April 24, 2018, Introduced by Reps. Johnson, Rabhi, Barrett, Dianda and Glenn and referred to the Committee on Energy Policy.
A bill to amend 1939 PA 3, entitled
"An act to provide for the regulation and control of public and
certain private utilities and other services affected with a public
interest within this state; to provide for alternative energy
suppliers; to provide for licensing; to include municipally owned
utilities and other providers of energy under certain provisions of
this act; to create a public service commission and to prescribe
and define its powers and duties; to abolish the Michigan public
utilities commission and to confer the powers and duties vested by
law on the public service commission; to provide for the 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
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 section 10a (MCL 460.10a), as amended by 2016 PA 341.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 10a. (1) The commission shall issue orders establishing
the rates, terms, and conditions of service that allow retail
customers to take service from an alternative electric supplier.
The
orders shall must do all of the following:
(a) Except as otherwise provided in this section, provide that
no more than 10% of an electric utility's average weather-adjusted
retail sales for the preceding calendar year may take service from
an alternative electric supplier at any time.
(b) Set forth procedures necessary to allocate the amount of
load that will be allowed to be served by alternative electric
suppliers, through the use of annual energy allotments awarded on a
calendar year basis. If the sales of a utility are less in a
subsequent year or if the energy usage of a customer receiving
electric service from an alternative electric supplier exceeds its
annual energy allotment for that facility, that customer shall not
be forced to purchase electricity from a utility, but may purchase
electricity from an alternative electric supplier for that facility
during that calendar year.
(c) Notwithstanding any other provision of this section,
provide that, if the commission determines that less than 10% of an
electric utility's average weather-adjusted retail sales for the
preceding calendar year is taking service from alternative electric
suppliers, the commission shall set as a cap on the weather-
adjusted retail sales that may take service from an alternative
electric supplier, for the current calendar year and 5 subsequent
calendar years, the percentage amount of weather-adjusted retail
sales for the preceding calendar year rounded up to the nearest
whole percentage. If the cap is not adjusted for 6 consecutive
calendar
years, the cap shall return returns
to 10% in the calendar
year following that sixth consecutive calendar year. If a utility
that serves less than 200,000 customers in this state has not had
any load served by an alternative electric supplier in the
preceding 4 years, the commission shall adjust the cap in
accordance with this provision for no more than 2 consecutive
calendar years.
(d) Notwithstanding any other provision of this section,
customers seeking to expand usage at a facility that has been
continuously served through an alternative electric supplier since
April
1, 2008 shall be permitted to may
purchase electricity from
an alternative electric supplier for both the existing and any
expanded load at that facility as well as any new facility
constructed or acquired after October 6, 2008 that is similar in
nature if the customer owns more than 50% of the new facility.
(e) Provide that for an existing facility that is receiving
100% of its electric service from an alternative electric supplier
on
or after the effective date of the amendatory act that added
section
6t, April 20, 2017, the owner of that facility may purchase
electricity from an alternative electric supplier, regardless of
whether the sales exceed 10% of the servicing electric utility's
average weather-adjusted retail sales, for both the existing
electric choice load at that facility and any expanded load arising
after
the effective date of the amendatory act that added section
6t
April 20, 2017 at that facility as well as any new facility that
is similar in nature to the existing facility, that is constructed
or acquired by the customer on a site contiguous to the existing
site or on a site that would be contiguous to an existing site in
the absence of an existing public right-of-way, and the customer
owns more than 50% of that facility. This subdivision does not
authorize or permit an existing facility being served by an
electric
utility on standard tariff service on the effective date
of
the amendatory act that added section 6t April 20, 2017 to be
served by an alternative electric supplier.
