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					BIL:     3297
TYP:     General Bill GB
INB:     House
IND:     19990119
PSP:     Kirsh
SPO:     Kirsh
DDN:     l:\council\bills\nbd\11069jm99.doc
RBY:     House
COM:     Labor, Commerce and Industry Committee 26 HLCI
SUB:     Competitive Power Act of 1999, Electricity, Public Service Commission,


Body     Date       Action Description                        Com     Leg Involved
______   ________   _______________________________________   _______ ____________
House    19990119   Introduced, read first time,              26 HLCI
                    referred to Committee

Printed Versions of This Bill

 9                           A BILL
16   ACT 173 OF 1987 AS SECTION 58-27-690 OF THE 1976
21   58-27-650, 58-27-670, 58-27-680, 58-27-1280, OR 58-27-1360,
23   58-27-650, 58-27-670, AND 58-27-680 IN KEEPING WITH
37   ELECTRIC UTILITIES, AND SECTIONS 58-27-610, 58-27-620,
38   58-27-630, 58-27-640, 58-27-650, 58-27-660, 58-27-670, AND

     [3297]                       1
 1   Be it enacted by the General Assembly of the State of South
 2   Carolina:
 4   SECTION 1. Title 58 of the 1976 Code is amended by adding:
 6                             “CHAPTER 28
 8                 South Carolina Competitive Power Act
10     Section 58-28-10. This chapter may be cited as the „South
11   Carolina Competitive Power Act of 1999‟.
13      Section 58-28-20. It is the policy of the General Assembly to
14   authorize and permit competition in the supply of electricity to
15   consumers in South Carolina only in accordance with the
16   following principles and subsequent provisions:
17      (1) Customer Choice.        To realize the full benefits of
18   competition, all customers should be able to choose among and
19   access a wide array of competing, qualified suppliers of electricity
20   approved and certified by the commission. All customers must
21   have the opportunity to benefit from competition, which should be
22   implemented in a fair and equitable manner. A process should be
23   established which seeks to ensure that larger electricity users do
24   not benefit at the expense of smaller customers, and rural
25   customers do not suffer at the expense of urban areas. Customers
26   should be made aware of their new rights and the benefits and risks
27   of customer choice through a consumer education process
28   administered by the commission.
29      (2) Unbundling of Services. Generation services should
30   become fully competitive, while the provision of transmission and
31   distribution should provide for open access, comparability of
32   service for all users, and nondiscriminatory pricing, while
33   recognizing that federal and state jurisdictional uncertainties over
34   wholesale and retail services should be resolved. Companies
35   which own transmission or distribution, as well as generation,
36   should not be allowed to use any monopoly position in those
37   services as a barrier to competition in generation.             The
38   determinations of corporate structure, excluding market power
39   issues, should be left to the marketplace and not dictated by the
40   government.
41      (3) Open Access. Customer access to alternative suppliers of
42   electricity requires open access to the transmission grid and

     [3297]                           2
 1   distribution system and is critical to creating a fully competitive
 2   market structure.
 3      (4) Fair dealing. Competition among electricity suppliers and
 4   buyers must be fair, nondiscriminatory, and consistent.
 5      (5) Reliability and Safety. Reliable and safe electric service
 6   must be maintained or improved. South Carolina and federal
 7   regulators should have the necessary authority to assure the
 8   reliability and safety of the electric system.
 9      (6) Recovery of Stranded Costs. Following the process
10   established herein, the utilities are entitled to recover prudently
11   incurred, net, verifiable stranded costs, and investments. The
12   South Carolina General Assembly has the responsibility to
13   determine the just and reasonable recovery mechanisms to
14   determine net stranded costs and investments, including mitigation
15   methods and incentives. It should provide for a public process that
16   identifies and values investments and costs stranded by
17   competition. It should set the time frame involved for an
18   expeditious transition. And it should employ mechanisms that do
19   not disadvantage one class of customer or supplier over another.
20   The amount of recovery and methodology to be used will be
21   determined by the South Carolina Public Service Commission
22   according to the principles and provisions of this chapter.
23      (7) Sanctity of contract. The rights and obligations embodied
24   in contractual arrangements are and will be an indispensable
25   element of an effective competitive power market. Legislation
26   should not interfere with the rights of parties under contract.
27      (8) Environmental and Social Policy. The energy marketplace
28   should not be used as a vehicle for accomplishing
29   government-mandated, government-sponsored, consumer, or
30   taxpayer subsidized, social, or environmental programs. These
31   programs should not be incorporated in electric utility rate
32   structures, but instead be unbundled from rates.
33      (9) Transmission and distribution Pricing. To the extent that
34   South Carolina has jurisdiction over transmission and distribution
35   pricing, pricing methodologies should be encouraged to enhance
36   reliability, compensate transmission owners fairly, allow for widest
37   possible markets, and relieve transmission congestion.
38      (10) Transition to competition/Date Certain. The process for the
39   transition to electric supply competition should provide for
40   implementation of the initial phase-in period two years after the
41   effective date of this act. During the two years after the effective
42   date of the act the commission will determine the appropriate
43   market structure, utility restructuring plans, stranded costs,

