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ENGROSSED HOUSE
BILL NO. 2747 By: Caldwell (Trey), Hilbert,
and Dobrinski of the House
and
Jett of the Senate
[ public utilities – electricity – requirements -
fuel type - application window - reasonable
alternatives - separate rate adjustment mechanism –
refunds - elections – deferrals - increases -
alternative dates - reviews by the Oklahoma
Corporation Commission - rate basis – costs -
expenses – offsets - lowest reasonable rates –
facilities - competitive bids - independent
evaluator - exempt entities – codification –
emergency ]
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 17 O.S. 2021, Section 286, is
amended to read as follows:
Section 286. A. 1. The portion of costs incurred by an
electric utility, which is subject to rate regulation by the
Corporation Commission, for transmission upgrades approved by a
regional transmission organization to which the utility is a member
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and resulting from an order of a federal regulatory authority having
legal jurisdiction over interstate regulation of transmission rates,
shall be presumed recoverable by the utility. The presumption
established in this paragraph may be rebutted by evidence that the
costs so incurred by the utility for the transmission upgrades
exceed the scope of the project authorized by the regional
transmission organization or order issued by the federal regulatory
authority having jurisdiction over interstate regulation of
transmission rates. The Commission shall transmit rules to
implement the requirements of this subsection to the Legislature on
or before April 1, 2006. The rules may authorize an electric
utility to periodically adjust its rates to recover all or a portion
of the costs so incurred by the utility for the transmission
upgrades.
2. Reasonable costs incurred by an electric utility for
transmission upgrades:
a. needed to develop wind generation in this state,
b. approved by the Southwest Power Pool, and
c. placed into service before December 31, 2013,
shall be presumed recoverable through a periodic adjustment in the
rates of the utility, provided that the presumption of the recovery
of such costs or the recovery of such costs through a periodic
adjustment in rates may be rebutted by evidence presented to the
Commission. The determination of whether the costs shall be
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recovered and whether the costs shall be recovered through a
periodic adjustment of rates shall be made by the Commission
following proper notice and hearing in a cause to be filed by the
electric utility in which it files such information as the
Commission may require.
B. An electric utility subject to rate regulation by the
Corporation Commission may file an application seeking Commission
authorization of a plan by the utility to make capital expenditures
for equipment or facilities necessary to comply with the federal
Clean Air Act (CAA), the Clean Water Act (CWA), the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA),
the Emergency Planning & Community Right-to-Know Act (EPCRA), the
Endangered Species Act (ESA), the National Environmental Policy Act
(NEPA), the Occupational Safety and Health Act (OSHA), the Oil
Pollution Act (OPA), the Pollution Prevention Act (PPA), the
Resource Conservation and Recovery Act (RCRA), the Safe Drinking
Water Act (SDWA), the Toxic Substances Control Act (TSCA), all as
amended, and, as the Commission may deem appropriate, federal,
state, local or tribal environmental requirements which apply to
generation facilities. If approved by the Commission, after notice
and hearing, the equipment or facilities specified in the approved
utility plan are conclusively presumed used and useful. The utility
may elect to periodically adjust its rates to recover the costs of
the expenditures. The utility shall file a request for a review of
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its rates pursuant to Section 152 of this title no more than twenty-
four (24) months after the utility begins recovering the costs
through a periodic rate adjustment mechanism and no more than
twenty-four (24) months after the utility begins recovering the
costs through any subsequent periodic rate adjustment mechanism.
Provided further, that a periodic rate adjustment or adjustments are
not intended to prevent a utility from seeking cost recovery of
capital expenditures as otherwise may be authorized by the
Commission. However, the reasonableness of the costs to be
recovered by the utility shall be subject to Commission review and
approval. The Commission shall promulgate rules to implement the
provisions of this subsection, such rules to that shall be
transmitted to the Legislature on or before April 1, 2007.
C. 1. An electric utility subject to rate regulation by the
Corporation Commission may elect to file an application seeking
approval by the Commission to construct a new electric generating
facility, to purchase an existing electric generation facility or
enter into a long-term contract for purchased power and capacity
and/or energy, subject to the provisions of this subsection. If,
and to the extent that, the Commission determines there is a need
for construction or purchase of the electric generating facility or
long-term purchase power contract, the generating facility or
contract shall be considered used and useful and its costs shall be
subject to cost recovery rules promulgated by the Commission. The
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Commission shall enter an order on an application filed pursuant to
this subsection within two hundred forty (240) days of the filing of
the application, unless the generation facility utilizes natural gas
as its primary fuel source, following notice and hearing and after
consideration of reasonable alternatives. If the generation
facility uses natural gas as its primary fuel source, the Commission
shall enter an order on an application filed pursuant to this
subsection within one hundred eighty (180) days of the filing of the
application, following notice and hearing and after consideration of
the reasonable alternative.
