July 18, 2012, Introduced by Senators CASPERSON and WALKER 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 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
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,"
by amending section 6a (MCL 460.6a), as amended by 2008 PA 286.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 6a. (1) A gas or electric utility shall not increase its
rates and charges or alter, change, or amend any rate or rate
schedules, the effect of which will be to increase the cost of
services to its customers, without first receiving commission
approval as provided in this section. The utility shall place in
evidence facts relied upon to support the utility's petition or
application to increase its rates and charges, or to alter, change,
or amend any rate or rate schedules. The commission shall require
notice to be given to all interested parties within the service
area to be affected, and all interested parties shall have a
reasonable opportunity for a full and complete hearing. A utility
may use projected costs and revenues for a future consecutive 12-
month period in developing its requested rates and charges. The
commission shall notify the utility within 30 days of filing,
whether the utility's petition or application is complete. A
petition or application is considered complete if it complies with
the rate application filing forms and instructions adopted under
subsection (6). A petition or application pending before the
commission
prior to before the adoption of filing forms and
instructions
pursuant to under subsection (6) shall be evaluated
based upon the filing requirements in effect at the time the
petition or application was filed. If the application is not
complete, the commission shall notify the utility of all
information necessary to make that filing complete. If the
commission has not notified the utility within 30 days of whether
the utility's petition or application is complete, the application
is considered complete. If the commission has not issued an order
within 180 days of the filing of a complete application, the
utility may implement up to the amount of the proposed annual rate
request through equal percentage increases or decreases applied to
all base rates. For a petition or application pending before the
commission
prior to the effective date of the amendatory act that
added
this sentence, before October
6, 2008, the 180-day period
commences
on the effective date of the amendatory act that added
this
sentence. October 6, 2008. If the utility uses projected costs
and revenues for a future period in developing its requested rates
and charges, the utility may not implement the equal percentage
increases
or decreases prior to before
the calendar date
corresponding to the start of the projected 12-month period. For
good cause, the commission may issue a temporary order preventing
or delaying a utility from implementing its proposed rates or
charges. If a utility implements increased rates or charges under
this subsection before the commission issues a final order, that
utility shall refund to customers, with interest, any portion of
the total revenues collected through application of the equal
percentage increase that exceed the total that would have been
produced by the rates or charges subsequently ordered by the
commission in its final order. The commission shall allocate any
refund required by this section among primary customers based upon
their pro rata share of the total revenue collected through the
applicable increase, and among secondary and residential customers
in a manner to be determined by the commission. The rate of
interest for refunds shall equal 5% plus the London interbank
offered rate (LIBOR) for the appropriate time period. For any
portion of the refund which, exclusive of interest, exceeds 25% of
the annual revenue increase awarded by the commission in its final
order, the rate of interest shall be the authorized rate of return
on the common stock of the utility during the appropriate period.
Any refund or interest awarded under this subsection shall not be
included, in whole or in part, in any application for a rate
increase by a utility. Nothing in this section impairs the
commission's ability to issue a show cause order as part of its
rate-making authority. An alteration or amendment in rates or rate
schedules applied for by a public utility that will not result in
an increase in the cost of service to its customers may be
authorized and approved without notice or hearing. There shall be
no increase in rates based upon changes in cost of fuel or
purchased gas unless notice has been given within the service area
to be affected, and there has been an opportunity for a full and
complete hearing on the cost of fuel or purchased gas. The rates
charged by any utility pursuant to an automatic fuel or purchased
gas adjustment clause shall not be altered, changed, or amended
unless notice has been given within the service area to be
affected, and there has been an opportunity for a full and complete
hearing on the cost of the fuel or purchased gas.
(2) The commission shall adopt rules and procedures for the
filing, investigation, and hearing of petitions or applications to
increase or decrease utility rates and charges as the commission
finds necessary or appropriate to enable it to reach a final
decision with respect to petitions or applications within a period
of 12 months from the filing of the complete petitions or
applications. The commission shall not authorize or approve
adjustment clauses that operate without notice and an opportunity
for
a full and complete hearing, and all such clauses shall be are
abolished. The commission may hold a full and complete hearing to
determine the cost of fuel, purchased gas, or purchased power
separately from a full and complete hearing on a general rate case
and may be held concurrently with the general rate case. The
commission shall authorize a utility to recover the cost of fuel,
purchased gas, or purchased power only to the extent that the
purchases
are reasonable and prudent. As used in this section:
(a)
"Full and complete hearing" means a hearing that provides
interested
parties a reasonable opportunity to present and cross-
examine
evidence and present arguments relevant to the specific
element
or elements of the request that are the subject of the
hearing.
(b)
"General rate case" means a proceeding initiated by a
utility
in an application filed with the commission that alleges a
revenue
deficiency and requests an increase in the schedule of
rates
or charges based on the utility's total cost of providing
service.
(3) Except as otherwise provided in this subsection, if the
commission fails to reach a final decision with respect to a
completed petition or application to increase or decrease utility
rates within the 12-month period following the filing of the
completed petition or application, the petition or application is
considered approved. If a utility makes any significant amendment
to its filing, the commission has an additional 12 months from the
date of the amendment to reach a final decision on the petition or
application. If the utility files for an extension of time, the
commission shall extend the 12-month period by the amount of
additional time requested by the utility.
(4) A utility shall not file a general rate case application
for an increase in rates earlier than 12 months after the date of
the filing of a complete prior general rate case application. A
utility may not file a new general rate case application until the
commission has issued a final order on a prior general rate case or
until the rates are approved under subsection (3).
