CHARGE RATES BY 2 1/2 YEARS TO DECEMBER 31, 2005; PROVIDING FOR REIMBURSEMENT AND AUTHORIZING FINES IF AN ELECTRICITY SUPPLIER FAILS TO PROVIDE ELECTRICITY SUPPLY AND RELATED SERVICES TO RETAIL CUSTOMERS; MODIFYING COMMISSION AUTHORITY; REQUIRING THE COMMISSION TO MONITOR WHETHER OR NOT WORKABLE COMPETITION HAS DEVELOPED FOR SMALL CUSTOMERS; PROVIDING THAT THE COMMISSION REPORT TO THE LEGISLATURE IF IT DETERMINES THAT WORKABLE COMPETITION HAS DEVELOPED; MODIFYING BILL INFORMATION REQUIREMENTS; ELIMINATING DEFAULT SUPPLIER LICENSING REQUIREMENTS; ELIMINATING THE TRANSITION ADVISORY COMMITTEE AND TAX REVENUE ANALYSIS REQUIREMENTS; AMENDING SECTIONS 5-5-202, 5-5-223, 35-19-104, 69-8-102, 69-8-103, 69-8-104, 69-8-201, 69-8-203, 69-8-204, 69-8-208, 69-8-210, 69-8-211, 69-8-301, 69-8-402, 69-8-403, 69-8-408, 69-8-409, AND 69-8-503, MCA; REPEALING SECTIONS 35-19-103, 69-8-416, 69-8-417, 69-8-501, AND 69-8-502, MCA; AND PROVIDING AN EFFECTIVE DATE.
AN ACT REVISING LAWS RELATED TO ELECTRICAL ENERGY; PROVIDING THAT AN ELECTRICITY BUYING COOPERATIVE MAY SERVE ONLY AS A SUPPLIER OR PROMOTER OF ALTERNATIVE ENERGY AND CONSERVATION PROGRAMS; ESTABLISHING AN ENERGY AND TELECOMMUNICATIONS INTERIM COMMITTEE; REVISING CERTAIN LEGISLATIVE FINDINGS AND POLICY; DESIGNATING THE DEFAULT SUPPLIER AS THE DISTRIBUTION SERVICES PROVIDER OF A UTILITY; MODIFYING CERTAIN DEFINITIONS; DEFINING "DEFAULT SUPPLY SERVICE" AND "ELECTRICITY SUPPLY COSTS"; EXTENDING THE TRANSITION PERIOD TO JULY 1, 2027; MODIFYING PILOT PROGRAMS TO REQUIRE UTILITIES AND ELECTRICITY SUPPLIERS TO USE A SELECT SET OF SMALL CUSTOMERS TO MEASURE THE POTENTIAL FOR DEVELOPING AND OFFERING CUSTOMER CHOICE IN THE FUTURE; ESTABLISHING OPTIONS AND REQUIREMENTS FOR CUSTOMER CHOICE OF ENERGY SUPPLY; REQUIRING THE COMMISSION TO ESTABLISH RATES, FEES, RULES, AND PROCEDURES TO ENABLE CUSTOMERS TO REASONABLY CHOOSE AN ELECTRICITY SUPPLIER WHILE PROTECTING SMALL CUSTOMERS; ALLOWING THE COMMISSION TO ESTABLISH DIFFERENT CATEGORIES OF DEFAULT SUPPLY CUSTOMERS; PROHIBITING A CUSTOMER RECEIVING DEFAULT SUPPLY SERVICE FROM RESELLING ELECTRICITY; ALLOWING THE DEFAULT SUPPLIER TO IMPLEMENT DEMAND REDUCTION PROGRAMS; CLARIFYING CERTAIN PUBLIC UTILITY RESPONSIBILITIES AS A SUCCESSOR IN INTEREST; MODIFYING THE REQUIREMENT THAT PUBLIC UTILITIES EDUCATE CUSTOMERS ABOUT CUSTOMER CHOICE; MODIFYING PUBLIC UTILITY FUNCTIONAL SEPARATION REQUIREMENTS; MODIFYING DISTRIBUTION SERVICES REQUIREMENTS; MODIFYING PUBLIC UTILITY ELECTRICITY SUPPLY REQUIREMENTS; REQUIRING THAT A PUBLIC UTILITY'S DISTRIBUTION SERVICES PROVIDER PROVIDE DEFAULT SUPPLY SERVICE; REQUIRING THE COMMISSION TO ESTABLISH DEFAULT SUPPLY RESOURCE PLANNING AND PROCUREMENT GUIDELINES; REQUIRING THE COMMISSION TO ESTABLISH AN ELECTRICITY COST RECOVERY MECHANISM; PROVIDING FOR COMMISSION REVIEW OF ELECTRICITY SUPPLY COSTS; ALLOWING THE COMMISSION TO REQUIRE A DEFAULT SUPPLIER TO OFFER MULTIPLE SERVICE OPTIONS; REQUIRING A DEFAULT SUPPLIER TO OFFER ITS CUSTOMERS THE OPTION OF PURCHASING A PRODUCT COMPOSED OF CERTIFIED ENVIRONMENTALLY PREFERRED RESOURCES; EXTENDING THE UNIVERSAL SYSTEM BENEFITS CHARGE RATES BY 2 1/2 YEARS TO DECEMBER 31, 2005; PROVIDING FOR REIMBURSEMENT AND AUTHORIZING FINES IF AN ELECTRICITY SUPPLIER FAILS TO PROVIDE ELECTRICITY SUPPLY AND RELATED SERVICES TO RETAIL CUSTOMERS; MODIFYING COMMISSION AUTHORITY; REQUIRING THE COMMISSION TO MONITOR WHETHER OR NOT WORKABLE COMPETITION HAS DEVELOPED FOR SMALL CUSTOMERS; PROVIDING THAT THE COMMISSION REPORT TO THE LEGISLATURE IF IT DETERMINES THAT WORKABLE COMPETITION HAS DEVELOPED; MODIFYING BILL INFORMATION REQUIREMENTS; ELIMINATING DEFAULT SUPPLIER LICENSING REQUIREMENTS; ELIMINATING THE TRANSITION ADVISORY COMMITTEE AND TAX REVENUE ANALYSIS REQUIREMENTS; AMENDING SECTIONS 5-5-202, 5-5-223, 35-19-104, 69-8-102, 69-8-103, 69-8-104, 69-8-201, 69-8-203, 69-8-204, 69-8-208, 69-8-210, 69-8-211, 69-8-301, 69-8-402, 69-8-403, 69-8-408, 69-8-409, AND 69-8-503, MCA; REPEALING SECTIONS 35-19-103, 69-8-416, 69-8-417, 69-8-501, AND 69-8-502, MCA; AND PROVIDING AN EFFECTIVE DATE.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
Section 1. Section 5-5-202, MCA, is amended to read:
"5-5-202. Interim committees. (1) During an interim when the legislature is not in session, the committees listed in subsection (2) are the interim committees of the legislature. They are empowered to sit as committees and may act in their respective areas of responsibility. The functions of the legislative council, legislative audit committee, legislative finance committee, environmental quality council, and state-tribal relations committee are provided for in the statutes governing those committees.
