SENATE BILL NO. 812
April 09, 2024, Introduced by Senator RUNESTAD and referred to the Committee on Energy and
Environment.
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 and certain providers of electric vehicle charging
services; 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 powers and
duties of certain state governmental officers and entities; to
provide for the continuance, transfer, and completion of certain
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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
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 2023 PA 231.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 6a. (1) A gas utility, electric utility, or steam utility
2 shall not increase its rates and charges or alter, change, or amend
3 any rate or rate schedules, the effect of which will be to increase
4 the cost of services to its customers, without first receiving
5 commission approval as provided in this section. A utility shall
6 coordinate with the commission staff in advance of filing its
7 general rate case application under this section to avoid resource
8 challenges with applications being filed at the same time as
9 applications filed under this section by other utilities. In the
10 case of electric utilities serving more than 1,000,000 customers in
11 this state, the commission may, if necessary, order a delay in
12 filing an application to establish a 21-day spacing between filings
13 of electric utilities serving more than 1,000,000 customers in this
14 state. The utility shall place in evidence facts relied upon to
15 support the utility's petition or application to increase its rates
16 and charges, or to alter, change, or amend any rate or rate
17 schedules. The commission shall require notice to be given to all
18 interested parties within the service area to be affected, and
19 allow interested parties a reasonable opportunity for a full and
20 complete hearing. A utility may use projected costs and revenues
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1 for a future consecutive 12-month period in developing its
2 requested rates and charges. The commission shall use a utility's
3 actual cost of providing service during a historical test year
4 adjusted only for known and measurable changes in establishing that
5 utility's rates and charges. The commission shall notify the
6 utility within 30 days after filing, whether the utility's petition
7 or application is complete. A petition or application is considered
8 complete if it complies with the rate application filing forms and
9 instructions adopted under subsection (8). If the application is
10 not complete, the commission shall notify the utility of all
11 information necessary to make that filing complete. If the
12 commission has not notified the utility within 30 days of whether
13 the utility's petition or application is complete, the application
14 is considered complete. Concurrently with filing a complete
15 application, or at any time after filing a complete application, a
16 gas utility serving fewer than 1,000,000 customers in this state
17 may file a motion seeking partial and immediate rate relief. After
18 providing notice to the interested parties within the service area
19 to be affected and affording interested parties a reasonable
20 opportunity to present written evidence and written arguments
21 relevant to the motion seeking partial and immediate rate relief,
22 the commission shall make a finding and enter an order granting or
23 denying partial and immediate relief within 180 days after the
24 motion seeking partial and immediate rate relief was submitted. The
25 commission has 12 months to issue a final order in a case in which
26 a gas utility has filed a motion seeking partial and immediate rate
27 relief.
28 (2) If the commission has not issued an order within 180 days
29 after the filing of a complete application, the utility may
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1 implement up to the amount of the proposed annual rate request
2 through equal percentage increases or decreases applied to all base
3 rates. If the utility uses projected costs and revenues for a
4 future period in developing its requested rates and charges, the
5 utility may not implement the equal percentage increases or
6 decreases before the calendar date corresponding to the start of
7 the projected 12-month period. For good cause, the commission may
8 issue a temporary order preventing or delaying a utility from
9 implementing its proposed rates or charges. If a utility implements
10 increased rates or charges under this subsection before the
11 commission issues a final order, that utility shall refund to
12 customers, with interest, any portion of the total revenues
13 collected through application of the equal percentage increase that
14 exceed the total that would have been produced by the rates or
15 charges subsequently ordered by the commission in its final order.
16 The commission shall allocate any refund required by this
17 subsection among primary customers based upon their pro rata share
18 of the total revenue collected through the applicable increase, and
19 among secondary and residential customers in a manner to be
20 determined by the commission. The rate of interest for refunds is
21 5% plus the London interbank offered rate (LIBOR) for the
22 appropriate time period. For any portion of the refund that,
23 exclusive of interest, exceeds 25% of the annual revenue increase
24 awarded by the commission in its final order, the rate of interest
25 is the authorized rate of return on the common stock of the utility
26 during the appropriate period. Any refund or interest awarded under
27 this subsection must not be included, in whole or in part, in any
28 application for a rate increase by a utility. This subsection only
29 applies to completed applications filed with the commission before
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1 April 20, 2017.
