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First Substitute S.B. 26

This document includes Senate Committee Amendments incorporated into the bill on Mon, Jan 24, 2005 at 10:33 AM by rday. -->

Senator Gregory S. Bell proposes the following substitute bill:


             1     
PUBLIC UTILITIES AMENDMENTS

             2     
2005 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Sponsor: Gregory S. Bell

             5     

             6      LONG TITLE
             7      General Description:
             8          This bill modifies the Public Utilities Title to address public utility issues including
             9      enacting the Energy Resource Procurement Act.
             10      Highlighted Provisions:
             11          This bill:
             12          .    addresses prudence;
             13          .    addresses certificates of convenience and necessity;
             14          .    enacts the Energy Resource Procurement Act;
             15          .    defines terms;
             16          .    grants the commission rulemaking authority;
             17          .    establishes requirements for a solicitation process for a significant energy resource
             18      of an affected electrical utility;
             19          .    provides for the review of action plans under an affected electrical utility's
             20      integrated resource plan;
             21          .    provides for the approval of a significant energy resource decision;
             22          .    provides for cost recovery of an approved significant energy resource decision;
             23          .    addresses orders to proceed implementing a significant energy resource decision;
             24          .    permits an energy utility to request approval of a resource decision;
             25          .    provides for cost recovery of an approved resource decision;



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         .    addresses orders to proceed implementing a resource decision; and
             27          .    makes technical changes.
             28      Monies Appropriated in this Bill:
             29          None
             30      Other Special Clauses:
             31          This bill provides an immediate effective date.
             32          This bill provides revisor instructions.
             33      Utah Code Sections Affected:
             34      AMENDS:
             35          54-4-4, as last amended by Chapter 200, Laws of Utah 2003
             36          54-4-25, as last amended by Chapter 286, Laws of Utah 2002
             37      ENACTS:
             38          54-17-101, Utah Code Annotated 1953
             39          54-17-102, Utah Code Annotated 1953
             40          54-17-103, Utah Code Annotated 1953
             41          54-17-201, Utah Code Annotated 1953
             42          54-17-202, Utah Code Annotated 1953
             43          54-17-203, Utah Code Annotated 1953
             44          54-17-301, Utah Code Annotated 1953
             45          54-17-302, Utah Code Annotated 1953
             46          54-17-303, Utah Code Annotated 1953
             47          54-17-304, Utah Code Annotated 1953
             48          54-17-401, Utah Code Annotated 1953
             49          54-17-402, Utah Code Annotated 1953
             50          54-17-403, Utah Code Annotated 1953
             51          54-17-404, Utah Code Annotated 1953
             52     

             53      Be it enacted by the Legislature of the state of Utah:
             54          Section 1. Section 54-4-4 is amended to read:
             55           54-4-4. Classification and fixing of rates after hearing.
             56          (1) (a) The commission shall take an action described in Subsection (1)(b), if the



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     commission finds after a hearing that:
             58          (i) the rates, fares, tolls, rentals, charges, or classifications demanded, observed,
             59      charged, or collected by any public utility for, or in connection with, any service, product, or
             60      commodity, including the rates or fares for excursion or commutation tickets, or that the rules,
             61      regulations, practices, or contracts affecting the rates, fares, tolls, rentals, charges, or
             62      classifications are:
             63          (A) unjust;
             64          (B) unreasonable;
             65          (C) discriminatory;
             66          (D) preferential; or
             67          (E) otherwise in violation of any provisions of law; or
             68          (ii) the rates, fares, tolls, rentals, charges, or classifications described in Subsection
             69      (1)(a)(i) are insufficient.
             70          (b) If the commission makes a finding described in Subsection (1)(a), the commission
             71      shall:
             72          (i) determine the just, reasonable, or sufficient rates, fares, tolls, rentals, charges,
             73      classifications, rules, regulations, practices, or contracts to be thereafter observed and in force;
             74      and
             75          (ii) fix the determination described in Subsection (1)(b)(i) by order as provided in this
             76      section.
             77          (2) The commission may:
             78          (a) investigate:
             79          (i) one or more rates, fares, tolls, rentals, charges, classifications, rules, regulations,
             80      contracts, or practices of any public utility; or
             81          (ii) one or more schedules of rates, fares, tolls, rentals, charges, classifications, rules,
             82      regulations, contracts, or practices of any public utility; and
             83          (b) establish, after hearing, new rates, fares, tolls, rentals, charges, classifications, rules,
             84      regulations, contracts, practices, or schedules in lieu of them.
             85          (3) (a) If in the commission's determination of just and reasonable rates the
             86      commission uses a test period, the commission shall select a test period that, on the basis of
             87      evidence, the commission finds best reflects the conditions that a public utility will encounter



