Current Status Bill Number:3414 Type of Legislation:General Bill GB Introducing Body:House Introduced Date:19970206 Primary Sponsor:D. Smith All Sponsors:D. Smith and Robinson Drafted Document Number:gjk\20018sd.97 Residing Body:House Current Committee:Labor, Commerce and Industry Committee 26 LCI Subject:Competitive Power Act of 1997, electric or public utilities, electricity, Public Service Commission
Body Date Action Description Com Leg Involved
______ ________ _______________________________________ _______ ____________
House 19970206 Introduced, read first time, 26 HLCI
referred to Committee
View additional legislative information at the LPITS web site.
TO AMEND TITLE 58, CODE OF THE LAWS OF SOUTH CAROLINA, 1976, RELATING TO PUBLIC UTILITIES, SERVICES, AND CARRIERS, BY ADDING CHAPTER 28 SO AS TO ENACT THE "SOUTH CAROLINA COMPETITIVE POWER ACT " WHICH PROVIDES FOR LEGISLATIVE FINDINGS AND DECLARATIONS, REQUIRES THE PUBLIC SERVICE COMMISSION TO ADOPT A PLAN FOR RESTRUCTURING THE ELECTRIC UTILITY INDUSTRY, REQUIRES ELECTRIC UTILITIES TO FILE WITH THE PUBLIC SERVICE COMMISSION A RESTRUCTURING PLAN PROVIDING FOR CUSTOMER CHOICE, PROVIDES THAT ALL RETAIL CUSTOMERS SHALL BE PERMITTED TO CHOOSE THEIR PROVIDERS OF ELECTRIC GENERATION SERVICES BY A CERTAIN DATE, PROVIDES THAT LOCAL UTILITIES SHALL BE RELIEVED OF THE TRADITIONAL OBLIGATION TO SERVE BUT SHALL HAVE AN OBLIGATION TO CONNECT ALL CUSTOMERS WITHIN THEIR SERVICE TERRITORY ON NONDISCRIMINATORY TERMS AND CONDITIONS, REQUIRES ELECTRIC UTILITIES TO FILE WITH THE PUBLIC SERVICE COMMISSION A PLAN FOR RECOVERING STRANDED COSTS, CREATES A LEGISLATIVE OVERSIGHT COMMITTEE ON ELECTRIC UTILITY RESTRUCTURING, AND PROVIDES FOR RELATED MATTERS; AND TO REPEAL ARTICLES 3 AND 5, CHAPTER 27 OF TITLE 58 OF THE 1976 CODE RELATING TO SERVICE RIGHTS AND RATES AND CHARGES OF ELECTRIC SUPPLIERS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Title 58 of the 1976 Code is amended by adding:
Section 58-28-10. This chapter may be cited as the 'South Carolina Competitive Power Act of 1997'.
Section 58-28-20. The General Assembly finds and declares as follows:
(1) The generation of electricity is not a natural monopoly and should not be regulated as if it were a natural monopoly.
(2) Most experts, including power company executives, agree deregulation is inevitable and necessary. Numerous states, across the country are giving their citizens choices for their electricity and lower rates. The states that act quickly will reap the benefits of more jobs, more disposable income, and a better standard of living. Those that lag behind will suffer.
(3) Regulation of the monopoly electric industry has resulted in rates which vary considerably among electric utilities. Rate disparities hinder the sustained and orderly economic development of South Carolina.
(4) Restructuring the electric generation industry to facilitate retail competition will lower prices, increase customer choice, and improve the quality, quantity, and variety of generation services available, thereby promoting the public interest.
(5) It is technically and administratively practical to restructure the electric industry in South Carolina to promote retail customer choice.
(6) Competition in the retail market for electricity will have long-term benefits for the economy of South Carolina, including lower prices for electrical service to all consumers, more efficient use of resources, innovation in service and supply, and a more diverse and decentralized electricity supply system.
(7) A competitive marketplace is the most efficient way to lower prices, increase value for consumers, and reduce the cost of regulatory oversight.
(8) The economy of South Carolina is dependent upon the availability of reliable, low-cost energy, which is essential to the economic viability of the State.
(9) Restructuring of electric utilities to provide greater competition and more efficient regulation is a nationwide phenomenon, and South Carolina must aggressively pursue restructuring and increased customer choice in order to provide electric service at lower and more competitive rates.
(10) It is in the public interest to permit all retail electric customers to choose their supplier of electric generation services in a competitive market and to continue to regulate electric transmission and distribution in order to provide safe and reliable electricity at the lowest possible prices for all consumers, while maintaining the consumer services of customer assistance and reliability.
