FISCAL NOTE

Date Requested: January 22, 2019
Time Requested: 01:09 PM

2062	Introduced	HB2589
Agency:	Public Service Commission
CBD Number:	Version:	Bill Number:	Resolution Number:
CBD Subject:	Public Service Commission

FUND(S):

Public Service Commission Utilities Fund 8623

Sources of Revenue:

Special Fund

Legislation creates:

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

Summarize in a clear and concise manner what impact this measure will have on costs and revenues of state government. House Bill 2589 proposes partial deregulation of the electric industry. It is in conflict with existing W.Va. Code §24-2-18, referred to as the “Electric Deregulation Bill.” The prior law passed in 1998 required a comprehensive analysis in subsection (a)(1) by the Commission to ensure that “reliable electric service should continue to be available to all customers at reasonable rates and on reasonable terms and conditions.” This bill proposes a narrow carve-out for a smaller group of electric customers. Currently the two major electric companies in W.Va. own generation and ratepayers are required to pay the costs of owning, operating and maintaining these generating coal plants. If some electric customers are permitted to leave the electric companies and acquire capacity from a different non-utility source, rates will go up for the remaining electric customers. The prior Electric Deregulation Bill included a requirement for the Commission deregulation plan to be submitted to the Legislature for review and issuance of a “concurrent resolution, approv[e]ing or reject[ing] the deregulation plan.” A Deregulation Plan was submitted to the Legislature but never authorized for implementation because of the need for additional tax changes. The Deregulation Plan did not resolve issues associated with the Plan impact on tax revenue for local B&O assessed on the local electric utility at 4%- as well as excise tax by municipalities on consumers of electricity up to 2%. House Bill 2589 also does not address these significant tax implications for the State and municipalities. The costs and financial impacts of House Bill 2589 are broad, including: 1.A shifting of generation costs resulting in increased electric rates for the customers that continue to obtain generation from the electric companies. 2.Undetermined loss of Municipal B&O tax revenue. 3.Undetermined loss of Municipal excise tax revenue. 4.No provision for PSC assessment of the solar generating entities that will file certificates pursuant W.Va. Code §24-2-11. Therefore language including authority for the Commission to assess an application fee should be included to be paid to the PSC to offset the cost of reviewing these certificates. The fee would be similar to the fee authorized in W.Va. Code §24-2-11c permitting the Commission to establish in a rulemaking a fee to offset its costs to review Siting certificates for certain electric generating facilities or material modifications thereof since 2003. The Commission Rules governing Siting Certificates for Exempt Wholesale Generators, 150 C.S.R. 30-4 provides for an application fee equaling the lesser of $500.00 per megawatt or $200,000.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2019 Increase/Decrease (use"-")	2020 Increase/Decrease (use"-")	Fiscal Year (Upon Full Implementation)
1. Estmated Total Cost	0	0	0
Personal Services	0	0	0
Current Expenses	0	0	0
Repairs and Alterations	0	0	0
Assets	0	0	0
Other	0	0	0
2. Estimated Total Revenues	0	0	0

Explanation of above estimates (including long-range effect):

Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years. *The PSC will be required to dedicate existing engineering, financial and legal professional staff to review the solar generation project certificates. Language authorizing the Commission to assess an application fee to be paid to the PSC should be included to offset the cost of reviewing these certificates. The fee would be similar to the fee authorized in W.Va.Code §24-2-11c permitting the Commission to establish by rule a fee to offset its costs to review Siting certificates for certain electric generating facilities or material modifications thereof. The Commission Rules governing Siting Certificates for Exempt Wholesale Generators, 150 C.S.R. 30, Rule 4 provide for an application fee equaling the lesser of $500.00 per megawatt or $200,000.

Memorandum

Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form. As written, House Bill 2589 proposes partial deregulation for small groups of electric customers. This partial deregulation will shift costs to existing customers and increase electric rates.

Person submitting Fiscal Note: Cheryl A. Ranson
Email Address: cranson@psc.state.wv.us