First Regular Session

Sixty-first General Assembly

LLS NO. 97­0584.01 DHG SENATE BILL 97­149

STATE OF COLORADO

BY SENATORS Wattenberg, Ament, Bishop, and Schroeder;

also REPRESENTATIVE Schwarz.

REENGROSSED

AGRICULTURE, NATURAL

RESOURCES & ENERGY

APPROPRIATIONS

A BILL FOR AN ACT

CONCERNING AN EVALUATION OF THE REGULATORY STRUCTURE OF THE RETAIL ELECTRIC INDUSTRY IN THE STATE OF COLORADO, AND, IN CONNECTION THEREWITH, ESTABLISHING AN ELECTRICITY ADVISORY PANEL, COMMISSIONING A STUDY OF THE ISSUES INVOLVED, AND MAKING AN APPROPRIATION.

Bill Summary

(Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments which may be subsequently adopted.)

Declares a need for an objective evaluation of the existing regulatory structure governing the provision of retail electric service in Colorado. Commissions a study of the issues that should be included in such evaluation. Establishes a 26­member advisory panel to conduct the evaluation, provides for technical and research assistance to the advisory panel from the public utilities commission, and establishes a public hearing process to afford meaningful opportunity for public comment and input into the evaluation. For purposes of funding the study and report, makes an appropriation to the public utilities commission.

Be it enacted by the General Assembly of the State of Colorado:

SECTION 1.  Article 4 of title 40, Colorado Revised Statutes, 1993 Repl. Vol., is amended BY THE ADDITION OF THE FOLLOWING NEW SECTIONS to read:

40­4­113.  Evaluation of retail electric industry structure ­ study ­ repeal. (1)  THE GENERAL ASSEMBLY FINDS, DETERMINES, AND DECLARES THAT:

(a)  AN OBJECTIVE EVALUATION OF THE EXISTING FRAMEWORK OF REGULATION OF RETAIL ELECTRIC SERVICE IS NECESSARY TO DETERMINE HOW SUCH SYSTEM OF REGULATION IS FUNCTIONING IN THE PUBLIC INTEREST OF ALL COLORADO CITIZENS AND BUSINESSES AND WHETHER CHANGES ARE WARRANTED;

(b)  OTHER STATES, AS WELL AS THE UNITED STATES CONGRESS, ARE, OR SOON MAY BE, ADDRESSING THE ISSUES OF ELECTRIC INDUSTRY RESTRUCTURING AND RETAIL ELECTRIC COMPETITION. COLORADO NEEDS TO BE PREPARED TO CONSIDER THE POLICY IMPLICATIONS OF ANY PROPOSAL TO RESTRUCTURE ITS REGULATION OF RETAIL ELECTRIC SERVICE.

(c)  ANY PROPOSAL TO RESTRUCTURE THE RETAIL ELECTRIC INDUSTRY IN COLORADO TO PERMIT COMPETITION IN THE SUPPLY FUNCTION OF THIS ESSENTIAL SERVICE REQUIRES ADVANCE STUDY, ON A THOROUGH AND UNBIASED BASIS, OF THE RISKS, BENEFITS, AND IMPACTS OF SUCH RESTRUCTURING ON ALL COLORADO CONSUMERS AND ALL SECTORS OF COLORADO'S ECONOMY;

(d)  THE EVALUATION OF THE RETAIL ELECTRIC INDUSTRY PROVIDED FOR IN THIS SECTION SHALL NOT COMMENCE FROM ANY PRECONCEPTION REGARDING A NEED TO CHANGE THE EXISTING SYSTEM OF REGULATION, NOR SHALL IT PROCEED ON A BASIS THAT IMPROVEMENTS CANNOT BE MADE TO THE EXISTING SYSTEM;

(e)  EXPERIENCE HAS SHOWN THAT UTILIZING THE BEST TECHNICAL ADVICE CURRENTLY AVAILABLE, DRAWING UPON BOTH PUBLIC AND PRIVATE SOURCES, CAN LEAD TO A MORE INFORMED LEGISLATIVE DECISION AND THEREBY BETTER HELP TO SHAPE PUBLIC POLICY FOR THE FUTURE.

