2007 Legislation
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HOUSE BILL NO. 30 – Cities, electric generatn projects


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Bill Status

H0030.................................by ENVIRONMENT, ENERGY AND TECHNOLOGY
CITIES - ELECTRIC GENERATION - Adds to existing law to authorize cities to
participate as joint owners or power purchasers in joint electric
generation and transmission projects; and to provide required terms and
provisions for participation agreements and related matters.
01/19    House intro - 1st rdg - to printing
01/22    Rpt prt - to Env
01/25    Rpt out - rec d/p - to 2nd rdg
01/26    2nd rdg - to 3rd rdg
01/31    3rd rdg - PASSED - 67-0-3
      AYES -- Anderson, Andrus, Barrett, Bayer, Bedke, Bell, Bilbao, Black,
      Bock, Boe, Bolz, Brackett, Bradford, Chadderdon, Chavez, Chew, Clark,
      Collins, Crane, Durst, Edmunson, Eskridge, Hagedorn, Hart, Harwood,
      Henbest, Henderson, Jaquet, Killen, King, Kren, Labrador, Lake,
      LeFavour, Loertscher, Luker, Marriott, Mathews, McGeachin, Mortimer,
      Moyle, Nonini, Pasley-Stuart, Patrick, Pence, Raybould, Ring, Ringo,
      Ruchti, Rusche, Sayler, Schaefer, Shepherd(2), Shepherd(8), Shirley,
      Shively, Smith(30), Smith(24), Snodgrass, Stevenson, Thayn, Trail,
      Vander Woude, Wills, Wood(27), Wood(35), Mr. Speaker
      NAYS -- None
      Absent and excused -- Block, Nielsen, Roberts
    Floor Sponsor - Eskridge
    Title apvd - to Senate
02/01    Senate intro - 1st rdg - to St Aff
02/09    Rpt out - rec d/p - to 2nd rdg
02/12    2nd rdg - to 3rd rdg
02/16    3rd rdg - PASSED - 35-0-0
      AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Burkett,
      Cameron, Coiner, Corder, Darrington, Davis, Fulcher, Gannon, Geddes,
      Goedde, Hammond, Heinrich, Hill, Jorgenson, Kelly, Keough, Langhorst,
      Little, Lodge, Malepeai, McGee, McKague, McKenzie, Pearce,
      Richardson, Schroeder, Siddoway, Stegner, Stennett, Werk
      NAYS -- None
      Absent and excused -- None
    Floor Sponsor - McKenzie
    Title apvd - to House
02/19    To enrol
02/20    Rpt enrol - Sp signed
02/21    Pres signed
02/22    To Governor
02/23    Governor signed
         Session Law Chapter 28
         Effective: 02/23/07

