SB 781 - RETAIL ELECTRIC SERVICE CUSTOMER CHOICE - This act provides that retail electric generation services shall be provided in a competitive market. The Public Service Commission shall determine the commencement date after which all retail electric consumers, except those in areas exempted by the act, shall be permitted to choose their supplier or suppliers of electric generation services. The commencement date shall be the later of January 1, 2004, or the date that the Commission determines that all provisions of the act which must be implemented prior to commencement are implemented. Retail service options shall include: service from a Competitive Electricity Provider (CEP) under a standard offer; an individually negotiated bilateral contract with an CEP; purchase through a market aggregator who will negotiate directly with a CEP on behalf of the consumer; or purchase from an incumbent electric utility as a default provider or as the supplier of last resort.

LICENSURE OF COMPETITIVE ELECTRICITY PROVIDERS - All CEPs shall obtain and hold a license from the Commission in order to do business in the state. The act contains licensing requirements which include: proof of financial and operational fitness; an agreement to collect and remit applicable state and local sales and use taxes and local business taxes; an agreement to report certain customer data; a requirement to sell at least a certain fraction of power to residential customers; and a requirement that the rates to a customer shall not exceed the standard offer of the local distribution utility (LDU) providing service to such customer. The act provides for the review and approval of license applications. A license shall be valid for five years and may be renewed. The Commission may suspend or revoke a license for failure to meet one or more requirements of a license.

MUNICIPAL AND COOPERATIVE OPT IN - Municipally-owned utilities and rural electric cooperatives may elect to participate in retail competition. Exclusive generation service rights shall no longer apply to those municipally owned utilities and rural electric cooperatives which elect to participate in retail competition. The Commission shall not have rate authority over municipal and coop transmission and distribution service.

Municipalities may elect to participate by vote of the governing body or upon approval by voters of a proposal to participate. Municipal utilities shall provide open access in competitive annexed regions at same unbundled rates established for municipal customers who do not have choice. Municipal utilities competing in the city only shall provide open access at same unbundled rates established for customers who do not have choice. Retail choice shall continue in an area annexed by a municipality not participating in retail competition.

Cooperatives may elect to participate upon a vote of the Board of Directors. Competing cooperatives shall notify the Commission, and competition shall begin for such cooperatives 30 days following such notice. Non-competing cooperatives shall not sell generation in territories served by another utility when competition starts, except as allowed under current law, unless the Commission determines it to be in the public interest.

SEPARATION OF ASSETS/MARKET POWER - Existing electric utilities which provide generation and other services shall functionally separate the competitive and non-competitive services on or before 6 months prior to the commencement date, except that competing municipal utilities and cooperatives shall functionally separate prior to the date they begin to compete. Local Distribution Utilities (LDUs) and other companies may own transmission facilities. Affiliates of electric utilities may own electric generation assets and may sell generation directly to a retail consumer.

The Commission shall continue to investigate the development of competition and the degree of concentration of market power and shall implement remedies to promote a competitive market. The Commission shall investigate the impact of mergers and other disposition of assets which may affect development of retail competition. The Commission shall monitor the market to ensure non-utility generators do not exceed 20% market share in a destination market, and to ensure that, after five years of retail choice, at least 75% of load in an incumbent's service territory can be served by generation not owned by the utility or its affiliate.

In case of merger, acquisition or creation of new company, successor shall recognize and bargain with union representing employees of incumbent utility and refrain from making unilateral changes to terms and condition of employment. Any successor employer shall remain bound to collective bargaining agreements as permitted by federal law.

ACCESS TO TRANSMISSION AND DISTRIBUTION FACILITIES - All Missouri electric utilities shall provide access to their transmission and distribution facilities, ancillary services and other available services to any buyer or seller on a nondiscriminatory and comparable basis. The Commission shall ensure that no CEP has an unfair advantage in offering access to and pricing transmission and distribution services. The Commission shall establish, by rule, standards of conduct governing the relationships among the various business functions conducted by electric utilities. The LDU shall have an obligation to connect and provide delivery of electric service to all retail consumers within its current retail service territory on nondiscriminatory terms and conditions.

RELIABILITY - The state, the Commission and utilities shall work with the FERC and other entities to establish Regional Transmission Organizations (RTOs) or their equivalents to operated the transmission system. Each electric utility shall join an RTO by July 1, 2002, or file a plan with the Commission to provide for independent operation of its transmission system in a manner which provides open access and ensures reliability. The act specifies certain requirements for an RTO. All competitive electricity providers shall provide proof of adequate capacity reserve to the ISO or purchase such services from the RTO. Generation plant shall be subject to PSC jurisdiction with regard to safety.