(2) The following are the interim committees of the legislature:
(a) economic affairs committee;
(b) education and local government committee;
(c) children, families, health, and human services committee;
(d) law and justice committee;
(e) energy and telecommunications committee;
(e)(f) revenue and transportation committee; and
(f)(g) state administration and veterans' affairs committee.
(3) An interim committee or the environmental quality council may refer an issue to another committee that the referring committee determines to be more appropriate for the consideration of the issue. Upon the acceptance of the referred issue, the accepting committee shall consider the issue as if the issue were originally within its jurisdiction. If the committee that is referred an issue declines to accept the issue, the original committee retains jurisdiction.
(4) If there is a dispute between committees as to which committee has proper jurisdiction over a subject, the legislative council shall determine the most appropriate committee and assign the subject to that committee."
Section 2. Section 5-5-223, MCA, is amended to read:
"5-5-223. Economic affairs interim committee. The economic affairs interim committee has administrative rule review, draft legislation review, program evaluation, and monitoring functions for the following executive branch agencies and the entities attached to agencies for administrative purposes:
(1) department of agriculture;
(2) department of commerce;
(3) department of labor and industry;
(4) department of livestock;
(5) department of public service regulation;
(6)(5) office of the state auditor and insurance commissioner; and
(7)(6) office of economic development."
Section 3. Energy and telecommunications interim committee. The energy and telecommunications interim committee has administrative rule review, draft legislation review, program evaluation, and monitoring functions for the department of public service regulation and the entities attached to the department for administrative purposes.
Section 4. Section 35-19-104, MCA, is amended to read:
"35-19-104. Permissible purpose of incorporation. A buying cooperative may be organized under this chapter only for the purpose of supplying electricity to small customers as a default supplier, pursuant to 69-8-403, and for serving as a supplier or promoter of alternative energy and conservation programs."
Section 5. Section 69-8-102, MCA, is amended to read:
"69-8-102. Legislative findings and policy. The legislature finds and declares the following:
(1) The generation and sale of electricity is becoming a competitive industry.
(2) Montana customers should have the freedom to choose their supplier of electricity supply and related services in a competitive market as soon as administratively feasible accordance with this chapter. Affording this opportunity serves the public interest.
(3) The interests of small Montana consumers should must be protected through the provision of adequate and reliable default supply service at the lowest long-term total cost. and the
(4) The financial integrity of electrical utilities should must be fostered.
(4)(5) The public interest requires the continued protection of consumers through:
(a) licensure of electricity suppliers;
(b) provision of information to consumers regarding electricity supply service;
(c) provision of a process for investigating and resolving complaints;
(d) continued funding for public purpose programs for:
(i) cost-effective local energy conservation;
(ii) low-income customer weatherization;
(iii) renewable resource projects and applications;
(iv) research and development programs related to energy conservation and renewables;
(v) market transformation; and
(vi) low-income energy assistance;
(e) assurance of service reliability and quality; and
(f) prevention of anticompetitive and abusive activities.
(5)(6) A utility in the state of Montana may not be advantaged or disadvantaged in the competitive electricity supply market, including the consideration of the existence of universal system benefits programs and the comparable level of funding for those programs throughout the regions neighboring Montana."
Section 6. Section 69-8-103, MCA, is amended to read:
"69-8-103. Definitions. As used in this chapter, unless the context requires otherwise, the following definitions apply:
(1) "Aggregator" or "market aggregator" means an entity, licensed by the commission, that aggregates retail customers, purchases electrical energy, and takes title to electrical energy as an intermediary for sale to retail customers.
(2) "Assignee" means any entity, including a corporation, partnership, board, trust, or financing vehicle, to which a utility assigns, sells, or transfers, other than as security, all or a portion of the utility's interest in or right to transition transition property. The term also includes an entity, corporation, public authority, partnership, trust, or financing vehicle to which an assignee assigns, sells, or transfers, other than as security, the assignee's interest in or right to transition transition property.
(3) "Board" means the board of investments created by 2-15-1808.
(4) "Broker" or "marketer" means an entity, licensed by the commission, that acts as an agent or intermediary in the sale and purchase of electrical energy but that does not take title to electrical energy.
(5) "Cooperative utility" means:
(a) a utility qualifying as an electric cooperative pursuant to Title 35, chapter 18; or
(b) an existing municipal electric utility as of May 2, 1997.
(6) "Customer" or "consumer" means a retail electric customer or consumer. The university of Montana, pursuant to 20-25-201(1), and Montana state university, pursuant to 20-25-201(2), are each considered a single retail electric customer or consumer with a single individual load.
