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F I S C A L I M P A C T R E P O R T

SPONSOR B Lujan

DATE TYPED 3/3/05

HB 1088

SHORT TITLE Definition of “Public Utility” or “Utility”

SB

ANALYST Wilson

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$315.0 Recurring General Fund

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

Unknown

Unknown Recurring

General Fund

SOURCES OF INFORMATION

LFC Files

Responses Received From

Energy, Minerals & Natural Resources (EMNRD)

Public Regulation Commission (PRC)

SUMMARY

Synopsis of Bill

House Bill 1088 amends the Public Utility Act (PUA). The definition of “public utility” is

amended so that an entity that manufactures, stores, sells or distributes liquefied petroleum (LP)

gas in enclosed containers or tank truck for use by others than consumers who receive their sup-

ply through any pipeline system operating under municipal authority will be considered a public

utility. Existing law does not now treat such entities involved in LP gas activities as public utili-

ties.

House Bill 1088 -- Page 2

Significant Issues

HB 1088 will provide the PRC authority over entities manufacturing, storing, selling, or distrib-

uting liquefied petroleum (LP) gas in enclosed containers or tank truck for use by others than

consumers who receive their supply through any pipeline system operating under municipal au-

thority. Such entities and their activities will be regulated under the PUA, including rates

charged for LP gas deliveries. Rural electric cooperatives offering LP gas services will be in-

cluded among those regulated entities.

Retailers such as grocery stores or gas stations that sell bottled propane and for whom propane

sales are a side line may opt to cease sales rather than come under the PRC’s regulation under the

Public Utility Act. Besides setting prices for their product, the PRC will be involved in approv-

ing financing for the retailer.

Even though the propane market is technically competitive, current industry practice regarding

sale and ownership of storage tanks results is an impediment to consumers having effective

choice of suppliers, a market feature necessary for a truly competitive market. Regulation under

the PUA by the PRC will provide an alternative pricing mechanism.

FISCAL IMPLICATIONS

Propane and butane manufacturers, distributors, and retailers will pay Inspection and Supervision

Fees (I&S) to the PRC for deposit into the general fund. The I&S fee rate is .506% of gross re-

ceipts from business transacted in New Mexico. Gross receipts from propane and butane are not

known at this time.

Additional staffing for the PRC is estimated to include one attorney, 2 economists and one engi-

neer. Personal services and overhead are estimated at $315 thousand per year. Contractual ser-

vices associated with a rulemaking are estimated at $10 thousand.

ADMINISTRATIVE IMPLICATIONS

The PRC will conduct a rulemaking to develop procedures for collecting and presenting data

necessary for price and quality of service regulation of the propane industry.

DW/sb:lg