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1168Type of Legislation: General Bill GBIntroducing Body: SenateIntroduced Date: 20000222Primary Sponsor: J. Verne SmithAll Sponsors: J. Verne Smith, Drummond, Mescher, Russell, Thomas, Glover and HayesDrafted Document Number: l:\council\bills\gjk\20834sd00.docResiding Body: SenateCurrent Committee: Judiciary Committee 11 SJSubject: Competitive Power Act of 2000, Public Service Commission, Public Utilities, Electricity, Utility Restructuring PlanHistory Body Date Action Description Com Leg Involved ______ ________ ______________________________________ _______ ____________ Senate 20000223 Co-Sponsor removed by Senator Ford Senate 20000222 Introduced, read first time, 11 SJ referred to Committee Versions of This 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 OF 2000" WHICH REQUIRES THE PUBLIC SERVICE COMMISSION TO ADOPT A PLAN FOR RESTRUCTURING THE ELECTRIC UTILITY INDUSTRY, REQUIRES INVESTOR-OWNED UTILITIES, MUNICIPAL UTILITIES, RURAL ELECTRIC COOPERATIVES, JOINT AGENCIES, AND STATE-OWNED UTILITIES TO EACH FILE WITH THE COMMISSION A UTILITY RESTRUCTURING PLAN PROVIDING FOR CUSTOMER CHOICE FOR ALL RETAIL ELECTRIC CUSTOMERS AND ESTABLISHING A PROTOCOL FOR THE UNBUNDLING OF SERVICES, PROVIDES FOR THE MANNER IN WHICH CUSTOMERS SHALL BE PERMITTED TO CHOOSE THEIR ELECTRIC GENERATION PROVIDER, PROVIDES FOR THE MANNER IN WHICH INVESTOR-OWNED UTILITIES, MUNICIPAL UTILITIES, BOARDS AND COMMISSIONS OF PUBLIC WORKS, RURAL ELECTRIC COOPERATIVES, JOINT AGENCIES, AND STATE-OWNED UTILITIES SHALL PARTICIPATE IN THE TRANSITION TO COMPETITION, CREATES A LEGISLATIVE OVERSIGHT COMPETITION COMMITTEE ON ELECTRIC UTILITY RESTRUCTURING, AND PROVIDES FOR RELATED MATTERS.
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 2000'.
Section 58-28-20. (1) The General Assembly finds and declares as follows:
(a) a free market economy should exist in South Carolina whenever possible;
(b) most experts including power company executives agree deregulation is inevitable and necessary;
(c) numerous states across the country are moving toward giving their citizens choices for the supply of electricity;
(d) regulation of the monopoly electric industry has resulted in rates which vary considerably among electric utilities;
(e) restructuring the electric generation industry to facilitate retail competition will increase customer choice and improve the variety of generation services available, thereby promoting the public interest;
(f) it is technically and administratively practical to restructure the electric industry in South Carolina to promote retail customer choice;
(g) competition in the retail market for electricity will have long-term benefits for the economy of South Carolina including more efficient use of resources, innovation in service and supply, and a more diverse and a decentralized electricity supply system;
(h) 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;
(i) it is the intent of the General Assembly to ensure the availability of dependable, affordable electrical service to all classes of customers in South Carolina; and
(j) 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; and
(2) 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) Competitive markets are preferred to regulation, which should serve as a substitute only in those circumstances where competition cannot provide results that serve the best interests of all consumers.
(b) To realize the full benefits of competition, all customers should be able to choose among and access a wide array of competing, qualified electric generation suppliers.
(c) All customers must have the opportunity to benefit from competition, which should be implemented in a fair and equitable manner.
(d) All customers should be made aware of their new rights and the benefits and risks of customer choice.
(e) 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.
(f) 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.
(g) Municipal electric utility, boards and commissions of public works, rural electric cooperatives, joint agencies, and state power authorities shall also participate in the transition to competition and the determinations of corporate structure, excluding market power issues, must be left to the marketplace and not dictated by the government.
(h) 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.
(i) Competition among electricity suppliers and buyers must be fair, nondiscriminatory, and consistent.
(j) 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.
