HOUSE BILL No. 6522


     November 13, 2002, Introduced by Rep. Bradstreet and referred to the Committee on Energy and Technology.


        A bill to amend 1939 PA 3, entitled

   "An act to provide for the regulation and control of public util-
   ities and other services affected with a public interest within
   this state; to provide for alternative energy suppliers; to pro-
   vide for licensing; to include municipally owned utilities and
   other providers of energy under certain provisions of this act;
   to create a public service commission and to prescribe and define
   its powers and duties; to abolish the Michigan public utilities
   commission and to confer the powers and duties vested by law on
   the public service commission; to provide for the continuance,
   transfer, and completion of certain matters and proceedings; to
   abolish automatic adjustment clauses; to prohibit certain rate
   increases without notice and hearing; to qualify residential
   energy conservation programs permitted under state law for cer-
   tain federal exemption; to create a fund; to provide for a
   restructuring of the manner in which energy is provided in this
   state; to encourage the utilization of resource recovery facili-
   ties; to prohibit certain acts and practices of providers of
   energy; to allow for the securitization of stranded costs; to
   reduce rates; to provide for appeals; to provide appropriations;
   to declare the effect and purpose of this act; to prescribe reme-
   dies and penalties; and to repeal acts and parts of acts,"

   by amending sections 10 and 10a (MCL 460.10 and 460.10a), as

   added by 2000 PA 141.




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               THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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             Sec. 10.  (1) Sections 10 through  10bb  10CC shall be known

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        and may be cited as the "customer choice and electricity reli-

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        ability act".

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             (2) The purpose of sections 10a through  10bb  10CC is to do

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        all of the following:

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             (a) To ensure that all retail customers in this state of

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        electric power have a choice of electric suppliers.

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             (b) To allow and encourage the Michigan public service com-

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        mission to foster competition in this state in the provision of

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        electric supply and maintain regulation of electric supply for

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        customers who continue to choose supply from incumbent electric

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        utilities.

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             (c) To encourage the development and construction of mer-

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        chant plants, which will diversify the ownership of electric gen-

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        eration in this state.

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             (d) To ensure that all persons in this state are afforded

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        safe  ,  AND reliable electric power at a reasonable rate.

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             (e) To improve the opportunities for economic development in

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        this state and to promote financially healthy and competitive

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        utilities in this state.

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             (3) Subsection (2) does not apply after December 31, 2003.

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             Sec. 10a.  (1)  No later than January 1, 2002, the  THE com-

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        mission shall issue orders establishing the rates, terms, and

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        conditions of service that allow all retail customers of an elec-

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        tric utility or provider to choose an alternative electric

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        supplier.  The orders shall provide for full recovery of a



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        utility's net stranded costs and implementation costs as

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        determined by the commission.

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             (2) The commission shall issue orders establishing a licens-

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        ing procedure for all alternative electric suppliers.  To ensure

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        adequate service to customers in this state, the  THE commission

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        shall require that an alternative electric supplier maintain an

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        office within  Michigan, shall assure that an alternative elec-

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        tric supplier has  THIS STATE, HAVE the necessary financial, man-

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        agerial, and technical capabilities,  shall require that an

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        alternative electric supplier  maintain records  which  THAT
    the

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        commission considers necessary, and  shall ensure an alternative

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        electric supplier's accessibility  MAKE THOSE RECORDS ACCESSIBLE

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        to the commission,  to  consumers, and  to  electric utilities
    in

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        this state.  The  commission also shall require  alternative

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        electric suppliers  to agree that they will  SHALL collect and

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        remit to local units of government all applicable users, sales,

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        and use taxes.  An alternative electric supplier is not required

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        to obtain any certificate, license, or authorization from the

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        commission other than as required by this act.

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             (3) The commission shall issue orders to ensure that custom-

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        ers in this state are not switched to another supplier or billed

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        for any services without the customer's consent.

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             (4)  Within 180 days after the effective date of the amenda-

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        tory act that added this section, the  THE commission shall

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        establish a code of conduct that shall apply to all electric

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        utilities.  The code of conduct shall include, but is not limited

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        to, measures to prevent cross-subsidization, information sharing,



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        and preferential treatment, between a utility's regulated and

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        unregulated services, whether those services are provided by the

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        utility or the utility's affiliated entities.  The code of con-

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        duct established under this subsection shall also be applicable

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        to electric utilities and alternative electric suppliers consis-

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        tent with section 10, this section, and sections 10b through

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         10bb  10CC.

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             (5) The orders issued by the commission before  the effec-

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        tive date of the amendatory act that added this section  JUNE 5,

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        2000 that allow customers of an electric utility to choose an

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        alternative electric supplier, including orders that determine

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        and authorize recovery of net stranded costs and implementation

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        costs and that confirm any voluntary commitments of electric

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        utilities, are in compliance with this act and enforceable by the

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        commission.  An electric utility that has not had voluntary com-

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        mitments to provide customer choice previously approved by orders

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        of the commission shall file a restructuring plan to allow cus-

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        tomers to choose an alternative electric supplier no later than

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        the date ordered by the commission.  The plan shall propose a

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        methodology to determine the electric utility's net stranded

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        costs and implementation costs.

