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First Substitute H.B. 335

Representative Gregory H. Hughes proposes the following substitute bill:


             1     
UTILITY RELATED EXEMPTIONS

             2     
2010 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Gregory H. Hughes

             5     
Senate Sponsor: J. Stuart Adams

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill excludes from various public utility provisions certain entities producing
             10      electricity.
             11      Highlighted Provisions:
             12          This bill:
             13          .    provides that certain entities providing electricity to certain owners and creditors are
             14      not considered an electrical corporation or public utility under Title 54, Public
             15      Utilities;
             16          .    exempts from various regulatory provisions electricity provided to certain owners
             17      and creditors; and
             18          .    makes technical changes.
             19      Monies Appropriated in this Bill:
             20          None
             21      Other Special Clauses:
             22          None
             23      Utah Code Sections Affected:
             24      AMENDS:
             25          54-2-1, as last amended by Laws of Utah 2008, Chapter 374


             26          54-3-8, as last amended by Laws of Utah 2005, Chapter 5
             27          54-4-2, Utah Code Annotated 1953
             28     
             29      Be it enacted by the Legislature of the state of Utah:
             30          Section 1. Section 54-2-1 is amended to read:
             31           54-2-1. Definitions.
             32          As used in this title:
             33          (1) "Avoided costs" means the incremental costs to an electrical corporation of electric
             34      energy or capacity or both which, due to the purchase of electric energy or capacity or both
             35      from small power production or cogeneration facilities, the electrical corporation would not
             36      have to generate itself or purchase from another electrical corporation.
             37          (2) "Cogeneration facility":
             38          (a) means a facility which produces:
             39          (i) electric energy; and
             40          (ii) steam or forms of useful energy, including heat, which are used for industrial,
             41      commercial, heating, or cooling purposes; and
             42          (b) is a qualifying cogeneration facility under federal law.
             43          (3) "Commission" means the Public Service Commission of Utah.
             44          (4) "Commissioner" means a member of the commission.
             45          (5) (a) "Corporation" includes an association, and a joint stock company having any
             46      powers or privileges not possessed by individuals or partnerships.
             47          (b) "Corporation" does not include towns, cities, counties, conservancy districts,
             48      improvement districts, or other governmental units created or organized under any general or
             49      special law of this state.
             50          (6) "Distribution electrical cooperative" includes an electrical corporation that:
             51          (a) is a cooperative;
             52          (b) conducts a business that includes the retail distribution of electricity the cooperative
             53      purchases or generates for the cooperative's members; and
             54          (c) is required to allocate or distribute savings in excess of additions to reserves and
             55      surplus on the basis of patronage to the cooperative's:
             56          (i) members; or


             57          (ii) patrons.
             58          (7) "Electrical corporation" includes every corporation, cooperative association, and
             59      person, their lessees, trustees, and receivers, owning, controlling, operating, or managing any
             60      electric plant, or in any way furnishing electric power for public service or to its consumers or
             61      members for domestic, commercial, or industrial use, within this state, except independent
             62      energy producers, and except where electricity is generated on or distributed by the producer
             63      solely for the producer's own use, or the use of the producer's tenants, or for the use of
             64      members of an association of unit owners formed under Title 57, Chapter 8, Condominium
             65      Ownership Act, and not for sale to the public generally, and except where the electricity
             66      generated is consumed by an owner, lessor, or interest holder, or by an affiliate of an owner,
             67      lessor, or interest holder, who has provided at least $25,000,000 in value, including credit
             68      support, relating to the electric plant furnishing the electricity and whose consumption does not
             69      exceed its long term entitlement in the plant under a long term arrangement other than a power
             70      purchase agreement, except a power purchase agreement with an electrical corporation.
             71          (8) "Electric plant" includes all real estate, fixtures, and personal property owned,
             72      controlled, operated, or managed in connection with or to facilitate the production, generation,
             73      transmission, delivery, or furnishing of electricity for light, heat, or power, and all conduits,
             74      ducts, or other devices, materials, apparatus, or property for containing, holding, or carrying
             75      conductors used or to be used for the transmission of electricity for light, heat, or power.
             76          (9) "Gas corporation" includes every corporation and person, their lessees, trustees, and
             77      receivers, owning, controlling, operating, or managing any gas plant for public service within
             78      this state or for the selling or furnishing of natural gas to any consumer or consumers within the
             79      state for domestic, commercial, or industrial use, except in the situation that:
             80          (a) gas is made or produced on, and distributed by the maker or producer through,
             81      private property:
             82          (i) solely for the maker's or producer's own use or the use of the maker's or producer's
             83      tenants; and
             84          (ii) not for sale to others;
             85          (b) gas is compressed on private property solely for the owner's own use or the use of
             86      the owner's employees as a motor vehicle fuel; or
             87          (c) gas is compressed by a retailer of motor vehicle fuel on the retailer's property solely


