SB 923 - This act provides the means for the deregulation of the transmission and distribution of electricity in the state.

Five or more individuals who represent electric utilities, whether privately held, municipal or rural electric cooperatives, may form a nonprofit corporation to provide a competitive marketplace for the sale of electric services. This electric power exchange may purchase and sell electric power, acquire real and personal property, and incur debt.

Persons who own an electric power system may become members of the electric power exchange if they agree to purchase all generation services from the exchange and pay a fee to the exchange equal to one dollar per every one hundred customers up to a maximum of ten thousand dollars. Members shall meet annually or on the call of the board or ten percent of the members.

There shall be a board of directors for a power exchange of at least twelve individuals. Of those initially appointed at least one-half shall be independent and one-third of those shall be appointed by the Governor, the Speaker of the House and the President Pro Tem, respectively. Independent directors are those not employed by any member of the power exchange but may represent power marketers, independent power producers, public interest groups, the Public Service Commission and non-market participants. All directors identified in the articles of incorporation shall hold office until the next meeting. Subsequently, directors shall be divided into three classes and one-third of the terms shall expire each year. Directors shall be elected at each annual meeting.

The electric power exchange shall be operational by December 31, 2003 and when operational, electric generation services shall be considered to be competitive. After services are available, members may not generate, purchase or acquire generation services for sale at retail, with certain exceptions.

The board shall adopt procedures for establishing, modifying and abolishing rates, determine billing practices; establish bidding procedures, set minimum generation reserves, permit electrical purchases from only approved sources, determine conditions under which members may sell power to non-members, and set the price to be paid by the exchange for services provided to the exchange and services sold by the exchange.

An electric generation service supplier shall obtain a certificate of authority from the exchange before it may provide services to the exchange. The certificate shall be valid for up to three years. The exchange may issue cease and desist orders to any supplier who fails to comply with its rules, or may revoke or suspend a certificate of authority, impose financial penalties of up to $50,000 per occurrence or $500,000 per day for violation of a cease and desist order.

The exchange shall decide whether to grant a certificate within 45 days of application. Applications will be granted based upon a finding that the applicant: has the requisite resources; will comply with requirements designed to protect the integrity and reliability of the transmission system; will sell to the exchange and not to any retail customers; will provide such data as the exchange may require; and will allow Missouri entities with generating facilities to provide power to either the exchange or directly to retail customers.

A member of the exchange that is a regulated public utility shall continue to provide retail services and to maintain and modernize its transmission and distribution systems, provide access to its transmission and distribution systems to any supplier providing services to the exchange, and file tariffs based upon costs of electric power purchased from the exchange and not based upon the utility's own generating plant costs.

No member of an exchange is liable for the debts of the exchange. The Missouri securities law shall not apply to any mortgage executed to secure indebtedness, any indebtedness issued by an exchange or membership certificates.

The supplier of electrical services to an electric power exchange and the exchange are exempt from regulation by the Public Service Commission. The Public Service Commission may order electrical corporations to report major costs by customer class by January 1, 2000. After July 2, 2000, the Public Service Commission may order electrical corporations to become members of the exchange by December 31, 2003.

Any electric cooperative, municipal utility or rural electric cooperative that owns transmission facilities or provides transmission services shall submit an application to the Federal Energy Regulatory Commission to establish or join an independent system operator. These operators will manage the power transmission system.

An oversight board shall be created for entities owning transmission facilities that have failed to apply to the Federal Energy Regulatory Commission by January 1, 2000 or have not been approved by June 30, 2001. The board shall consist of three members appointed by the Governor with advice and consent of the Senate, one member appointed by the Speaker of the House of Representatives, and one member appointed by the President Pro Tem of the Senate. The board shall incorporate and serve as the Missouri independent system operator until an independent system operator is otherwise created.

The Missouri independent system operator may combine or merge its operations with others authorized to provide transmission services including another independent system operator, may purchase or lease transmission assets, and may operate as a transmission public facility under federal law.

The Public Service Commission may authorize regulated electric utilities to adopt alternatives to rate of return regulation under conditions specified in the act. The Commission shall act on a request to adopt modifications within 270 days and if it fails to approve it shall specify the reasons for its actions and identify specific modifications that it would approve. Any alternatives approved by the Commission shall be reviewed in two years.

Municipal utilities and rural electric cooperatives may become members of the exchange and they have rights and obligations as any other member. After an election to become a member, the utility or cooperative must continue to provide service within its area and it cannot withdraw from the exchange. DAVID VALENTINE AND OTTO FAJEN