(k) Following the process established herein, the utilities are entitled to recover prudently incurred, net, verifiable stranded costs.
(l) The South Carolina General Assembly has the responsibility to determine the just and reasonable recovery mechanism to determine net stranded costs including mitigation incentives.
(m) The General Assembly should provide for a public process that applies to costs stranded by competition, establish the time frame involved for an expeditious transition, and employ mechanisms that do not disadvantage one class of customer or supplier over another.
(n) The rights and obligations embodied in contractual arrangements are and will be an indispensable element of an effective competitive power market.
(o) Legislation should not interfere with the rights of parties under contract.
(p) 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.
(q) 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.
(r) The General Assembly shall establish a transition period to accomplish the transition to competition.
(s) This transition period shall provide 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.
(t) 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.
(u) The process of restructuring generation services with consumer choice has profound interstate implications.
(v) 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 and federal jurisdiction over transmission and distribution services are all important to workable competition.
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 an entity who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with a specified entity.
(2) 'Aggregator or market aggregator' means an entity, licensed by the commission, that serves as an agent/intermediary on behalf of a group of 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) 'Bundled electric rates' means rates designed to recover all costs of providing the services required to generate and deliver electricity, along with all associated costs of providing customer services, on a combined basis.
(5) 'Commission' means the South Carolina Public Service Commission.
(6) 'Customer' means a retail electric customer.
(7) '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.
(8) 'Electric distribution company' means the public electrical utility providing facilities for the jurisdictional 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.
(9) 'Electric generation supplier' or 'electricity supplier' means a person or corporation including municipal corporations' 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.
(10) 'Incumbent electric utility' means an investor-owned utility, rural electric cooperative, municipal electrical utility, board and commission of public works, or state public service authority providing electric service under bundled electric rates to retail customers prior to restructuring under this chapter. Regulated incumbent electric supplier means those incumbent electric suppliers that were regulated by the commission prior to the effective date of this chapter.
(11) '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.
(12) '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.
(13) '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.
(14) 'Stranded costs' are the costs, liabilities, and investments in generation-related assets incurred by an incumbent electric utility to serve customers in a regulated marketplace that may not be recoverable in a competitive marketplace. Stranded costs shall not include costs which can be avoided.
(15) 'Stranded cost recovery charge' means a nonbypassable charge applied to the bill of customers accessing the transmission or distribution network which charge is designed to recover an electric utility's stranded costs as recommended by the commission under Section 58-28-130.
(16) '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.
(17) 'Unbundled electric rates' means rates designed to separately recover the costs of providing generation, transmission, distribution, customer, and public policy services, as well as recovery of approved stranded costs.
(18) '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 three years after this chapter becomes effective, 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, in order to have full customer choice for all customers no later than three years after this chapter becomes effective.
(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) the development of a regional independent system operator or the establishment on an interim basis of an in-state process to carry out the functions of transmission;
(2) the development, examination, and implementation of utility-specific restructuring processes;
(3) the identification and evaluation of utility stranded costs;
(4) the examination of consumer support programs;
(5) the development and implementation of customer education to increase awareness and understanding of the implications of restructuring;
(6) the evaluation of potential market power issues under existing federal and state laws;
(7) the examination of the necessity, desirability, and feasibility of incorporating new technologies for system operations and other areas;
(8) the identification and resolution, to the extent possible, of federal and state jurisdictional issues;
(9) the development of a consumer protection process;
(10) the establishment of financial requirements for electricity suppliers to ensure reliability and security;
(11) the development of a metering, billing, and accounting system to ensure the accuracy of the electricity suppliers' deliveries;
(12) the development of a plan for the expedited review and resolution of disputes related to violations of the open access provisions of this chapter.
(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. (A) No later than six months after the adoption of the restructuring plan by the commission, each incumbent electric utility, which includes investor-owned utilities, municipal utilities, boards and commissions of public works, rural electric cooperatives, joint agencies, and state-owned utilities, shall file a utility restructuring plan for review and comment before the commission providing for customer choice for all retail electric customers as set forth in this chapter and establishing a protocol for the unbundling of services as required by this chapter.