2 (3) This section does not impair the commission's ability to
3 issue a show cause order as part of its rate-making authority. An
4 alteration or amendment in rates or rate schedules applied for by a
5 public utility that will not result in an increase in the cost of
6 service to its customers may be authorized and approved without
7 notice or hearing. There shall be no increase in rates based upon
8 changes in cost of fuel, purchased gas, or purchased steam unless
9 notice has been given within the service area to be affected, and
10 there has been an opportunity for a full and complete hearing on
11 the cost of fuel, purchased gas, or purchased steam. The rates
12 charged by any utility under an automatic fuel, purchased gas, or
13 purchased steam adjustment clause shall must not be altered,
14 changed, or amended unless notice has been given within the service
15 area to be affected, and there has been an opportunity for a full
16 and complete hearing on the cost of the fuel, purchased gas, or
17 purchased steam.
18 (4) The commission shall adopt rules and procedures for the
19 filing, investigation, and hearing of petitions or applications to
20 increase or decrease utility rates and charges as the commission
21 finds necessary or appropriate to enable it to reach a final
22 decision with respect to petitions or applications within a period
23 of time allotted by law to issue a final order after the filing of
24 the complete petitions or applications. The commission shall not
25 authorize or approve adjustment clauses that operate without notice
26 and an opportunity for a full and complete hearing, and all such
27 clauses are abolished. The commission may hold a full and complete
28 hearing to determine the cost of fuel, purchased gas, purchased
29 steam, or purchased power separately from a full and complete
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1 hearing on a general rate case and may hold that hearing
2 concurrently with the general rate case. The commission shall
3 authorize a utility to recover the cost of fuel, purchased gas,
4 purchased steam, or purchased power only to the extent that the
5 purchases are reasonable and prudent.
6 (5) Except as otherwise provided in this subsection and
7 subsection (1), if the commission fails to reach a final decision
8 with respect to a completed petition or application to increase or
9 decrease utility rates within the 10-month period following the
10 filing of the completed petition or application, the petition or
11 application is considered approved. If a utility makes any
12 significant amendment to its filing, the commission has an
13 additional 10 months after the date of the amendment to reach a
14 final decision on the petition or application. If the utility files
15 for an extension of time, the commission shall extend the 10-month
16 period by the amount of additional time requested by the utility.
17 (6) A utility shall not file a general rate case application
18 for an increase in rates earlier than 12 months after the date of
19 the filing of a complete prior general rate case application. A
20 utility may not file a new general rate case application until the
21 commission has issued a final order on a prior general rate case or
22 until the rates are approved under subsection (5).
23 (7) The commission shall, if requested by a gas utility,
24 establish load retention transportation rate schedules or approve
25 gas transportation contracts as required for the purpose of serving
26 industrial or commercial customers whose individual annual
27 transportation volumes exceed 500,000 decatherms on the gas
28 utility's system. The commission shall approve these rate schedules
29 or approve transportation contracts entered into by the utility in
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1 good faith if the industrial or commercial customer has the
2 installed capability to use an alternative fuel or otherwise has a
3 viable alternative to receiving natural gas transportation service
4 from the utility, the customer can obtain the alternative fuel or
5 gas transportation from an alternative source at a price that would
6 cause them not to use the gas utility's system, and the customer,
7 as a result of their use of the system and receipt of
8 transportation service, makes a significant contribution to the
9 utility's fixed costs. The commission shall adopt accounting and
10 rate-making policies to ensure that the discounts associated with
11 the transportation rate schedules and contracts are recovered by
12 the gas utility through charges applicable to other customers if
13 the incremental costs related to the discounts are no greater than
14 the costs that would be passed on to those customers as the result
15 of a loss of the industrial or commercial customer's contribution
16 to a utility's fixed costs.
