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                                 SENATE AMENDED
        PRIOR PRINTER'S NOS. 3089, 3176, 3218,        PRINTER'S NO. 4526
        3233, 4429

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

No. 2200 Session of 2008


        INTRODUCED BY GEORGE, McCALL, BELFANTI, CALTAGIRONE, CONKLIN,
           DALEY, N. P. 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, RE-REPORTED AS AMENDED, OCTOBER 7, 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. FURTHER PROVIDING FOR DIRECTOR OF   <--
    10     OPERATIONS, SECRETARY, EMPLOYEES AND CONSULTANTS; REPEALING
    11     PROVISIONS RELATING TO OFFICE OF TRIAL STAFF; FURTHER
    12     PROVIDING FOR BUREAUS AND OFFICES; PROVIDING FOR OTHER
    13     BUREAUS, OFFICES AND POSITIONS; FURTHER PROVIDING FOR
    14     ELECTRIC UTILITY DEFINITIONS; PROVIDING FOR ENERGY EFFICIENCY
    15     AND CONSERVATION PROGRAM AND FOR ENERGY EFFICIENCY AND
    16     CONSERVATION; FURTHER PROVIDING FOR DUTIES OF ELECTRIC
    17     DISTRIBUTION COMPANIES AND FOR MARKET POWER REMEDIATION; AND
    18     PROVIDING FOR PROCUREMENT, FOR ADDITIONAL ALTERNATIVE ENERGY
    19     SOURCES AND FOR CARBON DIOXIDE SEQUESTRATION NETWORK.

    20     THE GENERAL ASSEMBLY RECOGNIZES THE FOLLOWING PUBLIC POLICY
    21  FINDINGS AND DECLARES THAT THE FOLLOWING OBJECTIVES OF THE
    22  COMMONWEALTH ARE SERVED BY THIS ACT:
    23         (1)  THE HEALTH, SAFETY AND PROSPERITY OF ALL CITIZENS OF

     1     THIS COMMONWEALTH ARE INHERENTLY DEPENDENT UPON THE
     2     AVAILABILITY OF ADEQUATE, RELIABLE, AFFORDABLE, EFFICIENT AND
     3     ENVIRONMENTALLY SUSTAINABLE ELECTRIC SERVICE AT THE LEAST
     4     COST, TAKING INTO ACCOUNT ANY BENEFITS OF PRICE STABILITY,
     5     OVER TIME AND THE IMPACT ON THE ENVIRONMENT.
     6         (2)  IT IS IN THE PUBLIC INTEREST TO ADOPT ENERGY
     7     EFFICIENCY AND CONSERVATION MEASURES AND TO IMPLEMENT ENERGY
     8     PROCUREMENT REQUIREMENTS DESIGNED TO ENSURE THAT ELECTRICITY
     9     OBTAINED REDUCES THE POSSIBILITY OF ELECTRIC PRICE
    10     INSTABILITY, PROMOTES ECONOMIC GROWTH AND ENSURES AFFORDABLE
    11     AND AVAILABLE ELECTRIC SERVICE TO ALL RESIDENTS.
    12         (3)  IT IS IN THE PUBLIC INTEREST TO EXPAND THE USE OF
    13     ALTERNATIVE ENERGY AND TO EXPLORE THE FEASIBILITY OF NEW
    14     SOURCES OF ALTERNATIVE ENERGY TO PROVIDE ELECTRIC GENERATION
    15     IN THIS COMMONWEALTH.
    16     The General Assembly of the Commonwealth of Pennsylvania
    17  hereby enacts as follows:
    18     Section 1.  Title 66 of the Pennsylvania Consolidated          <--
    19  Statutes is amended by adding a section to read:
    20  § 1329.  Recovery of certain labor relations expenses.
    21     No public utility may charge its customers as a permissible
    22  operating expense for ratemaking purposes any portion of the
    23  direct or indirect cost of meetings, publications, consultants,
    24  attorneys or other professional services and expenses associated
    25  with the utility's efforts to dissuade the employees of the
    26  utility, or the employees of any affiliated interest of the
    27  utility as defined in section 2101 (relating to definition of
    28  affiliated interest), from becoming or remaining a member in, or
    29  otherwise being represented by, any labor union.
    30     Section 2.  Section 2803 of Title 66 is amended by adding
    20080H2200B4526                  - 2 -     

     1  definitions to read:
     2  § 2803.  Definitions.
     3     The following words and phrases when used in this chapter
     4  shall have the meanings given to them in this section unless the
     5  context clearly indicates otherwise:
     6     "Affiliated interest."  As defined in section 2101 (relating
     7  to definition of affiliated interest).
     8     * * *
     9     "Cost effective."  In relation to a program being evaluated,
    10  satisfaction of the total resource cost test.
    11     * * *
    12     "Demand-side response."  Load management technologies,
    13  management practices or other strategies employed by retail
    14  customers that decrease peak electricity demand or shift demand
    15  from on-peak to off-peak periods provided that:
    16         (1)  The measure is installed on or after the effective
    17     date of this section at the service location of a retail
    18     customer.
    19         (2)  The measure reduces the peak demand or cost of
    20     energy by the retail customer.
    21         (3)  The costs of the acquisition or installation of the
    22     measure are directly incurred in whole or in part by the
    23     electric distribution company.
    24     * * *
    25     "Energy efficiency."  Technologies, management practices or
    26  other strategies or measures employed by retail customers that
    27  reduce electricity consumption provided that:
    28         (1)  The measure is installed on or after the effective
    29     date of this definition at the service location of a retail
    30     customer.
    20080H2200B4526                  - 3 -     

     1         (2)  The measure reduces the consumption of energy by the
     2     retail customer.
     3         (3)  The costs of the acquisition or installation of the
     4     measure are directly incurred in whole or in part by the
     5     electric distribution company.
     6     "Independent entity."  An entity with no direct or indirect
     7  ownership, partnership or other affiliated interest with an
     8  electric distribution company.
     9     "Peak demand."  The highest electrical requirement occurring
    10  during a specified period. For an electric distribution company,
    11  the term means the sum of the metered consumption for all retail
    12  customers over that period.
    13     "Real-time price."  A rate that directly reflects the
    14  different cost of energy during each hour.
    15     * * *
    16     "Smart meter technology."  Technology, including, but not
    17  limited to, metering technology and network communications
    18  technology capable of bidirectional communication and that
    19  records electricity usage on at least an hourly basis, including
    20  related electric distribution system upgrades to enable the
    21  technology. The technology shall provide customers with direct
    22  access to and use of price and consumption information. The
    23  technology shall also:
    24         (1)  Directly provide customers with information on their
    25     hourly consumption.
    26         (2)  Enable time-of-use rates and real-time price
    27     programs.
    28         (3)  Effectively support the automatic control of the
    29     customer's electricity consumption by one or more of the
    30     following as selected by the customer:
    20080H2200B4526                  - 4 -     

     1             (i)  the customer;
     2             (ii)  the customer's utility; or
     3             (iii)  a third party engaged by the customer or the
     4         customer's utility.
     5     "Time-of-use rate."  A rate that reflects the costs of
     6  serving customers during different time periods, including off-
     7  peak and on-peak periods, but not as frequently as each hour.
     8     "Total resources cost test."  A standard test that is met if,
     9  over the effective life of the program, the avoided supply-side
    10  monetary costs are greater than the monetary costs of the
    11  demand-side programs borne by both the electric distribution
    12  company and the participants.
    13     * * *
    14     Section 3.  Title 66 is amended by adding a section to read:
    15  § 2806.1.  Adoption of procedures encouraging energy efficiency
    16             and demand-side response.
    17     (a)  Program.--The commission shall develop a program to
    18  provide for the implementation of cost-effective programs that
    19  reduce energy demand and consumption within the service
    20  territories of all electric distribution companies throughout
    21  this Commonwealth. The program shall include, but is not limited
    22  to, the following:
    23         (1)  Selecting a program administrator to develop and
    24     oversee the delivery of energy efficiency and demand-side
    25     response programs within the service territory of each
    26     electric distribution company within this Commonwealth.
    27         (2)  Implementing the necessary administrative and
    28     financial mechanisms that will enable the program
    29     administrator to develop and oversee the provision of energy
    30     efficiency and demand-side response programs within the
    20080H2200B4526                  - 5 -     

     1     service territory of each electric distribution company
     2     within this Commonwealth, including the levying of
     3     assessments in accordance with sections 510 (relating to
     4     assessment for regulatory expenses upon public utilities),
     5     1307 (relating to sliding scale of rates; adjustments) and
     6     1308 (relating to voluntary changes in rates). The commission
     7     shall not approve or implement and shall not assess or charge
     8     to customers the costs of energy efficiency or demand-
     9     response programs to the extent that the costs of such
    10     programs exceed 2% of the total annual revenues of the
    11     electric distribution company from all sources, including
    12     default service generation revenues as of January 1, 2007.
    13     This funding limit shall not include amounts provided for by
    14     the low-income usage reduction programs established under
    15     regulations at 52 Pa. Code Ch. 58 (relating to residential
    16     low income usage reduction programs).
    17         (3)  Implementing the necessary administrative and
    18     financial mechanisms that facilitate a system of third-party
    19     entities to deliver all or portions of the energy efficiency
    20     and demand-side response programs within the service
    21     territory of each electric distribution company within this
    22     Commonwealth, including the levying of assessments in
    23     accordance with sections 510, 1307 and 1308. The commission
    24     may order the electric distribution company to pay the third-
    25     party entity for services rendered in an electric
    26     distribution company's respective service territory pursuant
    27     to this section. The electric distribution company may be a
    28     third-party entity.
    29     (b)  Selection of program administrator.--The commission
    30  shall implement the following procedures when selecting a
    20080H2200B4526                  - 6 -     

     1  program administrator:
     2         (1)  The commission shall prepare a request for proposals
     3     for a program administrator to provide for the development
     4     and delivery of the energy efficiency and demand-side
     5     response programs in the service territories of all electric
     6     distribution companies and shall make the request for
     7     proposals available for public comment.
     8         (2)  The commission shall, within 60 days of the
     9     completion of the public comment period, issue the final
    10     request for proposals.
    11         (3)  The commission shall, based on a competitive bid
    12     process, select an independent entity to serve as the energy
    13     efficiency and demand-side response program administrator.
    14         (4)  The commission shall include as a part of its
    15     agreement with the program administrator a system of
    16     performance parameters and a financial mechanism that
    17     provides incentives for exceeding established performance
    18     parameters and penalties for third parties not meeting
    19     established performance parameters.
    20     (c)  Powers and duties of program administrator.--The program
    21  administrator shall have powers and duties assigned by the
    22  commission. The powers and duties shall include, but not be
    23  limited to:
    24         (1)  Soliciting through a competitive procurement process
    25     within each electric distribution company service territory a
    26     program of providing energy efficiency and demand-side
    27     response programs to residential, commercial and industrial
    28     customers utilizing third-party entities.
    29         (2)  Ensuring that each proposal includes, but is not
    30     limited to:
    20080H2200B4526                  - 7 -     

     1             (i)  A clear delineation of how the program will be
     2         conducted.
     3             (ii)  The types of specific program measures to be
     4         offered.
     5             (iii)  The cost and benefit of each program to be
     6         offered.
     7             (iv)  A process for monitoring and verifying results,
     8         data collection and management procedures, program
     9         evaluation processes and financial management strategies.
    10         (3)  In its review of each proposal received:
    11             (i)  Taking into account the unique circumstances of
    12         each electric distribution company's service territory.
    13             (ii)  Finding that each program is cost effective and
    14         that the portfolio of programs is designed to provide
    15         every affected customer class with the opportunity to
    16         participate and benefit economically.
    17             (iii)  Determining the cost-effectiveness of energy
    18         efficiency and demand-side response measures using the
    19         total resource cost test.
    20         (4)  Recommending to the commission those entities best
    21     suited to provide energy efficiency and demand-side response
    22     programs within the service territory of each electric
    23     distribution company.
    24         (5)  In the event no qualified proposals are received
    25     that meet the required plan goals in an electric distribution
    26     company service territory to conduct the program activities:
    27             (i)  Issuing a subsequent request for proposals with
    28         plan goals that are reduced no more than necessary to
    29         obtain qualified proposals to provide program activities.
    30         The lowered plan goals for energy efficiency and demand-
    20080H2200B4526                  - 8 -     

     1         side response shall only be in effect for that year.
     2             (ii)  In subsequent years, utilizing the plan goals
     3         unless no qualified proposals are received to conduct the
     4         program activities that meet the plan goals, the program
     5         administrator shall issue a subsequent request for
     6         proposals in accordance with the procedures identified in
     7         this subparagraph.
     8         (6)  Executing agreements on behalf of the commission
     9     with the selected entity in each electric distribution
    10     company service territory to conduct the energy efficiency
    11     and demand-side response program. As part of these agreements
    12     the program administrator shall ensure that:
    13             (i)  The programs offered by the selected entity are
    14         provided equitably across all customer classes.
    15             (ii)  A clearly defined process for financial
    16         compensation for the entity delivering the program which
    17         is tied to defined goals for performance regarding
    18         program activities accomplished, energy cost savings on a
    19         per-customer basis and utility-wide basis and overall
    20         energy and peak demand reduction is established.
    21             (iii)  A system of incentives and penalties for
    22         performance of contractual activities above and below
    23         predetermined levels is in place.
    24             (iv)  There is a set contract term which may include
    25         an initial three-year term with renewal terms of varied
    26         length.
    27         (7)  Submitting reports to the commission at such times
    28     and in such manner as the commission directs.
    29     (d)  Commission review of recommendations.--The commission
    30  shall review the recommendations made by the program
    20080H2200B4526                  - 9 -     

     1  administrator regarding those entities best suited to provide
     2  energy efficiency and demand-side response programs within the
     3  service territory of each electric distribution company. The
     4  commission shall approve or disapprove the recommendations made
     5  by the program administrator.
     6         (1)  The commission review of the recommendations of the
     7     program administrator shall be limited to ensuring that:
     8             (i)  There is no evidence of fraud or market abuse.
     9             (ii)  Any costs entered into are borne by the
    10         appropriate parties and that costs, including the costs
    11         of subsection (c)(6)(iii) incentives, related to the
    12         provision of the contracted services are borne by the
    13         appropriate customer class.
    14             (iii)  There will be provided, in a cost-effective
    15         manner, a program that provides energy efficiency and
    16         demand-side response measures to all customer classes
    17         throughout the service territory of each electric
    18         distribution company.
    19         (2)  If the commission approves a third-party entity to
    20     conduct the program, the commission shall ensure the program
    21     administrator finalizes the agreement between the commission
    22     and the third-party entity selected to provide the program of
    23     energy efficiency and demand-side response.
    24         (3)  In the event the commission disapproves the
    25     recommendation of the program administrator, the commission
    26     shall provide a rationale for this decision and direct the
    27     program administrator on a course of action.
    28     (e)  Plan goals.--The program administrator shall ensure that
    29  each proposal submitted by a third-party entity to deliver a
    30  program of energy efficiency and demand-side response measures
    20080H2200B4526                 - 10 -     

     1  includes meeting the following energy saving goals:
     2         (1)  The following relate to energy efficiency goals:
     3             (i)  By May 31, 2011, total annual deliveries to
     4         retail customers of electric distribution companies shall
     5         be reduced by a minimum of 1%. This load reduction shall
     6         be measured against the expected load forecasted by the
     7         commission for June 1, 2010, through May 31, 2011, based
     8         on load for the period June 1, 2007, through May 31,
     9         2008, with provision made for weather adjustments and
    10         extraordinary load that the electric distribution company
    11         must serve. The commission shall determine and make
    12         public the forecasts to be used for each electric
    13         distribution company no later than August 31, 2008. The
    14         program administrator shall ensure that a third-party
    15         entity meets the goals contained in this section through
    16         the implementation of a program of energy efficiency
    17         measures throughout the service territory of the electric
    18         distribution company.
    19             (ii)  By May 31, 2013, total annual deliveries to
    20         retail customers of electric distribution companies shall
    21         be reduced by a minimum of 2.5%. This load reduction
    22         shall be measured against the expected load forecasted by
    23         the commission for June 1, 2012, through May 31, 2013,
    24         based on load for the period June 1, 2007, through May
    25         31, 2008, with provision made for weather adjustments and
    26         extraordinary load that the electric distribution company
    27         must serve. The commission shall determine and make
    28         public the forecasts to be used for each electric
    29         distribution company no later than August 31, 2008. The
    30         program administrator shall ensure that a third-party
    20080H2200B4526                 - 11 -     

     1         entity meets the goals contained in this section through
     2         the implementation of a program of energy efficiency
     3         measures throughout the service territory of the electric
     4         distribution company.
     5             (iii)  By November 30, 2013, the program
     6         administrator shall evaluate the costs and benefits of
     7         these energy efficiency and conservation programs. If the
     8         benefits have been shown to exceed the costs, consistent
     9         with the total resource cost test, the program
    10         administrator, in consultation with the commission, shall
    11         set additional, incremental energy efficiency and
    12         conservation goals for the period ending May 31, 2018.
    13             (iv)  After May 31, 2018, the program administrator
    14         shall continue to evaluate the costs and benefits of
    15         efficiency and conservation measures and, in consultation
    16         with the commission, may adopt additional incremental
    17         load reduction standards for electric distribution
    18         companies.
    19         (2)  The following relate to demand-side response
    20     measures:
    21             (i)  Cost-effective demand-side response measures to
    22         reduce peak demand by a minimum of 4% in the 100 hours of
    23         highest demand with provision made for weather
    24         adjustments and extraordinary load that the electric
    25         distribution company must serve shall be implemented in
    26         each electric distribution company's service territory.
    27         This reduction will be measured against the electric
    28         distribution company's peak demand in the 100 hours of
    29         greatest demand for June 1, 2007, through May 31, 2008.
    30         The reductions shall be accomplished by May 31, 2012.
    20080H2200B4526                 - 12 -     

     1             (ii)  By November 30, 2012, the program administrator
     2         shall compare the total costs of these demand-side
     3         response measures to the total savings in energy and
     4         capacity costs to retail customers of this Commonwealth.
     5         If the benefits have been shown to exceed the costs,
     6         consistent with the total resource cost test, the
     7         commission shall order additional peak demand reductions
     8         for the 100 hours of greatest demand or an alternative
     9         measure adopted by the commission. The reductions shall
    10         be measured from the electric distribution company's peak
    11         demand for the period from June 1, 2011, through May 31,
    12         2012. The mandated reductions shall be accomplished no
    13         later than May 31, 2017.
    14             (iii)  After May 31, 2017, the program administrator
    15         shall continue to evaluate the costs and benefits of
    16         demand-side response measures and may, in consultation
    17         with the commission, adopt additional incremental peak
    18         load reduction standards.
    19     (f)  Measurements and verification.--The commission shall
    20  establish standards by which the program administrator submits
    21  to the commission an annual report, which includes that
    22  information relating to the actions and results of the energy
    23  efficiency and demand-side response programs undertaken within
    24  each electric distribution service territory by each third-party
    25  entity.
    26         (1)  The report shall include, but not be limited to:
    27             (i)  Documentation of program expenditures.
    28             (ii)  Measurement and verification of savings
    29         resulting from programs.
    30             (iii)  Evaluation of the cost-effectiveness of
    20080H2200B4526                 - 13 -     

     1         expenditures.
     2             (iv)  Any other information the commission may
     3         require pursuant to its rulemaking authority.
     4         (2)  The program administrator, upon consultation with
     5     the commission, shall direct a third-party entity to modify
     6     or terminate a particular energy efficiency or a demand-side
     7     response program if, after an adequate period for
     8     implementation of the program, the commission determines the
     9     program is not sufficiently meeting its goals and purposes.
    10         (3)  In the event an energy efficiency or demand-side
    11     response program is terminated, the program administrator
    12     shall require the third-party entity to submit a revised
    13     program describing the actions to be undertaken to either
    14     offer a substitute program or increase the availability of
    15     existing programs to make up for the effect of the terminated
    16     program on its overall program goals.
    17     (g)  Responsibilities of electric distribution companies.--
    18  Each electric distribution company that does not seek to be a
    19  third-party entity shall:
    20         (1)  Cooperate with the program administrator as needed
    21     in its efforts to competitively procure the services of a
    22     third-party entity to provide an energy efficiency and
    23     demand-side response program within the service territory of
    24     the electric distribution company.
    25         (2)  Provide information necessary to effectively
    26     facilitate the work of the selected third-party entity in
    27     conducting the energy efficiency and demand-side response
    28     program.
    29         (3)  Provide assistance as may be requested by the
    30     program administrator in reviewing proposals from third-party
    20080H2200B4526                 - 14 -     

     1     entities seeking to provide energy efficiency and demand-side
     2     response programs within their service territories.
     3         (4)  Provide assistance as may be requested by the
     4     program administrator to facilitate the successful execution
     5     of the contract agreement with the third-party entities to
     6     provide an energy efficiency and demand-side response program
     7     within their service territories.
     8     (h)  Recovery of administrative and program costs.--An
     9  electric distribution company may fully recover all
    10  administrative costs, including, but not limited to, costs
    11  incurred under subsections (a)(3) and (g)(1), (2), (3) and (4),
    12  that the commission determines are prudently incurred and
    13  reasonable in amount pursuant to implementing a program to
    14  deliver cost-effective energy efficiency and demand-side
    15  response activities through a third-party entity. Program and
    16  administrative costs shall be recovered on a full and current
    17  basis by the electric distribution company from customers
    18  through a reconcilable automatic adjustment clause pursuant to
    19  section 1307. Energy efficiency and demand-side resource
    20  programs shall be deemed to be a new service offered for the
    21  first time under section 2804(4)(vi) (relating to standards for
    22  restructuring of electric industry).
    23     (i)  Reporting.--The commission shall submit an annual report
    24  to the General Assembly describing the results of the programs
    25  implemented by each of the electric distribution companies,
    26  including, but not limited to:
    27         (1)  The costs, benefits and reductions in energy costs.
    28         (2)  Energy use by customer class within this
    29     Commonwealth.
    30         (3)  Reductions in overall peak demand and projections
    20080H2200B4526                 - 15 -     

     1     toward complying with the overall target reduction goals of
     2     this section.
     3     (j)  Definitions.--For purposes of this section, the term
     4  "electric distribution company" shall mean a public utility
     5  providing facilities for the jurisdictional transmission and
     6  distribution of electricity to 100,000 or more retail customers
     7  in this Commonwealth.
     8     Section 4.  Section 2807(e) of Title 66 is amended by adding
     9  a paragraph to read:
    10  § 2807.  Duties of electric distribution companies.
    11     * * *
    12     (e)  Obligation to serve.--* * *
    13         (6)  (i)  Within nine months after the effective date of
    14         this paragraph, electric distribution companies shall
    15         file a smart meter technology procurement and
    16         installation plan with the commission for approval and
    17         make the plan available for public comment for a minimum
    18         of 30 days. The plan shall describe the smart meter
    19         technologies the electric distribution company proposes
    20         to install, how the smart meter technology meets the
    21         requirements of this paragraph and how the smart meter
    22         technology shall be installed according to this
    23         paragraph. In addition, the plan shall ensure that all
    24         smart meter technology installation and maintenance work
    25         shall be performed by adequately trained and qualified
    26         personnel and that, to the extent practical, such work
    27         shall be offered initially to employees of the electric
    28         distribution company.
    29             (ii)  Electric distribution companies shall furnish
    30         smart meter technology to:
    20080H2200B4526                 - 16 -     

     1                 (A)  Customers responsible for 40% of the
     2             distribution company's annual peak demand within four
     3             years after the effective date of this paragraph.
     4                 (B)  Customers responsible for 75% of the
     5             distribution company's annual peak demand within six
     6             years after the effective date of this paragraph.
     7                 (C)  One hundred percent of its customers within
     8             ten years after the effective date of this paragraph.
     9         Electric distribution companies shall, with customer
    10         consent, make available electronic access to customer
    11         meter data to third parties, including electric
    12         generation suppliers and providers of conservation and
    13         load management services.
    14             (iii)  Electric distribution companies shall be
    15         permitted to recover all reasonable and prudent costs, as
    16         determined by the commission, of providing smart meter
    17         technology, including annual deprecation and capital
    18         costs over the life of the smart meter technology, that
    19         are incurred after the effective date of this paragraph,
    20         less all operating and capital costs savings realized by
    21         the electric distribution company from the introduction
    22         and use of the smart meter technology. An electric
    23         distribution company may, at its option, recover such
    24         smart meter technology costs:
    25                 (A)  through base rates, including a deferral for
    26             future base rate recovery of current costs, with
    27             carrying charges equal to 6%; or
    28                 (B)  on a full and current basis through a
    29             reconcilable automatic adjustment clause under
    30             section 1307 (relating to sliding scale of rates;
    20080H2200B4526                 - 17 -     

