The Electric Utility Industry Restructuring Transition Advisory Committee : a report to the Governor and the 56th Legislature

122 Pages·1998·7.8 MB·English

by  Montana.Legislative Services Division

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The:E lectrid Utilrty Industry Restructlr:i ng
Transition Advisory Comrnittee
A: 4ep6,r1tolh e Governora nd the 56th L,egiilature
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Decembe1r 998 sr*TE.Oocu9wor$|Lm s
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MontanaL egislativeS ervicesD ivision
StateC apitol,R oom 138
Ilelen4 Montana5 9,620-!7CI6 , ': , . ',,,'
Legislativ
uSentices
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: (406)4 //.-3064
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The ElectricU tility IndustryR estructuring
TRANSTTIOAND VISORYC OMMITTEE
Chair: SenatorF redT homas
Vice-chair: RepresentativeBillByan
COMMITTESET AFF:
StephenM aly, ResearchA nalYst
Todd Everts,L egislativeE nvironmentaAln alyst
Judy Keintz,S ecretary
PUBLISHEBDY :
MontanaL egislativeC ouncil
RepresentativLea rryH al Grinde,P residingO fficer
MontanaL egislativeS ervicesD ivision
RobertB . Person,E xecutiveD irector
DavidD . Bohyer,D irector,O fficeo f Researcha nd PolicyA nalysis
GregoryJ . PeteschD, irector,L egalS ervicesO ffice

TABLE OF CONTENTS
TACFinaRle portExecutiveSummary .'....1
f. Introduc{ioann dO verview 2
ll. BudgeSt ummary
lll.C hronologyToAf CAc'tivitiesEanvde nts -...... 6
July11,1997,Helena ....6
October6-71,9 97,B illings 7
January9 , 1998,H elena 7
Februar6y, 1998M, issoula I
March1 3,1 998,H elena I
F,pri124,199G8,r eatF alls. 9
July2 4,1998S, idney I
Septembe1r8 ,1 998,H elena 10
Oc{ober231,9 98H, elena 10
OtherR elatedE vents 11
lV.A bstractoSfu bstantiveAchievements&Win Porrkosg ress ...... 13
. The EducationS ubcommittee 14
January?2,1998 ......14
March2 4, 1998 14
Ju1y1,1998 ......15
Septembe1r7 ,1 998 16
TheU niversaSly stemB enefitsProgramSubcomm. ittee ...... 17
TACUSBPFundStatutoryDirectives ......18
USBPS ubcommifteAec {ion 19
APPENDICES
Appendixl: TACm embershiP19, 97-99
Appendixll : MontanaE lectricaIln dustryR estructurin&g ConsumeCr hoiceA ct
(SenateB ill3 90)
Appendixll l: A LegaAl nalysiso f the Elec'tricaUl tilltyI ndustryR estructurin&g
CustomeCr hoiceA c't'sR eciprocitPy rovision
Appendixlv : EleclricaIln dustryR estruc{urin&g M ontanaP owerC ompany's,sa le
of GeneratioAn ssets
AppendiVx : T.A.GR. ePorts
AppendixV l: TheC ollaborativoen CustomeEr ducationa ndP ilotP rograms
AppendixV ll: lssuesG onceminWg aterR ightsO wnedb y MontanaP ower
Gompan(yQ uestionass kedb y senatorH unritzt hroughL EPO)
TACF inalR eport ExecutiveS ummary
I $ome partsa nd phaseso f the restruc'turinpgr ocessp roceededin accordancew ith the
schedules et forth in SenateB ill 390,w frileo thersd id not. Deadlinesfo r the Public
ServiceC ommission'fsin alo dErs on utilityt ransitionp fansa nd the startd ateo f pilot
programsw ere ne@ssarilyd elayed.
The TransitionA dvisoryC ommitteec rAC or Committeew) as responsiveto unanticipated
decisionsa nd'eventss, ucha s the MontanaP owerC ompanfs announ@menot f its
intentionto sell all of its generationa ssetsi n the state.
The TAC met its statutoryr quirements regardingq uarterlym eetingsa nd reports,a nd
conduc{eda n additionaml eetingi n conjunctionw ith the MontanaG onsumeCr ounsel.
The TAC establishedth e EducationS ubcommitteteo ensuret hat otherT AC members
and interestedl egislatorsw ere informeda bout basic aspectso f restructuringin Montana
and elsewtrerea nd to monitora nd evaluatet he faimess and efrec{ivenesso f customer
educationm essagesa nd materialsp roducedb y investor-owneudt ilitiesa nd participating
elec'tricacl oopenatives.