(B) The restructuring plan for competition and customer choice for all retail electric customers shall be fully implemented no later than three years after the effective date of this chapter.
Section 58-28-60. All customers must be permitted to choose their providers of electric generation 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 this chapter.
(2) Customers may choose to receive generation from or through market aggregators, brokers, cooperatives, buying clubs, municipalities, joint agencies, or other entities which buy or arrange for electric generation. Any of these entities may choose to be market aggregators. Market aggregators may generate electricity directly, buy and sell electricity, or enter into financial contracts for electric generation resources. In no event may a government entity acting as a market aggregator deny its citizens direct access to any other electricity supplier.
(3) Customers who do not choose an alternative source of generation will be provided service by a default provider. The default provider shall be the electricity supplier affiliated with the distribution system to which the customer is connected.
Section 58-28-70. (A) Generation providers or suppliers for purposes of this section shall be defined as generators, aggregators, power marketers, and others (such as cogenerators supplying excess power) that supply electricity to a retail market. The commission shall establish certification requirements to contribute toward attaining reliability and adequacy of service from these providers under competition and also aid in ensuring compliance with commission procedures and rules. Adequacy and reliability require the supplier to have financial capability, management, operational, and technical expertise, and facilities and contractual arrangements necessary to meet the needs of customers. Each supplier shall be responsible and held accountable for delivering power to the grid to fulfill its customers' requirements and to meet any customer protection requirements established by the General Assembly or the commission. A potential supplier shall not be allowed to commence operation in the State until it has fully complied with all of the certification requirements established by the General Assembly or the commission. The commission also shall have the authority to decertify a generation provider or supplier for failure to maintain certification requirements.
(B) The commission may not limit market entry for anti-competitive reasons or 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) 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 metering, meter reading, resolving complaints, 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.
(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 regulatory treatment in the future. Disparate regulation that favors certain competitors or disadvantages others shall be eliminated by the commission. This process also requires municipal electrical utilities, rural electric cooperatives, and state public service authorities to participate in customer choice.
(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 including divestiture of assets.
(C) Customer bills shall contain unbundled charges sufficient to enable the customer to determine the basis for those charges.
(D) The electric distribution company shall continue to provide consumer service functions consistent with the regulations of the commission including metering, meter reading, resolving complaints, customer billing, 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 as existed prior to direct access.
(1) The commission shall promulgate regulations to ensure that an electric distribution company may not change a customer's electricity supplier without 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 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.
Section 58-28-90. The local utility must be relieved of its traditional obligation to serve but shall have an obligation to connect all customers within the territory where it conducts its electric distribution business on nondiscriminatory terms and conditions. Any actions taken pursuant to this section must comply with the provisions of Section 58-28-60(3) relating to default service providers.
Section 58-28-100. (A) The distribution, customer service, public policy, and stranded cost rates, and functions of the regulated incumbent electric utilities shall continue to be regulated by the commission. The jurisdictional transmission rates and functions of all transmission service providers shall be regulated by the commission.
(1)(a) The commission shall adopt a plan to provide for the unbundling of charges for including, but not limited to, metering, meter reading, resolving complaints, and customer billing from the charge for construction, operation, and maintenance of the distribution system for purposes of determining the nondiscriminatory, appropriate payments to the electric distribution company for each service. Each regulated incumbent electric utility shall file unbundled service tariffs to provide services to all eligible customers on a nondiscriminatory basis. Customer bills shall contain unbundled charges sufficient to enable the customer to determine the basis for those charges.
(b) The commission shall establish reasonable rates for unbundled local distribution services. The rates shall provide for recovery of the 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 costs must be charged to each customer on a nondiscriminatory basis. Distribution charges may differ across customer classes based on the cost of providing service to the class of customer. The monthly charge may also be related to load characteristics within customer classes.
(c) In the development of retail rates, the costs of mandated public policy programs must be unbundled from other services and separately recovered.
(2)(a) 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.
(b) The commission shall encourage pricing mechanisms to enhance reliability, compensate transmission owners fairly, allow for the widest possible markets, and relieve transmission congestion. Companies providing transmission 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.
