AN
ACT Relating to unbundling the components of electrical service; creating new
sections; and declaring an emergency.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW
SECTION. Sec. 1. The
definitions in this section apply throughout chapter . . ., Laws of
1998 (this act) unless the context clearly requires otherwise.
(1)
"Commission" means the utilities and transportation commission.
(2)
"Conservation" means an increase in efficiency in the use of energy use
that yields a decrease in energy consumption while providing the same or higher
levels of service. Conservation includes low-income weatherization programs
and programs that result in overall reductions of electrical system
requirements.
(3)
"Consumer-owned utility" means a municipal electric utility, an
electric cooperative, a public utility district, an irrigation district, a port
district, or a water-sewer district that is engaged in the business of
distributing electricity to retail electric customers in this state.
(4)
"Control area services" means scheduling, reactive power, spinning
reserves, nonspinning reserves, voltage control and regulation, load following,
and other related services necessary to sustain reliable delivery of
electricity.
(5)
"Delivery services" means the services needed to deliver electricity
to a retail electric customer using transmission, distribution, and related
facilities. Delivery services include control area services, and the real
property upon which the delivery plant, equipment, and other delivery
infrastructure is located.
(6)
"Electric cooperative" means a cooperative or association organized
under chapter 23.86 or 24.06 RCW.
(7)
"Electric meters in service" means those meters that record in at
least nine of twelve calendar months in any calendar year not less than two
hundred fifty kilowatt hours per month.
(8)
"Electrical company" means a company owned by investors that meets
the definition of RCW 80.04.010 and is engaged in the business of distributing
electricity to more than one retail electric customer in the state.
(9)
"Electric utility" means any electrical company or consumer-owned
utility as defined in this section.
(10)
"Electricity" means electric energy, measured in kilowatt hours, or
electric capacity, measured in kilowatts.
(11)
"Governing body" means the council of a city or town, the
commissioners of a municipal electric utility, an irrigation district, a port
district, a water-sewer district, or a public utility district, or the board of
directors of an electric cooperative that has the authority to set and approve
rates.
(12)
"Irrigation district" means an irrigation district authorized by
chapter 87.03 RCW.
(13)
"Municipal electric utility" means a utility providing electrical
service that is operated by a city or town as authorized by chapter 35.92 RCW.
(14)
"Port district" means a port district within which an industrial
district has been established as authorized by Title 53 RCW.
(15)
"Public utility district" means a district authorized by chapter
54.04 RCW.
(16)
"Renewable resources" means electricity generation facilities fueled
by: (a) Water; (b) wind; (c) solar energy; (d) geothermal energy; (e) landfill
gas; or (f) biomass energy based on solid organic fuels from wood, forest, or
field residues, or dedicated energy crops that do not include wood pieces that
have been treated with chemical preservatives such as creosote,
pentachlorophenol, or copper-chrome-arsenic.
(17)
"Retail electric customer" means any person or entity, including, but
not limited to, a residential, commercial, or industrial customer, that
purchases electricity for ultimate consumption and not for resale.
(18)
"Small utility" means any consumer-owned utility with twenty-five
thousand or fewer electric meters in service, or that has an average of seven
or fewer customers per mile of distribution line.
(19)
"State" means the state of Washington.
(20)
"Unbundle" means to separately identify, and publish the accounting,
functionalization, classification, and assignment or allocation of the costs of
electrical service.
(21)
"Water-sewer district" means a water-sewer district authorized by
Title 57 RCW.
NEW
SECTION. Sec. 2. (1)(a)
By September 30, 1998, each electrical company shall submit a cost study
described in subsections (2) and (3) of this section, and a service quality and
reliability report described in subsection (4) of this section, to the
commission. The commission shall review each cost study and each service
quality and reliability report in an open public meeting to determine whether
the filings meet the requirements of this section, and to identify any issues
in dispute. Nothing in chapter . . ., Laws of 1998 (this act) shall
be construed as either increasing or limiting the authority of the commission
to conduct hearings on disputed issues.
(b)
Except as provided in section 4 of this act, by September 1, 1998, each
consumer-owned utility shall submit a cost study described in subsections (2)
and (3) of this section, and a service quality and reliability report described
in subsection (4) of this section, to its governing body in an open public
meeting. The governing body shall determine whether the study and report meet
the requirements of this section. By October 1, 1998, each consumer-owned
utility shall submit the cost study and service quality and reliability report
to the state auditor.
(2)
Except as provided in section 4 of this act, by September 30, 1998, every
electric utility shall unbundle. At a minimum, an electric utility shall
include in such unbundling the accounting treatment for generation and energy
supply, delivery services separately identifying transmission, distribution,
and control area services, metering and billing, customer account services,
programs to support conservation or renewable resources other than
hydroelectric power, fish and wildlife mitigation, general administration and
overhead, and taxes; the functionalization of costs separately for generation
and energy supply, transmission, distribution, and other; the classification of
costs separately to include, but not be limited to, energy and capacity; and
the assignment or allocation of costs separately to include, but not be limited
to, residential, small commercial, industrial, and other. For the purpose of
chapter . . ., Laws of 1998 (this act), as directed by the commission
for an electrical company or the governing body of a consumer-owned utility,
the electric utility shall use the data from either the cost study used to
formulate the retail rates in effect as of the effective date of this act, or a
more recent cost study.
