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SB 504

Public utilities: electric utilities; long-term industrial load rates; prohibit from being subject to securitization charges. Amends sec. 10gg of 1939 PA 3 (MCL 460.10gg).

2023-2024 Regular Session Introduced by Kristen McDonald Rivet

Michigan law now prohibits electric utilities from charging securitization fees to industrial customers under long-term rate agreements, potentially shifting costs to residential ratepayers.

ASSIGNED PA 0167'24
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Bill Summary · SB 504

Legislative bill overview

SB 504 amends Michigan's Public Utilities Act to prohibit electric utilities from imposing securitization charges on long-term industrial load rates. Securitization allows utilities to recover costs by bundling them into bonds sold to investors, effectively spreading expenses across ratepayers. This bill exempts industrial customers with long-term rate agreements from bearing these additional financing charges.

Why is this important

Industrial customers represent significant electricity demand and economic activity in Michigan. By preventing securitization charges on their long-term rates, the bill aims to reduce operational costs for manufacturers and large facilities, potentially improving their competitiveness and investment decisions. The outcome affects how utility costs are distributed among different customer classes and the financial tools available to utilities for capital recovery.

Potential points of contention

  • Ratepayer burden shift: If securitization costs cannot be recovered from industrial customers, those expenses may be reallocated to residential and small business ratepayers, raising their bills
  • Utility financing constraints: Restricting securitization options may limit utilities' ability to fund infrastructure upgrades and system improvements, potentially affecting service reliability
  • Competitive fairness: Industrial customers receive preferential treatment regarding cost recovery mechanisms, which may be viewed as inequitable to other customer classes without similar protections

Compiled from official sources — confirm details with the bill’s official record.

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