THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY McCALL, EACHUS, GEORGE, BRENNAN, BUXTON, CARROLL, CALTAGIRONE, CASORIO, CONKLIN, CRUZ, DONATUCCI, FREEMAN, GODSHALL, HALUSKA, HANNA, HARKINS, KIRKLAND, KORTZ, MANDERINO, MANN, MICOZZIE, MUNDY, MUSTIO, M. O'BRIEN, O'NEILL, PAYTON, READSHAW, SANTARSIERO, SANTONI, SCAVELLO, SCHRODER, SHAPIRO, SIPTROTH, K. SMITH, SOLOBAY, SWANGER, J. TAYLOR, THOMAS, WHITE, YUDICHAK, JOSEPHS, HORNAMAN, JOHNSON, MciLVAINE SMITH, MELIO, D. COSTA, CLYMER, BRIGGS, GABIG, HELM, KULA, BROOKS, HESS, YOUNGBLOOD, GALLOWAY, FRANKEL, BURNS, STABACK, BOYD, MURT, MAHONEY AND GEIST, MARCH 17, 2009

AS REPORTED FROM COMMITTEE ON CONSUMER AFFAIRS, HOUSE OF REPRESENTATIVES, AS AMENDED, APRIL 21, 2009   

AN ACT

Amending Title 66 (Public Utilities) of the Pennsylvania

Consolidated Statutes, further providing for the definition

<--

of 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 

<--

definitions 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:

* * *

"Deferred amounts."  The reasonable and prudent costs

<--

incurred by an electric distribution company to procure power

for its default service obligation not recovered in current

customer rates and credits provided to customers who elect to

participate in a phase-in plan and obtain service from an

electric generation supplier, both including allowable costs as

defined under Statement of Financial Accounting Standards No.

71, Accounting for the Effects of Certain Types of Regulation

(Financial Accounting Standards Board, issued December 1982, as

amended), provided that the cost of capital, for the purposes of

section 2816 (relating to rate phase-in plans), shall be equal

to the rate specified under section 202 of the act of January

30, 1974 (P.L.13, No.6), referred to as the Loan Interest and

Protection Law.

* * *

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

electric distribution company for electric service including all

applicable riders and surcharges.

"Phase-in plan."  A plan filed with the Pennsylvania Public

<--

Utility Commission by an electric distribution company that

provides the customer with the option to phase in any initial

increase in the GENERATION rate that may occur upon the

expiration of that electric distribution company's generation

rate cap. 

"Prepayment plan."  A plan filed with the Pennsylvania Public

Utility Commission by an electric distribution company that

provides the customer with the option to begin the phase-in

period prior to the expiration of that electric distribution

company's generation rate cap.

* * *

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 subject to a

<--

generation rate cap as described under this chapter as of

December 31, 2009, shall file a competitively neutral phase-in

plan with the commission to provide residential and small

commercial customers the option to phase in any initial increase

in the price for generation service that may occur upon the

expiration of the generation rate cap for such provider

specified in section 2804(4) (relating to standards for

restructuring of electric industry) or a restructuring plan in

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 and shall

<--

require the affirmative consent of the customer.

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

commission approval and shall meet the following conditions:

(1)  Such The phase-in plan shall offer a gradual

<--

transition to prices at the level permitted pursuant to a

commission-approved procurement plan under section 2807(e)

(3.1) (relating to duties of electric distribution companies)

beginning on the expiration date of the generation rate cap

for the provider.

(2)  The phase-in plan shall ensure that the annual

<--

percentage increase in the overall generation rate charged to

<--

each customer class under the plan shall, if greater than

<--

10%, be phased in in three equal annual percentage increases,

provided that the increase in any one year shall not exceed

15% 20% of the overall rate in effect for the customer class

<--

on the last day before the expiration of the generation rate

caps during the three-year period specified in subsection

(a). After appropriate notice and opportunity for hearing,

the commission may provide for an additional three-year

period for the recovery of deferred amounts under this

section.