The TAC establishedth e UniversaSl ystemB enefttsP rcgram( USBP)S ubcommitteteo
developa nd recommenda pnc{ical meanso f collectinga nd administeringU SBPf unds
as well as to ftnda methodf or determiningth e applicabilitoy f creditsa gainstu niversal
systemb enefitsc harges.
The TAC considercda nd heardp ublic@ mmento n a varietyo f issuesa risingf rom
restructuringS. omeo f thesei ssuesw ere of centmli mportancei,n dudingc ustomer
aggregationa nd banierst o competitionw, hileo thersw ere morep eriphemltot he scope
of SB 390, sucfra s waterr ightsa nd continueda ccesst o recreationapl roperty.
Becauseim portanat spectso f eleciricali ndustryr cstructuringa re to be phasedi n overa
numbero f years,r elativefyfe w mattersc ouldb e concludedo r resolvedd uringt he 1997-
98 interim;t hereforet,h e Committee'sle gislativere commendationasr e few in number.
Theyi ncluded etailedd rafrl egistationto structuret he USBPa nd a proposaltor epealthe
reciprocityp rcvisionso f SB 390.
TRANSITIONA DVISORYC OMMITTEEF INALR EPORT
l. lntroductiona nd Overview
SenateB ill3 90( ChapteNr o.5 05,L auao f 1997) establishetdh e ElectricU tility
IndustryR estructurinTgr ansitionA dvisoryC ommitte(eT ACo r Commifteec)o mposed
of 2}members8, of wfroma rev otingm embers4, eachf romM ontana'Hs ousea nd
Senatew, itha n equaln umbeor f Republicanasn dD emocratsT.h eo ther1 2 members
werea ppointedb y theg ovemotro fulfilla dvisoryfu nctionsa s representativeosf groups
in Montanaw itha n interesitn the restruc'turinpgro cess(.S eeA ppendixI fora lis.o f
memberas nd their affiliations.)
SB3 90i s a relativetyc omplicatelde gislativep ad<agen,o tr eadilyu nderstoobdy
Montanac itizensw trod id notp articipatein or observeth e bill'sr iteso f passaged uring
the 1gg7s essionT. hec ommitteem adee xtensiveu see arlyo n of severasl ynopseso f
the biff, oneo f whbh is includedin thisr eport( s* Appendixtt ),a ndc ana lsob e found
at the PublicS erviceC ommission('Ps SG)w ebsitea t unrrrv.psc.stateO.mnte. o f the
foremosct trallengesfa cedb y the TACw ast o bettere ducateit s orn memberso n the
intricacieos f the bilt,a s wella s someo f the speculativaes pectso f restruc'turinthga t
the lawi tselfc ouldn ot( ands tillc annota) ddressw itha nyd egreeo f certaintyT. he
predictivep owero f theT ACh asb eenc onstrainebdy limitedk nowledgoef thef utureo f
electricityp rices,t he sourcest,y pes,a ndl ong-terma vailabilitoy f reliablee lectricity
suppliesa, ndt he shapee nergym arketsw ill ac'tualltya kei n a changede conomica nd
technology-inufel ncede nvironment.
Them embershiopf theT ACr eflectsth e differengt roupsin thes tatew itha n interesitn
the outcomeo f restructurings.t akeholderisn the processin cludep roduceras nd
purveyorso f electricitys,u cha s investor-owneudti litiesa nde lectricacl ooperativesa,s
we1a s elec{ricity@ nsumeros f variouss izesa ndt ypes,i ncludingla rgei ndustriafli rms,
publice ntitiess, malcl ommercieanl terpriseas,n dr esidentiaclu stomersU.n der
'
Codifieda s Title 69, chapterS in the Montma CodeA motated'
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regulationt,h e interestso f produceras ndc onsumerasr e largelyc ongruenot,r at least
heldt ogetheirn a balancefda shionth roughth er ulingsa ndg oodo fficeso f theP SC'
W1hp artiadl eregulatiofnir,m si n theg eneratiosne gmenot f thep roductiosni dea re
freet o pursueb usinessin tereststh atm ayb e quited isparatefr omt hoseo f many
customersM. aketf orcesa reb elievedto be the bestm eanso f achievingth e balance
thatw asf ormerlys truckb y regulation.
