Montana SB SB0154
SENATE BILL NO. 154
INTRODUCED BY E. STONINGTON
BY REQUEST OF THE TRANSITION ADVISORY COMMITTEE ON ELECTRIC UTILITY INDUSTRY RESTRUCTURING
A BILL FOR AN ACT ENTITLED: "AN ACT REVISING LAWS RELATED TO ELECTRICAL ENERGY; PROVIDING FOR THE DEFAULT SUPPLIER'S RECOVERY OF ELECTRICITY SUPPLY COSTS; DEFINING "ELECTRICITY SUPPLY COSTS"; REQUIRING THAT THE PUBLIC SERVICE COMMISSION USE AN ELECTRICITY COST RECOVERY MECHANISM THAT ENSURES THAT ALL PRUDENTLY INCURRED ELECTRICITY SUPPLY COSTS ARE FULLY RECOVERABLE IN RATES; REQUIRING THAT THE COMMISSION ESTABLISH A METHOD TO PROVIDE FOR THE FULL RECOVERY OF ELECTRICITY SUPPLY COSTS THAT EXTEND BEYOND THE END OF THE TRANSITION PERIOD; REQUIRING THAT THE COMMISSION ESTABLISH DEFAULT SUPPLY RESOURCE PLANNING AND PROCUREMENT RULES THAT PRESCRIBE A METHODOLOGY AGAINST WHICH THE DEFAULT SUPPLIER'S ELECTRICITY SUPPLY ACTIONS CAN BE PERFORMED AND REVIEWED BY THE COMMISSION; AMENDING SECTIONS 69-8-103 AND 69-8-210, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE."
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
Section 1. Section 69-8-103, MCA, is amended to read:
"69-8-103. Definitions. As used in this chapter, unless the context requires otherwise, the following definitions apply:
(1) "Aggregator" or "market aggregator" means an entity, licensed by the commission, that aggregates retail customers, purchases electrical energy, and takes title to electrical energy as an intermediary for sale to retail customers.
(2) "Assignee" means any entity, including a corporation, partnership, board, trust, or financing vehicle, to which a utility assigns, sells, or transfers, other than as security, all or a portion of the utility's interest in or right to transition property. The term also includes an entity, corporation, public authority, partnership, trust, or financing vehicle to which an assignee assigns, sells, or transfers, other than as security, the assignee's interest in or right to transition property.
(3) "Board" means the board of investments created by 2-15-1808.
(4) "Broker" or "marketer" means an entity, licensed by the commission, that acts as an agent or intermediary in the sale and purchase of electrical energy but that does not take title to electrical energy.
(5) "Cooperative utility" means:
(a) a utility qualifying as an electric cooperative pursuant to Title 35, chapter 18; or
(b) an existing municipal electric utility as of May 2, 1997.
(6) "Customer" or "consumer" means a retail electric customer or consumer. The university of Montana, pursuant to 20-25-201(1), and Montana state university, pursuant to 20-25-201(2), are each considered a single retail electric customer or consumer with a single individual load.
(7) "Customer-generator" means a user of a net metering system.
(8) "Default supplier" means a distribution services provider or a person that has received a default supplier license from the commission.
(9) "Distribution facilities" means those facilities by and through which electricity is received from a transmission services provider and distributed to the customer and that are controlled or operated by a distribution services provider.
(10) "Distribution services provider" means a utility owning distribution facilities for distribution of electricity to the public.
(11) "Electricity supplier" means any person, including aggregators, market aggregators, brokers, and marketers, offering to sell electricity to retail customers in the state of Montana.
(12) (a) "Electricity supply costs" means actual costs of the electricity. Actual costs include fuel, ancillary service costs, transmission costs including congestion and losses, and any other costs directly related to the purchase of electricity and management of electricity costs or a related service.
(b) Revenue from the sale of surplus electricity must be deducted from the costs included under subsection (12)(a). Total transmission costs are recoverable only once in electricity supply costs.
(c) The terms used in this subsection (12) must be construed according to industry standards.
(12)(13) "Financing order" means an order of the commission adopted in accordance with 69-8-503 that authorizes the imposition and collection of fixed transition amounts and the issuance of transition bonds.
