SB 499 - RETAIL ELECTRIC SERVICE CUSTOMER CHOICE - Beginning on July 1, 2004, retail consumers of electric service receiving service from municipal electric utilities that have elected to participate in competitive sales, from an electric cooperative or from an electrical corporation may choose their supplier by taking electric power and energy either directly from a competitive electric provider (CEP), or from the incumbent electric service provider on a regulated basis.

Retail customers receiving service at a structure on July 1, 2004, and the initial customer for any new structure to which power and energy are first supplied after July 1, 2004, will have the choice to receive electric power and energy on a competitive basis or on a regulated basis. Once a customer has elected for a structure on a competitive basis, the customer may not buy power and energy for that structure on a regulated basis, unless the Commission determines that it would be in the public interest to do so. Local distribution service for an existing structure that the retail customer has elected to purchase services for on a competitive basis will be provided by the current local distribution utility (LDU). The CEP will deliver the contracted amounts of power and energy to the LDU. The LDU will be paid a fee by retail customers having electric power on a competitive basis for each customer's share of the local distribution utility's costs in maintaining backup, peaking and emergency power for consumers.

MARKET POWER INVESTIGATIONS - The Public Service Commission shall investigate allegations of market power on its own motion or when requested by an interested party and shall issue its report and order as to the presence of market power within 90 days. If the Commission finds probably cause to believe market power exists, the electric provider alleged to have market power must submit a market power analysis. The Commission shall then hold a hearing and issue an order if it finds market power exists. If market power is found, the electric provider must file a proposed market power mitigation plan. The Commission shall annually report to the General Assembly on the development of competition in electric markets.

LICENSURE OF COMPETITIVE ELECTRICITY PROVIDERS - All CEPs shall obtain and hold a license from the Public Service Commission in order to do business in the state. The act contains licensing requirements which include: proof of financial and operational fitness; if necessary, filing a bond with the Commission; an agreement to disclose certain information. The act provides for the review and approval of license applications. A license shall be valid for five years and may be renewed. The Commission may suspend or revoke a license for failure to meet one or more requirements of a license.

MUNICIPAL OPT IN - Municipally-owned utilities may elect to participate in retail competition. Exclusive generation service rights shall no longer apply to those municipally owned utilities which elect to participate in retail competition. The Commission shall not have rate authority over municipal transmission and distribution service.

Municipalities may elect to participate by vote of the governing body or upon approval by voters of a proposal to participate. Municipal utilities shall provide open access in competitive annexed regions at same unbundled rates established for municipal customers who do not have choice. Municipal utilities competing in the city only shall provide open access at same unbundled rates established for customers who do not have choice. Retail choice shall continue in an area annexed by a municipality not participating in retail competition.

ACCESS TO TRANSMISSION AND DISTRIBUTION FACILITIES - All Missouri electric utilities shall provide access to their transmission and distribution facilities, ancillary services and other available services to any buyer or seller on a nondiscriminatory and comparable basis. The Commission shall ensure that no CEP has an unfair advantage in offering access to and pricing transmission and distribution services. The Commission shall establish, by rule, standards of conduct governing the relationships among the various business functions conducted by electric utilities. The LDU shall have an obligation to connect and provide delivery of electric service to all retail consumers within its current retail service territory on nondiscriminatory terms and conditions.

RELIABILITY - The Commission will adopt procedures and conditions relating to reliability of service. Each transmission utility that chooses not to join a Regional Transmission Organization (RTO) shall implement procedures and act to assure the provision of reliable service.

RATES FOR TRANSMISSION AND DISTRIBUTION - The Commission shall establish just and reasonable rates for unbundled local distribution services for electrical corporations. Rates for municipal utilities and electric cooperatives shall be set by their respective governing bodies.

UNBUNDLED BILLS AND CONSUMER PROTECTION - Billing and metering of retail sales of electric power and energy, including special metering, is the responsibility of the local distribution utility that provides service to the structure. The local distribution utility may contract with other entities to provide these services. Billing statements must include billing for the electric power and energy delivered on behalf of a competitive electric provider. On or before July 1, 2004, all statements for electric service must list as separate components the charges for electric power and energy, local electric distribution service, taxes, and any other breakdown in costs the utility believes will aid in informing customers. If a retail customer fails to pay his bill in full when due, the LDU may terminate service. The CEP and retail customer are jointly and severally liable to the LDU for costs incurred as a result of the competitive electric provider's failure to deliver services and satisfy its contractual obligations.

TRANSITION OR "STRANDED" COSTS - Electric service providers competing in the retail sale of electric power and energy can recover competitive transition costs (CTCs) and have a duty to mitigate such costs. Electric service providers must file a resource plan with the Commission within six months after the effective date of the act to specify the resources that will be used to satisfy obligations to regulated customers. An electrical corporation may request Commission approval to remove assets from its rate base for service to regulated basis retail customers, and may file a request for a plan to recover anticipated competitive transition costs. Municipal utilities and cooperatives also may designate assets as being removed from dedication to serve regulated basis retail customers and adopt a plan to recover anticipated transition costs, and this plan needs to be filed with the Commission, but is not subject to approval. The requirements for a recovery plan and for Commission approval are specified.

CTCs are not recoverable for reductions in usage occurring during the normal course of business, and any recovery of such costs will be through non-bypassable and appropriately structured charges. Unless the Commission determines otherwise, the charge will be fixed per kilowatt-hour charge on all sales to competitive basis retail customers. The charge will not apply to the exercise of any competitive alternative that existed prior to the effective date of this act. The Commission may review competitive transition costs for any electrical corporation under its jurisdiction. Transition cost recovery rates by municipal electric systems and electric cooperatives are set by the regulatory body for each utility and are subject to judicial review upon customer complaint. Transition cost recovery charges by retail customer class must be nondiscriminatory between retail customers of the same class and similar usage.

TRANSITIONAL LABOR ISSUES - A competitive electric supplier must demonstrate that its employees have knowledge, skills and competence to install, operate and maintain electric supply facilities in this state. Electric service providers serving more than 500,000 customers in Missouri shall mitigate the impact of any workforce reductions on employees and their communities, including a workforce reduction plan. If an electric service provider serving more than 500,000 customers in Missouri sells any portion of its business or a generating plant, the acquiring entity shall employ a sufficient number of the utility's non- supervisory employees at substantially the same wages and benefits.

ELECTRIC COOPERATIVES - The act adds a definition of "local distribution utility service and removes "rural area" from cooperative laws in chapter 394, RSMo. The act adds providing local distribution utility service as a power of cooperatives and removes the limitation to rural areas. Cooperative members must agree to use electric power and energy or local distribution utility service, when made available by the cooperative.

Cooperatives may be divided so as to distribute directors among members receiving different types of service. Cooperatives are exempted from foreign corporation laws. Territorial agreements regarding service areas may included generation service, distribution service or both. The "flip flop" protection for cooperatives is revised to refer only to distribution service.

This act is similar to SB 819 from 2000.
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