Sec. 2 Statement of principles [Does not conform to SB 688]
This AARP language lays out the justification for electric restructuring.

Sec. 3 Definitions [Conforms to Sec. 56-577]
The AARP provisions provide a basis for distinguishing transmission and distribution monopolies from affiliates who wish to provide competitive supplies of electricity after restructuring, to the extent this will be permitted, if at all. The AARP provisions assume that utilities will be severely limited in continuing to perform both the monopoly transmission and distribution functions, and the competitive supply functions.

Sec. 4 Retail access; deregulation of prices. [Conforms to Sec. 56-579]
The AARP provisions include the core statement of terms for introducing retail competition in electricity sales. The provisions provide that customers will have the right to buy energy from competitive electricity suppliers, and utilities must deliver that power to the customers over their poles and wires, if the State Commerce Commission finds that the Conditions for Competition have been met.

The Conditions for Competition are essential as a check to prevent jumping into competition without thinking through the pros and cons for the state, and making sure that competition will actually function in the relevant market to deliver the benefits intended.

Sec. 5 Reduction in residential rates; standard offer [Conforms to Sec. 56-584]
This section provides that residential consumers will get a 15 percent rate reduction within 9 months of passage of the statute and eventually a further 10 percent reduction, for a total rate reduction of 25 percent, whether or not they shop for power in the competitive market. AARP recognizes that such large rate reductions could in some cases jeopardize the financial integrity of the distribution utility. To provide for this risk, the AARP provisions first permit the utility to petition the SCC for authority to take steps to mitigate the risk of such financial danger. If there is no way to mitigate this risk sufficiently, and still provide the required rate reduction, the language allows the utility to petition the commission for funding from a Ratepayer Equity Trust Fund, established in the state treasury. This fund is made up of tax revenues from the sale of utility plant, statutory penalties, and income from investment of fund assets.

The AARP provisions also provide for a competitive bid process to select an alternate supplier to provide the energy portion of the bill.

Sec. 6 Limit on spread between residential and other rates. [Conforms to Sec. 56-584]
This section limits the spread between residential rates and both industrial and average rates for the region. These provisions, patterned after a similar provision in the Connecticut restructuring statute, caps the gap in rates. It also puts a check on the spread between residential rates and the average price in the region as a whole.

Sec. 7 Municipal aggregation [Conforms to Sec. 56-578]
This section paves the way for a municipality, county or group of local governments to conduct a bid process and select a competitive electricity supplier for their town, city or county. The supplier so selected would not only supply the governmental offices, but would be the presumptive supplier for the electricity customers in the municipality. Consumers would have an opt-out right.

Sec. 8 Electric metering and billing services. [Conforms to Sec. 56-588]
The AARP provisions here presumes an eventual (after 5 years) move to competition in these services, but permits the commission to keep the services subject to regulated monopoly upon making findings that they are not competitive according to the standards of the bill.

Sec. 9 Licensing competitive providers consumer protections; enforcement. [Conforms to Sec. 56-585]
The AARP provisions charge the SCC with the responsibility of vetting applicants for licenses and issuing licenses to those qualified. The AARP provisions reflect the understanding that licensure is an essential tool in protecting consumers.

Sec. 10 Consumer protections, obligations of competitive electricity providers. [Conforms to Sec. 56-589]
The AARP provisions include key consumer protections, leaving no doubt about what rights consumers have. The language makes it plain that violation of these protections is grounds for a supplier to lose its license.

The AARP provisions spell out consumer rights in a number of key areas: no disconnection from the distribution network for non-payment of a competitive supply, no prepayment or other unfair requirements, a prohibition on selling credit life or disability for residential bills; a right to return to the standard offer, a limitation on charges for switching service, and prohibitions on redlining and other unfair discrimination.

Sec. 11. Consumer protections: recourse and enforcement. [Conforms to Sec. 56-589]
In this section, the AARP provisions gather together the primary tools for consumer redress, including dispute resolution, ordering restitution, instituting enforcement actions, private rights of action, penalties, and cease and desist orders.