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     during the period when the rates determined by the commission will be in effect.
             89          (b) In establishing the test period determined in Subsection (3)(a), the commission may
             90      use:
             91          (i) a future test period that is determined on the basis of projected data not exceeding
             92      20 months from the date a proposed rate increase or decrease is filed with the commission
             93      under Section 54-7-12 ;
             94          (ii) a test period that is:
             95          (A) determined on the basis of historic data; and
             96          (B) adjusted for known and measurable changes; or
             97          (iii) a test period that is determined on the basis of a combination of:
             98          (A) future projections; and
             99          (B) historic data.
             100          (c) If pursuant to this Subsection (3), the commission establishes a test period that is
             101      not determined exclusively on the basis of future projections, in determining just and
             102      reasonable rates the commission shall consider changes outside the test period that:
             103          (i) occur during a time period that is close in time to the test period;
             104          (ii) are known in nature; and
             105          (iii) are measurable in amount.
             106          (4) (a) If, in the commission's determination of just, reasonable, or sufficient rates, the
             107      commission considers the prudence of an action taken by a public utility or an expense incurred
             108      by a public utility, the commission shall apply the following standards in making its prudence
             109      determination:
             110          (i) ensure just and reasonable rates for the retail ratepayers of the public utility in this
             111      state;
             112          (ii) focus on the reasonableness of the expense resulting from the action of the public
             113      utility judged as of the time the action was taken;
             114          (iii) determine whether a reasonable utility, knowing what the utility knew or
             115      reasonably should have known at the time of the action, would reasonably have incurred all or
             116      some portion of the expense, in taking the same or some other prudent action; and
             117          (iv) apply other factors determined by the commission to be relevant, consistent with
             118      the standards specified in this section.



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         (b) The commission may find an expense fully or partially prudent, up to the level that
             120      a reasonable utility would reasonably have incurred.
             121          Section 2. Section 54-4-25 is amended to read:
             122           54-4-25. Certificate of convenience and necessity prerequisite to construction and
             123      operation -- Electrical suppliers.
             124          (1) Except as provided in Section 11-13-304 , a gas corporation, electric corporation,
             125      telephone corporation, telegraph corporation, heat corporation, water corporation, or sewerage
             126      corporation may not establish, or begin construction or operation of a line, route, plant, or
             127      system or of any extension of a line, route, plant, or system, without having first obtained from
             128      the commission a certificate that present or future public convenience and necessity does or
             129      will require the construction.
             130          (2) This section may not be construed to require any corporation to secure a certificate
             131      for an extension:
             132          (a) within any city or town within which it has lawfully commenced operations;
             133          (b) into territory, either within or without a city or town, contiguous to its line, plant, or
             134      system that is not served by a public utility of like character; or
             135          (c) within or to territory already served by it, necessary in the ordinary course of its
             136      business.
             137          (3) If any public utility in constructing or extending its line, plant, or system interferes
             138      or may interfere with the operation of the line, plant, or system of any other public utility
             139      already constructed, the commission, on complaint of the public utility claiming to be
             140      injuriously affected, may, after a hearing, make an order and prescribe the terms and conditions
             141      for the location of the lines, plants, or systems affected as the commission determines are just
             142      and reasonable.
             143          (4) (a) (i) Each applicant for a certificate shall file in the office of the commission
             144      evidence as required by the commission to show that the applicant has received or is in the
             145      process of obtaining the required consent, franchise, or permit of the proper county, city,
             146      municipal, or other public authority.
             147          (ii) If the applicant is in the process of obtaining the required consent, franchise, or
             148      permit, a certificate shall be conditioned upon:
             149          (A) receipt of the consent, franchise, or permit within the time period the commission



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     may direct; and
             151          (B) the filing of such evidence of the receipt of the consent, franchise, or permit as the
             152      commission may require.
             153          (b) Each applicant, except an interlocal entity defined in Section 11-13-103 , shall also
             154      file in the office of the commission a statement that any proposed line, plant, or system will not
             155      conflict with or adversely affect the operations of any existing certificated fixed public utility
             156      which supplies the same product or service to the public and that it will not constitute an
             157      extension into the territory certificated to the existing fixed public utility.
             158          (c) The commission may, after a hearing:
             159          (i) issue the certificate as requested;
             160          (ii) refuse to issue the certificate; or
             161          (iii) issue the certificate for the construction of a portion only of the contemplated line,
             162      plant, or system, or extension thereof, or for the partial exercise only of the right or privilege.
             163          (d) The commission may attach to the exercise of the rights granted by the certificate
             164      the terms and conditions as in its judgment public convenience and necessity may require.
             165          (e) (i) If a public utility desires to exercise a right or privilege under a franchise or
             166      permit which it contemplates securing but which has not yet been granted to it, the public
             167      utility may apply to the commission for an order preliminary to the issue of the certificate.
             168          (ii) The commission may make an order declaring that it will upon application, under
             169      rules and regulations as it may prescribe, issue the desired certificate upon terms and conditions
             170      as it may designate after the public utility has obtained the contemplated franchise or permit.
             171          (iii) Upon presentation to the commission of evidence satisfactory to it that the
             172      franchise or permit has been secured by the public utility, the commission shall issue the
             173      certificate.
             174          (5) (a) Any supplier of electricity which is brought under the jurisdiction and regulation
             175      of the Public Service Commission by this [act] title may file with the commission an
             176      application for a certificate of convenience and necessity, giving the applicant the exclusive
             177      right to serve the customers it is serving in the area in which it is serving at the time of this
             178      filing, subject to the existing right of any other electrical corporation to likewise serve its
             179      customers in existence in the area at the time.
             180          (b) The application shall be prima facie evidence of the applicant's rights to a



