§ 56-1.2 amended.

Public utilities; persons not designated as public utility, public service corporation, etc. Excludes from the definitions of public utility, public service corporation, and public service company any person who owns or operates property and provides electricity, natural gas or water to residents or tenants on the property, if such person (i) purchases such electricity, natural gas or water from a public utility, public service corporation, public service company, municipality or other public body, (ii) only charges the resident or tenant an amount not exceeding such tenant's or resident's actual utility charges and does not charge for meter reading, and (iii) maintains three years' billing records for such charges. HB 1937; CH. 778.

§§ 25-233 and 56-49 amended.

Public service corporations and electric authorities; eminent domain. Clarifies that public service corporations which have not been (i) allotted territories for public utility service by the Virginia State Corporation Commission (SCC) or (ii) issued certificates to provide public utility service may not acquire property through eminent domain for lines and other facilities until they have obtained from the SCC the requisite certificates of public convenience and necessity required for such lines and facilities. The bill also furnishes clarification concerning petition and public hearing requirements applicable to the exercise of eminent domain by (i) public service corporations and (ii) electric authorities established pursuant to the provisions of Chapter 54 (§ 15.2-5400 et seq.) of Title 15.2. HB 1881; CH. 531/SB 899; CH. 484.

§ 56-210 amended.

Electric cooperatives; purpose; prohibited activities. Establishes July 1, 2000, as the date when electric cooperatives may provide within their certificated service territories specified energy and engineering services, such as sales and service of HVACR equipment, sales of propane fuel oil, etc. Currently, cooperatives may begin providing such services on July 1, 1999. HB 2013; CH. 415.

§ 56-224.2 added.

Distribution cooperatives; donation of certain patronage capital to the cooperative. Allows cooperative bylaws or member agreements to deem that retired patronage capital of (i) a deceased person with no identifiable spouse or next of kin or (ii) a member or former member who has terminated service and may not be located is a gift to the cooperative. Such credits may be deemed a gift to the distribution cooperative only if the cooperative publishes notice of such retired patronage capital in its regular member publication and a publication of general circulation, and the retired patronage capital credit remains unclaimed for at least 120 days, or longer if set out in the bylaws or member agreement. If the cooperative does not publish such notice or does not have a provision in its bylaws or member agreement pertaining to retired patronage capital, the unclaimed retired patronage capital is treated in accordance with the Uniform Disposition of Unclaimed Property Act.

The bill also declares that its provisions are applicable only to cooperatives organized on a mutual, not-for-profit basis, with a democratically elected board. The bill's provisions with respect to its notice and publication provisions become effective July 1, 1999, and the other provisions of the bill are declared to be declaratory of existing law. HB 2355; CH. 939/SB 1334; CH. 940 (effective-see bill).

§§ 56-231.15 through 56-231.37 and 56-231.38 through 56-231.52 added; §§ 56-209 through 56-231.14 repealed.

Public service companies; restructuring utility cooperatives. Establishes new enabling statutes for distribution electric cooperatives and power supply cooperatives. The legislation makes the following changes concerning distribution cooperatives: (i) introduces several structural revisions including amended membership qualifications and a mechanism for changing the number of classes of directors, (ii) ensures that the regulated activities of cooperatives will remain regulated to the same extent as the same activities of other entities, and that unregulated activities will not be regulated, (iii) clarifies the authority of cooperatives to offer multiple types of utility services, directly or through subsidiaries, and (iv) increases the limit on early pay-outs of capital credits to the next of kin of deceased members from $5,000 to $10,000. The measure makes the following changes concerning power supply cooperatives: (i) authorizes them to engage in sales at retail, (ii) revises their membership qualifications and classes of membership, (iii) clarifies the legality of cooperative independent system operators and regional power exchanges, (iv) authorizes generation cooperatives to issue preferred stock, and (v) emphasizes their ability to recover the costs of investments that have become stranded as a consequence of electric utility industry restructuring. The bill also requires the Virginia State Corporation Commission to establish codes of conduct governing relations between cooperatives and their affiliates, when such affiliates are engaged in business activities that are not regulated utility services. The bill also establishes a private right of action that accrues to any person sustaining any loss resulting from a violation of any provisions of such codes of conduct. The bill also stipulates that neither existing cooperatives nor their subsidiaries may, subject to certain exceptions, engage in the sale or service of HVACR equipment or service, or in the sale or distribution of propane or fuel oil, or equipment using the same, until July 1, 2000. HB 2438; CH. 874.

§ 56-232 amended.