     1             adjustments).
     2         In no event shall lost or decreased revenues by an
     3         electric distribution company due to reduced electricity
     4         consumption or shifting energy demand be considered a
     5         cost of smart meter technology. Smart meter technology
     6         shall be deemed to be a new service offered for the first
     7         time under section 2804(4)(vi) (relating to standards for
     8         restructuring of electric industry).
     9             (iv)  By January 1, 2010, or at the end of the
    10         applicable generation rate cap period, whichever is
    11         later, a default service provider shall submit to the
    12         commission one or more proposed time-of-use rates and a
    13         real-time price plan. The commission shall approve or
    14         modify the time-of-use rates and real-time price plan
    15         within six months of submittal. The default service
    16         provider shall offer commission-approved time-of-use
    17         rates and a real-time price plan to all residential and
    18         commercial customers that have been provided with smart
    19         meter technology within 60 days of installation of the
    20         smart meter technology or commission approval of the
    21         time-of-use rates and a real-time price plan, whichever
    22         is later. Customer participation in time-of-use rates or
    23         real-time pricing shall be voluntary and shall only be
    24         provided with the affirmative consent of the customer.
    25         The default service provider shall submit an annual
    26         report to the commission on the participation in the
    27         time-of-use and real-time price programs and the efficacy
    28         of the programs in affecting energy demand and
    29         consumption and the effect on wholesale market prices.
    30             (v)  For purposes of this paragraph, the term
    20080H2200B4526                 - 18 -     

     1         "electric distribution company" shall mean a public
     2         utility providing facilities for the jurisdictional
     3         transmission and distribution of electricity to 100,000
     4         or more retail customers in this Commonwealth.
     5     Section 5.  This act shall take effect immediately.
     6     SECTION 1.  SECTION 2803 OF TITLE 66 OF THE PENNSYLVANIA       <--
     7  CONSOLIDATED STATUTES IS AMENDED BY ADDING 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     * * *
    13     "BILATERAL CONTRACT."  AN AGREEMENT, AS APPROVED BY THE
    14  PENNSYLVANIA PUBLIC UTILITY COMMISSION, REACHED BY TWO PARTIES,
    15  EACH ACTING IN ITS OWN INDEPENDENT SELF-INTEREST, AS A RESULT OF
    16  NEGOTIATIONS FREE OF UNDUE INFLUENCE, DURESS OR FAVORITISM, IN
    17  WHICH THE ELECTRIC ENERGY SUPPLIER AGREES TO SELL AND THE
    18  ELECTRIC DISTRIBUTION COMPANY AGREES TO BUY A QUANTITY OF
    19  ELECTRIC ENERGY AT A SPECIFIED PRICE FOR A SPECIFIED PERIOD OF
    20  TIME UNDER TERMS AGREED TO BY BOTH PARTIES, AND WHICH FOLLOWS A
    21  STANDARD INDUSTRY TEMPLATE WIDELY ACCEPTED IN THE INDUSTRY OR
    22  VARIATIONS THERETO ACCEPTED BY THE PARTIES. STANDARD INDUSTRY
    23  TEMPLATES MAY INCLUDE THE EEI MASTER AGREEMENT FOR PHYSICAL
    24  ENERGY PURCHASES AND SALES AND THE ISDA MASTER AGREEMENT FOR
    25  FINANCIAL ENERGY PURCHASES AND SALES.
    26     * * *
    27     "DEFAULT SERVICE PROVIDER."  AN ELECTRIC DISTRIBUTION COMPANY
    28  WITHIN ITS CERTIFIED SERVICE TERRITORY OR AN ALTERNATIVE
    29  SUPPLIER APPROVED BY THE PENNSYLVANIA PUBLIC UTILITY COMMISSION
    30  THAT PROVIDES GENERATION SERVICE TO RETAIL ELECTRIC CUSTOMERS
    20080H2200B4526                 - 19 -     

     1  WHO:
     2         (1)  CONTRACT FOR ELECTRIC POWER, INCLUDING ENERGY AND
     3     CAPACITY, AND THE CHOSEN ELECTRIC GENERATION SUPPLIER DOES
     4     NOT SUPPLY THE SERVICE; OR
     5         (2)  DO NOT CHOOSE AN ALTERNATIVE ELECTRIC GENERATION
     6     SUPPLIER.
     7     SECTION 2.  TITLE 66 IS AMENDED BY ADDING A SECTION TO READ:
     8  § 2806.1.  ENERGY EFFICIENCY AND CONSERVATION.
     9     (A)  PROGRAM.--THE COMMISSION SHALL ADOPT A PROGRAM TO
    10  REQUIRE ELECTRIC DISTRIBUTION COMPANIES TO ADOPT AND IMPLEMENT
    11  COST-EFFECTIVE ENERGY EFFICIENCY AND CONSERVATION PLANS TO
    12  REDUCE ENERGY DEMAND AND CONSUMPTION WITHIN THE SERVICE
    13  TERRITORIES OF ALL ELECTRIC DISTRIBUTION COMPANIES IN THIS
    14  COMMONWEALTH. THE PROGRAM SHALL INCLUDE:
    15         (1)  PROCEDURES FOR THE APPROVAL OF PLANS SUBMITTED UNDER
    16     SUBSECTION (B).
    17         (2)  A PLAN EVALUATION PROCESS INCLUDING A PROCESS TO
    18     MONITOR AND VERIFY DATA COLLECTION, QUALITY ASSURANCE AND
    19     RESULTS SUBMITTED.
    20         (3)  AN ANALYSIS OF THE COST AND BENEFIT OF EACH PLAN
    21     SUBMITTED UNDER SUBSECTION (B) IN ACCORDANCE WITH A TOTAL
    22     RESOURCE COST TEST.
    23         (4)  AN ANALYSIS OF HOW THE PROGRAM AND INDIVIDUAL PLANS
    24     WILL ENABLE EACH ELECTRIC DISTRIBUTION COMPANY TO ACHIEVE THE
    25     REQUIREMENTS FOR REDUCTION IN CONSUMPTION UNDER SUBSECTIONS
    26     (C) AND (D).
    27         (5)  STANDARDS TO ENSURE THAT EACH PLAN INCLUDES A
    28     VARIETY OF ENERGY EFFICIENCY AND CONSERVATION MEASURES AND
    29     WILL PROVIDE THE MEASURES EQUITABLY TO ALL CLASSES OF
    30     CUSTOMERS.
    20080H2200B4526                 - 20 -     

     1         (6)  PROCEDURES TO REVIEW ALL PROPOSED CONTRACTS PRIOR TO
     2     THE EXECUTION OF THE CONTRACT WITH THIRD-PARTY ENTITIES TO
     3     IMPLEMENT THE PLAN. THE COMMISSION MAY ORDER THE MODIFICATION
     4     OF A PROPOSED CONTRACT TO ENSURE THAT THE PLAN IS ADEQUATE.
     5         (7)  PROCEDURES TO ENSURE COMPLIANCE WITH REQUIREMENTS
     6     FOR REDUCTION IN CONSUMPTION UNDER SUBSECTIONS (C) AND (D).
     7         (8)  A REQUIREMENT FOR THE PARTICIPATION OF THIRD-PARTY
     8     ENTITIES IN THE IMPLEMENTATION OF ALL OR PART OF A PLAN.
     9         (9)  A PROCESS TO LINK REDUCTIONS IN CONSUMPTION TO THE
    10     COMPENSATION OF THIRD-PARTY ENTITIES.
    11         (10)  PROCEDURES FOR THE LEVY OF ASSESSMENTS IN
    12     ACCORDANCE WITH SECTIONS 510 (RELATING TO ASSESSMENT FOR
    13     REGULATORY EXPENSES UPON PUBLIC UTILITIES) AND 1308 (RELATING
    14     TO VOLUNTARY CHANGES IN RATES) SUBJECT TO THE LIMITATIONS OF
    15     SUBSECTION (G) TO FUND PLANS FILED UNDER SUBSECTION (B)
    16     SUBJECT TO THE LIMITATIONS SET FORTH UNDER SUBSECTION (G).
    17     (B)  DUTIES OF ELECTRIC DISTRIBUTION COMPANIES.--
    18         (1)  (I)  BY NOVEMBER 15, 2008, EACH ELECTRIC
    19         DISTRIBUTION COMPANY SHALL DEVELOP AND FILE AN ENERGY
    20         EFFICIENCY AND CONSERVATION PLAN WITH THE COMMISSION FOR
    21         APPROVAL TO MEET THE REQUIREMENTS OF SUBSECTION (A) AND
    22         THE REQUIREMENTS FOR REDUCTION IN CONSUMPTION UNDER
    23         SUBSECTIONS (C) AND (D). THE PLAN SHALL BE IMPLEMENTED
    24         UPON APPROVAL BY THE COMMISSION AND SHALL COMPLY WITH ALL
    25         OF THE FOLLOWING:
    26                 (A)  INCLUDE SPECIFIC PROPOSALS TO IMPLEMENT
    27             ENERGY EFFICIENCY AND CONSERVATION MEASURES TO
    28             ACHIEVE THE REQUIRED REDUCTIONS IN CONSUMPTION UNDER
    29             SUBSECTIONS (C) AND (D).
    30                 (B)  A MINIMUM OF 10% OF THE REQUIRED REDUCTIONS
    20080H2200B4526                 - 21 -     

     1             IN CONSUMPTION UNDER SUBSECTIONS (C) AND (D) SHALL BE
     2             OBTAINED FROM UNITS OF FEDERAL, STATE AND LOCAL
     3             GOVERNMENT, INCLUDING MUNICIPALITIES, SCHOOL
     4             DISTRICTS, INSTITUTIONS OF HIGHER EDUCATION AND
     5             NONPROFIT ENTITIES.
     6                 (C)  THE MANNER IN WHICH PERFORMANCE WILL BE
     7             MEASURED, VERIFIED AND EVALUATED.
     8                 (D)  THE MANNER IN WHICH THE PLAN WILL ACHIEVE
     9             THE REQUIREMENTS OF THE PROGRAM UNDER SUBSECTION (A)
    10             AND THE REQUIRED REDUCTIONS IN CONSUMPTION UNDER
    11             SUBSECTIONS (C) AND (D).
    12                 (E)  INCLUDE A CONTRACT WITH ONE OR MORE THIRD-
    13             PARTY ENTITIES TO IMPLEMENT THE PLAN OR A PORTION OF
    14             THE PLAN AS APPROVED BY THE COMMISSION.
    15                 (F)  INCLUDE ESTIMATES OF THE COST OF
    16             IMPLEMENTATION OF THE ENERGY EFFICIENCY AND
    17             CONSERVATION MEASURES IN THE PLAN.
    18                 (G)  INCLUDE SPECIFIC ENERGY EFFICIENCY MEASURES
    19             FOR HOUSEHOLDS AT OR BELOW 150% OF THE FEDERAL
    20             POVERTY INCOME GUIDELINES. THE NUMBER OF MEASURES
    21             SHALL BE PROPORTIONATE TO THOSE HOUSEHOLDS' SHARE OF
    22             THE TOTAL ENERGY USAGE IN THIS COMMONWEALTH. THE
    23             ELECTRIC DISTRIBUTION COMPANY SHALL COORDINATE
    24             MEASURES UNDER THIS CLAUSE WITH OTHER PROGRAMS
    25             ADMINISTERED BY THE COMMISSION OR ANOTHER FEDERAL OR
    26             STATE AGENCY. THE EXPENDITURES OF AN ELECTRIC
    27             DISTRIBUTION COMPANY UNDER THIS CLAUSE SHALL BE IN
    28             ADDITION TO EXPENDITURES MADE UNDER 52 PA. CODE CH.
    29             58 (RELATING TO RESIDENTIAL LOW INCOME USAGE
    30             REDUCTION PROGRAMS).
    20080H2200B4526                 - 22 -     

     1                 (H)  INCLUDE A PROPOSED COST-RECOVERY TARIFF
     2             MECHANISM TO FUND THE ENERGY EFFICIENCY AND
     3             CONSERVATION MEASURES AND TO ENSURE RECOVERY OF THE
     4             PRUDENT AND REASONABLE COSTS OF THE PLAN AS APPROVED
     5             BY THE COMMISSION.
     6                 (I)  A DEMONSTRATION THAT THE PLAN IS COST-
     7             EFFECTIVE USING A TOTAL RESOURCE COST TEST OR OTHER
     8             COST-BENEFIT ANALYSIS APPROVED BY THE COMMISSION AND
     9             PROVIDES A DIVERSE CROSS SECTION OF ALTERNATIVES FOR
    10             CUSTOMERS OF ALL RATE CLASSES.
    11                 (J)  REQUIRE AN ANNUAL INDEPENDENT EVALUATION OF
    12             THE PERFORMANCE OF THE COST-EFFECTIVENESS OF THE PLAN
    13             AND A FULL REVIEW OF THE FIVE-YEAR RESULTS OF THE
    14             PLAN AND, TO THE EXTENT PRACTICABLE, HOW THE PLAN
    15             WILL BE ADJUSTED ON A GOING-FORWARD BASIS AS A RESULT
    16             OF THE EVALUATION.
    17             (II)  A NEW PLAN SHALL BE FILED WITH THE COMMISSION
    18         EVERY FIVE YEARS OR AS OTHERWISE REQUIRED BY THE
    19         COMMISSION. THE PLAN SHALL SET FORTH THE MANNER IN WHICH
    20         THE COMPANY WILL MEET THE REQUIRED REDUCTIONS IN
    21         CONSUMPTION UNDER SUBSECTIONS (C) AND (D).
    22             (III)  NO MORE THAN 2% OF FUNDS AVAILABLE TO
    23         IMPLEMENT A PLAN UNDER THIS SUBSECTION SHALL BE ALLOCATED
    24         FOR EXPERIMENTAL EQUIPMENT OR DEVICES.
    25         (2)  THE COMMISSION SHALL DIRECT AN ELECTRIC DISTRIBUTION
    26     COMPANY TO MODIFY OR TERMINATE ANY PART OF A PLAN APPROVED
    27     UNDER THIS SECTION IF, AFTER AN ADEQUATE PERIOD FOR
    28     IMPLEMENTATION, THE COMMISSION DETERMINES THAT AN ENERGY
    29     EFFICIENCY OR CONSERVATION MEASURE INCLUDED IN THE PLAN IS
    30     NOT EFFECTIVE.
    20080H2200B4526                 - 23 -     

     1         (3)  IF PART OF A PLAN IS MODIFIED OR TERMINATED UNDER
     2     PARAGRAPH (2), THE ELECTRIC DISTRIBUTION COMPANY SHALL SUBMIT
     3     A REVISED PLAN DESCRIBING ACTIONS TO BE TAKEN TO OFFER
     4     SUBSTITUTE MEASURES OR TO INCREASE THE AVAILABILITY OF
     5     EXISTING MEASURES IN THE PLAN TO ACHIEVE THE REQUIRED
     6     REDUCTIONS IN CONSUMPTION UNDER SUBSECTIONS (C) AND (D).
     7     (C)  REDUCTIONS IN CONSUMPTION.--EACH ELECTRIC DISTRIBUTION
     8  COMPANY SHALL REDUCE CONSUMPTION AS FOLLOWS:
     9         (1)  BY MAY 31, 2011, EACH ELECTRIC DISTRIBUTION COMPANY
    10     SHALL REDUCE ITS TOTAL ANNUAL WEATHER-NORMALIZED DELIVERIES
    11     TO RETAIL CUSTOMERS BY A MINIMUM OF 1%. THE 1% LOAD REDUCTION
    12     IN CONSUMPTION SHALL BE MEASURED AGAINST THE ELECTRIC
    13     DISTRIBUTION COMPANY'S EXPECTED LOAD AS FORECASTED BY THE
    14     COMMISSION FOR JUNE 1, 2007 THROUGH MAY 31, 2008, WITH
    15     PROVISIONS MADE FOR WEATHER ADJUSTMENTS AND EXTRAORDINARY
    16     LOADS THAT THE ELECTRIC DISTRIBUTION COMPANY MUST SERVE.
    17         (2)  BY MAY 31, 2013, EACH ELECTRIC DISTRIBUTION COMPANY
    18     SHALL REDUCE ITS TOTAL ANNUAL WEATHER-NORMALIZED DELIVERIES
    19     TO RETAIL CUSTOMERS BY A MINIMUM OF 2.5%. THE 2.5% LOAD
    20     REDUCTION IN CONSUMPTION SHALL BE MEASURED AGAINST THE
    21     ELECTRIC DISTRIBUTION COMPANY'S EXPECTED LOAD AS FORECASTED
    22     BY THE COMMISSION FOR JUNE 1, 2007, THROUGH MAY 31, 2008,
    23     WITH PROVISION MADE FOR WEATHER ADJUSTMENTS AND EXTRAORDINARY
    24     LOADS THAT THE ELECTRIC DISTRIBUTION COMPANY MUST SERVE.
    25         (3)  BY NOVEMBER 30, 2013, THE COMMISSION SHALL EVALUATE
    26     THE COSTS AND BENEFITS OF THE PROGRAM ESTABLISHED UNDER
    27     SUBSECTION (A) AND ENERGY EFFICIENCY AND CONSERVATION PLANS
    28     SUBMITTED TO THE PROGRAM. THE EVALUATION SHALL BE CONSISTENT
    29     WITH A TOTAL RESOURCE COST TEST OR A COST VERSUS BENEFIT
    30     MEASUREMENT DETERMINED BY THE COMMISSION. IF THE COMMISSION
    20080H2200B4526                 - 24 -     

     1     DETERMINES THAT THE BENEFITS OF THE PROGRAM EXCEED THE COSTS,
     2     THE COMMISSION SHALL ADOPT ADDITIONAL INCREMENTAL REQUIRED
     3     REDUCTIONS IN CONSUMPTION FOR THE PERIOD ENDING MAY 31, 2018.
     4         (4)  AFTER MAY 31, 2018, THE COMMISSION SHALL CONTINUE TO
     5     EVALUATE THE COSTS AND BENEFITS OF THE PROGRAM ESTABLISHED
     6     UNDER SUBSECTION (A) AND ENERGY EFFICIENCY AND CONSERVATION
     7     PLANS APPROVED UNDER SUBSECTION (A). IF THE COMMISSION
     8     DETERMINES THAT THE BENEFITS OF THE PROGRAM EXCEED THE COSTS,
     9     THE COMMISSION MAY REQUIRE AND APPROVE ADDITIONAL PLANS TO
    10     ACHIEVE INCREMENTAL REQUIREMENTS FOR REDUCTION IN CONSUMPTION
    11     FOR ELECTRIC DISTRIBUTION COMPANIES. EACH PLAN SHALL BE FOR A
    12     TERM NOT TO EXCEED FIVE YEARS.
    13     (D)  PEAK DEMAND.--EACH ELECTRIC DISTRIBUTION COMPANY SHALL
    14  IMPLEMENT ENERGY EFFICIENCY AND CONSERVATION MEASURES TO ACHIEVE
    15  THE FOLLOWING REDUCTIONS IN CONSUMPTION:
    16         (1)  BY MAY 31, 2013, EACH ENERGY DISTRIBUTION COMPANY
    17     SHALL REDUCE ITS WEATHER-NORMALIZED DELIVERIES TO RETAIL
    18     CUSTOMERS BY A MINIMUM OF 4% IN THE 100 HOURS OF HIGHEST
    19     DEMAND. THE REDUCTION SHALL BE MEASURED AGAINST THE ELECTRIC
    20     DISTRIBUTION COMPANY'S PEAK DEMAND IN THE 100 HOURS OF
    21     GREATEST DEMAND FOR JUNE 1, 2007, THROUGH MAY 31, 2008.
    22         (2)  BY NOVEMBER 30, 2013, THE COMMISSION SHALL COMPARE
    23     THE TOTAL COSTS OF ENERGY EFFICIENCY AND CONSERVATION PLANS
    24     IMPLEMENTED UNDER THIS SECTION TO THE TOTAL SAVINGS IN ENERGY
    25     AND CAPACITY COSTS TO RETAIL CUSTOMERS IN THIS COMMONWEALTH.
    26     IF THE COMMISSION DETERMINES THAT THE BENEFITS OF THE
    27     MEASURES EXCEED THE COSTS, THE COMMISSION SHALL SET
    28     ADDITIONAL INCREMENTAL REQUIREMENTS FOR REDUCTION IN PEAK
    29     DEMAND FOR THE 100 HOURS OF GREATEST DEMAND OR AN ALTERNATIVE
    30     REDUCTION APPROVED BY THE COMMISSION. REDUCTIONS IN
    20080H2200B4526                 - 25 -     

     1     CONSUMPTION SHALL BE MEASURED FROM THE ELECTRIC DISTRIBUTION
     2     COMPANY'S PEAK DEMAND FOR THE PERIOD FROM JUNE 1, 2011,
     3     THROUGH MAY 31, 2012. THE REDUCTIONS IN CONSUMPTION REQUIRED
     4     BY THE COMMISSION SHALL BE ACCOMPLISHED NO LATER THAN MAY 31,
     5     2017.
     6     (E)  COMMISSION APPROVAL.--THE COMMISSION SHALL APPROVE OR
     7  DISAPPROVE A PLAN FILED UNDER SUBSECTION (B) WITHIN 120 DAYS OF
     8  SUBMISSION. THE FOLLOWING SHALL APPLY TO AN ORDER DISAPPROVING A
     9  PLAN:
    10         (1)  THE COMMISSION SHALL DESCRIBE IN DETAIL THE REASONS
    11     FOR THE DISAPPROVAL.
    12         (2)  THE ELECTRIC DISTRIBUTION COMPANY SHALL HAVE 60 DAYS
    13     TO FILE A REVISED PLAN TO ADDRESS THE DEFICIENCIES IDENTIFIED
    14     BY THE COMMISSION.
    15     (F)  PENALTIES.--
    16         (1)  THE FOLLOWING SHALL APPLY FOR FAILURE TO SUBMIT A
    17     PLAN:
    18             (I)  AN ELECTRIC DISTRIBUTION COMPANY THAT FAILS TO
    19         FILE A PLAN UNDER SUBSECTION (B) SHALL BE SUBJECT TO A
    20         CIVIL PENALTY OF $100,000 PER DAY UNTIL THE PLAN IS
    21         FILED.
    22             (II)  AN ELECTRIC DISTRIBUTION COMPANY THAT FAILS TO
    23         FILE A REVISED PLAN UNDER SUBSECTION (E)(2) SHALL BE
    24         SUBJECT TO A CIVIL PENALTY OF $100,000 PER DAY UNTIL THE
    25         PLAN IS FILED.
    26             (III)  PENALTIES COLLECTED UNDER THIS PARAGRAPH SHALL
    27         BE DEPOSITED IN THE LOW-INCOME ELECTRIC CUSTOMER
    28         ASSISTANCE PROGRAM OF THE ENERGY DISTRIBUTION COMPANY FOR
    29         THE RESPECTIVE SERVICE TERRITORY.
    30         (2)  THE FOLLOWING SHALL APPLY TO AN ELECTRIC
    20080H2200B4526                 - 26 -     

