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HOUSE BILL NO. 305
INTRODUCED BY D. EWER
A BILL FOR AN ACT ENTITLED: "AN ACT REQUIRING THAT IN ORDER TO LOWER THE COST OF ELECTRIC POWER FOR PUBLIC UTILITY CONSUMERS THAT PUBLIC UTILITY CONSUMERS BE GIVEN A GENERATION SALE PREMIUM CREDIT WHEN THERE IS A GENERATION SALE PREMIUM; CREATING AN ELECTRIC CONSUMER GENERATION SALE PREMIUM CREDIT SPECIAL REVENUE ACCOUNT; PROVIDING A CAPITAL GAINS TAX EXEMPTION FOR THE SALE OF GENERATION ASSETS; AMENDING SECTION 69-8-103, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE AND A RETROACTIVE APPLICABILITY 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 and purchases electric energy and takes title to electric 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 electric energy but that does not take title to electric 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) "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.
(8) "Distribution services provider" means a person controlling or operating distribution facilities for distribution of electricity to the public.
(9) "Electricity supplier" means any person, including aggregators, market aggregators, brokers, and marketers, offering to sell electricity to retail customers in the state of Montana.
(10) "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.
(11) (a) "Fixed transition amounts" means those nonbypassable rates or charges, including but not limited to:
(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 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.
(12) "Functionally separate" means a utility's separation of the utility's electricity supply, transmission, distribution, and unregulated retail energy services assets and operations.
(13) "Generation sale premium" means any amount realized through a sale of a public utility's generation assets that were included in a utility's rate base on or before July 1, 1998, that exceed the book value of those generation assets less any reasonable amount for transaction costs as determined by the public service commission. The net amount from the sale includes cash, securities, stock, property of any kind, other valuable intangibles, and any other assets or agreements that constitute a payment and transfer of ownership of a public utility's generation assets during any time within the transition period.
(14) "Generation sale premium credit" means a credit provided to consumers if there is a generation sale premium.
(13)(15) "Local governing body" means a local board of trustees of a rural electric cooperative. (14)(16) "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. (15)(17) "Nonbypassable rates or charges" means rates or charges approved by the commission imposed on a customer
to pay the customer's share of transition costs or universal system benefits program costs even if the customer has
physically bypassed either the utility's transmission or distribution facilities. (16)(18) "Pilot program" means a program using a representative sample of residential and small commercial customers
to assist in developing and offering customer choice of electric supply for all residential and commercial customers. (17)(19) "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. (18)(20) "Transition bondholder" means a holder of transition bonds including trustees, collateral agents, and other
entities acting for the benefit of that holder. (19)(21) "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. (20)(22) "Transition charge" means a nonbypassable rate or charge to be imposed on a customer to pay the customer's
share of transition costs. (21)(23) "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. (22)(24) "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.
(23)(25) "Transition period" means the period beginning on July 1, 1998, and ending on July 1, 2002, unless otherwise
extended pursuant to this chapter, during which utilities may phase in customer choice of electricity supplier. (24)(26) "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. (25)(27) "Transmission facilities" means those facilities that are used to provide transmission services as determined by
the federal energy regulatory commission and the commission. (26)(28) "Transmission services provider" means a person controlling or operating transmission facilities. (27)(29) "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 program costs. (28)(30) "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 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.
(29)(31) "Utility" means any public utility or cooperative utility."
NEW SECTION. Section 2. Public utilities -- generation sale premium and generation sale premium credit. (1) If a public utility incurs a generation sale premium, each consumer must receive a generation sale premium credit to lower the consumer's cost of electric power.
(2) Within a reasonable time, as determined by the commission, after the occurrence of a generation sale premium, the generation sale premium must be transferred to the electric consumer generation sale premium credit special revenue account established in [section 3].
(3) The commission shall provide a generation sale premium credit to each consumer.
(4) A sliding scale must be implemented to provide a greater distribution of generation sale premiums to consumers having smaller loads. The sliding scale must include a maximum amount of credit from a generation sale premium for a consumer with loads greater than 1,000 kilowatts.
(5) The public service commission shall calculate the generation sale premium credit to consumers by assuming a total payout of those credits for a minimum of 5 years excluding interest earned on the cash or cash equivalent proceeds or liquidation of noncash proceeds. Any interest or noncash proceeds must be paid out prorata during a 10-year period.
NEW SECTION. Section 3. Electric consumer generation sale premium credit special revenue account. There is an electric consumer generation sale premium credit account in the state special revenue fund established in 17-2-102 that is to be allocated by the public service commission in accordance with [section 2]. There must be deposited in the electric consumer generation sale premium credit account any generation sale premiums.
NEW SECTION. Section 4. Capital gains exemption for sale of generation assets. (1) Any capital gains or dividend income realized by a public utility, as defined in 69-8-103, that serves consumers in the state from the sale of electric generation facilities between December 1, 1998, and October 1, 1999, is exempt from taxation under Title 15, chapter 31.
(2) For the purposes of this section, "electric generation facilities" means any physically connected combination of a generator or generators, associated prime movers, other associated property, including appurtenant land and improvements, and personal property that are normally operated together to produce electric power. The term includes but is not limited to generating facilities that produce electricity from coal-fired steam turbines, oil or gas turbines, or turbine generators that are driven by falling water.
NEW SECTION. Section 5. Codification instruction. (1) [Sections 2 and 3] are intended to be codified as an integral part of Title 69, chapter 8, part 2, and the provisions of Title 69, chapter 8, part 2, apply to [sections 2 and 3].
(2) [Section 4] is intended to be codified as an integral part of Title 15, chapter 31, and the provisions of Title 15, chapter 31, apply to [section 4].
NEW SECTION. Section 6. Nonseverability. It is the intent of the legislature that each part of [this act] is essentially dependent upon every other part, and if one part is held unconstitutional or invalid, all other parts are invalid.
NEW SECTION. Section 7. Effective date. [This act] is effective on passage and approval.
NEW SECTION. Section 8. Retroactive applicability. [Section 4] applies retroactively, within the meaning of 1-2-109, to the sale of electric generation facilities as of December 1, 1998.
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Latest Version of HB 305 (HB0305.01)
Processed for the Web on January 18, 1999 (12:21PM)
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