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S.B. 198

             1     

ELECTRIC GENERATION COMPETITIVE BID
             2      AMENDMENTS
             3      2004 GENERAL SESSION
             4      STATE OF UTAH
             5      Sponsor: Curtis S. Bramble
             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Public Utilities Code to enact the Electric Reliability and
             10      Transparency Act.
             11      Highlighted Provisions:
             12          This bill:
             13          .    defines terms;
             14          .    enacts provisions related to the filing and approval of a resource plan and
             15      procurement plan by an affected utility;
             16          .    establishes requirements and guidelines related to a competitive bidding process by
             17      an affected utility;
             18          .    requires an independent evaluator to oversee a competitive bidding process under
             19      certain circumstances;
             20          .    establishes an advisory panel to evaluate and make recommendations regarding a
             21      competitive bidding process;
             22          .    enacts requirements related to the filing and approval of avoided cost methodology
             23      and data by an affected utility;
             24          .    enacts provisions governing the effect of this bill on other functions of the Public
             25      Service Commission;
             26          .     establishes confidentiality requirements; and
             27          .     grants rulemaking authority to the Public Service Commission.

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             28      Monies Appropriated in this Bill:
             29          None
             30      Other Special Clauses:
             31          None
             32      Utah Code Sections Affected:
             33      ENACTS:
             34          54-17-101, Utah Code Annotated 1953
             35          54-17-102, Utah Code Annotated 1953
             36          54-17-201, Utah Code Annotated 1953
             37          54-17-202, Utah Code Annotated 1953
             38          54-17-203, Utah Code Annotated 1953
             39          54-17-204, Utah Code Annotated 1953
             40          54-17-301, Utah Code Annotated 1953
             41          54-17-302, Utah Code Annotated 1953
             42          54-17-303, Utah Code Annotated 1953
             43          54-17-304, Utah Code Annotated 1953
             44          54-17-401, Utah Code Annotated 1953
             45          54-17-402, Utah Code Annotated 1953
             46          54-17-403, Utah Code Annotated 1953
             47          54-17-404, Utah Code Annotated 1953
             48          54-17-501, Utah Code Annotated 1953
             49          54-17-502, Utah Code Annotated 1953
             50          54-17-503, Utah Code Annotated 1953
             51          54-17-504, Utah Code Annotated 1953
             52          54-17-601, Utah Code Annotated 1953
             53          54-17-602, Utah Code Annotated 1953
             54          54-17-603, Utah Code Annotated 1953
             55          54-17-604, Utah Code Annotated 1953
             56          54-17-605, Utah Code Annotated 1953
             57          54-17-701, Utah Code Annotated 1953
             58          54-17-801, Utah Code Annotated 1953

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             59          54-17-901, Utah Code Annotated 1953
             60     
             61      Be it enacted by the Legislature of the state of Utah:
             62          Section 1. Section 54-17-101 is enacted to read:
             63      CHAPTER 17. ELECTRIC RELIABILITY AND TRANSPARENCY ACT
             64      Part 1. General Provisions
             65          54-17-101. Title.
             66          This chapter is known as the "Electric Reliability and Transparency Act."
             67          Section 2. Section 54-17-102 is enacted to read:
             68          54-17-102. Definitions.
             69          As used in this chapter:
             70          (1) "Advisory panel" means a panel of volunteers appointed by the commission:
             71          (a) pursuant to Section 54-17-504 ; and
             72          (b) to oversee a competitive bidding process.
             73          (2) "Affected utility" means an investor-owned electrical corporation that provides
             74      retail electric service to at least 200,000 consumers in Utah.
             75          (3) "Avoided cost data" means sufficient data to permit the calculation of an affected
             76      utility's avoided costs:
             77          (a) using the avoided cost methodology; and
             78          (b) based on cost and operating data for a proxy resource, consistent with the
             79      requirements of Part 6, Avoided Cost Methodology and Data.
             80          (4) "Avoided cost methodology" means a methodology for calculating an affected
             81      utility's avoided costs:
             82          (a) utilizing a proxy resource; and
             83          (b) consistent with Section 54-17-602 .
             84          (5) "Binding commitment" means a statement:
             85          (a) in a form and meeting the requirements set by the commission by rule under
             86      Section 54-17-901 ; and
             87          (b) that an independent producer intends legally to obligate itself to the delivery:
             88          (i) of:
             89          (A) electricity;

