SB 0476 Establishes retail electric customer choice
LR Number:S1942.04I Fiscal Note:1942-04
Committee:Commerce and Environment
Last Action:03/09/99 - Hearing Conducted S Commerce & Environment Journal page:
Effective Date:August 28, 1999
Full Bill Text | All Actions | Available Summaries | Senate Home Page | List of 1999 Senate Bills
Current Bill Summary

SB 476 - 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, 2002 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 Retail Electric Provider (REP) under a standard offer; an individually negotiated bilateral contract with an REP; purchase through a market aggregator who will negotiate directly with an REP on behalf of the consumer; or purchase from an incumbent electric utility as a supplier of last resort.

LICENSURE OF COMPETITIVE ELECTRICITY PROVIDERS - All REPs, aggregators and brokers 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 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. Municipalities may elect to participate by vote of the governing body or upon approval by voters of a proposal to participate. Cooperatives may vote to participate. Exclusive generation service rights shall no longer apply to those municipally owned utilities and rural electric cooperatives which elect to participate in retail competition. Retail choice shall continue in an area annexed by a municipality not participating in retail competition.

SEPARATION OF ASSETS - Existing electric utilities which provide generation and other services shall functionally separate the generation services on or before the commencement date. 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.

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. 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 Independent System Operators (ISOs) or their equivalents to operated the transmission system. Each electric utility shall join an ISO by July 1, 2000. The act specifies certain requirements for an ISO. All competitive electricity providers shall provide proof of adequate capacity reserve to the ISO or purchase such services from the ISO.

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. The Commission may establish performance-based or incentive rate mechanisms and rate caps on electric services as part of the rate-making process to encourage mitigation of transition costs.

UNBUNDLED BILLS AND CONSUMER PROTECTION - The Commission shall adopt rules requiring the separation of charges for generation, distribution and transmission services, transition costs and taxes on retail customer bills. The Commission shall adopt rules regulating billing, complaints, billing disputes and change of service or provider. The Commission shall, prior to the commencement date, carry out an educational program to inform customers regarding changes in provision of service and requirements regarding disclosure of information by sellers and to help customers make informed choices.

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 transition charges which shall not cause the total price for electric power paid by any consumer purchasing from an LDU or its affiliate during the recovery period to exceed the rate per kilowatt-hour paid on the commencement date.

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 may include adjustments approved by the Commission for certain unforeseen, required expenditures.

Costs arising from prudently-incurred power purchase 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 according to a process established in the act.

Each electric utility may file a recovery plan which documents anticipated transition costs, mitigation proposals and offsetting increases in the value of other assets. 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 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, and unless otherwise determined by the Commission, shall be through a fixed per kilowatt hour charge on all sales. Charges to recover transition costs shall only apply to consumers within an electric utility's former retail service territory.

STATEWIDE POOL/PROVIDER OF LAST RESORT - The act establishes a statewide pool to help LDUs serve as the provider of last resort for electric generation services in areas with retail choice. The statewide pool shall be governed by a Board of Directors which shall be appointed by the Commission and shall consist of at least nine and no more than fifteen members. Each member of the Board shall meet all membership requirements established by the Commission and shall not have a substantial financial interest in electric generation, transmission or distribution service. REPs shall provide customer lists to LDUs. The act requires LDUs to provide load forecasts to the pool, including the load requirements for REP customers. The statewide pool shall arrange to purchase generation for the load not served by REPs. The Commission shall establish the rates which LDUs may collect from customers for purchases from the statewide pool. The statewide pool shall be terminated on December 31, 2005 if the pool serves less than ten percent of residential customers unless the Commission determines the pool will still be needed.

TAXATION - This act makes changes to the provisions enacted in Senate Bill 627 from the 1998 legislative session, which required sellers of electricity and gas to be certified by the Commission and to file agreements which the sellers entered into, with either the distributor or political subdivision, for the payment of all gross receipt taxes or franchise fees owed. This act clarifies that the sales at issue will be deemed to be local sales even if title passes outside the state, and that a retail consumer will not be considered a seller. Electric and gas corporations shall file tariffs to comply with the act.

The act also extends the same framework to sales and use tax, requiring sellers of electricity and gas to file, with the Commission, agreements entered into with either the distributor or political subdivision to collect and remit all sales and use taxes. Distributors and political subdivisions are prohibited from providing energy services to any person unless the seller has been certified by the Commission and has filed its agreements. Sellers are required to waive all rights to challenge the validity of any agreement and of any right to a refund. A declaratory judgment action is authorized. Legal action challenging the validity of any agreement suspends that agreement until a final court judgment is made; if a court judgment invalidates the agreement structure, energy services may only be provided upon a showing of public convenience and necessity by the Commission.

This portion of the act is similar to SB 209.

This act contains some provisions which are similar to SB 327 from 1999.