(11) It is the policy of the General Assembly to authorize and permit competition in the supply of electricity to consumers in South Carolina only in accordance with the following principles and subsequent provisions:
(a) Competition. Competitive markets are preferred to regulation. Regulation should serve as a substitute only in those circumstances where competition cannot provide results that serve the best interests of all consumers.
(b) Customer Choice. To realize the full benefits of competition, all customers should be able to choose among and access a wide array of competing, qualified suppliers of electricity. All customers must have the opportunity to benefit from competition, which should be implemented in a fair and equitable manner. Customers should be made aware of their new rights and the benefits and risks of customer choice.
(c) Unbundling of Services. Generation services should become fully competitive, while the provision of transmission and distribution should accomplish the triple objectives of open access, comparability of service for all users, and nondiscriminatory pricing, while recognizing that federal and state jurisdictional uncertainties over wholesale and retail services should be resolved. Companies which own both transmission and distribution, as well as generation, should not be allowed to use any monopoly position in those services as a barrier to competition in generation. Municipal utilities, electric member cooperatives, and state power authorities are encouraged but not compelled to participate in the transition to competition. The determinations of corporate structure, excluding market power issues, should be left to the marketplace and not dictated by the government.
(d) Open Access. Customer access to alternative suppliers of electricity requires open access to the transmission grid and distribution system and is critical to creating a fully competitive market structure.
(e) Fair Dealing. Competition among electricity suppliers and buyers must be fair, nondiscriminatory, and consistent.
(f) Reliability and Safety. Reliable and safe electric service must be maintained or improved. South Carolina and federal regulators should have the necessary authority to assure the reliability and safety of the electric system.
(g) Recovery of Stranded Costs. Following the process established herein, the utilities are entitled to recover prudently incurred, net, verifiable stranded costs, and investments. The South Carolina General Assembly has the responsibility to determine the just and reasonable recovery mechanisms to determine net stranded costs and investments, including mitigation incentives. It should provide for a public process that applies to investments and costs stranded by competition. It should set the time frame involved for an expeditious transition. And, it should employ mechanisms that do not disadvantage one class of customer or supplier over another. The amount of recovery will be determined by the South Carolina Public Service Commission according to the principles and provisions of this chapter.
(h) Sanctity of Contract. The rights and obligations embodied in contractual arrangements are and will be an indispensable element of an effective competitive power market. Legislation should not interfere with the rights of parties under contract.
(i) Environmental and Social Policy. The energy marketplace should not be used as a vehicle for accomplishing government-mandated, government-sponsored, consumer, or taxpayer subsidized, social, or environmental programs. These programs should not be incorporated in electric utility rate structures, but instead be unbundled from rates.
(j) Transmission and Distribution Pricing. To the extent that South Carolina has jurisdiction over transmission and distribution pricing, pricing methodologies should be encouraged to enhance reliability, compensate transmission owners fairly, allow for widest possible markets, and relieve transmission congestion.
(k) Transition to Competition/Date Certain. South Carolina should establish a date certain to accomplish the transition to competition. A specific, limited time frame should be established for the transition from a regulated monopoly to competition during which there should be some certainty in rates, the securing of appropriate regulatory approvals, and establishment of an appropriate market structure. In addition, sufficient measures to preserve the integrity, safety, and reliability of the state's electric system should be established.
(l) Obligation to Connect. In a competitive retail market, local utilities should be relieved of the traditional obligation to serve the public, which should be replaced with an obligation to connect, and distribution should remain a regulated monopoly service for incumbent providers.
(m) Federal Barriers. It is the sense of the General Assembly that the repeal of the Public Utility Holding Company Act and the Public Utility Regulatory Policies Act and the reform of other federal laws that impede competitive electric markets should be accomplished to complement South Carolina's plans for the transition to customer choice. The process of restructuring generation services with consumer choice has profound interstate implications. Assured reliability of the grid, consumer and supplier access to sufficiently wide markets, a competitive playing field free of uneven subsidies and anti-competitive advantages, and resolution of existing state/federal jurisdiction over transmission and distribution services are all important to workable competition. South Carolina and other states should cooperate with Congress to remove federal barriers which should be part of the transition to competition.
(n) Purpose. Municipal utilities, electric member cooperatives, and state public service authorities are encouraged but not compelled to participate in the transition to competition. The determinations of corporate structure, excluding market power issues, should be left to the marketplace and not dictated by the government.