             88      for sale as a motor vehicle fuel.
             89          (10) "Gas plant" includes all real estate, fixtures, and personal property owned,
             90      controlled, operated, or managed in connection with or to facilitate the production, generation,
             91      transmission, delivery, or furnishing of gas, natural or manufactured, for light, heat, or power.
             92          (11) "Heat corporation" includes every corporation and person, their lessees, trustees,
             93      and receivers, owning, controlling, operating, or managing any heating plant for public service
             94      within this state.
             95          (12) (a) "Heating plant" includes all real estate, fixtures, machinery, appliances, and
             96      personal property controlled, operated, or managed in connection with or to facilitate the
             97      production, generation, transmission, delivery, or furnishing of artificial heat.
             98          (b) "Heating plant" does not include either small power production facilities or
             99      cogeneration facilities.
             100          (13) "Independent energy producer" means every electrical corporation, person,
             101      corporation, or government entity, their lessees, trustees, or receivers, that own, operate,
             102      control, or manage an independent power production or cogeneration facility.
             103          (14) "Independent power production facility" means a facility that:
             104          (a) produces electric energy solely by the use, as a primary energy source, of biomass,
             105      waste, a renewable resource, a geothermal resource, or any combination of the preceding
             106      sources; or
             107          (b) is a qualifying power production facility.
             108          (15) "Private telecommunications system" includes all facilities for the transmission of
             109      signs, signals, writing, images, sounds, messages, data, or other information of any nature by
             110      wire, radio, lightwaves, or other electromagnetic means, excluding mobile radio facilities, that
             111      are owned, controlled, operated, or managed by a corporation or person, including their lessees,
             112      trustees, receivers, or trustees appointed by any court, for the use of that corporation or person
             113      and not for the shared use with or resale to any other corporation or person on a regular basis.
             114          (16) (a) "Public utility" includes every railroad corporation, gas corporation, electrical
             115      corporation, distribution electrical cooperative, wholesale electrical cooperative, telephone
             116      corporation, telegraph corporation, water corporation, sewerage corporation, heat corporation,
             117      and independent energy producer not described in Subsection (16)(d), where the service is
             118      performed for, or the commodity delivered to, the public generally, or in the case of a gas


             119      corporation or electrical corporation where the gas or electricity is sold or furnished to any
             120      member or consumers within the state for domestic, commercial, or industrial use.
             121          (b) (i) If any railroad corporation, gas corporation, electrical corporation, telephone
             122      corporation, telegraph corporation, water corporation, sewerage corporation, heat corporation,
             123      or independent energy producer not described in Subsection (16)(d), performs a service for or
             124      delivers a commodity to the public, it is considered to be a public utility, subject to the
             125      jurisdiction and regulation of the commission and this title.
             126          (ii) If a gas corporation, independent energy producer not described in Subsection
             127      (16)(d), or electrical corporation sells or furnishes gas or electricity to any member or
             128      consumers within the state, for domestic, commercial, or industrial use, for which any
             129      compensation or payment is received, it is considered to be a public utility, subject to the
             130      jurisdiction and regulation of the commission and this title.
             131          (c) Any corporation or person not engaged in business exclusively as a public utility as
             132      defined in this section is governed by this title in respect only to the public utility owned,
             133      controlled, operated, or managed by the corporation or person, and not in respect to any other
             134      business or pursuit.
             135          (d) An independent energy producer is exempt from the jurisdiction and regulations of
             136      the commission with respect to an independent power production facility if it meets the
             137      requirements of Subsection (16)(d)(i), (ii), or (iii), or any combination of these:
             138          (i) the commodity or service is produced or delivered, or both, by an independent
             139      energy producer solely for the uses exempted in Subsection (7) or for the use of state-owned
             140      facilities;
             141          (ii) the commodity or service is sold by an independent energy producer solely to an
             142      electrical corporation or other wholesale purchaser; or
             143          (iii) (A) the commodity or service delivered by the independent energy producer is
             144      delivered to an entity which controls, is controlled by, or affiliated with the independent energy
             145      producer or to a user located on real property managed by the independent energy producer;
             146      and
             147          (B) the real property on which the service or commodity is used is contiguous to real
             148      property which is owned or controlled by the independent energy producer. Parcels of real
             149      property separated solely by public roads or easements for public roads shall be considered as


