COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. No.:         5192-11

Bill No.:          SCS for HCS for HB 2279 w/ SA 1, 2, 3, 6, & 7

Subject:           Utilities: Corporations

Type:              Original

Date:               May 9, 2008

Bill Summary:           Allows an electric supplier to trim, remove, or control trees that threaten the safe and reliable operations of electric service; Provides for scrap metal purchases in this state; Authorizes the Public Service Commission to assess a penalty for violating any order relating to federal natural gas safety standards; Gives the Public Service Commission authority to give permission and approval after the construction or acquisition of any electric plant has been completed in certain counties; Creates a hot weather rule for maintenance of utility service

FISCAL SUMMARY

Numbers within parentheses: ( ) indicate costs or losses.

This fiscal note contains 11 pages.

*Offsetting Revenue and Transfers Out are $0 to Unknown or (Unknown) in FY2010 and FY 2011

☐ Estimated Total Net Effect on All funds expected to exceed $100,000 savings or (cost).

☐ Estimated Net Effect on General Revenue Fund expected to exceed $100,000 (cost).

FISCAL ANALYSIS

ASSUMPTION

Officials from the Office of Secretary of State (SOS) assume many bills considered by the General Assembly include provisions allowing or requiring agencies to submit rules and regulations to implement the act. The SOS is provided with core funding to handle a certain amount of normal activity resulting from each year’s legislative session. The fiscal impact to the SOS office for Administrative Rules for this proposal is less than $2,500. The SOS recognizes this is a small amount and does not expect additional funding would be required to meet these costs. However, SOS also recognizes that many such bills may be passed in a given year and that collectively the costs may be in excess of what the SOS can sustain with their core budget. Any additional required funding would be handled through the budget process.

Officials from the Office of State Courts Administrator state this proposal has no fiscal impact on the Courts.

386.572 - Penalties for violating federal natural gas safety standards

According to officials from the Department of Natural Resources (DNR), while the Federal government is primarily responsible for developing, issuing, and enforcing pipeline safety regulations, the pipeline safety statutes provide for State assumption of the intrastate regulatory, inspection, and enforcement responsibilities under an annual certification. To qualify for certification, a state must adopt the minimum Federal regulations and may adopt additional or more stringent regulations as long as they are not incompatible. A State must also provide for injunctive and monetary sanctions substantially the same as those authorized by the pipeline safety statutes.

Two statutes provide the framework for the Federal pipeline safety program. The Natural Gas Pipeline Safety Act of 1968 as amended (NGPSA) authorizes the U.S. Department of

Transportation (USDOT) to regulate pipeline transportation of natural (flammable, toxic, or corrosive) gas and other gases as well as the transportation and storage of liquefied natural gas (LNG). Similarly, the Hazardous Liquid Pipeline Safety Act of 1979 as amended (HLPSA) authorizes the USDOT to regulate pipeline transportation of hazardous liquids (crude oil, ASSUMPTION (continued)

petroleum products, anhydrous ammonia, and carbon dioxide). Both of these Acts have been recodified as 49 U.S.C. Chapter 601.

The Federal pipeline safety regulations (1) assure safety in design, construction, inspection, testing, operation, and maintenance of pipeline facilities and in the siting, construction, operation, and maintenance of LNG facilities; (2) set out parameters for administering the pipeline safety program; and (3) delineate requirements for onshore oil pipeline response plans. The regulations are written as minimum performance standards. The regulations are published in the Code of Federal Regulations, 49 CFR Parts 190-199.

Oversight assumes that, to the extent any additional natural gas safety penalty monies would be collected, they would be placed in the State School Monies Fund, per §386.600, RSMo, and considered as Total State Revenue. Proceeds to the State School Moneys Fund are distributed to the local school districts, and may result in a deduction in the state General Revenue allocation to fund local school districts in the following year.

