SENATE AMENDED
        PRIOR PRINTER'S NOS. 3089, 3176, 3218,        PRINTER'S NO. 4429
        3233

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

No. 2200 Session of 2008


        INTRODUCED BY GEORGE, McCALL, BELFANTI, CALTAGIRONE, CONKLIN,
           DALEY, GOODMAN, HARHAI, HARKINS, KULA, MANDERINO, McGEEHAN,
           VITALI, J. WHITE, WALKO, SURRA, DeLUCA, DERMODY, GRUCELA,
           JOSEPHS, JAMES, GINGRICH, FREEMAN, K. SMITH, McILVAINE SMITH,
           YOUNGBLOOD AND FRANKEL, JANUARY 15, 2008

        SENATOR TOMLINSON, CONSUMER PROTECTION AND PROFESSIONAL
           LICENSURE, IN SENATE, AS AMENDED, SEPTEMBER 23, 2008

                                     AN ACT

     1  Amending Title 66 (Public Utilities) of the Pennsylvania
     2     Consolidated Statutes, providing for recovery of certain       <--
     3     labor relations expenses; further providing for definitions;
     4     providing for adoption of energy efficiency and demand-side
     5     response; and further providing for duties of electric
     6     distribution companies. FURTHER PROVIDING FOR DEFINITIONS;     <--
     7     PROVIDING FOR ENERGY EFFICIENCY AND CONSERVATION; FURTHER
     8     PROVIDING FOR DUTIES OF ELECTRIC DISTRIBUTION COMPANIES; AND
     9     PROVIDING FOR PROCUREMENT.

    10     The General Assembly of the Commonwealth of Pennsylvania
    11  hereby enacts as follows:
    12     Section 1.  Title 66 of the Pennsylvania Consolidated          <--
    13  Statutes is amended by adding a section to read:
    14  § 1329.  Recovery of certain labor relations expenses.
    15     No public utility may charge its customers as a permissible
    16  operating expense for ratemaking purposes any portion of the
    17  direct or indirect cost of meetings, publications, consultants,
    18  attorneys or other professional services and expenses associated


     1  with the utility's efforts to dissuade the employees of the
     2  utility, or the employees of any affiliated interest of the
     3  utility as defined in section 2101 (relating to definition of
     4  affiliated interest), from becoming or remaining a member in, or
     5  otherwise being represented by, any labor union.
     6     Section 2.  Section 2803 of Title 66 is amended by adding
     7  definitions to read:
     8  § 2803.  Definitions.
     9     The following words and phrases when used in this chapter
    10  shall have the meanings given to them in this section unless the
    11  context clearly indicates otherwise:
    12     "Affiliated interest."  As defined in section 2101 (relating
    13  to definition of affiliated interest).
    14     * * *
    15     "Cost effective."  In relation to a program being evaluated,
    16  satisfaction of the total resource cost test.
    17     * * *
    18     "Demand-side response."  Load management technologies,
    19  management practices or other strategies employed by retail
    20  customers that decrease peak electricity demand or shift demand
    21  from on-peak to off-peak periods provided that:
    22         (1)  The measure is installed on or after the effective
    23     date of this section at the service location of a retail
    24     customer.
    25         (2)  The measure reduces the peak demand or cost of
    26     energy by the retail customer.
    27         (3)  The costs of the acquisition or installation of the
    28     measure are directly incurred in whole or in part by the
    29     electric distribution company.
    30     * * *
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     1     "Energy efficiency."  Technologies, management practices or
     2  other strategies or measures employed by retail customers that
     3  reduce electricity consumption provided that:
     4         (1)  The measure is installed on or after the effective
     5     date of this definition at the service location of a retail
     6     customer.
     7         (2)  The measure reduces the consumption of energy by the
     8     retail customer.
     9         (3)  The costs of the acquisition or installation of the
    10     measure are directly incurred in whole or in part by the
    11     electric distribution company.
    12     "Independent entity."  An entity with no direct or indirect
    13  ownership, partnership or other affiliated interest with an
    14  electric distribution company.
    15     "Peak demand."  The highest electrical requirement occurring
    16  during a specified period. For an electric distribution company,
    17  the term means the sum of the metered consumption for all retail
    18  customers over that period.
    19     "Real-time price."  A rate that directly reflects the
    20  different cost of energy during each hour.
    21     * * *
    22     "Smart meter technology."  Technology, including, but not
    23  limited to, metering technology and network communications
    24  technology capable of bidirectional communication and that
    25  records electricity usage on at least an hourly basis, including
    26  related electric distribution system upgrades to enable the
    27  technology. The technology shall provide customers with direct
    28  access to and use of price and consumption information. The
    29  technology shall also:
    30         (1)  Directly provide customers with information on their
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     1     hourly consumption.
     2         (2)  Enable time-of-use rates and real-time price
     3     programs.
     4         (3)  Effectively support the automatic control of the
     5     customer's electricity consumption by one or more of the
     6     following as selected by the customer:
     7             (i)  the customer;
     8             (ii)  the customer's utility; or
     9             (iii)  a third party engaged by the customer or the
    10         customer's utility.
    11     "Time-of-use rate."  A rate that reflects the costs of
    12  serving customers during different time periods, including off-
    13  peak and on-peak periods, but not as frequently as each hour.
    14     "Total resources cost test."  A standard test that is met if,
    15  over the effective life of the program, the avoided supply-side
    16  monetary costs are greater than the monetary costs of the
    17  demand-side programs borne by both the electric distribution
    18  company and the participants.
    19     * * *
    20     Section 3.  Title 66 is amended by adding a section to read:
    21  § 2806.1.  Adoption of procedures encouraging energy efficiency
    22             and demand-side response.
    23     (a)  Program.--The commission shall develop a program to
    24  provide for the implementation of cost-effective programs that
    25  reduce energy demand and consumption within the service
    26  territories of all electric distribution companies throughout
    27  this Commonwealth. The program shall include, but is not limited
    28  to, the following:
    29         (1)  Selecting a program administrator to develop and
    30     oversee the delivery of energy efficiency and demand-side
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     1     response programs within the service territory of each
     2     electric distribution company within this Commonwealth.
     3         (2)  Implementing the necessary administrative and
     4     financial mechanisms that will enable the program
     5     administrator to develop and oversee the provision of energy
     6     efficiency and demand-side response programs within the
     7     service territory of each electric distribution company
     8     within this Commonwealth, including the levying of
     9     assessments in accordance with sections 510 (relating to
    10     assessment for regulatory expenses upon public utilities),
    11     1307 (relating to sliding scale of rates; adjustments) and
    12     1308 (relating to voluntary changes in rates). The commission
    13     shall not approve or implement and shall not assess or charge
    14     to customers the costs of energy efficiency or demand-
    15     response programs to the extent that the costs of such
    16     programs exceed 2% of the total annual revenues of the
    17     electric distribution company from all sources, including
    18     default service generation revenues as of January 1, 2007.
    19     This funding limit shall not include amounts provided for by
    20     the low-income usage reduction programs established under
    21     regulations at 52 Pa. Code Ch. 58 (relating to residential
    22     low income usage reduction programs).
    23         (3)  Implementing the necessary administrative and
    24     financial mechanisms that facilitate a system of third-party
    25     entities to deliver all or portions of the energy efficiency
    26     and demand-side response programs within the service
    27     territory of each electric distribution company within this
    28     Commonwealth, including the levying of assessments in
    29     accordance with sections 510, 1307 and 1308. The commission
    30     may order the electric distribution company to pay the third-
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     1     party entity for services rendered in an electric
     2     distribution company's respective service territory pursuant
     3     to this section. The electric distribution company may be a
     4     third-party entity.
     5     (b)  Selection of program administrator.--The commission
     6  shall implement the following procedures when selecting a
     7  program administrator:
     8         (1)  The commission shall prepare a request for proposals
     9     for a program administrator to provide for the development
    10     and delivery of the energy efficiency and demand-side
    11     response programs in the service territories of all electric
    12     distribution companies and shall make the request for
    13     proposals available for public comment.
    14         (2)  The commission shall, within 60 days of the
    15     completion of the public comment period, issue the final
    16     request for proposals.
    17         (3)  The commission shall, based on a competitive bid
    18     process, select an independent entity to serve as the energy
    19     efficiency and demand-side response program administrator.
    20         (4)  The commission shall include as a part of its
    21     agreement with the program administrator a system of
    22     performance parameters and a financial mechanism that
    23     provides incentives for exceeding established performance
    24     parameters and penalties for third parties not meeting
    25     established performance parameters.
    26     (c)  Powers and duties of program administrator.--The program
    27  administrator shall have powers and duties assigned by the
    28  commission. The powers and duties shall include, but not be
    29  limited to:
    30         (1)  Soliciting through a competitive procurement process
    20080H2200B4429                  - 6 -     

     1     within each electric distribution company service territory a
     2     program of providing energy efficiency and demand-side
     3     response programs to residential, commercial and industrial
     4     customers utilizing third-party entities.
     5         (2)  Ensuring that each proposal includes, but is not
     6     limited to:
     7             (i)  A clear delineation of how the program will be
     8         conducted.
     9             (ii)  The types of specific program measures to be
    10         offered.
    11             (iii)  The cost and benefit of each program to be
    12         offered.
    13             (iv)  A process for monitoring and verifying results,
    14         data collection and management procedures, program
    15         evaluation processes and financial management strategies.
    16         (3)  In its review of each proposal received:
    17             (i)  Taking into account the unique circumstances of
    18         each electric distribution company's service territory.
    19             (ii)  Finding that each program is cost effective and
    20         that the portfolio of programs is designed to provide
    21         every affected customer class with the opportunity to
    22         participate and benefit economically.
    23             (iii)  Determining the cost-effectiveness of energy
    24         efficiency and demand-side response measures using the
    25         total resource cost test.
    26         (4)  Recommending to the commission those entities best
    27     suited to provide energy efficiency and demand-side response
    28     programs within the service territory of each electric
    29     distribution company.
    30         (5)  In the event no qualified proposals are received
    20080H2200B4429                  - 7 -     

