RECOMMENDATION OF ELECTRIC COOPERATIVES
"Gaming the System:" Rate Caps; Change in Generation Supplier
§ 56-582. Rate caps.
A. The Commission shall establish capped rates, effective January 1, 2001, and expiring on July 1, 2007, for each service territory of every incumbent utility as follows:
1. Capped rates shall be established for customers purchasing bundled electric transmission, distribution and generation services from an incumbent electric utility.
2. Capped rates for electric generation services, only, shall also be established for the purpose of effecting customer choice for those retail customers authorized under this chapter to purchase generation services from a supplier other than the incumbent utility during this period.
3. The capped rates established under this section shall be the rates in effect for each incumbent utility as of the effective date of this chapter, or rates subsequently placed into effect pursuant to a rate application filed by an incumbent electric utility with the Commission prior to January 1, 2001, and subsequently approved by the Commission, and made by an incumbent electric utility that is not currently bound by a rate case settlement adopted by the Commission that extends in its application beyond January 1, 2002. If such rate application is filed, the rates proposed therein shall go into effect on January 1, 2001, but such rates shall be interim in nature and subject to refund until such time as the Commission has completed its investigation of such application. Any amount of the rates found excessive by the Commission shall be subject to refund with interest, as may be ordered by the Commission. The Commission shall act upon such applications prior to commencement of the period of transition to customer choice. Such rate application and the Commission's approval shall give due consideration, on a forward-looking basis, to the justness and reasonableness of rates to be effective for a period of time ending as late as July 1, 2007. The capped rates established under this section, which include rates, tariffs, electric service contracts, and rate programs (including experimental rates, regardless of whether they otherwise would expire), shall be such rates, tariffs, contracts, and programs of each incumbent electric utility, provided that experimental rates and rate programs may be closed to new customers upon application to the Commission.
B. The Commission may adjust such capped rates in connection
with the following: (i) utilities' recovery of fuel costs pursuant to § 56-249.6,
(ii) any changes in the taxation by the Commonwealth of incumbent electric utility
revenues, (iii) any financial distress of the utility beyond its control, (iv)
with respect to cooperatives that were not members of a power supply cooperative
on January 1, 1999, and as long as they do not become members, their cost of
purchased wholesale power and discounts from capped rates to match the cost
of providing distribution services, and (v) with respect to cooperatives that
were members of a power supply cooperative on January 1, 1999, their recovery
of fuel costs, through the wholesale power cost adjustment clauses of their
tariffs pursuant to § 56-226 56-231.33. Notwithstanding
the provisions of § 56-249.6, the Commission may authorize tariffs that include
incentives designed to encourage an incumbent electric utility to reduce its
fuel costs by permitting retention of a portion of cost savings resulting from
fuel cost reductions or by other methods determined by the Commission to be
fair and reasonable to the utility and its customers.
C. A utility may petition the Commission to terminate the capped rates to all customers any time after January 1, 2004, and such capped rates may be terminated upon the Commission finding of an effectively competitive market for generation services within the service territory of that utility. If the capped rates are continued after January 1, 2004, an incumbent electric utility which is not, as of the effective date of this chapter, bound by a rate case settlement adopted by the Commission that extends in its application beyond January 1, 2002, may petition the Commission for approval of a one-time change in the nongeneration components of such rates.
D. Until the expiration or termination of capped rates as provided in this section, the incumbent electric utility, consistent with the functional separation plan implemented under § 56-590, shall make electric service available at capped rates established under this section to any customer in the incumbent electric utility's service territory, including any customer that, until the expiration or termination of capped rates, requests such service after a period of utilizing service from another supplier. Any customer that requests capped rate services from the incumbent electric utility after a period of receiving services from one or more suppliers of electric energy other than the incumbent electric utility shall be subject to a twelve-month customer retention period. During such twelve-month customer retention period, the customer shall receive electric service only from the incumbent electric utility. A customer returning to the incumbent electric utility after receiving electric service from another supplier shall pay the capped rate for electric energy as established in accordance with this section.
E. During the period when capped rates are in effect for an incumbent electric utility, such utility may file with the Commission a plan describing the method used by such utility to assure full funding of its nuclear decommissioning obligation and specifying the amount of the revenues collected under either the capped rates, as provided in this section, or the wires charges, as provided in § 56-583, that are dedicated to funding such nuclear decommissioning obligation under the plan. The Commission shall approve the plan upon a finding that the plan is not contrary to the public interest.