0001|                            HOUSE BILL 51
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0002|     43RD LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 1998
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0003|                            INTRODUCED BY
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0004|                              TED HOBBS
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0005|     
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0006|                                   
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0007|     
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0008|                                   
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0009|     
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0010|                                AN ACT
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0011|     RELATING TO THE RESTRUCTURE OF THE ELECTRIC INDUSTRY;
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0012|     ESTABLISHING A PLANNING STRUCTURE AND TERMS AND CONDITIONS OF
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0013|     THE EVENTUAL RESTRUCTURE OF THE ELECTRIC INDUSTRY; PERMITTING
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0014|     VOLUNTARY RATE REDUCTIONS; CREATING AN OVERSIGHT COMMITTEE AND
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0015|     ADVISORY STUDY PANELS; ENACTING SECTIONS OF THE NMSA 1978;
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0016|     MAKING AN APPROPRIATION.
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0017|     
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0018|     BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
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0019|          Section 1.  SHORT TITLE.--This act may be cited as the
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0020|     "Electric Industry Restructuring Planning Act". 
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0021|          Section 2.  FINDINGS AND PURPOSES.-- 
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0022|               A.  The legislature finds that: 
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0023|                    (1)  the generation and sale of electricity is
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0024|     becoming a competitive industry;
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0025|                    (2)  electric service customers in New Mexico
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0001|     should have the opportunity to benefit from competition in
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0002|     this industry and should have the freedom to choose their
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0003|     suppliers of electricity and related services in a competitive
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0004|     market; 
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0005|                    (3)  competition in the retail market for
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0006|     electricity is intended to have long-term benefits for the
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0007|     economy of New Mexico, including lower prices for electric
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0008|     service to all customers, more efficient use of resources and

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0009|     innovations in services and supply;  
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0010|                    (4)  a collaborative effort on the restructure
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0011|     of the electric industry has been conducted with the
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0012|     participation of representatives of the New Mexico public
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0013|     utility commission, customers, anticipated competitors, other
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0014|     interests and the industry.  This collaborative effort ended
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0015|     with certain consensus achieved and insights acquired.  The
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0016|     industry, representatives of customer interests and branches
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0017|     and divisions of government have examined the competitive
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0018|     restructure of this industry during the recent past and the
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0019|     information, consensuses and concerns resulting from these
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0020|     efforts should be included in the continuing planning to
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0021|     achieve the restructure of this industry; and
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0022|                    (5)  it is necessary to continue studies for
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0023|     the comprehensive implementation of a restructure of the
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0024|     electric utility industry to ensure that the public interest
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0025|     is best served by a restructure.  It is necessary to provide
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0001|     and establish direction for all aspects of the restructure, to
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0002|     provide for continuing study and to prepare comprehensive
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0003|     implementing legislation for presentation and consideration by
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0004|     the forty-fourth legislature. 
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0005|               B.  The purposes of the Electric Industry
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0006|     Restructuring Planning Act are to: 
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0007|                    (1)  provide a framework and time schedule for
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0008|     further evaluative studies and the restructure of the electric
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0009|     industry to prepare for competition; 
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0010|                    (2)  permit the legislature, regulators,
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0011|     industry and customers to further evaluate and determine the
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0012|     best methodologies to implement the restructure of the
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0013|     electric industry for competitive supply and services, other
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0014|     than transmission and distribution of electricity, to
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0015|     customers in this state;
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0016|                    (3)  expressly state the intention of the
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0017|     legislature to permit on January 1, 2001 competition in this
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0018|     industry to benefit customers and to state the policies of the
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0019|     legislature regarding stranded and transition cost recovery
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0020|     and the divestiture of existing electric operations from
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0021|     intended competitive electric services in preparation for
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0022|     competition;
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0023|                    (4)  ensure that all alternatives are
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0024|     considered and evaluated to address major issues associated
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0025|     with the restructure of the electric industry;
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0001|                    (5)  provide for the orderly restructure of
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0002|     the electric industry to allow direct access by retail
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0003|     customers to the competitive market for electricity supply and
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0004|     energy services while maintaining and ensuring the safety and
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0005|     reliability of the electric service, supply and system in this
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0006|     state; 
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0007|                    (6)  ensure that the competitive component
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0008|     suppliers and the regulated component suppliers of the
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0009|     restructured electric industry, including electric suppliers
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0010|     not operating in New Mexico before January 1, 2001, have fair
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0011|     and equitable opportunities to prepare for competition and the
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0012|     resulting changes in the regulated components of this
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0013|     industry; and
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0014|                    (7)  preserve the interests and recognize the
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0015|     self-regulation of rural electric cooperatives and municipal
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0016|     utilities by establishing an option for these entities to
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0017|     determine their involvement in the competitive market, if any,
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0018|     on terms that fairly and equitably consider the different
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0019|     concerns and operations of these entities.
