PRINTER'S NO. 1903
No. 1507 Session of 2003
INTRODUCED BY SCRIMENTI, READSHAW, HARHAI, LAUGHLIN, LEDERER,
GEORGE, FABRIZIO, BELARDI, YOUNGBLOOD, SHANER, WASHINGTON,
WALKO, CRUZ, DeWEESE, ROEBUCK, MUNDY, FREEMAN, WANSACZ,
STABACK, BISHOP, WHEATLEY, JOSEPHS, HANNA, HORSEY, BROWNE,
THOMAS, SURRA, TIGUE, CAWLEY AND YUDICHAK, JUNE 3, 2003
REFERRED TO COMMITTEE ON CONSUMER AFFAIRS, JUNE 3, 2003
AN ACT
1 Amending Title 66 (Public Utilities) of the Pennsylvania
2 Consolidated Statutes, defining "affordable"; and adding
3 provisions to require that rates of public utilities be
4 affordable.
5 The General Assembly of the Commonwealth of Pennsylvania
6 hereby enacts as follows:
7 Section 1. Section 102 of Title 66 of the Pennsylvania
8 Consolidated Statutes is amended by adding a definition to read:
9 § 102. Definitions.
10 Subject to additional definitions contained in subsequent
11 provisions of this part which are applicable to specific
12 provisions of this part, the following words and phrases when
13 used in this part shall have, unless the context clearly
14 indicates otherwise, the meanings given to them in this section:
15 "Affordable." Relating to the ability of customers to pay
16 their utility bills while maintaining an acceptable standard of
17 living, taking into consideration the financial circumstances of
1 customers and the community as indicated by factors such as
2 household income, age, family size, climate and other factors
3 bearing upon the cost of living in that particular community.
4 * * *
5 Section 2. Sections 315(a) and (c), 508, 523(a), 529(i),
6 1103(a), 1301, 1307(f)(3), 1308(c), 1309(a), 1318 heading and
7 (a), (b) and (d), 1324(c), 1325(a), 1327(b), 1703(c), 2107,
8 2904(a), 2906(b), 2914, 3004(a), 3005(d) and 3007 of Title 66
9 are amended to read:
10 § 315. Burden of proof.
11 (a) Reasonableness of rates.--In any proceeding upon the
12 motion of the commission, involving any proposed or existing
13 rate of any public utility, or in any proceedings upon complaint
14 involving any proposed increase in rates, the burden of proof to
15 show that the rate involved is just, affordable and reasonable
16 shall be upon the public utility. The commission shall give to
17 the hearing and decision of any such proceeding preference over
18 all other proceedings, and decide the same as speedily as
19 possible.
20 * * *
21 (c) Adequacy of services and facilities.--In any proceeding
22 upon the motion of the commission, involving the service or
23 facilities of any public utility, the burden of proof to show
24 that the service and facilities involved are adequate,
25 efficient, safe, affordable and reasonable shall be upon the
26 public utility.
27 * * *
28 § 508. Power of commission to vary, reform and revise
29 contracts.
30 The commission shall have power and authority to vary,
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1 reform, or revise, upon a fair, reasonable, and equitable basis,
2 any obligations, terms, or conditions of any contract heretofore
3 or hereafter entered into between any public utility and any
4 person, corporation, or municipal corporation, which embrace or
5 concern a public right, benefit, privilege, duty, or franchise,
6 or the grant thereof, or are otherwise affected or concerned
7 with the public interest and the general well-being of this
8 Commonwealth. Whenever the commission shall determine, after
9 reasonable notice and hearing, upon its own motion or upon
10 complaint, that any such obligations, terms, or conditions are
11 unjust, unreasonable, inequitable, unaffordable or otherwise
12 contrary or adverse to the public interest and the general well-
13 being of this Commonwealth, the commission shall determine and
14 prescribe, by findings and order, the just, reasonable, and
15 equitable, affordable obligations, terms, and conditions of such
16 contract. Such contract, as modified by the order of the
17 commission, shall become effective 30 days after service of such
18 order upon the parties to such contract.
19 § 523. Performance factor consideration.
20 (a) Considerations.--The commission shall consider, in
21 addition to all other relevant evidence of record, the
22 efficiency, effectiveness and adequacy of service of each
23 utility when determining just, affordable and reasonable rates
24 under this title. On the basis of the commission's consideration
25 of such evidence, it shall give effect to this section by making
26 such adjustments to specific components of the utility's claimed
27 cost of service as it may determine to be proper and
28 appropriate. Any adjustment made under this section shall be
29 made on the basis of specific findings upon evidence of record,
30 which findings shall be set forth explicitly, together with
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1 their underlying rationale, in the final order of the
2 commission.
