Bill Number: OK51RHB 1739 Date: 02-20-2007
HOUSE FLOOR VERSION
THE HOUSE OF REPRESENTATIVES
1 Tuesday, February 20, 2007
2 House Bill No. 1739
3 HOUSE BILL NO. 1739 - By: WATSON AND ADKINS of the House and
4 BINGMAN of the Senate.
5 An Act relating to the Corporation Commission; creating the
6 Retail Electric Consumer Cost Reduction, Safety and Service
7 Efficiency Act; stating purpose of the act; providing procedures for
8 division of affected area by retail electric suppliers; requiring
9 notification by retail electric supplier of intention to negotiate
10 division; specifying process for notification; requiring good faith
11 negotiations; providing for execution of a contract; directing
12 Corporation Commission to issue order approving division; stating
13 presumption; directing the Commission to divide affected area if
14 suppliers are unable; specifying criteria for division; allowing
15 certain retail electric suppliers to continue electric service
16 during certain time period; providing for collection and remittance
17 of an in lieu tax; providing an exception for suppliers paying a
18 franchise fee; providing for collection and remittance of sales tax;
19 providing for payment of an infrastructure fee; authorizing two or
20 more suppliers to serve an affected area in certain circumstances;
21 granting retail electric suppliers right to continue and extend
22 service in incorporated or annexed areas; making certain
23 declarations; amending 17 O.S. 2001, Sections 158.22, 158.25,
24 158.28, and 158.29, which relate to the Retail Electric Supplier
1
1 Certified Territory Act; updating statutory language and citations;
2 modifying definitions; increasing size of facility to which electric
3 service can be extended in certain areas; deleting exception for
4 certain municipal entities; limiting provision relating to
5 annexation of territory; amending 17 O.S. 2001, Section 190.7, which
6 relates to the Electric Restructuring Act of 1997; limiting
7 application of prohibition for certain providers to service certain
8 electric consuming facilities; providing for codification; and
9 providing an effective date.
10 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
11 SECTION 1. NEW LAW A new section of law to be codified in
12 the Oklahoma Statutes as Section 158.41 of Title 17, unless there is
13 created a duplication in numbering, reads as follows:
14 Sections 2 through 5 of this act shall be known and may be
15 cited as the Retail Electric Consumer Cost Reduction, Safety and
16 Service Efficiency Act.
17 SECTION 2. NEW LAW A new section of law to be codified
18 in the Oklahoma Statutes as Section 158.42 of Title 17, unless there
19 is created a duplication in numbering, reads as follows:
20 The purpose of the Retail Electric Consumer Cost Reduction,
21 Safety and Service Efficiency Act is to encourage the orderly
22 development of coordinated statewide retail electric service,
23 conserve natural resources and materials, minimize unnecessary use
24 of the public rights of way, avoid needless and wasteful duplication
25 of electric distribution facilities within the State of Oklahoma and
26 provide safe, economical and cost-efficient electric service to
27 retail electric consumers.
2
1 SECTION 3. NEW LAW A new section of law to be codified
2 in the Oklahoma Statutes as Section 158.43 of Title 17, unless there
3 is created a duplication in numbering, reads as follows:
4 A. Notwithstanding any other provision of law to the
5 contrary, when as a result of annexation by a municipality or for
6 any other reason, two or more retail electric suppliers, excluding
7 the Grand River Dam Authority but including investor-owned
8 utilities, rural electric cooperatives, municipalities that provide
9 electricity either directly or through a trust, authority or other
10 political entity and any other retail supplier of electricity, have
11 been authorized to serve consumers in a geographical area, to be
12 defined herein as the affected area, part or all of which was
13 previously certified territory under the Retail Electric Supplier
14 Certified Territory Act, the following procedure shall apply:
15 1. Any retail electric supplier authorized to serve consumers
16 in the affected area shall notify all other retail electric
17 suppliers authorized to serve consumers in the same affected area of
18 its intention to negotiate a division of the affected area among the
19 affected retail electric suppliers. Notification shall be performed
20 by certified mail to the chief executive officer of a privately
21 owned retail electric supplier, including investor-owned utilities
22 and rural electric cooperatives, or to the mayor of a municipality
23 or chief executive officer of any other governmental entity, and a
24 copy of the notification shall be transmitted simultaneously to the
25 Corporation Commission. All affected retail electric suppliers
26 shall negotiate in good faith to divide the affected area by mutual
27 agreement.