(13)(14) (a) "Fixed transition amounts" means those nonbypassable rates or charges, including but not limited to:
(i) distribution;
(ii) connection;
(iii) disconnection; and
(iv) termination rates and charges that are authorized by the commission in a financing order to permit recovery of transition costs and the costs of recovering, reimbursing, financing, or refinancing the transition costs and of acquiring transition property through a plan approved by the commission in the financing order, including the costs of issuing, servicing, and retiring transition bonds.
(b) If requested by the utility in the utility's application for a financing order, fixed transition amounts must include nonbypassable rates or charges to recover federal and state taxes in which the transition cost recovery period is modified by the transactions approved in the financing order.
(14)(15) "Functionally separate" means a utility's separation of the utility's electricity supply, transmission, distribution, and unregulated retail energy services assets and operations.
(15)(16) "Interested person" means a retail electricity customer, the consumer counsel established in 5-15-201, the commission, or a utility.
(16)(17) "Large customer" means, for universal system benefits programs purposes, a customer with an individual load greater than a monthly average of 1,000 kilowatt demand in the previous calendar year for that individual load.
(17)(18) "Local governing body" means a local board of trustees of a rural electric cooperative.
(18)(19) "Low-income customer" means those energy consumer households and families with incomes at or below industry-recognized levels that qualify those consumers for low-income energy-related assistance.
(19)(20) "Net metering" means measuring the difference between the electricity distributed to and the electricity generated by a customer-generator that is fed back to the distribution system during the applicable billing period.
(20)(21) "Net metering system" means a facility for the production of electrical energy that:
(a) uses as its fuel solar, wind, or hydropower;
(b) has a generating capacity of not more than 50 kilowatts;
(c) is located on the customer-generator's premises;
(d) operates in parallel with the distribution services provider's distribution facilities; and
(e) is intended primarily to offset part or all of the customer-generator's requirements for electricity.
(21)(22) "Nonbypassable rates or charges" means rates or charges that are approved by the commission and imposed on a customer to pay the customer's share of transition costs or universal system benefits programs costs even if the customer has physically bypassed either the utility's transmission or distribution facilities.
(22)(23) "Pilot program" means a program using a representative sample of residential and small commercial customers to assist in developing and offering customer choice of electricity supply for all residential and commercial customers.
(23)(24) "Public utility" means any electric utility regulated by the commission pursuant to Title 69, chapter 3, on May 2, 1997, including the public utility's successors or assignees.
(24)(25) "Qualifying load" means, for payments and credits associated with universal system benefits programs, all nonresidential demand-metered accounts of a large customer within the utility's service territory in which the customer qualifies as a large customer.
(25)(26) "Small customer" means a residential customer or a small commercial customer who has an individual account with an average monthly demand in the previous calendar year of less than 100 kilowatts or a new commercial customer with an estimated average monthly demand of less than 100 kilowatts of a public utility distribution services provider that has opened access on its distribution system pursuant to Title 35, chapter 19, or this chapter.
(26)(27) "Transition bondholder" means a holder of transition bonds, including trustees, collateral agents, and other entities acting for the benefit of that holder.
(27)(28) "Transition bonds" means any bond, debenture, note, interim certificate, collateral, trust certificate, or other evidence of indebtedness or ownership issued by the board or other transition bonds issuer that is secured by or payable from fixed transition amounts or transition property. Proceeds from transition bonds must be used to recover, reimburse, finance, or refinance transition costs and to acquire transition property.
(28)(29) "Transition charge" means a nonbypassable rate or charge to be imposed on a customer to pay the customer's share of transition costs.
(29)(30) "Transition cost recovery period" means the period beginning on July 1, 1998, and ending when a utility customer does not have any liability for payment of transition costs.
