H 3414 Session 112 (1997-1998)
H 3414 General Bill, By D. Smith and Robinson
A BILL TO AMEND TITLE 58, CODE OF 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.
02/06/97 House Introduced and read first time HJ-24
02/06/97 House Referred to Committee on Labor, Commerce and
Industry HJ-24
A BILL
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:
"CHAPTER 28
South Carolina Competitive Power Act
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.
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