PRIOR PRINTER'S NO. 1477 PRINTER'S NO. 2262
No. 1134 Session of 2007
INTRODUCED BY TOMLINSON, M. WHITE, PILEGGI, RAFFERTY, WASHINGTON, ERICKSON, KITCHEN, LOGAN AND GREENLEAF, OCTOBER 19, 2007
SENATOR TOMLINSON, CONSUMER PROTECTION AND PROFESSIONAL LICENSURE, AS AMENDED, JUNE 26, 2008
AN ACT 1 Amending Title 66 (Public Utilities) of the Pennsylvania 2 Consolidated Statutes, in restructuring of electric utility 3 industry, FURTHER PROVIDING FOR DEFINITIONS; providing for <-- 4 rate change mitigation and for energy efficiency and demand- <-- 5 response measures; and further providing for duties of 6 electric distribution companies. 7 The General Assembly of the Commonwealth of Pennsylvania 8 hereby enacts as follows: 9 Section 1. Title 66 of the Pennsylvania Consolidated <-- 10 Statutes is amended by adding sections to read: 11 § 2806.1. Rate change mitigation. 12 (a) Prepayment or deferment.--Following the expiration of a 13 generation rate cap, if a default service provider's total 14 retail rate for a customer class rises by more than 12% 15 following the expiration of a generation rate cap, the following 16 shall apply: 17 (1) The default service provider shall offer all of its 18 residential and small business customers using 25kW or less 19 in maximum registered peak load the opportunity to prepay or
1 defer a portion of the increase by implementing a deferral or 2 phase-in of the rate increase for up to three years. 3 (2) Competitively neutral rate mitigation options shall 4 be included in the rate deferral or phase-in program of the 5 default service provider to begin with the expiration of a 6 generation rate gap approved by the commission. 7 (3) Default service providers may fully recover the 8 reasonable carrying costs associated with a rate increase 9 deferral program, including associated administrative costs 10 and pay any reasonable carrying cost on prepayment by 11 customers. 12 (b) Other mitigation strategies.--In addition to the 13 mitigation strategy under subsection (a), a default service 14 provider may propose other reasonable rate mitigation strategies 15 that would reflect the incurrence of reasonable costs. 16 § 2806.2. Energy efficiency and demand-response measures. 17 (a) Policy.--It is the policy of the Commonwealth that 18 electric distribution companies are required to use cost- 19 effective energy efficiency and demand-response measures to 20 reduce delivery load. Requiring investment in cost-effective 21 energy efficiency and demand-response measures will reduce 22 direct and indirect costs to consumers by decreasing 23 environmental impacts and by avoiding or delaying the need for 24 new generation, transmission and distribution infrastructure. 25 (b) Goals.--Electric distribution companies shall implement 26 cost-effective energy efficiency and conservation measures to 27 meet the following energy saving goals: 28 (1) By May 31, 2013, each electric distribution company 29 shall reduce its total annual deliveries to retail customers 30 by 2%. This load reduction shall be measured against the 20070S1134B2262 - 2 -
1 expected load forecasted by the commission for June 1, 2012, 2 through May 31, 2013. The commission shall determine and make 3 public the forecasts to be used for each electric 4 distribution company no later than May 31, 2008. 5 (2) By November 30, 2013, the commission shall evaluate 6 the costs and benefits of these efficiency and conservation 7 programs. If the benefits have been shown to exceed the 8 costs, consistent with the total resource cost test, the 9 commission shall set additional, incremental energy 10 efficiency and conservation goals for the period ending May 11 31, 2018. 12 (3) After May 31, 2018, the commission shall continue to 13 evaluate the costs and benefits of efficiency and 14 conservation measures and may adopt additional incremental 15 load reduction standards for electric distribution companies. 16 (c) Reduction in peak demand.-- 17 (1) Electric distribution companies shall implement 18 cost-effective demand response measures to reduce peak demand 19 by at least 3% in the 100 hours of highest demand. This 20 reduction will be measured against the electric distribution 21 company's peak demand in the 100 hours of greatest demand for 22 June 1, 2007, through May 31, 2008. The reductions shall be 23 accomplished by May 31, 2012. 24 (2) By November 31, 2012, the commission shall compare 25 the total costs of these demand-response measures to the 26 total savings in energy and capacity costs to Pennsylvania 27 retail customers. If the benefits have been shown to exceed 28 the costs, consistent with the total resource cost test, the 29 commission shall order electric distribution companies to 30 seek additional incremental peak demand reductions for the 20070S1134B2262 - 3 -