(2)  Evaluation study. (a)  THE ELECTRICITY ADVISORY PANEL CREATED IN SUBSECTION (4) OF THIS SECTION, ALSO REFERRED TO IN THIS SECTION AS THE "PANEL", SHALL CONDUCT AN EVALUATION STUDY OF THE RETAIL ELECTRIC INDUSTRY IN COLORADO AND SHALL REPORT ITS FINDINGS TO THE GENERAL ASSEMBLY AND THE GOVERNOR IN ACCORDANCE WITH SECTION 24­1­136 (9), C.R.S. THE REPORT SHALL BE SUBMITTED NO LATER THAN DECEMBER 1, 1998, AND SHALL CONTAIN SPECIFIC FINDINGS ON THE ISSUES IDENTIFIED IN SUBSECTION (3) OF THIS SECTION.

(b)  A DRAFT OF THE EVALUATION STUDY REPORT SHALL BE RELEASED TO THE PUBLIC NO LATER THAN AUGUST 1, 1998, AND SUCH DRAFT SHALL BE THE SUBJECT OF PUBLIC HEARINGS HELD AT A MINIMUM OF FIVE LOCATIONS THROUGHOUT THE STATE. IN ORDER TO PROVIDE SUITABLE TIME AND OPPORTUNITY FOR CHANGES TO THE DRAFT REPORT OCCASIONED BY PUBLIC COMMENT THE PUBLIC HEARINGS SHALL BE CONCLUDED ON OR BEFORE OCTOBER 1, 1998. A MINIMUM OF TEN MEMBERS OF THE PANEL SHALL BE PRESENT AT EACH PUBLIC HEARING.

(c) (I)  THE PANEL, IN CARRYING OUT ITS FUNCTIONS AND RESPONSIBILITIES, MAY AT ITS DISCRETION OBTAIN RESEARCH AND TECHNICAL AND ADMINISTRATIVE ASSISTANCE, MEETING SPACE, AND OTHER NECESSARY FACILITIES AND SUPPORT SERVICES FROM THE PUBLIC UTILITIES COMMISSION, WHICH IS HEREBY DIRECTED TO PROVIDE SUCH SERVICES AS THE PANEL MAY REQUEST. IN PARTICULAR, THE COMMISSION IS HEREBY SPECIFICALLY AUTHORIZED TO PROVIDE, AND TO DRAW UPON THE RETAIL ELECTRICITY POLICY DEVELOPMENT FUND CREATED IN SECTION 40­4­114 TO AUGMENT THE COMMISSION'S ANNUAL BUDGET APPROPRIATION AS REQUIRED TO PAY FOR, SERVICES REQUESTED BY THE PANEL, WHICH MAY INCLUDE BUT SHALL NOT BE LIMITED TO:

(A)  EXPERT TESTIMONY;

(B)  CONSULTING SERVICES;

(C)  POSTAGE AND PRINTING;

(D)  ARRANGING FOR AND CONDUCTING MEETINGS; AND

(E)  PREPARATION AND DISTRIBUTION OF STUDIES OR REPORTS.

(II)  THE COMMISSION MAY CONTRACT WITH PRIVATE PARTIES FOR THE PROVISION OF ANY OF THE SERVICES LISTED IN SUBPARAGRAPH (I) OF THIS PARAGRAPH (c) AS WELL AS ANY OTHER SERVICES REQUIRED BY THE PANEL AND TO TAKE SUCH OTHER ACTIONS AS THE PANEL MAY DEEM NECESSARY TO FULFILL THE RESPONSIBILITIES UNDER THIS SECTION WITHOUT UNDULY DELAYING THE COMMISSION'S OTHER BUSINESS.

(d)  THE PANEL SHALL CONDUCT ITS AFFAIRS AND CARRY OUT ITS RESPONSIBILITIES IN SUCH A MANNER AS WILL ENSURE THAT ITS RESEARCH, FINDINGS, AND CONCLUSIONS ARE FACTUAL, FAIR, AND UNBIASED.

