HOUSE BILL NO. 632
INTRODUCED BY D. MOOD, BECK, COCCHIARELLA, DOHERTY, GILLAN, MCGEE, SLITER
A BILL FOR AN ACT ENTITLED: "AN ACT GENERALLY REVISING THE ELECTRIC UTILITY INDUSTRY
RESTRUCTURING AND CUSTOMER CHOICE LAWS; PROVIDING TAX RELIEF FOR A PUBLIC UTILITY OR
OTHER ELECTRICITY SUPPLIER THAT SELLS ELECTRICITY AT LIFELINE RATES; DEFINING "LIFELINE
RATES RATE"; ALLOWING THE PUBLIC SERVICE COMMISSION TO IMMEDIATELY ADJUST RATES
UPWARD IN THE PUBLIC INTEREST; CLARIFYING THAT THE PUBLIC SERVICE COMMISSION RETAINS
AUTHORITY OVER THE PRICE OF ELECTRICITY UNTIL A FINAL TRANSITION PLAN IS APPROVED BY THE
COMMISSION; CLARIFYING THAT THE COMMISSION'S AUTHORITY TO SET JUST AND REASONABLE
RATES FOR DEFAULT SUPPLY IS A CONTINUING OBLIGATION; REQUIRING THE COMMISSION TO
COMMENCE A PROCEEDING TO PROVIDE JUST AND REASONABLE RATES; REQUIRING THE COMMISSION
TO ADOPT A TEMPORARY LIFELINE RATES RATE FOR COMMERCIAL OR INDUSTRIAL LARGE
CUSTOMERS UNDER SECTION 69-8-201(1)(A) WHO HAVE CHOSEN AN ELECTRICITY SUPPLIER UNDER
TITLE 69, CHAPTER 8, MCA; AMENDING SECTIONS 15-31-113, 69-8-103, 69-8-201, 69-8-210, 69-8-211, AND
69-8-403, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE, A RETROACTIVE APPLICABILITY
DATE, AND A TERMINATION DATE."
WHEREAS, THE 1997 LEGISLATURE APPROVED SENATE BILL NO. 390, WHICH PLACED MONTANA ON THE ROAD TO CUSTOMER CHOICE, WITH THE GOAL OF EVENTUALLY ALLOWING MARKET FORCES TO PROVIDE LOWER PRICES FOR MONTANA ELECTRICITY CONSUMERS THAN COULD BE ACHIEVED THROUGH GOVERNMENT REGULATION; AND
WHEREAS, THE 1997 LEGISLATURE HAD NO WAY OF ANTICIPATING RECENT EVENTS AND
CONDITIONS THAT HAVE PRODUCED EXTRAORDINARILY HIGH ELECTRICITY PRICES IN THE WESTERN
UNITED STATES, INCLUDING THE UNWILLINGNESS OF THE STATE OF CALIFORNIA TO BUILD POWER
PLANTS TO SERVE THAT STATE'S SURGING POWER DEMANDS, SEVERE DROUGHT CONDITIONS IN THE
NORTHWEST THAT HAVE SUBSTANTIALLY REDUCED HYDROELECTRIC GENERATION, AND RAPID
INCREASES IN NATURAL GAS PRICES THAT HAVE INFLATED ELECTRICITY COSTS FROM GAS-FIRED
PLANTS; AND
WHEREAS, SENATE BILL NO. 390 CONTAINED CERTAIN PROVISIONS INTENDED TO PROTECT MONTANA ELECTRICITY CONSUMERS IN THE EVENT THAT COMPETITION DID NOT PROVE ADEQUATE TO PROVIDE REASONABLE ELECTRICITY PRICES; AND
WHEREAS, THE MONTANA LEGISLATURE HAS NOW CONCLUDED THAT THE MONTANA PUBLIC SERVICE COMMISSION HAS THE AUTHORITY TO IMMEDIATELY ESTABLISH A LIFELINE RATE FOR THAT PORTION OF GENERATION THAT SERVED LARGE CUSTOMERS IN MONTANA IN 1998 AND SHOULD ESTABLISH JUST AND REASONABLE RATES TO CONTINUE REGULATION FOR ALL CUSTOMERS UNTIL THE PUBLIC SERVICE COMMISSION APPROVES A TRANSITION PLAN FOR A PUBLIC UTILITY THAT HAS ELECTED TO FILE A TRANSITION PLAN.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
Section 1. Section 15-31-113, MCA, is amended to read:
"15-31-113. Gross income and net income. (1) The term Except as provided in subsection (4), "gross income" means
all income recognized in determining the corporation's gross income for federal income tax purposes and:
(a) including:
(i) interest exempt from federal income tax and exempt-interest dividends as defined in section 852(b)(5) of the Internal
Revenue Code of 1986, as that section may be amended or renumbered;
(ii) the portion of gain from a liquidation of the reporting corporation not recognized for federal corporate income tax
purposes pursuant to sections 331 through 337 of the Internal Revenue Code, as those sections may be amended or
renumbered, attributable to stockholders, either individual or corporate, not subject to Montana income or license tax under
Title 15, chapter 30 or chapter 31, as appropriate, on the gain passing through to the stockholders pursuant to federal law;
and
(b) excluding gain recognized for federal tax purposes as a shareholder of a liquidating corporation pursuant to sections
331 through 337 of the Internal Revenue Code, as those sections may be amended or renumbered, when the gain is required
to be recognized by the liquidating corporation pursuant to subsection (1)(a)(ii) of this section.