(7) "Customer-generator" means a user of a net metering system.
(8) "Default supplier" means a distribution services provider or a person that has received a default supplier license from the commission of a utility that has restructured in accordance with this chapter.
(9) "Default supply service" means the provision of electricity supply by a default supplier.
(9)(10) "Distribution facilities" means those facilities by and through which electricity is received from a transmission services provider and distributed to the customer and that are controlled or operated by a distribution services provider.
(10)(11) "Distribution services provider" means a utility owning distribution facilities for distribution of electricity to the public.
(11)(12) "Electricity supplier" means any person, including aggregators, market aggregators, brokers, and marketers, offering to sell electricity to retail customers in the state of Montana.
(13) "Electricity supply costs" means the actual costs of providing default supply service, including but not limited to:
(a) capacity costs;
(b) energy costs;
(c) fuel costs;
(d) ancillary service costs;
(e) demand-side management and energy efficiency costs;
(f) transmission costs, including congestion and losses;
(g) billing costs;
(h) planning and administrative costs; and
(i) any other costs directly related to the purchase of electricity, management of default electricity supply costs, and provision of default supply and related services.
(12)(14) "Financing order" means an order of the commission adopted in accordance with 69-8-503 that authorizes the imposition and collection of fixed transition transition amounts and the issuance of transition transition bonds.
(13)(15) (a) "Fixed transition transition amounts" means those nonbypassable rates or charges, including but not limited to:
(i) distribution;
(ii) connection;
(iii) disconnection; and
(iv) termination rates and charges that are authorized by the commission in a financing order to permit recovery of transition transition costs and the costs of recovering, reimbursing, financing, or refinancing the transition transition costs and of acquiring transition transition property through a plan approved by the commission in the financing order, including the costs of issuing, servicing, and retiring transition transition bonds.
(b) If requested by the utility in the utility's application for a financing order, fixed transition transition amounts must include nonbypassable rates or charges to recover federal and state taxes in which the transition cost transition cost recovery period is modified by the transactions approved in the financing order.
(14)(16) "Functionally separate" means a utility's separation of the utility's electricity supply, transmission, distribution, and unregulated retail energy services assets and operations.
(15)(17) "Interested person" means a retail electricity customer, the consumer counsel established in 5-15-201, the commission, or a utility.
(16)(18) "Large customer" means, for universal system benefits programs purposes, a customer with an individual load greater than a monthly average of 1,000 kilowatt demand in the previous calendar year for that individual load.
(17)(19) "Local governing body" means a local board of trustees of a rural electric cooperative.
(18)(20) "Low-income customer" means those energy consumer households and families with incomes at or below industry-recognized levels that qualify those consumers for low-income energy-related assistance.
(19)(21) "Net metering" means measuring the difference between the electricity distributed to and the electricity generated by a customer-generator that is fed back to the distribution system during the applicable billing period.
(20)(22) "Net metering system" means a facility for the production of electrical energy that:
(a) uses as its fuel solar, wind, or hydropower;
(b) has a generating capacity of not more than 50 kilowatts;
(c) is located on the customer-generator's premises;
(d) operates in parallel with the distribution services provider's distribution facilities; and
(e) is intended primarily to offset part or all of the customer-generator's requirements for electricity.
(21)(23) "Nonbypassable rates or charges" means rates or charges that are approved by the commission and imposed on a customer to pay the customer's share of transition transition costs or universal system benefits programs costs even if the customer has physically bypassed either the utility's transmission or distribution facilities.
(22)(24) "Pilot program" means a program an experimental program using a representative sample select set of residential and small commercial small customers to assist in assess the potential for developing and offering customer choice of electricity supply for all residential and commercial to small customers in the future.
(23)(25) "Public utility" means any electric utility regulated by the commission pursuant to Title 69, chapter 3, on May 2, 1997, including the public utility's successors or assignees.
(24)(26) "Qualifying load" means, for payments and credits associated with universal system benefits programs, all nonresidential demand-metered accounts of a large customer within the utility's service territory in which the customer qualifies as a large customer.
(25)(27) "Small customer" means a residential customer or a small commercial customer who has an individual account with an average monthly demand in the previous calendar year of less than 100 50 kilowatts or a new residential or commercial customer with an estimated average monthly demand of less than 100 50 kilowatts of a public utility distribution services provider that has opened access on its distribution system restructured pursuant to Title 35, chapter 19, or this chapter.
(26)(28) "Transition "Transition bondholder" means a holder of transition transition bonds, including trustees, collateral agents, and other entities acting for the benefit of that holder bondholder.
(27)(29) "Transition "Transition bonds" means any bond, debenture, note, interim certificate, collateral, trust certificate, or other evidence of indebtedness or ownership issued by the board or other transition transition bonds issuer that is secured by or payable from fixed transition transition amounts or transition transition property. Proceeds from transition transition bonds must be used to recover, reimburse, finance, or refinance transition transition costs and to acquire transition transition property.
(28)(30) "Transition "Transition charge" means a nonbypassable rate or charge to be imposed on a customer to pay the customer's share of transition transition costs.
(29)(31) "Transition cost "Transition cost recovery period" means the period beginning on July 1, 1998, and ending when a utility customer does not have any liability for payment of transition transition costs.
(30)(32) "Transition "Transition costs" means:
(a) a public utility's net verifiable generation-related and electricity supply costs, including costs of capital, that become unrecoverable as a result of the implementation of this chapter or of federal law requiring retail open access or customer choice;
(b) those costs that include but are not limited to:
(i) regulatory assets and deferred charges that exist because of current regulatory practices and can be accounted for up to the effective date of the commission's final order regarding a public utility's transition transition plan and conservation investments made prior to universal system benefits charge implementation;
(ii) nonutility and utility power purchase contracts executed before May 2, 1997, including qualifying facility contracts;
(iii) existing generation investments and supply commitments or other obligations incurred before May 2, 1997, and costs arising from these investments and commitments;
(iv) the costs associated with renegotiation or buyout of the existing nonutility and utility power purchase contracts, including qualifying facilities and all costs, expenses, and reasonable fees related to issuing transition transition bonds; and
(v) the costs of refinancing and retiring of debt or equity capital of the public utility and associated federal and state tax liabilities or other utility costs for which the use of transition transition bonds would benefit customers.
