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HOUSE BILL NO. 6095
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
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
June 16, 2026, Introduced by Reps. Price, Miller, Mentzer, McFall, Weiss, Wegela, Byrnes,
Morgan, McKinney, Dievendorf, Rheingans, Myers -Phillips, Wilson, Paiz, MacDonell and
Coffia and referred to Committee on Energy.
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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:
Sec. 6a. (1) A gas utility, electric utility, or steam utility 1
shall not increase its rates and charges or alter, change, or amend 2
any rate or rate schedules, the effect of which will be to increase 3
the cost of services to its customers, without first receiving 4
commission approval as provided in this section. A utility shall 5
coordinate with the commission staff in advance of filing its 6
general rate case application under this section to avoid resource 7
challenges with applications being filed at the same time as 8
applications filed under this section by other utilities. In the 9
case of electric utilities serving more than 1,000,000 customers in 10
this state, the commission may, if necessary, order a delay in 11
filing an application to establish a 21-day spacing between filings 12
of electric utilities serving more than 1,000,000 customers in this 13
state. The utility shall place in evidence facts relied upon to 14
support the utility's petition or application to increase its rates 15
and charges, or to alter, change, or amend any rate or rate 16
schedules. The commission shall require notice to be given to all 17
interested parties within in the service area to be affected, and 18
allow interested parties a reasonable opportunity for a full and 19
complete hearing. A utility may use projected costs and revenues 20
for a future consecutive 12-month period in developing its 21
requested rates and charges. The commission shall notify the 22
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utility within not less than 30 days after filing, whether the 1
utility's petition or application is complete. A petition or 2
application is considered complete if it complies with the rate 3
application filing forms and instructions adopted under subsection 4
(8). If the application is not complete, the commission shall 5
notify the utility of all information necessary to make that filing 6
complete. If the commission has not notified the utility within 30 7
days of whether the utility's petition or application is complete, 8
the application is considered complete. Concurrently with filing a 9
complete application, or at any time after filing a complete 10
application, a gas utility serving fewer than 1,000,000 customers 11
in this state may file a motion seeking partial and immediate rate 12
relief. After providing notice to the interested parties within in 13
the service area to be affected and affording interested parties a 14
reasonable opportunity to present written evidence and written 15
arguments relevant to the motion seeking partial and immediate rate 16
relief, the commission shall make a finding and enter an order 17
granting or denying partial and immediate relief within not less 18
than 180 days after the motion seeking partial and immediate rate 19
relief was submitted. The commission has 12 months to issue a final 20
order in a case in which a gas utility has filed a motion seeking 21
partial and immediate rate relief. 22
(2) If the commission has not issued an order within 180 days 23
after the filing of a complete application, the utility may 24
implement up to the amount of the proposed annual rate request 25
through equal percentage increases or decreases applied to all base 26
rates. If the utility uses projected costs and revenues for a 27
future period in developing its requested rates and charges, the 28
utility may not implement the equal percentage increases or 29
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decreases before the calendar date corresponding to the start of 1
the projected 12-month period. For good cause, the commission may 2
issue a temporary order preventing or delaying a utility from 3
implementing its proposed rates or charges. If a utility implements 4
increased rates or charges under this subsection before the 5
commission issues a final order, that utility shall refund to 6
customers, with interest, any portion of the total revenues 7
collected through application of the equal percentage increase that 8
exceed the total that would have been produced by the rates or 9
charges subsequently ordered by the commission in its final order. 10
The commission shall allocate any refund required by this 11
subsection among primary customers based upon their on the 12
customer's pro rata share of the total revenue collected through 13
the applicable increase, and among secondary and residential 14
customers in a manner to be determined by the commission. The rate 15
of interest for refunds is 5% plus the London interbank offered 16
rate (LIBOR) for the appropriate time period. For any portion of 17
the refund that, exclusive of interest, exceeds 25% of the annual 18
