May 8, 2014, Introduced by Reps. Nesbitt, MacMaster, LaVoy, Dianda and Yonker 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,"
(MCL 460.1 to 460.11) by adding section 9u.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 9u. (1) A natural gas utility may file an infrastructure
expansion investment plan with the commission to provide the
natural gas infrastructure necessary to serve unserved or
underserved areas. An infrastructure expansion investment plan
filed under this section shall include all of the following:
(a) A 1-year plan that projects infrastructure investment
related to infrastructure expansion into unserved or underserved
areas.
(b) A proposed infrastructure expansion recovery mechanism
that provides for the recovery of the incremental revenue
requirement associated with the infrastructure expansion
investment.
(c) All expected costs and benefits associated with proposed
investments, demonstrating that those investments will augment or
enhance any customer attachment programs authorized by the
commission and support the natural gas utility's ability to reach
unserved or underserved areas or to provide adequate capacity for
demand growth in currently unserved or underserved areas.
(d) An investment projection of natural gas infrastructure
expansion investment up to 5 years in duration proposed to be
recovered in future consecutive infrastructure expansion recovery
mechanisms.
(2) Within 180 days after the filing of an infrastructure
expansion investment plan under subsection (1), the commission
shall evaluate the reasonableness and prudence of the plan,
including any proposed infrastructure expansion recovery mechanism,
and shall issue an order that approves, disapproves, or amends the
infrastructure expansion investment plan and the infrastructure
expansion recovery mechanism. The commission shall conduct the
review of a natural gas utility's plan as a contested hearing
pursuant to chapter 4 of the administrative procedures act of 1969,
1969 PA 306, MCL 24.271 to 24.287. In issuing an order under this
subsection, the commission shall also give consideration to and
make all necessary determinations in order to meet the requirements
of 1929 PA 69, MCL 460.501 to 460.506.
(3) A natural gas utility may implement charges pursuant to an
infrastructure expansion recovery mechanism in the manner approved
in an infrastructure expansion investment plan. A natural gas
utility whose infrastructure expansion investment plan is approved
by the commission under subsection (2) shall record incremental
rate base items to ensure the ability to illustrate incremental
rate base totals on a monthly basis, using specially designated
subaccounts when possible.
(4) In its final order in a proceeding conducted under
subsection (2), the commission shall evaluate the decisions
underlying the investment projection filed by a natural gas utility
as part of the infrastructure expansion investment plan. The
commission may also indicate any cost items in the investment
projection that, on the basis of present evidence, the commission
would be unlikely to permit the natural gas utility to recover from
its customers in rates, rate schedules, or infrastructure expansion
investment plans established in the future.
(5) A natural gas utility whose infrastructure expansion
investment plan and infrastructure expansion recovery mechanism is
approved under subsection (2) shall annually file with the
commission an infrastructure expansion recovery mechanism
reconciliation. Within 180 days from the date the natural gas
utility files a reconciliation under this subsection, the
commission shall review the filing in a contested hearing conducted
pursuant to chapter 4 of the administrative procedures act of 1969,
1969 PA 306, MCL 24.271 to 24.287. In a reconciliation under this
subsection, the commission shall review the implementation of the
infrastructure expansion investment plan to determine if the
natural gas utility extended service to the unserved or underserved
areas identified in the plan and compare the actual investment made
by the natural gas utility with the investment approved in the plan
under subsection (2). The commission shall adjust the
infrastructure investment recovery mechanism to reflect the actual
levels of investment made by the natural gas utility. However, if
the actual amount of investment exceeds the amount approved in the
plan, a natural gas utility may recover the excess costs if the
natural gas utility demonstrates the reasonableness and prudence of
those costs in a subsequent proceeding conducted under subsection
(2) or as part of a general gas rate application.
(6) This section does not do any of the following:
(a) Prohibit a natural gas utility from filing a general gas
rate application.
(b) Inhibit the commission's authority to approve rate
adjustment mechanisms for natural gas or electric utilities or
utility customer attachment programs.
(c) Prohibit the commission from approving an infrastructure
expansion investment plan and infrastructure expansion recovery
mechanism as part of a general gas rate application.
(7) The commission may promulgate administrative rules
pursuant to the administrative procedures act of 1969, 1969 PA 306,
MCL 24.201 to 24.328, for the processing of any proceeding required
under this section.
(8) As used in this section:
(a) "Incremental rate base" means the level of rate base above
the higher of either the rate base level reflected in the natural
gas utility's most recent general gas rate case or the level of
rate base recorded at the year ending before the start of the plan
year.
(b) "Incremental revenue requirement" means the incremental
revenue required to recover the costs associated with
infrastructure expansion investment that consists of the following:
(i) The rate of return on the incremental rate base, using the
rate of return approved by the commission in the most recent
general gas rate case for the natural gas utility.
(ii) The annual depreciation expense associated with the
incremental rate base.
(iii) The annual incremental property tax associated with the
incremental rate base.
(iv) Net of the incremental allowance for funds used during
construction.
(c) "Infrastructure expansion investment" means investment in
planning, developing, acquiring, and constructing any natural gas
pipeline or facilities, not including service lines, necessary to
the transmission and distribution of natural gas to an unserved or
underserved area.
(d) "Infrastructure expansion recovery mechanism" means the
element of rates to be charged for natural gas service to reflect
the incremental revenue requirement associated with an
infrastructure expansion investment plan approved under subsection
(2).
(e) "Natural gas utility" means an investor-owned business
engaged in the sale and distribution of natural gas in this state
whose rates are regulated by the commission.
(f) "Unserved or underserved area" means an area in this state
lacking adequate natural gas pipeline infrastructure to meet the
demand of existing or potential end-use customers.