BP BHEAD INT S [atlas:bill]

AN ACT Relating to procedures for public utility districts to participate in wholesale electricity market activities; and adding a new chapter to Title 54 RCW.

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

NEW SECTION. Sec. 1. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.

(1) "Independent advisor" means a business, financial, or advisory firm or person: (a) With knowledge and experience in connection with wholesale energy markets and general business; (b) that is acting as an advisor to the public utility district and does not control or own a majority interest in any other party engaged in transactions with the public utility district to which the advisor is rendering advice and which are made under this chapter; and (c) whose compensation is not wholly based upon completion of any transaction or a percentage of any transaction or series of transactions made under this chapter.

(2) "Wholesale electric public utility district" is a public utility district that is not a full requirements customer of Bonneville power administration and has elected to engage in wholesale electric activities under this chapter and has implemented the measures described in section 2 of this act.

(3) "Wholesale power" means electric capacity or energy, or rights thereto, transacted for purposes of resale.

NEW SECTION. Sec. 2. (1) Prior to engaging in any wholesale electric activities under section 3 or 4 of this act, a public utility district shall develop and approve a written implementation plan under subsection (2) of this section and adopt a resolution under subsection (3) of this section.

(2)(a) The implementation plan shall include the following: (i) A general description of how the district intends to engage in the wholesale electric activities under section 3 or 4 of this act; (ii) a discussion of how the public interest will be served by engaging in wholesale electric activities under section 3 or 4 of this act; (iii) an explanation of the provisions made for the actual and prospective electric energy needs of the district; (iv) a description of the risk management program and other safeguards the district will employ to manage any risks that may be associated with the wholesale electric activities under section 3 or 4 of this act; and (v) policies and procedures governing the wholesale electricity activities under section 3 or 4 of this act. The plan and any amendments to it shall be reviewed by an independent advisor.

(b) The independent advisor shall submit a report to the commission that includes an analysis of the implementation plan and (i) the nature of and extent to which the proposed wholesale electric activities under section 3 or 4 of this act may entail financial risk, and (ii) the adequacy of proposed measures to manage any potential risks. The independent advisor may include in the report any recommendations the advisor deems pertinent to the purposes of the analysis. The report shall be advisory only and not binding upon the commission.

(c) The plan, along with the independent advisor's report, shall be submitted to the commission for approval. At least ten days prior to the public meeting at which the plan is to be considered, a notice that includes a general description of the implementation plan shall be published in a newspaper of general circulation in the county in which the district is located. The plan may be amended by the commission from time to time, as necessary, subject to the same procedure as required for approval of the plan under this subsection.

(3) After approval of the implementation plan, the commission may elect to engage in wholesale electric activities under section 3 or 4 of this act by adopting a resolution enabling such activities. The wholesale electric activities undertaken under section 3 or 4 of this act shall be consistent with the implementation plan approved under subsection (2) of this section.

(4) A wholesale electric public utility district may at any time rescind the resolution electing to engage in wholesale electric activities under this chapter. After approval of a rescission resolution, a district may not engage in the wholesale electric activities under this chapter other than to discontinue and wind up the affairs conducted under this chapter. Any such rescission shall not impair or modify any contracts or leases executed prior to such rescission and the public utility district shall continue to have the ability to engage in the wholesale electric activities for and in connection with such existing contracts and leases. A rescission shall not prevent a district at any time thereafter from electing to engage in wholesale activities in accordance with this chapter.

NEW SECTION. Sec. 3. A wholesale electric public utility district engaging in wholesale power transactions to serve its customers' load requirements may:

(1) Enter into contracts and agreements with any person or entity, within or without the state, and may participate in the formation, function, and operation and be members of or partners in: (a) A limited liability partnership or limited liability company; (b) a nonprofit corporation; (c) a mutual corporation or association; and (d) a cooperative association, within or without the state, for carrying out any of the powers authorized in this title as related to wholesale power activities, except those activities set forth in section 4 of this act. When participating in such an entity, the wholesale electric public utility district shall not assume joint liability for the debts or acts of other participants, or obtain, or acquire stock ownership or purchase, sell, exchange, exercise, or otherwise perform any physical or financial risk management instruments beyond those authorized in subsection (3) of this section.

(2) Enter into transactions for the purchase or sale of wholesale power under this chapter by means of a wholesale power contract or series of wholesale power contracts having a total term of three years or less without regard to the requirement of RCW 54.16.040. However, the contract or contracts may only be made pursuant to a resolution of the commission introduced at least ten days prior to the date of adoption of the resolution.

