April 26, 2016, Introduced by Senators SHIRKEY and STAMAS 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 the title and section 6s (MCL 460.6s), the title as
amended by 2005 PA 190 and section 6s as added by 2008 PA 286.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
TITLE
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 require the competitive procurement of electric capacity
and energy; 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.
Sec. 6s. (1) An electric utility that proposes to construct an
electric generation facility, make a significant investment in an
existing electric generation facility, purchase an existing
electric generation facility, or enter into a power purchase
agreement for the purchase of electric capacity for a period of 6
years or longer may submit an application to the commission seeking
a certificate of necessity for that construction, investment, or
purchase if that construction, investment, or purchase costs
$500,000,000.00
$100,000,000.00 or more and a portion of the costs
would be allocable to retail customers in this state. A significant
investment in an electric generation facility includes a group of
investments reasonably planned to be made over a multiple year
period
not to exceed 6 years for a the
singular purpose such as of
increasing the capacity of an existing electric generation plant.
The
commission shall not issue a certificate of necessity under
this
section for any environmental upgrades to existing electric
generation
facilities or for a renewable energy system.
(2) The commission may implement separate review criteria and
approval standards for electric utilities with less than 1,000,000
retail
customers who that seek a certificate of necessity for
projects
costing less than $500,000,000.00.$100,000,000.00.
(3) An electric utility submitting an application under this
section may request 1 or more of the following:
(a) A certificate of necessity that the power to be supplied
as a result of the proposed construction, investment, or purchase
is needed.
(b) A certificate of necessity that the size, fuel type, and
other design characteristics of the existing or proposed electric
generation facility or the terms of the power purchase agreement
represent the most reasonable and prudent means of meeting that
power need.
(c) A certificate of necessity that the price specified in the
power purchase agreement will be recovered in rates from the
electric utility's customers.
(d) A certificate of necessity that the estimated purchase or
capital costs of and the financing plan for the existing or
proposed electric generation facility, including, but not limited
to, the costs of siting and licensing a new facility and the
estimated cost of power from the new or proposed electric
generation facility, will be recoverable in rates from the electric
utility's customers subject to subsection (4)(c).
(4)
Within 270 days of after the filing of an application
under this section, the commission shall issue an order granting,
modifying, or denying the requested certificate of necessity for
the construction, investment, or purchase contained in the
application or alternative proposals submitted under subsection
(13) that best represent the most reasonable and prudent means of
meeting the power need. The commission shall hold a hearing on the
application and any alternative proposals submitted under
subsection (13). The hearing shall be conducted as a contested case
pursuant to chapter 4 of the administrative procedures act of 1969,
1969 PA 306, MCL 24.271 to 24.287. The commission shall allow
intervention
by interested persons. Reasonable A person submitting
an alternative proposal under subsection (13) has standing to
intervene as a party. The commission shall permit reasonable
discovery
shall be permitted before and during the hearing in order
to assist parties and interested persons in obtaining evidence
concerning the application or any alternative proposals submitted
under subsection (13), including, but not limited to, the
reasonableness and prudence of the construction, investment, or
purchase
for which the certificate of necessity has been requested.
proposed in the application or an alternative proposal submitted
under subsection (13). The commission shall grant the request for a
certificate of necessity for the construction, investment, or
purchase contained in the application as proposed or as modified,
alternative proposals submitted under subsection (13), or a
combination of both, that best represent the most reasonable and
prudent means of meeting the power need if it determines all of the
following:
(a) That the electric utility has demonstrated a need for the
power that would be supplied by the existing or proposed electric
generation facility or pursuant to the proposed power purchase
agreement through its approved integrated resource plan that
complies with subsection (11).
(b) The information supplied indicates that the existing or
proposed electric generation facility will comply with all
applicable state and federal environmental standards, laws, and
rules.