revenue increase awarded by the commission in its final order, the 19
rate of interest is the authorized rate of return on the common 20
stock of the utility during the appropriate period. Any refund or 21
interest awarded under this subsection must not be included, in 22
whole or in part, in any application for a rate increase by a 23
utility. This subsection only applies to completed applications 24
filed with the commission before April 20, 2017. 25
(3) This section does not impair the commission's ability to 26
issue a show cause order as part of its rate-making authority. An 27
alteration or amendment in rates or rate schedules applied for by a 28
public utility that will not result in an increase in the cost of 29
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service to its customers may be authorized and approved without 1
notice or hearing. There shall be no increase in rates based upon 2
changes in cost of fuel, purchased gas, or purchased steam unless 3
notice has been given within in the service area to be affected, 4
and there has been an opportunity for a full and complete hearing 5
on the cost of fuel, purchased gas, or purchased steam. The rates 6
charged by any utility under an automatic fuel, purchased gas, or 7
purchased steam adjustment clause shall must not be altered, 8
changed, or amended unless notice has been given within in the 9
service area to be affected, and there has been an opportunity for 10
a full and complete hearing on the cost of the fuel, purchased gas, 11
or purchased steam. 12
(4) The commission shall adopt rules and procedures for the 13
filing, investigation, and hearing of petitions or applications to 14
increase or decrease utility rates and charges as the commission 15
finds necessary or appropriate to enable it to reach a final 16
decision with respect to petitions or applications within a period 17
of time allotted by law to issue a final order after the filing of 18
the complete petitions or applications. The commission shall not 19
authorize or approve adjustment clauses that operate without notice 20
and an opportunity for a full and complete hearing, and all such 21
clauses are abolished. The commission may hold a full and complete 22
hearing to determine the cost of fuel, purchased gas, purchased 23
steam, or purchased power separately from a full and complete 24
hearing on a general rate case and may hold that hearing 25
concurrently with the general rate case. The commission shall 26
authorize a utility to recover the cost of fuel, purchased gas, 27
purchased steam, or purchased power only to the extent that the 28
purchases are reasonable and prudent. 29
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(5) Except as otherwise provided in this subsection and 1
subsection (1), if the commission fails to reach a final decision 2
with respect to a completed petition or application to increase or 3
decrease utility rates within the 10-month period following the 4
filing of the completed petition or application, the petition or 5
application is considered approved. If a utility makes any 6
significant amendment to its filing, the commission has an 7
additional 10 months after the date of the amendment to reach a 8
final decision on the petition or application. If the utility files 9
for an extension of time, the commission shall extend the 10-month 10
period by the amount of additional time requested by the utility. 11
(6) A utility shall not file a general rate case application 12
for an increase in rates earlier than 12 months after the date of 13
the filing of a complete prior general rate case application. A 14
utility may not file a new general rate case application until the 15
commission has issued a final order on a prior general rate case or 16
until the rates are approved under subsection (5). 17
(7) The commission shall, if requested by a gas utility, 18
establish load retention transportation rate schedules or approve 19
gas transportation contracts as required for the purpose of serving 20
industrial or commercial customers whose individual annual 21
transportation volumes exceed 500,000 decatherms on the gas 22
utility's system. The commission shall approve these rate schedules 23
or approve transportation contracts entered into by the utility in 24
good faith if the industrial or commercial customer has the 25
installed capability to use an alternative fuel or otherwise has a 26
viable alternative to receiving natural gas transportation service 27
from the utility, the customer can obtain the alternative fuel or 28
gas transportation from an alternative source at a price that would 29
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cause them not to use the gas utility's system, and the customer, 1
as a result of their use of the system and receipt of 2
transportation service, makes a significant contribution to the 3
utility's fixed costs. The commission shall adopt accounting and 4
rate-making policies to ensure that the discounts associated with 5
the transportation rate schedules and contracts are recovered by 6
the gas utility through charges applicable to other customers if 7
the incremental costs related to the discounts are no greater than 8
