A bill to provide for electric generation customer choice and competition
Article 3.1

§ 56-253.1 Development of Effective Competition; Legislative Deregulation Oversight Committee.

A. A Legislative Deregulation Oversight Committee shall be created by the General Assembly to monitor the implementation of the new competitive electric generation supply market effective July 1, 1999. The Legislative Deregulation Oversight Committee, with input from the Attorney General and the Commission as provided in § 56-253.13, may recommend legislative actions to the General Assembly, as necessary, to ensure the development of effective electric generation customer choice and competition in the Commonwealth.

B. To assist the Legislative Deregulation Oversight Committee, a Customer Advisory Board shall be created, effective July 1, 1999. The Governor shall appoint members of the Customer Advisory Board, with membership drawn from all customer classes. The Customer Advisory Board shall monitor the development of electric generation customer choice and competition in the Commonwealth and submit reports of its activities and recommendations to the Legislative Deregulation Oversight Committee on a schedule determined by the Legislative Deregulation Oversight Committee.

C. With input from the Commission and the Customer Advisory Board, the Legislative Deregulation Oversight Committee shall review and recommend to the General Assembly the appropriate levels of administration, eligibility, and funding, including appropriate funding mechanisms, and public financial support, for the following consumer, environmental, and education programs:

(1) The consumer education program provided for in § 56-253.2;

(2) Low-income assistance, including:

a. Existing and potential programs for heating assistance;

b. Weatherization and/or winterization;

c. Energy conservation programs designed specifically for low-income Virginians.

(3) Energy efficiency and conservation initiatives, including support for research, development and demonstration programs to promote energy efficiency, conservation, and the use of renewable energy sources.

(4) A program to provide retraining and outplacement services to electric utility workers whose jobs are eliminated during implementation of electric generation customer choice and competition;

(5) A universal service program; and

(6) Any support that may be needed to assist in the implementation of pilot electric generation customer choice and competition programs.

D. The Legislative Deregulation Oversight Committee shall present its recommendations, as provided for in subsection C of this section, by December 1, 1999, for consideration by the 2000 session of the General Assembly.

E. During the price protection period and any extended period provided for in § 56­253.11, the Legislative Deregulation Oversight Committee shall recommend to the General Assembly whether (i) metering and billing services should be deregulated and made subject to competition, effective after such periods; and (ii) further procedures are required to ensure proper disposition of customer complaints filed against Electric Generation Suppliers and Aggregators licensed under § 56-253.7.

F. Any electric generation customer choice and competition pilot program ordered or approved by the Commission shall remain in effect until January 1, 2002. The Commission shall report to the Legislative Deregulation Oversight Committee and the Customer Advisory Board on the implementation of any such pilot program by December 1, 1999, and each December 1 thereafter during the implementation of any such pilot program.

G. All electric utilities shall continue existing voluntary programs to provide low­income heating assistance until further action of the General Assembly following any report on such programs by the Legislative Deregulation Oversight Committee with input from the Commission and the Customer Advisory Board.

§ 56-253.2 Consumer Education.

To ensure that all customers are able to make informed choices in the emerging competitive electric generation supply market, the Commission, with input from the Secretary of Health and Human Resources, shall supervise the development of statewide consumer education programs to educate consumers on issues including the nature of competitive electric generation services, how to choose or change suppliers, and how and where to secure answers to questions and complaints. Such statewide consumer education programs may be conducted by independent non-profit and/or public groups, in collaboration with the Virginia Department of Agriculture and Consumer Services. Education efforts shall target all distribution electric service consumers including low-income and handicapped consumers.

§ 56-253.3. Electric Generation Customer Choice and Competition Implementation Plan.

