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KHS S01822'25_SB1031_INTR_1 90yo45
SENATE BILL NO. 1031
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
June 10, 2026, Introduced by Senator RUNESTAD and referred to Committee on Energy and
Environment.
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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
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
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for a future consecutive 12-month period in developing its 1
requested rates and charges. The commission shall use a utility's 2
actual cost of providing service during a historical test year 3
adjusted only for known and measurable changes in establishing that 4
utility's rates and charges. The commission shall notify the 5
utility within not later than 30 days after filing, whether the 6
utility's petition or application is complete. A petition or 7
application is considered complete if it complies with the rate 8
application filing forms and instructions adopted under subsection 9
(8). If the application is not complete, the commission shall 10
notify the utility of all information necessary to make that filing 11
complete. If the commission has not notified the utility within 30 12
days of whether the utility's petition or application is complete, 13
the application is considered complete. Concurrently with filing a 14
complete application, or at any time after filing a complete 15
application, a gas utility serving fewer than 1,000,000 customers 16
in this state may file a motion seeking partial and immediate rate 17
relief. After providing notice to the interested parties within the 18
service area to be affected and affording interested parties a 19
reasonable opportunity to present written evidence and written 20
arguments relevant to the motion seeking partial and immediate rate 21
relief, the commission shall make a finding and enter an order 22
granting or denying partial and immediate relief within not later 23
than 180 days after the motion seeking partial and immediate rate 24
relief was submitted. The commission has 12 months to issue a final 25
order in a case in which a gas utility has filed a motion seeking 26
partial and immediate rate relief. 27
(2) If the commission has not issued an order within 180 days 28
after the filing of a complete application, the utility may 29
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implement up to the amount of the proposed annual rate request 1
through equal percentage increases or decreases applied to all base 2
rates. If the utility uses projected costs and revenues for a 3
future period in developing its requested rates and charges, the 4
utility may not implement the equal percentage increases or 5
decreases before the calendar date corresponding to the start of 6
the projected 12-month period. For good cause, the commission may 7
issue a temporary order preventing or delaying a utility from 8
implementing its proposed rates or charges. If a utility implements 9
increased rates or charges under this subsection before the 10
commission issues a final order, that utility shall refund to 11
customers, with interest, any portion of the total revenues 12
collected through application of the equal percentage increase that 13
exceed the total that would have been produced by the rates or 14
charges subsequently ordered by the commission in its final order. 15
The commission shall allocate any refund required by this 16
subsection among primary customers based upon their pro rata share 17
of the total revenue collected through the applicable increase, and 18
among secondary and residential customers in a manner to be 19
determined by the commission. The rate of interest for refunds is 20
5% plus the London interbank offered rate (LIBOR) for the 21
appropriate time period. For any portion of the refund that, 22
exclusive of interest, exceeds 25% of the annual revenue increase 23
awarded by the commission in its final order, the rate of interest 24
is the authorized rate of return on the common stock of the utility 25
during the appropriate period. Any refund or interest awarded under 26
this subsection must not be included, in whole or in part, in any 27
application for a rate increase by a utility. This subsection only 28
applies to completed applications filed with the commission before 29
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April 20, 2017. 1
(3) This section does not impair the commission's ability to 2
issue a show cause order as part of its rate-making authority. An 3
alteration or amendment in rates or rate schedules applied for by a 4
public utility that will not result in an increase in the cost of 5
service to its customers may be authorized and approved without 6
notice or hearing. There shall be no increase in rates based upon 7
changes in cost of fuel, purchased gas, or purchased steam unless 8
notice has been given within the service area to be affected, and 9
there has been an opportunity for a full and complete hearing on 10
the cost of fuel, purchased gas, or purchased steam. The rates 11
charged by any utility under an automatic fuel, purchased gas, or 12
purchased steam adjustment clause shall must not be altered, 13
changed, or amended unless notice has been given within the service 14
area to be affected, and there has been an opportunity for a full 15
and complete hearing on the cost of the fuel, purchased gas, or 16
purchased steam. 17
(4) The commission shall adopt rules and procedures for the 18
filing, investigation, and hearing of petitions or applications to 19
increase or decrease utility rates and charges as the commission 20
finds necessary or appropriate to enable it to reach a final 21
decision with respect to petitions or applications within a period 22
of time allotted by law to issue a final order after the filing of 23
the complete petitions or applications. The commission shall not 24
authorize or approve adjustment clauses that operate without notice 25
and an opportunity for a full and complete hearing, and all such 26
clauses are abolished. The commission may hold a full and complete 27
hearing to determine the cost of fuel, purchased gas, purchased 28