(2) The term "net income" means the gross income of the corporation less the deductions set forth in 15-31-114.
(3) A corporation is not exempt from the corporation license tax unless specifically provided for under 15-31-101(3) or
15-31-102. Any corporation not subject to or liable for federal income tax but not exempt from the corporation license tax
under 15-31-101(3) or 15-31-102 shall compute gross income for corporation license tax purposes in the same manner as a
corporation that is subject to or liable for federal income tax according to the provisions for determining gross income in
the federal Internal Revenue Code in effect for the taxable year.
(4) (a) Gross income does not include income from the sale of electricity for lifeline rates A LIFELINE RATE under
69-8-403 by a public utility or other electricity supplier as defined in 69-8-103 if that public utility or other electricity
supplier is subject to the tax provided in this chapter.
(b) The exclusion from gross income allowed under subsection (4)(a) also applies to a limited liability partnership if the
limited liability partnership satisfies the conditions in subsection (4)(a)."
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 electric electrical energy, and takes title to electric 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 electric electrical energy but that does not take title to electric 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) "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) (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) "Functionally separate" means a utility's separation of the utility's electricity supply, transmission, distribution, and unregulated retail energy services assets and operations.
(15) "Interested person" means a retail electricity customer, the consumer counsel established in 5-15-201, the commission, or a utility.
(16) "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) "Lifeline rates RATE" means AN emergency, temporary rates that are RATE adopted for the express purpose of
allowing commercial or industrial LARGE customers without UNDER 69-8-201(1)(A) WHO HAVE CHOSEN AN
ELECTRICITY SUPPLIER UNDER TITLE 69, CHAPTER 8, TO OBTAIN an affordable supply of electricity as of May
1, 2001, to remain in operation or to recommence operations once suspended UNTIL THE COMMISSION ESTABLISHES
JUST AND REASONABLE RATES FOR GENERATION PURSUANT TO 69-8-403(1).
(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 electric 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 TO ANY BUSINESS COMPONENT OF THE ELECTRIC
UTILITY THAT GENERATES, TRANSMITS, OR DISTRIBUTES ELECTRICAL ENERGY.
(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 beginning on July 1, 1998, and ending on July 1, 2002 2004, unless
otherwise extended pursuant to this chapter, during which utilities may phase in customer choice of electricity supplier.
(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.
(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 69-8-201, MCA, IS AMENDED TO READ:
"69-8-201. Public utility -- transition to customer choice -- waiver. (1) A public utility shall, except as provided in this section, adhere to the following deadlines:
(a) On Subject to subsection (6), on or before July 1, 1998, all customers with individual loads greater than 1,000
kilowatts and for loads of the same customer with individual loads at a meter greater than 300 kilowatts that aggregate to
1,000 kilowatts or greater must have the opportunity to choose an electricity supplier.
(b) Subject to subsection (2), and as soon as is administratively feasible but before July 1, 2002, all other public utility customers must have the opportunity to choose an electricity supplier.
(2) (a) Except as provided for in subsection (4), the commission may determine that additional time is necessary for customers identified in subsection (1)(b); however, the implementation of full customer choice may not be delayed beyond July 1, 2004.
(b) A determination by the commission that additional time is necessary for subsection (1)(b) customers must be made at least 60 days in advance of the scheduled date and must be based on one or more of the following considerations:
(i) implementation would not be administratively feasible;
(ii) implementation would materially affect the reliability of the electric system; or
(iii) Montana customers or electricity suppliers would be disadvantaged due to lack of a competitive electricity supply market.
