March 5, 2015, Introduced by Rep. Franz and referred to the Committee on Energy Policy.
A bill to amend 2008 PA 295, entitled
"Clean, renewable, and efficient energy act,"
by amending section 47 (MCL 460.1047); and to repeal acts and parts
of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 47. (1) Subject to the retail rate impact limits under
section 45, the commission shall consider all actual costs
reasonably and prudently incurred in good faith before the
effective date of the amendatory act that repealed section 27 to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. 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, incurred before the
effective date of the amendatory act that repealed section 27, and
not
already approved for recovery in electric rates as of the
effective
date of this act:October 6,
2008:
(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 That 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 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 That 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).
(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. 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 of 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 27 of the clean, renewable, and
efficient energy act, 2008 PA 295, MCL 460.1027, is repealed.