3 * * *
4 § 529. Power of commission to order acquisition of small water
5 and sewer utilities.
6 * * *
7 (i) Burden of proof.--The Law Bureau shall have the burden
8 of establishing a prima facie case that the acquisition of the
9 small water or sewer utility would be in the public interest and
10 in compliance with the provisions of this section. Once the
11 commission determines that a prima facie case has been
12 established:
13 (1) the small water or sewer utility shall have the
14 burden of proving its ability to render adequate, efficient,
15 safe and reasonable service at just, affordable and
16 reasonable rates; and
17 (2) a proximate public utility providing the same type
18 of service as the small water or sewer utility shall have the
19 opportunity and burden of proving its financial, managerial
20 or technical inability to acquire and operate the small water
21 or sewer utility.
22 * * *
23 § 1103. Procedure to obtain certificates of public convenience.
24 (a) General rule.--Every application for a certificate of
25 public convenience shall be made to the commission in writing,
26 be verified by oath or affirmation, and be in such form, and
27 contain such information, as the commission may require by its
28 regulations. A certificate of public convenience shall be
29 granted by order of the commission, only if the commission shall
30 find or determine that the granting of such certificate is
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1 necessary or proper for the service, accommodation, convenience,
2 or safety of the public. The commission, in granting such
3 certificate, may impose such conditions as it may deem to be
4 just, affordable and reasonable. In every case, the commission
5 shall make a finding or determination in writing, stating
6 whether or not its approval is granted. Any holder of a
7 certificate of public convenience, exercising the authority
8 conferred by such certificate, shall be deemed to have waived
9 any and all objections to the terms and conditions of such
10 certificate.
11 * * *
12 § 1301. Rates to be just, affordable and reasonable.
13 (a) General rule.--Every rate made, demanded, or received by
14 any public utility, or by any two or more public utilities
15 jointly, shall be just, affordable and reasonable, and in
16 conformity with regulations or orders of the commission.
17 (b) Municipal corporations.--Only public utility service
18 being furnished or rendered by a municipal corporation, or by
19 the operating agencies of any municipal corporation, beyond its
20 corporate limits, shall be subject to regulation and control by
21 the commission as to rates, with the same force, and in like
22 manner, as if such service were rendered by a public utility.
23 § 1307. Sliding scale of rates; adjustments.
24 * * *
25 (f) Recovery of natural gas costs.--
26 * * *
27 (3) Within 60 days following the end of such 12-month
28 period as the commission shall designate, each natural gas
29 distribution company subject to this subsection shall file
30 with the commission a statement which specifies for such
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1 period:
2 (i) The total revenues received pursuant to this
3 section.
4 (ii) The total natural gas costs incurred.
5 (iii) The difference between the amounts specified
6 by subparagraphs (i) and (ii).
7 (iv) How actual natural gas costs incurred differ
8 from the natural gas costs allowed under paragraph (2)
9 and why such differences occurred.
10 (v) How these natural gas costs are consistent with
11 a least cost procurement policy as required by section
12 1318 (relating to determination of just, affordable and
13 reasonable gas cost rates).
14 Such report shall be a matter of public record and copies
15 thereof shall be made available by the natural gas distributor's
16 company to any person upon request. Copies of the reports shall
17 be filed with the Office of Consumer Advocate and the Office of
18 Small Business Advocate at the same time as they are filed with
19 the commission.
20 * * *
21 § 1308. Voluntary changes in rates.
22 * * *
23 (c) Determination.--If, after such hearing, the commission
24 finds any such rate to be unjust, unaffordable or unreasonable,
25 or in anywise in violation of law, the commission shall
26 determine the just and reasonable rate to be charged or applied
27 by the public utility for the service in question, and shall fix
28 the same by order to be served upon the public utility and such
29 rate shall thereafter be observed until changed as provided by
30 this part.
20030H1507B1903 - 6 -
1 * * *
2 § 1309. Rates fixed on complaint; investigation of costs of
3 production.