2. Bids received by the utility through a competitive bidding
process within twelve (12) months following the final bid due date
of such competitive bidding process shall be considered substantial
evidence to satisfy the consideration of reasonable alternatives.
3. Following receipt of an application filed pursuant to this
subsection, the Corporation Commission staff may file a request to
assess the specific costs, to be paid by the electric utility and
which shall be deemed to be recoverable, for the costs associated
with conducting the analysis or investigation of the application
including, but not limited to, the cost of acquiring expert
witnesses, consultants, and analytical services. The request shall
be filed at and heard by the Corporation Commissioners in the docket
opened by the electric utility pursuant to this subsection. After
notice and hearing, the Commission shall decide the request.
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3. 4. Additionally, following receipt of an application filed
pursuant to this subsection, the Office of the Attorney General may
file a request with the Corporation Commission for the assessment of
specific costs, to be paid by the electric utility and which shall
be deemed to be recoverable, associated with the performance of the
Attorney General's duties as provided by law. Those costs may
include, but are not limited to, the cost of acquiring expert
witnesses, consultants and analytical services. The request shall
be filed at and heard by the Corporation Commissioners in the docket
opened by the electric utility pursuant to this subsection. After
notice and hearing, the Commission shall decide the request.
4. 5. The Commission shall promulgate rules to implement the
provisions of this subsection. The rules shall be transmitted to
the Legislature on or before April 1, 2006. In promulgating rules
to implement the provisions of this subsection, the Commission shall
consider, among other things, rules which would:
a. permit contemporaneous utility recovery from its
customers, the amount necessary to cover the
Corporation Commission staff and Attorney General
assessments as authorized by this subsection,
b. establish how the cost of facilities approved pursuant
to this subsection shall be timely reviewed, approved,
and recovered or disapproved, and
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c. establish the information which an electric utility
must provide when filing an application pursuant to
this subsection.
5. 6. The Commission shall also consider rules which may permit
an electric utility to begin to recover return on or and return of
Construction-Work-In-Progress expenses prior to commercial operation
of a newly constructed electric generation facility subject to the
provisions of this subsection, provided the newly constructed
electric generation facility utilizes natural gas as its primary
fuel source. The Commission shall permit a separate rate adjustment
mechanism, adjusted periodically, to recover the costs described in
this section for new capacity in natural-gas-fired electrical
generation facilities. The new natural-gas-fired generation
capacity eligible for those provisions shall also include new
natural-gas-fired capacity additions at an existing electric
generation facility. If a public utility implements a rate
adjustment mechanism pursuant to this section and subsequently
elects to terminate the initiative to construct or acquire a stake
in a natural gas generating facility, the public utility shall
automatically refund customers, from the same rate adjustment
mechanism in which costs were recovered, the total amount that was
collected plus interest at the one-year U.S. Treasury Bill rate
through the mechanism, over a period not to exceed ninety (90) days
from the effective date of the termination of the initiative.
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7. For any new natural-gas-fired-generating facility
constructed pursuant to this section, an electric utility shall
secure a firm contract to transport natural gas to the generating
facility. Such a contract shall be secured pursuant to a
competitive solution process conducted in accordance with applicable
Commission rules. The cost incurred for such a contract shall be
presumed recoverable by the electric utility through its applicable
fuel adjustment clause. Costs assessed upon the electric utility by
the Commission for noncompliance with this section shall not be
recoverable from the electric utility's customers. In the event
that the electric utility does not receive a bid for firm
transportation as a result of its competitive solicitation, the
electric utility shall be considered compliant with the requirement
of this section; provided that the Commission determines that such
competitive solicitation is for a firm contract for transportation
of natural gas which could be reasonably provided by an available
pipeline.
SECTION 2. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 295 of Title 17, unless there is
created a duplication in numbering, reads as follows:
A. Commencing on July 1, 2025, a public utility shall defer to
a regulatory asset ninety percent (90%) of all depreciation expense
and return associated with all qualifying electric plants recorded
to plant-in-service on the utility's books, provided the public
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utility has submitted notice to the Commission of the public
utility's election to make such deferrals pursuant to this section.
A qualifying electric plant shall include all incremental electric
plants added to plant-in-service by a public utility since the
utility's last general rate case, except transmission facilities or
new electric generating units.
B. Such deferral shall begin on July 1, 2025, if the public
utility has notified the Commission of the public utility's election
to make such deferral by such date or shall begin on the date that
such election is made if such election is made after July 1, 2025.