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0020|          Section 3. DEFINITIONS.--As used in the Electric Industry
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0021|     Restructuring Planning Act: 
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0022|               A.  "commission" means the New Mexico public
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0023|     utility commission or its successor agency;
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0024|               B.  "customer" means a person purchasing or seeking
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0025|     to purchase retail electric energy provided over transmission
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0001|     and distribution facilities or other electric services;     
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0002|               C. "customer choice" means the opportunity and
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0003|     option for a customer to select an electric supplier from
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0004|     which to purchase electric energy provided over regulated
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0005|     transmission and distribution facilities or other energy
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0006|     services;
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0007|               D.  "distribution" means delivery of electricity
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0008|     for consumption to a customer, excluding generation and
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0009|     transmission services, by a regulated provider that has access
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0010|     to the electric grid and owns or operates the poles and wires
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0011|     that transmit electricity from the transmission system to
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0012|     customers; 
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0013|               E.  "electric supplier" means a person selling or
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0014|     offering to sell electric energy to a customer; 
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0015|               F.  "energy services" means a competitive
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0016|     unregulated service offered through customer choice, 
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0017|     excluding electric energy, for sale or offered for sale to a
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0018|     customer;
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0019|               G.  "energy service provider" means a person
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0020|     selling or offering to sell a competitive unregulated service
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0021|     and includes an electric supplier;           
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0022|               H.  "generation" means the competitive unregulated
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0023|     electric energy supply service for sale or offered for sale to
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0024|     a customer through customer choice; and
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0025|               I.  "transmission" means the service of
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0001|     transporting bulk electricity between generation and
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0002|     distribution systems by a regulated provider.
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0003|          Section 4.  AUTHORIZATION FOR CUSTOMER CHOICE.--On
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0004|     January 1, 2001, generation and energy services shall be
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0005|     deregulated and subject to the competitive market and customer
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0006|     choice may begin.
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0007|          Section 5.  DIVESTITURE.--An electric utility operating
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0008|     and subject to the jurisdiction of the commission on the
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0009|     effective date of the Electric Industry Restructuring Planning
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0010|     Act shall not be required to divest or be precluded from
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0011|     voluntarily divesting itself of any component of its operation
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0012|     existing and operating on January 1, 1998.  On January 1,
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0013|     2001, generation and energy services shall be competitive
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0014|     services subject to the market and not regulated by the
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0015|     commission.  Transmission and distribution shall remain
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0016|     subject to regulation of rates, terms and conditions of
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0017|     service by the commission or a federal oversight agency. 
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0018|     Generation and energy services shall be functionally separated
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0019|     from transmission and distribution to ensure that competitive
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0020|     advantages inherent in their combination are avoided. 
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0021|          Section 6.  RECOGNITION OF STRANDED COSTS.--Stranded
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0022|     costs may result from a restructure of the electric industry
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0023|     to customer choice.  An opportunity to recover claimed
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0024|     stranded costs shall be afforded and determined for each
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0025|     utility claiming stranded costs considering its
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0001|     characteristics and circumstances. 
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0002|          Section 7.  RECOVERY OF TRANSITION COSTS--UTILITY
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0003|     FILINGS.--Transition costs associated with and resulting from
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0004|     the restructure of the electric industry and the change from
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0005|     regulation to competition for generation and energy services
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0006|     will be incurred and may be recovered, as mitigated and
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0007|     verified, within a reasonable period after January 1, 2001. 
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0008|          Section 8.  RURAL ELECTRIC COOPERATIVES AND MUNICIPAL
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0009|     UTILITIES--OPTIONAL PARTICIPATION IN CUSTOMER CHOICE.--Rural
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0010|     electric cooperatives providing distribution service to the
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0011|     public and municipal utilities shall not be subject to the
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0012|     provisions of Section 4 of the Electric Industry Restructuring
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0013|     Planning Act unless an election to participate in customer
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0014|     choice and receive the benefits of Section 4 of that act is
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0015|     made.  Once made, the election may not be withdrawn.  In the
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0016|     absence of an election to participate in customer choice and
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0017|     receive the benefits of Section 4 of that act, a municipal
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0018|     utility or a rural electric cooperative may not extend its
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0019|     service beyond the actual area served by it as of January 1,
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0020|     1998 or, in the case of a municipal utility, beyond its
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0021|     borders, whichever is greater.  For purposes of this section,
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0022|     the borders of a municipal utility include areas annexed by
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0023|     the municipality after the effective date of the Electric
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0024|     Industry Restructuring Planning Act.