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     certificate, and the certificate shall be issued within 30 days after the filing, pending which,
             182      however, the applicant shall have the right to continue its operations.
             183          (c) Upon good cause shown to the commission by anyone protesting the issuance of
             184      such a certificate, or upon the commission's own motion, a public hearing may be held to
             185      determine if the applicant has sufficient finances, equipment, and plant to continue its existing
             186      service. The commission shall issue its order within 45 days after the hearing according to the
             187      proof submitted at the hearing.
             188          (d) Every electrical corporation, save and except those applying for a certificate to
             189      serve only the customers served by applicant on May 11, 1965, applying for a certificate shall
             190      have established a ratio of debt capital to equity capital or will within a reasonable period of
             191      time establish a ratio of debt capital to equity capital which the commission shall find renders
             192      the electrical corporation financially stable and which financing shall be found to be in the
             193      public interest.
             194          (6) Nothing in this section affects the existing rights of municipalities.
             195          (7) The commission shall consolidate an action filed under Chapter 17, Part 3 or 4,
             196      with a proceeding under this section if:
             197          (a) a public utility is required to obtain a certificate of convenience and necessity
             198      pursuant to this section; and
             199          (b) the public utility files an action under Chapter 17, Part 3 or 4.
             200          Section 3. Section 54-17-101 is enacted to read:
             201     
CHAPTER 17. ENERGY RESOURCE PROCUREMENT ACT

             202     
Part 1. General Provisions

             203          54-17-101. Title.
             204          This chapter is known as the "Energy Resource Procurement Act."
             205          Section 4. Section 54-17-102 is enacted to read:
             206          54-17-102. Definitions.
             207          As used in this chapter:
             208          (1) "Affected electrical utility" means an electrical corporation with at least 200,000
             209      retail customers in the state.
             210          (2) "Benchmark option" means an energy resource against which bids in an open bid
             211      process may be evaluated that:



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         (a) could be constructed or owned by:
             213          (i) an affected electrical utility; or
             214          (ii) an affiliate of an affected electrical utility; or
             215          (b) may be a purchase of:
             216          (i) electricity;
             217          (ii) electric generating capacity; or
             218          (iii) electricity and electric generating capacity.
             219          (3) "Integrated resource plan" means a plan that contains:
             220          (a) the demand and energy forecast by the affected electrical utility for at least a
             221      ten-year period;
             222          (b) the affected electrical utility's options for meeting the requirements shown in its
             223      load and resource forecast in an economic and reliable manner, including:
             224          (i) demand-side and supply-side options; and
             225          (ii) a brief description and summary cost-benefit analysis, if available, of each option
             226      that was considered;
             227          (c) the affected electrical utility's assumptions and conclusions with respect to the
             228      effect of the plan on the cost and reliability of energy service;
             229          (d) a description of the external environmental and economic consequences of the plan
             230      to the extent practicable; and
             231          (e) any other data and analyses as the commission may require.
             232          (4) "Significant energy resource" for an affected electrical utility means a resource that
             233      consists of:
             234          (a) a total of 100 megawatts or more of new generating capacity that has a dependable
             235      life of ten or more years;
             236          (b) a purchase of the following if the contract is for a term of ten or more years and not
             237      less than 100 megawatts:
             238          (i) electricity;
             239          (ii) electric generating capacity; or
             240          (iii) electricity and electrical generating capacity;
             241          (c) the purchase or lease by an affected electrical utility from an affiliated company of:
             242          (i) a generating facility;



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         (ii) electricity;
             244          (iii) electrical generating capacity; or
             245          (iv) electricity and electrical generating capacity;
             246          (d) a contract with an option for the affected electrical utility or an affiliate to purchase
             247      a resource that consists of not less than 100 megawatts or more of new generating capacity that
             248      has a remaining dependable life of ten or more years; or
             249          (e) a type of resource designated by the commission as a significant energy resource in
             250      rules made by the commission in accordance with Title 63, Chapter 46a, Utah Administrative
             251      Rulemaking Act, after considering the affected electrical utility's integrated resource plan and
             252      action plan.
             253          (5) "Solicitation" means a request for proposals or other invitation for persons to
             254      submit a bid or proposal through an open bid process for construction or acquisition of a
             255      significant energy resource.
             256          Section 5. Section 54-17-103 is enacted to read:
             257          54-17-103. Rulemaking.
             258          (1) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             259      commission:
             260          (a) shall make rules when required by this chapter; and
             261          (b) in addition to the rules required under Subsection (1)(a), may make rules necessary
             262      for the implementation of this chapter.
             263          (2) Notwithstanding a requirement that the commission make rules, the commission
             264      may take action under this chapter before the commission makes a required rule including:
             265          (a) approving a solicitation process under Part 2, Solicitation Process;
             266          (b) approving a significant energy resource under Section 54-17-302 ;
             267          (c) issuing an order under Section 54-17-304 regarding whether an affected electrical
             268      utility should proceed with implementing a significant energy resource decision;
             269          (d) approving an energy resource under Section 54-17-402 ; or
             270          (e) issuing an order under Section 54-17-404 regarding whether an energy utility
             271      should proceed with implementing a resource decision.
             272          Section 6. Section 54-17-201 is enacted to read:
             273     
Part 2. Solicitation Process