     1     DISTRIBUTION COMPANY THAT FAILS TO ACHIEVE THE REDUCTIONS IN
     2     CONSUMPTION REQUIRED UNDER SUBSECTION (C) OR (D):
     3             (I)  THE ELECTRIC DISTRIBUTION COMPANY SHALL BE
     4         SUBJECT TO A CIVIL PENALTY OF UP TO $5,000,000 FOR
     5         FAILURE TO ACHIEVE THE REQUIRED REDUCTIONS IN CONSUMPTION
     6         UNDER SUBSECTION (C) OR (D). ANY PENALTY PAID BY AN
     7         ELECTRIC DISTRIBUTION COMPANY UNDER THIS SUBPARAGRAPH
     8         SHALL NOT BE RECOVERABLE FROM RATEPAYERS.
     9             (II)  IF AN ELECTRIC DISTRIBUTION COMPANY FAILS TO
    10         ACHIEVE THE REQUIRED REDUCTIONS IN CONSUMPTION UNDER
    11         SUBSECTION (C) OR (D) BY 2013, RESPONSIBILITY TO ACHIEVE
    12         THE REDUCTIONS IN CONSUMPTION SHALL BE TRANSFERRED TO THE
    13         COMMISSION. THE COMMISSION SHALL DO ALL OF THE FOLLOWING:
    14                 (A)  IMPLEMENT A PLAN TO ACHIEVE THE REQUIRED
    15             REDUCTIONS IN CONSUMPTION UNDER SUBSECTION (C) OR
    16             (D).
    17                 (B)  CONTRACT WITH THIRD-PARTY ENTITIES AS
    18             NECESSARY TO IMPLEMENT ANY PORTION OF THE PLAN.
    19             (III)  THE PROVISIONS OF SUBPARAGRAPH (II) SHALL
    20         APPLY IN EACH SUBSEQUENT FIVE-YEAR PERIOD IF THE ELECTRIC
    21         DISTRIBUTION COMPANY FAILS TO ACHIEVE THE REDUCTION
    22         STANDARDS UNDER SUBSECTION (C) OR (D).
    23     (G)  LIMITATION ON COSTS.--THE TOTAL COST OF ANY PLAN
    24  REQUIRED UNDER THIS SECTION SHALL NOT EXCEED 2% OF THE ELECTRIC
    25  DISTRIBUTION COMPANY'S TOTAL ANNUAL REVENUE AS OF DECEMBER 31,
    26  2006. NO MORE THAN 1% OF THE 2% OF THE COMPANY'S TOTAL ANNUAL
    27  REVENUE MAY BE USED FOR THE ADMINISTRATIVE COSTS OF THE ELECTRIC
    28  DISTRIBUTION COMPANY. THE LIMITATION UNDER THIS PARAGRAPH SHALL
    29  NOT INCLUDE THE COST OF LOW-INCOME USAGE REDUCTION PROGRAMS
    30  ESTABLISHED UNDER 52 PA. CODE CH. 58 (RELATING TO RESIDENTIAL
    20080H2200B4526                 - 27 -     

     1  LOW INCOME USAGE REDUCTION PROGRAMS).
     2     (H)  REPORT.--THE FOLLOWING SHALL APPLY:
     3         (1)  EACH ELECTRIC DISTRIBUTION COMPANY SHALL SUBMIT AN
     4     ANNUAL REPORT TO THE COMMISSION RELATING TO THE RESULTS OF
     5     THE ENERGY EFFICIENCY AND CONSERVATION PLAN WITHIN THE
     6     ELECTRIC DISTRIBUTION SERVICE TERRITORY. THE REPORT SHALL
     7     INCLUDE ALL OF THE FOLLOWING:
     8             (I)  DOCUMENTATION OF PROGRAM EXPENDITURES.
     9             (II)  MEASUREMENT AND VERIFICATION OF ENERGY SAVINGS
    10         UNDER THE PLAN.
    11             (III)  EVALUATION OF THE COST-EFFECTIVENESS OF
    12         EXPENDITURES.
    13             (IV)  ANY OTHER INFORMATION REQUIRED BY THE
    14         COMMISSION.
    15         (2)  BEGINNING FIVE YEARS FOLLOWING THE EFFECTIVE DATE OF
    16     THIS SECTION AND ANNUALLY THEREAFTER, THE COMMISSION SHALL
    17     SUBMIT A REPORT TO THE CONSUMER PROTECTION AND PROFESSIONAL
    18     LICENSURE COMMITTEE OF THE SENATE AND THE CONSUMER AFFAIRS
    19     COMMITTEE OF THE HOUSE OF REPRESENTATIVES.
    20     (I)  EXISTING FUNDING SOURCES.--EACH ELECTRIC DISTRIBUTION
    21  COMPANY SHALL PROVIDE A LIST OF ALL ELIGIBLE FEDERAL AND STATE
    22  FUNDING PROGRAMS.
    23     (J)  RECOVERY.--IN NO CASE SHALL DECREASED REVENUES OF AN
    24  ELECTRIC DISTRIBUTION COMPANY DUE TO REDUCED ENERGY CONSUMPTION
    25  OR CHANGES IN ENERGY DEMAND BE CONSIDERED A RECOVERABLE COST.
    26     (K)  APPLICABILITY.--THIS SECTION SHALL NOT APPLY TO AN
    27  ELECTRIC DISTRIBUTION COMPANY WITH FEWER THAN 100,000 CUSTOMERS.
    28     (L)  DEFINITIONS.--AS USED IN THIS SECTION, THE FOLLOWING
    29  WORDS AND PHRASES SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS
    30  SUBSECTION:
    20080H2200B4526                 - 28 -     

     1     "ELECTRIC DISTRIBUTION COMPANY TOTAL ANNUAL REVENUE."
     2  AMOUNTS PAID TO THE ELECTRIC DISTRIBUTION COMPANY FOR
     3  GENERATION, TRANSMISSION, DISTRIBUTION AND SURCHARGES BY RETAIL
     4  CUSTOMERS.
     5     "ENERGY EFFICIENCY AND CONSERVATION MEASURES."
     6         (1)  TECHNOLOGIES, MANAGEMENT PRACTICES OR OTHER MEASURES
     7     EMPLOYED BY RETAIL CUSTOMERS THAT REDUCE ELECTRICITY
     8     CONSUMPTION OR DEMAND IF ALL OF THE FOLLOWING APPLY:
     9             (I)  THE TECHNOLOGY, PRACTICE OR OTHER MEASURE IS
    10         INSTALLED ON OR AFTER THE EFFECTIVE DATE OF THIS SECTION
    11         AT THE LOCATION OF A RETAIL CUSTOMER.
    12             (II)  THE TECHNOLOGY, PRACTICE OR OTHER MEASURE
    13         REDUCES CONSUMPTION OF ENERGY BY THE RETAIL CUSTOMER.
    14             (III)  THE COST OF THE ACQUISITION OR INSTALLATION OF
    15         THE MEASURE IS DIRECTLY INCURRED IN WHOLE OR IN PART BY
    16         THE ELECTRIC DISTRIBUTION COMPANY.
    17         (2)  ENERGY EFFICIENCY AND CONSERVATION MEASURES SHALL
    18     INCLUDE SOLAR OR SOLAR PHOTOVOLTAIC PANELS, ENERGY EFFICIENT
    19     WINDOWS AND DOORS, ENERGY EFFICIENT LIGHTING, INCLUDING EXIT
    20     SIGN RETROFIT, HIGH BAY FLUORESCENT RETROFIT AND PEDESTRIAN
    21     AND TRAFFIC SIGNAL CONVERSION, GEOTHERMAL HEATING,
    22     INSULATION, AIR SEALING, REFLECTIVE ROOF COATINGS, ENERGY
    23     EFFICIENT HEATING AND COOLING EQUIPMENT OR SYSTEMS AND ENERGY
    24     EFFICIENT APPLIANCES AND OTHER TECHNOLOGIES, PRACTICES OR
    25     MEASURES APPROVED BY THE COMMISSION.
    26     "PEAK DEMAND."  THE HIGHEST ELECTRICAL REQUIREMENT OCCURRING
    27  DURING A SPECIFIED PERIOD. FOR AN ELECTRIC DISTRIBUTION COMPANY,
    28  THE TERM SHALL MEAN THE SUM OF THE METERED CONSUMPTION FOR ALL
    29  RETAIL CUSTOMERS OVER THAT PERIOD.
    30     "QUALITY ASSURANCE."  ALL OF THE FOLLOWING:
    20080H2200B4526                 - 29 -     

     1         (1)  THE AUDITING OF BUILDINGS, EQUIPMENT AND PROCESSES
     2     TO DETERMINE THE COST-EFFECTIVENESS OF ENERGY EFFICIENCY AND
     3     CONSERVATION MEASURES USING NATIONALLY RECOGNIZED TOOLS AND
     4     CERTIFICATION PROGRAMS.
     5         (2)  INDEPENDENT INSPECTION OF COMPLETED ENERGY
     6     EFFICIENCY AND CONSERVATION MEASURES COMPLETED BY THIRD-PARTY
     7     ENTITIES TO EVALUATE THE QUALITY OF THE COMPLETED MEASURE.
     8     "REAL-TIME PRICE."  A RATE THAT DIRECTLY REFLECTS THE
     9  DIFFERENT COST OF ENERGY DURING EACH HOUR.
    10     "THIRD-PARTY ENTITY."  AN ENTITY WITH NO DIRECT OR INDIRECT
    11  OWNERSHIP, PARTNERSHIP OR OTHER AFFILIATED INTEREST WITH AN
    12  ELECTRIC DISTRIBUTION COMPANY.
    13     "TIME-OF-USE RATE."  A RATE THAT REFLECTS THE COSTS OF
    14  SERVING CUSTOMERS DURING DIFFERENT TIME PERIODS, INCLUDING OFF-
    15  PEAK AND ON-PEAK PERIODS, BUT NOT AS FREQUENTLY AS EACH HOUR.
    16     "TOTAL RESOURCE COST TEST."  A STANDARD TEST THAT IS MET IF,
    17  OVER THE EFFECTIVE LIFE OF EACH PLAN NOT TO EXCEED FIVE YEARS,
    18  THE AVOIDED MONETARY COSTS OF SUPPLYING ELECTRICITY ARE GREATER
    19  THAN THE MONETARY COSTS OF ENERGY EFFICIENCY MEASURES AND
    20  CONSERVATION OF CONSUMPTION.
    21     SECTION 3.  SECTION 2807(E) OF TITLE 66 IS AMENDED AND THE
    22  SECTION IS AMENDED BY ADDING SUBSECTIONS TO READ:
    23  § 2807.  DUTIES OF ELECTRIC DISTRIBUTION COMPANIES.
    24     * * *
    25     (E)  OBLIGATION TO SERVE.--[AN ELECTRIC DISTRIBUTION
    26  COMPANY'S] A DEFAULT SERVICE PROVIDER'S OBLIGATION TO PROVIDE
    27  ELECTRIC GENERATION SUPPLY SERVICE FOLLOWING [IMPLEMENTATION OF
    28  RESTRUCTURING AND THE CHOICE OF ALTERNATIVE GENERATION BY A
    29  CUSTOMER] THE EXPIRATION OF A GENERATION RATE CAP SPECIFIED
    30  UNDER SECTION 2804(4) (RELATING TO STANDARDS FOR RESTRUCTURING
    20080H2200B4526                 - 30 -     

     1  OF ELECTRIC INDUSTRY) OR A RESTRUCTURING PLAN UNDER SECTION
     2  2806(F) (RELATING TO IMPLEMENTATION, PILOT PROGRAMS AND
     3  PERFORMANCE-BASED RATES) IS REVISED AS FOLLOWS:
     4         (1)  WHILE AN ELECTRIC DISTRIBUTION COMPANY COLLECTS
     5     EITHER A COMPETITIVE TRANSITION CHARGE OR AN INTANGIBLE
     6     TRANSITION CHARGE OR UNTIL 100% OF ITS CUSTOMERS HAVE CHOICE,
     7     WHICHEVER IS LONGER, THE ELECTRIC DISTRIBUTION COMPANY SHALL
     8     CONTINUE TO HAVE THE FULL OBLIGATION TO SERVE, INCLUDING THE
     9     CONNECTION OF CUSTOMERS, THE DELIVERY OF ELECTRIC ENERGY AND
    10     THE PRODUCTION OR ACQUISITION OF ELECTRIC ENERGY FOR
    11     CUSTOMERS.
    12         [(2)  AT THE END OF THE TRANSITION PERIOD, THE COMMISSION
    13     SHALL PROMULGATE REGULATIONS TO DEFINE THE ELECTRIC
    14     DISTRIBUTION COMPANY'S OBLIGATION TO CONNECT AND DELIVER AND
    15     ACQUIRE ELECTRICITY UNDER PARAGRAPH (3) THAT WILL EXIST AT
    16     THE END OF THE PHASE-IN PERIOD.
    17         (3)  IF A CUSTOMER CONTRACTS FOR ELECTRIC ENERGY AND IT
    18     IS NOT DELIVERED OR IF A CUSTOMER DOES NOT CHOOSE AN
    19     ALTERNATIVE ELECTRIC GENERATION SUPPLIER, THE ELECTRIC
    20     DISTRIBUTION COMPANY OR COMMISSION-APPROVED ALTERNATIVE
    21     SUPPLIER SHALL ACQUIRE ELECTRIC ENERGY AT PREVAILING MARKET
    22     PRICES TO SERVE THAT CUSTOMER AND SHALL RECOVER FULLY ALL
    23     REASONABLE COSTS.]
    24         (3.1)  (I)  FOLLOWING THE EXPIRATION OF AN ELECTRIC
    25         DISTRIBUTION COMPANY'S OBLIGATION TO PROVIDE ELECTRIC
    26         GENERATION SUPPLY SERVICE TO RETAIL CUSTOMERS AT CAPPED
    27         RATES, IF A CUSTOMER CONTRACTS FOR ELECTRIC GENERATION
    28         SUPPLY SERVICE AND THE CHOSEN ELECTRIC GENERATION
    29         SUPPLIER DOES NOT PROVIDE THE SERVICE OR IF A CUSTOMER
    30         DOES NOT CHOOSE AN ALTERNATIVE ELECTRIC GENERATION
    20080H2200B4526                 - 31 -     

     1         SUPPLIER, THE DEFAULT SERVICE PROVIDER SHALL PROVIDE
     2         ELECTRIC GENERATION SUPPLY SERVICE TO THAT CUSTOMER
     3         PURSUANT TO A COMMISSION-APPROVED COMPETITIVE PROCUREMENT
     4         PLAN. THE ELECTRIC POWER ACQUIRED SHALL BE PROCURED
     5         THROUGH COMPETITIVE PROCUREMENT PROCESSES AND SHALL
     6         INCLUDE ONE OR MORE OF THE FOLLOWING:
     7                 (A)  AUCTIONS.
     8                 (B)  REQUESTS FOR PROPOSAL.
     9                 (C)  BILATERAL AGREEMENTS ENTERED INTO AT THE
    10             SOLE DISCRETION OF THE DEFAULT SERVICE PROVIDER WHICH
    11             SHALL BE AT PRICES WHICH ARE:
    12                     (I)  NO GREATER THAN THE COST OF OBTAINING
    13                 GENERATION UNDER COMPARABLE TERMS IN THE
    14                 WHOLESALE MARKET, AS DETERMINED BY THE COMMISSION
    15                 AT THE TIME OF EXECUTION OF THE CONTRACT; OR
    16                     (II)  CONSISTENT WITH A COMMISSION-APPROVED
    17                 COMPETITION PROCUREMENT PROCESS. ANY AGREEMENT
    18                 BETWEEN AFFILIATED PARTIES SHALL BE SUBJECT TO
    19                 REVIEW AND APPROVAL OF THE PENNSYLVANIA PUBLIC
    20                 UTILITY COMMISSION UNDER CHAPTER 21 (RELATING TO
    21                 RELATIONS WITH AFFILIATED INTERESTS). IN NO CASE
    22                 SHALL THE COST OF OBTAINING GENERATION FROM ANY
    23                 AFFILIATED INTEREST BE GREATER THAN THE COST OF
    24                 OBTAINING GENERATION UNDER COMPARABLE TERMS IN
    25                 THE WHOLESALE MARKET AT THE TIME OF EXECUTION OF
    26                 THE CONTRACT.
    27             (II)  THE PROVISIONS OF THIS PARAGRAPH SHALL APPLY TO
    28         ANY TYPE OF FUEL PURCHASED BY A DEFAULT SERVICE PROVIDER
    29         TO PROVIDE ELECTRIC GENERATION SUPPLY SERVICE, INCLUDING
    30         FUEL REQUIRED TO BE PURCHASED UNDER THE ACT OF NOVEMBER
    20080H2200B4526                 - 32 -     

     1         30, 2004 (P.L.1672, NO.213), KNOWN AS THE ALTERNATIVE
     2         ENERGY PORTFOLIO STANDARDS ACT.
     3         (3.2)  THE ELECTRIC POWER PROCURED PURSUANT TO PARAGRAPH
     4     (3.1) SHALL INCLUDE A PRUDENT MIX OF THE FOLLOWING:
     5             (I)  SPOT MARKET PURCHASES.
     6             (II)  SHORT-TERM CONTRACTS.
     7             (III)  LONG-TERM PURCHASE CONTRACTS, ENTERED INTO AS
     8         A RESULT OF AN AUCTION, REQUEST FOR PROPOSAL OR BILATERAL
     9         CONTRACT THAT IS FREE OF UNDUE INFLUENCE, DURESS OR
    10         FAVORITISM, OF NOT LESS THAN THREE AND NOT MORE THAN 20
    11         YEARS, UNLESS THE COMMISSION DETERMINES A LONGER TERM IS
    12         NECESSARY FOR THE RELIABILITY IN THE ACQUISITION OF
    13         GENERATION AND IT IS IN THE BEST INTEREST OF CONSUMERS TO
    14         EXTEND THE TERM OF THE CONTRACT BEYOND 20 YEARS. THE
    15         DEFAULT SERVICE PROVIDER SHALL HAVE SOLE DISCRETION TO
    16         DETERMINE THE SOURCE, FUEL TYPE AND LENGTH OF CONTRACT.
    17         (3.3)  THE PRUDENT MIX OF CONTRACTS ENTERED INTO PURSUANT
    18     TO PARAGRAPH (3.2) SHALL BE DESIGNED TO ENSURE:
    19             (I)  ADEQUATE AND RELIABLE SERVICE.
    20             (II)  THE LEAST COST TO CUSTOMERS OVER TIME.
    21             (III)  COMPLIANCE WITH THE REQUIREMENTS OF PARAGRAPH
    22         (3.1).
    23         (3.4)  THE DEFAULT SERVICE PROVIDER SHALL FILE A PLAN FOR
    24     COMPETITIVE PROCUREMENT WITH THE COMMISSION AND OBTAIN
    25     COMMISSION APPROVAL OF THE PLAN CONSIDERING THE STANDARDS IN
    26     PARAGRAPHS (3.1), (3.2) AND (3.3) BEFORE THE COMPETITIVE
    27     PROCESS IS IMPLEMENTED. THE COMMISSION SHALL HOLD HEARINGS AS
    28     NECESSARY ON THE PROPOSED PLAN. IF THE COMMISSION FAILS TO
    29     ISSUE A FINAL ORDER ON THE PLAN WITHIN NINE MONTHS OF THE
    30     DATE THAT THE PLAN IS FILED, THE PLAN SHALL BE DEEMED TO BE
    20080H2200B4526                 - 33 -     

     1     APPROVED AND THE DEFAULT SERVICE PROVIDER MAY IMPLEMENT THE
     2     PLAN AS FILED. COSTS INCURRED THROUGH AN APPROVED COMPETITIVE
     3     PROCUREMENT PLAN SHALL BE DEEMED TO BE THE LEAST COST OVER
     4     TIME AS REQUIRED UNDER PARAGRAPH (3.3).
     5         (3.5)  AT THE TIME THE COMMISSION EVALUATES THE PLAN AND
     6     PRIOR TO APPROVAL, IN DETERMINING IF THE DEFAULT ELECTRIC
     7     SERVICE PROVIDER'S PLAN OBTAINS GENERATION SUPPLY AT THE
     8     LEAST COST, THE COMMISSION SHALL CONSIDER THE DEFAULT SERVICE
     9     PROVIDER'S OBLIGATION TO PROVIDE ADEQUATE AND RELIABLE
    10     SERVICE TO THE CUSTOMERS AND THAT THE DEFAULT SERVICE
    11     PROVIDER HAS OBTAINED A PRUDENT MIX OF CONTRACTS TO OBTAIN
    12     LEAST COST ON LONG-TERM, SHORT-TERM AND SPOT MARKET BASIS AND
    13     SHALL MAKE SPECIFIC FINDINGS WHICH SHALL INCLUDE THE
    14     FOLLOWING:
    15             (I)  THE DEFAULT SERVICE PROVIDER'S PLAN INCLUDES
    16         PRUDENT STEPS NECESSARY TO NEGOTIATE FAVORABLE GENERATION
    17         SUPPLY CONTRACTS.
    18             (II)  THE DEFAULT SERVICE PROVIDER'S PLAN INCLUDES
    19         PRUDENT STEPS NECESSARY TO OBTAIN LEAST COST GENERATION
    20         SUPPLY CONTRACTS ON A LONG-TERM, SHORT-TERM AND SPOT
    21         MARKET BASIS.
    22             (III)  NEITHER THE DEFAULT SERVICE PROVIDER NOR ITS
    23         AFFILIATED INTEREST HAS WITHHELD OR ASKED TO WITHHOLD
    24         FROM THE MARKET ANY GENERATION SUPPLY WHICH SHOULD HAVE
    25         BEEN UTILIZED AS PART OF THE LEAST COST PROCUREMENT
    26         POLICY.
    27         (3.6)  NOTWITHSTANDING SECTIONS 508 (RELATING TO POWER OF
    28     COMMISSION TO VARY, REFORM AND REVISE CONTRACTS) AND 2102
    29     (RELATING TO APPROVAL OF CONTRACTS WITH AFFILIATED
    30     INTERESTS), THE COMMISSION SHALL NOT MODIFY CONTRACTS OR
    20080H2200B4526                 - 34 -     

     1     DISALLOW COSTS ASSOCIATED WITH AN APPROVED PROCUREMENT
     2     PROCESS WHEN IT HAS REVIEWED AND APPROVED THE RESULTS OF THE
     3     PROCUREMENT.
     4         (3.7)  NOTWITHSTANDING ANY OTHER PROVISION OF THIS TITLE
     5     TO THE CONTRARY, THE COMMISSION MAY MODIFY CONTRACTS OR
     6     DISALLOW COSTS WHEN THE PARTY SEEKING RECOVERY OF THE COSTS
     7     IS AT FAULT ASSOCIATED WITH CONTRACTS ENTERED INTO PURSUANT
     8     TO A COMMISSION-APPROVED PROCUREMENT PLAN IF THE COMMISSION
     9     DETERMINES AFTER A HEARING THAT:
    10             (I)  THE CONTRACT HAS NOT BEEN IMPLEMENTED OR
    11         APPROVED OR DOES NOT COMPLY WITH THE COMMISSION-APPROVED
    12         PROCUREMENT PLAN; OR
    13             (II)  THERE HAS BEEN FRAUD, COLLUSION OR MARKET
    14         MANIPULATION WITH REGARD TO THESE CONTRACTS.
    15         (3.8)  THE DEFAULT SERVICE PROVIDER SHALL HAVE THE RIGHT
    16     TO RECOVER ON A FULL AND CURRENT BASIS, PURSUANT TO A
    17     RECONCILABLE AUTOMATIC ADJUSTMENT CLAUSE UNDER SECTION 1307
    18     (RELATING TO SLIDING SCALE OF RATES; ADJUSTMENTS), ALL COSTS
    19     INCURRED UNDER THIS SECTION AND A COMMISSION-APPROVED
    20     COMPETITIVE PROCUREMENT PLAN.
    21         (4)  IF A CUSTOMER THAT CHOOSES AN ALTERNATIVE SUPPLIER
    22     AND SUBSEQUENTLY DESIRES TO RETURN TO THE LOCAL DISTRIBUTION
    23     COMPANY FOR GENERATION SERVICE, THE LOCAL DISTRIBUTION
    24     COMPANY SHALL TREAT THAT CUSTOMER EXACTLY AS IT WOULD ANY NEW
    25     APPLICANT FOR ENERGY SERVICE.
    26         (5)  (I)  NOTWITHSTANDING PARAGRAPH [(3)] (3.1), THE
    27         ELECTRIC DISTRIBUTION COMPANY OR COMMISSION-APPROVED
    28         ALTERNATIVE SUPPLIER MAY, IN ITS SOLE DISCRETION, OFFER
    29         LARGE CUSTOMERS WITH A PEAK DEMAND OF 15 MEGAWATTS OR
    30         GREATER AT ONE METER AT A LOCATION IN ITS SERVICE
    20080H2200B4526                 - 35 -     