1 100 hours of greatest demand or an alternative measure 2 adopted by the commission. The reductions shall be measured 3 from the electric distribution company's peak demand for the 4 period from June 1, 2011, through May 31, 2012. The mandated 5 reductions shall be accomplished no later than May 31, 2017. 6 (3) After May 31, 2017, the commission shall continue to 7 evaluate the costs and benefits of demand-response measures 8 and may adopt additional incremental peak reduction standards 9 for electric distribution companies. 10 (d) Oversight.--Electric distribution companies shall be 11 responsible for overseeing the design, development and filing of 12 energy efficiency and demand-response plans with the commission. 13 Electric distribution companies shall implement 100% of the 14 demand-response measures in the plans. Electric distribution 15 companies shall implement 100% of the energy efficiency measures 16 approved by the commission and may, as part of that 17 implementation, outsource various aspects of program development 18 and implementation. A minimum of 10% of the entire portfolio of 19 cost-effective energy efficiency measures shall be procured from 20 units of local government, municipal corporations, school 21 districts and community college districts. The commission shall 22 coordinate the implementation of these measures. The portfolio 23 of measures, administered by the utilities, shall be designed to 24 achieve the annual savings targets described in subsections (b) 25 and (c). The utility and the commission shall agree upon a 26 reasonable portfolio of measures and determine the measurable 27 corresponding percentage of the savings goals associated with 28 measures implemented by the utility. 29 (e) Plan.--No later than November 15, 2008, each electric 30 distribution company shall file an energy efficiency and demand- 20070S1134B2262 - 4 -
1 response plan with the commission to meet the energy efficiency 2 and demand-response standards. No later than December 1, 2008, 3 each electric distribution company shall file an energy 4 efficiency, conservation and demand-response program to meet the 5 goals identified in subsections (b) and (c). Subsequent plans 6 shall be filed pursuant to the commission's direction to obtain 7 the delivered and peak load reduction goals. Every five years 8 thereafter, each electric distribution company shall file an 9 energy efficiency and demand-response plan with the commission. 10 If a distribution company does not file such a plan, it shall 11 face a penalty of $100,000 per day until the plan is filed. Each 12 utility's plan shall set forth the utility's proposals to meet 13 the utility's portion of the energy efficiency standards 14 identified in subsection (b) and the demand-response standards 15 identified in subsection (c). The commission shall seek public 16 comment on the utility's plan and shall issue an order approving 17 or disapproving each plan at a set date after its submission. If 18 the commission disapproves a plan, the commission shall describe 19 in detail the reasons for the disapproval and describe a 20 procedure by which the utility may file a revised draft of the 21 plan to satisfactorily address the commission's concerns. If the 22 utility does not refile with the commission within 60 days, the 23 utility shall be subject to penalties at a rate of $100,000 per 24 day until the plan is filed. This process shall continue and 25 penalties shall accrue until the utility has successfully filed 26 a portfolio of energy efficiency and demand-response measures. 27 Penalties shall be deposited into the appropriate sustainable 28 energy fund. In submitting proposed energy efficiency and 29 demand-response plans and funding levels to meet the savings 30 goals adopted by this section, the utility shall: 20070S1134B2262 - 5 -
