PRINTER'S NO. 97
No. 103 Session of 1999
INTRODUCED BY SALVATORE, WHITE, BELL, THOMPSON AND TOMLINSON, JANUARY 11, 1999
REFERRED TO CONSUMER PROTECTION AND PROFESSIONAL LICENSURE, JANUARY 11, 1999
AN ACT 1 Amending Title 66 (Public Utilities) of the Pennsylvania 2 Consolidated Statutes, prohibiting anticompetitive practices 3 involving energy-related and other services by electric and 4 gas utilities using ratepayer-based assets. 5 The General Assembly of the Commonwealth of Pennsylvania 6 hereby enacts as follows: 7 Section 1. Title 66 of the Pennsylvania Consolidated 8 Statutes is amended by adding a chapter to read: 9 CHAPTER 22 10 ELECTRIC AND GAS UTILITY FAIR COMPETITION 11 Sec. 12 2201. Short title of chapter. 13 2202. Findings. 14 2203. Definitions. 15 2204. Prohibition of anticompetitive cross-subsidies. 16 2205. Applicability of Federal, State and local law. 17 2206. Enforcement. 18 2207. Applicability of antitrust laws.
1 2208. Penalties. 2 § 2201. Short title of chapter. 3 This chapter shall be known and may be cited as the Electric 4 and Gas Utility Fair Competition Act. 5 § 2202. Findings. 6 The General Assembly finds and declares as follows: 7 (1) Small business plays an important role in the 8 efficient functioning of a competitive market and allows 9 consumers to benefit from safe, reliable and high-quality 10 service at lower prices. 11 (2) The current statutory and regulatory regime, 12 including the antitrust laws, has been unsuccessful and has 13 effectively prevented anticompetitive practices such as 14 cross-subsidization of nonregulated enterprises employing 15 assets acquired through the provision of regulated services. 16 (3) In order to maintain a vigorous competitive 17 environment, the General Assembly finds that it is necessary 18 to prohibit cross-subsidization. 19 § 2203. Definitions. 20 The following words and phrases when used in this chapter 21 shall have the meanings given to them in this section unless the 22 context clearly indicates otherwise: 23 "Affiliate." An entity that directly or indirectly owns or 24 controls, is owned or controlled by or is under common ownership 25 and control with another entity. 26 "Cross-subsidization." The use of funds, personnel or other 27 assets derived from or paid for by regulated service activities 28 to reduce the cost of nonregulated construction and service 29 contracting provided by an affiliate of an electric or gas 30 utility, or the electric or gas utility directly, or the use of 19990S0103B0097 - 2 -
1 funds, personnel or other assets derived from or paid for by 2 nonregulated service activities to reduce the cost of regulated 3 services by an electric or gas utility. 4 "Electric or gas utility." An electric or gas utility 5 subject to regulation as a monopoly. 6 "Nonregulated services." Construction and services 7 contracting provided by a regulated electric or gas utility 8 through a subsidiary or affiliate not subject to the 9 jurisdiction of the commission. 10 "Regulated services." Electric or gas utility services 11 subject to the jurisdiction of the commission. 12 "Service." Includes a product. 13 "Utility contractor." A person, including an individual, 14 corporation, partnership, firm, incorporator or unincorporated 15 association, or other business or legal entity, which contracts 16 with an electric or gas utility, either orally or in writing, to 17 provide nonregulated services. The term also includes a 18 contractor, subcontractor, material supplier or other person. 19 The term does not include an officer, director or employee of an 20 electric or gas utility. 21 § 2204. Prohibition of anticompetitive cross-subsidies. 22 (a) General prohibitions.-- 23 (1) No electric or gas utility, its affiliate or a 24 utility contractor shall, directly or indirectly, use 25 proceeds obtained from providing regulated service or assets 26 obtained with such proceeds to subsidize nonregulated 27 services. This prohibition shall include, but not be limited 28 to, the use of vehicles, service tools and instruments, 29 billing practices, office space or employees and the costs, 30 salaries and benefits attributable thereto. 19990S0103B0097 - 3 -