(30)(31) "Transition costs" means:
(a) a public utility's net verifiable generation-related and electricity supply costs, including costs of capital, that become unrecoverable as a result of the implementation of this chapter or of federal law requiring retail open access or customer choice;
(b) those costs that include but are not limited to:
(i) regulatory assets and deferred charges that exist because of current regulatory practices and can be accounted for up to the effective date of the commission's final order regarding a public utility's transition plan and conservation investments made prior to universal system benefits charge implementation;
(ii) nonutility and utility power purchase contracts, including qualifying facility contracts;
(iii) existing generation investments and supply commitments or other obligations incurred before May 2, 1997, and costs arising from these investments and commitments;
(iv) the costs associated with renegotiation or buyout of the existing nonutility and utility power purchase contracts, including qualifying facilities and all costs, expenses, and reasonable fees related to issuing transition bonds; and
(v) the costs of refinancing and retiring of debt or equity capital of the public utility and associated federal and state tax liabilities or other utility costs for which the use of transition bonds would benefit customers.
(31)(32) "Transition period" means the period ending July 1, 2007.
(32)(33) "Transition property" means the property right created by a financing order, including without limitation the right, title, and interest of a utility, assignee, or other issuer of transition bonds to all revenue, collections, claims, payments, money, or proceeds of or arising from or constituting fixed transition amounts that are the subject of a financing order, including those nonbypassable rates and other charges and fixed transition amounts that are authorized by the commission in the financing order to recover transition costs and the costs of recovering, reimbursing, financing, or refinancing the transition costs and acquiring transition property, including the costs of issuing, servicing, and retiring transition bonds. Any right that a utility has in the transition property before the utility's sale or transfer or any other right created under this section or created in the financing order and assignable under this chapter or assignable pursuant to a financing order is only a contract right.
(33)(34) "Transmission facilities" means those facilities that are used to provide transmission services as determined by the federal energy regulatory commission and the commission.
(34)(35) "Transmission services provider" means a person controlling or operating transmission facilities.
(35)(36) "Universal system benefits charge" means a nonbypassable rate or charge to be imposed on a customer to pay the customer's share of universal system benefits programs costs.
(36)(37) "Universal system benefits programs" means public purpose programs for:
(a) cost-effective local energy conservation;
(b) low-income customer weatherization;
(c) renewable resource projects and applications, including those that capture unique social and energy system benefits or that provide transmission and distribution system benefits;
(d) research and development programs related to energy conservation and renewables;
(e) market transformation designed to encourage competitive markets for public purpose programs; and
(f) low-income energy assistance.
(37)(38) "Utility" means any public utility or cooperative utility."
Section 2. Section 69-8-210, MCA, is amended to read:
"69-8-210. Public utilities -- electricity supply. (1) On the effective date of a commission order implementing a public utility's transition plan pursuant to 69-8-202, the public utility shall remove its generation assets from the rate base.
(2) During the transition period, the commission may establish cost-based prices for electricity supply service for customers that do not have a choice of electricity supply service or that have not yet chosen an electricity supplier.
(3) If the transition period is extended, then the The customers' distribution services provider shall:
(a) extend any cost-based contract with the distribution services provider's affiliate supplier for a term of not more than 3 years; or
(b) purchase electricity from the market; and
(c) use a mechanism that recovers electricity supply costs in rates to ensure that as provided in subsection (4) so that those costs are fully recovered.
(4) (a) The commission shall use an electricity cost recovery mechanism that ensures that all prudently incurred electricity supply costs are fully recoverable in rates.
(b) The cost recovery mechanism must provide for prospective rate adjustments for cost differences resulting from cost changes, load changes, and the time value of money on the differences.
(c) In reviewing whether electricity supply costs were prudently incurred, the commission shall consider only those facts that were known or should reasonably have been known by the default supplier at the time the default supplier entered into an energy supply contract.
(d) The commission shall establish a method to provide for the full recovery of electricity supply costs that extend beyond the end of the transition period.
(e) The commission shall establish default supply resource planning and procurement rules that prescribe a methodology, in sufficient detail, against which the default supplier's electricity supply actions can be performed and reviewed by the commission. (4)(5) If a public utility intends to be an electricity supplier through an unregulated division, then the public utility must be licensed as an electricity supplier pursuant to 69-8-404."
NEW SECTION. Section 3. Effective date. [This act] is effective on passage and approval.
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Latest Version of SB 154 (SB0154.01)
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