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             90          (B) electrical generating capacity; or
             91          (C) electricity and electrical generating capacity;
             92          (ii) at rates that reflect an affected utility's full avoided costs as determined in
             93      accordance with Part 6, Avoided Cost Methodology and Data; and
             94          (iii) upon reasonable terms and conditions determined or approved by the commission
             95      under Section 54-17-901 .
             96          (6) "Competitive bidding procedure" means a procedure approved by the commission
             97      to govern a competitive bidding process.
             98          (7) "Competitive bidding process" means an open, competitive process:
             99          (a) for the acquisition of a significant generation resource; and
             100          (b) that meets the requirements of Part 4, Competitive Bidding Process.
             101          (8) "Electric infrastructure" means facilities and equipment reasonably necessary or
             102      appropriate for an affected utility to deliver reliable electric service to its retail customers in
             103      Utah.
             104          (9) "Incentive mechanism" means a regulatory mechanism that permits an affected
             105      utility to share a portion of the savings to its retail ratepayers in Utah if the affected utility
             106      demonstrates that the savings, when compared to the most reasonable and economical utility
             107      self-build option, result from the selection in a competitive bidding process of a resource to be
             108      constructed and owned by someone other than:
             109          (a) the affected utility; or
             110          (b) an affiliate of the affected utility.
             111          (10) "Independent evaluator" means an independent person or entity selected by the
             112      commission to:
             113          (a) oversee a competitive bidding process; and
             114          (b) evaluate bids pursuant to Part 5, Independent Evaluator.
             115          (11) "Independent producer" means a person or entity that would have qualified as an
             116      independent energy producer under laws in effect on May 3, 2004.
             117          (12) "Procurement plan" means a plan for the acquisition of a significant generation
             118      resource that meets the requirements of Part 3, Procurement Plan.
             119          (13) "Proxy resource" means:
             120          (a) the next significant generation resource to be acquired or constructed by an affected

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             121      utility under the affected utility's procurement plan that has been approved by the commission
             122      under Section 54-17-303 ; or
             123          (b) if there is no significant generation resource that meets the requirements of
             124      Subsection (13)(a), the most recent significant generation resource constructed, acquired, or
             125      committed to by an affected utility.
             126          (14) "Procurement expenditures" means expenditures reasonably incurred by an
             127      affected utility in procuring approved resources in conformity with:
             128          (a) an approved resource plan;
             129          (b) an approved procurement plan; and
             130          (c) approved competitive bidding procedures.
             131          (15) "Request for avoided cost pricing" means a request from an existing or potential
             132      independent producer:
             133          (a) for access to an affected utility's:
             134          (i) avoided cost methodology; and
             135          (ii) avoided cost data;
             136          (b) to determine avoided costs for a facility of any size and configuration; and
             137          (c) in a form and containing the information and requirements determined by the
             138      commission under Section 54-17-901 .
             139          (16) "Resource plan" means a plan:
             140          (a) developed in a public resource planning process; and
             141          (b) that meets the requirements of Part 2, Resources Planning.
             142          (17) "Significant generation resource" means any of the following that will have a cost
             143      to an affected utility equal to or greater than $10,000,000:
             144          (a) a contract with a term greater than one year for the acquisition of:
             145          (i) electricity;
             146          (ii) electric generating capacity; or
             147          (iii) electricity and electrical generating capacity; or
             148          (b) an electric generation plant owned or operated by an affected utility.
             149          (18) "Solicitation" means a request for proposals or other invitation for persons or
             150      entities to submit a bid or proposal in connection with a competitive bidding process.
             151          (19) "Utility self-build option" means a resource against which bids in a competitive

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             152      bidding process may be evaluated:
             153          (a) that is the most reasonable and economical comparable resource that could be
             154      constructed or owned by:
             155          (i) an affected utility; or
             156          (ii) an affiliate of an affected utility; or
             157          (b) in which an affected utility or an affiliate of an affected utility may receive an
             158      option to acquire an ownership interest at any time within 20 years after the commencement of
             159      deliveries to the affected utility.
             160          Section 3. Section 54-17-201 is enacted to read:
             161      Part 2. Resources Planning
             162          54-17-201. Priority of utility investment for electric infrastructure.
             163          (1) An affected utility shall take all reasonably necessary actions and make all
             164      reasonably necessary investments in electric infrastructure to provide reliable electric service to
             165      its customers in Utah.
             166          (2) An affected utility shall give its highest investment priority to expenditures
             167      reasonably necessary to assure reliability of its electric infrastructure.
             168          Section 4. Section 54-17-202 is enacted to read:
             169          54-17-202. Affected utility to develop resource plan.
             170          On or before December 31, 2004, and annually thereafter, an affected utility shall file
             171      with the commission a proposed resource plan.
             172          Section 5. Section 54-17-203 is enacted to read:
             173          54-17-203. Requirements of a resource plan.
             174          A resource plan shall:
             175          (1) be developed in a public process that solicits input from customers of the affected
             176      utility in Utah and other interested parties on relevant issues, including:
             177          (a) cost considerations;
             178          (b) reliability;
             179          (c) price volatility;
             180          (d) fuel and resource diversification;
             181          (e) ownership diversification;
             182          (f) externalities;

