Bill Summary – FastDemocracy

HOUSE BILL NO. 4256
     March 09, 2023, Introduced by Reps. Hill, Byrnes, McKinney, Rheingans, Hood, Paiz, Morse,
       MacDonell, Wegela, Martus, Morgan, Price, Wilson, Andrews, Mentzer, Farhat, Arbit, Brabec,
       Coffia and Aiyash and referred to the Committee on Energy, Communications, and
       Technology.
          A bill to amend 2008 PA 295, entitled
    "Clean and renewable energy and energy waste reduction act,"
    by amending sections 1, 5, and 7 (MCL 460.1001, 460.1005, and
1007), as amended by 2016 PA 342, and by adding sections 101
    and 103 to subpart D of part 2, by amending the heading of subpart
    D of part 2, by designating sections 111 and 113 as subpart E of
    part 2, and by adding a heading for subpart E of part 2.
                     THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
       Sec. 1. (1) This act shall be known and may be cited as the
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 "clean and renewable energy and energy waste reduction act".
       (2) The purpose of this act is to promote the development and
 use of clean and renewable energy resources and the reduction of
 energy waste through programs that will cost-effectively do all of
 the following:
       (a) Diversify the resources used to reliably meet the energy
 needs of consumers in this state.
       (b) Provide greater energy security through the use of
 indigenous energy resources available within the state.
       (c) Provide more reliable and resilient energy supplies during
 periods of extreme weather.
       (d) (c) Encourage private investment in renewable energy and
 energy waste reduction.
       (e) (d) Coordinate with federal regulations to provide
 improved air quality and other benefits to energy consumers and
 citizens of this state.
       (f) (e) Remove unnecessary burdens on the appropriate use of
 solid waste as a clean energy source.
       (3) As a goal, not less than 35% of this state's electric
 needs should be met through a combination of energy waste reduction
 and renewable energy by 2025, if the investments in energy waste
 reduction and renewable energy are the most reasonable means of
 meeting an electric utility's energy and capacity needs relative to
 other resource options. Both of the following count toward
 achievement of the goal:
       (a) All renewable energy, including renewable energy credits
 purchased or otherwise acquired with or without the associated
 renewable energy, and any banked renewable energy credits, that
 counted toward the renewable energy credit standard on the
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 effective date of the 2016 amendatory act that added this
 subsection, April 20, 2017, as well as renewable energy credits
 granted as a result of any investments made in renewable energy by
 the utility or a utility customer after that effective date.April
 20, 2017.
       (b) The sum of the annual electricity savings since October 6,
 2008, as recognized by the commission through annual reconciliation
 proceedings, that resulted from energy waste reduction measures
 implemented under an energy optimization plan or energy waste
 reduction plan approved under section 73.
       Sec. 5. As used in this act:
       (a) "Electric provider" 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 C of part 2, an alternative
 electric supplier licensed under section 10a of 1939 PA 3, MCL
 460.10a.
       (b) "Eligible electric generator" means 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
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 energy usage behavior.
       (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 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, educate consumers about the benefits of
 energy efficiency, and help promote energy efficiency in buildings
 by benchmarking and rating energy performance.
       (f) "Energy storage contract" means a type of contract
 designated by the commission under section 101, entered into by an
 electric provider and the owner of an energy storage system, and
 under which the electric provider receives services from the energy
 storage system.
       (g) "Energy storage system" means any technology that is
 capable of absorbing energy, storing that energy for a period of
 time, and then redelivering that energy.
       (h) (f) "Energy waste reduction", subject to subdivision (g),
 (i), means all of the following:
       (i) Energy efficiency.
       (ii) Load management, to the extent that the load management
 reduces provider costs.
       (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 waste reduction plan.
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       (i) (g) Energy waste reduction does not include electric
 provider infrastructure projects that are approved for cost
 recovery by the commission other than as provided in this act.
       (j) (h) "Energy waste reduction credit" means a credit
 certified pursuant to section 87 that represents achieved energy
 waste reduction.
       (k) (i) "Energy waste reduction plan" means a plan under
 section 71.
       (l) (j) "Energy waste reduction standard" means the minimum
 energy savings required to be achieved under section 77 or 78(1),
 as applicable.
       (m) (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 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
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 proposed transmission line is included in a transmission project
 approved by the applicable regional transmission organization
 through the approval process developed after October 6, 2008.
       (iv) Any other Federal Energy Regulatory Commission-approved
 transmission planning process for a transmission project.
       Sec. 7. As used in this act:
       (a) "Gasification facility" means a facility located in this
 state that, using a thermochemical process that does not involve
 direct combustion, produces synthesis gas, composed of carbon
 monoxide and hydrogen, from carbon-based feedstocks (such as coal,
 petroleum coke, wood, biomass, hazardous waste, medical waste,
 industrial waste, and solid waste, including, but not limited to,
 municipal solid waste, electronic waste, and waste described in
 section 11514 of the natural resources and environmental protection
 act, 1994 PA 451, MCL 324.11514) and that uses the synthesis gas or
 a mixture of the synthesis gas and methane to generate electricity
 for commercial use. Gasification facility includes the transmission
 lines, gas transportation lines and facilities, and associated
 property and equipment specifically attributable to such a
 facility. Gasification facility includes, but is not limited to, an
 integrated gasification combined cycle facility and a plasma arc
 gasification facility.
