2019 Montana Legislature

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SENATE BILL NO. 188

INTRODUCED BY S. MALEK

 

A BILL FOR AN ACT ENTITLED: "AN ACT GENERALLY REVISING UTILITY SYSTEM PLANNING AND ELECTRICITY SUPPLY RESOURCE PROCUREMENT LAWS; REQUIRING A PUBLIC UTILITY TO ESTABLISH AN ADVISORY COMMITTEE FOR UTILITY SYSTEM AND ELECTRICITY SUPPLY RESOURCE PROCUREMENT PLANNING; ESTABLISHING CERTAIN MEMBERSHIP REQUIREMENTS; ESTABLISHING A COMPETITIVE SOLICITATION PROCESS FOR PUBLIC UTILITIES SEEKING PREAPPROVAL; REQUIRING A PUBLIC UTILITY SEEKING PREAPPROVAL TO ACQUIRE, CONSTRUCT, OR PURCHASE AN ELECTRICITY SUPPLY RESOURCE TO CONDUCT A COMPETITIVE SOLICITATION PROCESS APPROVED BY THE PUBLIC SERVICE COMMISSION; ESTABLISHING THE REQUIREMENTS OF A COMPETITIVE SOLICITATION PROCESS; ESTABLISHING COMMISSION REQUIREMENTS FOR REVIEW AND APPROVAL OR REJECTION OF A COMPETITIVE SOLICITATION PROCESS; REVISING PUBLIC HEARING REQUIREMENTS; REVISING ELECTRICITY SUPPLY RESOURCE PREAPPROVAL CRITERIA AND REQUIREMENTS; PROVIDING THE COMMISSION WITH RULEMAKING AUTHORITY; AMENDING SECTIONS 69-1-114, 69-8-419, 69-8-420, AND 69-8-421, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE AND AN APPLICABILITY DATE."

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:

 

     NEW SECTION.  Section 1.  Utility system and electricity supply resource procurement planning -- advisory committee. (1) A public utility shall maintain a broad-based advisory committee to review, evaluate, and make recommendations on technical, economic, environmental, and policy issues related to a utility's electricity system. The committee shall advise the utility on transmission and distribution system planning, demand-side management, portfolio planning, and management and procurement completed in accordance with 69-8-419 through 69-8-421.

     (2) All advisory committee meetings are public. Agendas must be posted at least 3 days in advance of meetings and must include time for public comment and participation.

 

     NEW SECTION.  Section 2.  Competitive solicitation process required -- exception. (1) (a) A public utility that intends to seek approval by the commission pursuant to 69-8-421 for the acquisition, construction, or purchase of an electricity supply resource as defined in 69-8-103 shall conduct a competitive solicitation process.

     (b) A public utility may not prohibit a qualifying small power production facility as defined in 69-3-601 or another utility or supplier that owns an electricity supply resource or intends to construct an electricity supply resource from participating in a competitive solicitation process.

     (c) A competitive solicitation process that is open to bids that would result in the ownership of an electricity supply resource by the public utility issuing the solicitation must include the use of a third-party administrator selected by the public utility to open, consider, and evaluate bids submitted pursuant to a solicitation.

     (2) A public utility that plans to conduct a competitive solicitation process shall submit the following information to the commission:

     (a) a description of the competitive solicitation process that the public utility will use and proof of compliance with subsections (1)(b) and (1)(c), if applicable;

     (b) a complete draft of the proposal soliciting an electricity supply resource; and

     (c) any other information the commission requires.

     (3) (a) If the commission receives information from a public utility pursuant to subsection (2), the commission shall accept public comment on the information for at least 30 days. To allow for public comment, the commission may hold a public hearing.

     (b) The commission may select and retain a person or organization to act as an independent monitor for a competitive solicitation process. If an independent monitor is retained, the commission shall charge a fee to the public utility to pay for the costs of the independent monitor. These costs are recoverable in rates.

