House Introduced Bill 6474

HOUSE BILL No. 6474

November 7, 2002, Introduced by Rep. Kolb and referred to the Committee on Energy and Technology.

A bill to require certain providers of electric service to

comply with a portfolio standard for renewable energy; to pre-

scribe the powers and duties of certain state agencies and offi-

cials; and to provide for penalties.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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Sec. 1. As used in this act:

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(a) "Biomass" means any organic matter that is available on

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a renewable basis, including, but not limited to, all of the

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following:

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(i) Agricultural crops and agricultural wastes and

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residues.

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(ii) Wood and wood wastes and residues.

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(iii) Animal wastes.

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(iv) Municipal wastes.

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(v) Aquatic plants.

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(b) "Commission" means the Michigan public service

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commission in the department of consumer and industry services.

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(c) "Portfolio standard" means a portfolio standard for

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renewable energy established by the commission under this act.

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(d) "Provider" means any person or entity that is in the

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business of selling electricity to retail customers in this

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state.

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(e) "Renewable energy" means any of the following:

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(i) Biomass.

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(ii) Geothermal energy.

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(iii) Solar thermal energy.

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(iv) Wind energy.

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(f) "Renewable energy system" means any of the following:

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(i) A facility or energy system that uses renewable energy

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to generate electricity and transmits or distributes the elec-

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tricity that it generates from renewable energy.

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(ii) A solar thermal energy system that reduces the consump-

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tion of electricity.

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Sec. 2. (1) For each provider, the commission shall estab-

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lish a portfolio standard for renewable energy. The portfolio

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standard shall require the provider to generate or acquire elec-

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tricity from renewable energy systems in the following amounts:

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(a) For calendar years 2003 through 2005, not less than

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7% of the total amount of electricity sold by the provider to its

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retail customers in this state during the calendar year.

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(b) For calendar years 2006 through 2008, not less than

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9% of the total amount of electricity sold by the provider to its

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retail customers in this state during the calendar year.

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(c) For calendar years 2009 through 2011, not less than

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13% of the total amount of electricity sold by the provider to

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its retail customers in this state during the calendar year.

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(d) For calendar year 2012 and for each calendar year there-

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after, not less than 15% of the total amount of electricity sold

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by the provider to its retail customers in this state during the

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calendar year.

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(2) In addition to the requirements under subsection (1),

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the portfolio standard for each provider shall require all of the

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following:

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(a) That of the total amount of electricity that the pro-

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vider is required to generate or acquire from renewable energy

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systems during each calendar year, not less than 5% of that

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amount must be generated or acquired from solar renewable energy

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systems.

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(b) If the provider acquires electricity from a renewable

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energy system under a renewable energy contract with another

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party, the contract shall provide both of the following:

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(i) That the term of the renewable energy contract shall be

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not less than 10 years, unless the other party agrees to a renew-

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able energy contract with a shorter term.

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(ii) That the terms and conditions of the renewable energy

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contract are just and reasonable, as determined by the

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commission.

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(3) If, for the benefit of 1 or more of its retail customers

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in this state, the provider has subsidized, in whole or in part,

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the acquisition or installation of a solar thermal energy system

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that qualifies as a renewable energy system and that reduces the

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consumption of electricity, the total reduction in the consump-

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tion of electricity during each calendar year that results from

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the solar thermal energy system is considered to be electricity

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that the provider generated or acquired from a renewable energy

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system for the purposes of complying with its portfolio

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standard.

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(4) The commission may establish a system of renewable

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energy credits that may be used by a provider to comply with its

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portfolio standard.

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(5) If a provider is unable to comply with its portfolio

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standard through the generation of electricity from its own

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renewable energy systems or the use of renewable energy credits,

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the provider shall acquire electricity under 1 or more renewable

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energy contracts.

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(6) If the commission determines that there is not or will

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not be a sufficient supply of electricity made available to a

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provider under renewable energy contracts with just and reason-

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able terms and conditions, the commission shall exempt the pro-

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vider, for that calendar year, from the remaining requirements of

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its portfolio standard or from any appropriate portion of the

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standard.

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(7) The commission shall determine whether the terms and

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conditions of a renewable energy contract are just and

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reasonable.

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(8) As used in this section:

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(a) "Renewable energy contract" means a contract to acquire

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electricity from 1 or more renewable energy systems owned, oper-

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ated, or controlled by third parties.

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(b) "Terms and conditions" includes the price that a pro-

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vider of electric service is to pay to acquire electricity under

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a renewable energy contract.

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Sec. 3. (1) Each provider of electric service shall submit

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to the commission an annual report that provides information

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relating to the actions taken by the provider to comply with its

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portfolio standard.

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(2) Each provider shall submit the annual report to the com-

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mission after the end of each calendar year and within the time

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prescribed by the commission. The report shall be submitted in a

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format approved by the commission.

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(3) Each annual report shall include all of the following

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information:

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(a) The amount of electricity that the provider generated or

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acquired from renewable energy systems during the reporting

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period and the amount of renewable energy credits that the pro-

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vider acquired, sold, or traded during the reporting period to

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comply with its portfolio standard.

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(b) The capacity of each renewable energy system owned,

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operated, or controlled by the provider, the total amount of

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electricity generated by each system during the reporting period

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and the percentage of that total amount that was generated

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directly from renewable energy.

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(c) Whether, during the reporting period, the provider began

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construction on, acquired, or placed into operation any renewable

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energy system.

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(d) Any other information that the commission may require.

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Sec. 4. (1) If a provider does not comply with its portfo-

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lio standard for any calendar year and the commission has not

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exempted the provider from the requirements of its portfolio

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standard, the commission may impose a fine or take other appro-

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priate action against the provider.

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(2) The commission may impose a fine against a provider

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based on either of the following:

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(a) Each kilowatt-hour of electricity that the provider does

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not generate or acquire from a renewable energy system or a solar

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thermal renewable energy system during a calendar year in viola-

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tion of its portfolio standard.

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(b) Any other reasonable formula adopted by the commission.

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(3) If the commission imposes a fine against a regulated

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rate provider, then all of the following apply:

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(a) The fine is not a cost of service of the provider.

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(b) The provider shall not include any portion of the fine

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in any application for a rate adjustment or rate increase.

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(c) The commission shall not allow the provider to recover

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any portion of the fine from its retail customers.

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