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                                                      PRINTER'S NO. 2887

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

No. 2049 Session of 2007


        INTRODUCED BY DERMODY, TURZAI, PRESTON, BENNINGTON, BIANCUCCI,
           COSTA, DeLUCA, FRANKEL, GERGELY, KORTZ, KOTIK, LEVDANSKY,
           MARKOSEK, MARSHALL, MUSTIO, PETRARCA, PETRONE, PYLE, RAMALEY,
           READSHAW, M. SMITH, VULAKOVICH, WAGNER, WALKO, WHEATLEY,
           BELFANTI, CALTAGIRONE, CAPPELLI, DePASQUALE, HARKINS,
           HORNAMAN, JOSEPHS, McCALL, McILHATTAN, MENSCH, PASHINSKI,
           PAYNE, SIPTROTH, S. H. SMITH, SOLOBAY AND SURRA,
           NOVEMBER 21, 2007

        REFERRED TO COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY,
           NOVEMBER 21, 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


     1     either a competitive transition charge or an intangible
     2     transition charge or until 100% of its customers have choice,
     3     whichever is longer, the electric distribution company shall
     4     continue to have the full obligation to serve, including the
     5     connection of customers, the delivery of electric energy and
     6     the production or acquisition of electric energy for
     7     customers.
     8         (2)  At the end of the transition period, the commission
     9     shall promulgate regulations to define the electric
    10     distribution company's obligation to connect and deliver and
    11     acquire electricity under paragraph (3) that will exist at
    12     the end of the phase-in period.
    13         (3)  If a customer contracts for electric energy and it
    14     is not delivered or if a customer does not choose an
    15     alternative electric generation supplier, the electric
    16     distribution company or commission-approved alternative
    17     supplier shall acquire electric energy [at prevailing market
    18     prices] through a portfolio of electric generation to serve
    19     [that customer] those customers and shall recover fully all
    20     reasonable costs. The electric energy procurement proposed by
    21     the electric distribution company should be designed to
    22     provide customers:
    23             (i)  Safe and reliable service.
    24             (ii)  The lowest reasonable retail prices to
    25         customers over time.
    26             (iii)  Compliance with the requirements of the act of
    27         November 30, 2004 (P.L.1672, No.213), known as the
    28         Alternative Energy Portfolio Act.
    29         (3.1)  The procurement strategy in paragraph (3) may
    30     include an appropriate mix of long-term, short-term and spot
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     1     market purchases and may include one or more of the
     2     following:
     3             (i)  Auctions.
     4             (ii)  Requests for proposal.
     5             (iii)  Spot market purchases.
     6             (iv)  Long-term purchase power agreements to support
     7         construction of new generation facilities, including
     8         generation that meets the requirements of the Alternative
     9         Energy Portfolio Standards Act.
    10             (v)  Bilateral contracts negotiated between the
    11         electric distribution company or commission-approved
    12         alternative supplier and a wholesale electric supplier.
    13         (3.2)  The commission shall not modify contracts or
    14     disallow costs associated with contracts entered into
    15     pursuant to a commission-approved procurement plan unless the
    16     commission determines that:
    17             (i)  the contract does not comply with the
    18         commission-approved portfolio plan; or
    19             (ii)  there has been fraud, collusion, market
    20         manipulation or abuse of market power.
    21         (3.3)  In addition to any voluntary rates offered to all
    22     customers, such as a time-of-use rate, the electric
    23     distribution company or commission-approved alternative
    24     supplier shall offer all customers a fixed rate that shall
    25     change no more frequently than on an annual basis. All rates
    26     shall be reviewed by the commission to ensure that the costs
    27     of providing service to each customer class are borne solely
    28     by that customer class.
    29         (4)  If a customer that chooses an alternative supplier
    30     and subsequently desires to return to the local distribution
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     1     company for generation service, the local distribution
     2     company shall treat that customer exactly as it would any new
     3     applicant for energy service.
     4         (5)  (i)  Notwithstanding paragraph (3), the electric
     5         distribution company or commission-approved alternative
     6         supplier may, in its sole discretion, offer large
     7         customers with a peak demand of 15 megawatts or greater
     8         at one meter at a location in its service territory any
     9         negotiated rate for service at all of the customers'
    10         locations within the service territory for any duration
    11         agreed upon by the electric distribution company or
    12         commission-approved alternative supplier and the large
    13         customer. The commission shall permit, but shall not
    14         require, an electric distribution company or commission-
    15         approved alternative supplier to provide service to large
    16         customers under this paragraph. Contract rates entered
    17         into under this paragraph shall be subject to review by
    18         the commission in order to ensure that all costs related
    19         to the rates are borne by the parties to the contract and
    20         that no costs related to the rates are borne by other
    21         customers or customer classes. If no costs related to the
    22         rates are borne by other customers or customer classes,
    23         the commission shall approve the contract within 90 days
    24         of its filing, or it shall be deemed approved by
    25         operation of law upon expiration of the 90 days.
    26         Information submitted under this paragraph shall be
    27         subject to the commission's procedures for the filing of
    28         confidential and proprietary information.
    29             (ii)  For purposes of providing service under this
    30         paragraph to customers with a peak demand of 20 megawatts
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     1         or greater at one meter at a location within that
     2         distribution company's service territory, an electric
     3         distribution company that has completed its restructuring
     4         transition period as of the effective date of this
     5         paragraph may, in its sole discretion, acquire an
     6         interest in a generation facility or construct a
     7         generation facility specifically to meet the energy
     8         requirements of the customers, including the electric
     9         requirements of the customers' other billing locations
    10         within its service territory. The electric distribution
    11         company must commence construction of the generation
    12         facility or contract to acquire the generation interest
    13         within three years after the effective date of this
    14         paragraph, except that the electric distribution company
    15         may add to the generation facilities it commenced
    16         construction or contracted to acquire after this three-
    17         year period to serve additional load of customers for
    18         whom it commenced construction or contracted to acquire
    19         generation within three years. Nothing in this paragraph
    20         requires or authorizes the commission to require an
    21         electric distribution company to commence construction or
    22         acquire an interest in a generation facility. The
    23         electric distribution company's interest in the
    24         generation facility it built or contracted to acquire
    25         shall be no larger than necessary to meet peak demand of
    26         customers served under this subparagraph. During times
    27         when the customer's demand is less than the electric
    28         distribution company's generation interest, the electric
    29         distribution company may sell excess power on the
    30         wholesale market. At no time shall the costs associated
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     1         with the generating facility interests be included in
     2         rate base or otherwise reflected in rates. The generation
     3         facility interests shall not be commission-regulated
     4         assets.
     5     Section 2.  This act shall take effect in 60 days.

















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