3
1 2. Within six (6) months of the date of notification, the
2 affected retail electric suppliers shall negotiate a division of the
3 affected area. Upon successful negotiation, the affected retail
4 electric suppliers shall execute a contract that recites with
5 specificity the precise division of the affected area. An executed
6 copy of the contract shall be filed with the Corporation Commission.
7 The Commission, within thirty (30) days of receipt of an executed
8 copy of the contract, shall issue an order approving the division of
9 the affected area as specified in the contract unless it determines,
10 after hearing, that the contract does not comply with provisions of
11 the Retail Electric Consumer Cost Reduction, Safety and Service
12 Efficiency Act or that it is not in the public interest. There
13 shall be a presumption that a contract that complies with provisions
14 of this act is in the public interest. No contract executed under
15 provisions of this act shall become effective until the contract is
16 approved by the Commission.
17 3. If the affected retail electric suppliers are unable to
18 negotiate a division of the affected area within the applicable six-
19 month period, the retail electric supplier that provided the
20 original notice shall have ten (10) days in which to notify the
21 Corporation Commission of the inability of the retail electric
22 suppliers to negotiate a division of the affected area. In the
23 event notice is not provided within the ten-day period, any other
24 affected retail electric supplier may provide notice to the
25 Commission. Upon receipt of the notice, the Commission shall within
26 six (6) months divide the affected area among the affected retail
27 electric suppliers based upon projected sales and other criteria so
4
1 that each affected retail electric supplier shall have, as nearly as
2 is reasonable, an approximately equal share of the projected
3 economic benefits. The Commission shall consider economic
4 projections provided by the affected retail electric suppliers. The
5 Commission may choose to employ or contract with an independent
6 consultant to provide economic projections, in which case the
7 reasonable, ordinary and necessary costs of the consultant shall be
8 borne equally by the affected retail electric suppliers. In all
9 cases, criteria upon which the Commission makes its determination
10 shall include public safety, current and projected population,
11 existing electric service, current and anticipated municipal zoning,
12 potential customer revenue, quality of electric service, cost to
13 provide electric service, growth potential over a ten-year period,
14 conservation of natural resources and materials and efficient use of
15 public rights of way. After making its determination, the
16 Commission shall issue an order dividing the territory among the
17 affected retail electric suppliers.
18 4. During the time beginning when two or more retail electric
19 suppliers are authorized to serve consumers in an affected area and
20 ending when a contract is executed or a Commission order issued, the
21 affected retail electric suppliers shall be entitled to continue to
22 provide and extend electric service to retail consumers within the
23 territory previously certified to the retail electric supplier.
24 B. An investor-owned utility or rural electric cooperative
25 that enters into a contract, or that is assigned territory by the
26 Commission under subsection A of this section, beginning upon
27 execution of the contract, or upon the effective date of a
5
1 Commission order, shall collect and remit to the affected
2 municipality an annual tax upon the gross receipts from residential
3 and commercial sales of power, light, heat or electricity, in the
4 municipality in the amount of two percent (2%) of the gross receipts
5 from residential and commercial sales, which tax shall be in lieu of
6 any other franchise, license, occupation or excise tax levied by the
7 municipality, except as otherwise provided for in this subsection.
8 The provisions of this subsection shall not apply to a retail
9 electric supplier that is paying a franchise fee under a valid
10 franchise with the municipality. Any retail electric supplier
11 affected by this subsection shall also be required to collect and
12 remit any applicable municipal sales tax on retail sales of
13 electricity beginning upon execution of the contract or upon the
14 effective date of a Commission order, which sales tax shall be
15 cumulative of any gross receipts tax or franchise fee.
