Representative Michael E. Noel proposes the following substitute bill:


1     
NATURAL GAS INFRASTRUCTURE AMENDMENTS

2     
2018 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Michael E. Noel

5     
Senate Sponsor: David P. Hinkins

6     

7     LONG TITLE
8     General Description:
9          This bill enacts provisions relating to natural gas infrastructure.
10     Highlighted Provisions:
11          This bill:
12          ▸     modifies provisions relating to requests for approval of an energy utility's resource
13     decision;
14          ▸     includes a project for rural gas infrastructure development as a resource decision
15     that a gas corporation may request approval of from the Public Service
16     Commission;
17          ▸     provides requirements related to a request for approval of rural gas infrastructure
18     development; and
19          ▸     authorizes the Public Service Commission to spread rural gas infrastructure
20     development costs to the larger customer base and to approve the inclusion of rural
21     gas infrastructure development costs within a gas corporation's base rates under
22     certain circumstances.
23     Money Appropriated in this Bill:
24          None
25     Other Special Clauses:
26          None
27     Utah Code Sections Affected:
28     AMENDS:
29          54-17-401, as last amended by Laws of Utah 2008, Chapter 382
30          54-17-402, as last amended by Laws of Utah 2008, Chapter 382
31          54-17-403, as enacted by Laws of Utah 2005, Chapter 11
32     