     1     that meet the required plan goals in an electric distribution
     2     company service territory to conduct the program activities:
     3             (i)  Issuing a subsequent request for proposals with
     4         plan goals that are reduced no more than necessary to
     5         obtain qualified proposals to provide program activities.
     6         The lowered plan goals for energy efficiency and demand-
     7         side response shall only be in effect for that year.
     8             (ii)  In subsequent years, utilizing the plan goals
     9         unless no qualified proposals are received to conduct the
    10         program activities that meet the plan goals, the program
    11         administrator shall issue a subsequent request for
    12         proposals in accordance with the procedures identified in
    13         this subparagraph.
    14         (6)  Executing agreements on behalf of the commission
    15     with the selected entity in each electric distribution
    16     company service territory to conduct the energy efficiency
    17     and demand-side response program. As part of these agreements
    18     the program administrator shall ensure that:
    19             (i)  The programs offered by the selected entity are
    20         provided equitably across all customer classes.
    21             (ii)  A clearly defined process for financial
    22         compensation for the entity delivering the program which
    23         is tied to defined goals for performance regarding
    24         program activities accomplished, energy cost savings on a
    25         per-customer basis and utility-wide basis and overall
    26         energy and peak demand reduction is established.
    27             (iii)  A system of incentives and penalties for
    28         performance of contractual activities above and below
    29         predetermined levels is in place.
    30             (iv)  There is a set contract term which may include
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     1         an initial three-year term with renewal terms of varied
     2         length.
     3         (7)  Submitting reports to the commission at such times
     4     and in such manner as the commission directs.
     5     (d)  Commission review of recommendations.--The commission
     6  shall review the recommendations made by the program
     7  administrator regarding those entities best suited to provide
     8  energy efficiency and demand-side response programs within the
     9  service territory of each electric distribution company. The
    10  commission shall approve or disapprove the recommendations made
    11  by the program administrator.
    12         (1)  The commission review of the recommendations of the
    13     program administrator shall be limited to ensuring that:
    14             (i)  There is no evidence of fraud or market abuse.
    15             (ii)  Any costs entered into are borne by the
    16         appropriate parties and that costs, including the costs
    17         of subsection (c)(6)(iii) incentives, related to the
    18         provision of the contracted services are borne by the
    19         appropriate customer class.
    20             (iii)  There will be provided, in a cost-effective
    21         manner, a program that provides energy efficiency and
    22         demand-side response measures to all customer classes
    23         throughout the service territory of each electric
    24         distribution company.
    25         (2)  If the commission approves a third-party entity to
    26     conduct the program, the commission shall ensure the program
    27     administrator finalizes the agreement between the commission
    28     and the third-party entity selected to provide the program of
    29     energy efficiency and demand-side response.
    30         (3)  In the event the commission disapproves the
    20080H2200B4429                  - 9 -     

     1     recommendation of the program administrator, the commission
     2     shall provide a rationale for this decision and direct the
     3     program administrator on a course of action.
     4     (e)  Plan goals.--The program administrator shall ensure that
     5  each proposal submitted by a third-party entity to deliver a
     6  program of energy efficiency and demand-side response measures
     7  includes meeting the following energy saving goals:
     8         (1)  The following relate to energy efficiency goals:
     9             (i)  By May 31, 2011, total annual deliveries to
    10         retail customers of electric distribution companies shall
    11         be reduced by a minimum of 1%. This load reduction shall
    12         be measured against the expected load forecasted by the
    13         commission for June 1, 2010, through May 31, 2011, based
    14         on load for the period June 1, 2007, through May 31,
    15         2008, with provision made for weather adjustments and
    16         extraordinary load that the electric distribution company
    17         must serve. The commission shall determine and make
    18         public the forecasts to be used for each electric
    19         distribution company no later than August 31, 2008. The
    20         program administrator shall ensure that a third-party
    21         entity meets the goals contained in this section through
    22         the implementation of a program of energy efficiency
    23         measures throughout the service territory of the electric
    24         distribution company.
    25             (ii)  By May 31, 2013, total annual deliveries to
    26         retail customers of electric distribution companies shall
    27         be reduced by a minimum of 2.5%. This load reduction
    28         shall be measured against the expected load forecasted by
    29         the commission for June 1, 2012, through May 31, 2013,
    30         based on load for the period June 1, 2007, through May
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     1         31, 2008, with provision made for weather adjustments and
     2         extraordinary load that the electric distribution company
     3         must serve. The commission shall determine and make
     4         public the forecasts to be used for each electric
     5         distribution company no later than August 31, 2008. The
     6         program administrator shall ensure that a third-party
     7         entity meets the goals contained in this section through
     8         the implementation of a program of energy efficiency
     9         measures throughout the service territory of the electric
    10         distribution company.
    11             (iii)  By November 30, 2013, the program
    12         administrator shall evaluate the costs and benefits of
    13         these energy efficiency and conservation programs. If the
    14         benefits have been shown to exceed the costs, consistent
    15         with the total resource cost test, the program
    16         administrator, in consultation with the commission, shall
    17         set additional, incremental energy efficiency and
    18         conservation goals for the period ending May 31, 2018.
    19             (iv)  After May 31, 2018, the program administrator
    20         shall continue to evaluate the costs and benefits of
    21         efficiency and conservation measures and, in consultation
    22         with the commission, may adopt additional incremental
    23         load reduction standards for electric distribution
    24         companies.
    25         (2)  The following relate to demand-side response
    26     measures:
    27             (i)  Cost-effective demand-side response measures to
    28         reduce peak demand by a minimum of 4% in the 100 hours of
    29         highest demand with provision made for weather
    30         adjustments and extraordinary load that the electric
    20080H2200B4429                 - 11 -     

     1         distribution company must serve shall be implemented in
     2         each electric distribution company's service territory.
     3         This reduction will be measured against the electric
     4         distribution company's peak demand in the 100 hours of
     5         greatest demand for June 1, 2007, through May 31, 2008.
     6         The reductions shall be accomplished by May 31, 2012.
     7             (ii)  By November 30, 2012, the program administrator
     8         shall compare the total costs of these demand-side
     9         response measures to the total savings in energy and
    10         capacity costs to retail customers of this Commonwealth.
    11         If the benefits have been shown to exceed the costs,
    12         consistent with the total resource cost test, the
    13         commission shall order additional peak demand reductions
    14         for the 100 hours of greatest demand or an alternative
    15         measure adopted by the commission. The reductions shall
    16         be measured from the electric distribution company's peak
    17         demand for the period from June 1, 2011, through May 31,
    18         2012. The mandated reductions shall be accomplished no
    19         later than May 31, 2017.
    20             (iii)  After May 31, 2017, the program administrator
    21         shall continue to evaluate the costs and benefits of
    22         demand-side response measures and may, in consultation
    23         with the commission, adopt additional incremental peak
    24         load reduction standards.
    25     (f)  Measurements and verification.--The commission shall
    26  establish standards by which the program administrator submits
    27  to the commission an annual report, which includes that
    28  information relating to the actions and results of the energy
    29  efficiency and demand-side response programs undertaken within
    30  each electric distribution service territory by each third-party
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     1  entity.
     2         (1)  The report shall include, but not be limited to:
     3             (i)  Documentation of program expenditures.
     4             (ii)  Measurement and verification of savings
     5         resulting from programs.
     6             (iii)  Evaluation of the cost-effectiveness of
     7         expenditures.
     8             (iv)  Any other information the commission may
     9         require pursuant to its rulemaking authority.
    10         (2)  The program administrator, upon consultation with
    11     the commission, shall direct a third-party entity to modify
    12     or terminate a particular energy efficiency or a demand-side
    13     response program if, after an adequate period for
    14     implementation of the program, the commission determines the
    15     program is not sufficiently meeting its goals and purposes.
    16         (3)  In the event an energy efficiency or demand-side
    17     response program is terminated, the program administrator
    18     shall require the third-party entity to submit a revised
    19     program describing the actions to be undertaken to either
    20     offer a substitute program or increase the availability of
    21     existing programs to make up for the effect of the terminated
    22     program on its overall program goals.
    23     (g)  Responsibilities of electric distribution companies.--
    24  Each electric distribution company that does not seek to be a
    25  third-party entity shall:
    26         (1)  Cooperate with the program administrator as needed
    27     in its efforts to competitively procure the services of a
    28     third-party entity to provide an energy efficiency and
    29     demand-side response program within the service territory of
    30     the electric distribution company.
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     1         (2)  Provide information necessary to effectively
     2     facilitate the work of the selected third-party entity in
     3     conducting the energy efficiency and demand-side response
     4     program.
     5         (3)  Provide assistance as may be requested by the
     6     program administrator in reviewing proposals from third-party
     7     entities seeking to provide energy efficiency and demand-side
     8     response programs within their service territories.
     9         (4)  Provide assistance as may be requested by the
    10     program administrator to facilitate the successful execution
    11     of the contract agreement with the third-party entities to
    12     provide an energy efficiency and demand-side response program
    13     within their service territories.
    14     (h)  Recovery of administrative and program costs.--An
    15  electric distribution company may fully recover all
    16  administrative costs, including, but not limited to, costs
    17  incurred under subsections (a)(3) and (g)(1), (2), (3) and (4),
    18  that the commission determines are prudently incurred and
    19  reasonable in amount pursuant to implementing a program to
    20  deliver cost-effective energy efficiency and demand-side
    21  response activities through a third-party entity. Program and
    22  administrative costs shall be recovered on a full and current
    23  basis by the electric distribution company from customers
    24  through a reconcilable automatic adjustment clause pursuant to
    25  section 1307. Energy efficiency and demand-side resource
    26  programs shall be deemed to be a new service offered for the
    27  first time under section 2804(4)(vi) (relating to standards for
    28  restructuring of electric industry).
    29     (i)  Reporting.--The commission shall submit an annual report
    30  to the General Assembly describing the results of the programs
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     1  implemented by each of the electric distribution companies,
     2  including, but not limited to:
     3         (1)  The costs, benefits and reductions in energy costs.
     4         (2)  Energy use by customer class within this
     5     Commonwealth.
     6         (3)  Reductions in overall peak demand and projections
     7     toward complying with the overall target reduction goals of
     8     this section.
     9     (j)  Definitions.--For purposes of this section, the term
    10  "electric distribution company" shall mean a public utility
    11  providing facilities for the jurisdictional transmission and
    12  distribution of electricity to 100,000 or more retail customers
    13  in this Commonwealth.
    14     Section 4.  Section 2807(e) of Title 66 is amended by adding
    15  a paragraph to read:
    16  § 2807.  Duties of electric distribution companies.
    17     * * *
    18     (e)  Obligation to serve.--* * *
    19         (6)  (i)  Within nine months after the effective date of
    20         this paragraph, electric distribution companies shall
    21         file a smart meter technology procurement and
    22         installation plan with the commission for approval and
    23         make the plan available for public comment for a minimum
    24         of 30 days. The plan shall describe the smart meter
    25         technologies the electric distribution company proposes
    26         to install, how the smart meter technology meets the
    27         requirements of this paragraph and how the smart meter
    28         technology shall be installed according to this
    29         paragraph. In addition, the plan shall ensure that all
    30         smart meter technology installation and maintenance work
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     1         shall be performed by adequately trained and qualified
     2         personnel and that, to the extent practical, such work
     3         shall be offered initially to employees of the electric
     4         distribution company.
     5             (ii)  Electric distribution companies shall furnish
     6         smart meter technology to:
     7                 (A)  Customers responsible for 40% of the
     8             distribution company's annual peak demand within four
     9             years after the effective date of this paragraph.
    10                 (B)  Customers responsible for 75% of the
    11             distribution company's annual peak demand within six
    12             years after the effective date of this paragraph.
    13                 (C)  One hundred percent of its customers within
    14             ten years after the effective date of this paragraph.
    15         Electric distribution companies shall, with customer
    16         consent, make available electronic access to customer
    17         meter data to third parties, including electric
    18         generation suppliers and providers of conservation and
    19         load management services.
    20             (iii)  Electric distribution companies shall be
    21         permitted to recover all reasonable and prudent costs, as
    22         determined by the commission, of providing smart meter
    23         technology, including annual deprecation and capital
    24         costs over the life of the smart meter technology, that
    25         are incurred after the effective date of this paragraph,
    26         less all operating and capital costs savings realized by
    27         the electric distribution company from the introduction
    28         and use of the smart meter technology. An electric
    29         distribution company may, at its option, recover such
    30         smart meter technology costs:
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     1                 (A)  through base rates, including a deferral for
     2             future base rate recovery of current costs, with
     3             carrying charges equal to 6%; or
     4                 (B)  on a full and current basis through a
     5             reconcilable automatic adjustment clause under
     6             section 1307 (relating to sliding scale of rates;
     7             adjustments).
     8         In no event shall lost or decreased revenues by an
     9         electric distribution company due to reduced electricity
    10         consumption or shifting energy demand be considered a
    11         cost of smart meter technology. Smart meter technology
    12         shall be deemed to be a new service offered for the first
    13         time under section 2804(4)(vi) (relating to standards for
    14         restructuring of electric industry).
    15             (iv)  By January 1, 2010, or at the end of the
    16         applicable generation rate cap period, whichever is
    17         later, a default service provider shall submit to the
    18         commission one or more proposed time-of-use rates and a
    19         real-time price plan. The commission shall approve or
    20         modify the time-of-use rates and real-time price plan
    21         within six months of submittal. The default service
    22         provider shall offer commission-approved time-of-use
    23         rates and a real-time price plan to all residential and
    24         commercial customers that have been provided with smart
    25         meter technology within 60 days of installation of the
    26         smart meter technology or commission approval of the
    27         time-of-use rates and a real-time price plan, whichever
    28         is later. Customer participation in time-of-use rates or
    29         real-time pricing shall be voluntary and shall only be
    30         provided with the affirmative consent of the customer.
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     1         The default service provider shall submit an annual
     2         report to the commission on the participation in the
     3         time-of-use and real-time price programs and the efficacy
     4         of the programs in affecting energy demand and
     5         consumption and the effect on wholesale market prices.
     6             (v)  For purposes of this paragraph, the term
     7         "electric distribution company" shall mean a public
     8         utility providing facilities for the jurisdictional
     9         transmission and distribution of electricity to 100,000
    10         or more retail customers in this Commonwealth.
    11     Section 5.  This act shall take effect immediately.
    12     SECTION 1.  SECTION 2803 OF TITLE 66 OF THE PENNSYLVANIA       <--
    13  CONSOLIDATED STATUTES IS AMENDED BY ADDING DEFINITIONS TO READ:
    14  § 2803.  DEFINITIONS.
    15     THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS CHAPTER
    16  SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
    17  CONTEXT CLEARLY INDICATES OTHERWISE:
    18     * * *
    19     "BILATERAL CONTRACT."  AN AGREEMENT, AS APPROVED BY THE
    20  PENNSYLVANIA PUBLIC UTILITY COMMISSION, REACHED BY TWO PARTIES,
    21  EACH ACTING IN ITS OWN INDEPENDENT SELF-INTEREST, AS A RESULT OF
    22  NEGOTIATIONS FREE OF UNDUE INFLUENCE, DURESS OR FAVORITISM, IN
    23  WHICH THE ELECTRIC ENERGY SUPPLIER AGREES TO SELL AND THE
    24  ELECTRIC DISTRIBUTION COMPANY AGREES TO BUY A QUANTITY OF
    25  ELECTRIC ENERGY AT A SPECIFIED PRICE FOR A SPECIFIED PERIOD OF
    26  TIME UNDER TERMS AGREED TO BY BOTH PARTIES, AND WHICH FOLLOWS A
    27  STANDARD INDUSTRY TEMPLATE WIDELY ACCEPTED IN THE INDUSTRY OR
    28  VARIATIONS THERETO ACCEPTED BY THE PARTIES. STANDARD INDUSTRY
    29  TEMPLATES MAY INCLUDE THE EEI MASTER AGREEMENT FOR PHYSICAL
    30  ENERGY PURCHASES AND SALES AND THE ISDA MASTER AGREEMENT FOR
    20080H2200B4429                 - 18 -     