(31) "Transition period" means the period ending July 1, 2007.
(33) "Transition period" means the period ending July 1, 2027.
(32)(34) "Transition "Transition property" means the property right created by a financing order, including without limitation the right, title, and interest of a utility, assignee, or other issuer of transition transition bonds to all revenue, collections, claims, payments, money, or proceeds of or arising from or constituting fixed transition transition amounts that are the subject of a financing order, including those nonbypassable rates and other charges and fixed transition transition amounts that are authorized by the commission in the financing order to recover transition transition costs and the costs of recovering, reimbursing, financing, or refinancing the transition transition costs and acquiring transition transition property, including the costs of issuing, servicing, and retiring transition transition bonds. Any right that a utility has in the transition transition property before the utility's sale or transfer or any other right created under this section or created in the financing order and assignable under this chapter or assignable pursuant to a financing order is only a contract right.
(33)(35) "Transmission facilities" means those facilities that are used to provide transmission services as determined by the federal energy regulatory commission and the commission.
(34)(36) "Transmission services provider" means a person an entity controlling or operating transmission facilities.
(35)(37) "Universal system benefits charge" means a nonbypassable rate or charge to be imposed on a customer to pay the customer's share of universal system benefits programs costs.
(36)(38) "Universal system benefits programs" means public purpose programs for:
(a) cost-effective local energy conservation;
(b) low-income customer weatherization;
(c) renewable resource projects and applications, including those that capture unique social and energy system benefits or that provide transmission and distribution system benefits;
(d) research and development programs related to energy conservation and renewables;
(e) market transformation designed to encourage competitive markets for public purpose programs; and
(f) low-income energy assistance.
(37)(39) "Utility" means any public utility or cooperative utility."
Section 7. Section 69-8-104, MCA, is amended to read:
"69-8-104. Pilot programs. (1) Except as provided in 69-8-201(3) 69-8-201(9) and 69-8-311, utilities shall shall conduct pilot programs using a select set of their small customers to assess the potential for developing and offering customer choice of electricity supply to small customers in the future. The commission shall review and approve the design and availability of pilot programs and shall monitor the results of pilot programs. representative sample of their residential and small commercial customers. A report describing and analyzing the results of the pilot programs must be submitted to the commission and the transition advisory committee established in 69-8-501 on or before July 1, 2005.
(2) Utilities shall use pilot Pilot programs must be designed to gather necessary information to determine the most effective and timely options for providing customer choice to small customers in the future. Necessary information includes but is not limited to:
(a) the level of demand for electricity supply choice and the availability of market prices market-based electricity supply options for small customers;
(b) the best means to encourage and support the development of sufficient markets and bargaining power for the benefit of small customers;
(c) the electricity suppliers' interest in serving small customers and the opportunities in providing service to small customers; and
(d) experience in the broad range of technical and administrative support matters involved in designing and delivering unbundled retail services to small customers."
Section 8. Section 69-8-201, MCA, is amended to read:
"69-8-201. Public utility -- transition to transition to customer choice -- options and requirements -- waiver. (1) A public utility shall, except as provided in this section, adhere to the following deadlines:
(a) All customers with individual loads greater than 1,000 kilowatts and for loads of the same customer with individual loads at a meter greater than 300 kilowatts that aggregate to 1,000 kilowatts or greater must have the opportunity to choose an electricity supplier.
(b) Before July 1, 2007, all other public utility customers must have the opportunity to choose an electricity supplier.
(2) The commission shall designate the public utility or one or more default suppliers to provide regulated default service for those small customers of a public utility that are not being served by a competitive electricity supplier. (1) Before July 1, 2027, all public utility customers of a public utility that has restructured in accordance with this chapter must have the opportunity to choose an electricity supplier other than the default supplier.
(2) (a) A small customer of a public utility that has restructured in accordance with this chapter:
(i) must receive default supply services from the default supplier as provided in this chapter; and
(ii) may purchase electricity supply services through a commission-approved small customer electricity supply program as provided in this section.
(b) A small customer receiving electricity from a licensed supplier prior to [the effective date of this act] may continue to receive electricity supply from a supplier other than the default supplier.
(c) Customers that represent separately metered services with an estimated average monthly demand of less than 50 kilowatts related to the same individual customer referred to in subsection (3) or (4) may be combined with the respective eligible customer load or loads.
(3) (a) Subject to subsection (3)(b), a customer of a public utility that has restructured in accordance with this chapter and that has an individual load with an average monthly demand of less than 5,000 kilowatts but greater than or equal to 50 kilowatts may choose an electricity supplier.
(b) The total average monthly billing demand for all customers that choose an electricity supplier pursuant to subsection (3)(a) in each calendar year may not exceed 20,000 kilowatts.
(c) A customer referred to in subsection (3)(a) receiving electricity from a licensed supplier prior to [the effective date of this act] may continue to receive electricity supply from a supplier other than the default supplier.
(4) (a) Except as provided in subsections (4)(b) through (4)(e), a customer of a utility that has restructured in accordance with this chapter and that has an individual load with an average monthly demand of greater than or equal to 5,000 kilowatts shall purchase its entire electricity supply from the competitive marketplace.
(b) A customer referred to in subsection (4)(a) that is receiving its electricity supply from the competitive marketplace may make a one-time election to enter into a permanent power supply contract with the default supplier for service on or after July 1, 2004. These contracts must include the applicable provisions established by the commission pursuant to subsection (5). This election must be submitted to the commission in writing no later than December 31, 2003.
