Oklahoma 2025 Regular Session

Oklahoma Senate Bill SB998 Compare Versions

Version 1 (Old)

Version 2 (New)

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3		-	SB998 HFLR Page 1
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	3	+	ENGR. S. B. NO. 998 Page 1 1
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28		-
29		-	HOUSE OF REPRESENTATIVES - FLOOR VERSION
30		-
31		-	STATE OF OKLAHOMA
32		-
33		-	1st Session of the 60th Legislature (2025)
34	27
35	28		ENGROSSED SENATE
36	29		BILL NO. 998 By: Green and Gollihare of the
37	30		Senate
38	31
39	32		and
40	33
41	34		Caldwell (Trey) of the
42	35		House
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47	40		An Act relating to public utilities; amending 17 O.S.
48	41		2021, Section 286, which relates to cost of
49	42		transmission upgrades; modifying application p rocess
50	43		for construction of certain facilities; establishing
51	44		cost recovery provisions; updating statutory
52	45		references; updating statutory language; referring
53	46		deference of certain assets by a public utility;
54	47		defining term; providing for Corporation Commission
55	48		prudence review process; establishing rate proceeding
56	49		procedures for certain utilities; providing
57	50		exceptions; providing for codification; providing an
58	51		effective date; and declaring an emergency .
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63	56		BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
64	57		SECTION 1. AMENDATORY 17 O.S. 2021, Section 286, is
65	58		amended to read as follows:
66	59		Section 286. A. 1. The portion of costs incurred by an
67	60		electric utility, which is subject to rate regulation by the
68	61		Corporation Commission, for trans mission upgrades approved by a
69	62		regional transmission organization to which the utility is a member
	63	+	and resulting from an order of a federal regulatory authority having
	64	+	legal jurisdiction over int erstate regulation of transmission rates,
	65	+	shall be presumed recoverable by the utility. The presumption
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71		-	SB998 HFLR Page 2
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	67	+	ENGR. S. B. NO. 998 Page 2 1
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97		-	and resulting from an order of a federal regulatory authority having
98		-	legal jurisdiction over interstate regulation of transmission rates,
99		-	shall be presumed recoverable by the utility. The presumption
100	92		established in this paragraph may be rebutted by evidence that the
101	93		costs so incurred by the utility for the transmission upgrades
102	94		exceed the scope of the project authorized by the regional
103	95		transmission organizati on or order issued by the federal regulatory
104	96		authority having jurisdiction over interstate regulation of
105	97		transmission rates. The Commission shall transmit rules to
106	98		implement the requirements of this subsection to the Legislature on
107	99		or before April 1, 2006 . The rules may authorize an electric
108	100		utility to periodically adjust its rates to recover all or a portion
109	101		of the costs so incurred by the utility for the transmission
110	102		upgrades.
111	103		2. Reasonable costs incurred by an electric utility for
112	104		transmission upgrade s:
113	105		a. needed to develop wind generation in this state,
114	106		b. approved by the Southwest Power Pool, and
115	107		c. placed into service before December 31, 2013,
116	108		shall be presumed recoverable through a period ic adjustment in the
117	109		rates of the utility, provided that the presumption of the recovery
118	110		of such costs or the recovery of such costs through a periodic
119	111		adjustment in rates may be rebutted by evidence presented to the
120	112		Commission. The determination of whether the costs shall be
	113	+	recovered and whether the costs shall b e recovered through a
	114	+	periodic adjustment of rates shall be made by the Commission
	115	+	following proper notice and hearing in a cause to be filed by the
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148		-	recovered and whether the costs shall be recovered through a
149		-	periodic adjustment of rates shall be made by the Commission
150		-	following proper notice and hearing in a cause to be filed by the
151	142		electric utility in which it files such inform ation as the
152	143		Commission may require.