(5) The commission shall, if requested by a gas utility,
establish load retention transportation rate schedules or approve
gas transportation contracts as required for the purpose of
retaining industrial or commercial customers whose individual
annual transportation volumes exceed 500,000 decatherms on the gas
utility's system. The commission shall approve these rate schedules
or approve transportation contracts entered into by the utility in
good faith if the industrial or commercial customer has the
installed capability to use an alternative fuel or otherwise has a
viable alternative to receiving natural gas transportation service
from the utility, the customer can obtain the alternative fuel or
gas transportation from an alternative source at a price which
would cause them to cease using the gas utility's system, and the
customer, as a result of their use of the system and receipt of
transportation service, makes a significant contribution to the
utility's fixed costs. The commission shall adopt accounting and
rate-making policies to ensure that the discounts associated with
the transportation rate schedules and contracts are recovered by
the gas utility through charges applicable to other customers if
the incremental costs related to the discounts are no greater than
the costs that would be passed on to those customers as the result
of a loss of the industrial or commercial customer's contribution
to a utility's fixed costs.
(6)
Within 90 days of the effective date of the amendatory act
that
added this subsection, By
January 4, 2009, the commission
shall adopt standard rate application filing forms and instructions
for use in all general rate cases filed by utilities whose rates
are regulated by the commission. For cooperative electric utilities
whose rates are regulated by the commission, in addition to rate
applications filed under this section, the commission shall
continue to allow for rate filings based on the cooperative's times
interest earned ratio. The commission may, in its discretion,
modify the standard rate application forms and instructions adopted
under this subsection.
(7) If, on or before January 1, 2008, a merchant plant entered
into a contract with an initial term of 20 years or more to sell
electricity to an electric utility whose rates are regulated by the
commission with 1,000,000 or more retail customers in this state
and
if, prior to before January 1, 2008, the merchant plant
generated electricity under that contract, in whole or in part,
from wood or solid wood wastes, then the merchant plant shall, upon
petition by the merchant plant, and subject to the limitation set
forth in subsection (8), recover the amount, if any, by which the
merchant plant's reasonably and prudently incurred actual fuel and
variable operation and maintenance costs exceed the amount that the
merchant plant is paid under the contract for those costs. This
subsection does not apply to landfill gas plants, hydro plants,
municipal solid waste plants, or to merchant plants engaged in
litigation against an electric utility seeking higher payments for
power delivered pursuant to contract.
(8) The total aggregate additional amounts recoverable by
merchant
plants pursuant to under subsection (7) in excess of the
amounts paid under the contracts shall not exceed $1,000,000.00 per
month for each affected electric utility. The $1,000,000.00 per
month limit specified in this subsection shall be reviewed by the
commission upon petition of the merchant plant filed no more than
once per year and may be adjusted if the commission finds that the
eligible merchant plants reasonably and prudently incurred actual
fuel and variable operation and maintenance costs exceed the amount
that those merchant plants are paid under the contract by more than
$1,000,000.00 per month. The annual amount of the adjustments shall
not exceed a rate equal to the United States consumer price index.
An adjustment shall not be made by the commission unless each
affected merchant plant files a petition with the commission. As
used in this subsection, "United States consumer price index" means
the United States consumer price index for all urban consumers as
defined and reported by the United States department of labor,
bureau of labor statistics. If the total aggregate amount by which
the eligible merchant plants reasonably and prudently incurred
actual fuel and variable operation and maintenance costs determined
by the commission exceed the amount that the merchant plants are
paid under the contract by more than $1,000,000.00 per month, the
commission shall allocate the additional $1,000,000.00 per month
payment among the eligible merchant plants based upon the
relationship of excess costs among the eligible merchant plants.
The $1,000,000.00 limit specified in this subsection, as adjusted,
shall not apply with respect to actual fuel and variable operation
and maintenance costs that are incurred due to changes in federal
or state environmental laws or regulations that are implemented
after
the effective date of the amendatory act that added this
subsection.
October 6, 2008. The $1,000,000.00 per month payment
limit under this subsection shall not apply to merchant plants
eligible under subsection (7) whose electricity is purchased by a
utility that is using wood or wood waste or fuels derived from
those materials for fuel in their power plants.
(9) The commission shall issue orders to permit the recovery
authorized under subsections (7) and (8) upon petition of the
merchant
plant. The merchant plant shall is
not be required to
alter or amend the existing contract with the electric utility in
order to obtain the recovery under subsections (7) and (8). The
commission shall permit or require the electric utility whose rates
are regulated by the commission to recover from its ratepayers all
fuel and variable operation and maintenance costs that the electric
utility is required to pay to the merchant plant as reasonably and
prudently incurred costs.
(10) If an electric utility in the Upper Peninsula of this
state leases with an option to purchase an electric generation
facility from an affiliated entity under a law expressly
authorizing public utility affiliate leased generation contracts,
the commission shall not include in that electric utility's rates
any costs in excess of the costs that would have been included in
rates if the utility owned, rather than leased, the electric
generation facility. This subsection does not apply if the
affiliated entity is more than 1/3 owned by a nonprofit or
governmental entity.
(11) As used in this section:
(a) "Full and complete hearing" means a hearing that provides
interested parties a reasonable opportunity to present and cross-
examine evidence and present arguments relevant to the specific
element or elements of the request that are the subject of the
hearing.
(b) "General rate case" means a proceeding initiated by a
utility in an application filed with the commission that alleges a
revenue deficiency and requests an increase in the schedule of
rates or charges based on the utility's total cost of providing
service.