April 23, 2015, Introduced by Senators HOPGOOD, KNEZEK, ANANICH, SMITH, HERTEL, WARREN, YOUNG, HOOD, JOHNSON, GREGORY and BIEDA and referred to the Committee on Energy and Technology.
A bill to amend 2008 PA 295, entitled
"Clean, renewable, and efficient energy act,"
by amending sections 7, 11, 37, 45, and 47 (MCL 460.1007, 460.1011,
460.1037, 460.1045, and 460.1047); and to repeal acts and parts of
acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 7. As used in this act:
(a) "Gasification facility" means a facility located in this
state
that, uses using a thermochemical
process that does not
involve
direct combustion, to produce 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.
(b) (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.
(c) (d)
"Industrial cogeneration
facility" means a facility
that generates electricity using industrial thermal energy or
industrial waste energy.
(d) (e)
"Industrial thermal
energy" means thermal energy that
is a by-product of an industrial or manufacturing process and that
would otherwise be wasted. For the purposes of this subdivision,
industrial or manufacturing process does not include the generation
of electricity.
(e) (f)
"Industrial waste energy"
means exhaust gas or flue
gas that is a by-product of an industrial or manufacturing process
and that would otherwise be wasted. For the purposes of this
subdivision, industrial or manufacturing process does not include
the generation of electricity.
(f) (g)
"Integrated gasification
combined cycle facility"
means a 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.
(g) (h)
"LEED" means the
leadership in energy and
environmental design green building rating system developed by the
United States green building council.
(h) (i)
"Load management" means
measures or programs that
target equipment or devices to result in decreased peak electricity
demand such as by shifting demand from a peak to an off-peak
period.
(i) (j)
"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). 177. Standby charges for modified net
metering customers on an energy rate schedule 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 for modified net metering customers on demand-based rate
schedules that provide an equivalent contribution to utility system
costs.
Sec. 11. As used in this act:
(a) "Renewable energy" means electricity generated using a
renewable energy system.
(b) "Renewable energy capacity portfolio" means the number of
megawatts calculated under section 27(2) for a particular year.
(c) "Renewable energy contract" means a contract to acquire
renewable energy and the associated renewable energy credits from 1
or more renewable energy systems.
(d) "Renewable energy credit" means a credit granted pursuant
to the certification and tracking program under section 41 that
represents generated renewable energy.
(e) "Renewable energy credit portfolio" means the sum of the
renewable energy credits achieved by a provider for a particular
year.
(f) "Renewable energy credit standard" means a minimum
renewable
energy credit portfolio required under section 27.27(3).
(g) "Renewable energy generator" means a person that, together
with its affiliates, has constructed or has owned and operated 1 or
more renewable energy systems with combined gross generating
capacity of at least 10 megawatts.
(h) "Renewable energy plan" or "plan", means a plan approved
under section 21 or 23 or found to comply with this act under
section 25, with any amendments adopted under this act.
(i) "Renewable energy resource" means a resource that
naturally replenishes over a human, not a geological, time frame
and that is ultimately derived from solar power, water power, or
wind power. Renewable energy resource does not include petroleum,
nuclear, natural gas, or coal. A renewable energy resource comes
from the sun or from thermal inertia of the earth and minimizes the
output of toxic material in the conversion of the energy and
includes, but is not limited to, all of the following:
(i) Biomass.
(ii) Solar and solar thermal energy.
(iii) Wind energy.
(iv) Kinetic energy of moving water, including all of the
following:
(A) Waves, tides, or currents.
(B) Water released through a dam.
(v) Geothermal energy.
(vi) Municipal solid waste.
(vii) Landfill gas produced by municipal solid waste.
(j) "Renewable energy standard" means the minimum renewable
energy capacity portfolio, if applicable, and the renewable energy
credit portfolio required to be achieved under section 27.
(k) "Renewable energy system" means a facility, electricity
generation system, or set of electricity generation systems that
use 1 or more renewable energy resources to generate electricity.
Renewable energy system does not include any of the following:
(i) A hydroelectric pumped storage facility.
(ii) A hydroelectric facility that uses a dam constructed
after
the effective date of this act October
6, 2008 unless the dam
is
a repair or replacement of a dam in existence on the effective
date
of this act October 6, 2008 or an upgrade of a dam in
existence
on the effective date of this act October 6, 2008 that
increases its energy efficiency.
(iii) An incinerator unless the incinerator is a municipal
solid waste incinerator as defined in section 11504 of the natural
resources and environmental protection act, 1994 PA 451, MCL
324.11504,
that was brought into service before the effective date
of
this act, October 6, 2008, including any of the following:
(A) Any upgrade of such an incinerator that increases energy
efficiency.
(B)
Any expansion of such an incinerator before the effective
date
of this act.October 6, 2008.
