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SB 217: "An Act relating to the Regulatory Commission of Alaska."

00                             SENATE BILL NO. 217                                                                         
01 "An Act relating to the Regulatory Commission of Alaska."                                                               
02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
03    * Section 1. AS 42.05.141(c) is amended to read:                                                                   
04            (c)  In the establishment of electric service rates under this chapter the                                   
05       commission shall promote the conservation of resources used in the generation of                                  
06       electric energy and shall promote competitive and nondiscriminatory                                           
07       procurement of electrical energy from and by public utilities, qualifying facilities,                         
08       and independent power producers.                                                                              
09    * Sec. 2. AS 42.05.141 is amended by adding new subsections to read:                                               
10            (e)  The commission shall make regulatory decisions consistent with state                                    
11       energy policy declared in AS 44.99.115. The commission shall                                                      
12                 (1)  promote the development of renewable and alternative energy                                        
13       resources, including geothermal, wind, solar, hydroelectric, hydrokinetic, tidal, and                             
14       biomass energy, for use by residents of the state and for export;                                                 
15                 (2)  promote the development, transport, and efficient use of                                           
01       nonrenewable and alternative energy resources, including natural gas, coal, oil, gas                              
02       hydrates, heavy oil, and nuclear energy, for use by residents of the state and for                                
03       export;                                                                                                           
04                 (3)  work to identify and assist with development of the most cost-                                     
05       effective, long-term sources of energy for each community statewide; and                                          
06                 (4)  create and maintain permitting and regulatory processes that                                       
07       encourage independent power producers to develop, finance, own, operate, and                                      
08       manage qualifying facilities and independent power producers.                                                     
09            (f)  The commission shall require that the owner of a transmission asset located                             
10       in the state allow a qualifying facility or independent power producer fair access to a                           
11       transmission asset at the same cost as the owner or owning entity charges itself.                                 
12    * Sec. 3. AS 42.05.151(a) is amended to read:                                                                      
13            (a)  The commission may adopt regulations, consistent [NOT                                               
14       INCONSISTENT] with state [THE] law including the state energy policy declared                             
15       in AS 44.99.115, necessary or proper to exercise its powers and to perform its duties                         
16       under this chapter.                                                                                               
17    * Sec. 4. AS 42.05.175(e) is amended to read:                                                                      
18            (e)  The commission shall issue a final order in a rule-making proceeding                                    
19                 (1)  not later than 730 days after a complete petition for adoption,                                
20       amendment, or repeal of a regulation under AS 44.62.180 - 44.62.290 is filed;                                 
21                 (2)  [OR,] when the commission initiates a rule-making docket, not                                  
22       later than 730 days after the order initiating the proceeding is issued, except as                            
23       provided in (3) of this subsection; or                                                                        
24                 (3)  when the commission initiates a rule-making docket relating to                                 
25       a qualifying facility or the state energy policy declared in AS 44.99.115, not later                          
26       than 365 days after the order initiating the proceeding is issued.                                            
27    * Sec. 5. AS 42.05.211 is amended to read:                                                                         
28            Sec. 42.05.211. Annual report. The commission shall, by November 15 of                                     
29       each year, publish an annual report reviewing its activities during the previous fiscal                           
30       year and notify the legislature that the report is available. The report must                                     
31                 (1)  address the regulation of public utility service in the state as of                            
01       June 30;                                                                                                      
02                 (2)  [AND MUST] contain details about the commission's compliance                                   
03       with the requirements of AS 42.05.175(a) - (e), with the timeline extensions made by                              
04       the commission under AS 42.05.175(f), and with other performance measures                                         
05       established by the commission; and                                                                            
06                 (3)  list the avoided cost of each public utility issued a certificate                              
07       under AS 42.05.221.                                                                                           
08    * Sec. 6. AS 42.05.221(d) is amended to read:                                                                      
09            (d)  In an area where the commission determines that two or more public                                      
10       utilities are competing to furnish identical utility service and that this competition is                         
11       not in the public interest, the commission shall take appropriate action to eliminate the                         
12       competition and any undesirable duplication of facilities. This appropriate action may                            
13       include [, BUT IS NOT LIMITED TO,] ordering the competing utilities to enter into a                               
14       contract that, among other things, would [:]                                                                      
15                 (1)  delineate the service area boundaries of each in those areas of                                    
16       competition;                                                                                                      