A. Each electric utility subject to regulation as to rates and service by the Commission under the provisions of Chapter 10 (§ 56-232 et seq.) of this title shall submit to the Commission by January l, 2000, a plan relating to the implementation of competition for the purchase and sale of electric energy and capacity at retail within the Commonwealth. Each electric utility's plan shall include (i) a proposal for unbundling the utility's generation, transmission, distribution, and other charges when competition for the purchase and sale of electric energy and capacity is implemented; (ii) a proposal for separating the generation, transmission, and distribution functions and services of the electric utility; and (iii) a phase-in plan consistent with § 56-253.4.A(4).

B. The Commission shall, after public notice, conduct public hearings for the purpose of examining each plan submitted pursuant to this section. In each such hearing, the Commission shall determine whether the plan satisfies the requirements of subsection A of this section.

§ 56-253.4. Schedule for Transition to Electric Generation Customer Choice and Competition; Commission authority.

A. Competition for the purchase and sale of electric energy and capacity at retail shall be implemented as follows:

(1) On or before January 1, 2001, the Commission shall hold the public hearings provided for in § 56-253.3.B and issue an order approving, modifying, or denying each plan filed pursuant to § 56-253.3.A.

(2) On or before January 1, 2001, each incumbent electric utility shall join an independent system operator ("ISO"), established pursuant to Chapter 633 of the 1998 Acts of Assembly, to facilitate a competitive market for the purchase and sale of electric energy and capacity at retail within the Commonwealth.

(3) Beginning on January 1, 2002, each electric utility subject to regulation as to rates and service by the Commission shall separate its generation function and services from its transmission and distribution functions and services. The electric utility's generation function and services shall no longer be subject to regulation under Title 56 of the Code of Virginia by the Commission. Except as provided in § 56-253.12, after such separation and deregulation each such electric utility shall purchase all electric energy and capacity for resale to its retail customers either through a regional power exchange ("RPX") established to facilitate a competitive market for the purchase and sale of electric energy and capacity at retail in the Commonwealth or through a contract or other arrangement with a wholesale generator or other wholesale supplier.

(4) Retail electric customers in each customer class of each electric utility, as determined by the Commission, shall have the right to choose their Electric Generation Supplier according to the following phase-in schedule:

Effective Date	Percent of Customers
Beginning January 1, 2002	33 1/3 percent
Beginning January 1, 2003	66 2/3 percent
Beginning January 1, 2004	100 percent

(5) After January 1, 2002, the Commission may accelerate the availability of electric generation customer choice and competition to all retail electric customers if it finds such acceleration is in the public interest. The Commission may delay the January 1, 2003, and/or January 1, 2004, phase-in schedules for up to one year if it finds that such delays are necessary (i) to preserve the reliability of electric service; (ii) because of any action or inaction by the Federal Energy Regulatory Commission that prevents implementation of electric generation customer choice and competition in the Commonwealth; or (iii) because of pending litigation before the Virginia Supreme Court.

B. Nondiscriminatory Access to Transmission and Distribution. - The Commission shall ensure that all Electric Generation Suppliers and Power Generators have nondiscriminatory access to transmission and distribution systems and services within its jurisdiction, at rates that are just, reasonable, and nondiscriminatory.

§ 56-253.5. Independent System Operators; Regional Power Exchange; Transmission and Distribution of Electric Energy.

A. Independent System Operators:

(1) The entity that has the obligation to build transmission facilities shall have the right of eminent domain as provided by § 56-49. If an ISO assumes operational control but not ownership of transmission facilities from a utility, the obligation to build such facilities shall remain with the incumbent electric utility that provided transmission service prior to the effective date of this article.

(2) The Commission shall continue to have authority to approve the transfer of ownership of transmission facilities from a utility to an ISO as provided in Chapter 5 (§ 56-88 et seq.) of this title. The Commission, however, shall have no authority to require or approve the participation of an electric utility in a specific ISO.

B. Regional Power Exchanges.

(1) One or more RPX(s) shall be established pursuant to Chapter 633 of the 1998 Acts of Assembly on or before January 1, 2001.

(2) The Commission shall have no authority to require or approve the participation of an electric utility in a specific RPX.

