OK
Oklahoma House Bill HB2747

Oklahoma 2025 Regular Session

Oklahoma House Bill HB2747 Compare Versions

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2828 STATE OF OKLAHOMA
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3030 1st Session of the 60th Legislature (2025)
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3232 HOUSE BILL 2747 By: Caldwell (Trey)
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3838 AS INTRODUCED
3939
4040 An Act relating to public utilities; amending 17 O.S.
4141 2021, Section 286, which relates to electricity;
4242 modifying certain require ments; determining fuel
4343 type; providing a new application window; determining
4444 reasonable alternatives; providing for a separate
4545 rate adjustment mechanism allowing for refunds;
4646 amending 17 O.S. 2021, Section 291, which relates to
4747 definitions; modifying defi nition; amending 17 O.S.
4848 2021, Section 292, which relates to rights of
4949 electric transmission owners; adding description of
5050 certain electric transmission facilities; requiring
5151 solicitation of competitive bids for construction of
5252 certain facilities; requirin g certain requests for
5353 proposal and bid evaluation to be overseen by
5454 appointed independent evaluator; authorizing
5555 incumbent electric transmission owner to submit
5656 certain bid; amending 17 O.S. 2021, Section 293,
5757 which relates to local electric transmission
5858 facility; requiring certain notice of intent;
5959 creating elections to make new d eferrals; allowing
6060 for certain increases after certain rate cases;
6161 determining the start of new deferrals; providing for
6262 alternative dates; requiring certain reviews by the
6363 Commission; allowing for certain assets to be added
6464 into rate basis under specific circumstances;
6565 providing certain assets not be in specific rate
6666 basis to accrue certain costs; allowing for certain
6767 expenses and offsets; determining how certain returns
6868 are to be calculated; applying certain provisions to
6969 certain elections; providing for codification;
7070 providing an effective date ; and declaring an
7171 emergency.
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103103 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
104104 SECTION 1. AMENDATORY 17 O.S. 2021, Section 286, is
105105 amended to read as follows:
106106 Section 286. A. 1. The portion of costs incurred by an
107107 electric utility, which is subject to rate regulation by the
108108 Corporation Commission, for transmission upgrades approved by a
109109 regional transmission organization to which the utility is a member
110110 and resulting from an order of a federal regulatory authority having
111111 legal jurisdiction over interstate regulation of transmission rates,
112112 shall be presumed recoverable by the utility. The presump tion
113113 established in this paragraph may be rebutted by evidence that the
114114 costs so incurred by the utility for the transmission upgrades
115115 exceed the scope of the project authorized by the regional
116116 transmission organization or order issued by the federal regulatory
117117 authority having jurisdiction over interstate regulation of
118118 transmission rates. The Commission shall transmit rules to
119119 implement the requirements of this subsection to the Legislature on
120120 or before April 1, 2006. The rules may authorize an electric
121121 utility to periodically adjust its rates to recover all or a portion
122122 of the costs so incurred by the utility for the transmission
123123 upgrades.
124124 2. Reasonable costs incurred by an electric utility for
125125 transmission upgrades:
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152152 a. needed to develop wind generation in this state,