       (b) "Incremental costs of compliance" means the net revenue
 required by an electric provider to comply with the renewable
 energy standard, calculated as provided under section 47.
       (c) "Independent transmission company" means that term as
 defined in section 2 of the electric transmission line
 certification act, 1995 PA 30, MCL 460.562.
       (d) "Integrated gasification combined cycle facility" means a
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 gasification facility that uses a thermochemical process, including
 high temperatures and controlled amounts of air and oxygen, to
 break substances down into their molecular structures and that uses
 exhaust heat to generate electricity.
       (e) "Integrated pyrolysis combined cycle facility" means a
 pyrolysis facility that uses exhaust heat to generate electricity.
       (f) "LEED" means the leadership in energy and environmental
 design green building rating system developed by the United States
 Green Building Council.
       (g) "Load management" means measures or programs that target
 equipment or behavior to result in decreased peak electricity
 demand such as by shifting demand from a peak to an off-peak
 period.
       (h) "Long-duration energy storage system" means an energy
 storage system capable of continuously discharging electricity at
 its full rated capacity for more than 10 hours.
       (i) (h) "Megawatt", "megawatt hour", or "megawatt hour of
 electricity", unless the context implies otherwise, includes the
 steam equivalent of a megawatt or megawatt hour of electricity.
       (j) (i) "Modified net metering" means a utility billing method
 that applies the power supply component of 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). Under modified net metering, standby charges
 for distributed generation customers on an energy rate schedule
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 shall be equal to the retail distribution charge applied to the
 imputed customer usage during the billing period. The imputed
 customer usage is calculated as the sum of the metered on-site
 generation and the net of the bidirectional flow of power across
 the customer interconnection during the billing period. The
 commission shall establish standby charges under modified net
 metering for distributed generation customers on demand-based rate
 schedules that provide an equivalent contribution to utility system
 costs. A charge for net metering and distributed generation
 customers established pursuant to section 6a of 1939 PA 3, MCL
 460.6a, shall not be recovered more than once. This subdivision is
 subject to section 177(5).
       (k) "Multiday energy storage system" means an energy storage
 system capable of continuously discharging electricity at its full
 rated capacity for more than 24 hours.
16
                              SUBPART D.
                   MISCELLANEOUS ELECTRICITY STORAGE
       Sec. 101. (1) By December 31, 2029, each electric provider
 whose rates are regulated by the commission shall petition the
 commission for any necessary approvals to construct, acquire, or
 contract for the services of energy storage systems with a combined
 capacity of at least the electric provider's statewide load share
 of a total of 2,500 megawatts for all such electric providers
 combined. For the purposes of this subsection, an energy storage
 system must have been placed into service on or after the effective
 date of the amendatory act that added this subsection or approved
 by the commission before the effective date of the amendatory act
 that added this subsection. This act does not limit the amount of
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 energy storage capacity an electric provider may procure.
       (2) At least 50% of the megawatts of energy storage capacity
 used by each electric provider whose rates are regulated by the
 commission to meet the requirements of subsection (1) shall be from
 energy storage contracts that meet all of the following
 requirements:
       (a) The owner of the energy storage system is not an electric
 provider or an affiliate of an electric provider.
       (b) The contract has a term of at least 15 years.
       (c) The contract does not require transfer of ownership of the
 energy storage system to the electric provider.
       (3) The commission shall, within 60 days after the effective
 date of the amendatory act that added this section, initiate a
 proceeding to designate the type of energy storage contract that
 electric providers must use under subsection (2). The type of
 energy storage contract designated must achieve all of the
 following standards:
       (a) Identify products transferred and include other material
 commercial contractual terms.
       (b) Allow energy storage systems owned by persons other than
 electric providers whose rates are regulated by the commission to
 participate in wholesale markets by providing all services that
 energy storage systems are capable of providing, including, but not
 limited to, energy, capacity, and ancillary services.
       (c) Incentivize energy storage system owners and operators to
 economically optimize energy storage systems by ensuring that the
 owners and operators are compensated for performance and bear the
 risk of underperformance, based on prevailing wholesale electricity
 market conditions.
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       (d) Provide long-term contracted revenue sufficient to support
 third-party financing of energy storage systems.
       (e) Increase value for electric customers when increased
 volatility in wholesale electricity prices allows energy storage
 systems to earn additional revenue.
       (f) Meet the requirements of subsection (1) at a just and
 reasonable cost to electric customers.
       (4) Within 180 days after the effective date of the amendatory
 act that added this section, the commission shall issue an order
 that designates a type of energy storage contract as provided under
 subsection (3).
       (5) Within 90 days after issuance of the order under
 subsection (4), each electric provider whose rates are regulated by
 the commission shall submit to the commission for approval a
 standard energy storage contract form that complies with the order.
 The commission shall provide an opportunity for public review and
 comment on each such electric provider's standard energy storage
 contract form before final approval.
       (6) An energy storage contract under subsection (2) shall be
 executed only after a competitive bidding process conducted
 pursuant to guidelines issued by the commission.
       (7) An electric provider or its affiliate may not submit a
 proposal in response to an electric provider's request for
 proposals under this section.
       (8) Within 180 days after the effective date of the amendatory
 act that added this section, the commission shall complete a study
 to determine procurement targets for long-duration energy storage
 systems and mu