             150      contiguous for purposes of this Subsection (16).
             151          (e) Any person or corporation defined as an electrical corporation or public utility
             152      under this section may continue to serve its existing customers subject to any order or future
             153      determination of the commission in reference to the right to serve those customers.
             154          (f) (i) "Public utility" does not include any person that is otherwise considered a public
             155      utility under this Subsection (16) solely because of that person's ownership of an interest in an
             156      electric plant, cogeneration facility, or small power production facility in this state if all of the
             157      following conditions are met:
             158          (A) the ownership interest in the electric plant, cogeneration facility, or small power
             159      production facility is leased to:
             160          (I) a public utility, and that lease has been approved by the commission;
             161          (II) a person or government entity that is exempt from commission regulation as a
             162      public utility; or
             163          (III) a combination of Subsections (16)(f)(i)(A)(I) and (II);
             164          (B) the lessor of the ownership interest identified in Subsection (16)(f)(i)(A) is:
             165          (I) primarily engaged in a business other than the business of a public utility; or
             166          (II) a person whose total equity or beneficial ownership is held directly or indirectly by
             167      another person engaged in a business other than the business of a public utility; and
             168          (C) the rent reserved under the lease does not include any amount based on or
             169      determined by revenues or income of the lessee.
             170          (ii) Any person that is exempt from classification as a public utility under Subsection
             171      (16)(f)(i) shall continue to be so exempt from classification following termination of the
             172      lessee's right to possession or use of the electric plant for so long as the former lessor does not
             173      operate the electric plant or sell electricity from the electric plant. If the former lessor operates
             174      the electric plant or sells electricity, the former lessor shall continue to be so exempt for a
             175      period of 90 days following termination, or for a longer period that is ordered by the
             176      commission. This period may not exceed one year. A change in rates that would otherwise
             177      require commission approval may not be effective during the 90-day or extended period
             178      without commission approval.
             179          (g) "Public utility" does not include any person that provides financing for, but has no
             180      ownership interest in an electric plant, small power production facility, or cogeneration facility.


             181      In the event of a foreclosure in which an ownership interest in an electric plant, small power
             182      production facility, or cogeneration facility is transferred to a third-party financer of an electric
             183      plant, small power production facility, or cogeneration facility, then that third-party financer is
             184      exempt from classification as a public utility for 90 days following the foreclosure, or for a
             185      longer period that is ordered by the commission. This period may not exceed one year.
             186          (h) (i) The distribution or transportation of natural gas for use as a motor vehicle fuel
             187      does not cause the distributor or transporter to be a "public utility," unless the commission,
             188      after notice and a public hearing, determines by rule that it is in the public interest to regulate
             189      the distributers or transporters, but the retail sale alone of compressed natural gas as a motor
             190      vehicle fuel may not cause the seller to be a "public utility."
             191          (ii) In determining whether it is in the public interest to regulate the distributors or
             192      transporters, the commission shall consider, among other things, the impact of the regulation
             193      on the availability and price of natural gas for use as a motor fuel.
             194          (i) "Public utility" does not include any corporation, cooperative association, or person,
             195      their affiliates, lessees, trustees, or receivers, owning, controlling, operating, or managing an
             196      electric plant or in any way furnishing electricity if the electricity is consumed by an owner,
             197      lessor, or interest holder or by an affiliate of an owner, lessor, or interest holder, who has
             198      provided at least $25,000,000 in value, including credit support, relating to the electric plant
             199      furnishing the electricity and whose consumption does not exceed its long term entitlement in
             200      the plant under a long term arrangement other than a power purchase agreement, except a
             201      power purchase agreement with an electrical corporation.
             202          (17) "Purchasing utility" means any electrical corporation that is required to purchase
             203      electricity from small power production or cogeneration facilities pursuant to the Public Utility
             204      Regulatory Policies Act, 16 U.S.C. Section 824a-3.
             205          (18) "Qualifying power producer" means a corporation, cooperative association, or
             206      person, or the lessee, trustee, and receiver of the corporation, cooperative association, or
             207      person, who owns, controls, operates, or manages any qualifying power production facility or
             208      cogeneration facility.
             209          (19) "Qualifying power production facility" means a facility that:
             210          (a) produces electrical energy solely by the use, as a primary energy source, of biomass,
             211      waste, a renewable resource, a geothermal resource, or any combination of the preceding