Public utilities; small power producers; exemption from utility regulation. Exempts from the definition of "public utility," for the purpose of public utility rate and service regulation by the Virginia State Corporation Commission (SCC) under Chapter 10 (§ 56-232 et seq.) of Title 56, small power producers (qualified as such under the federal Public Utilities Regulatory Act of 1978, and FERC regulations implementing the same) (i) whose rated capacity does not exceed 7.5 megawatts and (ii) whose output is not sold to residential customers. Under current law, small hydroelectric producers not exceeding 20 megawatts of rated capacity are exempt from SCC rate and service regulation if their output is sold to fewer than five end users, none of whom may be residential customers. The bill also exempts from SCC regulation aggregators of such small power producers. HB 2646; CH. 419.

§ 59.1-199 amended; § 56-235.8 added.

Gas utilities; retail supply choice; taxation; consumer protection. Authorizes gas utilities operating in Virginia to offer retail supply choice to all their customers. Transportation and delivery of gas would continue to be regulated by the State Corporation Commission ("SCC"). Gas utilities seeking to offer retail supply choice must file a plan for implementation with the SCC. The SCC must accept the plan if it contains (i) a schedule for implementing retail supply choice for all customers, (ii) tariff revisions and terms and conditions of service designed to provide nondiscriminatory open access over a gas utility's transportation system, thereby allowing competitive suppliers to sell gas directly to a gas utility's existing customers, (iii) provisions for complete recovery of non-mitigable costs prudently incurred to support the gas utility's merchant obligation, (iv) tariff provisions to balance the receipt and deliveries of gas supplies to retail supply choice customers, (v) a mechanism for offering to gas suppliers and customers a right of first refusal to acquire the gas utility's upstream transmission and/or storage capacity, (vi) a code of conduct designed to prevent anti-competitive or discriminatory conduct and the unlawful exercise of market power, and (vii) other requirements established by the SCC. The SCC must approve the plan to offer retail supply choice unless, after notice and opportunity for hearing, the SCC determines the plan (i) jeopardizes or impairs the safety or reliability of natural gas service by the gas utility or the provision of adequate service to the gas utility's customers, (ii) produces a rate of return for the gas utility unreasonably in excess of authorized levels, (iii) adversely affects the gas utility's customers not participating in the retail supply choice plan, or (iv) unreasonably discriminates against one class of the gas utility's customers in favor of another class. Plans approved by the SCC may not be placed into effect before July 1, 2000. The bill also establishes a private right of action for individuals harmed by gas suppliers' deceptive or unfair practices in providing or marketing gas service. The Senate Finance Committee, House Finance Committee, Senate Committee on Local Government and House Committee on Counties, Cities and Towns are required to conduct a joint study of taxation of gas utilities and submit their recommendations by December 15, 1999. In formulating their findings and recommendations, the committees are required to consider and assess the effect of state and local taxation of gas utilities and natural gas suppliers on the economic development goals and objectives of the Commonwealth. Furthermore, the committees are required to formulate and recommend specific statutory language to ensure (i) revenue neutrality for the Commonwealth and its local governments and (ii) that any revisions to the existing regime of local and state taxation of gas utilities and natural gas suppliers do not increase the tax rate applicable to, or tax burdens borne by, gas utilities, natural gas suppliers and gas customers, as of the date of enactment of this legislation. This measure expires July 1, 2000. SB 1105; CH. 494.

§ 56-265.1 amended.

Public utilities; Utilities Facilities Act; exemption. Exempts from regulation under the Utilities Facilities Act authorities created pursuant to the Virginia Water and Waste Authorities Act making a sale or ancillary transmission or delivery service of landfill gas to a commercial or industrial customer from a solid waste management facility permitted by the Department of Environmental Quality and operated by that same authority, if such an authority limits off-premises sale, transmission or delivery service of landfill gas to no more than one purchaser. SB 1273; CH. 768.

§ 56-484.11 amended.

Wireless Enhanced Public Safety Telephone Service Act; audit of Board's accounts. Requires the Auditor of Public Accounts, or his legally authorized representatives, to annually audit the accounts of the Wireless E-911 Service Board (the Board). The cost of such audit services will be borne by the Board. The Board must furnish copies of such audit to the Governor. HB 1880; CH. 530.

