SB 0447 - Fiscal Note

Fiscal Note - SB 0447 - Regulates certain activities of electric and gas companies

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO.: 1943-01

BILL NO.: SB 447

SUBJECT: Utilities: Public Service Commission

TYPE: Original

DATE: March 19, 1999

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
Public Service Commission*	$0	$0	$0
Total Estimated Net Effect on All State Funds	$0	$0	$0

*Assumes costs of $450,000 in FY 00 and an increase in the PSC assessment and appropriation, resulting in a net effect of $0.

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
None	$0	$0	$0
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
Local Government	(Unknown)	(Unknown)	(Unknown)

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 6 pages.

FISCAL ANALYSIS

ASSUMPTION

Officials from the Department of Economic Development - Public Service Commission (PSC) assume the proposed legislation would establish minimum performance, customer service, reliability and maintenance standards for the provision of electric and gas service in Missouri. The legislation also addresses labor relations between electric and gas utilities and their employees, including the requirement of worker transition plans. It requires electric and gas companies to file written reports of certain incidents and an annual preventive maintenance plan with the Commission. The PSC assumes they would need three consultants at $150,000 each to establish: 1) customer service standards; 2) reliability and maintenance standards; and 3) employee performance standards. Also, PSC has requested two additional FTE after the consultants have established those standards. The additional FTE would include one Utility Engineering Specialist II (1 FTE at $37,656 per year) to review the annual preventive maintenance plan, a .5 Regulatory Law Judge (.5 FTE at $33,288 per year) to conduct necessary hearings and draft decisions for Commission review and approval and a .5 Clerk Steno II (.5 FTE at $19,608 per year) to process and handle the filings made by electric and gas companies, with related fringe, expense, equipment, and rental space.

In a previous proposal with similar requirements, PSC officials stated the fiscal impact to be totally related to consulting services for the first year at $450,000 to establish the required standards. In a conversation with the PSC relating to the change in the fiscal note response from the previous proposal, they noted that previously, the PSC had the capability to absorb the additional workload. However, those staff have been redirected to support computer services, as well as to handle additional workload associated with a bill that was passed last session that included additional FTE that were not included in the agency's budget. Therefore, the PSC does not currently have resources to absorb any additional workload associated with this proposal. Oversight has not included costs associated with the additional 2 FTE in the fiscal impact specifications below and assumes the PSC could request additional resources to handle any increased workload through the normal budget process.

Additionally, Oversight assumes the PSC would increase the assessment to utilities and that appropriation would be made, resulting in a net effect of $0.

Officials from the City Utilities of Springfield assume the internal cost to produce the annual preventive maintenance plan, file with the Commission and maintain the plan and records for the distribution system and the power plants is estimated to be $198,500 per year. The cost to provide the increased training and increased level of maintenance is not included in the above estimate, but could easily run in the seven figures annually.

ASSUMPTION (continued)

To participate in the Commission's proceedings mandated by 393.306 and 393.309 will require the hiring of outside legal and technical consultants at an estimated cost of $100,000 per year.

City Utilities does not anticipate the sale or lease of facilities or any significant downsizing. Therefore, no costs are included for 393.312 and 393.315. The activities required by 393.317 are either currently being performed or will be without the enactment of SB 447. Therefore, no costs are included.

The Columbia Water and Light Department assume the proposal would have far reaching implications for their company. It would have even more severe implications for the other 86 municipal utilities in the state, many of which are small rural communities who simply may not have the resources available to deal with the requirements of the bill.

The Columbia Water and Light Department is a municipally owned utility and has not been regulated by the PSC. This bill would subject the utility to PSC jurisdiction for the maintenance planning, employee training, and job security provisions. It would require a series of planning documents and filings at the PSC. Possible evidentiary hearings and extended analysis and follow up testimony could result. The initial preparation of the filing alone could cost the utility in excess of $50,000.

It would be necessary to hire an attorney and consultants with regulatory experience to prepare the necessary maintenance plans, with estimated costs for the first year to exceed $100,000. In the following years, further filings could cost approximately $50,000.

The requirements for employee protection could cost in excess of $100,000 per employee if a reduction in force or a sale of assets were to occur.

