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        PRIOR PRINTER'S NOS. 1876, 2182               PRINTER'S NO. 2285

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

No. 1530 Session of 2007


        INTRODUCED BY DERMODY, TURZAI, PALLONE, SOLOBAY, MAHONEY, WALKO,
           PETRARCA, TANGRETTI, READSHAW, BELFANTI, CAPPELLI, FABRIZIO,
           JOSEPHS, GEORGE, CALTAGIRONE, FAIRCHILD, HARHAI, YUDICHAK,
           COHEN, HARKINS, MARSHALL, J. WHITE, THOMAS, KULA, McCALL,
           LEVDANSKY, LONGIETTI, YOUNGBLOOD, GIBBONS, PYLE, CURRY,
           GOODMAN, KORTZ, MUNDY, WANSACZ, SCHRODER, MYERS, PASHINSKI
           AND K. SMITH, JUNE 8, 2007

        AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES,
           JULY 10, 2007

                                     AN ACT

     1  Amending Title 66 (Public Utilities) of the Pennsylvania
     2     Consolidated Statutes, in restructuring of electric utility
     3     industry, further providing for duties of electric
     4     distribution companies.

     5     The General Assembly of the Commonwealth of Pennsylvania
     6  hereby enacts as follows:
     7     Section 1.  Section 2807(e) of Title 66 of the Pennsylvania
     8  Consolidated Statutes is amended to read:
     9  § 2807.  Duties of electric distribution companies.
    10     * * *
    11     (e)  Obligation to serve.--An electric distribution company's
    12  obligation to provide electric service following implementation
    13  of restructuring and the choice of alternative generation by a
    14  customer is revised as follows:
    15         (1)  While an electric distribution company collects
    16     either a competitive transition charge or an intangible

     1     transition charge or until 100% of its customers have choice,
     2     whichever is longer, the electric distribution company shall
     3     continue to have the full obligation to serve, including the
     4     connection of customers, the delivery of electric energy and
     5     the production or acquisition of electric energy for
     6     customers.
     7         (2)  At the end of the transition period, the commission
     8     shall promulgate regulations to define the electric
     9     distribution company's obligation to connect and deliver and
    10     acquire electricity under paragraph (3) that will exist at
    11     the end of the phase-in period.
    12         (3)  (i)  If a customer contracts for electric energy and  <--
    13         it is not delivered or if a customer does not choose an
    14         alternative electric generation supplier, the electric
    15         distribution company or commission-approved alternative
    16         supplier shall acquire electric energy at prevailing
    17         market prices to serve that customer and shall recover
    18         fully all reasonable costs. The electric distribution
    19         company or commission-approved supplier shall adjust
    20         rates at appropriate intervals as determined by the
    21         commission. The electric energy acquired under this
    22         paragraph shall be procured through competitive
    23         procurement processes that may include one or more of the
    24         following:
    25                 (A)  Auctions.
    26                 (B)  Requests for proposal.
    27                 (C)  Bilateral contracts negotiated between the
    28             electric distribution company or commission-approved
    29             alternative supplier and a wholesale electric
    30             supplier, except that the bilateral contracts shall
    20070H1530B2285                  - 2 -     

     1             be entered into at the sole discretion of the
     2             electric distribution company or commission-approved
     3             alternative supplier and the commission shall have no
     4             authority to require the contracts and shall be at
     5             prices no greater than reasonable forward market
     6             prices.
     7             (ii)  The commission shall not modify contracts or
     8         disallow costs associated with contracts entered into
     9         pursuant to an approved competitive procurement process.
    10         Prices obtained through the competitive procurement
    11         processes shall be deemed to be prevailing market prices.
    12         The resources procured pursuant to this paragraph may
    13         reflect a mix of long-term, short-term and OR spot market  <--
    14         purchases.
    15         (4)  If a customer that chooses an alternative supplier
    16     and subsequently desires to return to the local distribution
    17     company for generation service, the local distribution
    18     company shall treat that customer exactly as it would any new
    19     applicant for energy service.
    20         (5)  (i)  Notwithstanding paragraph (3), the electric
    21         distribution company or commission-approved alternative
    22         supplier may, in its sole discretion, offer large
    23         customers with a peak demand of 15 megawatts or greater
    24         at one meter at a location in its service territory any
    25         negotiated rate for service at all of the customers'
    26         locations within the service territory for any duration
    27         agreed upon by the electric distribution company or
    28         commission-approved alternative supplier and the large
    29         customer. The commission shall permit, but shall not
    30         require, an electric distribution company or commission-
    20070H1530B2285                  - 3 -     

     1         approved alternative supplier to provide service to large
     2         customers under this paragraph. Contract rates entered
     3         into under this paragraph shall be subject to review by
     4         the commission in order to ensure that all costs related
     5         to the rates are borne by the parties to the contract and
     6         that no costs related to the rates are borne by other
     7         customers or customer classes. If no costs related to the
     8         rates are borne by other customers or customer classes,
     9         the commission shall approve the contract within 90 days
    10         of its filing or it shall be deemed approved by operation
    11         of law upon expiration of the 90 days. Information
    12         submitted under this paragraph shall be subject to the
    13         commission's procedures for the filing of confidential
    14         and proprietary information.
    15             (ii)  For purposes of providing service under this
    16         paragraph to customers with a peak demand of 20 megawatts
    17         or greater at one meter at a location within that
    18         distribution company's service territory, an electric
    19         distribution company that has completed its restructuring
    20         transition period as of the effective date of this
    21         paragraph may, in its sole discretion, acquire an
    22         interest in a generation facility or construct a
    23         generation facility specifically to meet the energy
    24         requirements of the customers including the electric
    25         requirements of the customers' other billing locations
    26         within its service territory. The electric distribution
    27         company must commence construction of the generation
    28         facility or contract to acquire the generation interest
    29         within three years after the effective date of this
    30         paragraph, except that the electric distribution company
    20070H1530B2285                  - 4 -     

     1         may add to the generation facilities it commenced
     2         construction or contracted to acquire after this three-
     3         year period to serve additional load of customers for
     4         whom it commenced construction or contracted to acquire
     5         generation within three years. Nothing in this paragraph
     6         requires or authorized the commission to require an
     7         electric distribution company to commence construction or
     8         acquire an interest in a generation facility. The
     9         electric distribution company's interest in the
    10         generation facility it built or contracted to acquire
    11         shall be no larger than necessary to meet peak demand of
    12         customers served under this subparagraph. During times
    13         when the customer's demand is less than the electric
    14         distribution company's generation interest, the electric
    15         distribution company may sell excess power on the
    16         wholesale market. At no time shall the costs associated
    17         with the generating facility interests be included in
    18         rate base or otherwise reflected in rates. The generation
    19         facility interests shall not be commission-regulated
    20         assets.
    21     Section 2.  This act shall take effect in 60 days.






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