(3) The commission shall designate the public utility or one or more default suppliers to provide regulated default
service for those small customers of a public utility that are not being served by a competitive electricity supplier and those
customers who elect to receive service from the default supplier. The transition advisory committee shall review and
address the need for continued default supply service and make recommendation to the 57th legislature.
(4) Except as provided in 69-5-101, 69-5-102, 69-5-104 through 69-5-112, and 69-8-402, a public utility currently doing business in Montana as part of a single integrated multistate operation, no portion of which lies within the basin of the Columbia River, may:
(a) defer compliance with this chapter until a time that the public utility can reasonably implement customer choice in the state of the public utility's primary service territory, except that the public utility shall file a transition plan pursuant to 69-8-202 to provide transition to customer choice on or before July 1, 2002, and must have completed the transition period to customer choice by July 1, 2006; and
(b) petition the commission to delay the public utility's transition plan filing until July 1, 2004.
(5) Upon a request from a public utility with fewer than 50 customers, the commission shall waive compliance with the requirements of 69-8-104, 69-8-202 through 69-8-204, 69-8-208 through 69-8-211, 69-8-402, and this section.
(6) A customer who chose an electricity supplier prior to July 1, 2001, may make an election prior to October 1, 2001, to receive the customer's electricity from the default supplier. A customer who chose an electricity supplier prior to July 1, 2001, and who chooses to receive the customer's electricity from the default supplier pursuant to this subsection is bound by the election and may not again elect to choose an electricity supplier other than the default supplier."
Section 3. Section 69-8-210, MCA, is amended to read:
"69-8-210. Public utilities -- electricity supply. (1) Consistent with the provisions of 69-8-403, the commission
retains authority over the price of RATES, TOLLS, AND CHARGES FOR electricity supply paid by customers of Montana
utilities A PUBLIC UTILITY THAT HAS FILED A TRANSITION PLAN until a final transition plan is approved by the
commission. The commission's authority and duty to set just and reasonable rates for electricity supply costs paid by
customers OF A DEFAULT SUPPLIER is a continuing obligation.
(2) On the effective date of a final 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)(3) During the transition period, the commission may shall 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 just
and reasonable rates for THE GENERATION OF ELECTRICITY SUPPLIED TO all customers of a REQUESTING THAT
SERVICE FROM ANY public utility that has filed a transition plan. In establishing those rates, the commission shall
consider the following factors:
(a) cost of production;
(b) reasonable rate of return;
(c) market considerations; and
(d) the ability of customers to pay OTHER FACTORS THAT THE COMMISSION CONSIDERS RELEVANT TO
THE DETERMINATION OF JUST AND REASONABLE RATES.
(4) IF THE TRANSITION PERIOD IS EXTENDED, 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 THOSE COSTS ARE FULLY RECOVERED.
(3) If the transition period is extended, then the customers' distribution services provider shall:
(a) extend any cost-based contract with the distribution services provider's affiliate supplier for a term 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 those costs are fully recovered.
(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.
(6) A PUBLIC UTILITY SHALL OFFER ITS CUSTOMERS AN OPPORTUNITY TO PURCHASE A SEPARATELY MARKETED PRODUCT COMPOSED OF POWER FROM RENEWABLE RESOURCES. THIS PRODUCT MAY BE PRICED DIFFERENTLY FROM THE STANDARD ELECTRICITY PRODUCT AUTHORIZED IN THIS SECTION. FOR THE PURPOSES OF THIS SECTION, "RENEWABLE RESOURCES" MEANS WIND, SOLAR, OR GEOTHERMAL RESOURCES."
Section 4. Section 69-8-211, MCA, is amended to read:
"69-8-211. Public utilities -- transition costs and charges -- rate moratorium. (1) Subject to the provisions of this section, the commission shall allow recovery of the following categories of transition costs:
(a) the unmitigable costs of qualifying facility contracts, including reasonable buyout or buydown costs, for which the contract price of generation is above the market price for generation;
(b) the unmitigable costs of energy supply-related regulatory assets and deferred charges that exist because of current regulatory practices and that can be accounted for up to the effective date of the commission's final order regarding a public utility's transition plan, including costs, expenses, and reasonable fees related to issuing of transition bonds;
(c) the unmitigable transition costs related to public utility-owned generation and other power purchase contracts, except that recovery of those costs is limited to the amount accruing during the first 4 years after the commission enters an order pursuant to 69-8-202(3); and
(d) other transition costs as may qualify for recovery under this section.
