BP BHEAD INT S [atlas:bill]

AN ACT Relating to the regulation of mergers, restructurings, and acquisitions of certain public utility suppliers by the utilities and transportation commission; amending RCW 80.04.160 and 80.04.095; adding new sections to chapter 80.04 RCW; adding a new section to chapter 42.17 RCW; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. (1) The legislature finds that the rapid pace of technological changes and business changes, such as corporate mergers, restructuring, and acquisitions, in the electricity industry coupled with the everchanging state, regional, and federal regulatory constraints and policy issues that affect the electricity industry require that statutes and regulations be created, revised, or repealed on an ongoing basis. The legislature declares that all interested parties, including but not limited to employees, ratepayers, and shareholders, should be included in this review process.

(2) When addressing the evolving electricity industry, it is the intent of the legislature that:

(a) Where electricity service can be made available at affordable prices established through competition that is both efficient and that treats all customers fairly, competition should be accommodated and encouraged;

(b) The long-term integrity, safety, reliability, and quality of the bulk electric system and retail electricity service should not be jeopardized;

(c) Consumers should be afforded a broad range of choice in electricity service and pricing options, but not at the loss of reasonably priced and reliable service;

(d) Creating an advantage or imposing a disadvantage upon any group of competitors, or inhibiting the organic evolution of efficient markets, should be avoided; and

(e) Protecting consumers by establishing fair prices free from monopoly abuse should continue to be balanced with the opportunity for shareholders to earn fair returns. When justified by the public interest, regulatory policy should seek flexible ways to reduce both shareholder and ratepayer exposure to potentially stranded costs. However, regulation cannot and should not be expected to guarantee utilities will, in all circumstances, be made entirely whole for generation or other costs that are determined through actual and fair competition to be stranded or uneconomic.

Sec. 2. RCW 80.04.160 and 1961 c 14 s 80.04.160 are each amended to read as follows:

The commission is hereby authorized and empowered to adopt((~~, promulgate and issue~~)) rules ((~~and regulations~~)) covering the transmission and delivery of messages and conversations, and the furnishing and supply of gas, electricity, and water, and any and all services concerning the same, or connected therewith; and generally such rules as pertain to the comfort and convenience of the public and with regard to gas and electricity companies the encouragement of fairness through business competition, concerning the subjects treated of in this title. Such rules ((~~and regulations~~)) shall be ((~~promulgated and issued~~)) adopted by the commission on its own motion, and shall be served on the public service company affected thereby as other orders of the commission are served. Any public service company affected thereby, and deeming such rules ((~~and regulations, or any of them,~~)) improper, unjust, unreasonable, or contrary to law, may within twenty days from the date of service of such order upon it file objections thereto with the commission, specifying the particular grounds of such objections. The commission shall, upon receipt of such objections, fix a time and place for hearing the same, and after a full hearing may make such changes or modifications thereto, if any, as the evidence may justify. The commission shall have, and it is hereby given, power to adopt rules to govern its proceedings, and to regulate the mode and manner of all investigations and hearings: PROVIDED, No person desiring to be present at such hearing shall be denied permission. Actions may be instituted to review rules ((~~and regulations promulgated~~)) adopted under this section as in the case of orders of the commission.

NEW SECTION. Sec. 3. A new section is added to chapter 80.04 RCW to read as follows:

(1) For the purposes of this section and section 4 of this act, "public utility supplier" means electrical companies and gas companies.

(2) The commission shall establish, by rule, the definitions of "merger," "restructuring," and "acquisition" or any change in corporate status that results in a change of the corporate entity that controls the business activities of a public utility supplier.

