THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY MILLARD, TURZAI, SAYLOR, BEYER, BOBACK, BOYD, BROOKS, CAUSER, CLYMER, D. COSTA, CREIGHTON, CUTLER, DALLY, EVERETT, GEIST, GINGRICH, GROVE, HARHART, HARRIS, HICKERNELL, KAUFFMAN, M. KELLER, MAJOR, MOUL, PHILLIPS, REICHLEY, ROCK, ROHRER, SCAVELLO, STERN, SWANGER, VULAKOVICH, WATSON AND BENNINGHOFF, APRIL 7, 2009

REFERRED TO COMMITTEE ON CONSUMER AFFAIRS, APRIL 7, 2009  

AN ACT

Amending Title 66 (Public Utilities) of the Pennsylvania

Consolidated Statutes, in restructuring of electric utility

industry, further providing for definitions; and providing

for rate phase-in plans.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 2803 of Title 66 of the Pennsylvania

Consolidated Statutes is amended by adding a definition to read:

§ 2803.  Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

* * *

"Overall rate."  The sum of all retail rates charged by an

electric distribution company for electric service, including

all applicable riders and surcharges.

"Rate phase-in plan" or "plan."  A plan filed with the

commission by an electric distribution company solely to phase

in any initial increase in the rate for generation service that

may occur upon the expiration of that electric distribution

company's generation rate cap. The plan may not address or

affect any other rate changes filed by the electric distribution

company.

* * *

Section 2.  Title 66 is amended by adding a section to read:

§ 2816.  Rate phase-in plans.

(a)  General rule.--Within 90 days of the effective date of

this section, each electric distribution company shall file a

rate phase-in plan with the commission to provide residential

and small commercial customers, who use up to 25 kw in maximum

registered peak load, the option to phase in any overall rate

increase that:

(1)  is greater than 25% for a customer class; and

(2)  results from an initial increase in the price for

default generation service that may occur

upon the expiration of the generation rate cap for such electric

distribution company specified under section 2804(4) (relating

to standards for restructuring of electric industry) or a

restructuring plan under section 2806(f) (relating to

implementation, pilot programs and performance-based rates) and

ending no later than three years after such expiration date.

Customer participation in any plan approved under this

subsection shall be voluntary.

(b)  Conditions.--Each rate phase-in plan shall be subject to

commission approval, which shall be granted no less than 90 days

prior to implementation of the phase-in plan in each electric

distribution company's service territory and shall meet the

following conditions:

(1)  The plan, which shall be implemented through a

nonbypassable credit or charge to customers' bills separate

from the default generation charge, shall offer a transition

to prices at the level permitted pursuant to a commission-

approved procurement plan beginning on the expiration date of

the generation rate cap for the electric distribution

company.

(2)  The plan shall provide for all of the following:

(i)  that the overall rate increase resulting from an

initial increase in the rate for default generation

service charged to each customer class under the plan

shall be phased in for as long as three years; and

(ii)  that the overall rate increase in the first

year shall not exceed 25% of the overall rate in effect

for that customer class on the last day prior to

expiration of the generation rate cap, and the overall

rate increase in the second year shall not exceed an

additional 25% of the overall rate in effect for that

customer class on the last day prior to expiration of the

generation rate cap.

(3)  The plan may offer the customer the option to begin

the phase-in period prior to the expiration of the generation

rate cap, provided that the customer accrues interest on any

prepaid amount at a rate of 6% compounded annually. Customer

participation in any plan approved under this subsection

shall be voluntary.

(4)  The plan shall specify the means of providing notice

to customers of the option to participate in such plan on a

voluntary basis.

(5)  Any customer is eligible to participate in a phase-

in plan as described under this section whether the customer

chooses to take electric generation service from an electric

distribution company or from an electric generation supplier.

(c)  Recovery.--

(1)  The electric distribution company shall fully

recover the expenses associated with implementing a plan,

including related administrative costs, and the amount of the

deferred payments resulting from customers' participation in

the plan and a carrying charge of 6% compounded annually on

the deferred payments from the customers by means of a

competitively neutral nonbypassable charge to each customer

class, subject to the conditions established under subsection

(b).

(2)  The charge shall be a reconcilable automatic

adjustment charge under section 1307 (relating to sliding

scale of rates; adjustments), be applied to participating

customers on a customer class basis, be included in other

charges on the electric distribution company's bill and not

appear as a separate line item on a customer's bill.

(3)  Any rate phase-in plan approved by the commission

shall be considered a new service offered for the first time

under section 2804(4)(vi).

(4)  The amounts deferred together with the carrying

charges thereon shall be deemed to be transition costs for

the purposes of section 2812 (relating to approval of

transition bonds); and upon issuance by the commission of a

qualified rate order under section 2812, such amounts

together with any cost related to the issuance of transition

bonds shall be deemed qualified transition expenses.

(d)  Deferred amounts.--The commission shall permit deferred

costs and associated carrying charges to be recorded for

accounting purposes on an electric distribution company's books

of account as a regulatory asset where the electric distribution

company is the default service provider.

(e)  Credit.--If a customer enrolled in a plan that begins

prior to the expiration of the electric distribution company's

generation rate cap leaves the electric distribution company's 

system prior to the full distribution of amounts collected, a

credit shall be applied to the customer's final bill and any

remainder shall be refunded to the customer.

(f)  Intangible transition property.--

(1)  An electric distribution company's right to recover

costs under an approved phase-in plan shall be deemed

intangible transition property for the purposes of sections

2808(e) and 2812, but not for any other sections of this

chapter.

(2)  The commission may issue a qualified rate order

under section 2812 with respect to such costs and to issue

other orders and take actions as may be necessary or proper

for the electric distribution company or its assignee to

issue transition bonds, as provided under section 2812,

secured by such intangible transition property; and upon

issuance by the commission of a qualified rate order, the

amounts authorized to be imposed on customer bills shall be

deemed intangible transition charges for the purposes of

section 2812.

(g)  Penalty for failure to file.--If any electric

distribution company fails to file a rate phase-in plan with the

time required by subsection (a), the commission shall impose a

fine of $100,000 per day on that electric distribution company

until it files such plan.

Section 3.  This act shall take effect immediately.