2010 Pennsylvania Code
Title 66 - PUBLIC UTILITIES
Chapter 28 - Restructuring of Electric Utility Industry
2806 - Implementation, pilot programs and performance-based rates.

     § 2806.  Implementation, pilot programs and performance-based
                rates.
        (a)  General rule.--The generation of electricity shall no
     longer be regulated as a public utility service or function
     except as otherwise provided for in this chapter at the
     conclusion of a transition and phase-in period beginning on the
     effective date of this chapter and ending, consistent with the
     commission's discretion under this section, January 1, 2001. As
     of January 1, 2001, consistent with the commission's discretion
     under this section, all customers of electric distribution
     companies in this Commonwealth shall have the opportunity to
     purchase electricity from their choice of electric generation
     suppliers. The ultimate choice of the electric generation
     supplier is to rest with the consumer.
        (b)  Schedule.--Recognizing that approximately 5% of the peak
     load will have retail access through pilot programs, the
     following schedule for phased implementation of retail access
     shall be adhered to unless a determination is made by the
     commission under subsection (c):
            (1)  As of January 1, 1999, a maximum of 33% of the peak
        load of each customer class shall have the opportunity for
        direct access.
            (2)  As of January 1, 2000, a maximum of 66% of the peak
        load of each customer class shall have the opportunity for
        direct access.
            (3)  As of January 1, 2001, all customers of electric
        distribution companies in this Commonwealth shall have the
        opportunity for direct access.
            (4)  The commission shall establish regulations
        specifying that, within each customer class, the customers
        that are eligible for direct access prior to full direct
        access shall be determined on a first-come-first-served basis
        unless otherwise determined by the commission through
        regulation, in the context of restructuring plans, or in
        other appropriate administrative proceedings, to prevent
        competitive disadvantages among similarly situated customers
        within a customer class.
        (c)  Additional time.--
            (1)  The commission may determine that an additional six-
        month transition period is necessary prior to the January 1,
        1999, implementation date. A determination under this
        subsection must be made at least 45 days in advance of the
        scheduled date for implementation and must be based on one or
        more of the following considerations:
                (i)  Implementation would materially affect the
            reliability of the electric system.
                (ii)  Federal approvals necessary for the
            implementation of the provisions of this chapter have not
            been granted.
                (iii)  Communications and information systems
            necessary for the implementation of retail access have
            not been installed for reasons beyond the utility's
            control, as measured by appropriate industry standards.
                (iv)  Pennsylvania generators would be disadvantaged
            due to lack of regional reciprocity with respect to
            direct access.
                (v)  The interests of Pennsylvania consumers and the
            competitive position of Pennsylvania business and
            industry would be materially affected.
                (vi)  Such other consideration as would materially
            affect the orderly implementation of the legislative
            purpose of this chapter under section 2802(12) through
            (21) (relating to declaration of policy).
            (2)  Consistent with the considerations listed in
        paragraph (1), the commission may determine that an
        additional six-month transition period is necessary. This
        determination must be made by the commission by May 15, 1999.
        (d)  Filing of restructuring plans.--All electric utilities
     in this Commonwealth shall submit to the commission, pursuant to
     a schedule to be determined by the commission in consultation
     with the electric utilities, beginning on April 1, 1997, but in
     no event later than September 30, 1997, a restructuring plan to
     implement direct access to a competitive market for the
     generation of electricity.
        (e)  Contents of restructuring plans.--A restructuring plan
     under subsection (d) must include, consistent with the
     determinations of the commission, unbundled prices or rates for
     generation, jurisdictional transmission, distribution and other
     services; a proposed competitive transition charge; a proposed
     universal service and energy conservation cost-recovery
     mechanism; procedures for ensuring direct access to all licensed
     electric generation suppliers; a discussion of the impacts of
     the proposed plan on the utility's employees; and revised
     tariffs and rate schedules implementing the above.