     (c) The independent monitor may assist the commission by:

     (i) providing comments on the consistency of the competitive solicitation process with industry standards and the commission's criteria;

     (ii) monitoring and observing the competitive solicitation process, paying particular attention to the public utility's evaluation of electricity supply resources that will result in utility ownership of the resource, to ensure that the utility conducts a fair and proper process in accordance with industry standards and commission criteria;

     (iii) notifying the utility and the commission on a timely basis of any discrepancies observed in the process and resolving any differences of opinion; and

     (iv) preparing a closing report regarding the consistency of the process, including selection and notification of electricity supply resources taking part in the solicitation process based on industry standards and commission criteria.

     (4) (a) Except as provided in subsection (4)(b), within 60 days of receiving the information required pursuant to subsection (2), the commission shall:

     (i) approve a proposed competitive solicitation process that meets the requirements of subsections (2) and (5);

     (ii) suggest modifications to a proposed competitive solicitation process in order to meet the requirements of subsections (2) and (5); or

     (iii) reject a proposed competitive solicitation process.

     (b) The commission may extend the time in subsection (4)(a) to a date that provides the commission with adequate time to analyze the information provided in accordance with subsection (2). The time may not be extended by more than 90 days.

     (5) In approving or denying a competitive solicitation process, the commission shall determine whether the competitive solicitation process is in the public interest. The commission shall make the determination by considering:

     (a) the cost to Montana ratepayers;

     (b) long-term and short-term impacts;

     (c) risk;

     (d) reliability;

     (e) environmental impacts;

     (f) financial impacts on the public utility; and

     (g) other factors determined by the commission to be relevant.

 

     Section 3.  Section 69-1-114, MCA, is amended to read:

     "69-1-114.  Fees. (1) Each fee charged by the commission must be reasonable.

     (2)  Except for a fee assessed pursuant to 69-3-204(2), 69-8-421(10) [section 2(3)(b)], 69-8-421(11), or 69-12-423(2), a fee set by the commission may not exceed $500.

     (3)  All fees collected by the department under 69-8-421(10) [section 2(3)(b)] and 69-8-421(11) must be deposited in an account in the special revenue fund. Funds in this account must be used as provided in 69-8-421(10) [section 2(3)(b)] and 69-8-421(11)."

 

     Section 4.  Section 69-8-419, MCA, is amended to read:

     "69-8-419.  Electricity supply resource Utility system planning and electricity supply resource procurement planning -- duties of public utility -- objectives -- commission rules. (1) The public utility shall:

     (a)  plan for future electricity supply resource needs;

     (b)  manage a portfolio of electricity supply resources, including cost-effective demand-side management; and

     (c) efficiently utilize transmission and distribution resources;

     (d) assess the costs and benefits of existing resources in the system; and

     (c)(e)  procure new electricity supply resources when needed and use a competitive solicitation process in accordance with [section 2].

     (2)  The public utility shall pursue the following objectives in fulfilling its duties pursuant to subsection (1):

     (a)  provide adequate and reliable electricity supply service at the lowest long-term total cost;

     (b)  conduct an efficient electricity supply resource planning utility system and electricity supply resource procurement planning process that evaluates the full range of cost-effective electricity supply and demand-side management options;

     (c)  identify and cost-effectively manage and mitigate risks related to its obligation to provide electricity supply service;

     (d)  use open, fair, and competitive procurement processes and solicitations whenever possible; and

     (e)  provide electricity supply service and related services at just and reasonable rates; and

     (f) consult and involve a broad-based advisory committee pursuant to [section 1].

     (3)  By March 31, 2008, the The commission shall adopt rules that guide the electricity supply resource utility system planning and electricity supply resource procurement planning processes used by the public utility and facilitate the achievement of the objectives in subsection (2) by the public utility. The rules must establish:

     (a)  goals, objectives, and guidelines that are consistent with the objectives in subsection (2) for:

     (i)  planning for future electricity supply resource needs;

     (ii) managing the portfolio of electricity supply resources, including cost-effective demand-side management; and

     (iii) effective utilization of transmission and distribution resources;

     (iii)(iv) procuring new electricity supply resources; and

     (v) conducting a competitive solicitation process in accordance with [section 2];

     (b)  standards for the evaluation by the commission of the reasonableness of a power purchase agreement proposed by the public utility; and

     (c)  minimum filing requirements for an application by the public utility for approval of an electricity supply resource."

