PRIOR PRINTER'S NO. 1876 PRINTER'S NO. 2182
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 AND PASHINSKI, JUNE 8, 2007
AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES, JUNE 30, 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 declaration of policy and for <-- 4 duties of electric distribution companies. 5 The General Assembly of the Commonwealth of Pennsylvania 6 hereby enacts as follows: 7 Section 1. Section 2802(6) of Title 66 of the Pennsylvania <-- 8 Consolidated Statutes is amended and the section is amended by 9 adding a paragraph to read: 10 § 2802. Declaration of policy. 11 The General Assembly finds and declares as follows: 12 * * * 13 (6) The cost of electricity is an important factor in 14 decisions made by businesses concerning locating, expanding 15 and retaining facilities in this Commonwealth. The benefits 16 of a competitive market for the generation of electricity
1 will be received by businesses and all customers when 2 electric distribution companies or commission-approved 3 alternative suppliers and electric generation suppliers may 4 offer and provide competitive generation services without 5 limitation on the type of generation services that each may 6 offer. 7 * * * 8 (22) Following the completion of the transition period 9 in an electric distribution company's service area pursuant 10 to section 2807(e) (relating to duties of electric 11 distribution companies), the electric distribution company or 12 commission-approved alternative supplier and each electric 13 generation supplier operating in that service area may offer 14 and provide at its discretion competitive generation services 15 to all customers without limitation on the types of 16 generation service that may be offered. 17 Section 2. Section 2807(e) of Title 66 is amended to read: 18 SECTION 1. SECTION 2807(E) OF TITLE 66 OF THE PENNSYLVANIA <-- 19 CONSOLIDATED STATUTES IS AMENDED TO READ: 20 § 2807. Duties of electric distribution companies. 21 * * * 22 (e) Obligation to serve.--An electric distribution company's 23 obligation to provide electric service following implementation 24 of restructuring and the choice of alternative generation by a 25 customer is revised as follows: 26 (1) While an electric distribution company collects 27 either a competitive transition charge or an intangible 28 transition charge or until 100% of its customers have choice, 29 whichever is longer, the electric distribution company shall 30 continue to have the full obligation to serve, including the 20070H1530B2182 - 2 -
1 connection of customers, the delivery of electric energy and 2 the production or acquisition of electric energy for 3 customers. 4 (2) At the end of the transition period, the commission 5 shall promulgate regulations to define the electric 6 distribution company's obligation to connect and deliver and 7 acquire electricity under paragraph (3) that will exist at 8 the end of the phase-in period. 9 (3) (I) If a customer contracts for electric energy and <-- 10 it is not delivered or if a customer does not choose an 11 alternative electric generation supplier, the electric 12 distribution company or commission-approved alternative 13 supplier shall acquire electric energy [at prevailing <-- 14 market prices] to serve that customer and shall recover <-- 15 fully all reasonable costs. The electric energy acquired <-- 16 under this paragraph may include long-term contracts or a 17 portfolio of resources to serve that customer and may be 18 procured through auctions, requests for proposals and 19 bilateral contracts as well as through the generation of 20 the electricity by the electric distribution company or 21 commission-approved alternative supplier with its assets. 