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                                                      PRINTER'S NO. 4437

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

No. 2791 Session of 2008


        INTRODUCED BY GEORGE, BELFANTI, CALTAGIRONE, GOODMAN, GRUCELA,
           HARKINS, JOSEPHS, KOTIK, MAHER, MAHONEY, MANDERINO, READSHAW,
           SURRA AND WALKO, SEPTEMBER 24, 2008

        REFERRED TO COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY,
           SEPTEMBER 24, 2008

                                     AN ACT

     1  Amending the act of April 9, 1929 (P.L.177, No.175), entitled
     2     "An act providing for and reorganizing the conduct of the
     3     executive and administrative work of the Commonwealth by the
     4     Executive Department thereof and the administrative
     5     departments, boards, commissions, and officers thereof,
     6     including the boards of trustees of State Normal Schools, or
     7     Teachers Colleges; abolishing, creating, reorganizing or
     8     authorizing the reorganization of certain administrative
     9     departments, boards, and commissions; defining the powers and
    10     duties of the Governor and other executive and administrative
    11     officers, and of the several administrative departments,
    12     boards, commissions, and officers; fixing the salaries of the
    13     Governor, Lieutenant Governor, and certain other executive
    14     and administrative officers; providing for the appointment of
    15     certain administrative officers, and of all deputies and
    16     other assistants and employes in certain departments, boards,
    17     and commissions; and prescribing the manner in which the
    18     number and compensation of the deputies and all other
    19     assistants and employes of certain departments, boards and
    20     commissions shall be determined," providing for Commonwealth
    21     Energy Advocate and for energy development authority.

    22     The General Assembly of the Commonwealth of Pennsylvania
    23  hereby enacts as follows:
    24     Section 1.  The act of April 9, 1929 (P.L.177, No.175), known
    25  as The Administrative Code of 1929, is amended by adding a
    26  section to read:


