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HB-5548, As Passed House, April 17, 2008

SUBSTITUTE FOR

HOUSE BILL NO. 5548

A bill to require providers of retail electric service to

establish a renewable energy program; to prescribe the powers and

duties of certain state agencies and officials; and to provide for

sanctions.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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

"renewable energy portfolio act".

Sec. 3. As used in this act:

(a) "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 is available on a renewable basis,

including, but not limited to, all of the following:

(i) Agricultural crops and crop wastes.

House Bill No. 5548 (H-4) as amended April 17, 2008

(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.

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

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.

(d) "Electronic waste" means any of the following discarded

items:

(i) A computer, including a computer monitor or peripheral.

(ii) A television.

(iii) A telephone.

(iv) A personal digital assistant device.

(v) A radio.

(vi) A compact disc or digital video disc or a compact disc or

digital video disc player.

(vii) Other similar items as determined by the commission.

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

required by a provider to comply with the renewable energy

portfolio standard, calculated as provided under section 27(2).

(f) "Industrial cogeneration" means the generation of

electricity using industrial thermal energy.

(g) "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.

(h) "Provider", subject to sections 7(1) and 9(1), means any

of the following:

(i) Any person or entity that is regulated by the commission

for the purpose of selling electricity to retail customers in this

state.

(ii) A municipally owned electric utility in this state.

(iii) A cooperative electric utility in this state.

(iv) An alternative electric supplier licensed in this state.

(i) "PURPA" means the public utility regulatory policies act

of 1978, Public Law 95-617.

(j) "Qualifying cogeneration facility" means that term as

defined in 16 USC 824a-3.

(k) "Qualifying small power production facility" means that

term as defined in 16 USC 824a-3.

Sec. 5. As used in this act:

(a) "Renewable energy" means electricity generated using a

renewable energy system.

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

renewable energy and the associated renewable energy credits from 1

or more renewable energy systems.

this act that represents generated renewable energy.

(d) "Renewable energy portfolio" for the years 2012 through

2015 means the percentage determined as follows for a given

provider and year:

(i) Determine the number of renewable energy credits used to

comply with this act during that year.

(ii) Divide by 1 of the following at the option of the provider

as specified in its renewable energy portfolio plan:

(A) The number of weather-normalized megawatt hours of

electricity sold by the provider during the previous year to retail

customers in this state.

(B) The average number of megawatt hours of electricity sold

by the provider annually during the previous 3 years to retail

customers in this state.

(iii) Multiply by 100.

(e) "Renewable energy portfolio" for the year 2016 and

thereafter means the number of renewable energy credits used to

comply with this act during that year.

House Bill No. 5548 (H-4) as amended April 17, 2008

(f) "Renewable energy portfolio plan" or "plan" means a plan

approved under section 7(3) or 9(3).

(g) "Renewable energy portfolio standard" means the minimum

renewable energy portfolio required to be achieved under section

13.

(h) "Renewable energy resource" means any of the following:

(i) Biomass.

(ii) Solar 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.

extent that the water was pumped into the storage facility using

renewable energy.

(v) Hydrogen synthesis gas produced from the plasma

gasification of industrial by-products or electronic waste.

(vi) Geothermal energy.

(vii) Industrial thermal energy.

[(viii) Municipal solid waste, including, but not limited to, landfilled municipal solid waste that produces landfill gas.]

(i) "Renewable energy system" means a facility, electricity

generation system, or integrated set of electricity generation

systems that use 1 or more renewable energy resources to generate

electricity. Renewable energy system does not include any of the

following:

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

the effective date of this act unless the dam is a repair or

replacement of a dam in existence on the effective date of this

act.

(ii) 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, and was brought into service before the effective date

of this act.

(j) "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.

(k) "Revenue recovery mechanism" means the mechanism for

recovery of incremental costs of compliance established under

section 7(4).

Sec. 7. (1) As used in this section, "provider" means a

provider whose rates are regulated by the commission.

