2010 Pennsylvania Code
Title 15 - CORPORATIONS AND UNINCORPORATED ASSOCIATIONS
Chapter 74 - Generation Choice for Customers of Electric Cooperatives
Cooperatives -

                                CHAPTER 74
                     GENERATION CHOICE FOR CUSTOMERS
                         OF ELECTRIC COOPERATIVES

     Sec.
     7401.  Short title of chapter.
     7402.  Application.
     7403.  Declaration of policy.
     7404.  Definitions.
     7405.  Customer choice in electric cooperative service
            territories.
     7406.  Competition by electric cooperatives.
     7407.  Transition surcharge and stranded cost recovery.
     7408.  Option to elect commission review.
     7409.  Universal service and energy conservation.
     7410.  Savings provision and repealer.

        Enactment.  Chapter 74 was added December 3, 1996, P.L.802,
     No.138, effective January 1, 1997.
        Cross References.  Chapter 74 is referred to in sections
     2803, 2805, 2809 of Title 66 (Public Utilities).
     § 7401.  Short title of chapter.
        This chapter shall be known and may be cited as the
     Electricity Generation Choice for Customers of Electric
     Cooperatives Act.
     § 7402.  Application.
        The provisions of 66 Pa.C.S. Ch. 28 (relating to
     restructuring of electric utility industry) shall not apply to
     electric cooperative corporations or to the laws relating to
     electric cooperative corporations.
     § 7403.  Declaration of policy.
        The General Assembly finds and declares as follows:
            (1)  Because of advances in electric generation
        technology and Federal initiatives to encourage greater
        competition in the wholesale electric market, it is now in
        the public interest to permit retail customers to obtain
        direct access to a competitive generation market as long as
        safe and affordable service is available at levels of
        reliability that are currently enjoyed by the citizens and
        businesses of this Commonwealth.
            (2)  Electric cooperative corporations which own and
        operate electric generation, transmission or distribution
        facilities in this Commonwealth, which are operated on a
        nonprofit basis and which are owned and are democratically
        controlled by the member-consumers which they serve are an
        essential part of the rural infrastructure and an important
        participant in the economic development and vitality of
        significant areas of this Commonwealth.
            (3)  In providing for customer choice for the member-
        consumers of electric cooperative corporations, the financial
        integrity, operations and independence of electric
        cooperative corporations must be protected and preserved,
        while comparable standards are provided for electric
        suppliers for the provision of service to new loads, by
        providing for the continued exemption for electric
        cooperative corporations from the jurisdiction and control of
        the commission and by providing for a separate system of
        choice for persons in the service territories of electric
        cooperative corporations.
            (4)  The complete right of electric cooperative
        corporations to compete with others in providing electric and
        other services must be provided for throughout this
        Commonwealth.
     § 7404.  Definitions.
        The following words and phrases when used in this chapter
     shall have the meanings given to them in this section unless the
     context clearly indicates otherwise:
        "Commission."  The Pennsylvania Public Utility Commission.
        "Departing member."  A member-consumer served at retail by an
     electric cooperative corporation that has given notice of intent
     to receive generation service from another source or that is
     otherwise in the process of changing generation suppliers. These
     persons shall nonetheless remain members of the electric
     distribution cooperative corporation for purposes of
     distribution service.
        "Electric-consuming facilities."  As defined in section 7352
     (relating to definitions).
        "Retail electric service."  As defined in section 7352
     (relating to definitions).
        "Service territory."  The service territory of electric
     cooperative corporations established in Chapter 73 (relating to
     electric cooperative corporations) as interpreted by existing
     case law.
        "Transition surcharge."  The total stranded costs payable to
     an electric cooperative corporation as a condition precedent to
     a consumer-member of an electric cooperative corporation having
     the right to receive electric generation service from another
     source.
     § 7405.  Customer choice in electric cooperative service
                territories.