(c) The commission shall establish reasonable rates for jurisdictional transmission 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. Transmission costs must be charged to each electricity supplier or customer on a nondiscriminatory basis.
(d) The commission shall monitor jurisdictional companies providing transmission services and take necessary measures to ensure that no supplier has an unfair advantage in offering access to and pricing the services.
(B) Municipal electrical utilities, joint agencies, rural electric cooperatives, and state power authorities shall continue to be regulated by their respective governing bodies.
(1) Municipal electrical utilities, boards, commissions of public works, rural electric cooperatives, joint agencies, and state power authorities shall functionally unbundle their rates for providing generation, transmission, distribution, and customer services. Transmission, distribution, and customer service rates must be nondiscriminatory and shall apply to both the municipal utilities, rural electric cooperative, joint agency, or state power authority and any other electric generation suppliers or customers on the same basis.
(2) The governing body shall adopt a plan to provide for the unbundling of charges for including, but not limited to, metering, meter reading, resolving complaints, and customer billing from the charge for construction, operation, and maintenance of the distribution system for purposes of determining the nondiscriminatory, appropriate payments to the electric distribution company for each service. Customer bills shall contain unbundled charges sufficient to enable the customer to determine the basis for those charges.
(3) The governing body shall establish reasonable rates for unbundled local distribution services. The rates shall provide for recovery of the 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 costs must be charged to each customer on a nondiscriminatory basis. Distribution charges may differ across customer classes based on the cost of providing service to the class of customer. The monthly charge may also be related to load characteristics within customer classes.
(4) In the development of retail rates, the costs of mandated public policy programs must be unbundled from other services and separately recovered.
(5) In establishing unbundled rates, the governing body of a transmission service provider shall be subject to commission regulation relating to the jurisdictional transmission function and rates of the municipal electrical utility, rural electric cooperative, joint agency, or state power authority.
Section 58-28-110. 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 58-28-120. (A) 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. This section does not impede any transactions involving interstate commerce.
(B) All owners, operators, and providers of transmission, distribution, or ancillary services, 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 and the governing bodies shall promote nondiscriminatory open access to the electric system for wholesale and retail transactions.
(C) A municipal electric system, board and commission of public works, state power authority, or rural electric cooperative which distributes electricity to customers may utilize the transmission or distribution system of an electric distribution company regulated by the commission for the purpose of supplying electricity to a customer. In the same manner, a municipal electric system, state power authority, or rural electric cooperative shall provide open and nondiscriminatory access to 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. The reliability of the transmission service provided to all electric generation suppliers must be comparable to the reliability which the transmission supplier provides to its own customers or the customers of its affiliated electric generation suppliers.
(D) 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.
(E) Customers shall have the right to select their source of power supply. Customers and electric generation suppliers shall have the right to have power transported on a nondiscriminatory basis:
(1) from the point of generation to the point of delivery to the electric distribution system; and
(2) from the point of delivery to the electric distribution system to the customer.
Section 58-28-130. (A)(1) Following the process established herein, electric systems providing retail electric service or sale for resale electric service or both in South Carolina as of the effective date of this chapter are entitled to recover 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 electric systems, customers, and utility investors during the limited recovery period. Nothing in this section is intended to reduce any opportunity for stranded cost recovery that is available under other applicable regulation or provision of law on the effective date of this chapter.
(3) The commission shall address the issue of stranded costs in the manner provided by this chapter. These proceedings shall determine the initial estimate of the allowed level of stranded costs for each utility. These proceedings would consider unbundling proposals for organizational and service purposes; cost studies related to unbundled services; determination of new rates for unbundled services; codes of conduct for affiliates and marketers of competitive services; standards for fair competition; and other issues necessary to comply with the restructuring process.
(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 systems entitled to recover stranded costs under subsection (A)(1) shall have the duty to mitigate stranded costs prudently, thoroughly, and aggressively as of the effective date of this chapter.
(2)(a) Each electric system entitled to recover stranded costs under subsection (A)(1) must file a stranded cost plan with the commission within three months after adoption of the restructuring plan by the commission. The stranded costs plan shall document anticipated stranded costs including anticipated costs for decommissioning of nuclear generating facilities, mitigation proposals, value to be received for the asset during the recovery period, and offsetting increases in the value of other assets.