Bill Text

  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   First Regular Session - 2007
                              IN THE HOUSE OF REPRESENTATIVES
                                     HOUSE BILL NO. 30
  1                                        AN ACT
  8    Be It Enacted by the Legislature of the State of Idaho:
  9        SECTION 1.  That Chapter 3, Title 50, Idaho Code,  be,  and  the  same  is
 10    hereby  amended by the addition thereto of a NEW SECTION, to be known and des-
 11    ignated as Section 50-342A, Idaho Code, and to read as follows:
 13    hereby determined and declared that securing long-term electric generation and
 14    transmission resources at cost-based rates is  essential  to  the  ability  of
 15    municipal utilities to provide reliable and economic electric services at sta-
 16    ble prices to the consumers and communities they serve and is essential to the
 17    economy  and  the  economic development of their communities and to the public
 18    health, safety and  welfare.  It is further determined and  declared  that  in
 19    order to facilitate the development of such cost-based resources, it is neces-
 20    sary  and desirable that municipal electrical utilities have sufficient flexi-
 21    bility and statutory authority to pay  the  ordinary  and  necessary  expenses
 22    associated with the operation and maintenance of such cost-based resources.
 23        (2)  When  used in this section the following terms shall have the follow-
 24    ing meanings:
 25        (a)  "Joint electric facilities" means all works, facilities and  property
 26        necessary  or  useful  in the generation or transmission of electric power
 27        and energy.
 28        (b)  "Participants" means a city and the other parties to a  participation
 29        agreement, including municipalities or public agencies of other states who
 30        have  authority  to  own,  construct,  develop  and operate joint electric
 31        facilities under the laws of such state.
 32        (c)  "Participation agreement" means:
 33             (i)   An agreement providing for the joint ownership and operation of
 34             joint electric facilities; or
 35             (ii)  A long-term power purchase agreement providing for the right to
 36             receive a share of the capacity or output of joint  electric  facili-
 37             ties at cost-based rates.
 38        (3)  In  order  to  obtain  long-term electric generation and transmission
 39    resources at cost-based rates, a city that owns and operates a municipal elec-
 40    tric utility system may acquire an undivided ownership interest in, or a  con-
 41    tractual  right to the capacity, output or services of, joint electric facili-
 42    ties under a participation agreement with  one  (1)  or  more  investor-owned,
 43    cooperative  or municipal utilities or with other entities engaged in the gen-
  1    eration or transmission of electricity.  Prior to entering into any participa-
  2    tion agreement, the governing body of the city shall consider:
  3        (a)  The city's long-term power supply and transmission requirements;
  4        (b)  The efficiencies and economies of scale expected to  be  achieved  by
  5        participating  with  others  in  the  acquisition or construction of joint
  6        electric facilities;
  7        (c)  The estimated cost, commercial operation date and useful life of  the
  8        joint electric facilities;
  9        (d)  The  financial,  regulatory and technical feasibility of constructing
 10        and operating such joint electric facilities; and
 11        (e)  The availability, reliability and cost of existing or alternate power
 12        supply and transmission resources.
 13    In order to facilitate such consideration, the city  may  retain  engineering,
 14    financial  or other consultants to provide advice and recommendations concern-
 15    ing such long-term power supply or transmission facilities and in such  event,
 16    all  written  reports  prepared  by such consultants shall be made a matter of
 17    record and be available to the public in accordance with the provisions of the
 18    Idaho public records act.
 19        (4)  Each participation agreement shall include provisions regarding:
 20        (a)  The specific joint or undivided ownership interests of  the  partici-
 21        pants  in the joint electric facilities or the specific contractual rights
 22        of the participants to the capacity, output or services of the joint elec-
 23        tric facilities, any restrictions on the  right  of  the  participants  to
 24        withdraw from participation in the operation of the joint electric facili-
 25        ties  or  restrictions  upon  transfer  or  partition of such interests or
 26        rights and the method for allocating the capacity or output of  the  joint
 27        electric facilities among the participants;
 28        (b)  The  creation  of a management committee comprised of representatives
 29        of the participants which shall be responsible for the governance  of  the
 30        acquisition,  construction and operation of the joint electric facilities,
 31        and provisions granting each participant voting rights proportional to its
 32        percentage  entitlement to the output or capacity of such  joint  electric
 33        facilities;
 34        (c)  The  acquisition,  construction  and  operation of the joint electric
 35        facilities and the appointment of construction and operation managers  and
 36        agents  and the employment of personnel in connection with the joint elec-
 37        tric facilities, which may include provisions for the  indemnification  of
 38        such managers, agents and personnel;
 39        (d)  The  methods for financing the costs of acquisition, construction and
 40        operation of the joint electric facilities, which may  include  provisions
 41        obligating  or enabling each participant to finance its proportional share
 42        of such costs, based on its ownership interest in or contractual rights to
 43        the joint electric facilities;
 44        (e)  The allocation of the costs of acquisition, construction  and  opera-
 45        tion  of the joint electric facilities among the participants proportional
 46        to the percentage entitlement to the output  or  capacity  of  such  joint
 47        electric  facilities  and  the specific obligations of the participants to
 48        pay such costs, which may include a provision obligating each  participant
 49        to  pay its respective share of all costs of the joint electric facilities
 50        regardless of whether such facilities are acquired, completed, operable or
 51        operating and notwithstanding the suspension or reduction of the capacity,
 52        output or services of the joint electric facilities for any reason;
 53        (f)  The remedies upon a default by any participant in the performance  of
 54        its  obligations  under  the  participation agreement, which may include a
 55        provision obligating or enabling the other participants to succeed to  all
  1        or  a  portion of the ownership interest or contractual rights and obliga-
  2        tions of the defaulting participant;
  3        (g)  The liabilities of the participants, which shall be several  and  not
  4        joint  and  no  participant  shall be obligated for the acts, omissions or
  5        obligations of any other participant; and
  6        (h)  The  amendment  and  termination  of  the  agreement,  and  for   the
  7        decommissioning  of  the  joint electric facilities and the funding of the
  8        costs thereof.
  9        (5)  A city may finance its proportionate share of the  acquisition,  con-
 10    struction  and  operation costs of joint electric facilities through the issu-
 11    ance of its bonds as provided by law or through  financing  arrangements  with
 12    the Idaho energy resources authority under chapter 89, title 67, Idaho Code.
 13        SECTION  2.  SEVERABILITY.  The provisions of this act are hereby declared
 14    to be severable and if any provision of this act or the  application  of  such
 15    provision  to  any  person or circumstance is declared invalid for any reason,
 16    such declaration shall not affect the validity of the  remaining  portions  of
 17    this act.
 18        SECTION  3.  An  emergency  existing  therefor,  which emergency is hereby
 19    declared to exist, this act shall be in full force and effect on and after its
 20    passage and approval.

Statement of Purpose / Fiscal Impact

                        STATEMENT OF PURPOSE

                             RS 16670

           Authorizing Cities to Participate as Owners
     In Joint Electric Generation and Transmission Projects

There are nine cities in Idaho that provide electric service
to meet the needs of citizens and businesses within the municipal
boundaries. This Act authorizes those cities to sign long-term
power supply contracts to secure reliable and affordable
electricity for their citizens, rather than relying upon more
volatile market-based power supply contracts.

Idaho Consumer-Owned Utilities need to secure stable, long
term electric power supplies that will allow these utilities to
meet load growth in their respective service territories. Some
utilities will choose to meet future load growth with a new kind of
contract from the Bonneville Power Administration which provides a
form of beneficial ownership in the resource. Others may
participate with other utilities in development and construction of
jointly owned power projects in order to meet their future load
growth. In either event, in order to finance and enter into such
contracts, consumer-owned utilities must have clear statutory
authority to enter into these BPA contracts and power supply
contracts for jointly owned facilities.

Current Idaho law is unclear whether municipalities have
authority to purchase an interest in a jointly owned project or
whether their authority is merely limited to ownership of wholly
owned facilities. Unfortunately wholly owned projects are no longer
economically feasible or otherwise available, therefore forcing
municipalities to purchase power on the volatile open market. This
bill eliminates that statutory ambiguity and provides municipal
governments with an alternative to volatile market-based power
supply contracts.

                          FISCAL IMPACT
This legislation will have no fiscal impact on the state.

                       CONTACTS & SPONSORS
Senator Bart Davis
Senator Curt McKenzie
Representative George Eskridge
Representative Eric Anderson

Ron Williams        Attorney at Law                         344-6633
Ken Harward         Association of Idaho Cities             344-8594

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