1 (1) Demonstrate that its proposed energy efficiency and 2 demand-response measures will achieve the requirements of 3 this chapter. 4 (2) Present specific proposals to implement new building 5 and appliance standards that have been placed into effect. 6 (3) Present estimates of the total amount paid for 7 electric service expressed on a per kilowatt hour basis 8 associated with the proposed portfolio of measures designed 9 to meet the requirements of this chapter. 10 (4) Coordinate with the commission to present a 11 portfolio of energy efficiency measures targeted to 12 households at or below 150% of the poverty level at a level 13 proportionate to those households' share of total annual 14 utility revenues in this Commonwealth. 15 (5) Demonstrate that its overall portfolio of energy 16 efficiency and demand-response measures, not including 17 programs covered by paragraph (4), are cost effective using 18 the total resource cost test and represent a diverse cross 19 section of opportunities for customers of all rate classes to 20 participate in the programs. 21 (6) Include a proposed cost-recovery tariff mechanism to 22 fund the proposed energy efficiency and demand-response 23 measures and to ensure the recovery of the prudently and 24 reasonably incurred costs of commission-approved programs. 25 (7) Provide for an annual independent evaluation of the 26 performance of the cost-effectiveness of the utility's 27 portfolio of measures, as well as a full review of the five- 28 year results of the broader net program impacts and, to the 29 extent practicable, for adjustment of the measures on a 30 going-forward basis as a result of the evaluations. The 20070S1134B2262 - 6 -
1 resources dedicated to evaluation shall not exceed 3% of 2 portfolio resources in any given year. 3 (f) Allocation limit.--No more than 3% of energy efficiency 4 and demand-response program revenue may be allocated for 5 demonstration of breakthrough equipment and devices. 6 (g) Failure to meet standard.--If an electric distribution 7 company fails to meet the efficiency standards specified in 8 subsections (b) and (c), it shall be assessed a civil penalty in 9 an amount up to $5,000,000 in accordance with this subsection. 10 In addition, the responsibility for implementing the energy 11 efficiency measures of the utility making the payment shall be 12 transferred to the commission if, after five years, or in any 13 subsequent five-year period, the utility fails to meet the 14 efficiency standard. The commission shall implement a 15 competitive procurement program to procure resources necessary 16 to meet the standards in this chapter. 17 (h) Definitions.--As used in this section the following 18 words and phrases shall have the meanings given to them in this 19 subsection: 20 "Amount per kilowatt hour." The total amount paid for 21 electric service expressed on a per kilowatt hour basis. 22 "Cost-effective." Measures which satisfy the total resource 23 cost test. 24 "Total amount paid for electric service." The term includes, 25 without limitation, estimated amounts paid for generation, 26 transmission, distribution, surcharges and add-on taxes. 27 Section 2. Section 2807(e) of Title 66, amended July 17, 28 2007 (P.L.120, No.36), is amended to read: 29 § 2807. Duties of electric distribution companies. 30 * * * 20070S1134B2262 - 7 -
1 (e) Obligation to serve.--[An electric distribution 2 company's obligation to provide] The obligation of a default 3 service provider to furnish electric service following 4 implementation of restructuring and the choice of alternative 5 generation by a customer is revised as follows: 6 (1) While an electric distribution company collects 7 either a competitive transition charge or an intangible 8 transition charge or until 100% of its customers have choice, 9 whichever is longer, the electric distribution company shall 10 continue to have the full obligation to serve, including the 11 connection of customers, the delivery of electric energy and 12 the production or acquisition of electric energy for 13 customers. 14 [(2) At the end of the transition period, the commission 15 shall promulgate regulations to define the electric 16 distribution company's obligation to connect and deliver and 17 acquire electricity under paragraph (3) that will exist at 18 the end of the phase-in period. 19 (3) If a customer contracts for electric energy and it 20 is not delivered or if a customer does not choose an 21 alternative electric generation supplier, the electric 22 distribution company or commission-approved alternative 23 supplier shall acquire electric energy at prevailing market 24 prices to serve that customer and shall recover fully all 25 reasonable costs.] 26 (3.1) From and after the expiration of an electric 27 distribution company's obligation to supply electric energy 28 and capacity to retail customers at capped rates, if a 29 customer contracts for electric energy and capacity and the 30 chosen electric generation supplier does not supply the 20070S1134B2262 - 8 -
