January 22, 2009, Introduced by Rep. Valentine and referred to the Committee on Energy and Technology.
A bill to amend 2008 PA 295, entitled
"Clean, renewable, and efficient energy act,"
by amending sections 3, 5, 9, and 13 (MCL 460.1003, 460.1005,
460.1009, and 460.1013) and by adding section 28.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 3. As used in this act:
(a) "Advanced cleaner energy" means electricity generated
using an advanced cleaner energy system.
(b) "Advanced cleaner energy credit" means a credit certified
under section 43 that represents generated advanced cleaner energy.
(c) "Advanced cleaner energy system" means any of the
following:
(i) A gasification facility.
(ii) An industrial cogeneration facility.
(iii) A coal-fired electric generating facility if 85% or more
of the carbon dioxide emissions are captured and permanently
geologically sequestered.
(iv) An electric generating facility or system that uses
technologies
not in commercial operation on the effective date of
this
act October 6, 2008.
(d) "Affiliated transmission company" means that term as
defined in section 2 of the electric transmission line
certification act, 1995 PA 30, MCL 460.562.
(e) "Applicable regional transmission organization" means a
nonprofit, member-based organization governed by an independent
board of directors that serves as the federal energy regulatory
commission-approved
commission approved regional transmission
organization with oversight responsibility for the region that
includes the provider's service territory.
(f) "Biomass" means any organic matter that is not derived
from fossil fuels, that can be converted to usable fuel for the
production of energy, and that replenishes over a human, not a
geological, time frame, including, but not limited to, all of the
following:
(i) Agricultural crops and crop wastes.
(ii) Short-rotation energy crops.
(iii) Herbaceous plants.
(iv) Trees and wood, but only if derived from sustainably
managed forests or procurement systems, as defined in section 261c
of the management and budget act, 1984 PA 431, MCL 18.1261c.
(v) Paper and pulp products.
(vi) Precommercial wood thinning waste, brush, or yard waste.
(vii) Wood wastes and residues from the processing of wood
products or paper.
(viii) Animal wastes.
(ix) Wastewater sludge or sewage.
(x) Aquatic plants.
(xi) Food production and processing waste.
(xii) Organic by-products from the production of biofuels.
(g) "Board" means the wind energy resource zone board created
under section 143.
(h) "Carbon dioxide emissions benefits" means that the carbon
dioxide emissions per megawatt hour of electricity generated by the
advanced cleaner energy system are at least 85% less or, for an
integrated gasification combined cycle facility, 70% less than the
average carbon dioxide emissions per megawatt hour of electricity
generated from all coal-fired electric generating facilities
operating in this state on January 1, 2008.
(i) "C-BED tariff" means a community-based energy development
tariff approved under section 28(2).
(j) (i)
"Commission" means the Michigan
public service
commission.
(k) "Community-based energy development project" or "C-BED
project" means a new renewable energy system that meets all of the
following requirements:
(i) If the renewable energy system is a wind energy conversion
system, no single qualifying owner owns more than 15% of the wind
energy conversion system unless 1 or more of the following
requirements are met:
(A) The wind energy conversion system does not include more
than 2 turbines.
(B) No qualifying owner that owns more than 15% of the wind
energy conversion system is a municipally owned electric utility.
(ii) Under a power purchase agreement over the life of the
renewable energy system, at least 51% of the gross revenues will
accrue to qualifying owners and other local entities.
(iii) The renewable energy system is approved by a resolution
adopted by the county board of commissioners of each county in
which the project is to be located or, if the project is to be
located within the boundaries of an Indian reservation, by the
tribal council for that reservation.
(l) (j)
"Customer meter" means an
electric meter of a
provider's retail customer. Customer meter does not include a
municipal water pumping meter or additional meters at a single site
that were installed specifically to support interruptible air
conditioning, interruptible water heating, net metering, or time-
of-day tariffs.
Sec. 5. As used in this act:
(a)
"Electric provider", subject to sections 21(1), 23(1), and
25(1), and 28, means any of the following:
(i) Any person or entity that is regulated by the commission
for the purpose of selling electricity to retail customers in this
state.
(ii) A municipally-owned electric utility in this state.
(iii) A cooperative electric utility in this state.
(iv) Except as used in subpart B of part 2, an alternative
electric supplier licensed under section 10a of 1939 PA 3, MCL
460.10a.
(b)
"Eligible electric generator" means that a methane
digester or renewable energy system with a generation capacity
limited to the customer's electric need and that does not exceed
the following:
(i) For a renewable energy system, 150 kilowatts of aggregate
generation at a single site.
(ii) For a methane digester, 550 kilowatts of aggregate
generation at a single site.
(c) "Energy conservation" means the reduction of customer
energy use through the installation of measures or changes in
energy usage behavior. Energy conservation does not include the use
of advanced cleaner energy systems.