(2) Within 90 days after the commission issues a temporary

order under section 37, each provider shall file a proposed

renewable energy portfolio plan with the commission. The proposed

plan shall meet all of the following requirements:

(a) Describe how the provider will meet the renewable energy

portfolio standards.

(b) Specify whether the number of megawatt hours of

electricity used in the calculation of the renewable energy

portfolio will be weather-normalized or based on a 3-year running

average. Once the plan is approved by the commission, this option

shall not be changed.

House Bill No. 5548 (H-4) as amended April 17, 2008

the renewable portfolio standard for a 20-year period beginning

when the plan is approved by the commission.

(d) Include a nonvolumetric mechanism for the recovery of the

incremental costs of compliance within the provider's customer

rates.

(e) For a provider that is an [electric utility with 1,000,000 or

more retail customers in this state as of January 1, 2008], describe the

bidding

process to be used by the provider under section 17(2). The

description shall include measures to be employed in the

preparation of requests for proposals and the handling and

evaluation of proposals received to ensure that any bidder that is

an affiliate of the electric utility is not afforded a competitive

advantage over any other bidder and that each bidder, including any

bidder that is an affiliate of the provider, is treated in a fair

and nondiscriminatory manner.

(3) The commission shall conduct a contested case hearing on

the proposed plan filed under subsection (2), pursuant to the

administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to

24.328. If a renewable energy generator files a petition to

intervene in the contested case in the manner prescribed by the

commission's rules for interventions generally, the commission

shall grant the petition. After the hearing and within 90 days

after the proposed plan is filed with the commission, the

commission shall approve, with any changes consented to by the

provider, or reject the plan. A provider shall not begin recovery

of the incremental costs of compliance within its rates until the

commission has approved its proposed plan.

(4) The plan, as approved by the commission, shall establish a

nonvolumetric mechanism for the recovery of the incremental costs

of compliance within the provider's customer rates. The revenue

recovery mechanism shall not result in rate impacts that exceed the

monthly maximum retail rate impacts specified under section 25. A

customer participating in a commission-approved voluntary renewable

energy program under an agreement in effect on the effective date

of this act shall not incur charges under the revenue recovery

mechanism except to the extent that the charges under the revenue

recovery mechanism exceed the charges the customer is incurring for

the voluntary renewable energy program. The limitation on charges

applies only during the term of the agreement, not including

automatic agreement renewals, or until 1 year after the effective

date of this act, whichever is later. Before entering an agreement

with a customer to participate in a commission-approved voluntary

renewable energy program and before the last automatic monthly

renewal of such an agreement that will occur less than 1 year after

the effective date of this act, a provider shall notify the

customer that the customer will be responsible for the full

applicable charges under the revenue recovery mechanism as well as

under the voluntary renewable energy program as provided under this

subsection.

(5) If proposed by the provider in its proposed plan, the

revenue recovery mechanism shall result in an accumulation of

reserve funds in advance of expenditure and the creation of a

regulatory liability that accrues interest at the average short-

term borrowing rate available to the provider during the

appropriate period. If proposed by the provider in its proposed

plan, the commission shall establish a minimum balance of

accumulated reserve funds for the purposes of section 27(4).

(6) A revenue recovery mechanism is subject to adjustment

under sections 27(4) and 29.

(7) Every 2 years after initial approval of a renewable energy

portfolio plan under subsection (3), the commission shall review

the plan. The commission shall conduct a contested case hearing on

the plan pursuant to the administrative procedures act of 1969,

1969 PA 306, MCL 24.201 to 24.328. A renewable energy generator may

intervene in the contested case as provided in subsection (3). The

annual renewable cost reconciliation under section 29 for that year

may be joined with the overall plan review in the same contested

case hearing. After the hearing, the commission shall approve, with

any changes consented to by the provider, or reject any proposed

amendments to the plan.