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             183          (g) risk; and
             184          (h) other issues and impacts;
             185          (2) include, for at least the following ten years:
             186          (a) load and resource projections; and
             187          (b) detailed explanation of the load and resource projections;
             188          (3) include an avoided cost methodology and avoided cost data meeting the
             189      requirements of Part 6, Avoided Cost Methodology and Data; and
             190          (4) comply with rules made by the commission under Section 54-17-901 relating to
             191      resource planning.
             192          Section 6. Section 54-17-204 is enacted to read:
             193          54-17-204. Approval of resource plan.
             194          After holding public hearings, the commission shall approve a resource plan for the
             195      affected utility if the commission finds the resource plan to be:
             196          (1) consistent with this chapter; and
             197          (2) in the public interest.
             198          Section 7. Section 54-17-301 is enacted to read:
             199      Part 3. Procurement Plan
             200          54-17-301. Affected utility to develop procurement plan.
             201          If a proposed resource plan filed by an affected utility for commission approval
             202      identifies a need for a significant generation resource, the affected utility shall file with its
             203      proposed resource plan a proposed procurement plan.
             204          Section 8. Section 54-17-302 is enacted to read:
             205          54-17-302. Requirements of a procurement plan.
             206          A procurement plan shall:
             207          (1) be filed with the commission sufficiently in advance of the time when a new
             208      significant generation resource will be needed to permit full and adequate commission review,
             209      including appropriate revisions or improvements;
             210          (2) include a detailed discussion of alternative procurement options, including:
             211          (a) options proposed by the affected utility;
             212          (b) potential purchases from independent producers; and
             213          (c) other reasonable options;

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             214          (3) provide a thorough evaluation of the costs, risks, and potential impacts of resource
             215      options;
             216          (4) discuss appropriate balancing of:
             217          (a) cost;
             218          (b) reliability;
             219          (c) price stability;
             220          (d) risk; and
             221          (e) other relevant factors;
             222          (5) provide a detailed description of a potential utility self-build option;
             223          (6) demonstrate whether the utility has:
             224          (a) satisfied its investment priority for electric infrastructure as required by Section
             225      54-17-201 ; and
             226          (b) access to sufficient additional capital to construct or acquire a utility self-build
             227      option;
             228          (7) develop a framework for evaluating resource options, including a utility self-build
             229      option, on a fair and comparable basis;
             230          (8) offer an assessment of price risks associated with the affected utility's existing
             231      resource portfolio and its proposed resource additions;
             232          (9) provide an explanation of the affected utility's risk management policies, strategies
             233      and practices, including specific measures designed to enhance price stability;
             234          (10) discuss appropriate means of moderating price and reliability risks associated with
             235      serving retail customers in Utah;
             236          (11) encourage reasonable diversity of:
             237          (a) fuel supply; and
             238          (b) ownership of generation resources;
             239          (12) provide sufficient advance planning and time to permit a significant generation
             240      resource to be acquired:
             241          (a) through a competitive bidding process; and
             242          (b) with the participation of an independent evaluator;
             243          (13) include proposed competitive bidding procedures;
             244          (14) provide a detailed description of any incentive mechanism the affected utility may

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             245      propose for adoption, including:
             246          (a) appropriate benchmarks for the measurement of savings;
             247          (b) means for determining an appropriate sharing of risks and benefits; and
             248          (c) means for ensuring that the affected utility's return on equity will not exceed a
             249      lawful and reasonable return, as determined by the commission; and
             250          (15) comply with rules made by the commission under Section 54-17-901 relating to
             251      resource procurement.
             252          Section 9. Section 54-17-303 is enacted to read:
             253          54-17-303. Approval of procurement plan.
             254          After holding public hearings, the commission shall approve a procurement plan for the
             255      affected utility if the commission finds the procurement plan to be:
             256          (1) consistent with this chapter; and
             257          (2) in the public interest.
             258          Section 10. Section 54-17-304 is enacted to read:
             259          54-17-304. Approval of incentive mechanism.
             260          In approving a procurement plan, the commission may approve an incentive mechanism
             261      to the extent the commission determines the incentive mechanism to be in the public interest.
             262          Section 11. Section 54-17-401 is enacted to read:
             263      Part 4. Competitive Bidding Process
             264          54-17-401. Affected utility to utilize competitive bidding process.
             265          (1) Except as provided in Subsection (3), an affected utility shall utilize a competitive
             266      bidding process to acquire any significant generation resource after May 3, 2004.
             267          (2) If a proposed procurement plan filed by an affected utility for commission approval
             268      identifies a need for a significant generation resource, the affected utility shall file with its
             269      proposed procurement plan proposed competitive bidding procedures.
             270          (3) A competitive bidding process is not required for purchases approved by the
             271      commission that are:
             272          (a) purchases of capacity or energy from an independent producer;
             273          (b) other purchases of capacity or energy that are required by law;
             274          (c) bona fide emergency acquisitions;
             275          (d) necessary purchases in instances when a competitive bidding process is not feasible