(3)  Issues to be evaluated. AT A MINIMUM, THE EVALUATION STUDY SHALL EXAMINE THE ISSUES SET FORTH IN THIS SUBSECTION (3), AND, IF APPROPRIATE, OPTIONS SHALL BE RECOMMENDED FOR ADDRESSING THE PANEL'S FINDINGS AND CONCLUSIONS ON THE SUBJECT MATTERS STUDIED. SUCH OPTIONS MAY, BUT NEED NOT, INCLUDE CONTINUATION OF THE EXISTING SYSTEM OF REGULATION. THE EVALUATION ISSUES SHALL INCLUDE:

(a)  THE PERFORMANCE OF COLORADO'S EXISTING SYSTEM OF REGULATION IN COMPARISON TO OTHER STATES IN TERMS OF SUCH FACTORS AS RELATIVE RATES FOR SERVICE, QUALITY OF SERVICE, RELIABILITY OF SERVICE, AND ECONOMIC DEVELOPMENT ENHANCEMENT;

(b)  HOW COMPETITIVE MARKET DEVELOPMENTS IN THE WHOLESALE ELECTRIC INDUSTRY WILL LIKELY IMPACT COLORADO'S RETAIL ELECTRIC INDUSTRY AND END­USE CUSTOMERS;

(c)  THE LIKELY EFFECTS OF RETAIL COMPETITION ON EACH OF THE VARIOUS CLASSES, GROUPS, POPULATIONS, AND TYPES OF ELECTRIC CONSUMERS IDENTIFIED BY THE PANEL, BOTH IN THE SHORT TERM, OVER THE NEXT FIVE YEARS, AND IN THE LONG TERM;

(d)  HOW THE INTRODUCTION OF RETAIL COMPETITION MIGHT AFFECT THE RELIABILITY AND QUALITY OF SERVICE PROVIDED TO COLORADO CITIZENS AND BUSINESSES;

(e)  IF RETAIL COMPETITION IS INTRODUCED, WHAT OBLIGATIONS, IF ANY, WILL OR SHOULD REMAIN ON THE EXISTING UTILITIES TO CONTINUE TO PROVIDE FULL SALES SERVICE AND WHAT OBLIGATIONS WILL OR SHOULD BE IMPOSED ON FORMER CUSTOMERS BEFORE A UTILITY IS REQUIRED TO RESTORE FULL SALES SERVICE;

(f)  WHAT CERTIFICATION, FINANCIAL, RELIABILITY, AND OPERATING REQUIREMENTS SHOULD BE APPLIED TO NEW­ENTRANT ELECTRIC GENERATION SUPPLIERS IF RETAIL COMPETITION IS INTRODUCED;

(g)  WHAT PARTICULAR IMPACTS OF RETAIL COMPETITION CAN BE EXPECTED TO BE EXPERIENCED BY RURAL COMMUNITIES AND RURAL AREAS OF THE STATE;

(h)  AN ASSESSMENT OF THE POTENTIAL EFFECTS OF MARKET­BASED RETAIL COMPETITION ON THE DEVELOPMENT OF RENEWABLE SOURCES OF ELECTRIC SUPPLY, ENERGY EFFICIENCY PROGRAMS, LOW­INCOME ENERGY ASSISTANCE PROGRAMS, AND ENVIRONMENTAL ISSUES AND PROGRAMS;

(i)  IF RETAIL COMPETITION IS INTRODUCED, HOW COLORADO CONSUMERS CAN BE ASSURED THAT LONG­TERM, ECONOMIC SOURCES OF POWER SUPPLY WILL BE AVAILABLE WHEN NEEDED, AND IN THE QUANTITIES DESIRED;

(j)  IF RETAIL COMPETITION IS INTRODUCED, WHAT WILL BE THE LIKELY EFFECTS ON THE CONTINUED AVAILABILITY OF COLORADO'S ELECTRIC GENERATION RESOURCES FOR COLORADO CUSTOMERS;

