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§ 56-579. Schedule for Transition to Retail Competition.
A. On or before July 31, 1999, the Commission shall establish criteria for the content of the restructuring plan for each incumbent investor owned electric utility and each electric cooperative. The Commission's criteria shall include: (1) a requirement for the unbundling of electric generation, transmission, distribution and associated services; (2) provisions to promote effective competition for retail sales of electricity and associated services; (3) provisions to prevent the abuse of market power; and (4) provisions to encourage the development of dispersed generation. On or before January 1, 2000, each incumbent investor owned electric utility and each electric cooperative shall file restructuring plans consistent with the Commission's criteria. The Commission shall ensure that interested parties are provided adequate notice and an opportunity to be heard. After hearing, the Commission shall order each incumbent investor owned electric utility and each electric cooperative to implement a restructuring plan that is consistent with this chapter.
Drafting note: The intent of this subsection is to delegate to the SCC the authority to implement the General Assembly's policy decision regarding electric restructuring, including provisions to promote competition, prevent abuse of market power and encourage development of new generation. This subsection recognizes that while each utility and cooperative is unique, the SCC must develop the guidelines under which utilities must file their restructuring plan. This subsection also requires the SCC to determine the portion of each utility's and cooperative's bill that is attributable to generation, transmission, distribution and associated services so that consumers will be able to make an "apples to apples" comparison of the costs of electricity and associated services of various providers.
B. Each restructuring plan ordered under this chapter shall permit all customers of incumbent investor owned electric utilities and cooperatives to choose an alternate retail supplier of electricity no later than January 1, 2002. Upon petition of an incumbent investor owned utility or electric cooperative, or upon its own motion, and after hearing, the Commission may extend the date for customer choice of retail supplier, or permit a phased in approach for customer choice of retail supplier, if it finds that such an extension is necessary to ensure system reliability and is otherwise in the public interest. Notwithstanding any provision of this subsection to the contrary, the Commission shall ensure that at least one-half of each class of the customers of every incumbent investor owned utility and electric cooperative shall have choice of retail supplier no later than January 1, 2002. Unless the Commission finds that system reliability dictates otherwise, in no event shall the Commission extend the date for all customers of incumbent investor owned electric utilities and electric cooperatives to choose a retail supplier of electricity beyond January 1, 2004.
Drafting note: This subsection establishes a target date for retail competition of 1/1/2002, but permits the Commission to phase in and/or delay customer choice in order to preserve reliability.
C. On a case by case basis, the Commission shall order the deregulation of generation assets only after hearing and a finding that competition for retail electricity is sufficient to protect the public interest.
Drafting note: This subsection recognizes that permitting the deregulation of generation assets before sufficient competition exists would create an unregulated monopoly with no price protection for consumers.
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§ 56-584. Regulation of Rates Subject to the Commission's Jurisdiction.
A. In conjunction with the unbundling of generation, transmission, distribution and associated services under § 56-579, the Commission shall determine the elements of basic electric service for each incumbent investor owned electric utility and each electric cooperative and shall establish a rate for such service based on the cost of service for each utility and cooperative. This regulated rate shall be effective upon the commencement of customer choice for retail electricity and available to every customer on a nondiscriminatory basis until the Commission determines that competition for retail sales of electricity is sufficient to allow the termination of the regulated rate.
B. Regulation of rates for associated services shall be as provided for in § 56-588.
Drafting note: This section requires the SCC to define "basic electric service," as a standard package of services similar to traditional utility service that will be available to all consumers under a regulated rate until the SCC determines that there is effective competition in the marketplace.
§ 56-585. Licensure and Regulation of Suppliers of Retail Electricity.
The Commission shall promulgate reasonable regulations governing the provision of retail sales of electricity, associated services and aggregation services. No person shall sell electricity at retail nor provide associated services or aggregation services, nor market or broker the same, without first having obtained a license from the Commission. The Commission's regulations shall require each applicant to demonstrate that it has the technical, managerial, and financial ability to provide the services governed by the license and shall make provision for the protection of the applicant's proprietary information and trade secrets from disclosure to third parties.
Drafting note: This section requires new entrants to obtain a license and requires the SCC to establish standards to ensure that new entrants are financially viable and able to serve the public.
§ 56-586. Supplier of Last Resort and Default Supplier.
As used in this section, "supplier of last resort" means the electric supplier that will supply electricity in the event that a retail supplier fails to deliver electricity. As used in this section, "default supplier" means the supplier of electricity that will provide electricity at retail to customers who are unable to obtain a retail supplier or who choose not to choose a retail supplier. During the transition period to retail competition, each incumbent investor owned electric utility and electric cooperative shall serve as supplier of last resort and default supplier for customers within its service territory. Beginning January 1, 2004, the Commission shall periodically assess whether a supplier other than the incumbent should provide supplier of last resort or default supplier services. If it finds that the selection of a supplier other than the incumbent would foster a competitive market for retail sales of electricity and serve the public interest, it shall so order.
