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HOUSE BILL NO. 6131
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
June 25, 2026, Introduced by Reps. Miller, Dievendorf and Foreman and referred to Committee
on Government Operations.
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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:
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 on 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
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requested rates and charges. The commission shall notify the 1
utility within not later than 30 days after filing, whether the 2
utility's petition or application is complete. A petition or 3
application is considered complete if it complies with the rate 4
application filing forms and instructions adopted under subsection 5
(8). If the application is not complete, the commission shall 6
notify the utility of all information necessary to make that filing 7
complete. If the commission has not notified the utility within 30 8
days of whether the utility's petition or application is complete, 9
the application is considered complete. Concurrently with filing a 10
complete application, or at any time after filing a complete 11
application, a gas utility serving fewer than 1,000,000 customers 12
in this state may file a motion seeking partial and immediate rate 13
relief. After providing notice to the interested parties within in 14
the service area to be affected and affording interested parties a 15
reasonable opportunity to present written evidence and written 16
arguments relevant to the motion seeking partial and immediate rate 17
relief, the commission shall make a finding and enter an order 18
granting or denying partial and immediate relief within not later 19
than 180 days after the motion seeking partial and immediate rate 20
relief was submitted. The commission has 12 months to issue a final 21
order in a case in which a gas utility has filed a motion seeking 22
partial and immediate rate relief. 23
(2) If the commission has not issued an order within 180 days 24
after the filing of a complete application, the utility may 25
implement up to the amount of the proposed annual rate request 26
through equal percentage increases or decreases applied to all base 27
rates. If the utility uses projected costs and revenues for a 28
future period in developing its requested rates and charges, the 29
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utility may not implement the equal percentage increases or 1
decreases before the calendar date corresponding to the start of 2
the projected 12-month period. For good cause, the commission may 3
issue a temporary order preventing or delaying a utility from 4
implementing its proposed rates or charges. If a utility implements 5
increased rates or charges under this subsection before the 6
commission issues a final order, that utility shall refund to 7
customers, with interest, any portion of the total revenues 8
collected through application of the equal percentage increase that 9
exceed the total that would have been produced by the rates or 10
charges subsequently ordered by the commission in its final order. 11
The commission shall allocate any refund required by this 12
subsection among primary customers based upon their on the 13
customer's pro rata share of the total revenue collected through 14
the applicable increase, and among secondary and residential 15
customers in a manner to be determined by the commission. The rate 16
of interest for refunds is 5% plus the London interbank offered 17
rate (LIBOR) for the appropriate time period. For any portion of 18
the refund that, exclusive of interest, exceeds 25% of the annual 19
revenue increase awarded by the commission in its final order, the 20
rate of interest is the authorized rate of return on the common 21
stock of the utility during the appropriate period. Any refund or 22
interest awarded under this subsection must not be included, in 23
whole or in part, in any application for a rate increase by a 24
utility. This subsection only applies to completed applications 25
filed with the commission before April 20, 2017. 26
(3) This section does not impair the commission's ability to 27
issue a show cause order as part of its rate-making authority. An 28
alteration or amendment in rates or rate schedules applied for by a 29
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public utility that will not result in an increase in the cost of 1
service to its customers may be authorized and approved without 2
notice or hearing. There shall must be no increase in rates based 3
upon on changes in cost of fuel, purchased gas, or purchased steam 4
unless notice has been given within in the service area to be 5
affected, and there has been an opportunity for a full and complete 6
hearing on the cost of fuel, purchased gas, or purchased steam. The 7
rates charged by any utility under an automatic fuel, purchased 8
gas, or purchased steam adjustment clause shall must not be 9
