HB-5205, As Passed House, December 4, 2014

SUBSTITUTE FOR

HOUSE BILL NO. 5205

     A bill to amend 2008 PA 295, entitled

"Clean, renewable, and efficient energy act,"

by amending sections 1, 3, 7, 9, 11, and 39 (MCL 460.1001,

460.1003, 460.1007, 460.1009, 460.1011, and 460.1039).

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 1. (1) This act shall be known and may be cited as the

"clean, renewable, and efficient energy act".

     (2) The purpose of this act is to promote the development of

clean energy, renewable energy, and energy optimization through the

implementation of a clean, renewable, and energy efficient standard

that will cost-effectively do all of the following:

     (a) Diversify the resources used to reliably meet the energy

needs of consumers in this state.

     (b) Provide greater energy security through the use of

indigenous energy resources available within the this state.

     (c) Encourage private investment in renewable energy and

energy efficiency.

     (d) Provide improved air quality and other benefits to energy

consumers and citizens of this state.

     (e) Remove unnecessary burdens on the appropriate use of solid

waste as a clean energy source.

     Sec. 3. As used in this act:

     (a) "Advanced cleaner energy" means electricity generated

using an advanced cleaner energy system.

     (b) "Advanced cleaner energy credit" means a credit certified

under section 43 that represents generated advanced cleaner energy.

     (c) "Advanced cleaner energy system" means any of the

following:

     (i) A gasification facility.

     (ii) An industrial cogeneration facility.

     (iii) A coal-fired electric generating facility if 85% or more

of the carbon dioxide emissions are captured and permanently

geologically sequestered.

     (iv) An electric generating facility or system that uses

technologies not in commercial operation on the effective date of

this act.October 6, 2008.

     (d) "Affiliated transmission company" means that term as

defined in section 2 of the electric transmission line

certification act, 1995 PA 30, MCL 460.562.

     (e) "Applicable regional transmission organization" means a

nonprofit, member-based organization governed by an independent

board of directors that serves as the federal energy regulatory

commission-approved commission approved regional transmission

organization with oversight responsibility for the region that

includes the provider's service territory.

     (f) "Biomass" means any organic matter that is not derived

from fossil fuels, that can be converted to usable fuel for the

production of energy, and that replenishes over a human, not a

geological, time frame, including, but not limited to, all of the

following:

     (i) Agricultural crops and crop wastes.

     (ii) Short-rotation energy crops.

     (iii) Herbaceous plants.

     (iv) Trees and wood, but only if derived from sustainably

managed forests or procurement systems, as defined in section 261c

of the management and budget act, 1984 PA 431, MCL 18.1261c.

     (v) Paper and pulp products.

     (vi) Precommercial wood thinning waste, brush, or yard waste.

     (vii) Wood wastes and residues from the processing of wood

products or paper.

     (viii) Animal wastes.

     (ix) Wastewater sludge or sewage.

     (x) Aquatic plants.

     (xi) Food production and processing waste.

     (xii) Organic by-products from the production of biofuels.

     (g) "Board" means the wind energy resource zone board created

under section 143.

     (h) "Carbon dioxide emissions benefits" means that the carbon

dioxide emissions per megawatt hour of electricity generated by the

advanced cleaner energy system are at least 85% less or, for an

integrated gasification combined cycle facility or an integrated

pyrolysis combined cycle facility, 70% less than the average carbon

dioxide emissions per megawatt hour of electricity generated from

all coal-fired electric generating facilities operating in this

state on January 1, 2008.

     (i) "Commission" means the Michigan public service commission.

     (j) "Customer meter" means an electric meter of a provider's

retail customer. Customer meter does not include a municipal water

pumping meter or additional meters at a single site that were

installed specifically to support interruptible air conditioning,

interruptible water heating, net metering, or time-of-day tariffs.

     Sec. 7. As used in this act:

     (a) "Gasification facility" means a facility located in this

state that uses a thermochemical process that does not involve

direct combustion to produce synthesis gas, composed of carbon

monoxide and hydrogen, from carbon-based feedstocks (such as coal,

petroleum coke, wood, biomass, hazardous waste, medical waste,

industrial waste, and solid waste, including, but not limited to,

municipal solid waste, electronic waste, and waste described in

section 11514 of the natural resources and environmental protection

act, 1994 PA 451, MCL 324.11514) and that uses the synthesis gas or

a mixture of the synthesis gas and methane to generate electricity

for commercial use. Gasification facility includes the transmission

lines, gas transportation lines and facilities, and associated

property and equipment specifically attributable to such a

facility. Gasification facility includes, but is not limited to, an

integrated gasification combined cycle facility and a plasma arc

gasification facility.

     (b) "Incremental costs of compliance" means the net revenue

required by an electric provider to comply with the renewable

energy standard, calculated as provided under section 47.

     (c) "Independent transmission company" means that term as

defined in section 2 of the electric transmission line

certification act, 1995 PA 30, MCL 460.562.

     (d) "Industrial cogeneration facility" means a facility that

generates electricity using industrial thermal energy or industrial

waste energy.