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             276      because the need for a significant generation resource could not reasonably have been foreseen;
             277          (e) purchases resulting from unexpected opportunities that arise for below-market
             278      acquisitions; or
             279          (f) capacity upgrades of less than 10% to an existing generation plant.
             280          Section 12. Section 54-17-402 is enacted to read:
             281          54-17-402. Requirements of competitive bidding procedures.
             282          (1) Competitive bidding procedures shall:
             283          (a) be reasonably designed to ensure that all aspects of the competitive bidding process
             284      are:
             285          (i) fair;
             286          (ii) commercially reasonable; and
             287          (iii) applied equally to:
             288          (A) the affected utility; and
             289          (B) all other participants in the competitive bidding process;
             290          (b) include requirements for participation in a competitive bidding process that are:
             291          (i) fair and reasonable;
             292          (ii) clear and unambiguous; and
             293          (iii) not unduly onerous;
             294          (c) include credit requirements, liquidated damage provisions, and other similar
             295      requirements that are:
             296          (i) fair and reasonable;
             297          (ii) clear and unambiguous;
             298          (iii) not designed to discourage legitimate bidders from participating in the process;
             299          (iv) not more onerous than are typical for long-term contracts; and
             300          (v) uniformly applied to:
             301          (A) the affected utility;
             302          (B) an affiliate of the affected utility; and
             303          (C) other companies with whom the affected utility does business;
             304          (d) be sufficiently flexible to:
             305          (i) permit a bidder to customize its proposal in a way that enhances value to the
             306      affected utility's customers; and

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             307          (ii) allow negotiation with bidders to achieve the best possible outcome;
             308          (e) require that a solicitation include clear and adequate descriptions of:
             309          (i) qualification requirements for bidders;
             310          (ii) bid and selection formats and procedures;
             311          (iii) pertinent transmission limitations and issues;
             312          (iv) applicable price and non-price factors and weights;
             313          (v) the size and nature of a utility self-build option against which bids will be
             314      evaluated; and
             315          (vi) other information reasonably necessary to facilitate a successful and reasonable
             316      competitive bidding process;
             317          (f) include a pre-issuance bidders' conference in Utah:
             318          (i) with both in-person and conference call participation; and
             319          (ii) available not later than 15 calendar days before issuance of a solicitation;
             320          (g) include a pre-bid conference in Utah:
             321          (i) with both in-person and conference call participation; and
             322          (ii) available at least 30 days before the deadline to submit responsive bids;
             323          (h) require that a solicitation include a detailed description of any utility self-build
             324      option against which bids may be evaluated;
             325          (i) ensure that bids for resources to be constructed and owned by third parties will be
             326      treated and evaluated in all respects on a fair and comparable basis with a utility self-build
             327      option;
             328          (j) require that bidders timely receive:
             329          (i) all data and information needed to facilitate a fair and reasonable competitive
             330      bidding process;
             331          (ii) all information relating to the process made available to:
             332          (A) employees of the affected utility working on a utility-bid option; or
             333          (B) affiliates of the affected utility; and
             334          (iii) all reasonable information requested by bidders;
             335          (k) include procedures for the commission to timely resolve any disputes that may arise
             336      relating to a competitive bidding process;
             337          (l) ensure that a person may not participate in the solicitation, preparation or evaluation

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             338      of bids, or have any contact regarding the competitive bidding process with any person
             339      assisting in the competitive bidding process, except on the same terms as any other bidder, if
             340      the person:
             341          (i) works for:
             342          (A) the affected utility; or
             343          (B) an affiliate of the affected utility; and
             344          (ii) is or may be involved in the sale or marketing of resources from generation or
             345      transmission assets owned by:
             346          (A) the affected utility; or
             347          (B) an affiliate of the affected utility; and
             348          (m) comply with rules made by the commission under Section 54-17-901 .
             349          (2) In a competitive bidding process involving an independent evaluator:
             350          (a) at least 30 calendar days before the proposed solicitation is made public, an affected
             351      utility shall provide to the independent evaluator and the advisory panel a draft of:
             352          (i) the proposed solicitation; and
             353          (ii) all data and information relevant to the proposed solicitation;
             354          (b) (i) at least ten calendar days before the draft solicitation is made public, the
             355      independent evaluator and the advisory panel shall provide input to the affected utility on the
             356      proposed solicitation; and
             357          (ii) the affected utility, advisory panel, and independent evaluator shall thoroughly
             358      document all discussions, correspondence, and revisions;
             359          (c) (i) the affected utility shall revise the solicitation as appropriate in response to input
             360      received from the:
             361          (A) independent evaluator; or
             362          (B) advisory panel; and
             363          (ii) a dispute shall be presented to the commission for resolution; and
             364          (d) the solicitation shall:
             365          (i) identify and describe the role of the independent evaluator; and
             366          (ii) invite bidders to communicate with the independent evaluator.
             367          Section 13. Section 54-17-403 is enacted to read:
             368          54-17-403. Approval of competitive bidding procedures.