(8) If a provider proposes to amend its renewable energy

portfolio plan at a time other than during the biennial review

process under subsection (7), the provider shall file the proposed

amendment with the commission. If the proposed amendment would

modify the revenue recovery mechanism, the commission shall conduct

a contested case hearing on the amendment pursuant to the

administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to

24.328. A renewable energy generator may intervene in the contested

case as provided in subsection (3). The annual renewable cost

reconciliation under section 29 may be joined with the plan

amendment in the same contested case proceeding. After the hearing

and within 90 days after the amendment is filed, the commission

shall approve, with any changes consented to by the provider, or

reject the amendment.

Sec. 9. (1) As used in this section, "provider" means a

provider whose rates are not regulated by the commission.

(2) Within 90 days after the commission issues a temporary

order under section 37, each provider shall file a proposed

renewable energy portfolio plan with the commission. The proposed

plan shall meet all of the following requirements:

(a) Describe how the provider will meet the renewable energy

portfolio standards.

(b) Specify whether the number of megawatt hours of

electricity used in the calculation of the renewable energy

portfolio will be weather-normalized or based on a 3-year running

average. Once the plan is approved by the commission, this option

shall not be changed.

the renewable portfolio standard for a 20-year period beginning

when the plan is approved by the commission.

(d) Describe the manner in which the provider will allocate

costs, subject to section 25(1).

(3) The commission shall provide an opportunity for public

comment on the proposed plan filed under subsection (2). However,

the commission need not provide an opportunity for public comment

if the provider is a municipally owned electric utility and the

governing body of the provider has already provided an opportunity

for public comment and filed the comments with the commission along

with the plan. After the applicable opportunity for public comment

and within 90 days after the proposed plan is filed with the

commission, the commission shall approve, with any changes

consented to by the provider, or reject the plan. The provider

shall not begin recovery of the incremental costs of compliance

within its rates until the commission has approved its proposed

plan. However, if the provider is a municipally owned electric

utility, the provider may begin recovery of the incremental costs

of compliance upon approval of its proposed plan by the governing

body of the municipally owned electric utility.

(4) Every 2 years after initial approval of a renewable energy

portfolio plan under subsection (3), the commission shall review

the plan. The commission shall provide an opportunity for public

comment on the plan. However, the commission need not provide an

opportunity for public comment if the provider is a municipally

owned electric utility and the governing body of the provider has

already provided an opportunity for public comment and filed the

comments with the commission. After the applicable opportunity for

public comment, the commission shall approve, with any changes

consented to by the provider, or reject any proposed amendments to

the plan.

(5) If a provider proposes to amend its renewable energy

portfolio plan at a time other than during the biennial review

process under subsection (4), the provider shall file the proposed

amendment with the commission. The commission shall provide an

opportunity for public comment on the amendment. However, the

commission need not provide an opportunity for public comment if

the provider is a municipally owned electric utility and the

governing body of the provider has already provided an opportunity

for public comment and filed the comments with the commission.

After the opportunity for public comment and within 90 days after

the amendment is filed, the commission shall approve, with any

changes consented to by the provider, or reject the amendment.

Sec. 11. The commission shall ensure that plans submitted by

providers serving customers in the same distribution territory do

not create an unfair competitive advantage for any of those

providers.

Sec. 13. Subject to sections 15 and 25, each provider shall do

all of the following:

(a) In each of years 2012, 2013, and 2014, achieve a renewable

energy portfolio of at least 4%.

(b) In 2015, achieve a renewable energy portfolio of at least

10%.

energy portfolio that consists of at least the same number of

renewable energy credits as were required in 2015 under subdivision

(b).

Sec. 17. (1) A provider shall comply with the renewable energy

portfolio standard by obtaining renewable energy credits by any of

the following means:

(a) Producing electricity from renewable energy systems.

(b) Purchasing electricity through a renewable energy

contract.

House Bill No. 5548 (H-4) as amended April 17, 2008

electricity.

(2) Subject to subsection (3), a provider that is an [electric

utility with 1,000,000 or more retail customers in this state as of

January 1, 2008] shall obtain the renewable energy credits that are

necessary to meet the renewable portfolio standard under section

13(b) and (c) as follows:

(a) At the provider's option, up to but no more than 33-1/3%

of such renewable energy credits shall be from renewable energy

systems that were developed by and are owned by the provider. A

provider shall competitively bid any contract for engineering,

procurement, or construction of any new renewable energy systems

described in this subdivision.