     1         TERRITORY ANY NEGOTIATED RATE FOR SERVICE AT ALL OF THE
     2         CUSTOMERS' LOCATIONS WITHIN THE SERVICE TERRITORY FOR ANY
     3         DURATION AGREED UPON BY THE ELECTRIC DISTRIBUTION COMPANY
     4         OR COMMISSION-APPROVED ALTERNATIVE SUPPLIER AND THE LARGE
     5         CUSTOMER. THE COMMISSION SHALL PERMIT, BUT SHALL NOT
     6         REQUIRE, AN ELECTRIC DISTRIBUTION COMPANY OR COMMISSION-
     7         APPROVED ALTERNATIVE SUPPLIER TO PROVIDE SERVICE TO LARGE
     8         CUSTOMERS UNDER THIS PARAGRAPH. CONTRACT RATES ENTERED
     9         INTO UNDER THIS PARAGRAPH SHALL BE SUBJECT TO REVIEW BY
    10         THE COMMISSION IN ORDER TO ENSURE THAT ALL COSTS RELATED
    11         TO THE RATES ARE BORNE BY THE PARTIES TO THE CONTRACT AND
    12         THAT NO COSTS RELATED TO THE RATES ARE BORNE BY OTHER
    13         CUSTOMERS OR CUSTOMER CLASSES. IF NO COSTS RELATED TO THE
    14         RATES ARE BORNE BY OTHER CUSTOMERS OR CUSTOMER CLASSES,
    15         THE COMMISSION SHALL APPROVE THE CONTRACT WITHIN 90 DAYS
    16         OF ITS FILING, OR IT SHALL BE DEEMED APPROVED BY
    17         OPERATION OF LAW UPON EXPIRATION OF THE 90 DAYS.
    18         INFORMATION SUBMITTED UNDER THIS PARAGRAPH SHALL BE
    19         SUBJECT TO THE COMMISSION'S PROCEDURES FOR THE FILING OF
    20         CONFIDENTIAL AND PROPRIETARY INFORMATION.
    21             (II)  FOR PURPOSES OF PROVIDING SERVICE UNDER THIS
    22         PARAGRAPH TO CUSTOMERS WITH A PEAK DEMAND OF 20 MEGAWATTS
    23         OR GREATER AT ONE METER AT A LOCATION WITHIN THAT
    24         DISTRIBUTION COMPANY'S SERVICE TERRITORY, AN ELECTRIC
    25         DISTRIBUTION COMPANY THAT HAS COMPLETED ITS RESTRUCTURING
    26         TRANSITION PERIOD AS OF THE EFFECTIVE DATE OF THIS
    27         PARAGRAPH MAY, IN ITS SOLE DISCRETION, ACQUIRE AN
    28         INTEREST IN A GENERATION FACILITY OR CONSTRUCT A
    29         GENERATION FACILITY SPECIFICALLY TO MEET THE ENERGY
    30         REQUIREMENTS OF THE CUSTOMERS, INCLUDING THE ELECTRIC
    20080H2200B4526                 - 36 -     

     1         REQUIREMENTS OF THE CUSTOMERS' OTHER BILLING LOCATIONS
     2         WITHIN ITS SERVICE TERRITORY. THE ELECTRIC DISTRIBUTION
     3         COMPANY MUST COMMENCE CONSTRUCTION OF THE GENERATION
     4         FACILITY OR CONTRACT TO ACQUIRE THE GENERATION INTEREST
     5         WITHIN THREE YEARS AFTER THE EFFECTIVE DATE OF THIS
     6         PARAGRAPH, EXCEPT THAT THE ELECTRIC DISTRIBUTION COMPANY
     7         MAY ADD TO THE GENERATION FACILITIES IT COMMENCED
     8         CONSTRUCTION OR CONTRACTED TO ACQUIRE AFTER THIS THREE-
     9         YEAR PERIOD TO SERVE ADDITIONAL LOAD OF CUSTOMERS FOR
    10         WHOM IT COMMENCED CONSTRUCTION OR CONTRACTED TO ACQUIRE
    11         GENERATION WITHIN THREE YEARS. NOTHING IN THIS PARAGRAPH
    12         REQUIRES OR AUTHORIZES THE COMMISSION TO REQUIRE AN
    13         ELECTRIC DISTRIBUTION COMPANY TO COMMENCE CONSTRUCTION OR
    14         ACQUIRE AN INTEREST IN A GENERATION FACILITY. THE
    15         ELECTRIC DISTRIBUTION COMPANY'S INTEREST IN THE
    16         GENERATION FACILITY IT BUILT OR CONTRACTED TO ACQUIRE
    17         SHALL BE NO LARGER THAN NECESSARY TO MEET PEAK DEMAND OF
    18         CUSTOMERS SERVED UNDER THIS SUBPARAGRAPH. DURING TIMES
    19         WHEN THE CUSTOMER'S DEMAND IS LESS THAN THE ELECTRIC
    20         DISTRIBUTION COMPANY'S GENERATION INTEREST, THE ELECTRIC
    21         DISTRIBUTION COMPANY MAY SELL EXCESS POWER ON THE
    22         WHOLESALE MARKET. AT NO TIME SHALL THE COSTS ASSOCIATED
    23         WITH THE GENERATING FACILITY INTERESTS BE INCLUDED IN
    24         RATE BASE OR OTHERWISE REFLECTED IN RATES. THE GENERATION
    25         FACILITY INTERESTS SHALL NOT BE COMMISSION-REGULATED
    26         ASSETS.
    27         (6)  A DEFAULT SERVICE PLAN APPROVED BY THE COMMISSION
    28     PRIOR TO THE EFFECTIVE DATE OF THIS SECTION SHALL REMAIN IN
    29     EFFECT THROUGH ITS APPROVED TERM. AT ITS SOLE DISCRETION, THE
    30     DEFAULT SERVICE PROVIDER MAY PROPOSE AMENDMENTS TO ITS
    20080H2200B4526                 - 37 -     

     1     APPROVED PLAN THAT ARE CONSISTENT WITH THIS SECTION, AND THE
     2     COMMISSION SHALL ISSUE A DECISION WHETHER TO APPROVE OR
     3     DISAPPROVE THE PROPOSED AMENDMENTS WITHIN NINE MONTHS OF THE
     4     DATE THAT THE AMENDMENTS ARE FILED. IF THE COMMISSION FAILS
     5     TO ISSUE A FINAL ORDER WITHIN NINE MONTHS, THE AMENDMENTS
     6     SHALL BE DEEMED TO BE APPROVED AND THE DEFAULT SERVICE
     7     PROVIDER MAY IMPLEMENT THE AMENDMENTS AS FILED.
     8         (7)  THE DEFAULT SERVICE PROVIDER SHALL OFFER RESIDENTIAL
     9     AND SMALL BUSINESS CUSTOMERS A GENERATION SUPPLY SERVICE RATE
    10     THAT SHALL CHANGE NO MORE FREQUENTLY THAN ON A QUARTERLY
    11     BASIS. ALL DEFAULT SERVICE RATES SHALL BE REVIEWED BY THE
    12     COMMISSION TO ENSURE THAT THE COSTS OF PROVIDING SERVICE TO
    13     EACH CUSTOMER CLASS ARE NOT SUBSIDIZED BY ANY OTHER CLASS.
    14     (F)  SMART METER TECHNOLOGY AND TIME OF USE RATES.--
    15         (1)  WITHIN NINE MONTHS AFTER THE EFFECTIVE DATE OF THIS
    16     PARAGRAPH, ELECTRIC DISTRIBUTION COMPANIES SHALL FILE A SMART
    17     METER TECHNOLOGY PROCUREMENT AND INSTALLATION PLAN WITH THE
    18     COMMISSION FOR APPROVAL. THE PLAN SHALL DESCRIBE THE SMART
    19     METER TECHNOLOGIES THE ELECTRIC DISTRIBUTION COMPANY PROPOSES
    20     TO INSTALL IN ACCORDANCE WITH PARAGRAPH (2).
    21         (2)  ELECTRIC DISTRIBUTION COMPANIES SHALL FURNISH SMART
    22     METER TECHNOLOGY AS FOLLOWS:
    23             (I)  UPON REQUEST TO A CUSTOMER THAT AGREES TO PAY
    24         THE COST OF THE SMART METER.
    25             (II)  IN THE CONSTRUCTION OF A NEW RESIDENCE OR NEW
    26         BUILDING TO BE USED BY A COMMERCIAL CUSTOMER.
    27             (III)  IN ACCORDANCE WITH A SCHEDULE OF REPLACEMENT
    28         OF FULL DEPRECIATION OF EXISTING METERS.
    29         (3)  ELECTRIC DISTRIBUTION COMPANIES SHALL, WITH CUSTOMER
    30     CONSENT, MAKE AVAILABLE ELECTRONIC ACCESS TO CUSTOMER METER
    20080H2200B4526                 - 38 -     

     1     DATA TO THIRD PARTIES, INCLUDING ELECTRIC GENERATION
     2     SUPPLIERS AND PROVIDERS OF CONSERVATION AND LOAN MANAGEMENT
     3     SERVICES.
     4         (4)  AN ELECTRIC DISTRIBUTION COMPANY SHALL NOT BE
     5     PERMITTED TO RECOVER THE COSTS, AS DETERMINED BY THE
     6     COMMISSION, OF PROVIDING SMART METER TECHNOLOGY UNDER
     7     PARAGRAPH (2).
     8         (5)  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 COST OF
    11     SMART METER TECHNOLOGY.
    12         (6)  BY JANUARY 1, 2010, OR AT THE END OF THE APPLICABLE
    13     GENERATION RATE CAP PERIOD, WHICHEVER IS LATER, A DEFAULT
    14     SERVICE PROVIDER SHALL SUBMIT TO THE COMMISSION ONE OR MORE
    15     PROPOSED TIME-OF-USE RATES AND REAL-TIME PRICE PLANS. THE
    16     COMMISSION SHALL APPROVE OR MODIFY THE TIME-OF-USE RATES AND
    17     REAL-TIME PRICE PLAN WITHIN SIX MONTHS OF SUBMITTAL. THE
    18     DEFAULT SERVICE PROVIDER SHALL OFFER THE RATES AND REAL-TIME
    19     PRICE PLAN TO ALL RESIDENTIAL AND COMMERCIAL CUSTOMERS THAT
    20     HAVE BEEN PROVIDED WITH SMART METER TECHNOLOGY WITHIN 60 DAYS
    21     OF INSTALLATION OF THE SMART METER TECHNOLOGY OR COMMISSION
    22     APPROVAL OF THE TIME-OF-USE RATES AND REAL-TIME PRICE PLAN,
    23     WHICHEVER IS LATER. RESIDENTIAL OR COMMERCIAL CUSTOMERS MAY
    24     ELECT TO PARTICIPATE IN TIME-OF-USE RATES OR REAL-TIME
    25     PRICING. THE DEFAULT SERVICE PROVIDER SHALL SUBMIT AN ANNUAL
    26     REPORT TO THE COMMISSION ON THE PARTICIPATION IN THE TIME-OF-
    27     USE AND REAL-TIME PRICE PROGRAMS AND THE EFFICACY OF THE
    28     PROGRAMS IN AFFECTING ENERGY DEMAND AND CONSUMPTION AND THE
    29     EFFECT ON WHOLESALE MARKET PRICES.
    30         (7)  THE PROVISIONS OF THIS SUBSECTION SHALL NOT APPLY TO
    20080H2200B4526                 - 39 -     

     1     AN ELECTRIC DISTRIBUTION COMPANY WITH 100,000 OR FEWER
     2     CUSTOMERS.
     3     (G)  DEFINITION.--AS USED IN THIS SECTION, THE TERM "SMART
     4  METER TECHNOLOGY" MEANS TECHNOLOGY, INCLUDING METERING
     5  TECHNOLOGY AND NETWORK COMMUNICATIONS TECHNOLOGY CAPABLE OF
     6  BIDIRECTIONAL COMMUNICATION, THAT RECORDS ELECTRICITY USAGE ON
     7  AT LEAST AN HOURLY BASIS, INCLUDING RELATED ELECTRIC
     8  DISTRIBUTION SYSTEM UPGRADES TO ENABLE THE TECHNOLOGY. THE
     9  TECHNOLOGY SHALL PROVIDE CUSTOMERS WITH DIRECT ACCESS TO AND USE
    10  OF PRICE AND CONSUMPTION INFORMATION. THE TECHNOLOGY SHALL ALSO:
    11         (1)  DIRECTLY PROVIDE CUSTOMERS WITH INFORMATION ON THEIR
    12     HOURLY CONSUMPTION.
    13         (2)  ENABLE TIME-OF-USE RATES AND REAL-TIME PRICE
    14     PROGRAMS.
    15         (3)  EFFECTIVELY SUPPORT THE AUTOMATIC CONTROL OF THE
    16     CUSTOMER'S ELECTRICITY CONSUMPTION BY ONE OR MORE OF THE
    17     FOLLOWING AS SELECTED BY THE CUSTOMER:
    18             (I)  THE CUSTOMER;
    19             (II)  THE CUSTOMER'S UTILITY; OR
    20             (III)  A THIRD PARTY ENGAGED BY THE CUSTOMER OR THE
    21         CUSTOMER'S UTILITY.
    22         (4)  PROVIDE A MEANS TO OBTAIN REAL-TIME CONSUMPTION
    23     INFORMATION FROM A METER SUCH AS AN INSTALLED PORT OR OUTPUT
    24     FOR TRANSMITTING METER PULSE DATA EXTERNAL TO THE METER TO BE
    25     USED BY THE CUSTOMER, THE ELECTRIC DISTRIBUTION COMPANY OR A
    26     THIRD PARTY ENGAGED BY THE CUSTOMER IN THE ELECTRIC
    27     DISTRIBUTION COMPANY.
    28     SECTION 4.  TITLE 66 IS AMENDED BY ADDING A SECTION TO READ:
    29  § 2813.  PROCUREMENT OF POWER.
    30     EXCEPT AS PROVIDED UNDER THE ACT OF NOVEMBER 30, 2004
    20080H2200B4526                 - 40 -     

     1  (P.L.1672, NO.213), KNOWN AS THE ALTERNATIVE ENERGY PORTFOLIO
     2  STANDARDS ACT, THE COMMISSION MAY NOT ORDER A DEFAULT SERVICE
     3  PROVIDER TO PROCURE POWER FROM A SPECIFIC GENERATION SUPPLIER,
     4  FROM A SPECIFIC GENERATION FUEL TYPE OR FROM NEW GENERATION
     5  ONLY.
     6     SECTION 5.  THIS ACT SHALL TAKE EFFECT IN 60 DAYS.
     7     SECTION 1.  SECTION 305(A) OF TITLE 66 OF THE PENNSYLVANIA     <--
     8  CONSOLIDATED STATUTES IS AMENDED TO READ:
     9  § 305.  DIRECTOR OF OPERATIONS, SECRETARY, EMPLOYEES AND
    10             CONSULTANTS.
    11     (A)  DIRECTOR OF OPERATIONS.--THE COMMISSION MAY APPOINT A
    12  DIRECTOR OF OPERATIONS WHO SHALL SERVE AT THE PLEASURE OF THE
    13  COMMISSION AND SHALL BE RESPONSIBLE FOR THE DAY-TO-DAY
    14  ADMINISTRATION AND OPERATION OF THE BUREAUS AND OFFICES OF THE
    15  COMMISSION, EXCEPT THAT THE DIRECTOR OF OPERATIONS SHALL HAVE
    16  RESPONSIBILITY FOR THE [OFFICE OF TRIAL STAFF] PROSECUTORIAL
    17  FUNCTION ONLY WITH REGARD TO ADMINISTRATIVE MATTERS.
    18     * * *
    19     SECTION 1.1.  SECTION 306 OF TITLE 66 IS REPEALED:
    20  [§ 306.  OFFICE OF TRIAL STAFF.
    21     (A)  GENERAL RULE.--THE OFFICE OF TRIAL STAFF TO THE
    22  PENNSYLVANIA PUBLIC UTILITY COMMISSION IS HEREBY CREATED. THE
    23  DIRECTOR OF TRIAL STAFF, WHO SHALL BE THE CHIEF PROSECUTOR OF
    24  THE COMMISSION, SHALL BE APPOINTED BY THE COMMISSION AND HOLD
    25  OFFICE AT ITS PLEASURE. THE COMMISSION SHALL ASSIGN A PERMANENT
    26  STAFF OF SUCH LEGAL, TECHNICAL AND OTHER EMPLOYEES OF THE
    27  COMMISSION AS MAY BE REQUIRED FOR THE PROPER CONDUCT OF THE WORK
    28  OF THE OFFICE OF TRIAL STAFF. EMPLOYEES ASSIGNED TO THE OFFICE
    29  OF TRIAL STAFF SHALL BE UNDER THE SUPERVISION OF THE DIRECTOR OF
    30  TRIAL STAFF AND SHALL NOT BE ASSIGNED TO ANY DUTIES OTHER THAN
    20080H2200B4526                 - 41 -     

     1  WITH THE OFFICE OF TRIAL STAFF, EXCEPT AS THE COMMISSION MAY ON
     2  A TEMPORARY CASE-BY-CASE BASIS PERMIT WHERE THE PERFORMANCE OF
     3  SUCH OTHER DUTIES WILL NOT REPRESENT, OR CREATE THE APPEARANCE
     4  OF, A CONFLICT OF INTEREST. THE COMMISSION MAY DESIGNATE
     5  EMPLOYEES OF THE OFFICE OF TRIAL STAFF TO SERVE AS DEPUTIES TO
     6  THE DIRECTOR OF TRIAL STAFF. THE DIRECTOR OF TRIAL STAFF MAY
     7  RECOMMEND PERSONS FOR CONSIDERATION BY THE COMMISSION AS
     8  EMPLOYEES UNDER HIS SUPERVISION. ATTORNEYS ASSIGNED TO THE
     9  OFFICE OF TRIAL STAFF MAY BE REMOVED BY THE COMMISSION ONLY FOR
    10  GOOD CAUSE. THE COMPENSATION OF THE DIRECTOR OF TRIAL STAFF AND
    11  THE EMPLOYEES UNDER HIS SUPERVISION SHALL BE FIXED BY THE
    12  COMMISSION. THE DIRECTOR OF TRIAL STAFF SHALL REPORT AND BE
    13  RESPONSIBLE DIRECTLY TO THE COMMISSION, PROVIDED THAT THE
    14  DIRECTOR OF TRIAL STAFF SHALL BE RESPONSIBLE TO THE COMMISSION
    15  THROUGH THE DIRECTOR OF OPERATIONS ONLY FOR PURPOSES OF
    16  ADMINISTRATIVE MATTERS.
    17     (B)  POWER AND DUTIES.--
    18         (1)  THE OFFICE OF TRIAL STAFF SHALL BE RESPONSIBLE FOR
    19     AND SHALL ASSIST IN THE DEVELOPMENT OF, CHALLENGE OF AND
    20     REPRESENTATION ON THE RECORD OF ALL MATTERS IN THE PUBLIC
    21     INTEREST IN ALL COMMISSION PROCEEDINGS EXCEPT THOSE INVOLVING
    22     TRANSPORTATION, SAFETY, EMINENT DOMAIN, SITING, SERVICE
    23     ISSUES HAVING NO IMPACT ON RATES AND ABILITY TO PAY, PROVIDED
    24     THAT THE DIRECTOR OF TRIAL STAFF MAY PETITION THE COMMISSION
    25     OR MAY BE DIRECTED BY THE COMMISSION TO INTERVENE TO PROTECT
    26     THE PUBLIC INTEREST IN ANY PROCEEDING INVOLVING
    27     TRANSPORTATION, SAFETY, EMINENT DOMAIN, SITING, SERVICE
    28     ISSUES HAVING NO IMPACT ON RATES AND ABILITY TO PAY. TO
    29     ASSIST IN CARRYING OUT HIS POWERS AND DUTIES UNDER THIS
    30     SECTION, THE DIRECTOR OF TRIAL STAFF SHALL SUPERVISE THE
    20080H2200B4526                 - 42 -     

     1     ACTIVITIES OF THE OFFICE OF TRIAL STAFF IN ALL COMMISSION
     2     PROCEEDINGS IN WHICH HE PARTICIPATES. IF THE DIRECTOR OF
     3     TRIAL STAFF IS OF THE OPINION THAT THE INITIATION OF A
     4     PROCEEDING IS NECESSARY TO PROTECT THE PUBLIC INTEREST, HE
     5     SHALL REQUEST THAT THE COMMISSION INITIATE THE APPROPRIATE
     6     PROCEEDING. WHEN HE PARTICIPATES IN A COMMISSION PROCEEDING,
     7     IT SHALL BE THE DUTY AND RESPONSIBILITY OF THE DIRECTOR OF
     8     TRIAL STAFF TO PROSECUTE IN THAT PROCEEDING.
     9         (2)  IN ADDITION TO ANY OTHER RESPONSIBILITY CONVEYED
    10     UPON IT BY THE COMMISSION, THE OFFICE OF TRIAL STAFF SHALL
    11     SUBMIT A REPORT TO THE COMMISSION RECOMMENDING WHETHER THE
    12     COMMISSION SHOULD ENTER UPON A HEARING IN ORDER TO
    13     INVESTIGATE THE JUSTNESS AND REASONABLENESS OF A TARIFF FILED
    14     PURSUANT TO SECTION 1308 (RELATING TO VOLUNTARY CHANGES IN
    15     RATES), TO SUSPEND THE EFFECTIVENESS OF SUCH TARIFF, TO ALLOW
    16     SUCH TARIFF TO BE SUSPENDED BY OPERATION OF LAW OR TO ALLOW
    17     TEMPORARY RATES PURSUANT TO SECTION 1310 (RELATING TO
    18     TEMPORARY RATES). THE REPORT:
    19             (I)  SHALL RECOMMEND ONLY THE INITIAL ACTION WHICH
    20         THE COMMISSION SHOULD TAKE AND SHALL NOT CONTAIN AN
    21         OPINION AS TO THE PORTION OF A PROPOSED RATE INCREASE
    22         WHICH APPEARS TO BE JUST AND REASONABLE, UNLESS THE
    23         REPORT INCLUDES A FINDING THAT THE PROPOSED RATE INCREASE
    24         APPEARS TO BE JUST AND REASONABLE IN ITS ENTIRETY;
    25             (II)  SHALL BE RELEASED TO THE PUBLIC IF THE REPORT
    26         RECOMMENDS THAT NO HEARINGS NEED TO BE HELD REGARDING THE
    27         PROPOSED TARIFF OR THAT THE PROPOSED TARIFF SHOULD NOT BE
    28         SUSPENDED, AND MAY BE RELEASED TO THE PUBLIC IN OTHER
    29         CIRCUMSTANCES WHEN, IN THE OPINION OF THE COMMISSION,
    30         SUCH RELEASE WOULD BE IN THE PUBLIC INTEREST;
    20080H2200B4526                 - 43 -     

     1             (III)  SHALL BE CONSIDERED ONLY AS AN INDICATION OF
     2         THE OFFICE OF TRIAL STAFF'S OPINION REGARDING WHETHER
     3         THERE SHOULD BE A HEARING ON THE PROPOSED TARIFF OR
     4         WHETHER THE PROPOSED TARIFF SHOULD BE SUSPENDED; AND
     5             (IV)  SHALL NOT BE CONSIDERED AS EVIDENCE OF THE
     6         OFFICE OF TRIAL STAFF'S OPINION REGARDING THE JUSTNESS
     7         AND REASONABLENESS OF ANY PROPOSED TARIFF IN ANY
     8         SUBSEQUENT COMMISSION PROCEEDING.
     9         (3)  EXCEPT FOR THE DUTIES SET OUT IN PARAGRAPH (2),
    10     NEITHER THE DIRECTOR OF TRIAL STAFF NOR ANY EMPLOYEE WHOM THE
    11     DIRECTOR OF TRIAL STAFF SUPERVISES SHALL COMMUNICATE WITH THE
    12     COMMISSION, AN ADMINISTRATIVE LAW JUDGE OR ANY OTHER EMPLOYEE
    13     OF THE COMMISSION WHO IS DECIDING OR ADVISING IN THE DECISION
    14     IN AN ON-THE-RECORD PROCEEDING, WHETHER CONTESTED OR
    15     UNCONTESTED, AS DEFINED IN SECTION 332(C) (RELATING TO
    16     PROCEDURES IN GENERAL), EXCEPT THROUGH THE PRACTICE AND
    17     PROCEDURE AVAILABLE TO ALL PARTIES TO COMMISSION
    18     PROCEEDINGS.]
    19     SECTION 1.2.  SECTION 308(A)(2) AND (4), (B), (C), (E), (F)
    20  AND (G) OF TITLE 66 ARE AMENDED TO READ:
    21  § 308.  BUREAUS AND OFFICES.
    22     (A)  ENUMERATION.--THERE SHALL BE ESTABLISHED WITHIN THE
    23  COMMISSION THE FOLLOWING BUREAUS AND FUNCTIONS:
    24         * * *
    25         [(2)  BUREAU OF CONSERVATION, ECONOMICS AND ENERGY
    26     PLANNING.]
    27         * * *
    28         [(4)  OFFICE OF SPECIAL ASSISTANTS.]
    29     (B)  LAW BUREAU.--THE LAW BUREAU SHALL BE A MULTIFUNCTION
    30  LEGAL STAFF, CONSISTING OF A PROSECUTORY FUNCTION, AN ADVISORY
    20080H2200B4526                 - 44 -     