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

<--

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

rate cap In addition to the phase-in plan provided under

<--

paragraph (2), an electric distribution company may offer

customers the option to participate in a rate increase

prepayment plan, provided that the customer accrues interest

on any prepaid amount at a rate of at least 6% compounded

<--

annually. Customer participation in any plan approved under

this subsection shall be voluntary and shall require the

<--

affirmative consent of the customer.

(4)  Such The following shall apply:

<--

(i)  The phase-in plan shall specify the means of

providing notice to customers of the option to

participate in such the plan on a voluntary basis. The

<--

electric distribution company shall provide notice of the

phase-in plan in at least four billing statements prior

to the expiration of the generation rate cap. Notice

shall also be posted on the electric distribution

company's Internet website. The notice shall include all

of the following:

(A)  Specific information on the phase-in plan

including potential benefits and costs with regard to

participating in the plan.

(B)  A form to elect participation in the phase-

in plan.

(C)  A toll-free telephone number to allow a

customer to elect participation in the phase-in plan

by telephone or to receive additional information.

(ii)  In order to participate in the phase-in plan,

the customer shall file a written or electronic election

to participate.

(5)  In order to ensure competitive neutrality, the

phase-in plan or prepayment plan shall be implemented through

nonbypassable charges and credits on customer's bills

separate from the default generation charge, and the plans

shall be available to customers whether the customer chooses

to take electric generation service from the electric

distribution company or from an electric generation supplier.

(6)  A customer participating in the phase-in plan can

elect to withdraw at any time by notifying the electric

distribution company by filing a written or electronic

election to withdraw.

(c)  Recovery.--The default service provider shall be

eligible to fully recover the amount of the deferred payment 

<--

deferred amounts resulting from a customer's participation in

<--

the phase-in plan from such customers by means of a

<--

nonbypassable charge to such customers subject to the conditions

established in subsection (b). The charge shall be a

reconcilable automatic adjustment charge under section 1307

(relating to sliding scale of rates; adjustments), shall be

applied to participating customers on a customer class basis,

shall not be included in other charges on the electric

<--

distribution company's bill and shall not appear as a separate

<--

line item on the customer's bill. The recovery authorized under

<--

this subsection may not be applied to customers who are not

participating in a plan under this section. Any plan approved by

the commission shall be considered a new service offered for the

first time under section 2804(f)(vi). 2804(4)(vi).

<--

(d)  Notice and collection of deferred payments.--

<--

(1)  The default service provider shall provide adequate

notice to all customers participating in the phase-in plan of

the intent to collect deferred amounts provided for in

subsection (c). The default service provider shall provide

notice at least 90 days prior to collecting such deferred

amounts and continue to provide notice at 30-day intervals

thereafter.

(2)  The default service provider shall charge a customer

for the current balance of the customer's deferred amounts at

the time the customer:

(i)  leaves the default service provider's service

territory;

(ii)  elects to withdraw from the phase-in plan as

provided under subsection (b)(6); or

(iii)  chooses an electric generation supplier for

their electric generation service.

(e)  Deferred costs amounts.--The For purposes of this

<--

chapter, the commission shall permit such deferred costs amounts 

<--

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) (f)  Credit.--In For customers participating in a

<--

prepayment plan, in the event a customer leaves the default

service provider's system service territory prior to the full

<--

distribution of amounts collected, a credit, with interest, will

<--

be applied to the customer's final bill and any remainder, with

<--

interest, shall be refunded to the customer.

(f) (g)  Intangible transition property.--An electric

<--

distribution company's right to recover costs under an approved

phase-in plan shall be deemed intangible transition property for

purposes of section 2812 (relating to approval of transition

bonds), but not for any other section of Chapter 28 (relating to

restructuring of electric utility industry), and the commission

is authorized to issue a qualified rate order under section 2812

with respect to such costs and to issue such other orders and

take such actions as may be necessary or proper for the electric

distribution company to issue transition bonds, as provided in

section 2812, secured by the electric distribution company's

right to recover such costs.

Section 3.  This act shall take effect immediately.