(f) Notwithstanding any other provision of this section, any
customer operating an iron ore mining facility, iron ore processing
facility, or both, located in the Upper Peninsula of this state,
may purchase all or any portion of its electricity from an
alternative electric supplier, regardless of whether the sales
exceed 10% of the serving electric utility's average weather-
adjusted retail sales, if that customer is in compliance with the
terms of a settlement agreement requiring it to facilitate
construction of a new power plant located in the Upper Peninsula of
this state. A customer described in this subdivision and the
alternative electric supplier that provides electric service to
that
customer are not subject to the requirements contained in the
amendatory
act that added section 6t 2016
PA 341 and any
administrative
regulations adopted under that amendatory act. 2016
PA 341. The commission's orders establishing rates, terms, and
conditions
of retail access service issued before the effective
date
of the amendatory act that added section 6t April 20, 2017
remain in effect with regard to retail open access provided under
this subdivision.
(g) Provide that a customer on an enrollment queue waiting to
take retail open access service as of December 31, 2015 shall
continue on the queue and an electric utility shall add a new
customer to the queue if the customer's prospective alternative
electric supplier submits an enrollment request to the electric
utility. A customer shall be removed from the queue by notifying
the electric utility electronically or in writing.
(h) Require each electric utility to file with the commission
not later than January 15 of each year a rank-ordered queue of all
customers awaiting retail open access service under subdivision
(g). The filing must include the estimated amount of electricity
used by each customer awaiting retail open access service under
subdivision (g). All customer-specific information contained in the
filing under this subdivision is exempt from release under the
freedom of information act, 1976 PA 442, MCL 15.231 to 15.246, and
the commission shall treat that information as confidential
information. The commission may release aggregated information as
part of its annual report as long as individual customer
information or data are not released.
(i) Provide that if the prospective alternative electric
supplier of a customer next on the queue awaiting retail open
access
service is notified after the effective date of the
amendatory
act that added section 6t April
20, 2017 that less than
10% of an electric utility's average weather-adjusted retail sales
for the preceding calendar year are taking service from an
alternative electric supplier and that the amount of electricity
needed to serve the customer's electric load is available under the
10% allocation, the customer may take service from an alternative
electric supplier. The customer's prospective alternative electric
supplier shall notify the electric utility within 5 business days
after being notified whether the customer will take service from an
alternative electric supplier. If the customer's prospective
alternative electric supplier fails to notify the utility within 5
business days or if the customer chooses not to take retail open
access service, the customer shall be removed from the queue of
those awaiting retail open access service. The customer may
subsequently be added to the queue as a new customer under the
provisions of subdivision (g). A customer that elects to take
service from an alternative electric supplier under this
subdivision shall become service-ready under rules established by
the commission and the utility's approved retail open access
service tariffs.
(j) Provide that the commission shall ensure if a customer is
notified that the customer's service from an alternative electric
supplier will be terminated or restricted as a result of the
alternative electric supplier limiting service in this state, the
customer has 60 days to acquire service from a different
alternative electric supplier. If the customer is a public entity,
the time to acquire services from a different alternative electric
supplier shall not be less than 180 days.
(k) Provide that as a condition of licensure, an alternative
electric supplier meets all of the requirements of this act.
(2) The commission shall issue orders establishing a licensing
procedure for all alternative electric suppliers. To ensure
adequate service to customers in this state, the commission shall
require that an alternative electric supplier maintain an office
within
this state, shall assure ensure
that an alternative electric
supplier has the necessary financial, managerial, and technical
capabilities, shall require that an alternative electric supplier
maintain records that the commission considers necessary, and shall
ensure an alternative electric supplier's accessibility to the
commission, to consumers, and to electric utilities in this state.
The commission also shall require alternative electric suppliers to
agree that they will collect and remit to local units of government
all applicable users, sales, and use taxes. An alternative electric
supplier is not required to obtain any certificate, license, or
authorization from the commission other than as required by this
act.
(3) The commission shall issue orders to ensure that customers
in this state are not switched to another supplier or billed for
any services without the customer's consent.