16 C. In cases when a municipality that provides electricity
17 either directly or through a trust, authority or other political
18 entity is an affected retail electric supplier, an investor-owned
19 utility or rural electric cooperative that enters into a contract or
20 that is assigned territory by the Commission under subsection A of
21 this section shall include in the contract or shall be ordered by
22 the Commission, whichever the case may be, to pay the municipality
23 an infrastructure fee of no more than two percent (2%) of the gross
24 receipts from sales of electricity. The purpose of the
25 infrastructure fee shall be to offset potential profits the
26 municipality would lose from retail electric service sales in the
27 territory assigned to the investor-owned utility or rural electric
6
1 cooperative. The infrastructure fee shall be prospective in effect
2 and shall be collected from the customers located within the
3 municipality. The provisions of this subsection shall apply
4 exclusively to municipalities that were providing electricity either
5 directly or through a trust, authority or other political entity
6 prior to November 1, 1971.
7 D. Two or more retail electric suppliers shall be authorized
8 to serve customers in an affected area if, and only if, one of the
9 following conditions is met:
10 1. When a retail electric supplier has a franchise agreement
11 with a municipality, and the municipality annexes territory
12 completely or partially certified to one or more other retail
13 electric suppliers under the Retail Electric Supplier Certified
14 Territory Act;
15 2. When a municipality or beneficial trust or authority
16 thereof provides retail electric distribution service from a
17 municipally- or trust- or authority-owned electric distribution
18 system, and the municipality annexes territory completely or
19 partially certified to one or more other retail electric suppliers
20 under the Retail Electric Supplier Certified Territory Act; or
21 3. When two or more retail electric suppliers are, upon the
22 effective date of this act, lawfully providing retail electric
23 service in an area that is not included within any other certified
24 territory of a retail electric supplier, as defined in the Retail
25 Electric Supplier Certified Territory Act.
26 SECTION 4. NEW LAW A new section of law to be codified
27 in the Oklahoma Statutes as Section 158.44 of Title 17, unless there
7
1 is created a duplication in numbering, reads as follows:
2 Any retail electric supplier shall be entitled to continue and
3 extend the furnishing of electricity, including the right to
4 construct, maintain and operate electric transmission and
5 distribution lines and related facilities along, upon, under and
6 across all existing and future public thoroughfares in an area that
7 has been or shall be included, as a result of incorporation,
8 annexation, population growth or otherwise, within the boundaries of
9 a municipality if the retail electric supplier was furnishing
10 electricity or was constructing or operating electric facilities in
11 the area prior to inclusion without obtaining the consent,
12 franchise, license, permit or other authority of the municipality.
13 SECTION 5. NEW LAW A new section of law to be codified
14 in the Oklahoma Statutes as Section 158.45 of Title 17, unless there
15 is created a duplication in numbering, reads as follows:
16 If the Retail Electric Consumer Cost Reduction, Safety and
17 Service Efficiency Act, or any provision hereof is, or may be deemed
18 to be, in conflict or inconsistent with any of the provisions of
19 Sections 18 through 34, inclusive, of Article IX of the Constitution
20 of the State of Oklahoma, then, to the extent of any such conflicts
21 or inconsistencies, it is hereby expressly declared this entire act
22 and this section are amendments to and alterations of said sections
23 of the Constitution, as authorized by Section 35 of Article IX of
24 said Constitution.