1 service or if a customer does not choose an alternative 2 electric generation supplier, the default service provider 3 shall provide electric generation supply service to that 4 customer pursuant to a commission-approved competitive 5 procurement plan. The electric power acquired to provide 6 electric generation service under this paragraph shall be 7 procured through competitive procurement processes that may 8 include one or more of the following: 9 (i) Auctions. 10 (ii) Requests for proposal. 11 (iii) Bilateral contracts negotiated between the 12 electric distribution company or commission-approved 13 alternative supplier and a wholesale electric supplier, 14 except that the bilateral contracts shall be entered into 15 at the sole discretion of the electric distribution 16 company or commission-approved alternative supplier and 17 the commission shall have no authority to require the 18 contracts and shall be at prices no greater than 19 reasonable forward market prices. 20 (iv) Any other electric energy approved by the 21 commission through regulation. 22 (3.2) The commission shall not modify contracts or 23 disallow costs associated with contracts entered into 24 pursuant to an approved competitive procurement process. 25 Prices obtained through the competitive procurement processes 26 shall be deemed to be prevailing market prices. The resources 27 procured pursuant to this paragraph may reflect a mix of 28 long-term, short-term or spot market purchases. The 29 commission may disallow cost recovery if there has been 30 fraud, collusion, market manipulation or similar activities 20070S1134B2262 - 9 -
1 with regard to these contracts. 2 (4) If a customer that chooses an alternative supplier 3 and subsequently desires to return to the local distribution 4 company for generation service, the local distribution 5 company shall treat that customer exactly as it would any new 6 applicant for energy service. 7 (5) (i) Notwithstanding paragraph (3), the electric 8 distribution company or commission-approved alternative 9 supplier may, in its sole discretion, offer large 10 customers with a peak demand of 15 megawatts or greater 11 at one meter at a location in its service territory any 12 negotiated rate for service at all of the customers' 13 locations within the service territory for any duration 14 agreed upon by the electric distribution company or 15 commission-approved alternative supplier and the large 16 customer. The commission shall permit, but shall not 17 require, an electric distribution company or commission- 18 approved alternative supplier to provide service to large 19 customers under this paragraph. Contract rates entered 20 into under this paragraph shall be subject to review by 21 the commission in order to ensure that all costs related 22 to the rates are borne by the parties to the contract and 23 that no costs related to the rates are borne by other 24 customers or customer classes. If no costs related to the 25 rates are borne by other customers or customer classes, 26 the commission shall approve the contract within 90 days 27 of its filing, or it shall be deemed approved by 28 operation of law upon expiration of the 90 days. 29 Information submitted under this paragraph shall be 30 subject to the commission's procedures for the filing of 20070S1134B2262 - 10 -
1 confidential and proprietary information. 2 (ii) For purposes of providing service under this 3 paragraph to customers with a peak demand of 20 megawatts 4 or greater at one meter at a location within that 5 distribution company's service territory, an electric 6 distribution company that has completed its restructuring 7 transition period as of the effective date of this 8 paragraph may, in its sole discretion, acquire an 9 interest in a generation facility or construct a 10 generation facility specifically to meet the energy 11 requirements of the customers, including the electric 12 requirements of the customers' other billing locations 13 within its service territory. The electric distribution 14 company must commence construction of the generation 15 facility or contract to acquire the generation interest 16 within three years after the effective date of this 17 paragraph, except that the electric distribution company 18 may add to the generation facilities it commenced 19 construction or contracted to acquire after this three- 20 year period to serve additional load of customers for 21 whom it commenced construction or contracted to acquire 22 generation within three years. Nothing in this paragraph 23 requires or authorizes the commission to require an 24 electric distribution company to commence construction or 25 acquire an interest in a generation facility. The 26 electric distribution company's interest in the 27 generation facility it built or contracted to acquire 28 shall be no larger than necessary to meet peak demand of 29 customers served under this subparagraph. During times 30 when the customer's demand is less than the electric 20070S1134B2262 - 11 -