(d) "Energy efficiency" means a decrease in customer
consumption of electricity or natural gas achieved through measures
or programs that target customer behavior, equipment, devices, or
materials without reducing the quality of energy services.
(e) "Energy optimization", subject to subdivision (f), means
all of the following:
(i) Energy efficiency.
(ii) Load management, to the extent that the load management
reduces overall energy usage.
(iii) Energy conservation, but only to the extent that the
decreases in the consumption of electricity produced by energy
conservation are objectively measurable and attributable to an
energy optimization plan.
(f) Energy optimization does not include electric provider
infrastructure projects that are approved for cost recovery by the
commission other than as provided in this act.
(g) "Energy optimization credit" means a credit certified
pursuant to section 87 that represents achieved energy
optimization.
(h) "Energy optimization plan" or "EO plan" means a plan
approved
under section 71 73.
(i) "Energy optimization standard" means the minimum energy
savings required to be achieved under section 77.
(j) "Energy star" means the voluntary partnership among the
United States department of energy, the United States environmental
protection agency, product manufacturers, local utilities, and
retailers to help promote energy efficient products by labeling
with the energy star logo, to educate consumers about the benefits
of energy efficiency, and to help promote energy efficiency in
buildings by benchmarking and rating energy performance.
(k) "Federal approval" means approval by the applicable
regional transmission organization or other federal energy
regulatory commission approved transmission planning process of a
transmission project that includes the transmission line. Federal
approval may be evidenced in any of the following manners:
(i) The proposed transmission line is part of a transmission
project included in the applicable regional transmission
organization's board-approved transmission expansion plan.
(ii) The applicable regional transmission organization has
informed the electric utility, affiliated transmission company, or
independent transmission company that a transmission project
submitted for an out-of-cycle project review has been approved by
the applicable regional transmission organization, and the approved
transmission project includes the proposed transmission line.
(iii) If, after the effective date of this act October 6, 2008,
the applicable regional transmission organization utilizes another
approval process for transmission projects proposed by an electric
utility, affiliated transmission company, or independent
transmission company, the proposed transmission line is included in
a transmission project approved by the applicable regional
transmission organization through the approval process developed
after
the effective date of this act October 6, 2008.
(iv) Any other federal energy regulatory commission approved
transmission planning process for a transmission project.
Sec. 9. As used in this act:
(a) "Natural gas provider" means an investor-owned business
engaged in the sale and distribution of natural gas within this
state whose rates are regulated by the commission. However, as used
in subpart B of part 2, natural gas provider does not include an
alternative gas supplier licensed under section 9b of 1939 PA 3,
MCL 460.9b.
(b) "Net present value rate" means a rate equal to the net
present value of the nominal payments to a C-BED project divided by
the total expected energy production of the C-BED project over the
life of its power purchase agreement.
(c) "Nonqualifying owner" means a person who is not a
qualifying owner.
(d) (b)
"Plasma arc gasification
facility" means a
gasification facility that uses a plasma torch to break substances
down into their molecular structures.
(e) (c)
"Provider" means an
electric provider or a natural gas
provider.
(f) (d)
"PURPA" means the public
utility regulatory policies
act of 1978, Public Law 95-617.
(g) "Qualifying owner" means any of the following:
(i) A resident of this state.
(ii) A limited liability company that is organized under the
Michigan limited liability company act, 1993 PA 23, MCL 450.4101 to
450.5200, and whose members are all residents of this state.
(iii) A nonprofit corporation organized under the nonprofit
corporation act, 1982 PA 162, MCL 450.2101 to 450.3192.
(iv) A cooperative corporation organized under sections 98 to
109 of 1931 PA 327, MCL 450.98 to 450.109, or chapter 11 of the
nonprofit corporation act, 1982 PA 162, MCL 450.3100 to 450.3192,
including a cooperative electric utility.
(v) A public or private institution of higher education.
(vi) A county, city, village, township, or school district or
an authority formed by 1 or any combination of these, or any other
local or regional governmental organization such as a board or
commission or a municipally owned electric utility.
(vii) A tribal council.
(h) (e)
"Qualifying small power
production facility" means
that term as defined in 16 USC 824a-3.
Sec. 13. As used in this act:
(a) "Site" means a contiguous site, regardless of the number
of meters at that site. A site that would be contiguous but for the
presence of a street, road, or highway shall be considered to be
contiguous for the purposes of this subdivision.
(b) "Standard reliability criteria" means both of the
following requirements with respect to the generation of
electricity:
(i) Can be safely integrated into and operated within the
electric provider's grid without causing any adverse or unsafe
consequences.
(ii) Is consistent with the electric provider's resource needs.
(c) (b)
"Transmission line" means
all structures, equipment,
and real property necessary to transfer electricity at system bulk
supply voltage of 100 kilovolts or more.