altered, changed, or amended unless notice has been given within in 10
the service area to be affected, and there has been an opportunity 11
for a full and complete hearing on the cost of the fuel, purchased 12
gas, or purchased steam. 13
(4) The commission shall adopt rules and procedures for the 14
filing, investigation, and hearing of petitions or applications to 15
increase or decrease utility rates and charges as the commission 16
finds necessary or appropriate to enable it to reach a final 17
decision with respect to petitions or applications within a period 18
of time allotted by law to issue a final order after the filing of 19
the complete petitions or applications. The commission shall not 20
authorize or approve adjustment clauses that operate without notice 21
and an opportunity for a full and complete hearing, and all such 22
clauses are abolished. The commission may hold a full and complete 23
hearing to determine the cost of fuel, purchased gas, purchased 24
steam, or purchased power separately from a full and complete 25
hearing on a general rate case and may hold that hearing 26
concurrently with the general rate case. The commission shall 27
authorize a utility to recover the cost of fuel, purchased gas, 28
purchased steam, or purchased power only to the extent that the 29
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purchases are reasonable and prudent. 1
(5) Except as otherwise provided in this subsection and 2
subsection (1), if the commission fails to reach a final decision 3
with respect to a completed petition or application to increase or 4
decrease utility rates within in the 10-month period following the 5
filing of the completed petition or application, the petition or 6
application is considered approved. If a utility makes any 7
significant amendment to its filing, the commission has an 8
additional 10 months after the date of the amendment to reach a 9
final decision on the petition or application. If the utility files 10
for an extension of time, the commission shall extend the 10-month 11
period by the amount of additional time requested by the utility. 12
(6) A utility shall not file a general rate case application 13
for an increase in rates earlier than 12 months after the date of 14
the filing of a complete prior general rate case application. A 15
utility may not file a new general rate case application until the 16
commission has issued a final order on a prior general rate case or 17
until the rates are approved under subsection (5). 18
(7) The commission shall, if requested by a gas utility, 19
establish load retention transportation rate schedules or approve 20
gas transportation contracts as required for the purpose of serving 21
industrial or commercial customers whose individual annual 22
transportation volumes exceed 500,000 decatherms on the gas 23
utility's system. The commission shall approve these rate schedules 24
or approve transportation contracts entered into by the utility in 25
good faith if the industrial or commercial customer has the 26
installed capability to use an alternative fuel or otherwise has a 27
viable alternative to receiving natural gas transportation service 28
from the utility, the customer can obtain the alternative fuel or 29
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gas transportation from an alternative source at a price that would 1
cause them not to use the gas utility's system, and the customer, 2
as a result of their use of the system and receipt of 3
transportation service, makes a significant contribution to the 4
utility's fixed costs. The commission shall adopt accounting and 5
rate-making policies to ensure that the discounts associated with 6
the transportation rate schedules and contracts are recovered by 7
the gas utility through charges applicable to other customers if 8
the incremental costs related to the discounts are no greater than 9
the costs that would be passed on to those customers as the result 10
of a loss of the industrial or commercial customer's contribution 11
to a utility's fixed costs. 12
(8) The commission shall adopt standard rate application 13
filing forms and instructions for use in all general rate cases 14
filed by utilities whose rates are regulated by the commission. For 15
cooperative electric utilities whose rates are regulated by the 16
commission, in addition to rate applications filed under this 17
section, the commission shall continue to allow for rate filings 18
based on the cooperative's times interest earned ratio. The 19
commission may modify the standard rate application forms and 20
instructions adopted under this subsection. 21
(9) If, on or before January 1, 2008, a merchant plant entered 22
into a contract with an initial term of 20 years or more to sell 23
electricity to an electric utility whose rates are regulated by the 24
commission with 1,000,000 or more retail customers in this state 25
and if, before January 1, 2008, the merchant plant generated 26
electricity under that contract, in whole or in part, from wood or 27