17                 (2)  eliminate existing duplication and paralleling to the fullest                                      
18       reasonable extent;                                                                                                
19                 (3)  preclude future duplication and paralleling;                                                       
20                 (4)  provide for the exchange of customers and facilities for the                                       
21       purposes of providing better public service and of eliminating duplication and                                    
22       paralleling; and                                                                                                  
23                 (5)  provide [SUCH] other mutually equitable arrangements [AS                                           
24       WOULD BE] in the public interest, including, when applicable, a requirement that                              
25       a public utility purchase electric energy or energy capacity from a qualifying                                
26       facility or independent power producer at the avoided cost of the public utility                              
27       unless that purchase results in a rate increase for the consumer.                                             
28    * Sec. 7. AS 42.05.311(a) is amended to read:                                                                      
29            (a)  A public utility having sewers, conduits, utilidors, poles, pole lines, pipes,                          
30       pipelines, mains, or other distribution or transmission facilities shall, for [A]                                 
31       reasonable compensation, permit another public utility, a qualifying facility, or an                          
01       independent power producer to use them when the public convenience and necessity                              
02       require the [THIS] use, [AND] the use will not result in substantial injury to the                        
03       owner, or the use will not result in substantial detriment to the service to the                              
04       customers of the owners. The cost of modifications or additions necessary to a joint                              
05       use shall be at the expense of the public utility, qualifying facility, or independent                        
06       power producer requesting the use of the facilities.                                                          
07    * Sec. 8. AS 42.05.311 is amended by adding new subsections to read:                                               
08            (d)  An electric utility shall permit connection to be made and service to be                                
09       furnished between a system operated by it and the system or facilities operated by                                
10       another public utility, qualifying facility, or independent power producer if the                                 
11       connection                                                                                                        
12                 (1)  is required by the public convenience and necessity;                                               
13                 (2)  is in accordance with AS 42.05.141(e) and the state energy policy                                  
14       declared in AS 44.99.115;                                                                                         
15                 (3)  will not result in substantial injury to the owner or other users of                               
16       the facilities of the entities making the connection; and                                                         
17                 (4)  will not result in substantial detriment to the service provided by                                
18       the entities making the connection.                                                                               
19            (e)  If a request for interconnection or joint use is made to the owner of a                                 
20       public utility for use of a facility located in the state that was financed in whole or in                        
21       part with federal or state grants or loans and an interconnection or joint use study has                          
22       not been performed in the five years immediately preceding the request, the owner of                              
23       the public utility shall pay for the applicable study. If an interconnection or joint use                         
24       study has been completed in the five years immediately preceding the request, the                                 
25       entity requesting interconnection or joint use may procure the applicable study at its                            
26       own expense.                                                                                                      
27            (f)  When providing access to a transmission asset, a public utility may not                                 
28                 (1)  discriminate between users of the transmission asset;                                              
29                 (2)  employ an anticompetitive practice with a transmission asset; or                                   
30                 (3)  use its management, ownership, or control of a transmission asset                                  
31       to increase the cost to or prevent use by a utility, qualifying facility, or independent                          
01       power producer attempting to use a transmission asset.                                                            
02            (g)  A public utility may assess reasonable integration charges or credits to                                
03       another public utility, qualifying facility, or independent power producer connecting to                          
04       its system.                                                                                                       
05            (h)  A benefit resulting from a connection described in this section shall be                                
06       credited toward the connecting entity. Upon request of the commission or the                                      
07       connecting entity, the owning public utility shall disclose the basis for the integration                         
08       charges or credits and shall bear the burden of demonstrating that the charges or                                 
09       credits comply with this section.                                                                                 
10    * Sec. 9. AS 42.05.321 is amended to read:                                                                         
11            Sec. 42.05.321. Failure to agree upon joint use or interconnection. (a) In                                 
12       case of failure to agree upon the joint use or interconnection of facilities or the                               
13       conditions or compensation for joint use or interconnections, the public utility,                                 
14       including any municipality, or an interested person may apply to the commission for                               
15       an order requiring the interconnection. If, after investigation and opportunity for                               
16       hearing, the commission finds that public convenience and necessity require the joint                             
17       use or connection, that the connection is consistent with AS 42.05.141(e) and the                             
18       state energy policy declared in AS 44.99.115, and that the use or connection will not                         