(b) At the provider's option, up to but not more than 33-1/3%

of such renewable energy credits shall be from renewable energy

systems that were developed by 1 or more third parties pursuant to

a contract with the provider under which the ownership of the

renewable energy system may be transferred to the provider, but not

before the renewable energy system begins commercial operation. A

transfer of ownership resulting from such a contract does not count

toward the new renewable energy systems ownership limit under

subdivision (a). Any such contract shall be executed after a

competitive bidding process conducted pursuant to guidelines issued

by the commission. An affiliate of the provider may submit a

proposal in response to a request for proposals, subject to the

code of conduct under section 10a(4) of 1939 PA 3, MCL 460.10a, and

the sanctions for violation thereof under section 10c of 1939 PA 3,

MCL 460.10c.

from renewable energy contracts that do not require transfer of

ownership of the applicable renewable energy system to the provider

or from contracts for the purchase of renewable energy credits

alone. A renewable energy contract or contract for the purchase of

renewable energy credits under this subdivision shall be executed

after a competitive bidding process conducted pursuant to

guidelines issued by the commission. An affiliate of the provider

may submit a proposal in response to a request for proposals,

subject to the code of conduct under section 10a(4) of 1939 PA 3,

MCL 460.10a, and the sanctions for violation thereof under section

10c of 1939 PA 3, MCL 460.10c. Ownership of renewable energy

systems by affiliates of the provider resulting from renewable

energy contracts executed under this subdivision do not count

toward the provider's new renewable energy systems ownership limit

under subdivision (a). If a provider selects a bid other than the

least price conforming bid from a qualified bidder, the provider

shall promptly notify the commission. The commission shall

determine under section 21 whether the provider had good cause for

selecting that bid. If the commission determines that the provider

did not have good cause, the commission shall disapprove the

contract.

(3) The allocation formula in subsection (2) does not apply to

either of the following:

(a) Renewable energy credits that are transferred to the

provider pursuant to section 19(4).

(b) Renewable energy credits that are produced or obtained by

the provider from renewable energy systems for which recovery in

electric rates was approved as of the effective date of this act,

including renewable energy credits resulting from biomass co-firing

of, or use of industrial thermal energy in, electric generation

facilities in existence on the effective date of this act, except

to the extent the number of megawatt hours of electricity annually

generated by biomass co-firing or industrial thermal energy exceeds

the number of megawatt hours generated during the 1-year period

immediately preceding the effective date of this act.

(4) For purposes of subsection (2), the method of procuring

the renewable energy credits generated from a renewable energy

system that uses water released from a pumped storage facility

shall be considered to be the method of procuring the renewable

energy used to pump the water into the facility.

(5) A provider may submit a contract entered into pursuant to

subsection (2) to the commission for review and approval. If the

commission approves the contract, it shall be considered to be

consistent with the provider's renewable energy portfolio plan.

Sec. 19. (1) A renewable energy system that is the source of

renewable energy credits used to satisfy the requirements of

section 13 shall be either located outside of this state in the

retail electric customer service territory of any provider that is

not an alternative electric supplier or located anywhere in this

state. For the purposes of this subsection, retail electric

customer service territories shall be considered to be those

recognized by the commission on January 1, 2008 together with any

expansions of retail electric customer service territory that may

be recognized by the commission after January 1, 2008 for purposes

of 1939 PA 3, MCL 460.1 to 460.10cc. The commission may also expand

a service territory for the purposes of this subsection if a lack

of transmission lines limits the ability to obtain sufficient

renewable energy from renewable energy systems that meet the

location requirement of this subsection.