Section 58-28-30. The following words and phrases when used in this chapter shall have the meanings shown unless the context clearly indicates otherwise:
(1) 'Affiliate' means a person who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with a specified person.
(2) 'Aggregator or market aggregator' means an entity, licensed by the commission, that purchases electric energy and takes title to electric energy as an intermediary for sale to retail electric customers.
(3) 'Broker or marketer' means an entity, licensed by the commission, that acts as an agent or intermediary in the sale and purchase of electric energy but that does not take title to electric energy.
(4) 'Commission' means the South Carolina Public Service Commission.
(5) 'Customer' means a retail electric customer.
(6) 'Direct access' means the right of electric generation suppliers and customers to utilize and interconnect with the electric transmission and distribution system on a nondiscriminatory basis at rates, terms, and conditions of service comparable to the transmission and distribution companies' own use of the system to transport electricity from any generator of electricity to any customer. This term also is referred to as 'customer choice' in this chapter.
(7) 'Electric distribution company' means the public utility providing facilities for the jurisdictional transmission and distribution of electricity to customers, except building or facility owners or operators that manage the internal distribution system serving the building or facility and that supply electric power and other related electric power services to occupants of the building or facility.
(8) 'Electric generation supplier' or 'electricity supplier' means a person or corporation, including municipal corporations which choose to provide service outside the municipal limits except to the extent provided before the effective date of this chapter, brokers and marketers, aggregators, or any other entities, that sell to customers electricity or related services utilizing the jurisdictional transmission or distribution facilities of an electric distribution company or that purchases, brokers, arranges, or markets electricity or related services for sale to end-use customers utilizing the jurisdictional transmission and distribution facilities of an electric distribution company. The term excludes building or facility owners or operators that manage the internal distribution system serving the building or facility that supplies electric power and other related power services to occupants of the building or facility.
(9) 'Reliability' means and includes adequacy and security. As used in this definition, adequacy means the provision of sufficient generation, transmission, and distribution capacity so as to supply the aggregate electric power and energy requirements of customers, taking into account scheduled and unscheduled outages of system facilities, and 'security' means designing, maintaining, and operating a system that can handle emergencies safely while continuing to operate.
(10) 'Renewable resource' means and includes technologies such as solar photovoltaic energy, solar thermal energy, wind power, low head hydro power, geothermal energy, landfill and mine-based methane gas, energy from waste, and sustainable biomass energy.
(11) 'Retail electric customer' means a direct purchaser of electric power. The term excludes an occupant of a building or facility where the owners or operators manage the internal distribution system serving the building or facility and supply electric power and other related power services to occupants of the building or facility; where the owners or operators are direct purchasers of electric power; and where the occupants are not direct purchasers.
(12) 'Stranded cost recovery charge' means 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 commission under Section 58-28-160.
(13) 'Transmission costs' and 'distribution costs' means all costs directly or indirectly incurred to provide transmission and distribution services to retail electric customers. This includes the return of and return on facilities and other capital investments necessary to provide transmission and distribution services and associated operating expenses, including applicable taxes.
(14) 'Universal service and energy conservation' means policies, protections, and services that help low-income customers to maintain electric service. The term includes customer assistance programs, termination of service protection and policies, and services that help low-income customers to reduce or manage energy consumption in a cost-effective manner, such as the low-income usage reduction programs, application of renewable resources, and consumer education.
Section 58-28-40. (A) No later than January 1, 1999, electric generation must be deregulated and subject to the competitive market in accordance with the provisions of the industry restructuring plan developed by the commission.
(B) The commission shall adopt and publish a plan no later than six months after the effective date of this chapter for restructuring the South Carolina electric industry, consistent with the policies and procedures established under this chapter, with the objective of having full customer choice for all customers no later than January 1, 1999. The plan shall address appropriate steps to achieve an orderly transition to a competitive market. The commission plan shall provide for a phase-in of direct access so that:
(1) all residential customers shall have customer choice no later than January 1, 1998;
(2) all commercial classes of customers shall have customer choice no later than July 1, 1998; and
(3) all industrial classes of customers will have customer choice no later than January 1, 1999.
(C) The plan shall incorporate the substance of this chapter and may include other provisions as the commission considers appropriate and necessary to expedite the transition to full customer choice. The plan shall address transition issues, including:
(1) rate certainty;
(2) outstanding federal and state issues;
(3) appropriate regulatory approvals; and
(4) legislative intent and public comment.