     1     Section 903-A.1.  Commonwealth Energy Advocate.--(a)  The
     2  Consumer Advocate, with the approval of the Attorney General,
     3  shall appoint a Commonwealth Energy Advocate. The compensation
     4  of the Commonwealth Energy Advocate and clerical, technical and
     5  professional staff shall be set by the executive board. The
     6  Commonwealth Energy Advocate shall not, while serving in such
     7  position, engage in any business, vocation, other employment or
     8  have other interests inconsistent with his official
     9  responsibilities.
    10     (b)  The duties of the Commonwealth Energy Advocate shall be:
    11     (1)  To monitor the activities of the Federal Energy
    12  Regulatory Commission and other Federal agencies and advocate on
    13  behalf of the interests of retail electric customers in this
    14  Commonwealth.
    15     (2)  To participate in the governance process for the
    16  regional transmission organizations serving areas of this
    17  Commonwealth and advocate on behalf of retail electric customers
    18  in this Commonwealth.
    19     Section 2.  The act is amended by adding an article to read:
    20                          ARTICLE XXVIII-D
    21       POWERS AND DUTIES OF THE PENNSYLVANIA POWER AUTHORITY
    22  Section 2801-D.  Short title of article.
    23     This article shall be known and may be cited as the
    24  Pennsylvania Power Authority Act.
    25  Section 2802-D.  Legislative findings and declarations.
    26     The General Assembly finds and declares as follows:
    27         (1)  The health, welfare and prosperity of all
    28     Pennsylvanians require the provision of adequate, reliable,
    29     affordable, efficient and environmentally sustainable
    30     electric service at the lowest total cost over time, taking
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     1     into account any benefits of price stability.
     2         (2)  The transition to retail competition is not
     3     complete. Some customers, especially residential and small
     4     commercial customers, have failed to benefit from lower
     5     electricity costs from retail and wholesale competition.
     6         (3)  Escalating prices for electricity in Pennsylvania
     7     pose a serious threat to the economic well-being, health and
     8     safety of residents, commerce and industry of this
     9     Commonwealth.
    10         (4)  To protect against this threat to economic well-
    11     being, health and safety, it is necessary to improve the
    12     process of procuring electricity to serve the residents of
    13     this Commonwealth, to promote investment in energy efficiency
    14     and demand-response measures and to support development of
    15     clean coal technologies and renewable resources.
    16         (5)  Procuring a diverse electricity supply portfolio
    17     will ensure the lowest total cost over time for adequate,
    18     reliable, efficient and environmentally sustainable electric
    19     service.
    20         (6)  Including cost-effective renewable resources in that
    21     portfolio will reduce long-term direct and indirect costs to
    22     consumers by decreasing environmental impacts and by avoiding
    23     or delaying the need for new generation, transmission and
    24     distribution infrastructure.
    25         (7)  Energy efficiency, demand-response measures and
    26     renewable energy are resources currently underused throughout
    27     this Commonwealth. The General Assembly therefore finds that
    28     it is necessary to create the Pennsylvania Power Authority.
    29     The goals and objectives of the authority are to accomplish
    30     each of the following:
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     1             (i)  Develop electricity procurement plans to ensure
     2         adequate, reliable, affordable, efficient and
     3         environmentally sustainable electric service at the
     4         lowest total cost over time, taking into account any
     5         benefits of price stability, for electric utilities that
     6         provide electric service to at least 50,000 customers in
     7         this Commonwealth. The procurement plan shall be updated
     8         on an annual basis.
     9             (ii)  Conduct competitive procurement processes to
    10         procure the supply resources identified in the
    11         procurement plan.
    12             (iii)  Develop electric generation and cogeneration
    13         facilities that use indigenous coal or renewable
    14         resources, or both, financed with bonds issued by the
    15         Commonwealth Financing Authority.
    16             (iv)  Supply electricity from the authority's
    17         facilities at cost to one or more of the following:
    18                 (A)  Municipal electric systems.
    19                 (B)  Governmental aggregators.
    20                 (C)  Rural electric cooperatives in this
    21             Commonwealth.
    22  Section 2803-D.  Definitions.
    23     The following words and phrases when used in this article
    24  shall have the meanings given to them in this section unless the
    25  context clearly indicates otherwise:
    26     "Authority."  The Pennsylvania Power Authority established
    27  under section 2804-D.
    28     "Consumer."  As defined in 66 Pa.C.S. § 2803 (relating to
    29  definitions).
    30     "Customer."  As defined in 66 Pa.C.S. § 2803 (relating to
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     1  definitions).
     2     "Electric distribution company."  As defined in 66 Pa.C.S. §
     3  2803 (relating to definitions).
     4     "Electric generation supplier."  As defined in 66 Pa.C.S. §
     5  2803 (relating to definitions).
     6     "Rebate."  The generation rebate established under section
     7  2808-D(a).
     8  Section 2804-D.  Pennsylvania Power Authority.
     9     (a)  Establishment.--There is hereby established the
    10  Pennsylvania Power Authority.
    11     (b)  Board of directors.--The authority shall be governed and
    12  all of its corporate powers exercised by a board of directors
    13  which shall be composed of the following:
    14         (1)  The Consumer Advocate or a designee.
    15         (2)  The Small Business Advocate or a designee.
    16         (3)  One representative of the industrial customer sector
    17     who shall be appointed by the Governor.
    18     (c)  Board compensation and reimbursement.--The members of
    19  the board of directors shall be entitled to no compensation for
    20  their services as members but shall be entitled to reimbursement
    21  for all necessary expenses incurred in connection with the
    22  performance of their duties as members.
    23     (d)  Meetings.--The board of directors shall provide for the
    24  holding of regular and special meetings. Two directors attending
    25  shall constitute a quorum for the transaction of any business,
    26  and at least two votes shall be required to adopt any action,
    27  except that at least three votes shall be required to approve
    28  financial assistance for any project. Representatives of the
