HB 1842 -- Retail Electric Choices

Co-Sponsors:  Burton, Mays (50), Hegeman

This bill is the Electric Industry Restructuring and Customer
Choice Act.  Beginning December 31, 2004, retail customers of
electric utilities or electric cooperatives will be able to
choose their electric suppliers, as long as comprehensive tax
reform replacing certain utility taxes is in effect.  Otherwise,
customer choice will begin 6 months after the date that tax
reform takes effect.

The bill prohibits the Public Service Commission (PSC) from
increasing or decreasing an electric utility's rates prior to
January 31, 2008, with certain exemptions.  By July 1, 2003,
electric utilities and cooperatives must file specified rate
schedules showing separate charges for distribution, electric
supply services, decommissioning costs, and transition costs.
The bill states that an electric utility is entitled to a fair
opportunity to recover any transition costs incurred as a result
of implementation of the bill.

The bill lists the rights of retail customers, including
nondiscriminatory access to service and the ability to aggregate
with other customers, and authorizes the PSC to adopt rules
protecting residential and small nonresidential customers
against unfair practices.

Electric utilities, rural electric cooperatives, and municipal
utilities will be the exclusive distributors of electric service
in the state.  Electric utilities will not have an obligation to
build new generation plants to supply retail customers or to
supply them from their own generation facilities.  The bill
outlines what electric suppliers are authorized to do, including
entering into contracts with retail customers and establishing
terms and conditions of service.  Also outlined are the
obligations of electric suppliers, such as maintaining adequate
sources of supply and other reserves and complying with
applicable safety and environmental regulations.

The bill authorizes the PSC to adopt rules on functional
separation of a vertically integrated electric utility's
distribution operations from its generation operations as
necessary to promote the development of a competitive market for
electric supply services.  The bill regulates the provision of
essential facilities or services by a utility or cooperative
providing distribution service to electric suppliers.  The PSC
is authorized to adopt uniform accounting rules for all electric
suppliers designed to prevent cross-subsidization between
suppliers and their affiliates and to require any transmission--
owning utility or electric cooperative to join an independent
system operator (ISO) or regional transmission organization
(RTO) to facilitate the development of competition.

Any electric supplier, other than utilities or cooperatives
providing tariffed electric supply service or municipal
utilities that have elected to participate in competition, is
required to obtain a certificate of service authority from the
PSC.  The bill describes application procedures and the
conditions on which the PSC will approve applications.

The PSC is required to implement and maintain through January 1,
2008, a consumer education program to provide residential and
small commercial retail customers with information to help them
understand their service options in a competitive market and
their rights and responsibilities.  The bill also requires the
PSC to form a working group that will make recommendations to
the PSC on how to implement the education program and outlines
the topics to be covered by the educational materials.  The
General Assembly will appropriate up to $300,000 per year to pay
for expenses associated with the consumer education program and
the working group.

The bill requires the PSC to monitor and analyze market patterns
and report to the General Assembly by December 31, 2005, and
once every 2 years until 2014 regarding any barriers to entry to
or participation in the market for electric supply services.
Also outlined are requirements for adequate employee skill and
knowledge sets; mitigation of the impact of workforce reduction;
sufficient personnel to provide safe, reliable service; and
recognition of collective bargaining agreements of certain
utilities in the case of a significant change in operations.

The bill authorizes utilities to use securitization to mitigate
the transition costs and to manage costs without increasing
rates, and it outlines procedures for issuing transitional
funding orders.

A municipal utility will not sell electric supply services to
retail customers outside of its service area unless its
governing body elects to participate in competition.  The bill
gives the PSC jurisdiction to hear and dispose of complaints
against electric suppliers involved in certain practices.