153153 b. approved by the Southwest Power Pool, and
154154 c. placed into service before December 31, 2013,
155155 shall be presumed recoverable through a periodic adjustment in the
156156 rates of the utility, provided that the presumption of the recovery
157157 of such costs or the recovery of such costs through a periodic
158158 adjustment in rates may be rebutted by evidence presented to the
159159 Commission. The determination of whether the costs shall be
160160 recovered and whether the costs shall be recovered through a
161161 periodic adjustment of rates shall be made by the Commission
162162 following proper notice and hear ing in a cause to be filed by the
163163 electric utility in which it files such information as the
164164 Commission may require.
165165 B. An electric utility subject to rate regulation by the
166166 Corporation Commission may file an application seeking Commission
167167 authorization of a plan by the utility to make capital expenditures
168168 for equipment or facilities necessary to comply with the federal
169169 Clean Air Act (CAA), the Clean Water Act (CWA), the Comprehe nsive
170170 Environmental Response, Compensation, and Liability Act (CERCLA),
171171 the Emergency Planning & Community Right -to-Know Act (EPCRA), the
172172 Endangered Species Act (ESA), the National Environmental Policy Act
173173 (NEPA), the Occupational Safety and Health Act (OS HA), the Oil
174174 Pollution Act (OPA), the Pollution Prevention Act (PPA), the
175175 Resource Conservation and Recovery Act (RCRA), the Safe Drinking
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202202 Water Act (SDWA), the Toxic Substances Control Act (TSCA), all as
203203 amended, and, as the Commission may deem appropriat e, federal,
204204 state, local or tribal environmental requirements which apply to
205205 generation facilities. If approved by the Commission, after notice
206206 and hearing, the equipment or facilities specified in the approved
207207 utility plan are conclusively presumed used and useful. The utility
208208 may elect to periodically adjust its rates to recover the costs of
209209 the expenditures. The utility shall file a request for a review of
210210 its rates pursuant to Section 152 of this title no more than twenty-
211211 four (24) months after the u tility begins recovering the costs
212212 through a periodic rate adjustment mechanis m and no more than
213213 twenty-four (24) months after the utility begins recovering the
214214 costs through any subsequent periodic rate adjustment mechanism.
215215 Provided further, that a periodic rate adjustment or adjustments are
216216 not intended to prevent a utility from seeking cost recovery of
217217 capital expenditures as otherwise may be authorized by the
218218 Commission. However, the reasonableness of the costs to be
219219 recovered by the utility shall be subject to Commission review and
220220 approval. The Commission shall promulgate r ules to implement the
221221 provisions of this subsection, such rules to be transmitted to the
222222 Legislature on or before April 1, 2007.
223223 C. 1. An electric utility subject to rate regul ation by the
224224 Corporation Commission may elect to file an application seeking
225225 approval by the Commission to construct a new electric generating
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252252 facility, to purchase an existing electric generation facility or
253253 enter into a long-term contract for purchased p ower and capacity
254254 and/or energy, subject to the provisions of this subsection. If,
255255 and to the extent that, the Commission determines there is a need
256256 for construction or purchase of the electric generating facility or
257257 long-term purchase power contract , the generating facility or
258258 contract shall be considered used and useful and its costs shall be
259259 subject to cost recovery rules promulgated by the Commission. The
260260 Commission shall enter an order on an application filed pursuant to
261261 this subsection within two hu ndred forty (240) days of the filing of
262262 the application, unless the generation facility utilizes natural gas
263263 as its primary fuel source, following notice and hearing and after
264264 consideration of reasonable alternatives. If the generation
265265 facility uses natural gas as its primary fuel source, the Commission
266266 shall enter an order on an application filed pursuant to this
267267 subsection within one hundred eighty (180) days of the filing of the
268268 application, following notice and hearing and after consideration of
269269 the reasonable alternative.
270270 2. Regardless of the generation source, bids received b y the
271271 utility through a competitive bidding process within twelve (12)
272272 months following the final bid due date of such competitive bidding
273273 process shall be considered substantial evidence to satisfy the
274274 consideration of reasonable alternatives.
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301301 2. 3. Following receipt of an application filed pursuant to
302302 this subsection, the Corporation Commission staff may file a request
303303 to assess the specific costs, to be paid by the electric u tility and
304304 which shall be deemed to be recoverable, for the costs associated
305305 with conducting the analysis or investigation of the application
306306 including, but not limited to, the cost of acquiring expert
307307 witnesses, consultants, and analytical services. The request shall
308308 be filed at and heard by the Corporation Commissioners in the docket
309309 opened by the electric utility pursuant to this subsection. After
310310 notice and hearing, the Commission shall decide the request.
311311 3. 4. Additionally, following receipt of an application filed
312312 pursuant to this subsection, the Office of the Attorney Gene ral may
313313 file a request with the Corporation Commission for the assessment of
314314 specific costs, to be paid by the electric utility and which shall
315315 be deemed to be recoverable, assoc iated with the performance of the
316316 Attorney General’s duties as provided by law. Those costs may
317317 include, but are not limited to, the cost of acquiring expert
318318 witnesses, consultants and analytical services. The request shall
319319 be filed at and heard by the C orporation Commissioners in the docket
320320 opened by the electric utility pursuant to this subsection. After
321321 notice and hearing, the Commission shall decide the request.