153	144		B. An electric utility subject to rate regulation by the
154	145		Corporation Commission may file an application seeking Commission
155	146		authorization of a plan by the utility to make capital expenditures
156	147		for equipment or facilities necessary to comply with the federal
157	148		Clean Air Act (CAA), th e Clean Water Act (CWA), the Comprehensive
158	149		Environmental Response, Compensation, and Liability Act of 1980
159	150		(CERCLA), the Emergency Planning & and Community Right-to-Know Act
160	151		of 1986 (EPCRA), the Endangered Species Act of 1973 (ESA), the
161	152		National Environmental Policy Act of 1969 (NEPA), the Occupational
162	153		Safety and Health Act of 1970 (OSHA), the Oil Pollution Act of 1990
163	154		(OPA), the Pollution Prevention Act of 1990 (PPA), the Resource
164	155		Conservation and Recovery Act of 1976 (RCRA), the Safe Drinking
165	156		Water Act (SDWA), the Toxic Substances Control Act (TSCA), all as
166	157		amended, and, as the Commission may deem appropriate, federal,
167	158		state, local or tribal environmental requirements which apply to
168	159		generation facilities. If approved by the Commission, after notice
169	160		and hearing, the equipment or facilities specified in the approved
170	161		utility plan are conclusively presumed used and useful. The utility
171	162		may elect to periodically adjust its rates to recover the costs of
	163	+	the expenditures. The utility shall file a request for a r eview of
	164	+	its rates pursuant to Section 152 of this title no more than twenty -
	165	+	four (24) months after the utility begins recovering the costs
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199		-	the expenditures. The utility shall file a request for a review of
200		-	its rates pursuant to Section 152 of this title no more than twenty -
201		-	four (24) months after the utility begins recovering the costs
202	192		through a periodic rate adjustment mechanism and no mor e than
203	193		twenty-four (24) months after the utility begins recov ering the
204	194		costs through any subsequent periodic rate adjustment mechanism.
205	195		Provided further, that a periodic rate adjustment or adjustments are
206	196		not intended to prevent a utility from seeking cost recovery of
207	197		capital expenditures as otherwise may be author ized by the
208	198		Commission. However, the reasonableness of the costs to be
209	199		recovered by the utility shall be subject to Commission review and
210	200		approval. The Commission shall promulgate rules to impl ement the
211	201		provisions of this subsection, such rules to be tra nsmitted to the
212	202		Legislature on or before April 1, 2007.
213	203		C. 1. An electric utility subject to rate regulation by the
214	204		Corporation Commission may elect to file an application seeking
215	205		approval by the Commission to construct a new electric generating
216	206		facility, to purchase an existing electric generation facility or
217	207		enter into a long-term contract for purchased power and, capacity
218	208		and/or and energy, subject to the provisions of this subsection.
219	209		If, and to the extent that, the Commission determines there is a
220	210		need for construction or purchase of the electric generating
221	211		facility or long-term purchase power contract, the generating
222	212		facility or contract shall be considered used and useful and its
	213	+	costs shall be subject to cost recovery rules promulgated by the
	214	+	Commission. The Commission shall enter an order on an application
	215	+	filed pursuant to this subsection within two hundred forty (240)
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250		-	costs shall be subject to cost recovery rules promulgated by the
251		-	Commission. The Commission shall enter an order on an application
252		-	filed pursuant to this subsection within two hundred forty (240)
253	242		days of the filing of the application, following notice and hearing
254	243		and after consideration of reasonable alternatives , unless the
255	244		electric generation facility utilizes natural gas as its primary
256	245		fuel source. If the electric generation facility uses natural gas
257	246		as its primary fuel source, then the Commission shall enter an order
258	247		on an application filed pursuant to this subsection within one
259	248		hundred eighty (180) days of the filing of the application,
260	249		following notice and hearing and after consideration of reasonable
261	250		alternatives.
262	251		2. Bids received by the utility through a competitive bidding
263	252		process within the twelve (12) months fol lowing the final bid due
264	253		date of such competitive bidding process shall be considered
265	254		substantial evidence to satisfy the consideration of reasonable
266	255		alternatives.
267	256		3. Following receipt of an application filed pursuant to this
268	257		subsection, the Corporation C ommission staff may file a request to
269	258		assess the specific costs, to be paid by the electric utility and
270	259		which shall be deemed to be recoverable, for the costs associated
271	260		with conducting the analy sis or investigation of the application
272	261		including, but not li mited to, the cost of acquiring expert
273	262		witnesses, consultants, and analytical services. The request shall
	263	+	be filed at and heard by the Corporation Commissioners in the docket
	264	+	opened by the electric utility pursuant to this subsection. After
	265	+	notice and hearing, the Commission shall decide the request.
