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Committee holds HB 1027 after debate over how municipal utilities may price and finance large-load contracts
Summary
Lawmakers reviewed a substitute to HB 1027 that would let municipal authorities sign up to 20-year power contracts with large-load customers and require those customers to cover upfront generation costs. Members delayed action to resolve how the bill defines retail rates and whether it would disadvantage municipal systems in data-center recruitment.
The Senate Regulated Industries and Utilities Committee heard extended testimony on House Bill 1027, a committee substitute that would allow municipal power authorities to enter contracts up to 20 years and require large-load customers to pay specified up-front costs.
Representative Anderson introduced the substitute, saying it extends what had been a 10-year maximum so municipal authorities can amortize investments tied to new generation and remain competitive for very large customers. The substitute also inserts contract provisions intended to protect retail electricity customers, including minimum billing to recover incremental costs, performance and credit protections for retail customers in the event of default, and termination provisions designed to shield retail ratepayers from the consequences of a contract ending.
The bill defines a “large load customer” as a customer with an expected peak demand of 100 megawatts or greater on one or contiguous premises and applies parallel language to municipal and county code because the authority’s membership includes municipalities and one county, the sponsor said.
James Fuller, president and CEO of MAG Power, testified that using retail rates as a baseline in contract language would make it difficult for many of MAG’s 49 participating cities to be competitive for data centers and similar large loads. “If we build a facility and collect more from the ultimate large load customer through the municipal utility, that margin will go to the benefit of all the cities that contribute electricity,” Fuller said, arguing the substitute’s retail-rate phrasing would prevent some cities from participating and could harm MAG’s ability to offer a wholesale product competitive with investor-owned utilities.
Lawmakers focused much of their questioning on the phrase “rate paid by retail customers,” noting that utilities maintain different retail classifications (residential, commercial, industrial) and seasonal or time-of-use elements, and asked whether the bill’s language would effectively require parity with published retail tariffs. Several senators suggested the C and D contract provisions—intended to require large-load customers to pay costs up front—might be more appropriately incorporated into separate, statewide language so the rules would apply uniformly across municipal, cooperative and investor-owned providers.
After more than an hour of questions and industry testimony, the committee agreed to hold action on HB 1027 to give members time to study the substitute language and potential cross‑bill fixes. The sponsor and committee chairs said they expect to revisit the bill at a follow-up hearing later in the week.
What’s next: Committee members postponed a vote and said staff will work with sponsors and stakeholders to refine definitions (including "retail customer") and consider placing any uniform contract rules into broader legislation covering all suppliers.