solid wood wastes, then the merchant plant shall, upon on petition 28
by the merchant plant, and subject to the limitation set forth in 29
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subsection (10), recover the amount, if any, by which the merchant 1
plant's reasonably and prudently incurred actual fuel and variable 2
operation and maintenance costs exceed the amount that the merchant 3
plant is paid under the contract for those costs. This subsection 4
does not apply to landfill gas plants, hydro plants, municipal 5
solid waste plants, or to merchant plants engaged in litigation 6
against an electric utility seeking higher payments for power 7
delivered pursuant to contract. 8
(10) The total aggregate additional amounts recoverable by 9
merchant plants under subsection (9) in excess of the amounts paid 10
under the contracts must not exceed $1,000,000.00 per month for 11
each affected electric utility. The $1,000,000.00 per month limit 12
specified in this subsection must be reviewed by the commission 13
upon on petition of the merchant plant filed no more than once per 14
year and may be adjusted if the commission finds that the eligible 15
merchant plants reasonably and prudently incurred actual fuel and 16
variable operation and maintenance costs exceed the amount that 17
those merchant plants are paid under the contract by more than 18
$1,000,000.00 per month. The annual amount of the adjustments must 19
not exceed a rate equal to the United States Consumer Price Index. 20
The commission shall not make an adjustment unless each affected 21
merchant plant files a petition with the commission. If the total 22
aggregate amount by which the eligible merchant plants reasonably 23
and prudently incurred actual fuel and variable operation and 24
maintenance costs determined by the commission exceed the amount 25
that the merchant plants are paid under the contract by more than 26
$1,000,000.00 per month, the commission shall allocate the 27
additional $1,000,000.00 per month payment among the eligible 28
merchant plants based upon the relationship of excess costs among 29
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the eligible merchant plants. The $1,000,000.00 limit specified in 1
this subsection, as adjusted, does not apply to actual fuel and 2
variable operation and maintenance costs that are incurred due to 3
changes in federal or state environmental laws or regulations that 4
are implemented after October 6, 2008. The $1,000,000.00 per month 5
payment limit under this subsection does not apply to merchant 6
plants eligible under subsection (9) whose electricity is purchased 7
by a utility that is using wood or wood waste or fuels derived from 8
those materials for fuel in their its power plants. As used in this 9
subsection, "United States Consumer Price Index" means the United 10
States Consumer Price Index for all urban consumers as defined and 11
reported by the United States Department of Labor, Bureau of Labor 12
Statistics. 13
(11) The commission shall issue orders to permit the recovery 14
authorized under subsections (9) and (10) upon on petition of the 15
merchant plant. The merchant plant is not required to alter or 16
amend the existing contract with the electric utility in order to 17
obtain the recovery under subsections (9) and (10). The commission 18
shall permit or require the electric utility whose rates are 19
regulated by the commission to recover from its ratepayers all fuel 20
and variable operation and maintenance costs that the electric 21
utility is required to pay to the merchant plant as reasonably and 22
prudently incurred costs. 23
(12) Subject to subsection (13), if requested by an electric 24
utility with less than 200,000 customers in this state, the 25
commission shall approve an appropriate revenue decoupling 26
mechanism that adjusts for decreases in actual sales compared to 27
the projected levels used in that utility's most recent rate case 28
that are the result of implemented energy waste reduction, 29
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conservation, demand-side programs, and other waste reduction 1
measures, if the utility first demonstrates the following to the 2
commission: 3
(a) That the projected sales forecast in the utility's most 4
recent rate case is reasonable. 5
(b) That the electric utility has achieved annual incremental 6
energy savings at least equal to the lesser of the following: 7
(i) The incremental energy savings requirement of section 77(1) 8
of the clean and renewable energy and energy waste reduction act, 9
2008 PA 295, MCL 460.1077. 10
(ii) The amount of any incremental savings yielded by energy 11
waste reduction, conservation, demand-side programs, and other 12
waste reduction measures approved by the commission in that 13
utility's most recent integrated resource plan. 14
(13) The commission shall consider the aggregate revenues 15
attributable to revenue decoupling mechanisms, financial 16