(3) Purchase, sell, exchange, exercise, and otherwise perform any risk management instrument for purposes of protecting against loss resulting from price or market fluctuations or for the purposes of securing the district's electrical energy supply. The wholesale electric public utility district shall separately track and account for the transactions undertaken under this subsection.

(4) A wholesale electric public utility district acting under this section shall not acquire through condemnation electric generation plants and facilities, accompanying transmission systems, contractual rights to the output of electric generation plants and facilities, or contractual rights to access transmission facilities. Nothing in this section affects the authority of a public utility district when not acting under this chapter to condemn property or facilities.

NEW SECTION. Sec. 4. In addition to the activities provided in section 3 of this act, a wholesale public utility district that is a surplus generator may:

(1) Enter into contracts and agreements with any person or entity, within or without the state, and may participate in the formation, function, and operation and be members of or partners in: (a) A limited liability partnership or limited liability company; (b) a nonprofit corporation; (c) a mutual corporation or association; and (d) a cooperative association within or without the state for carrying out the powers authorized in this title as related to wholesale power activities and in this section. When participating in such an entity, the wholesale public utility district shall not assume joint liability for the debts or acts of other participants, obtain or acquire stock ownership, or purchase, sell, exchange, exercise, or otherwise perform any physical or financial risk management instruments beyond those authorized in section 3(3) of this act.

(2) Purchase, sell, and exchange wholesale power and other services related thereto without limitation on the quantity of the purchases or sales, and may construct, purchase, own, control, acquire or operate electric generation plants and facilities and accompanying transmission systems for wholesale power transactions without limitation on the quantity of the electric energy or capacity generated. Nothing in this subsection is intended to modify the energy financing voter approval act, chapter 80.52 RCW. A wholesale electric public utility district acting under this section shall not acquire through condemnation electric generation plants and facilities, accompanying transmission systems, contractual rights to the output of electric generation plants and facilities, or contractual rights to access transmission facilities. Nothing in this section affects the authority of a public utility district when not acting under this chapter to condemn property or facilities.

(3) Lease its facilities, plants, and properties to maximize the operational and economic efficiency of district's assets and may enter into leaseback agreements, without regard to the procedures of RCW 54.16.180. The lease and leaseback agreements may contain those terms and conditions as determined by the commission to be necessary, including provisions to secure payments on the lease. No lease shall be for a term longer than fifty years. At least ten days prior to the public meeting at which the proposed lease is to be considered, the commission shall cause to have published a notice that includes a general description of the proposed lease transaction in a newspaper of general circulation in the county in which the district is located. The commission may use the procedure provided in this section or the procedure set forth in RCW 54.16.180 when leasing any facilities, plants, and properties.

(4) A public utility district is a surplus generator when during the year immediately preceding the election made under section 2 of this act the district's average annual net generation from projects or facilities owned and operated by the district exceeds the district's average annual load requirement to serve the needs of the district and its inhabitants and the district continues to use its generation resources to serve those needs. In the event that a district satisfies the requirements in this subsection for status as a surplus generator at the time of election, any subsequent changes in the district's net generation or load shall not effect the district's status as a surplus generator.

NEW SECTION. Sec. 5. The following are exempt from public inspection and copying requirements of chapter 42.17 RCW: Records of a wholesale electric public utility district obtained by the district within one year of the request for disclosure that contain confidential market data or pricing information relating to the purchase, sale, or exchange of wholesale power or related services.

NEW SECTION. Sec. 6. The activities authorized in this chapter shall be in addition to other powers previously conferred upon public utility districts. This chapter is intended to clarify and supplement the authorities provided under existing law. No inference may be drawn that any authority granted under this chapter is not available under existing law. It is the intent of the legislature that public utility districts be granted the ability by this chapter to engage in the activities and practices as provided in this chapter, subject to the limitations set forth, in addition to the authority for such activities that are express or implied in other provisions of the law. Nothing in this chapter shall be construed as affecting the authorities of a wholesale public utility district or any other public utility district to act under existing law. Except as specifically provided, nothing in this chapter shall be construed as affecting a wholesale public utility district's obligations or responsibilities to its own retail customers.

NEW SECTION. Sec. 7. This act may be known and cited as the "public utility district wholesale electric act."

NEW SECTION. Sec. 8. Sections 1 through 7 of this act constitute a new chapter in Title 54 RCW.

NEW SECTION. Sec. 9. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.