     1  FUNCTION, A REPRESENTATIONAL FUNCTION AND AN ENFORCEMENT
     2  FUNCTION. THE DIRECTOR OF THE LAW BUREAU SHALL BE THE CHIEF
     3  COUNSEL OF THE COMMISSION AND SHALL SERVE AT THE PLEASURE OF THE
     4  COMMISSION. THE COMMISSION MAY ALSO, FROM TIME TO TIME, APPOINT
     5  SUCH ASSISTANT COUNSEL TO THE COMMISSION AS MAY BE REQUIRED FOR
     6  THE PROPER CONDUCT OF THE WORK OF THE LAW BUREAU. ASSISTANT
     7  COUNSEL MAY BE REMOVED BY THE COMMISSION ONLY FOR GOOD CAUSE.
     8  THE LAW BUREAU SHALL ADVISE THE COMMISSION ON ANY AND ALL
     9  MATTERS. NO COUNSEL SHALL IN THE SAME CASE OR A FACTUALLY
    10  RELATED CASE PERFORM DUTIES IN THE PROSECUTORY AND ADVISORY
    11  FUNCTIONS, IF SUCH PERFORMANCE WOULD REPRESENT A CONFLICT OF
    12  INTEREST. EXCEPT FOR LITIGATION REFERRED TO THE ATTORNEY GENERAL
    13  OR OTHER APPROPRIATE OUTSIDE COUNSEL, THE LAW BUREAU SOLELY
    14  SHALL BE RESPONSIBLE TO REPRESENT THE COMMISSION UPON APPEALS
    15  AND OTHER HEARINGS IN THE COURTS OF COMMON PLEAS AND IN THE
    16  COMMONWEALTH COURT, SUPREME COURT OR OTHER COURTS OF THIS
    17  COMMONWEALTH OR IN ANY FEDERAL COURT OR AGENCY AND IN ACTIONS
    18  INSTITUTED TO RECOVER PENALTIES AND TO ENFORCE REGULATIONS AND
    19  ORDERS OF THE COMMISSION. [NO MEMBER OF THE LAW BUREAU SHALL
    20  PARTICIPATE IN ANY PROSECUTORY FUNCTION IN ANY MATTER] IF
    21  NECESSARY TO PROTECT THE PUBLIC INTEREST, THE LAW BUREAU,
    22  PURSUANT TO ITS PROSECUTORIAL FUNCTION, MAY INITIATE AND
    23  PARTICIPATE IN PROCEEDINGS BEFORE THE COMMISSION UNLESS DIRECTED
    24  BY THE COMMISSION TO DO SO IN A PROCEEDING INVOLVING
    25  TRANSPORTATION, SAFETY, EMINENT DOMAIN, SITING, SERVICE ISSUES
    26  HAVING NO IMPACT ON RATES OR ABILITY TO PAY OR ASSIST THE OFFICE
    27  OF TRIAL STAFF IN CARRYING OUT THE DUTIES OF THE OFFICE OF TRIAL
    28  STAFF, NOR SHALL ANY MEMBER OF THE LAW BUREAU RECEIVE ASSISTANCE
    29  FROM THE OFFICE OF TRIAL STAFF IN THE PERFORMANCE OF HIS DUTIES.
    30  EXCEPT AS PROVIDED IN THIS SECTION, THE LAW BUREAU MAY RECEIVE
    20080H2200B4526                 - 45 -     

     1  ASSISTANCE FROM ANY OTHER BUREAU OR OFFICE OF THE COMMISSION AS
     2  DETERMINED TO BE NECESSARY.
     3     [(C)  BUREAU OF CONSERVATION, ECONOMICS AND ENERGY
     4  PLANNING.--THE BUREAU OF CONSERVATION, ECONOMICS AND ENERGY
     5  PLANNING SHALL CONDUCT STUDIES AND RESEARCH ALL MATTERS WITHIN
     6  THE COMMISSION'S JURISDICTION AND ADVISE THE COMMISSION OF THE
     7  RESULTS THEREOF IN ORDER TO ENABLE THE COMMISSION TO PROVIDE
     8  PROSPECTIVE REGULATION IN THE BEST INTEREST OF ALL PARTIES
     9  CONCERNED. SUCH STUDIES AND RESEARCH SHALL INCLUDE LONG RANGE
    10  FORECASTING OF ENERGY NEEDS AND DEVELOPMENT; RESEARCH INTO THE
    11  USE OF NEW, EFFICIENT AND ECONOMIC METHODS OF ENERGY PRODUCTION;
    12  THE REVIEW OF THE EFFICIENCY OF THE PRESENT GENERATING SYSTEMS
    13  OPERATED WITHIN THIS COMMONWEALTH; AND THE DEVELOPMENT OF AN
    14  EFFECTIVE PROGRAM OF ENERGY CONSERVATION. THE COMMISSION SHALL
    15  REQUIRE ALL ELECTRIC AND GAS PUBLIC UTILITIES SUBJECT TO ITS
    16  JURISDICTION TO FILE WITH IT AN ANNUAL CONSERVATION REPORT WHICH
    17  SHOWS THE PLANS AND PROGRESS ACHIEVED ON PROGRAMS OF ENERGY
    18  CONSERVATION. THE COMMISSION SHALL, BY RULE, PRESCRIBE
    19  GUIDELINES FOR THE FORM AND MANNER OF SUCH ANNUAL CONSERVATION
    20  REPORT WHICH REPORT SHALL DESCRIBE THE CURRENT AND PROPOSED
    21  PROGRAMS OF EACH SUCH UTILITY DESIGNED TO EDUCATE AND ENCOURAGE
    22  ITS CUSTOMERS IN THE OPTIMUM, EFFECTIVE AND EFFICIENT USE BY
    23  THEM OF ELECTRIC AND GAS ENERGY. THE REPORT SHALL INCLUDE AN
    24  ACCOUNTING OF THE MONETARY AND PERSONNEL RESOURCES ACTUALLY OR
    25  PROPOSED TO BE EXPENDED OR DEVOTED TO AND THE ACTUAL OR
    26  ANTICIPATED RESULTS OF SUCH PROGRAMS. THE BUREAU SHALL REVIEW
    27  ALL PROPOSALS FOR ELECTRIC AND GAS PUBLIC UTILITY PLANT
    28  EXPANSION AND SHALL SUBMIT FOR CONSIDERATION OF THE COMMISSION
    29  ITS FINDINGS ON WHAT IMPACT, IF ANY, THE ELECTRIC AND GAS PUBLIC
    30  UTILITY PLANT EXPANSION WILL HAVE ON RATES CHARGED BY THE PUBLIC
    20080H2200B4526                 - 46 -     

     1  UTILITY.]
     2     * * *
     3     [(E)  OFFICE OF SPECIAL ASSISTANTS.--THE OFFICE OF SPECIAL
     4  ASSISTANTS SHALL BE A SUPPORT STAFF WHICH SHALL BE RESPONSIBLE
     5  TO ASSIST IN THE PREPARATION OF COMMISSION ORDERS AND SHALL
     6  PERFORM SUCH OTHER ADVISORY DUTIES AS MAY BE REQUIRED OF IT BY
     7  THE COMMISSION. NO MEMBER OF THE OFFICE OF SPECIAL ASSISTANTS
     8  SHALL PARTICIPATE IN ANY PROSECUTORY FUNCTION IN ANY MATTER
     9  BEFORE THE COMMISSION. NO MEMBER OF THE OFFICE OF SPECIAL
    10  ASSISTANTS SHALL ASSIST THE OFFICE OF TRIAL STAFF IN CARRYING
    11  OUT THE DUTIES OF THE OFFICE OF TRIAL STAFF, NOR SHALL ANY
    12  MEMBER OF THE OFFICE OF SPECIAL ASSISTANTS RECEIVE ASSISTANCE
    13  FROM THE OFFICE OF TRIAL STAFF IN THE PERFORMANCE OF HIS DUTIES.
    14  EXCEPT AS PROVIDED IN THIS SECTION, THE OFFICE OF SPECIAL
    15  ASSISTANTS MAY RECEIVE ASSISTANCE FROM, OR PROVIDE ASSISTANCE
    16  TO, ANY OTHER BUREAU OR OFFICE OF THE COMMISSION AS DETERMINED
    17  TO BE NECESSARY.
    18     (F)  OTHER BUREAUS AND OFFICES.--THE COMMISSION SHALL
    19  ESTABLISH SUCH BUREAU OR BUREAUS TO PERFORM SUCH DUTIES AS THE
    20  COMMISSION MAY PRESCRIBE REGARDING ALL MATTERS RESPECTING RATES
    21  OF PUBLIC UTILITIES AND ALL MATTERS RESPECTING COMMON CARRIERS
    22  AND CONTRACT CARRIERS. THE ESTABLISHMENT OF THESE BUREAUS SHALL
    23  NOT BE CONSTRUED TO PROHIBIT THE COMMISSION FROM ESTABLISHING
    24  ANY ADDITIONAL BUREAUS WHICH THE COMMISSION FINDS NECESSARY TO
    25  PROTECT THE INTERESTS OF THE PEOPLE OF THIS COMMONWEALTH. THE
    26  BUREAUS MAY PERFORM SUCH OTHER DUTIES NOT INCONSISTENT WITH LAW
    27  AS THE COMMISSION MAY DIRECT.
    28     (G)  STAFF TESTIMONY.--MEMBERS OF THE STAFF OF THE
    29  COMMISSION, EXCEPT FOR THE OFFICE OF SPECIAL ASSISTANTS, SHALL
    30  APPEAR AND PRESENT TESTIMONY IN ANY PROCEEDING BEFORE THE
    20080H2200B4526                 - 47 -     

     1  COMMISSION WHEN CALLED BY THE COMMISSION, THE CHIEF COUNSEL, THE
     2  DIRECTOR OF TRIAL STAFF OR ANY OF THE PARTIES TO THE PROCEEDING.
     3  IN ADDITION TO ANY CROSS-EXAMINATION BY THE OFFICE OF TRIAL
     4  STAFF AS PROVIDED IN SECTION 306 (RELATING TO OFFICE OF TRIAL
     5  STAFF) OR THE CHIEF COUNSEL, ANY MEMBER OF THE COMMISSION STAFF
     6  WHO PARTICIPATES IN THE ANALYSIS, REVIEW AND CONCLUSIONS IN ANY
     7  PROCEEDINGS BEFORE THE COMMISSION MAY, IN THE DISCRETION OF THE
     8  OFFICE OF TRIAL STAFF OR THE CHIEF COUNSEL AND WITH THE CONSENT
     9  OF THE PRESIDING OFFICER, CROSS-EXAMINE ANY WITNESS PRESENTED BY
    10  THE PARTIES TO THE PROCEEDING AT THE PUBLIC HEARING.]
    11     SECTION 1.3.  TITLE 66 IS AMENDED BY ADDING A SECTION TO
    12  READ:
    13  § 308.2.  OTHER BUREAUS, OFFICES AND POSITIONS.
    14     (A)  ESTABLISHMENT OF OTHER BUREAUS, OFFICES AND POSITIONS.--
    15  IN ADDITION TO THE SPECIFIC BUREAUS ESTABLISHED IN THIS PART,
    16  THE COMMISSION MAY ESTABLISH OTHER BUREAUS, OFFICES AND
    17  POSITIONS TO PERFORM THE FOLLOWING FUNCTIONS:
    18         (1)  REVIEW AND PROVIDE ADVICE REGARDING APPLICATIONS,
    19     PETITIONS, TARIFF FILINGS AND OTHER MATTERS FILED WITH THE
    20     COMMISSION.
    21         (2)  PROVIDE ADVICE, REVIEW EXCEPTIONS AND PREPARE ORDERS
    22     REGARDING MATTERS TO BE ADJUDICATED.
    23         (3)  CONDUCT FINANCIAL REVIEWS, EARNINGS ANALYSES AND
    24     OTHER FINANCIAL STUDIES.
    25         (4)  CONDUCT ECONOMIC RESEARCH, FORECASTING, ENERGY
    26     CONSERVATION STUDIES, COST STUDIES AND OTHER ECONOMIC STUDIES
    27     RELATED TO PUBLIC UTILITIES.
    28         (5)  MONITOR INDUSTRY MARKETS TO DETECT ANTICOMPETITIVE,
    29     DISCRIMINATORY OR OTHER UNLAWFUL CONDUCT.
    30         (6)  INSURE ADEQUATE MAINTENANCE, SAFETY AND RELIABILITY
    20080H2200B4526                 - 48 -     

     1     OF UTILITY NETWORKS.
     2         (7)  INSURE ADEQUATE SERVICE QUALITY, EFFICIENCY AND
     3     AVAILABILITY AT JUST AND REASONABLE RATES.
     4         (8)  CONDUCT FINANCIAL, MANAGEMENT, OPERATIONAL AND
     5     SPECIAL AUDITS.
     6         (9)  PROVIDE CONSUMER INFORMATION, CONSUMER PROTECTION
     7     AND INFORMAL RESOLUTION OF COMPLAINTS.
     8         (10)  INSURE ADEQUATE SAFETY, INSURANCE, FITNESS AND
     9     OTHER REQUIREMENTS RELEVANT TO TRANSPORTATION UTILITIES.
    10         (11)  TAKE APPROPRIATE ENFORCEMENT ACTIONS, INCLUDING
    11     RATE PROCEEDINGS, SERVICE PROCEEDINGS AND ALLOCATION
    12     PROCEEDINGS, NECESSARY TO INSURE COMPLIANCE WITH THIS TITLE,
    13     COMMISSION REGULATIONS AND ORDERS.
    14         (12)  PERFORM OTHER FUNCTIONS THE COMMISSION DEEMS
    15     NECESSARY FOR THE PROPER WORK OF THE COMMISSION.
    16     (B)  PROHIBITION ON COMMINGLING OF FUNCTIONS.--A COMMISSION
    17  EMPLOYEE ENGAGED IN A PROSECUTORY FUNCTION MAY NOT, IN THAT
    18  MATTER OR A FACTUALLY RELATED MATTER, PROVIDE ADVICE OR
    19  ASSISTANCE TO A COMMISSION EMPLOYEE PERFORMING AN ADVISORY
    20  FUNCTION AS TO THAT MATTER.
    21     SECTION 1.4.  SECTION 2803 OF TITLE 66 IS AMENDED BY ADDING
    22  DEFINITIONS TO READ:
    23  § 2803.  DEFINITIONS.
    24     THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS CHAPTER
    25  SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
    26  CONTEXT CLEARLY INDICATES OTHERWISE:
    27     * * *
    28     "BILATERAL CONTRACT."  AN AGREEMENT, AS APPROVED BY THE
    29  PENNSYLVANIA PUBLIC UTILITY COMMISSION, REACHED BY TWO PARTIES,
    30  EACH ACTING IN ITS OWN INDEPENDENT SELF-INTEREST, AS A RESULT OF
    20080H2200B4526                 - 49 -     

     1  NEGOTIATIONS FREE OF UNDUE INFLUENCE, DURESS OR FAVORITISM, IN
     2  WHICH THE ELECTRIC ENERGY SUPPLIER AGREES TO SELL AND THE
     3  ELECTRIC DISTRIBUTION COMPANY AGREES TO BUY A QUANTITY OF
     4  ELECTRIC ENERGY AT A SPECIFIED PRICE FOR A SPECIFIED PERIOD OF
     5  TIME UNDER TERMS AGREED TO BY BOTH PARTIES, AND WHICH FOLLOWS A
     6  STANDARD INDUSTRY TEMPLATE WIDELY ACCEPTED IN THE INDUSTRY OR
     7  VARIATIONS THERETO ACCEPTED BY THE PARTIES. STANDARD INDUSTRY
     8  TEMPLATES MAY INCLUDE THE EEI MASTER AGREEMENT FOR PHYSICAL
     9  ENERGY PURCHASES AND SALES AND THE ISDA MASTER AGREEMENT FOR
    10  FINANCIAL ENERGY PURCHASES AND SALES.
    11     * * *
    12     "DEFAULT SERVICE PROVIDER."  AN ELECTRIC DISTRIBUTION COMPANY
    13  WITHIN ITS CERTIFIED SERVICE TERRITORY OR AN ALTERNATIVE
    14  SUPPLIER APPROVED BY THE PENNSYLVANIA PUBLIC UTILITY COMMISSION
    15  THAT PROVIDES GENERATION SERVICE TO RETAIL ELECTRIC CUSTOMERS
    16  WHO:
    17         (1)  CONTRACT FOR ELECTRIC POWER, INCLUDING ENERGY AND
    18     CAPACITY, AND THE CHOSEN ELECTRIC GENERATION SUPPLIER DOES
    19     NOT SUPPLY THE SERVICE; OR
    20         (2)  DO NOT CHOOSE AN ALTERNATIVE ELECTRIC GENERATION
    21     SUPPLIER.
    22     * * *
    23     SECTION 2.  TITLE 66 IS AMENDED BY ADDING SECTIONS TO READ:
    24  § 2806.1.  ENERGY EFFICIENCY AND CONSERVATION PROGRAM.
    25     (A)  PROGRAM.--THE COMMISSION SHALL, BY JANUARY 15, 2009,
    26  ADOPT AN ENERGY EFFICIENCY AND CONSERVATION PROGRAM TO REQUIRE
    27  ELECTRIC DISTRIBUTION COMPANIES TO ADOPT AND IMPLEMENT COST-
    28  EFFECTIVE ENERGY EFFICIENCY AND CONSERVATION PLANS TO REDUCE
    29  ENERGY DEMAND AND CONSUMPTION WITHIN THE SERVICE TERRITORY OF
    30  EACH ELECTRIC DISTRIBUTION COMPANY IN THIS COMMONWEALTH. THE
    20080H2200B4526                 - 50 -     

     1  PROGRAM SHALL INCLUDE:
     2         (1)  PROCEDURES FOR THE APPROVAL OF PLANS SUBMITTED UNDER
     3     SUBSECTION (B).
     4         (2)  AN EVALUATION PROCESS, INCLUDING A PROCESS TO
     5     MONITOR AND VERIFY DATA COLLECTION, QUALITY ASSURANCE AND
     6     RESULTS OF EACH PLAN AND THE PROGRAM.
     7         (3)  AN ANALYSIS OF THE COST AND BENEFIT OF EACH PLAN
     8     SUBMITTED UNDER SUBSECTION (B) IN ACCORDANCE WITH A TOTAL
     9     RESOURCE COST TEST APPROVED BY THE COMMISSION.
    10         (4)  AN ANALYSIS OF HOW THE PROGRAM AND INDIVIDUAL PLANS
    11     WILL ENABLE EACH ELECTRIC DISTRIBUTION COMPANY TO ACHIEVE OR
    12     EXCEED THE REQUIREMENTS FOR REDUCTION IN CONSUMPTION UNDER
    13     SUBSECTIONS (C) AND (D).
    14         (5)  STANDARDS TO ENSURE THAT EACH PLAN INCLUDES A
    15     VARIETY OF ENERGY EFFICIENCY AND CONSERVATION MEASURES AND
    16     WILL PROVIDE THE MEASURES EQUITABLY TO ALL CLASSES OF
    17     CUSTOMERS.
    18         (6)  PROCEDURES TO MAKE RECOMMENDATIONS AS TO ADDITIONAL
    19     MEASURES THAT WILL ENABLE AN ELECTRIC DISTRIBUTION COMPANY TO
    20     IMPROVE ITS PLAN AND EXCEED THE REQUIRED REDUCTIONS IN
    21     CONSUMPTION UNDER SUBSECTIONS (C) AND (D).
    22         (7)  PROCEDURES TO REQUIRE THAT ELECTRIC DISTRIBUTION
    23     COMPANIES COMPETITIVELY BID ALL CONTRACTS WITH CONSERVATION
    24     SERVICE PROVIDERS.
    25         (8)  PROCEDURES TO REVIEW ALL PROPOSED CONTRACTS PRIOR TO
    26     THE EXECUTION OF THE CONTRACT WITH CONSERVATION SERVICE
    27     PROVIDERS TO IMPLEMENT THE PLAN. THE COMMISSION MAY ORDER THE
    28     MODIFICATION OF A PROPOSED CONTRACT TO ENSURE THAT THE PLAN
    29     MEETS THE REQUIREMENTS FOR REDUCTION IN DEMAND AND
    30     CONSUMPTION UNDER SUBSECTIONS (C) AND (D).
    20080H2200B4526                 - 51 -     

     1         (9)  PROCEDURES TO ENSURE COMPLIANCE WITH REQUIREMENTS
     2     FOR REDUCTION IN CONSUMPTION UNDER SUBSECTIONS (C) AND (D).
     3         (10)  A REQUIREMENT FOR THE PARTICIPATION OF CONSERVATION
     4     SERVICE PROVIDERS IN THE IMPLEMENTATION OF ALL OR PART OF A
     5     PLAN.
     6         (11)  COST RECOVERY TO ENSURE THAT MEASURES APPROVED ARE
     7     FINANCED BY THE SAME CUSTOMER CLASS THAT WILL RECEIVE THE
     8     DIRECT ENERGY AND CONSERVATION BENEFITS.
     9     (B)  DUTIES OF ELECTRIC DISTRIBUTION COMPANIES.--
    10         (1)  (I)  BY JULY 1, 2009, EACH ELECTRIC DISTRIBUTION
    11         COMPANY SHALL DEVELOP AND FILE AN ENERGY EFFICIENCY AND
    12         CONSERVATION PLAN WITH THE COMMISSION FOR APPROVAL TO
    13         MEET THE REQUIREMENTS OF SUBSECTION (A) AND THE
    14         REQUIREMENTS FOR REDUCTION IN CONSUMPTION UNDER
    15         SUBSECTIONS (C) AND (D). THE PLAN SHALL BE IMPLEMENTED
    16         UPON APPROVAL BY THE COMMISSION. THE FOLLOWING ARE THE
    17         PLAN REQUIREMENTS:
    18                 (A)  THE PLAN SHALL INCLUDE SPECIFIC PROPOSALS TO
    19             IMPLEMENT ENERGY EFFICIENCY AND CONSERVATION MEASURES
    20             TO ACHIEVE OR EXCEED THE REQUIRED REDUCTIONS IN
    21             CONSUMPTION UNDER SUBSECTIONS (C) AND (D).
    22                 (B)  A MINIMUM OF 10% OF THE REQUIRED REDUCTIONS
    23             IN CONSUMPTION UNDER SUBSECTIONS (C) AND (D) SHALL BE
    24             OBTAINED FROM UNITS OF FEDERAL, STATE AND LOCAL
    25             GOVERNMENT, INCLUDING MUNICIPALITIES, SCHOOL
    26             DISTRICTS, INSTITUTIONS OF HIGHER EDUCATION AND
    27             NONPROFIT ENTITIES.
    28                 (C)  THE PLAN SHALL EXPLAIN HOW QUALITY ASSURANCE
    29             AND PERFORMANCE WILL BE MEASURED, VERIFIED AND
    30             EVALUATED.
    20080H2200B4526                 - 52 -     