4 (a) General rule.--Whenever the commission, after reasonable
5 notice and hearing, upon its own motion or upon complaint, finds
6 that the existing rates of any public utility for any service
7 are unjust, unaffordable, unreasonable, or in anywise in
8 violation of any provision of law, the commission shall
9 determine the just and reasonable rates, including maximum or
10 minimum rates, to be thereafter observed and in force, and shall
11 fix the same by order to be served upon the public utility, and
12 such rates shall constitute the legal rates of the public
13 utility until changed as provided in this part. Whenever a
14 public utility does not itself produce or generate that which it
15 distributes, transmits, or furnishes to the public for
16 compensation, but obtains the same from another source, the
17 commission shall have the power and authority to investigate the
18 cost of such production or generation in any investigation of
19 the reasonableness of the rates of such public utility.
20 * * *
21 § 1318. Determination of just, affordable and reasonable gas
22 cost rates.
23 (a) General rule.--In establishing just, affordable and
24 reasonable rates for those natural gas distribution companies as
25 defined in section 2202 (relating to definitions), with gross
26 intrastate operating revenues in excess of $40,000,000 under
27 section 1307(f) (relating to sliding scale of rates;
28 adjustments) or 1308(d) (relating to voluntary changes in rates)
29 or any other rate proceeding, the commission shall consider the
30 materials provided by the utilities pursuant to section 1317
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1 (relating to regulation of natural gas costs). No rates for a
2 natural gas distribution utility shall be deemed just,
3 affordable and reasonable unless the commission finds that the
4 utility is pursuing a least cost fuel procurement policy,
5 consistent with the utility's obligation to provide safe,
6 adequate and reliable service to its customers. In making such a
7 determination, the commission shall be required to make specific
8 findings which shall include, but need not be limited to,
9 findings that:
10 (1) The utility has fully and vigorously represented the
11 interests of its ratepayers in proceedings before the Federal
12 Energy Regulatory Commission.
13 (2) The utility has taken all prudent steps necessary to
14 negotiate favorable gas supply contracts and to relieve the
15 utility from terms in existing contracts with its gas
16 suppliers which are or may be adverse to the interests of the
17 utility's ratepayers.
18 (3) The utility has taken all prudent steps necessary to
19 obtain lower cost gas supplies on both short-term and long-
20 term bases both within and outside the Commonwealth,
21 including the use of gas transportation arrangements with
22 pipelines and other distribution companies.
23 (4) The utility has not withheld from the market or
24 caused to be withheld from the market any gas supplies which
25 should have been utilized as part of a least cost fuel
26 procurement policy.
27 (b) Limitation on gas purchased from affiliates.--In any
28 instance in which a natural gas distribution company purchases
29 all or part of its gas supplies from an affiliated interest, as
30 that term is defined in section 2101 (relating to definition of
20030H1507B1903 - 8 -
1 affiliated interest), the commission, in addition to the
2 determinations and findings set forth in subsection (a), shall
3 be required to make specific findings with regard to the
4 justness, affordability and reasonableness of all such
5 purchases. Such findings shall include, but not be limited to
6 findings:
7 (1) That the utility has fully and vigorously attempted
8 to obtain less costly gas supplies on both short-term and
9 long-term bases from nonaffiliated interests.
10 (2) That each contract for the purchase of gas from its
11 affiliated interest is consistent with a least cost fuel
12 procurement policy.
13 (3) That neither the utility nor its affiliated interest
14 has withheld from the market any gas supplies which should
15 have been utilized as part of a least cost fuel procurement
16 policy.
17 * * *
18 (d) Other regulatory approvals.--The fact that a contract or
19 rate has been approved by a Federal regulatory agency for
20 interstate ratemaking purposes shall not, in and of itself, be
21 adequate to satisfy the utility's burden of proof that gas
22 prices and volumes associated with such contract or rate are
23 just, affordable and reasonable for purposes of this section.
24 * * *
25 § 1324. Residential telephone service rates based on duration
26 or distance of call.
27 * * *
28 (c) Rate relationship.--In addition to any other
29 requirements imposed by this title, the rates for services
30 required or permitted pursuant to subsections (a) and (b) shall
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1 be maintained at just, affordable and reasonable levels in
2 comparison to one another.
3 * * *
4 § 1325. Local exchange service increases; limitation.
5 (a) General rule.--In any rate proceeding pursuant to
6 section 1308 (relating to voluntary changes in rates), no public
7 utility shall be granted a percentage increase in local exchange
8 service unless that percentage increase is just, affordable and
9 reasonable. In no event shall the public utility be granted an
10 increase in local exchange rates which is greater than the
11 overall average percentage increase in total intrastate revenues
12 authorized by the commission unless the utility proves by record
13 evidence that a greater percentage increase for local exchange
14 service is justified based upon the cost of providing that
15 service.
16 * * *
17 § 1327. Acquisition of water and sewer utilities.