(c) A new customer with an estimated average monthly demand of greater than or equal to 5,000 kilowatts may enter into a power supply contract with the default supplier in order to receive default supply service. The new customer's election of an electricity supplier must be submitted in writing to the commission at least 90 days before delivery of electricity. These contracts must include the applicable provisions established by the commission pursuant to subsection (5).
(d) A customer referred to in subsection (4)(a) that was receiving electricity from the default supplier on [the effective date of this act] may continue to receive electricity from the default supplier.
(e) A customer referred to in subsection (4)(a) that is a public agency, as defined in 18-1-101, may enter into a power supply contract with the default supplier for default supply service for all or part of the public agency's load. These contracts must include the applicable provisions established by the commission pursuant to subsection (5).
(5) The commission shall adopt rules and establish rates and fees to enable customers to have reasonable opportunities to choose an electricity supplier or to receive default supply service in accordance with subsections (2) through (4), while providing protection for small customers from higher or more unstable default supply service rates than would otherwise result if these choices were not offered.
(6) An electricity supplier licensed by the commission to offer electricity supply service to small customers may petition the commission for the opportunity to provide electricity to small customers. The total average monthly demand for all customers referred to in subsection (2)(a) in each calendar year that receive service from an electricity supplier that is not the default supplier may not exceed 10,000 kilowatts. The commission shall ensure that electricity supply service provided pursuant to this subsection is consistent with the requirements in subsection (5) and the provision of default supply service pursuant to this chapter.
(7) Based on an analysis of the sources of costs of providing default supply service, the commission may:
(a) establish different categories of default supply service customers to assist with the implementation of this section;
(b) allocate default supply costs; and
(c) develop default supply rates.
(8) (a) Except as provided in subsection (8)(b), a customer receiving default supply service may not resell the electricity.
(b) A default supplier may implement demand reduction programs that reward customers for reducing demand under terms established by the commission.
(3)(9) (a) Except as provided in 69-5-101, 69-5-102, 69-5-104 through 69-5-112, and 69-8-402, a public utility currently doing business in Montana as part of a single integrated multistate operation, no portion of which lies within the basin of the Columbia River, may defer compliance with this chapter until a time that the public utility can reasonably implement customer choice in the state of the public utility's primary service territory.
(b) To the extent that a public utility described in subsection (9)(a) becomes the successor in interest of another public utility that has restructured in accordance with this chapter, it shall assume responsibility only for the applicable transition plan of the acquired public utility.
(4)(10) Upon a request from a public utility with fewer than 50 customers, the commission shall waive compliance with the requirements of 69-8-104, 69-8-202 through 69-8-204, 69-8-208 through 69-8-211, 69-8-402, and this section."
Section 9. Section 69-8-203, MCA, is amended to read:
"69-8-203. Public utility -- customer choice -- continued service -- customer choice -- education of customers. (1) A customer is permitted to choose an electricity supplier pursuant to the deadlines established in 69-8-201. Public utilities shall propose a method for customers to choose an electricity supplier.
(2) If a customer has not chosen an electricity supplier by the end of the transition period, a city, county, or consolidated government that is licensed as an electricity supplier may, upon application to and approval by the commission, become the default supplier to residential and commercial customers of a public utility within its jurisdiction. For customers that are not within the jurisdiction of a licensed and approved city, county, or consolidated government electricity supplier area, a public utility shall propose a method in the public utility's transition plans for assigning that customer to an electricity supplier. The commission shall establish an application process and guidelines for the designation of one or more default suppliers for the distribution area of each public utility.
(3) A public utility may phase in customer choice to promote the orderly transition to a competitive market environment pursuant to the deadlines in 69-8-201.
(4) Public During the transition period, public utilities shall educate their customers about customer choice options so that customers may make an informed choice of an electricity supplier from among the options, including pilot programs, electricity supplier service options, and other electricity supply options available under default supply service. This education process must give special emphasis to education efforts during the transition period."
Section 10. Section 69-8-204, MCA, is amended to read:
"69-8-204. Public utility -- functional separation, divestiture, and nondiscrimination. (1) To the extent that a public utility is vertically integrated, a public utility shall functionally separate the public utility's electricity supply, retail transmission, and retail distribution, and regulated and unregulated retail energy services operations in the state of Montana, upon application to and approval from the commission.
(2) The commission may not order a public utility to divest itself of any generation assets or prohibit a public utility from divesting itself voluntarily of any generation assets.
(3)(2) Public utilities shall:
(a) prevent undue discrimination in favor of their own power supply, other services, divisions, or affiliates, if any;
(b) prevent any other forms of self-dealing that could result in noncompetitive electricity prices to customers; and
(c) grant customers and their electricity suppliers access to the public utility's retail transmission and distribution system on a nondiscriminatory basis at rates, terms, and conditions of service comparable to the use of the retail transmission and distribution system by the public utility and the public utility's affiliates.
(4)(3) The provisions of this section are satisfied if the public utility adopts and complies with a code of conduct consistent with the federal energy regulatory commission approved code of conduct pursuant to 18 CFR, part 37. The commission shall promulgate rules relating to the codes of conduct, and commission rules and orders."
Section 11. Section 69-8-208, MCA, is amended to read:
"69-8-208. Public utility -- distribution services. (1) A public utility's distribution services provider shall:
(a)(1) file tariffs that make distribution facilities available to all electricity suppliers, transmission services providers, and customers on a nondiscriminatory and comparable basis;
(b)(2) build and maintain distribution facilities; and
(c)(3) be an emergency supplier of electricity and related services provide default supply service; and
(4) provide or contract for emergency electricity supply and related services.
(2) When a distribution services provider acts as an emergency supplier of electricity and related services to customers, the electricity supplier that should have provided the electricity shall reimburse the distribution services provider at the higher of a multiple of the cost or a multiple of the then-existing market rate for that electricity. The commission shall determine and authorize the multiple used. The market rate is the highest published rate for electricity purchased within the local load control area at the time that the distribution services provider provided the emergency supply. A distribution services provider is not required to purchase any reserve supply of electricity to fulfill this obligation."