Legislativpea ssagea ndi mplementatioonf M ontana'es lectricailn dustryre structuring
biil did noto ccuri n a vacuumC. alifomiaa ndN ewH ampshirwe eree arlyp ioneersin
this ventureW. hiled ifferenitn manyo bviousre spec-ttsh,e industrieas ndc ommunities
in botht heses tatesw ereb urdenedw ithr elativelyh ighe nergyc osts.M ontanaw ast he
first lor-coste nergys tatet o go fonrardw ithr estructuringA.s of April1 998,a n
additionasl evens tatesh ade nactedre structurinlge gislationa,n others evenh adm oved
decisivelyto rard restructurintgh roughth e issuanceo f comprehensivree gulatory
orderst,e n statesh adt egislatioonr ordersp endinga, nd2 3 statesh ads omes orto f
studyc ommissioinn placet o investigatfee asibilityS. outhD akotaw asa lonea mongth e
50 statesi n noth avinga uthorizeadn ys ignificanrte struc{urinagc livity.'Meanwhile,
severabl illsa rep endingin the U.S.C ongrestso establishre structurinogn a
nationwideb asis,a lthoughth erei s considerablree sistancea mongs tatest o
preemptorayc {ionb y thef ederagl ovemment.
TheC ommitteies authorizetdo makel egislativere @mmendationUsn. dera general
provisiono f SB3 90,t heT AC'shallr ecommenledg islatioinf n ecessartyo promote
electricu tilityr estructurinagn dr etailc hoiceo f electricitys uppliers."-T he law
mandatess ucha ctioni n onlyo neg eneraal rena,h oweverd, uringt he 1997-98in terim.
A provisiono f SB 390r equiresth eT AGt o maker e@mmendatiotnos t he govemor
regardingth e implementatioonf s tatewideu niversasl ystemb enefitsc hargeso n or
beforeJ anuary1 , 1999,a nda relatedfe atureo f the bill requiresth eT ACt o make
re@mmendatiotnos t he governoar ndt he Legislaturree gardinglo wi ncomee nergy
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So.n'oeEt nerglnformationAdministratio,U.S. D€pt. ofEnergl n'wu'.eiadoe.gov
" se" 69-8-501(I3),.MCA
assistancdee rivedfr oma ll energyp roviderisn thes tate.'Asis documenteladt eri n this
reportt,h e universasl ystemB enefitsP rcgram(u sBP)S ubcommitteoef t heT AC
developedg uidelineas ndr ecommendethde mt o thef ull Gommittefeo r consideration
andf or formalr ecommendatioton t hee ntireL egislature.
other legislativere commendatioanrse likelyt o emergein thef uture,a s the
complicaterde struc{uringp rocesse volvesF. ore xamplet,h eT AC'sE ducation
Subcommitteweil l continueto monitoar c'tivitietsh atc ouldl eadm embertso suggest
changesin the lawr egardingw froi s ultimatelrye sponsiblfeo r customeer ducation
and/orwhatty pea nda mounot f fundingm ayb e requiredto effectiveliyn form
cr.rstomeorsf w fratt heirc hoicesa rei n the nascenmt arkefto r retaile lectricitys upply
ands ervicesI.n additionl,e gislatiown ill probablyb e requiredto makem orec ertain
wl'row ill bearr esponsibiliftoy r providinge lec'tricittyo consumerws hof or oner easono r
anothefra il to makea deliberatecf ioiceo f powers uppliear t thee ndo f thet ransition
period.
Therea rea numbeor f unanswereqdu estionsa ndu nresolveids suesto be addressed
in subsequenpth aseso f the restrucilurinpgro oessF. ore xamplew, hethemr eteringa nd
billings ervicesm ustb e unbundlefdo m distributiocnh argesa ndt he extento f the
pSC'sj urisdictionre gardingth e distributioonf proceedsre sultingfr omt he saleo f
formerlyre gulatedu tilitya ssetsa rei ssuesth ata risei n the reviewo f transitionp lans
thatu tilitiesa rer equiredto file witht he PSCu nderS B3 90.I n additiona, s thet exto f
the restructurinbgi ll spellso ut,t herei s an anticipatesde quenceo f requireda ctivities'
sucha s transitionp lans,p ilotp rogramsth, e licensureo f supplierst,h e unbundlinogf
utilityb ills.H owevera, s thisf irstp haseo f the prooessil lustratesth, ereh aveb een
severasl urprisingtu mso f eventsth atw eren ota nticipatebdy the bill'ss upporterosr
the Committeme embers.
TheM ontanaP owerC ompany'(sM PC)a nnoun@din tentionto sell its generation
facilitiesin Decembecra usedth e scheduleo f hearingsa ndr elatedm eetingsto
changeA. laterd ecisionb y MPCt o dissolveit s elec{ricitmy arketinagf filiatea ndt hen
pacifigorp,sd ecisionto sell itst ransmissioann dd istributiosny stemin the northwestern
'
S€e 69-8-501(14a)n d6 9-8-501(18M),C A.
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