(2) The requirements of subsection (1) do not apply if 1 or

more of the following requirements are met:

(a) The renewable energy system is a wind turbine or wind farm

and the electricity generated from the wind, or the renewable

energy credits associated with that electricity, is being purchased

under a contract in effect on January 1, 2008. If electricity and

associated renewable energy credits purchased under such a contract

are used by a provider to meet renewable energy portfolio

requirements established after January 1, 2008 by the legislature

of the state in which the wind turbine or wind farm is located, the

provider may, for the purpose of meeting the renewable energy

portfolio standard under this act, obtain, by any means authorized

under section 17(1), up to the same number of replacement renewable

energy credits from any other wind farm or wind farms located in

that state.

(b) The renewable energy system is a wind turbine or wind farm

that was under construction and owned by a provider on January 1,

2008.

the wind turbines meets the requirements of subsection (1), and the

remaining wind turbines are within 15 miles of a wind turbine that

is part of that wind farm and that meets the requirements of

subsection (1), as determined by the commission.

(d) Before January 1, 2008, a provider that serves not more

than 75,000 retail electric customers in this state filed an

application for a certificate of authority for the renewable energy

system with a state regulatory commission in another state that is

also served by that provider. However, renewable energy credits

shall not be granted for electricity generated using more than 10.0

megawatts of nameplate capacity of the renewable energy system.

(e) Electricity generated from the renewable energy system is

sold by a not-for-profit entity located in Indiana or Wisconsin to

a municipally owned electric utility in this state or cooperative

electric utility in this state under a contract in effect on

January 1, 2008, and the electricity is not being used to meet

another state's portfolio standard for renewable energy.

(f) Electricity generated from the renewable energy system is

sold by a not-for-profit entity located in Ohio to a municipally

owned electric utility in this state under a contract approved by

resolution of the governing body of the municipally owned electric

utility by January 1, 2008, and the electricity is not being used

to meet another state's portfolio standard for renewable energy.

However, renewable energy credits shall not be granted for

electricity generated using more than 13.4 megawatts of nameplate

capacity of the renewable energy system.

(3) Renewable energy from industrial cogeneration shall not

constitute more than 1/10 of the renewable energy portfolio

required by this act.

(4) If a provider obtains renewable energy for resale to

retail or wholesale customers under an agreement under PURPA,

ownership of the associated renewable energy credits shall be as

provided by the PURPA agreement. If the PURPA agreement does not

provide for ownership of the renewable energy credits, then:

(a) Except to the extent that a separate agreement governs

under subdivision (b), for the duration of the PURPA agreement, for

every 5 renewable energy credits associated with the renewable

energy, ownership of 4 of the renewable energy credits shall be

considered to be transferred to the provider with the renewable

energy, and ownership of 1 renewable energy credit shall be

considered to remain with the qualifying cogeneration facility or

qualifying small power production facility.

(b) If a separate agreement in effect on January 1, 2008

provides for the ownership of the renewable attributes of the

generated electricity, the separate agreement shall govern until

January 1, 2013 or until expiration of the separate agreement,

whichever occurs first.

(5) If an investor-owned electric utility with less than

20,000 customers, a municipally owned electric utility, or

cooperative electric utility obtains all or substantially all of

its electricity for resale under a power purchase agreement or

agreements in existence on the effective date of this act,

ownership of any associated renewable energy credits shall be

considered to be transferred to the provider purchasing the

electricity. The number of renewable energy credits associated with

the purchased electricity shall be determined by multiplying the

total number of renewable energy credits associated with the total

power supply of the seller during the term of the agreement by a

fraction, the numerator of which is the amount of energy purchased

under the agreement or agreements and the denominator of which is

the total power supply of the seller during the term of the

agreement. This subsection does not apply unless 1 or more of the

following occur:

(a) The seller and the provider purchasing the electricity

agree that this subsection applies.

(b) For a seller that is an independent investor-owned

electric utility whose retail electric rates are regulated by the

commission, the commission reduces the number of renewable energy

credits required under the renewable energy portfolio standard for

the seller by the number of renewable energy credits to be

transferred to the provider purchasing the electricity under this

subsection.