(3)(a) A public utility supplier, its affiliate or subsidiary, or a corporation with a controlling interest in a public utility supplier may not, through merger, restructuring, or acquisition, take or hold any part of the capital stock of any other public utility supplier without the authorization of the commission. Before authorizing a merger, restructuring, or acquisition that includes any public utility supplier, the commission, based on information provided by the utility at the time the proposal is submitted, must find that the proposal meets all of the criteria under this subsection (3)(a) and that the requirements under (b) of this subsection have been established. The proposal must do all of the following:

(i) Provide short-term and long-term economic benefits to ratepayers;

(ii) Equitably allocate the total short-term and long-term forecasted economic benefits, as determined by the commission, of the proposed merger, restructuring, or acquisition between shareholders and ratepayers. Ratepayers shall receive not less than fifty percent of those benefits;

(iii) Not adversely affect competition;

(iv) Maintain or improve the financial condition of the resulting public utility supplier doing business in the state;

(v) Maintain or improve the quality of service to public utility supplier ratepayers in the state;

(vi) Maintain or improve the quality of management of the resulting public utility supplier doing business in the state;

(vii) Be fair and reasonable to affected public utility supplier employees, including both represented and nonrepresented employees;

(viii) Be fair and reasonable to the majority of all affected public utility supplier shareholders;

(ix) Be beneficial on an overall basis to state and local economies, and to the communities in the area served by the resulting public utility supplier;

(x) Preserve the jurisdiction of the commission and the capacity of the commission to effectively regulate and audit public utility supplier operations in the state; and

(xi) Provide mitigation measures to prevent significant adverse consequences which may result.

(b) In order to ensure that utility service continues in a safe and reliable manner, the commission shall establish by rule a means of determining and evaluating by objective, measurable criteria the following critical factors:

(i) Operations and maintenance budget levels;

(ii) System average interruption duration;

(iii) System average interruption frequency;

(iv) Reportable accident and incident rates under the occupational safety and health act and Washington industrial safety and health act;

(v) Impact on represented and nonrepresented employees; and

(vi) Long-term integrity, quality, safety, and reliability considerations of bulk and retail service.

(4) When reviewing a merger, restructuring, or acquisition the commission shall consider reasonable options to the proposal recommended by other parties, including no new merger, restructuring, or acquisition, to determine whether comparable short-term and long-term economic savings can be achieved through other means while avoiding the possible adverse consequences of the proposal.

(5) The commission may, after considering the criteria under subsections (3) and (4) of this section, modify or reject all or part of a proposed merger, restructuring, or acquisition by a public utility supplier based upon a significant adverse impact to the quality of utility service provided.

NEW SECTION. Sec. 4. A new section is added to chapter 80.04 RCW to read as follows:

(1) Any public utility supplier or corporate entity regulated under section 3 of this act shall notify the commission at least ninety days prior to any reduction in work force that is the result of a proposed merger, restructuring, or acquisition or the result of implementing an already approved merger, restructuring, or acquisition. The commission must complete its review and grant its approval or disapproval within one hundred twenty days of receipt of notice. If approval is granted, the work force, including employees not subject to the reduction in work force, must be notified of the planned reduction at least ninety days prior to implementation.

(2) The commission may, after consideration of reduction of work force proposals, modify or reject all or part of a proposed merger, restructuring, or acquisition by a public utility supplier based upon a significant adverse impact to the quality of utility service provided.

Sec. 5. RCW 80.04.095 and 1987 c 107 s 1 are each amended to read as follows:

Records, subject to chapter 42.17 RCW, filed with the commission or the attorney general from any person which contain valuable commercial information, including trade secrets or confidential marketing, cost, or financial information((~~, or~~)); customer-specific usage and network configuration and design information((,)); and any information concerning the merger, restructuring, or acquisition of a public utility supplier under sections 3 and 4 of this act shall not be subject to inspection or copying under chapter 42.17 RCW: (1) Until notice to the person or persons directly affected has been given; and (2) if, within ten days of the notice, the person has obtained a superior court order protecting the records as confidential. The court shall determine that the records are confidential and not subject to inspection and copying if disclosure would result in private loss, including an unfair competitive disadvantage. When providing information to the commission or the attorney general, a person shall designate which records or portions of records contain valuable commercial information. Nothing in this section shall prevent the use of protective orders by the commission governing disclosure of proprietary or confidential information in contested proceedings.

NEW SECTION. Sec. 6. A new section is added to chapter 42.17 RCW to read as follows:

All records filed under chapter 80.04 RCW which contain valuable commercial information concerning the merger, restructuring, or acquisition of a public utility supplier under sections 3 and 4 of this act are exempt from disclosure under this chapter.