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         54-17-201. Solicitation process required -- Exception.
             275          (1) (a) An affected electrical utility shall comply with this chapter to acquire or
             276      construct a significant energy resource after the effective date of this bill.
             277          (b) Notwithstanding Subsection (1)(a), this chapter does not apply to a significant
             278      energy resource for which the affected electrical utility has issued a solicitation before the
             279      effective date of this bill.
             280          (2) (a) Except as provided in Subsection (3), to acquire or construct a significant
             281      energy resource, an affected electrical utility shall conduct a solicitation process that is
             282      approved by the commission.
             283          (b) To obtain the approval of the commission of a solicitation process, the affected
             284      electrical utility shall file with the commission a request for approval that includes:
             285          (i) a description of the solicitation process the affected electrical utility will use;
             286          (ii) a complete proposed solicitation; and
             287          (iii) any other information the commission requires by rule made in accordance with
             288      Title 63, Chapter 46a, Utah Administrative Rulemaking Act.
             289          (c) In ruling on the request for approval of a solicitation process, the commission shall
             290      determine whether the solicitation process:
             291          (i) complies with this chapter and rules made in accordance with Title 63, Chapter 46a,
             292      Utah Administrative Rulemaking Act; and
             293          (ii) is in the public interest taking into consideration:
             294          (A) whether it will most likely result in the acquisition, production, and delivery of
             295      electricity at the lowest reasonable cost to the retail customers of an affected electrical utility
             296      located in this state;
             297          (B) long-term and short-term impacts;
             298          (C) risk;
             299          (D) reliability;
             300          (E) financial impacts on the affected electrical utility; and
             301          (F) other factors determined by the commission to be relevant.
             302          (d) Before approving a solicitation process under this section the commission:
             303          (i) may hold a public hearing; and
             304          (ii) shall provide an opportunity for public comment.



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         (e) As part of its review of a solicitation process, the commission may provide the
             306      affected electrical utility guidance on any additions or changes to its proposed solicitation
             307      process.
             308          (f) Unless the commission determines that additional time to analyze a solicitation
             309      process is warranted and is in the public interest, within 90 days of the day on which the
             310      affected electrical utility files a request for approval of the solicitation process, the commission
             311      shall:
             312          (i) approve a proposed solicitation process;
             313          (ii) suggest modifications to a proposed solicitation process; or
             314          (iii) reject a proposed solicitation process.
             315          (3) (a) Notwithstanding Subsection (2), an affected electrical utility may acquire or
             316      construct a significant energy resource without conducting a solicitation process if the
             317      commission finds that waiving the requirement of a solicitation process is in the public interest
             318      because:
             319          (i) there exists:
             320          (A) a clear emergency; or
             321          (B) a time-limited commercial or technical opportunity that provides value to the
             322      customers of the affected electrical utility; or
             323          (ii) there exists a factor not described in Subsection (3)(a)(i) that makes waiving the
             324      requirement of conducting a solicitation in the public interest.
             325          (b) To obtain a finding from the commission under Subsection (3)(a), the affected
             326      electrical utility shall file with the commission the information required by the commission by
             327      rule made in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act.
             328          (c) Unless the commission determines that additional time to analyze a request for
             329      waiver of a solicitation process is warranted and is in the public interest, within 30 days of the
             330      day on which the affected electrical utility files a request for waiver of the solicitation process,
             331      the commission shall:
             332          (i) approve the waiver;
             333          (ii) approve the waiver subject to conditions imposed by the commission; or
             334          (iii) reject the waiver.
             335          (d) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the



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     commission may define what constitutes:
             337          (i) a clear emergency; or
             338          (ii) a time-limited commercial or technical opportunity.
             339          (4) In accordance with the commission's authority under Subsection 54-12-2 (2), the
             340      commission shall determine:
             341          (a) whether this chapter or another competitive bidding procedure shall apply to a
             342      purchase of a significant energy resource by an affected electrical utility from a small power
             343      producer or cogenerator; and
             344          (b) if this chapter applies as provided in Subsection (4)(a), the manner in which this
             345      chapter applies to a purchase of a significant energy resource by an affected electrical utility
             346      from a small power producer or cogenerator.
             347          Section 7. Section 54-17-202 is enacted to read:
             348          54-17-202. Requirements for solicitation.
             349          (1) The commission shall make rules, in accordance with Title 63, Chapter 46a, Utah
             350      Administrative Rulemaking Act, outlining the requirements for a solicitation process. The
             351      rules required by this Subsection (1) shall include:
             352          (a) the type of screening criteria an affected electrical utility may use in a solicitation
             353      process including the risks an affected electrical utility may consider;
             354          (b) the required disclosures by an affected electrical utility if a solicitation includes a
             355      benchmark option;
             356          (c) the required disclosures by an affected electrical utility related to the methodology
             357      the affected electrical utility uses to evaluate bids; and
             358          (d) the participation of an independent evaluator in a manner consistent with Section
             359      54-17-203 .
             360          (2) If an affected electrical utility is subject to regulation in more than one state
             361      regarding the acquisition, construction, or cost recovery of a significant energy resource, in
             362      making the rules required by Subsection (1), the commission may consider the impact of the
             363      multistate regulation including requirements imposed by other states as to:
             364          (a) the solicitation process;
             365          (b) cost recovery of resources; and
             366          (c) methods by which the affected electrical utility may be able to mitigate the potential