25 SECTION 6. AMENDATORY 17 O.S. 2001, Section 158.22, is
26 amended to read as follows:
27 Section 158.22 [For the purposes of this act, the following
8
1 terms shall have the meanings given them] As used in the Retail
2 Electric Supplier Certified Territory Act:
3 1. [The term "retail] Retail electric supplier" means any
4 person, firm, corporation, association or cooperative corporation,
5 exclusive of municipal corporations [or], beneficial trusts, or
6 authorities thereof, engaged in the furnishing of retail electric
7 service[.];
8 2. [The term "certified] Certified territory" [shall mean]
9 means the unincorporated areas as certified by and pursuant to
10 Section 158.24 of this title[.];
11 3. [The term "existing] Existing distribution line" [shall
12 mean] means an electric line which on the effective date of this
13 act:
14 a. is located in an unincorporated area, and
15 b. is being or has been substantially used for retail
16 electric service[.] provided to an electric-consuming facility not
17 owned or operated by the retail electric supplier;
18 4. [The term "retail] Retail electric service" means
19 electric service furnished to a consumer for ultimate consumption,
20 but does not include wholesale electric energy furnished by an
21 electric supplier to another electric supplier for resale[.];
22 5. [The term "unincorporated] Unincorporated area" [shall
23 mean] means a geographical area outside the corporate limits of
24 cities and towns[.];
25 6. [The term "electric consuming] Electric-consuming
26 facilities" means everything that utilizes electric energy from a
27 central station source[.];
9
1 7. [The term] "Commission" [shall mean] means the
2 "Corporation Commission [of Oklahoma]" or its successor[.];
3 8. [The term "association] Association or cooperative
4 corporation" [shall mean] means any association or cooperative
5 corporation doing business under the Rural Electric Cooperative
6 Act[.];
7 9. [The term "hearing" shall mean] Hearing means a
8 hearing by the Commission pursuant to reasonable notice to all
9 affected retail electric suppliers[.]; and
10 10. [The term "member] Member consumer" [shall mean]
11 means the customer in whose name service of any association or
12 cooperative corporation doing business under the Rural Electric
13 Cooperative Act is being provided.
14 SECTION 7. AMENDATORY 17 O.S. 2001, Section 158.25, is
15 amended to read as follows:
16 Section 158.25 A. Except as otherwise provided [herein] in
17 this section, each retail electric supplier shall have the
18 exclusive right to furnish retail electric service to all electric-
19 consuming facilities located within its certified territory, and
20 shall not furnish, make available, render or extend its retail
21 electric service to a consumer for use in electric-consuming
22 facilities located within the certified territory of another retail
23 electric supplier[; provided that any]. Any retail electric
24 supplier may extend its facilities through the certified territory
25 of another retail electric supplier, if [such] the extension is
26 necessary for [such] the supplier to connect any of its facilities
27 or to serve its consumers within its own certified territory.
10
1 B. Except as provided in [Section 5] subsections C and
2 [Section 5] E of this section, any new electric-consuming facility
3 located in an unincorporated area which has not as yet been included
4 in a map issued by the Corporation Commission, pursuant to
5 paragraph (1) of subsection C of Section [4C(1)] 158.24 of this
6 title, or certified, pursuant to subsection D of Section [4 D]
7 158.24 of this title, shall be furnished retail electric service
8 by the retail electric supplier which has an existing distribution
9 line in closer proximity to [such] the electric-consuming facility
10 than is the nearest existing distribution line of any other retail
11 electric supplier. Any disputes under this [Section 5 B]
12 subsection shall be resolved by the Commission.
13 C. If the Commission, after hearing, shall determine that the
14 retail electric service being furnished or proposed to be furnished
15 by a retail electric supplier to an electric-consuming facility is
16 inadequate and is not likely to be made adequate, the Commission may
17 authorize another retail electric supplier to furnish retail
18 electric service to [such] the facility.
19 D. Except as provided in [Section 5] subsection C of this
20 section, no retail electric supplier shall furnish, make available,
21 render or extend retail electric service to any electric-consuming
22 facility to which [such] service is being lawfully furnished by
23 another retail electric supplier on the effective date of this act,
24 or to which retail electric service is lawfully commenced thereafter
25 in accordance with this section by another retail electric supplier.
26 E. The provisions of this act shall not preclude any retail
27 electric supplier from extending its service after the effective
11
1 date of this act [(1)] to [its]:
2 1. Its own property and facilities, in an unincorporated
3 area[,]; and [(2) subject]
4 2. Subject to [Section 5] subsection D of this section,
5 [to] an electric-consuming facility requiring electric service, in
6 an unincorporated area, if the connected load for initial full
7 operation of [such] the electric-consuming facility is to be
8 [1,000] 2,500 kw or larger.
