HBA-BSM H.B. 2969 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2969 By: Cook State Affairs 3/30/2001 Introduced BACKGROUND AND PURPOSE 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 cooperatives. 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 competition. 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. RULEMAKING AUTHORITY 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. ANALYSIS 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. EFFECTIVE DATE On passage, or if the Act does not receive the necessary vote, the Act takes effect September 1, 2001.