1 (2) No electric or gas utility shall allow the name, 2 logo, service mark, trademark or trade name of a separate 3 subsidiary or affiliate to resemble the name, logo, service 4 mark, trademark or trade name of the utility, and neither the 5 utility nor the separate subsidiary or affiliate may trade 6 upon, promote or advertise their affiliate or related status. 7 (3) No electric or gas utility shall provide any 8 affiliate, subsidiary or other commercial entity with the use 9 of its intangible assets, permits, licenses, exemptions or 10 variances granted to it by the Commonwealth or political 11 subdivisions, agencies or local and municipal governments 12 therein, including, but not limited to, mailing lists, 13 bonding ability, insurance, lines of credit, marketing and 14 other customer-related information unless the use of such 15 intangible assets is available to all commercial businesses 16 on a nondiscriminatory basis. 17 (4) No electric or gas utility shall grant a preference 18 or privilege to an affiliate in a transaction of business 19 between them or to a utility contractor in awarding a 20 contract. 21 (5) No electric or gas utility shall purchase, receive, 22 hold or otherwise acquire the stock, shares, bonds, real 23 estate debentures, notes or other securities or other 24 interests in an affiliate unless the utility pays at least 25 the fair market value for the interest acquired. 26 (6) No electric or gas utility or affiliate shall trade 27 upon, promote or advertise their affiliate status. 28 (7) No electric or gas utility or affiliate shall 29 commingle their accounts, books and records. The accounts, 30 books and records of an affiliate shall be separate and 19990S0103B0097 - 4 -
1 distinct from those of the utility. 2 (8) The affiliate shall not share the use of premises, 3 equipment, inventory, space or personnel. 4 (b) Nonregulated services.--A utility may only engage in the 5 provision of nonregulated services through a legally separate 6 affiliate which transacts its business in this Commonwealth 7 separate and independent of the utility. The affiliate shall 8 transact its business in this Commonwealth separate and 9 independent of the utility so as to gain no competitive 10 advantage by virtue of its status as an affiliate. 11 § 2205. Applicability of Federal, State and local law. 12 Any company subject to this chapter shall abide by all 13 applicable Federal, State and local laws. 14 § 2206. Enforcement. 15 (a) Powers of Attorney General.--It shall be the duty of the 16 Attorney General to enforce violations of this chapter. 17 (b) Criminal liability.--Any person who knowingly engages or 18 knowingly attempts to engage in an activity that is prohibited 19 by section 2204 (relating to prohibition of anticompetitive 20 cross-subsidies) commits a felony. 21 (c) Private right of action.--Any person who is injured in 22 that person's business or property by reason of a violation of 23 this chapter: 24 (1) May bring a civil action in the Commonwealth Court. 25 (2) Shall recover treble damages, together with the cost 26 of suit and reasonable attorney fees. 27 (d) Interest.--The court may award, pursuant to a motion by 28 a person who brings a timely private right of action under this 29 section, simple interest on actual damages for the period 30 beginning on the date of service of that person's pleading 19990S0103B0097 - 5 -
1 setting forth a claim under this chapter and ending on the date 2 of judgment or for any shorter period therein if the court finds 3 that the award of such interest for such period is just under 4 the circumstances. 5 (e) Private injunctive relief.--Any person shall be entitled 6 to sue for and have injunctive relief in any court of 7 appropriate jurisdiction over the parties against threatened 8 loss or damage by a violation of this chapter. In any action 9 under this subsection in which the plaintiff substantially 10 prevails, the court shall award the cost of suit, including a 11 reasonable attorney fee, to the plaintiff. 12 § 2207. Applicability of antitrust laws. 13 As the provision of nonregulated services is conducted in 14 competition with nonregulated entities, such activities are 15 neither conducted pursuant to a clearly articulated and 16 affirmatively expressed policy of the Commonwealth nor actively 17 supervised by the Commonwealth, and each electric or gas 18 utility, affiliate and utility contractor shall be subject to 19 all applicable Federal and State laws, rules and regulations 20 governing competitive practices of business entities. 21 § 2208. Penalties. 22 Any penalty imposed or relief granted under this chapter 23 shall be in addition to and not in lieu of any penalty or relief 24 authorized by any other law to be imposed with respect to the 25 conduct described in this chapter. 26 Section 2. All acts and parts of acts are repealed insofar 27 as they are inconsistent with this act. 28 Section 3. This act shall take effect in 60 days. L23L66JLW/19990S0103B0097 - 6 -