9 SECTION 8. AMENDATORY 17 O.S. 2001, Section 158.28, is
10 amended to read as follows:
11 Section 158.28 The provisions of this act shall not be
12 applicable to [municipal corporations, or beneficial trusts thereof,
13 owning or operating electric lines or generating facilities, or] the
14 financing of a rural electric cooperative or association[; and
15 nothing]. Nothing in this act shall prohibit or shall ever be
16 construed to prohibit any municipal corporation, or beneficial
17 trusts thereof, owning or operating electric lines, from furnishing
18 electric service to any territory thereafter annexed to and
19 incorporated into the corporate limits of [said] the municipal
20 corporation, or from acquiring the electric distribution facilities
21 of any association or cooperative corporation as now provided in
22 [Title 18,] Section 437.2 of Title 18 of the Oklahoma Statutes.
23 Provided further that it shall not be necessary for any [such]
24 municipal corporation, or beneficial trusts thereof, to secure the
25 prior order, consent or authorization of the Corporation
26 Commission to proceed under [said Title 18,] Section 437.2 of Title
27 18 of the Oklahoma Statutes, but after the acquisition of any
12
1 [such] electric distribution facilities of any association or
2 cooperative corporation, the Commission shall be notified by [such]
3 the municipal corporation as to the description of the territory
4 annexed and incorporated into the corporate limits in order that the
5 Commission may adjust its required maps.
6 SECTION 9. AMENDATORY 17 O.S. 2001, Section 158.29, is
7 amended to read as follows:
8 Section 158.29 When an area, which is included in whole or in
9 part in any territory or territories certified to a retail electric
10 supplier or suppliers under this act, is annexed to and becomes a
11 part of an incorporated city or town, the certification of [such]
12 the territory or territories [hereunder] under this act shall be
13 null and void[. In such event, the Commission shall be notified and
14 the appropriate maps be corrected accordingly], except to the
15 extent otherwise provided by law.
16 SECTION 10. AMENDATORY 17 O.S. 2001, Section 190.7, is
17 amended to read as follows:
18 Section 190.7 A. Electric distribution providers governed by
19 the Retail Electric Supplier Certified Territory Act, [Section
20 158.21 et seq. of this title] or municipal corporations or
21 beneficial trusts thereof owning or operating a retail electric
22 distribution system or the Grand River Dam Authority, shall not
23 furnish retail electric service to an electric-consuming facility
24 which is currently being served, or which was being served and the
25 permanent electric facilities are in place to render [such] the
26 service, by a municipal corporation or beneficial trust thereof, a
27 rural electric cooperative or an investor-owned electric utility or
13
1 the Grand River Dam Authority, until enactment of electric
2 restructuring enabling legislation and the implementation of
3 consumer choice of retail electric energy suppliers, unless the
4 entities involved have agreed by mutual consent, in writing, to
5 [such] the transaction. For the purpose of this section,
6 "electric distribution providers" shall mean the same as "retail
7 electric service distributors" as defined by Section 190.3 of this
8 title. The provisions of this section shall not apply to an order
9 issued by the Corporation Commission under the Retail Electric
10 Consumer Cost Reduction, Safety and Service Efficiency Act.
11 B. Any municipal corporation or beneficial trust thereof
12 offering retail electric distribution service from a municipally or
13 trust-owned electric distribution system that decides not to
14 participate in the provisions of this act as outlined in Section
15 190.3 of this title shall be prohibited from extending a retail
16 electric distribution primary feeder system beyond its corporate
17 limits with the exception that it may continue to offer retail
18 electric distribution service through the addition of secondary
19 service drops from the primary feeder system it owned outside the
20 corporate limits of [such] the municipality on April 25, 1997.
21 [Provided, however, nothing] Nothing contained in this section
22 shall be construed to prohibit system maintenance, repairs or
23 upgrades to [such] primary distribution feeder system outside the
24 corporate limits except that secondary service drops shall not be
25 upgraded to primary distribution lines.
26 SECTION 11. This act shall become effective January 1, 2008.
27 COMMITTEE REPORT BY: COMMITTEE ON ENERGY AND TECHNOLOGY, dated
14
1 02-19-07 - DO PASS, As Coauthored.
2 HB1739 HFLR- 15 -House of Representatives
3 UNDERLINED language denotes Amendments to present Statutes.
4 BOLD FACE CAPITALIZED language denotes Committee Amendments.
5 Strike thru language denotes deletion from present Statutes.
15