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             369          After holding public hearings, the commission shall approve competitive bidding
             370      procedures for an affected utility if the commission finds the competitive bidding procedures to
             371      be:
             372          (1) consistent with this chapter; and
             373          (2) in the public interest.
             374          Section 14. Section 54-17-404 is enacted to read:
             375          54-17-404. Approval of resource acquisition.
             376          Following completion of a competitive bidding process, and after holding public
             377      hearings and considering the input of the affected utility, other interested parties, the advisory
             378      panel, and the independent evaluator, the commission shall approve specific resources to be
             379      acquired or constructed by an affected utility if the commission finds the resource acquisition
             380      to be:
             381          (1) consistent with this chapter; and
             382          (2) in the public interest.
             383          Section 15. Section 54-17-501 is enacted to read:
             384      Part 5. Independent Evaluator
             385          54-17-501. Commission to appoint independent evaluator.
             386          (1) The commission shall:
             387          (a) appoint or designate a state agency to appoint an independent evaluator to oversee
             388      any competitive bidding process in which bids may be evaluated against a utility self-build
             389      option;
             390          (b) oversee a public request for proposals to identify and select a qualified independent
             391      person or entity to serve as an independent evaluator;
             392          (c) consider comments and recommendations offered with respect to the selection of an
             393      independent evaluator by utility regulatory authorities from other states where an affected
             394      utility provides regulated retail service; and
             395          (d) select or approve an independent evaluator after considering recommendations and
             396      comments from:
             397          (i) the advisory panel; and
             398          (ii) other interested parties.
             399          (2) (a) The affected utility shall pay fees and expenses for an independent evaluator

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             400      after the fees and expenses have been:
             401          (i) approved by:
             402          (A) the commission; or
             403          (B) a state agency designated by the commission; and
             404          (ii) submitted by the commission or state agency to the affected utility for payment.
             405          (b) The affected utility may include any fees and expenses paid under this Subsection
             406      (2) as regulatory expenses when retail rates are set in a general rate case.
             407          Section 16. Section 54-17-502 is enacted to read:
             408          54-17-502. Affected utility to cooperate with independent evaluator and advisory
             409      panel.
             410          (1) An affected utility shall cooperate fully with the:
             411          (a) independent evaluator; and
             412          (b) advisory panel.
             413          (2) An affected utility shall involve the independent evaluator in all aspects of a
             414      competitive bidding process.
             415          (3) Subject to Part 8, Confidentiality, and rules made by the commission under Section
             416      54-17-901 , an affected utility shall provide the independent evaluator full, timely, and
             417      unfettered access to all relevant materials used in or relating to a competitive bidding process,
             418      including:
             419          (a) data;
             420          (b) resources;
             421          (c) models;
             422          (d) confidential or proprietary information;
             423          (e) pricing information; and
             424          (f) information used by the affected utility in developing or in connection with:
             425          (i) the competitive bidding process;
             426          (ii) a utility self-build option; or
             427          (iii) the evaluation of bids.
             428          (4) An affected utility shall provide the independent evaluator and the advisory panel
             429      with reasonable and adequate access to requested personnel of the affected utility.
             430          Section 17. Section 54-17-503 is enacted to read:

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             431          54-17-503. Duties of independent evaluator.
             432          (1) An independent evaluator shall:
             433          (a) monitor and facilitate communications, questions, comments, and complaints
             434      regarding a competitive bidding process by and among the:
             435          (i) affected utility;
             436          (ii) advisory panel; and
             437          (iii) bidders;
             438          (b) facilitate delivery of reasonably requested clarifications, documents, or information
             439      from:
             440          (i) bidders; or
             441          (ii) the advisory panel;
             442          (c) validate the consistency and reasonableness of the utility self-build option
             443      assumptions and calculations, including:
             444          (i) technical feasibility;
             445          (ii) consistency with the solicitation; and
             446          (iii) treatment of a utility self-build option in comparison to other bid responses;
             447          (d) confirm that a utility self-build option includes all resource-related information
             448      reasonably requested of bidders;
             449          (e) ensure that a solicitation includes:
             450          (i) sufficient information regarding a utility self-build option; and
             451          (ii) the manner in which bids will be evaluated against a utility self-build option;
             452          (f) (i) receive bid responses; and
             453          (ii) remove from bid responses any information that would identify a bidder;
             454          (g) confirm that all bids are identified, categorized, analyzed, and treated:
             455          (i) on an accurate, fair, and comparable basis; and
             456          (ii) in compliance with all applicable requirements and criteria;
             457          (h) participate in and offer feedback on all aspects of the competitive bidding process,
             458      including:
             459          (i) evaluation and ranking of responses;
             460          (ii) selection of short list candidates;
             461          (iii) the implications and advisability of making adjustments to the:

