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Show THE OGDEN VALLEY NEWS Page 18 Volume III, Issue I November 1, 2000 What’s Wrong with H.B. 320 and is it Being Fixed? From UTAH LEGISLATIVE WATCH What’s Wrong with H.B. 320? This bill was largely drafted by Questar, the natural gas monopoly that provides gas to many Utahns. No consumers were consulted in the drafting of this legislation and few were even given the opportunity to speak against passage of this bill. It was passed by the Utah Legislature in the 2000 session and was allowed to become law without Governor Leavitt’s signature. It will become effective in July 2001. House Bill 320 is not about streamlining utility regulation, eliminating waste and inefficiency or facilitating competition, as Questar and the Governor contend. It is a radical and sweeping change in utility regulation that encourages backroom settlements without public input. There is no streamlining or elimination of waste or inefficiency brought about by implementing this legislation. There will be no saving to the state and consumers will be the poorer for it. The Committee of Consumer Services (CCS) has helped save consumers hundreds of millions of dollars through rate reductions and the prevention of rate increases. In one instance, the CCS was solely responsible for a $60 million rebate for electric ratepayers. The total budget for the Committee since its inception in 1977 through last year is approximately $12 million. Therefore, with just this one rebate, the Committee has saved ratepayers $48 million above its total operating costs since 1977. This is not government waste and inefficiency. Not only does H.B. 320 not facilitate competition, one competitor testified that it was anti-competitive. Competitors would not want to invest to compete in Utah, because this bill tilts the advantage to the incumbent utility. It is clearly impossible to foster a competitive environment if the utility has such an advantage. Specific Problems with H.B. 320: It eliminates the Committee of Consumer Services. The CCS currently represents residential and small commercial consumers of utility service. It would be eliminated. The Division of Public Utilities would be merged with the Committee and renamed and charged with balancing the interests of the utility with those of the consumers. It would also be responsible for representing the interests of residential and small commercial consumers. It is not possible for this new office to be an effective, independent advocate for consumers under the requirement that it balance their interests with those of the utility. It allows rates to be changed without public hearings. This legislation encourages the Public Service Commission to enter into discussion with a utility absent other public participation, and to negotiate rate increases rather than allow all parties to present evidence on which the Commission’s decision must be based. It makes it easier for utilities to “justify” rate increases. Many provisions of this legislation would change the standards of evidence the utility needs to meet to increase rates. For example, the utility would simply be able to pass costs of an affiliate through to customers without having to show those costs were justifiable. This would provide an enormous loophole for utilities. It would be up to others to obtain information showing that the charges were not justified. With the elimination of the CCS, there would be no agency charged with being our advocate who would obtain the information to contest unwarranted charges of an affiliate. Other problems. There are a number of other problems with this legislation, including changing the designation of the assessment on the gross receipts of the utility from a fee to a tax. This fee pays the cost of the Commission and other regulatory bodies and changing to a tax may have numerous unintended consequences. The bill would also allow single-issue ratemaking (giving utilities the opportunity to increase rates when costs of one item go up without having to show that no other costs have gone down). Except for volatile costs (such as fuel or energy), no state allows utility rates to be changed when the cost of a single item changes. Is the Legislature fixing H.B. 320? The answer is a resounding NO. Governor Leavitt promised that the legislature would negotiate with consumer groups to correct the problems with H.B. 320 before its effective date next summer. A group of legislators met with consumer groups, utility representatives and regulators in July and agreed on broad conceptual issues, including the restoration of an independent consumer advocate, the Committee of Consumer Services. On October 2, 2000, legislators provided new draft legislation intended to reflect the agreement from the July meeting. However, consumers do not feel the new draft to replace H.B. 320 implemented the agreement that was reached. While some legislators have said they will take input from others and may make changes to this language, there are no guarantees that what is agreed to now will be supported or passed in the 2001 Legislative session. THIS IS NOT NEGOTIATION. These legislators cannot bind the next Legislature. If we accept these discussions as real negotiations and allow ourselves to be silenced by promises on which these legislators can’t deliver, consumers could easily lose all protection in utility regulation. And the utilities have no incentive to negotiate at all. They got what they wanted in H.B. 320 and if it is not repealed or changed, H.B. 320 will go into effect in July 2001. The new draft to replace H.B. 320 is totally unacceptable. It does not reflect the agreement reached in the July meeting. One of the main concerns about H.B. 320 was the elimination of the Committee of Consumer Services. The July agreement was to restore and strengthen the independence of the HB320 cont. on page 19 |