the costs that would be passed on to those customers as the result 9
of a loss of the industrial or commercial customer's contribution 10
to a utility's fixed costs. 11
(8) The commission shall adopt standard rate application 12
filing forms and instructions for use in all general rate cases 13
filed by utilities whose rates are regulated by the commission. For 14
cooperative electric utilities whose rates are regulated by the 15
commission, in addition to rate applications filed under this 16
section, the commission shall continue to allow for rate filings 17
based on the cooperative's times interest earned ratio. The 18
commission may modify the standard rate application forms and 19
instructions adopted under this subsection. 20
(9) If, on or before January 1, 2008, a merchant plant entered 21
into a contract with an initial term of 20 years or more to sell 22
electricity to an electric utility whose rates are regulated by the 23
commission with 1,000,000 or more retail customers in this state 24
and if, before January 1, 2008, the merchant plant generated 25
electricity under that contract, in whole or in part, from wood or 26
solid wood wastes, then the merchant plant shall, upon on petition 27
by the merchant plant, and subject to the limitation set forth in 28
subsection (10), recover the amount, if any, by which the merchant 29
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plant's reasonably and prudently incurred actual fuel and variable 1
operation and maintenance costs exceed the amount that the merchant 2
plant is paid under the contract for those costs. This subsection 3
does not apply to landfill gas plants, hydro plants, municipal 4
solid waste plants, or to merchant plants engaged in litigation 5
against an electric utility seeking higher payments for power 6
delivered pursuant to contract. 7
(10) The total aggregate additional amounts recoverable by 8
merchant plants under subsection (9) in excess of the amounts paid 9
under the contracts must not exceed $1,000,000.00 per month for 10
each affected electric utility. The $1,000,000.00 per month limit 11
specified in this subsection must be reviewed by the commission 12
upon on petition of the merchant plant filed no more than once per 13
year and may be adjusted if the commission finds that the eligible 14
merchant plants reasonably and prudently incurred actual fuel and 15
variable operation and maintenance costs exceed the amount that 16
those merchant plants are paid under the contract by more than 17
$1,000,000.00 per month. The annual amount of the adjustments must 18
not exceed a rate equal to the United States Consumer Price Index. 19
The commission shall not make an adjustment unless each affected 20
merchant plant files a petition with the commission. If the total 21
aggregate amount by which the eligible merchant plants reasonably 22
and prudently incurred actual fuel and variable operation and 23
maintenance costs determined by the commission exceed the amount 24
that the merchant plants are paid under the contract by more than 25
$1,000,000.00 per month, the commission shall allocate the 26
additional $1,000,000.00 per month payment among the eligible 27
merchant plants based upon on the relationship of excess costs 28
among the eligible merchant plants. The $1,000,000.00 limit 29
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specified in this subsection, as adjusted, does not apply to actual 1
fuel and variable operation and maintenance costs that are incurred 2
due to changes in federal or state environmental laws or 3
regulations that are implemented after October 6, 2008. The 4
$1,000,000.00 per month payment limit under this subsection does 5
not apply to merchant plants eligible under subsection (9) whose 6
electricity is purchased by a utility that is using wood or wood 7
waste or fuels derived from those materials for fuel in their its 8
power plants. As used in this subsection, "United States Consumer 9
Price Index" means the United States Consumer Price Index for all 10
urban consumers as defined and reported by the United States 11
Department of Labor, Bureau of Labor Statistics. 12
(11) The commission shall issue orders to permit the recovery 13
authorized under subsections (9) and (10) upon on petition of the 14
merchant plant. The merchant plant is not required to alter or 15
amend the existing contract with the electric utility in order to 16
obtain the recovery under subsections (9) and (10). The commission 17
shall permit or require the electric utility whose rates are 18
regulated by the commission to recover from its ratepayers all fuel 19
and variable operation and maintenance costs that the electric 20
utility is required to pay to the merchant plant as reasonably and 21
prudently incurred costs. 22
(12) Subject to subsection (13), if requested by an electric 23
utility with less than 200,000 customers in this state, the 24
commission shall approve an appropriate revenue decoupling 25
mechanism that adjusts for decreases in actual sales compared to 26
the projected levels used in that utility's most recent rate case 27
that are the result of implemented energy waste reduction, 28