 

     Section 5.  Section 69-8-420, MCA, is amended to read:

     "69-8-420.  Electricity supply resource Utility system and electricity supply resource procurement plans planning -- comment on plans. (1) (a) The public utility shall develop electricity supply resource utility system and electricity supply resource procurement plans.

     (b) The plans must be submitted to the commission at intervals determined in rules adopted by the commission.

     (2)  An electricity supply resource A utility system and electricity supply resource procurement plan must demonstrate the public utility's achievement of the objectives provided in 69-8-419 and compliance with [sections 1 and 2] and additional commission rules.

     (3)  The commission shall:

     (a)  review the electricity supply resource procurement plan; publish a copy of the plan;

     (b) allow for a minimum of 60 days for the public to comment on the plan;

     (b)(c)  provide an opportunity to the public to comment on the plan hold public meetings in accordance with subsection (4) (6); and

     (c)(d) review the plan and issue written comments within 9 months after the plan is submitted to the commission.

     (4) (a) The commission may provide comments on the plan in accordance with subsection (3)(d) and also that identify deficiencies in the plan, including:

     (i)  any concerns of the commission regarding the public utility's compliance with commission rules; and

     (ii) ways to remedy any concerns.

     (b) Upon request of the commission, a public utility shall provide underlying data, assumptions, and modeling necessary for the commission to review a plan in accordance with subsection (3).

     (c) In accordance with 69-8-421(11), the commission may engage independent engineering, financial, and management consultants or advisory services to evaluate a public utility's plan.

     (4)(5)  The After a plan is submitted and prior to issuing comments on the plan in accordance with subsection (3)(d), the commission shall hold at least two public meetings in an area of the state encompassed by the plan the utility's Montana service territory.

     (6) Notice of the meetings required in accordance with subsection (5) must be published once a week for 2 consecutive weeks in a newspaper of general circulation starting at least 30 days prior to each meeting."

 

     Section 6.  Section 69-8-421, MCA, is amended to read:

     "69-8-421.  Approval of electricity supply resources. (1) A public utility that removed its generation assets from its rate base pursuant to this chapter prior to October 1, 2007, may apply to the commission for approval of an electricity supply resource that:

     (a) is not yet procured;

     (b) meets the requirements of subsection (2); and

     (c) is subject to a competitive solicitation process in accordance with [section 2].

     (2) If the utility system and electricity supply resource procurement plan identified deficiencies in accordance with 69-8-420(4) and those deficiencies are directly applicable to the application made in accordance with subsection (1), the public utility shall provide:

     (a) a complete and thorough explanation and justification of all changes to the utility's most recent utility system and electricity supply resource procurement plan, including how the utility responded to the applicable deficiencies; and

     (b) testimony and supporting work papers describing the electricity supply resource and demonstrating that the acquisition is in the public interest and is consistent with the requirements and objectives in 69-3-201, 69-8-419, and the utility's most recent utility system and electricity supply resource procurement plan.

     (2)(3)  Within 45 days of the public utility's submission of an application for approval, the commission shall determine whether or not the application is adequate and in compliance with subsections (1) and (2) and the commission's minimum filing requirements. If the commission determines that the application is inadequate, it shall explain the deficiencies.

     (3)(4)  The commission shall issue an order within 180 days of receipt of an adequate application for approval of a power purchase agreement from an existing generating resource unless it determines that extraordinary circumstances require additional time.

     (4)(5)  (a) Except as provided in subsections (4)(b) (5)(b) through (4)(d) (5)(d), the commission shall issue an order within 270 days of receipt of an adequate application for approval of a lease, an acquisition of an equity interest in a new or existing plant or equipment used to generate electricity, or a power purchase agreement for which approval would result in construction of a new electric generating resource. The commission may extend the time limit up to an additional 90 days if it determines that extraordinary circumstances require it.

     (b)  If an air quality permit pursuant to Title 75, chapter 2, is required for a new electrical generation resource or a modification to an existing resource, the commission shall hold the public hearing on the application for approval at least 30 days after the issuance of the final air quality permit.

     (c)  If a final air quality permit is not issued within the time limit pursuant to subsection (4)(a) (5)(a), the commission shall extend the time limit in order to comply with subsection (4)(b) (5)(b).

     (d)  The commission may extend the time limit for issuing an order for an additional 60 days following the hearing pursuant to subsection (4)(b) (5)(b).