(3) Retail customers may purchase through a RPX or directly from an Electric Generation Supplier.

C. Transmission and Distribution of Electric Energy.

(1) Upon the separation and deregulation of the generation function and services of incumbent electric utilities, the Commission shall retain jurisdiction over utilities' electric transmission function and services, to the extent not preempted by federal law. Nothing in this article shall impair the Commission's authority under §§ 56-46.1, 56-46.2, and 56-265.2 of this title with respect to the construction of electric transmission facilities.

(2) Nothing in this article shall impair the distribution service territorial rights of incumbent electric utilities, and incumbent electric utilities shall continue to provide distribution services within their exclusive service territories as established by the Commission. Nothing in this article shall impair the Commission's existing authority over the provision of electric distribution services to retail customers in the Commonwealth including, but not limited to, the authority contained in Chapters 10 (§ 56-232 et seq.) and 10.1 (§ 56-265.1 et seq.) of this title.

§ 56-253.6. Regulation of rates subject to the Commission's jurisdiction.

A. Except as provided in this article, the Commission shall continue to regulate each electric utility's rates remaining subject to the Commission's jurisdiction pursuant to Chapter 10 (§ 56-232 et seq.) of this title.

B. During the price protection period and any extended period provided for in § 56­253.11 of this article, no rate investigation may be conducted by the Commission except (i) as necessary to determine the nonbypassable wires charge or credit provided for in § 56­253.8; and (ii) as provided in § 56-253.11 for emergency circumstances.

C. Notwithstanding the provisions of this section or § 56­249.6, the Commission shall determine by January 1, 2002, each incumbent electric utility's anticipated actual fuel cost for the price protection period provided for in § 56­253.11 that shall be recovered from retail customers who continue to receive electric generation service from the electric utility. The Commission shall direct each electric utility to place in effect tariff provisions designed to recover the electric utility's anticipated actual fuel costs during the price protection period. Such tariff provisions also shall apply during any extended period provided for in § 56-253.11.

§ 56-253.7. Licensure of Electric Generation Suppliers; Licensure of Aggregators; Permitting of Electric Generation Facilities; License Revocation or Suspension; Penalty; Authority of Commission.

A. After the effective date of this article, any person seeking to sell, offering to sell, or selling electric generation services to retail customers in the Commonwealth shall obtain an Electric Generation Supplier license from the Commission for such retail services.

B. After the effective date of this article, any person, including community action agencies, non-profit organizations, local governments, and for-profit organizations may, upon obtaining an Aggregator license from the Commission, aggregate retail customers for the purchase of electric generation services.

C. The Electric Generation Supplier or Aggregator license shall authorize the person to provide retail electric generation services or aggregation services, as applicable, as of January 1, 2002, or such other date as may be specified by the Commission in the license, until the license is terminated, suspended or revoked. Upon application, each incumbent electric utility authorized to do business in the Commonwealth as of the effective date of this article shall be issued an Electric Generation Supplier license under this section without the need for any further showing. A person that generates electric energy exclusively for its own consumption shall not be required to obtain an Electric Generation Supplier license.

B. As a condition of obtaining, retaining, and renewing an Electric Generation Supplier license or an Aggregator license, an applicant or licensee must (i) demonstrate sufficient financial responsibility and technical capability, (ii) comply with a code of conduct approved by the Commission, and (iii) comply with such other requirements as may be specified by the Commission to ensure protection of consumers, the environment, and fair competition among all Electric Generation Suppliers or Aggregators. Additionally, an Electric Generation Supplier license applicant or licensee must demonstrate the ability to maintain adequate generating reserves.

C. Any person desiring to construct and operate an electric generation facility in the Commonwealth, except to generate electricity exclusively for its own consumption, shall obtain a Power Generator permit from the Commission. In granting such permit, the Commission shall consider (1) the impact of the proposed facility on service reliability and (2) the effect of the facility on the environment. The Commission shall establish such conditions as may be desirable or necessary to minimize any adverse environmental impacts. Such person shall have no authority to acquire property by eminent domain unless it possessed such authority in its capacity as a public service company as of January 1, 1999.

