I. Structure and Transition
• January 1, 2001: Regional transmission entities (ISO's, for example) will be functional, per HB1172
• January 1, 2001: Transition period begins. Electric utilities which upon the commencement of the transition period serve retail customers within the Commonwealth will prepare during such transition period for the onset of retail competition in accordance with the parameters set forth below. Also during such period of transition, any customer of an electric utility may, through access to the energy delivery systems of that utility and/or independent transmission entity, choose to purchase generation services from one or more alternative suppliers.
During the transition period, extending from January 1, 2001 through December 31, 2003 utilities retail rates for the generation component of their services will be capped. Utilities will, during the period, prepare for competition within the constraint imposed by the capping of their rates.
To establish such capped rates, utilities will make timely application to the SCC for (i) the unbundling of their then effective rates into transmission, distribution, generation components, and other components that will be offered on a competitive basis including metering and billing services, or, (ii) at their discretion, an increase or decrease in their aggregate, or bundled, rate and revenue levels which would be effective on and after January 1, 2001; any such request for an overall rate increase or decrease shall also be accompanied by a request for approval for the unbundling of the rates thereby approved.
Absent the filing of a timely application by the utility which includes, in addition to the request to unbundle rates, a request for an increase or decrease in the aggregate rate levels being charged, and in the revenues being received, by the utility, the presumption will be that the capped rates and components which are effective on January 1, 2001 will produce revenues sufficient to provide the utility with the reasonable opportunity to recover any generation-related regulatory assets and transition-related costs, including stranded costs, that may be recorded on its books prior to and during the period. Such rates shall be capped and exempt from regulatory review for the duration of the transition period.
During the transition period, a utility may seek approval from the Commission for an adjustment in its capped rate only for purposes of the utility's recovery of the costs associated with the utility's compliance with new environmental regulations and tax laws.
No provision shall be made for generation-related regulatory asset or transition or stranded cost recovery following the onset of competition on January 1, 2004.
In acting on a utility's request to increase rates preparatory to the transition period, the Commission will employ its traditionally-used ratemaking principles and rules, and, further give due recognition to the intent of this provision which is to provide the opportunity for regulatory asset and transition and stranded cost recovery in a manner consistent with the public interest.
Any customer of an electric utility may choose to purchase generation services from one or more alternative suppliers during the transition period, subject to the condition that such customer pay to such electric utility a competitive transition charge.
The State Corporation Commission will, by January 1, 2000, adopt guidelines for its determination of competitive transition charges to be paid to incumbent electric utilities by those of their retail customers who choose to take generation service from an alternative supplier prior to January 1, 2004.
• January 1, 2002: Generation deregulated per HB1172.
• January 1, 2004: Retail choice fully available per HB1172.
II. Development of Effective Markets
• To provide for effective competitive markets, the Commission shall (1) facilitate the development of new transmission capacity, to the extent of its authority, for purposes of providing relief for transmission constraints within the Commonwealth; such actions may include, but should not be limited to, expedited siting provisions and facilitating transmission capacity development by independent transmission providers; and (2) create policies and rules which will encourage the development of merchant generation plants within the Commonwealth.
III. Supplier of Last Resort
• In the event of a generation supplier's failure to deliver energy as scheduled to the control area, the independent transmission entity shall be responsible for charging the defaulting supplier for the replacement energy, with such charges including the cost of the energy, the cost incurred by others as a result of the default, and the assessment of penalties as may be approved by the Federal Energy Regulatory Commission. Repeated failures will result in the revocation of the supplier's license.
IV. Supplier Licensure
As a condition of doing business in the Commonwealth, each person seeking to sell, offering to sell, or selling electric energy to any retail customer in the Commonwealth after January 1, 2001, will obtain a license from the Commission to do so. The license will authorize that person to act as a supplier until the license is otherwise terminated, suspended or revoked. Unless renewed by the Commission, a supplier's license will expire after a period of five years from the date on which it was issued. A person that generates electric energy exclusively for its own consumption or the consumption of an affiliate will not be required to obtain a license.
As a condition of obtaining, retaining and renewing any license issued pursuant to this provision, a person will (i) satisfy such reasonable and nondiscriminatory requirements as may be specified by the Commission, including requirements that such period will demonstrate, in a manner satisfactory to the Commission, financial responsibility, (ii) post a bond as deemed adequate by the Commission to ensure that financial responsibility, (iii) pay an annual license fee to be determined by the Commission, and (iv) pay all taxes and fees lawfully imposed by the Commonwealth or by any municipality or other political subdivision of the Commonwealth.
The Commission may adopt reasonable rules and regulations governing the requirements for obtaining, retaining, and renewing a license to supply electric energy to retail customers, and may, as appropriate, refuse to issue a license to, or suspend, revoke, or refuse to renew the license of, any person that does not meet those requirements.
V. Legislative Transition Task Force
A legislative transition task force will be established to work collaboratively with the Commission in conjunction with the transition to retail competition within the Commonwealth.
The transition task force will consist of ten members, with six members from the House of Delegates and four members from the Senate. Appointments will be made and vacancies filled by the Speaker of the House of Delegates and the Senate Committee on Privileges and Elections, as appropriate.
The task force members will be appointed to begin service on and after the effective date of this chapter. They will (i) monitor the work of the Commission in implementing this chapter and (ii) annually report to the Governor and each session of the General Assembly during their tenure concerning the progress of each stage of the development of retail competition, offering such recommendations as may be appropriate for legislative and administrative consideration.
VI. Nonbypassable Wires Charges
After January 1, 2004, each incumbent electric utility operating in the Commonwealth may charge nonbypassable wires charges which will recover costs incurred by the utility for (1) the establishment of an independent transmission entity, (2) public purpose programs required by legislative or regulatory mandate, including pilot programs, and (3) the unrecovered costs of compliance with new environmental requirements. Such nonbypassable wires charges will be established by the Commission from time to time, as required, as part of its regulation of the distribution component of unbundled electric rates and will be applied as an additional charge above the rates otherwise determined by the Commission for regulated electric utility services. Nonbypassable wires charges will be applied to all customers in such manner as to avoid undue discrimination among customers.