(D) The plan developed by the commission shall include a program for making customers aware of their new rights and the benefits and risks of customer choice.
Section 58-28-50. No later than three months after the effective date of this chapter, each incumbent electric utility shall file a utility restructuring plan for review and comment before the commission providing for customer choice for all residential customers as set forth in this chapter and establishing a protocol for the disaggregation of services as required by this chapter. Each incumbent electric utility shall file a supplemental restructuring plan concerning direct access for commercial and industrial customers by July 1, 1998, if the incumbent electric utility's initial restructuring plan only addressed direct access for residential customers. The plan shall include:
(1) a schedule for the introduction of customer choice for customers currently served by the incumbent electric utility; and
(2) the manner in which it will otherwise comply with each provision of this chapter.
Section 58-28-60. Pursuant to the timeliness established under Section 58-28-40(B) and by the commission, all customers must be permitted to choose their providers of electric generation services no later than January 1, 1999, through the following means:
(1) Customers may negotiate a bilateral contract with a generator of electricity, under which contract electricity must be transmitted and distributed to the customer, subject to the provisions of Section 58-28-90(C).
(2) Customers may choose to receive generation and other energy services from a market aggregator. Market aggregators may generate electricity directly, buy and sell electricity, or enter into financial contracts for electric generation resources. Market aggregators may be brokers, cooperatives, buying clubs, municipalities, or other entities which buy or arrange for electric generation services through a power pool or through direct contracts. In no event may a government entity acting as a market aggregator deny its citizens direct access to any other market aggregator.
(3) A default provider or providers for a customer, who has not chosen an alternative source of generation, must be established by the commission in accordance with Section 58-28-110(C). The commission shall set standards to ensure the participation of default providers serving all classes of customers.
Section 58-28-70. (A) All electricity suppliers shall register with the commission. Registration shall include:
(1) applicant's technical ability to obtain and deliver electricity and provide any other proposed services;
(2) documentation of financial capability of the applicant to provide the proposed services; and
(3) a description of the form of ownership.
(B) The commission neither may limit market entry for economic reasons or anti-competitive reasons nor regulate generation prices.
Section 58-28-80 (A) The commission plan for restructuring of the incumbent electric utilities shall require that all existing electric utilities operationally and financially shall separate electric generation, transmission, and distribution assets and operations as described in this section.
(B)(1) Both electric distribution companies and other companies which are not electricity suppliers may own transmission facilities.
(2) Affiliates of electricity suppliers and electric distribution companies may own electric generation assets. The affiliates may sell generation directly to a customer, provided that generation assets and services are operationally separate from transmission and distribution affiliates, if any, and the transmission and generation affiliate provides for comparability of service for all users and nondiscriminatory pricing.
(3) Affiliates of electricity suppliers and electric distribution companies may offer unbundled generation services as approved by the commission. Prices for unbundled generation services shall not be established by the commission, but must be determined by competitive market forces.
(4) The commission shall adopt a plan to provide for the unbundling of charges for meters, meter reading, and customer billing from the charge for construction, operation, and maintenance of the distribution system for purposes of determining the appropriate payment to the electric distribution company in cases where marketers or other electricity suppliers choose to install and read meters.
(5) Competition among electricity suppliers and buyers must be fair, nondiscriminatory, and consistent. In order to ensure a level playing field, all competitors shall be subject to the same legal, regulatory, and tax treatments in the future. Subsidies and disparate regulation or legal requirements that favor certain competitors or disadvantage others shall be eliminated by the commission. While this process immediately does not compel municipal utilities, electric member cooperatives, and state public service authorities to participate in customer choice, they are encouraged to do so. Consequently, no competitor must be allowed access to a utility's customers unless comparable and reciprocal access is provided to that competitor's customers.
(6) The commission shall adopt a plan designed to permit all electricity suppliers to compete equally to supply power to South Carolina customers and to mitigate concentrations of undue market power.
(C) Subject to the right of a customer to choose to receive a separate bill from its electric generation supplier, the electric distribution company or, at the election of the customer, its electricity supplier must be responsible for billing customers for all electric services, consistent with the regulations of the commission, regardless of the identity of the provider of those services.
(1) Customer bills shall contain unbundled charges sufficient to enable the customer to determine the basis for those charges.
(2) If services are provided by an entity other than the electric distribution company or the electricity supplier and the electric distribution company or the electricity supplier is the responsible party for billing the customer, the entity that provides those services shall furnish to the electric distribution company or electricity supplier, as applicable, billing data so that the electric distribution company or electricity supplier shall bill customers in a single, monthly bill with separate components for all services, generation, transmission, distribution, stranded cost recovery charge, and social programs.
