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STATE OF OKLAHOMA
1st Session of the 60th Legislature (2025)
HOUSE BILL 2747 By: Caldwell (Trey)
AS INTRODUCED
An Act relating to public utilities; amending 17 O.S.
2021, Section 286, which relates to electricity;
modifying certain require ments; determining fuel
type; providing a new application window; determining
reasonable alternatives; providing for a separate
rate adjustment mechanism allowing for refunds;
amending 17 O.S. 2021, Section 291, which relates to
definitions; modifying defi nition; amending 17 O.S.
2021, Section 292, which relates to rights of
electric transmission owners; adding description of
certain electric transmission facilities; requiring
solicitation of competitive bids for construction of
certain facilities; requirin g certain requests for
proposal and bid evaluation to be overseen by
appointed independent evaluator; authorizing
incumbent electric transmission owner to submit
certain bid; amending 17 O.S. 2021, Section 293,
which relates to local electric transmission
facility; requiring certain notice of intent;
creating elections to make new d eferrals; allowing
for certain increases after certain rate cases;
determining the start of new deferrals; providing for
alternative dates; requiring certain reviews by the
Commission; allowing for certain assets to be added
into rate basis under specific circumstances;
providing certain assets not be in specific rate
basis to accrue certain costs; allowing for certain
expenses and offsets; determining how certain returns
are to be calculated; applying certain provisions to
certain elections; providing for codification;
providing an effective date ; and declaring an
emergency.
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BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 17 O.S. 2021, Section 286, is
amended to read as follows:
Section 286. A. 1. The portion of costs incurred by an
electric utility, which is subject to rate regulation by the
Corporation Commission, for transmission upgrades approved by a
regional transmission organization to which the utility is a member
and resulting from an order of a federal regulatory authority having
legal jurisdiction over interstate regulation of transmission rates,
shall be presumed recoverable by the utility. The presump tion
established in this paragraph may be rebutted by evidence that the
costs so incurred by the utility for the transmission upgrades
exceed the scope of the project authorized by the regional
transmission organization or order issued by the federal regulatory
authority having jurisdiction over interstate regulation of
transmission rates. The Commission shall transmit rules to
implement the requirements of this subsection to the Legislature on
or before April 1, 2006. The rules may authorize an electric
utility to periodically adjust its rates to recover all or a portion
of the costs so incurred by the utility for the transmission
upgrades.
2. Reasonable costs incurred by an electric utility for
transmission upgrades:
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a. needed to develop wind generation in this state,
b. approved by the Southwest Power Pool, and
c. placed into service before December 31, 2013,
shall be presumed recoverable through a periodic adjustment in the
rates of the utility, provided that the presumption of the recovery
of such costs or the recovery of such costs through a periodic
adjustment in rates may be rebutted by evidence presented to the
Commission. The determination of whether the costs shall be
recovered and whether the costs shall be recovered through a
periodic adjustment of rates shall be made by the Commission
following proper notice and hear ing in a cause to be filed by the
electric utility in which it files such information as the
Commission may require.
B. An electric utility subject to rate regulation by the
Corporation Commission may file an application seeking Commission
authorization of a plan by the utility to make capital expenditures
for equipment or facilities necessary to comply with the federal
Clean Air Act (CAA), the Clean Water Act (CWA), the Comprehe nsive
Environmental Response, Compensation, and Liability Act (CERCLA),
the Emergency Planning & Community Right -to-Know Act (EPCRA), the
Endangered Species Act (ESA), the National Environmental Policy Act
(NEPA), the Occupational Safety and Health Act (OS HA), the Oil
Pollution Act (OPA), the Pollution Prevention Act (PPA), the
Resource Conservation and Recovery Act (RCRA), the Safe Drinking
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Water Act (SDWA), the Toxic Substances Control Act (TSCA), all as
amended, and, as the Commission may deem appropriat e, federal,
state, local or tribal environmental requirements which apply to
generation facilities. If approved by the Commission, after notice
and hearing, the equipment or facilities specified in the approved
utility plan are conclusively presumed used and useful. The utility
may elect to periodically adjust its rates to recover the costs of
the expenditures. The utility shall file a request for a review of
its rates pursuant to Section 152 of this title no more than twenty-
four (24) months after the u tility begins recovering the costs
through a periodic rate adjustment mechanis m and no more than
twenty-four (24) months after the utility begins recovering the
costs through any subsequent periodic rate adjustment mechanism.