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     for cost disallowances.
             368          Section 8. Section 54-17-203 is enacted to read:
             369          54-17-203. Independent evaluator.
             370          (1) (a) The commission shall:
             371          (i) appoint an independent evaluator to monitor any solicitation conducted by an
             372      affected electrical utility under this chapter; and
             373          (ii) oversee or direct the division to oversee the independent evaluator in monitoring
             374      any solicitation conducted by an affected electrical utility under this chapter.
             375          (b) The commission, in accordance with Title 63, Chapter 46a, Utah Administrative
             376      Procedures Act, shall make rules setting the qualifications of an independent evaluator.
             377          (2) The commission shall determine the method used to pay the fees and expenses for
             378      the independent evaluator which may include:
             379          (a) the payment of a bid fee by bidders to a solicitation; or
             380          (b) (i) requiring the affected electrical utility to pay the fees and expenses; and
             381          (ii) permitting an affected electrical utility to recover the amounts paid under this
             382      Subsection (2)(b).
             383          (3) (a) The independent evaluator may not make the decision as to which bid should be
             384      awarded under the solicitation.
             385          (b) The independent evaluator shall:
             386          (i) actively monitor the solicitation process for fairness and compliance with
             387      commission rules;
             388          (ii) report regularly to:
             389          (A) the commission; and
             390          (B) others as directed by the commission;
             391          (iii) develop one or more reports addressing:
             392          (A) the solicitation process;
             393          (B) any concerns of the independent evaluator related to the solicitation process; and
             394          (C) the ultimate results of the solicitation process, including the opinions and
             395      conclusions of the independent evaluator;
             396          (iv) provide ongoing input regarding issues, concerns, and improvements in the
             397      solicitation process with the objective of correcting ongoing deficiencies in the solicitation



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             398
     process to the following:
             399          (A) the commission;
             400          (B) the affected electrical utility; and
             401          (C) others as directed by the commission;
             402          (v) render an opinion as to whether:
             403          (A) the solicitation process is:
             404          (I) fair; and
             405          (II) in compliance with this part; and
             406          (B) any modeling used by the affected electrical utility to evaluate bids is sufficient;
             407          (vi) testify in any proceeding under Section 54-17-302 ; and
             408          (vii) perform other functions and provide other input and reports as the commission
             409      may direct, including periodic presentations to interested parties regarding the solicitation
             410      process.
             411          Section 9. Section 54-17-301 is enacted to read:
             412     
Part 3. Resource Plans and Significant Energy Resource Approval

             413          54-17-301. Review of integrated resource plan action plans.
             414          (1) An affected electrical utility shall file with the commission any action plan
             415      developed as part of the affected electrical utility's integrated resource plan to enable the
             416      commission to review and provide guidance to the affected electrical utility.
             417          (2) (a) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
             418      the commission shall make rules providing a process for its review of an action plan.
             419          (b) The rules required under Subsection (2)(a) shall provide sufficient flexibility to
             420      permit changes in an action plan between the periodic filings of the affected electrical utility's
             421      integrated resource plan.
             422          Section 10. Section 54-17-302 is enacted to read:
             423          54-17-302. Approval of a significant energy resource decision required.
             424          (1) If pursuant to Part 2, Solicitation Process, an affected electrical utility is required to
             425      conduct a solicitation for a significant energy resource or is exempt from conducting a
             426      solicitation under Subsection 54-17-201 (3), the affected electrical utility shall obtain approval
             427      of its significant energy resource decision:
             428          (a) after the completion of the solicitation process, if the affected electrical utility is