     1  FINANCIAL ENERGY PURCHASES AND SALES.
     2     * * *
     3     "DEFAULT SERVICE PROVIDER."  AN ELECTRIC DISTRIBUTION COMPANY
     4  WITHIN ITS CERTIFIED SERVICE TERRITORY OR AN ALTERNATIVE
     5  SUPPLIER APPROVED BY THE PENNSYLVANIA PUBLIC UTILITY COMMISSION
     6  THAT PROVIDES GENERATION SERVICE TO RETAIL ELECTRIC CUSTOMERS
     7  WHO:
     8         (1)  CONTRACT FOR ELECTRIC POWER, INCLUDING ENERGY AND
     9     CAPACITY, AND THE CHOSEN ELECTRIC GENERATION SUPPLIER DOES
    10     NOT SUPPLY THE SERVICE; OR
    11         (2)  DO NOT CHOOSE AN ALTERNATIVE ELECTRIC GENERATION
    12     SUPPLIER.
    13     SECTION 2.  TITLE 66 IS AMENDED BY ADDING A SECTION TO READ:
    14  § 2806.1.  ENERGY EFFICIENCY AND CONSERVATION.
    15     (A)  PROGRAM.--THE COMMISSION SHALL ADOPT A PROGRAM TO
    16  REQUIRE ELECTRIC DISTRIBUTION COMPANIES TO ADOPT AND IMPLEMENT
    17  COST-EFFECTIVE ENERGY EFFICIENCY AND CONSERVATION PLANS TO
    18  REDUCE ENERGY DEMAND AND CONSUMPTION WITHIN THE SERVICE
    19  TERRITORIES OF ALL ELECTRIC DISTRIBUTION COMPANIES IN THIS
    20  COMMONWEALTH. THE PROGRAM SHALL INCLUDE:
    21         (1)  PROCEDURES FOR THE APPROVAL OF PLANS SUBMITTED UNDER
    22     SUBSECTION (B).
    23         (2)  A PLAN EVALUATION PROCESS INCLUDING A PROCESS TO
    24     MONITOR AND VERIFY DATA COLLECTION, QUALITY ASSURANCE AND
    25     RESULTS SUBMITTED.
    26         (3)  AN ANALYSIS OF THE COST AND BENEFIT OF EACH PLAN
    27     SUBMITTED UNDER SUBSECTION (B) IN ACCORDANCE WITH A TOTAL
    28     RESOURCE COST TEST.
    29         (4)  AN ANALYSIS OF HOW THE PROGRAM AND INDIVIDUAL PLANS
    30     WILL ENABLE EACH ELECTRIC DISTRIBUTION COMPANY TO ACHIEVE THE
    20080H2200B4429                 - 19 -     

     1     REQUIREMENTS FOR REDUCTION IN CONSUMPTION UNDER SUBSECTIONS
     2     (C) AND (D).
     3         (5)  STANDARDS TO ENSURE THAT EACH PLAN INCLUDES A
     4     VARIETY OF ENERGY EFFICIENCY AND CONSERVATION MEASURES AND
     5     WILL PROVIDE THE MEASURES EQUITABLY TO ALL CLASSES OF
     6     CUSTOMERS.
     7         (6)  PROCEDURES TO REVIEW ALL PROPOSED CONTRACTS PRIOR TO
     8     THE EXECUTION OF THE CONTRACT WITH THIRD-PARTY ENTITIES TO
     9     IMPLEMENT THE PLAN. THE COMMISSION MAY ORDER THE MODIFICATION
    10     OF A PROPOSED CONTRACT TO ENSURE THAT THE PLAN IS ADEQUATE.
    11         (7)  PROCEDURES TO ENSURE COMPLIANCE WITH REQUIREMENTS
    12     FOR REDUCTION IN CONSUMPTION UNDER SUBSECTIONS (C) AND (D).
    13         (8)  A REQUIREMENT FOR THE PARTICIPATION OF THIRD-PARTY
    14     ENTITIES IN THE IMPLEMENTATION OF ALL OR PART OF A PLAN.
    15         (9)  A PROCESS TO LINK REDUCTIONS IN CONSUMPTION TO THE
    16     COMPENSATION OF THIRD-PARTY ENTITIES.
    17         (10)  PROCEDURES FOR THE LEVY OF ASSESSMENTS IN
    18     ACCORDANCE WITH SECTIONS 510 (RELATING TO ASSESSMENT FOR
    19     REGULATORY EXPENSES UPON PUBLIC UTILITIES) AND 1308 (RELATING
    20     TO VOLUNTARY CHANGES IN RATES) SUBJECT TO THE LIMITATIONS OF
    21     SUBSECTION (G) TO FUND PLANS FILED UNDER SUBSECTION (B)
    22     SUBJECT TO THE LIMITATIONS SET FORTH UNDER SUBSECTION (G).
    23     (B)  DUTIES OF ELECTRIC DISTRIBUTION COMPANIES.--
    24         (1)  (I)  BY NOVEMBER 15, 2008, EACH ELECTRIC
    25         DISTRIBUTION COMPANY SHALL DEVELOP AND FILE AN ENERGY
    26         EFFICIENCY AND CONSERVATION PLAN WITH THE COMMISSION FOR
    27         APPROVAL TO MEET THE REQUIREMENTS OF SUBSECTION (A) AND
    28         THE REQUIREMENTS FOR REDUCTION IN CONSUMPTION UNDER
    29         SUBSECTIONS (C) AND (D). THE PLAN SHALL BE IMPLEMENTED
    30         UPON APPROVAL BY THE COMMISSION AND SHALL COMPLY WITH ALL
    20080H2200B4429                 - 20 -     

