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1 STATE OF OKLAHOMA
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2 1st Session of the 60th Legislature (2025)
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3 SENATE BILL 998 By: Gollihare
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6 AS INTRODUCED
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7 An Act relating to public utilities; amending 17 O.S.
7 2021, Section 286, which relates to cost of
8 transmission upgrades; referring deference of certain
8 assets by a public utility; defining term; providing
9 for Corporation Commission prudence review process;
9 establishing rate proceeding procedures for certain
10 utilities; providing exceptions; providing for
10 codification; providing an effective date; and
11 declaring an emergency.
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14 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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15 SECTION 1. AMENDATORY 17 O.S. 2021, Section 286, is
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16 amended to read as follows:
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17 Section 286. A. 1. The portion of costs incurred by an
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18 electric utility, which is subject to rate regulation by the
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19 Corporation Commission, for transmission upgrades approved by a
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20 regional transmission organization to which the utility is a member
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21 and resulting from an order of a federal regulatory authority having
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22 legal jurisdiction over interstate regulation of transmission rates,
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23 shall be presumed recoverable by the utility. The presumption
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24 established in this paragraph may be rebutted by evidence that the
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1 costs so incurred by the utility for the transmission upgrades
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2 exceed the scope of the project authorized by the regional
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3 transmission organization or order issued by the federal regulatory
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4 authority having jurisdiction over interstate regulation of
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5 transmission rates. The Commission shall transmit rules to
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6 implement the requirements of this subsection to the Legislature on
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7 or before April 1, 2006. The rules may authorize an electric
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8 utility to periodically adjust its rates to recover all or a portion
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9 of the costs so incurred by the utility for the transmission
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10 upgrades.
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11 2. Reasonable costs incurred by an electric utility for
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12 transmission upgrades:
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13 a. needed to develop wind generation in this state,
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14 b. approved by the Southwest Power Pool, and
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15 c. placed into service before December 31, 2013,
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16 shall be presumed recoverable through a periodic adjustment in the
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17 rates of the utility, provided that the presumption of the recovery
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18 of such costs or the recovery of such costs through a periodic
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19 adjustment in rates may be rebutted by evidence presented to the
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20 Commission. The determination of whether the costs shall be
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21 recovered and whether the costs shall be recovered through a
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22 periodic adjustment of rates shall be made by the Commission
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23 following proper notice and hearing in a cause to be filed by the
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1 electric utility in which it files such information as the
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2 Commission may require.
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3 B. An electric utility subject to rate regulation by the
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4 Corporation Commission may file an application seeking Commission
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5 authorization of a plan by the utility to make capital expenditures
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6 for equipment or facilities necessary to comply with the federal
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7 Clean Air Act (CAA), the Clean Water Act (CWA), the Comprehensive
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8 Environmental Response, Compensation, and Liability Act (CERCLA),
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9 the Emergency Planning & Community Right-to-Know Act (EPCRA), the
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10 Endangered Species Act (ESA), the National Environmental Policy Act
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11 (NEPA), the Occupational Safety and Health Act (OSHA), the Oil
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12 Pollution Act (OPA), the Pollution Prevention Act (PPA), the
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13 Resource Conservation and Recovery Act (RCRA), the Safe Drinking
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14 Water Act (SDWA), the Toxic Substances Control Act (TSCA), all as
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15 amended, and, as the Commission may deem appropriate, federal,
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16 state, local or tribal environmental requirements which apply to
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17 generation facilities. If approved by the Commission, after notice
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18 and hearing, the equipment or facilities specified in the approved
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19 utility plan are conclusively presumed used and useful. The utility
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20 may elect to periodically adjust its rates to recover the costs of
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21 the expenditures. The utility shall file a request for a review of
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22 its rates pursuant to Section 152 of this title no more than twenty-
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23 four (24) months after the utility begins recovering the costs
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24 through a periodic rate adjustment mechanism and no more than
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1 twenty-four (24) months after the utility begins recovering the
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2 costs through any subsequent periodic rate adjustment mechanism.