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0025|          Section 9.  ELECTRIC SUPPLIERS AND ENERGY SERVICE
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0001|     PROVIDERS--REGISTRATION--LICENSURE.--All electric suppliers
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0002|     and energy service providers are subject to registration and
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0003|     licensure by the commission before operating or offering
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0004|     service in New Mexico.  Registration and licensure shall
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0005|     require an applicant to be technically able to provide the
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0006|     services proposed, to document its financial capability to
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0007|     provide the proposed services and its form of ownership and to
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0008|     comply with quality, safety, bonding and reliability
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0009|     standards.  The commission may suspend registration and
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0010|     licensure or impose penalties if an electric supplier or
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0011|     energy service provider violates the provisions of its license
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0012|     or of law.  Registration and licensure shall be effective on
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0013|     January 1, 2001. 
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0014|          Section 10.  REGULATION OF TRANSMISSION AND DISTRIBUTION
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0015|     SERVICES--RULE MAKING.--The commission shall regulate
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0016|     transmission and distribution services and shall promulgate
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0017|     rules to implement this regulation.  Transmission and
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0018|     distribution facilities shall be made available for all
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0019|     electric suppliers and customers on a nondiscriminatory and
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0020|     comparable basis.
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0021|          Section 11.  VOLUNTARY RATE REDUCTIONS WITHOUT RATE CASE
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0022|     APPROVALS.--An electric utility subject to the jurisdiction of
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0023|     the commission may, without rate case approval by the
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0024|     commission, voluntarily lower its rates below the levels in
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0025|     effect on the effective date of the Electric Industry
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0001|     Restructuring Planning Act for any class of service, but shall
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0002|     not lower any rate below the incremental cost of providing the
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0003|     service to the affected class.  A tariff filing by the
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0004|     electric utility shall be made by the electric utility with
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0005|     the commission at least thirty days prior to the effective
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0006|     date of any rate reduced pursuant to this section.
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0007|          Section 12.  CUSTOMER INTERESTS, INFORMATION AND
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0008|     PROTECTION.--Information provided to consumers after January
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0009|     1, 2001 by electric suppliers and energy service providers
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0010|     shall be in standardized format to permit reasonable
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0011|     comparisons among services and prices for all electricity
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0012|     supply and services.  Consumer protection against unfair trade
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0013|     practices and noncompetitive activities shall be regulated by
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0014|     the commission.
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0015|          Section 13.  REGIONAL COOPERATION--NO IMPACT ON
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0016|     INTERSTATE COMMERCE.--After January 1, 2001, the commission
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0017|     shall promote and encourage cooperation in the electric
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0018|     industry, both regulated and unregulated, and with other
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0019|     states and regions to avoid disadvantages, resulting from
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0020|     competition, to this state, electric service providers,
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0021|     electric utilities and customers.  Commerce among the various
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0022|     states is not impeded by the Electric Industry Restructuring
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0023|     Planning Act and shall not be impeded by commission regulation
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0024|     or action.
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0025|          Section 14.  COMMISSION STUDY OF INDEPENDENT SYSTEM
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0001|     OPERATOR.--The commission shall conduct a study on the
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0002|     feasibility and advisability of and alternatives to an
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0003|     independent system operator to direct and maintain the use of
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0004|     and access to the transmission system existing and necessary
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0005|     in this state or region and by October 15, 1998 shall report
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0006|     its findings and recommendations to the restructuring
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0007|     oversight committee.
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0008|          Section 15.  RESTRUCTURING OVERSIGHT COMMITTEE CREATED--
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0009|     AUTHORIZATION--RESPONSIBILITIES--TERMINATION.--
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0010|               A.  The joint interim legislative "restructuring
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0011|     oversight committee" is created.  The committee shall function
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0012|     from the date of its appointment until December 1 prior to the
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0013|     first session of the forty-fifth legislature.