(3) The electricity generation supplier is not required to forward payment to entities providing services to customers, and on whose behalf the electricity generation supplier is billing those customers, before the electricity generation supplier has received payment for those services from customers.
(D) The electric distribution company shall continue to provide consumer service functions consistent with the regulations of the commission, including meter reading, complaint resolution, and other necessary services to the extent that the electric distribution company continues to provide the services to its customers as part of its unbundled distribution services. Customer services, at a minimum, must be maintained at the same level of quality under direct access.
(1) The commission shall promulgate regulations to ensure that an electric distribution company may not change a customer's electricity supplier without direct oral confirmation from the customer of record or written evidence of the customer's consent to a change of supplier.
(2) The commission shall promulgate regulations to require each electric distribution company, electricity supplier, marketer, aggregator, and broker to provide adequate and accurate customer information to enable customers to make informed choices regarding the purchase of all electricity services offered by that provider. Information must be provided to customers in an understandable format that enables customers to compare prices and services on a uniform basis.
(E) It is the responsibility of every electricity supplier who directly bills its customers or receives revenues from the direct sale of electricity to collect any and all charges mandated by this chapter, other than the generation charge for which the customer may elect to be billed directly by the electric generation supplier including, but not limited to, the stranded cost recovery charge, the monthly distribution fee, transmission charges, and any other fees mandated by the commission. These fees are to be promptly forwarded to the appropriate parties. Any billing electricity supplier that is to receive any component of these fees must make arrangements to ensure that these funds are promptly received by the parties to whom they are due. Billing electricity suppliers shall ensure the proper handling of these funds and shall provide assurances of payment to other suppliers of electricity services by electing one of the following two methods:
(1) The billing electricity supplier can arrange with a bank authorized to do business in South Carolina by South Carolina or the United States to receive bill payments from customers in a locked-box escrow account. The escrow agent shall receive these funds and be responsible for the proper disbursement. The escrow agent must forward all funds received from customers in two days. Customer account information is the sole property of the billing electricity supplier.
(2) The billing electricity supplier is required to post a surety bond or other performance guarantee in accordance with regulations promulgated by the commission. This bond or guarantee is to remain in place while the billing electricity supplier is otherwise in compliance with this provision and until the electricity supplier ceases to sell electricity and collect revenues from customers in South Carolina.
Section 58-28-90. (A) Owners, operators, and providers of transmission and distribution facilities and ancillary services, including all federal, state, and local public power agencies, unless otherwise excluded herein, are required to provide access to those facilities, ancillary services, and other services, including maintenance, installation, repair, and meter reading, available to any buyer or seller on a nondiscriminatory and comparable basis to the extent permissible under federal and state law, including this chapter. The commission shall promote nondiscriminatory open access to the electric system for wholesale and retail transactions.
(B) Companies providing transmission or distribution services shall file at the Federal Energy Regulatory Commission or with the commission, as appropriate, comparable service tariffs that provide open access for all competitors. The commission shall monitor jurisdictional companies providing transmission or distribution services and take necessary measures to ensure that no supplier has an unfair advantage in offering access to and pricing the services.
(C) The commission shall establish by regulation, and consistent with federal law, standards, and conditions for the exchange of reciprocal rights for transmission and distribution access between corporations located within this State and those located outside the State. Corporations located outside South Carolina may not be an electricity supplier within the State unless the electric distribution company serving that customer has the reciprocal right, whether exercised or not, by statute, regulation, or voluntary tariff of the out-of-state corporation to serve a customer of the out-of-state corporation, if any.
Section 58-28-100. Upon the effective date of this chapter, all intrastate owners and operators of transmission and distribution facilities shall have comparable and reciprocal access to the transmission and distribution customers of other transmission and distribution facility owners and operators, for the purpose of providing generation services to the customers, subject to Section 58-28-150. This section does not impede any transactions involving interstate commerce.
Section 58-28-110. (A) The local utility must be relieved of its traditional obligation to serve but shall have an obligation to connect all customers within its service territory on nondiscriminatory terms and conditions.
(B) Consumers shall have the right to select their source of power supply, and shall have nondiscriminatory access to interconnection with their host electric utility, which utility is required to transport the electricity from the point of generation to the host's distribution facilities;
(C) In the case of a residential customer, or a customer in any other class or subclass of customers designated by the commission, failure by the customer to make its own alternative arrangements for power supply and delivery constitutes a request to the commission to select a provider under a commission-approved default provider plan. The default provider plan provides for the distribution of the customers equally among all licensed electricity generation suppliers that elect to participate in the commission's default provider plan in a nondiscriminatory manner.