             212      sources;
             213          (b) has a power production capacity that, together with any other facilities located at
             214      the same site, is no greater than 80 megawatts; and
             215          (c) is a qualifying small power production facility under federal law.
             216          (20) "Railroad" includes every commercial, interurban, and other railway, other than a
             217      street railway, and each branch or extension of a railway, by any power operated, together with
             218      all tracks, bridges, trestles, rights-of-way, subways, tunnels, stations, depots, union depots,
             219      yards, grounds, terminals, terminal facilities, structures, and equipment, and all other real
             220      estate, fixtures, and personal property of every kind used in connection with a railway owned,
             221      controlled, operated, or managed for public service in the transportation of persons or property.
             222          (21) "Railroad corporation" includes every corporation and person, their lessees,
             223      trustees, and receivers, owning, controlling, operating, or managing any railroad for public
             224      service within this state.
             225          (22) (a) "Sewerage corporation" includes every corporation and person, their lessees,
             226      trustees, and receivers, owning, controlling, operating, or managing any sewerage system for
             227      public service within this state.
             228          (b) "Sewerage corporation" does not include private sewerage companies engaged in
             229      disposing of sewage only for their stockholders, or towns, cities, counties, conservancy
             230      districts, improvement districts, or other governmental units created or organized under any
             231      general or special law of this state.
             232          (23) "Telegraph corporation" includes every corporation and person, their lessees,
             233      trustees, and receivers, owning, controlling, operating, or managing any telegraph line for
             234      public service within this state.
             235          (24) "Telegraph line" includes all conduits, ducts, poles, wires, cables, instruments, and
             236      appliances, and all other real estate, fixtures, and personal property owned, controlled,
             237      operated, or managed in connection with or to facilitate communication by telegraph, whether
             238      that communication be had with or without the use of transmission wires.
             239          (25) (a) "Telephone corporation" means any corporation or person, and their lessees,
             240      trustee, receivers, or trustees appointed by any court, who owns, controls, operates, manages, or
             241      resells a public telecommunications service as defined in Section 54-8b-2 .
             242          (b) "Telephone corporation" does not mean a corporation, partnership, or firm


