Bill Number: OK51RHB 1486 Filed: 01-19-2007
Author: Adkins
STATE OF OKLAHOMA
1 1st Session of the 51st Legislature (2007)
2 HOUSE BILL 1486 By: Adkins
3 AS INTRODUCED
4 An Act relating to public utilities; amending Section
5 1, Chapter 161, O.S.L. 2005 (17 O.S. Supp. 2006,
6 Section 286), which relates to recovery of certain
7 electric utility upgrade costs and expenditures;
8 updating statutory citation; allowing utilities to
9 include a periodic rate adjustment mechanism to
10 recover certain costs; granting utilities the option
11 to periodically adjust rates to recover certain
12 costs; allowing recovery of certain costs associated
13 with Construction-Work-In-Progress investment;
14 modifying rule-making requirement for the Corporation
15 Commission; and declaring an emergency.
16 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
17 SECTION 1. AMENDATORY Section 1, Chapter 161, O.S.L.
18 2005 (17 O.S. Supp. 2006, Section 286), is amended to read as
19 follows:
20 Section 286. A. Effective July 1, 2006, the portion of costs
21 incurred by an electric utility, which is subject to rate regulation
22 by the Corporation Commission, for transmission upgrades approved by
23 a regional transmission organization to which such utility is a
24 member and resulting from an order of a federal regulatory authority
1
1 having legal jurisdiction over interstate regulation of transmission
2 rates, shall be presumed recoverable by such utility. The
3 presumption established in this subsection may be rebutted by
4 evidence that the costs so incurred by the utility for such
5 transmission upgrades exceed the scope of the project authorized by
6 the regional transmission organization or order issued by such
7 federal regulatory authority having jurisdiction over interstate
8 regulation of transmission rates. The Commission shall transmit
9 rules to implement the requirements of this subsection to the
10 Legislature on or before April 1, 2006. The rules may authorize an
11 electric utility to periodically adjust its rates to recover all or
12 a portion of the costs so incurred by the utility [for such] and
13 the utility may include a periodic rate adjustment mechanism
14 recovery of the financing costs of Construction-Work-In-Progress
15 investment prior to the in-service date of the transmission
16 upgrades.
17 B. An electric utility subject to rate regulation by the
18 Corporation Commission may file an application seeking Commission
19 authorization of the utility's plan to make capital expenditures for
20 equipment or facilities necessary to comply with the Federal Clean
21 Air Act, as amended, and, as the Commission may deem appropriate,
22 federal, state, local or tribal environmental requirements which
23 apply to generation facilities. If approved by the Commission,
24 after notice and hearing, the equipment or facilities specified in
25 such approved utility plan are conclusively presumed used and
26 useful. The utility may elect to periodically adjust its rates to
27 recover the costs of such expenditures; provided that the utility
2
1 shall file a request for a review of its rates pursuant to Section
2 152 of [Title 17 of the Oklahoma Statutes] this title no less than
3 twenty-four (24) months after the utility begins recovering such
4 costs through a periodic rate adjustment mechanism and no less than
5 twenty-four (24) months after the utility begins recovering such
6 costs through any subsequent periodic rate adjustment mechanism.
7 Provided further, that such periodic rate adjustment or adjustments
8 are not intended to prevent a utility from seeking cost recovery of
9 such capital expenditures as otherwise may be authorized by the
10 Commission. However, the reasonableness of the costs to be
11 recovered by the utility shall be subject to Commission review and
12 approval. The Commission shall promulgate rules to implement the
13 provisions of this subsection, such rules to be transmitted to the
14 Legislature on or before April 1, 2007.
15 C. 1. An electric utility subject to rate regulation by the
16 Corporation Commission may elect to file an application seeking
17 approval by the Commission to construct a new electric generating
18 facility or to purchase an existing electric generation facility
19 subject to the provisions of this subsection. If, and to the
20 extent that, the Commission determines there is a need for
21 construction or purchase of [such] an electric generating
22 facility, the generating facility shall be considered used and
23 useful and its costs shall be subject to cost recovery rules
24 promulgated by the Commission. The utility shall have the option
25 to periodically adjust its rates to recover the costs approved by
26 the Commission. If the Commission approves the construction of an
27 electric generating facility which is reasonably expected to require
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1 at least two (2) years to construct and cost in excess of Two
2 Hundred Fifty Million Dollars ($250,000,000.00), the utility may
3 include in the periodic rate adjustment mechanism recovery of
4 financing costs associated with Construction-Work-In-Progress
5 investment prior to the commercial operation of the new electric
6 generating facility. Financing costs are defined as interest on
7 debt, shareowners return, and related income taxes. The Commission
8 shall enter an order on an application filed pursuant to this
9 subsection within two hundred forty (240) days of the filing of the
10 application, following notice and hearing and after consideration of
11 reasonable alternatives.
12 2. Following receipt of an application filed pursuant to this
13 subsection, the Corporation Commission staff may file a request to
14 assess the specific costs, to be paid by the electric utility and
15 which shall be deemed to be recoverable, for the costs associated
16 with conducting the analysis or investigation of the application
17 including, but not limited to, the cost of acquiring expert
18 witnesses, consultants, and analytical services. Such request shall
19 be filed at and heard by the Corporation Commissioners in the docket
20 opened by the electric utility pursuant to this subsection. After
21 notice and hearing, the Commission shall decide the request.
22 3. Additionally, following receipt of an application filed
23 pursuant to this subsection, the Office of the Attorney General may
24 file a request with the Corporation Commission for the assessment of
25 specific costs, to be paid by the electric utility and which shall
26 be deemed to be recoverable, associated with the performance of the
27 Attorney Generals duties as provided by law. Those costs may
4
1 include, but are not limited to, the cost of acquiring expert
2 witnesses, consultants and analytical services. Such request shall
3 be filed at and heard by the Corporation Commissioners in the docket
4 opened by the electric utility pursuant to this subsection. After
5 notice and hearing, the Commission shall decide the request.
6 4. The Commission shall promulgate rules to implement the
7 provisions of this subsection. [Such] The rules shall be
8 transmitted to the Legislature on or before April 1, 2006. In
9 promulgating rules to implement the provisions of this subsection,
10 the Commission shall consider, among other things, rules which
11 would:
12 a. permit contemporaneous utility recovery from its
13 customers, the amount necessary to cover the Corporation Commission
14 staff and Attorney General assessments as authorized by this
15 subsection,
16 b. establish how the cost of facilities approved pursuant
17 to this subsection shall be timely reviewed, approved, and recovered
18 or disapproved, and
19 c. establish the information which an electric utility
20 must provide when filing an application pursuant to this subsection.
21 5. The Commission shall also [consider] promulgate rules
22 which [may] permit an electric utility to begin to recover [return
23 on or return of] financing costs associated with Construction-
24 Work-In-Progress [expenses] investment prior to commercial
25 operation of a newly constructed electric generation facility
26 [subject to the provisions of] as provided for in this subsection.
27 SECTION 2. It being immediately necessary for the
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1 preservation of the public peace, health and safety, an emergency is
2 hereby declared to exist, by reason whereof this act shall take
3 effect and be in full force from and after its passage and approval.
4 51-1-6880 KB 01/17/07
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6 Req. No. 6880
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