DEPARTMENT OF LICENSING AND REGULATORY AFFAIRS

PUBLIC SERVICE COMMISSION

CODE OF CONDUCT

(By authority conferred on the public service commission by section 10ee(1) of 2016 PA 341,

MCL 460.10ee(1))

PART 1. GENERAL PROVISIONS

R 460.10101 Applicability.

Rule 1. These rules apply to all utilities and alternative electric suppliers subject to the

jurisdiction of the commission and the requirements of these rules under section 10ee of 2016

PA 341, MCL 460.10ee. These rules do not apply to a utility with fewer than 150 customers.

History: 2019 AACS.

R 460.10102 Definitions.

Rule 2. (1) As used in these rules:

(a) “Affiliate” means a person or entity that directly or indirectly through 1 or more

intermediates, controls, is controlled by, or is under common control with another specified

entity. As used in these rules, “control” means, whether through an ownership, beneficial,

contractual, or equitable interest, the possession, directly or indirectly, of the power to direct or

to cause the direction of the management or policies of a person or entity or the ownership of at

least 7% of an entity either directly or indirectly.

(b) “Alternative electric supplier” means a person selling electric generation service to retail

customers in this state as licensed by the commission under section 10a of 2016 PA 341, MCL

460.10a. Alternative electric supplier does not include a person who physically delivers

electricity directly to retail customers in this state. An alternative electric supplier is not a public

utility, but may be an affiliate of a public utility.

(c) “Commission” means the public service commission.

(d) “Other entity within the corporate structure” means a division, department, subsidiary, or

similar entity within the corporate structure of a utility.

(e) “Third-party” means an entity separate from a utility, and separate from a utility affiliate,

that offers value-added programs and services to a utility’s customers through a contract.

(f) “Utility” means an electric, steam, or natural gas utility regulated by the public service

commission, and an electric or natural gas cooperative that is subject to regulation pursuant to

the Electric Cooperative Member-Regulation Act, 2008 PA 167, MCL 460.31 to 460.39.

(g) “Value-added programs and services” means programs and services that are utility or

energy related, including, but not limited to, home comfort and protection, appliance service,

building energy performance, alternative energy options, or engineering and construction

services. Value-added programs and services do not include energy optimization or energy

waste reduction programs paid for by utility customers as part of the regulated rates.

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History: 2019 AACS.

PART 2. CROSS-SUBSIDIZATION AND PREFERENTIAL TREATMENT

R 460.10103 Preventive measures.

Rule 3. (1) A utility that offers both regulated and unregulated services shall prevent

anticompetitive behavior, cross-subsidization, and preferential treatment prohibited by law and

these rules.

(2) A utility shall not offer unregulated value-added programs and services except through an

affiliate or other entity within the corporate structure, or through a third-party contract.

(3) A utility’s regulated services shall not subsidize the business of its affiliates, other entities

within the corporate structure, or third-party contractors offering unregulated value-added

programs or services.

History: 2019 AACS.

R 460.10104 Records.

Rule 4. (1) A utility shall maintain its books and records separately from those of its affiliates

or other entities within the corporate structure offering unregulated value-added programs and

services.

(2) The commission may review records relating to any transaction between a utility and an

affiliate, or relating to the offering of unregulated value-added programs and services. At any

time, the commission may initiate an investigation into transactions between the utility and its

affiliates, or into its offering of value-added programs and services.

(3) A utility, its affiliates, and other entities within the corporate structure shall keep their

books in a manner consistent with generally accepted accounting principles and, where

applicable, with the Uniform System of Accounts.

History: 2019 AACS.

R 460.10105 Sharing of facilities and employees.

Rule 5. (1) A utility, its affiliates, and other entities within the corporate structure may share

facilities, equipment, operating employees, and computer hardware and software with

documented protection to prevent discriminatory access to competitively sensitive information,

provided that such sharing complies with section 10ee of 2016 PA 341, MCL 460.10ee, and

measures are adopted to prevent cross-subsidization and preferential treatment that is otherwise

prohibited.