D. The Commission shall adopt rules and regulations to implement this section and establish the requirements for obtaining, retaining, and renewing Electric Generation Supplier licenses, Aggregator licenses, and Power Generator permits, including rules that prohibit discrimination on the basis of race, color, religion, national origin, sex, pregnancy, childbirth, or related medical conditions, age, marital status, or disability, and safeguards against fraudulent, deceptive or unfair marketing, advertising, or other business practices. The Commission may refuse to issue or renew a license or permit to any person that does not meet those requirements. The Commission also may suspend or revoke the license or permit of any person that does not meet those requirements.

E. The Commission shall have the power to enforce the terms, conditions, limitations, restrictions, undertakings and commitments upon which such Electric Generation Supplier licenses, Aggregator licenses and Power Generator permits are based, including the power to penalize for and enjoin the violation or attempted violation thereof, and to issue mandatory injunctions requiring such actions as may be in the public interest to remedy any such violation or attempted violation. Any person committing any such violation or attempted violation, or failing or refusing to obey any order or injunction of the Commission issued under this section, may be fined by the Commission such sum, not exceeding $50,000, as the Commission may deem proper, and each day's continuance of such violation, attempted violation, failure or refusal shall be a separate offense.

§ 56-253.8. Nonbypassable wires charge or credit.

A. A nonbypassable wires charge or credit shall be determined each year by the Commission for each electric utility subject to the Commission's regulation as to rates and service under Chapter 10 (§ 56-232 et seq.) of this title. Such nonbypassable wires charge shall include (1) the above-market costs associated with all power purchase contracts entered into by that utility as of January 1, 1999, (2) the costs associated with closing and decommissioning the utility's nuclear generating plants, and (3) the costs associated with the development and implementation of the infrastructure for transition to electric generation customer choice and competition ("Transition Costs"); provided, however, that no recovery of an electric utility's above-market costs associated with its power purchase contracts shall be permitted after the expiration of such contracts, and no recovery of an electric utility's nuclear generating plant's closing and decommissioning costs shall be permitted after such plant is closed and decommissioned. Beginning January 1, 2002, such nonbypassable wires charge or credit shall be paid by or credited to retail customers of each electric utility as specified by this section, and § 56-253.11.

B. An electric utility's nonbypassable wires charge or credit related to all power purchase contracts entered into by such electric utility as of January 1, 1999, to the closing and decommissioning of nuclear generating plants, and to the development and implementation of the infrastructure for transition to electric generation customer choice and competition, shall be calculated each year as follows:

(1) The Commission shall estimate the revenues the electric utility is expected to receive that year from the sale of electric energy and capacity purchased under power purchase contracts and shall estimate the annual revenues the electric utility must receive that year to ensure recovery of its costs for such contracts. Additionally, the Commission shall estimate the electric utility's costs for closing and decommissioning nuclear generating plants, and its Transition Costs.

(2) In estimating the annual revenues the electric utility must receive that year to ensure recovery of its costs for such contracts, and in estimating the utility's costs for closing and decommissioning nuclear generating plants, and its Transition Costs, the Commission shall include (i) all commitments in power purchase contracts that were being recovered in rates that were being charged by that utility as of January 1, 1999, (ii) all nuclear generating plant closing and decommissioning costs to be incurred by the electric utility, and (iii) all Transition Costs as determined by the Commission.

(3) If the Commission estimates that the amount the electric utility will receive from the sale of electric energy and capacity purchased pursuant to all power purchase contracts will be less than the amount it estimates the electric utility needs to recover its costs for such contracts, then the Commission shall add the difference to the amount it estimates to be the utility's costs for closing and decommissioning nuclear generating plants, and the amount it estimates to be the utility's Transition Costs, to determine the nonbypassable wires charge that the electric utility shall impose to recover the difference and the costs for closing and decommissioning and Transition Costs from retail customers in the service territory of the electric utility.