(d) (c)
"True net metering" means
a utility billing method
that applies the full retail rate to the net of the bidirectional
flow of kilowatt hours across the customer interconnection with the
utility distribution system, during a billing period or time-of-use
pricing period. A negative net metered quantity during the billing
period or during each time-of-use pricing period within the billing
period reflects net excess generation for which the customer is
entitled
to receive credit under section 177(4) 177.
(e) (d)
"Utility system resource cost
test" means a standard
that is met for an investment in energy optimization if, on a life
cycle basis, the total avoided supply-side costs to the provider,
including representative values for electricity or natural gas
supply, transmission, distribution, and other associated costs, are
greater than the total costs to the provider of administering and
delivering the energy optimization program, including net costs for
any provider incentives paid by customers and capitalized costs
recovered under section 89.
(f) (e)
"Wind energy conversion
system" means a renewable
energy system that uses 1 or more wind turbines to generate
electricity and has a nameplate capacity of 100 kilowatts or more.
(g) (f)
"Wind energy resource
zone" or "wind zone" means an
area designated by the commission under section 147.
Sec. 28. (1) As used in this section, "electric provider" does
not include an alternative electric supplier.
(2) By December 1, 2009, each electric provider whose rates
are regulated by the commission shall file for commission approval
a proposed community-based energy development tariff consistent
with subsection (4). Within 90 days after the proposed tariff is
filed, the commission shall issue an order approving a community-
based energy development tariff for the electric provider.
(3) Within 90 days after the first commission approval order
of a C-BED tariff filed under subsection (2), each electric
provider whose rates are not regulated by the commission shall
adopt a community-based energy development tariff consistent with
subsection (4).
(4) A C-BED tariff shall have a rate schedule that allows for
a net present value rate over the duration of a power purchase
agreement with a life of 20 years or more. The C-BED tariff shall
provide for a rate that is higher in the first 10 years of the
power purchase agreement than in the last 10 years. The discount
rate required to calculate the net present value shall be the
electric provider's normal discount rate used for its other
business purposes.
(5) The commission shall consider and may implement mechanisms
to encourage the aggregation of community-based energy development
projects. The commission shall do all of the following:
(a) Require qualifying owners of C-BED projects to provide
sufficient security to secure performance under a power purchase
agreement.
(b) Prohibit the transfer of a C-BED project to a
nonqualifying owner during the initial 20 years of a power purchase
agreement.
(6) An electric provider that plans to construct or purchase
electricity from a new renewable energy system under its renewable
energy plan shall take reasonable steps to determine whether a
power purchase agreement with 1 or more C-BED projects would meet
the electric provider's cost and reliability requirements, applying
standard reliability criteria, to fulfill some or all of the
identified need at minimal impact to customer rates. This section
does not obligate an electric provider to enter into a power
purchase agreement under a C-BED tariff.
(7) Each electric provider shall periodically file with the
commission under rules adopted by the commission a description of
its efforts to purchase energy from C-BED projects, including a
list of C-BED projects under contract and the amount of energy
purchased from each C-BED project. The commission shall consider
the expenditures of an electric provider to purchase energy from C-
BED projects when evaluating under section 31 the provider's good-
faith effort to spend the full amount of its incremental costs of
compliance.
(8) To the extent feasible, a developer of a C-BED project
shall provide, in writing, an opportunity to invest in the C-BED
project to each property owner on whose property is constructed a
high-voltage transmission line that will transmit to market the
energy generated by the C-BED project. This subsection does not
apply unless the property is located and the owner resides in the
county where the C-BED project is located.
(9) A developer of a C-BED project and an electric provider
shall negotiate the rate and other terms for any power purchase
agreement entered into under subsection (6) consistent with the C-
BED tariff. At the discretion of the developer of a C-BED project,
the developer and an electric provider may negotiate a power
purchase agreement with terms different from the C-BED tariff.
(10) A qualifying owner, or any combination of qualifying
owners, may develop a joint venture renewable energy system with a
nonqualifying owner. However, the terms of the C-BED tariff of the
electric provider that purchases energy from the C-BED project only
apply to the portion of the total energy production of the C-BED
project that is proportional to the equity share of the C-BED
project owned by the qualifying owners.
(11) A project that is operating under a power purchase
agreement under a C-BED tariff is not eligible for net metering
under part 5.
(12) A power purchase agreement for a C-BED project entered
into under subsection (6) by an electric provider whose rates are
regulated by the commission does not take effect until approved by
the commission. The commission shall provide the electric
provider's ratepayers an opportunity to address the reasonableness
of the proposed power purchase agreement. Unless a party objects to
a power purchase agreement within 30 days of submission of the
agreement to the commission, the agreement shall be considered
approved.
(13) An electric provider or a person providing electric
service to wholesale customers in this state may, subject to the
limits specified in this act, participate in a C-BED project,
including as an owner or equity partner or by providing technical
or financial assistance.