Colorado Legislative Council Staff

STATE

REVISED FISCAL NOTE

(Replaces Fiscal Note dated April 21, 1998)

Cash Fund Revenue and Cash Fund Exempt Expenditure Impact


Drafting Number:

Prime Sponsor(s):

LLS 98-759

Sen. Wattenberg

Rep. George

Date:

Bill Status:

Fiscal Analyst:

April 27, 1998

House 2nd Reading

Will Meyer (866-4976)

 

TITLE:            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.


Summary of Legislation


          The reengrossed bill, as amended in the House Business Affairs and Labor and Appropriations Committees, would create the “Electricity Advisory Panel“ (panel), consisting of twenty two members, and would authorize the panel to commission a study to assess whether restructuring of the retail electric industry is in the best interest of all classes of Colorado electricity consumers and the state as a whole. The bill would allow the panel, at its discretion, to obtain research, technical and administrative assistance, meeting facilities, and other support from the Public Utilities Commission (PUC) staff, Department of Regulatory Agencies. It would create the Retail Electricity Policy Development (REPD) cash fund and would authorize the director of the PUC to pay all the expenses associated with the study from the fund.


          It is assumed that the panel would direct the PUC staff to conduct the study. Given the study’s completion date of November 1, 1999, the PUC could complete most of the study elements within their existing resources. However, the PUC staff would require outside consultants to assist in the study of eleven of the twenty-one study elements. The provisions of the bill would also impact the workload of the Office of Consumer Counsel (OCC) staff, both as a member of the panel and based on their statutory role as a consumer advocate.


STATE FISCAL IMPACT SUMMARY

FY 1998/99

FY 1999/2000

State Revenues

General Fund

Retail Electricity Policy Cash Fund



Possible Grants and Donations

State Expenditures

Secretary of State CF - Transfer to Cash Exempt Fund

Retail Electricity Policy Fund - Cash Fund Exempt


$267,756

$211,220



$56,536

FTE Position Change

None

None

Local Government Impact — None.

          The reengrossed bill would reduce the total number of study elements from 23 to 21. Four of the twenty-one elements identified in the bill are outside the normal area of expertise of the PUC staff and would require the use of consultants to analyze these elements. An additional seven elements are within the expertise of the PUC staff, but could only be completed within the time line with the help of outside consultants.


          The panel would report the findings of the study to the General Assembly and the Governor by November 1, 1999. The bill would require that a draft of the study be released to the public by July 1, 1999; and be the subject of public hearings conducted in at least five locations throughout the state by September 1, 1999. It would require that a minimum of eleven members of the panel attend each public hearing.


          The bill would require the President of the Senate, the Speaker of the House of Representatives, and the Governor to appoint the members of the panel within thirty days of the effective date of this bill. The members would serve without compensation, except for members who represent residential and low-income consumers who would be entitled to reimbursement for actual and reasonable expenses. While the bill provides that upon signature of the Governor, the PUC would prepare a budget estimating the costs and expenses necessary to conduct the evaluation and prepare its report, based on current assumptions (that the PUC would be directed to conduct the study), the costs of the panel to conduct the study have been estimated and are contained in this fiscal note. The bill also would authorize the State Treasurer to transfer $267,756 from the Department of State cash fund to the REPD cash fund on July 1, 1998. The bill would become effective upon signature of the Governor.


State Revenues 


          The reengrossed bill, as amended, would authorize the PUC to solicit and accept grants and donations from private sources and to deposit all moneys received in the REPD cash fund. Any unexpended and unencumbered moneys remaining in the fund as of December 31, 2000, would be transferred to the PUC’s Fixed Utilities cash fund.


State Expenditures


          It is assumed that the director of the PUC would contract for outside services to analyze the following elements of the study that are outside of the expertise of the PUC staff: (1) impact of retail wheeling on taxes in Colorado; (2) consideration of local choice options; (3) impact on all geographic areas of the state and economy; and (4) disadvantages of current legal requirements on existing electric providers. It is estimated that this would cost $33,600 in FY 1998/99.


          It also is assumed that the director of the PUC would contract for outside services that are within the areas of expertise of the PUC staff, but that could only be completed within the time line with the help of outside consultants. These areas include the following: (1) impact of retail competition on classes of electric consumers over the short and long term; (2) impact of retail competition on reliability and quality of service; (3) impact of retail competition on energy efficiency renewables, the environment, and low-income consumers; (4) impact of retail competition on long-term economic sources of power supply; (5) calculation of stranded costs; (6) impact of retail competition on employees of public utilities; and (7) impact of retail competition on universal service and the obligation to adequately plan and service under the existing regulatory framework. It is estimated that this would cost $126,000 in FY 1998/99.


          The PUC would also contract for the preparation, printing and distributions of the reports. It is estimated that it would cost $26,000 in FY 1999/00. It is assumed that the panel would meet every month from when the panel is formed in September 1998 through July 1999. It is further assumed that five public hearings would be held throughout the state in August and September 1999. The costs of these meetings, including reimbursable travel costs and meeting room costs (where necessary) total $1,620 in FY 1998/99 and $5,536 in FY 1999/2000.


          It is assumed that the OCC would contract with outside experts to analyze the study elements of concern to them. It is estimated that this would cost $50,000 (400 hours @ $125 per hour) in FY 1998/99 and $10,000 (80 hours @ $125 per hour) in FY 1999/2000 to acquire relevant economic, financial, engineering and legal expertise.


ELECTRIC RETAIL WHEELING STUDY COSTS OF SB 152

 

FY 1998-99

FY 1999-00

PUC: 

 

 

  Panel Expenses - Meetings and Travel

$1,620

$5,536

  Contract Study Consultants: 11 Study Elements

159,600

15,000

  Reports: Writing and Distribution

 

26,000

OCC:

 

 

  Contract Consultants: 250/80 hours @ $125

50,000

10,000

TOTAL COSTS:

$211,220

$56,536


          Estimated costs of the provisions of the bill are $211,220 in FY 1998/99, and $56,536 in FY 1999/2000.


Spending Authority


          This fiscal note implies that the Department of Regulatory Agencies would require a transfer from the Department of State cash fund $267,756 to the REPD cash fund and cash fund exempt spending authority of $211,220 CFE in FY 1998/99.



Departments Contacted                   Regulatory Agencies