06 LC 36 0138S

The House Committee on Public Utilities and Telecommunications offers the
following substitute to HB 1325:

A BILL TO BE ENTITLED
AN ACT

To amend Code Section 46-4-155 of the Official Code of Georgia Annotated, relating to regulation of unbundled services, peaking service, customer services, and interstate capacity assets with regard to the distribution, storage, and sale of gas, so as to provide for definitions; to provide for the requirements upon which the electing distribution company may file strategic infrastructure asset proposals with the Public Service Commission; to provide for the information that must be filed with any strategic infrastructure asset proposal; to provide for a public hearing on the proposal; to provide for a procedure for the Public Service Commission to approve or disapprove such a strategic infrastructure asset proposal; to provide that the Public Service Commission shall not in a subsequent proceeding disapprove any strategic infrastructure assets which were previously approved by the commission; to provide for cost recovery; to provide for legislative findings and declarations; to provide for related matters; to provide for an effective date; to repeal conflicting laws; and for other purposes.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:

SECTION 1.
The General Assembly finds and declares as follows:
(1) The high and rising cost of natural gas has caused financial hardship on homeowners, small businesses, and low-income citizens of Georgia;
(2) The rising demand for natural gas as a clean-burning fuel source coupled with a limited supply of natural gas will continue to boost heating and electricity costs;
(3) Elba Island Liquefied Natural Gas Terminal on the Georgia coast is one of the natiońs key receiving points for imported natural gas;
(4) The provision of an increased diversity of natural gas supplies to Georgia will offset part of the need for supplies from the Gulf of Mexico and will help stabilize or lower the price for natural gas in Georgia, helping to create a favorable energy market for Georgia consumers;
(5) More natural gas capacity and supply is necessary to accommodate economic development and job creation in Georgia;
(6) A favorable energy market in Georgia will aid economic development, help attract new jobs, and help to secure existing jobs;
(7) More competition in delivering natural gas will put a downward pressure on prices which could lead to lower prices for Georgians; and
(8) In order to meet the energy demands of Georgians and the rest of this nation and to benefit the Georgia economy, there is a need to provide means of accessing and delivering natural gas within this state.

SECTION 2.
Code Section 46-4-155 of the Official Code of Georgia Annotated, relating to regulation of unbundled services, peaking service, customer services, and interstate capacity assets with regard to the distribution, storage, and sale of gas, is amended by adding a new subsection (f) to read as follows:
"(f)(1) As used in this subsection, the term:
(A) 'LNG' means liquefied natural gas.
(B) 'Strategic infrastructure asset' means intrastate assets providing access to the imported liquefied natural gas market through the Elba Island LNG Terminal facility on the Georgia coast for firm distribution service to retail customers.
(C) 'Strategic infrastructure asset cost' means costs that include, but are not limited to, feasibility studies, preliminary engineering, facility and system modeling, engineering design and procedure development, permits, utility service extensions, bidding, material and equipment attainment, site preparation, legal services, environmental compliance, utility locating, construction, labor, materials and equipment, project management services, testing, inspections, community outreach, public meetings, land rights attainment, erosion control, land surveys, safety and fire protection, site remediation, and security.
(2) The electing distribution company may file a strategic infrastructure asset proposal with the commission when the construction of such additional assets will provide for at least two of the following:
(A) A lower total proposal cost compared to the cost of the best alternative proposal using only interstate capacity assets to meet its forecast system requirements;
(B) Greater reliability of delivery of gas supply to and within its system for firm distribution service to retail customers;
(C) A more economical gas supply for retail customers by providing access to a greater diversity of gas supply sources; or

(D) The overall best interest of the natural gas consumers in the state.
(3) Any such strategic infrastructure asset proposal shall include such reasonable detail regarding the proposed strategic infrastructure assets as the commission may require including a description of the strategic infrastructure to be constructed, acquired, or modified; an explanation of the need for such strategic infrastructure investment; the projected cost of the infrastructure investment; and the projected schedule for completion.
(4) Not less than 30 days after the filing of a strategic infrastructure asset proposal by an electing distribution company, the commission shall commence a public hearing on the proposal. The electing distribution companýs testimony shall be under oath and shall, with any corrections thereto, constitute the electing distribution companýs affirmative case. At any hearing conducted pursuant to this paragraph, the burden of proof to show that the strategic infrastructure asset proposal meets the requirements of paragraph (2) of this subsection shall be upon the electing distribution company. For the commission to approve any strategic infrastructure asset proposal, it must find that the requirements of paragraph (2) of this subsection are met.
(5) Following such a hearing, the commission shall either approve or deny the strategic infrastructure asset proposal and shall not modify the electing distribution companýs proposal related to such strategic infrastructure assets. Should the commission fail or refuse to issue an order by the ninetieth day after the electing distribution companýs filing which either approves or disapproves the strategic infrastructure asset proposal filed by the electing distribution company, the strategic infrastructure asset proposal filed by the electing distribution company shall thereupon be deemed approved by operation of law.
(6) After the approval of a strategic infrastructure asset proposal, the commission shall not in a subsequent proceeding disapprove the strategic infrastructure assets which were previously approved, and the commission shall provide for cost recovery of such strategic infrastructure assets separate and apart from the electing distribution companýs base rates as more fully described in paragraph (7) of this subsection.

(7) The electing distribution company shall file the estimated cost of any strategic infrastructure asset proposal. Any order approving a strategic infrastructure asset proposal shall include cost recovery for the electing distribution company of the actual cost of the strategic infrastructure assets pursuant to the provisions set forth in this subsection absent a showing of fraud, concealment, failure to disclose a material fact, imprudence, or criminal misconduct. The electing distribution company shall be entitled to recover 100 percent of the actual strategic infrastructure asset costs not to exceed the estimated cost filed with the commission by more than 15 percent. If such actual strategic infrastructure asset cost exceeds the estimated cost filed with the commission by more than 15 percent, then the electing distribution company shall be entitled to recover the amount that exceeds the filed estimate by more than 15 percent only if such costs are shown by the electing distribution company to have been reasonable and prudent. The commission shall provide for cost recovery by a monthly strategic infrastructure charge to the marketers that shall not be placed in and that shall be maintained separate and apart from the base rates of the electing distribution company. Each marketer may identify the strategic infrastructure asset cost as a separate item on a customeŕs monthly bill. Should a marketer elect to identify such charge, the line item shall specifically state the purpose of the charge and said charge shall be collected as provided by law or previous orders of the commission.
(8) The cost of strategic infrastructure assets shall be recovered by the electing distribution company upon the completion of the construction based on the net incremental cost. The commission shall provide for a recovery mechanism that shall be in the form of an incremental charge, separate and apart from the then existing rates of the electing distribution company. The rate shall be determined by calculating the electing distribution companýs net investment (invested capital less accumulated depreciation and accumulated deferred income taxes) multiplied by the pre-tax rate of return plus the incremental operating and maintenance costs associated with the strategic infrastructure assets. The return on investment and depreciation used in the computation of this charge shall be the same as those determined by the commission in the last fully litigated rate case before the commission by the electing distribution company. The cost as estimated of newly proposed strategic infrastructure assets included in a strategic infrastructure asset proposal shall not exceed 25 percent of the electing distribution companýs rate base at the time of the filing of the proposal."

SECTION 3.
This Act shall become effective upon its approval by the Governor or upon its becoming law without such approval.

SECTION 4.
All laws and parts of laws in conflict with this Act are repealed.