     1                 (D)  THE PLAN SHALL STATE THE MANNER IN WHICH THE
     2             PLAN WILL ACHIEVE THE REQUIREMENTS OF THE PROGRAM
     3             UNDER SUBSECTION (A) AND WILL ACHIEVE OR EXCEED THE
     4             REQUIRED REDUCTIONS IN CONSUMPTION UNDER SUBSECTIONS
     5             (C) AND (D).
     6                 (E)  THE PLAN SHALL INCLUDE A CONTRACT WITH ONE
     7             OR MORE CONSERVATION SERVICE PROVIDERS SELECTED BY
     8             COMPETITIVE BID TO IMPLEMENT THE PLAN OR A PORTION OF
     9             THE PLAN AS APPROVED BY THE COMMISSION.
    10                 (F)  THE PLAN SHALL INCLUDE ESTIMATES OF THE COST
    11             OF IMPLEMENTATION OF THE ENERGY EFFICIENCY AND
    12             CONSERVATION MEASURES IN THE PLAN.
    13                 (G)  THE PLAN SHALL INCLUDE SPECIFIC ENERGY
    14             EFFICIENCY MEASURES FOR HOUSEHOLDS AT OR BELOW 150%
    15             OF THE FEDERAL POVERTY INCOME GUIDELINES. THE NUMBER
    16             OF MEASURES SHALL BE PROPORTIONATE TO THOSE
    17             HOUSEHOLDS' SHARE OF THE TOTAL ENERGY USAGE IN THE
    18             SERVICE TERRITORY. THE ELECTRIC DISTRIBUTION COMPANY
    19             SHALL COORDINATE MEASURES UNDER THIS CLAUSE WITH
    20             OTHER PROGRAMS ADMINISTERED BY THE COMMISSION OR
    21             ANOTHER FEDERAL OR STATE AGENCY. THE EXPENDITURES OF
    22             AN ELECTRIC DISTRIBUTION COMPANY UNDER THIS CLAUSE
    23             SHALL BE IN ADDITION TO EXPENDITURES MADE UNDER 52
    24             PA. CODE CH. 58 (RELATING TO RESIDENTIAL LOW INCOME
    25             USAGE REDUCTION PROGRAMS).
    26                 (H)  THE PLAN SHALL INCLUDE A PROPOSED COST-
    27             RECOVERY TARIFF MECHANISM, IN ACCORDANCE WITH SECTION
    28             1307 (RELATING TO SLIDING SCALE OR RATES;
    29             ADJUSTMENTS), TO FUND THE ENERGY EFFICIENCY AND
    30             CONSERVATION MEASURES AND TO ENSURE FULL AND CURRENT
    20080H2200B4526                 - 53 -     

     1             RECOVERY OF THE PRUDENT AND REASONABLE COSTS OF THE
     2             PLAN, INCLUDING ADMINISTRATIVE COSTS, AS APPROVED BY
     3             THE COMMISSION.
     4                 (I)  THE ELECTRIC DISTRIBUTION COMPANY SHALL
     5             DEMONSTRATE THAT THE PLAN IS COST-EFFECTIVE USING A
     6             TOTAL RESOURCE COST TEST APPROVED BY THE COMMISSION
     7             AND PROVIDES A DIVERSE CROSS SECTION OF ALTERNATIVES
     8             FOR CUSTOMERS OF ALL RATE CLASSES.
     9                 (J)  THE PLAN SHALL REQUIRE AN ANNUAL INDEPENDENT
    10             EVALUATION OF ITS COST-EFFECTIVENESS AND A FULL
    11             REVIEW OF THE RESULTS OF EACH FIVE-YEAR PLAN REQUIRED
    12             UNDER SUBSECTION (C)(3) AND, TO THE EXTENT PRACTICAL,
    13             HOW THE PLAN WILL BE ADJUSTED ON A GOING-FORWARD
    14             BASIS AS A RESULT OF THE EVALUATION.
    15                 (K)  THE PLAN SHALL INCLUDE AN ANALYSIS OF THE
    16             ELECTRIC DISTRIBUTION COMPANY'S ADMINISTRATIVE COSTS.
    17             (II)  A NEW PLAN SHALL BE FILED WITH THE COMMISSION
    18         EVERY FIVE YEARS OR AS OTHERWISE REQUIRED BY THE
    19         COMMISSION. THE PLAN SHALL SET FORTH THE MANNER IN WHICH
    20         THE COMPANY WILL MEET THE REQUIRED REDUCTIONS IN
    21         CONSUMPTION UNDER SUBSECTIONS (C) AND (D).
    22             (III)  NO MORE THAN 2% OF FUNDS AVAILABLE TO
    23         IMPLEMENT A PLAN UNDER THIS SUBSECTION SHALL BE ALLOCATED
    24         FOR EXPERIMENTAL EQUIPMENT OR DEVICES.
    25         (2)  THE COMMISSION SHALL DIRECT AN ELECTRIC DISTRIBUTION
    26     COMPANY TO MODIFY OR TERMINATE ANY PART OF A PLAN APPROVED
    27     UNDER THIS SECTION IF, AFTER AN ADEQUATE PERIOD FOR
    28     IMPLEMENTATION, THE COMMISSION DETERMINES THAT AN ENERGY
    29     EFFICIENCY OR CONSERVATION MEASURE INCLUDED IN THE PLAN WILL
    30     NOT ACHIEVE THE REQUIRED REDUCTIONS IN CONSUMPTION IN A COST-
    20080H2200B4526                 - 54 -     

     1     EFFECTIVE MANNER UNDER SUBSECTIONS (C) AND (D).
     2         (3)  IF PART OF A PLAN IS MODIFIED OR TERMINATED UNDER
     3     PARAGRAPH (2), THE ELECTRIC DISTRIBUTION COMPANY SHALL SUBMIT
     4     A REVISED PLAN DESCRIBING ACTIONS TO BE TAKEN TO OFFER
     5     SUBSTITUTE MEASURES OR TO INCREASE THE AVAILABILITY OF
     6     EXISTING MEASURES IN THE PLAN TO ACHIEVE THE REQUIRED
     7     REDUCTIONS IN CONSUMPTION UNDER SUBSECTIONS (C) AND (D).
     8     (C)  REDUCTIONS IN CONSUMPTION.--THE PLANS ADOPTED UNDER
     9  SUBSECTION (B) SHALL REDUCE ELECTRIC CONSUMPTION AS FOLLOWS:
    10         (1)  BY MAY 31, 2011, TOTAL ANNUAL WEATHER-NORMALIZED
    11     CONSUMPTION OF THE RETAIL CUSTOMERS OF EACH ELECTRIC
    12     DISTRIBUTION COMPANY SHALL BE REDUCED BY A MINIMUM OF 1%. THE
    13     1% LOAD REDUCTION IN CONSUMPTION SHALL BE MEASURED AGAINST
    14     THE ELECTRIC DISTRIBUTION COMPANY'S EXPECTED LOAD AS
    15     FORECASTED BY THE COMMISSION FOR JUNE 1, 2009, THROUGH MAY
    16     31, 2010, WITH PROVISIONS MADE FOR WEATHER ADJUSTMENTS AND
    17     EXTRAORDINARY LOADS THAT THE ELECTRIC DISTRIBUTION COMPANY
    18     MUST SERVE.
    19         (2)  BY MAY 31, 2013, THE TOTAL ANNUAL WEATHER-NORMALIZED
    20     CONSUMPTION OF THE RETAIL CUSTOMERS OF EACH ELECTRIC
    21     DISTRIBUTION COMPANY SHALL BE REDUCED BY A MINIMUM OF 3%. THE
    22     3% LOAD REDUCTION IN CONSUMPTION SHALL BE MEASURED AGAINST
    23     THE ELECTRIC DISTRIBUTION COMPANY'S EXPECTED LOAD AS
    24     FORECASTED BY THE COMMISSION FOR JUNE 1, 2009, THROUGH MAY
    25     31, 2010, WITH PROVISION MADE FOR WEATHER ADJUSTMENTS AND
    26     EXTRAORDINARY LOADS THAT THE ELECTRIC DISTRIBUTION COMPANY
    27     MUST SERVE.
    28         (3)  BY NOVEMBER 30, 2013, AND EVERY FIVE YEARS
    29     THEREAFTER, THE COMMISSION SHALL EVALUATE THE COSTS AND
    30     BENEFITS OF THE PROGRAM ESTABLISHED UNDER SUBSECTION (A) AND
    20080H2200B4526                 - 55 -     

     1     OF APPROVED ENERGY EFFICIENCY AND CONSERVATION PLANS
     2     SUBMITTED TO THE PROGRAM. THE EVALUATION SHALL BE CONSISTENT
     3     WITH A TOTAL RESOURCE COST TEST OR A COST-BENEFIT ANALYSIS
     4     DETERMINED BY THE COMMISSION. IF THE COMMISSION DETERMINES
     5     THAT THE BENEFITS OF THE PROGRAM EXCEED THE COSTS, THE
     6     COMMISSION SHALL ADOPT ADDITIONAL REQUIRED INCREMENTAL
     7     REDUCTIONS IN CONSUMPTION.
     8     (D)  PEAK DEMAND.--THE PLANS ADOPTED UNDER SUBSECTION (B)
     9  SHALL REDUCE ELECTRIC DEMAND AS FOLLOWS:
    10         (1)  BY MAY 31, 2013, THE WEATHER-NORMALIZED DEMAND OF
    11     THE RETAIL CUSTOMERS OF EACH ELECTRIC DISTRIBUTION COMPANY
    12     SHALL BE REDUCED BY A MINIMUM OF 4.5% OF ANNUAL SYSTEM PEAK
    13     DEMAND IN THE 100 HOURS OF HIGHEST DEMAND. THE REDUCTION
    14     SHALL BE MEASURED AGAINST THE ELECTRIC DISTRIBUTION COMPANY'S
    15     PEAK DEMAND FOR JUNE 1, 2007, THROUGH MAY 31, 2008.
    16         (2)  BY NOVEMBER 30, 2013, THE COMMISSION SHALL COMPARE
    17     THE TOTAL COSTS OF ENERGY EFFICIENCY AND CONSERVATION PLANS
    18     IMPLEMENTED UNDER THIS SECTION TO THE TOTAL SAVINGS IN ENERGY
    19     AND CAPACITY COSTS TO RETAIL CUSTOMERS IN THIS COMMONWEALTH
    20     OR OTHER COSTS DETERMINED BY THE COMMISSION. IF THE
    21     COMMISSION DETERMINES THAT THE BENEFITS OF THE PLANS EXCEED
    22     THE COSTS, THE COMMISSION SHALL SET ADDITIONAL INCREMENTAL
    23     REQUIREMENTS FOR REDUCTION IN PEAK DEMAND FOR THE 100 HOURS
    24     OF GREATEST DEMAND OR AN ALTERNATIVE REDUCTION APPROVED BY
    25     THE COMMISSION. REDUCTIONS IN DEMAND SHALL BE MEASURED FROM
    26     THE ELECTRIC DISTRIBUTION COMPANY'S PEAK DEMAND FOR THE
    27     PERIOD FROM JUNE 1, 2011, THROUGH MAY 31, 2012. THE
    28     REDUCTIONS IN CONSUMPTION REQUIRED BY THE COMMISSION SHALL BE
    29     ACCOMPLISHED NO LATER THAN MAY 31, 2017.
    30     (E)  COMMISSION APPROVAL.--
    20080H2200B4526                 - 56 -     

     1         (1)  THE COMMISSION SHALL CONDUCT A PUBLIC HEARING ON
     2     EACH PLAN AND ALLOW FOR THE SUBMISSION OF RECOMMENDATIONS BY
     3     THE OFFICE OF CONSUMER ADVOCATE AND THE OFFICE OF SMALL
     4     BUSINESS ADVOCATE AND BY MEMBERS OF THE PUBLIC AS TO HOW THE
     5     ELECTRIC DISTRIBUTION COMPANY COULD IMPROVE ITS PLAN OR
     6     EXCEED THE REQUIRED REDUCTIONS IN CONSUMPTION UNDER
     7     SUBSECTIONS (C) AND (D).
     8         (2)  THE COMMISSION SHALL APPROVE OR DISAPPROVE A PLAN
     9     FILED UNDER SUBSECTION (B) WITHIN 120 DAYS OF SUBMISSION. THE
    10     FOLLOWING SHALL APPLY TO AN ORDER DISAPPROVING A PLAN:
    11             (I)  THE COMMISSION SHALL DESCRIBE IN DETAIL THE
    12         REASONS FOR THE DISAPPROVAL.
    13             (II)  THE ELECTRIC DISTRIBUTION COMPANY SHALL HAVE 60
    14         DAYS TO FILE A REVISED PLAN TO ADDRESS THE DEFICIENCIES
    15         IDENTIFIED BY THE COMMISSION. THE REVISED PLAN SHALL BE
    16         APPROVED OR DISAPPROVED BY THE COMMISSION WITHIN 60 DAYS.
    17     (F)  PENALTIES.--
    18         (1)  THE FOLLOWING SHALL APPLY FOR FAILURE TO SUBMIT A
    19     PLAN:
    20             (I)  AN ELECTRIC DISTRIBUTION COMPANY THAT FAILS TO
    21         FILE A PLAN UNDER SUBSECTION (B) SHALL BE SUBJECT TO A
    22         CIVIL PENALTY OF $100,000 PER DAY UNTIL THE PLAN IS
    23         FILED.
    24             (II)  AN ELECTRIC DISTRIBUTION COMPANY THAT FAILS TO
    25         FILE A REVISED PLAN UNDER SUBSECTION (E)(2)(II) SHALL BE
    26         SUBJECT TO A CIVIL PENALTY OF $100,000 PER DAY UNTIL THE
    27         PLAN IS FILED.
    28             (III)  PENALTIES COLLECTED UNDER THIS PARAGRAPH SHALL
    29         BE DEPOSITED IN THE LOW-INCOME ELECTRIC CUSTOMER
    30         ASSISTANCE PROGRAM OF THE ENERGY DISTRIBUTION COMPANY FOR
    20080H2200B4526                 - 57 -     

     1         THE RESPECTIVE SERVICE TERRITORY.
     2         (2)  THE FOLLOWING SHALL APPLY TO AN ELECTRIC
     3     DISTRIBUTION COMPANY THAT FAILS TO ACHIEVE THE REDUCTIONS IN
     4     CONSUMPTION REQUIRED UNDER SUBSECTION (C) OR (D):
     5             (I)  THE ELECTRIC DISTRIBUTION COMPANY SHALL BE
     6         SUBJECT TO A CIVIL PENALTY NOT LESS THAN $1,000,000 AND
     7         NOT TO EXCEED $20,000,000 FOR FAILURE TO ACHIEVE THE
     8         REQUIRED REDUCTIONS IN CONSUMPTION UNDER SUBSECTION (C)
     9         OR (D). ANY PENALTY PAID BY AN ELECTRIC DISTRIBUTION
    10         COMPANY UNDER THIS SUBPARAGRAPH SHALL NOT BE RECOVERABLE
    11         FROM RATEPAYERS.
    12             (II)  IF AN ELECTRIC DISTRIBUTION COMPANY FAILS TO
    13         ACHIEVE THE REQUIRED REDUCTIONS IN CONSUMPTION UNDER
    14         SUBSECTION (C) OR (D), RESPONSIBILITY TO ACHIEVE THE
    15         REDUCTIONS IN CONSUMPTION SHALL BE TRANSFERRED TO THE
    16         COMMISSION. THE COMMISSION SHALL DO ALL OF THE FOLLOWING:
    17                 (A)  IMPLEMENT A PLAN TO ACHIEVE THE REQUIRED
    18             REDUCTIONS IN CONSUMPTION UNDER SUBSECTION (C) OR
    19             (D).
    20                 (B)  CONTRACT WITH CONSERVATION SERVICE PROVIDERS
    21             AS NECESSARY TO IMPLEMENT ANY PORTION OF THE PLAN.
    22     (G)  LIMITATION ON COSTS.--THE TOTAL COST OF ANY PLAN
    23  REQUIRED UNDER THIS SECTION SHALL NOT EXCEED 2% OF THE ELECTRIC
    24  DISTRIBUTION COMPANY'S TOTAL ANNUAL REVENUE AS OF DECEMBER 31,
    25  2006. THE PROVISIONS OF THIS PARAGRAPH SHALL NOT APPLY TO THE
    26  COST OF LOW-INCOME USAGE REDUCTION PROGRAMS ESTABLISHED UNDER 52
    27  PA. CODE CH. 58 (RELATING TO RESIDENTIAL LOW INCOME USAGE
    28  REDUCTION PROGRAMS).
    29     (H)  COSTS.--THE COMMISSION SHALL RECOVER FROM ELECTRIC
    30  DISTRIBUTION COMPANIES THE COSTS OF IMPLEMENTING THE PROGRAM
    20080H2200B4526                 - 58 -     

     1  ESTABLISHED UNDER THIS SECTION.
     2     (I)  REPORT.--THE FOLLOWING SHALL APPLY:
     3         (1)  EACH ELECTRIC DISTRIBUTION COMPANY SHALL SUBMIT AN
     4     ANNUAL REPORT TO THE COMMISSION RELATING TO THE RESULTS OF
     5     THE ENERGY EFFICIENCY AND CONSERVATION PLAN WITHIN EACH
     6     ELECTRIC DISTRIBUTION SERVICE TERRITORY. THE REPORT SHALL
     7     INCLUDE ALL OF THE FOLLOWING:
     8             (I)  DOCUMENTATION OF PROGRAM EXPENDITURES.
     9             (II)  MEASUREMENT AND VERIFICATION OF ENERGY SAVINGS
    10         UNDER THE PLAN.
    11             (III)  EVALUATION OF THE COST-EFFECTIVENESS OF
    12         EXPENDITURES.
    13             (IV)  ANY OTHER INFORMATION REQUIRED BY THE
    14         COMMISSION.
    15         (2)  BEGINNING FIVE YEARS FOLLOWING THE EFFECTIVE DATE OF
    16     THIS SECTION AND ANNUALLY THEREAFTER, THE COMMISSION SHALL
    17     SUBMIT A REPORT TO THE CONSUMER PROTECTION AND PROFESSIONAL
    18     LICENSURE COMMITTEE OF THE SENATE AND THE CONSUMER AFFAIRS
    19     COMMITTEE OF THE HOUSE OF REPRESENTATIVES.
    20     (J)  EXISTING FUNDING SOURCES.--EACH ELECTRIC DISTRIBUTION
    21  COMPANY SHALL, UPON REQUEST BY ANY PERSON, PROVIDE A LIST OF ALL
    22  ELIGIBLE FEDERAL AND STATE FUNDING PROGRAMS AVAILABLE TO
    23  RATEPAYERS FOR ENERGY EFFICIENCY AND CONSERVATION. THE LIST
    24  SHALL BE POSTED ON THE ELECTRIC DISTRIBUTION COMPANY'S INTERNET
    25  WEBSITE.
    26     (K)  RECOVERY.--
    27         (1)  AN ELECTRIC DISTRIBUTION COMPANY SHALL RECOVER ON A
    28     FULL AND CURRENT BASIS FROM CUSTOMERS, THROUGH A RECONCILABLE
    29     ADJUSTMENT CLAUSE UNDER SECTION 1307, ALL REASONABLE AND
    30     PRUDENT COSTS INCURRED IN THE PROVISION OR MANAGEMENT OF A
    20080H2200B4526                 - 59 -     

     1     PLAN PROVIDED UNDER THIS SECTION. THIS PARAGRAPH SHALL APPLY
     2     TO ALL ELECTRIC DISTRIBUTION COMPANIES, INCLUDING ELECTRIC
     3     DISTRIBUTION COMPANIES SUBJECT TO GENERATION OR OTHER RATE
     4     CAPS.
     5         (2)  EXCEPT AS SET FORTH IN PARAGRAPH (3), DECREASED
     6     REVENUES OF AN ELECTRIC DISTRIBUTION COMPANY DUE TO REDUCED
     7     ENERGY CONSUMPTION OR CHANGES IN ENERGY DEMAND SHALL NOT BE A
     8     RECOVERABLE COST UNDER A RECONCILABLE AUTOMATIC ADJUSTMENT
     9     CLAUSE.
    10         (3)  DECREASED REVENUE AND REDUCED ENERGY CONSUMPTION MAY
    11     BE REFLECTED IN REVENUE AND SALES DATA USED TO CALCULATE
    12     RATES IN A DISTRIBUTION-BASE RATE PROCEEDING FILED BY AN
    13     ELECTRIC DISTRIBUTION COMPANY UNDER SECTION 1308 (RELATING TO
    14     VOLUNTARY CHANGES IN RATES).
    15     (L)  APPLICABILITY.--THIS SECTION SHALL NOT APPLY TO AN
    16  ELECTRIC DISTRIBUTION COMPANY WITH FEWER THAN 100,000 CUSTOMERS.
    17     (M)  DEFINITIONS.--AS USED IN THIS SECTION, THE FOLLOWING
    18  WORDS AND PHRASES SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS
    19  SUBSECTION:
    20     "CONSERVATION SERVICE PROVIDER."  AN ENTITY THAT PROVIDES
    21  INFORMATION AND TECHNICAL ASSISTANCE ON MEASURES TO ENABLE A
    22  PERSON TO INCREASE ENERGY EFFICIENCY OR REDUCE ENERGY
    23  CONSUMPTION AND THAT HAS NO DIRECT OR INDIRECT OWNERSHIP,
    24  PARTNERSHIP OR OTHER AFFILIATED INTEREST WITH AN ELECTRIC
    25  DISTRIBUTION COMPANY.
    26     "ELECTRIC DISTRIBUTION COMPANY TOTAL ANNUAL REVENUE."
    27  AMOUNTS PAID TO THE ELECTRIC DISTRIBUTION COMPANY FOR
    28  GENERATION, TRANSMISSION, DISTRIBUTION AND SURCHARGES BY RETAIL
    29  CUSTOMERS.
    30     "ENERGY EFFICIENCY AND CONSERVATION MEASURES."
    20080H2200B4526                 - 60 -     

     1         (1)  TECHNOLOGIES, MANAGEMENT PRACTICES OR OTHER MEASURES
     2     EMPLOYED BY RETAIL CUSTOMERS THAT REDUCE ELECTRICITY
     3     CONSUMPTION OR DEMAND IF ALL OF THE FOLLOWING APPLY:
     4             (I)  THE TECHNOLOGY, PRACTICE OR OTHER MEASURE IS
     5         INSTALLED ON OR AFTER THE EFFECTIVE DATE OF THIS SECTION
     6         AT THE LOCATION OF A RETAIL CUSTOMER.
     7             (II)  THE TECHNOLOGY, PRACTICE OR OTHER MEASURE
     8         REDUCES CONSUMPTION OF ENERGY OR PEAK LOAD BY THE RETAIL
     9         CUSTOMER.
    10             (III)  THE COST OF THE ACQUISITION OR INSTALLATION OF
    11         THE MEASURE IS DIRECTLY INCURRED IN WHOLE OR IN PART BY
    12         THE ELECTRIC DISTRIBUTION COMPANY.
    13         (2)  ENERGY EFFICIENCY AND CONSERVATION MEASURES SHALL
    14     INCLUDE SOLAR OR SOLAR PHOTOVOLTAIC PANELS, ENERGY EFFICIENT
    15     WINDOWS AND DOORS, ENERGY EFFICIENT LIGHTING, INCLUDING EXIT
    16     SIGN RETROFIT, HIGH BAY FLUORESCENT RETROFIT AND PEDESTRIAN
    17     AND TRAFFIC SIGNAL CONVERSION, GEOTHERMAL HEATING,
    18     INSULATION, AIR SEALING, REFLECTIVE ROOF COATINGS, ENERGY
    19     EFFICIENT HEATING AND COOLING EQUIPMENT OR SYSTEMS AND ENERGY
    20     EFFICIENT APPLIANCES AND OTHER TECHNOLOGIES, PRACTICES OR
    21     MEASURES APPROVED BY THE COMMISSION.
    22     "PEAK DEMAND."  THE HIGHEST ELECTRICAL REQUIREMENT OCCURRING
    23  DURING A SPECIFIED PERIOD. FOR AN ELECTRIC DISTRIBUTION COMPANY,
    24  THE TERM SHALL MEAN THE SUM OF THE METERED CONSUMPTION FOR ALL
    25  RETAIL CUSTOMERS OVER THAT PERIOD.
    26     "QUALITY ASSURANCE."  ALL OF THE FOLLOWING:
    27         (1)  THE AUDITING OF BUILDINGS, EQUIPMENT AND PROCESSES
    28     TO DETERMINE THE COST-EFFECTIVENESS OF ENERGY EFFICIENCY AND
    29     CONSERVATION MEASURES USING NATIONALLY RECOGNIZED TOOLS AND
    30     CERTIFICATION PROGRAMS.
    20080H2200B4526                 - 61 -     