(k)  AN ANALYSIS OF THE EFFECTS RETAIL COMPETITION MAY HAVE ON THE AMOUNT AND COLLECTION OF TAXES, FEES, PAYMENTS IN LIEU OF TAXES AND FEES, AND OTHER REVENUES BY COLORADO'S TAXING AUTHORITIES, INCLUDING LOCAL GOVERNMENTS;

(l)  A CALCULATION OF THE REASONABLY ESTIMATED STRANDED COSTS AND INVESTMENTS OF COLORADO'S EXISTING ELECTRIC UTILITIES IF RETAIL COMPETITION IS INTRODUCED, AND THE METHODS FOR TIMELY RECOVERY OF SUCH STRANDED COSTS AND INVESTMENTS;

(m)  AN ASSESSMENT OF THE EFFECT OF RETAIL COMPETITION ON THE COST OF CAPITAL INCURRED BY ELECTRIC UTILITIES AND THE EFFECT ON LONG­TERM DEBT ISSUED BY CONSUMER­OWNED ELECTRIC UTILITIES WHERE REPAYMENT OF EXISTING DEBT IS SECURED BY THE STREAM OF REVENUES PRODUCED FROM SALES OF ELECTRIC POWER;

(n)  AN ASSESSMENT OF THE EFFECTS OF RETAIL COMPETITION ON THE VALUE HELD BY COLORADO CITIZENS AND BUSINESSES IN THE EQUITY, RETAINED EARNINGS, CAPITAL CREDITS, AND ONGOING BUSINESS VALUE OF COLORADO'S ELECTRIC UTILITIES;

(o)  AN ASSESSMENT OF THE EFFECTS THAT THE INTRODUCTION OF RETAIL COMPETITION MAY HAVE ON EMPLOYEES OF ELECTRIC UTILITIES;

(p)  AN ASSESSMENT OF THE MEANS BY WHICH COLORADO POLICY COULD PROTECT CONSUMERS FROM PREDATORY AND DISCRIMINATORY PRICING IF RETAIL COMPETITION WERE INTRODUCED;

(q)  CONSIDERATION OF LOCAL CHOICE OPTIONS DELEGATED TO CONSUMER­OWNED UTILITIES TO PARTICIPATE IF RETAIL COMPETITION IS INTRODUCED;

(r)  AN ASSESSMENT OF FEDERAL, STATE, AND LOCAL JURISDICTIONAL ISSUES;

(s)  AN ASSESSMENT OF THE EFFECT OF RETAIL COMPETITION ON THE REQUIREMENT OF UNIVERSAL SERVICE AND THE OBLIGATION TO ADEQUATELY PLAN AND SERVE IMPOSED ON EXISTING UTILITIES UNDER THE CURRENT FRAMEWORK OF REGULATION;

(t)  AN ASSESSMENT OF THE LIKELY ECONOMIC EFFECTS OF THE INTRODUCTION OF RETAIL COMPETITION IN ALL GEOGRAPHIC AREAS OF THE STATE AND ON VARIOUS SEGMENTS OF THE ECONOMY, INCLUDING AGRICULTURE, FOSSIL FUELS, LABOR, AND ENERGY DEVELOPMENT;

(u)  THE TYPE AND KIND OF INFORMATION THAT MUST BE AVAILABLE TO CONSUMERS IF RETAIL COMPETITION IS INTRODUCED AND AN IDENTIFICATION OF CURRENT LEGAL REQUIREMENTS THAT WOULD IMPOSE UNFAIR COMPETITIVE DISADVANTAGES ON SOME EXISTING PROVIDERS OF RETAIL ELECTRIC SERVICE, FOR EXAMPLE, THE APPLICATION OF OPEN RECORDS LAWS TO MUNICIPALLY­OWNED ELECTRIC SYSTEMS, BUT NOT OTHER RETAIL SERVICE PROVIDERS;

(v)  AN IDENTIFICATION OF MEASURES THAT MAY BE NECESSARY TO PROVIDE ADEQUATE PROTECTION TO ALL CONSUMERS AND THE MEANS TO ENFORCE REQUIRED CONSUMER PROTECTION STANDARDS; AND

(w)  AN IDENTIFICATION OF THE KEY TRANSITION ISSUES IF RETAIL COMPETITION AT THE POWER SUPPLY LEVEL WERE INTRODUCED.