     [3297]                           3
 1   consumer education process, and consumer protection process.
 2   Implementation will consist of a phase-in of customer choice for
 3   three years after the initial two-year period. Year one of the
 4   phase-in should allow for twenty percent of the peak load derived
 5   for a base period of each participating host utility to be subject to
 6   competition and customer choice. In year two of the phase-in, an
 7   additional twenty percent, or a total of forty percent, of each
 8   utility‟s peak load will be subject to competition. In year three of
 9   the phase-in, an additional twenty percent of peak load would be
10   included for a total of sixty percent. The implementation process
11   must allow residential and small customers sufficient opportunity
12   to participate in the process. The phase-in process may be
13   modified by the commission should conditions warrant such
14   action. The load subject to competition will be applicable to all
15   customer classes each year with the residential class having first
16   priority on a first-come first-serve basis. The commercial class
17   will have second choice, and any remaining load will be allocated
18   to the industrial class. Under this process, the customer must first
19   notify the host utility of the intent to participate. If the customer
20   does not have a supplier at the time of notification, a specific time
21   period should be established for the customer to obtain a supplier.
22   The customer must have an approved and certified supplier to
23   participate in the process, and failure to obtain a supplier by a
24   given time disqualifies that customer. Following the third year of
25   the phase-in, full implementation shall take place across the state
26   with one hundred percent of load being subject to competition for
27   all customer classes; however, at any time during any part of the
28   phase-in period the General Assembly, upon request by the
29   commission, may by joint resolution terminate, delay, or suspend
30   any further implementation of this process.
31      (11) Obligation to Connect. In a competitive retail market, local
32   utilities should be relieved of the traditional obligation to serve the
33   public, which should be replaced with an obligation to connect,
34   and distribution should remain a regulated monopoly service for
35   incumbent providers subject to the incumbent utility providing the
36   default service function until further order of the commission.
37      (12) Federal Barriers. It is the sense of the General Assembly
38   that the repeal of the Public Utility Holding Company Act and the
39   Public Utility Regulatory Policies Act and the reform of other
40   federal laws that impede competitive electric markets should be
41   accomplished to complement South Carolina‟s plans for the
42   transition to customer choice. The process of restructuring
43   generation services with consumer choice has profound interstate

     [3297]                             4
 1   implications. Assured reliability of the grid, consumer, and
 2   supplier access to sufficiently wide markets, a competitive playing
 3   field free of uneven subsidies and anti-competitive advantages, and
 4   resolution of existing state/federal jurisdiction over transmission
 5   and distribution services are all important to workable competition.
 6   South Carolina and other states should cooperate with congress to
 7   remove federal barriers which should be part of the transition to
 8   competition.
10      Section 58-28-30. The following words and phrases when
11   used in this chapter have the meanings shown unless the context
12   clearly indicates otherwise:
13      (1) „Affiliate‟ means a person who, directly or indirectly
14   through one or more intermediaries, controls, is controlled by, or is
15   under common control with a specified person.
16      (2) „Aggregator or market aggregator‟ means an entity
17   approved and certified, by the commission and subject to
18   applicable commission regulations, procedures, and requirements,
19   that purchases electric energy and takes title to electric energy as
20   an intermediary for sale to retail electric customers.
21      (3) „Broker or marketer‟ means an entity, approved, and
22   certified by the commission and subject to applicable commission
23   rules, procedures, and requirements, that acts as an agent or
24   intermediary in the sale and purchase of electric energy but that
25   does not take title to electric energy.
26      (4) „Commission‟ means the South Carolina Public Service
27   Commission.
28      (5) „Customer‟ means a retail electric customer.
29      (6) „Direct access‟ means the right of electric generation
30   suppliers and customers to utilize and interconnect with the electric
31   transmission and distribution system on a nondiscriminatory basis
32   at rates, terms, and conditions of service comparable to the
33   transmission and distribution companies‟ own use of the system to
34   transport electricity from any generator of electricity to any
35   customer. This term also is referred to as „customer choice‟ in this
36   chapter.
37      (7) „Electric distribution company‟ means the public utility
38   providing facilities for the jurisdictional transmission and
39   distribution of electricity to customers, except building or facility
40   owners or operators that manage the internal distribution system
41   serving the building or facility and that supply electric power and
42   other related electric power services to occupants of the building or
43   facility.