     (e) "Industrial thermal energy" means thermal energy that is a

by-product of an industrial or manufacturing process and that would

otherwise be wasted. For the purposes of this subdivision,

industrial or manufacturing process does not include the generation

of electricity.

     (f) "Industrial waste energy" means exhaust gas or flue gas

that is a by-product of an industrial or manufacturing process and

that would otherwise be wasted. For the purposes of this

subdivision, industrial or manufacturing process does not include

the generation of electricity.

     (g) "Integrated gasification combined cycle facility" means a

gasification facility that uses a thermochemical process, including

high temperatures and controlled amounts of air and oxygen, to

break substances down into their molecular structures and that uses

exhaust heat to generate electricity.

(h) "Integrated pyrolysis combined cycle facility" means a

pyrolysis facility that uses exhaust heat to generate electricity.

(i) (h) "LEED" means the leadership in energy and

environmental design green building rating system developed by the

United States green building council.

(j) (i) "Load management" means measures or programs that

target equipment or devices to result in decreased peak electricity

demand such as by shifting demand from a peak to an off-peak

period.

     (k) "Megawatt", "megawatt hour", or "megawatt hour of

electricity", unless the context implies otherwise, includes the

steam equivalent of a megawatt or megawatt hour of electricity.

(l) (j) "Modified net metering" means a utility billing method

that applies the power supply component of the full retail rate to

the net of the bidirectional flow of kilowatt hours across the

customer interconnection with the utility distribution system,

during a billing period or time-of-use pricing period. A negative

net metered quantity during the billing period or during each time-

of-use pricing period within the billing period reflects net excess

generation for which the customer is entitled to receive credit

under section 177(4). Standby charges for modified net metering

customers on an energy rate schedule shall be equal to the retail

distribution charge applied to the imputed customer usage during

the billing period. The imputed customer usage is calculated as the

sum of the metered on-site generation and the net of the

bidirectional flow of power across the customer interconnection

during the billing period. The commission shall establish standby

charges for modified net metering customers on demand-based rate

schedules that provide an equivalent contribution to utility system

costs.

     Sec. 9. As used in this act:

     (a) "Natural gas provider" means an investor-owned business

engaged in the sale and distribution of natural gas within this

state whose rates are regulated by the commission. However, as used

in subpart B of part 2, natural gas provider does not include an

alternative gas supplier licensed under section 9b of 1939 PA 3,

MCL 460.9b.

     (b) "Pet coke" means a solid carbonaceous residue produced

from a coker after cracking and distillation from petroleum

refining operations.

(c) (b) "Plasma arc gasification facility" means a

gasification facility that uses a plasma torch to break substances

down into their molecular structures.

(d) (c) "Provider" means an electric provider or a natural gas

provider.

(e) (d) "PURPA" means the public utility regulatory policies

act of 1978, Public Law 95-617.

     (f) "Pyrolysis facility" means a facility that effects

thermochemical decomposition at elevated temperatures without the

participation of oxygen, from carbon-based feedstocks such as coal,

wood, biomass, industrial waste, or solid waste, including, but not

limited to, waste described in section 11514 of the natural

resources and environmental protection act, 1994 PA 451, MCL

324.11514. Pyrolysis facility includes the transmission lines, gas

transportation lines and facilities, and associated property and

equipment specifically attributable to the facility. Pyrolysis

facility includes, but is not limited to, an integrated pyrolysis

combined cycle facility.

(g) (e) "Qualifying small power production facility" means

that term as defined in 16 USC 824a-3.

Sec. 11. As used in this act:

     (a) "Renewable energy" means electricity or steam generated

using a renewable energy system.

     (b) "Renewable energy capacity portfolio" means the number of

megawatts calculated under section 27(2) for a particular year.

     (c) "Renewable energy contract" means a contract to acquire

renewable energy and the associated renewable energy credits from 1

or more renewable energy systems.

     (d) "Renewable energy credit" means a credit granted pursuant

to section 41 that represents generated renewable energy.

     (e) "Renewable energy credit portfolio" means the sum of the

renewable energy credits achieved by a provider for a particular

year.

     (f) "Renewable energy credit standard" means a minimum

renewable energy portfolio required under section 27.27(3).

     (g) "Renewable energy generator" means a person that, together

with its affiliates, has constructed or has owned and operated 1 or

more renewable energy systems with combined gross generating

capacity of at least 10 megawatts.

     (h) "Renewable energy plan" or "plan", means a plan approved

under section 21 or 23 or found to comply with this act under

section 25, with any amendments adopted under this act.

     (i) "Renewable energy resource", subject to subdivision (j),

means a resource that naturally replenishes over a human, not a

geological, time frame and that is ultimately derived from solar

power, water power, or wind power. Renewable energy resource does

not include petroleum, nuclear, natural gas, or coal. A renewable

energy resource comes from the sun or from thermal inertia of the

earth and minimizes the output of toxic material in the conversion

of the energy and includes, but is not limited to, all any of the

following:

     (i) Biomass.

     (ii) Solar and solar thermal energy.

     (iii) Wind energy.

     (iv) Kinetic energy of moving water, including all of the

following:

     (A) Waves, tides, or currents.

     (B) Water released through a dam.

     (v) Geothermal energy.