(4)  Electricity advisory panel ­ composition ­ appointment.

(a)  THERE IS HEREBY CREATED WITHIN THE PUBLIC UTILITIES COMMISSION OF THE DEPARTMENT OF REGULATORY AGENCIES AN ELECTRICITY ADVISORY PANEL, WHICH SHALL CONDUCT THE EVALUATION STUDY PROVIDED FOR IN THIS SECTION. THE PANEL SHALL CONSIST OF NINETEEN MEMBERS AS FOLLOWS:

(I)  THE FOLLOWING SEVEN MEMBERS, APPOINTED BY THE GOVERNOR:

(A)  ONE REPRESENTATIVE OF ELECTRICITY CONSUMERS WHO ARE ELIGIBLE TO RECEIVE LOW­INCOME ENERGY ASSISTANCE AS DEFINED BY THE DEPARTMENT OF HUMAN SERVICES PURSUANT TO SECTION 40­8.5­105;

(B)  ONE REPRESENTATIVE OF AGRICULTURAL CONSUMERS OF ELECTRIC ENERGY;

(C)  ONE REPRESENTATIVE OF COMMERCIAL CONSUMERS OF ELECTRIC ENERGY;

(D)  ONE REPRESENTATIVE OF THE OFFICE OF CONSUMER COUNSEL, ESTABLISHED PURSUANT TO ARTICLE 6.5 OF THIS TITLE;

(E)  ONE REPRESENTATIVE OF EMPLOYEES OF AN ELECTRIC UTILITY;

(F)  ONE REPRESENTATIVE OF ENVIRONMENTAL INTEREST ORGANIZATIONS THAT ARE ACTIVELY INVOLVED IN ELECTRIC UTILITY MATTERS;

(G)  ONE REPRESENTATIVE OF A MUNICIPAL GOVERNMENT, WHETHER OR NOT SUCH MUNICIPAL GOVERNMENT OPERATES AN ELECTRIC UTILITY.

(II)  THE FOLLOWING SIX MEMBERS, APPOINTED BY THE PRESIDENT OF THE SENATE:

(A)  ONE REPRESENTATIVE OF A BUSINESS CONCERN THAT MINES OR PRODUCES NATURAL GAS IN COLORADO FOR SALE TO COLORADO ELECTRIC UTILITIES FOR EVENTUAL USE IN THE GENERATION OF ELECTRIC ENERGY;

(B)  ONE REPRESENTATIVE OF A BUSINESS CONCERN THAT MINES OR PRODUCES COAL IN COLORADO FOR SALE TO COLORADO ELECTRIC UTILITIES FOR EVENTUAL USE IN THE GENERATION OF ELECTRIC ENERGY;

(C)  ONE REPRESENTATIVE OF INDUSTRIAL CONSUMERS OF ELECTRIC ENERGY;

(D)  ONE REPRESENTATIVE OF A MUNICIPALLY OWNED UTILITY THAT GENERATES ELECTRIC ENERGY;

(E)  ONE REPRESENTATIVE OF AN INVESTOR­OWNED ELECTRIC UTILITY THAT GENERATES ELECTRIC ENERGY;

(F)  ONE REPRESENTATIVE OF AN INDEPENDENT POWER GENERATOR.

(III)  THE FOLLOWING SIX MEMBERS, APPOINTED BY THE SPEAKER OF THE HOUSE OF REPRESENTATIVES:

(A)  ONE REPRESENTATIVE OF A COOPERATIVELY OWNED DISTRIBUTION ELECTRIC UTILITY THAT PURCHASES ALL ITS WHOLESALE ELECTRIC POWER NEEDS FROM A GENERATION AND TRANSMISSION COOPERATIVE ASSOCIATION;

(B)  ONE REPRESENTATIVE OF A COOPERATIVELY OWNED DISTRIBUTION ELECTRIC UTILITY THAT PURCHASES ITS WHOLESALE ELECTRIC POWER FROM A SUPPLIER OTHER THAN A GENERATION AND TRANSMISSION COOPERATIVE ASSOCIATION;