(2) Transition costs as determined by the commission upon an affirmative showing by a public utility must meet the following requirements:
(a) Transition costs must reflect all reasonable mitigation by the public utility, including but not limited to good faith efforts to renegotiate contracts, buying out or buying down contracts, and refinancing through transition bonds.
(b) The value of all generation-related assets and liabilities and electricity supply costs must be reasonably demonstrable and must be considered on a net basis, and methods for determining value must include but are not limited to:
(i) estimating future market values of electricity and ancillary services provided by the assets;
(ii) appraisal by independent third-party professionals; or
(iii) a competitive bid sale. A sale by a public utility of its generation assets to a successor or assignee does not relieve
either the public utility or its successor or assignee of its THE obligation to serve customers at just and reasonable rates.
(c) Investments and power purchase contracts must have been previously allowed in rates or, if not previously in rates, must be determined to be used and useful to ratepayers in connection with the commission's approval of the utility's transition plan.
(d) Unless otherwise provided for in this chapter, only costs related to existing investments and power purchase contracts identified in subsection (2)(c) and costs arising from those investments and power purchase contracts may be included as transition costs.
(3) (a) On commission approval of the amount of a public utility's transition costs, those costs must be recovered through the imposition of a transition charge.
(b) A transition charge may not be collected from customers for:
(i) new or additional loads of 1,000 kilowatts or greater that were first served by the public utility after December 31, 1996; or
(ii) loads served by that customer's own generation.
(c) Subject to commission approval, a utility and a customer may agree to alter the customer's transition charge payment schedule. Public utilities may file with the commission tariffs for electric service rates that foster economic development or retention of existing customers within the state, including generally available rate schedules. Transition charges are the only charges that may be imposed upon a customer class to recover transition costs under this section. A separate exit fee may not be charged.
(4) Transition charges must be imposed within a transition cost recovery period approved by the commission on a case-by-case basis. Except for transition costs recovered under subsection (1)(c), categories of transition costs may have varying transition cost recovery periods.
(5) Approval of transition costs and collection of those transition costs through transition charges is a settlement of all transition costs claims by a public utility. A public utility seeking to recover transition costs through any means not authorized by this chapter may not collect transition charges with respect to these transition costs.
(6) Except as provided in subsection (7), public utilities shall implement a rate moratorium during the transition period as follows:
(a) From July 1, 1998, through June 30, 2000, public utilities may not charge rates higher than those rates in effect on July 1, 1998.
(b) From July 1, 2000, through June 30, 2002, and only for those customers subject to the provisions of 69-8-201(1)(b), public utilities may not increase that increment of rates normally allocated to electric supply-related costs above the increment associated with electric supply-related costs reflected in rates in effect on July 1, 1998. Beginning on July 1, 2000, public utilities may propose increases to those increments of rates normally allocated to transmission and distribution costs.
(7) Excepted from the provisions of subsection (6) are:
(a) increased costs related to universal system benefits programs greater than those currently in rates, including the treatment of universal system benefits program costs as an expense;
(b) increased costs necessary to implement full customer choice, including but not limited to metering, billing, and technology. Those costs must be recovered from the customers on whose behalf the increased costs are incurred.
(c) subject to commission approval, an extraordinary event resulting in either:
(i) a 4% annual revenue requirement increase from July 1, 1998, through June 30, 2000; or
(ii) an 8% power supply-related annual revenue requirement increase from July 1, 2000, through June 30, 2002;
(d) the increase or decrease in the annual state and local property tax expense that has occurred since May 2, 1997.;
(E) AN INCREASE IN RATES REFLECTING THE COMMISSION'S DETERMINATION THAT A GRADUAL
UPWARD ADJUSTMENT BASED ON JUST AND REASONABLE CRITERIA SET FORTH IN 69-8-210(3) IS IN THE
PUBLIC INTEREST.
(8) Notwithstanding subsections (6) and (7), during the transition period, public utilities may not charge rates or collect costs that include costs reallocated to transition costs at a level higher than the public utility would reasonably expect to recover in rates had the current regulatory system remained intact.
(9) Public utilities shall apply savings resulting under 69-8-503 toward the rate moratorium pursuant to subsection (6).