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301		-	be filed at and heard by the Corporation Com missioners in the docket
302		-	opened by the electric utility pursuant to this subsection. After
303		-	notice and hearing, the Commission shall decide the request.
304	292		3. 4. Additionally, following receipt of an application filed
305	293		pursuant to this subsection, the Office of the Attorney General may
306	294		file a request with the Corporation Commission for the assessment of
307	295		specific costs, to be paid by the electric utility and which shall
308	296		be deemed to be recoverable, associated with the performance of the
309	297		Attorney General’s duties as provided by law. Those costs may
310	298		include, but are not limited to, the cost of acquiring expert
311	299		witnesses, consultants and analytical services. The request shall
312	300		be filed at and heard by the Corporation Commissioners in the docket
313	301		opened by the electric utility pursuant to this subsection. Af ter
314	302		notice and hearing, the Commission shall decide the reque st.
315	303		4. 5. The Commission shall promulgate rules to implement the
316	304		provisions of this subsection. The rules shall be transmitted to
317	305		the Legislature on or before April 1, 2006. In promulgating rules
318	306		to implement the provisions of this subsection, the Commi ssion shall
319	307		consider, among other things, rules which would:
320	308		a. permit contemporaneous utility recovery from its
321	309		customers, the amount necessary to cover the
322	310		Corporation Commission staff and Atto rney General
323	311		assessments as authorized by this subsection,
	312	+	b. establish how the cost of facilities approved pursuant
	313	+	to this subsection shall be timely reviewed, approved,
	314	+	and recovered or disapproved, and
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351		-	b. establish how the cost of facilities approved pursuant
352		-	to this subsection shall be timely reviewed, approved,
353		-	and recovered or disapproved, and
354	341		c. establish the information which an electric utility
355	342		must shall provide when filing an application pursuant
356	343		to this subsection.
357	344		5. 6. The Commission shall also consider rules which may permit
358	345		an electric utility to begin to recover return on or and return of
359	346		Construction-Work-In-Progress expenses prior to commercial operation
360	347		of a newly constructed electric gene ration facility subject to the
361	348		provisions of this subsection , provided the newly constructed
362	349		electric generation facility utilizes natural gas as its primary
363	350		fuel source. The Commission shall permit a separate rate adjustment
364	351		mechanism, adjusted periodica lly, to recover the costs described in
365	352		this section for new capacity in natural -gas-fired electric
366	353		generation facilities. The new natural-gas-fired electric
367	354		generation capacity eligible for thos e provisions shall also include
368	355		new natural-gas-fired capacity additions at an existing electric
369	356		generation facility. If a public utility implements a rate
370	357		adjustment mechanism pursuant to this section and subsequently
371	358		terminates the initiative to construct or acquire stake in a natural
372	359		gas electric generation faci lity, the public utility shall
373	360		automatically refund customers any amounts collected through such
374	361		rate adjustment mechanism plus interest at the one -year United
	362	+	States Treasury Bill rate through t he mechanism, over a period not
	363	+	to exceed ninety (90) days fr om the effective date of the
	364	+	termination of the initiative .
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402		-	States Treasury Bill rate through the mechanism, over a period not
403		-	to exceed ninety (90) days from the effective date of the
404		-	termination of the initiative .
405	391		7. For any new natural-gas-fired electric generation facility
406	392		constructed pursuant to this section, an electric utility shall
407	393		secure a firm contract to transport natural gas to the generating
408	394		facility. Such contract shall be secured pursuant to a competitive
409	395		solicitation process conducted in accordance with applicable
410	396		Commission rules. The cost incurred for the contract shall be
411	397		presumed recoverable by the electric utility through its applicable
412	398		fuel adjustment clause. Costs assessed upon the electric utility by
413	399		the Commission for non -compliance with this section shall not be
414	400		recoverable from the customers of the electric utility. If the
415	401		electric utility does not receive a bid for firm transpor tation as a
416	402		result of its competitive solicitation, the electric utility shall
417	403		be considered compliant with the requirements of this section
418	404		provided that the Commission determines that the compe titive
419	405		solicitation is for a firm contract for transport of n atural gas
420	406		which could be reasonably provided by an available pipeline .