(C)
Any expansion of such an incinerator on or after the
effective
date of this act October 6,
2008 to an approximate design
rated capacity of not more than 950 tons per day pursuant to the
terms of a final request for proposals issued on or before October
1, 1986.
(l) "Revenue recovery mechanism" means the
mechanism for
recovery
of incremental costs of compliance established under
section
21.
Sec.
37. If, after the effective date of this act, October 6,
2008, an electric provider whose rates are regulated by the
commission enters a renewable energy contract or a contract to
purchase renewable energy credits without the associated renewable
energy, the commission shall determine whether the contract
provides
reasonable and prudent terms and conditions. and complies
with
the retail rate impact limits under section 45. In making this
determination, the commission shall consider the contract price and
term. If the contract is a renewable energy contract, the
commission shall also consider at least all of the following:
(a) The cost to the electric provider and its customers of the
impacts of accounting treatment of debt and associated equity
requirements imputed by credit rating agencies and lenders
attributable to the renewable energy contract. The commission shall
use standard rating agency, lender, and accounting practices for
electric utilities in determining these costs, unless the impacts
for the electric provider are known.
(b)
Subject to section 45, the The
life-cycle cost of the
renewable energy contract to the electric provider and customers
including costs, after expiration of the renewable energy contract,
of maintaining the same renewable energy output in megawatt hours,
whether by purchases from the marketplace, by extension or renewal
of the renewable energy contract, or by the electric provider
purchasing the renewable energy system and continuing its
operation.
(c) Electric provider and customer price and cost risks if the
renewable energy systems supporting the renewable energy contract
move from contracted pricing to market-based pricing after
expiration of the renewable energy contract.
Sec.
45. (1) For an electric provider whose rates are
regulated
by the commission, the commission shall determine the
appropriate
charges for the electric provider's tariffs that permit
recovery
of the incremental cost of compliance subject to the
retail
rate impact limits set forth in subsection (2).
(2)
An electric provider shall recover the incremental cost of
compliance
with the renewable energy standards by an itemized
charge
on the customer's bill for billing periods beginning not
earlier
than 90 days after the commission approves the electric
provider's
renewable energy plan under section 21 or 23 or
determines
under section 25 that the plan complies with this act.
An
electric provider shall not comply with the renewable energy
standards
to the extent that, as determined by the commission,
recovery
of the incremental cost of compliance will have a retail
rate
impact that exceeds any of the following:
(a)
$3.00 per month per residential customer meter.
(b)
$16.58 per month per commercial secondary customer meter.
(c)
$187.50 per month per commercial primary or industrial
customer
meter.
(3)
The retail rate impact limits of subsection (2) apply only
to
the incremental costs of compliance and do not apply to costs
approved
for recovery by the commission other than as provided in
this
act.
(4)
The incremental cost of compliance shall be calculated for
a
20-year period beginning with approval of the renewable energy
plan
and shall be recovered on a levelized basis.
(1) (5)
In its billing statements for a
residential customer,
each electric provider shall report to the residential customer all
of the following in a format consistent with other information on
the customer bill:
(a)
An itemized monthly charge, expressed in dollars and
cents,
collected from the customer for implementing the renewable
energy
program requirements of this act. In the first bill issued
after
the close of the previous year, an electric provider shall
notify
each residential customer that the customer may be entitled
to
an income tax credit to offset some of the annual amounts
collected
for the renewable energy program.
(a) (b)
An itemized monthly charge,
expressed in dollars and
cents, collected from the customer for implementing the energy
optimization program requirements of this act.
(b) (c)
An estimated monthly savings,
expressed in dollars and
cents, for that customer to reflect the reductions in the monthly
energy bill produced by the energy optimization program under this
act.
(c) (d)
An estimated monthly savings,
expressed in dollars and
cents, for that customer to reflect the long-term, life-cycle,
levelized costs of building and operating new conventional coal-
fired
electric generating power plants avoided under this act
subpart B of this part as determined by the commission.
(d) (e)
The website address at which the
commission's annual
report under section 51 is posted.
(2) (6)
For the first year of the programs under this part,
the
The values reported under subsection (5) (1) shall
be estimates
by
the commission. The values in following years shall be based on
the electric provider's actual customer experiences. If the
electric provider is unable to provide customer-specific
information
under subsection (5)(b) or (c), (1)(a)
or (b), it shall
instead specify the state average itemized charge or savings, as
applicable, for residential customers. The electric provider shall
make this calculation based on a method approved by the commission.
(3) (7)
In determining long-term,
life-cycle, levelized costs
of building and operating and acquiring nonrenewable electric
generating capacity and energy for the purpose of subsection
(5)(d),
(1)(c), the commission shall consider historic and
predicted costs of financing, construction, operation, maintenance,
fuel supplies, environmental protection, and other appropriate
elements of energy production. For purposes of this comparison, the
capacity of avoided new conventional coal-fired electric generating
facilities shall be expressed in megawatts and avoided new
conventional coal-fired electricity generation shall be expressed
in megawatt hours. Avoided costs shall be measured in cents per
kilowatt hour.
