SB 0327 Establishes retail electric customer choice
LR Number:S1467.01I Fiscal Note:1467-01
Committee:Commerce and Environment
Last Action:03/09/99 - Hearing Conducted S Commerce & Environment Journal page:
Effective Date:August 28, 1999
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Current Bill Summary

SB 327 - This act establishes the conditions for deregulation of retail electricity.

DEREGULATION OF RETAIL ELECTRIC SERVICE - No later than January 1, 2000, electric generation shall be deregulated and subject to the competitive market. The Public Service Commission shall adopt and publish a plan for restructuring the Missouri electric industry, consistent with the act. The plan shall implement only a market structure which will provide full direct access to the market for all consumers. The Commission shall not create or encourage any form of power exchange or any other organization created to determine the wholesale or retail price of electricity. Each electric utility shall file a restructuring plan for review and comment before the Commission providing for consumer choice, functional disaggregation, unbundling of services and unbundling of rates.

CUSTOMER CHOICE - All retail electric consumers shall be permitted to choose their supplier or suppliers of electric generation services no later than January 1, 2000. Retail service options shall include: service from an Retail Electric Provider (REP) under a standard offer; an individually negotiated bilateral contract with an REP; or delegation of retail choice to a market aggregator who will negotiate directly with a REP on behalf of the consumer. The Commission shall establish procedures for the selection of REPs to serve any retail consumer who has not chosen an alternative REP on or before July 1, 2000 using a competitive bidding process. The bidding process shall be repeated at eighteen-month intervals. All REPs shall register with the Commission before doing business in the state. The act contains registration requirements.

DIVESTITURE AND SEPARATION OF ASSETS - The Commission's restructuring plan shall require all existing electric utilities to functionally disaggregate on or before January 1, 2000. 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 adopt a plan designed to promote fair competition and to eliminate undue concentrations of market power. The Commission may order divestiture of generation assets to mitigate market power.

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 REP 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.

MUNICIPAL AND COOPERATIVE OPT IN - Municipally-owned utilities and rural electric cooperatives may elect to participate in retail competition at any time by submitting their intent in writing to the Commission or by engaging in at least one retail sale to a retail consumer located outside their retail service territory. The exclusive service rights established pursuant to Section 91.025, RSMo, and Section 394.315, RSMo, shall no longer apply to those municipally owned utilities and rural electric cooperatives that elect to participate in retail competition.

OBLIGATION TO PROVIDE CONNECTION - 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. A utility shall not use eminent domain to: deny physical access or interconnection to transmission or distribution facilities; restrict the construction of new transmission or distribution facilities; or otherwise limit competition.

RATES FOR TRANSMISSION AND DISTRIBUTION - The Commission shall establish just and reasonable rates for unbundled local distribution services. Each electric utility shall file unbundled service tariffs to provide services to all eligible purchasers on a nondiscriminatory basis. The Commission shall have jurisdiction over all aspects of transmission rates and services not subject to the exclusive jurisdiction of the FERC.

PUBLIC BENEFITS - The amounts included in current rates for environmental, social and other mandated programs shall be unbundled from electric rates and clearly identified on all electric bills. The Commission's plan shall address the need for continued collection of these amounts and, if necessary, how the amounts will be recovered in the LDU's rates.

TRANSITION OR "STRANDED" COSTS - Electric utilities shall be given a reasonable opportunity to recover from retail consumers the portion of verifiable net transition costs that the Commission determines is eligible for recovery. The portion eligible for recovery shall not exceed fifty percent of the net transition costs, except upon a showing by the electric utility that a larger portion must be recovered in order for the electric utility to maintain an investment grade bond rating. The transition charges which shall not cause the total price for electric power paid by any consumer during the recovery period to exceed the rate per kilowatt-hour paid on August 28, 1998. Entry and exit fees shall not be used to recover transition costs.

Net transition costs shall not include transmission and distribution assets and shall be reconciled to actual electricity market conditions from time to time. Transition costs shall include any needed adjustments based on any assets obtained by purchase or merger or other means within three years prior to August 28, 1998. Electric utilities shall be allowed to recover one hundred percent of the net unmitigated transition costs associated with required environmental mandates currently approved for cost recovery.

Power purchase contracts mandated by federal statute shall continue for the duration of the contract. Costs arising from those contracts or associated with any renegotiation of the contracts shall be eligible for recovery in transition cost recovery charges. Transition cost charges shall not be recoverable for changes in usage occurring in the normal course of business. Electric utilities shall have the duty to take all reasonable measures to mitigate transition costs. The act includes a list of mitigation measures.

Each electric utility may file a recovery plan pursuant to the restructuring plan adopted by the Commission. The recovery plan shall document anticipated transition costs, mitigation proposals and offsetting increases in the value of other assets. The recovery plan shall provide for recovery of transition costs over a period of not more than five years. The Commission shall approve and publish a recovery plan for each electric utility submitting a plan. The approved recovery plan shall establish the amount of transition costs eligible for recovery from retail consumers and the transition charges. The Commission shall determine the transition cost recovery charges for each electric utility. All interested parties may participate in the transition cost proceeding. The burden of proof for any transition cost recovery claim shall be borne by the electric utility making such claim. Any allowable transition costs not recovered within five years shall not be recoverable by the electric utility.

The recovery of transition costs shall be through a nonbypassable, nondiscriminatory, appropriately structured charge that is fair to all retail consumers, limited in duration and consistent with the promotion of fully competitive markets. Charges to recover transition costs shall only apply to consumers within an electric utility's former retail service territory.

RELIABILITY - The Commission shall promulgate rules to ensure reliable and safe electric service. All electric utilities and providers of electric power delivery and ancillary services shall have in place sufficient measures to preserve the integrity, safety, reliability and quality of electric service in the state. REPs shall have appropriate provisions for operating reserves and other ancillary services in order to maintain the integrity of the bulk electricity transmission network.

This act is the same as SB 728 from 1998.