421	407		SECTION 2. NEW LAW A new section of law to be codified
422	408		in the Oklahoma Statutes as Section 286A of Title 17, unless there
423	409		is created a duplication in numbering, reads as follows:
424	410		A. 1. On and after the effective date of this act, a public
425	411		utility shall defer to a regulatory asset ninety percent (90%) of
	412	+	all depreciation expenses and return associated with all qualifying
	413	+	electric plants placed in service, provid ed the public utility has
	414	+	provided notice to the Corporation Commission of the public
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453		-	all depreciation expenses and return associated with all qualifying
454		-	electric plants placed in service, provided the public utility has
455		-	provided notice to the Corporation Commission of the public
456	441		utility’s election to make such deferrals pursuant to this section.
457	442		Deferral under this section shall begin on the effective date of
458	443		this act if the public utility notif ies the Commission of the
459	444		election prior to the effective date, or on the date that the
460	445		utility notifies the Commission of the election if such date is
461	446		after the effective date of this act.
462	447		2. For the purposes of this section, “qualifying electric
463	448		plant” means all incremental electric plants placed in service by a
464	449		public utility following the utility ’s last general rate case,
465	450		excluding transmission facilities or new electric generating units.
466	451		B. The Commission shall conduct a prudence review of the
467	452		associated qualifying electric plant resulting in the regulatory
468	453		asset balances prior to moving such balances into the public
469	454		utility’s rate base. The regulatory asset balances arising under
470	455		this section shall be adjusted to reflect any prudence disallowances
471	456		of the associated qualifying electric plant, following notice and
472	457		hearing, as ordered by the Commission.
473	458		C. Unless otherwise provided by this section, in each general
474	459		rate proceeding concluded on or after July 1, 2025, the balance of
475	460		the regulatory asset a s of the end of the test year shall be
476	461		included in the public utility ’s rate base without any offset,
	462	+	reduction, or adjustment based upon consideration of any other
	463	+	factor with the regulatory ass et balances arising from deferrals
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504		-	reduction, or adjustment based upon consideration of any other
505		-	factor with the regulatory asset balances arising from deferrals
506	490		associated with the qualif ying electric plant placed in service
507	491		after the end of the test year.
508	492		D. Parts of regulatory asset balances created under this
509	493		section that are not included in rate base shall accrue carrying
510	494		costs at the public utility ’s weighted average cost of capital plus
511	495		applicable federal, state, and local income or excise taxes.
512	496		Regulatory asset balances arising under this section that are
513	497		included in rate base shall be recovered in rates through a twenty -
514	498		year amortization beginning on the date new rates reflecting such
515	499		amortization take effect.
516	500		E. Depreciation expenses deferred under this section shall
517	501		account for any qualifying electric plant placed into service.
518	502		Return deferred under this section shall be determined using the
519	503		weighted average cost of capital ap proved by the Commission in the
520	504		public utility’s last general rate case and applied to the change in
521	505		regulatory asset balances caused by the qualifying electric plant,
522	506		plus applicable federal, st ate, and local income or excise taxes.
523	507		In determining the re turn deferred, the public utility shall account
524	508		for changes in all plant -related accumulated deferred income taxes
525	509		and changes in accumulated depreciation, excluding retirements.
	510	+	F. This section shall only apply to any public utility that has
	511	+	elected to make the deferrals for which this section provides and
	512	+	filed a notice with the Commission of such election.
	513	+	SECTION 3. This act shall become effective July 1, 2025.
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553		-	F. This section shall only apply to any public utility that has
554		-	elected to make the deferrals for which this section provides and
555		-	filed a notice with the Commission of such election.
556		-	SECTION 3. This act shall become effective July 1, 2025.
557	540		SECTION 4. It being immediately necessary for the preserva tion
558	541		of the public peace, health or safety, an emergency is hereby
559	542		declared to exist, by reason whereof this act shall take effect and
560	543		be in full force from and after its passage and approval.
	544	+	Passed the Senate the 27th day of March, 2025.
561	545
562		-	COMMITTEE REPORT BY: COMMITTEE ON ENERGY AND NATURAL RESOURCES
563		-	OVERSIGHT, dated 04/16/2025 - DO PASS.
	546	+
	547	+
	548	+	Presiding Officer of the Senate
	549	+
	550	+
	551	+	Passed the House of Representatives the ____ day of __________,
	552	+	2025.
	553	+
	554	+
	555	+
	556	+	Presiding Officer of the House
	557	+	of Representatives
	558	+