        (f)  Commission review.--The commission shall review the
     restructuring plan filed by each electric utility and shall,
     after open evidentiary hearings with proper notice and
     opportunity for all parties to cross-examine witnesses, issue an
     order accepting, modifying or rejecting such plan at the
     earliest date possible, but no later than nine months from the
     filing of such restructuring plan. If the commission rejects a
     restructuring plan, it shall state the specific reasons for
     rejection and direct the electric utility to file an alternative
     plan addressing these objections within 30 days of the entry
     date of the commission order rejecting the plan. The commission
     shall review the alternative plan, solicit comments from
     interested parties and issue a final order within 45 days of the
     filing of the revised plan.
        (g)  Retail access pilot programs.--As of the effective date
     of this chapter, the commission has authority to order electric
     utilities to submit proposals for retail access pilot programs
     to begin April 1, 1997. The commission shall provide guidelines
     for retail access pilot programs by order.
            (1)  In order to determine whether all customers classes
        can benefit from competitive markets, utilities shall tailor
        proposed retail access pilot programs to accommodate the
        specific geographic, demographic and socioeconomic
        characteristics of their customer base. Retail access pilot
        programs must include an equal opportunity for the broadest
        practical direct access by all customer classes to electric
        generation suppliers.
            (2)  The minimum period of time for a retail access pilot
        program shall be one year and shall include an evaluation
        process as directed by the commission.
            (3)  In order to ensure the safety and reliability of the
        generation of electricity in this Commonwealth, participation
        in the retail access pilot programs shall be limited to
        electricity suppliers subject to commission licensure or
        certification.
                (i)  Each participating electricity supplier shall do
            all of the following:
                    (A)  Certify to the commission that it will pay
                and in subsequent years has paid the full amount of
                taxes imposed by Articles II and XI of the act of
                March 4, 1971 (P.L.6, No.2), known as the Tax Reform
                Code of 1971, and any tax imposed by this chapter.
                    (B)  Provide the commission with the address of
                the participant's principal office in this
                Commonwealth or the address of the participant's
                registered agent in this Commonwealth, the latter
                being the address at which the participant may be
                served process.
                    (C)  Agree that it shall be subject to all taxes
                imposed by the Tax Reform Code of 1971 and any tax
                imposed by this chapter.
                (ii)  Failure of an electricity supplier to pay a tax
            referred to in subparagraph (i) or to otherwise comply
            with the provisions of this paragraph shall be cause for
            the commission to revoke the license of the electricity
            supplier.
                (iii)  If an electricity supplier, other than an
            electric distribution company, does not pay the tax
            imposed upon gross receipts under section 1101 of the Tax
            Reform Code of 1971 or this chapter, the electric
            distribution company to whose retail customer the
            electricity supplier provided generation service shall
            remit the unpaid tax, as a tax on the use of electricity
            in this Commonwealth, to the Department of Revenue and
            may collect or seek reimbursement of the tax so paid from
            the electricity provider or any other appropriate party
            that used the electricity in this Commonwealth. The
            department shall collect and enforce the use tax herein
            provided under section 1102 of the Tax Reform Code of
            1971. Failure of the electric distribution company to pay
            the amount within 30 days after notice provided by the
            department shall cause interest to be imposed on the
            electric distribution company in accordance with Article
            XI of the Tax Reform Code of 1971. Interest shall be
            calculated from the 31st day after the department gives
            the notice required in this subparagraph. An electric
            distribution company or other appropriate person may
            challenge the imposition of the tax and interest by
            filing a petition with the department not later than 30
            days after the date on which the tax became due.
            (4)  The percentage of utility load committed to a retail
        access pilot program must be approximately 5% of utility's
        peak load for each customer class. Waivers of this condition
        may be considered by the commission for economic development
        purposes or special circumstances.
        (h)  Flexible pricing.--In addition to the implicit authority
     of the commission under section 501 (relating to general
     powers), the commission has the authority to approve flexible
     pricing and flexible rates, including negotiated, contract-based
     tariffs designed to meet the specific needs of a utility
     customer and to address competitive alternatives.
        (i)  Performance-based rates and alternative regulation.--The
     commission has authority to use performance-based rates as an
     alternative to existing rate base/rate of return ratemaking,
     subject to the restrictions pertaining to rate caps in section
     2804(4) (relating to standards for restructuring of electric
     industry).

        Cross References.  Section 2806 is referred to in sections
     2804, 2807, 2810, 2812 of this title; section 7405 of Title 15
     (Corporations and Unincorporated Associations).