Provided further, that a periodic rate adjustment or adjustments are
not intended to prevent a utility from seeking cost recovery of
capital expenditures as otherwise may be authorized by the
Commission. However, the reasonableness of the costs to be
recovered by the utility shall be subject to Commission review and
approval. The Commission shall promulgate r ules to implement the
provisions of this subsection, such rules to be transmitted to the
Legislature on or before April 1, 2007.
C. 1. An electric utility subject to rate regul ation by the
Corporation Commission may elect to file an application seeking
approval by the Commission to construct a new electric generating
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facility, to purchase an existing electric generation facility or
enter into a long-term contract for purchased p ower and capacity
and/or energy, subject to the provisions of this subsection. If,
and to the extent that, the Commission determines there is a need
for construction or purchase of the electric generating facility or
long-term purchase power contract , the generating facility or
contract shall be considered used and useful and its costs shall be
subject to cost recovery rules promulgated by the Commission. The
Commission shall enter an order on an application filed pursuant to
this subsection within two hu ndred forty (240) days of the filing of
the application, unless the generation facility utilizes natural gas
as its primary fuel source, following notice and hearing and after
consideration of reasonable alternatives. If the generation
facility uses natural gas as its primary fuel source, the Commission
shall enter an order on an application filed pursuant to this
subsection within one hundred eighty (180) days of the filing of the
application, following notice and hearing and after consideration of
the reasonable alternative.
2. Regardless of the generation source, bids received b y the
utility through a competitive bidding process within twelve (12)
months following the final bid due date of such competitive bidding
process shall be considered substantial evidence to satisfy the
consideration of reasonable alternatives.
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2. 3. Following receipt of an application filed pursuant to
this subsection, the Corporation Commission staff may file a request
to assess the specific costs, to be paid by the electric u tility and
which shall be deemed to be recoverable, for the costs associated
with conducting the analysis or investigation of the application
including, but not limited to, the cost of acquiring expert
witnesses, consultants, and analytical services. The request shall
be filed at and heard by the Corporation Commissioners in the docket
opened by the electric utility pursuant to this subsection. After
notice and hearing, the Commission shall decide the request.
3. 4. Additionally, following receipt of an application filed
pursuant to this subsection, the Office of the Attorney Gene ral may
file a request with the Corporation Commission for the assessment of
specific costs, to be paid by the electric utility and which shall
be deemed to be recoverable, assoc iated with the performance of the
Attorney General’s duties as provided by law. Those costs may
include, but are not limited to, the cost of acquiring expert
witnesses, consultants and analytical services. The request shall
be filed at and heard by the C orporation Commissioners in the docket
opened by the electric utility pursuant to this subsection. After
notice and hearing, the Commission shall decide the request.
4. 5. The Commission shall promulgate rules to implement the
provisions of this subsecti on. The rules shall be transmitted to
the Legislature on or before April 1, 2006. In promulgating rules
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to implement the provisions of this subsection, the Commission shall
consider, among other things, rules which would:
a. permit contemporaneous utilit y recovery from its
customers, the amount necessary to cover the
Corporation Commission staff and Attorney General
assessments as authorized by this subsection,
b. establish how the cost of facilities approved pursuant
to this subsection shall be timely re viewed, approved,
and recovered or disapproved, and
c. establish the information which an electric utility
must provide when filing an application pursuant to
this subsection.
5. 6. The Commission shall also consider rules which may permit
an electric utility to begin to recover return on or and return of
Construction-Work-In-Progress expenses prior to commercial operation
of a newly constructed electric generation facility subject to the
provisions of this subsection , provided the newly constructed
electric generation facility utilizes natural gas as its primary
fuel source. The Commission shall permit a separate rate adjustment
mechanism, adjusted periodically, to recover the costs described in
this section. If a public utility implements a rate adjustm ent
mechanism pursuant to this section and subsequently terminates the
initiative to construct or acquire a stake in a generating facility,
the Commission shall have the authority, following notice and
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hearing, to order the public utility to refund custome rs any amounts
collected through such rate adjustment mechanism. In ordering any
such refund, the Commission shall give consideration as to the
circumstances resulting in the termination of the construction or
acquisition.
