February 20, 2007, Introduced by Senators PATTERSON, RICHARDVILLE, JELINEK, KAHN, PAPPAGEORGE, THOMAS, HUNTER and OLSHOVE 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
utilities and other services affected with a public interest within
this state; to provide for alternative energy suppliers; to provide
for licensing; to include municipally owned utilities and other
providers of energy under certain provisions of this act; to create
a public service commission and to prescribe and define its powers
and duties; to abolish the Michigan public utilities commission and
to confer the powers and duties vested by law on the public service
commission; to provide for the continuance, transfer, and
completion of certain matters and proceedings; to abolish automatic
adjustment clauses; to prohibit certain rate increases without
notice and hearing; to qualify residential energy conservation
programs permitted under state law for certain federal exemption;
to create a fund; to provide for a restructuring of the manner in
which energy is provided in this state; to encourage the
utilization of resource recovery facilities; to prohibit certain
acts and practices of providers of energy; to allow for the
securitization of stranded costs; to reduce rates; to provide for
appeals; to provide appropriations; to declare the effect and
purpose of this act; to prescribe remedies and penalties; and to
repeal acts and parts of acts,"
(MCL 460.1 to 460.10cc) by adding section 10dd; and to repeal acts
and parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 10dd. (1) The legislature finds and declares that there
is a need to provide assistance to low income individuals in paying
their energy costs and to develop measures to reduce residential
energy use in this state.
(2) The purpose of this section is to do all of the following:
(a) To protect the health and safety of the citizens of this
state by assisting low income customers in maintaining life-
sustaining electric and natural gas service.
(b) To provide payment assistance to low income customers for
electric and natural gas service.
(c) To help certain low income customers conserve energy and
reduce residential utility bills.
(d) To ensure that low income energy assistance and efficiency
programs receiving funds under this section are operated in a cost-
effective and efficient manner.
(3) The low income energy assistance and efficiency program is
created within the commission and shall be funded by the fund
created under subsection (4). Within 90 days of the effective date
of the amendatory act that added this section, the commission by
order shall terminate the low income and energy efficiency fund
created under section 10d(7), vacate any portion of a commission
order continuing the funding of that program, and transfer any
balances in the fund to the fund created under subsection (4). The
commission shall provide low income energy assistance and
efficiency only as provided under this section.
(4) The low income energy assistance and efficiency fund is
created in the state treasury and shall be administered by the
commission as provided under this section. The money collected
through the surcharge authorized under subsection (5) shall be
deposited with the state treasurer and credited to the fund. An
account shall be created inside the fund for each utility imposing
a surcharge under this section. All money collected from a
particular utility's customers under this section shall be
deposited into that utility's account. The state treasurer may
receive money or other assets from any source for deposit into the
fund. The state treasurer shall direct the investments of the fund
and credit to the fund interest and earnings from fund investments.
No money shall be expended from the funds except as specifically
authorized by this section. Money in the fund at the close of the
fiscal year shall remain in the fund and not lapse to the general
fund.
(5) The commission shall, after notice and hearing, annually
approve a low income energy assistance and efficiency factor that
shall be a nonbypassable surcharge payable by every customer
receiving a distribution service from a natural gas or electric
utility with rates regulated by the commission. In establishing the
surcharge, the commission shall consider the amount of alternative
funds or sources of funding for energy assistance and energy
efficiency. In no event shall the surcharge exceed $1.00 per month,
per billing meter or customer location for residential and
commercial customers, and shall not exceed $20.00 per month, per
billing meter or customer location for industrial customers. A
residential customer shall not be assessed a surcharge for more
than 2 meters. Customers purchasing energy from suppliers other
than the local electric or natural gas utility shall pay an amount
equal to what they would have paid had they been a full service
customer of the local utility. Customers who receive electric and
natural gas service at a single location shall pay 1 surcharge for
the electric service and 1 surcharge for the natural gas service.
Only money actually collected shall be used to calculate the amount
of a utility’s surcharge revenue under this section.
(6) The surcharge for each utility under this section shall be
set at a level designed to collect an annual amount not exceeding
the lesser of a reasonable amount determined by the commission to
be required in the utility's service area for low income and energy
efficiency assistance or the amount allowed under subsection (5).
(7) The commission may authorize the state treasurer to make
disbursements from the fund through a competitive grant process to
any governmental or nongovernmental entity that provides assistance
to electric or natural gas utility customers. The commission shall
issue requests for proposals and permit at least 30 days for
responses. After responses are received and made available to the
public, including by posting them on the commission’s website, the
commission shall hold a public hearing to take comment on the
various proposals. As a condition to receiving a grant, the
commission shall require all of the following:
(a) A written grant proposal providing detailed information
regarding the grantee and the services or assistance the grantee
proposes to offer.
(b) Written quarterly progress reports and a final report at
the end of the grant funding submitted to the commission.
(c) That the grantee maintain records of expenditures and
submit monthly financial reports to the commission.
(d) That the grantee be subject to an audit by the commission
staff or as otherwise designated by the commission.