    29  three customer sectors shall be weighted equally.
    30     (e)  Board appointments.--
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     1         (1)  Members appointed by the Governor shall serve a term
     2     of three years.
     3         (2)  Any appointment of a member of the authority shall
     4     be subject to the advice and consent of a majority of the
     5     members of the Senate.
     6         (3)  Any appointed member of the authority shall be
     7     eligible for reappointment.
     8         (4)  All appointments shall be made within 90 days of the
     9     effective date of this act.
    10  Section 2805-D.  Duties and obligations.
    11     The authority shall:
    12         (1)  Acquire an ownership interest in existing and new
    13     Pennsylvania-based power plants and industrial cogeneration
    14     facilities through purchase or construction.
    15         (2)  Enter into long-term power purchase agreements to
    16     facilitate the financing of new Pennsylvania-based power
    17     plants and industrial cogeneration facilities.
    18         (3)  Enter into power purchase agreements with new and
    19     existing Pennsylvania-based power plants and industrial
    20     cogeneration facilities.
    21         (4)  Procure power supply and other related products in
    22     applicable regional transmission organization markets.
    23         (5)  Distribute the authority's power supply, at cost,
    24     among Pennsylvania electric distribution companies on an
    25     equitable basis and determine how the electric distribution
    26     companies in turn will allocate the power supply to retail
    27     customers on an equitable basis.
    28         (6)  Distribute the revenues raised by the rebate to
    29     electric distribution companies on an equitable basis and
    30     determine how the electric distribution companies in turn
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     1     will pass on the rebate to retail customers on an equitable
     2     basis.
     3         (7)  Manage default service acquisition for Pennsylvania
     4     electric distribution companies under a least-cost portfolio
     5     approach over time, including both demand-side and supply-
     6     side resources, unless current law is changed to require
     7     electric distribution companies to use a least-cost portfolio
     8     standard that includes consideration of long-term contracts
     9     without any artificial limitations and that is subject to
    10     review by the Pennsylvania Public Utility Commission.
    11  Section 2806-D.  Authority powers.
    12     (a)  Acquisition or construction.--The authority has the
    13  power to take all necessary actions to purchase or construct or
    14  otherwise obtain Pennsylvania-based power plants, industrial
    15  cogeneration facilities, transmission lines and transmission-
    16  related facilities.
    17     (b)  Eminent domain.--The authority has the power of eminent
    18  domain to acquire Pennsylvania-based power plants and associated
    19  facilities.
    20     (c)  Contracting.--The authority has the power to enter into
    21  contracts to obtain Pennsylvania-based power plants and
    22  industrial cogeneration facilities and the power to enter into
    23  contracts to purchase power supply, including, but not limited
    24  to, the power to facilitate the financing of generating units in
    25  this Commonwealth through long-term power purchase agreements.
    26     (d)  Bond issuance.--The authority has the power to issue
    27  bonds and incur debt as needed to meet all duties and
    28  obligations.
    29     (e)  Hiring.--The authority has the power to hire staff and
    30  outside consultants to implement the authority's activities.
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     1     (f)  Sound economic principles.--In executing its duties, the
     2  authority will apply sound economic principles and ensure its
     3  activities meet a cost-benefit analysis.
     4  Section 2807-D.  Funding.
     5     The revenue requirements of the authority will be allocated
     6  in a nondiscriminatory manner on a cost-of-service basis that
     7  will avoid interclass and intraclass subsidization.
     8  Section 2808-D.  Electric distribution company obligations.
     9     (a)  Supplies.--Electric distribution companies shall accept
    10  specified supplies from the authority and pass on the supplies
    11  to retail customers at cost.
    12     (b)  Power supplies.--Electric distribution companies shall
    13  allocate power supplies from the authority to retail customers
    14  on an equitable basis, in a manner to be determined by the
    15  authority.
    16     (c)  Revenues.--Electric distribution companies shall pass
    17  through to retail customers, on a current basis, revenues from
    18  the rebate in a manner to be determined by the authority.
    19     (d)  Fixed-price contracts.--Electric distribution companies
    20  shall offer fixed-price contracts to retail customers who agree
    21  to waive their right to switch suppliers during the term of the
    22  contract. This obligation is not limited by the amount of the
    23  power supply provided to the electric distribution companies by
    24  the authority.
    25     (e)  Access to information.--Electric distribution companies
    26  shall provide access to data and personnel and all other
    27  information necessary to the authority so supply may be acquired
    28  in a least-cost manner.
    29  Section 2809-D.  Generation rebate.
    30     (a)  Establishment.--Establish a generation rebate collected
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     1  on a per megawatt basis from all Pennsylvania generating units
     2  portions of those units that were subject to regulation as a
     3  public utility function prior to 66 Pa.C.S. Ch. 28 (relating to
     4  restructuring of electric utility industry) taking effect.
     5     (b)  Collection.--The rebate will be collected on the
     6  nameplate rating of units or portions of units that were subject
     7  to regulation as a public utility function regardless of current
     8  ownership.
     9     (c)  Applicability.--
    10         (1)  The rebate will apply to generating units or
    11     portions of generating units with nameplate ratings in excess
    12     of 150 megawatts.
    13         (2)  The rebate will not apply, during the term of the
    14     contract, to a generating unit that has entered into a long-
    15     term contract to sell power to the authority at rates that
    16     are based on the generating unit's cost of service.
    17     (d)  Rates.--The rebate initially will be imposed at a rate
    18  of $100 per megawatt per day. The level of the rebate will be
    19  adjusted periodically by the authority.
    20     (e)  Revenue.--Revenue from the rebate shall be used to
    21  provide rebates to Pennsylvania electric consumers to reduce
    22  generation rates and to fund the establishment and ongoing
    23  activities of the authority and the Commonwealth Energy
    24  Advocate.
    25     Section 3.  This act shall take effect in 60 days.




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