Okla. Stat. tit. 17, § 17-190.4

utility industry restructuring.

A. To ensure an orderly and equitable restructuring of the

electric utility industry in this state and achieve the goals

outlined in Section 190.2 of this title, the Legislature hereby

directs the Joint Electric Utility Task Force to undertake a study

of all relevant issues relating to restructuring the electric

utility industry in this state including, but not limited to, those

issues set forth in this section, and develop a proposed electric

utility industry restructuring framework for the State of Oklahoma.

The Joint Electric Utility Task Force shall address appropriate

steps to achieve an orderly transition to a competitive market and

may include in addition to the directives in this act other

provisions as the task force shall deem necessary and appropriate to

expedite the transition to full consumer choice. The Corporation

Commission shall assist the task force in achieving the goals

outlined in the Electric Restructuring Act of 1997; provided,

however, during the transition period to full consumer choice, the

Corporation Commission is expressly prohibited from promulgating any

rules or issuing any orders relating to the restructuring of

Oklahoma's electric utility industry without prior express

authorization by the Oklahoma State Legislature.

B. It is the intent of the Legislature that the following

principles and directives be adhered to in developing a framework

for a restructured industry:

1. Reliability and safety. Appropriate rules shall be

promulgated, in accordance with the provisions of this act, ensuring

that reliable and safe electric service is maintained;

2. Competition. Competitive markets are to be encouraged to

the greatest extent possible. Regulation should serve as a

substitute only in those circumstances where competition cannot

provide results that serve the best interests of all consumers;

3. Consumer choice. Consumers shall be allowed to choose among

retail electric energy suppliers to help ensure fully competitive

and innovative markets. A process should be established whereby all

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retail consumers are permitted to choose their retail electric

energy suppliers by July 1, 2002. Consumer choice means that retail

electric consumers shall be allowed to purchase different levels and

quality of electric supply from a variety of retail electric energy

suppliers and that every seller of electric generation in the retail

market shall have nondiscriminatory open access to the electric

distribution system of every retail electric service distributor,

subject to this act. The Corporation Commission should ensure that

consumer confusion will be minimized and consumers will be well

informed about changes resulting from restructuring and increased

choice;

4. Regulation and unbundling of services. Entities which own

both transmission and distribution, as well as generation

facilities, shall not be allowed to use any monopoly position in

these services as a barrier to competition. Generation services may

be subject to minimal regulation and shall be functionally separated

from transmission and distribution services, which services shall

remain regulated. All retail electric energy suppliers shall be

required to meet certain minimum standards designed to ensure

reliability and financial integrity, and be registered with the

Corporation Commission;

5. Unbundling of rates. When consumer choice is introduced,

rates shall be unbundled to provide clear price information on the

components of generation, transmission and distribution and any

other ancillary charges. Electric bills for all classes shall be

unbundled, utilizing line itemization to reveal the various

component cost of providing electrical services. Charges for public

benefit programs currently authorized by statute or the Commission,

or both, shall be unbundled and appear in line item format on
on the

components of generation, transmission and distribution and any

other ancillary charges. Electric bills for all classes shall be

unbundled, utilizing line itemization to reveal the various

component cost of providing electrical services. Charges for public

benefit programs currently authorized by statute or the Commission,

or both, shall be unbundled and appear in line item format on

electric bills for all classes of consumers;

6. Open access to transmission and distribution facilities.

Consumer access to alternative suppliers of electricity requires

open access to the transmission grid and the distribution system.

Comparability shall be assured for retail electric energy suppliers

competing with affiliates of entities supplying transmission and

distribution services. The Corporation Commission shall monitor

companies providing transmission and distribution services and take

necessary measures to ensure that no supplier of such services has

an unfair advantage in offering and pricing such services;

7. Obligation to connect and establishment of firm service

territories. An entity providing distribution services shall be

relieved of its traditional obligation to provide electric supply

but shall have a continuing obligation to provide distribution

service for all consumers in its service territory. As part of the

restructuring process firm service territories shall be fixed by a

date certain, if not currently established by law in order to avoid

wasteful duplication of distribution facilities;

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8. Independent system planning committee. The benefits

associated with implementing an independent system planning

committee composed of owners of electric distribution systems to

develop and maintain planning and reliability criteria for

distribution facilities shall be evaluated;

9. Consumer safeguards. Minimum residential consumer service

safeguards and protections shall be ensured including programs and

mechanisms that enable residential consumers with limited incomes to

obtain affordable essential electric service, and the establishment

of a default provider or providers for any distribution customer who

has not chosen an alternative retail electric energy supplier;

10. Establishment of a transition period. A defined period for

the transition to a restructured electric utility industry shall be

established. The transition period shall reflect a suitable time

frame for full compliance with the requirements of a restructured

utility industry;

11. Rates for service. Electric rates for all consumer classes

shall not rise above current levels throughout the transition

period. If possible, electric rates for all consumers shall be

lowered when feasible as markets become more efficient in a

restructured industry;