steam, or purchased power separately from a full and complete 29
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hearing on a general rate case and may hold that hearing 1
concurrently with the general rate case. The commission shall 2
authorize a utility to recover the cost of fuel, purchased gas, 3
purchased steam, or purchased power only to the extent that the 4
purchases are reasonable and prudent. 5
(5) Except as otherwise provided in this subsection and 6
subsection (1), if the commission fails to reach a final decision 7
with respect to a completed petition or application to increase or 8
decrease utility rates within the 10-month period following the 9
filing of the completed petition or application, the petition or 10
application is considered approved. If a utility makes any 11
significant amendment to its filing, the commission has an 12
additional 10 months after the date of the amendment to reach a 13
final decision on the petition or application. If the utility files 14
for an extension of time, the commission shall extend the 10-month 15
period by the amount of additional time requested by the utility. 16
(6) A utility shall not file a general rate case application 17
for an increase in rates earlier than 12 months after the date of 18
the filing of a complete prior general rate case application. A 19
utility may not file a new general rate case application until the 20
commission has issued a final order on a prior general rate case or 21
until the rates are approved under subsection (5). 22
(7) The commission shall, if requested by a gas utility, 23
establish load retention transportation rate schedules or approve 24
gas transportation contracts as required for the purpose of serving 25
industrial or commercial customers whose individual annual 26
transportation volumes exceed 500,000 decatherms on the gas 27
utility's system. The commission shall approve these rate schedules 28
or approve transportation contracts entered into by the utility in 29
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good faith if the industrial or commercial customer has the 1
installed capability to use an alternative fuel or otherwise has a 2
viable alternative to receiving natural gas transportation service 3
from the utility, the customer can obtain the alternative fuel or 4
gas transportation from an alternative source at a price that would 5
cause them not to use the gas utility's system, and the customer, 6
as a result of their use of the system and receipt of 7
transportation service, makes a significant contribution to the 8
utility's fixed costs. The commission shall adopt accounting and 9
rate-making policies to ensure that the discounts associated with 10
the transportation rate schedules and contracts are recovered by 11
the gas utility through charges applicable to other customers if 12
the incremental costs related to the discounts are no greater than 13
the costs that would be passed on to those customers as the result 14
of a loss of the industrial or commercial customer's contribution 15
to a utility's fixed costs. 16
(8) The commission shall adopt standard rate application 17
filing forms and instructions for use in all general rate cases 18
filed by utilities whose rates are regulated by the commission. For 19
cooperative electric utilities whose rates are regulated by the 20
commission, in addition to rate applications filed under this 21
section, the commission shall continue to allow for rate filings 22
based on the cooperative's times interest earned ratio. The 23
commission may modify the standard rate application forms and 24
instructions adopted under this subsection. 25
(9) If, on or before January 1, 2008, a merchant plant entered 26
into a contract with an initial term of 20 years or more to sell 27
electricity to an electric utility whose rates are regulated by the 28
commission with 1,000,000 or more retail customers in this state 29
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and if, before January 1, 2008, the merchant plant generated 1
electricity under that contract, in whole or in part, from wood or 2
solid wood wastes, then the merchant plant shall, upon petition by 3
the merchant plant, and subject to the limitation set forth in 4
subsection (10), recover the amount, if any, by which the merchant 5
plant's reasonably and prudently incurred actual fuel and variable 6
operation and maintenance costs exceed the amount that the merchant 7
plant is paid under the contract for those costs. This subsection 8
does not apply to landfill gas plants, hydro plants, municipal 9
solid waste plants, or to merchant plants engaged in litigation 10
against an electric utility seeking higher payments for power 11
delivered pursuant to contract. 12
(10) The total aggregate additional amounts recoverable by 13
merchant plants under subsection (9) in excess of the amounts paid 14
under the contracts must not exceed $1,000,000.00 per month for 15
each affected electric utility. The $1,000,000.00 per month limit 16
specified in this subsection must be reviewed by the commission 17
upon petition of the merchant plant filed no more than once per 18
year and may be adjusted if the commission finds that the eligible 19
merchant plants reasonably and prudently incurred actual fuel and 20
variable operation and maintenance costs exceed the amount that 21
those merchant plants are paid under the contract by more than 22
$1,000,000.00 per month. The annual amount of the adjustments must 23
not exceed a rate equal to the United States Consumer Price Index. 24
The commission shall not make an adjustment unless each affected 25
merchant plant files a petition with the commission. If the total 26
aggregate amount by which the eligible merchant plants reasonably 27
and prudently incurred actual fuel and variable operation and 28
maintenance costs determined by the commission exceed the amount 29
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that the merchant plants are paid under the contract by more than 1
$1,000,000.00 per month, the commission shall allocate the 2
additional $1,000,000.00 per month payment among the eligible 3
merchant plants based upon on the relationship of excess costs 4