incentives, and shared savings mechanisms the commission has 17
approved for an electric utility relative to energy waste 18
reduction, conservation, demand-side programs, peak load reduction, 19
and other waste reduction measures. The commission may approve an 20
alternative methodology for a revenue decoupling mechanism 21
authorized under subsection (12) or a financial incentive 22
authorized under section 75 of the clean and renewable energy and 23
energy waste reduction act, 2008 PA 295, MCL 460.1075, if the 24
commission determines that the resulting aggregate revenues from 25
those mechanisms would not result in a reasonable and cost-26
effective method to ensure that investments in energy waste 27
reduction, demand-side programs, peak load reduction, and other 28
waste reduction measures are not disfavored when compared to 29
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utility supply-side investments. The commission's consideration of 1
an alternative methodology under this subsection must be conducted 2
as a contested case in accordance with chapter 4 of the 3
administrative procedures act of 1969, 1969 PA 306, MCL 24.271 to 4
24.288. 5
(14) By April 20, 2018, the commission shall conduct a study 6
on an appropriate tariff reflecting equitable cost of service for 7
utility revenue requirements for customers who participate in a net 8
metering program or distributed generation program under the clean 9
and renewable energy and energy waste reduction act, 2008 PA 295, 10
MCL 460.1001 to 460.1211. 460.1232. In any rate case filed after 11
June 1, 2018, the commission shall, subject to section 173(7) of 12
the clean and renewable energy and energy waste reduction act, 2008 13
PA 295, MCL 460.1173, approve such a tariff for inclusion in the 14
rates of all customers participating in a net metering or 15
distributed generation program under the clean and renewable energy 16
and energy waste reduction act, 2008 PA 295, MCL 460.1001 to 17
460.1211.460.1232. A tariff established under this subsection does 18
not apply to customers participating in a net metering program 19
under the clean and renewable energy and energy waste reduction 20
act, 2008 PA 295, MCL 460.1001 to 460.1211, 460.1232, before the 21
date that the commission establishes a tariff under this 22
subsection, who continues to participate in the program at their 23
current site or facility. 24
(15) A utility that requests a rate increase under this 25
section shall include in its application a clear itemized summary 26
describing how the utility proposes to allocate the additional 27
revenue sought through the rate increase. The itemized summary 28
must, at a minimum, identify anticipated allocations among the 29
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following categories, presented in aggregated form: 1
(a) Capital investments and infrastructure improvements. 2
(b) Operations and maintenance costs. 3
(c) Debt service and financing obligations. 4
(d) Executive compensation, including bonuses and incentive-5
based pay. 6
(e) Shareholder distributions, including dividends and stock 7
repurchases. 8
(16) The information required under subsection (15) must be 9
included in the utility's filing in a manner consistent with filing 10
instructions issued by the commission and may be presented as 11
estimated dollar amounts, percentage ranges, or narrative 12
explanations sufficient to inform the public and interested 13
parties. The commission shall incorporate the requirements of 14
subsection (15) into its existing rate case filing instructions and 15
procedures. The information required under subsection (15) is for 16
informational purposes only and the commission shall not use that 17
information as a basis to approve, deny, or condition a rate 18
request. This subsection does not expand, limit, or otherwise 19
modify the commission's discretion, standards, or authority for 20
evaluating, approving, or denying a rate request. Information 21
submitted under subsection (15) must be made available in the 22
public docket at the time the rate increase request is filed, 23
subject to existing laws governing confidential or proprietary 24
information. 25
(17) (15) Except as otherwise provided in this act, "utility" 26
and "electric utility" do not include a municipally owned electric 27
utility. 28
(18) (16) As used in this section: 29
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(a) "Full and complete hearing" means a hearing that provides 1
interested parties a reasonable opportunity to present and cross-2
examine evidence and present arguments relevant to the specific 3
element or elements of the request that are the subject of the 4
hearing. 5
(b) "General rate case" means a proceeding initiated by a 6
utility in an application filed with the commission that alleges a 7
revenue deficiency and requests an increase in the schedule of 8
rates or charges based on the utility's total cost of providing 9
service. 10
(c) "Steam utility" means a steam distribution company 11
regulated by the commission. 12