322322 4. 5. The Commission shall promulgate rules to implement the
323323 provisions of this subsecti on. The rules shall be transmitted to
324324 the Legislature on or before April 1, 2006. In promulgating rules
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351351 to implement the provisions of this subsection, the Commission shall
352352 consider, among other things, rules which would:
353353 a. permit contemporaneous utilit y recovery from its
354354 customers, the amount necessary to cover the
355355 Corporation Commission staff and Attorney General
356356 assessments as authorized by this subsection,
357357 b. establish how the cost of facilities approved pursuant
358358 to this subsection shall be timely re viewed, approved,
359359 and recovered or disapproved, and
360360 c. establish the information which an electric utility
361361 must provide when filing an application pursuant to
362362 this subsection.
363363 5. 6. The Commission shall also consider rules which may permit
364364 an electric utility to begin to recover return on or and return of
365365 Construction-Work-In-Progress expenses prior to commercial operation
366366 of a newly constructed electric generation facility subject to the
367367 provisions of this subsection , provided the newly constructed
368368 electric generation facility utilizes natural gas as its primary
369369 fuel source. The Commission shall permit a separate rate adjustment
370370 mechanism, adjusted periodically, to recover the costs described in
371371 this section. If a public utility implements a rate adjustm ent
372372 mechanism pursuant to this section and subsequently terminates the
373373 initiative to construct or acquire a stake in a generating facility,
374374 the Commission shall have the authority, following notice and
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401401 hearing, to order the public utility to refund custome rs any amounts
402402 collected through such rate adjustment mechanism. In ordering any
403403 such refund, the Commission shall give consideration as to the
404404 circumstances resulting in the termination of the construction or
405405 acquisition.
406406 SECTION 2. AMENDATORY 17 O.S. 2021, Section 291, is
407407 amended to read as follows:
408408 Section 291. As used in this act:
409409 1. "Commission" means the Corporation Commission;
410410 2. "Incumbent electric transmission owner " means any Oklahoma
411411 electric public utility, as recog nized by the Commission, or its
412412 affiliates, or subsidiaries or any electric cooperative, any
413413 municipal power agency or any municipal utility that owns, operates
414414 and maintains an electric transmission facility in this state or any
415415 public utility, as recogni zed by the Commission, that is engaged in
416416 the development of an electric trans mission facility in the state as
417417 of the effective date of this act;
418418 3. "Local electric transmission facility " means a high-voltage
419419 transmission line or high -voltage associated t ransmission facilities
420420 with a rating of greater than sixty -nine (69) kilovolts and less
421421 than three hundred (300) kilovolts ; and
422422 4. "Southwest Power Pool " means the Southwest Power Pool or any
423423 federally recognized successor entity.
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450450 SECTION 3. AMENDATORY 17 O.S. 2021, Section 292, is
451451 amended to read as follo ws:
452452 Section 292. A. An For any local electric transmission
453453 facility with a rating greater than sixty -nine (69) kilovolts and
454454 less than three hundred (300) kilovolts, an incumbent electric
455455 transmission owner has the right to construct, own and maintain a
456456 local electric transmission any such facility that has been approved
457457 for construction in a Southwest Power Pool transmission plan and
458458 will interconnect to facilities owned by tha t incumbent electric
459459 transmission owner. An incumbent electric transmission o wner has
460460 the right to construct, own and maintain:
461461 1. A new local electric transmission facility that connects to
462462 electric transmission facilities owned by the incumbent; and
463463 2. Upgrades to the existing local electric transmission
464464 facilities of the incumbent.