1 distribution company's generation interest, the electric 2 distribution company may sell excess power on the 3 wholesale market. At no time shall the costs associated 4 with the generating facility interests be included in 5 rate base or otherwise reflected in rates. The generation 6 facility interests shall not be commission-regulated 7 assets. 8 Section 3. This act shall take effect in 60 days. 9 SECTION 1. SECTION 2803 OF TITLE 66 OF THE PENNSYLVANIA <-- 10 CONSOLIDATED STATUTES IS AMENDED BY ADDING DEFINITIONS TO READ: 11 § 2803. DEFINITIONS. 12 THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS CHAPTER 13 SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE 14 CONTEXT CLEARLY INDICATES OTHERWISE: 15 * * * 16 "BILATERAL CONTRACT." AN AGREEMENT, AS APPROVED BY THE 17 PENNSYLVANIA PUBLIC UTILITY COMMISSION, REACHED BY TWO PARTIES, 18 EACH ACTING IN ITS OWN INDEPENDENT SELF-INTEREST, AS A RESULT OF 19 NEGOTIATIONS FREE OF UNDUE INFLUENCE, DURESS OR FAVORITISM, IN 20 WHICH THE ELECTRIC ENERGY SUPPLIER AGREES TO SELL AND THE 21 ELECTRIC DISTRIBUTION COMPANY AGREES TO BUY A SPECIFIED QUANTITY 22 OF ELECTRIC ENERGY AT A PRICE FOR A SPECIFIED PERIOD OF TIME 23 UNDER TERMS AGREED TO BY BOTH PARTIES, AND WHICH FOLLOWS A 24 STANDARD INDUSTRY TEMPLATE WIDELY ACCEPTED IN THE INDUSTRY OR 25 VARIATIONS THERETO ACCEPTED BY THE PARTIES AND APPROVED BY THE 26 COMMISSION. STANDARD INDUSTRY TEMPLATES INCLUDE THE EEI MASTER 27 AGREEMENT FOR PHYSICAL ENERGY PURCHASES AND SALES AND THE ISDA 28 MASTER AGREEMENT FOR FINANCIAL ENERGY PURCHASES AND SALES. 29 * * * 30 "DEFAULT SERVICE PROVIDER." AN ELECTRIC DISTRIBUTION COMPANY 20070S1134B2262 - 12 -
1 WITHIN ITS CERTIFICATED SERVICE TERRITORY OR A PENNSYLVANIA 2 PUBLIC UTILITY COMMISSION-APPROVED ALTERNATIVE SUPPLIER 3 PROVIDING GENERATION SERVICE TO RETAIL ELECTRIC CUSTOMERS WHO: 4 (1) CONTRACT FOR ELECTRIC POWER, INCLUDING, BUT NOT 5 LIMITED TO, ENERGY AND CAPACITY, AND THE CHOSEN ELECTRIC 6 GENERATION SUPPLIER DOES NOT SUPPLY THE SERVICE; OR 7 (2) DO NOT CHOOSE AN ALTERNATIVE ELECTRIC GENERATION 8 SUPPLIER. 9 * * * 10 SECTION 2. TITLE 66 IS AMENDED BY ADDING A SECTION TO READ: 11 § 2806.1. RATE CHANGE MITIGATION. 12 (A) DEFERRAL PROGRAM.--AN ELECTRIC DISTRIBUTION COMPANY 13 WHOSE TOTAL RETAIL RATE INCLUDING GENERATION, TRANSMISSION AND 14 DISTRIBUTION SERVICE COMPONENTS AND ANY APPLICABLE SURCHARGE FOR 15 A CUSTOMER CLASS IS ANTICIPATED TO RISE BY MORE THAN 12% UPON 16 THE EXPIRATION OF A GENERATION RATE CAP ESTABLISHED IN AN 17 ELECTRIC UTILITY RESTRUCTURING PROCEEDING SPECIFIED IN SECTION 18 2804(4) (RELATING TO STANDARDS FOR RESTRUCTURING OF ELECTRIC 19 INDUSTRY) OR A RESTRUCTURING PLAN SHALL SUBMIT A RATE MITIGATION 20 PLAN TO THE COMMISSION FOR APPROVAL NO LATER THAN ONE YEAR PRIOR 21 TO THE DATE OF THE EXPIRATION OF THE GENERATION RATE CAP. THE 22 RATE MITIGATION PLAN SHALL PROVIDE THE FOLLOWING: 23 (1) A RATE MITIGATION PHASE-IN PROGRAM, WHICH SHALL BE 24 AUTHORIZED FOR RESIDENTIAL OR SMALL BUSINESS CUSTOMERS, USING 25 25KW OR LESS IN MAXIMUM REGISTERED PEAK LOAD. THE RATE 26 MITIGATION PROGRAM SHALL LIMIT THE ANTICIPATED TOTAL RETAIL 27 RATE INCREASE FOR THE INITIAL DEFAULT SERVICE GENERATION RATE 28 INCREASE FOR A PERIOD OF UP TO FIVE YEARS IN ACCORDANCE WITH 29 THE FOLLOWING: 30 (I) THE PLAN SHALL PROVIDE FOR RESIDENTIAL AND SMALL 20070S1134B2262 - 13 -