     (5)(6)  To facilitate timely consideration of an application, the commission may initiate proceedings to evaluate planning and procurement activities related to a potential resource procurement, if necessary, in accordance with [section 2] prior to the public utility's submission of an application for approval.

     (6)(7)  (a) The commission may approve or deny, in whole or in part, an application for approval of an electricity supply resource.

     (b)  The commission may consider all relevant information known up to the time that the administrative record in the proceeding is closed in the evaluation of an application for approval.

     (c)  A commission order granting approval of an application must include the following findings:

     (i)  approval, in whole or in part, is in the public interest; and

     (ii) procurement of the electricity supply resource is consistent with the requirements in 69-3-201, the objectives and requirements in 69-8-419, 69-8-420, and [section 2], and commission rules.

     (d)  The commission order may include a provision for allowable generation assets cost of service when the utility has filed an application for the lease or acquisition of an equity interest in a plant or equipment used to generate electricity.

     (e)  When issuing an order for the acquisition of an equity interest or lease in a facility or equipment that is constructed after January 1, 2007, and that is used to generate electricity that is primarily fueled by natural or synthetic gas, the commission shall require the applicant to implement cost-effective carbon offsets. Expenditures required for cost-effective carbon offsets pursuant to this subsection (6)(e) (7)(e) are fully recoverable in rates. By March 31, 2008, the commission shall adopt rules for the implementation of this subsection (6)(e) (7)(e).

     (f)  The commission order may include other findings that the commission determines are necessary.

     (g)  A commission order that denies approval must describe why the findings required in subsection (6)(c) (7)(c) could not be reached.

     (7)(8)  Notwithstanding any provision of this chapter to the contrary, if the commission has issued an order containing the findings required under subsection (6)(c) (7)(c), the commission may not subsequently disallow the recovery of costs related to the approved electricity supply resource based on contrary findings.

     (8)(9)  Until the state or federal government has adopted uniformly applicable statewide standards for the capture and sequestration of carbon dioxide, the commission may not approve an application for the acquisition of an equity interest or lease in a facility or equipment used to generate electricity that is primarily fueled by coal and that is constructed after January 1, 2007, unless the facility or equipment captures and sequesters a minimum of 50% of the carbon dioxide produced by the facility. Carbon dioxide captured by a facility or equipment may be sequestered offsite from the facility or equipment.

     (9)(10)  Nothing limits the commission's ability to subsequently, in any future rate proceeding, inquire into the manner in which the public utility has managed, dispatched, operated, or maintained any resource or managed any power purchase agreement as part of its overall resource portfolio. The commission may subsequently disallow rate recovery for the costs that result from the failure of a public utility to reasonably manage, dispatch, operate, maintain, or administer electricity supply resources in a manner consistent with 69-3-201, 69-8-419, 69-8-420, and commission rules.

     (10)(11) The commission may engage independent engineering, financial, and management consultants or advisory services to evaluate a public utility's electricity supply resource procurement plans and proposed electricity supply resources. The consultants must have demonstrated knowledge and experience with electricity supply procurement and resource portfolio management, modeling, risk management, and engineering practices. The commission shall charge a fee to the public utility to pay for the costs of consultants or advisory services. These costs are recoverable in rates.

     (11)(12) By March 31, 2008, the The commission shall adopt rules prescribing minimum filing requirements for applications filed pursuant to this part."

 

     NEW SECTION.  Section 7.  Codification instruction. [Sections 1 and 2] are intended to be codified as an integral part of Title 69, chapter 8, part 4, and the provisions of Title 69, chapter 8, part 4, apply to [sections 1 and 2].

 

     NEW SECTION.  Section 8.  Saving clause. [This act] does not affect rights and duties that matured, penalties that were incurred, or proceedings that were begun before [the effective date of this act].

 

     NEW SECTION.  Section 9.  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 10.  Effective date. [This act] is effective on passage and approval.

 

     NEW SECTION.  Section 11.  Applicability. [This act] applies to utility system and electricity supply resource procurement plans and requests for approval developed, submitted, or both on or after [the effective date of this act].

- END -

 


Latest Version of SB 188 (SB0188.01)
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