12. Establishment of a distribution access fee. The task force

shall consider the establishment of a distribution access fee to be

assessed to all consumers in the State of Oklahoma connected to

electric distribution systems regulated by the Corporation

Commission. This fee shall be charged to cover social costs,

capital costs, operating costs, and other appropriate costs

associated with the operation of electric distribution systems and

the provision of electric service to the retail consumer;

13. Recovery of stranded costs. Electric utilities have

traditionally had an obligation to provide service to consumers

within their established service territories and have entered into

contracts, long-term investments and federally mandated co-

generation contracts to meet the needs of consumers. These

investments and contracts have resulted in costs which may not be

recoverable in a competitive restructured market and thus may be

"stranded". Procedures shall be established for identifying and

quantifying stranded investments and for allocating costs and
have entered into

contracts, long-term investments and federally mandated co-

generation contracts to meet the needs of consumers. These

investments and contracts have resulted in costs which may not be

recoverable in a competitive restructured market and thus may be

"stranded". Procedures shall be established for identifying and

quantifying stranded investments and for allocating costs and

mechanisms shall be proposed for recovery of an appropriate amount

of prudently incurred, unmitigable and verifiable stranded costs and

investments. As part of this process, each entity shall be required

to propose a recovery plan which establishes its unmitigable and

verifiable stranded costs and investments and a limited recovery

period designed to recover such costs expeditiously, provided that

the recovery period and the amount of qualified transition costs

shall yield a transition charge which shall not cause the total

price for electric power, including transmission and distribution

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services, for any consumer to exceed the cost per kilowatt-hour paid

on April 25, 1997, during the transition period. The transition

charge shall be applied to all consumers including direct access

consumers, and shall not disadvantage one class of consumer or

supplier over another, nor impede competition and shall be allocated

over a period of not less than three (3) years nor more than seven

(7) years; and

14. Transition costs. All transition costs shall be recovered

by virtue of the savings generated by the increased efficiency in

markets brought about by restructuring of the electric utility

industry. All classes of consumers shall share in the transition

costs.

C. The study of all relevant issues related to electric

industry restructuring shall be divided into four parts, as follows:

independent system operator issues, technical issues, financial

issues and consumer issues. All studies created pursuant to this

section shall be conducted under the direction of the Joint Electric

Utility Task Force. The task force shall direct the Corporation

Commission, the Oklahoma Tax Commission, any other state agency or

consultant as necessary to assist the task force in the completion

of such studies.

1. The Commission shall commence the study of independent

system operator issues no later than July 1, 1997, and provide a

final report to the Joint Electric Utility Task Force no later than

February 1, 1998. Such report shall be in writing and shall make

recommendations as the Commission deems necessary and appropriate

regarding the establishment of an independent system operator in the

State of Oklahoma or the appropriate region.

2. No later than July 1, 1998, the Joint Electric Utility Task

Force shall commence the study of technical issues related to the

restructuring of the electric utility industry. Such study shall

include, but is not limited to, the examination of:

a. reliability and safety,

b. unbundling of generation, transmission and

distribution services,

c. market power,

d. open access to transmission and distribution,

e. transition issues, and

f. any other technical issues the task force deems

appropriate.

A final report shall be completed by the Joint Electric Utility

Task Force no later than October 1, 1999.

3. No later than July 1, 1998, the Joint Electric Utility Task

Force shall commence the study of financial issues related to

restructuring of the electric utility industry. Such study shall

include, but is not limited to, the examination of:

a. rates and charges,

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b. access and transition costs and fees,

c. stranded costs and their recovery,

d. stranded benefits and their funding,

e. municipal financing,

f. cooperative financing,

g. investor-owned utility financing, and

h. any other financial issues the task force deems

appropriate.
limited to, the examination of:

a. rates and charges,

Oklahoma Statutes - Title 17. Corporation Commission Page 167

b. access and transition costs and fees,

c. stranded costs and their recovery,

d. stranded benefits and their funding,

e. municipal financing,

f. cooperative financing,

g. investor-owned utility financing, and

h. any other financial issues the task force deems

appropriate.

A final report shall be completed by the Joint Electric Utility

Task Force no later than October 1, 1999.

4. No later than September 1, 1998, the Joint Electric Utility

Task Force shall commence the study of consumer issues related to

restructuring of the electric utility industry. Such study shall

include, but is not limited to, the examination of:

a. service territories,

b. the obligation to serve,

c. the obligation to connect,

d. consumer safeguards,

e. rates for regulated services,

f. consumer choices,

g. competition,

h. licensing of retail electric energy suppliers, and

i. any other consumer issues the task force finds

appropriate.

A final report shall be completed by the Joint Electric Utility

Task Force no later than October 1, 1999.

D. The Joint Electric Utility Task Force may, if it deems

necessary, by a majority vote of the members combine or modify any

of the studies required by this act. Provided, however, the task

force shall not eliminate any of the issues required to be studied

herein.