SS SCS HCS HB 1038 -- UTILITY MERCHANDISING PRACTICES

This bill establishes utility merchandising practices in order
to promote free and open competition.  In its main provisions,
the bill:

(1)  Prohibits a utility from engaging in the warranty, sale,
lease, rental, installation, construction, modernization,
retrofit, maintenance, or repair of heating, ventilating, and
air conditioning equipment and services ("HVAC services"),
except to provide emergency service, any service required by
law, or a program pursuant to an existing tariff, rule, or order
of the Public Service Commission;

(2)  Prohibits a utility from granting an unfair preference or
privilege to an affiliate in the transaction of business between
a utility and the affiliate or to a utility contractor; and

(3)  Requires the Public Service Commission to inspect accounts,
records, operations, and contracts of utilities and affiliates
to ensure compliance with the provisions of this bill.   The
Public Service Commission is prohibited, by rule or otherwise,
from imposing requirements that are in addition to or
inconsistent with those set forth in this bill.

The provisions of this bill do not apply to any utility that has
provided comparable services for at least 5 years prior to
August 28, 1998.

The bill contains penalty provisions.

HCS HB 1038 -- UTILITY MERCHANDISING PRACTICES (Carter)

This substitute establishes utility merchandising practices in
order to promote free and open competition.  In its main
provisions, the substitute:

(1)  Prohibits a utility from engaging in the sale, lease,
rental, installation, construction, modernization, retrofit,
maintenance, or repair of heating, ventilating, and air
conditioning equipment and services; however, a utility may
engage in the sale, lease, rental, installation, construction,
modernization, retrofit, maintenance or repair of products or
equipment used by the utility in the operation of its business;

(2)  Prohibits a utility from selling any type of warranty
coverage on products and equipment, including household
appliances, except by an affiliate;

(3)  Prohibits a utility from granting an unfair preference or
privilege to an affiliate in the transaction of business between
a utility and the affiliate or to a utility contractor;

(4)  Prohibits a utility from making referrals for the sale or
servicing of energy-consuming products, equipment, or appliances;

(5)  Prohibits a utility from financially assisting an affiliate
or engaging in certain transactions with an affiliate at less
than fair market value;

(6)  Prohibits entering into service contracts after existing
service contracts expire or August 28, 1998, whichever comes
first;

(7)  Requires an affiliate to meet certain requirements before
it may engage in the sale, lease, rental, installation,
maintenance, or repair of heating, ventilating, and air
conditioning equipment; and

(8)  Requires the Public Service Commission to inspect accounts,
records, operations, and contracts of utilities and affiliates
to ensure compliance with the provisions of this substitute.
The Public Service Commission is prohibited, by rule or
otherwise, from imposing requirements that are in addition to or
inconsistent with those set forth in this substitute.

The provisions of this substitute do not apply to any utility,
its affiliates, or a utility contractor that has provided
comparable services for at least 5 years prior to August 28,
1998, nor does it apply to a utility with less than 150,000
customers located in 10 or more counties.

This substitute contains penalty provisions.

FISCAL NOTE:  Estimated Net Effect to Public Service Commission
Fund is $0 in FY 1999, 2000, and 2001.

HCS HB 1038 -- UTILITY MERCHANDISING PRACTICES

SPONSORS:  Hickey (Carter)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Labor by
a vote of 23 to 1.

This substitute establishes utility merchandising practices in
order to promote free and open competition.  In its main
provisions, the bill:

(1)  Prohibits a utility from engaging in the sale, lease,
rental, installation, construction, modernization, retrofit,
maintenance, or repair of heating, ventilating, and air
conditioning equipment and services;

(2)  Prohibits a utility from selling any type of warranty
coverage on products and equipment, including household
appliances, except by an affiliate;

(3)  Prohibits a utility from granting an unfair preference or
privilege to an affiliate in the transaction of business between
a utility and the affiliate or to a utility contractor;

(4)  Prohibits a utility from making referrals for the sale or
servicing of energy-consuming products, equipment, or appliances;

(5)  Prohibits a utility from financially assisting an affiliate
or engaging in certain transactions with an affiliate at less
than fair market value;

(6)  Prohibits entering into service contracts after existing
service contracts expire or August 28, 1998, whichever comes
first;

(7)  Requires an affiliate to meet certain requirements before
it may engage in the sale, lease, rental, installation,
maintenance, or repair of heating, ventilating, and air
conditioning equipment; and

(8)  Requires the Public Service Commission to inspect accounts,
records, operations, and contracts of utilities and affiliates
to ensure compliance with the provisions of this substitute.

The provisions of this substitute do not apply to any utility,
its affiliates, or a utility contractor that has provided
comparable services for at least 5 years prior to August 28,
1998.

This substitute contains penalty provisions.

FISCAL NOTE:  Estimated Net Cost to Public Service Commission
Fund of $139,425 in FY 1999, $151,185 in FY 2000, and $155,124
in FY 2001.  The net effect to the Public Service Commission
Fund could be $0 if the PSC increases the PSC assessment and
appropriation is made.

PROPONENTS:  Supporters say that this bill promotes open and
fair competition by prohibiting utilities from using their
special status as regulated monopolies to gain an unfair
competitive advantage.  It benefits consumers by offering them
more choices in terms of quality and price.

Testifying for the bill were Representative Carter; Missouri
Coalition for Fair Competition; National Federation of
Independent Business; Henry J. Hoff; Sheet Metal Workers'
International Association Local Union No. 36; and Missouri AFL--
CIO.

OPPONENTS:  Those who oppose the bill say that this bill is
contrary to the basic tenets of free enterprise.  It prohibits
utilities from providing and performing services which they have
provided and performed for many years.  This bill provides an
unfair advantage for out-of-state utilities already operating in
this state who are not covered by the substitute, and it
protects special-interest groups.

Testifying against the bill were Laclede Gas Company; Ameren UE;
Kansas City Power & Light Company; Empire District Electric
Company; UtiliCorp United, Inc.; and St. Joseph Light & Power
Company.

Julie Jinkens McNitt, Legislative Analyst

HB 1038 -- Utility Merchandising Practices

Co-Sponsors:  Carter, Green, Hickey

This bill establishes utility merchandising practices in order
to promote fair and open market competition.  The bill prohibits
a utility from selling, contracting for repairs of, or selling
service warranties for household energy appliances or
equipment.  The bill also prohibits a utility from making
referrals for sale or service of household energy appliances or
equipment.

The bill prohibits an affiliate from using a utility's name and
requires that all records, assets, and revenues of the affiliate
be maintained separately from those of the utility.

These provisions do not apply to any utility, its affiliates, or
a utility contractor that has provided comparable services for
at least 5 years prior to August 28, 1998.

The bill also prohibits entering into service contracts after
existing service contracts expire or July 1, 1998, whichever
comes first.

The Public Service Commission is authorized to inspect accounts,
records, operations and contracts of utilities and affiliates to
ensure compliance with these provisions.