19       result in substantial injury to the owner utility or its customers, or in substantial                             
20       detriment to the services furnished by the owner utility, or in the creation of safety                            
21       hazards, it shall                                                                                                 
22                 (1)  order that the use be permitted;                                                                   
23                 (2)  prescribe reasonable conditions and compensation for the joint use;                                
24                 (3)  order the interconnection to be made;                                                              
25                 (4)  determine the time and manner of the interconnection;                                              
26                 (5)  determine the apportionment of costs and responsibility for                                        
27       operation and maintenance of the interconnection.                                                                 
28            (b)  Notwithstanding an exemption from other regulation, this [THIS]                                     
29       section and AS 42.05.311 apply to a utility, qualifying facility, or independent                              
30       power producer [ALL UTILITIES WHETHER OR NOT THEY ARE EXEMPT                                                  
31       FROM OTHER REGULATION UNDER AS 42.05.711].                                                                        
01    * Sec. 10. AS 42.05.381(a) is amended to read:                                                                     
02            (a)  All rates demanded or received by a public utility [,] or by any two or more                            
03       public utilities jointly [,] for a service furnished or to be furnished shall be just and                         
04       reasonable; however, a rate may not include an allowance for costs of political                                   
05       contributions, costs of [OR] public relations, or costs related to actions against a                      
06       qualifying facility or independent power producer except for reasonable amounts                               
07       spent for                                                                                                         
08                 (1)  energy conservation efforts;                                                                       
09                 (2)  public information designed to promote more efficient use of the                                   
10       utility's facilities or services or to protect the physical plant of the utility;                                 
11                 (3)  informing shareholders and members of a cooperative of meetings                                    
12       of the utility and encouraging attendance; [OR]                                                                   
13                 (4)  emergency situations to the extent and under the circumstances                                     
14       authorized by the commission for good cause shown; or                                                         
15                 (5)  a mediator, independent expert, or similar impartial analyst                                   
16       used in good faith negotiations with a qualifying facility or independent power                               
17       producer.                                                                                                     
18    * Sec. 11. AS 42.05.411 is amended by adding a new subsection to read:                                             
19            (d)  Upon the filing of a new or revised tariff, the commission shall review the                             
20       entire tariff for consistency with AS 42.05.141(e) and the state energy policy declared                           
21       in AS 44.99.115. If the new or revised tariff is not consistent with AS 42.05.141(e)                              
22       and the state energy policy, the commission shall direct the utility to revise the tariff to                      
23       be consistent with AS 42.06.141(e) and the state energy policy and submit the revised                             
24       tariff to the commission.                                                                                         
25    * Sec. 12. AS 42.05.431(c) is amended to read:                                                                     
26            (c)  Notwithstanding (b) of this section,                                                                    
27                 (1)  a wholesale agreement for the sale of power from a project licensed                                
28       by the Federal Energy Regulatory Commission on or before January 1, 1987, and                                     
29       related contracts for the wheeling, storage, regeneration, or wholesale repurchase of                             
30       power purchased under the agreement, entered into between the Alaska Energy                                       
31       Authority and one or more other public utilities or among the utilities after October 31,                         
01       1987, and before January 1, 1988, and amendments to the wholesale agreement or                                    
02       related contract, and the wholesale agreement or related contract assigned by the                                 
03       Alaska Energy Authority to a joint action agency formed under AS 42.45.310 that                                   
04       purchases the project from the Alaska Energy Authority, are not subject to review or                              
05       approval by the commission until all long-term debt incurred for the project is retired,                          
06       or, for a wholesale agreement or related contract assigned to a joint action agency                               
07       formed under AS 42.45.310, until all long-term debt incurred to pay the purchase price                            
08       to the Alaska Energy Authority is retired; [AND]                                                                  
09                 (2)  a wholesale agreement or related contract described in (1) of this                                 
10       subsection may contain a covenant for the public utility to establish, charge, and                                
11       collect rates sufficient to meet its obligations under the contract; the rate covenant is                         
12       valid and enforceable;                                                                                        
13                 (3)  a wholesale agreement between a public utility and a qualifying                                
14       facility or independent power producer, for the sale of power at or below the                                 
15       avoided cost of the public utility, is valid and enforceable; and                                             
16                 (4) a wholesale agreement for the purchase and sale of electricity is                               
17       not subject to review or approval of the commission if, at the time the initial                               
18       agreement is made, the entity providing the electricity is not a utility and the                              
19       purchaser is a person located outside a certificated service area of a utility,                               