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             429
     required to conduct a solicitation; and
             430          (b) before an affected electrical utility may construct or enter into a binding agreement
             431      to acquire the significant energy resource.
             432          (2) (a) To obtain the approval required by Subsection (1), the affected electrical utility
             433      shall file a request for approval with the commission.
             434          (b) The request for approval required by this section shall include any information
             435      required by the commission by rule made in accordance with Title 63, Chapter 46a, Utah
             436      Administrative Rulemaking Act.
             437          (3) In ruling on a request for approval of a significant energy resource decision, the
             438      commission shall determine whether the significant energy resource decision:
             439          (a) is reached in compliance with this chapter and rules made in accordance with Title
             440      63, Chapter 46a, Utah Administrative Rulemaking Act;
             441          (b) (i) is reached in compliance with the solicitation process approved by the
             442      commission in accordance with Part 2, Solicitation Process; or
             443          (ii) is reached after the waiver of the solicitation process as provided in Subsection
             444      54-17-201 (3); and
             445          (c) is in the public interest, taking into consideration:
             446          (i) whether it will most likely result in the acquisition, production, and delivery of
             447      electricity at the lowest reasonable cost to the retail customers of an affected electrical utility
             448      located in this state;
             449          (ii) long-term and short-term impacts;
             450          (iii) risk;
             451          (iv) reliability;
             452          (v) financial impacts on the affected electrical utility; and
             453          (vi) other factors determined by the commission to be relevant.
             454          (4) The commission may not approve a significant energy resource decision under this
             455      section before holding a public hearing.
             456          (5) Unless the commission determines that additional time to analyze a significant
             457      energy resource decision is warranted and is in the public interest, within 180 days of the day
             458      on which the affected electrical utility files a request for approval, the commission shall:
             459          (a) approve the significant energy resource decision;



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             460
         (b) approve the significant energy resource decision subject to conditions imposed by
             461      the commission; or
             462          (c) disapprove the significant energy resource decision.
             463          (6) The commission shall include in its order under this section:
             464          (a) findings as to the total projected costs for construction or acquisition of an
             465      approved significant energy resource; and
             466          (b) the basis upon which the findings described in Subsection (6)(a) are made.
             467          (7) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             468      commission shall make rules regarding the process for approval of a significant energy
             469      resource decision under this section.
             470          Section 11. Section 54-17-303 is enacted to read:
             471          54-17-303. Cost recovery.
             472          (1) (a) Except as otherwise provided in this section, if the commission approves a
             473      significant energy resource decision under Section 54-17-302 , the commission shall, in a
             474      general rate case or other appropriate commission proceeding, include in the affected electrical
             475      utility's retail electric rates the state's share of costs:
             476          (i) relevant to the proceeding;
             477          (ii) incurred by the affected electrical utility in constructing or acquiring the approved
             478      significant energy resource; and
             479          (iii) up to the projected costs specified in the commission's order issued under Section
             480      54-17-302 .
             481          (b) Except to the extent that the commission enters an order under Section 54-17-304 ,
             482      an increase from the projected costs specified in the commission's order issued under Section
             483      54-17-302 shall be subject to review by the commission as part of a rate hearing under Section
             484      54-7-12 .
             485          (2) (a) Subsequent to the commission issuing an order described in Subsection (2)(a)(i)
             486      or (ii), the commission may disallow some or all costs incurred in connection with an
             487      approved significant energy resource decision if the commission finds that an affected
             488      electrical utility's actions in implementing an approved significant energy resource decision are
             489      not prudent because of new information or changed circumstances that occur after:
             490          (i) the commission's approval of the significant energy resource decisions under



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             491
     Section 54-17-302 ; or
             492          (ii) a commission order to proceed under Section 54-17-304 .
             493          (b) In making a determination of prudence under Subsection (2)(a), the commission
             494      shall use the standards identified in Section 54-4-4 .
             495          (3) Notwithstanding any other provision of this chapter, the commission may disallow
             496      some or all of the costs incurred by an affected electrical utility in connection with an approved
             497      significant energy resource decision upon a finding by the commission that the affected
             498      electrical utility is responsible for a material misrepresentation or concealment in connection
             499      with an approval process under this chapter.
             500          Section 12. Section 54-17-304 is enacted to read:
             501          54-17-304. Order to proceed.
             502          (1) (a) In the event of a change in circumstances or projected costs, an affected
             503      electrical utility may seek a commission review and determination of whether the affected
             504      electrical utility should proceed with the implementation of an approved significant energy
             505      resource decision.
             506          (b) In making a determination under this Subsection (1), the commission shall use the
             507      standards identified in Subsection 54-17-302 (3)(c).
             508          (c) Before making a determination under this Subsection (1) the commission:
             509          (i) may hold a public hearing; and
             510          (ii) shall provide an opportunity for public comment.
             511          (2) Unless the commission determines that additional time is warranted and is in the
             512      public interest, within 60 days of the day on which the affected electrical utility files a request
             513      for commission review and determination under this section, the commission shall:
             514          (a) issue an order:
             515          (i) determining that the affected electrical utility should proceed with the
             516      implementation of the significant energy resource decision;
             517          (ii) making findings as to the total projected costs for construction or acquisition of the
             518      approved significant energy resource; and
             519          (iii) stating the basis upon which the findings described in Subsection (2)(a)(ii) are
             520      made; or
             521          (b) issue an order determining that the affected electrical utility should not proceed