     1         OF THE FOLLOWING:
     2                 (A)  INCLUDE SPECIFIC PROPOSALS TO IMPLEMENT
     3             ENERGY EFFICIENCY AND CONSERVATION MEASURES TO
     4             ACHIEVE THE REQUIRED REDUCTIONS IN CONSUMPTION UNDER
     5             SUBSECTIONS (C) AND (D).
     6                 (B)  A MINIMUM OF 10% OF THE REQUIRED REDUCTIONS
     7             IN CONSUMPTION UNDER SUBSECTIONS (C) AND (D) SHALL BE
     8             OBTAINED FROM UNITS OF FEDERAL, STATE AND LOCAL
     9             GOVERNMENT, INCLUDING MUNICIPALITIES, SCHOOL
    10             DISTRICTS, INSTITUTIONS OF HIGHER EDUCATION AND
    11             NONPROFIT ENTITIES.
    12                 (C)  THE MANNER IN WHICH PERFORMANCE WILL BE
    13             MEASURED, VERIFIED AND EVALUATED.
    14                 (D)  THE MANNER IN WHICH THE PLAN WILL ACHIEVE
    15             THE REQUIREMENTS OF THE PROGRAM UNDER SUBSECTION (A)
    16             AND THE REQUIRED REDUCTIONS IN CONSUMPTION UNDER
    17             SUBSECTIONS (C) AND (D).
    18                 (E)  INCLUDE A CONTRACT WITH ONE OR MORE THIRD-
    19             PARTY ENTITIES TO IMPLEMENT THE PLAN OR A PORTION OF
    20             THE PLAN AS APPROVED BY THE COMMISSION.
    21                 (F)  INCLUDE ESTIMATES OF THE COST OF
    22             IMPLEMENTATION OF THE ENERGY EFFICIENCY AND
    23             CONSERVATION MEASURES IN THE PLAN.
    24                 (G)  INCLUDE SPECIFIC ENERGY EFFICIENCY MEASURES
    25             FOR HOUSEHOLDS AT OR BELOW 150% OF THE FEDERAL
    26             POVERTY INCOME GUIDELINES. THE NUMBER OF MEASURES
    27             SHALL BE PROPORTIONATE TO THOSE HOUSEHOLDS' SHARE OF
    28             THE TOTAL ENERGY USAGE IN THIS COMMONWEALTH. THE
    29             ELECTRIC DISTRIBUTION COMPANY SHALL COORDINATE
    30             MEASURES UNDER THIS CLAUSE WITH OTHER PROGRAMS
    20080H2200B4429                 - 21 -     

     1             ADMINISTERED BY THE COMMISSION OR ANOTHER FEDERAL OR
     2             STATE AGENCY. THE EXPENDITURES OF AN ELECTRIC
     3             DISTRIBUTION COMPANY UNDER THIS CLAUSE SHALL BE IN
     4             ADDITION TO EXPENDITURES MADE UNDER 52 PA. CODE CH.
     5             58 (RELATING TO RESIDENTIAL LOW INCOME USAGE
     6             REDUCTION PROGRAMS).
     7                 (H)  INCLUDE A PROPOSED COST-RECOVERY TARIFF
     8             MECHANISM TO FUND THE ENERGY EFFICIENCY AND
     9             CONSERVATION MEASURES AND TO ENSURE RECOVERY OF THE
    10             PRUDENT AND REASONABLE COSTS OF THE PLAN AS APPROVED
    11             BY THE COMMISSION.
    12                 (I)  A DEMONSTRATION THAT THE PLAN IS COST-
    13             EFFECTIVE USING A TOTAL RESOURCE COST TEST OR OTHER
    14             COST-BENEFIT ANALYSIS APPROVED BY THE COMMISSION AND
    15             PROVIDES A DIVERSE CROSS SECTION OF ALTERNATIVES FOR
    16             CUSTOMERS OF ALL RATE CLASSES.
    17                 (J)  REQUIRE AN ANNUAL INDEPENDENT EVALUATION OF
    18             THE PERFORMANCE OF THE COST-EFFECTIVENESS OF THE PLAN
    19             AND A FULL REVIEW OF THE FIVE-YEAR RESULTS OF THE
    20             PLAN AND, TO THE EXTENT PRACTICABLE, HOW THE PLAN
    21             WILL BE ADJUSTED ON A GOING-FORWARD BASIS AS A RESULT
    22             OF THE EVALUATION.
    23             (II)  A NEW PLAN SHALL BE FILED WITH THE COMMISSION
    24         EVERY FIVE YEARS OR AS OTHERWISE REQUIRED BY THE
    25         COMMISSION. THE PLAN SHALL SET FORTH THE MANNER IN WHICH
    26         THE COMPANY WILL MEET THE REQUIRED REDUCTIONS IN
    27         CONSUMPTION UNDER SUBSECTIONS (C) AND (D).
    28             (III)  NO MORE THAN 2% OF FUNDS AVAILABLE TO
    29         IMPLEMENT A PLAN UNDER THIS SUBSECTION SHALL BE ALLOCATED
    30         FOR EXPERIMENTAL EQUIPMENT OR DEVICES.
    20080H2200B4429                 - 22 -     

     1         (2)  THE COMMISSION SHALL DIRECT AN ELECTRIC DISTRIBUTION
     2     COMPANY TO MODIFY OR TERMINATE ANY PART OF A PLAN APPROVED
     3     UNDER THIS SECTION IF, AFTER AN ADEQUATE PERIOD FOR
     4     IMPLEMENTATION, THE COMMISSION DETERMINES THAT AN ENERGY
     5     EFFICIENCY OR CONSERVATION MEASURE INCLUDED IN THE PLAN IS
     6     NOT EFFECTIVE.
     7         (3)  IF PART OF A PLAN IS MODIFIED OR TERMINATED UNDER
     8     PARAGRAPH (2), THE ELECTRIC DISTRIBUTION COMPANY SHALL SUBMIT
     9     A REVISED PLAN DESCRIBING ACTIONS TO BE TAKEN TO OFFER
    10     SUBSTITUTE MEASURES OR TO INCREASE THE AVAILABILITY OF
    11     EXISTING MEASURES IN THE PLAN TO ACHIEVE THE REQUIRED
    12     REDUCTIONS IN CONSUMPTION UNDER SUBSECTIONS (C) AND (D).
    13     (C)  REDUCTIONS IN CONSUMPTION.--EACH ELECTRIC DISTRIBUTION
    14  COMPANY SHALL REDUCE CONSUMPTION AS FOLLOWS:
    15         (1)  BY MAY 31, 2011, EACH ELECTRIC DISTRIBUTION COMPANY
    16     SHALL REDUCE ITS TOTAL ANNUAL WEATHER-NORMALIZED DELIVERIES
    17     TO RETAIL CUSTOMERS BY A MINIMUM OF 1%. THE 1% LOAD REDUCTION
    18     IN CONSUMPTION SHALL BE MEASURED AGAINST THE ELECTRIC
    19     DISTRIBUTION COMPANY'S EXPECTED LOAD AS FORECASTED BY THE
    20     COMMISSION FOR JUNE 1, 2007 THROUGH MAY 31, 2008, WITH
    21     PROVISIONS MADE FOR WEATHER ADJUSTMENTS AND EXTRAORDINARY
    22     LOADS THAT THE ELECTRIC DISTRIBUTION COMPANY MUST SERVE.
    23         (2)  BY MAY 31, 2013, EACH ELECTRIC DISTRIBUTION COMPANY
    24     SHALL REDUCE ITS TOTAL ANNUAL WEATHER-NORMALIZED DELIVERIES
    25     TO RETAIL CUSTOMERS BY A MINIMUM OF 2.5%. THE 2.5% LOAD
    26     REDUCTION IN CONSUMPTION SHALL BE MEASURED AGAINST THE
    27     ELECTRIC DISTRIBUTION COMPANY'S EXPECTED LOAD AS FORECASTED
    28     BY THE COMMISSION FOR JUNE 1, 2007, THROUGH MAY 31, 2008,
    29     WITH PROVISION MADE FOR WEATHER ADJUSTMENTS AND EXTRAORDINARY
    30     LOADS THAT THE ELECTRIC DISTRIBUTION COMPANY MUST SERVE.
    20080H2200B4429                 - 23 -     

     1         (3)  BY NOVEMBER 30, 2013, THE COMMISSION SHALL EVALUATE
     2     THE COSTS AND BENEFITS OF THE PROGRAM ESTABLISHED UNDER
     3     SUBSECTION (A) AND ENERGY EFFICIENCY AND CONSERVATION PLANS
     4     SUBMITTED TO THE PROGRAM. THE EVALUATION SHALL BE CONSISTENT
     5     WITH A TOTAL RESOURCE COST TEST OR A COST VERSUS BENEFIT
     6     MEASUREMENT DETERMINED BY THE COMMISSION. IF THE COMMISSION
     7     DETERMINES THAT THE BENEFITS OF THE PROGRAM EXCEED THE COSTS,
     8     THE COMMISSION SHALL ADOPT ADDITIONAL INCREMENTAL REQUIRED
     9     REDUCTIONS IN CONSUMPTION FOR THE PERIOD ENDING MAY 31, 2018.
    10         (4)  AFTER MAY 31, 2018, THE COMMISSION SHALL CONTINUE TO
    11     EVALUATE THE COSTS AND BENEFITS OF THE PROGRAM ESTABLISHED
    12     UNDER SUBSECTION (A) AND ENERGY EFFICIENCY AND CONSERVATION
    13     PLANS APPROVED UNDER SUBSECTION (A). IF THE COMMISSION
    14     DETERMINES THAT THE BENEFITS OF THE PROGRAM EXCEED THE COSTS,
    15     THE COMMISSION MAY REQUIRE AND APPROVE ADDITIONAL PLANS TO
    16     ACHIEVE INCREMENTAL REQUIREMENTS FOR REDUCTION IN CONSUMPTION
    17     FOR ELECTRIC DISTRIBUTION COMPANIES. EACH PLAN SHALL BE FOR A
    18     TERM NOT TO EXCEED FIVE YEARS.
    19     (D)  PEAK DEMAND.--EACH ELECTRIC DISTRIBUTION COMPANY SHALL
    20  IMPLEMENT ENERGY EFFICIENCY AND CONSERVATION MEASURES TO ACHIEVE
    21  THE FOLLOWING REDUCTIONS IN CONSUMPTION:
    22         (1)  BY MAY 31, 2013, EACH ENERGY DISTRIBUTION COMPANY
    23     SHALL REDUCE ITS WEATHER-NORMALIZED DELIVERIES TO RETAIL
    24     CUSTOMERS BY A MINIMUM OF 4% IN THE 100 HOURS OF HIGHEST
    25     DEMAND. THE REDUCTION SHALL BE MEASURED AGAINST THE ELECTRIC
    26     DISTRIBUTION COMPANY'S PEAK DEMAND IN THE 100 HOURS OF
    27     GREATEST DEMAND FOR JUNE 1, 2007, THROUGH MAY 31, 2008.
    28         (2)  BY NOVEMBER 30, 2013, THE COMMISSION SHALL COMPARE
    29     THE TOTAL COSTS OF ENERGY EFFICIENCY AND CONSERVATION PLANS
    30     IMPLEMENTED UNDER THIS SECTION TO THE TOTAL SAVINGS IN ENERGY
    20080H2200B4429                 - 24 -     