20       regardless of whether the purchaser subsequently becomes part of a certificated                               
21       service area of a utility.                                                                                    
22    * Sec. 13. AS 42.05.431(e) is amended to read:                                                                     
23            (e)  Validated costs incurred by a utility in connection with the related                                    
24       contracts described in (c)(1) of this section must be allowed in the rates charged by the                         
25       utility. In this subsection, "validated costs" are the actual costs that a utility uses, under                    
26       the formula set out in related contracts described in (c) of this section, to establish                           
27       rates, charges for services and rights, and the payment of charges for services and                               
28       rights. This subsection does not grant the commission jurisdiction to alter or amend                              
29       the formula set out in those related contracts, except that the commission may alter                          
30       or amend the formula to ensure that the contracts are consistent with                                         
31       AS 42.05.141(e) and the state energy policy declared in AS 44.99.115.                                         
01    * Sec. 14. AS 42.05.511(a) is amended to read:                                                                     
02            (a)  The commission may                                                                                      
03                 (1)  investigate the management of a public utility, including [BUT                                 
04       NOT LIMITED TO] staffing patterns, wage and salary scales and agreements,                                         
05       investment policies and practices, purchasing and payment arrangements with                                       
06       affiliated interests, for the purpose of determining inefficient or unreasonable practices                        
07       that adversely affect the cost or quality of service of the public utility;                                   
08                 (2)  review emergency backup, mid-term, and long-term fuel                                          
09       supply plans for reasonableness;                                                                              
10                 (3)  investigate suspected discriminatory or anticompetitive                                        
11       practices in the procurement of wholesale power from a qualifying facility or                                 
12       independent power producer.                                                                                   
13    * Sec. 15. AS 42.05.711(r) is amended to read:                                                                     
14            (r)  A plant or facility owned or operated by an independent power                                       
15       producer [THAT GENERATES ELECTRICITY ENTIRELY FROM RENEWABLE                                                  
16       ENERGY RESOURCES] is exempt from regulation under this chapter if                                                 
17                 (1)  the plant or facility                                                                              
18                      (A)  is first placed into commercial operation on or after                                         
19            August 31, 2010, and before January 1, 2025 [2016]; and                                                  
20                      (B)  does not generate more than 80 [65] megawatts of                                          
21            electricity; and                                                                                         
22                 (2)  the net electricity generated by the plant or facility is sold only to                         
23       one or more electric utilities that are regulated by the commission or to one or more                         
24       customers who are located outside a certificated service area of a utility and who                            
25       are not the "public," as that term is defined in AS 42.05.990 [; AND                                          
26                 (3)  THE PERSON THAT CONSTRUCTS, OWNS, ACQUIRES, OR                                                     
27       OPERATES THE PLANT OR FACILITY HAS NOT RECEIVED FROM THE                                                          
28       STATE                                                                                                             
29                      (A)  A GRANT THAT WAS USED TO GENERATE THE                                                         
30            ELECTRICITY FROM THE RENEWABLE ENERGY RESOURCES; OR                                                          
31                      (B)  A TAX CREDIT RELATED TO THE GENERATION OF                                                     
01            ELECTRICITY FROM THE RENEWABLE ENERGY RESOURCES].                                                            
02    * Sec. 16. AS 42.05.711 is amended by adding a new subsection to read:                                             
03            (u)  A qualifying facility that generates less than 80 megawatts of electricity is                           
04       exempt from regulation under this chapter.                                                                        
05    * Sec. 17. AS 42.05.990(6) is amended to read:                                                                     
06                 (6)  "public utility" or "utility" includes every corporation whether                                   
07       public, cooperative, joint action agency, or otherwise, company, individual, or                               
08       association of individuals, their lessees, trustees, or receivers appointed by a court, that                      
09       owns, operates, manages, or controls any plant, pipeline, or system for                                           
10                      (A)  furnishing, by generation, transmission, or distribution,                                     
11            electrical service to the public for compensation;                                                           
12                      (B)  furnishing telecommunications service to the public for                                       
13            compensation;                                                                                                
14                      (C)  furnishing water, steam, or sewer service to the public for                                   
15            compensation;                                                                                                
16                      (D)  furnishing by transmission or distribution of natural or                                      
17            manufactured gas to the public for compensation;                                                             
18                      (E)  furnishing for distribution or by distribution petroleum or                                   
19            petroleum products to the public for compensation when the consumer has no                                   
20            alternative in the choice of supplier of a comparable product and service at an                              
21            equal or lesser price;                                                                                       