SECTION 2. AMENDATORY 17 O.S. 2021, Section 291, is
amended to read as follows:
Section 291. As used in this act:
1. "Commission" means the Corporation Commission;
2. "Incumbent electric transmission owner " means any Oklahoma
electric public utility, as recog nized by the Commission, or its
affiliates, or subsidiaries or any electric cooperative, any
municipal power agency or any municipal utility that owns, operates
and maintains an electric transmission facility in this state or any
public utility, as recogni zed by the Commission, that is engaged in
the development of an electric trans mission facility in the state as
of the effective date of this act;
3. "Local electric transmission facility " means a high-voltage
transmission line or high -voltage associated t ransmission facilities
with a rating of greater than sixty -nine (69) kilovolts and less
than three hundred (300) kilovolts ; and
4. "Southwest Power Pool " means the Southwest Power Pool or any
federally recognized successor entity.
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SECTION 3. AMENDATORY 17 O.S. 2021, Section 292, is
amended to read as follo ws:
Section 292. A. An For any local electric transmission
facility with a rating greater than sixty -nine (69) kilovolts and
less than three hundred (300) kilovolts, an incumbent electric
transmission owner has the right to construct, own and maintain a
local electric transmission any such facility that has been approved
for construction in a Southwest Power Pool transmission plan and
will interconnect to facilities owned by tha t incumbent electric
transmission owner. An incumbent electric transmission o wner has
the right to construct, own and maintain:
1. A new local electric transmission facility that connects to
electric transmission facilities owned by the incumbent; and
2. Upgrades to the existing local electric transmission
facilities of the incumbent.
B. For any local electric transmission facility with a rating
greater than three hundred (300) kilovolts with a need date within
three (3) years, as determined by the Sout hwest Power Pool, an
incumbent electric transmission owner has the right to co nstruct,
own, and maintain any such facility that has been approved for
construction in a Southwest Power Pool transmission plan and will
interconnect to facilities owned by that incumbent electric
transmission owner. An incumbent electric transmission owner has
the right to construct, own, and maintain:
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1. The new local electric transmission facility that connects
to electric transmission facilities owned by the incumbent; and
2. Upgrades to the existing local electric transmission
facilities of the inc umbent.
C. For any local electric transmission facility with a rating
greater than three hundred (300) kilovolts with a need date greater
than three (3) years, a nd determined by the Southwest Power Pool, an
incumbent electric transmission owner has the right to own and
maintain any such facility that has been approved for construction
in a Southwest Power Pool transmission plan and will interconnect to
facilities owned by that in cumbent electric transmission owner, if
the incumbent electric transmission ow ner issues a request for
proposal which solicits competitive bids for construction of the
facility. The request for proposal and associated bid evaluation
and selection shall be overseen by an independent evaluator
appointed by the Oklahoma Corporation Commission. Nothing herein
shall prohibit an incumbent electric transmission owner from
submitting its own bid to construct such a facility. An incumbent
electric transmission ow ner has the right to own and maintain:
1. A new local electric transmission f acility that connects to
electric transmission facilities owned by the incumbent; and
2. Upgrades to the existing local electric transmission
facilities of the incumbent.
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D. The right to construct, own and maintain a local electric
transmission facility that will interconnect to facilities owned by
two or more incumbent electric transmission owners belongs
individually and equally to each incumbent electric transmission
owner, unless otherwise agreed upon in writing by the incumbent
electric transmission owners.
C. E. Nothing in this section is intended to affect an
incumbent electric transmission owner 's use and control of its
existing property rights including the incumbent el ectric
transmission owner's ability to assign its rights to construct, own
and maintain a local electric transmission facility described in
subsection A of this section. The retention, modification or
transfer of existing property rights of an incumbent e lectric
transmission owner and the rights described in subsection A of this
section shall remain subject to the relevant state law or regulation
recognizing the property right.
F. An electric cooperative which is not a member of the
Southwest Power Pool m ay construct, own, and maintain local electric
transmission facilities without regard to the provisions of this
section.
SECTION 4. AMENDATORY 17 O.S. 2021, Section 293, is
amended to read as follows:
Section 293. A. If the Southwest Power Pool has approved a
local electric transmission facility in a Sout hwest Power Pool
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transmission plan and has formally directed the incumbent electric
transmission owner or owners, if there is more than one owner, to
construct, own and maintain the local electric transmission
facility, the incumbent electric transmission owner or owners shall
give notice to the Southwest Power Pool, in writing, within ninety
(90) days of receipt of the direction to construct by the Southwest
Power Pool, regarding its intent to construct, own and maintain the
local electric transmission fac ility pursuant to subsection A or B
of Section 292 of this title of its intent to own and maintain the
local electric transmission facility pursuant to subsection C of
Section 292 of this title. If notice is not provided, the incumbent
electric transmission owner shall surrender its right to construct,
own and maintain the local electric transmission facility.
