HOUSE BILL No. 5521

December 4, 2007, Introduced by Reps. Gaffney, Mayes, Accavitti, LaJoy and Hune 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 6r.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 6r. (1) An electric utility that proposes to construct an

electric generation facility, make a significant investment in an

existing electric generation facility, purchase an existing

electric generation facility, or enter into a power purchase

agreement for the purchase of electric capacity for a period in

excess of 5 years may submit an application to the commission

seeking certification of that construction, investment, or

purchase.

(2) An electric utility submitting an application under this

section may request 1 or more of the following forms of relief:

(a) Certification that the power to be supplied as a result of

the proposed construction, investment, or purchase is needed.

(b) Certification that the size, fuel type, and other design

characteristics of the existing or proposed electric generation

facility or the terms of the power purchase agreement represent a

reasonable and prudent means of meeting that power need.

purchase agreement will be recovered in rates from the electric

utility's customers.

(d) Certification that the estimated purchase or capital costs

of the existing or proposed electric generation facility,

including, but not limited to, the costs of siting and licensing a

new facility, the capital and operating costs to install equipment

needed to comply with federal, state, or local environmental

requirements, and the estimated cost of power from the new electric

generation facility, will be recoverable in rates from the electric

utility's customers.

(e) Certification that, with respect to the construction costs

of an electric generation facility, the commission will adopt rate-

making treatment that will allow the utility to earn a cash return

on its investment during the construction period of that facility.

(3) Within 180 days of the filing of an application under this

section, the commission shall hold a hearing on the application and

issue an order granting or denying the requested certification. The

commission shall grant the requested certification if it determines

all of the following:

(a) The utility has filed an integrated resource plan that

addresses issues such as capacity needs, energy efficiency, and the

availability of renewable energy resources.

(b) There is a need for the power that would be supplied by

the existing or proposed electric generation facility or pursuant

to the proposed power purchase agreement.

proposed electric generation facility will comply with all

applicable state and federal environmental standards, laws, and

rules.

(d) The estimated cost of power from the existing or proposed

electric generation facility or the price of power specified in the

proposed power purchase agreement is reasonable. The commission

shall find that the cost is reasonable if, in the construction or

significant investment in a new or existing facility, to the extent

it is commercially practicable, the estimated costs are the result

of competitively bid engineering, procurement, and construction

contracts, or in a power purchase agreement, the cost is the result

of a competitive solicitation.

(e) The existing or proposed electric generation facility or

proposed power purchase agreement represents a reasonable and

prudent means of meeting the power need.

(4) In a certification granted under this section, the

commission shall specify the costs approved for construction of the

electric generation facility, the price approved for the purchase

of the existing electric generation facility, or the price approved

for the purchase of power pursuant to the terms of the power

purchase agreement.

(5) The commission may undertake periodic reviews of a

certification granted under subsection (3) and may adopt a

mechanism to allocate between customers and an electric utility any

differences between the costs included in the certification and the

actual costs.

(6) If the commission denies any of the relief requested by an

electric utility, the electric utility may withdraw its application

or proceed with the proposed construction, purchase, or power

purchase agreement.

(7) The commission shall include in an electric utility's

retail rates all reasonable and prudent costs for an electric

generation facility or power purchase agreement for which a

certification has been granted. The commission shall not disallow

recovery of costs an electric utility incurs in constructing or

purchasing an electric generation facility or in purchasing power

pursuant to a power purchase agreement for which a certification

has been granted, if the costs do not exceed the costs approved by

the commission in the certification. The commission shall include

in the electric utility's retail rates costs actually incurred by

the electric utility that exceed the costs approved by the

commission if the electric utility presents evidence to the

commission demonstrating that the additional costs are reasonable

and prudent.

(8) As used in this section, "electric generation facility"

means a facility for the generation of electricity, including, but

not limited to, a renewable resource generation facility.

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. 5522(request no.

04884'07 *).

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.