Sec.
47. (1) Subject to the retail rate impact limits under
section
45, the The commission shall consider all actual costs
reasonably and prudently incurred in good faith to implement a
commission-approved renewable energy plan by an electric provider
whose rates are regulated by the commission to be a cost of service
to be recovered by the electric provider from the electric
provider's customer rates established under 1939 PA 3, MCL 460.1 to
460.11, but only to the extent the costs do not exceed
representative applicable costs for electricity supply,
transmission,
distribution, and other associated services. Subject
to
the retail rate impact limits under section 45, an electric
provider
whose rates are regulated by the commission shall recover
through
its retail electric rates all of the electric provider's
incremental
costs of compliance during the 20-year period beginning
when
the electric provider's plan is approved by the commission and
all
reasonable and prudent ongoing costs of compliance during and
after
that period. The recovery shall include, but is not limited
to,
the electric provider's authorized rate of return on equity for
costs
approved under this section, which shall remain fixed at the
rate
of return and debt to equity ratio that was in effect in the
electric
provider's base rates when the electric provider's
renewable
energy plan was approved.
(2)
Incremental costs of compliance shall be calculated as
follows:
(a)
Determine the sum of the following costs to the extent
those
costs are reasonable and prudent and not already approved for
recovery
in electric rates as of the effective date of this act:
(i) Capital, operating, and maintenance costs of
renewable
energy
systems or advanced cleaner energy systems, including
property
taxes, insurance, and return on equity associated with an
electric
provider's renewable energy systems or advanced cleaner
energy
systems, including the electric provider's renewable energy
portfolio
established to achieve compliance with the renewable
energy
standards and any additional renewable energy systems or
advanced
cleaner energy systems, that are built or acquired by the
electric
provider to maintain compliance with the renewable energy
standards
during the 20-year period beginning when the electric
provider's
plan is approved by the commission.
(ii) Financing costs attributable to capital,
operating, and
maintenance
costs of capital facilities associated with renewable
energy
systems or advanced cleaner energy systems used to meet the
renewable
energy standard.
(iii) Costs that are not otherwise recoverable in rates
approved
by the federal energy regulatory commission and that are
related
to the infrastructure required to bring renewable energy
systems
or advanced cleaner energy systems used to achieve
compliance
with the renewable energy standards on to the
transmission
system, including interconnection and substation costs
for
renewable energy systems or advanced cleaner energy systems
used
to meet the renewable energy standard.
(iv) Ancillary service costs determined by the
commission to
be
necessarily incurred to ensure the quality and reliability of
renewable
energy or advanced cleaner energy used to meet the
renewable
energy standards, regardless of the ownership of a
renewable
energy system or advanced cleaner energy technology.
(v) Except to the extent the costs are allocated under
a
different
subparagraph, all of the following:
(A)
The costs of renewable energy credits purchased under this
act.
(B)
The costs of contracts described in section 33(1).
(vi) Expenses incurred as a result of state or federal
governmental
actions related to renewable energy systems or
advanced
cleaner energy systems attributable to the renewable
energy
standards, including changes in tax or other law.
(vii) Any additional electric provider costs determined
by the
commission
to be necessarily incurred to ensure the quality and
reliability
of renewable energy or advanced cleaner energy used to
meet
the renewable energy standards.
(b)
Subtract from the sum of costs not already included in
electric
rates determined under subdivision (a) the sum of the
following
revenues:
(i) Revenue derived from the sale of environmental
attributes
associated
with the generation of renewable energy or advanced
cleaner
energy systems attributable to the renewable energy
standards.
Such revenue shall not be considered in determining
power
supply cost recovery factors under section 6j of 1939 PA 3,
MCL
460.6j.
(ii) Interest on regulatory liabilities.
(iii) Tax credits specifically designed to promote
renewable
energy
or advanced cleaner energy.
(iv) Revenue derived from the provision of renewable
energy or
advanced
cleaner energy to retail electric customers subject to a
power
supply cost recovery clause under section 6j of 1939 PA 3,
MCL
460.6j, of an electric provider whose rates are regulated by
the
commission. After providing an opportunity for a contested case
hearing
for an electric provider whose rates are regulated by the
commission,
the commission shall annually establish a price per
megawatt
hour. In addition, an electric provider whose rates are
regulated
by the commission may at any time petition the commission
to
revise the price. In setting the price per megawatt hour under
this
subparagraph, the commission shall consider factors including,
but
not limited to, projected capacity, energy, maintenance, and
operating
costs; information filed under section 6j of 1939 PA 3,
MCL
460.6j; and information from wholesale markets, including, but
not
limited to, locational marginal pricing. This price shall be
multiplied
by the sum of the number of megawatt hours of renewable
energy
and the number of megawatt hours of advanced cleaner energy
used
to maintain compliance with the renewable energy standard. The
product
shall be considered a booked cost of purchased and net
interchanged
power transactions under section 6j of 1939 PA 3, MCL
460.6j.