§393.108 - Hot weather rule for maintenance of utility service

Officials from the Department of Economic Development - Office of Public Counsel and the Department of Health and Senior Services state this section of the proposal will have no fiscal impact on their respective agencies.

According to the Department of Social Services (DOS), the Family Support Division (FSD) contracts with Missouri Community Action Agencies for eligibility determination and outreach. The agencies currently work with the Public Service Commission and the regulated utilities to provide information and assistance during the "cold weather rule". It is assumed the FSD and the agencies would continue the same partnership with the regulated utilities during the months the "hot weather rule" would be in effect. There is no fiscal impact on the FSD.

According to officials from the Department of Economic Development - Public Service Commission (PSC), this proposal requires a program that involves agency investigation of informal and possibly formal claims of violations of "state statutes, policies and procedures". The PSC receives informal and formal consumer complaints that may involve such claims as violation of a "hot weather rule", and therefore the activities of its consumer services department would be affected. The proposal requires temperature requirements that will involve creation of

a daily log of temperature predictions and the need to establish cooling degree day data and tracking for the purpose of reviewing consumer informal or formal complaints on bill disputes or ASSUMPTION (continued)

discontinuance of service for non-payment. Because the PSC has not had any experience with a hot weather rule and its application or impact on Missourians, PSC officials are using the PSC's experience with the "cold weather rule" as a basis for the state fiscal impact. Accordingly, a "hot weather rule" would likely require at least one additional Consumer Services Specialist II that would handle investigation of consumer complaints with utility and customer, prepare correspondence, and prepare staff reports and testimony in connection with complaints. PSC

officials note that the current caseload backlog has resulted in an age in excess of 30 days per case on average.

Oversight assumes that personnel who handle the "cold weather rule" could perform the duties required during the "hot weather rule" alternate season. If additional personnel are needed, they can be requested through the budget process.

§407.300, 407.301, 407.302, 407.303, 570.055, and 570.056 - Scrap metal purchases

Officials from the Department of Public Safety - Office of the Director and Missouri State Highway Patrol, City of Columbia, Lincoln University, Missouri State University, and University of Missouri assume the proposal will have no fiscal impact on their organizations.

Officials from the Office of Attorney General assume any potential costs arising from this proposal can be absorbed with existing resources.

Officials from the Department of Corrections (DOC) state the DOC cannot predict the number of new commitments which may result from the creation of the offense(s) outlined in this

proposal. An increase in commitments depends on the utilization by prosecutors and the actual sentences imposed by the court.

If additional persons are sentenced to the custody of the DOC due to the provisions of this legislation, the DOC will incur a corresponding increase in operational cost either through incarceration (FY 06 average of $39.43 per inmate per day, or an annual cost of $14,394 per inmate) or through supervision provided by the Board of Probation and Parole (FY 06 average of $2.52 per offender per day, or an annual cost of $920 per offender). Supervision by the DOC through probation or incarceration would result in additional unknown costs to the DOC. Seven (7) persons would have to be incarcerated per fiscal year to exceed $100,000 annually. Due to the narrow scope of this new crime, it is assumed the impact would be less than $100,000 per year for the DOC.

ASSUMPTION (continued)

For the purpose of this proposed legislation, officials at the Office of State Public Defender (SPD) cannot assume that existing staff will provide competent, effective representation for any new cases arising where indigent persons are charged with new crimes relating to the purchase of scrap yards. It will be a new misdemeanor for scrap yards to purchase beer kegs or manhole covers or metal that can be identified as belonging to a political subdivision, electrical cooperative, municipal utility or utility regulated under Chapter 386 or 393, including bleachers, guardrails, signs, street or traffic signals/lights other than from those organizations unless authorized in writing.

It will also be a new misdemeanor for failure to maintain records. It will become a class C felony to steal wire, etc. associated with transmitting telecommunications and a class C felony for anyone stealing property on utility or electrical cooperatives’ property.

