HOUSE BILL No. 6755

 

November 25, 2008, Introduced by Rep. Mayes 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,"

 

by amending section 11 (MCL 460.11), as added by 2008 PA 286.


 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 11. (1) This subsection applies beginning January 1,

 

2009. Except as otherwise provided in this subsection, the

 

commission shall phase in electric rates equal to the cost of

 

providing service to each customer class over a period of 5 years

 

from the effective date of the amendatory act that added this

 

section October 6, 2008. If the commission determines that the rate

 

impact on industrial metal melting customers will exceed the 2.5%

 

limit provided in subsection (2), the commission may phase in cost-

 

based rates for that class over a longer period. The cost of

 

providing service to each customer class shall be based on the

 

allocation of production-related and transmission costs based on

 

using the 50-25-25 method of cost allocation. The commission may

 

modify this method to better ensure that rates are equal to the

 

cost of service if this method does not result in a greater amount

 

of production-related and transmission costs allocated to primary

 

customers.

 

     (2) The commission shall ensure that the impact on residential

 

and industrial metal melting rates due to the cost of service

 

requirement provided in subsection (1) is no more than 2.5% per

 

year.

 

     (3) Notwithstanding any other provision of this act, the

 

commission may establish eligible low-income customer or eligible

 

senior citizen customer rates. Upon filing of a rate increase

 

request, a utility shall include proposed eligible low-income

 

customer and eligible senior citizen customer rates and a method

 

methodology to allocate the revenue shortfall attributed to the


 

implementation of those rates upon all customer classes. As used in

 

this subsection, "eligible low-income customer" and "eligible

 

senior citizen customer" mean those terms as defined in section

 

10t.

 

     (4) 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

 

October 6, 2008, 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 as provided in this subsection.

 

     (5) Subsections (1) to (4) apply only to electric utilities

 

with 1,000,000 or more retail customers in this state.

 

     (6) This subsection applies beginning January 1, 2009. The

 

commission shall approve rates equal to the cost of providing

 

service to customers of electric utilities serving less than

 

1,000,000 retail customers in this state. The rates shall be

 

approved by the commission in each utility's first general rate

 

case filed after passage of the amendatory act that added this

 

section 2008 PA 286. If, in the judgment of the commission, the

 

impact of imposing cost of service rates on customers of a utility

 

would have a material impact, the commission may approve an order

 

that implements those rates over a suitable number of years. The

 

commission shall ensure that any impact on rates due to the cost of


 

service requirement in this subsection is not more than 2.5% per

 

year.

 

     (7) The commission shall annually retain an independent

 

consultant to verify that the requirements of this section are

 

being satisfied for each electric utility. The costs of this

 

service shall be recoverable in the utility's electric rates. This

 

subsection does not apply after December 31, 2015.