     1     AND CAPACITY COSTS TO RETAIL CUSTOMERS IN THIS COMMONWEALTH.
     2     IF THE COMMISSION DETERMINES THAT THE BENEFITS OF THE
     3     MEASURES EXCEED THE COSTS, THE COMMISSION SHALL SET
     4     ADDITIONAL INCREMENTAL REQUIREMENTS FOR REDUCTION IN PEAK
     5     DEMAND FOR THE 100 HOURS OF GREATEST DEMAND OR AN ALTERNATIVE
     6     REDUCTION APPROVED BY THE COMMISSION. REDUCTIONS IN
     7     CONSUMPTION SHALL BE MEASURED FROM THE ELECTRIC DISTRIBUTION
     8     COMPANY'S PEAK DEMAND FOR THE PERIOD FROM JUNE 1, 2011,
     9     THROUGH MAY 31, 2012. THE REDUCTIONS IN CONSUMPTION REQUIRED
    10     BY THE COMMISSION SHALL BE ACCOMPLISHED NO LATER THAN MAY 31,
    11     2017.
    12     (E)  COMMISSION APPROVAL.--THE COMMISSION SHALL APPROVE OR
    13  DISAPPROVE A PLAN FILED UNDER SUBSECTION (B) WITHIN 120 DAYS OF
    14  SUBMISSION. THE FOLLOWING SHALL APPLY TO AN ORDER DISAPPROVING A
    15  PLAN:
    16         (1)  THE COMMISSION SHALL DESCRIBE IN DETAIL THE REASONS
    17     FOR THE DISAPPROVAL.
    18         (2)  THE ELECTRIC DISTRIBUTION COMPANY SHALL HAVE 60 DAYS
    19     TO FILE A REVISED PLAN TO ADDRESS THE DEFICIENCIES IDENTIFIED
    20     BY THE COMMISSION.
    21     (F)  PENALTIES.--
    22         (1)  THE FOLLOWING SHALL APPLY FOR FAILURE TO SUBMIT A
    23     PLAN:
    24             (I)  AN ELECTRIC DISTRIBUTION COMPANY THAT FAILS TO
    25         FILE A PLAN UNDER SUBSECTION (B) SHALL BE SUBJECT TO A
    26         CIVIL PENALTY OF $100,000 PER DAY UNTIL THE PLAN IS
    27         FILED.
    28             (II)  AN ELECTRIC DISTRIBUTION COMPANY THAT FAILS TO
    29         FILE A REVISED PLAN UNDER SUBSECTION (E)(2) SHALL BE
    30         SUBJECT TO A CIVIL PENALTY OF $100,000 PER DAY UNTIL THE
    20080H2200B4429                 - 25 -     

     1         PLAN IS FILED.
     2             (III)  PENALTIES COLLECTED UNDER THIS PARAGRAPH SHALL
     3         BE DEPOSITED IN THE LOW-INCOME ELECTRIC CUSTOMER
     4         ASSISTANCE PROGRAM OF THE ENERGY DISTRIBUTION COMPANY FOR
     5         THE RESPECTIVE SERVICE TERRITORY.
     6         (2)  THE FOLLOWING SHALL APPLY TO AN ELECTRIC
     7     DISTRIBUTION COMPANY THAT FAILS TO ACHIEVE THE REDUCTIONS IN
     8     CONSUMPTION REQUIRED UNDER SUBSECTION (C) OR (D):
     9             (I)  THE ELECTRIC DISTRIBUTION COMPANY SHALL BE
    10         SUBJECT TO A CIVIL PENALTY OF UP TO $5,000,000 FOR
    11         FAILURE TO ACHIEVE THE REQUIRED REDUCTIONS IN CONSUMPTION
    12         UNDER SUBSECTION (C) OR (D). ANY PENALTY PAID BY AN
    13         ELECTRIC DISTRIBUTION COMPANY UNDER THIS SUBPARAGRAPH
    14         SHALL NOT BE RECOVERABLE FROM RATEPAYERS.
    15             (II)  IF AN ELECTRIC DISTRIBUTION COMPANY FAILS TO
    16         ACHIEVE THE REQUIRED REDUCTIONS IN CONSUMPTION UNDER
    17         SUBSECTION (C) OR (D) BY 2013, RESPONSIBILITY TO ACHIEVE
    18         THE REDUCTIONS IN CONSUMPTION SHALL BE TRANSFERRED TO THE
    19         COMMISSION. THE COMMISSION SHALL DO ALL OF THE FOLLOWING:
    20                 (A)  IMPLEMENT A PLAN TO ACHIEVE THE REQUIRED
    21             REDUCTIONS IN CONSUMPTION UNDER SUBSECTION (C) OR
    22             (D).
    23                 (B)  CONTRACT WITH THIRD-PARTY ENTITIES AS
    24             NECESSARY TO IMPLEMENT ANY PORTION OF THE PLAN.
    25             (III)  THE PROVISIONS OF SUBPARAGRAPH (II) SHALL
    26         APPLY IN EACH SUBSEQUENT FIVE-YEAR PERIOD IF THE ELECTRIC
    27         DISTRIBUTION COMPANY FAILS TO ACHIEVE THE REDUCTION
    28         STANDARDS UNDER SUBSECTION (C) OR (D).
    29     (G)  LIMITATION ON COSTS.--THE TOTAL COST OF ANY PLAN
    30  REQUIRED UNDER THIS SECTION SHALL NOT EXCEED 2% OF THE ELECTRIC
    20080H2200B4429                 - 26 -     

     1  DISTRIBUTION COMPANY'S TOTAL ANNUAL REVENUE AS OF DECEMBER 31,
     2  2006. NO MORE THAN 1% OF THE 2% OF THE COMPANY'S TOTAL ANNUAL
     3  REVENUE MAY BE USED FOR THE ADMINISTRATIVE COSTS OF THE ELECTRIC
     4  DISTRIBUTION COMPANY. THE LIMITATION UNDER THIS PARAGRAPH SHALL
     5  NOT INCLUDE THE COST OF LOW-INCOME USAGE REDUCTION PROGRAMS
     6  ESTABLISHED UNDER 52 PA. CODE CH. 58 (RELATING TO RESIDENTIAL
     7  LOW INCOME USAGE REDUCTION PROGRAMS).
     8     (H)  REPORT.--THE FOLLOWING SHALL APPLY:
     9         (1)  EACH ELECTRIC DISTRIBUTION COMPANY SHALL SUBMIT AN
    10     ANNUAL REPORT TO THE COMMISSION RELATING TO THE RESULTS OF
    11     THE ENERGY EFFICIENCY AND CONSERVATION PLAN WITHIN THE
    12     ELECTRIC DISTRIBUTION SERVICE TERRITORY. THE REPORT SHALL
    13     INCLUDE ALL OF THE FOLLOWING:
    14             (I)  DOCUMENTATION OF PROGRAM EXPENDITURES.
    15             (II)  MEASUREMENT AND VERIFICATION OF ENERGY SAVINGS
    16         UNDER THE PLAN.
    17             (III)  EVALUATION OF THE COST-EFFECTIVENESS OF
    18         EXPENDITURES.
    19             (IV)  ANY OTHER INFORMATION REQUIRED BY THE
    20         COMMISSION.
    21         (2)  BEGINNING FIVE YEARS FOLLOWING THE EFFECTIVE DATE OF
    22     THIS SECTION AND ANNUALLY THEREAFTER, THE COMMISSION SHALL
    23     SUBMIT A REPORT TO THE CONSUMER PROTECTION AND PROFESSIONAL
    24     LICENSURE COMMITTEE OF THE SENATE AND THE CONSUMER AFFAIRS
    25     COMMITTEE OF THE HOUSE OF REPRESENTATIVES.
    26     (I)  EXISTING FUNDING SOURCES.--EACH ELECTRIC DISTRIBUTION
    27  COMPANY SHALL PROVIDE A LIST OF ALL ELIGIBLE FEDERAL AND STATE
    28  FUNDING PROGRAMS.
    29     (J)  RECOVERY.--IN NO CASE SHALL DECREASED REVENUES OF AN
    30  ELECTRIC DISTRIBUTION COMPANY DUE TO REDUCED ENERGY CONSUMPTION
    20080H2200B4429                 - 27 -     

     1  OR CHANGES IN ENERGY DEMAND BE CONSIDERED A RECOVERABLE COST.
     2     (K)  APPLICABILITY.--THIS SECTION SHALL NOT APPLY TO AN
     3  ELECTRIC DISTRIBUTION COMPANY WITH FEWER THAN 100,000 CUSTOMERS.
     4     (L)  DEFINITIONS.--AS USED IN THIS SECTION, THE FOLLOWING
     5  WORDS AND PHRASES SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS
     6  SUBSECTION:
     7     "ELECTRIC DISTRIBUTION COMPANY TOTAL ANNUAL REVENUE."
     8  AMOUNTS PAID TO THE ELECTRIC DISTRIBUTION COMPANY FOR
     9  GENERATION, TRANSMISSION, DISTRIBUTION AND SURCHARGES BY RETAIL
    10  CUSTOMERS.
    11     "ENERGY EFFICIENCY AND CONSERVATION MEASURES."
    12         (1)  TECHNOLOGIES, MANAGEMENT PRACTICES OR OTHER MEASURES
    13     EMPLOYED BY RETAIL CUSTOMERS THAT REDUCE ELECTRICITY
    14     CONSUMPTION OR DEMAND IF ALL OF THE FOLLOWING APPLY:
    15             (I)  THE TECHNOLOGY, PRACTICE OR OTHER MEASURE IS
    16         INSTALLED ON OR AFTER THE EFFECTIVE DATE OF THIS SECTION
    17         AT THE LOCATION OF A RETAIL CUSTOMER.
    18             (II)  THE TECHNOLOGY, PRACTICE OR OTHER MEASURE
    19         REDUCES CONSUMPTION OF ENERGY BY THE RETAIL CUSTOMER.
    20             (III)  THE COST OF THE ACQUISITION OR INSTALLATION OF
    21         THE MEASURE IS DIRECTLY INCURRED IN WHOLE OR IN PART BY
    22         THE ELECTRIC DISTRIBUTION COMPANY.
    23         (2)  ENERGY EFFICIENCY AND CONSERVATION MEASURES SHALL
    24     INCLUDE SOLAR OR SOLAR PHOTOVOLTAIC PANELS, ENERGY EFFICIENT
    25     WINDOWS AND DOORS, ENERGY EFFICIENT LIGHTING, INCLUDING EXIT
    26     SIGN RETROFIT, HIGH BAY FLUORESCENT RETROFIT AND PEDESTRIAN
    27     AND TRAFFIC SIGNAL CONVERSION, GEOTHERMAL HEATING,
    28     INSULATION, AIR SEALING, REFLECTIVE ROOF COATINGS, ENERGY
    29     EFFICIENT HEATING AND COOLING EQUIPMENT OR SYSTEMS AND ENERGY
    30     EFFICIENT APPLIANCES AND OTHER TECHNOLOGIES, PRACTICES OR
    20080H2200B4429                 - 28 -     

