SB 1269

Legislative Transition Task Force of the Virginia Electric Utility Restructuring Act

June 13, 2000, Richmond

The first meeting of the task force's second year featured reports on activities during the 2000 legislative session, the status of activities underway at the State Corporation Commission (SCC), and Virginia Power's retail competition pilot program.

Task Force Actions

Staff briefed task force members on the missions delegated to the body by 1999's Electric Utility Restructuring Act. The act, which requires the commencement of consumer choice in the purchase of electricity generation services starting in 2002, directs the Legislative Transition Task Force to work collaboratively with the SCC in conjunction with the phase-in of retail competition within the Commonwealth.

In addition to examining specific issues relating to the implementation of the restructuring act, the task force is directed to make annual reports concerning the progress of each stage of the phase-in of retail competition, offering such recommendations as may be appropriate in order to maintain the Commonwealth's position as a low-cost electricity market and to ensure that residential customers and small business customers benefit from competition.

In order to address concerns with the act that became apparent as the Commonwealth moved to implement consumer choice for electricity generation, the task force's work in 1999 produced four items of legislation that were recommended to the 2000 Session of the General Assembly. The 2000 Session's amendments to the restructuring act did not substantively change the course outlined in the act; rather, these amendments sought to clarify and fine-tune the prior year's legislation.

This year the task force will receive recommendations from the Consumer Advisory Board regarding the topics of low-income energy assistance, energy efficiency, and renewable energy programs.

SCC Implementation Developments

The SCC has several rule-making procedures underway that will provide needed detail for successful implementation of retail competition. On May 26, the commission adopted interim rules for retail choice pilot programs that allow limited numbers of Virginians to shop for electricity and natural gas. Within the next several weeks, the commission expects to adopt final regulations governing the transfer of Virginia utilities' transmission assets to regional transmission entities. The SCC approved Virginia Power's pilot program on April 28, while decisions concerning pilot programs proposed by AEP-Virginia and Rappahannock Electric Cooperative are pending. Additionally, net energy metering rules were promulgated by the commission on May 25. Other matters pending before the commission include rule-making concerning the separation of incumbent utilities' generation, transmission, and distribution functions and the relationships between cooperatives and their cooperative affiliates furnishing non-utility services. The SCC is also preparing a plan for competition in metering services and billing services. The plan will be presented to the task force prior to January 1, 2001.

On June 9, the SCC announced the "price to compare" for the cost of generation and transmission services under Virginia Power's Richmond-area pilot program. The average annual price to compare, which ranges from 3.688 cents per kWh for large industrial consumers to 5.117 cents per kWh for residential consumers, tells potential competitive power suppliers the price they have to beat in order to attract customers. The data will allow consumers to calculate the estimated annual savings that can be achieved by switching to a lower-priced competitive supplier. The actual cost to the consumer will vary depending on actual usage patterns. The total cost charged to users will include regulated distribution charges and a wires charge for recovery of the utility's stranded costs. The wires charge is based on the difference between the projected market price for generation and the utility's capped rate.

The implementation of the Federal Energy Regulatory Commission's Order 2000 was discussed. This FERC order is intended to encourage voluntary membership by electric utilities in regional transmission entities (RTEs). The SCC is in the process of considering concerns expressed by some Virginia utilities with respect to possible federal preemption in this area. The SCC's rules concerning Virginia utilities' transfer of transmission assets to RTEs are expected in July.

The SCC is maintaining a website on Virginia Energy Choice, the Commonwealth's effort to introduce Virginians to competition for electricity and natural gas. The site's address is The SCC's toll-free telephone number for information about Virginia Energy Choice is 1-877-YES-2004.

Virginia Power's Pilot Program

Phase I of Virginia Power's retail access pilot program, named Project Current Choice, focuses on the Richmond area and provides for up to 35,623 participants. Phase II, which is scheduled to start in the last quarter of 2000, will allow an equal number of customers in the Fairfax area to participate. The pilot program will cease upon the implementation of retail choice under the restructuring act in January 2002. The utility sponsoring a pilot program will be responsible for consumer education; upon the start of statewide competition in 2002, the SCC will assume responsibility for consumer education efforts.

The pilot program has two goals: to test procedures and systems and to create consumer awareness and interest. A Virginia Power spokesman stressed that expectations for the pilot need to be realistic and that the success of the pilot will not be measured by the number of customers who switch to competitor suppliers.

Next Meeting

The Task Force will convene its next meeting in Richmond on August 21, beginning at 1:00 p.m. The meeting will address developments at the federal level and activities in other states.

The Honorable Thomas K. Norment, Jr., Chairman
Legislative Services contact: Franklin D. Munyan