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0014|               B.  The restructuring oversight committee shall be
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0015|     composed of ten members.  The New Mexico legislative council
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0016|     shall appoint five members of the committee from the house of
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0017|     representatives and five members from the senate.  At the time
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0018|     of making the appointments, the legislative council shall
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0019|     designate the chairman and vice chairman of the committee.
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0020|               C.  Members shall be appointed from each house so
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0021|     as to give the two major political parties in each house the
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0022|     same proportionate representation on the committee as prevails
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0023|     in each house; however, each party shall not have less than
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0024|     one member from each house on the committee.  At the request
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0025|     of the committee chairman, members may be removed from the
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0001|     committee by the New Mexico legislative council for
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0002|     nonattendance according to legislative council policy. 
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0003|     Vacancies on the committee, however caused, may be filled by
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0004|     the legislative council, or it may reduce the size of the
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0005|     committee by not making replacement appointments and in that
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0006|     case need not readjust party representation.
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0007|               D.  An action shall not be taken by the committee
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0008|     if a majority of the total membership from either house on the
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0009|     committee rejects that action. 
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0010|               E.  After its appointment, the restructuring
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0011|     oversight committee shall hold one organizational meeting to
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0012|     develop a work plan and budget for the ensuing interim.  The
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0013|     work plan and budget shall be submitted to the New Mexico
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0014|     legislative council for approval.  Upon approval of the work
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0015|     plan and budget by the legislative council, the committee
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0016|     shall maintain oversight of the advisory study panels' work
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0017|     authorized in Section 16 of the Electric Industry
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0018|     Restructuring Planning Act and receive the report and
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0019|     recommendation of the commission pursuant to Section 14 of the
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0020|     that act and develop comprehensive implementing legislation to
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0021|     restructure the electric industry for recommendation to the
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0022|     first session of the forty-fourth legislature.
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0023|               F.  The restructuring oversight committee shall
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0024|     make a report of its findings and recommendations for the
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0025|     consideration of the first session of the forty-fourth
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0001|     legislature.  The report and suggested legislation shall be
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0002|     made available to the New Mexico legislative council on or
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0003|     before December 15 preceding that session.
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0004|               G.  The staff for the restructuring oversight
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0005|     committee shall be provided by the legislative council
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0006|     service. 
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0007|          Section 16.  ADVISORY STUDY PANELS CREATED--
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0008|     AUTHORIZATION--COMPOSITION--REPORTS TO RESTRUCTURING OVERSIGHT
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0009|     COMMITTEE.--
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0010|               A.  Further study on electric industry
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0011|     restructuring and customer choice implementation is necessary
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0012|     and shall be conducted by advisory study panels composed of
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0013|     representatives of industry, intended electric suppliers and
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0014|     energy service providers, transmission and distribution
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0015|     providers, customers, regulators and others.  The
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0016|     restructuring oversight committee shall appoint the following
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0017|     advisory panels to study and make recommendations on or before
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0018|     October 15, 1998: 
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0019|                    (1)  one panel to address technical issues,
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0020|     including: 
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0021|                         (a)  unbundling of generation,
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0022|     transmission and distribution and energy services;
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0023|                         (b)  utility restructuring plans; 
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0024|                         (c)  market power; 
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0025|                         (d)  anti-competitive and unfair trade
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0001|     activities;
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0002|                         (e)  open access to transmission and
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0003|     distribution; 
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0004|                         (f)  transition issues; 
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0005|                         (g)  sequencing of customer choice; 
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0006|                         (h)  regulation of distribution
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0007|     services, responsibilities and service territories; 
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0008|                         (i)  role of rural electric
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0009|     cooperatives, rural electric generation and transmission
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0010|     cooperatives and municipal utilities in the competitive market
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0011|     with or without election to participate; and
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0012|                         (j)  siting of new generation;
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0013|                    (2)  one panel to address financial and tax
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0014|     issues, including: 
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0015|                         (a)  rates and charges; 
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0016|                         (b)  access and transition costs and
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0017|     fees, including recovery methodologies; 
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0018|                         (c)  stranded costs and their recovery,
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0019|     including:  1) securitization; 2) previous mitigation
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0020|     measures; 3) term of collection period and its impact on
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0021|     rates; and 4) impact on financial health and economic
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0022|     viability of affected utilities;
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0023|                         (d)  stranded benefits and accounting
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0024|     for such benefits; 
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0025|                         (e)  municipal financing issues; 