     1         (2)  INDEPENDENT INSPECTION OF COMPLETED ENERGY
     2     EFFICIENCY AND CONSERVATION MEASURES COMPLETED BY THIRD-PARTY
     3     ENTITIES TO EVALUATE THE QUALITY OF THE COMPLETED MEASURE.
     4     "REAL-TIME PRICE."  A RATE THAT DIRECTLY REFLECTS THE
     5  DIFFERENT COST OF ENERGY DURING EACH HOUR.
     6     "TIME-OF-USE RATE."  A RATE THAT REFLECTS THE COSTS OF
     7  SERVING CUSTOMERS DURING DIFFERENT TIME PERIODS, INCLUDING OFF-
     8  PEAK AND ON-PEAK PERIODS, BUT NOT AS FREQUENTLY AS EACH HOUR.
     9     "TOTAL RESOURCE COST TEST."  A STANDARD TEST THAT IS MET IF,
    10  OVER THE EFFECTIVE LIFE OF EACH PLAN NOT TO EXCEED 15 YEARS, THE
    11  NET PRESENT VALUE OF THE AVOIDED MONETARY COST OF SUPPLYING
    12  ELECTRICITY IS GREATER THAN THE NET PRESENT VALUE OF THE
    13  MONETARY COST OF ENERGY EFFICIENCY CONSERVATION MEASURES.
    14  § 2806.2.  ENERGY EFFICIENCY AND CONSERVATION.
    15     (A)  REGISTRY.--THE COMMISSION SHALL, BY MARCH 1, 2009,
    16  ESTABLISH A REGISTRY OF APPROVED PERSONS QUALIFIED TO PROVIDE
    17  CONSERVATION SERVICES TO ALL CLASSES OF CUSTOMERS. IN ORDER TO
    18  BE INCLUDED IN THE REGISTRY, A CONSERVATION SERVICE PROVIDER
    19  MUST MEET EXPERIENCE AND OTHER QUALIFICATIONS DETERMINED BY THE
    20  COMMISSION.
    21     (B)  APPLICATION.--THE COMMISSION SHALL DEVELOP AN
    22  APPLICATION FOR REGISTRATION UNDER SUBSECTION (A) AND MAY CHARGE
    23  A REASONABLE REGISTRATION FEE.
    24     SECTION 3.  SECTION 2807(E) OF TITLE 66 IS AMENDED AND THE
    25  SECTION IS AMENDED BY ADDING SUBSECTIONS TO READ:
    26  § 2807.  DUTIES OF ELECTRIC DISTRIBUTION COMPANIES.
    27     * * *
    28     (E)  OBLIGATION TO SERVE.--[AN ELECTRIC DISTRIBUTION
    29  COMPANY'S] A DEFAULT SERVICE PROVIDER'S OBLIGATION TO PROVIDE
    30  ELECTRIC GENERATION SUPPLY SERVICE FOLLOWING [IMPLEMENTATION OF
    20080H2200B4526                 - 62 -     

     1  RESTRUCTURING AND THE CHOICE OF ALTERNATIVE GENERATION BY A
     2  CUSTOMER] THE EXPIRATION OF A GENERATION RATE CAP SPECIFIED
     3  UNDER SECTION 2804(4) (RELATING TO STANDARDS FOR RESTRUCTURING
     4  OF ELECTRIC INDUSTRY) OR A RESTRUCTURING PLAN UNDER SECTION
     5  2806(F) (RELATING TO IMPLEMENTATION, PILOT PROGRAMS AND
     6  PERFORMANCE-BASED RATES) IS REVISED AS FOLLOWS:
     7         (1)  WHILE AN ELECTRIC DISTRIBUTION COMPANY COLLECTS
     8     EITHER A COMPETITIVE TRANSITION CHARGE OR AN INTANGIBLE
     9     TRANSITION CHARGE OR UNTIL 100% OF ITS CUSTOMERS HAVE CHOICE,
    10     WHICHEVER IS LONGER, THE ELECTRIC DISTRIBUTION COMPANY SHALL
    11     CONTINUE TO HAVE THE FULL OBLIGATION TO SERVE, INCLUDING THE
    12     CONNECTION OF CUSTOMERS, THE DELIVERY OF ELECTRIC ENERGY AND
    13     THE PRODUCTION OR ACQUISITION OF ELECTRIC ENERGY FOR
    14     CUSTOMERS.
    15         [(2)  AT THE END OF THE TRANSITION PERIOD, THE COMMISSION
    16     SHALL PROMULGATE REGULATIONS TO DEFINE THE ELECTRIC
    17     DISTRIBUTION COMPANY'S OBLIGATION TO CONNECT AND DELIVER AND
    18     ACQUIRE ELECTRICITY UNDER PARAGRAPH (3) THAT WILL EXIST AT
    19     THE END OF THE PHASE-IN PERIOD.
    20         (3)  IF A CUSTOMER CONTRACTS FOR ELECTRIC ENERGY AND IT
    21     IS NOT DELIVERED OR IF A CUSTOMER DOES NOT CHOOSE AN
    22     ALTERNATIVE ELECTRIC GENERATION SUPPLIER, THE ELECTRIC
    23     DISTRIBUTION COMPANY OR COMMISSION-APPROVED ALTERNATIVE
    24     SUPPLIER SHALL ACQUIRE ELECTRIC ENERGY AT PREVAILING MARKET
    25     PRICES TO SERVE THAT CUSTOMER AND SHALL RECOVER FULLY ALL
    26     REASONABLE COSTS.]
    27         (3.1)  FOLLOWING THE EXPIRATION OF AN ELECTRIC
    28     DISTRIBUTION COMPANY'S OBLIGATION TO PROVIDE ELECTRIC
    29     GENERATION SUPPLY SERVICE TO RETAIL CUSTOMERS AT CAPPED
    30     RATES, IF A CUSTOMER CONTRACTS FOR ELECTRIC GENERATION SUPPLY
    20080H2200B4526                 - 63 -     

     1     SERVICE AND THE CHOSEN ELECTRIC GENERATION SUPPLIER DOES NOT
     2     PROVIDE THE SERVICE OR IF A CUSTOMER DOES NOT CHOOSE AN
     3     ALTERNATIVE ELECTRIC GENERATION SUPPLIER, THE DEFAULT SERVICE
     4     PROVIDER SHALL PROVIDE ELECTRIC GENERATION SUPPLY SERVICE TO
     5     THAT CUSTOMER PURSUANT TO A COMMISSION-APPROVED COMPETITIVE
     6     PROCUREMENT PLAN. THE ELECTRIC POWER ACQUIRED SHALL BE
     7     PROCURED THROUGH COMPETITIVE PROCUREMENT PROCESSES AND SHALL
     8     INCLUDE ONE OR MORE OF THE FOLLOWING:
     9             (I)  AUCTIONS.
    10             (II)  REQUESTS FOR PROPOSAL.
    11             (III)  BILATERAL AGREEMENTS ENTERED INTO AT THE SOLE
    12         DISCRETION OF THE DEFAULT SERVICE PROVIDER WHICH SHALL BE
    13         AT PRICES WHICH ARE:
    14                 (A)  NO GREATER THAN THE COST OF OBTAINING
    15             GENERATION UNDER COMPARABLE TERMS IN THE WHOLESALE
    16             MARKET, AS DETERMINED BY THE COMMISSION AT THE TIME
    17             OF EXECUTION OF THE CONTRACT; OR
    18                 (B)  CONSISTENT WITH A COMMISSION-APPROVED
    19             COMPETITION PROCUREMENT PROCESS. ANY AGREEMENT
    20             BETWEEN AFFILIATED PARTIES SHALL BE SUBJECT TO REVIEW
    21             AND APPROVAL OF THE PENNSYLVANIA PUBLIC UTILITY
    22             COMMISSION UNDER CHAPTER 21 (RELATING TO RELATIONS
    23             WITH AFFILIATED INTERESTS). IN NO CASE SHALL THE COST
    24             OF OBTAINING GENERATION FROM ANY AFFILIATED INTEREST
    25             BE GREATER THAN THE COST OF OBTAINING GENERATION
    26             UNDER COMPARABLE TERMS IN THE WHOLESALE MARKET AT THE
    27             TIME OF EXECUTION OF THE CONTRACT.
    28         (3.2)  THE ELECTRIC POWER PROCURED PURSUANT TO PARAGRAPH
    29     (3.1) SHALL INCLUDE A PRUDENT MIX OF THE FOLLOWING:
    30             (I)  SPOT MARKET PURCHASES.
    20080H2200B4526                 - 64 -     

     1             (II)  SHORT-TERM CONTRACTS.
     2             (III)  LONG-TERM PURCHASE CONTRACTS, ENTERED INTO AS
     3         A RESULT OF AN AUCTION, REQUEST FOR PROPOSAL OR BILATERAL
     4         CONTRACT THAT IS FREE OF UNDUE INFLUENCE, DURESS OR
     5         FAVORITISM, OF MORE THAN FOUR AND NOT MORE THAN 20 YEARS.
     6         THE DEFAULT SERVICE PROVIDER SHALL HAVE SOLE DISCRETION
     7         TO DETERMINE THE SOURCE AND FUEL TYPE. LONG-TERM PURCHASE
     8         CONTRACTS UNDER THIS SUBPARAGRAPH MAY NOT CONSTITUTE MORE
     9         THAN 25% OF THE DEFAULT SERVICE PROVIDER'S PROJECTED
    10         DEFAULT SERVICE LOAD UNLESS THE COMMISSION, AFTER A
    11         HEARING, DETERMINES FOR GOOD CAUSE THAT A GREATER PORTION
    12         OF LOAD IS NECESSARY TO ACHIEVE LEAST COST PROCUREMENT.
    13         THIS SUBPARAGRAPH SHALL NOT APPLY TO CONTRACTS EXECUTED
    14         UNDER PARAGRAPH (5).
    15         (3.3)  THE COMMISSION MAY DETERMINE THAT A CONTRACT IS
    16     REQUIRED TO BE EXTENDED FOR A LONGER TERM OF UP TO 20 YEARS,
    17     IF THE EXTENSION IS NECESSARY TO ENSURE ADEQUATE AND RELIABLE
    18     SERVICE AT LEAST COST TO CUSTOMERS OVER TIME.
    19         (3.4)  THE PRUDENT MIX OF CONTRACTS ENTERED INTO PURSUANT
    20     TO PARAGRAPHS (3.2) AND (3.3) SHALL BE DESIGNED TO ENSURE:
    21             (I)  ADEQUATE AND RELIABLE SERVICE.
    22             (II)  THE LEAST COST TO CUSTOMERS OVER TIME.
    23             (III)  COMPLIANCE WITH THE REQUIREMENTS OF PARAGRAPH
    24         (3.1).
    25         (3.5)  EXCEPT AS SET FORTH IN PARAGRAPH (5)(II), THE
    26     PROVISIONS OF THIS SECTION SHALL APPLY TO ANY TYPE OF ENERGY
    27     PURCHASED BY A DEFAULT SERVICE PROVIDER TO PROVIDE ELECTRIC
    28     GENERATION SUPPLY SERVICE, INCLUDING ENERGY OR ALTERNATIVE
    29     ENERGY PORTFOLIO STANDARDS CREDITS REQUIRED TO BE PURCHASED
    30     UNDER THE ACT OF NOVEMBER 30, 2004 (P.L.1672, NO.213), KNOWN
    20080H2200B4526                 - 65 -     

     1     AS THE ALTERNATIVE ENERGY PORTFOLIO STANDARDS ACT. THE
     2     COMMISSION SHALL APPLY PARAGRAPH (3.4) TO COMPARABLE TYPES OF
     3     ENERGY SOURCES.
     4         (3.6)  THE DEFAULT SERVICE PROVIDER SHALL FILE A PLAN FOR
     5     COMPETITIVE PROCUREMENT WITH THE COMMISSION AND OBTAIN
     6     COMMISSION APPROVAL OF THE PLAN CONSIDERING THE STANDARDS IN
     7     PARAGRAPHS (3.1), (3.2), (3.3) AND (3.4) BEFORE THE
     8     COMPETITIVE PROCESS IS IMPLEMENTED. THE COMMISSION SHALL HOLD
     9     HEARINGS AS NECESSARY ON THE PROPOSED PLAN. IF THE COMMISSION
    10     FAILS TO ISSUE A FINAL ORDER ON THE PLAN WITHIN NINE MONTHS
    11     OF THE DATE THAT THE PLAN IS FILED, THE PLAN SHALL BE DEEMED
    12     TO BE APPROVED AND THE DEFAULT SERVICE PROVIDER MAY IMPLEMENT
    13     THE PLAN AS FILED. COSTS INCURRED THROUGH AN APPROVED
    14     COMPETITIVE PROCUREMENT PLAN SHALL BE DEEMED TO BE THE LEAST
    15     COST OVER TIME AS REQUIRED UNDER PARAGRAPH (3.4)(II).
    16         (3.7)  AT THE TIME THE COMMISSION EVALUATES THE PLAN AND
    17     PRIOR TO APPROVAL, IN DETERMINING IF THE DEFAULT ELECTRIC
    18     SERVICE PROVIDER'S PLAN OBTAINS GENERATION SUPPLY AT THE
    19     LEAST COST, THE COMMISSION SHALL CONSIDER THE DEFAULT SERVICE
    20     PROVIDER'S OBLIGATION TO PROVIDE ADEQUATE AND RELIABLE
    21     SERVICE TO CUSTOMERS AND THAT THE DEFAULT SERVICE PROVIDER
    22     HAS OBTAINED A PRUDENT MIX OF CONTRACTS TO OBTAIN LEAST COST
    23     ON A LONG-TERM, SHORT-TERM AND SPOT MARKET BASIS AND SHALL
    24     MAKE SPECIFIC FINDINGS WHICH SHALL INCLUDE THE FOLLOWING:
    25             (I)  THE DEFAULT SERVICE PROVIDER'S PLAN INCLUDES
    26         PRUDENT STEPS NECESSARY TO NEGOTIATE FAVORABLE GENERATION
    27         SUPPLY CONTRACTS.
    28             (II)  THE DEFAULT SERVICE PROVIDER'S PLAN INCLUDES
    29         PRUDENT STEPS NECESSARY TO OBTAIN LEAST COST GENERATION
    30         SUPPLY CONTRACTS ON A LONG-TERM, SHORT-TERM AND SPOT
    20080H2200B4526                 - 66 -     

     1         MARKET BASIS.
     2             (III)  NEITHER THE DEFAULT SERVICE PROVIDER NOR ITS
     3         AFFILIATED INTEREST HAS WITHHELD FROM THE MARKET ANY
     4         GENERATION SUPPLY IN A MANNER THAT VIOLATES FEDERAL LAW.
     5         (3.8)  NOTWITHSTANDING SECTIONS 508 (RELATING TO POWER OF
     6     COMMISSION TO VARY, REFORM AND REVISE CONTRACTS) AND 2102
     7     (RELATING TO APPROVAL OF CONTRACTS WITH AFFILIATED
     8     INTERESTS), THE COMMISSION MAY MODIFY CONTRACTS OR DISALLOW
     9     COSTS ONLY WHEN THE PARTY SEEKING RECOVERY OF THE COSTS OF A
    10     PROCUREMENT PLAN IS, AFTER HEARING, FOUND TO BE AT FAULT FOR
    11     THE FOLLOWING:
    12             (I)  NOT COMPLYING WITH THE COMMISSION-APPROVED
    13         PROCUREMENT PLAN; OR
    14             (II)  THE COMMISSION OF FRAUD, COLLUSION OR MARKET
    15         MANIPULATION WITH REGARD TO THESE CONTRACTS.
    16         (3.9)  THE DEFAULT SERVICE PROVIDER SHALL HAVE THE RIGHT
    17     TO RECOVER ON A FULL AND CURRENT BASIS, PURSUANT TO A
    18     RECONCILABLE AUTOMATIC ADJUSTMENT CLAUSE UNDER SECTION 1307
    19     (RELATING TO SLIDING SCALE OF RATES; ADJUSTMENTS), ALL
    20     REASONABLE COSTS INCURRED UNDER THIS SECTION AND A
    21     COMMISSION-APPROVED COMPETITIVE PROCUREMENT PLAN.
    22         (4)  IF A CUSTOMER THAT CHOOSES AN ALTERNATIVE SUPPLIER
    23     AND SUBSEQUENTLY DESIRES TO RETURN TO THE LOCAL DISTRIBUTION
    24     COMPANY FOR GENERATION SERVICE, THE LOCAL DISTRIBUTION
    25     COMPANY SHALL TREAT THAT CUSTOMER EXACTLY AS IT WOULD ANY NEW
    26     APPLICANT FOR ENERGY SERVICE.
    27         (5)  (I)  NOTWITHSTANDING PARAGRAPH [(3)] (3.1), THE
    28         ELECTRIC DISTRIBUTION COMPANY OR COMMISSION-APPROVED
    29         ALTERNATIVE SUPPLIER MAY, IN ITS SOLE DISCRETION, OFFER
    30         LARGE CUSTOMERS WITH A PEAK DEMAND OF 15 MEGAWATTS OR
    20080H2200B4526                 - 67 -     

     1         GREATER AT ONE METER AT A LOCATION IN ITS SERVICE
     2         TERRITORY ANY NEGOTIATED RATE FOR SERVICE AT ALL OF THE
     3         CUSTOMERS' LOCATIONS WITHIN THE SERVICE TERRITORY FOR ANY
     4         DURATION AGREED UPON BY THE ELECTRIC DISTRIBUTION COMPANY
     5         OR COMMISSION-APPROVED ALTERNATIVE SUPPLIER AND THE LARGE
     6         CUSTOMER. THE COMMISSION SHALL PERMIT, BUT SHALL NOT
     7         REQUIRE, AN ELECTRIC DISTRIBUTION COMPANY OR COMMISSION-
     8         APPROVED ALTERNATIVE SUPPLIER TO PROVIDE SERVICE TO LARGE
     9         CUSTOMERS UNDER THIS PARAGRAPH. CONTRACT RATES ENTERED
    10         INTO UNDER THIS PARAGRAPH SHALL BE SUBJECT TO REVIEW BY
    11         THE COMMISSION IN ORDER TO ENSURE THAT ALL COSTS RELATED
    12         TO THE RATES ARE BORNE BY THE PARTIES TO THE CONTRACT AND
    13         THAT NO COSTS RELATED TO THE RATES ARE BORNE BY OTHER
    14         CUSTOMERS OR CUSTOMER CLASSES. IF NO COSTS RELATED TO THE
    15         RATES ARE BORNE BY OTHER CUSTOMERS OR CUSTOMER CLASSES,
    16         THE COMMISSION SHALL APPROVE THE CONTRACT WITHIN 90 DAYS
    17         OF ITS FILING, OR IT SHALL BE DEEMED APPROVED BY
    18         OPERATION OF LAW UPON EXPIRATION OF THE 90 DAYS.
    19         INFORMATION SUBMITTED UNDER THIS PARAGRAPH SHALL BE
    20         SUBJECT TO THE COMMISSION'S PROCEDURES FOR THE FILING OF
    21         CONFIDENTIAL AND PROPRIETARY INFORMATION.
    22             (II)  FOR PURPOSES OF PROVIDING SERVICE UNDER THIS
    23         PARAGRAPH TO CUSTOMERS WITH A PEAK DEMAND OF 20 MEGAWATTS
    24         OR GREATER AT ONE METER AT A LOCATION WITHIN THAT
    25         DISTRIBUTION COMPANY'S SERVICE TERRITORY, AN ELECTRIC
    26         DISTRIBUTION COMPANY THAT HAS COMPLETED ITS RESTRUCTURING
    27         TRANSITION PERIOD AS OF THE EFFECTIVE DATE OF THIS
    28         PARAGRAPH MAY, IN ITS SOLE DISCRETION, ACQUIRE AN
    29         INTEREST IN A GENERATION FACILITY OR CONSTRUCT A
    30         GENERATION FACILITY SPECIFICALLY TO MEET THE ENERGY
    20080H2200B4526                 - 68 -     

     1         REQUIREMENTS OF THE CUSTOMERS, INCLUDING THE ELECTRIC
     2         REQUIREMENTS OF THE CUSTOMERS' OTHER BILLING LOCATIONS
     3         WITHIN ITS SERVICE TERRITORY. THE ELECTRIC DISTRIBUTION
     4         COMPANY MUST COMMENCE CONSTRUCTION OF THE GENERATION
     5         FACILITY OR CONTRACT TO ACQUIRE THE GENERATION INTEREST
     6         WITHIN THREE YEARS AFTER THE EFFECTIVE DATE OF THIS
     7         PARAGRAPH, EXCEPT THAT THE ELECTRIC DISTRIBUTION COMPANY
     8         MAY ADD TO THE GENERATION FACILITIES IT COMMENCED
     9         CONSTRUCTION OR CONTRACTED TO ACQUIRE AFTER THIS THREE-
    10         YEAR PERIOD TO SERVE ADDITIONAL LOAD OF CUSTOMERS FOR
    11         WHOM IT COMMENCED CONSTRUCTION OR CONTRACTED TO ACQUIRE
    12         GENERATION WITHIN THREE YEARS. NOTHING IN THIS PARAGRAPH
    13         REQUIRES OR AUTHORIZES THE COMMISSION TO REQUIRE AN
    14         ELECTRIC DISTRIBUTION COMPANY TO COMMENCE CONSTRUCTION OR
    15         ACQUIRE AN INTEREST IN A GENERATION FACILITY. THE
    16         ELECTRIC DISTRIBUTION COMPANY'S INTEREST IN THE
    17         GENERATION FACILITY IT BUILT OR CONTRACTED TO ACQUIRE
    18         SHALL BE NO LARGER THAN NECESSARY TO MEET PEAK DEMAND OF
    19         CUSTOMERS SERVED UNDER THIS SUBPARAGRAPH. DURING TIMES
    20         WHEN THE CUSTOMER'S DEMAND IS LESS THAN THE ELECTRIC
    21         DISTRIBUTION COMPANY'S GENERATION INTEREST, THE ELECTRIC
    22         DISTRIBUTION COMPANY MAY SELL EXCESS POWER ON THE
    23         WHOLESALE MARKET. AT NO TIME SHALL THE COSTS ASSOCIATED
    24         WITH THE GENERATING FACILITY INTERESTS BE INCLUDED IN
    25         RATE BASE OR OTHERWISE REFLECTED IN RATES. THE GENERATION
    26         FACILITY INTERESTS SHALL NOT BE COMMISSION-REGULATED
    27         ASSETS.
    28         (6)  A DEFAULT SERVICE PLAN APPROVED BY THE COMMISSION
    29     PRIOR TO THE EFFECTIVE DATE OF THIS SECTION SHALL REMAIN IN
    30     EFFECT THROUGH ITS APPROVED TERM. AT ITS SOLE DISCRETION, THE
    20080H2200B4526                 - 69 -     

     1     DEFAULT SERVICE PROVIDER MAY PROPOSE AMENDMENTS TO ITS
     2     APPROVED PLAN THAT ARE CONSISTENT WITH THIS SECTION, AND THE
     3     COMMISSION SHALL ISSUE A DECISION WHETHER TO APPROVE OR
     4     DISAPPROVE THE PROPOSED AMENDMENTS WITHIN NINE MONTHS OF THE
     5     DATE THAT THE AMENDMENTS ARE FILED. IF THE COMMISSION FAILS
     6     TO ISSUE A FINAL ORDER WITHIN NINE MONTHS, THE AMENDMENTS
     7     SHALL BE DEEMED TO BE APPROVED AND THE DEFAULT SERVICE
     8     PROVIDER MAY IMPLEMENT THE AMENDMENTS AS FILED.
     9         (7)  THE DEFAULT SERVICE PROVIDER SHALL OFFER RESIDENTIAL
    10     AND SMALL BUSINESS CUSTOMERS A GENERATION SUPPLY SERVICE RATE
    11     THAT SHALL CHANGE NO MORE FREQUENTLY THAN ON A QUARTERLY
    12     BASIS. ALL DEFAULT SERVICE RATES SHALL BE REVIEWED BY THE
    13     COMMISSION TO ENSURE THAT THE COSTS OF PROVIDING SERVICE TO
    14     EACH CUSTOMER CLASS ARE NOT SUBSIDIZED BY ANY OTHER CLASS.
    15     (F)  SMART METER TECHNOLOGY AND TIME OF USE RATES.--
    16         (1)  WITHIN NINE MONTHS AFTER THE EFFECTIVE DATE OF THIS
    17     PARAGRAPH, ELECTRIC DISTRIBUTION COMPANIES SHALL FILE A SMART
    18     METER TECHNOLOGY PROCUREMENT AND INSTALLATION PLAN WITH THE
    19     COMMISSION FOR APPROVAL. THE PLAN SHALL DESCRIBE THE SMART
    20     METER TECHNOLOGIES THE ELECTRIC DISTRIBUTION COMPANY PROPOSES
    21     TO INSTALL IN ACCORDANCE WITH PARAGRAPH (2).
    22         (2)  ELECTRIC DISTRIBUTION COMPANIES SHALL FURNISH SMART
    23     METER TECHNOLOGY AS FOLLOWS:
    24             (I)  UPON REQUEST FROM A CUSTOMER THAT AGREES TO PAY
    25         THE COST OF THE SMART METER AT THE TIME OF THE REQUEST.
    26             (II)  IN NEW BUILDING CONSTRUCTION.
    27             (III)  IN ACCORDANCE WITH A DEPRECIATION SCHEDULE NOT
    28         TO EXCEED 15 YEARS.
    29         (3)  ELECTRIC DISTRIBUTION COMPANIES SHALL, WITH CUSTOMER
    30     CONSENT, MAKE AVAILABLE DIRECT METER ACCESS AND ELECTRONIC
    20080H2200B4526                 - 70 -     