(10) During the 4-year 6-YEAR 4-YEAR transition period, public utilities may accelerate the amortization of
accumulated deferred investment tax credits associated with transmission, distribution, and the general plant as an
adjustment to earnings if electric earnings fall below 9.5% earned return on average equity. The public utility may include
the flow through of investment tax credits so that the public utility's earned return on equity is maintained at 9.5%.
Accumulated deferred investment tax credits amortized under this subsection may not be reflected in operating income for
ratemaking purposes.
(11) The commission shall issue the accounting orders necessary to align rate moratorium timing and requirements to actual transition bonds savings."
Section 5. Section 69-8-403, MCA, is amended to read:
"69-8-403. Commission authority -- rulemaking authority. (1) Within 7 days of [the effective date of this act] the
commission shall immediately commence a proceeding to provide just and reasonable rates to all Montana consumers FOR
THE GENERATION OF ELECTRICITY SUPPLIED TO ALL CUSTOMERS OF A PUBLIC UTILITY THAT HAS
FILED A TRANSITION PLAN, taking into consideration the cost of production, a REASONABLE rate of return analysis,
the customer's ability to pay, and, market conditions, as warranted, and OTHER FACTORS THAT THE COMMISSION
DETERMINES ARE RELEVANT, IN ORDER TO provide a rate that allows all public utility customers to have access to
affordable energy.
(2) Within 7 days of [the effective date of this act], the commission shall adopt temporary lifeline rates for all
commercial or industrial customers currently unable to purchase power at an affordable price who request this rate
determination. The lifeline rate must be set at a price that is based on consideration of data regarding operation costs from
those commercial or industrial customers currently without an affordable price of electricity. The lifeline rates must expire
as soon as the commission enters an interim order provided for in subsection (3).
(2) WITHIN 30 DAYS OF [THE EFFECTIVE DATE OF THIS ACT], THE COMMISSION SHALL ADOPT A
TEMPORARY LIFELINE RATE FOR ALL LARGE CUSTOMERS UNDER 69-8-201(1)(A) WHO HAVE CHOSEN AN
ELECTRICITY SUPPLIER UNDER TITLE 69, CHAPTER 8, WHO REQUEST THIS RATE CLASSIFICATION FOR A
SUPPLY OF ELECTRICITY, THE PRICE OF WHICH DOES NOT EXCEED 150% OF THE PRICE OF THE SUPPLY
COMPONENT OF THE OTHERWISE APPLICABLE REGULATED TARIFFED RATE FOR THAT CLASS OF
CUSTOMER. IN ORDER TO BE ELIGIBLE FOR A LIFELINE RATE, A LARGE CUSTOMER SHALL
DEMONSTRATE TO THE COMMISSION THAT THE CUSTOMER EARNED NO MORE THAN AN 8% RETURN
ON EQUITY ON THE CUSTOMER'S MONTANA OPERATION IN THE PREVIOUS 12 MONTHS. THE LIFELINE
RATE MUST EXPIRE AS SOON AS THE COMMISSION ISSUES THE INTERIM ORDER PROVIDED FOR IN
SUBSECTION (3). IN ADDITION TO ANY OTHER REQUIREMENTS THAT THE COMMISSION MAY IMPOSE, IN
ORDER TO BE ELIGIBLE FOR A LIFELINE RATE, CUSTOMERS UNDER 69-8-201(1)(A) WHO HAVE CHOSEN
AN ELECTRICITY SUPPLIER UNDER TITLE 69, CHAPTER 8, THAT REQUEST A LIFELINE RATE
CLASSIFICATION SHALL AGREE TO REPAY, UNDER PROCEDURES ESTABLISHED BY THE COMMISSION,
ANY DIFFERENCE BETWEEN THE LIFELINE RATE AND THE INTERIM RATE ESTABLISHED BY THE
COMMISSION PURSUANT TO SUBSECTION (3). IF THE LIFELINE RATE IS GREATER THAN THE INTERIM
RATE, THE COMMISSION SHALL ESTABLISH PROCEDURES TO REIMBURSE THOSE CUSTOMERS UNDER
69-8-201(1)(A) WHO HAVE CHOSEN AN ELECTRICITY SUPPLIER UNDER TITLE 69, CHAPTER 8, THAT
RECEIVED A LIFELINE RATE.
(3) The commission shall enter an interim order no later than November 30, 2001, establishing just and reasonable rates
for all Montana consumers CUSTOMERS OF A UTILITY THAT HAS FILED A TRANSITION PLAN.