Section 58-28-120. The right of eminent domain may not be used to:
(1) deny physical access or interconnection to transmission or distribution facilities;
(2) restrict the construction of new transmission or distribution facilities by any qualified party; or
(3) otherwise limit competition.
Section 58-28-130. (A) To the extent that the commission has jurisdiction over transmission and distribution pricing, the commission shall encourage pricing mechanisms to enhance reliability, compensate transmission owners fairly, allow for the widest possible markets, and relieve transmission congestion.
(B) The commission shall establish reasonable rates for unbundled local distribution services. The rates shall provide for jurisdictional transmission costs and distribution costs of providing distribution services. Rates must be based upon cost of service or performance-based incentives combined with other considerations to promote efficient, safe and reliable services at the lowest possible cost. Distribution charges must be structured as a fixed, monthly access fee. Distribution costs charged to each customer must be done in a nondiscriminatory manner. The monthly charge may differ across customer classes based on the cost of providing service to the class of customer. The monthly charge must be set based on a nondiscriminatory allocation of costs across customer classes. The monthly charge also may be related to load capacity within customer classes.
(C) Each incumbent electric utility shall file unbundled service tariffs to provide services to all eligible customers on a nondiscriminatory basis.
(D) The commission shall have jurisdiction over all aspects of transmission rates and services not subject to the exclusive jurisdiction of the Federal Energy Regulatory Commission.
Section 58-28-140. The subsidies for environmental, universal service, energy conservation, and other mandated programs must be unbundled from electric rates. The commission shall prepare and submit a report to the General Assembly that recommends legislative action, as appropriate, to remove barriers to fair competition.
Section 58-28-150. (A) No municipal electric system, state electric public service provider, or electric member cooperative which distributes electricity to customers may utilize the transmission or distribution system of an electricity supplier regulated by the commission for the purpose of supplying electricity to a customer unless the municipal electric system, state electric public service provider, or electric member cooperative provides open and nondiscriminatory access and allows other electricity suppliers to utilize its facilities, including any facilities it is entitled to provide third parties pursuant to contract, to make sales to customers it serves. Notwithstanding the foregoing, a municipality may prohibit electricity suppliers from serving customers within its municipality; however, such a municipality must be prohibited from providing generation service to customers outside its territorial limits which it did not serve before the effective date of this chapter. When a municipal electric system, state electric public service provider, or electric member cooperative elects to provide direct access for its customers or to supply direct access to other customers, it shall file with the commission a notice of intent to provide or supply direct access to customers. The commission shall require an electric member cooperative seeking a certificate of public convenience to provide open and nondiscriminatory access to its transmission and distribution facilities as a condition to the granting of the certificate. The reliability of the transmission service provided to an electric member cooperative must be comparable to the reliability which the transmission supplier provides at the wholesale level.
(B) All electric distribution companies must be subject to:
(1) the jurisdiction of the commission and regulated on the same basis including, but not limited to, regulation of rates, terms, and conditions; and
(2) uniform tax obligations to the extent that the electric distribution companies are subject to taxation on the effective date of this chapter.
Section 58-28-160. (A)(1) Following the process established herein, utilities are entitled to recovery of prudently incurred, net, verifiable stranded costs and investments.
(2) It is the intent of the General Assembly to provide appropriate tools and reasonable guidance to the commission in order to assist in addressing claims for stranded cost recovery and fulfilling its responsibility to determine rates which are equitable, appropriate, balanced, and in the public interest. In making its determinations, the commission shall balance the interests of the customers and utility investors during the limited recovery period. Nothing in this section is intended to provide any greater opportunity for stranded cost recovery than is available under applicable regulation or provision of law on the effective date of this chapter.
(B) Stranded cost charges shall not be recoverable for changes in usage occurring in the normal course of business, including those resulting from changes in business cycles, termination of operations, weather, reduced production, changes in manufacturing processes, installation or expansion of new self-generation, or co-generation equipment, performance of existing self-generation, or co-generation equipment, energy conservation efforts, or other similar factors.
(C)(1) Electric utilities shall have the duty to prudently, thoroughly, and aggressively mitigate stranded costs as of the effective date of this chapter.
(2)(a) Each public utility may file a recovery plan within three months after adoption of the restructuring plan by the commission. The recovery plan shall document anticipated stranded costs, mitigation proposals and offsetting increases in the value of other assets.