1 BUSINESS CUSTOMERS USING 25KW OR LESS TO BE PERMITTED TO 2 MAKE PAYMENTS IN ACCORDANCE WITH THE FOLLOWING SCHEDULE: 3 (A) YEAR ONE FOLLOWING THE EXPIRATION OF THE 4 GENERATION RATE CAPS - NO MORE THAN A 9% INCREASE 5 OVER THE RATE ON THE EFFECTIVE DATE OF THIS SECTION 6 OR AS CERTIFIED BY THE COMMISSION. 7 (B) YEAR TWO FOLLOWING THE EXPIRATION OF THE 8 GENERATION RATE CAPS - NO MORE THAN AN 18% INCREASE 9 OVER THE RATE ON THE EFFECTIVE DATE OF THIS SECTION 10 OR AS CERTIFIED BY THE COMMISSION. 11 (C) YEAR THREE FOLLOWING THE EXPIRATION OF THE 12 GENERATION RATE CAPS - NO MORE THAN A 27% INCREASE 13 OVER THE RATE ON THE EFFECTIVE DATE OF THIS SECTION 14 OR AS CERTIFIED BY THE COMMISSION. 15 (D) YEAR FOUR FOLLOWING THE EXPIRATION OF THE 16 GENERATION RATE CAPS - NO MORE THAN A 36% INCREASE 17 OVER THE RATE ON THE EFFECTIVE DATE OF THIS SECTION 18 OR AS CERTIFIED BY THE COMMISSION. 19 (E) YEAR FIVE FOLLOWING THE EXPIRATION OF THE 20 GENERATION RATE CAPS - NO MORE THAN A 45% INCREASE 21 OVER THE RATE ON THE EFFECTIVE DATE OF THIS SECTION 22 OR AS CERTIFIED BY THE COMMISSION. 23 (II) A CUSTOMER MAY ELECT, BUT SHALL NOT BE 24 REQUIRED, TO PARTICIPATE IN THE RATE MITIGATION PHASE-IN 25 PROGRAM UNDER THIS PARAGRAPH. THE ELECTRIC DISTRIBUTION 26 COMPANY SHALL PROVIDE NOTICE OF THE ABILITY TO ELECT TO 27 PARTICIPATE IN THE RATE MITIGATION PROGRAM IN AT LEAST 28 FOUR BILLING STATEMENTS PRIOR TO THE EXPIRATION OF THE 29 GENERATION RATE CAP. NOTICE SHALL ALSO BE POSTED ON THE 30 ELECTRIC DISTRIBUTION COMPANY'S INTERNET WEBSITE. THE 20070S1134B2262 - 14 -
1 NOTICE SHALL INCLUDE: 2 (A) A FORM TO ELECT PARTICIPATION IN THE 3 PROGRAM. 4 (B) A TOLL-FREE TELEPHONE NUMBER TO ALLOW A 5 CUSTOMER TO ELECT PARTICIPATION IN THE PROGRAM BY 6 TELEPHONE OR TO RECEIVE ADDITIONAL INFORMATION. 7 (III) IN ORDER TO PARTICIPATE IN THE RATE MITIGATION 8 PHASE-IN PROGRAM, THE CUSTOMER SHALL FILE A WRITTEN OR 9 ELECTRONIC ELECTION TO PARTICIPATE. 10 (2) A COMPETITIVELY NEUTRAL RATE MITIGATION OPTION 11 APPROVED BY THE COMMISSION BEFORE BEING IMPLEMENTED. A 12 CUSTOMER TAKING GENERATION SERVICE FROM EITHER THE DEFAULT 13 SERVICE PROVIDER OR AN ALTERNATIVE ELECTRIC GENERATION 14 SUPPLIER MAY SELECT THE OPTION. 15 (3) IN ADDITION TO THE MITIGATION STRATEGY UNDER THIS 16 SUBSECTION, AN ELECTRIC DISTRIBUTION COMPANY MAY PROPOSE 17 OTHER REASONABLE RATE MITIGATION STRATEGIES. 18 (B) COMMISSION DUTIES.--THE COMMISSION SHALL REVIEW THE PLAN 19 AND CERTIFY THE RATE AS OF THE EFFECTIVE DATE OF THIS SECTION AS 20 IT PERTAINS TO RESIDENTIAL AND SMALL BUSINESS CUSTOMERS USING 21 25KW OR LESS IN MAXIMUM REGISTERED PEAK LOAD PRIOR TO THE START 22 DATE OF THE PROGRAM. 23 SECTION 3. SECTION 2807(E) OF TITLE 66 IS AMENDED TO READ: 24 § 2807. DUTIES OF ELECTRIC DISTRIBUTION COMPANIES. 25 * * * 26 (E) OBLIGATION TO SERVE.--AN ELECTRIC DISTRIBUTION COMPANY'S 27 OBLIGATION TO PROVIDE ELECTRIC GENERATION SUPPLY SERVICE 28 FOLLOWING [IMPLEMENTATION OF RESTRUCTURING AND THE CHOICE OF 29 ALTERNATIVE GENERATION BY A CUSTOMER] THE EXPIRATION OF A 30 GENERATION RATE CAP SPECIFIED UNDER SECTION 2804(4) (RELATING TO 20070S1134B2262 - 15 -
1 STANDARDS FOR RESTRUCTURING OF ELECTRIC INDUSTRY) OR A 2 RESTRUCTURING PLAN UNDER SECTION 2806(F) IS REVISED AS FOLLOWS: 3 (1) WHILE AN ELECTRIC DISTRIBUTION COMPANY COLLECTS 4 EITHER A COMPETITIVE TRANSITION CHARGE OR AN INTANGIBLE 5 TRANSITION CHARGE OR UNTIL 100% OF ITS CUSTOMERS HAVE CHOICE, 6 WHICHEVER IS LONGER, THE ELECTRIC DISTRIBUTION COMPANY SHALL 7 CONTINUE TO HAVE THE FULL OBLIGATION TO SERVE, INCLUDING THE 8 CONNECTION OF CUSTOMERS, THE DELIVERY OF ELECTRIC ENERGY AND 9 THE PRODUCTION OR ACQUISITION OF ELECTRIC ENERGY FOR 10 CUSTOMERS. 11 [(2) AT THE END OF THE TRANSITION PERIOD, THE COMMISSION 12 SHALL PROMULGATE REGULATIONS TO DEFINE THE ELECTRIC 13 DISTRIBUTION COMPANY'S OBLIGATION TO CONNECT AND DELIVER AND 14 ACQUIRE ELECTRICITY UNDER PARAGRAPH (3) THAT WILL EXIST AT 15 THE END OF THE PHASE-IN PERIOD. 16 (3) IF A CUSTOMER CONTRACTS FOR ELECTRIC ENERGY AND IT 17 IS NOT DELIVERED OR IF A CUSTOMER DOES NOT CHOOSE AN 18 ALTERNATIVE ELECTRIC GENERATION SUPPLIER, THE ELECTRIC 19 DISTRIBUTION COMPANY OR COMMISSION-APPROVED ALTERNATIVE 20 SUPPLIER SHALL ACQUIRE ELECTRIC ENERGY AT PREVAILING MARKET 21 PRICES TO SERVE THAT CUSTOMER AND SHALL RECOVER FULLY ALL 22 REASONABLE COSTS.] 23 (3.1) FOLLOWING THE EXPIRATION OF AN ELECTRIC 24 DISTRIBUTION COMPANY'S OBLIGATION TO PROVIDE ELECTRIC 25 GENERATION SUPPLY SERVICE TO RETAIL CUSTOMERS AT CAPPED 26 RATES, IF A CUSTOMER CONTRACTS FOR ELECTRIC GENERATION SUPPLY 27 SERVICE AND THE CHOSEN ELECTRIC GENERATION SUPPLIER DOES NOT 28 PROVIDE THE SERVICE OR IF A CUSTOMER DOES NOT CHOOSE AN 29 ALTERNATIVE ELECTRIC GENERATION SUPPLIER, THE DEFAULT SERVICE 30 PROVIDER SHALL PROVIDE ELECTRIC GENERATION SUPPLY SERVICE TO 20070S1134B2262 - 16 -