465465 B. For any local electric transmission facility with a rating
466466 greater than three hundred (300) kilovolts with a need date within
467467 three (3) years, as determined by the Sout hwest Power Pool, an
468468 incumbent electric transmission owner has the right to co nstruct,
469469 own, and maintain any such facility that has been approved for
470470 construction in a Southwest Power Pool transmission plan and will
471471 interconnect to facilities owned by that incumbent electric
472472 transmission owner. An incumbent electric transmission owner has
473473 the right to construct, own, and maintain:
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500500 1. The new local electric transmission facility that connects
501501 to electric transmission facilities owned by the incumbent; and
502502 2. Upgrades to the existing local electric transmission
503503 facilities of the inc umbent.
504504 C. For any local electric transmission facility with a rating
505505 greater than three hundred (300) kilovolts with a need date greater
506506 than three (3) years, a nd determined by the Southwest Power Pool, an
507507 incumbent electric transmission owner has the right to own and
508508 maintain any such facility that has been approved for construction
509509 in a Southwest Power Pool transmission plan and will interconnect to
510510 facilities owned by that in cumbent electric transmission owner, if
511511 the incumbent electric transmission ow ner issues a request for
512512 proposal which solicits competitive bids for construction of the
513513 facility. The request for proposal and associated bid evaluation
514514 and selection shall be overseen by an independent evaluator
515515 appointed by the Oklahoma Corporation Commission. Nothing herein
516516 shall prohibit an incumbent electric transmission owner from
517517 submitting its own bid to construct such a facility. An incumbent
518518 electric transmission ow ner has the right to own and maintain:
519519 1. A new local electric transmission f acility that connects to
520520 electric transmission facilities owned by the incumbent; and
521521 2. Upgrades to the existing local electric transmission
522522 facilities of the incumbent.
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549549 D. The right to construct, own and maintain a local electric
550550 transmission facility that will interconnect to facilities owned by
551551 two or more incumbent electric transmission owners belongs
552552 individually and equally to each incumbent electric transmission
553553 owner, unless otherwise agreed upon in writing by the incumbent
554554 electric transmission owners.
555555 C. E. Nothing in this section is intended to affect an
556556 incumbent electric transmission owner 's use and control of its
557557 existing property rights including the incumbent el ectric
558558 transmission owner's ability to assign its rights to construct, own
559559 and maintain a local electric transmission facility described in
560560 subsection A of this section. The retention, modification or
561561 transfer of existing property rights of an incumbent e lectric
562562 transmission owner and the rights described in subsection A of this
563563 section shall remain subject to the relevant state law or regulation
564564 recognizing the property right.
565565 F. An electric cooperative which is not a member of the
566566 Southwest Power Pool m ay construct, own, and maintain local electric
567567 transmission facilities without regard to the provisions of this
568568 section.
569569 SECTION 4. AMENDATORY 17 O.S. 2021, Section 293, is
570570 amended to read as follows:
571571 Section 293. A. If the Southwest Power Pool has approved a
572572 local electric transmission facility in a Sout hwest Power Pool
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599599 transmission plan and has formally directed the incumbent electric
600600 transmission owner or owners, if there is more than one owner, to
601601 construct, own and maintain the local electric transmission
602602 facility, the incumbent electric transmission owner or owners shall
603603 give notice to the Southwest Power Pool, in writing, within ninety
604604 (90) days of receipt of the direction to construct by the Southwest
605605 Power Pool, regarding its intent to construct, own and maintain the
606606 local electric transmission fac ility pursuant to subsection A or B
607607 of Section 292 of this title of its intent to own and maintain the
608608 local electric transmission facility pursuant to subsection C of
609609 Section 292 of this title. If notice is not provided, the incumbent
610610 electric transmission owner shall surrender its right to construct,
611611 own and maintain the local electric transmission facility.
612612 B. If an incumbent electric transmission owner or owners give
613613 notice of intent not to construct the local electric transmission
614614 facility or fail to provide notice as required in subsection A of
615615 this section, then the Southwest Power Pool may determine whether
616616 the incumbent electric transmission owner or owners or other enti ty
617617 will construct, own and maintain the local electric transmission
618618 facility.
619619 C. Nothing in this section is intended to limit the ability of
620620 any person to notify the Southwest Power Pool that it believes an
621621 incumbent electric transmission owner with the r ight to construct,
622622 own and maintain a local electric transmission facility ori ginally
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649649 approved by the Southwest Power Pool has failed to exercise its
650650 right to construct, own and maintain the local electric transmission
651651 facility within a reasonable period o f time and request that the
652652 Southwest Power Pool rescind the right to construct, own and
653653 maintain the local electric transmission facility and assign the
654654 rights to another incumbent electric transmission owner.