(2) A utility may transfer employees between the utility and an affiliate alternative electric

supplier providing the utility documents those transfers and files semi-annually with the

commission a report of each occasion on which an employee of the utility became an employee

of an affiliate alternative electric supplier and/or an employee of an affiliate alternative electric

supplier became an employee of the utility.

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(3) None of these rules shall be interpreted to require a utility with fewer than 60 employees to

maintain separate facilities, operations, or personnel used to deliver regulated services and

unregulated programs and services. Utilities using a third-party contractor for value-added

programs and services remain subject to the provisions of MCL 460.10ee(12).

History: 2019 AACS.

R 460.10106 Marketing.

Rule 6. (1) A utility, its affiliates, and other entities within the corporate structure offering

unregulated value-added programs or services, shall not engage in joint advertising, marketing,

or other promotional activities related to the provision of both regulated and unregulated

services, nor shall they jointly sell regulated services and unregulated value-added programs and

services.

(2) A utility or affiliate alternative electric supplier shall not provide or offer to provide any

customer with preferential treatment or service for doing business with the utility, its affiliates, or

other entities within the corporate structure offering unregulated value-added programs or

services, nor shall the utility or affiliate alternative electric supplier provide any customer with

inferior treatment or service for doing business with an unaffiliated supplier of a similar service.

(3) A utility shall not condition or otherwise tie the provision of a utility service or the

availability of discounts, rates, other charges, fees, rebates, or waivers of terms and conditions to

the taking of any goods or services from the utility, its affiliates, or other entities within the

corporate structure offering unregulated value-added programs or services.

History: 2019 AACS.

R 460.10107 Utility and affiliate or alternative electric supplier relationship.

Rule 7. (1) A utility shall not interfere in the business operations of any alternative electric

supplier. This provision includes, but is not limited to, all of the following:

(a) A utility shall not give the appearance that it speaks on behalf of any alternative electric

supplier or affiliate.

(b) A utility shall not interfere in the contractual relationship between the alternative electric

supplier and its customers unless the utility’s action is clearly permitted in the contract between

the customer and the alternative electric supplier or in tariffs approved by the commission.

(2) A utility shall not finance or co-sign loans, provide loan guarantees, provide collateral, or

be encumbered or allow its assets to be encumbered by affiliates or other entities within the

corporate structure. The utility and its assets shall not be the subject of recourse in the event of

default by an affiliate or other entity within the corporate structure.

History: 2019 AACS.

PART 3. DISCRIMINATION

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R 460.10108 Discrimination.

Rule 8. (1) A utility shall not discriminate in favor of or against any person, including its

affiliates.

(2) A utility shall not provide any affiliate or other entity within the corporate structure offering

unregulated value-added programs or services, or any customer of an affiliate or other entity

within the corporate structure offering unregulated value-added programs or services,

preferential treatment or any other advantages that are not offered under the same terms and

conditions and contemporaneously to other suppliers offering programs or services within the

same service territory or to customers of those suppliers.

(3) If a utility provides to any affiliate alternative electric supplier or customers of an affiliate

alternative electric supplier a discount, rebate, fee waiver, or waiver of its regulated tariffed

terms and conditions for services or products, it shall contemporaneously offer the same

discount, rebate, fee waiver, or waiver to all alternative electric suppliers operating within the

utility’s service territory or all alternative electric suppliers’ customers.

(4) If a utility provides services or products to any affiliate or other entity within the corporate

structure, and the cost of the service or product is not governed by section 10ee(8) of 2016 PA

341, MCL 460.10ee(8), compensation is based upon the higher of fully allocated embedded cost

or fair market price. If an affiliate or other entity within the corporate structure provides services

or products to a utility, and the cost of the service or product is not governed by section 10ee(8)

of 2016 PA 341, MCL 460.10ee(8), compensation is at the lower of market price or 10% over

fully allocated embedded cost. Asset transfers from a utility to an affiliate or other entity within

the corporate structure for which the cost is not governed by section 10ee(8) of 2016 PA 341,

MCL 460.10ee(8), is at the higher of cost or fair market value. Asset transfers from an affiliate

or other entity within the corporate structure to a utility for which the cost is not governed by

section 10ee(8) of 2016 PA 341, MCL 460.10ee(8) is at the lower of cost or fair market value.