        (a)  General rule.--
            (1)  An electric cooperative corporation shall provide
        open and nondiscriminatory access and allow other electric
        generation suppliers that have been licensed or certified by
        the commission or jurisdictional public utilities to utilize
        the cooperative's facilities to make sales to end-use
        customers it serves. A person that, on or after the effective
        date of this chapter, receives retail electric service at an
        electric-consuming facility from an electric cooperative in
        this Commonwealth or owns or occupies an electric-consuming
        facility within the service territory of an electric
        cooperative corporation shall have the right to purchase and
        receive electric generation from another source at the
        conclusion of a four-year transition and phase-in period
        beginning on the effective date of this chapter and ending
        January 1, 2001. The following schedule for phased
        implementation of retail access shall be adhered to unless
        the commission should determine to extend the transition and
        phase-in period for its jurisdictional electric utilities
        under 66 Pa.C.S. § 2806 (relating to implementation, pilot
        programs and performance-based rates), in which case the
        transition and phase-in period for electric cooperative
        corporations shall be substantially similar to that
        established by the commission for direct access to the
        competitive electric generation market by customers of
        electric utilities:
                (i)  As of January 1, 1999, a maximum of 33% of the
            peak load of each customer class shall have the
            opportunity for direct access.
                (ii)  As of January 1, 2000, a maximum of 66% of the
            peak load of each customer class shall have the
            opportunity for direct access.
                (iii)  As of January 1, 2001, all customers of
            electric cooperative corporations in this Commonwealth
            shall have the opportunity for direct access.
            (2)  If the commission establishes a phase-in period
        which is not uniform among electric utilities, then the
        phase-in period for persons in the service territories of
        electric cooperative corporations may be as long as that of
        the longest phase-in period permitted by the commission. No
        electric cooperative corporation may utilize the transmission
        or distribution system of an electric utility regulated by
        the commission for the purpose of providing generation
        electric service until the electric cooperative begins its
        phase-in period. No electric utility regulated by the
        commission may utilize the transmission or distribution
        system of an electric cooperative corporation until the
        electric utility begins its phase-in period other than for
        pilot programs.
            (3)  Electric cooperative corporations may develop retail
        pilot programs for their own service territories.
            (4)  Customer bills issued by an electric cooperative
        corporation shall contain unbundled charges sufficient to
        enable the customer to determine the generation component of
        and basis for those charges. Electric generation shall be
        delivered to the departing member by the electric cooperative
        which has the exclusive right to provide retail electric
        service in such area under Chapter 73 (relating to electric
        cooperative corporations) at the nondiscriminatory prices,
        terms and conditions determined by the electric cooperative
        corporation.
            (5)  It shall be the duty of an electric cooperative
        corporation which is a borrower from the Rural Utilities
        Service of the United States Department of Agriculture to
        maintain the integrity and safety of its distribution system
        in a manner to provide service to all customers connected to
        such system consistent with standards established by the
        Rural Utilities Service. It shall be the duty of an electric
        cooperative corporation which is not a borrower from the
        Rural Utilities Service to maintain the integrity and safety
        of its distribution system in a manner to provide service to
        all customers connected to such system consistent with
        standards of the National Electric Safety Code.
            (6)  The right in this subsection to take generation
        service from another source and the duty of an electric
        cooperative corporation to deliver service shall be expressly
        subject to and contingent upon the full advance satisfaction
        by a departing member of all of the following conditions,
        unless waived by the electric cooperative corporation:
                (i)  The departing member must give written notice of
            intent to receive generation service from another source
            to the electric cooperative corporation.
                (ii)  With the written notice of intent required by
            subparagraph (i), the departing member must provide to
            the electric cooperative corporation written evidence
            reasonably satisfactory to the electric cooperative
            corporation that the departing member has acquired all
            necessary transmission services and related ancillary
            services as may be necessary to transmit the generation
            service from the alternative electric supplier to the
            distribution system of the electric cooperative
            corporation.
