Section 56-XXX

A. Definitions.

1. For purposes of this section, the term "generating assets" includes generating units owned by a public utility, and the term "purchase power contracts" means contracts in which a public utility is obligated to buy generating capacity from another company, including, but not limited to, another public utility or another company that is not a public utility.

B. Divestiture of generation assets.

1. Beginning January 1, 2002, if the Commission determines that a public utility's ownership of generating assets may permit it to influence unduly the price of electricity, the Commission may issue an order requiring the utility to sell such generating assets, or interest in such generating assets, as the Commission determines to be necessary to remove the public utility's ability to exercise such influence, and the public utility shall sell such assets according to the conditions described in such order.

2. If the Commission issues an order requiring the sale of generating assets pursuant to this subsection, the sale of such assets shall occur over a period to be determined by the Commission, but such period shall not exceed three years.

3. The Commission may impose conditions on any sale by a public utility of generating assets under this section to promote competition in the generation of electricity and the public interest, including conditions to ensure that any buyer or group of buyers is not able to influence unduly the price of electricity and to ensure that the public interest is served in such sale. A sale of generating assets shall not become effective without the Commission's approval.

B. Methodology for Recovery of Stranded Costs.

1. If the Commission determines that a public utility will not be able to influence unduly the price of electricity after competition for retail generation sales is permitted, the Commission shall determine and establish methodologies to produce just and reasonable rates and charges to allow the public utility an opportunity to recover its just and reasonable net stranded costs, or to return to its customers any just and reasonable net stranded benefits, resulting from:

a. the difference between the market value of its generating assets and its gross investment, less accumulated depreciation (i.e., "net investment"), in such assets, provided that the market value shall be determined by the Commission considering the results of the actual sale of all or a portion of the utility's interest in such generating assets in arm's length transactions, and

b. the difference between the (i) market value of its purchase power contracts and (ii) the accumulated future capacity payments (and any other verifiable, fixed, non-mitigable obligations) required by the public utility to be paid under such contracts, provided that the market value shall be determined by the Commission considering the results of the actual sale of all or a portion of the utility's interest in such purchase power contracts in arm's length transactions.

2. In determining just and reasonable net stranded costs, and in determining and establishing methodologies to produce just and reasonable rates and charges to permit a public utility an opportunity for their recovery, the Commission shall balance the interests of the public utility's customers, its investors, and the public. The Commission may take the following factors into account:

a. the degree to which the relevant market for electric generation is effectively competitive,

b. the degree to which the public utility has fostered the development of an effectively competitive market for electric generation,

c. the degree to which the utility has minimized the total costs that it seeks to recover as just and reasonable net stranded costs, and

d. any other factors deemed by the Commission to be in the public interest.

3. A public utility seeking the opportunity to recover just and reasonable net stranded costs shall bear the burden of proof in establishing before the Commission such costs and the methodologies to produce just and reasonable rates to recover them.