1 THAT CUSTOMER PURSUANT TO A COMMISSION-APPROVED COMPETITIVE 2 PROCUREMENT PLAN. THE ELECTRIC POWER ACQUIRED SHALL BE 3 PROCURED THROUGH COMPETITIVE PROCUREMENT PROCESSES AND SHALL 4 INCLUDE A PRUDENT MIX OF THE FOLLOWING: 5 (I) AUCTIONS. 6 (II) REQUESTS FOR PROPOSAL. 7 (III) SPOT MARKET PURCHASES. 8 (IV) LONG-TERM PURCHASE CONTRACTS OF NOT LESS THAN 9 THREE AND NOT MORE THAN 20 YEARS, UNLESS THE COMMISSION 10 DETERMINES THAT A LONGER TERM IS NECESSARY FOR 11 RELIABILITY IN THE ACQUISITION OF GENERATION AND THAT IT 12 IS IN THE BEST INTEREST OF THE CONSUMER TO EXTEND THE 13 TERM OF THE CONTRACT BEYOND 20 YEARS. 14 (V) BILATERAL CONTRACTS WHICH SHALL BE AT PRICES 15 WHICH ARE: 16 (A) NO GREATER THAN THE COST OF OBTAINING 17 GENERATION IN THE WHOLESALE MARKET, AS DETERMINED BY 18 THE COMMISSION; OR 19 (B) CONSISTENT WITH A COMMISSION-APPROVED 20 COMPETITIVE PROCUREMENT PROCESS. ANY AGREEMENT 21 BETWEEN AFFILIATED PARTIES SHALL BE SUBJECT TO REVIEW 22 AND APPROVAL OF THE PENNSYLVANIA PUBLIC UTILITY 23 COMMISSION UNDER CHAPTER 21 (RELATING TO RELATIONS 24 WITH AFFILIATED INTERESTS). IN NO CASE SHALL THE COST 25 OF OBTAINING GENERATION FROM ANY AFFILIATED INTEREST 26 BE GREATER THAN THE COST OF OBTAINING GENERATION 27 UNDER COMPARABLE TERMS IN THE WHOLESALE MARKET AT THE 28 TIME OF PURCHASE. 29 (3.2) THE PRUDENT MIX OF RESOURCES ACQUIRED PURSUANT TO 30 PARAGRAPH (3.1) SHALL BE DESIGNED TO ENSURE: 20070S1134B2262 - 17 -
1 (I) ADEQUATE AND RELIABLE SERVICE. 2 (II) THE LEAST COST TO CUSTOMERS OVER TIME. 3 (III) COMPLIANCE WITH THE REQUIREMENTS OF PARAGRAPH 4 (3.1). 5 (3.3) THE DEFAULT SERVICE PROVIDER SHALL FILE A PLAN FOR 6 COMPETITIVE PROCUREMENT WITH THE COMMISSION AND OBTAIN 7 COMMISSION APPROVAL OF THE PLAN BEFORE THE COMPETITIVE 8 PROCESS IS IMPLEMENTED. THE COMMISSION SHALL HOLD HEARINGS AS 9 NECESSARY ON THE PROPOSED PLAN. IF THE COMMISSION FAILS TO 10 ISSUE A FINAL ORDER ON THE PLAN WITHIN NINE MONTHS OF THE 11 DATE THAT THE PLAN IS FILED, THE PLAN SHALL BE DEEMED TO BE 12 APPROVED AND THE DEFAULT SERVICE PROVIDER MAY IMPLEMENT THE 13 PLAN AS FILED. COSTS INCURRED THROUGH THE COMPETITIVE 14 PROCUREMENT PROCESSES SHALL BE DEEMED TO BE THE LEAST COST ON 15 A LONG-TERM BASIS. 16 (3.4) NOTWITHSTANDING SECTIONS 508 (RELATING TO POWER OF 17 COMMISSION TO VARY, REFORM AND REVISE CONTRACTS) AND 2102 18 (RELATING TO APPROVAL OF CONTRACTS WITH AFFILIATED 19 INTERESTS), THE COMMISSION SHALL NOT MODIFY CONTRACTS OR 20 DISALLOW COSTS ASSOCIATED WITH AN APPROVED PROCUREMENT 21 PROCESS WHEN IT HAS REVIEWED AND APPROVED THE RESULTS OF THE 22 PROCUREMENT, UNLESS OTHERWISE SPECIFIED UNDER THIS TITLE. 23 (3.5) IN DETERMINING IF THE DEFAULT ELECTRIC SERVICE 24 PROVIDER HAS OBTAINED GENERATION SUPPLY AT THE LEAST COST, 25 THE COMMISSION SHALL CONSIDER THE UTILITY'S OBLIGATION TO 26 PROVIDE ADEQUATE AND RELIABLE SERVICE TO CUSTOMERS, AND SHALL 27 MAKE SPECIFIC FINDINGS WHICH SHALL INCLUDE THE FOLLOWING: 28 (I) THE UTILITY HAS TAKEN ALL PRUDENT STEPS 29 NECESSARY TO NEGOTIATE FAVORABLE GENERATION SUPPLY 30 CONTRACTS AND TO RELIEVE THE UTILITY FROM TERMS IN 20070S1134B2262 - 18 -
1 EXISTING CONTRACTS WITH ITS GENERATION SUPPLIERS WHICH 2 ARE OR MAY BE ADVERSE TO THE INTERESTS OF THE UTILITY 3 CUSTOMERS. 4 (II) THE UTILITY HAS TAKEN ALL PRUDENT STEPS 5 NECESSARY TO OBTAIN LEAST COST GENERATION SUPPLY 6 CONTRACTS ON A LONG-TERM, SHORT-TERM AND SPOT MARKET 7 BASIS. 8 (III) NEITHER THE UTILITY NOR ITS AFFILIATED 9 INTEREST HAS WITHHELD FROM THE MARKET ANY GENERATION 10 SUPPLY WHICH SHOULD HAVE BEEN UTILIZED AS PART OF A LEAST 11 COST PROCUREMENT POLICY. THE GENERATION RATES PROCURED BY 12 A COMPETITIVE PROCUREMENT PROCESS SHALL NOT ALLOW THE 13 CROSS SUBSIDIZATION OF ONE CUSTOMER CLASS BY ANOTHER. THE 14 COMMISSION MAY DISALLOW COST RECOVERY IF THERE IS REASON 15 TO BELIEVE THAT FRAUD, COLLUSION OR MARKET MANIPULATION 16 WITH REGARD TO THESE CONTRACTS HAS OCCURRED OR FOR 17 FAILURE TO IMPLEMENT THE COMPETITIVE PROCUREMENT PLAN 18 APPROVED BY THE COMMISSION. 19 (3.6) NOTWITHSTANDING ANY OTHER PROVISION OF THIS TITLE 20 TO THE CONTRARY, THE COMMISSION MAY MODIFY LONG-TERM 21 CONTRACTS OR DISALLOW COSTS ASSOCIATED WITH CONTRACTS ENTERED 22 INTO PURSUANT TO A COMMISSION-APPROVED PROCUREMENT PLAN IF 23 THE COMMISSION DETERMINES THAT: 24 (I) THE CONTRACT DOES NOT COMPLY WITH THE 25 COMMISSION-APPROVED PROCUREMENT PLAN; OR 26 (II) THE CONTRACT ADVERSELY IMPACTS THE RATES OF A 27 CONSUMER DUE TO A CHANGE IN CIRCUMSTANCES. 28 (4) IF A CUSTOMER THAT CHOOSES AN ALTERNATIVE SUPPLIER 29 AND SUBSEQUENTLY DESIRES TO RETURN TO THE LOCAL DISTRIBUTION 30 COMPANY FOR GENERATION SERVICE, THE LOCAL DISTRIBUTION 20070S1134B2262 - 19 -