18 * * *
19 (b) Procedure.--The commission, upon application by a public
20 utility, person or corporation which has agreed to acquire
21 property from another public utility, municipal corporation or
22 person, may approve an inclusion in rate base in accordance with
23 subsection (a) prior to the acquisition and prior to a
24 proceeding under this chapter to determine just, affordable and
25 reasonable rates if:
26 (1) the applicant has provided notice of the proposed
27 acquisition and any proposed increase in rates to the
28 customers served by the property to be acquired, in such form
29 and manner as the commission, by regulation, shall require;
30 (2) the applicant has provided notice to its customers,
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1 in such form and manner as the commission, by regulation,
2 shall require, if the proposed acquisition would increase
3 rates to the acquiring public utility's customers by an
4 amount in excess of 1% of the acquiring public utility's base
5 annual revenue;
6 (3) the applicant has provided notice of the application
7 to the Director of Trial Staff and the Consumer Advocate; and
8 (4) in addition to any other information required by the
9 commission, the application includes a full description of
10 the proposed acquisition and a plan for reasonable and
11 prudent investments to assure that the customers served by
12 the property to be acquired will receive adequate, efficient,
13 safe and reasonable service.
14 * * *
15 § 1703. Depreciation accounts; reports.
16 * * *
17 (c) Use of estimates.--The commission shall not be bound in
18 rate proceedings to accept, as just, affordable and reasonable
19 for rate-making purposes, estimates of annual depreciation
20 established under the provisions of this section, but in such
21 rate proceedings it shall give consideration to statements
22 submitted under this section, in addition to such other factors
23 as may be relevant.
24 § 2107. Federal regulatory agencies.
25 The provisions of this chapter shall not be applicable to the
26 rates and related terms and conditions for the interstate
27 transmission of electricity, natural gas, liquified natural gas,
28 substitute natural gas, liquified propane gas or naphtha which
29 have been submitted to and approved by a Federal regulatory
30 agency having jurisdiction thereof, except that the commission
20030H1507B1903 - 11 -
1 may regulate the volume of such purchases. This section shall
2 not apply to any proceeding under section 1317 (relating to
3 regulation of natural gas costs) or 1318 (relating to
4 determination of just, affordable and reasonable gas cost
5 rates).
6 § 2904. Joint use of telephone and telegraph facilities.
7 (a) Through lines for continuous service.--The commission
8 may, upon complaint or upon its own motion, after reasonable
9 notice and hearing, by order, require any two or more public
10 utilities, whose lines or wires form a continuous line of
11 communication, or could be made to do so by the construction and
12 maintenance of suitable connections or the joint use of
13 facilities, or the transfer of messages at common points,
14 between different localities which cannot be communicated with,
15 or reached by, the lines of either public utility alone, where
16 such service is not already established or provided, to
17 establish and maintain through lines within this Commonwealth
18 between two or more such localities. The rate for such service
19 shall be just, affordable and reasonable and the commission
20 shall have power to establish the same, and declare the portion
21 thereof to which each company affected thereby is entitled and
22 the manner in which the same must be secured and paid. All
23 facilities necessary to establish such service shall be
24 constructed and maintained in such manner and under such rules,
25 with such division of expense and labor, as may be required by
26 the commission.
27 * * *
28 § 2906. Dissemination of telephone numbers and other
29 identifying information.
30 * * *
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1 (b) Charge prohibited.--There shall be no charge to the
2 caller who requests that the caller's telephone number and other
3 identifying information be withheld on a per-call basis. The
4 commission may approve a charge to the caller who requests that
5 the caller's telephone number and other identifying information
6 be withheld on a per-line basis if the commission finds, after
7 notice to all customers and an opportunity for hearing, that the
8 charge is just, affordable and reasonable and that the charge
9 should be imposed on the caller. Tariff rates shall not apply to
10 victims of domestic violence receiving services from a domestic
11 violence program or protected by a court order nor to social
12 welfare agencies, such as women's shelters, health and
13 counseling centers, public service hotlines and their staffs. In
14 addition, the commission shall direct that the tariff rates
15 shall not apply to customers who order the per-line blocking
16 service within 60 days of its introduction or within 60 days of
17 any request for new telephone service or transfer of existing
18 telephone service. The commission shall also direct that, as
19 soon as practicable, any public utility or any other person,
20 partnership, association or corporation that makes use of the
21 facilities of a public utility which provides this service shall
22 also provide to the calling party only the ability to
23 selectively unblock at no charge on a per-call basis a blocked
24 line using a means which differs from the means to activate per-
25 call blocking. The commission, in the interest of balancing
26 respective privacy interests, shall also permit a tariffed
27 service that automatically prevents the completion of telephone
28 calls to customers who do not wish to receive calls from callers
29 that withhold their telephone number or other identifying
30 information; the terms and conditions of such a tariff shall be
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1 subject to commission approval.