For energy purchased by such an electric provider under a
renewable
energy contract or advanced cleaner energy contract, the
price
shall be the lower of the amount established by the
commission
or the actual price paid and shall be multiplied by the
number
of megawatt hours of renewable energy or advanced cleaner
energy
purchased. The resulting value shall be considered a booked
cost
of purchased and net interchanged power under section 6j of
1939
PA 3, MCL 460.6j.
(v) Revenue from wholesale renewable energy sales and
advanced
cleaner
energy sales. Such revenue shall not be considered in
determining
power supply cost recovery factors under section 6j of
1939
PA 3, MCL 460.6j.
(vi) Any additional electric provider revenue
considered by
the
commission to be attributable to the renewable energy
standards.
(vii) Any revenues recovered in rates for renewable
energy
costs
that are included under subdivision (a).
(2) (3)
The commission shall authorize an electric provider
whose
rates are regulated by the commission to spend in any given
month
more to comply with this act and implement an approved
renewable
energy plan than the revenue actually generated by the
revenue
recovery mechanism. This
subsection applies to regulatory
assets and regulatory liabilities accrued before the effective date
of the 2015 act that amended this section. An electric provider
whose rates are regulated by the commission shall recover its
commission approved pre-tax rate of return on regulatory assets
during the appropriate period. An electric provider whose rates are
regulated by the commission shall record interest on regulatory
liabilities at the average short-term borrowing rate available to
the electric provider during the appropriate period. Any regulatory
assets or liabilities resulting from the recovery costs of
renewable energy or advanced cleaner energy attributable to
renewable energy standards through the power supply cost recovery
clause under section 6j of 1939 PA 3, MCL 460.6j, shall continue to
be reconciled under that section.
(4)
If an electric provider's incremental costs of compliance
in
any given month during the 20-year period beginning when the
electric
provider's plan is approved by the commission are in
excess
of the revenue recovery mechanism as adjusted under section
49
and in excess of the balance of any accumulated reserve funds,
subject
to the minimum balance established under section 21, the
electric
provider shall immediately notify the commission. The
commission
shall promptly commence a contested case hearing
pursuant
to the administrative procedures act of 1969, 1969 PA 306,
MCL
24.201 to 24.328, and modify the revenue recovery mechanism so
that
the minimum balance is restored. However, if the commission
determines
that recovery of the incremental costs of compliance
would
otherwise exceed the maximum retail rate impacts specified
under
section 45, it shall set the revenue recovery mechanism for
that
electric provider to correspond to the maximum retail rate
impacts.
Excess costs shall be accrued and deferred for recovery.
Not
later than the expiration of the 20-year period beginning when
the
electric provider's plan is approved by the commission, for an
electric
provider whose rates are regulated by the commission, the
commission
shall determine the amount of deferred costs to be
recovered
under the revenue recovery mechanism and the recovery
period,
which shall not extend more than 5 years beyond the
expiration
of the 20-year period beginning when the electric
provider's
plan is approved by the commission. The recovery of
excess
costs shall be proportional to the retail rate impact limits
in
section 45 for each customer class. The recovery of excess costs
alone,
or, if begun before the expiration of the 20-year period, in
combination
with the recovery of incremental costs of compliance
under
the revenue recovery mechanism, shall not exceed the retail
rate
impact limits of section 45 for each customer class.
(5)
If, at the expiration of the 20-year period beginning when
the
electric provider's plan is approved by the commission, an
electric
provider whose rates are regulated by the commission has a
regulatory
liability, the refund to customer classes shall be
proportional
to the amounts paid by those customer classes under
the
revenue recovery mechanism.
(6)
After achieving compliance with the renewable energy
standard
for 2015, the actual costs reasonably and prudently
incurred
to continue to comply with this subpart both during and
after
the conclusion of the 20-year period beginning when the
electric
provider's plan is approved by the commission shall be
considered
costs of service. The commission shall determine a
mechanism
for an electric provider whose rates are regulated by the
commission
to recover these costs in its retail electric rates,
subject
to the retail rate impact limits in section 45. Remaining
and
future regulatory assets shall be recovered consistent with
subsections
(2) and (3) and section 49.
Enacting section 1. Section 49 of the clean, renewable, and
efficient energy act, 2008 PA 295, MCL 460.1049, is repealed.
Enacting section 2. This amendatory act takes effect 90 days
after the date it is enacted into law.
Enacting section 3. This amendatory act does not take effect
unless Senate Bill No. 295
of the 98th Legislature is enacted into law.