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0001|                         (f)  rural electric cooperative
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0002|     financing issues; 
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0003|                         (g)  financing issues related to
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0004|     generation and transmission cooperatives, including issues
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0005|     related to bonded indebtedness;
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0006|                         (h)  investor-owned utility financing
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0007|     issues;
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0008|                         (i)  tax issues, including maintenance
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0009|     of revenue neutrality for the state and political
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0010|     subdivisions;
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0011|                         (j)  impacts on employment in the state;
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0012|     and
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0013|                         (k)  impacts on issuers, insurers and
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0014|     holders of debt issued on behalf of rural electric
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0015|     cooperatives to fund pollution control improvements;
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0016|                    (3)  one panel to address consumer issues,
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0017|     including: 
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0018|                         (a)  consumer education and information,
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0019|     including responsibility for and the role and availability of
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0020|     technology; 
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0021|                         (b)  the obligation to serve; 
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0022|                         (c)  the obligation to connect; 
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0023|                         (d)  regulation of standard offer; 
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0024|                         (e)  regulation of universal service;
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0025|                         (f)  rates for regulated services; 
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0001|                         (g)  retail aggregation;
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0002|                         (h)  consumer safeguards, including:  
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0003|     1) standardization in advertising; 2) right to privacy; 
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0004|     3) requirements for special demand meters; 4) disclosure of
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0005|     unbundled prices; 5) regulation of disconnects, complaints,
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0006|     service quality and collections; 6) low-income assistance;
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0007|     7) protection from unfair trade practices; 8) codes of
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0008|     conduct; 9) anti-slamming regulations; 10) anti-trust
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0009|     enforcement funding; 11) regulation of nonutility services
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0010|     where cross-subsidization is found; and 12) regulation to
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0011|     license, bond, set meter requirements and require production
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0012|     of records to ensure compliance with a consumer protection
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0013|     standard; 
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0014|                         (i)  consumer choices; and
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0015|                         (j)  environmental issues; and
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0016|                    (4)  one panel to address reliability and
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0017|     safety concerns, including:
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0018|                         (a)  regional cooperation; 
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0019|                         (b)  registration and licensing of
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0020|     electric suppliers and energy service providers; 
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0021|                         (c)  responsibilities for maintenance
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0022|     and repair service; and
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0023|                         (d)  access to and adequacy of
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0024|     interstate transmission for import and export capability.
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0025|               B.  Each study panel shall include representatives
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0001|     of the restructuring oversight committee and other groups
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0002|     interested in the restructure of the electric industry with
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0003|     specific knowledge of the work topic of the panel.  Members of
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0004|     each study panel shall serve without compensation or
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0005|     reimbursement.
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0006|               C.  The staff for each study panel, if any, shall
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0007|     be provided by the legislative council service or the
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0008|     commission upon request of the study panel and with approval
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0009|     of the restructuring oversight committee.  Upon approval of
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0010|     the restructuring oversight committee, a study panel may
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0011|     retain and pay advisers and consultants to assist in
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0012|     fulfilling the work assigned to that panel.  
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0013|               D.  Each study panel shall begin its study after
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0014|     July 1, 1998 and complete its work and prepare a written
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0015|     report for presentation and submission to the restructuring
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0016|     oversight committee no later than October 15, 1998.
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0017|          Section 17.  APPROVED CUSTOMER CHOICE PLANS NOT
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0018|     AFFECTED.--The Electric Industry Restructuring Planning Act
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0019|     shall not affect commission-approved plans voluntarily
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0020|     submitted by an electric utility to the commission, prior to
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0021|     January 1, 1998, that sought authorization by the commission
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0022|     for customer choice for its electric customers.
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0023|          Section 18.  INCONSISTENCIES.--If the Electric Industry
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0024|     Restructuring Planning Act is inconsistent with a provision of
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0025|     the Public Utility Act or other law, then the provisions of
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0001|     the Electric Industry Restructuring Planning Act shall
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0002|     control.
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0003|          Section 19.  APPROPRIATION.--Twenty-five thousand dollars
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0004|     ($25,000) is appropriated from the general fund to the
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0005|     legislative council service for expenditure in fiscal year
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0006|     1999 for the purpose of carrying out the provisions of Section
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0007|     15 of the Electric Industry Restructuring Planning Act.  Any
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0008|     unexpended or unencumbered balance remaining at the end of
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0009|     fiscal year 1999 shall revert to the general fund. 
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0010|          Section 20.  DELAYED REPEAL.--The Electric Industry
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0011|     Restructuring Planning Act is repealed effective January 1,
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0012|     2001.
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0013|                              
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