B. If an incumbent electric transmission owner or owners give
notice of intent not to construct the local electric transmission
facility or fail to provide notice as required in subsection A of
this section, then the Southwest Power Pool may determine whether
the incumbent electric transmission owner or owners or other enti ty
will construct, own and maintain the local electric transmission
facility.
C. Nothing in this section is intended to limit the ability of
any person to notify the Southwest Power Pool that it believes an
incumbent electric transmission owner with the r ight to construct,
own and maintain a local electric transmission facility ori ginally
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approved by the Southwest Power Pool has failed to exercise its
right to construct, own and maintain the local electric transmission
facility within a reasonable period o f time and request that the
Southwest Power Pool rescind the right to construct, own and
maintain the local electric transmission facility and assign the
rights to another incumbent electric transmission owner.
SECTION 5. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 295 of Title 17, unless there is
created a duplication in numbering, reads as follows:
A. Commencing on July 1, 2025, a public utility shall defer to
a regulatory asset ninety percent (90%) of all depreciation expense
and return associated with all qualifying electric plant s recorded
to plant-in-service on the utility's books, provided the public
utility has provided notice to the Commission of the public
utility's election to make suc h deferrals pursuant to th is section.
Qualifying electric plant shall include all incremental electric
plant added to plant -in-service by a public utility since the
utility's last general rate case, except transmission facilities or
new electric generatin g units.
B. Such deferral shall begin on July 1, 2025, if the public
utility has notified the Commission of the public utility's election
to make such deferral by such date or shall begin on the date that
such election is made if such election is made af ter July 1, 2025.
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C. The Commission shall conduct a prudence review of the
associated qualifying electric plant resulting in the regulatory
asset balances prior to moving such balances into the public
utility's rate base. The regulatory asset balances a rising under
this section shall be adjusted to reflect any prudence disallowances
of the associated qualifying electric plant, following notice and
hearing, as ordered by the Commission.
D. In each general rate proceeding concluded after July 1,
2025, the balance of the regulatory asset as the end of the test
year shall be include d in the public utility's rate base without any
offset, reduction or adjustment based upon consideration of any
other factor with the regulatory asset balances arising from the
deferrals associated with qualifying electric plant placed in
service after the end of the test year to be included in the rate
base in the next general rate proceeding, unless otherwise provided
in this section.
E. Parts of regulatory asset balances crea ted under this
section that are not included in rate base shall accrue carryin g
costs as the public utility's weighted average cost of capital, plus
applicable federal, state and local income or excise taxes.
Regulatory asset balances arising under this se ction that are
included in the rate base shall be recovered through a twenty -year
amortization beginning on the date new rates reflecting such
amortization take effect.
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F. Depreciation expense deferred under this section shall
account for any qualifying electric plant placed into service less
any applicable retirements. Returns deferred under this section
shall be determined using the weighted average cost of capital
approved by the Commission in the public utility's last general rate
case and applied to the change in regulatory asset balances caused
by the qualifying electric plant, plus applicable federal, state and
local income or excise taxes. In determining the return deferred,
the public utility shall account for changes in all plant -related
accumulated deferred income taxes and changes in accumulated
depreciation, excluding retirements.
G. This section shall only apply to any public utility that has
elected to make the deferrals for which this section provides and
has filed a notice of such elect ion with the Commission.
SECTION 6. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 801.10 of Title 17, unless there
is created a duplication in numbering, reads as follows:
No retail electric suppl ier, as defined in Section 158.22 of
Title 17 of the Oklahoma Statute, shall o ffer rate-payer-funded
incentives, rebates, or inducements to its customers to promote the
switching of fuel sources from natural gas to electricity.
SECTION 7. This act shall become effective July 1, 2025.
SECTION 8. It being immediately necessary for the preservation
of the public peace, health or safety, an emergency is hereby
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declared to exist, by reason whereof this act shall take effect and
be in full force from and after its passage and approval.
60-1-10897 MKS 01/15/25