June 4, 2015, Introduced by Rep. Dianda and referred to the Committee on Energy Policy.
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 section 6s (MCL 460.6s), as added by 2008 PA 286.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
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 that has been
approved in an integrated
resource plan under subsection (11) shall 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 singular purpose such as 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 seek a certificate of necessity for projects
costing
less than $500,000,000.00.$50,000,000.00.
(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 the filing of an application under this
section,
subsection (1), the commission shall issue an order
granting or denying the requested certificate of necessity. The
commission shall hold a hearing on the application. 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 discovery shall be permitted before and during
the hearing in order to assist parties and interested persons in
obtaining evidence concerning the application, including, but not
limited to, the reasonableness and prudence of the construction,
investment, or purchase for which the certificate of necessity has
been requested. The commission shall grant the request 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 an approved integrated resource plan that
complies
with subsection (11).(14).
(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 estimated cost of power from the existing or proposed
electric generation facility or the price of power specified in the
proposed power purchase agreement 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. Up to 150 days after an electric
utility makes its initial filing, it may file to update its cost
estimates if they have materially changed. No other aspect of the
initial filing may be modified unless 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 the most reasonable
and prudent means of meeting the power need relative to other
resource options for meeting power demand, including 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 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.
(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.
(7) The 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 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), (16), 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), (16), 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
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 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.
(11) Within 120 days after the effective date of the
amendatory act that added this sentence, the commission shall
commence hearings on its own motion to adopt a regional integrated
resource plan for each of the following regions:
(a) The Detroit metro region.
(b) The east central region.
(c) The east region.
(d) The northeast region.
(e) The northwest region.
(f) The south central region.
(g) The southeast region.
(h) The southwest region.
(i) The Upper Peninsula region.
(j) The west region.
(12) The commission shall consider all of the following in
adopting a regional integrated resource plan under this section:
(a) The projected fuel and regulatory costs of different types
of generation technology.
(b) The availability of renewable energy resources in the
region.
(c) The current generation facilities in the region and the
projected remaining useful life of each of those generation
facilities.
(d) Any state or federal environmental standard, law, or rule
and how the standard, law, or rule would affect electric
reliability and cost in the region.
(e) (c)
Projected energy and capacity
purchased or produced by
the electric utility pursuant to any renewable portfolio standard.
(f) (d)
Projected energy efficiency program
savings under any
energy efficiency program requirements and the projected costs for
that program.
(g) (e)
Projected load management and demand
response savings
for the electric utility and the projected costs for those
programs.
(h) (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) to (g).
(g)
Electric transmission options for the electric utility.
(i) The region's current electric transmission infrastructure.
(j) The cost of electricity to customers in that region and
the reliability of the transmission and generation systems in that
region if any of the following occur:
(i) Any mining or mineral processing facilities located in
those regions cease operation.
(ii) Any new transmission line serving that area is
constructed.
(iii) An investor-owned electric utility located in the region
that is regulated by the commission and that has a greater number
of customers located outside of this state changes its corporate
form to create a Michigan-only state jurisdictional utility.
(13) A hearing under subsection (11) 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. The
commission shall permit reasonable discovery before and during the
hearing in order to assist parties and interested persons in
obtaining evidence concerning the plan.
(14) Within 240 days after the effective date of the
amendatory act that added this subsection, the commission shall
adopt a regional integrated resource plan for each region listed in
subsection (11) that does all of the following:
(a) Includes a 20-year forecast of electric load growth in the
region.
(b) Includes an optimal percentage of each type of technology
used in the region's generation portfolio, based on the cost and
reliability of those technologies.
(c) Includes a plan for meeting current and future electricity
demand, including whether that demand will be met by construction
of new generation or transmission facilities, energy efficiency
programs, load management and demand response programs, the
establishment of microgrids, or distributed generation.
(d) Gives a preference to energy resources located in this
state.
(15) An electric utility shall not 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 unless that construction,
investment, purchase, or agreement complies with the regional
integrated resource plan for that region adopted by the commission
under subsection (14) and that electric utility receives a
certificate of necessity under subsection (1).
(16) (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.
(17) (13)
As used in this section: ,
"renewable energy system"
means
that term as defined in the clean, renewable, and efficient
energy
act.
(a) "Detroit metro region" means the counties of Macomb,
Oakland, and Wayne.
(b) "East central region" means the counties of Arenac, Bay,
Clare, Gladwin, Gratiot, Isabella, Midland, and Saginaw.
(c) "East region" means the counties of Genesee, Huron,
Lapeer, St. Clair, Sanilac, Shiawassee, and Tuscola.
(d) "Northeast region" means the counties of Alcona, Alpena,
Cheboygan, Crawford, Iosco, Montmorency, Ogemaw, Oscoda, Otsego,
Presque Isle, and Roscommon.
(e) "Northwest region" means the counties of Antrim, Benzie,
Charlevoix, Emmet, Grand Traverse, Kalkaska, Leelanau, Manistee,
Missaukee, and Wexford.
(f) "Renewable energy resource" means that term as defined in
section 11 of the clean, renewable, and efficient energy act, 2008
PA 295, MCL 460.1011.
(g) "South central region" means the counties of Clinton,
Eaton, and Ingham.
(h) "Southeast region" means the counties of Hillsdale,
Jackson, Lenawee, Livingston, Monroe, and Washtenaw.
(i) "Southwest region" means the counties of Berrien, Branch,
Calhoun, Cass, Kalamazoo, St. Joseph, and Van Buren.
(j) "Upper Peninsula region" means the counties of Alger,
Baraga, Chippewa, Delta, Dickinson, Gogebic, Houghton, Iron,
Keweenaw, Luce, Mackinac, Marquette, Menominee, Ontonagon, and
Schoolcraft.
(k) "West Michigan region" means the counties of Allegan,
Barry, Ionia, Kent, Lake, Mason, Mecosta, Montcalm, Muskegon,
Newaygo, Oceana, Osceola, and Ottawa.
Enacting section 1. This amendatory act takes effect 90 days
after the date it is enacted into law.