History: 2019 AACS.

PART 4. INFORMATION SHARING

R 460.10109 Disclosure of information.

Rule 9. (1) Notwithstanding any provision of this rule, utilities shall comply at all times with

applicable data privacy tariffs.

(2) Prior written approval of the customer is not required for the disclosure of a customer list to

a program or service provider of an unregulated value-added program or service in compliance

with section 10ee(10)(a) of 2016 PA 341, MCL 460.10ee(10)(a), or to otherwise comply with

these rules. A customer list may include only the name and address of a customer.

(3) Information obtained by a utility in the course of conducting its regulated business shall not

be shared directly or indirectly with its affiliates or other entities within the corporate structure

offering unregulated value-added programs or services unless that same information is provided

upon request to competitors operating in the service territory on the same terms and conditions

and contemporaneously.

(4) Customer specific consumption or billing data shall not be provided to any affiliate, other

entity within the corporate structure offering unregulated value-added programs or services, or

alternative electric supplier without prior written approval of the customer.

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(5) If a utility provides non-customer specific, or aggregated, customer information to its

affiliate or other entity within the corporate structure offering unregulated value-added programs

or services, it must, upon request, offer the same information on the same terms and conditions,

in the same form and manner, and contemporaneously, to all competitors of that affiliate or other

entity within the corporate structure. The provision of such data must comply with all applicable

data privacy tariffs.

(6) When disclosure required in subrule (5) of this rule is otherwise allowed, a utility shall not

provide its affiliates or other entities within the corporate structure offering unregulated value-

added programs or services with information about the distribution system, including operation

and expansion, without providing, upon request, the same information under the same terms and

conditions, in the same form and manner, and contemporaneously, to all licensed alternative

electric suppliers and competitors of the affiliate or other entity within the corporate structure.

The utility shall keep a record of requests for such information, and shall make that record

available to the commission upon request.

(7) A utility shall not provide any information received from or as a result of doing business

with a competitor to the utility’s affiliate or other entity within the corporate structure offering

unregulated value-added programs or services without the written approval of the competitor.

History: 2019 AACS.

PART 5. REPORTING, OVERSIGHT, AND PENALTIES

R 460.10110 Notification.

Rule 10. (1) Utilities that intend to offer a value-added program or service shall notify the

commission not less than 30 days before offering the new program or service. The written

notification shall, at a minimum, provide all of the following:

(a) A detailed description of the new value-added program or service and what it will offer.

(b) A list of the personnel responsible for management of the value-added program or service

and their location within the utility, both physically and within the corporate structure.

(c) A detailed description of how costs, including but not limited to, billing, postage, and call

center costs, will be allocated to the value-added program or service to ensure that there is no

cross-subsidization between regulated and unregulated programs or services.

(d) A copy of the business plan for the value-added program or service.

(e) Pro forma financial statements that outline the expected financial performance for each

value-added program or service for the next 12 months.

(2) Utilities shall request a docket for the filing of the notification, and shall thereafter make all

annual report filings in that docket.

(3) A utility that intends to sell or transfer an asset with a market value of $1,000,000 or more

to any affiliate or other entity within the corporate structure shall notify the commission of the

impending sale or transfer no less than 30 days before the sale or transfer. An affiliate or other

entity within the corporate structure of a utility that intends to sell or transfer an asset with a

market value of $1,000,000 or more to a utility shall notify the commission of the impending sale

or transfer no less than 30 days before the sale or transfer. Upon request, the utility, affiliate, or

other entity within the corporate structure shall make available to the commission information

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that demonstrates how the sale or transfer price was determined. Notification shall be in the

form of a letter to the director of the regulated energy division of the commission.

History: 2019 AACS.

R 460.10111 Oversight.