     1     MEASURES APPROVED BY THE COMMISSION.
     2     "PEAK DEMAND."  THE HIGHEST ELECTRICAL REQUIREMENT OCCURRING
     3  DURING A SPECIFIED PERIOD. FOR AN ELECTRIC DISTRIBUTION COMPANY,
     4  THE TERM SHALL MEAN THE SUM OF THE METERED CONSUMPTION FOR ALL
     5  RETAIL CUSTOMERS OVER THAT PERIOD.
     6     "QUALITY ASSURANCE."  ALL OF THE FOLLOWING:
     7         (1)  THE AUDITING OF BUILDINGS, EQUIPMENT AND PROCESSES
     8     TO DETERMINE THE COST-EFFECTIVENESS OF ENERGY EFFICIENCY AND
     9     CONSERVATION MEASURES USING NATIONALLY RECOGNIZED TOOLS AND
    10     CERTIFICATION PROGRAMS.
    11         (2)  INDEPENDENT INSPECTION OF COMPLETED ENERGY
    12     EFFICIENCY AND CONSERVATION MEASURES COMPLETED BY THIRD-PARTY
    13     ENTITIES TO EVALUATE THE QUALITY OF THE COMPLETED MEASURE.
    14     "REAL-TIME PRICE."  A RATE THAT DIRECTLY REFLECTS THE
    15  DIFFERENT COST OF ENERGY DURING EACH HOUR.
    16     "THIRD-PARTY ENTITY."  AN ENTITY WITH NO DIRECT OR INDIRECT
    17  OWNERSHIP, PARTNERSHIP OR OTHER AFFILIATED INTEREST WITH AN
    18  ELECTRIC DISTRIBUTION COMPANY.
    19     "TIME-OF-USE RATE."  A RATE THAT REFLECTS THE COSTS OF
    20  SERVING CUSTOMERS DURING DIFFERENT TIME PERIODS, INCLUDING OFF-
    21  PEAK AND ON-PEAK PERIODS, BUT NOT AS FREQUENTLY AS EACH HOUR.
    22     "TOTAL RESOURCE COST TEST."  A STANDARD TEST THAT IS MET IF,
    23  OVER THE EFFECTIVE LIFE OF EACH PLAN NOT TO EXCEED FIVE YEARS,
    24  THE AVOIDED MONETARY COSTS OF SUPPLYING ELECTRICITY ARE GREATER
    25  THAN THE MONETARY COSTS OF ENERGY EFFICIENCY MEASURES AND
    26  CONSERVATION OF CONSUMPTION.
    27     SECTION 3.  SECTION 2807(E) OF TITLE 66 IS AMENDED AND THE
    28  SECTION IS AMENDED BY ADDING SUBSECTIONS TO READ:
    29  § 2807.  DUTIES OF ELECTRIC DISTRIBUTION COMPANIES.
    30     * * *
    20080H2200B4429                 - 29 -     

     1     (E)  OBLIGATION TO SERVE.--[AN ELECTRIC DISTRIBUTION
     2  COMPANY'S] A DEFAULT SERVICE PROVIDER'S OBLIGATION TO PROVIDE
     3  ELECTRIC GENERATION SUPPLY SERVICE FOLLOWING [IMPLEMENTATION OF
     4  RESTRUCTURING AND THE CHOICE OF ALTERNATIVE GENERATION BY A
     5  CUSTOMER] THE EXPIRATION OF A GENERATION RATE CAP SPECIFIED
     6  UNDER SECTION 2804(4) (RELATING TO STANDARDS FOR RESTRUCTURING
     7  OF ELECTRIC INDUSTRY) OR A RESTRUCTURING PLAN UNDER SECTION
     8  2806(F) (RELATING TO IMPLEMENTATION, PILOT PROGRAMS AND
     9  PERFORMANCE-BASED RATES) IS REVISED AS FOLLOWS:
    10         (1)  WHILE AN ELECTRIC DISTRIBUTION COMPANY COLLECTS
    11     EITHER A COMPETITIVE TRANSITION CHARGE OR AN INTANGIBLE
    12     TRANSITION CHARGE OR UNTIL 100% OF ITS CUSTOMERS HAVE CHOICE,
    13     WHICHEVER IS LONGER, THE ELECTRIC DISTRIBUTION COMPANY SHALL
    14     CONTINUE TO HAVE THE FULL OBLIGATION TO SERVE, INCLUDING THE
    15     CONNECTION OF CUSTOMERS, THE DELIVERY OF ELECTRIC ENERGY AND
    16     THE PRODUCTION OR ACQUISITION OF ELECTRIC ENERGY FOR
    17     CUSTOMERS.
    18         [(2)  AT THE END OF THE TRANSITION PERIOD, THE COMMISSION
    19     SHALL PROMULGATE REGULATIONS TO DEFINE THE ELECTRIC
    20     DISTRIBUTION COMPANY'S OBLIGATION TO CONNECT AND DELIVER AND
    21     ACQUIRE ELECTRICITY UNDER PARAGRAPH (3) THAT WILL EXIST AT
    22     THE END OF THE PHASE-IN PERIOD.
    23         (3)  IF A CUSTOMER CONTRACTS FOR ELECTRIC ENERGY AND IT
    24     IS NOT DELIVERED OR IF A CUSTOMER DOES NOT CHOOSE AN
    25     ALTERNATIVE ELECTRIC GENERATION SUPPLIER, THE ELECTRIC
    26     DISTRIBUTION COMPANY OR COMMISSION-APPROVED ALTERNATIVE
    27     SUPPLIER SHALL ACQUIRE ELECTRIC ENERGY AT PREVAILING MARKET
    28     PRICES TO SERVE THAT CUSTOMER AND SHALL RECOVER FULLY ALL
    29     REASONABLE COSTS.]
    30         (3.1)  (I)  FOLLOWING THE EXPIRATION OF AN ELECTRIC
    20080H2200B4429                 - 30 -     

     1         DISTRIBUTION COMPANY'S OBLIGATION TO PROVIDE ELECTRIC
     2         GENERATION SUPPLY SERVICE TO RETAIL CUSTOMERS AT CAPPED
     3         RATES, IF A CUSTOMER CONTRACTS FOR ELECTRIC GENERATION
     4         SUPPLY SERVICE AND THE CHOSEN ELECTRIC GENERATION
     5         SUPPLIER DOES NOT PROVIDE THE SERVICE OR IF A CUSTOMER
     6         DOES NOT CHOOSE AN ALTERNATIVE ELECTRIC GENERATION
     7         SUPPLIER, THE DEFAULT SERVICE PROVIDER SHALL PROVIDE
     8         ELECTRIC GENERATION SUPPLY SERVICE TO THAT CUSTOMER
     9         PURSUANT TO A COMMISSION-APPROVED COMPETITIVE PROCUREMENT
    10         PLAN. THE ELECTRIC POWER ACQUIRED SHALL BE PROCURED
    11         THROUGH COMPETITIVE PROCUREMENT PROCESSES AND SHALL
    12         INCLUDE ONE OR MORE OF THE FOLLOWING:
    13                 (A)  AUCTIONS.
    14                 (B)  REQUESTS FOR PROPOSAL.
    15                 (C)  BILATERAL AGREEMENTS ENTERED INTO AT THE
    16             SOLE DISCRETION OF THE DEFAULT SERVICE PROVIDER WHICH
    17             SHALL BE AT PRICES WHICH ARE:
    18                     (I)  NO GREATER THAN THE COST OF OBTAINING
    19                 GENERATION UNDER COMPARABLE TERMS IN THE
    20                 WHOLESALE MARKET, AS DETERMINED BY THE COMMISSION
    21                 AT THE TIME OF EXECUTION OF THE CONTRACT; OR
    22                     (II)  CONSISTENT WITH A COMMISSION-APPROVED
    23                 COMPETITION PROCUREMENT PROCESS. ANY AGREEMENT
    24                 BETWEEN AFFILIATED PARTIES SHALL BE SUBJECT TO
    25                 REVIEW AND APPROVAL OF THE PENNSYLVANIA PUBLIC
    26                 UTILITY COMMISSION UNDER CHAPTER 21 (RELATING TO
    27                 RELATIONS WITH AFFILIATED INTERESTS). IN NO CASE
    28                 SHALL THE COST OF OBTAINING GENERATION FROM ANY
    29                 AFFILIATED INTEREST BE GREATER THAN THE COST OF
    30                 OBTAINING GENERATION UNDER COMPARABLE TERMS IN
    20080H2200B4429                 - 31 -     

     1                 THE WHOLESALE MARKET AT THE TIME OF EXECUTION OF
     2                 THE CONTRACT.
     3             (II)  THE PROVISIONS OF THIS PARAGRAPH SHALL APPLY TO
     4         ANY TYPE OF FUEL PURCHASED BY A DEFAULT SERVICE PROVIDER
     5         TO PROVIDE ELECTRIC GENERATION SUPPLY SERVICE, INCLUDING
     6         FUEL REQUIRED TO BE PURCHASED UNDER THE ACT OF NOVEMBER
     7         30, 2004 (P.L.1672, NO.213), KNOWN AS THE ALTERNATIVE
     8         ENERGY PORTFOLIO STANDARDS ACT.
     9         (3.2)  THE ELECTRIC POWER PROCURED PURSUANT TO PARAGRAPH
    10     (3.1) SHALL INCLUDE A PRUDENT MIX OF THE FOLLOWING:
    11             (I)  SPOT MARKET PURCHASES.
    12             (II)  SHORT-TERM CONTRACTS.
    13             (III)  LONG-TERM PURCHASE CONTRACTS, ENTERED INTO AS
    14         A RESULT OF AN AUCTION, REQUEST FOR PROPOSAL OR BILATERAL
    15         CONTRACT THAT IS FREE OF UNDUE INFLUENCE, DURESS OR
    16         FAVORITISM, OF NOT LESS THAN THREE AND NOT MORE THAN 20
    17         YEARS, UNLESS THE COMMISSION DETERMINES A LONGER TERM IS
    18         NECESSARY FOR THE RELIABILITY IN THE ACQUISITION OF
    19         GENERATION AND IT IS IN THE BEST INTEREST OF CONSUMERS TO
    20         EXTEND THE TERM OF THE CONTRACT BEYOND 20 YEARS. THE
    21         DEFAULT SERVICE PROVIDER SHALL HAVE SOLE DISCRETION TO
    22         DETERMINE THE SOURCE, FUEL TYPE AND LENGTH OF CONTRACT.
    23         (3.3)  THE PRUDENT MIX OF CONTRACTS ENTERED INTO PURSUANT
    24     TO PARAGRAPH (3.2) SHALL BE DESIGNED TO ENSURE:
    25             (I)  ADEQUATE AND RELIABLE SERVICE.
    26             (II)  THE LEAST COST TO CUSTOMERS OVER TIME.
    27             (III)  COMPLIANCE WITH THE REQUIREMENTS OF PARAGRAPH
    28         (3.1).
    29         (3.4)  THE DEFAULT SERVICE PROVIDER SHALL FILE A PLAN FOR
    30     COMPETITIVE PROCUREMENT WITH THE COMMISSION AND OBTAIN
    20080H2200B4429                 - 32 -     

