• The proposed amending language provides that by January 1, 2002, the SCC shall promulgate regulations regarding minimum periods, if any, that customers shall be obligated to receive service from their incumbent electric utilities or from default service providers after having obtained service for a period of time from other competitive suppliers of electric energy.

• The proposal repeals the current language and substitutes in its place provisions relating to implementing competition for billing and metering services. It provides that beginning January 1, 2002, distributors will be required to offer consolidated billing service to suppliers, aggregators, and retail customers, and licensed suppliers and aggregators will be permitted to bill customers separately for their services, subject to requirements established by the SCC. Beginning January 1, 2003, licensed suppliers and aggregators may offer consolidated billing service to distributors and retail customers. The SCC may delay implementation of competitive billing services to retail customers for up to one year if necessary to resolve issues of billing accuracy, timeliness, quality, consumer readiness, or adverse effects on competition.

• The proposal provides that the SCC shall approve the provision of competitive metering services by licensed providers for large industrial and large commercial customers of investor-owned distributors beginning January 1, 2002, and for residential and small business customers of investor-owned distributors beginning January 1, 2003, as determined to be in the public interest and consistent with specified criteria, including consumer and technical readiness, safety, reliability, and quality. Upon the reasonable request of a distributor, the SCC shall delay the provision of competitive metering service in such distributor's service territory until January 1, 2003, for large industrial and large commercial customers, and after January 1, 2004, for residential and small business customers.

• The proposal further authorizes the SCC to promulgate rules and regulations necessary to implement competitive billing and metering services, including licensing requirements for billing and metering service providers. Incumbent electric utilities shall be required to coordinate with licensed billing and metering providers.

• Notwithstanding capped rate provisions, the SCC shall allow a distributor to recover its costs directly associated with the implementation of billing or metering competition through a tariff for all licensed suppliers, but not those costs that would be incurred in any event as part of restructuring. The SCC will determine the most appropriate method for recovering such costs. The SCC also will adjust the rates for any non-competitive services provided by a distributor so that the rates do not reflect costs associated with or properly allocable to the competitive service.

• Coops and municipal electric utilities will be exempt from the provisions of this section unless they offer competitive electric energy supply to retail customers in the service territory of any other Virginia incumbent electric utility. The SCC, nevertheless, may permit any coop or municipal electric that pursues such competitive activity to maintain the exemption upon a demonstration of good cause.

• The proposal elaborates upon the current provisions and clearly establishes that rates for default service after the capped rate period are to be based on competitive market prices for electric generation services. Amendments provide that initially and periodically, the SCC shall conduct a bidding process and, upon a finding that the public interest will be served, designate one or more willing and suitable providers of default service. If a bidding process fails to produce willing and suitable providers, the SCC may require a distributor to provide default service for a specified period of time and at rates established according to provision of this section.

• Under the proposed amendments, the rates for default service provided by a distributor during the capped rate period shall equal the distributor's capped rates. After the capped rate period, the rates for default services shall be determined by the SCC, but shall be based on competitive market prices for electric generation services. In determining the rates, terms, and conditions for default service, the SCC shall also take into account provider characteristics and qualifications, such as experience, safety, reliability, access to energy resources necessary to serve customers, etc.

• A distributor that is designated to provide default service may submit to the SCC a plan for procuring electric generation services necessary to meet its default service provider obligations. The SCC will approve the distributor's plan if the Commission determines that the procurement of generation capacity and energy under the plan is adequately based on the prices of capacity and energy in competitive regional electricity markets. The SCC may modify a distributor's plan only with the concurrence of the distributor or it may reject the plan. In the absence of an approved plan, the SCC will establish rates for the generation component of default services, again, based on the prices of capacity and energy in competitive regional electricity markets. In either circumstance, the SCC shall consider, among other factors, the "liquidity and price transparency" of such markets and the reasonable accessibility of such markets to the RTE to which the distributor belongs. In implementing these provisions, the SCC also shall consider default service customers' need for rate stability and protection from unreasonable rate fluctuations.

• Finally, the proposed amendments specify that an electric coop's rates for providing default service in its service territory shall be the coop's capped rates during the capped rate period and shall be based upon the coop's prudently incurred cost thereafter.

• The proposed amendments clarify that with regard to the imposition of the condition specified above, any election to make the "equivalent" of an incumbent electric utility's generation assets available for service at capped rates or for default service, shall be made by the incumbent electric utility and be subject to SCC approval based on adequately meeting the public interest. The proposal further provides that any generation asset sold, transferred, or otherwise disposed of by the incumbent electric utility with SCC approval shall not be further sold, transferred, or otherwise disposed of without additional SCC approval during the capped rate period and, if applicable, during any period the distributor serves as default provider.

• In addition, the proposal reiterates that the SCC shall have no authority to regulate, including on a cost of service basis, the price at which generation assets or their equivalent are made available for default service purposes, and that rates for the provision of default service by a distributor are to be determined consistent with the provisions of § 56-585.

• The amendment to this section specifies that, in addition to working with the SCC on the phase-in of retail competition, the Legislative Transition Task Force also shall "seek to ensure effective competition in the Commonwealth as soon as practical." The proposal also provides that the Task Force shall continue to serve until December 31, 2008, rather than July 1, 2005.

• The proposal includes adding a new section, §56-596, relating to measures and policies intended to advance competition. The new section specifies that in all relevant proceedings pursuant to this Act, the SCC shall take into consideration the goals of advancement of competition and economic development in the Commonwealth. In addition, the SCC shall report annually to the Legislative Transition Task Force and the Governor on the status of competition in the Commonwealth and its recommendations to facilitate effective competition in the Commonwealth as soon as practical. This report shall include any recommendations of actions to be taken by the General Assembly, SCC, electric utilities, suppliers, generators, distributors and regional transmission entities that it considers to be in the public interest. The recommendations shall include actions regarding the supply and demand balance for generation services, new and existing generation capacity, transmission constraints, market power, suppliers licensed and operating in the Commonwealth, and the shared or joint use of generation sites.

• In addition to duties of the Legislative Transition Task Force already specified in §56-595.C, the Task Force shall report annually to the General Assembly and the Governor on the status of competition in the Commonwealth and its recommendations to facilitate effective competition in the Commonwealth as soon as practical. This report shall include any recommendations of actions to be taken by the General Assembly, SCC, electric utilities, suppliers, generators, distributors, and regional transmission entities it considers to be in the public interest.

• Further, by December 1, 2001, the Task Force shall recommend to the Governor and General Assembly modifications in state administration and regulatory procedures it determines appropriate to facilitate the approval of construction of new electric generation facilities to provide electric capacity and energy within the Commonwealth to ensure effective competition as soon as practical, without lessening necessary environmental considerations including siting and air quality impacts. The SCC, Secretary of Commerce and Trade, Secretary of Natural Resources, and all state agencies shall assist in the study resulting in the above-recommended procedural modifications.

• Amendments to tax statutes are proposed to conform to provisions permitting competitive providers to provide billing services.

• A second enactment clause provides that the proposed new provision of § 56- 590(B)(3)(iii) (specifying that generation assets sold, transferred, or otherwise disposed of by an incumbent electric utility not be further sold, transferred or otherwise disposed of under certain conditions without SCC approval) does not apply to such sales, transfers or disposals approved by the SCC prior to the effective date of this Act.