Sec. 21. If, after the effective date of this act, a provider

whose rates are regulated by the commission enters a renewable

energy contract or a contract to purchase renewable energy credits

alone, the commission shall determine whether the contract provides

reasonable terms and conditions that will ensure a favorable

economic outcome for the provider and its customers. In making this

determination, the commission shall consider the contract price and

term. If the contract is a renewable energy contract, the

commission shall also consider at least all of the following:

(a) The cost to the provider and its customers of the impacts

of accounting treatment of debt and associated equity requirements

imputed by credit rating agencies and lenders attributable to the

renewable energy contract. The commission shall use standard rating

agency, lender, and accounting practices for electric utilities in

determining these costs, unless the impacts for the provider are

known.

(b) The life-cycle cost of the renewable energy contract to

the provider and customers including costs, after expiration of the

renewable energy contract, of maintaining the same renewable energy

output in megawatt hours, whether by purchases from the

marketplace, by extension or renewal of the renewable energy

contract, or by the provider purchasing the renewable energy system

and continuing its operation.

renewable energy systems supporting the renewable energy contract

move from contracted pricing to market-based pricing after

expiration of the renewable energy contract.

Sec. 23. (1) The commission shall establish a renewable energy

credit certification and tracking program. The certification and

tracking program may be contracted to and performed by a third

party through a system of competitive bidding. The renewable energy

credit certification and tracking program shall include all of the

following:

(a) A process to certify renewable energy systems, including

all existing renewable energy systems operating on the effective

date of this act, as eligible to receive renewable energy credits.

(b) Certification that the operator of a renewable energy

system is in compliance with state and federal law applicable to

the operation of the renewable energy system when certification is

granted. If a renewable energy system becomes noncompliant with

state or federal law, renewable energy credits shall not be granted

for renewable energy generated by that renewable energy system

during the period of noncompliance.

(d) Determining the date that a renewable energy credit is

valid for transfer under this act.

(e) A method for ensuring that each renewable energy credit

traded and sold under this act is properly accounted for under this

act.

(2) A renewable energy credit purchased from a renewable

energy system in this state is not required to be used in this

state.

(3) Except as provided in section 19(4), 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, the number of renewable energy credits granted shall

be based on the percentage of the electricity generated from the

renewable energy resource.

(b) Renewable energy credits shall not be granted for

renewable energy generated from an incinerator to the extent that

the renewable energy was generated by operating the incinerator in

excess of its boilerplate capacity on January 1, 2008.

generation of renewable energy, such as wind energy, used to pump

water into a pumped storage facility or to fill other energy

storage facilities, but shall be granted for renewable energy

generated upon release from a pumped storage facility or other

energy storage facility. However, the number of renewable energy

credits shall be calculated based on the number of megawatt hours

of renewable energy used to fill a pumped storage facility or other

energy storage facility, not the number of megawatt hours actually

generated by discharge from the energy storage facility.

(d) Renewable energy credits shall not be granted for

renewable energy whose renewable attributes are used by a provider

in a commission-approved voluntary renewable energy program.

(4) Subject to subsection (3), 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.

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 on a commercial basis.

(d) 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 on a commercial basis.

(5) A renewable energy credit expires when used by a provider

to comply with its renewable energy portfolio standard. If not

already used, a renewable energy credit automatically expires 3

years after the generation of the electricity associated with the

renewable energy credit. A renewable energy credit associated with

the generation of electricity within 120 days after the start of a

calendar year may be used to satisfy the prior year's renewable

energy portfolio standard and expires when so used.

Sec. 29. (1) Concurrent with the submission of each report

under section 33(1), the commission shall commence an annual

proceeding, to be known as a renewable cost reconciliation, for

each provider whose rates are regulated by the commission. The

renewable cost reconciliation proceeding shall be conducted as a

contested case pursuant to the administrative procedures act of

1969, 1969 PA 306, MCL 24.201 to 24.328. Reasonable discovery shall

be permitted before and during the reconciliation proceeding to

assist in obtaining evidence concerning reconciliation issues

including, but not limited to, the reasonableness and prudence of

expenditures and the amounts collected pursuant to the revenue

recovery mechanism.