Rule 11. (1) A utility, its affiliates, and other entities within the corporate structure offering

unregulated value-added programs or services shall maintain documentation needed to

investigate compliance with section 10ee of 2016 PA 341, MCL 460.10ee, and these rules. All

documentation shall be kept at a designated company office in this state, unless the Commission

by order has authorized a different location. The utility, its affiliates, and other entities within

the corporate structure offering unregulated value-added programs or services shall make this

information available for review upon request by the commission or its staff.

(2) The utility, its affiliates, and other entities within the corporate structure offering

unregulated value-added programs or services shall use a documented dispute resolution process

separate from any process that might be available from the commission. This dispute resolution

process shall address complaints arising from application of these rules. The utility, its affiliates,

and other entities within the corporate structure offering unregulated value-added programs or

services shall keep a log of all complaints, including the name of the person or entity filing the

complaint, the date the complaint was filed, a written statement of the nature of the complaint,

and the results of the resolution process.

(3) A utility, its affiliates, and other entities within the corporate structure offering unregulated

value-added programs or services may request a waiver from 1 or more provisions of these rules

by filing an application with the commission. The requesting party carries the burden of

demonstrating that such a waiver will not impair the development or functioning of the

competitive market. Waivers shall be granted for entities that qualify for loans to deploy

broadband services in rural areas under the Rural Electrification Act of 1936, as amended, 7

U.S.C. §901 et seq.

History: 2019 AACS.

R 460.10112 Reporting.

Rule 12. (1) Utilities shall file the code of conduct annual report information required under

section 10ee(6)(c) and (15), 2016 PA 341, MCL 460.10ee, no later than April 30 of each year in

the docket in which the utility filed its notification for a new program or service, or in a new

docket for an existing program or service. Code of conduct annual reports shall include all of the

following:

(a) Designation of a corporate officer of the utility who will oversee compliance with these

rules and be available to serve as the commission’s primary contact regarding compliance.

(b) An organizational chart of the parent or holding company showing all regulated entities and

affiliates and a description of all programs and services provided between the regulated entity

and its affiliates.

(c) An overview of the report year, including a detailed accounting of how costs were

apportioned between the utility and the value-added program or service, expectations for the

following year, and any 5-year projections available for each value-added program and service.

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(d) A table illustrating the customer count, revenue, and expense of each value-added program

and service.

(e) A balance sheet, where available, and income statement for each value-added program and

service offered by an affiliate or other entity within the corporate structure, including revenues,

less direct and indirect expenses broken out separately. Direct and indirect revenues and

expenses shall be separated by category and then aggregated at the direct and indirect levels, and

the report shall include gross income, amounts flowed back to ratepayers to reduce rates, and net

income.

Each category of

indirect

cost

should be accompanied by

formulas/calculations/allocations showing how they have been derived.

(f) General ledger and trial balance for each value-added program and service shall be provided

to the commission staff separately on a USB thumb drive or other appropriate technological

device with formulas intact.

(g) The number and type of complaints received in the prior calendar year regarding code of

conduct issues from customers, alternative electric suppliers, or any other person or entity, and a

summary of the resolution of any complaint that occurred during the calendar year.

(h) The number of times during the prior calendar year that customer information was provided

to an affiliate or competing provider of an unregulated value-added program or service, the

identity of the affiliate or competing provider, and a description of the information shared.

(i) A description of the nature of each transaction with an affiliate or other entity within the

corporate structure and of the basis for the cost allocation and pricing established in each

transaction.

(j) Reports of internal audits conducted by the utility regarding transactions between the utility

and its affiliates, or transactions between the utility and other entities within the corporate

structure offering value-added programs or services.

(2) The annual report shall be signed by the designated corporate officer or a person

responsible for each value-added program and service attesting to the accuracy of the

information in the annual report and certifying that there is no cross-subsidization between

regulated and non-regulated utility programs and services.

(3) Copies of federal income tax returns for utilities, affiliates, and, where applicable, other

entities within the corporate structure who offer a value-added program or service, shall be

available to the commission for inspection and review.

History: 2019 AACS.

R 460.10113 Penalties.

Rule 13. Penalties for violations of these rules are as provided in sections 10c and 10ee(14) of

2016 PA 341, MCL 460.10c, and MCL 460.10ee(14).

History: 2019 AACS.

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