(b) The recovery plan shall propose a stranded cost recovery charge, which must be a fixed, monthly access charge, allocated to all customers pursuant to the most recent rate design approved by the commission subject to item (4) of this subsection.
(c) The recovery plan shall permit collection of a transition charge to recover net, unmitigated stranded costs over a period of ten years.
(d) The recovery plan shall establish net, unmitigatable stranded costs, provided that the recovery period and the amount of qualified transition costs shall yield a stranded cost recovery charge which shall not cause the total price charged by the incumbent electric utility for electric power, including transmission and distribution services, for any customer to exceed the cost for each kilowatt-hour paid on the effective date of this chapter during the recovery period.
(e) Recovery mechanisms that impede competition such as entry and exit fees shall not be utilized.
(f) The commission shall approve and publish a recovery plan for each utility submitting a plan not more than eighteen months after the effective date of this chapter.
(g) An electricity supplier that files with the commission a notice of intent to provide or supply direct access to customers pursuant to Section 58-28-150(A) is eligible for stranded cost recovery according to the provisions of this section, and the commission shall establish an appropriate timetable for the examination and determination of the electricity supplier's stranded costs.
(h) Any stranded costs not recovered under this chapter and the recovery plan, as modified and approved by the commission, within ten years shall not be recoverable by the public utility.
(3) Electricity suppliers shall have a duty to cooperate with the commission in the implementation of this chapter as a precondition for recovery of stranded costs. Approval of a recovery plan and collection of any stranded costs is considered a settlement of all the claims by an electricity supplier. No electricity supplier seeking to establish claims for recovery of stranded costs through any other means is eligible for recovery pursuant to a recovery plan or the collection of a stranded cost recovery charge. An electricity supplier that files with the commission a notice of intent to provide or supply direct access to customers pursuant to Section 58-28-150(A) is eligible for stranded cost recovery according to the provisions of this section, and the commission shall establish an appropriate timetable for the examination and determination of the electricity supplier's stranded costs.
(4) The commission shall be responsible for the final determination of permissible stranded cost recovery charges for each electricity supplier and for approval of the recovery plan subject to its determination in a rate case proceeding that the charge and the plan are equitable, appropriate, balanced, and promote customer choice.
(D)(1)Electricity suppliers shall be allowed to recover the net unmitigatable stranded costs associated with required environmental mandates currently approved for cost recovery and power acquisitions mandated by federal statutes.
(2) Electricity suppliers have an obligation to take all reasonable measures to prudently, thoroughly, and aggressively mitigate stranded costs. Mitigation measures may include, but are not limited to:
(a) reduction of expenses;
(b) renegotiation of existing contracts;
(c) refinancing of existing debt;
(d) sale, write-off, or write-down of uneconomic or surplus assets, including regulatory assets not directly related to the provision of electricity service.
(3) Stranded costs shall be determined on a net basis, be verifiable, shall not include transmission and distribution assets, and be reconciled to actual electricity market conditions from time to time subject to the limitations of subsection (B) above. Stranded costs shall include an offset for the market value of any assets, domestic or foreign obtained or controlled by an electricity supplier by purchase, acquisition, merger, or other means within three years before the effective date of this chapter.
(4) Power purchase contract obligations shall continue for the duration of the contract. Costs arising pursuant to the contracts or associated with any buy-out, buy-down, or renegotiation of the contracts shall be eligible for recovery in stranded cost recovery charges.
(5) Stranded benefits, any utility asset whose market value exceeds the book value, must be used to reduce stranded costs.
(6) Any recovery of stranded costs must be through a nonbypassable, nondiscriminatory, appropriately structured, access charge that is fair to all customer classes, lawful, constitutional, limited in duration, and consistent with the promotion of fully competitive markets. Charges to recover stranded costs shall only apply to customers within an electricity supplier's retail service territory. The charges neither shall apply to wheeling-through transactions nor shall they apply to any competitive alternative which existed before the effective date of this chapter including, but not limited to, self-generation and sales of nonfirm electricity. Stranded cost recovery charges must be based on the load capacity and class of each customer as determined by the commission.
(7) The commission is authorized to allow electricity suppliers to collect a stranded cost recovery charge, subject to its determination in the context of a rate case proceeding that the charge is equitable, appropriate, balanced, in the public interest, and consistent with the intent of this chapter. The burden of proof for any stranded cost recovery claim must be borne by the electricity supplier making the claim. The stranded cost recovery charge must be assessed as a separate line item on a customer's bill with the designation, 'stranded cost recovery charge'.