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             522
     with the implementation of the significant energy resource decision.
             523          (3) If the commission determines that the affected electrical utility should proceed with
             524      the implementation of the approved significant energy resource decision, the commission shall,
             525      in a general rate case or other appropriate commission proceeding, include in the affected
             526      electrical utility's retail electric rates the state's share of costs:
             527          (a) relevant to that proceeding;
             528          (b) incurred by the affected electrical utility in constructing or acquiring the approved
             529      significant energy resource; and
             530          (c) up to the projected costs as specified in the commission's order issued under
             531      Subsection (2)(a).
             532          (4) If the commission determines that the affected electrical utility should not proceed
             533      with the implementation of the approved significant energy resource decision, the commission
             534      shall, in a general rate case or other appropriate commission proceeding, include in the affected
             535      electrical utility's retail electric rates the state's share of costs:
             536          (a) relevant to that proceeding; and
             537          (b) incurred by the affected electrical utility in constructing or acquiring the approved
             538      significant energy resource before issuance of a determination not to proceed, including any
             539      prudently incurred costs of terminating the approved significant energy resource decision.
             540          (5) A commission order under this section not to proceed with the implementation of a
             541      significant energy resource may not prejudice:
             542          (a) the right of an affected electrical utility to:
             543          (i) continue to implement the significant energy resource decision; and
             544          (ii) seek recovery of costs incurred after a determination not to proceed in a future rate
             545      proceeding; or
             546          (b) the right of any other party to support or oppose recovery of costs sought under
             547      Subsection (5)(a)(ii).
             548          (6) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             549      commission shall make rules regarding the process for the commission's review and
             550      determination on a request for an order to proceed under this section.
             551          Section 13. Section 54-17-401 is enacted to read:
             552     
Part 4. Voluntary Request for Resource Decision Review



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Senate Committee Amendments 1-24-2005 rd/po
             553
         54-17-401. Definitions.
             554          As used in this part:
             555          (1) "Energy utility" means one of the following with 200,000 retail customers in the
             556      state:
             557          (a) an electrical corporation; or
             558          (b) a gas corporation.
             559          (2) S (a) s "Resource decision" means a decision, other than a decision to construct or
             559a      acquire
             560      a significant energy resource, involving:
             561           S [ (a) ] (i) s an energy utility's acquisition, management, or operation of energy production,
             562      processing, transmission, or distribution facilities or processes including:
             563           S [ (i) ] (A) s a facility or process for the efficient, reliable, or safe provision of energy to retail
             564      customers; or
             565           S [ (ii) ] (B) s an energy efficiency and conservation program; or
             566           S [ (b) ] (ii) s a decision determined by the commission to be appropriate for review under this
             567      part.
             567a      S (b) THE COMMISSION MAY ADOPT RULES IN ACCORDANCE WITH TITLE 63, CHAPTER 46a, UTAH
             567b      ADMINISTRATIVE RULEMAKING ACT, TO SPECIFY THE NATURE OF RESOURCE DECISIONS SUBJET
             567c      TO APPROVAL UNDER SECTION 54-17-402. s
             568          Section 14. Section 54-17-402 is enacted to read:
             569          54-17-402. Request for review of resource decision.
             570          (1) Beginning on the effective date of this bill, before implementing a resource
             571      decision, an energy utility may request that the commission approve all or part of a resource
             572      decision in accordance with this part.
             573          (2) (a) To obtain the approval permitted by Subsection (1), the energy utility shall file a
             574      request for approval with the commission.
             575          (b) The request for approval required by this section shall include any information
             576      required by the commission by rule made in accordance with Title 63, Chapter 46a, Utah
             577      Administrative Rulemaking Act.
             578          (3) In ruling on a request for approval of a resource decision, the commission shall
             579      determine whether the decision:
             580          (a) is reached in compliance with this chapter and rules made in accordance with Title
             581      63, Chapter 46a, Utah Administrative Rulemaking Act; and
             582          (b) is in the public interest, taking into consideration:
             583          (i) whether it will most likely result in the acquisition, production, and delivery of




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             584
     utility services at the lowest reasonable cost to the retail customers of an energy utility located
             585      in this state;
             586          (ii) long-term and short-term impacts;
             587          (iii) risk;
             588          (iv) reliability;
             589          (v) financial impacts on the energy utility; and
             590          (vi) other factors determined by the commission to be relevant.
             591          (4) (a) If the commission approves a proposed resource decision only in part, the
             592      commission shall explain in the order issued under this section why the commission does not
             593      approve the resource decision in total.
             594          (b) Recovery of expenses incurred in connection with parts of a resource decision that
             595      are not approved is subject to the review of the commission as part of a rate hearing under
             596      Section 54-7-12 .
             597          (5) The commission may not approve a resource decision in whole or in part under this
             598      section before holding a public hearing.
             599          (6) Unless the commission determines that additional time to analyze a resource
             600      decision is warranted and is in the public interest, within 180 days of the day on which the
             601      energy utility files a request for approval, the commission shall:
             602          (a) approve all or part of the resource decision;
             603          (b) approve all or part of the resource decision subject to conditions imposed by the
             604      commission; or
             605          (c) disapprove all or part of the resource decision.
             606          (7) The commission shall include in its order under this section:
             607          (a) findings as to the approved projected costs of a resource decision; and
             608          (b) the basis upon which the findings described in Subsection (7)(a) are made.
             609          (8) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             610      commission shall make rules regarding the process for approval of a resource decision under
             611      this section.
             612          Section 15. Section 54-17-403 is enacted to read:
             613          54-17-403. Cost recovery.
             614          (1) (a) Except as otherwise provided in this section, if the commission approves any



