STATE OF OKLAHOMA

1st Session of the 54th Legislature (2013)

SENATE BILL 709	By:	Sparks

AS INTRODUCED

An Act relating to electric generating public utilities; creating the Oklahoma Clean Jobs Act of 2013; providing short title; stating legislative findings; requiring utilities to submit certain emission reduction plans to the Corporation Commission by certain date; stating requirements for plans; requiring consultation with Commission; authorizing state agencies to comment on plans; providing for utilities to recover certain costs; authorizing Commission to implement cost recovery mechanisms; authorizing Commission to promulgate rules and make legislative recommendations; providing for codification; providing for noncodification; and declaring an emergency.

BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 289.1 of Title 17, unless there is created a duplication in numbering, reads as follows:
This act shall be known and may be cited as the "Oklahoma Clean Jobs Act of 2013".
SECTION 2.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 289.2 of Title 17, unless there is created a duplication in numbering, reads as follows:
A.  The Legislature finds, determines and declares that the Federal Clean Air Act, 42 U.S.C. Section 7401 et seq., will likely require reductions in emissions from coal-fired power plants operated by rate-regulated utilities located in this state and under the jurisdiction of the Corporation Commission.  A coordinated plan of emission reductions from these coal-fired power plants will enable Oklahoma rate-regulated utilities to meet the requirements of the federal act and protect public health and the environment at a lower cost than a piecemeal approach.  A coordinated plan of reduction of emissions for Oklahoma's rate-regulated utilities will also result in reductions in many air pollutants and promote the use of natural gas and other low-emitting resources to meet our state's electricity needs, which will in turn promote development of our state's economy and industry.
B.  The Legislature further finds the use of natural gas to reduce coal-fired emissions may require rate-regulated utilities to enter into long-term contracts for natural gas in a manner that protects electricity consumers.  Even though such long-term contracts might be beneficial to consumers, financial rating agencies could find that such contracts increase the financial risk to rate-regulated utilities, which in turn could increase the cost of capital to these utilities.  The Legislature finds that it is important to give financial markets confidence that utilities will be able to recover the costs of long-term gas contracts without the risk of future regulators disallowing contracts.
C.  The Legislature further finds and declares that Oklahoma rate-regulated utilities require timely and forward-looking reviews of their costs of providing utility service in order to undertake the comprehensive and extensive planning and changes to their business operations contemplated by this act.  In order to allow these utilities to continue to provide reliable electric service, alter their operations in the manner described herein, and meet other state public policy goals, it is imperative that Oklahoma rate-regulated utilities continue in sound financial condition and remain attractive investments so that sufficient capital is provided to achieve the state's goals.  To that end, the Legislature finds that the Corporation Commission should have additional tools and more flexibility in its regulatory authority to ensure the continued financial health of our state's utility providers.
SECTION 3.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 289.3 of Title 17, unless there is created a duplication in numbering, reads as follows:
A.  On or before August 15, 2014, and in coordination with current or expected requirements of the Federal Clean Air Act, all rate-regulated utilities that own or operate coal-fired electric generating units located in this state shall submit to the Corporation Commission an emission reduction plan for emissions from those units.
B.  1.  The plan filed under this section shall cover a minimum of fifty percent (50%) of the utility's coal-fired electric generating units located in this state but shall not include any coal-fired capacity that the utility has already announced it plans to retire prior to January 1, 2015.  At the utility's discretion, the plan may include some or all of the following elements:
a.	new emission control equipment for oxides of nitrogen and other pollutants,
b.	retirement of coal-fired units, if the retired coal-fired units are replaced by natural gas-fired electric generation or other low-emitting resources, including energy efficiency,
c.	conversion of coal-fired generation to operate on natural gas,
d.	long-term fuel supply agreements,
e.	new natural gas pipelines and other supporting gas infrastructure,
f.	increased utilization of existing gas-fired generating capacity,
g.	new transmission lines and other supporting transmission infrastructure,
h.	emission control equipment that is required to be installed at affected units prior to or in conjunction with any retirement, conversion, or emission control equipment retrofit set forth under the plan in order to limit any pollutant other than oxides of nitrogen, and
i.	any other capital, fuel, and operations and maintenance expenditures appropriate to support the implementation of the plan.
B.  1.  Prior to filing the plan, the utility shall consult with the Commission and shall work with the Commission in good faith to design a plan to meet the current and reasonably foreseeable requirements of the federal act and state law in a cost-effective and flexible manner.
2.  The Commission shall provide an opportunity for the Department of Environmental Quality, the State Department of Health and any other state environmental agency an opportunity to:
a.	comment on the air quality, all other pollutants, and other emission reductions of the plan, and
b.	evaluate and determine whether the plan is consistent with the current and reasonably foreseeable requirements of the federal act.
3.  The Commission shall not approve a plan except after an evidentiary hearing.
C.  The plan shall include a schedule that would result in full implementation of the plan on or before December 31, 2017.  The schedule may include interim milestones.  The utility shall design the schedule to protect system reliability, control overall cost, and assure consistency with the requirements of the federal act.
D.  The plan shall set forth the costs associated with activities identified in the plan, including the planning, development, construction, and operation of elements identified in this section, as well as the costs of any shutdown, decommissioning, or repowering of existing coal-fired electric generating units that are set forth in the plan.
SECTION 4.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 289.4 of Title 17, unless there is created a duplication in numbering, reads as follows:
A.  A utility is entitled to recover the costs that it prudently incurs in executing an approved emission reduction plan pursuant to the requirements of this act, including the costs of planning, developing, constructing, operating, and maintaining any emission control or replacement capacity constructed pursuant to the plan, as well as any interim air quality emission control costs the utility incurs while the plan is being implemented.
B.  To that end, the Corporation Commission is authorized to employ rate-making mechanisms, in addition to allowing a current return on construction work in progress, that permit rate adjustments, no less frequently than once per year, without requiring the utility to file a general rate case to allow recovery of the approved plan's costs.  Such rate-making mechanisms may include a separate rate adjustment clause or other appropriate mechanisms as determined appropriate by the Commission.
SECTION 5.     NEW LAW     A new section of law not to be codified in the Oklahoma Statutes reads as follows:
A.  The Corporation Commission is authorized to promulgate any rules necessary to implement the provisions of this act.
B.  The Commission is further directed to make any legislative recommendations they deem necessary and appropriate to enact or amend current statutes to further implement the provisions of this act.  Such recommendations shall be submitted to the President Pro Tempore of the Senate and the Speaker of the House of Representatives no later than December 1, 2013.
SECTION 6.  It being immediately necessary for the preservation of the public peace, health and safety, an emergency is hereby declared to exist, by reason whereof this act shall take effect and be in full force from and after its passage and approval.

54-1-1073	MJM	1/16/2013 8:14:54 PM