22 The electric distribution company or commission-approved 23 alternative supplier may propose, and the commission 24 shall approve, an annual or multiyear fixed price service 25 option to the customer. In acquiring electric energy 26 pursuant to this paragraph, the electric distribution 27 company or commission-approved alternative supplier 28 should seek to provide the most stable and lowest cost 29 service for all of its customers. REASONABLE COSTS. THE <-- 30 ELECTRIC DISTRIBUTION COMPANY OR COMMISSION-APPROVED 20070H1530B2182 - 3 -
1 SUPPLIER SHALL ADJUST RATES AT APPROPRIATE INTERVALS AS 2 DETERMINED BY THE COMMISSION. THE ELECTRIC ENERGY 3 ACQUIRED UNDER THIS PARAGRAPH SHALL BE PROCURED THROUGH 4 COMPETITIVE PROCUREMENT PROCESSES THAT MAY INCLUDE ONE OR 5 MORE OF THE FOLLOWING: 6 (A) AUCTIONS. 7 (B) REQUESTS FOR PROPOSAL. 8 (C) BILATERAL CONTRACTS NEGOTIATED BETWEEN THE 9 ELECTRIC DISTRIBUTION COMPANY OR COMMISSION-APPROVED 10 ALTERNATIVE SUPPLIER AND A WHOLESALE ELECTRIC 11 SUPPLIER, EXCEPT THAT THE BILATERAL CONTRACTS SHALL 12 BE ENTERED INTO AT THE SOLE DISCRETION OF THE 13 ELECTRIC DISTRIBUTION COMPANY OR COMMISSION-APPROVED 14 ALTERNATIVE SUPPLIER AND THE COMMISSION SHALL HAVE NO 15 AUTHORITY TO REQUIRE THE CONTRACTS AND SHALL BE AT 16 PRICES NO GREATER THAN REASONABLE FORWARD MARKET 17 PRICES. 18 (II) THE COMMISSION SHALL NOT MODIFY CONTRACTS OR 19 DISALLOW COSTS ASSOCIATED WITH CONTRACTS ENTERED INTO 20 PURSUANT TO AN APPROVED COMPETITIVE PROCUREMENT PROCESS. 21 PRICES OBTAINED THROUGH THE COMPETITIVE PROCUREMENT 22 PROCESSES SHALL BE DEEMED TO BE PREVAILING MARKET PRICES. 23 THE RESOURCES PROCURED PURSUANT TO THIS PARAGRAPH MAY 24 REFLECT A MIX OF LONG-TERM, SHORT-TERM AND SPOT MARKET 25 PURCHASES. 26 (4) If a customer that chooses an alternative supplier 27 and subsequently desires to return to the local distribution 28 company for generation service, the local distribution 29 company shall treat that customer exactly as it would any new 30 applicant for energy service. 20070H1530B2182 - 4 -
1 (5) The electric distribution company or commission- <-- 2 approved alternative supplier may offer large customers any 3 rate, including, but not limited to, a cost-based rate, for 4 any duration agreed upon by the electric distribution company 5 or commission-approved alternative supplier and the large 6 customer. For purposes of providing service pursuant to this 7 paragraph, the electric distribution company or commission- 8 approved alternative supplier may build or acquire a 9 generation facility or acquire an interest in a generation 10 facility specifically to meet energy requirements, provided 11 that the cost of energy from the facility is below the cost 12 of acquiring energy in the wholesale market. Contract rates 13 entered into under this paragraph shall be subject to review 14 by the commission in order to ensure that no cost related to 15 the rates are borne by other customers or customer classes. 16 If no costs related to the rates are borne by other customers 17 or customer classes, the commission shall approve the 18 contract rate within 30 days of its filing or it shall be 19 deemed approved by operation of law upon expiration of the 30 20 days. Information submitted under this paragraph shall be 21 subject to the commission's procedures for the filing of 22 confidential and proprietary information. 23 (5) (I) NOTWITHSTANDING PARAGRAPH (3), THE ELECTRIC <-- 24 DISTRIBUTION COMPANY OR COMMISSION-APPROVED ALTERNATIVE 25 SUPPLIER MAY, IN ITS SOLE DISCRETION, OFFER LARGE 26 CUSTOMERS WITH A PEAK DEMAND OF 15 MEGAWATTS OR GREATER 27 AT ONE METER AT A LOCATION IN ITS SERVICE TERRITORY ANY 28 NEGOTIATED RATE FOR SERVICE AT ALL OF THE CUSTOMERS' 29 LOCATIONS WITHIN THE SERVICE TERRITORY FOR ANY DURATION 30 AGREED UPON BY THE ELECTRIC DISTRIBUTION COMPANY OR 20070H1530B2182 - 5 -