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             462          (A) bid process; or
             463          (B) scope or nature of requested resources in light of bid responses;
             464          (iv) post-bid discussions, negotiations, and evaluations; and
             465          (v) negotiation of potential contracts;
             466          (i) advise the affected utility, the advisory panel, and the commission at all stages of
             467      the competitive bidding process of any unresolved disputes, issues, or concerns that might
             468      affect the integrity or outcome of the competitive bidding process;
             469          (j) provide reasonable input and cooperation to the advisory panel overseeing the
             470      competitive bidding process;
             471          (k) prepare:
             472          (i) process reports for the commission, the affected utility, and the advisory panel as
             473      early as practical during the competitive bidding process; and
             474          (ii) a detailed final report as soon as is practical following completion of the
             475      competitive bidding process, including at least:
             476          (A) a process report detailing validation of the utility self-build option;
             477          (B) a process report detailing the screening evaluation of bids;
             478          (C) a detailed final report regarding:
             479          (I) all aspects of the competitive bidding process; and
             480          (II) the independent evaluator's involvement, observations, conclusions, and
             481      recommendations;
             482          (l) (i) attempt to mediate disputes that may arise during the competitive bidding
             483      process; and
             484          (ii) present recommendations for resolution of unresolved disputes to the commission;
             485          (m) provide regulatory feedback as requested, including:
             486          (i) responding to questions or requests for information; and
             487          (ii) testifying in regulatory proceedings regarding a competitive bidding process; and
             488          (n) comply with directions or requests from the commission.
             489          (2) In evaluating and preparing reports on a competitive bidding process, the
             490      independent evaluator shall analyze whether, and the extent to which:
             491          (a) a utility self-build option was considered and evaluated along with all other bids in
             492      a fair and comparable manner;

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             493          (b) environmental screening factors and weights were applied consistently and in a fair
             494      manner to:
             495          (i) all bid responses; and
             496          (ii) a utility self-build option;
             497          (c) credit requirements, liquidated damage provisions, warranties, and other similar
             498      requirements affected:
             499          (i) the bid evaluations; and
             500          (ii) the outcome of the competitive bidding process;
             501          (d) all relevant and reasonably available data and information were provided to
             502      bidders;
             503          (e) all data, information, and models relevant to the competitive bidding process were
             504      made available to the independent evaluator to permit full and timely testing and verification of
             505      assumptions, models, inputs, outputs, and results;
             506          (f) confidentiality claims and issues were resolved in a manner that:
             507          (i) preserved confidentiality as necessary; and
             508          (ii) permitted dissemination and consideration of all information reasonably necessary
             509      for a competitive bidding process to be conducted in a fair manner;
             510          (g) the reasons and bases for evaluating, ranking, and selecting or not selecting bids
             511      were:
             512          (i) fully identified and documented; and
             513          (ii) detailed in the independent evaluator's report; and
             514          (h) the competitive bidding process satisfied the requirements of:
             515          (i) this chapter; and
             516          (ii) rules made by the commission under Section 54-17-901 .
             517          Section 18. Section 54-17-504 is enacted to read:
             518          54-17-504. Formation and duties of advisory panel.
             519          (1) The commission shall appoint a volunteer advisory panel comprised of
             520      representatives of:
             521          (a) the Division of Public Utilities;
             522          (b) the Committee of Consumer Services;
             523          (c) industrial ratepayer groups;

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             524          (d) commercial ratepayer groups;
             525          (e) residential ratepayer groups;
             526          (f) environmental groups;
             527          (g) public interest groups; and
             528          (h) other stakeholders as determined by the commission under Section 54-17-901 .
             529          (2) The advisory panel shall:
             530          (a) oversee and evaluate a competitive bidding process;
             531          (b) provide advice and input to the commission on the selection of an independent
             532      evaluator;
             533          (c) provide advice and input to the commission, an affected utility, and an independent
             534      evaluator with respect to:
             535          (i) a competitive bidding process; and
             536          (ii) any issues or concerns that may arise with respect to a competitive bidding process;
             537          (d) evaluate and provide input to the commission on reports filed by an independent
             538      evaluator;
             539          (e) make suggestions for improvements to a competitive bidding process; and
             540          (f) maintain appropriate confidentiality as required by a confidentiality order entered by
             541      the commission.
             542          (3) An affected utility shall provide the advisory panel with all information and
             543      assistance necessary for the advisory panel to perform its duties under this chapter.
             544          Section 19. Section 54-17-601 is enacted to read:
             545      Part 6. Avoided Cost Methodology and Data
             546          54-17-601. Affected utility to file avoided cost methodology and data.
             547          An affected utility shall file with each annual resource plan an updated:
             548          (1) avoided cost methodology; and
             549          (2) avoided cost data.
             550          Section 20. Section 54-17-602 is enacted to read:
             551          54-17-602. Requirements of avoided cost methodology and data.
             552          (1) An avoided cost methodology filed by an affected utility shall propose a reasonable
             553      avoided cost methodology:
             554          (a) to determine the affected utility's avoided costs to be paid to an independent

