

     § 2802.  Declaration of policy.
        The General Assembly finds and declares as follows:
            (1)  Over the past 20 years, the Federal Government and
        State government have introduced competition in several
        industries that previously had been regulated as natural
        monopolies.
            (2)  Many state governments are implementing or studying
        policies that would create a competitive market for the
        generation of electricity.
            (3)  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 transmission and distribution service is
        available at levels of reliability that are currently enjoyed
        by the citizens and businesses of this Commonwealth.
            (4)  Rates for electricity in this Commonwealth are on
        average higher than the national average, and significant
        differences exist among the rates of Pennsylvania electric
        utilities.
            (5)  Competitive market forces are more effective than
        economic regulation in controlling the cost of generating
        electricity.
            (6)  The cost of electricity is an important factor in
        decisions made by businesses concerning locating, expanding
        and retaining facilities in this Commonwealth.
            (7)  This Commonwealth must begin the transition from
        regulation to greater competition in the electricity
        generation market to benefit all classes of customers and to
        protect this Commonwealth's ability to compete in the
        national and international marketplace for industry and jobs.
            (8)  In moving toward greater competition in the
        electricity generation market, the Commonwealth must resolve
        certain transitional issues in a manner that is fair to
        customers, electric utilities, investors, the employees of
        electric utilities, local communities, nonutility generators
        of electricity and other affected parties.
            (9)  Electric service is essential to the health and
        well-being of residents, to public safety and to orderly
        economic development, and electric service should be
        available to all customers on reasonable terms and
        conditions.
            (10)  The Commonwealth must, at a minimum, continue the
        protections, policies and services that now assist customers
        who are low-income to afford electric service.
            (11)  In order to ensure the safety and reliability of
        the electric system, ensure the continued provision of high-
        quality customer service and avoid economic dislocation,
        utilities shall consider the experience and expertise of
        their work force in moving towards competition.
            (12)  The purpose of this chapter is to modify existing
        legislation and regulations and to establish standards and
        procedures in order to create direct access by retail
        customers to the competitive market for the generation of
        electricity while maintaining the safety and reliability of
        the electric system for all parties. Reliable electric
        service is of the utmost importance to the health, safety and
        welfare of the citizens of the Commonwealth. Electric
        industry restructuring should ensure the reliability of the
        interconnected electric system by maintaining the efficiency
        of the transmission and distribution system.
            (13)  Under current law and regulation there exists some
        competition in the wholesale market for the generation of
        electricity, but the generation, transmission, distribution
        and retail sale of electricity is provided generally by
        public utilities under bundled rates regulated by the
        commission. The procedures established under this chapter
        provide for a fair and orderly transition from the current
        regulated structure to a structure under which retail
        customers will have direct access to a competitive market for
        the generation and sale or purchase of electricity.
            (14)  This chapter requires electric utilities to
        unbundle their rates and services and to provide open access
        over their transmission and distribution systems to allow
        competitive suppliers to generate and sell electricity
        directly to consumers in this Commonwealth. The generation of
        electricity will no longer be regulated as a public utility
        function except as otherwise provided for in this chapter.
        Electric generation suppliers will be required to obtain
        licenses, demonstrate financial responsibility and comply
        with such other requirements concerning service as the
        commission deems necessary for the protection of the public.
            (15)  In establishing the standards for the transition to
        and creation of a competitive electric market, heretofore,
        public utilities generally have had an obligation to serve
        customers within their defined service territories;
        consistent with that obligation, have undertaken long-term
        investments in generation, transmission and distribution
        facilities in order to meet the needs of their customers; and
        have entered into long-term power supply agreements as
        required by Federal law. In many instances, these investments
        and agreements have created costs which may not be
        recoverable in a competitive market. The commission is
        empowered under this chapter to determine the level of
        transition or stranded costs for each electric utility and to
        provide a mechanism, the competitive transition charge, for
        recovery of an appropriate amount of such costs in accordance
        with the standards established in this chapter.
            (16)  It is in the public interest for the transmission
        and distribution of electricity to continue to be regulated
        as a natural monopoly subject to the jurisdiction and active
        supervision of the commission. Electric distribution
        companies should continue to be the provider of last resort
        in order to ensure the availability of universal electric
        service in this Commonwealth unless another provider of last
        resort is approved by the commission.
            (17)  There are certain public purpose costs, including
        programs for low-income assistance, energy conservation and
        others, which have been implemented and supported by public
        utilities' bundled rates. The public purpose is to be
        promoted by continuing universal service and energy
        conservation policies, protections and services, and full
        recovery of such costs is to be permitted through a
        nonbypassable rate mechanism.
            (18)  There are certain changes to a utility which will
        create transition costs to accomplish the move to a
        competitive market. These changes may entail the closure of
        facilities or reduction in employee levels. If such actions
        are to be undertaken, the utility must fully inform the
        commission of the impact of such decisions on local
        communities and on social services and of any tax
        implications of the actions. The utility is expected to
        discuss the transition to competition with its employees or
        their certified representatives and may provide severance,
        retraining, early retirement and outplacement services. Such
        transition costs may be recoverable under the competitive
        transition charge in section 2808 (relating to competitive
        transition charge).
            (19)  All participants in the restructured electric
        industry are encouraged to coordinate their plans and
        transactions through an independent system operator or its
        functional equivalent.
            (20)  Since continuing and ensuring the reliability of
        electric service depends on adequate generation and on
        conscientious inspection and maintenance of transmission and
        distribution systems, the independent system operator or its
        functional equivalent should set, and the commission shall
        set through regulations, inspection, maintenance, repair and
        replacement standards and enforce those standards.
            (21)  Under Federal and State clean air laws and
        regulations, electricity generators located in states to the
        west and south of this Commonwealth are not subject to
        requirements as stringent as those which apply to generators
        and other "persons" as defined in section 3 of the act of
        January 8, 1960 (1959 P.L.2119, No.787), known as the Air
        Pollution Control Act, operating in this Commonwealth and
        that different regions within this Commonwealth are subject
        to varying air emission requirements. Under some scenarios,
        competition among electricity generators located in different
        states and different regions within this Commonwealth could
        make it more difficult for areas in this Commonwealth to
        demonstrate attainment with Federal and State air quality
        standards. Since this result may be caused by the disparate
        requirements imposed by Federal and State law on generators
        and other "persons" as defined in section 3 of the Air
        Pollution Control Act in this Commonwealth and generators
        located in other states, the General Assembly supports
        changes to Federal clean air laws and regulations that will
        protect Pennsylvania's environment and ensure that
        electricity generators and other "persons" as defined in
        section 3 of the Air Pollution Control Act located in this
        Commonwealth are not placed at an undue competitive
        disadvantage. The commission will consult with the Department
        of Environmental Protection regarding this issue during the
        transition to retail competition.

        Cross References.  Section 2802 is referred to in section
     2806 of this title.
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Last modified: November 27, 2007