Drafting note: This section ensures that the incumbent will serve as a backstop provider during the transition period so that consumers will be able to obtain electric service during that time. Once competition is in place, the SCC is required to develop a process wherein alternative suppliers can serve as default supplier or supplier of last resort if doing so would enhance competition and serve the public interest.
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§ 56-588. Associated Services.
After hearing, and upon a finding that there is a competitive market for any service associated with retail electric service, including metering, billing or ancillary services, the Commission shall permit alternate electric suppliers and marketers to provide such service, upon reasonable conditions established by the Commission, and shall order each investor owned electric utility and each electric cooperative to permit nondiscriminatory access to customers for the marketing of such service.
Drafting note: This section recognizes that many consumers will want the innovative pricing options and service packages that restructuring and improved technology will allow, and requires the Commission to open up that market once it develops.
§ 56-589. Consumer Protection and Consumer Services.
A. The Commission shall establish and enforce reasonable and appropriate standards of conduct and customer service standards for all retail suppliers, aggregators, marketers and brokers. Standards of conduct adopted pursuant to this subsection shall not work to create an advantage or disadvantage in the marketplace for entities affiliated with incumbent utilities.
B. The Commission shall develop regulations governing the form and content of any claims regarding the environmental benefits, including fuel mix, of electricity offered for retail sale. No person shall make any false claim regarding the environmental benefits of electricity offered for retail sale.
C. Prior to the onset of customer choice pursuant to § 56-579, the Commission shall develop a consumer education program designed to educate consumers about electric restructuring. The Commission's consumer education program shall promote consumer awareness of customer choice and be designed to equip consumers with the information to evaluate the retail offerings of utilities and alternate suppliers. The Attorney General and all agencies of the Commonwealth shall assist the Commission with its consumer education program. The Commission shall establish a customer information center to assist consumers with questions and assist customers with resolution of complaints regarding service quality.
Drafting note: This section requires the Commission to establish and enforce standards of conduct and customer service standards for market participants, including provisions to ensure that affiliates of incumbents are neither advantaged nor disadvantaged in the marketplace. This section further recognizes that it is not practical to mandate fuel mix disclosures, but protects consumers from misleading environmental claims by requiring the SCC to regulate such claims. It also requires the SCC to establish a consumer education program and customer information center to resolve complaints.
§ 56-590. Public Purpose Programs Continued.
Public assistance programs, including low-income energy assistance and weatherization programs, shall continue.
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§ 56-591.1. Stranded Costs.
A. The Commission shall allow the recovery in rates, through a non-bypassable surcharge or other fair and equitable mechanism, such costs as it finds: (1) have been incurred by or contractually committed to by incumbent investor owned electric utilities prior to the effective date of this chapter; (2) have been prudently incurred and are verifiable; and (3) could not reasonably be expected to be recoverable in the competitive markets required by this chapter. All such costs are hereinafter referred to as "stranded costs." Stranded costs shall include, but are not limited to: (1) unfunded nuclear decommissioning expense; (2) above market amounts paid under nonutility generation contracts; (3) above market fixed and variable generation costs; and (4) regulatory assets. Stranded costs shall be offset by by stranded benefits and opportunities to mitigate in order to calculate recoverable net stranded costs.
B. In determining how and over what periods to permit recovery of net stranded costs, the Commission shall be guided by the following principles:
(1) Any rate surcharges and recovery periods shall be determined and applied in ways that minimize costs to consumers while, at the same time, ensure the creation of robust competitive markets at the earliest practicable time for all classes of consumers;
(2) All stranded cost recovery mechanisms prescribed shall be fair to all classes of consumers and shall bear a reasonable relation to the costs actually stranded as to each class of consumer;
(3) Through annual rate adjustments or other reasonable procedures, the Commission shall ensure that the only costs recovered in regulated rates are those costs that are stranded by reason of this chapter and not offset by new sources of revenue made possible by this chapter; and
(4) No stranded cost surcharge or other recovery mechanism should be approved by the Commission that will delay the development of robust, competitive markets for electricity beyond the year 2004.
Drafting note: This section requires the SCC to determine net stranded costs based on the unique circumstances of each incumbent utility, and permits the utility to recover net stranded costs based upon principles of equity. The mechanism and timing of stranded cost recovery is to be determined with due regard for the effect that such recovery will have on the market. This section also recognizes that changes in the marketplace may dramatically affect stranded costs, and requires the SCC to ensure that incumbent utilities are not unjustly enriched.