Sec. 12. Privacy and unwanted solicitations [Conforms to Sec. 56-589]
The AARP provisions opt for the most protections for privacy - no information is to be released unless the customer affirmatively asks for it to be released, in writing. The language also provides that the SCC shall make aggregate load data available on a class by class basis.

Sec. 13. Unauthorized switching and unauthorized charges prohibited; penalties. [Conforms to Sec. 56-589]
Crammers and slammers rely on the fact that many customers do not closely examine their bills, and may be confused by the bills. To the extent the problem is confusion, AARP provisions give the SCC the authority to prevent a confusing bill format. To the extent fraudulent switching or service adding is the problem, the AARP provisions provide for stiff penalties.

The language requires that fees, other than the price of electricity itself, be cost-based. This is a limitation on the amount of money a firm can charge for such fees as late fees, restoration of service fees, bounced-check fees, and the like.

Sec. 14 Disclosure, billing information and labeling. [Conforms to Sec. 56-589]
The AARP provisions require competitive electricity suppliers to provide the SCC with information it needs to publish "price data, information on price variability, and customer service information, in such a format as to permit reasonable comparisons between price and service offerings of competitive electricity providers."

This section also protects consumers against misleading advertising. Not only must suppliers follow applicable state and federal laws, they are subject to specific restructuring statute requirements designed to prevent customer confusion.

Sec. 15 Divestiture of generation. [Conforms to Sec. 56-593]
The AARP provisions require that utilities sell their generating plants, as well as the output of any plants they have not sold. The purpose of this requirement is to prevent the same company from owning the monopoly grid and also owning generation plants that will compete with other suppliers' plants for sales of power.

The AARP language exempts PURPA contracts, energy-efficiency contracts, and nuclear plants from the divestiture requirement, as well as generation required only to maintain the stability of the transmission or distribution system. The SCC is required to set up rules for the sale to maximize the value received for the sale.

Sec. 16. Default service. [Conforms to Sec. 56-586]
The AARP provisions allows for the SCC to use a bid process to select the supplier that will have responsibility for the load of default customers. A competitive electricity supplier may be chosen by the SCC. Situations in which default supply may be required include: a) termination of a supply contract for any reason, at least until a new supply contract is initiated; b) moving to a new area without any idea which supplier to choose; and c) miscommunication with a supplier, resulting in the customer not realizing that no supplier has been designated.

Sec. 17 Marketing: large utilities [Does not conform to SB 688]
Sec. 18 Marketing: small utilities [Does not conform to SB 688]
The AARP language in section 17, based on the provisions of the Maine restructuring statute, severely limits the extent to which an affiliate of a monopoly distribution company can market power within the service area of that distribution utility. The AARP provisions prohibit the distribution utility from marketing power directly in its own service area. It must set up a separate corporate affiliate, subject to the rules of conduct set out in the language, if it wants to keep making sales of power. This competitive service provider affiliate may sell power to customers outside the transmission or distribution area. However, within the area of its transmission and distribution affiliate, the affiliated competitive service provider may sell only 33 percent of the energy sold in that area.

To prevent the utility from abusing even its limited market share within the area of the transmission and distribution affiliate, the statute provides for standards of conduct governing relationships between the competitive supply affiliate and the monopoly transmission and distribution affiliate. This section also limits the overall market share in the state by any one supplier. The limit proposed in the AARP provisions is 15 percent of the sales in the state.

Sec. 19. Marketing: consumer-owned utilities [Does not conform to SB 688]
Under the AARP provisions, consumer-owned utilities 1) may sell retail generation service only within their respective service territories; and
2) may not sell wholesale generation service except incidental sales necessary to reduce the cost of providing retail service.

Section 20. Stranded cost recovery. [Conforms to Sec. 56-591]
The AARP provisions define stranded costs as the costs of generation-related assets that are uneconomic relative to what could be obtained in the market, and that were rendered uneconomic because of the move to competition: 1) the costs of a utility's regulatory assets related to generation; 2) the difference between net plant investment associated with a utility's generation assets and the market value of the generation assets' and 3) the difference between future contract payments and the market value of a utility's purchased power contracts.