(e) For grantees who receive $100,000.00 or more in any 12-
month period, that the grantee submit an audited financial report
prepared by an independent certified public accountant for the 12-
month period to the commission.
(f) To the extent possible, that the funds received under the
grant program that were collected by a particular utility shall
only be used to provide energy assistance and energy efficiency to
low income customers for the services provided by that same
utility.
(8) A grant awarded under this section is supplemental to
existing federal funding and shall not be awarded to a grantee if
it will result in the redirection of any federal funds to a
nonparticipating utility.
(9) In awarding a grant, the commission shall consider the
amount of funds allocated to the proposed purpose and take into
account the preexisting sources of funding for that purpose. The
commission should give priority to any use of funds as leverage for
any other additional governmental or private resources that provide
low income energy assistance and efficiency. The commission shall
consider the benefits received relative to the cost of the
proposal. Proposals may be funded for 1 to 3 years. Grantees shall
not use more than 10% of the grant funds received through this
program for planning and administering of the funds by grantees.
(10) Not less than 90% of the funds granted under this section
shall be disbursed for direct energy assistance. Not more than 10%
of the funds granted can be used for energy efficiency.
(11) Grants for low income energy assistance shall be used
only to provide bill payment assistance to low income electric and
natural gas utility customers. Grants for energy efficiency grants
shall target, to the extent practicable, to high-cost, high-volume
use structures occupied by customers eligible for the low income
energy assistance program.
(12) The commission shall issue an annual report to the
legislature and the governor on or before May 1 of each year
regarding the effectiveness and use of the fund. The attorney
general shall have full access to all of the commission’s documents
pertaining to the administration of the fund.
(13) The commission shall maintain detailed records of its
activities under this section. Not less than every 2 years, the
auditor general, or a certified public accountant appointed by the
auditor general, shall conduct and remit to the legislature an
audit of the fund.
(14) On or after the effective date of the amendatory act that
added this section, the commission shall not approve a special
contract between an electric or natural gas utility with rates
regulated by the commission and a customer that does not include
the applicable low income energy assistance and efficiency
surcharge determined under subsection (5).
(15) The commission shall conduct audits and investigations to
ensure that funds are disbursed from the fund as required under
this section and by law. If an audit or investigation is conducted
under this subsection, a report shall be filed with the commission
with a copy sent to the grantee and the attorney general. If the
report discloses activity for which a criminal penalty is provided
by law, the attorney general, or upon his or her direction the
prosecuting attorney, shall institute criminal proceedings against
the grantee. The attorney general or the prosecuting attorney shall
also institute civil action in any court of competent jurisdiction
for the recovery of any funds that have been illegally expended or
not accounted for.
(16) This section does not apply to an investor owned electric
or natural gas utility with not more than 100,000 customers or a
cooperative electric utility in this state, unless the investor
owned electric or natural gas or cooperative electric utility
proposes a surcharge in a general rate case or in an application
filed with the commission. A proposed surcharge under this
subsection shall include a plan for the allocation and distribution
of the funds collected based on the utility's service area. The
commission shall only have the authority to either approve or deny
a plan proposed under this subsection.
(17) As used in this section:
(a) "Energy assistance" means financial support provided to an
electric or natural gas utility customer to prevent imminent shut-
off, as demonstrated on a disconnect notice or significant balance
due, or the need for restoration of service. Payment of electric or
natural gas bills is targeted to low income customers who
accumulate arrears during the heating season, or to provide
electricity or natural gas service to a household having a member
who is elderly, disabled, or a young child where the loss of
electric service would be especially dangerous to health, or to
provide electricity to a household where the loss of electric
service would make the operation of necessary medical or life-
support equipment impossible or impractical.
(b) "Energy efficiency" means energy education or measures,
including weatherization, with the goal and effect of reducing
energy use by residential customers.
(c) "Fund" means the low income energy assistance and
efficiency fund created under subsection (4).
(d) "Low income" means a household in which 1 of the following
exists:
(i) A household with a total income that does not exceed the
greater of the amount equal to 150% of the federal poverty
guidelines as published by the United States department of health
and human services or an amount equal to 60% of the state median
income.
(ii) One or more individuals in the household receive
assistance under any of the following:
(A) Part A of title IV of the social security act, 42 USC 601
to 619.
(B) Supplemental security income payments under title XVI of
the social security act, 42 USC 1381 to 1385.
(C) Food stamps under the food stamp act of 1977, 7 USC 2011
to 2036.
(D) Payment under section 38 USC 1315, 38 USC 521, or 38 USC
542 or under section 306 of the veterans' and survivors' pension
improvement act of 1978, 38 USC 1521.
(e) "Natural gas utility" means a natural gas company
providing local distribution service to retail customers, subject
to the jurisdiction of the commission under section 6a.
(f) "Utility" means a separate, combined, or affiliated
electric or natural gas company.
(18) This section is repealed effective July 1, 2009.
Enacting section 1. Section 6c of 1939 PA 3, MCL 460.6c, is
repealed.