Implementation of the requirements of the bill could cause rate increases for municipally owned utilities.

Officials from the Department of Economic Development - Office of Public Counsel (OPC) and the Department of Natural Resources (DNR) assume the proposed legislation would have no fiscal impact on their agencies.

Oversight assumes this proposal would result in new requirements that all utilities would have to meet, resulting in unknown costs.

Oversight assumes IF the requirements of this proposal would result in a change in utility rates, state government agencies, local governments and small businesses could be fiscally impacted.

FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
PUBLIC SERVICE COMMISSION FUND
Costs - Public Service Commission (PSC)
Consulting fees	($450,000)	$0	$0
Revenue-PSC
Assessment to utilities	$450,000	$0	$0
ESTIMATED NET EFFECT
ON PUBLIC SERVICE
COMMISSION FUND	$0	$0	$0
FISCAL IMPACT - Local Government	FY 2000	FY 2001	FY 2002
LOCAL GOVERNMENT
Costs for municipals to meet
additional requirements	(Unknown)	(Unknown)	(Unknown)
ESTIMATED NET EFFECT
ON LOCAL GOVERNMENT	(Unknown)	(Unknown)	(Unknown)
FISCAL IMPACT - Small Business
Small businesses could have a direct fiscal impact as a result of this proposal to the extent of changes to the operating requirements and potential rate changes to electric or gas users. Also, it could require additional paperwork and additional benefits for workers as part of a worker transition plan in the event of a closure or reorganization of the utility company.

DESCRIPTION

This act requires all electric and gas companies to file an annual preventive maintenance plan for approval by the Public Service Commission (PSC). The plan shall provide certain maintenance and inspection schedules, include appropriate training for employees, require sufficient properly

DESCRIPTION (continued)

trained permanent personnel, provide a minimum maintenance standard rating with a method for corrective action, and specify the location of certain records.

The act requires the PSC to establish minimal performance standards for all electric and gas companies. The companies shall implement procedures to ensure that employees and contractors adhere to all federal and state safety rules and regulations. Employees of contractors or vendors shall be bonded when working on or around customers or public property.

Each gas and electric company is responsible for all damage to customer property primarily caused by failure to deliver service in compliance with PSC rules. Gas and electric companies shall file a written report to the PSC within 30 days regarding any related incident involving a fatality or personal injury requiring inpatient hospitalization and any related property damage estimated at $20,000 or more.

The act requires the PSC to establish minimum reliability and maintenance service standards pertaining to employee skills, complaint and resolution procedures with penalties, and minimum staffing levels.

The PSC shall prohibit employers from allowing employees to perform critical functions without first demonstrating certification of the necessary skills and knowledge.

If a gas or electric company that is party to a recognized collective bargaining agreement undertakes organizational change, the entity must continue to recognize and bargain with the union representing the employees at the time of the change for 3 years or until contract expiration, whichever is later. Any successor is bound to the terms of the collective bargaining agreement unless the parties agree to different terms within the 3-year period.

The company shall inform its employees and certified representatives of the proposed plan, confer with the employees to minimize resulting hardship, and file with the PSC a worker transition plan at least 180 days prior to finalization of the transaction.

While the worker transition plan is in effect, the company shall file with the PSC notice of any closure or relocation of facilities and any action that will result in layoffs. The worker transition plan shall provide such services and benefits as severance pay, retraining, and outplacement services.

The act requires the PSC to adopt minimum customer service standards, such as a customer service center within its service territory with sufficient personnel, resolution of trouble reports

DESCRIPTION (continued)

by customers within 2 hours of initiation, and a toll-free customer complaint hotline with sufficient personnel to answer calls in a timely manner.

The act contains penalty provisions.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.

This proposal would not affect Total State Revenues.

SOURCES OF INFORMATION

Department of Economic Development - Public Service Commission

Department of Economic Development - Office of Public Counsel

Department of Natural Resources

City Utilities of Springfield

Columbia Water and Light

NOT RESPONDING:

MO Association of Municipal Utilities

Independence Power and Light

Jeanne Jarrett, CPA

Director

March 19, 1999