Energy: alternative sources; shared savings mechanism; provide for. Amends 1939 PA 3 (MCL 460.1 - 460.11) by adding sec. 6x.
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Progress
Where this bill stands in the legislative process.
- Introduced
- Passed Senate
- Passed House
- To Governor
- Became Law
Overview
This bill creates a shared savings mechanism for electric utilities in Michigan to encourage energy waste reduction, conservation, and demand reduction programs. The Michigan Public Service Commission will authorize these mechanisms, providing incentives based on the utility’s achieved energy savings. The incentives are tiered, increasing with the percentage of energy savings achieved, up to a maximum of 30% of program expenditures. The commission will calculate the value of these savings using a specific formula based on the utility’s weighted average cost of capital.
Key provisions
- Establishes a shared savings mechanism for electric utilities.
- Provides incentives for utilities achieving specific annual energy savings targets (1% - 1.5%).
- The incentive percentage increases with the level of energy savings achieved.
- The maximum shared savings incentive cannot exceed 20% of program expenditures.
- The commission calculates net benefits using a discounted cash flow analysis.
- The discount rate used is the utility’s weighted average cost of capital.
- Utilities must demonstrate energy waste reduction programs.
- The program must be authorized by the commission within 90 days of the bill’s effective date.
Who is affected
- Electric Utilities
- The Michigan Public Service Commission
- Electricity Consumers
Notable changes
Bill text
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Document of record
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- Senate Introduced Bill
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