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3 Provided further, that a periodic rate adjustment or adjustments are
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4 not intended to prevent a utility from seeking cost recovery of
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5 capital expenditures as otherwise may be authorized by the
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6 Commission. However, the reasonableness of the costs to be
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7 recovered by the utility shall be subject to Commission review and
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8 approval. The Commission shall promulgate rules to implement the
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9 provisions of this subsection, such rules to be transmitted to the
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10 Legislature on or before April 1, 2007.
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11 C. 1. An electric utility subject to rate regulation by the
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12 Corporation Commission may elect to file an application seeking
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13 approval by the Commission to construct a new electric generating
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14 facility, to purchase an existing electric generation facility or
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15 enter into a long-term contract for purchased power and capacity
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16 and/or energy, subject to the provisions of this subsection. If,
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17 and to the extent that, the Commission determines there is a need
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18 for construction or purchase of the electric generating facility or
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19 long-term purchase power contract, the generating facility or
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20 contract shall be considered used and useful and its costs shall be
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21 subject to cost recovery rules promulgated by the Commission. The
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22 Commission shall enter an order on an application filed pursuant to
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23 this subsection within two hundred forty (240) days of the filing of
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24 the application, following notice and hearing and after
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1 consideration of reasonable alternatives, unless the electric
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2 generation facility utilizes natural gas as its primary fuel source.
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3 If the electric generation facility uses natural gas as its primary
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4 fuel source, then the Commission shall enter an order on an
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5 application filed pursuant to this subsection within one hundred
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6 eighty (180) days of the filing of the application, following notice
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7 and hearing and after consideration of reasonable alternatives.
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8 2. Regardless of the generation source, bids received by the
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9 utility through a competitive bidding process within the twelve (12)
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10 months following the final bid due date of such competitive bidding
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11 process shall be considered substantial evidence to satisfy the
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12 consideration of reasonable alternatives.
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13 3. Following receipt of an application filed pursuant to this
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14 subsection, the Corporation Commission staff may file a request to
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15 assess the specific costs, to be paid by the electric utility and
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16 which shall be deemed to be recoverable, for the costs associated
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17 with conducting the analysis or investigation of the application
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18 including, but not limited to, the cost of acquiring expert
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19 witnesses, consultants, and analytical services. The request shall
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20 be filed at and heard by the Corporation Commissioners in the docket
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21 opened by the electric utility pursuant to this subsection. After
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22 notice and hearing, the Commission shall decide the request.
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23 3. 4. Additionally, following receipt of an application filed
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24 pursuant to this subsection, the Office of the Attorney General may
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1 file a request with the Corporation Commission for the assessment of
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2 specific costs, to be paid by the electric utility and which shall
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3 be deemed to be recoverable, associated with the performance of the
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4 Attorney General's duties as provided by law. Those costs may
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5 include, but are not limited to, the cost of acquiring expert
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6 witnesses, consultants and analytical services. The request shall
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7 be filed at and heard by the Corporation Commissioners in the docket
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8 opened by the electric utility pursuant to this subsection. After
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9 notice and hearing, the Commission shall decide the request.
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10 4. 5. The Commission shall promulgate rules to implement the
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11 provisions of this subsection. The rules shall be transmitted to
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12 the Legislature on or before April 1, 2006. In promulgating rules
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13 to implement the provisions of this subsection, the Commission shall
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14 consider, among other things, rules which would:
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15 a. permit contemporaneous utility recovery from its
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16 customers, the amount necessary to cover the
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17 Corporation Commission staff and Attorney General
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18 assessments as authorized by this subsection,
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19 b. establish how the cost of facilities approved pursuant
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20 to this subsection shall be timely reviewed, approved,
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21 and recovered or disapproved, and
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22 c. establish the information which an electric utility
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23 must provide when filing an application pursuant to
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24 this subsection.