§ 15.2-1500 amended; §§ 56-484.12, 56-484.13, and 56-484.14 added; second enactment of Chapter 906 of the 1998 Acts of Assembly repealed. Local telecommunications services. Grants localities, electric commissions or boards, industrial development authorities and economic development authorities the ability to lease on nondiscriminatory terms, for a term not to exceed 10 years, a certain telecommunications infrastructure to one or more certificated local exchange telephone companies and to not-for-profit educational schools and institutions, hospitals, health clinics and medical facilities for use in serving their not-for-profit purposes. The price for such lease may include reasonable provisions for the recovery of the cost of the network and installation of additional fiber and related facilities to complete the lessor's network but shall not otherwise be related to the revenue or profit of the lessee. The lessor may not profit from the leasing of such facilities. No such lease shall be effective unless, prior to entering into such lease: (i) the proposed lessee petitions the State Corporation Commission to approve such lease of the dark fiber and (ii) the Commission, after notice and an opportunity for hearing in the affected area, issues a written order approving the lease or fails to approve or disapprove the lease within 60 days after notice. The State Corporation Commission shall find that it is in the public interest to approve such lease unless one of several factors can be demonstrated to the Commission. The July 1, 2000, sunset provision is repealed. HB 2277; CH. 916.

§§ 56-576 through 56-595 added.

Virginia Electric Utility Restructuring Act. Restructures Virginia's electric utility industry. The bill deregulates the generation component of electric service, eventually permitting all Virginia electricity customers to purchase generation service from the provider of their choice. Customer choice of generation suppliers will be phased in beginning in 2002, to be completed by 2004. The Virginia State Corporation Commission (SCC) can delay this schedule's implementation - but not beyond 2005 - based on considerations of reliability, safety and market power. Transmission and distribution will remain regulated services, with transmission regulated principally by the Federal Energy Regulatory Commission (FERC) and distribution by the Virginia State Corporation Commission. Electric utilities will retain ownership and control over their current transmission systems and distribution service territories. Additionally, electric utilities are required by 2001, to join or establish regional transmission entities which will manage and control their transmission assets.

During the transition from fully regulated electricity prices to generation customer choice, capped rates for electricity service will be in effect during the period 2001 through 2007. Capped rates fall into two categories: (i) comprehensive ("bundled") rates for generation, transmission and distribution and (ii) rates for "unbundled" generation services only. The rates will be established on the basis of (i) utilities' rates in effect on July 1, 1999, or (ii) rates established through utility rate cases filed before January 1, 2001, by utilities not currently bound by any rate case settlements with the SCC. During the capped-rate period, the SCC may adjust these rates to reflect changes in fuel costs, taxes, or utilities' financial distress beyond their control. The SCC is also authorized, after 2004, to terminate capped rates in an electric utility's former service territory. Such termination must follow a finding that there is effective competition for generation services within that service territory.

Customers who purchase generation services from alternate generation suppliers (suppliers other than the incumbent electric utilities furnishing electric service to these customers prior to restructuring) during the capped-rate period may be required to pay a usage-based surcharge, or "wires charge." This charge will cover these "shopping customers'" pro rata share of incumbent utilities' potential losses, if any, resulting from market-based generation prices that are lower than the capped generation rates. The wires charge will also cover the shopping customers' pro rata share of any costs incurred by these customers' former electric utilities as part of their transition to a competitive market for generation services (and determined by the SCC to be just and reasonable). However, the combination of wires charges, together with (i) the unbundled charges for transmission and distribution services and (ii) projected market prices for generation, cannot exceed the capped rate for bundled electric service in effect for each utility during the capped-rate period. The bill stipulates that it is through capped rates or wires charges that Virginia's electric utilities will recover their just and reasonable net "stranded costs," if any, that exceed zero value in total.

Customers who are either unable or unwilling to shop for alternative generation suppliers are entitled to receive bundled electric service from "default" providers. Default service would be available after customer choice is available for all customers (as early as 2004, but no later than 2005). The bill requires the SCC to designate default service providers in all of the incumbent utilities' former service territories. These providers may be designated from among incumbent utilities or from among other suppliers willing to provide one or more components of default service. Rates charged for default generation service will be established by the SCC. On and after July 1, 2004, the SCC is required to annually determine whether default service can be eliminated for particular customers, customer classes, or in particular geographic areas of the Commonwealth. The SCC's findings are to be reported annually to the Legislative Transition Task Force.

The bill establishes licensing procedures for all persons and entities proposing to furnish competitive generation services in Virginia, either as suppliers or as aggregators. The legislation directs the Virginia State Corporation Commission to establish licensing criteria for both suppliers and aggregators, including requirements concerning (i) technical capabilities, (ii) access to generation and generation reserves, and (iii) adherence to market standards. The bill expressly permits public service companies' affiliates or subsidiaries to be licensed as suppliers or aggregators under this Act, even if electrical supply or aggregation is not "related or incidental to" these companies' stated public service company businesses. These affiliates and subsidiaries are also permitted to own, manage or control generation plants or equipment. Additionally, the SCC is directed to establish a reasonable period in which retail customers may cancel, without penalty or cost, any contract for services entered into with licensed suppliers or aggregators. The bill permits local governments and other political subdivisions of the Commonwealth to aggregate (i) the electrical load of governmental installations and facilities and (ii) the energy load of residential, commercial and industrial retail customers within their boundaries on a voluntary, opt-in basis. The Commonwealth is also permitted to aggregate its governmental load.