(4) The legislature expressly provides the commission discretion to set just and reasonable rates, FOR ALL CLASSES
OF CUSTOMERS OF A PUBLIC UTILITY THAT HAS FILED A TRANSITION PLAN UNTIL THE COMMISSION
HAS ISSUED A FINAL ORDER REGARDING THE UTILITY'S TRANSITION PLAN. and a legal challenge to the
interim rate may not be entertained until a final just and reasonable rate has been established by commission order. The
commission shall set a final just and reasonable rate before July 1, 2002, and the interim just and reasonable rate must
remain in effect until the final just and reasonable rate becomes effective.
(1)(5) Beginning on the effective date of a final commission order regarding a public utility's transition plan, the
commission shall regulate the public utility's retail transmission and distribution services within the state of Montana, as
provided in this chapter, and may not regulate the price of electricity supply except as electricity supply may be procured
WHEN ELECTRICITY SUPPLY IS PROCURED as provided in this section:
(a) by one or more default suppliers or the successor or assignee of a public utility for those customers not being WHO
HAVE NOT EXERCISED AND MAINTAINED THE CHOICE TO BE served by a competitive supplier or those
customers unable to obtain an affordable price for electricity supply; or
(b) by the distribution function of a public utility for those customers that are not being served by a competitive electricity supplier as provided by commission rules. During the transition period, those procurements may include a cost-based contract from a supply affiliate or an unregulated division.
(6) The commission may not give final approval to a transition plan until a final:
(A) A just and reasonable rate has been approved by the commission for all customers of a public utility.
THAT HAS FILED A TRANSITION PLAN; AND
(B)
(2)(7) The The commission may not give final approval to a transition plan unless the commission shall decide if
decides there is workable competition in the electricity supply market by determining whether competition is sufficient to
inhibit monopoly pricing or anticompetitive price leadership. In reaching a decision, the commission may not rely solely on
market share estimates.
(3)(8)(7) The commission shall license electricity suppliers and enforce licensing provisions pursuant to 69-8-404.
(4)(9)(8) The commission shall promulgate rules that identify the licensees and ensure that the offered electricity supply
is provided as offered and is adequate in terms of price, quality, safety, and reliability.
(5)(10)(9) The commission shall establish just and reasonable rates through established ratemaking principles for public
utility distribution and transmission services and shall regulate these services. The commission may approve rates and
charges for electricity distribution and transmission services based on alternative forms of ratemaking such as
performance-based ratemaking, on a demonstration by the public utility that the alternative method complies with this
chapter, and on the public utility's transition plan.
(6)(11)(10) The commission shall certify that a cooperative utility has adopted a transition plan that complies with this
chapter. A cooperative utility's transition plan is considered certified 60 days after the cooperative utility files for
certification.
(7)(12)(11) The commission shall promulgate rules that protect consumers, distribution services providers, and
electricity suppliers from anticompetitive and abusive practices.
(8)(13)(12) The commission shall license default suppliers and enforce default licensing provisions pursuant to
69-8-416.
(9)(14)(13) The commission shall promulgate rules for the licensing of default suppliers on or before December 1, 1999.
(10)(15)(14) Until the commission has determined that workable competition has developed for small customers, a
default supplier's obligation to serve remains.
(11)(16)(15) In addition to promulgating rules expressly provided for in this chapter, the commission may promulgate
any other rules necessary to carry out the provision of this chapter.
(12)(17)(16) This chapter does not give the commission the authority to:
(a) regulate cooperative utilities in any manner other than reviewing certification filings for compliance with this chapter; or
(b) compel any change to a cooperative utility's certification filing made pursuant to this chapter."
NEW SECTION. SECTION 6. SEVERABILITY. IF A PART OF [THIS ACT] IS INVALID, ALL VALID PARTS THAT ARE SEVERABLE FROM THE INVALID PART REMAIN IN EFFECT. IF A PART OF [THIS ACT] IS INVALID IN ONE OR MORE OF ITS APPLICATIONS, THE PART REMAINS IN EFFECT IN ALL VALID APPLICATIONS THAT ARE SEVERABLE FROM THE INVALID APPLICATIONS.
NEW SECTION. Section 7. Effective date. [This act] is effective on passage and approval.
NEW SECTION. Section 7. Retroactive applicability. [Section 1] applies retroactively, within the meaning of
1-2-109, to the tax year following December 31, 2000.
NEW SECTION. Section 8. Termination. [Section 1] terminates December 31, 2001.
- END -
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