand response savings for

 

the electric utility and the projected costs for those programs.

 

     (f) An analysis of the availability and costs of other

 

electric resources that could defer, displace, or partially

 

displace the proposed generation facility or purchased power

agreement, including additional renewable energy, energy efficiency

 

programs, load management, and demand response, beyond those

 

amounts contained in subdivisions (c) to (e).

 

     (g) Electric transmission options for the electric utility.

 

     (12) The commission shall may allow financing interest cost

 

recovery in an electric utility's base rates on construction work

 

in progress for capital improvements approved under this section

 

prior to the assets being considered used and useful. Regardless of

 

whether or not the commission authorizes base rate treatment for

 

construction work in progress financing interest expense, an

 

electric utility shall be allowed to recognize, accrue, and defer

 

the allowance for funds used during construction. related to equity

 

capital.

 

     (13) As used in this section, "renewable energy system" means

 

that term as defined in the clean, renewable, and efficient energy

 

act.An existing supplier of electric generation capacity currently

 

producing at least 200 megawatts of firm electric generation

 

capacity resources located in the independent system operator's

 

zone in which the utility's load is served that seeks to provide

 

electric generation capacity resources to the utility may submit a

 

written proposal directly to the commission as an alternative to

 

the construction, investment, or purchase for which the certificate

 

of necessity is sought under this section. The entity submitting an

 

alternative proposal under this subsection has standing to

 

intervene and the commission shall allow reasonable discovery in

 

the contested case proceeding conducted under this section. In

 

evaluating an alternative proposal, the commission shall consider

Senate Bill No. 437 as amended December 15, 2016

the cost of the alternative proposal and the submitting entity's

 

qualifications, technical competence, capability, reliability,

 

creditworthiness, and past performance. In reviewing an

 

application, the commission may consider any alternative proposals

 

submitted under this subsection. This subsection does not limit the

 

ability of any other person to submit to the commission an

 

alternative proposal to the construction, investment, or purchase

 

for which a certificate of necessity is sought under this section

 

and to petition for and be granted leave to intervene in the

 

contested case proceeding conducted under this section under the

 

rules of practice and procedure of the commission. This subsection

 

does not authorize the commission to order or otherwise require an

 

electric utility to adopt any alternative proposal submitted under

 

this subsection.

 

     (14) An order of the commission following a hearing under this

 

section is subject to judicial review as provided under section 28

 

of article VI of the state constitution of 1963 and chapter 6 of

 

the administrative procedures act of 1969, 1969 PA 306, MCL 24.301

 

to 24.306, except that the filing of a petition for review must be

 

filed in the court of appeals within 30 days after the order of the

 

commission is issued and the court shall conduct the review as

 

expeditiously as possible with lawful precedence over other

 

matters.

 

     [                                                          

 

                                                                  

 

                                                                

 

                                                            

Senate Bill No. 437 as amended December 15, 2016

                             ]

 

     Sec. 6t. (1) The commission shall, within 120 days of the

 

effective date of the amendatory act that added this section and

 

every 5 years thereafter, commence a proceeding and, in

 

consultation with the Michigan agency for energy, the department of

 

environmental quality, and other interested parties, do all of the

 

following as part of the proceeding:

 

     (a) Conduct an assessment of the potential for energy waste

 

reduction in this state, based on what is economically and

 

technologically feasible, as well as what is reasonably achievable.

 

     (b) Conduct an assessment for the use of demand response

 

programs in this state, based on what is economically and

 

technologically feasible, as well as what is reasonably achievable.

 

The assessment shall expressly account for advanced metering

 

infrastructure that has already been installed in this state and

 

seek to fully maximize potential benefits to ratepayers in lowering

 

utility bills.

 

     (c) Identify significant state or federal environmental

 

regulations, laws, or rules and how each regulation, law, or rule

 

would affect electric utilities in this state.

 

     (d) Identify any formally proposed state or federal

 

environmental regulation, law, or rule that has been published in

 

the Michigan Register or the Federal Register and how the proposed

 

regulation, law, or rule would affect electric utilities in this

 

state.

 

     (e) Identify any required planning reserve margins and local

 

clearing requirements in areas of this state.

     (f) Establish the modeling scenarios and assumptions each

 

electric utility should include in addition to its own scenarios

 

and assumptions in developing its integrated resource plan filed

 

under subsection (3), including, but not limited to, all of the

 

following:

 

     (i) Any required planning reserve margins and local clearing

 

requirements.

 

     (ii) All applicable state and federal environmental

 

regulations, laws, and rules identified in this subsection.

 

     (iii) Any supply-side and demand-side resources that

 

reasonably could address any need for additional generation

 

capacity, including, but not limited to, the type of generation

 

technology for any proposed generation facility, projected energy

 

waste reduction savings, and projected load management and demand

 

response savings.

 

     (iv) Any regional infrastructure limitations in this state.

 

     (v) The projected costs of different types of fuel used for

 

electric generation.

 

     (g) Allow other state agencies to provide input regarding any

 

other regulatory requirements that should be included in modeling

 

scenarios or assumptions.

 

     (h) Publish a copy of the proposed modeling scenarios and

 

assumptions to be used in integrated resource plans on the

 

commission's website.

 

     (i) Before issuing the final modeling scenarios and

 

assumptions each electric utility should include in developing its

 

integrated resource plan, receive written comments and hold

hearings to solicit public input regarding the proposed modeling

 

scenarios and assumptions.