among the eligible merchant plants. The $1,000,000.00 limit 5
specified in this subsection, as adjusted, does not apply to actual 6
fuel and variable operation and maintenance costs that are incurred 7
due to changes in federal or state environmental laws or 8
regulations that are implemented after October 6, 2008. The 9
$1,000,000.00 per month payment limit under this subsection does 10
not apply to merchant plants eligible under subsection (9) whose 11
electricity is purchased by a utility that is using wood or wood 12
waste or fuels derived from those materials for fuel in their its 13
power plants. As used in this subsection, "United States Consumer 14
Price Index" means the United States Consumer Price Index for all 15
urban consumers as defined and reported by the United States 16
Department of Labor, Bureau of Labor Statistics. 17
(11) The commission shall issue orders to permit the recovery 18
authorized under subsections (9) and (10) upon petition of the 19
merchant plant. The merchant plant is not required to alter or 20
amend the existing contract with the electric utility in order to 21
obtain the recovery under subsections (9) and (10). The commission 22
shall permit or require the electric utility whose rates are 23
regulated by the commission to recover from its ratepayers all fuel 24
and variable operation and maintenance costs that the electric 25
utility is required to pay to the merchant plant as reasonably and 26
prudently incurred costs. 27
(12) Subject to subsection (13), if requested by an electric 28
utility with less than 200,000 customers in this state, the 29
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commission shall approve an appropriate revenue decoupling 1
mechanism that adjusts for decreases in actual sales compared to 2
the projected levels used in that utility's most recent rate case 3
that are the result of implemented energy waste reduction, 4
conservation, demand-side programs, and other waste reduction 5
measures, if the utility first demonstrates the following to the 6
commission: 7
(a) That the projected sales forecast in the utility's most 8
recent rate case is reasonable. 9
(b) That the electric utility has achieved annual incremental 10
energy savings at least equal to the lesser of the following: 11
(i) The incremental energy savings requirement of section 77(1) 12
of the clean and renewable energy and energy waste reduction act, 13
2008 PA 295, MCL 460.1077. 14
(ii) The amount of any incremental savings yielded by energy 15
waste reduction, conservation, demand-side programs, and other 16
waste reduction measures approved by the commission in that 17
utility's most recent integrated resource plan. 18
(13) The commission shall consider the aggregate revenues 19
attributable to revenue decoupling mechanisms, financial 20
incentives, and shared savings mechanisms the commission has 21
approved for an electric utility relative to energy waste 22
reduction, conservation, demand-side programs, peak load reduction, 23
and other waste reduction measures. The commission may approve an 24
alternative methodology for a revenue decoupling mechanism 25
authorized under subsection (12) or a financial incentive 26
authorized under section 75 of the clean and renewable energy and 27
energy waste reduction act, 2008 PA 295, MCL 460.1075, if the 28
commission determines that the resulting aggregate revenues from 29
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those mechanisms would not result in a reasonable and cost-1
effective method to ensure that investments in energy waste 2
reduction, demand-side programs, peak load reduction, and other 3
waste reduction measures are not disfavored when compared to 4
utility supply-side investments. The commission's consideration of 5
an alternative methodology under this subsection must be conducted 6
as a contested case in accordance with chapter 4 of the 7
administrative procedures act of 1969, 1969 PA 306, MCL 24.271 to 8
24.288. 9
(14) By April 20, 2018, the commission shall conduct a study 10
on an appropriate tariff reflecting equitable cost of service for 11
utility revenue requirements for customers who participate in a net 12
metering program or distributed generation program under the clean 13
and renewable energy and energy waste reduction act, 2008 PA 295, 14
MCL 460.1001 to 460.1211. 460.1232. In any rate case filed after 15
June 1, 2018, the commission shall, subject to section 173(7) of 16
the clean and renewable energy and energy waste reduction act, 2008 17
PA 295, MCL 460.1173, approve such a tariff for inclusion in the 18
rates of all customers participating in a net metering or 19
distributed generation program under the clean and renewable energy 20
and energy waste reduction act, 2008 PA 295, MCL 460.1001 to 21
460.1211. 460.1232. A tariff established under this subsection does 22
not apply to customers participating in a net metering program 23
under the clean and renewable energy and energy waste reduction 24
act, 2008 PA 295, MCL 460.1001 to 460.1211, 460.1232, before the 25
date that the commission establishes a tariff under this 26
subsection, who continues to participate in the program at their 27
current site or facility. 28
(15) Except as otherwise provided in this act, "utility" and 29
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"electric utility" do not include a municipally owned electric 1
utility. 2
(16) As used in this section: 3
(a) "Full and complete hearing" means a hearing that provides 4
interested parties a reasonable opportunity to present and cross-5
examine evidence and present arguments relevant to the specific 6
element or elements of the request that are the subject of the 7
hearing. 8
(b) "General rate case" means a proceeding initiated by a 9
utility in an application filed with the commission that alleges a 10
revenue deficiency and requests an increase in the schedule of 11
rates or charges based on the utility's total cost of providing 12
service. 13
(c) "Historical test year" means the most recent 12-month 14
period for which the utility has actual cost and revenue data. 15
(d) (c) "Steam utility" means a steam distribution company 16
regulated by the commission. 17