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             (6) This act does not prohibit or limit the right of a

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        person to obtain self-service power, and it does not impose a

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        transition, implementation, exit fee, or any other similar charge

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        on self-service power.  A person using self-service power is not

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        an electric supplier, electric utility, or a person conducting an





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        electric utility business.  As used in this subsection,

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        "self-service power" means any of the following:

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             (a) Electricity generated and consumed at an industrial site

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        or contiguous industrial site or single commercial establishment

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        or single residence without the use of an electric utility's

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        transmission and distribution system.

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             (b) Electricity generated primarily by the use of by-product

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        fuels, including waste water solids, and the electricity is con-

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        sumed as part of a contiguous facility, with the use of an elec-

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        tric utility's transmission and distribution system, but only if

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        the point or points of receipt of the power within the facility

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        are not greater than 3 miles distant from the point of

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        generation.

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             (c) A site or facility with load existing on  the effective

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        date of the amendatory act that added this section  JUNE 5, 2000

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        that is divided by an inland body of water or by a public high-

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        way, road, or street but that otherwise meets this definition

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        meets the contiguous requirement of this subdivision regardless

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        of whether self-service power was being generated on  the effec-

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        tive date of the amendatory act that added this section  JUNE 5,

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        2000.

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             (d) A commercial or industrial facility or single residence

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        that meets the requirements of subdivision (a) or (b) meets this

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        definition whether or not the generation facility is owned by an

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        entity different from the owner of the commercial or industrial

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        site or single residence.





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             (7) This act does not prohibit or limit the right of a

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        person to engage in affiliate wheeling and does not impose a

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        transition, implementation, exit fee, or any other similar charge

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        on a person engaged in affiliate wheeling.  As used in this

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        section:

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             (a) "Affiliate" means a person or entity that directly, or

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        indirectly through 1 or more intermediates, controls, is con-

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        trolled by, or is under common control with another specified

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        entity.  As used in this subdivision, "control" means, whether

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        through an ownership, beneficial, contractual, or equitable

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        interest, the possession, directly or indirectly, of the power to

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        direct or to cause the direction of the management or policies of

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        a person or entity or the ownership of at least 7% of an entity

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        either directly or indirectly.

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             (b) "Affiliate wheeling" means a person's use of direct

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        access service where an electric utility delivers electricity

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        generated at a person's industrial site to that person or that

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        person's affiliate at a location, or general aggregated loca-

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        tions, within this state that was either 1 of the following:

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             (i) For at least 90 days during the period from January 1,

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        1996 to October 1, 1999, supplied by self-service power, but only

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        to the extent of the capacity reserved or load served by

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        self-service power during the period.

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             (ii) Capable of being supplied by a person's cogeneration

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        capacity within this state that has had since January 1, 1996 a

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        rated capacity of 15 megawatts or less, was placed in service

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        before December 31, 1975, and has been in continuous service



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        since that date.  A person engaging in affiliate wheeling is not

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        an electric supplier, an electric utility, or conducting an elec-

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        tric utility business when a person engages in affiliate

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        wheeling.

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             (8) The rights of parties to existing contracts and agree-

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        ments in effect as of January 1, 2000 between electric utilities

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        and qualifying facilities, including the right to have the

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        charges recovered from the customers of an electric utility, or

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        its successor, shall not be abrogated, increased, or diminished

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        by this act, nor shall the receipt of any proceeds of the securi-

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        tization bonds by an electric utility be a basis for any regula-

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        tory disallowance.  Further, any securitization or financing

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        order issued by the commission that relates to a qualifying

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        facility's power purchase contract shall fully consider that

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        qualifying facility's legal and financial interests.

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              (9) The commission shall, after a contested case proceed-

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        ing, issue annually an order approving for each electric utility

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        a true-up adjustment to reconcile any overcollections or under-

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        collections of the preceding 12 months to ensure the recovery of

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        all amounts of net stranded costs.  The rates for customers

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        remaining with an incumbent electric utility will not be affected

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        by the true-up process under this subsection.  The commission

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        shall review the electric utility's stranded cost recovery

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        charges and securitization charges implemented for the preceding

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        12 months, and adjust the stranded cost recovery charge, by way

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        of supplemental surcharges or credits, to allow the netting of

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        stranded costs.



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             (9)  (10)  The commission shall consider the reasonableness

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        and appropriateness of various methods to determine net stranded

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        costs, including, but not limited to, all of the following:

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             (a) Evaluating the relationship of market value to the net

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        book value of generation assets and purchased power contracts.

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             (b) Evaluating net stranded costs based on the market price

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        of power in relation to prices assumed by the commission in prior

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        orders.

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             (c) Any other method the commission considers appropriate.

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              (11) The true-up adjustment adopted under subsection (9)

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        shall not result in a modification to the securitization charge.

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        The commission shall not adjust or change in any manner securiti-

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        zation charges authorized by the commission in a financing order

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        issued under section 10i as a result of its review and any action

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        taken under subsection (9).

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             (10)  (12)  After the time period described in section

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        10d(2), the rates for retail customers that remain with or leave

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        and later return to the incumbent electric utility shall be

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        determined in the same manner as the rates were determined before

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        the effective date of this section.

















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