Section 12. Section 69-8-210, MCA, is amended to read:
"69-8-210. Public utilities -- electricity supply. (1) On the effective date of a commission order implementing a public utility's transition plan pursuant to 69-8-202, the public utility shall remove its generation assets from the rate base.
(2) During the transition period, the commission may establish cost-based prices for electricity supply service for customers that do not have a choice of electricity supply service or that have not yet chosen an electricity supplier.
(3) If the transition period is extended, then the customers' distribution services provider shall:
(a) extend any cost-based contract with the distribution services provider's affiliate supplier for a term of not more than 3 years; or
(b) purchase electricity from the market; and
(c) use a mechanism that recovers electricity supply costs in rates to ensure that those costs are fully recovered. (1) A public utility's distribution services provider shall provide default supply service.
(2) The commission shall adopt rules that establish guidelines that provide the basis for the default supplier's resource planning and procurement activities and the commission's review and consideration of the default supplier's requests for recovery of electricity supply costs.
(3) The commission shall establish an electricity cost recovery mechanism that allows a default supplier to fully recover prudently incurred electricity supply costs, subject to the provisions of subsection (2). The cost recovery mechanism must provide for prospective rate adjustments for cost differences resulting from cost changes, load changes, and the time value of money on the differences.
(4) The commission's review of the electricity supply costs incurred by a default supplier must be based on facts that were known or should reasonably have been known by the default supplier at the time it made the decisions that resulted in incurring the costs.
(5) The commission may direct a default supplier to offer its customers multiple default supply service options if the commission determines that those options are in the public interest and are consistent with the provisions of 69-8-104 and 69-8-201.
(6) Notwithstanding any service options that the commission may require pursuant to subsection (5), a default supplier shall offer its customers the option of purchasing a product composed of or supporting power from certified environmentally preferred resources that include but are not limited to wind, solar, geothermal, and biomass, subject to review and approval by the commission. The commission shall ensure that these resources have been certified as meeting industry-accepted standards.
(4)(7) If a public utility intends to be an electricity supplier through an unregulated division, then the public utility must be licensed as an electricity supplier pursuant to 69-8-404."
Section 13. Section 69-8-211, MCA, is amended to read:
"69-8-211. Public utilities -- transition transition costs and charges -- rate moratorium. (1) Subject to the provisions of this section, the commission shall allow recovery of the following categories of transition transition costs:
(a) the unmitigable costs of qualifying facility contracts, including reasonable buyout or buydown costs, for which the contract price of generation is above the market price for generation;
(b) the unmitigable costs of energy supply-related regulatory assets and deferred charges that exist because of current regulatory practices and that can be accounted for up to the effective date of the commission's final order regarding a public utility's transition transition plan, including costs, expenses, and reasonable fees related to issuing of transition transition bonds;
(c) the unmitigable transition transition costs related to public utility-owned generation and other power purchase contracts, except that recovery of those costs is limited to the amount accruing during the first 4 years after the commission enters an order pursuant to 69-8-202(3); and
(d) other transition transition costs as that may qualify for recovery under this section.
(2) Transition Transition costs as determined by the commission upon an affirmative showing by a public utility must meet the following requirements:
(a) Transition Transition costs must reflect all reasonable mitigation by the public utility, including but not limited to good faith efforts to renegotiate contracts, buying out or buying down contracts, and refinancing through transition transition bonds.
(b) The value of all generation-related assets and liabilities and other electricity supply costs obligations must be reasonably demonstrable and must be considered on a net basis, and methods for determining value must include but are not limited to:
(i) estimating future market values of electricity and ancillary services provided by the assets;
(ii) appraisal by independent third-party professionals; or
(iii) a competitive bid sale.
(c) Investments and power purchase contracts must have been previously allowed in rates or, if not previously allowed in rates, must be determined to be used and useful to ratepayers in connection with the commission's approval of the utility's transition transition plan.
(d) Unless otherwise provided for in this chapter, only costs related to existing investments and power purchase contracts identified in subsection (2)(c) that were allowed in rates before May 2, 1997, and costs arising from those investments and power purchase contracts may be included as transition transition costs.
(3) (a) On commission approval of the amount of a public utility's transition transition costs, those costs must be recovered through the imposition of a transition transition charge.
(b) A transition transition charge may not be collected from customers for:
(i) new or additional loads of 1,000 kilowatts or greater that were first served by the public utility after December 31, 1996; or
(ii) loads served by that customer's own generation.
(c) Subject to commission approval, a public utility and a customer may agree to alter the customer's transition transition charge payment schedule. Public utilities may file with the commission tariffs for electric service rates that foster economic development or retention of existing customers within the state, including generally available rate schedules. Transition Transition charges are the only charges that may be imposed upon a customer class to recover transition transition costs under this section. A separate exit fee may not be charged under this section.
(4) Transition charges Transition charges must be imposed within a transition cost transition cost recovery period approved by the commission on a case-by-case basis. Except for transition transition costs recovered under subsection (1)(c), categories of transition transition costs may have varying transition cost transition costs recovery periods.
(5) Approval of transition transition costs and collection of those transition transition costs through transition transition charges is a settlement of all transition transition costs claims by a public utility. A public utility seeking to recover transition transition costs through any means not authorized by this chapter may not collect transition transition charges with respect to these transition transition costs.
(6) Except as provided in subsection (7), public utilities shall implement a rate moratorium during the transition period from July 1, 2000, through June 30, 2002, and only for those customers subject to the provisions of 69-8-201(1)(b), public utilities may not increase that increment of rates normally allocated to electric supply-related costs above the increment associated with electric supply-related costs reflected in rates in effect on July 1, 1998. Public utilities may propose increases to those increments of rates normally allocated to transmission and distribution costs.