The AARP provisions require a utility to attempt to reduce its stranded costs. The language encourages such cost reduction, by linking a utility's level of stranded cost recovery to such efforts. The SCC must approve measures taken to reduce stranded costs.

The AARP provisions also require the SCC to determine the level of stranded costs in a contested hearing and provides for the SCC to revisit its calculation at least every three years, and make another estimate, based on the situation as it has changed in the interim.

The AARP provisions require shareholders absorb a fair share of the uneconomic costs of the current system. The language allows the utility to get a return of its investments in the assets, but not a return on its investments. That is, it can recover its costs, but no profit is allowed and the recovery period cannot exceed ten years.

Sec. 21. Rate design [Conforms to Sec. 56-592]
The AARP provisions reaffirm the authority of the SCC to set rates for the monopoly transmission and distribution company. The AARP language requires the SCC to hold a contested hearing to set rates for the monopoly utility shortly after passage of the statute. The language also provides that the SCC will establish a system benefits charge to pay for benefits to be provided by the electric industry under a restructured system. These benefits include energy efficiency investments, renewable power development, and low-income bill affordability assistance.

Sec. 22 Renewable resources [Conforms to Sec. 56-590.1]
The AARP provisions provide a placeholder for policymakers to encourage the development of renewable resources, either by requiring power marketers to include a certain amount of such renewable power in their portfolio of power sources or by raising funds to support research and development.

Sec. 23 Energy efficiency. [Conforms to Sec. 56-590.2]
The AARP provisions require distribution utilities to provide energy efficiency programs to its customers. The language sets out a specific schedule of kilowatt hour charges to raise the funds to pay for these efficiency programs. Based on the Massachusetts restructuring model, the statute calls for a gradual reduction from 3.3 tenths of a cent per kilowatt hour to 2.5 tenths of a cent per kilowatt hour. The SCC will have the authority to increase the rate up to the cap of 3.3 tenths of a cent per kilowatt hour after the fifth year. The language also requires that the programs funded under this section be cost-effective, and cost-efficiently use ratepayer dollars.

Sec. 24 Consumer education. [Conforms to Sec. 56-590]
The AARP language includes the concept of a consumer education advisory board to assist the SCC in developing the specifics of a consumer education plan.

Sec. 25 Needs-based, affordable rates for low-income consumers. [Conforms to Sec. 56-590]
The AARP provisions use a burden-based method to evaluate whether the cost of electricity to a household is affordable by that household. The language scales the cost as a percentage of income, recognizing that the same price can represent widely different burdens on a household's income, depending on the level of that income. The AARP language requires that the low-income program be evaluated by determining whether bills of low-income customers have been reduced to the target level. Funding is to be provided at a level designed to accomplish this result. The funds for the bill reduction are to come from the distribution utility, and be raised by distribution rates set in ordinary rate cases. The language authorizes utilities to propose additional forms and levels of assistance to their low-income customers.

Sec. 26 Commission participation in federal and international proceedings. [Does not conform to SB 688]
This AARP provision provides explicit authority for the commission to participate in federal and international proceedings that might affect the state's interests. It also authorizes the commission to monitor developments in the industry, and make whatever reports would be useful to advancing policy in the electric industry.

Sec. 27 Transition; utility employees. [Conforms to Sec. 56-590.3]
This AARP section provides for easing the transition to a competitive marketplace for employees of regulated monopoly utilities.

Sec. 28. Reports. [Conforms to Sec. 56-594]
This AARP provision requires policy implementers to monitor the industry, and report annually on the extent to which the purposes of the statute are being achieved. In addition, the commission must suggest ways to correct the problems that it identifies.

Sec. 29 Intervenor Compensation. [Does not conform to SB 688]
This AARP provision provides for funding to community groups and others that wish to present their case to the commission in the formal proceedings required by law, but do not have the resources to hire attorneys or expert witnesses. The language proposes to use fines collected by the SCC in the way of penalties incurred by utilities or competitive electricity providers in the consumer protection sections of the bill, to make up the core of funding for intervenor compensation. The SCC is authorized to direct the utilities to contribute further, and any interest on moneys in the fund are returned to the fund to support intervention.