(c)
The For the construction,
investment, purchase, or
alternative proposals that represent the most reasonable and
prudent means of meeting the power need, the estimated cost of
power
from the existing or proposed electric generation facility or
the
price of power specified in the proposed power purchase
agreement
construction, investment,
purchase, or alternative
proposals is reasonable. The commission shall find that the cost is
reasonable if, in the construction or investment in a new or
existing facility, to the extent it is commercially practicable,
the estimated costs are the result of competitively bid
engineering, procurement, and construction contracts, or in a power
purchase agreement, the cost is the result of a competitive
solicitation or the inclusion of an alternative proposal in a
certificate of necessity under subsection (13)(d). Up to 150 days
after
an electric utility makes its initial filing, it the electric
utility
may file to update its cost estimates
if they those
estimates
have materially changed. No An electric utility may not
modify
any other aspect of the initial filing may
be modified
unless the electric utility withdraws and refiles the application.
is
withdrawn and refiled. A utility's
filing updating its cost
estimates does not extend the period for the commission to issue an
order granting or denying a certificate of necessity. An affiliate
of an electric utility that serves customers in this state and at
least 1 other state may participate in the competitive bidding to
provide engineering, procurement, and construction services to that
electric utility for a project covered by this section.
(d)
The existing or proposed electric generation facility or
proposed
power purchase agreement represents construction,
investment, purchase, or alternative proposals represent the most
reasonable
and prudent means of meeting the power need relative
compared to other resource options for meeting power demand,
including alternative proposals submitted under subsection (13),
energy efficiency programs, and electric transmission efficiencies.
(e) To the extent practicable, the construction or investment
in a new or existing facility in this state is completed using a
workforce composed of residents of this state as determined by the
commission. This subdivision does not apply to a facility that is
located in a county that lies on the border with another state.
(5)
The commission may shall consider any other costs or
information related to the costs associated with the power that
would be supplied by the existing or proposed electric generation
facility or pursuant to the proposed purchase agreement or
alternatives
to the proposal raised by intervening
parties.alternative proposals submitted under
subsection (13).
(6) In a certificate of necessity under this section, the
commission shall specify the costs approved for the construction of
or significant investment in the electric generation facility, the
price approved for the purchase of the existing electric generation
facility, or the price approved for the purchase of power pursuant
to the terms of the power purchase agreement. After approving a
certificate of necessity that includes an alternative proposal
submitted under subsection (13), the commission shall approve an
agreement between the electric utility and the party that submitted
the alternative proposal if the agreement contains provisions that
are not inconsistent with this section, including, but not limited
to, provisions allowing a party submitting the alternative proposal
to charge additional costs under the agreement for which the
electric utility seeks and has gained the commission's approval to
be included in the electric utility's rates under subsection (9).
(7)
The An electric utility shall annually file, or more
frequent if required by the commission, reports to the commission
regarding the status of any project for which a certificate of
necessity has been granted under subsection (4), including an
update concerning the cost and schedule of that project.
(8) If the commission modifies or denies any of the relief
requested by an electric utility, the electric utility may withdraw
its application or proceed with the proposed construction,
purchase, investment, or power purchase agreement without a
certificate and the assurances granted under this section.
(9) Once the electric generation facility or power purchase
agreement is considered used and useful or as otherwise provided in
subsection (12), the commission shall include in an electric
utility's retail rates all reasonable and prudent costs for an
electric generation facility or power purchase agreement for which
a certificate of necessity has been granted. The commission shall
not disallow recovery of costs an electric utility incurs in
constructing, investing in, or purchasing an electric generation
facility or in purchasing power pursuant to a power purchase
agreement for which a certificate of necessity has been granted, if
the costs do not exceed the costs approved by the commission in the
certificate. Once the electric generation facility or power
purchase agreement is considered used and useful or as otherwise
provided in subsection (12), the commission shall include in the
electric utility's retail rates costs actually incurred by the
electric utility that exceed the costs approved by the commission
only if the commission finds that the additional costs are
reasonable and prudent. If the actual costs incurred by the
electric utility exceed the costs approved by the commission, the
electric utility has the burden of proving by a preponderance of
the evidence that the costs are reasonable and prudent. The portion
of
the cost of a plant, facility, or power purchase agreement which
that exceeds 110% of the cost approved by the commission is
presumed to have been incurred due to a lack of prudence. The
commission may include any or all of the portion of the cost in
excess of 110% of the cost approved by the commission if the
commission finds by a preponderance of the evidence that the costs
were prudently incurred.