     (vi) Municipal solid waste, including both the biogenic and

anthropogenic fractions.

     (vii) Landfill gas produced by municipal solid waste.

     (viii) Fuel that has been manufactured in whole or significant

part from waste, including, but not limited to, municipal solid

waste or waste described in section 11514 of the natural resources

and environmental protection act, 1994 PA 451, MCL 324.11514. Fuel

that meets the requirements of this subparagraph includes, but is

not limited to, material that is listed under 40 CFR 241.3(b) or

241.4(a) or for which a non-waste determination is made by the

United States environmental protection agency pursuant to 40 CFR

241.3(c).

     (j) "Renewable energy resource" does not include pet coke.

(k) (j) "Renewable energy standard" means the minimum

renewable energy capacity portfolio, if applicable, and the

renewable energy credit portfolio required to be achieved under

section 27.

(l) (k) "Renewable energy system" means a facility, electricity

generation system, or set of electricity generation systems that

use 1 or more renewable energy resources to generate electricity or

steam. Renewable energy system does not include any of the

following:

     (i) A hydroelectric pumped storage facility.

     (ii) A hydroelectric facility that uses a dam constructed after

the effective date of this act October 6, 2008 unless the dam is a

repair or replacement of a dam in existence on the effective date

of this act October 6, 2008 or an upgrade of a dam in existence on

the effective date of this act October 6, 2008 that increases its

energy efficiency.

     (iii) An incinerator unless the incinerator is a municipal solid

waste incinerator as defined in section 11504 of the natural

resources and environmental protection act, 1994 PA 451, MCL

324.11504. , that was brought into service before the effective

date of this act, including any of the following:

     (A) Any upgrade of such an incinerator that increases energy

efficiency.

     (B) Any expansion of such an incinerator before the effective

date of this act.

     (C) Any expansion of such an incinerator on or after the

effective date of this act to an approximate design rated capacity

of not more than 950 tons per day pursuant to the terms of a final

request for proposals issued on or before October 1, 1986.

(m) (l) "Revenue recovery mechanism" means the mechanism for

recovery of incremental costs of compliance established under

section 21.

     Sec. 39. (1) Except as otherwise provided in section 35(1), 1

renewable energy credit shall be granted to the owner of a

renewable energy system for each megawatt hour of electricity

generated from the renewable energy system, subject to all of the

following:

     (a) If a renewable energy system uses both a renewable energy

resource and a nonrenewable energy resource to generate electricity

or steam, the number of renewable energy credits granted shall be

based on the percentage of the electricity or steam, or both,

generated from the renewable energy resource.

     (b) A renewable energy credit shall not be granted for

renewable energy generated from a municipal solid waste incinerator

to the extent that the renewable energy was generated by operating

the incinerator in excess of the greater of the following, as

applicable:

     (i) The incinerator's nameplate capacity rating on January 1,

2008.

     (ii) If the incinerator is expanded after the effective date of

this act to an approximate continuous design rated capacity of not

more than 950 tons per day pursuant to the terms of a final request

for proposals issued not later than October 1986, the nameplate

capacity rating required to accommodate that expansion.

(b) (c) A renewable energy credit shall not be granted for

renewable energy the renewable attributes of which are used by an

electric provider in a commission-approved voluntary renewable

energy program.

     (2) Subject to subsection (3), the The following additional

renewable energy credits, to be known as Michigan incentive

renewable energy credits, shall be granted under the following

circumstances:

     (a) 2 renewable energy credits for each megawatt hour of

electricity from solar power.

     (b) 1/5 renewable energy credit for each megawatt hour of

electricity generated from a renewable energy system, other than

wind, at peak demand time as determined by the commission.

     (c) 1/5 renewable energy credit for each megawatt hour of

electricity generated from a renewable energy system during off-

peak hours, stored using advanced electric storage technology or a

hydroelectric pumped storage facility, and used during peak hours.

However, the number of renewable energy credits shall be calculated

based on the number of megawatt hours of renewable energy used to

charge the advanced electric storage technology or fill the pumped

storage facility, not the number of megawatt hours actually

discharged or generated by discharge from the advanced energy

storage facility or pumped storage facility.

     (d) 1/10 renewable energy credit for each megawatt hour of

electricity generated from a renewable energy system constructed

using equipment made in this state as determined by the commission.

The additional credit under this subdivision is available for the

first 3 years after the renewable energy system first produces

electricity or steam on a commercial basis.

     (e) 1/10 renewable energy credit for each megawatt hour of

electricity from a renewable energy system constructed using a

workforce composed of residents of this state as determined by the

commission. The additional credit under this subdivision is

available for the first 3 years after the renewable energy system

first produces electricity or steam on a commercial basis.

     (3) A renewable energy credit expires at the earliest of the

following times:

     (a) When used by an electric provider to comply with its

renewable energy credit standard.

     (b) When substituted for an energy optimization credit under

section 77.

     (c) Three years after the end of the month in which the

renewable energy credit was generated.

     (4) A renewable energy credit associated with renewable energy

generated within 120 days after the start of a calendar year may be

used to satisfy the prior year's renewable energy standard and

expires when so used.