(7) Excepted from the provisions of subsection (6) are:
(a) increased costs related to universal system benefits programs greater than those currently in rates, including the treatment of universal system benefits program costs as an expense;
(b) increased costs necessary to implement full customer choice, including but not limited to metering, billing, and technology. Those costs must be recovered from the customers on whose behalf the increased costs are incurred.
(c) subject to commission approval, an extraordinary event resulting in an 8% power supply-related annual revenue requirement increase from July 1, 2000, through June 30, 2002;
(d) the increase or decrease in the annual state and local property tax expense that has occurred since May 2, 1997.
(8) Notwithstanding subsections (6) and (7), during the transition period, public utilities may not charge rates or collect costs that include costs reallocated to transition costs at a level higher than the public utility would reasonably expect to recover in rates had the current regulatory system remained intact.
(9) Public utilities shall apply savings resulting under 69-8-503 toward the rate moratorium pursuant to subsection (6).
(10) Before July 1, 2002, public utilities may accelerate the amortization of accumulated deferred investment tax credits associated with transmission, distribution, and the general plant as an adjustment to earnings if electric earnings fall below 9.5% earned return on average equity. The public utility may include the flow through of investment tax credits so that the public utility's earned return on equity is maintained at 9.5%. Accumulated deferred investment tax credits amortized under this subsection may not be reflected in operating income for ratemaking purposes.
(11) The commission shall issue the accounting orders necessary to align rate moratorium timing and requirements to actual transition bonds savings."
Section 14. Section 69-8-301, MCA, is amended to read:
"69-8-301. Cooperative utility -- transition plan for customer choice. (1) Except as provided in 69-8-311, on or before July 1, 2006, the local governing body of a cooperative utility shall adopt a transition plan.
(2) (a) Except as provided in subsection (2)(b), transition plans must contain a transition period that may not end later than July 1, 2007 2027. At the conclusion of the transition period, all customers must have the opportunity to choose an electricity supplier.
(b) If after a pilot program for customers of a cooperative utility with loads less than 1,000 kilowatts a competitive market, technology, or other conditions precedent to full customer choice have not developed, then the transition plan may be altered by the cooperative utility's governing body for those customers.
(3) This chapter does not require the cooperative utility to divest itself of any generation, transmission, or distribution assets or prohibit a cooperative utility from divesting itself voluntarily of those assets.
(4) A cooperative utility's local governing body shall certify to the commission that the local governing body has adopted a transition plan. In the cooperative utility's certification filing, the cooperative utility shall provide to the commission documentation that the cooperative utility's transition plan is consistent with this chapter."
Section 15. Section 69-8-402, MCA, is amended to read:
"69-8-402. Universal system benefits programs. (1) Universal system benefits programs are established for the state of Montana to ensure continued funding of and new expenditures for energy conservation, renewable resource projects and applications, and low-income energy assistance during the transition period and into the future.
(2) Beginning January 1, 1999, 2.4% of each utility's annual retail sales revenue in Montana for the calendar year ending December 31, 1995, is established as the initial funding level for universal system benefits programs. To collect this amount of funds on an annualized basis in 1999, the commission shall establish rates for utilities subject to its jurisdiction and the governing boards of cooperatives shall establish rates for the cooperatives. Except as provided in subsection (7), these To collect this amount of funds on an annualized basis in 1999, the commission shall establish rates for utilities subject to its jurisdiction and the governing boards of cooperatives shall establish rates for the cooperatives. These universal system benefits charge rates must remain in effect until July 1, 2003 through December 31, 2005.
(a) The recovery of all universal system benefits programs costs imposed pursuant to this section is authorized through the imposition of a universal system benefits charge assessed at the meter for each local utility system customer as provided in this section.
(b) Utilities A utility must receive credit toward annual funding requirements for a the utility's internal programs or activities that qualify as universal system benefits programs, including those amortized or nonamortized portions of expenditures for the purchase of power that are for the acquisition or support of renewable energy, conservation-related activities, or low-income energy assistance, and for large customers' programs or activities as provided in subsection (7). The department of revenue shall review claimed credits of the utilities and large customers pursuant to 69-8-414.
(c) A utility's distribution services provider at which the sale of power for final end use occurs is the utility that receives credit for the universal system benefits programs expenditure.
(d) A customer's distribution services provider shall collect universal system benefits funds less any allowable credits.
(e) For a utility to receive credit for low-income related low-income-related expenditures, the activity must have taken place in Montana.
(f) If a utility's or a large customer's credit for internal activities does not satisfy the annual funding provisions of subsection (2), then the utility shall make a payment to the universal system benefits fund established in 69-8-412 for any difference.
(3) Cooperative utilities may collectively pool their statewide credits to satisfy their annual funding requirements for universal system benefits programs and low-income energy assistance.
(4) A utility's transition transition plan must describe how the utility proposes to provide for universal system benefits programs, including the methodologies, such as cost-effectiveness and need determination, used to measure the utility's level of contribution to each program.
(5) A utility's minimum annual funding requirement for low-income energy and weatherization assistance is established at 17% of the utility's annual universal system benefits funding level and is inclusive within the overall universal system benefits funding level.
(a) A utility must receive credit toward the utility's low-income energy assistance annual funding requirement for the utility's internal low-income energy assistance programs or activities.
(b) If a utility's credit for internal activities does not satisfy its annual funding requirement, then the utility shall make a payment for any difference to the universal low-income energy assistance fund established in 69-8-412.
(6) An individual customer may not bear a disproportionate share of the local utility's funding requirements, and a sliding scale must be implemented to provide a more equitable distribution of program costs.
