Bill Number: OK51RSB 629 Filed: 01-19-2007
Author: Myers
STATE OF OKLAHOMA
1 1st Session of the 51st Legislature (2007)
2 SENATE BILL 629 By: Myers
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 rate adjustments;
7 authorizing periodic rate adjustments for financing
8 certain Construction-Work-In-Progress investments;
9 authorizing utilities to adjust rates to recover
10 certain approved costs; stating requirements;
11 defining term; requiring Corporation Commission to
12 promulgate rules; and declaring an emergency.
13 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
14 SECTION 1. AMENDATORY Section 1, Chapter 161, O.S.L.
15 2005 (17 O.S. Supp. 2006, Section 286), is amended to read as
16 follows:
17 Section 286. A. Effective July 1, 2006, the portion of costs
18 incurred by an electric utility, which is subject to rate regulation
19 by the Corporation Commission, for transmission upgrades approved by
20 a regional transmission organization to which such utility is a
21 member and resulting from an order of a federal regulatory authority
22 having legal jurisdiction over interstate regulation of transmission
23 rates, shall be presumed recoverable by such utility. The
24 presumption established in this subsection may be rebutted by
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1 evidence that the costs so incurred by the utility for such
2 transmission upgrades exceed the scope of the project authorized by
3 the regional transmission organization or order issued by such
4 federal regulatory authority having jurisdiction over interstate
5 regulation of transmission rates. The Commission shall transmit
6 rules to implement the requirements of this subsection to the
7 Legislature on or before April 1, 2006. The rules may authorize an
8 electric utility to periodically adjust its rates to recover all or
9 a portion of the costs so incurred by the utility [for] and the
10 utility may include such periodic rate adjustment mechanism recovery
11 of the financing costs of Construction-Work-In-Progress Investment
12 prior to the in-service date of such transmission upgrades.
13 B. An electric utility subject to rate regulation by the
14 Corporation Commission may file an application seeking Commission
15 authorization of the utility's plan to make capital expenditures for
16 equipment or facilities necessary to comply with the Federal Clean
17 Air Act, as amended, and, as the Commission may deem appropriate,
18 federal, state, local or tribal environmental requirements which
19 apply to generation facilities. If approved by the Commission,
20 after notice and hearing, the equipment or facilities specified in
21 such approved utility plan are conclusively presumed used and
22 useful. The utility may elect to periodically adjust its rates to
23 recover the costs of such expenditures[;] and the utility may
24 include in such periodic rate adjustment mechanism recovery of the
25 financing costs associated with Construction-Work-In-Progress
26 investment prior to the in-service date of the equipment or
27 facilities, provided that the utility shall file a request for a
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1 review of its rates pursuant to Section 152 of [Title 17 of the
2 Oklahoma Statutes] this title no less than twenty-four (24) months
3 after the utility begins recovering such costs through a periodic
4 rate adjustment mechanism and no less than twenty-four (24) months
5 after the utility begins recovering such costs through any
6 subsequent periodic rate adjustment mechanism. Provided further,
7 that such periodic rate adjustment or adjustments are not intended
8 to prevent a utility from seeking cost recovery of such capital
9 expenditures as otherwise may be authorized by the Commission.
10 However, the reasonableness of the costs to be recovered by the
11 utility shall be subject to Commission review and approval. The
12 Commission shall promulgate rules to implement the provisions of
13 this subsection, such rules to be transmitted to the Legislature on
14 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 extent
20 that, the Commission determines there is a need for construction or
21 purchase of such electric generating facility, the generating
22 facility shall be considered used and useful and its costs shall be
23 subject to cost recovery rules promulgated by the Commission. The
24 utility shall have the option to periodically adjust its rates to
25 recover the costs approved by the Commission. If the Commission
26 approves the construction of an electric generating facility which
27 is reasonably expected to require at least two (2) years to
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1 construct and costs in excess of Two Hundred Fifty Million Dollars
2 ($250,000,000.00), the utility may include in the periodic rate
3 adjustment mechanism recovery of financing costs associated with
4 Construction-Work-In-Progress investment prior to the commercial
5 operation of the new electric generating facility. Financing costs
6 are defined as interest on debt, shareowners return and related
7 income taxes. The Commission shall enter an order on an
8 application filed pursuant to this subsection within two hundred
9 forty (240) days of the filing of the application, following notice
10 and hearing and after consideration of reasonable alternatives.
11 2. Following receipt of an application filed pursuant to this
12 subsection, the Corporation Commission staff may file a request to
13 assess the specific costs, to be paid by the electric utility and
14 which shall be deemed to be recoverable, for the costs associated
15 with conducting the analysis or investigation of the application
16 including, but not limited to, the cost of acquiring expert
17 witnesses, consultants, and analytical services. Such request shall
18 be filed at and heard by the Corporation Commissioners in the docket
19 opened by the electric utility pursuant to this subsection. After
20 notice and hearing, the Commission shall decide the request.
21 3. Additionally, following receipt of an application filed
22 pursuant to this subsection, the Office of the Attorney General may
23 file a request with the Corporation Commission for the assessment of
24 specific costs, to be paid by the electric utility and which shall
25 be deemed to be recoverable, associated with the performance of the
26 Attorney Generals duties as provided by law. Those costs may
27 include, but are not limited to, the cost of acquiring expert
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1 witnesses, consultants and analytical services. Such request shall
2 be filed at and heard by the Corporation Commissioners in the docket
3 opened by the electric utility pursuant to this subsection. After
4 notice and hearing, the Commission shall decide the request.
5 4. The Commission shall promulgate rules to implement the
6 provisions of this subsection. [Such] The rules shall be
7 transmitted to the Legislature on or before April 1, 2006. In
8 promulgating rules to implement the provisions of this subsection,
9 the Commission shall consider, among other things, rules which
10 would:
11 a. permit contemporaneous utility recovery from its
12 customers, the amount necessary to cover the Corporation Commission
13 staff and Attorney General assessments as authorized by this
14 subsection,
15 b. establish how the cost of facilities approved pursuant
16 to this subsection shall be timely reviewed, approved, and recovered
17 or disapproved, and
18 c. establish the information which an electric utility
19 must provide when filing an application pursuant to this subsection.
20 5. The Commission shall also [consider] promulgate rules
21 which [may] permit an electric utility to begin to recover [return
22 on or return of] financing costs associated with Construction-
23 Work-In-Progress [expenses] investment prior to commercial
24 operation of a newly constructed electric generation facility
25 [subject to the provisions of] as provided for in this subsection.
26 SECTION 2. It being immediately necessary for the
27 preservation of the public peace, health and safety, an emergency is
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1 hereby declared to exist, by reason whereof this act shall take
2 effect and be in full force from and after its passage and approval.
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