(C)  ONE REPRESENTATIVE OF A COOPERATIVELY OWNED GENERATION AND TRANSMISSION ASSOCIATION;

(D)  ONE REPRESENTATIVE OF AN INVESTOR­OWNED ELECTRIC UTILITY THAT TRANSMITS ELECTRICITY;

(E)  ONE REPRESENTATIVE OF AN INVESTOR­OWNED ELECTRIC UTILITY THAT DISTRIBUTES ELECTRICITY;

(F)  ONE REPRESENTATIVE OF A MUNICIPALLY OWNED ELECTRIC UTILITY THAT DISTRIBUTES ELECTRICITY.

(b)  THE MEMBERS OF THE PANEL SHALL ELECT ONE MEMBER TO SERVE AS CHAIRPERSON.

(c)  MEMBERS OF THE PANEL SHALL BE APPOINTED ON OR BEFORE SEPTEMBER 30, 1997.

(d)  MEMBERS OF THE PANEL SHALL SERVE WITHOUT COMPENSATION; EXCEPT THAT MEMBERS WHO REPRESENT RESIDENTIAL AND LOW­INCOME CONSUMERS SHALL BE ENTITLED TO REIMBURSEMENT FOR THEIR REASONABLE AND ACTUAL EXPENSES INCURRED TO ATTEND MEETINGS.

(e)  VACANCIES SHALL BE FILLED BY APPOINTMENT BY THE OFFICIAL WHO APPOINTED THE MEMBER WHOSE ABSENCE RESULTED IN THE VACANCY. THE COMPOSITION OF THE PANEL AS SET FORTH IN THIS SUBSECTION (4) SHALL BE MAINTAINED.

(5)  Funding for evaluation study.    WITHIN THIRTY DAYS UPON THE SIGNATURE OF THE GOVERNOR, THE PUBLIC UTILITIES COMMISSION SHALL PREPARE A BUDGET ESTIMATING THE COSTS AND EXPENSES NECESSARY TO CONDUCT THE EVALUATION STUDY AND PREPARE ITS REPORT.

(6)  THIS SECTION IS REPEALED, EFFECTIVE DECEMBER 31, 2000.

40­4­114.  Funding and appropriations ­ retail electricity policy development fund ­ creation ­ repeal. (1)  THERE IS HEREBY CREATED IN THE STATE TREASURY THE RETAIL ELECTRICITY POLICY DEVELOPMENT FUND, REFERRED TO IN THIS SECTION AS THE AFUND@, WHICH SHALL BE A SEPARATE, INTEREST­BEARING ACCOUNT ADMINISTERED AND ACCOUNTED FOR BY THE STAFF OF THE COMMISSION. EXPENDITURES MAY BE MADE FROM THE FUND TO AUGMENT THE COMMISSION'S ANNUAL BUDGET APPROPRIATION AS REQUIRED FOR EXPERT TESTIMONY, CONSULTING SERVICES, POSTAGE AND PRINTING COSTS, COSTS ASSOCIATED WITH ARRANGING FOR AND CONDUCTING MEETINGS, AND OTHER ASSOCIATED SUPPORT AND OPERATING COSTS INCURRED IN CARRYING OUT THE COMMISSION'S DUTIES UNDER SECTION 40­4­113. EXPENDITURES FROM THE FUND SHALL BE AUTHORIZED BY THE DIRECTOR OF THE COMMISSION WITH THE CONSENT OF THE DIRECTOR OF THE LEGISLATIVE COUNCIL.

(2)  THIS SECTION IS REPEALED, EFFECTIVE JANUARY 1, 2001.

SECTION 2.  Appropriation. (1) In addition to any other appropriation, there is hereby appropriated, out of any moneys in the cash fund not otherwise appropriated, to the retail electricity policy development fund created in section 40­4­114, Colorado Revised Statutes, for the fiscal year beginning July 1, 1997, the sum of seventy-two thousand dollars ($72,000), or so much thereof as may be necessary, for the implementation of this act.

SECTION 3.  Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.