                (iii)  The departing member must have made all
            payments for electric service or other services or
            products rendered to date by the electric cooperative
            corporation and must not otherwise be in violation or
            default of any membership requirement, rule or regulation
            of the electric cooperative corporation.
                (iv)  The departing member or the provider of the
            competing generation source must make full payment of a
            transition surcharge or transition surcharges to each
            electric cooperative corporation which provides
            distribution, transmission or generation service,
            directly or indirectly, to the departing member or
            associated electric consuming facility. During the
            conduct of a pilot program, the electric cooperative
            corporation may choose not to apply the transition
            surcharge to departing members. The duty to pay a
            transition surcharge by a departing member and the right
            of an electric cooperative corporation to collect a
            transition surcharge shall not apply to departing members
            who become new members of an electric cooperative
            corporation following the expiration of the phase-in
            provided for in this chapter.
        (b)  Effectiveness of existing contracts.--Notwithstanding
     the rights set forth in subsection (a), where an agreement for
     electric service evidenced by a signed writing between an
     electric cooperative corporation and any person exists prior to
     the effective date of this chapter, the person shall be bound by
     its terms and conditions and shall not have the right to receive
     generation service from another source until the expiration of
     the term of the agreement or otherwise pursuant to the terms and
     conditions of the agreement.
     § 7406.  Competition by electric cooperatives.
        (a)  Service rights.--Electric cooperative corporations may
     provide generation electric service to any person and at any
     location within this Commonwealth. In the case where an electric
     cooperative corporation provides generation electric service at
     retail to a person located outside of its service territory and
     within the franchised territory of an electric utility subject
     to 66 Pa.C.S. (relating to public utilities), it must first have
     been certified by the commission pursuant to subsection (e) and,
     unless it is otherwise exempt under subsection (d), it shall
     comply with all relevant terms, conditions and obligations
     applicable to electric generation suppliers pursuant to 66
     Pa.C.S. Electric cooperative corporations shall not be required
     to be licensed by the commission and shall be exempt as
     otherwise provided for in this chapter in any and all other
     respects from the jurisdiction and control of the commission. To
     the extent such services are not provided for resale to others,
     such persons must be members of the electric cooperative
     corporation. It shall not be necessary for an electric
     cooperative corporation to amend its bylaws to permit it to
     provide service to any person at any location within this
     Commonwealth. All other utilities and persons owning, operating
     or controlling electric transmission or distribution facilities
     within this Commonwealth shall be obligated to transmit and
     deliver generation service by electric cooperative corporations
     at the same prices and at the same terms and conditions as are
     approved by the commission or the Federal Energy Regulatory
     Commission for similar service to others.
        (b)  New load termination conditions.--In the case where an
     electric cooperative corporation provides generation service
     under subsection (a) to a person not located within its
     exclusive retail electric service territory and, consistent with
     any then-existing contract rights of the electric cooperative
     corporation, such person subsequently desires to receive
     generation service from another source, the departing member
     shall have the right to do so, contingent upon the full advance
     satisfaction of the following conditions, unless waived by the
     electric cooperative corporation:
            (1)  The departing member must give written notice of
        intent to receive generation service from another source to
        the electric cooperative corporation prior to the initiation
        of the new generation service.
            (2)  The departing member must have made all payments for
        electric service or other services or products rendered to
        date by the electric cooperative corporation.
        (c)  Relation to utilities gross receipts tax.--
            (1)  To the extent that an electric cooperative
        corporation provides generation electric service at retail to
        a person in this Commonwealth and located outside of its
        service territory as set forth in subsection (a), then for
        that limited purpose and in that limited area it shall be
        deemed to be the statutory equivalent of an "electric light
        company," a "waterpower company" and a "hydro-electric
        company" for purposes of section 1101 of the act of March 4,
        1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.