1 COMMISSION-APPROVED ALTERNATIVE SUPPLIER AND THE LARGE 2 CUSTOMER. THE COMMISSION SHALL PERMIT, BUT SHALL NOT 3 REQUIRE, AN ELECTRIC DISTRIBUTION COMPANY OR COMMISSION- 4 APPROVED ALTERNATIVE SUPPLIER TO PROVIDE SERVICE TO LARGE 5 CUSTOMERS UNDER THIS PARAGRAPH. CONTRACT RATES ENTERED 6 INTO UNDER THIS PARAGRAPH SHALL BE SUBJECT TO REVIEW BY 7 THE COMMISSION IN ORDER TO ENSURE THAT ALL COSTS RELATED 8 TO THE RATES ARE BORNE BY THE PARTIES TO THE CONTRACT AND 9 THAT NO COSTS RELATED TO THE RATES ARE BORNE BY OTHER 10 CUSTOMERS OR CUSTOMER CLASSES. IF NO COSTS RELATED TO THE 11 RATES ARE BORNE BY OTHER CUSTOMERS OR CUSTOMER CLASSES, 12 THE COMMISSION SHALL APPROVE THE CONTRACT WITHIN 90 DAYS 13 OF ITS FILING OR IT SHALL BE DEEMED APPROVED BY OPERATION 14 OF LAW UPON EXPIRATION OF THE 90 DAYS. INFORMATION 15 SUBMITTED UNDER THIS PARAGRAPH SHALL BE SUBJECT TO THE 16 COMMISSION'S PROCEDURES FOR THE FILING OF CONFIDENTIAL 17 AND PROPRIETARY INFORMATION. 18 (II) FOR PURPOSES OF PROVIDING SERVICE UNDER THIS 19 PARAGRAPH TO CUSTOMERS WITH A PEAK DEMAND OF 20 MEGAWATTS 20 OR GREATER AT ONE METER AT A LOCATION WITHIN THAT 21 DISTRIBUTION COMPANY'S SERVICE TERRITORY, AN ELECTRIC 22 DISTRIBUTION COMPANY THAT HAS COMPLETED ITS RESTRUCTURING 23 TRANSITION PERIOD AS OF THE EFFECTIVE DATE OF THIS 24 PARAGRAPH MAY, IN ITS SOLE DISCRETION, ACQUIRE AN 25 INTEREST IN A GENERATION FACILITY OR CONSTRUCT A 26 GENERATION FACILITY SPECIFICALLY TO MEET THE ENERGY 27 REQUIREMENTS OF THE CUSTOMERS INCLUDING THE ELECTRIC 28 REQUIREMENTS OF THE CUSTOMERS' OTHER BILLING LOCATIONS 29 WITHIN ITS SERVICE TERRITORY. THE ELECTRIC DISTRIBUTION 30 COMPANY MUST COMMENCE CONSTRUCTION OF THE GENERATION 20070H1530B2182 - 6 -
1 FACILITY OR CONTRACT TO ACQUIRE THE GENERATION INTEREST 2 WITHIN THREE YEARS AFTER THE EFFECTIVE DATE OF THIS 3 PARAGRAPH, EXCEPT THAT THE ELECTRIC DISTRIBUTION COMPANY 4 MAY ADD TO THE GENERATION FACILITIES IT COMMENCED 5 CONSTRUCTION OR CONTRACTED TO ACQUIRE AFTER THIS THREE- 6 YEAR PERIOD TO SERVE ADDITIONAL LOAD OF CUSTOMERS FOR 7 WHOM IT COMMENCED CONSTRUCTION OR CONTRACTED TO ACQUIRE 8 GENERATION WITHIN THREE YEARS. NOTHING IN THIS PARAGRAPH 9 REQUIRES OR AUTHORIZED THE COMMISSION TO REQUIRE AN 10 ELECTRIC DISTRIBUTION COMPANY TO COMMENCE CONSTRUCTION OR 11 ACQUIRE AN INTEREST IN A GENERATION FACILITY. THE 12 ELECTRIC DISTRIBUTION COMPANY'S INTEREST IN THE 13 GENERATION FACILITY IT BUILT OR CONTRACTED TO ACQUIRE 14 SHALL BE NO LARGER THAN NECESSARY TO MEET PEAK DEMAND OF 15 CUSTOMERS SERVED UNDER THIS SUBPARAGRAPH. DURING TIMES 16 WHEN THE CUSTOMER'S DEMAND IS LESS THAN THE ELECTRIC 17 DISTRIBUTION COMPANY'S GENERATION INTEREST, THE ELECTRIC 18 DISTRIBUTION COMPANY MAY SELL EXCESS POWER ON THE 19 WHOLESALE MARKET. AT NO TIME SHALL THE COSTS ASSOCIATED 20 WITH THE GENERATING FACILITY INTERESTS BE INCLUDED IN 21 RATE BASE OR OTHERWISE REFLECTED IN RATES. THE GENERATION 22 FACILITY INTERESTS SHALL NOT BE COMMISSION-REGULATED 23 ASSETS. 24 Section 3 2. This act shall take effect in 60 days. <-- E24L66BIL/20070H1530B2182 - 7 -