[atlas:bill]

AN ACT Relating to public service companies; adding a new section to chapter 80.28 RCW; and creating a new section.

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

NEW SECTION. Sec. 1. The legislature finds that:

(1) Infrastructure for distributing, transmitting, storing, and generating energy is crucial to the delivery of safe, reliable, and efficient energy service. The health, safety, and welfare of the citizens of the state and the vitality of its economy depend upon such infrastructure.

(2) Public service companies must make large and continuing investments in their infrastructure to meet the demands of a growing population, support economic development, and maintain and improve system reliability and security.

(3) Changes in federal energy policy during the past decade have fostered the development of a national wholesale energy market. This market has changed traditional wholesale energy relationships and made it necessary to update state law to allow more rapid regulatory response to changing wholesale market conditions.

(4) The interests of utility customers and utility investors are served by a financially sound and stable utility industry that is able to attract needed investment capital. Neither interest is served by an industry on the borderline of economic viability and creditworthiness.

NEW SECTION. Sec. 2. A new section is added to chapter 80.28 RCW to read as follows:

(1) Every gas or electrical company that purchases natural gas, fuel, or electric power to provide natural gas or electric power to the public may recover through its rates the actual costs of natural gas, fuel, and electric power using a purchased gas adjustment or power cost adjustment process. The purchased gas adjustment or power cost adjustment process must be included in its tariff.

(2)(a) An electrical company that recovers its actual costs of fuel or electric power through its rates under subsection (1) of this section must use deferred accounting by recording upon its books and records in deferred accounts all increases and decreases in costs for fuel and electric power that differ from the projected costs.

(b) An electrical company must file sufficient information as determined by the commission to allow the commission to verify the numerical calculations necessary to clear the deferred accounts.

(c) An electrical company using a power cost adjustment process must file monthly reports of deferred accounts activity and entries.

(d) An electrical company using deferred accounting shall file an application with the commission to clear its deferred accounts at least annually and may not file an application more often than quarterly in a twelve-month period. An electrical company must have used deferred accounting for six months before filing its first application.

(3) If the net increase or decrease in fuel and electric power costs necessary to clear its deferred accounts for the period requested is more than fifteen percent of the projected costs for the six-month period before the period in which application is made, the electrical company's rate will be adjusted by a percentage equal to the percentage increase above or decrease below fifteen percent. The rate adjustment takes effect on the first day following the period in which the application is made.

(4) For purposes of this section, "actual costs" means all costs that are incurred by an electrical company subject to the jurisdiction of the commission and that are required to purchase fuel, capacity, and energy.

(5) The commission must adopt rules to implement this section by December 31, 2002.