Passage of bills increasing penalties on existing crimes, or creating new crimes, requires the SPD system to further extend resources. While the number of new cases (or cases with increased penalties) may be too few or uncertain to request additional funding for this specific bill, the SPD will continue to request sufficient appropriations to provide competent and effective representation is all its cases.

Oversight assumes the SPD can absorb the additional caseload that may result from this proposal.

Officials from the Office of Prosecution Services (OPS) state because the provisions of this proposal creates new criminal laws, the OPS assumes it would have a direct fiscal impact on county prosecutors from an increase in the number of cases referred for prosecution. However,

the OPS is not able to establish an estimate of the additional criminal cases that would be referred to the County Prosecutors for charges.

It is assumed this proposal would not have a significant direct fiscal impact on the OPS.

Oversight assumes costs to County Prosecutors will be absorbed within existing resources.

Officials from the City of Centralia (City) state the amount of deterred theft is speculative. In 2006, the City suffered about $15,000 of wire theft. In 2007, the City suffered about $6,000 in the theft of used transformers. Therefore, the City assumes the proposal may deter the theft of items covered by the proposal, but any potential savings is unknown.

FISCAL IMPACT - Small Business

The proposal will administratively impact small business scrap metal businesses because of more stringent record-keeping requirements.

FISCAL DESCRIPTION

386.572 - Penalties for violating federal natural gas safety standards

This proposal creates penalties for corporations, persons, and public utilities that violate any law, order, decision, decree, rule, direction, demand, or requirement of the Missouri Public Service Commission relating to federally mandated natural gas safety standards. Municipalities that own gas plants are only liable for violations of natural gas safety laws, rules, and orders.

The maximum penalty per violation will be $15,000, and the maximum penalty for multiple violations or a continuing violation of the same rule will be $150,000; beginning January 1, 2015, the maximum penalties will be $20,000 and $200,000; beginning January 1, 2025, the maximum penalties will be $25,000 and $250,000; beginning January 1, 2035, the maximum penalties will be $30,000 and $300,000; and beginning January 1, 2040, the maximum penalties will be $40,000 and $400,000.

FISCAL DESCRIPTION (continued)

§407.300, 407.301, 407.302, 407.303, 570.055, and 570.056 - Scrap metal purchases

This proposal requires purchasers of scrap metal to keep a record of sale including a copy of a federally or state-issued form of identification from the seller, the date and time of delivery,

and the description and weight of all metals. Scrap metal includes any aluminum, copper, brass or bronze wire, cable, pipe, tubing, bar, ingot, rod, fitting, or fastener, or material used for farming purposes. Records are required to be kept for a minimum of 24 months from when the scrap metal was obtained and must be available for inspection by any law enforcement agency. Violations of these provisions are a class A misdemeanor.

Scrap metal dealers are not to purchase or possess metal bear kegs unless the purchase is from the brewer or authorized representative. Violations are a class A misdemeanor punishable only by a fine.

Any person who steals or appropriates, without consent, any wire, electrical transformer, metallic wire associated with transmitting communications, or any device associated with conducting electricity will be guilty of a class C felony. In addition, any person who steals or appropriates, without consent, any property located on the premises of electrical cooperatives or municipal utilities or utilities regulated under chapter 386, RSMo, will be guilty of a class D felony.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.

SOURCES OF INFORMATION

Department of Economic Development

            Public Service Commission

            Office of Public Counsel

Department of Health and Senior Services

Department of Social Services

Office of Prosecution Services

Office of State Public Defender

Office of State Courts Administrator

Office of Attorney General

Department of Corrections

Department of Public Safety

            Office of the Director

            Missouri State Highway Patrol

Office of Secretary of State

            Administrative Rules Division

Cities

            Centralia

            Columbia

Universities

            Lincoln University

            Missouri State University

            University of Missouri

                                                                                                Mickey Wilson, CPA

                                                                                                Director

                                                                                                May 9, 2008