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        PRIOR PRINTER'S NO. 1876                      PRINTER'S NO. 2182

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 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.           <--




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