

     § 2808.  Competitive transition charge.
        (a)  General rule.--To provide each electric utility with an
     opportunity to recover its transition or stranded costs
     following the commission's determination under subsection (c),
     every customer accessing the transmission or distribution
     network shall pay a competitive transition charge to the
     electric distribution company in whose certificated territory
     that customer is located. The costs to be recovered shall be
     allocated to customer classes in a manner that does not shift
     interclass or intraclass costs and maintains consistency with
     the allocation methodology for utility production plant accepted
     by the commission in the electric utility's most recent base
     rate proceeding. If a customer installs on-site generation which
     operates in parallel with other generation on the public
     utility's system and which significantly reduces the customer's
     purchases of electricity through the transmission and
     distribution network, the customer's fully allocated share of
     transition or stranded costs shall be recovered from the
     customer through a competitive transition charge. The recovery
     of transition or stranded costs associated with existing
     generating facilities is contingent on continued operation at
     reasonable availability levels of the generation facilities for
     which recovery has been approved, except when the generation
     facility is uneconomic on a production cost basis because of the
     transition to a competitive market.
        (b)  Period for collecting competitive transition charge.--
     The competitive transition charge shall be included on bills to
     customers for a period not to exceed nine years from the
     effective date of this chapter unless an alternative payment
     methodology is mutually agreed upon by the customer and the
     utility or unless the commission in its discretion and for good
     cause shown orders an alternative payment period. In
     establishing the length of the period for collection of the
     competitive transition charge, the commission shall consider the
     effect on the ability of the Commonwealth to compete in
     attracting industry and jobs, on the financial health of
     electric utilities and other relevant factors.
        (c)  Determination of competitive transition charge.--In
     determining the level of transition or stranded costs that an
     electric utility may recover through the competitive transition
     charge, the commission shall apply the following principles:
            (1)  The commission shall allow recovery of regulatory
        assets and other deferred charges typically recoverable under
        current regulatory practice, the unfunded portion of the
        utility's projected nuclear generating plant decommissioning
        costs and cost obligations under contracts with nonutility
        generating projects that have received a commission order.
        Nothing in this chapter shall be construed as requiring an
        electric utility or a nonutility generating project to enter
        into an arrangement to buy down, buy out and terminate or
        otherwise restructure a contract or as authorizing the
        commission to require a utility to pursue such an arrangement
        with a nonutility generating project.
            (2)  The commission shall allow recovery of an electric
        utility's prudently incurred costs related to cancellation,
        buyout, buydown or renegotiation of nonutility generating
        projects consistent with section 527 (relating to
        cogeneration rules and regulations).
            (3)  The commission shall determine the level of other
        generation-related transition or stranded costs that may be
        recovered through the competitive transition charge.
            (4)  The commission shall consider the extent to which
        the electric utility has undertaken efforts to mitigate
        generation-related transition or stranded costs by
        appropriate means in a manner that is reasonable under all of
        the circumstances, including consideration of whether
        mitigation has been commensurate with the magnitude of the
        electric utility's generation-related transition or stranded
        costs. During the transition period, electric utilities shall
        have the duty to mitigate generation-related transition or
        stranded costs to the extent practicable. Efforts may include
        the following:
                (i)  Acceleration of depreciation and amortization of
            existing rate base generation assets.
                (ii)  Minimization of new capital spending for
            existing rate base generation assets.
                (iii)  Reallocation of depreciation reserves to
            existing rate base generation assets.
                (iv)  Reduction of book assets by application of new
            proceeds of any sale of idle or underutilized existing
            rate base generation assets.
                (v)  Maximization of market revenues from existing
            rate base generation assets.
                (vi)  Issuance of securitized debt pursuant to the
            provisions of section 2812 (relating to approval of
            transition bonds).
            (5)  Of equal importance to the mitigation efforts under
        paragraph (4), the commission shall consider efforts
        undertaken over time, prior to the enactment of this chapter,
        to reduce or moderate customer rate levels while maintaining
        safe and efficient operations.
        (d)  Commission review.--As a component of its restructuring
     plan, each electric utility shall file with the commission a
     recovery plan, including a proposed competitive transition
     charge and supporting documentation. In evaluating a recovery
     plan and any proposed competitive transition charge, the
     commission shall schedule open evidentiary hearings with proper
     notice and opportunity for all parties to cross-examine
     witnesses as necessary.
        (e)  Use of transition bonds.--After the effective date of
     this chapter, a utility may apply to the commission for a
     qualified rate order under section 2812 for some or all of its
     transition or stranded costs.
            (1)  In evaluating a utility application under this
        subsection, the commission shall schedule hearings, as
        necessary.
            (2)  If the commission issues a qualified rate order
        under section 2812 and if the transition bonds approved by
        that order are successfully issued, then:
                (i)  the utility shall impose and collect through its
            customer bills the intangible transition charges approved
            by that qualified rate order; and
                (ii)  simultaneously, either the utility's rates for
            electric service or the utility's competitive transition
            charges shall be reduced by an amount equal to the
            revenue requirement of the transition or stranded costs
            for which transition bonds have been successfully issued.
        (f)  Annual revenue.--Consistent with section 1307(e)
     (relating to sliding scale of rates; adjustments), the
     commission shall establish procedures for the annual review of
     the competitive transition charge. The review shall reconcile
     the annual revenues received from the charge with the annual
     amortization of transition or stranded costs approved by the
     commission under this section. The commission shall adjust the
     competitive transition charge based upon underrecovery or
     overrecovery of the annual amortization amount.

        Cross References.  Section 2808 is referred to in sections
     2802, 2803, 2804, 2812 of this title.
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Last modified: November 27, 2007