33     Be it enacted by the Legislature of the state of Utah:
34          Section 1. Section 54-17-401 is amended to read:
35          54-17-401. Definitions.
36          (1) As used in this part:
37          [(1)] (a) "Energy utility" means one of the following with 200,000 retail customers in
38     the state:
39          [(a)] (i) an electrical corporation; or
40          [(b)] (ii) a gas corporation.
41          [(2) (a)] (b) "Resource decision" means a decision, other than a decision to construct or
42     acquire a significant energy resource, involving:
43          (i) an energy utility's acquisition, management, or operation of energy production,
44     processing, transmission, or distribution facilities or processes including:
45          (A) a facility or process for the efficient, reliable, or safe provision of energy to retail
46     customers; [or]
47          (B) an energy efficiency and conservation program; or
48          (C) rural gas infrastructure development; or
49          (ii) a decision determined by the commission to be appropriate for review under this
50     part.
51          (c) "Rural gas infrastructure development" means the planning, development, and
52     construction of an extension or expansion of natural gas main lines to serve previously
53     unserved rural areas of the state.
54          [(b)] (2) The commission may adopt rules in accordance with Title 63G, Chapter 3,
55     Utah Administrative Rulemaking Act, to specify the nature of resource decisions subject to
56     approval under Section 54-17-402.
57          Section 2. Section 54-17-402 is amended to read:
58          54-17-402. Request for review of resource decision.
59          (1) Beginning on February 25, 2005, before implementing a resource decision, an
60     energy utility may request that the commission approve all or part of a resource decision in
61     accordance with this part.
62          (2) (a) To obtain the approval permitted by Subsection (1), the energy utility shall file a
63     request for approval with the commission.
64          (b) The request for approval required by this section shall include any information
65     required by the commission by rule made in accordance with Title 63G, Chapter 3, Utah
66     Administrative Rulemaking Act.
67          (c) A request for approval of natural gas infrastructure development shall include:
68          (i) a description of the proposed rural gas infrastructure development project;
69          (ii) an explanation of projected benefits from the proposed rural gas infrastructure
70     development project;
71          (iii) the estimated costs of the rural gas infrastructure development project; and
72          (iv) any other information the commission requires.
73          (3) In ruling on a request for approval of a resource decision, the commission shall
74     determine whether the decision:
75          (a) is reached in compliance with this chapter and rules made in accordance with Title
76     63G, Chapter 3, Utah Administrative Rulemaking Act; and
77          (b) is in the public interest, taking into consideration:
78          (i) (A) whether it will most likely result in the acquisition, production, and delivery of
79     utility services at the lowest reasonable cost to the retail customers of an energy utility located
80     in this state;
81          [(ii)] (B) long-term and short-term impacts;
82          [(iii)] (C) risk;
83          [(iv)] (D) reliability;
84          [(v)] (E) financial impacts on the energy utility; and
85          [(vi)] (F) other factors determined by the commission to be relevant[.]; or
86          (ii) for a request for approval of rural gas infrastructure development:
87          (A) the potential benefits to previously unserved rural areas;
88          (B) the potential number of new customers;
89          (C) natural gas consumption; and
90          (D) revenues, costs, and other factors determined by the commission to be relevant.
91          (4) In a decision relating to a request for approval of rural gas infrastructure
92     development, the commission may determine that spreading all or a portion of the costs of the
93     rural gas infrastructure development to the larger customer base is in the public interest.
94          [(4)] (5) (a) If the commission approves a proposed resource decision only in part, the
95     commission shall explain in the order issued under this section why the commission does not
96     approve the resource decision in total.
97          (b) Recovery of expenses incurred in connection with parts of a resource decision that
98     are not approved is subject to the review of the commission as part of a rate hearing under
99     Section 54-7-12.
100          [(5)] (6) The commission may not approve a resource decision in whole or in part
101     under this section before holding a public hearing.
102          [(6)] (7) Unless the commission determines that additional time to analyze a resource
103     decision is warranted and is in the public interest, within 180 days of the day on which the
104     energy utility files a request for approval, the commission shall:
105          (a) approve all or part of the resource decision;
106          (b) approve all or part of the resource decision subject to conditions imposed by the
107     commission; or
108          (c) disapprove all or part of the resource decision.
109          [(7)] (8) The commission shall include in its order under this section:
110          (a) findings as to the approved projected costs of a resource decision; and
111          (b) the basis upon which the findings described in Subsection [(7)] (8)(a) are made.
112          [(8)] (9) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking
113     Act, the commission shall make rules regarding the process for approval of a resource decision
114     under this section.
115          Section 3. Section 54-17-403 is amended to read:
116          54-17-403. Cost recovery.
117          (1) (a) Except as otherwise provided in this section, if the commission approves any
118     portion of an energy utility's resource decision under Section 54-17-402, the commission shall,
119     in a general rate case or other appropriate commission proceeding, include in the energy
120     utility's retail rates the state's share of costs:
121          (i) relevant to that proceeding;
122          (ii) incurred by the energy utility in implementing the approved resource decision; and
123          (iii) up to the projected costs specified in the commission's order issued under Section
124     54-17-402.
125          (b) Except to the extent that the commission issues an order under Section 54-17-404,
126     any increase from the projected costs specified in the commission's order issued under Section
127     54-17-402 shall be subject to review by the commission as part of a rate hearing under Section
128     54-7-12.
129          (c) If the commission approves a request for approval of rural gas infrastructure
130     development under Section 54-17-402, the commission may approve the inclusion of rural gas
131     infrastructure development costs within the gas corporation's base rates if:
132          (i) the inclusion of those costs will not increase the base distribution non-gas revenue
133     requirement by more than 2% in any one year during a rolling three-year period;
134          (ii) the distribution of non-gas revenue requirement increase related to the
135     infrastructure development costs under Subsection (1)(c)(i) does not exceed 5% in the
136     aggregate; and
137          (iii) the applicable distribution of non-gas revenue requirement is the annual revenue
138     requirement determined in the gas corporation's most recent rate case.
139          (2) (a) Subsequent to the commission issuing an order described in Subsection (2)(a)(i)
140     or (ii), the commission may disallow some or all costs incurred in connection with an
141     approved resource decision if the commission finds that an energy utility's actions in
142     implementing an approved resource decision are not prudent because of new information or
143     changed circumstances that occur after:
144          (i) the commission approves the resource decision under Section 54-17-402; or
145          (ii) the commission issues an order to proceed under Section 54-17-404.
146          (b) In making a determination of prudence under Subsection (2)(a), the commission
147     shall use the standards identified in Section 54-4-4.
148          (3) Notwithstanding any other provision of this chapter, the commission may disallow
149     some or all of the costs incurred by an energy utility in connection with an approved resource
150     decision upon a finding by the commission that the energy utility is responsible for a material
151     misrepresentation or concealment in connection with an approval process under this chapter.