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S.B. 199

             1     

ENERGY REVISIONS

             2     
2013 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Curtis S. Bramble

             5     
House Sponsor: ____________

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill enacts provisions relating to qualifying zero carbon emissions generation.
             10      Highlighted Provisions:
             11          This bill:
             12          .    enacts provisions relating to qualifying zero carbon emissions generation;
             13          .    provides a process to identify potential bidders and for solicitation of bidders for
             14      qualifying zero carbon emissions generation;
             15          .    requires an affected electrical utility to provide notice to the Public Service
             16      Commission if the utility reasonably anticipates a future need for qualifying zero
             17      carbon emissions generation;
             18          .    requires the commission to retain a consultant under certain circumstances; and
             19          .    provides a process for an electrical corporation to recover or defer costs associated
             20      with proposed qualifying zero carbon emissions generation.
             21      Money Appropriated in this Bill:
             22          None
             23      Other Special Clauses:
             24          None
             25      Utah Code Sections Affected:
             26      ENACTS:
             27          54-17-503, Utah Code Annotated 1953


             28          54-17-608, Utah Code Annotated 1953
             29     
             30      Be it enacted by the Legislature of the state of Utah:
             31          Section 1. Section 54-17-503 is enacted to read:
             32          54-17-503. New qualifying zero carbon emissions generation -- Public solicitation
             33      process -- Notice of future need -- Consultant.
             34          (1) As used in this section, "qualifying source" means an energy source that is
             35      qualifying zero carbon emissions generation, as defined in Section 54-17-601 .
             36          (2) Sections 54-17-102 through 54-17-404 do not apply to a significant energy resource
             37      that is a qualifying source if:
             38          (a) the nameplate capacity of the qualifying source does not exceed 3000 megawatts; or
             39          (b) if applicable, the quantity of capacity that is the subject of a contract for the
             40      purchase of electricity from a qualifying source does not exceed 3000 megawatts.
             41          (3) Beginning August 31, 2013, and each August 1 thereafter, an affected electrical
             42      utility shall file a notice with the commission indicating whether the affected electrical utility
             43      reasonably anticipates that it will need to acquire or commence construction of a qualifying
             44      source within the following 15 years.
             45          (4) (a) If the commission receives a notice under Subsection (3) indicating that the
             46      affected electrical utility reasonably anticipates that it will need to acquire or commence
             47      construction of a qualifying source within the following 15 years, the commission shall
             48      promptly retain a consultant to:
             49          (i) validate that the affected electrical utility is following:
             50          (A) the process for identifying potential bidders developed under Subsection (5); and
             51          (B) if applicable, the public solicitation process developed under Subsection (6);
             52          (ii) make any recommendations the consultant considers appropriate for changes to the
             53      process for future solicitations;
             54          (iii) monitor and document all material aspects of the responses to solicitations, bids,
             55      bid evaluations, and bid negotiations between the affected electrical utility and any bidders or
             56      potential bidders in the solicitation process;
             57          (iv) maintain adequate documentation of each bid, including the solicitation,
             58      evaluation, and negotiation processes and the reason for the conclusion of negotiations, and


             59      submit that documentation to the commission at the conclusion of all negotiations in the
             60      solicitation; and
             61          (v) be available to testify under oath before the commission in any relevant proceeding
             62      concerning any aspect of the public solicitation process.
             63          (b) The consultant shall execute a contract with the commission with terms and
             64      conditions that the commission approves.
             65          (c) (i) Unless otherwise provided by contract, the consultant shall send an invoice for
             66      the consultant's services to the Division of Public Utilities for its review and approval.
             67          (ii) After the Division of Public Utilities approves the invoice, the consultant shall
             68      cause the invoice to be forwarded to the affected electrical utility for payment.
             69          (iii) The affected electrical utility may, in a general rate case or another appropriate
             70      commission proceeding, include a request for recovery of any amount the affected electrical
             71      utility pays for a consultant under this section.
             72          (iv) The commission shall grant a request under Subsection (4)(c)(iii).
             73          (d) The commission and the consultant shall use all reasonable efforts to avoid
             74      delaying the solicitation process.
             75          (e) The commission shall make the documentation submitted by the consultant
             76      available:
             77          (i) to the affected electrical utility, any bidder, or any other interested person; and
             78          (ii) under terms and conditions and at times that the commission determines
             79      appropriate.
             80          (5) (a) By January 31 of the year following an affected electrical utility's notice under
             81      Subsection (3) indicating that the affected electrical utility reasonably anticipates that it will
             82      need to acquire or commence construction of a qualifying source within the following 15 years,
             83      the affected electrical utility shall, pursuant to rules adopted by the commission, issue a public
             84      solicitation to identify potential bidders that qualify, under criteria established by the
             85      commission by rule, to provide or construct a qualifying source up to 3,000 megawatts in size.
             86          (b) The affected electrical utility shall develop a reasonable process for identifying
             87      potential bidders that includes:
             88          (i) a requirement that a potential bidder have acquired the necessary state approval for
             89      water anticipated to be used in the proposed qualifying source;