     1     ACCESS TO CUSTOMER METER DATA TO THIRD PARTIES, INCLUDING
     2     ELECTRIC GENERATION SUPPLIERS AND PROVIDERS OF CONSERVATION
     3     AND LOAD MANAGEMENT SERVICES.
     4         (4)  IN NO EVENT SHALL LOST OR DECREASED REVENUES BY AN
     5     ELECTRIC DISTRIBUTION COMPANY DUE TO REDUCED ELECTRICITY
     6     CONSUMPTION OR SHIFTING ENERGY DEMAND BE CONSIDERED ANY OF
     7     THE FOLLOWING:
     8             (I)  A COST OF SMART METER TECHNOLOGY RECOVERABLE
     9         UNDER A RECONCILABLE AUTOMATIC ADJUSTMENT CLAUSE UNDER
    10         SECTION 1307(B), EXCEPT THAT DECREASED REVENUES AND
    11         REDUCED ENERGY CONSUMPTION MAY BE REFLECTED IN THE
    12         REVENUE AND SALES DATA USED TO CALCULATE RATES IN A
    13         DISTRIBUTION RATE BASE RATE PROCEEDING FILED UNDER
    14         SECTION 1308 (RELATING TO VOLUNTARY CHANGE IN RATES).
    15             (II)  A RECOVERABLE COST.
    16         (5)  BY JANUARY 1, 2010, OR AT THE END OF THE APPLICABLE
    17     GENERATION RATE CAP PERIOD, WHICHEVER IS LATER, A DEFAULT
    18     SERVICE PROVIDER SHALL SUBMIT TO THE COMMISSION ONE OR MORE
    19     PROPOSED TIME-OF-USE RATES AND REAL-TIME PRICE PLANS. THE
    20     COMMISSION SHALL APPROVE OR MODIFY THE TIME-OF-USE RATES AND
    21     REAL-TIME PRICE PLAN WITHIN SIX MONTHS OF SUBMITTAL. THE
    22     DEFAULT SERVICE PROVIDER SHALL OFFER THE TIME-OF-USE RATES
    23     AND REAL-TIME PRICE PLAN TO ALL CUSTOMERS THAT HAVE BEEN
    24     PROVIDED WITH SMART METER TECHNOLOGY UNDER PARAGRAPH
    25     (2)(III). RESIDENTIAL OR COMMERCIAL CUSTOMERS MAY ELECT TO
    26     PARTICIPATE IN TIME-OF-USE RATES OR REAL-TIME PRICING. THE
    27     DEFAULT SERVICE PROVIDER SHALL SUBMIT AN ANNUAL REPORT TO THE
    28     PRICE PROGRAMS AND THE EFFICACY OF THE PROGRAMS IN AFFECTING
    29     ENERGY DEMAND AND CONSUMPTION AND THE EFFECT ON WHOLESALE
    30     MARKET PRICES.
    20080H2200B4526                 - 71 -     

     1         (6)  THE PROVISIONS OF THIS SUBSECTION SHALL NOT APPLY TO
     2     AN ELECTRIC DISTRIBUTION COMPANY WITH 100,000 OR FEWER
     3     CUSTOMERS.
     4         (7)  AN ELECTRIC DISTRIBUTION COMPANY MAY RECOVER
     5     REASONABLE AND PRUDENT COSTS OF PROVIDING SMART METER
     6     TECHNOLOGY UNDER PARAGRAPH (2)(II) AND (III), AS DETERMINED
     7     BY THE COMMISSION. THIS PARAGRAPH INCLUDES ANNUAL
     8     DEPRECIATION AND CAPITAL COSTS OVER THE LIFE OF THE SMART
     9     METER TECHNOLOGY AND THE COST OF ANY SYSTEM UPGRADES THAT THE
    10     ELECTRIC DISTRIBUTION COMPANY MAY REQUIRE TO ENABLE THE USE
    11     OF THE SMART METER TECHNOLOGY WHICH ARE INCURRED AFTER THE
    12     EFFECTIVE DATE OF THIS PARAGRAPH LESS OPERATING AND CAPITAL
    13     COST SAVINGS REALIZED BY THE ELECTRIC DISTRIBUTION COMPANY
    14     FROM THE INSTALLATION AND USE OF THE SMART METER TECHNOLOGY.
    15     SMART METER TECHNOLOGY SHALL BE DEEMED TO BE A NEW SERVICE
    16     OFFERED FOR THE FIRST TIME UNDER SECTION 2804(4)(VI). AN
    17     ELECTRIC DISTRIBUTION COMPANY MAY RECOVER SMART METER
    18     TECHNOLOGY COSTS:
    19             (I)  THROUGH BASE RATES, INCLUDING A DEFERRAL FOR
    20         FUTURE BASE RATE RECOVERY OF CURRENT BASIS WITH CARRYING
    21         CHARGE AS DETERMINED BY THE COMMISSION; OR
    22             (II)  ON A FULL AND CURRENT BASIS THROUGH A
    23         RECONCILABLE AUTOMATIC ADJUSTMENT CLAUSE UNDER SECTION
    24         1307.
    25     (G)  DEFINITION.--AS USED IN THIS SECTION, THE TERM "SMART
    26  METER TECHNOLOGY" MEANS TECHNOLOGY, INCLUDING METERING
    27  TECHNOLOGY AND NETWORK COMMUNICATIONS TECHNOLOGY CAPABLE OF
    28  BIDIRECTIONAL COMMUNICATION, THAT RECORDS ELECTRICITY USAGE ON
    29  AT LEAST AN HOURLY BASIS, INCLUDING RELATED ELECTRIC
    30  DISTRIBUTION SYSTEM UPGRADES TO ENABLE THE TECHNOLOGY. THE
    20080H2200B4526                 - 72 -     

     1  TECHNOLOGY SHALL PROVIDE CUSTOMERS WITH DIRECT ACCESS TO AND USE
     2  OF PRICE AND CONSUMPTION INFORMATION. THE TECHNOLOGY SHALL ALSO:
     3         (1)  DIRECTLY PROVIDE CUSTOMERS WITH INFORMATION ON THEIR
     4     HOURLY CONSUMPTION.
     5         (2)  ENABLE TIME-OF-USE RATES AND REAL-TIME PRICE
     6     PROGRAMS.
     7         (3)  EFFECTIVELY SUPPORT THE AUTOMATIC CONTROL OF THE
     8     CUSTOMER'S ELECTRICITY CONSUMPTION BY ONE OR MORE OF THE
     9     FOLLOWING AS SELECTED BY THE CUSTOMER:
    10             (I)  THE CUSTOMER;
    11             (II)  THE CUSTOMER'S UTILITY; OR
    12             (III)  A THIRD PARTY ENGAGED BY THE CUSTOMER OR THE
    13         CUSTOMER'S UTILITY.
    14     SECTION 4.  SECTION 2811 OF TITLE 66 IS AMENDED BY ADDING A
    15  SUBSECTION TO READ:
    16  § 2811.  MARKET POWER REMEDIATION.
    17     * * *
    18     (E.1)  MARKET MISCONDUCT.--
    19         (1)  IF AN ELECTRIC DISTRIBUTION COMPANY OR ANY OF ITS
    20     AFFILIATED COMPANIES OR ANY COMPANY THAT AN ELECTRIC
    21     DISTRIBUTION COMPANY HAS PURCHASED GENERATION FROM IS FOUND
    22     GUILTY OF MARKET MANIPULATION, EXERCISING MARKET POWER OR
    23     COLLUSION BY THE FEDERAL ENERGY REGULATORY COMMISSION OR ANY
    24     FEDERAL OR STATE COURT OR, IF AN ELECTRIC DISTRIBUTION
    25     COMPANY OR ANY ONE OF ITS AFFILIATED COMPANIES OR ANY COMPANY
    26     THAT AN ELECTRIC DISTRIBUTION COMPANY HAS PURCHASED
    27     GENERATION FROM SETTLES A CLAIM OF MARKET MANIPULATION,
    28     EXERCISING MARKET POWER OR COLLUSION THAT IS BROUGHT BY A
    29     REGIONAL TRANSMISSION OPERATOR'S MARKET MONITORING UNIT, THE
    30     FEDERAL ENERGY REGULATORY COMMISSION OR ANOTHER ENTITY, THE
    20080H2200B4526                 - 73 -     

     1     COMMISSION:
     2             (I)  SHALL DIRECT THE ELECTRIC DISTRIBUTION COMPANY
     3         TO TAKE ANY AND ALL REASONABLE ACTION TO QUANTIFY THE
     4         EFFECT OF THE MARKET MISCONDUCT UPON PENNSYLVANIA
     5         RATEPAYERS.
     6             (II)  FOLLOWING PUBLIC HEARING ON THE MATTER AND A
     7         FINDING OF PUBLIC INTEREST, MAY DIRECT THE ELECTRIC
     8         DISTRIBUTION COMPANY TO TAKE ANY AND ALL REASONABLE LEGAL
     9         ACTION, INCLUDING THE FILING OF A LAWSUIT AS MAY BE
    10         NECESSARY, TO RECOVER THE QUANTIFIED DAMAGES WHICH SHALL
    11         BE USED TO RECOMPENSE PENNSYLVANIA RATEPAYERS AFFECTED BY
    12         THE MARKET MISCONDUCT.
    13         (2)  IF THE ELECTRIC DISTRIBUTION COMPANY FAILS TO PURSUE
    14     REASONABLE ACTION TO QUANTIFY OR SEEK RECOVERY OF DAMAGES FOR
    15     PENNSYLVANIA RATEPAYERS AFFECTED BY MARKET MANIPULATION, THE
    16     EXERCISE OF MARKET POWER OR COLLUSION, THE COMMISSION IS
    17     AUTHORIZED, FOLLOWING NOTICE AND AN OPPORTUNITY OF THE
    18     ELECTRIC DISTRIBUTION COMPANY TO COMPLY OR CONTEST, TO ASSESS
    19     A CIVIL PENALTY, WHICH SHALL NOT BE RECOVERED IN RATES, OF
    20     NOT MORE THAN $10,000 PER DAY FOR FAILURE OR NEGLECT TO OBEY
    21     AN ORDER OF THE COMMISSION, THE CONTINUANCE OF THE FAILURE OR
    22     NEGLECT BEING A SEPARATE OFFENSE.
    23         (3)  ANY MONETARY DAMAGES RECOVERED BY THE ELECTRIC
    24     DISTRIBUTION COMPANY SHALL BE PAID TO AFFECTED PENNSYLVANIA
    25     RATEPAYERS IN THE FORM OF A CREDIT TO THEIR ELECTRIC BILLS OR
    26     AS REFUNDS.
    27         (4)  THE PROVISIONS OF THIS SUBSECTION SHALL BE HELD TO
    28     BE IN ADDITION TO AND NOT IN SUBSTITUTION FOR OR LIMITATION
    29     OF ANY OTHER PROVISIONS OF THIS TITLE.
    30     * * *
    20080H2200B4526                 - 74 -     

     1     SECTION 5.  TITLE 66 IS AMENDED BY ADDING SECTIONS TO READ:
     2  § 2813.  PROCUREMENT OF POWER.
     3     EXCEPT AS PROVIDED UNDER THE ACT OF NOVEMBER 30, 2004
     4  (P.L.1672, NO.213), KNOWN AS THE ALTERNATIVE ENERGY PORTFOLIO
     5  STANDARDS ACT, THE COMMISSION MAY NOT ORDER A DEFAULT SERVICE
     6  PROVIDER TO PROCURE POWER FROM A SPECIFIC GENERATION SUPPLIER,
     7  FROM A SPECIFIC GENERATION FUEL TYPE OR FROM NEW GENERATION
     8  ONLY.
     9  § 2814.  ADDITIONAL ALTERNATIVE ENERGY SOURCES.
    10     (A)  ALTERNATIVE ENERGY SOURCES.--THE TERM "ALTERNATIVE
    11  ENERGY SOURCES" AS DEFINED UNDER SECTION 2 OF THE ACT OF
    12  NOVEMBER 30, 2004 (P.L.1672, NO.213), KNOWN AS THE ALTERNATIVE
    13  ENERGY PORTFOLIO STANDARDS ACT, SHALL ALSO INCLUDE LOW-IMPACT
    14  HYDROPOWER CONSISTING OF ANY TECHNOLOGY THAT PRODUCES ELECTRIC
    15  POWER AND THAT HARNESSES THE HYDROELECTRIC POTENTIAL OF MOVING
    16  WATER IMPOUNDMENTS IF ONE OF THE FOLLOWING APPLIES:
    17         (1)  (I)  THE HYDROPOWER SOURCE HAS A FEDERAL ENERGY
    18         REGULATORY COMMISSION LICENSED CAPACITY OF 21 MEGAWATTS
    19         OR LESS; AND
    20             (II)  THE LICENSE FOR THE HYDROPOWER SOURCE WAS
    21         ISSUED BY THE FEDERAL ENERGY REGULATORY COMMISSION ON OR
    22         PRIOR TO JANUARY 1, 1984, AND HELD ON JULY 1, 2007, IN
    23         WHOLE OR IN PART BY A MUNICIPALITY LOCATED WHOLLY WITHIN
    24         THIS COMMONWEALTH OR BY AN ELECTRIC COOPERATIVE
    25         INCORPORATED IN THIS COMMONWEALTH.
    26         (2)  THE INCREMENTAL HYDROELECTRIC DEVELOPMENT:
    27             (I)  DOES NOT ADVERSELY CHANGE EXISTING IMPACTS TO
    28         AQUATIC SYSTEMS;
    29             (II)  MEETS THE CERTIFICATION STANDARDS ESTABLISHED
    30         BY THE LOW IMPACT HYDROPOWER INSTITUTE AND AMERICAN
    20080H2200B4526                 - 75 -     

     1         RIVERS, INC., OR THEIR SUCCESSORS;
     2             (III)  PROVIDES AN ADEQUATE WATER FLOW FOR PROTECTION
     3         OF AQUATIC LIFE AND FOR SAFE AND EFFECTIVE FISH PASSAGE;
     4             (IV)  PROTECTS AGAINST EROSION; AND
     5             (V)  PROTECTS CULTURAL AND HISTORIC RESOURCES.
     6     (B)  BIOMASS.--THE TERM "BIOMASS ENERGY" AS DEFINED UNDER
     7  SECTION 2 OF THE ALTERNATIVE ENERGY PORTFOLIO STANDARDS ACT
     8  SHALL ALSO INCLUDE THE GENERATION OF ELECTRICITY UTILIZING BY-
     9  PRODUCTS OF THE PULPING PROCESS AND WOOD MANUFACTURING PROCESS,
    10  INCLUDING BARK, WOOD CHIPS, SAWDUST AND LIGNINS IN SPENT PULPING
    11  LIQUORS. ELECTRICITY FROM BIOMASS ENERGY UNDER THIS SUBSECTION
    12  GENERATED INSIDE THIS COMMONWEALTH SHALL BE ELIGIBLE AS A TIER I
    13  ALTERNATIVE ENERGY SOURCE. ELECTRICITY FROM BIOMASS ENERGY UNDER
    14  THIS SUBSECTION GENERATED OUTSIDE THIS COMMONWEALTH SHALL BE
    15  ELIGIBLE AS A TIER II ALTERNATIVE ENERGY SOURCE.
    16     (C)  INCREASE IN TIER I.--THE COMMISSION SHALL AT LEAST
    17  QUARTERLY INCREASE THE PERCENTAGE SHARE OF TIER I ALTERNATIVE
    18  ENERGY SOURCES REQUIRED TO BE SOLD BY AN ELECTRIC DISTRIBUTION
    19  COMPANY OR ELECTRIC GENERATION SUPPLIER UNDER SECTION 3(B)(1) OF
    20  THE ALTERNATIVE ENERGY PORTFOLIO STANDARDS ACT TO REFLECT ANY
    21  NEW BIOMASS ENERGY OR LOW-IMPACT HYDROPOWER RESOURCES THAT
    22  QUALIFY AS A TIER I ALTERNATIVE ENERGY SOURCE UNDER THIS
    23  SECTION. NO NEW RESOURCE QUALIFYING AS BIOMASS ENERGY OR LOW-
    24  IMPACT HYDROPOWER UNDER THIS SECTION SHALL BE ELIGIBLE TO
    25  GENERATE TIER I ALTERNATIVE ENERGY CREDITS UNTIL THE COMMISSION
    26  HAS INCREASED THE PERCENTAGE SHARE OF TIER I TO REFLECT THESE
    27  ADDITIONAL RESOURCES.
    28  § 2815.  CARBON DIOXIDE SEQUESTRATION NETWORK.
    29     (A)  ASSESSMENT.--
    30         (1)  BY APRIL 1, 2009, THE DEPARTMENT SHALL COMPLETE A
    20080H2200B4526                 - 76 -     

     1     STUDY TO IDENTIFY SUITABLE GEOLOGICAL FORMATIONS, INCLUDING
     2     SITES WITHIN OR IN PROXIMITY TO THE MEDINA, TUSCARORA OR
     3     ORISKANY SANDSTONE FORMATION FOR THE LOCATION OF A STATE
     4     NETWORK.
     5         (2)  BY JUNE 1, 2009, THE DEPARTMENT, IN CONSULTATION
     6     WITH THE COMMISSION, SHALL HIRE ONE OR MORE INDEPENDENT
     7     EXPERTS PURSUANT TO 62 PA.C.S. PT. I (RELATING TO
     8     COMMONWEALTH PROCUREMENT CODE), AS NECESSARY, TO CONDUCT AN
     9     ASSESSMENT OF THE FOLLOWING:
    10             (I)  ESTIMATES OF CAPITAL REQUIREMENTS AND
    11         EXPENDITURES NECESSARY FOR THE ESTABLISHMENT, OPERATION
    12         AND MAINTENANCE OF A STATE NETWORK.
    13             (II)  THE COLLECTION OF DATA TO ALLOW A SAFETY
    14         ASSESSMENT.
    15             (III)  AN ASSESSMENT OF ALL POTENTIAL RISK TO
    16         INDIVIDUALS, PROPERTY AND THE ENVIRONMENT ASSOCIATED WITH
    17         THE GEOLOGICAL SEQUESTRATION OF CARBON DIOXIDE IN A STATE
    18         NETWORK. THE ASSESSMENT, WHICH SHALL BE COMPLETED BY
    19         OCTOBER 1, 2009, SHALL INCLUDE AN ANALYSIS OF THE
    20         FOLLOWING:
    21                 (A)  EXISTING FEDERAL AND STATE REGULATORY
    22             STANDARDS FOR THE STORAGE OF CARBON DIOXIDE.
    23                 (B)  FACTORS CONTAINED IN THE UNITED STATES
    24             ENVIRONMENTAL PROTECTION AGENCY'S VULNERABILITY
    25             EVALUATION FRAMEWORK FOR GEOLOGIC SEQUESTRATION OF
    26             CARBON DIOXIDE (EPA 430-R-08-009, DATED JULY 10,
    27             2008).
    28                 (C)  THE DIFFERENT TYPES OF INSURANCE, BONDS,
    29             OTHER INSTRUMENTS AND RECOMMENDED LEVELS OF INSURANCE
    30             WHICH SHOULD BE CARRIED BY THE OPERATOR OF THE STATE
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     1             NETWORK DURING THE CONSTRUCTION AND OPERATION OF THE
     2             STATE NETWORK.
     3                 (D)  THE AVAILABILITY OF COMMERCIAL INSURANCE.
     4                 (E)  MODELS FOR THE ESTABLISHMENT OF A
     5             COMMONWEALTH FUND TO PROVIDE PROTECTION AGAINST RISK
     6             TO BE FUNDED BY THE OPERATOR.
     7     (B)  TRANSMISSION OF STUDY AND ASSESSMENT.--
     8         (1)  THE DEPARTMENT SHALL SUBMIT THE STUDY CONDUCTED
     9     UNDER SUBSECTION (A)(1) TO THE GOVERNOR, THE CHAIRMAN AND
    10     MINORITY CHAIRMAN OF THE ENVIRONMENTAL RESOURCES AND ENERGY
    11     COMMITTEE OF THE SENATE, THE CHAIRMAN AND MINORITY CHAIRMAN
    12     OF THE ENVIRONMENTAL RESOURCES AND ENERGY COMMITTEE OF THE
    13     HOUSE OF REPRESENTATIVES AND THE DEPARTMENT NO LATER THAN MAY
    14     1, 2009.
    15         (2)  THE INDEPENDENT EXPERT SHALL SUBMIT THE FINAL
    16     ASSESSMENT UNDER SUBSECTION (A)(2) TO THE GOVERNOR, THE
    17     CHAIRMAN AND MINORITY CHAIRMAN OF THE ENVIRONMENTAL RESOURCES
    18     AND ENERGY COMMITTEE OF THE SENATE, THE CHAIRMAN AND MINORITY
    19     CHAIRMAN OF THE ENVIRONMENTAL RESOURCES AND ENERGY COMMITTEE
    20     OF THE HOUSE OF REPRESENTATIVES AND THE DEPARTMENT NO LATER
    21     THAN NOVEMBER 1, 2009.
    22     (C)  DEPARTMENT.--THE FOLLOWING SHALL APPLY:
    23         (1)  THE DEPARTMENT SHALL REVIEW THE ASSESSMENT SUBMITTED
    24     UNDER SUBSECTION (A)(2) AND ALL GEOLOGIC SEQUESTRATION
    25     REQUIREMENTS ASSOCIATED WITH A STATE NETWORK, INCLUDING
    26     GEOLOGICAL SITE CHARACTERIZATION, MODELING AND VERIFICATION
    27     OF FLUID MOVEMENT, CORRECTIVE ACTION, WELL CONSTRUCTION,
    28     OPERATION, MECHANICAL INTEGRITY TESTING, MONITORING AND SITE
    29     CLOSURE.
    30         (2)  FOLLOWING THE REVIEW UNDER PARAGRAPH (1), THE
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     1     DEPARTMENT MAY CONDUCT A PILOT PROJECT TO DETERMINE THE
     2     VIABILITY OF ESTABLISHING A STATE NETWORK IN THIS
     3     COMMONWEALTH.
     4     (D)  DEFINITIONS.--AS USED IN THIS SECTION, THE FOLLOWING
     5  WORDS AND PHRASES SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS
     6  SUBSECTION:
     7     "CARBON DIOXIDE SEQUESTRATION."  THE STORAGE OF CARBON
     8  DIOXIDE IN A SUPERCRITICAL PHASE WITHIN A GEOLOGICAL SUBSURFACE
     9  FORMATION SUCH AS A DEEP SALINE AQUIFER WITH SUITABLE CAP ROCK,
    10  SEALING FAULTS AND ANTICLINES THAT INCLUDES COMPRESSION,
    11  DEHYDRATION AND LEAK DETECTION MONITORING EQUIPMENT AND
    12  PIPELINES TO TRANSPORT CARBON DIOXIDE CAPTURED BY AN ADVANCED
    13  COAL COMBUSTION WITH LIMITED CARBON EMISSIONS PLANT TO AN
    14  UNDERGROUND STORAGE SITE. THE TERM SHALL NOT INCLUDE USE OF THE
    15  CARBON DIOXIDE FOR ENHANCED OIL RECOVERY.
    16     "DEPARTMENT."  THE DEPARTMENT OF CONSERVATION AND NATURAL
    17  RESOURCES OF THE COMMONWEALTH.
    18     "STATE NETWORK."  A CARBON DIOXIDE SEQUESTRATION NETWORK
    19  ESTABLISHED ON LANDS OWNED BY THE COMMONWEALTH, OR LANDS ON
    20  WHICH THE COMMONWEALTH HAS ACQUIRED THE RIGHT TO STORE CARBON
    21  DIOXIDE, THAT HAVE BEEN DESIGNATED BY THE DEPARTMENT OF
    22  CONSERVATION AND NATURAL RESOURCES FOR THE STORAGE OF CARBON
    23  DIOXIDE.
    24     SECTION 6.  THIS ACT SHALL TAKE EFFECT IN 30 DAYS.




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