             243      providing:
             244          (i) intrastate telephone service offered by a provider of cellular, personal
             245      communication systems (PCS), or other commercial mobile radio service as defined in 47
             246      U.S.C. Sec. 332 that has been issued a covering license by the Federal Communications
             247      Commission;
             248          (ii) Internet service; or
             249          (iii) resold intrastate toll service.
             250          (26) "Telephone line" includes all conduits, ducts, poles, wires, cables, instruments,
             251      and appliances, and all other real estate, fixtures, and personal property owned, controlled,
             252      operated, or managed in connection with or to facilitate communication by telephone whether
             253      that communication is had with or without the use of transmission wires.
             254          (27) "Transportation of persons" includes every service in connection with or
             255      incidental to the safety, comfort, or convenience of the person transported, and the receipt,
             256      carriage, and delivery of that person and that person's baggage.
             257          (28) "Transportation of property" includes every service in connection with or
             258      incidental to the transportation of property, including in particular its receipt, delivery,
             259      elevation, transfer, switching, carriage, ventilation, refrigeration, icing, dunnage, storage, and
             260      hauling, and the transmission of credit by express companies.
             261          (29) "Water corporation" includes every corporation and person, their lessees, trustees,
             262      and receivers, owning, controlling, operating, or managing any water system for public service
             263      within this state. It does not include private irrigation companies engaged in distributing water
             264      only to their stockholders, or towns, cities, counties, water conservancy districts, improvement
             265      districts, or other governmental units created or organized under any general or special law of
             266      this state.
             267          (30) (a) "Water system" includes all reservoirs, tunnels, shafts, dams, dikes, headgates,
             268      pipes, flumes, canals, structures, and appliances, and all other real estate, fixtures, and personal
             269      property owned, controlled, operated, or managed in connection with or to facilitate the
             270      diversion, development, storage, supply, distribution, sale, furnishing, carriage, appointment,
             271      apportionment, or measurement of water for power, fire protection, irrigation, reclamation, or
             272      manufacturing, or for municipal, domestic, or other beneficial use.
             273          (b) "Water system" does not include private irrigation companies engaged in


             274      distributing water only to their stockholders.
             275          (31) "Wholesale electrical cooperative" includes every electrical corporation that is:
             276          (a) in the business of the wholesale distribution of electricity it has purchased or
             277      generated to its members and the public; and
             278          (b) required to distribute or allocate savings in excess of additions to reserves and
             279      surplus to members or patrons on the basis of patronage.
             280          Section 2. Section 54-3-8 is amended to read:
             281           54-3-8. Preferences forbidden -- Power of commission to determine facts.
             282          (1) Except as provided in Chapter 8b, Public Telecommunications Law, a public utility
             283      may not:
             284          (a) as to rates, charges, service, facilities or in any other respect, make or grant any
             285      preference or advantage to any person, or subject any person to any prejudice or disadvantage;
             286      and
             287          (b) establish or maintain any unreasonable difference as to rates, charges, service or
             288      facilities, or in any other respect, either as between localities or as between classes of service.
             289          (2) The commission shall have power to determine any question of fact arising under
             290      this section.
             291          (3) This section does not apply to, and the commission may not enforce this chapter
             292      concerning, a schedule, classification, rate, price, charge, fare, toll, rental, rule, service, facility,
             293      or contract of a public utility or electrical corporation furnishing electricity, if the electricity is
             294      consumed by an owner, lessor, or interest holder or by an affiliate of an owner, lessor, or
             295      interest holder, who has provided at least $25,000,000 in value, including credit support,
             296      relating to the electric plant furnishing the electricity and whose consumption does not exceed
             297      its long term entitlement in the plant under a long term arrangement other than a power
             298      purchase agreement, except a power purchase agreement with an electrical corporation.
             299          Section 3. Section 54-4-2 is amended to read:
             300           54-4-2. Investigations -- Hearings and notice -- Findings.
             301          (1) Whenever the commission believes that in order to secure a compliance with the
             302      provisions of this title or with the orders of the commission, or that it will be otherwise in the
             303      interest of the public, an investigation should be made of any act or omission to act, or of
             304      anything accomplished or proposed, or of any schedule, classification, rate, price, charge, fare,


             305      toll, rental, rule, regulation, service or facility of any public utility, it shall investigate the same
             306      upon its own motion, and may fix a time and place for a hearing thereof with notice to the
             307      public utility concerning which such investigation shall be made, and upon such hearing shall
             308      make such findings and orders as shall be just and reasonable with respect to any such matter.
             309          (2) This chapter does not apply to a schedule, classification, rate, price, charge, fare,
             310      toll, rental, rule, service, or facility, or contract of a public utility or electrical corporation
             311      furnishing electricity if the electricity is consumed by an owner, lessor, or interest holder or by
             312      an affiliate of an owner, lessor, or interest holder, who has provided at least $25,000,000 in
             313      value, including credit support, relating to the electric plant furnishing the electricity and whose
             314      consumption does not exceed its long term entitlement in the plant under a long term
             315      arrangement other than a power purchase agreement, except a power purchase agreement with
             316      an electrical corporation.


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