HB 1778 -- Retail Choice in Electric Service

Co-Sponsors:  Mays (50), Smith, Koller, Crump, Graham (24),
Froelker, Kreider

This is the Electric Utility Restructuring Act.

RETAIL ELECTRIC PROVIDER CHOICE

The bill allows consumers to choose, starting July 1, 2004,
their suppliers of electric power and energy, either from a
competitive electric provider (CEP) on a competitive market
basis or from the incumbent electric utility on a regulated
basis.  Once a consumer chooses to purchase power on a
competitive market basis, that consumer may not later buy
electric power for that structure on a regulated basis, unless
the regulatory body with jurisdiction determines otherwise for a
reason in the public interest.

Local electric distribution service for consumers buying power
from competitive electric providers will be provided on a non--
discriminatory basis.  The bill requires every local
distribution utility (LDU) to become part of a control area as
recognized by the North America Electric Reliability Council.
CEPs will deliver to the LDU's control area the amount of power
they have contracted to sell to the retail consumers of that LDU.

Within 120 days after this bill becomes effective, all LDUs will
file with the Public Service Commission (PSC) maps of their
electric distribution systems as they existed on the effective
date of the bill.  After July 1, 2004, except as otherwise
agreed, each LDU will only provide distribution service to new
structures that are closer to its distribution system than to
the distribution system of another LDU as shown on the maps.
The regulatory body for each LDU will establish appropriate
rates for local distribution services and consumer services,
such as metering.

METERING & BILLING

All billing and metering of retail electric power sales will be
done by the LDU serving the structure.  By July 1, 2004, all
bills for electric service will list separately energy,
distribution service, taxes, and other breakdown of costs that
may be informative.  If the retail consumer does not pay the
bill in full when due, the LDU is authorized to terminate
service.

MUNICIPAL UTILITIES

A municipal utility will not participate in the competitive
retail electric market unless its governing body elects to do so.

COMPETITIVE TRANSITION COSTS

The bill allows electric service providers competing in retail
sales of electricity to remove assets from their regulated rate
bases and to recover a reasonable amount of prudently incurred,
net, verifiable competitive transition costs (CTCs).  The
electric service provider has the duty to serve its regulated
customers and to mitigate CTCs.  Within 6 months of the
effective date of the bill, each electric service provider will
file a resource plan with the PSC defining which resources and
assets it will use to satisfy its regulated consumer obligations
and which are free to be used in the competitive market.  The
plan and any changes to it are subject to PSC approval.
Municipal utilities and electric cooperatives will designate
assets at the direction of their regulatory bodies, adopt plans
for recovery of anticipated transition costs, and file the plans
with the PSC.

A recovery plan may include a competitive transition charge and
specify a recovery period.  The amount of CTCs and the length of
recovery cannot cause the total price for power, transmission,
and distribution service for any of that provider's retail
consumer classes to exceed the cost per kilowatt-hour paid as of
July 1, 2004.  All retail consumers in the same consumer class
will pay an identical transition charge, and CTC recovery will
be through a non-by-passable, per-kilowatt-hour charge on sales
that is fair to all consumer classes.  The bill outlines cases
where an exception may be authorized, and factors a regulatory
body must take into account in approving a CTC recovery plan.
The PSC is authorized to review charges and determine a revised
charge that may be applied prospectively.

Transition cost recovery rates for municipal electric utilities
and electric cooperatives will be set by their respective
regulatory bodies.  Any retail consumer disputing the amount of
the charge has standing to seek judicial review and
determination of the reasonableness of the charge.

CONSUMER PROTECTION MEASURES

Before January 1, 2004, the PSC will make rules to ensure that
service proposals include meaningful cost information and a
disclosure form that must be signed by the consumer before any
contract is valid.  The bill outlines components to be included
in the disclosure form and requires the PSC to establish the
components of the form.  The PSC will also make rules relating
to other consumer protections including unauthorized switching
of providers and dispute resolution procedures.  Before January
1, 2004, each electric service provider's regulatory body will
make rules establishing procedures and standards to discontinue
service for non-payment and reconnection.  The PSC is required
to make rules governing the conduct of LDUs acting as CEPs or
LDUs that are affiliated with CEPs.

AGGREGATION

In areas served by CEPs, consumers are allowed to aggregate
their electrical loads on a voluntary basis.  A political
subdivision aggregator must offer aggregation to all residential
consumers within its jurisdiction, but it cannot require anyone
to purchase power from the political subdivision.

LICENSING

Starting July 1, 2004, no CEP, aggregator, or broker will sell
electric power without obtaining a license from the PSC to do
so.  The PSC will make rules establishing procedures for
obtaining and renewing a license and is authorized to revoke or
suspend a license for violation of requirements.  The PSC is
authorized to makes rules prohibiting misleading or fraudulent
merchandising and marketing practices and to seek injunctive
relief in Cole County circuit court enjoining such prohibited
conduct by a CEP.  A person injured by such prohibited conduct
is entitled to available legal remedies.  The licensing
provisions of the bill do not apply to any CEP that is also an
LDU serving structures in this state.

TRANSMISSION

Each electric service provider is authorized to join a regional
transmission organization (RTO) or functional equivalent before
July 1, 2004.  The bill outlines requirements for any
transmission utility that owns and operates a system of at least
34 kilovolts and does not joint an RTO.

ELECTRIC COOPERATIVES

The bill modifies existing statutes relating to electric
cooperatives by removing the limitation to serve only rural
areas and empowering them to provide local distribution
service.  Territorial agreements must designate the boundaries
of both generation service area and local distribution service
area in addition to the current requirement to designate the
boundaries of the generation service area.  The "flip flop"
statute is amended to apply only to local distribution service;
it currently applies to electrical service.  Current law allows
a cooperative's bylaws to provide that the cooperative's service
territory may be divided into at least 2 voting districts in
order to distribute properly its directors over the area in
which its members reside.  The bill adds another purpose for
which the territory may be divided:  to distribute properly
directors among members receiving different types of services
from the cooperative.  A prohibition on certain unlawful
customer switching of electric suppliers is repealed.