July 1, 2001
L.A. Loves a Loophole
There's no getting around it...
Electric Restructuring Across the Country
Some states have become well-known for their regulatory or legislative initiatives on electric restructuring and customer choice. Among those drawing the greatest attention are California, New Hampshire, Rhode Island, Massachusetts, New York, and Texas.
At press time, reports were filtering in of legislation about to be introduced in Montana and North Carolina (em states that might be considered unlikely subjects for competitive initiatives. Restructuring activity was also seen developing in Missouri, Connecticut, Minnesota, Washington, Louisiana and Arkansas, as noted below:
This March, the Public Service Commission opened a docket to focus specifically on retail electric competition issues (Case No. EW-97-245) and intends to shortly establish a task force. Since the commission does not view restructuring as within its jurisdiction, it has looked to the Legislature to set direction. On the legislative front, "enabling" bills were introduced in both the House and Senate in early March (H.B. 801 and S.B. 450); if enacted, the PSC would be permitted to develop competition in retail electric service and introduce retail pilot programs. The PSC has already approved an experimental retail choice plan for Utilicorp's Missouri division. This two-year pilot is limited to 10 customers with at least 20 delivery points and 2.5 MW of demand; so far, McDonald's is the only scheduled participant.
The Legislature's Electric Industry Restructuring Task Force released its final report in late December. The group was unable to reach consensus and failed to make specific recommendations on whether the state should move to retail choice or whether utilities should receive full stranded cost recovery. Stakeholders in the restructuring debate have remained divided. With the advent of retail competition next year in neighboring states (New Hampshire, Rhode Island and Massachusetts), Connecticut is facing increasing pressure to address the issue.
While several restructuring bills were formally introduced early in the year, for the most part these were either generic statements of principle or plans without specific details. However, a bill introduced in February by the House Energy and Technology Committee consolidated many of the previous bills and represented a step toward compromise. Under H.B. 6774, all customers would have choice of generation suppliers by Jan. 1, 2000. Utilities would be allowed to recover 100 percent of their regulatory assets and above-market costs for contracts with independent power producers, but only 75 percent of the stranded generation plant assets.
The Minnesota Public Utilities Commission has not conducted any further formal investigations since issuing generic principles in 1995. There has, however, been significant activity on the legislative front this session. Two bills (H.B. 1299 and S.B. 1820) propose reorganizing the Electric Energy Task Force as a legislative committee on utility competition and requiring recommendations by early 1998. Another bill (S.B. 1344) proposes a study of retail wheeling and restructuring by the Department of Public Service by early 1998. Yet another bill, S.B. 1348, proposes a transition to retail competition by 2002 and pilot programs beginning in late 1997. The state is still wrestling with tax-impact issues, so it is unlikely that anything more than a study bill could be passed before the