22                      (F)  furnishing collection and disposal service of garbage,                                        
23            refuse, trash, or other waste material to the public for compensation;                                       
24                      (G)  furnishing the service of natural gas storage to the public                                   
25            for compensation;                                                                                            
26                      (H)  furnishing the service of liquefied natural gas storage to the                                
27            public for compensation;                                                                                     
28    * Sec. 18. AS 42.05.990 is amended by adding new paragraphs to read:                                               
29                 (14)  "anticompetitive practice" means                                                                  
30                      (A)  a practice that directly or indirectly manipulates the                                        
31            purchase or sale of electric energy, access to an electric transmission facility,                            
01            the cost of electric energy, the price paid for wholesale electric energy, or the                            
02            charges or credits allocated to a qualifying facility or independent power                                   
03            producer, including interconnection, integration, wheeling, and demand ratchet                               
04            charges or credits;                                                                                          
05                      (B)  an act, practice, or scheme by a utility to defraud; or                                       
06                      (C)  making an untrue statement or omission of material fact in                                    
07            a communication published by a public utility for use by the commission, a                                   
08            qualifying utility, an independent power producer, or the customers of the                                   
09            utility;                                                                                                     
10                 (15)  "avoided cost" means the incremental cost to an electric utility of                               
11       electric energy or electric capacity or both that, but for the purchase of that unit from a                       
12       qualifying facility or independent power producer, a public utility would have to                                 
13       generate itself or purchase from another source;                                                                  
14                 (16)  "distribution lines" means low voltage transmission lines that                                    
15       deliver power to retail customers;                                                                                
16                 (17)  "independent power producer" means a corporation, person,                                         
17       agency, authority, or other legal entity other than a qualifying facility that owns or                            
18       operates facilities for the generation of electricity for wholesale delivery to a public                          
19       utility or for use by customers outside the certificated service area of a utility;                               
20                 (18)  "joint action agency" means a joint action agency established                                     
21       under AS 42.45.300, except as otherwise provided in AS 42.05.711(o);                                              
22                 (19)  "qualifying facility" means                                                                       
23                      (A)  a small power production facility located in the state that                                   
24            generates 80 megawatts of electricity or less and whose primary energy source                                
25                           (i)  is a renewable or alternative energy resource,                                           
26                 including geothermal, wind, solar, hydroelectric, hydrokinetic, tidal, or                               
27                 biomass energy; or                                                                                      
28                           (ii)  originates in the state; or                                                             
29                      (B)  a cogeneration facility located in the state that sequentially                                
30            produces electricity and another form of useful thermal energy, including                                    
31            steam or heat, in a manner that is more efficient than the separate production of                            
01            both forms of energy;                                                                                        
02                 (20)  "reasonable compensation" means a return on the private equity of                                 
03       the owning public utility or joint action agency for the portion of the facility that is                          
04       jointly used plus the cost to the owning public utility or joint action agency of the                             
05       capacity of the sewer, conduit, utilidor, pole, pole line, pipe, pipeline, main, or other                         
06       distribution or transmission facility that is jointly used;                                                       
07                 (21)  "reasonable integration charges or credits" means the                                             
08       nondiscriminatory costs that are directly attributable to the system connection,                                  
09       reasonably necessary to maintain safe and reliable operations of the utility system, in                           
10       excess of the corresponding costs that the public utility would have otherwise                                    
11       incurred, not duplicative of costs already charged related to the system connection,                              
12       and determined in the same manner as the utility allocates the charges to itself;                                 
13                 (22)  "transmission asset" means an asset used to move bulk electricity                                 
14       from where it is produced or generated to distribution lines.                                                     
15    * Sec. 19. AS 42.45.300 is amended to read:                                                                        
16            Sec. 42.45.300. Joint action agencies. Two or more public utilities may form                               
17       a joint action agency for the purpose of participation in the design, construction,                               
18       operation, and maintenance of a generating or transmission facility and to secure                                 
19       financing for carrying out the design, construction, operation, and maintenance of the                            
20       facility. A joint action agency may request the Alaska Industrial Development and                                 
21       Export Authority to issue revenue bonds for projects of the agency. A joint action                                
22       agency may be regulated as [HAS THE POWERS OF] a public utility under                                         
23       AS 42.05.