(4) This act does not prohibit or limit the right of a
microgrid or person to obtain self-service power and does not
impose a transition, implementation, exit fee, or any other similar
charge
on self-service power. A person An
entity using self-service
power is not an electric supplier, electric utility, or a person
conducting an electric utility business. As used in this
subsection, "self-service power" means any of the following:
(a) Electricity generated and consumed at an industrial site
or contiguous industrial site or single commercial establishment or
single residence without the use of an electric utility's
transmission and distribution system.
(b) Electricity generated primarily by the use of by-product
fuels, including waste water solids, which electricity is consumed
as part of a contiguous facility, with the use of an electric
utility's transmission and distribution system, but only if the
point or points of receipt of the power within the facility are not
greater than 3 miles distant from the point of generation.
(c) A site or facility with load existing on June 5, 2000 that
is divided by an inland body of water or by a public highway, road,
or street but that otherwise meets this definition meets the
contiguous requirement of this subdivision regardless of whether
self-service power was being generated on June 5, 2000.
(d) A commercial or industrial facility or single residence
that meets the requirements of subdivision (a) or (b) meets this
definition whether or not the generation facility is owned by an
entity different from the owner of the commercial or industrial
site or single residence.
(5) This act does not prohibit or limit the right of a person
to engage in affiliate wheeling and does not impose a transition,
implementation, exit fee, or any other similar charge on a person
engaged in affiliate wheeling.
(6) The rights of parties to existing contracts and agreements
in effect as of January 1, 2000 between electric utilities and
qualifying facilities, including the right to have the charges
recovered from the customers of an electric utility, or its
successor, are not abrogated, increased, or diminished by this act,
nor shall the receipt of any proceeds of the securitization bonds
by an electric utility be a basis for any regulatory disallowance.
Further, any securitization or financing order issued by the
commission that relates to a qualifying facility's power purchase
contract
shall must fully consider that qualifying facility's legal
and financial interests.
(7) A customer that elects to receive service from an
alternative electric supplier may subsequently provide notice to
the electric utility of the customer's desire to receive standard
tariff service from the electric utility under procedures approved
by the commission.
(8) The commission shall authorize rates that will ensure that
an electric utility that offered retail open access service from
2002 through October 6, 2008 fully recovers its restructuring costs
and any associated accrued regulatory assets. This includes, but is
not limited to, implementation costs, stranded costs, and costs
authorized under section 10d(4) as it existed before October 6,
2008, that have been authorized for recovery by the commission in
orders issued before October 6, 2008. The commission shall approve
surcharges that will ensure full recovery of all such costs by
October 6, 2013.
(9) Within 270 days of the effective date of the 2018
amendatory act that added this subsection, the commission shall
issue orders that allow municipally owned electric utilities,
electric utilities, and private entities to establish microgrids
within this state. The order must do all of the following:
(a) Allow the establishment of microgrids to support 1 or more
critical facilities.
(b) Ensure that interconnections are uniform across all
electric utilities and that those interconnections follow the
standards promulgated by the commission, which must allow for
microgrid operations consistent with this act.
(c) Allow for the operation of microgrids during an emergency.
(d) Allow microgrids to serve 1 or more facilities that are
not critical facilities if those facilities are electrically
contiguous to the critical facilities when the microgrid is in
island mode.
(e) Prohibit electric utilities from charging standby rates to
microgrids owned by a person other than that electric utility.
(f) Establish a process that allows an electric utility
customer to request that a facility is designated a critical
facility if the commission determines that supplying electricity to
that facility during an emergency is necessary for the public
health, safety, and welfare.
(g) Require electric utilities to establish a microgrid for
any facilities designated as critical under subdivision (f) unless
a person other than that electric utility will establish the
microgrid.
(h) Establish rates for microgrids established by electric
utilities and private entities. The rates established under this
subdivision must reflect an equitable cost of service for utility
revenue requirement and must not include standby charges.
(i) Adopt standards for microgrids established by municipally
owned electric utilities, electric utilities, and private entities.
(j) Require municipally owned electric utilities and electric
utilities to allow any electric utility customer to use a microgrid
that meets the standards adopted in subdivision (i).