655655 SECTION 5. NEW LAW A new section of law to be codified
656656 in the Oklahoma Statutes as Section 295 of Title 17, unless there is
657657 created a duplication in numbering, reads as follows:
658658 A. Commencing on July 1, 2025, a public utility shall defer to
659659 a regulatory asset ninety percent (90%) of all depreciation expense
660660 and return associated with all qualifying electric plant s recorded
661661 to plant-in-service on the utility's books, provided the public
662662 utility has provided notice to the Commission of the public
663663 utility's election to make suc h deferrals pursuant to th is section.
664664 Qualifying electric plant shall include all incremental electric
665665 plant added to plant -in-service by a public utility since the
666666 utility's last general rate case, except transmission facilities or
667667 new electric generatin g units.
668668 B. Such deferral shall begin on July 1, 2025, if the public
669669 utility has notified the Commission of the public utility's election
670670 to make such deferral by such date or shall begin on the date that
671671 such election is made if such election is made af ter July 1, 2025.
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698698 C. The Commission shall conduct a prudence review of the
699699 associated qualifying electric plant resulting in the regulatory
700700 asset balances prior to moving such balances into the public
701701 utility's rate base. The regulatory asset balances a rising under
702702 this section shall be adjusted to reflect any prudence disallowances
703703 of the associated qualifying electric plant, following notice and
704704 hearing, as ordered by the Commission.
705705 D. In each general rate proceeding concluded after July 1,
706706 2025, the balance of the regulatory asset as the end of the test
707707 year shall be include d in the public utility's rate base without any
708708 offset, reduction or adjustment based upon consideration of any
709709 other factor with the regulatory asset balances arising from the
710710 deferrals associated with qualifying electric plant placed in
711711 service after the end of the test year to be included in the rate
712712 base in the next general rate proceeding, unless otherwise provided
713713 in this section.
714714 E. Parts of regulatory asset balances crea ted under this
715715 section that are not included in rate base shall accrue carryin g
716716 costs as the public utility's weighted average cost of capital, plus
717717 applicable federal, state and local income or excise taxes.
718718 Regulatory asset balances arising under this se ction that are
719719 included in the rate base shall be recovered through a twenty -year
720720 amortization beginning on the date new rates reflecting such
721721 amortization take effect.
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748748 F. Depreciation expense deferred under this section shall
749749 account for any qualifying electric plant placed into service less
750750 any applicable retirements. Returns deferred under this section
751751 shall be determined using the weighted average cost of capital
752752 approved by the Commission in the public utility's last general rate
753753 case and applied to the change in regulatory asset balances caused
754754 by the qualifying electric plant, plus applicable federal, state and
755755 local income or excise taxes. In determining the return deferred,
756756 the public utility shall account for changes in all plant -related
757757 accumulated deferred income taxes and changes in accumulated
758758 depreciation, excluding retirements.
759759 G. This section shall only apply to any public utility that has
760760 elected to make the deferrals for which this section provides and
761761 has filed a notice of such elect ion with the Commission.
762762 SECTION 6. NEW LAW A new section of law to be codified
763763 in the Oklahoma Statutes as Section 801.10 of Title 17, unless there
764764 is created a duplication in numbering, reads as follows:
765765 No retail electric suppl ier, as defined in Section 158.22 of
766766 Title 17 of the Oklahoma Statute, shall o ffer rate-payer-funded
767767 incentives, rebates, or inducements to its customers to promote the
768768 switching of fuel sources from natural gas to electricity.
769769 SECTION 7. This act shall become effective July 1, 2025.
770770 SECTION 8. It being immediately necessary for the preservation
771771 of the public peace, health or safety, an emergency is hereby
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794794 22
795795 23
796796 24
797797
798798 declared to exist, by reason whereof this act shall take effect and
799799 be in full force from and after its passage and approval.
800800
801801 60-1-10897 MKS 01/15/25