Section 58-28-170. (A) The commission shall promulgate appropriate regulations that ensure that reliable and safe electric service, with minimum residential consumer service safeguards, is maintained or improved.
(B) All electric utilities and providers of electric power delivery and ancillary services shall have in place sufficient measures to preserve the integrity, safety, reliability, and quality of electric service in South Carolina. Market entrants shall have appropriate provisions for capacity reserves, spinning reserves, and other ancillary services while maintaining the integrity of the bulk transmission network.
Section 58-28-180. Nothing in this chapter shall interfere with the rights of parties under contract. In addition, electric rates which by court decision or contract were frozen as of a particular date must remain at that level after the effective date of this chapter regardless of the electric power provider unless the customer affected agrees otherwise.
Section 58-28-190. No electric distribution company is liable for damages to a current or future customer if the customer's chosen generation supplier or provider of unbundled services fails to deliver the service in accordance with the terms of its bilateral contract with the customer. This provision may not be applied to relieve liability arising from the electric distribution company's own actions or failure to act.
Section 58-28-200. The commission shall develop a plan within three months of the effective date of this chapter to provide for the expedited review and resolution of disputes related to violations of the open access provisions of Section 58-28-90.
Section 58-28-210. Any existing jurisdictional uncertainties or disputes, regarding electric distributors, or suppliers shall not delay the implementation of this chapter.
Section 58-28-220. (A) There is established a legislative oversight committee on electric utility restructuring, which shall be known as the Electricity Competition Committee, consisting of fourteen ex officio members as follows:
(1) seven members of the House of Representatives appointed by the Speaker of the House.
(2) seven members of the Senate appointed by the President of the Senate.
(B) Committee members must be appointed within sixty days of the effective date of this chapter. Members shall serve for terms of two years and until their successors are appointed and qualify. Members may succeed themselves on the committee.
(C) A chairman and such other officers as the committee considers necessary must be selected by the committee.
(D) The Electricity Competition Committee shall be dissolved five years after the effective date of this chapter.
(E) The Electricity Competition Committee shall provide an annual report before November first of each year to the Governor, the House of Representatives, the Senate, and the Public Service Commission on the status of electric utility restructuring.
(F) The committee shall meet quarterly or as often as is necessary to conduct its business.
(G) The committee is responsible for working with the commission:
(1) to assess the transition to a competitive market;
(2) and other agencies, where necessary, to implement this chapter, its legislative intent and its restructuring principles.
(3) to develop any new legislation where necessary to promote electric utility restructuring and retail choice of electricity suppliers and to propose changes to existing provisions of law to be more consistent with the restructuring principles established in this chapter.
Section 58-28-230. If any provision or application of this chapter to a person or circumstance is held invalid, the invalidity may not affect other provisions or applications of the chapter which may be given effect without the invalid provision or applications and to this end the provisions of this chapter are declared severable.
Section 58-28-240. (A) Notwithstanding the provisions of Section 58-28-40, should the commission determine, upon petition by an electricity supplier, that the electricity supplier has provided substantial savings to a significant portion of residential customers following the initiation of customer choice under Section 58-28-40(B)(1) and before the deadlines established for direct access for commercial and industrial classes of customers in Section 58-28-40(B)(2) and (3), the commission shall authorize the electricity supplier to commence direct access to commercial and industrial customers within the State. If the commission authorizes the direct access to commercial and industrial customers by an electricity supplier, it may impose a temporary stranded cost recovery charge, subject to refund or adjustment, until such time as a stranded cost recovery charge is established for the commercial and industrial customers in accordance with Section 58-28-160. For purposes of this section, 'substantial savings' means an average total rate reduction for the electricity supplier's residential customers of twenty percent from the rate the customers paid before customer choice.
(B) An electricity supplier is eligible to provide direct access to commercial and industrial classes of customers under this section only as long as the:
(1) sales to commercial and industrial customers are no greater in amount than the amount of the electricity supplier's total aggregate load sold to residential customers; and
(2) rate reductions offered to industrial customers may be no greater than that offered to residential and commercial customers."
SECTION 2. Articles 3 and 5, Chapter 27 of Title 58 of the 1976 Code, and any other provisions of law which are inconsistent with Chapter 28 of Title 58, as added by Section 1 of this act, are repealed ninety days after the effective date of this chapter.
SECTION 3. This act takes effect upon approval by the Governor.