THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE RESOLUTION

INTRODUCED BY GEORGE, BELFANTI, CALTAGIRONE, COHEN, CONKLIN, DONATUCCI, GOODMAN, GRUCELA, HARKINS, HENNESSEY, JOSEPHS, LEVDANSKY, MANDERINO, McILVAINE SMITH, MELIO, MUNDY, READSHAW, SIPTROTH AND K. SMITH, MARCH 9, 2010

REFERRED TO COMMITTEE ON CONSUMER AFFAIRS, MARCH 9, 2010  

A RESOLUTION

Directing the Environmental Resources and Energy Committee of

the House of Representatives to formally investigate whether

some utility companies were unjustly enriched by

overcollecting and charging billions of dollars in

unjustified stranded cost payments under the Electricity

Generation Customer Choice and Competition Act of 1996 to

Pennsylvania ratepayers, and whether those electric

utilities' generation affiliates, which received formerly

regulated generation assets of the utility companies at

little to no cost, were unjustly enriched in those

transactions.

WHEREAS, The General Assembly, by enacting the Electricity

Generation Customer Choice and Competition Act, 66 Pa.C.S. Ch.

28, on December 3, 1996, to facilitate moving toward greater

competition in the electricity generation market, sought to

resolve certain transitional issues in a manner that is fair to

customers, electric utilities, investors, the employees of

electric utilities, local communities, nonutility generators of

electricity and other affected parties; and

WHEREAS, The Electricity Generation Customer Choice and

Competition Act defines "competitive transition charge" as "[a]

nonbypassable charge applied to the bill of every customer

accessing the transmission or distribution network which

(charge) is designed to recover an electric utility's transition

or stranded costs as determined by the public utility

commission"; and

WHEREAS, The act defines "transition or stranded costs" as,

in part, "[an] electric utility's known and measurable net

electric generation-related costs, determined on a net present

value basis over the life of the asset or liability as part of

its restructuring plan, which traditionally would be recoverable

under a regulated environment but which may not be recoverable

in a competitive electric generation market and which the

commission determines will remain following mitigation by the

electric utility"; and

WHEREAS, Since the implementation of the Electricity

Generation Customer Choice and Competition Act, there has not

been a close scrutiny by the Pennsylvania Public Utility

Commission, or any other governmental entity, of stranded costs

by electric utilities, nor has there been any analysis of the

commission-approved stranded costs that have been made publicly

available to ratepayers; and

WHEREAS, Electric utilities have been collecting stranded

cost payments from all classes of ratepayers during the period

in which electric rates have been capped; and

WHEREAS, With the expirations of electric rate caps, an

analysis is necessary to determine whether electric utilities

either overcollected or undercollected in stranded cost payments

from their ratepayers by comparing the projected cost of

electricity as outlined in the stranded cost agreements with the

actual cost of electricity charged to ratepayers; and

WHEREAS, The Environmental Resources and Energy Committee

desires to investigate whether electric utilities overcollected

millions or billions of dollars in stranded cost payments from

Pennsylvania ratepayers and were unjustly enriched in doing so,

and whether their unregulated generation affiliates (UGAs),

which received formerly regulated generation assets at little to

no cost from electric utilities that grossly undervalued those

assets, were unjustly enriched in those transactions; and

WHEREAS, In order to effectively investigate and to find the

answers to the questions listed above, it is imperative that the

Environmental Resources and Energy Committee has the power to

issue subpoenas to obtain testimony and documents; therefore be

it

RESOLVED, That the House of Representatives direct the

Environmental Resources and Energy Committee to conduct an

investigation on whether more than $18 billion of stranded costs

paid by Pennsylvania ratepayers were justified and whether some

electric utilities and their UGAs, which received formerly

regulated generation assets of the electric utilities at little

to no cost, were unjustly enriched in those transactions and

whether there should be any refunds to ratepayers in cases of

overcollection or unjust enrichment; and be it further

RESOLVED, That the committee may hold hearings, take

testimony and conduct investigations at such places as necessary

in this Commonwealth; and be it further

RESOLVED, That it may issue subpoenas under the hand and seal

of its chairman commanding any person to appear before the

committee and to testify on matters relevant to the committee's

inquiries and to produce such books, papers, records and

documents as the committee deems necessary; and be it further

RESOLVED, That the subpoenas may be served upon any person

and shall have the same effect as subpoenas issued out of the

courts of this Commonwealth; and be it further

RESOLVED, That any person who neglects or refuses to testify

or to produce any books, papers, records or documents shall be

subject to the penalties provided by the laws of this

Commonwealth in such case, and each member of the committee

shall have power to administer oaths and affirmations to

witnesses appearing before the committee; and be it further

RESOLVED, That the committee make a report of its

investigation and recommendations to the House of

Representatives by September 1, 2010.