Office of House Bill AnalysisH.B. 2969
By: Cook
State Affairs


In 1999, Senate Bill 7 set state goals for renewable energy resources
(e.g., hydroelectric, wind, and solar) and requires parties who want to
sell competitively in the retail power market to help meet these goals.
Electric cooperatives that opt to compete in the retail power market are
subject to these requirements.  The Public Utility Commission (PUC) adopted
rulemaking provisions concerning the nomination of offsets that
accommodates the organizational structure of cooperatives.  The rule
expressly allows a generation and transmission (G&T) electric cooperative
to nominate the combined offsets for itself and its member distribution
Unfortunately, the form to be used for nominations in June 2001 prevents
the G&T cooperative from nominating the combined offsets for itself and its
member distribution cooperatives.  Instead, it requires the G&T cooperative
to allocate its offsets between its member distribution cooperatives and
mandates that the allocations can never be changed.  

Electric distribution cooperatives have long joined together to form G&T
cooperatives to provide the cooperatives with generation and transmission
services.  The Federal Rural Utilities Services (RUS) financed the
construction of G&T facilities through long-term loans.  The loans are
guaranteed by full requirement contracts between the G&T cooperative, the
member distribution cooperatives and RUS.  The contracts require the G&T
cooperative to provide all of the power its members may need at any given
point in time, and the members are obligated to buy only from the G&T
cooperative.  The G&T cooperative may not prevent a member from calling on
it to supply the power to meet its needs by allocating a portion of its
power to another member distribution cooperative.  The contracts cannot be
amended or modified without RUS approval. 
The requirement that G&T cooperatives allocate their renewable offsets to
each of their member distribution cooperatives on a permanent basis
undermines the cohesiveness among  the members of G&T cooperatives that has
made their joint efforts so successful for their service areas in the past.
This is particularly true in instances where one or more of the G&T
cooperative's members opt for competition. The allocation issue becomes
very divisive and dampens the consideration a member might have to opt for

House Bill 2969 requires a G&T cooperative, at the election of its board of
directors, to be responsible for the cumulative total of its cooperative
members' renewable energy requirements and prohibits the PUC from requiring
such a G&T cooperative to allocate its resources between its members. 


It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 


House Bill 2969 amends the Utilities Code to require a generation and
transmission (G&T) cooperative  at the election of its board of directors
to be responsible for the cumulative total of its cooperative members'
renewable energy requirements.  The bill prohibits the Public Utility
Commission from requiring a G&T cooperative that makes the election to
allocate its renewable resources between its members when such resources
are nominated.  The bill does not affect the cumulative total of renewable
energy resources that are the responsibility of a G&T cooperative or its
cooperative members in meeting their share of the state's goals for
renewable energy resources. 


On passage, or if the Act does not receive the necessary vote, the Act
takes effect September 1, 2001.