(b) After such proceeding as the commission deems appropriate, the commission shall approve all prudently incurred, net, verifiable stranded costs for each such electric system.
(c) The commission shall approve a stranded cost recovery charge sufficient to recover the stranded costs of each electric system, which must be a fixed, monthly access charge, to be allocated to all retail customers of such electric system; provided, however, that the stranded cost recovery charge approved for any joint agency established under the provisions of Section 6-23-50 and owning an interest in a project acquired from an electric supplier as defined in Section 6-23-20(e), as of the effective date of this act, and the stranded cost recovery charge for any generation and transmission cooperative owning an interest in a project acquired from an electric supplier as defined in Section 6-23-20(e), as of the effective date of this act and the stranded cost recovery charge for the electric supplier from which the joint agency or cooperative acquired its interest in such project shall be combined and allocated on an equitable basis to all customers and customer classes of the electric distribution system of the member of such joint agency or cooperative, and to all retail customers and retail customer classes of any electric supplier in South Carolina as defined in Section 6-23-20(e) from which the joint agency or cooperative acquired its interest in the project.
(d) The commission shall provide for collection of the transition charge to recover net, unmitigated stranded costs over a period of up to ten years.
(e) Recovery of stranded costs shall include such exit fees as the commission may establish to reimburse the distribution companies only for administrative costs of a customer changing generation providers. Stranded costs must be recovered from all customers within each electric system pursuant to subsection (C)(2)(c) and subsection (D)(7). Exit fees shall not duplicate nor replace the costs to be recovered pursuant to subsection (C)(2)(c) or subsection (D)(7).
(f) Any stranded costs not recovered under this chapter and the stranded cost plan, as approved by the commission, within ten years shall not be recoverable by the electric system.
(3) Electric systems shall have a duty to cooperate with the commission in the implementation of this section as a precondition for recovery of stranded costs. The General Assembly's approval of a stranded cost plan and collection of any stranded costs shall constitute a settlement of all the stranded costs by an electric system. No electric system seeking to establish claims for recovery of stranded costs through any other means is eligible for recovery pursuant to the commission's stranded cost plan or the collection of the approved stranded cost recovery charge.
(D)(1) Electricity suppliers shall be allowed to recover the net unmitigatable stranded costs associated with required environmental mandates approved for cost recovery and power acquisitions mandated by federal statutes.
(2) Electric systems shall be allowed to recover reasonably anticipated costs of decommissioning of nuclear generation facilities as established by the commission.
(3) Electric systems have an obligation to take all reasonable measures to mitigate stranded costs prudently, thoroughly, and aggressively. 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.
(4) 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) of this section. Stranded costs shall include an offset for the market value of any assets, domestic or foreign obtained or controlled by an electric system by purchase, acquisition, merger, or other means within three years before the effective date of this chapter.
(5) 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.
(6) Stranded benefits, any utility asset whose market value exceeds the book value, must be used to reduce stranded costs.
(7) The recovery of stranded costs must be through a nonbypassable, nondiscriminatory, appropriately structured access charge as provided in this section. The charges for recovery of stranded costs shall not 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 may be based on the load capacity and class of each customer as determined by the commission.
Section 58-28-140. (A) The commission shall promulgate appropriate regulations that ensure that reliable and safe electric service, with minimum 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 58-28-150. 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 58-28-160. 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 affect liability issues related to the electric distribution company's own actions or failure to act.
Section 58-28-170. Any existing jurisdictional uncertainties or disputes, regarding electric distributors or suppliers shall not delay the implementation of this chapter.
Section 58-28-180. (A) There is established a legislative oversight competition committee on electric utility restructuring, which shall be known as the Electricity Competition Committee, consisting of fourteen 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 Pro Tempore 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 after full implementation 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;
(4) to assess whether or not any electric utility has been unreasonably advantaged or disadvantaged in the transition to a competitive market.
Section 58-28-190. 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 2. Any 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.
This web page was last updated on Wednesday, December 9, 2009 at 9:10 A.M.