(2) At the renewable cost reconciliation, a provider may

propose any necessary modifications of the revenue recovery

mechanism to ensure the provider's recovery of its incremental cost

of compliance with the renewable portfolio standard during the 20-

year period described in section 7(3).

(3) The commission shall reconcile the pertinent revenues

recorded and the allowance for the nonvolumetric revenue recovery

mechanism with the amounts actually expensed and projected

according to the provider's plan for compliance. The commission

shall consider any issue regarding the reasonableness and prudence

of expenses for which customers were charged in the relevant

reconciliation period. In its order, the commission shall do all of

the following:

(a) Make a determination of a provider's compliance with the

renewable energy portfolio standard, subject to sections 15 and 25.

(b) Adjust the revenue recovery mechanism for the incremental

costs of compliance. The commission shall ensure that the retail

rate impacts under this renewable cost reconciliation revenue

recovery mechanism do not exceed the maximum retail rate impacts

specified under section 25. The commission shall ensure that the

recovery mechanism is projected to maintain a minimum balance of

accumulated reserve so that a regulatory asset does not accrue.

capacity and renewable energy to be recovered through the power

supply cost recovery clause under section 6j of 1939 PA 3, MCL

460.6j, as outlined in section 27(2)(b)(iv).

(d) Adjust, if needed, the minimum balance of accumulated

reserve funds established under section 7(5).

(4) If a provider has recorded a regulatory liability in any

given month during the 20-year period described in section 7(3),

interest on the regulatory liability balance shall be accrued at

the average short-term borrowing rate available to the provider

during the appropriate period, and shall be used to fund

incremental costs of compliance incurred in subsequent periods

within the 20-year period described in section 7(3).

Sec. 31. (1) If a provider whose rates are regulated by the

commission fails to meet the renewable energy portfolio standard by

the applicable deadline under section 13, subject to sections 15

and 25, both of the following apply:

(a) The provider shall purchase sufficient renewable energy

credits to meet the renewable energy portfolio standard.

(b) The provider shall not recover from its ratepayers the

cost of purchasing renewable energy credits under subdivision (a).

(2) The attorney general or any customer of a municipally

owned electric utility or a cooperative electric utility that has

elected to become member-regulated under the electric cooperative

member-regulation act may commence a civil action for injunctive

relief against a municipally owned electric utility or such a

cooperative electric utility if the provider fails to meet the

applicable requirements of this act.

(3) An action under subsection (2) shall be commenced in the

circuit court for the circuit in which the principal office of the

provider is located. An action shall not be filed under subsection

(2) unless the prospective plaintiff has given the prospective

defendant and the commission at least 60 days' written notice of

the prospective plaintiff's intent to sue, the basis for the suit,

and the relief sought. Within 30 days after the prospective

defendant receives written notice of the prospective plaintiff's

intent to sue, the prospective defendant and plaintiff shall meet

and make a good faith attempt to determine if there is a credible

basis for the action. If both parties agree that there is a

credible basis for the action, the prospective defendant shall take

all reasonable steps necessary to comply with applicable

requirements of this act within 90 days of the meeting.

(4) In issuing a final order in an action brought under

subsection (2), the court may award costs of litigation, including

reasonable attorney and expert witness fees, to the prevailing or

substantially prevailing party.

(5) Upon a complaint of an alternative electric supplier's

customer or the commission's own motion, the commission may conduct

a contested case to review allegations that the alternative

electric supplier has violated this act, including an order issued

or rule promulgated under this act. If the commission finds, after

notice and hearing, that an alternative electric supplier has

violated this act, the commission shall do 1 or more of the

following:

(a) Revoke the license of the alternative electric supplier.

(b) Issue a cease and desist order.

fine of not less than $5,000.00 or more than $50,000.00 for each

violation.

Sec. 33. (1) By a time determined by the commission, each

provider shall submit to the commission an annual report that

provides information relating to the actions taken by the provider

to comply with the renewable energy portfolio standard. By that

same time, a municipally owned electric utility shall submit a copy

of the report to the governing body of the municipally owned

electric utility, and a cooperative electric utility shall submit a

copy of the report to its board of directors.