2 * * *
3 § 2914. Establishment of just, affordable and reasonable rates.
4 The commission shall ensure that all public and semipublic
5 coin telephone service rates for local and intrastate calls are
6 just, affordable and reasonable.
7 § 3004. Commission review and approval of petition and plan.
8 (a) Authorization.--In determining just, affordable and
9 reasonable rates in accordance with section 1301 (relating to
10 rates to be just, affordable and reasonable), the commission may
11 authorize a local exchange telecommunications company to set
12 rates based on an alternative form of regulation pursuant to a
13 plan approved by the commission under this chapter.
14 * * *
15 § 3005. Competitive services.
16 * * *
17 (d) Reclassification.--The commission shall have the
18 authority to reclassify a telecommunications service or other
19 service or business activity that it has previously found to be
20 competitive if, after notice and hearing, it determines, upon
21 application of the criteria set forth in this chapter, that
22 sufficient competition is no longer present, that the local
23 exchange company has engaged in unfair competition with respect
24 to the service or that the local exchange company has failed to
25 provide nondiscriminatory access in the provision of the
26 service. If the commission finds that a reclassification is
27 necessary, the commission must determine whether the rate for
28 the telecommunications service or other service or business
29 activity is just, affordable and reasonable in accordance with
30 section 1301 (relating to rates to be just, affordable and
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1 reasonable). If the telecommunications service or other service
2 or business activity subsequently becomes competitive, the local
3 exchange telecommunications company shall petition the
4 commission to make a determination of competitiveness for the
5 service under the provisions of this chapter.
6 * * *
7 § 3007. Determination of access charges.
8 Local exchange telecommunications companies serving more than
9 250,000 access lines in this Commonwealth as of the effective
10 date of this chapter shall comply with the following provisions:
11 (1) Local exchange telecommunications companies shall
12 have an effective per-minute switched-access service price
13 that shall not exceed 12¢ for the first five years from the
14 implementation date of the petition and plan, unless the
15 company can justify a higher rate based on the total cost of
16 switched-access services. The per-minute switched-access
17 service price includes both originating and terminating rates
18 and excludes nonrecurring rates. A local exchange
19 telecommunications company with an effective per-minute
20 switched-access service price greater than 12¢ on the
21 implementation date of the petition and plan shall provide
22 for a revenue-neutral phasedown to not more than 12¢ in not
23 more than three equal annual increments commencing with the
24 implementation of the petition and plan. Upon the sixth year
25 from the implementation date of the plan, the commission
26 shall review the per-minute switched-access service price
27 and, after notice and hearing, determine a just, affordable
28 and reasonable per-minute switched-access service price.
29 (2) Local exchange telecommunications companies with an
30 effective per-minute switched-access service price at or
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1 below 12¢, including both originating and terminating rates
2 and excluding nonrecurring rates, may not increase switched-
3 access prices either in conjunction with the filing or
4 consideration of a petition and plan or for four years from
5 the approval date of a petition, not to extend beyond
6 December 31, 1999, unless the company can show that, absent
7 an increase, total switched-access revenues would be below
8 total switched-access cost. Revenue-neutral access tariff
9 rate changes and restructures may be proposed subject to
10 commission approval.
11 (3) Upon the commission's evaluation of the consistency
12 of tariff rates and structures with the interstate access
13 service tariff, revenue-neutral tariff rate changes and
14 restructures may be proposed by local exchange
15 telecommunications companies in order to implement the
16 results of the commission evaluation. No rate change or
17 restructure shall be approved if it constitutes or promotes
18 unfair competition. Rate changes and restructures for access
19 services submitted in accordance with this paragraph are
20 subject to commission approval, after notice and hearing.
21 (4) Any existing limits, by tariff or otherwise, on the
22 amount of revenue that a local exchange telecommunications
23 company may recover from the carrier common line rate shall
24 continue at the effective date of this chapter. At the
25 conclusion of any phasedown period provided in paragraph (1),
26 the annual revenues to be derived from carrier common line
27 rates shall be no more than the total carrier common line
28 revenues applicable to the final 12 months of any phasedown
29 period.
30 Section 3. This act shall take effect in 60 days.
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