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             615
     portion of an energy utility's resource decision under Section 54-17-402 , the commission shall,
             616      in a general rate case or other appropriate commission proceeding, include in the energy
             617      utility's retail rates the state's share of costs:
             618          (i) relevant to that proceeding;
             619          (ii) incurred by the energy utility in implementing the approved resource decision; and
             620          (iii) up to the projected costs specified in the commission's order issued under Section
             621      54-17-402 .
             622          (b) Except to the extent that the commission issues an order under Section 54-17-404 ,
             623      any increase from the projected costs specified in the commission's order issued under Section
             624      54-17-402 shall be subject to review by the commission as part of a rate hearing under Section
             625      54-7-12 .
             626          (2) (a) Subsequent to the commission issuing an order described in Subsection (2)(a)(i)
             627      or (ii), the commission may disallow some or all costs incurred in connection with an
             628      approved resource decision if the commission finds that an energy utility's actions in
             629      implementing an approved resource decision are not prudent because of new information or
             630      changed circumstances that occur after:
             631          (i) the commission approves the resource decision under Section 54-17-402 ; or
             632          (ii) the commission issues an order to proceed under Section 54-17-404 .
             633          (b) In making a determination of prudence under Subsection (2)(a), the commission
             634      shall use the standards identified in Section 54-4-4 .
             635          (3) Notwithstanding any other provision of this chapter, the commission may disallow
             636      some or all of the costs incurred by an energy utility in connection with an approved resource
             637      decision upon a finding by the commission that the energy utility is responsible for a material
             638      misrepresentation or concealment in connection with an approval process under this chapter.
             639          Section 16. Section 54-17-404 is enacted to read:
             640          54-17-404. Order to proceed.
             641          (1) (a) In the event of a change in circumstances or projected costs, an energy utility
             642      may seek a commission review and determination of whether the energy utility should proceed
             643      with the implementation of an approved resource decision.
             644          (b) In making a determination under this Subsection (1), the commission shall use the
             645      standards identified in Subsection 54-17-402 (3)(b).



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             646
         (c) Before making a determination under this Subsection (1) the commission:
             647          (i) may hold a public hearing; and
             648          (ii) shall provide an opportunity for public comment.
             649          (2) Unless the commission determines that additional time is warranted and is in the
             650      public interest, within 60 days of the day on which the energy utility files a request for
             651      commission review and determination under this section, the commission shall:
             652          (a) issue an order:
             653          (i) determining that the energy utility should proceed with the implementation of the
             654      resource decision;
             655          (ii) making findings as to the total projected costs of the approved resource decision;
             656      and
             657          (iii) stating the basis upon which the findings described in Subsection (2)(a)(ii) are
             658      made; or
             659          (b) issue an order determining that the energy utility should not proceed with the
             660      implementation of the resource decision.
             661          (3) If the commission determines that the energy utility should proceed with the
             662      implementation of the approved resource decision, the commission shall, in a general rate case
             663      or other appropriate commission proceeding, include in the energy utility's retail rates the
             664      state's share of costs:
             665          (a) relevant to that proceeding;
             666          (b) incurred by the energy utility in implementing the approved resource decision; and
             667          (c) up to the projected costs as specified in the commission's order issued under
             668      Subsection (2)(a).
             669          (4) If the commission determines that the energy utility should not proceed with the
             670      implementation of the approved resource decision, the commission shall, in a general rate case
             671      or other appropriate commission proceeding, include in the energy utility's retail rates the
             672      state's share of costs:
             673          (a) relevant to that proceeding; and
             674          (b) incurred by the energy utility in implementing the approved resource decision
             675      before issuance of a determination not to proceed, including any prudently incurred costs of
             676      terminating the approved resource decision.



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             677
         (5) A commission order under this section not to proceed with the implementation of a
             678      resource decision may not prejudice:
             679          (a) the right of an energy utility to:
             680          (i) continue to implement the resource decision; and
             681          (ii) seek recovery of costs incurred after a determination not to proceed in a future rate
             682      proceeding; or
             683          (b) the right of any other party to support or oppose the recovery sought under
             684      Subsection (5)(a)(ii).
             685          (6) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             686      commission shall make rules regarding the process for the commission's review and
             687      determination on a request for an order to proceed under this section.
             688          Section 17. Effective date.
             689          If approved by two-thirds of all the members elected to each house, this bill takes effect
             690      upon approval by the governor, or the day following the constitutional time limit of Utah
             691      Constitution Article VII, Section 8, without the governor's signature, or in the case of a veto,
             692      the date of veto override.
             693          Section 18. Revisor instructions.
             694           It is the intent of the Legislature that the Office of Legislative Research and General
             695      Counsel in preparing the Utah Code database for publication replace the references to "the
             696      effective date of this bill" in Subsections 54-17-201 (1) and 54-17-402 (1) with the effective date
             697      of the bill.


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