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             555      producer of any size or characteristics; and
             556          (b) utilizing avoided cost data filed with the commission.
             557          (2) Avoided cost data filed by an affected utility shall include, in both hard copy and
             558      electronic formats, sufficient data to permit the calculation of an affected utility's avoided costs
             559      utilizing the avoided cost methodology, including:
             560          (a) capacity and energy costs;
             561          (b) operating characteristics;
             562          (c) fuel and market price projections;
             563          (d) models; and
             564          (e) other information necessary to satisfy the requirements of this Subsection (2).
             565          (3) An affected utility shall file with the commission instructions, operating manuals,
             566      and other information necessary or convenient to permit meaningful use and operation of the
             567      affected utility's proposed:
             568          (a) avoided cost methodology; and
             569          (b) avoided cost data.
             570          Section 21. Section 54-17-603 is enacted to read:
             571          54-17-603. Affected utility's obligation to purchase.
             572          (1) Consistent with Subsection (2), an affected utility shall pay its full avoided costs
             573      for:
             574          (a) electricity;
             575          (b) electric generating capacity; or
             576          (c) electricity and electric generating capacity.
             577          (2) An affected utility shall pay the avoided costs described in Subsection (1) to an
             578      independent producer:
             579          (a) upon terms and conditions approved by the commission;
             580          (b) with rates calculated:
             581          (i) based upon the avoided cost methodology approved by the commission when an
             582      independent producer makes a binding commitment; and
             583          (ii) utilizing the avoided cost data approved by the commission when an independent
             584      producer makes a binding commitment.
             585          Section 22. Section 54-17-604 is enacted to read:

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             586          54-17-604. Availability of avoided cost methodology and data to independent
             587      producer.
             588          (1) If the requirements of Subsection 63-2-304 (1) or (2) and Section 63-2-308 are
             589      satisfied, the following records provided to the commission are protected:
             590          (a) avoided cost methodology; and
             591          (b) avoided cost data.
             592          (2) Notwithstanding Subsection (1), the commission shall comply with Subsection (3)
             593      upon:
             594          (a) receipt from an existing or potential independent producer of a request for:
             595          (i) avoided cost methodology; or
             596          (ii) avoided cost data; and
             597          (b) execution of an agreement containing appropriate confidentiality requirements and
             598      other requirements established by the commission under Section 54-17-901 .
             599          (3) If the requirements of Subsection (2) are met, the commission shall promptly
             600      provide an existing or potential independent producer with access to an affected utility's:
             601          (a) avoided cost methodology; and
             602          (b) avoided cost data.
             603          Section 23. Section 54-17-605 is enacted to read:
             604          54-17-605. Approval of avoided cost methodology and data.
             605          After holding public hearings, the commission shall approve an avoided cost
             606      methodology and avoided cost data for an affected utility if the commission finds the avoided
             607      cost methodology and avoided cost data to be:
             608          (1) consistent with this chapter; and
             609          (2) in the public interest.
             610          Section 24. Section 54-17-701 is enacted to read:
             611      Part 7. Regulatory Functions
             612          54-17-701. Prudence of expenditures and ratemaking treatment.
             613          (1) Procurement expenditures shall bear a presumption of prudence in a regulatory
             614      proceeding to set retail rates in Utah.
             615          (2) An affected utility may recover a proportionate share of prudently incurred
             616      procurement expenditures in its rates charged to retail customers in Utah.