     1     COMMISSION APPROVAL OF THE PLAN CONSIDERING THE STANDARDS IN
     2     PARAGRAPHS (3.1), (3.2) AND (3.3) BEFORE THE COMPETITIVE
     3     PROCESS IS IMPLEMENTED. THE COMMISSION SHALL HOLD HEARINGS AS
     4     NECESSARY ON THE PROPOSED PLAN. IF THE COMMISSION FAILS TO
     5     ISSUE A FINAL ORDER ON THE PLAN WITHIN NINE MONTHS OF THE
     6     DATE THAT THE PLAN IS FILED, THE PLAN SHALL BE DEEMED TO BE
     7     APPROVED AND THE DEFAULT SERVICE PROVIDER MAY IMPLEMENT THE
     8     PLAN AS FILED. COSTS INCURRED THROUGH AN APPROVED COMPETITIVE
     9     PROCUREMENT PLAN SHALL BE DEEMED TO BE THE LEAST COST OVER
    10     TIME AS REQUIRED UNDER PARAGRAPH (3.3).
    11         (3.5)  AT THE TIME THE COMMISSION EVALUATES THE PLAN AND
    12     PRIOR TO APPROVAL, IN DETERMINING IF THE DEFAULT ELECTRIC
    13     SERVICE PROVIDER'S PLAN OBTAINS GENERATION SUPPLY AT THE
    14     LEAST COST, THE COMMISSION SHALL CONSIDER THE DEFAULT SERVICE
    15     PROVIDER'S OBLIGATION TO PROVIDE ADEQUATE AND RELIABLE
    16     SERVICE TO THE CUSTOMERS AND THAT THE DEFAULT SERVICE
    17     PROVIDER HAS OBTAINED A PRUDENT MIX OF CONTRACTS TO OBTAIN
    18     LEAST COST ON LONG-TERM, SHORT-TERM AND SPOT MARKET BASIS AND
    19     SHALL MAKE SPECIFIC FINDINGS WHICH SHALL INCLUDE THE
    20     FOLLOWING:
    21             (I)  THE DEFAULT SERVICE PROVIDER'S PLAN INCLUDES
    22         PRUDENT STEPS NECESSARY TO NEGOTIATE FAVORABLE GENERATION
    23         SUPPLY CONTRACTS.
    24             (II)  THE DEFAULT SERVICE PROVIDER'S PLAN INCLUDES
    25         PRUDENT STEPS NECESSARY TO OBTAIN LEAST COST GENERATION
    26         SUPPLY CONTRACTS ON A LONG-TERM, SHORT-TERM AND SPOT
    27         MARKET BASIS.
    28             (III)  NEITHER THE DEFAULT SERVICE PROVIDER NOR ITS
    29         AFFILIATED INTEREST HAS WITHHELD OR ASKED TO WITHHOLD
    30         FROM THE MARKET ANY GENERATION SUPPLY WHICH SHOULD HAVE
    20080H2200B4429                 - 33 -     

     1         BEEN UTILIZED AS PART OF THE LEAST COST PROCUREMENT
     2         POLICY.
     3         (3.6)  NOTWITHSTANDING SECTIONS 508 (RELATING TO POWER OF
     4     COMMISSION TO VARY, REFORM AND REVISE CONTRACTS) AND 2102
     5     (RELATING TO APPROVAL OF CONTRACTS WITH AFFILIATED
     6     INTERESTS), THE COMMISSION SHALL NOT MODIFY CONTRACTS OR
     7     DISALLOW COSTS ASSOCIATED WITH AN APPROVED PROCUREMENT
     8     PROCESS WHEN IT HAS REVIEWED AND APPROVED THE RESULTS OF THE
     9     PROCUREMENT.
    10         (3.7)  NOTWITHSTANDING ANY OTHER PROVISION OF THIS TITLE
    11     TO THE CONTRARY, THE COMMISSION MAY MODIFY CONTRACTS OR
    12     DISALLOW COSTS WHEN THE PARTY SEEKING RECOVERY OF THE COSTS
    13     IS AT FAULT ASSOCIATED WITH CONTRACTS ENTERED INTO PURSUANT
    14     TO A COMMISSION-APPROVED PROCUREMENT PLAN IF THE COMMISSION
    15     DETERMINES AFTER A HEARING THAT:
    16             (I)  THE CONTRACT HAS NOT BEEN IMPLEMENTED OR
    17         APPROVED OR DOES NOT COMPLY WITH THE COMMISSION-APPROVED
    18         PROCUREMENT PLAN; OR
    19             (II)  THERE HAS BEEN FRAUD, COLLUSION OR MARKET
    20         MANIPULATION WITH REGARD TO THESE CONTRACTS.
    21         (3.8)  THE DEFAULT SERVICE PROVIDER SHALL HAVE THE RIGHT
    22     TO RECOVER ON A FULL AND CURRENT BASIS, PURSUANT TO A
    23     RECONCILABLE AUTOMATIC ADJUSTMENT CLAUSE UNDER SECTION 1307
    24     (RELATING TO SLIDING SCALE OF RATES; ADJUSTMENTS), ALL COSTS
    25     INCURRED UNDER THIS SECTION AND A COMMISSION-APPROVED
    26     COMPETITIVE PROCUREMENT PLAN.
    27         (4)  IF A CUSTOMER THAT CHOOSES AN ALTERNATIVE SUPPLIER
    28     AND SUBSEQUENTLY DESIRES TO RETURN TO THE LOCAL DISTRIBUTION
    29     COMPANY FOR GENERATION SERVICE, THE LOCAL DISTRIBUTION
    30     COMPANY SHALL TREAT THAT CUSTOMER EXACTLY AS IT WOULD ANY NEW
    20080H2200B4429                 - 34 -     

     1     APPLICANT FOR ENERGY SERVICE.
     2         (5)  (I)  NOTWITHSTANDING PARAGRAPH [(3)] (3.1), THE
     3         ELECTRIC DISTRIBUTION COMPANY OR COMMISSION-APPROVED
     4         ALTERNATIVE SUPPLIER MAY, IN ITS SOLE DISCRETION, OFFER
     5         LARGE CUSTOMERS WITH A PEAK DEMAND OF 15 MEGAWATTS OR
     6         GREATER AT ONE METER AT A LOCATION IN ITS SERVICE
     7         TERRITORY ANY NEGOTIATED RATE FOR SERVICE AT ALL OF THE
     8         CUSTOMERS' LOCATIONS WITHIN THE SERVICE TERRITORY FOR ANY
     9         DURATION AGREED UPON BY THE ELECTRIC DISTRIBUTION COMPANY
    10         OR COMMISSION-APPROVED ALTERNATIVE SUPPLIER AND THE LARGE
    11         CUSTOMER. THE COMMISSION SHALL PERMIT, BUT SHALL NOT
    12         REQUIRE, AN ELECTRIC DISTRIBUTION COMPANY OR COMMISSION-
    13         APPROVED ALTERNATIVE SUPPLIER TO PROVIDE SERVICE TO LARGE
    14         CUSTOMERS UNDER THIS PARAGRAPH. CONTRACT RATES ENTERED
    15         INTO UNDER THIS PARAGRAPH SHALL BE SUBJECT TO REVIEW BY
    16         THE COMMISSION IN ORDER TO ENSURE THAT ALL COSTS RELATED
    17         TO THE RATES ARE BORNE BY THE PARTIES TO THE CONTRACT AND
    18         THAT NO COSTS RELATED TO THE RATES ARE BORNE BY OTHER
    19         CUSTOMERS OR CUSTOMER CLASSES. IF NO COSTS RELATED TO THE
    20         RATES ARE BORNE BY OTHER CUSTOMERS OR CUSTOMER CLASSES,
    21         THE COMMISSION SHALL APPROVE THE CONTRACT WITHIN 90 DAYS
    22         OF ITS FILING, OR IT SHALL BE DEEMED APPROVED BY
    23         OPERATION OF LAW UPON EXPIRATION OF THE 90 DAYS.
    24         INFORMATION SUBMITTED UNDER THIS PARAGRAPH SHALL BE
    25         SUBJECT TO THE COMMISSION'S PROCEDURES FOR THE FILING OF
    26         CONFIDENTIAL AND PROPRIETARY INFORMATION.
    27             (II)  FOR PURPOSES OF PROVIDING SERVICE UNDER THIS
    28         PARAGRAPH TO CUSTOMERS WITH A PEAK DEMAND OF 20 MEGAWATTS
    29         OR GREATER AT ONE METER AT A LOCATION WITHIN THAT
    30         DISTRIBUTION COMPANY'S SERVICE TERRITORY, AN ELECTRIC
    20080H2200B4429                 - 35 -     

     1         DISTRIBUTION COMPANY THAT HAS COMPLETED ITS RESTRUCTURING
     2         TRANSITION PERIOD AS OF THE EFFECTIVE DATE OF THIS
     3         PARAGRAPH MAY, IN ITS SOLE DISCRETION, ACQUIRE AN
     4         INTEREST IN A GENERATION FACILITY OR CONSTRUCT A
     5         GENERATION FACILITY SPECIFICALLY TO MEET THE ENERGY
     6         REQUIREMENTS OF THE CUSTOMERS, INCLUDING THE ELECTRIC
     7         REQUIREMENTS OF THE CUSTOMERS' OTHER BILLING LOCATIONS
     8         WITHIN ITS SERVICE TERRITORY. THE ELECTRIC DISTRIBUTION
     9         COMPANY MUST COMMENCE CONSTRUCTION OF THE GENERATION
    10         FACILITY OR CONTRACT TO ACQUIRE THE GENERATION INTEREST
    11         WITHIN THREE YEARS AFTER THE EFFECTIVE DATE OF THIS
    12         PARAGRAPH, EXCEPT THAT THE ELECTRIC DISTRIBUTION COMPANY
    13         MAY ADD TO THE GENERATION FACILITIES IT COMMENCED
    14         CONSTRUCTION OR CONTRACTED TO ACQUIRE AFTER THIS THREE-
    15         YEAR PERIOD TO SERVE ADDITIONAL LOAD OF CUSTOMERS FOR
    16         WHOM IT COMMENCED CONSTRUCTION OR CONTRACTED TO ACQUIRE
    17         GENERATION WITHIN THREE YEARS. NOTHING IN THIS PARAGRAPH
    18         REQUIRES OR AUTHORIZES THE COMMISSION TO REQUIRE AN
    19         ELECTRIC DISTRIBUTION COMPANY TO COMMENCE CONSTRUCTION OR
    20         ACQUIRE AN INTEREST IN A GENERATION FACILITY. THE
    21         ELECTRIC DISTRIBUTION COMPANY'S INTEREST IN THE
    22         GENERATION FACILITY IT BUILT OR CONTRACTED TO ACQUIRE
    23         SHALL BE NO LARGER THAN NECESSARY TO MEET PEAK DEMAND OF
    24         CUSTOMERS SERVED UNDER THIS SUBPARAGRAPH. DURING TIMES
    25         WHEN THE CUSTOMER'S DEMAND IS LESS THAN THE ELECTRIC
    26         DISTRIBUTION COMPANY'S GENERATION INTEREST, THE ELECTRIC
    27         DISTRIBUTION COMPANY MAY SELL EXCESS POWER ON THE
    28         WHOLESALE MARKET. AT NO TIME SHALL THE COSTS ASSOCIATED
    29         WITH THE GENERATING FACILITY INTERESTS BE INCLUDED IN
    30         RATE BASE OR OTHERWISE REFLECTED IN RATES. THE GENERATION
    20080H2200B4429                 - 36 -     