(10)
Within 90 days of the effective date of the amendatory
act
that added this section, the The
commission shall adopt
standard application filing forms and instructions for use in all
requests for a certificate of necessity under this section. The
commission
may , in its discretion, modify the standard application
filing forms and instructions adopted under this section.
(11) The commission shall establish standards for an
integrated resource plan that shall be filed by an electric utility
requesting a certificate of necessity under this section. An
integrated resource plan proceeding shall include all of the
following:
(a) A long-term forecast of the electric utility's load growth
under various reasonable scenarios.
(b) The type of generation technology proposed for the
generation facility and the proposed capacity of the generation
facility, including projected fuel and regulatory costs under
various reasonable scenarios.
(c) Projected energy and capacity purchased or produced by the
electric utility pursuant to any renewable portfolio standard.
(d) Projected energy efficiency program savings under any
energy efficiency program requirements and the projected costs for
that program.
(e) Projected load management and demand response savings for
the electric utility and the projected costs for those programs.
(f) An analysis of the availability and costs of other
electric resources that could defer, displace, or partially
displace the proposed generation facility or purchased power
agreement, including additional renewable energy, energy efficiency
programs, load management, and demand response, beyond those
amounts contained in subdivisions (c) to (e).
(g) Electric transmission options for the electric utility.
(12) The commission shall allow financing interest cost
recovery in an electric utility's base rates on construction work
in progress for capital improvements approved under this section
prior to the assets being considered used and useful. Regardless of
whether or not the commission authorizes base rate treatment for
construction work in progress financing interest expense, an
electric utility shall be allowed to recognize, accrue, and defer
the allowance for funds used during construction related to equity
capital.
(13) The commission shall accept and consider alternative
proposals to any construction, investment, or purchase contained in
an application submitted under subsection (1) as follows:
(a) Within 20 business days after an electric utility files an
application under subsection (1), the commission shall post on the
commission's Internet website a notice that interested persons may
submit alternative proposals to the construction, investment, or
purchase contained in the application. The notice must state the
power need that would be supplied by the construction, investment,
or purchase in the application. The notice must also state that an
alternative proposal must include the type of generation
technology, proposed capacity, projected costs, and other
characteristics. The notice may include any instructions for
submitting an alternative proposal. The commission may disseminate
the notice by any other means that the commission determines will
properly notify the citizens of this state.
(b) Any person may submit an alternative proposal according to
the notice posted under subdivision (a).
(c) The commission shall consider alternative proposals
submitted under this subsection and the construction, investment,
or purchase contained in the application to determine which best
represent the most reasonable and prudent means of meeting the
power need for which a certificate of necessity could be granted or
modified under subsection (4). When evaluating alternative
proposals submitted under this subsection, the commission shall
consider the cost of the proposal and the submitter's
qualifications, technical competence, capability, reliability,
creditworthiness, and past performance. The commission may procure
the assistance of an independent third party to assist in the
commission's evaluation under this subdivision.
(d) If the commission determines that an alternative proposal
best represents the most reasonable and prudent means of meeting
all or a portion of the power need according to subsection (4), the
commission shall modify the certificate of necessity under
subsection (4) to include the alternative proposal.
(14) (13)
As used in this section,
"renewable energy system"
means that term as defined in section 11 of the clean, renewable,
and efficient energy act, 2008 PA 295, MCL 460.1011.