(7) (a) A large customer:
(i) shall pay a universal system benefits programs charge with respect to the large customer's qualifying load equal to the lesser of:
(A) $500,000, less the large customer credits provided for in this subsection (7); or
(B) the product of 0.9 mills per kilowatt hour multiplied by the large customer's total kilowatt hour purchases, less large customer credits with respect to that qualifying load provided for in this subsection (7);
(ii) must receive credit toward that large customer's universal system benefits charge for internal expenditures and activities that qualify as a universal system benefits programs expenditure, and these internal expenditures must include but not be limited to:
(A) expenditures that result in a reduction in the consumption of electrical energy in the large customer's facility; and
(B) those amortized or nonamortized portions of expenditures for the purchase of power at retail or wholesale that are for the acquisition or support of renewable energy or conservation-related activities.
(b) Large customers making these expenditures must receive a credit against the large customer's universal system benefits charge, except that any of those amounts expended in a calendar year that exceed that large customer's universal system benefits charge for the calendar year must be used as a credit against those charges in future years until the total amount of those expenditures has been credited against that large customer's universal system benefits charges.
(8) A public utility shall prepare and submit an annual summary report of the public utility's activities relating to all universal system benefits programs to the commission,, the department of revenue, and the transition advisory committee provided for in 69-8-501, and the energy and telecommunications interim committee provided for in [section 3]. A cooperative utility shall prepare and submit annual summary reports of activities to the cooperative utility's respective local governing body,, the statewide cooperative utility office, and the transition advisory committee, and the energy and telecommunications interim committee. The statewide cooperative utility office shall prepare and submit an annual summary report of the activities of individual cooperative utilities, including a summary of the pooling of statewide credits, as provided in subsection (3), to the department of revenue and to the transition advisory committee and the energy and telecommunications interim committee. The annual report of a public utility or of the statewide cooperative utility office must include but is not limited to:
(a) the types of internal utility and customer programs being used to satisfy the provisions of this chapter;
(b) the level of funding for those programs relative to the annual funding requirements prescribed in subsection (2); and
(c) any payments made to the statewide funds in the event that internal funding was below the prescribed annual funding requirements.
(9) A utility or large customer filing for a credit shall develop and maintain appropriate documentation to support the utility's or the large customer's claim for the credit.
(10) (a) A large customer claiming credits for a calendar year shall submit an annual summary report of its universal system benefits programs activities and expenditures to the department of revenue and to the large customer's utility. The annual report of a large customer must identify each qualifying project or expenditure for which it has claimed a credit and the amount of the credit. Prior approval by the department of revenue or the utility is not required, except as provided in subsection (10)(b).
(b) If a large customer claims a credit that the department of revenue disallows in whole or in part, the large customer is financially responsible for the disallowance. A large customer and the large customer's utility may mutually agree that credits claimed by the large customer be first approved by the utility. If the utility approves the large customer credit, the utility may be financially responsible for any subsequent disallowance."
Section 16. Section 69-8-403, MCA, is amended to read:
"69-8-403. Commission authority -- rulemaking authority. (1) Beginning on the effective date of a commission order regarding a public utility's transition transition plan, the commission shall regulate the public utility's retail transmission, and distribution, and default supply services within the state of Montana, as provided in this chapter., and may not regulate the price of electricity supply except as electricity supply may be procured as provided in this section:
(a) by one or more default suppliers for those customers not being served by a competitive supplier; or
(b) by the distribution function of a public utility for those customers that are not being served by a competitive electricity supplier as provided by commission rules. During the transition period, those procurements may include a cost-based contract from a supply affiliate or an unregulated division.
(2) The commission shall decide if there is workable competition in the electricity supply market by determining whether competition is sufficient to inhibit monopoly pricing or anticompetitive price leadership. In reaching a decision, the commission may not rely solely on market share estimates.
(3)(2) The commission shall license electricity suppliers and enforce licensing provisions pursuant to 69-8-404.
(4)(3) The commission shall promulgate rules that identify the licensees and ensure that the offered electricity supply is provided as offered and is adequate in terms of quality, safety, and reliability.
(5)(4) The commission shall establish just and reasonable rates through established ratemaking principles for public utility default supply, distribution, and transmission services and shall regulate these services. The commission may approve rates and charges for electricity distribution and transmission those services based on alternative forms of ratemaking such as performance-based ratemaking, on a demonstration by the public utility that the alternative method complies with this chapter, and on the public utility's transition transition plan.
(6)(5) The commission shall certify that a cooperative utility has adopted a transition transition plan that complies with this chapter. A cooperative utility's transition transition plan is considered certified 60 days after the cooperative utility files for certification.
(7)(6) The commission shall promulgate rules that protect consumers, distribution services providers, and electricity suppliers from anticompetitive and abusive practices.
(8) The commission shall license default suppliers and enforce default licensing provisions pursuant to 69-8-416.
(9) The commission shall promulgate rules for the licensing of default suppliers on or before December 1, 1999.
(10) Until the commission has determined that workable competition has developed for small customers, a default supplier's obligation to serve remains.
(7) (a) After July 1, 2010, the commission shall continuously monitor whether or not workable competition has developed for small customers.
(b) If the commission determines that workable competition has developed for small customers after July 1, 2010, the commission shall provide a report to the legislature that includes recommendations for legislative implementation of customer choice for small customers.
(11)(8) In addition to promulgating rules expressly provided for in this chapter, the commission may promulgate any other rules necessary to carry out the provision of this chapter.
(12)(9) This chapter does not give the commission the authority to:
(a) regulate cooperative utilities in any manner other than reviewing certification filings for compliance with this chapter; or
(b) compel any change to a cooperative utility's certification filing made pursuant to this chapter."
Section 17. Section 69-8-408, MCA, is amended to read:
"69-8-408. Penalties -- license revocation. (1) The commission may begin a proceeding to revoke or suspend a license of an electricity supplier, impose a penalty, or both, for just cause on the commission's own investigation or upon the complaint of an affected party if it is established that the electricity supplier:
(a) intentionally provided false information to the commission;
(b) switched, the electricity supply for a customer or caused to be switched, the electricity supply for a customer <