17 (8) The commission shall adopt standard rate application
18 filing forms and instructions for use in all general rate cases
19 filed by utilities whose rates are regulated by the commission. For
20 cooperative electric utilities whose rates are regulated by the
21 commission, in addition to rate applications filed under this
22 section, the commission shall continue to allow for rate filings
23 based on the cooperative's times interest earned ratio. The
24 commission may modify the standard rate application forms and
25 instructions adopted under this subsection.
26 (9) If, on or before January 1, 2008, a merchant plant entered
27 into a contract with an initial term of 20 years or more to sell
28 electricity to an electric utility whose rates are regulated by the
29 commission with 1,000,000 or more retail customers in this state
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1 and if, before January 1, 2008, the merchant plant generated
2 electricity under that contract, in whole or in part, from wood or
3 solid wood wastes, then the merchant plant shall, upon petition by
4 the merchant plant, and subject to the limitation set forth in
5 subsection (10), recover the amount, if any, by which the merchant
6 plant's reasonably and prudently incurred actual fuel and variable
7 operation and maintenance costs exceed the amount that the merchant
8 plant is paid under the contract for those costs. This subsection
9 does not apply to landfill gas plants, hydro plants, municipal
10 solid waste plants, or to merchant plants engaged in litigation
11 against an electric utility seeking higher payments for power
12 delivered pursuant to contract.
13 (10) The total aggregate additional amounts recoverable by
14 merchant plants under subsection (9) in excess of the amounts paid
15 under the contracts must not exceed $1,000,000.00 per month for
16 each affected electric utility. The $1,000,000.00 per month limit
17 specified in this subsection must be reviewed by the commission
18 upon petition of the merchant plant filed no more than once per
19 year and may be adjusted if the commission finds that the eligible
20 merchant plants reasonably and prudently incurred actual fuel and
21 variable operation and maintenance costs exceed the amount that
22 those merchant plants are paid under the contract by more than
23 $1,000,000.00 per month. The annual amount of the adjustments must
24 not exceed a rate equal to the United States Consumer Price Index.
25 The commission shall not make an adjustment unless each affected
26 merchant plant files a petition with the commission. If the total
27 aggregate amount by which the eligible merchant plants reasonably
28 and prudently incurred actual fuel and variable operation and
29 maintenance costs determined by the commission exceed the amount
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1 that the merchant plants are paid under the contract by more than
2 $1,000,000.00 per month, the commission shall allocate the
3 additional $1,000,000.00 per month payment among the eligible
4 merchant plants based upon the relationship of excess costs among
5 the eligible merchant plants. The $1,000,000.00 limit specified in
6 this subsection, as adjusted, does not apply to actual fuel and
7 variable operation and maintenance costs that are incurred due to
8 changes in federal or state environmental laws or regulations that
9 are implemented after October 6, 2008. The $1,000,000.00 per month
10 payment limit under this subsection does not apply to merchant
11 plants eligible under subsection (9) whose electricity is purchased
12 by a utility that is using wood or wood waste or fuels derived from
13 those materials for fuel in their power plants. As used in this
14 subsection, "United States Consumer Price Index" means the United
15 States Consumer Price Index for all urban consumers as defined and
16 reported by the United States Department of Labor, Bureau of Labor
17 Statistics.
18 (11) The commission shall issue orders to permit the recovery
19 authorized under subsections (9) and (10) upon petition of the
20 merchant plant. The merchant plant is not required to alter or
21 amend the existing contract with the electric utility in order to
22 obtain the recovery under subsections (9) and (10). The commission
23 shall permit or require the electric utility whose rates are
24 regulated by the commission to recover from its ratepayers all fuel
25 and variable operation and maintenance costs that the electric
26 utility is required to pay to the merchant plant as reasonably and
27 prudently incurred costs.
28 (12) Subject to subsection (13), if requested by an electric
29 utility with less than 200,000 customers in this state, the
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1 commission shall approve an appropriate revenue decoupling
2 mechanism that adjusts for decreases in actual sales compared to
3 the projected levels used in that utility's most recent rate case
4 that are the result of implemented energy waste reduction,
5 conservation, demand-side programs, and ot