December 4, 2007, Introduced by Reps. LaJoy, Mayes, Gaffney, Hune and Accavitti and referred to the Committee on Energy and Technology.
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,"
(MCL 460.1 to 460.10cc) by adding section 11.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 11. (1) Subject to subsections (2), (4), and (7), the
commission shall adopt electric rates that reflect the cost of
providing service to each customer class. The cost of providing
service to each customer class shall be determined using a method
that allocates costs among customer classes as follows:
(a) Production-related and transmission costs to each customer
class based on the 75-25 method of cost allocation.
(b) Fixed costs based upon the demand of each customer class.
(c) Costs that vary with the number of customers based upon
the number of customers in each class.
(d) Costs that vary with electricity usage based upon the
level of electricity consumption in each customer class.
(2) Notwithstanding any other provision of this section, the
commission shall establish rate schedules which ensure that public
and private schools, universities, and community colleges are
charged retail electric rates that reflect the actual cost of
providing service to those customers. Not later than 90 days after
the effective date of the amendatory act that added this section,
electric utilities regulated under this section shall file with the
commission tariffs to ensure that public and private schools,
universities, and community colleges are charged electric rates
that fully reflect their unique load characteristics.
(3) For the purposes of this section, the commission shall
determine the demand of each customer class based upon the
contribution of each customer class to the average of the utility's
12 monthly system coincident peak demands for the relevant 12-month
period.
(4) The commission shall adopt rates that take into account
cost differences based upon the time of day and season of year, the
ability of a customer to shift usage from peak to off-peak periods,
and the cost of interruptible service.
(5) If it determines that it is necessary to minimize impact
on customers, the commission may phase in cost-based rates over a
period that does not exceed 3 years from the effective date of the
amendatory act that added this section for primary customers and
over a period that does not exceed 7 years from the effective date
of the amendatory act that added this section for secondary or
residential customers.
(6) During the phase-in period described in subsection (5),
the commission shall, for each customer class, ensure that rates in
effect for customers receiving service from alternative electric
suppliers reflect the full amount, whether positive or negative, by
which the rates in effect for other customers in the same customer
class differ from actual cost of service. Any differential may be
allocated on a per-customer basis.
(7) Notwithstanding subsection (1), the commission shall
establish 1 or more economic incentive rate schedules or approve 1
or more special contracts for the purpose of attracting or
retaining industrial or commercial facilities in this state. The
commission shall adopt policies to determine what facilities are
eligible for those rate schedules or contracts. In adopting the
policies under this subsection, the commission shall consider
whether the facilities have received a competitive and verifiable
economic incentive rate from another state or jurisdiction, are in
an energy intensive industry, create significant jobs, tax revenue,
or other economic benefits to this state, are eligible for and have
received economic development incentives from the Michigan economic
development corporation, or are engaged in a competitive edge
technology as defined in section 88a of the Michigan strategic fund
act, 1984 PA 270, 125.2088a. The annual aggregate amount of
electricity available under the economic incentive rate schedules
or contracts for an individual utility shall be limited to an
amount equal to 5% of the utility's primary load. The commission
shall adopt accounting and rate-making policies to ensure that all
discounts provided under this subsection are recovered by the
utility through charges applicable to all customers.
(8) As used in this section:
(a) "Customer class" means groupings of customers determined
by the commission based upon the voltage level at which each
customer receives electric service.
(b) "Fixed costs" means those non-production-related and
nontransmission costs that do not vary directly with the number of
customers or the level of electricity use.
(c) "Primary customers" means customers receiving service at a
nominal voltage level equal to or exceeding 2,400 volts.
(d) "Secondary customers" means nonresidential customers
receiving service at a nominal voltage level less than 2,400 volts.
(e) "75-25 method of cost allocation" means a cost allocation
method which allocates 75% of total capacity costs based upon the
demand of each customer class and 25% of total capacity costs based
upon the level of electricity consumption of each customer class.
Enacting section 1. This amendatory act does not take effect
unless all of the following bills of the 94th Legislature are
enacted into law:
(a) Senate Bill No.____ or House Bill No. 5524(request no.
02552'07*).
(b) Senate Bill No.____ or House Bill No. 5521(request no.
04883'07*).
(c) Senate Bill No.____ or House Bill No. 5520(request no.
04885'07*).
(d) Senate Bill No.____ or House Bill No. 5523(request no.
05023'07*).
(e) Senate Bill No.____ or House Bill No.____ (request no.
05570'07).
(f) Senate Bill No.____ or House Bill No.____ (request no.
05919'07).
(g) Senate Bill No.____ or House Bill No. 5525(request no.
05920'07).
(h) House Bill No. 5383.
(i) House Bill No. 5384.