The bill states that the SCC may not require any incumbent electric utility to divest itself of any generation, transmission or distribution assets as part of the restructuring process. However, these utilities are directed to functionally separate generation, retail transmission and distribution by January 1, 2002, with plans for that purpose to be submitted to the SCC by January 1, 2001. Additionally, the SCC is directed to develop rules and regulations governing conduct between these functionally separate units to prohibit cost-shifting and cross-subsidies between them, and to prohibit them from engaging in discriminatory behavior toward nonaffiliated units. The SCC is also provided review authority concerning any proposed mergers, acquisitions, consolidations or other transfers of control over providers of noncompetitive electric services. However, such authority does not extend to such transactions involving providers of default service. The bill also provides that its provisions are not to be construed as exempting or immunizing from punishment conduct violative of federal or state antitrust laws.

A customer education program, preparing consumers for the transition to a restructured market, is addressed by the bill. The SCC is directed to develop a comprehensive program addressing such issues as customers' rights and obligations in the purchase of electricity, and marketing and billing information. The SCC will present its findings and recommendations to the Legislative Transition Task Force on or before December 1, 1999, with particular emphasis on such a program's scope and on its funding. The SCC is also directed to develop regulations governing marketing practices, with particular emphasis on regulations addressing unauthorized switching of suppliers and improper solicitation activities. Standards for marketing and billing information will also be developed by the SCC through regulations.

The SCC is directed by this bill to establish or maintain a complaint bureau to receive and investigate complaints by retail customers against public service companies, licensed suppliers and aggregators, and other providers of competitive services. The SCC may enjoin or punish any violations of the provisions of this bill, pursuant to its existing authority. The Attorney General is authorized to participate in any such proceedings. Additional remedies available to electricity customers include a private right of action designed to provide compensation for customer losses resulting from (i) violations of the marketing regulations developed by the SCC pursuant to this bill or (ii) other deceptive or fraudulent practices. Customers can initiate civil actions to recover their actual damages or $500, whichever is greater. In the case of willful violations, customers may recover treble damages.

A Legislative Transition Task Force is established by the bill to monitor the work of the SCC in implementing the restructuring of Virginia's electricity market. The bill also indicates that the task force will be receiving reports from the Commission concerning restructuring programs implemented in other states. During its tenure (July 1, 1999, through July 1, 2005), the task force (composed of 10 legislators-six from the House of Delegates and four from the Senate) will also examine several specific issues, including the potential discounting of capped generation rates, utility worker protection, energy assistance programs for low-income households, energy efficiency and renewable energy programs, and the reliability of generation, transmission and distribution systems. Significantly, the task force is also directed to monitor stranded cost recovery authorized under this bill after the commencement of customer choice. This oversight will be accomplished with the assistance of the SCC, the Office of the Attorney General, incumbent electric utilities, suppliers, and retail customers. The purpose of the monitoring is to determine whether the recovery of stranded costs via capped rates and wires charges has resulted or is likely to result in the over-recovery or under-recovery of just and reasonable net stranded costs. The task force will make annual reports to the Governor and General Assembly, and it will be assisted in its efforts by a 17-member Consumer Advisory Board. The bill also indicates that recommendations of the task force will have at their core the policy of maintaining low electricity costs in Virginia, and ensuring that residential and small business customers will benefit from competition.

Other provisions in the bill (i) authorize the SCC to conduct retail customer choice pilot programs, (ii) exempt municipal power systems from retail competition unless the municipalities operating them (a) elect to permit it or (b) compete for electric customers outside the service territories currently served by such systems, (iii) permit electric cooperatives to furnish default service in their current service territories unless they seek to provide default service in the former service territories of other electric utilities, (iv) permit the SCC to adjust generation rates within transmission-constrained areas to the extent necessary to protect customers from the effects of market power, (v) eliminate the use of eminent domain in conjunction with generation facilities constructed on and after January 1, 2002, (vi) require the SCC to submit annual reports on the potential for future competition in metering, billing and other electric services not made competitive by this bill, and (vii) permit customer-generators who are self-generating with solar, wind or hydroelectrical generating systems to employ "net metering" equipment, subject to capacity restrictions and the provisions of regulations to be developed by the SCC. SB 1269; CH. 411.