     1         FACILITY INTERESTS SHALL NOT BE COMMISSION-REGULATED
     2         ASSETS.
     3         (6)  A DEFAULT SERVICE PLAN APPROVED BY THE COMMISSION
     4     PRIOR TO THE EFFECTIVE DATE OF THIS SECTION SHALL REMAIN IN
     5     EFFECT THROUGH ITS APPROVED TERM. AT ITS SOLE DISCRETION, THE
     6     DEFAULT SERVICE PROVIDER MAY PROPOSE AMENDMENTS TO ITS
     7     APPROVED PLAN THAT ARE CONSISTENT WITH THIS SECTION, AND THE
     8     COMMISSION SHALL ISSUE A DECISION WHETHER TO APPROVE OR
     9     DISAPPROVE THE PROPOSED AMENDMENTS WITHIN NINE MONTHS OF THE
    10     DATE THAT THE AMENDMENTS ARE FILED. IF THE COMMISSION FAILS
    11     TO ISSUE A FINAL ORDER WITHIN NINE MONTHS, THE AMENDMENTS
    12     SHALL BE DEEMED TO BE APPROVED AND THE DEFAULT SERVICE
    13     PROVIDER MAY IMPLEMENT THE AMENDMENTS AS FILED.
    14         (7)  THE DEFAULT SERVICE PROVIDER SHALL OFFER RESIDENTIAL
    15     AND SMALL BUSINESS CUSTOMERS A GENERATION SUPPLY SERVICE RATE
    16     THAT SHALL CHANGE NO MORE FREQUENTLY THAN ON A QUARTERLY
    17     BASIS. ALL DEFAULT SERVICE RATES SHALL BE REVIEWED BY THE
    18     COMMISSION TO ENSURE THAT THE COSTS OF PROVIDING SERVICE TO
    19     EACH CUSTOMER CLASS ARE NOT SUBSIDIZED BY ANY OTHER CLASS.
    20     (F)  SMART METER TECHNOLOGY AND TIME OF USE RATES.--
    21         (1)  WITHIN NINE MONTHS AFTER THE EFFECTIVE DATE OF THIS
    22     PARAGRAPH, ELECTRIC DISTRIBUTION COMPANIES SHALL FILE A SMART
    23     METER TECHNOLOGY PROCUREMENT AND INSTALLATION PLAN WITH THE
    24     COMMISSION FOR APPROVAL. THE PLAN SHALL DESCRIBE THE SMART
    25     METER TECHNOLOGIES THE ELECTRIC DISTRIBUTION COMPANY PROPOSES
    26     TO INSTALL IN ACCORDANCE WITH PARAGRAPH (2).
    27         (2)  ELECTRIC DISTRIBUTION COMPANIES SHALL FURNISH SMART
    28     METER TECHNOLOGY AS FOLLOWS:
    29             (I)  UPON REQUEST TO A CUSTOMER THAT AGREES TO PAY
    30         THE COST OF THE SMART METER.
    20080H2200B4429                 - 37 -     

     1             (II)  IN THE CONSTRUCTION OF A NEW RESIDENCE OR NEW
     2         BUILDING TO BE USED BY A COMMERCIAL CUSTOMER.
     3             (III)  IN ACCORDANCE WITH A SCHEDULE OF REPLACEMENT
     4         OF FULL DEPRECIATION OF EXISTING METERS.
     5         (3)  ELECTRIC DISTRIBUTION COMPANIES SHALL, WITH CUSTOMER
     6     CONSENT, MAKE AVAILABLE ELECTRONIC ACCESS TO CUSTOMER METER
     7     DATA TO THIRD PARTIES, INCLUDING ELECTRIC GENERATION
     8     SUPPLIERS AND PROVIDERS OF CONSERVATION AND LOAN MANAGEMENT
     9     SERVICES.
    10         (4)  AN ELECTRIC DISTRIBUTION COMPANY SHALL NOT BE
    11     PERMITTED TO RECOVER THE COSTS, AS DETERMINED BY THE
    12     COMMISSION, OF PROVIDING SMART METER TECHNOLOGY UNDER
    13     PARAGRAPH (2).
    14         (5)  IN NO EVENT SHALL LOST OR DECREASED REVENUES BY AN
    15     ELECTRIC DISTRIBUTION COMPANY DUE TO REDUCED ELECTRICITY
    16     CONSUMPTION OR SHIFTING ENERGY DEMAND BE CONSIDERED A COST OF
    17     SMART METER TECHNOLOGY.
    18         (6)  BY JANUARY 1, 2010, OR AT THE END OF THE APPLICABLE
    19     GENERATION RATE CAP PERIOD, WHICHEVER IS LATER, A DEFAULT
    20     SERVICE PROVIDER SHALL SUBMIT TO THE COMMISSION ONE OR MORE
    21     PROPOSED TIME-OF-USE RATES AND REAL-TIME PRICE PLANS. THE
    22     COMMISSION SHALL APPROVE OR MODIFY THE TIME-OF-USE RATES AND
    23     REAL-TIME PRICE PLAN WITHIN SIX MONTHS OF SUBMITTAL. THE
    24     DEFAULT SERVICE PROVIDER SHALL OFFER THE RATES AND REAL-TIME
    25     PRICE PLAN TO ALL RESIDENTIAL AND COMMERCIAL CUSTOMERS THAT
    26     HAVE BEEN PROVIDED WITH SMART METER TECHNOLOGY WITHIN 60 DAYS
    27     OF INSTALLATION OF THE SMART METER TECHNOLOGY OR COMMISSION
    28     APPROVAL OF THE TIME-OF-USE RATES AND REAL-TIME PRICE PLAN,
    29     WHICHEVER IS LATER. RESIDENTIAL OR COMMERCIAL CUSTOMERS MAY
    30     ELECT TO PARTICIPATE IN TIME-OF-USE RATES OR REAL-TIME
    20080H2200B4429                 - 38 -     

     1     PRICING. THE DEFAULT SERVICE PROVIDER SHALL SUBMIT AN ANNUAL
     2     REPORT TO THE COMMISSION ON THE PARTICIPATION IN THE TIME-OF-
     3     USE AND REAL-TIME PRICE PROGRAMS AND THE EFFICACY OF THE
     4     PROGRAMS IN AFFECTING ENERGY DEMAND AND CONSUMPTION AND THE
     5     EFFECT ON WHOLESALE MARKET PRICES.
     6         (7)  THE PROVISIONS OF THIS SUBSECTION SHALL NOT APPLY TO
     7     AN ELECTRIC DISTRIBUTION COMPANY WITH 100,000 OR FEWER
     8     CUSTOMERS.
     9     (G)  DEFINITION.--AS USED IN THIS SECTION, THE TERM "SMART
    10  METER TECHNOLOGY" MEANS TECHNOLOGY, INCLUDING METERING
    11  TECHNOLOGY AND NETWORK COMMUNICATIONS TECHNOLOGY CAPABLE OF
    12  BIDIRECTIONAL COMMUNICATION, THAT RECORDS ELECTRICITY USAGE ON
    13  AT LEAST AN HOURLY BASIS, INCLUDING RELATED ELECTRIC
    14  DISTRIBUTION SYSTEM UPGRADES TO ENABLE THE TECHNOLOGY. THE
    15  TECHNOLOGY SHALL PROVIDE CUSTOMERS WITH DIRECT ACCESS TO AND USE
    16  OF PRICE AND CONSUMPTION INFORMATION. THE TECHNOLOGY SHALL ALSO:
    17         (1)  DIRECTLY PROVIDE CUSTOMERS WITH INFORMATION ON THEIR
    18     HOURLY CONSUMPTION.
    19         (2)  ENABLE TIME-OF-USE RATES AND REAL-TIME PRICE
    20     PROGRAMS.
    21         (3)  EFFECTIVELY SUPPORT THE AUTOMATIC CONTROL OF THE
    22     CUSTOMER'S ELECTRICITY CONSUMPTION BY ONE OR MORE OF THE
    23     FOLLOWING AS SELECTED BY THE CUSTOMER:
    24             (I)  THE CUSTOMER;
    25             (II)  THE CUSTOMER'S UTILITY; OR
    26             (III)  A THIRD PARTY ENGAGED BY THE CUSTOMER OR THE
    27         CUSTOMER'S UTILITY.
    28         (4)  PROVIDE A MEANS TO OBTAIN REAL-TIME CONSUMPTION
    29     INFORMATION FROM A METER SUCH AS AN INSTALLED PORT OR OUTPUT
    30     FOR TRANSMITTING METER PULSE DATA EXTERNAL TO THE METER TO BE
    20080H2200B4429                 - 39 -     

     1     USED BY THE CUSTOMER, THE ELECTRIC DISTRIBUTION COMPANY OR A
     2     THIRD PARTY ENGAGED BY THE CUSTOMER IN THE ELECTRIC
     3     DISTRIBUTION COMPANY.
     4     SECTION 4.  TITLE 66 IS AMENDED BY ADDING A SECTION TO READ:
     5  § 2813.  PROCUREMENT OF POWER.
     6     EXCEPT AS PROVIDED UNDER THE ACT OF NOVEMBER 30, 2004
     7  (P.L.1672, NO.213), KNOWN AS THE ALTERNATIVE ENERGY PORTFOLIO
     8  STANDARDS ACT, THE COMMISSION MAY NOT ORDER A DEFAULT SERVICE
     9  PROVIDER TO PROCURE POWER FROM A SPECIFIC GENERATION SUPPLIER,
    10  FROM A SPECIFIC GENERATION FUEL TYPE OR FROM NEW GENERATION
    11  ONLY.
    12     SECTION 5.  THIS ACT SHALL TAKE EFFECT IN 60 DAYS.












    A11L66GRH/20080H2200B4429       - 40 -
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