(2) Each annual report under subsection (1) shall include all

of the following information:

(a) The amount of electricity and renewable energy credits

that the provider generated or acquired from renewable energy

systems during the reporting period and the amount of renewable

energy credits that the provider acquired, sold, or traded during

the reporting period.

(b) The capacity of each renewable energy system owned,

operated, or controlled by the provider, the total amount of

electricity generated by each renewable energy system during the

reporting period, and the percentage of that total amount that was

generated directly from renewable energy.

construction on, acquired, or placed into operation a renewable

energy system.

(d) Expenditures made in the past year and anticipated future

expenditures to comply with this act.

(e) Any other information that the commission determines

necessary.

(3) Concurrent with the submission of each report under

subsection (1), a municipally owned electric utility shall submit a

summary of the report to its customers in their bills with a bill

insert and to its governing body. Concurrent with the submission of

each report under subsection (1), a cooperative electric utility

shall submit a summary of the report to its members in a periodical

issued by an association of rural electric cooperatives and to its

board of directors. A municipally owned electric utility or

cooperative electric provider shall make a copy of the report

available at its office and shall post a copy of the report on its

website. A summary under this section shall indicate that a copy of

the report is available at the office or website.

(4) The commission shall monitor reports submitted under

subsection (1) and ensure that actions taken under this act by

providers serving customers in the same distribution territory do

not create an unfair competitive advantage for any of those

providers.

(5) Biennially, the commission shall submit to the legislature

a report that does all of the following:

(a) Summarizes data collected under this section.

(b) Discusses the status of renewable energy in this state and

the effect of this act on electricity prices.

at retail in this state, specifies the difference between the cost

of the renewable energy and the cost of electricity generated from

conventional sources.

House Bill No. 5548 (H-4) as amended April 17, 2008

(d) Provides a comparison of the cost effectiveness of the

methods of an [electric utility with 1,000,000 or more retail customers

in this state as of January 1, 2008] obtaining renewable energy

credits under the options described in section 17(2).

(e) Describes the impact of this act on employment in this

state. The commission shall consult with other appropriate agencies

of the department of labor and economic growth in the development

of this information.

(f) Discuss how the commission is fulfilling the requirements

of subsection (4).

(g) Makes any recommendations the commission may have

concerning amendments to this act, including changes in the

definition of renewable energy resource or renewable energy system

to reflect environmentally preferable technology.

Sec. 35. (1) A person may file commercially or financially

sensitive information or trade secrets with the commission under

section 7 or 9, or with the commission or a third party contractor

under section 23, confidentially. To be filed confidentially, the

information shall be accompanied by an affidavit that sets forth

both the reasons for the confidentiality and a public synopsis of

the information.

(2) Information filed confidentially is exempt from the

freedom of information act, 1976 PA 442, MCL 15.231 to 15.246, and

shall remain confidential, except under the terms of a mandatory

protective order. If information is disclosed under a mandatory

protective order, then the commission may use the information for

the purpose for which it is required, but the information shall

remain confidential.

(3) There is a rebuttable presumption that any information

filed confidentially under subsection (1) is commercially or

financially sensitive information or trade secrets entitled to

protection under subsection (1).

Sec. 37. (1) Within 60 days after the effective date of this

act, the commission shall issue a temporary order implementing this

act, including, but not limited to, all of the following:

(a) Formats of renewable energy portfolio plans for various

categories of providers.

(b) Guidelines for requests for proposals under this act.

(2) Within 1 year after the effective date of this act, the

commission shall promulgate rules to implement this act pursuant to

the administrative procedures act of 1969, 1969 PA 306, MCL 24.201

to 24.328.

Enacting section 1. As provided in section 5 of 1846 RS 1, MCL

8.5, this act is severable.

Enacting section 2. This act does not take effect unless all

of the following bills of the 94th Legislature are enacted into

law:

(a) House Bill No. 5383.

(b) House Bill No. 5524.

(d) House Bill No. 5549.

(e) House Bill No. 5972.

(f) House Bill No. 5973.

(g) House Bill No. 5974.