conservation, demand-side programs, and other waste reduction 29
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measures, if the utility first demonstrates the following to the 1
commission: 2
(a) That the projected sales forecast in the utility's most 3
recent rate case is reasonable. 4
(b) That the electric utility has achieved annual incremental 5
energy savings at least equal to the lesser of the following: 6
(i) The incremental energy savings requirement of section 77(1) 7
of the clean and renewable energy and energy waste reduction act, 8
2008 PA 295, MCL 460.1077. 9
(ii) The amount of any incremental savings yielded by energy 10
waste reduction, conservation, demand-side programs, and other 11
waste reduction measures approved by the commission in that 12
utility's most recent integrated resource plan. 13
(13) The commission shall consider the aggregate revenues 14
attributable to revenue decoupling mechanisms, financial 15
incentives, and shared savings mechanisms the commission has 16
approved for an electric utility relative to energy waste 17
reduction, conservation, demand-side programs, peak load reduction, 18
and other waste reduction measures. The commission may approve an 19
alternative methodology for a revenue decoupling mechanism 20
authorized under subsection (12) or a financial incentive 21
authorized under section 75 of the clean and renewable energy and 22
energy waste reduction act, 2008 PA 295, MCL 460.1075, if the 23
commission determines that the resulting aggregate revenues from 24
those mechanisms would not result in a reasonable and cost-25
effective method to ensure that investments in energy waste 26
reduction, demand-side programs, peak load reduction, and other 27
waste reduction measures are not disfavored when compared to 28
utility supply-side investments. The commission's consideration of 29
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an alternative methodology under this subsection must be conducted 1
as a contested case in accordance with chapter 4 of the 2
administrative procedures act of 1969, 1969 PA 306, MCL 24.271 to 3
24.288. 4
(14) By April 20, 2018, the commission shall conduct a study 5
on an appropriate tariff reflecting equitable cost of service for 6
utility revenue requirements for customers who participate in a net 7
metering program or distributed generation program under the clean 8
and renewable energy and energy waste reduction act, 2008 PA 295, 9
MCL 460.1001 to 460.1211. 460.1232. In any rate case filed after 10
June 1, 2018, the commission shall, subject to section 173(7) of 11
the clean and renewable energy and energy waste reduction act, 2008 12
PA 295, MCL 460.1173, approve such a tariff for inclusion in the 13
rates of all customers participating in a net metering or 14
distributed generation program under the clean and renewable energy 15
and energy waste reduction act, 2008 PA 295, MCL 460.1001 to 16
460.1211. 460.1232. A tariff established under this subsection does 17
not apply to customers participating in a net metering program 18
under the clean and renewable energy and energy waste reduction 19
act, 2008 PA 295, MCL 460.1001 to 460.1211, 460.1232, before the 20
date that the commission establishes a tariff under this 21
subsection, who continues to participate in the program at their 22
current site or facility. 23
(15) The commission shall not authorize a return on equity for 24
an electric utility or natural gas utility that exceeds 8.2%. 25
(16) If the commission determines that an electric utility's 26
or natural gas utility's return on equity has exceeded the amount 27
allowed in subsection (15), the commission shall order the utility 28
to refund to customers, with interest, any amount collected that 29
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exceed the amount allowed under subsection (15) and do all of the 1
following: 2
(a) For the first offense, pay a fine of not less than 3
$1,000.00 or more than $20,000.00. 4
(b) For a second offense, pay a fine of not more than 0.1% of 5
the utility's annual revenue. 6
(c) For a third and any subsequent offense, pay a fine of not 7
less than 0.1% of the utility's annual revenue or more than 0.5% of 8
the utility's annual revenue. 9
(17) A fine ordered under subsection (16) must be deposited in 10
the low-income energy assistance fund created in section 9t. 11
(18) (15) Except as otherwise provided in this act, "utility" 12
and "electric utility" do not include a municipally owned electric 13
utility. 14
(19) (16) As used in this section: 15
(a) "Full and complete hearing" means a hearing that provides 16
interested parties a reasonable opportunity to present and cross-17
examine evidence and present arguments relevant to the specific 18
element or elements of the request that are the subject of the 19
hearing. 20
(b) "General rate case" means a proceeding initiated by a 21
utility in an application filed with the commission that alleges a 22
revenue deficiency and requests an increase in the schedule of 23
rates or charges based on the utility's total cost of providing 24
service. 25
(c) "Steam utility" means a steam distribution company 26
regulated by the commission. 27