Under Public Act 295 of 2008, a utility that meets or exceeds statutory energy optimization goals receives a financial incentive equal to 25 percent of the net cost reductions experienced by the provider’s customers as a result of implementation of the energy optimization plan, capped at 15 percent of the provider’s actual energy efficiency program expenditures for the year. This financial incentive, or “bonus,” for meeting the regulatory mandate is funded by an additional surcharge authorized by the MPSC and levied on all ratepayers over the ensuing 12 months. Not only do all customers pay a mandatory monthly energy optimization charge to fund the program, they may also be subject to an additional surcharge on their monthly electric bills to reward the utilities for exceeding the statutorily mandated goal. There must be a balance between the cost of the energy optimization program and the benefits received but the “bonus” has the net effect of penalizing, rather than rewarding, customers for their hard work in exceeding energy optimization goals. For years 2009 and 2010, Michigan’s major utilities were authorized by the MPSC to collect $26,691,303 in bonuses, which were funded through additional rate increases on customers. We do not believe customers should be required to pay additional rate increases for utilities to earn bonuses on a program already funded by customers. Meeting or exceeding statutory goals should result in net savings for customers, not increased rates. MMA believes the financial incentive provision for utilities in Public Act 295 of 2008 should be removed to reduce rates for Michigan customers.