(4) If the Commission estimates that the amount the electric utility will receive from the sale of electric energy and capacity purchased pursuant to power purchase contracts will be more than the amount it estimates the electric utility needs to recover its costs for such contracts, then the Commission shall deduct the difference from the amount it estimates to be the utility's costs for closing and decommissioning nuclear generating plants, and the amount it estimates to be the utility's Transition Costs, to determine the nonbypassable wires charge or credit that the electric utility shall impose on or pay to the retail customers in the service territory of the electric utility.

(5) The Commission shall determine on an annual basis whether the amount it estimated to be the electric utility's costs for power purchase contracts, closing and decommissioning costs, and Transition Costs are more or less than the amounts the electric utility actually required, and the Commission shall adjust the nonbypassable wires charge or credit established pursuant to paragraph 3 or 4 of this subsection accordingly. In estimating the amount the electric utility will receive from the sale of energy and capacity under paragraph 3 or 4 of this subsection, the Commission shall consider the geographical market in which the incumbent electric utility and other Electric Generation Suppliers may reasonably compete for the sale and purchase of electric energy and capacity. In determining the amount the electric utility actually needs to recover its costs related to the power purchase contracts, the Commission shall determine the amount, if any, by which those costs were reduced because of the utility's efforts to mitigate those costs; and if there were such reductions, the Commission shall calculate any adjustment required by this paragraph so that any such reduction is shared equally by (i) the retail customers located in the service territory of the electric utility and (ii) the shareholders of that utility.

C. Customers that switch to an alternative Electric Generation Supplier or choose to be served by on-site generation and to be disconnected from the system power grid shall pay or receive the nonbypassable wires charge or credit as determined by the Commission. Customers that install self-generation and remain connected to the system power grid for supplemental, standby, or other electric services shall pay or receive the nonbypassable wires charge or credit as determined by the Commission.

§ 56-253.9. Supplier of Last Resort and Default Provider.

A. Supplier of Last Resort. - During the price protection period and any extended period provided for in § 56-253.11, the incumbent electric utility providing electric distribution services shall retain the obligation to provide generation services to retail customers who are unable to obtain an alternative Electric Generation Supplier or who have returned to such services by choice or because they were terminated by such supplier. The incumbent utility also shall retain the obligation to provide emergency service and such other services that are required to ensure universal service.

B. Default Provider. - During the price protection period and any extended period provided for in § 56-253.11, the incumbent utility providing electric distribution services shall retain the obligation to provide generation services to customers that do not exercise their right to choose an alternative Electric Generation Supplier.

§ 56-253.10. Metering and Billing Services.

A. Metering Services. - Metering services shall continue to be provided by the incumbent electric utility during the price protection period and any extended period provided for in § 56-253.11.

B. Billing Services. - Billing services shall continue to be provided by the incumbent electric utility during the price protection period and any extended period provided for in § 56-253.11. Beginning January 1, 2002, bills to retail electric customers shall separately list unbundled charges for the generation, transmission, and distribution of electrical energy, and for the nonbypassable wires charge or credit imposed under § 56-253.8 as determined by the Commission.

§ 56-253.11. Price Protection.

A. Price Protection Period. - There is hereby established for all retail electric customers a price protection period that shall begin January l, 2002, and end January 1, 2007. During the price protection period the Commission shall implement a transition price protection plan pursuant to which the sum of the rates for each incumbent electric utility's transmission, distribution and generation services shall be equal to the level of such utility's bundled electric transmission, distribution and generation rates as of January 1, 1999 ("Bundled Rate"), and the fuel cost recovery charge established by the Commission pursuant to § 56-253.6.C; provided, however, that an incumbent electric utility may petition the Commission for an adjustment in such rates under emergency circumstances as provided for in § 56-245.