(3)
The cost study required of each electric utility under subsection (1) of this
section shall include the following documentation:
(a)
A description of the fundamental cost study theory used, such as fully embedded
costs, marginal or incremental costs, or some combination thereof;
(b)
A detailed description of the classifications, functions, and assignments or
allocations of electrical service unbundled;
(c)
The costs attributed to each of these classifications, functions, and
assignments or allocations and, if proportional attribution of costs between
classifications, functions, and assignments or allocations is necessary, the
proposed method of attribution;
(d)
For utilities that operate in more than one state, the costs attributable to
operations in Washington;
(e)
For each class of retail electric customers, the method by which the utility
calculated costs, and classified, functionalized, and assigned or allocated
costs;
(f)
If the utility used marginal costs for the classifications, or assignments or
allocations, a clear description of those classifications, or assignments or
allocations, and the rationale for this choice; and
(g)
The time period over which cost data were compiled.
(4)
The service quality and reliability report required of each electric utility
under subsection (1) of this section shall include, to the extent such data are
currently collected and reasonably available, the following information:
(a)
The level of satisfaction of the utility's customers as measured by customer
surveys;
(b)
The number of customer complaints filed during a calendar year with the
commission if the utility is an electrical company or with the governing body
if the utility is a consumer-owned utility;
(c)
The number of minutes the average customer or feeder line is without
electricity during a calendar year; and
(d)
The number of times the average customer or feeder line is without power during
a calendar year.
If
available, the report shall include a copy of the survey instrument or script
used to collect the information described in (a) of this subsection.
NEW
SECTION. Sec. 3. (1)
The state auditor shall receive, analyze, and summarize the studies and reports
required of consumer-owned utilities under section 2 of this act. The state
auditor may consult with the commission, the department of community, trade,
and economic development, the electric utilities, and others in analyzing and
summarizing the studies and reports.
(2)
By December 1, 1998, the state auditor and commission shall prepare a joint
report on the results of the cost studies and service quality and reliability
reports required under section 2 of this act, and shall submit the joint report
to the energy and utilities committees of the senate and house of
representatives. The joint report shall include the following information:
(a)
A summary of the cost studies submitted by electric utilities;
(b)
Observations regarding the consistency or lack of consistency among utilities
in methods of classification, functionalization, and assignment or allocation,
and in descriptions of unbundled costs;
(c)
A summary of the service quality and reliability reports submitted by electric
utilities;
(d)
Observations regarding the consistency or lack of consistency among utilities
in the amount and kinds of information available regarding service quality and
reliability; and
(e)
An examination of alternative formats for simple, standardized disclosure of
fuel mix, air emissions, and other environmental impacts of coal,
hydroelectric, natural gas, nuclear, wind, and other generating resources,
including the approaches used by utilities that have offered pilot programs to
their customers allowing market access.
In
the report, the commission shall also describe any issues arising from the cost
studies and service quality and reliability reports submitted by electrical companies.
NEW
SECTION. Sec. 4. (1)
The legislature finds that: (a) Small utilities operate on a nonprofit basis,
and typically serve rural areas where the cost of providing service exceeds
that of urban areas; (b) most small utilities are full-requirements customers
of the Bonneville power administration and do not purchase electricity and
related products and services individually for resale to utility customers; and
(c) the additional expense of unbundling and preparing service quality and
reliability reports is likely to significantly outweigh the potential benefits
to small utilities.
(2)
The provisions of section 2 of this act do not apply to a small utility.
However, nothing in this section prohibits the governing body of a small
utility from determining the utility should unbundle and comply with any or all
of the provisions of section 2 of this act applicable to other consumer-owned
utilities.
(3)
A small utility whose governing body has determined the utility should unbundle
is encouraged, but not required, to submit a cost study and service quality and
reliability report described in section 2 of this act to the state auditor.
*NEW
SECTION. Sec. 5.
Any municipal electric utility formed by a
municipality with a population of more than four hundred thousand as of the
effective date of this section shall submit a report to its governing body by
December 1, 1998, with the following information:
(1)
The ratio of the municipal electric utility's customers to its employees as of
the effective date of this section, and the changes in the ratio that have
occurred over the previous ten years; and
(2)
The annual sources of funding and the amount of annual expenditures, including
federal funds, by the municipal electric utility on conservation, renewable
resources, and low-income weatherization and energy bill-paying assistance
programs during the previous ten years. This part of the report shall
describe: (a) The amount of electricity saved by such conservation programs;
(b) the overhead costs to the municipal electric utility to administer such
programs, including but not limited to amounts expended by other municipal
departments and nonprofit entities in administering such programs; and (c) for
low-income weatherization programs, the overhead cost per unit weatherized as
compared to the overhead costs of comparable programs administered by the
state.
*Sec. 5 was vetoed. See message at end of chapter.
NEW
SECTION. Sec. 6.
Nothing in chapter . . ., Laws of 1998 (this act) shall be construed
as requiring an electric utility to establish new rates or to adopt new
rate-making methods, or to require the commission to approve new revenue levels
for electrical companies. In addition, nothing in chapter . . .,
Laws of 1998 (this act) shall be construed as conferring on any state agency
jurisdiction, supervision, or control over any consumer-owned utility.
NEW
SECTION. Sec. 7. This
act is necessary for the immediate preservation of the public peace, health, or
safety, or support of the state government and its existing public
institutions, and takes effect immediately.