(10) Not later than July 1, 2019, the commission shall issue a
report to the legislature evaluating the costs and benefits of
using microgrids to provide electric service to critical
facilities.
(11) By December 31, 2018, the commission shall issue a report
to the governor and the legislature that analyzes the reliability
of the electric distribution systems in this state. The report must
include all of the following:
(a) The best technical, economic, and regulatory approach to
ensure reliable electric service when the electric distribution
systems in this state are confronted with natural disasters and
other threats.
(b) The structural, regulatory, legal, or other barriers in
this state to adopting those best practices identified in
subdivision (a).
(c) The benefits and costs of those best practices identified
in subdivision (a).
(d) The opportunities and barriers in this state to
implementing innovative multitechnology approaches to improve the
resilience, efficiency, functionality, and performance of the
electric distribution systems in this state.
(e) Performance standards that could be adopted to improve the
resilience, efficiency, functionality, and performance of the
electric distribution systems in this state.
(12) The commission shall convene an advisory panel to assist
in preparing the report under subsection (11) that consists of all
of the following:
(a) One individual representing investor-owned electric
utilities.
(b) One individual representing local units of government.
(c) One individual representing municipally owned electric
utilities.
(d) One individual representing cooperative electric
utilities.
(e) One individual representing a statewide environmental
organization.
(f) One individual representing electric consumers.
(g) One individual representing the energy industry.
(h) One individual representing a statewide labor
organization.
(13)
(9) As used in subsections (1) and (7):
(a) "Customer" means the building or facilities served through
a single existing electric billing meter and does not mean the
person, corporation, partnership, association, governmental body,
or other entity owning or having possession of the building or
facilities.
(b) "Standard tariff service" means, for each regulated
electric utility, the retail rates, terms, and conditions of
service approved by the commission for service to customers who do
not elect to receive generation service from alternative electric
suppliers.
(14) (10)
As used in this section:
(a) "Affiliate" means a person or entity that directly, or
indirectly through 1 or more intermediates, controls, is controlled
by, or is under common control with another specified entity. As
used in this subdivision, "control" means, whether through an
ownership, beneficial, contractual, or equitable interest, the
possession, directly or indirectly, of the power to direct or to
cause the direction of the management or policies of a person or
entity or the ownership of at least 7% of an entity either directly
or indirectly.
(b) "Affiliate wheeling" means a person's use of direct access
service where an electric utility delivers electricity generated at
a person's industrial site to that person or that person's
affiliate at a location, or general aggregated locations, within
this state that was either 1 of the following:
(i) For at least 90 days during the period from January 1,
1996 to October 1, 1999, supplied by self-service power, but only
to the extent of the capacity reserved or load served by self-
service power during the period.
(ii) Capable of being supplied by a person's cogeneration
capacity within this state that has had since January 1, 1996 a
rated capacity of 15 megawatts or less, was placed in service
before December 31, 1975, and has been in continuous service since
that date. A person engaging in affiliate wheeling is not an
electric supplier, an electric utility, or conducting an electric
utility business when a person engages in affiliate wheeling.
(c) "Critical facility" includes, but it not limited to, any
hospital or medical facility that provides life support, police
station, fire station, water treatment plant, sewage treatment
plant, public shelter, correctional facility, emergency
coordination center, military site, residential facility for the
elderly, or any other facility the commission designates as
critical.
(d) "Emergency" means whenever the macrogrid is inoperable or
whenever the power quality in the macrogrid is out of
specifications.
(e) "Island mode" means that a microgrid is in a status in
which loads and energy resources within the microgrid are able to
operate but power is not exchanged with the utility-owned
transmission or distribution network.
(f) "Microgrid" means a group of interconnected loads and
distributed energy resources with clearly defined electrical
boundaries that acts as a single controllable entity with respect
to the macrogrid and that connects and disconnects from the
macrogrid to enable it to operate in grid-connected or island mode.