 

     (2) A proceeding commenced under subsection (1) shall be

 

completed within 120 days, and shall not be a contested case under

 

chapter 4 of the administrative procedures act of 1969, 1969 PA

 

306, MCL 24.271 to 24.287. The determination of the modeling

 

assumptions for integrated resource plans made under subsection (1)

 

is not considered a final order for purposes of judicial review.

 

The determinations made under subsection (1) are only subject to

 

judicial review as part of the final commission order approving an

 

integrated resource plan under this section.

 

     (3) Not later than 2 years after the effective date of the

 

amendatory act that added this section, each electric utility whose

 

rates are regulated by the commission shall file with the

 

commission an integrated resource plan that provides a 5-year, 10-

 

year, and 15-year projection of the utility's load obligations and

 

a plan to meet those obligations, to meet the utility's

 

requirements to provide generation reliability, including meeting

 

planning reserve margin and local clearing requirements determined

 

by the commission or the appropriate independent system operator,

 

and to meet all applicable state and federal reliability and

 

environmental regulations over the ensuing term of the plan. The

 

commission shall issue an order establishing filing requirements,

 

including application forms and instructions, and filing deadlines

 

for an integrated resource plan filed by an electric utility whose

 

rates are regulated by the commission. The electric utility's plan

 

may include alternative modeling scenarios and assumptions in

addition to those identified under subsection (1).

 

     (4) For an electric utility with fewer than 1,000,000

 

customers in this state whose rates are regulated by the

 

commission, the commission may issue an order implementing separate

 

filing requirements, review criteria, and approval standards that

 

differ from those established under subsection (3). An electric

 

utility providing electric tariff service to customers both in this

 

state and in at least 1 other state may design its integrated

 

resource plan to cover all its customers on that multistate basis.

 

If an electric utility has filed a multistate integrated resource

 

plan that includes its service area in this state with the relevant

 

utility regulatory commission in another state in which it provides

 

tariff service to retail customers, the commission shall accept

 

that integrated resource plan filing for filing purposes in this

 

state. However, the commission may require supplemental information

 

if necessary as part of its evaluation and determination of whether

 

to approve the plan. Upon request of an electric utility, the

 

commission may adjust the filing dates for a multistate integrated

 

resource plan filing in this state to place its review on the same

 

timeline as other relevant state reviews.

 

     (5) An integrated resource plan shall include all of the

 

following:

 

     (a) A long-term forecast of the electric utility's sales and

 

peak demand under various reasonable scenarios.

 

     (b) The type of generation technology proposed for a

 

generation facility contained in the plan and the proposed capacity

 

of the generation facility, including projected fuel costs under

various reasonable scenarios.

 

     (c) Projected energy purchased or produced by the electric

 

utility from a renewable energy resource. If the level of renewable

 

energy purchased or produced is projected to drop over the planning

 

periods set forth in subsection (3), the electric utility must

 

demonstrate why the reduction is in the best interest of

 

ratepayers.

 

     (d) Details regarding the utility's plan to eliminate energy

 

waste, including the total amount of energy waste reduction

 

expected to be achieved annually, the cost of the plan, and the

 

expected savings for its retail customers.

 

     (e) An analysis of how the combined amounts of renewable

 

energy and energy waste reduction achieved under the plan compare

 

to the renewable energy resources and energy waste reduction goal

 

provided in section 1 of the clean and renewable energy and energy

 

waste reduction act, 2008 PA 295, MCL 460.1001. This analysis and

 

comparison may include renewable energy and capacity in any form,

 

including generating electricity from renewable energy systems for

 

sale to retail customers or purchasing or otherwise acquiring

 

renewable energy credits with or without associated renewable

 

energy, allowed under section 27 of the clean and renewable energy

 

and energy waste reduction act, 2008 PA 295, MCL 460.1027, as it

 

existed before the effective date of the amendatory act that added

 

this section.

 

     (f) Projected load management and demand response savings for

 

the electric utility and the projected costs for those programs.

 

     (g) Projected energy and capacity purchased or produced by the

electric utility from a cogeneration resource.

 

     (h) An analysis of potential new or upgraded electric

 

transmission options for the electric utility.

 

     (i) Data regarding the utility's current generation portfolio,

 

including the age, capacity factor, licensing status, and remaining

 

estimated time of operation for each facility in the portfolio.

 

     (j) Plans for meeting current and future capacity needs with

 

the cost estimates for all proposed construction and major

 

investments, including any transmission or distribution

 

infrastructure that would be required to support the proposed

 

construction or investment, and power purchase agreements.

 

     (k) An analysis of the cost, capacity factor, and viability of

 

all reasonable options available to meet projected energy and

 

capacity needs, including, but not limited to, existing electric

 

generation facilities in this state.

 

     (l) Projected rate impact for the periods covered by the plan.

 

     (m) How the utility will comply with all applicable state and

 

federal environmental regulations, laws, and rules, and the

 

projected costs of complying with those regulations, laws, and

 

rules.

 

     (n) A forecast of the utility's peak demand and details

 

regarding the amount of peak demand reduction the utility expects

 

to achieve and the actions the utility proposes to take in order to

 

achieve that peak demand reduction.

 

     (o) The projected long-term firm gas transportation contracts

 

or natural gas storage the electric utility will hold to provide an

 

adequate supply of natural gas to any new generation facility.