            (2)  To the extent that an electric cooperative
        corporation provides generation electric service at retail to
        a person in this Commonwealth and located outside of its
        service territory as set forth in subsection (a) and to the
        extent that the tax on sales of electric energy under section
        1101 of the Tax Reform Code of 1971 has not previously been
        imposed on such generation electric service or electric
        energy, then for that limited purpose and in that limited
        area such retail sales to end-use consumers under this
        chapter shall be deemed "sales of electric energy" for
        purposes of section 1101 of the Tax Reform Code of 1971.
        (d)  Small cooperative exceptions.--Because of the relatively
     small number of consumers which electric cooperative
     corporations serve, their relatively small electric loads, the
     nonprofit nature of their operations and their other unique
     characteristics, the General Assembly finds that it may be
     unduly burdensome and costly for small electric cooperative
     corporations to comply with the relevant terms, conditions and
     obligations applicable to electric generation suppliers pursuant
     to 52 Pa. Code Ch. 56 (relating to standards and billing
     practices for residential utility service) and regulations
     promulgated under 66 Pa.C.S. Ch. 28 (relating to restructuring
     of electric utility industry) when serving persons located
     outside of their service territories. Notwithstanding the
     provisions of subsection (a) requiring an electric cooperative
     corporation when serving persons outside of its territory to
     comply with relevant terms, conditions and obligations of
     electric generation suppliers pursuant to 52 Pa. Code Ch. 56 and
     regulations promulgated under 66 Pa.C.S. Ch. 28, an electric
     cooperative corporation may petition the commission to grant
     exemption from compliance with any or all such relevant terms,
     conditions or obligations or otherwise may petition the
     commission to establish and grant streamlined or reduced terms,
     conditions or standards. The commission shall approve such
     exemption, streamlining or reduction upon reaching a finding
     that the proposal is in the public interest. Exemptions shall
     not be transferable to any entity without prior commission
     approval. To the extent that an electric cooperative
     corporation, on its own or in partnership or combination with
     any other entity which operates on a for-profit basis, by sales
     outside of its service territory, increases its total net
     electric load by more than 20% of its total net electric load as
     of the effective date of this chapter, this subsection shall not
     apply. Nothing in this chapter shall be construed as allowing
     any entity, either through formation of a cooperative or through
     any other method described in this chapter, to avoid
     responsibility for paying a competitive transition charge that
     it would otherwise be required to pay pursuant to 66 Pa.C.S. Ch.
     28.
        (e)  Commission certification.--Prior to an electric
     cooperative corporation having the right to provide generation
     electric service at retail to a person located outside of its
     service territory as defined by Subchapter C of Chapter 73
     (relating to unincorporated area certified territory) and within
     the franchised territory of an electric utility subject to 66
     Pa.C.S., it must first have obtained from the commission a
     certification of its financial responsibility and technical
     capability, including the assurance that adequate reserve
     margins of electric supply are maintained. An application for
     certification by an electric cooperative corporation must be
     made to the commission in writing, be verified by oath or
     affirmation and be in such form and contain such information as
     the commission may require. A certification shall be issued by
     the commission to any qualified applicant if it is found that
     the applicant is fit, willing and able to perform properly the
     service proposed in conformity with the provisions of this
     chapter. No certification issued under this subsection may be
     transferred without prior commission approval.

        Cross References.  Section 7406 is referred to in section
     2810 of Title 66 (Public Utilities).
     § 7407.  Transition surcharge and stranded cost recovery.
        (a)  Transition surcharge.--A transition surcharge is the
     total stranded costs payable to an electric cooperative
     corporation as a condition precedent to a consumer-member of an
     electric cooperative corporation having the right to receive
     electric generation service from another source.
        (b)  Determination of stranded costs.--Total stranded costs
     shall be reasonably determined by an electric cooperative and
     may include:
            (1)  The pro rata share in all investments in electric
        cooperative distribution, transmission and generation plant
        and facilities.
            (2)  The pro rata share of foreseeable decommissioning
        costs of generation facilities.