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             617          (3) An affected utility shall bear the burden of proof to establish:
             618          (a) substantial compliance with the requirements of:
             619          (i) this chapter; and
             620          (ii) rules made by the commission; and
             621          (b) the prudence of the affected utility's procurement expenditures.
             622          (4) A party challenging the recovery by an affected utility of procurement expenditures
             623      prudently incurred in compliance with the requirements of this chapter shall bear the burden of
             624      proof to establish imprudence.
             625          (5) This chapter does not alter, modify, or diminish the commission's existing
             626      authority, including:
             627          (a) oversight over affiliate transactions; and
             628          (b) authority to disallow imprudently incurred costs.
             629          (6) The commission may deny cost recovery by an affected utility in the event of any
             630      imprudence in the procurement process, including:
             631          (a) failure to comply with:
             632          (i) (A) this chapter; or
             633          (B) rules made by the commission under Section 54-17-901 ;
             634          (ii) an approved resource plan;
             635          (iii) an approved procurement plan; or
             636          (iv) approved competitive bidding procedures; or
             637          (b) failure to ensure a commercially reasonable competitive bidding process.
             638          (7) An affected utility may not recover through regulated rates paid by ratepayers in
             639      Utah any costs incurred by the affected utility in connection with a utility self-build option that:
             640          (a) exceed the projected costs of a utility self-build option used to compare bids in a
             641      competitive bidding process; or
             642          (b) exceed the costs for a comparable resource:
             643          (i) offered by a bidder; and
             644          (ii) determined by the commission to be credible in a competitive bidding process.
             645          (8) An affected utility shall continue to bear the risk of different interstate allocations
             646      methodologies adopted by different jurisdictions in which an affected utility operates.
             647          (9) At least annually the commission shall conduct an evaluation of the:

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             648          (a) competitive bidding process; and
             649          (b) independent evaluator.
             650          Section 25. Section 54-17-801 is enacted to read:
             651      Part 8. Confidentiality
             652          54-17-801. Protection of confidential information.
             653          (1) (a) Except as provided in Subsection (1)(b), legitimate confidential or proprietary
             654      information of the affected utility shall be protected from public disclosure.
             655          (b) Notwithstanding Subsection (1)(a), an affected utility may not use claims of
             656      confidentiality or proprietary information to prevent dissemination of all information
             657      reasonably necessary for a fair and open competitive bidding process as required by:
             658          (i) this chapter; or
             659          (ii) rules made by the commission under Section 54-17-901 .
             660          (2) Notwithstanding any other provision of this chapter, the following shall be
             661      provided full access to information described in Subsection 54-17-901 (8):
             662          (a) regulatory agencies and consumer groups that are not market participants; and
             663          (b) representatives of market participants that are not involved in specific commercial
             664      transactions where an unreasonable advantage could be obtained by knowledge of the
             665      information allowed by this Subsection (2).
             666          (3) An affected utility shall share with bidders any material or relevant information:
             667          (a) in the possession of:
             668          (i) the affected utility; or
             669          (ii) an affiliate of the affected utility; and
             670          (b) that would create:
             671          (i) an unfair advantage for:
             672          (A) the affected utility; or
             673          (B) an affiliate of the affected utility; and
             674          (ii) a disadvantage for bidders in the competitive bidding process.
             675          (4) Competitive bidding procedures shall protect confidential information supplied by
             676      bidders, subject to disclosure:
             677          (a) to the independent evaluator; and
             678          (b) as otherwise required by the commission by rule made under Section 54-17-901 .

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             679          (5) (a) An affected utility shall comply with Subsection (5)(b) in developing or
             680      contracting for the following if used in or relevant in any way to the competitive bidding
             681      process or a utility self-build option:
             682          (i) data;
             683          (ii) information; or
             684          (iii) models.
             685          (b) An affected utility described in Subsection (5)(a) shall obtain consent for the
             686      following to access and use the data, information, and models to permit thorough independent
             687      testing and verification of assumptions, inputs, and results:
             688          (i) an independent evaluator;
             689          (ii) regulators; and
             690          (iii) others determined by the commission by rule made under Section 54-17-901 .
             691          Section 26. Section 54-17-901 is enacted to read:
             692      Part 9. Rulemaking Authority
             693          54-17-901. Rulemaking authority.
             694          In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             695      commission shall make rules to:
             696          (1) establish requirements consistent with this chapter for a:
             697          (a) resource plan; and
             698          (b) procurement plan;
             699          (2) determine the appropriate form, requirements, terms, and conditions for a binding
             700      commitment;
             701          (3) determine the necessary forms, information, and other requirements for a request
             702      for avoided cost pricing;
             703          (4) establish procedures and requirements for competitive bidding procedures that are
             704      consistent with Section 54-17-402 ;
             705          (5) establish guidelines for an independent evaluator consistent with Part 5,
             706      Independent Evaluator;
             707          (6) define the membership of the advisory panel consistent with Section 54-17-504 ;
             708          (7) establish confidentiality and other requirements consistent with Section 54-17-604
             709      related to the availability of avoided cost methodology and data; and

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             710          (8) adopt procedures consistent with Section 54-17-801 to ensure the confidentiality of
             711      market sensitive information submitted in, resulting from, or related to a utility's procurement
             712      plan, resource plan, or competitive bidding procedures, including:
             713          (a) proposed or executed power purchase agreements; and
             714          (b) responses to:
             715          (i) data requests; and
             716          (ii) reports of an independent evaluator.




Legislative Review Note
    as of 2-3-04 8:05 AM

A limited legal review of this legislation raises no obvious constitutional or statutory concerns.