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8/6/2019 ALEC Utility Construction Review Act
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Part VII: Environment, Energy and Natural Resources WUTILITY
CONSTRUCTION REVIEW ACT
ALECs models Utility Construction Review Act is designed to
ensure adequate and reliable e lectric powersupply at the
availability of a reasonable cost through reducing risks and
uncertainties from the rate reviewprocess and encourage utilities
to provide new capacity. Key components of the Act include: a
provision forcertificate review of electric power plants under
construction and investment recovery under certaincircumstances and
a provision for construction progress reports.Model
Le@slationSection 1. {Short Title.} This act shall be known and may
be cited as the Utility Construction Review Act.Section 2.
{Legislative findings and declarations.} The Legislature finds and
declares that:(A) An adequate and reliable electric power supply,
available at a reasonable cost to the residents,commerce, and
industry of the state is necessary to maintain both a healthy
economic climate in the state andthe general well-being of its
residents; and(B) To better assure the required financing for those
new electric generating facilities approved to meetincreased
demand, the procedure for regulatory review of construction costs
must be equitable, predictable,and orderly.Section 3.
(Definitions.} The following words and phrases when used in this
act shall have the meaningsgiven to them in this section unless the
context clearly indicates otherwise:(A) Certificate. The
certificate of public convenience. and necessity (or insert the
appropriate priorauthorization by the commission required for the
utility to begin facility construction).W Commission. The {insert
appropriate statepublic utility commission}.CC) Facility. An
electric generation facility regulated by the commission.0 Utility.
Any electric generating utility allowed by state law to cam a
regulated return on itsinvestment.Section 4. {Certificate review
and investment recovery.)(A) Commission review. When, in the
opinion of the commission, changes in the estimate of probable
futuregrowth o f the use of electricity so indicate, the commission
shall commence a review of any certificatepreviously granted to
determine whether the. public convenience and necessity continues
to require thefacility under construction. If the commission finds
that completion of the facility under construction is nolonger in
the public interest, the commission may modify or revoke the
certificate.(B) Investment recovery. If the public utility cancels
construction of the facility as a result of themodification or
revocation o f the certificate, it may recover, over a reasonable
period of time, through rates,absent fraud, concealment, or gross
mismanagement, the amount of its investment in that facility, along
witha reasonable return on the unamortized balance. Recovery may
not be challenged on the basis ofassumptions regarding probable
future growth of the use of electricity.Section 5. (Construction
progress reports.](A) Reporting requirements. The commission shall,
at the request of the public utility, maintain an ongoingreview o f
facility construction as it proceeds. The applicant shall submit
each year during construction, or at
Volume II: Sourcebook ofAmerican State Legislation I995 72
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Part VII: Environment, Energy and Natural Re.wwces nsuch other
periods as the Commission and the public utility mutually agree, a
progress report and anyrevisions in the cost estimates for the
construction.@) Prohibition of subsequent challenges. If the
commission approves the consrmction and the cost ofthe portion of
the facility under review, that approval forecloses subsequent
challenges to the inclusion ofthat portion of the facility in the
public utilitys rate base on the basis of excessive cost or
inadequate qualitycontrol.63 Investment recovery. If the commission
disapproves of all or part of the construction or cost of
theportion of the facility under review, the commission may modify
or revoke the certificate. If the publicutility cancels
construction of the facility as a result of the modifications or
revocation of the certificate, thefacility may recover, over a
reasonable period o f time through rates, absent fraud,
concealment, or grossmismanagement, the amount of its investment in
the facility along with a reasonable return on theunamortized
balance, to the extent the construction and the cost were approved
previously by thecommission.Section 6. (Severability
clause.}Section 7. @epealer clause.}Section 8. wffeetive date.}
Volume II: Sourcebook of American State Legislation I995 73