            (3)  The pro rata share of all effective electric
        cooperative contractual commitments to others, regulatory
        assets, deferred debits and credits, fixed operation and
        maintenance expenses, expenditures made for the benefit of
        the departing customer and administrative and other costs
        incurred or to be incurred by an electric cooperative as a
        result of a decision by a consumer-member to take electric
        generation service from another source.
        (c)  Determination of pro rata share.--The pro rata share of
     electric cooperative stranded costs shall be determined on the
     basis of historical energy and capacity usage by this consumer-
     member compared to historical total energy and capacity usage of
     such electric cooperative or by direct assignment where
     applicable.
     § 7408.  Option to elect commission review.
        (a)  General rule.--The transition surcharge assessed by an
     electric cooperative corporation under this chapter generally
     shall not be subject to the jurisdiction or control of the
     commission. An electric cooperative corporation shall have the
     option of submitting its proposed transition surcharge for
     review by the commission in the manner set forth in subsection
     (b).
        (b)  Submission to commission.--Either by an affirmative vote
     of two-thirds of all members of the corporation or by an
     affirmative vote of two-thirds of all directors at a meeting of
     the members or directors called for the purpose, an electric
     cooperative corporation may elect the option of submitting a
     transition surcharge which has been adopted by its board of
     directors to the commission for review and approval. Within 30
     days of such action by an electric cooperative corporation, the
     secretary of the corporation shall certify such an action by the
     members or directors, as the case may be, and submit the
     transition surcharge to the secretary of the commission
     requesting review and approval.
        (c)  Commission determination.--The commission, within 90
     days after a submission under subsection (b), shall make a
     determination as to whether the transition surcharge of an
     electric cooperative corporation is just and reasonable and
     shall issue an order reflecting its determination. If no order
     is issued within 90 days, the transition surcharge shall be
     deemed to be approved as being just and reasonable, and all
     review proceedings shall be terminated. If no order is issued by
     the commission within the 90 days, no appeal may be taken
     relative to the effectiveness of the transition surcharge, and
     it shall have full force and effect.
        (d)  Alternative.--An electric cooperative corporation may
     take action by a majority vote of its board of directors to
     alter the amount of its transition surcharge. If the transition
     surcharge has previously been submitted to the commission for
     review and approval under subsection (b) and if the change by
     the board of directors causes a reduction of the current
     transition surcharge of greater than 10%, that action by the
     board of directors shall have the effect of immediately
     terminating any pending approval proceeding by the commission
     and ending its jurisdiction and control over the subject
     transition surcharge.
     § 7409.  Universal service and energy conservation.
        (a)  General rule.--Electric cooperative corporations shall
     ensure that universal service and energy conservation policies,
     activities and services that they provide as of the effective
     date of this chapter to assist customers who are low-income to
     afford electric service are appropriately funded and available
     within their territories. Such activities shall be funded by
     nonbypassable, competitively neutral cost-recovery mechanisms
     that fully recover the costs of universal service and energy
     conservation services.
        (b)  Definition.--As used in this section, the term
     "universal service and energy conservation" shall mean policies,
     protections and services that help low-income customers to
     maintain electric service, including customer assistance
     programs 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 and customer education.
     § 7410.  Savings provision and repealer.
        (a)  Savings.--Except as set forth in subsection (b), all
     provisions of Chapter 73 (relating to electric cooperative
     corporations) are saved from repeal and shall remain in full
     force and effect.
        (b)  Repeal.--
            (1)  Those provisions of Subchapter C of Chapter 73
        (relating to unincorporated area certified territory) are
        repealed insofar as they conflict with the right of a
        departing member to take generation service from an
        alternative generation supplier.
            (2)  Those provisions of Subchapters A (relating to
        preliminary provisions) and B (relating to powers, duties and
        safeguards) of Chapter 73 are repealed insofar as they
        conflict with the right of an electric cooperative
        corporation to provide generation service to any person and
        at any location within this Commonwealth.