C. The Commission shall conduct a prudence review of the
associated qualifying electric plant resulting in the regulatory
asset balances prior to moving such balances into the public
utility's rate base. The regulatory asset balances arising under
this section shall be adjusted to reflect any prudence disallowances
of the associated qualifying electric plant, following notice and
hearing, as ordered by the Commission.
D. In each general rate proceeding concluded after July 1,
2025, the balance of the regulatory asset as the end of the test
year shall be included in the public utility's rate base without any
offset, reduction, or adjustment based upon consideration of any
other factor with the regulatory asset balances arising from the
deferrals associated with the qualifying electric plant placed in
service after the end of the test year to be included in the rate
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base in the next general rate proceeding, unless otherwise provided
in this section.
E. Parts of regulatory asset balances created under this
section that are not included in rate base shall accrue carrying
costs as the public utility's weighted average cost of capital, plus
applicable federal, state, and local income or excise taxes.
Regulatory asset balances arising under this section that are
included in the rate base shall be recovered through a twenty-year
amortization beginning on the date new rates reflecting such
amortization take effect.
F. Depreciation expense deferred under this section shall
account for any qualifying electric plant placed into service, less
any applicable retirements. Returns deferred under this section
shall be determined using the weighted average cost of capital
approved by the Commission in the public utility's last general rate
case and applied to the change in regulatory asset balances caused
by the qualifying electric plant, plus applicable federal, state,
and local income or excise taxes. In determining the return
deferred, the public utility shall account for changes in all plant-
related accumulated deferred income taxes and changes in accumulated
depreciation, excluding retirements.
G. This section shall only apply to any public utility that has
elected to make the deferrals for which this section provides and
has filed a notice of such election with the Commission.
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SECTION 3. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 296 of Title 17, unless there is
created a duplication in numbering, reads as follows:
A. The Corporation Commission shall have the authority to
ensure the development of new high-voltage transmission lines of
three hundred (300) kilovolts or greater approved for construction
in a Southwest Power Pool transmission plan that provides reliable
service at the lowest reasonable cost to Oklahoma retail electric
consumers.
B. For a retail electric supplier or rural electric cooperative
constructing an extension of its existing electric transmission
facility or to the facilities within or through any territory
already served by or connecting to facilities owned by it, the
retail electric supplier or rural electric cooperative shall be
permitted to construct, own, and maintain such facilities, provided
they meet the following conditions:
1. The retail electric supplier or rural electric cooperative
identifies any energy resource to which the electric transmission
facility is to be directly connected or, to the extent known,
resources to which the electric transmission facility could be
connected to integrate new or existing natural gas generation;
2. The retail electric supplier or rural electric cooperative
solicits competitive bids for construction of an extension of the
electric transmission facility. Transmission developers, as defined
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in Enrolled House Bill No. 2756 of the 1st Session of the 60th
Oklahoma Legislature, shall not be precluded from submitting bids
through the solicitation described in this section; and
3. Such solicitation for competitive bids is overseen by an
independent evaluator chosen from a list approved by the Commission.
The Commission's independent evaluator shall consider factors
including, but not limited to, cost of construction, cost of
operation and maintenance, reliability, and decommissioning in its
evaluation.
C. Nothing in this section is intended to supersede the rights
of any person, firm, corporation, entity, or incumbent electric
transmission owner described in any other statute, alter an
incumbent electric transmission owner's use and control of its
existing right-of-way, or eliminate any requirement for a
transmission developer to seek a Certificate of Authority pursuant
to Enrolled House Bill No. 2756 of the 1st Session of the 60th
Oklahoma Legislature.
D. Nothing in this section is intended to preclude a
transmission developer, as defined in Enrolled House Bill No. 2756
of the 1st Session of the 60th Oklahoma Legislature, from
developing, owning, operating, controlling, managing, or maintaining
an existing electric transmission facility within this state.
E. An electric cooperative which is not a member of the
Southwest Power Pool may construct, own, and maintain local electric
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transmission facilities without regard to the provisions of this
section.
SECTION 4. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 801.10 of Title 17, unless there
is created a duplication in numbering, reads as follows:
No Commission rate regulated retail electric supplier, as
defined in Section 158.22 of Title 17 of the Oklahoma Statutes,
shall offer rate-payer-funded incentives, rebates, or inducements to
its customers to promote the switching of fuel sources from natural
gas to electricity.
SECTION 5. It being immediately necessary for the preservation
of the public peace, health or safety, an emergency is hereby
declared to exist, by reason whereof this act shall take effect and
be in full force from and after its passage and approval.
Passed the House of Representatives the 26th day of March, 2025.
Presiding Officer of the House
of Representatives
Passed the Senate the ___ day of ___________, 2025.
Presiding Officer of the Senate