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1 5. 6. The Commission shall also consider rules which may permit
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2 an electric utility to begin to recover return on or and return of
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3 Construction-Work-In-Progress expenses prior to commercial operation
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4 of a newly constructed electric generation facility subject to the
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5 provisions of this subsection, provided the newly constructed
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6 electric generation facility utilizes natural gas as its primary
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7 fuel source. The Commission shall permit a separate rate adjustment
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8 mechanism, adjusted periodically, to recover the costs described in
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9 this paragraph. If a public utility implements a rate adjustment
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10 mechanism pursuant to this paragraph and subsequently terminates the
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11 initiative to construct or acquire stake in the electric generation
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12 facility, the Commission shall have the authority, following notice
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13 and hearing, to order the public utility to refund customers any
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14 amounts collected through such rate adjustment mechanism. In
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15 ordering any such refund, the Commission shall give consideration as
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16 to the circumstances resulting in the termination of the
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17 construction or acquisition.
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18 SECTION 2. NEW LAW A new section of law to be codified
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19 in the Oklahoma Statutes as Section 286A of Title 17, unless there
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20 is created a duplication in numbering, reads as follows:
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21 A. 1. On and after the effective date of this act, a public
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22 utility shall defer to a regulatory asset ninety percent (90%) of
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23 all depreciation expenses and return associated with all qualifying
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24 electric plants placed in service, provided the public utility has
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1 provided notice to the Corporation Commission of the public
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2 utility's election to make such deferrals pursuant to this section.
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3 Deferral under this section shall begin on the effective date of
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4 this act if the public utility notifies the Commission of the
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5 election prior to the effective date, or on the date that the
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6 utility notifies the Commission of the election if such date is
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7 after the effective date of this act.
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8 2. For the purposes of this section, "qualifying electric
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9 plant" means all incremental electric plants placed in service by a
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10 public utility following the utility's last general rate case,
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11 excluding transmission facilities or new electric generating units.
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12 B. The Commission shall conduct a prudence review of the
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13 associated qualifying electric plant resulting in the regulatory
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14 asset balances prior to moving such balances into the public
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15 utility's rate base. The regulatory asset balances arising under
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16 this section shall be adjusted to reflect any prudence disallowances
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17 of the associated qualifying electric plant, following notice and
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18 hearing, as ordered by the Commission.
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19 C. Unless otherwise provided by this section, in each general
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20 rate proceeding concluded on or after July 1, 2025, the balance of
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21 the regulatory asset as of the end of the test year shall be
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22 included in the public utility's rate base without any offset,
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23 reduction, or adjustment based upon consideration of any other
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24 factor with the regulatory asset balances arising from deferrals
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1 associated with the qualifying electric plant placed in service
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2 after the end of the test year.
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3 D. Parts of regulatory asset balances created under this
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4 section that are not included in rate base shall accrue carrying
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5 costs at the public utility's weighted average cost of capital plus
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6 applicable federal, state, and local income or excise taxes.
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7 Regulatory asset balances arising under this section that are
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8 included in rate base shall be recovered in rates through a twenty-
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9 year amortization beginning on the date new rates reflecting such
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10 amortization take effect.
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11 E. Depreciation expenses deferred under this section shall
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12 account for any qualifying electric plant placed into service.
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13 Return deferred under this section shall be determined using the
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14 weighted average cost of capital approved by the Commission in the
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15 public utility's last general rate case and applied to the change in
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16 regulatory asset balances caused by the qualifying electric plant,
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17 plus applicable federal, state, and local income or excise taxes.
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18 In determining the return deferred, the public utility shall account
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19 for changes in all plant-related accumulated deferred income taxes
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20 and changes in accumulated depreciation, excluding retirements.
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21 F. This section shall only apply to any public utility that has
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22 elected to make the deferrals for which this section provides and
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23 filed a notice with the Commission of such election.
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24 SECTION 3. This act shall become effective July 1, 2025.
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1 SECTION 4. It being immediately necessary for the preservation
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2 of the public peace, health or safety, an emergency is hereby
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3 declared to exist, by reason whereof this act shall take effect and
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4 be in full force from and after its passage and approval.
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Req. No. 341 Page 10Every fact on this page links to its source, starting with the official bill record.