1 COMPANY SHALL TREAT THAT CUSTOMER EXACTLY AS IT WOULD ANY NEW 2 APPLICANT FOR ENERGY SERVICE. 3 (5) (I) NOTWITHSTANDING PARAGRAPH [(3)] (3.1), THE 4 ELECTRIC DISTRIBUTION COMPANY OR COMMISSION-APPROVED 5 ALTERNATIVE SUPPLIER MAY, IN ITS SOLE DISCRETION, OFFER 6 LARGE CUSTOMERS WITH A PEAK DEMAND OF [15] SEVEN 7 MEGAWATTS OR GREATER AT ONE METER AT A LOCATION IN ITS 8 SERVICE TERRITORY ANY NEGOTIATED RATE FOR SERVICE AT ALL 9 OF THE CUSTOMERS' LOCATIONS WITHIN THE SERVICE TERRITORY 10 FOR ANY DURATION AGREED UPON BY THE ELECTRIC DISTRIBUTION 11 COMPANY OR COMMISSION-APPROVED ALTERNATIVE SUPPLIER AND 12 THE LARGE CUSTOMER. THE COMMISSION SHALL PERMIT, BUT 13 SHALL NOT REQUIRE, AN ELECTRIC DISTRIBUTION COMPANY OR 14 COMMISSION-APPROVED ALTERNATIVE SUPPLIER TO PROVIDE 15 SERVICE TO LARGE CUSTOMERS UNDER THIS PARAGRAPH. CONTRACT 16 RATES ENTERED INTO UNDER THIS PARAGRAPH SHALL BE SUBJECT 17 TO REVIEW BY THE COMMISSION IN ORDER TO ENSURE THAT ALL 18 COSTS RELATED TO THE RATES ARE BORNE BY THE PARTIES TO 19 THE CONTRACT AND THAT NO COSTS RELATED TO THE RATES ARE 20 BORNE BY OTHER CUSTOMERS OR CUSTOMER CLASSES. IF NO COSTS 21 RELATED TO THE RATES ARE BORNE BY OTHER CUSTOMERS OR 22 CUSTOMER CLASSES, THE COMMISSION SHALL APPROVE THE 23 CONTRACT WITHIN 90 DAYS OF ITS FILING, OR IT SHALL BE 24 DEEMED APPROVED BY OPERATION OF LAW UPON EXPIRATION OF 25 THE 90 DAYS. INFORMATION SUBMITTED UNDER THIS PARAGRAPH 26 SHALL BE SUBJECT TO THE COMMISSION'S PROCEDURES FOR THE 27 FILING OF CONFIDENTIAL AND PROPRIETARY INFORMATION. 28 (II) FOR PURPOSES OF PROVIDING SERVICE UNDER THIS 29 PARAGRAPH TO CUSTOMERS WITH A PEAK DEMAND OF 20 MEGAWATTS 30 OR GREATER AT ONE METER AT A LOCATION WITHIN THAT 20070S1134B2262 - 20 -
1 DISTRIBUTION COMPANY'S SERVICE TERRITORY, AN ELECTRIC 2 DISTRIBUTION COMPANY THAT HAS COMPLETED ITS RESTRUCTURING 3 TRANSITION PERIOD AS OF THE EFFECTIVE DATE OF THIS 4 PARAGRAPH MAY, IN ITS SOLE DISCRETION, ACQUIRE AN 5 INTEREST IN A GENERATION FACILITY OR CONSTRUCT A 6 GENERATION FACILITY SPECIFICALLY TO MEET THE ENERGY 7 REQUIREMENTS OF THE CUSTOMERS, INCLUDING THE ELECTRIC 8 REQUIREMENTS OF THE CUSTOMERS' OTHER BILLING LOCATIONS 9 WITHIN ITS SERVICE TERRITORY. THE ELECTRIC DISTRIBUTION 10 COMPANY MUST COMMENCE CONSTRUCTION OF THE GENERATION 11 FACILITY OR CONTRACT TO ACQUIRE THE GENERATION INTEREST 12 WITHIN THREE YEARS AFTER THE EFFECTIVE DATE OF THIS 13 PARAGRAPH, EXCEPT THAT THE ELECTRIC DISTRIBUTION COMPANY 14 MAY ADD TO THE GENERATION FACILITIES IT COMMENCED 15 CONSTRUCTION OR CONTRACTED TO ACQUIRE AFTER THIS THREE- 16 YEAR PERIOD TO SERVE ADDITIONAL LOAD OF CUSTOMERS FOR 17 WHOM IT COMMENCED CONSTRUCTION OR CONTRACTED TO ACQUIRE 18 GENERATION WITHIN THREE YEARS. NOTHING IN THIS PARAGRAPH 19 REQUIRES OR AUTHORIZES THE COMMISSION TO REQUIRE AN 20 ELECTRIC DISTRIBUTION COMPANY TO COMMENCE CONSTRUCTION OR 21 ACQUIRE AN INTEREST IN A GENERATION FACILITY. THE 22 ELECTRIC DISTRIBUTION COMPANY'S INTEREST IN THE 23 GENERATION FACILITY IT BUILT OR CONTRACTED TO ACQUIRE 24 SHALL BE NO LARGER THAN NECESSARY TO MEET PEAK DEMAND OF 25 CUSTOMERS SERVED UNDER THIS SUBPARAGRAPH. DURING TIMES 26 WHEN THE CUSTOMER'S DEMAND IS LESS THAN THE ELECTRIC 27 DISTRIBUTION COMPANY'S GENERATION INTEREST, THE ELECTRIC 28 DISTRIBUTION COMPANY MAY SELL EXCESS POWER ON THE 29 WHOLESALE MARKET. AT NO TIME SHALL THE COSTS ASSOCIATED 30 WITH THE GENERATING FACILITY INTERESTS BE INCLUDED IN 20070S1134B2262 - 21 -
1 RATE BASE OR OTHERWISE REFLECTED IN RATES. THE GENERATION 2 FACILITY INTERESTS SHALL NOT BE COMMISSION-REGULATED 3 ASSETS. 4 (6) A DEFAULT SERVICE PLAN APPROVED BY THE COMMISSION 5 PRIOR TO THE EFFECTIVE DATE OF THIS SECTION SHALL REMAIN IN 6 EFFECT THROUGH ITS APPROVED TERM. AT ITS SOLE OPTION, THE 7 DEFAULT SERVICE PROVIDER MAY PROPOSE AMENDMENTS TO ITS 8 APPROVED PLAN THAT ARE CONSISTENT WITH THIS SECTION, AND THE 9 COMMISSION SHALL ISSUE A DECISION WHETHER TO ACCEPT OR REJECT 10 THE PROPOSED AMENDMENTS WITHIN NINE MONTHS OF THE DATE THAT 11 THE AMENDMENTS ARE FILED. IF THE COMMISSION FAILS TO ISSUE A 12 FINAL ORDER WITHIN NINE MONTHS, THE AMENDMENTS SHALL BE 13 DEEMED TO BE APPROVED AND THE DEFAULT SERVICE PROVIDER MAY 14 IMPLEMENT THE AMENDMENTS AS FILED. 15 (7) THE DEFAULT SERVICE PROVIDER SHALL OFFER RESIDENTIAL 16 AND SMALL BUSINESS CUSTOMERS A RATE THAT SHALL CHANGE NO MORE 17 FREQUENTLY THAN ON A QUARTERLY BASIS. ALL RATES SHALL BE 18 REVIEWED BY THE COMMISSION TO ENSURE THAT THE COSTS OF 19 PROVIDING SERVICE TO EACH CUSTOMER CLASS ARE NOT SUBSIDIZED 20 BY ANY OTHER CLASS. 21 SECTION 4. THIS ACT SHALL TAKE EFFECT IN 60 DAYS. J12L66SFL/20070S1134B2262 - 22 -