Energy & Environment


Two major bills dealing with natural gas (SB 319 and SB 565) were fiercely debated near the end of the session. Both were adopted by the Legislature only to be vetoed by the Governor after the session ended.

SB 319 (Easley/Beutler): Was a result of a two year effort by interested parties in the natural gas industry to compile a comprehensive bill which would allow the Corporation Commission to investigate and remedy complaints about gathering rates and contract terms and conditions. Its purpose was to prevent natural gas gatherers from charging any fee or requiring any terms and conditions of service which are unfair, unjust, unreasonable and unduly discriminatory. If a complaint were filed with the Commission, they would have the authority, within 120 days, to make a determination based on the evidence presented and order appropriate remedies. (VETOED)

SB 565 (Easley/Rice): Created the Natural Gas Restructuring Act of 1998. This was a hotly debated bill near the end of the session which failed by a narrow margin and eventually was passed to the House after reconsideration. The measure dealt with two distinctive areas of the natural gas industry. (VETOED)

Sections 1-3 of the act dealt with downstream restructuring, meaning the process whereby competition is opened for natural gas service downstream of a citygate where only a public utility company formerly had a monopolistic service. SB 565 directed the statutorily created Natural Gas Policy Commission to study the implications of downstream restructuring and implement restructuring by October 1, 2001, if it deemed such restructuring appropriate. The study created in SB 565 was based largely on the same tenants as the electric industry restructuring studies created by SB 500 last year. A final report is required by December 31, 2000. SB 565 further prohibited the Corporation Commission from implementing downstream restructuring until the Legislature determines such restructuring will benefit consumers and not adversely affect state and local tax revenues.

The other area addressed in SB 565 (Sections 4 and 5 of the act) was restructuring upstream of a citygate. The intent was to encourage competition and promote "light-handed" regulation by the Corporation Commission. The bill directed the Commission to promulgate rules implementing unbundling of natural gas services upstream and to continue to regulate downstream natural gas service while that area of restructuring is being studied. This portion of SB 565 would allow for certain transportation contracts to be unregulated but only if the services were provided under competitive conditions. If an end user, customer or an unsuccessful bidder for a contract filed a challenge with the Commission that competitive conditions did not exist at the time the contract was entered into, the Commission would make a determination based on certain considerations and rule within 90 days whether or not the contract would be subject to Commission regulation.


Other bills enacted include:

SB 888 (Easley/Glover): Modifies the process begun last year with the passage of SB 500 to restructure the electric utility industry. The bill passed out of the Senate and House by wide margins; however, the Governor hesitated to sign it in it's original form due to one section which creates a new Board of Directors for the Grand River Dam Authority. The Governor requested amendments which modify the appointment of two Board members, appointed by the President Pro Tempore of the Senate and the Speaker of the House of Representatives. The bill was called back from the Governor's desk (S.C.R. 74) and sent back for further conference to amend the two appointments. The Governor agreed to language which allowed the Pro Tempore and the Speaker to submit a list of three nominees from which the Governor could choose. If the Governor did not choose any of those nominees, the Governor could request a list of three different nominees.

Important changes included in SB 888 are a moratorium placed on municipalities which prevent them from condemning electric utility facilities owned by either investor-owned utilities or rural electric cooperatives and using such facilities to provide electric service; moving up the dates for the completion of the studies required by SB 500 to October 1, 1999; putting the Joint Electric Utility Task Force in control of directing all the studies; and removing what the author referred to as the "poison pill" of SB 500, which would have prevented retail competition unless a uniform tax policy was in place prior to the target date of July 1, 2002. SB 888 simply requires that a uniform tax policy be established by that date.

SB 986 (Easley/Rice): Provides for the complete consolidation of employees into the Department of Environmental Quality by transferring 31 FTE positions from the Tulsa and Oklahoma City/County Health Departments. These employees are responsible mainly for air quality functions within the statutory jurisdiction of the DEQ. The bill was amended to allow for the transfer of two FTE from City/County Health Department to the Department of Agriculture for the purpose of consolidating the milk inspection functions of the Dept. of Agriculture. This measure completes the consolidation process of the environmental functions of the City/County Health Departments into the DEQ.

Another section of the bill provides for companies making capital investments in equipment for the purpose of manufacturing new products or deriving energy benefits from waste tires to recover funds for such equipment from the Waste Tire Indemnity Fund. SB 986(1) raises the limit from 50% to 100% based on a rate of $20.00 per ton of waste tire usage.

The bill also transfers responsibility for restaurants in Oklahoma and Tulsa County to the State Department of Health.


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