B. Rates. - Except as provided for in § 56-245 for emergency circumstances, retail electric generation service customers of each incumbent electric utility shall pay such utility's bundled rate, as established by the Commission pursuant to subsection A of this section, and the fuel cost recovery charge established by the Commission pursuant to § 56­253.6.C, during the price protection period. Customers that switch to an alternative Electric Generation Supplier during the price protection period or any extended period provided under subsection C of this section shall pay or receive the nonbypassable wires charge or credit as determined under § 56-253.8. Customers that switch to an alternative Electric Generation Supplier during the price protection period or any such extended period may return to the incumbent utility's regulated Bundled Rate and the applicable fuel cost recovery charge at any time during the price protection period or any such extended period without penalty.

C. The price protection period may be extended for up to two years by the General Assembly upon recommendation of the Legislative Deregulation Oversight Committee established under § 56-253.1.

§ 56-253.12 Transition Regulation.

During the price protection period and any extended period provided in § 56-253.11, no incumbent electric utility may sell or otherwise transfer any of its generation facilities to an entity other than an affiliated interest, as defined in § 56-76, without Commission approval. Further, to the extent that such electric utility is the Electric Generation Supplier for retail customers within its service territory, such utility shall commit sufficient generating facilities that it owns or has contracted for to serve the electric requirements of such retail customers during the price protection period and any extended period provided in § 56-253.11.

§ 56-253.13 Market Power; Attorney General; Commission.

A. The Attorney General, with technical assistance from the Commission, shall monitor the electric generation supply market in the Commonwealth during the price protection period and any extended period provided for in § 56-253.11, to identify any potential restraints of trade or monopolistic practices that could act or tend to act to decrease competition in the generation supply market after such price protection period and any such extended period in violation of the Virginia Antitrust Act (§ 59.1-9.1 et seq.). The Attorney General shall report any such potential restraints of trade or monopolistic practices to the General Assembly and the Legislative Deregulation Oversight Committee by December 1, 2002, and each December 1 thereafter during the price protection period and any such extended period.

B. The Commission shall monitor operations in the electric generation supply market during the price protection period and any extended period provided for in § 56-253.11, to determine the existence of any operating conditions or potential operating conditions that could impede the development of an effective competitive electric generation supply market in the Commonwealth after the price protection period and any such extended period. The Commission shall report any such operating conditions or potential operating conditions to the General Assembly and the Legislative Deregulation Oversight Committee by December 1, 2002, and each December 1 thereafter during the price protection period and any such extended period.

C. Notwithstanding the provisions of § 56-253.4.A(3), each person generating electricity in the Commonwealth, except persons generating electricity exclusively for their own consumption, shall provide to the Attorney General and/or Commission, upon request, such reports as the Attorney General and/or Commission may require to fulfill their responsibilities in this section and § 56-253.1.

§ 56-88

"Public utility" means . . . except that generation shall not include electric generation deregulated pursuant to § 56-253.4:A.3.

§ 56-232

The term "public utility" as used . . ., to or for the public, except that production shall not include electric generation deregulated by the Commission pursuant to § 56-253.4.A.3.

"Aggregator" means a person, licensed by the Commission, that seeks to aggregate or combine a number of retail customers for purposes of negotiation for procurement of electric generation services.

"Electric Generation Supplier" means a person, licensed by the Commission, that seeks to sell, offers to sell, or sells electric generation services to retail electric customers in the Commonwealth.

"Incumbent electric utility" means the public utility that, prior to the effective date of Article 3.1 of this title, supplied electric energy and capacity to retail electric customers located in the exclusive service territory established by the Commission for that public utility.

"Power Generator" means an entity, permitted by the Commission, that owns, constructs or operates a facility used for the generation of electric energy within the Commonwealth.

§ 56-265.1

(b) "Public utility" means . . . except that generation shall not include electric generation deregulated pursuant to § 56-253.4:A.3.