             90          (ii) a requirement that a potential bidder propose to use a qualifying source technology
             91      that is a standard design, approved by federal regulators, for commercial construction; and
             92          (iii) a requirement that the potential bidder establish that there is reason to believe the
             93      proposed site of the qualifying source in the state is suitable for the construction and operation
             94      of the qualifying source.
             95          (c) The affected electrical utility shall evaluate in good faith each response it receives
             96      to the public solicitation to identify potential bidders.
             97          (d) If the affected electrical utility determines that there is no more than a single
             98      potential bidder that meets the criteria established by the commission:
             99          (i) Subsection (6) does not apply;
             100          (ii) that potential bidder is considered to be the winning bidder; and
             101          (iii) the affected electrical utility may enter into a contract with that potential bidder, in
             102      accordance with rules adopted by the commission.
             103          (6) (a) Within 120 days after completing the process under Subsection (5) of
             104      identifying potential bidders, an affected electrical utility shall, pursuant to rules adopted by the
             105      commission, issue a solicitation of bids for a qualifying source up to 3,000 megawatts in size.
             106          (b) The affected electrical utility shall evaluate in good faith each bid that it receives
             107      and negotiate in good faith with each bidder whose bid appears to be cost effective.
             108          (7) Nothing in this section requires an affected electrical utility to enter into a contract
             109      or transaction that it reasonably believes is not cost effective or otherwise in the public interest.
             110          Section 2. Section 54-17-608 is enacted to read:
             111          54-17-608. Recoverable costs of proposed qualifying zero carbon emissions
             112      generation -- Adjustment or other reasonable mechanism allowed -- Deferral of costs.
             113          (1) As used in this section, "qualifying source" means an energy source that is
             114      qualifying zero carbon emissions generation, as defined in Section 54-17-601 .
             115          (2) The commission shall include in the retail electric rates of an electrical corporation,
             116      whose rates the commission regulates, the costs listed in Subsection (3):
             117          (a) that are relevant to the proceeding in which the commission considers the electrical
             118      corporation's rates;
             119          (b) that represent the share of total costs attributable to the electrical corporation's
             120      activities in the state;


             121          (c) if the electrical corporation prudently incurred the costs in connection with the
             122      acquisition, construction, or use of a qualifying source; and
             123          (d) to the extent that any qualifying electricity or qualifying source satisfies the
             124      cost-effectiveness criteria of Subsection 54-17-201 (2)(c)(i).
             125          (3) Costs that an electrical corporation may recover under Subsection (2) are costs:
             126          (a) of siting, property rights acquisition, equipment, design, licensing, permitting,
             127      construction, owning, operating, or other costs associated with acquiring a qualifying source
             128      and any associated asset, including transmission assets;
             129          (b) to acquire qualifying electricity through trade, power purchase, or other transfer;
             130          (c) to interconnect a qualifying source to the electrical corporation's transmission or
             131      distribution system;
             132          (d) associated with using a physical or financial asset to integrate, firm, or shape a
             133      qualifying source on a firm annual basis to meet a retail electricity need; and
             134          (e) associated with transmission or delivery of qualifying electricity to a retail
             135      electricity customer.
             136          (4) (a) The commission may allow an electrical corporation to use an adjustment or
             137      other reasonable mechanism other than a rate case under Sections 54-4-4 and 54-7-12 to allow
             138      recovery of costs under Subsection (3).
             139          (b) The commission shall ensure that any mechanism used under Subsection (4)(a)
             140      reflects, to the extent practicable, both the costs and any associated benefit.
             141          (c) Subsection (4)(a) does not create a presumption for or against the use of an
             142      adjustment or other reasonable mechanism.
             143          (5) (a) The commission may allow an electrical corporation to include in its retail
             144      electric rates costs listed in Subsection (3), whether or not the qualifying source ultimately
             145      becomes operational.
             146          (b) Subsection (5)(a) does not create a presumption concerning the prudence or
             147      recoverability of the costs listed in Subsection (3).
             148          (6) (a) To the extent consistent with other applicable law, the commission may allow
             149      an electrical corporation to defer costs listed in Subsection (3) until the recovery of those costs
             150      can be considered in:
             151          (i) a rate proceeding; or


             152          (ii) an adjustment or other reasonable mechanism under Subsection (4).
             153          (b) To request a deferral under Subsection (6)(a), an electrical corporation shall file an
             154      application with the commission within 60 days after the electrical corporation determines that
             155      the qualifying source project is impaired under generally accepted accounting principles and
             156      will not become operational.
             157          (c) Notwithstanding any deferral under Subsection (6)(a), and for the purpose of
             158      evaluating the cost effectiveness of a project to construct a qualifying source an electrical
             159      corporation proposes to construct, the electrical corporation shall include in its project costs
             160      any costs the electrical corporation incurs for siting, property acquisition, equipment, design,
             161      licensing, and permitting related to the qualifying source.
             162          (d) For the purpose of evaluating the cost of a project proposed by a person other than
             163      the electrical corporation, a deferred cost under Subsection (6)(a) may not be added to or
             164      otherwise considered in the evaluation.




Legislative Review Note
    as of 2-13-13 5:00 PM


Office of Legislative Research and General Counsel


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