Sec. 1. 35-A MRSA §3503, sub-§5, śC, as amended by PL 1993, c. 512, §3, is further amended to read:

C. For consumer-owned electric utilities, except rural electrification cooperatives:

(1) To provide each year a sum equal to not less than 2% nor more than 10% of the term indebtedness represented by the issuance of bonds created or assumed by the utility, which sum must be turned into a sinking fund and kept to provide for the extinguishment of term indebtedness. The money set aside in this sinking fund and all interest accrued to this fund must be devoted to the retirement of the term obligations of the utility and may be invested in such securities as savings banks in the State are allowed to hold;

(2) To provide for annual principal payments on serial indebtedness created or assumed by the utility; and

(3) To provide for a contingency reserve fund, 1/2 of which may be used for capital purposes, to reflect up to a 5% 25% addition to yearly revenues over the amount required to operate the electric utility, not including purchased power supply costs, if any. Any surplus in excess of 5% this 25% must be used to offset future revenue requirements in the setting of rates. Any interest generated on these funds must be deposited into the contingency reserve fund. The balance in the contingency reserve fund at the close of the utility's fiscal year may not exceed 5% 25% of the yearly revenues over the amount required to operate the electric utility, not including purchased power supply costs, if any; and

SUMMARY

This bill increases the contingency reserve fund percentage for consumer-owned electric utilities. After March 1, 2000, electric utilities will no longer have power supply costs included as part of their operating costs. Increasing the allowed percentage from 5% to 25% is intended to result in the consumer-owned electric utilities being allowed to collect the same level for the contingency reserve fund as is currently collected.