     [3297]                            5
 1      (8) „Electric generation supplier‟ or „electricity supplier‟ or
 2   „generation service provider‟ or „service provider‟ or „supplier‟
 3   means a person or corporation, including municipal corporations
 4   which choose to provide service outside the municipal limits,
 5   except to the extent provided before the effective date of this
 6   chapter, brokers and marketers, aggregators, or any other entities,
 7   that sell to customers electricity or related services utilizing the
 8   jurisdictional transmission or distribution facilities of an electric
 9   distribution company or that purchases, brokers, arranges, or
10   markets electricity or related services for sale to end-use customers
11   utilizing the jurisdictional transmission and distribution facilities
12   of an electric distribution company. The term excludes building or
13   facility owners or operators that manage the internal distribution
14   system serving the building or facility that supplies electric power
15   and other related power services to occupants of the building or
16   facility.
17      (9) „Reliability‟ means and includes adequacy and security. As
18   used in this definition, adequacy means the provision of sufficient
19   generation, transmission, and distribution capacity so as to supply
20   the aggregate electric power and energy requirements of
21   customers, taking into account scheduled and unscheduled outages
22   of system facilities, and „security‟ means designing, maintaining,
23   and operating a system that can handle emergencies safely while
24   continuing to operate.
25      (10) „Renewable resource‟ means and includes technologies
26   such as solar photovoltaic energy, solar thermal energy, wind
27   power, low head hydro power, geothermal energy, landfill and
28   mine-based methane gas, energy from waste, and sustainable
29   biomass energy.
30      (11) „Retail electric customer‟ means a direct purchaser of
31   electric power. The term excludes an occupant of a building or
32   facility where the owners or operators manage the internal
33   distribution system serving the building or facility and supply
34   electric power and other related power services to occupants of the
35   building or facility where the owners or operators are direct
36   purchasers of electric power and where the occupants are not direct
37   purchasers.
38      (12) „Competitive transition charge‟ means a nonbypassable
39   charge applied to the bill of every customer accessing the
40   transmission or distribution network in South Carolina, which
41   charge is designed to recover an electric utility‟s transition or
42   stranded costs as determined by the commission under Section
43   58-28-160.

     [3297]                            6
 1      (13) „Transmission costs‟ and „distribution costs‟ means all
 2   costs directly or indirectly incurred to provide transmission and
 3   distribution services to retail electric customers. This includes the
 4   return of and return on facilities and other capital investments
 5   necessary to provide transmission and distribution services and
 6   associated operating expenses, including applicable taxes.
 7      (14) „Universal service and energy conservation‟ means
 8   policies, protection, and services that help low-income customers
 9   to maintain electric service. The term includes customer assistance
10   programs, termination of service protection and policies, and
11   services that help low-income customers to reduce or manage
12   energy consumption in a cost-effective manner, such as the
13   low-income usage reduction programs, application of renewable
14   resources, and consumer education.
15      (15) „Participating utility‟ means participation in the Customer
16   Choice Program, which is mandatory for investor-owned electric
17   utilities, electric cooperatives, consolidated political subdivisions,
18   municipalities, and the Public Service Authority.
20      Section 58-28-40. (A) The implementation schedule must be
21   consistent with Section 58-28-20(10).
22      (B) The commission shall adopt and publish a plan in a timely
23   manner to facilitate implementation consistent with Section
24   58-28-20(10) for restructuring the South Carolina electric industry,
25   consistent with the policies and procedures established under this
26   chapter. The plan shall address appropriate steps to achieve an
27   orderly transition to a competitive market including, but not
28   limited to, market structure and a consumer protection process.
29      (C) The plan shall incorporate the substance of this chapter and
30   may include other provisions as the commission considers
31   appropriate and necessary to expedite the transition to and
32   implementation of full customer choice. The plan shall address
33   transition issues, including:
34        (1) rate certainty for transmission and distribution service;
35        (2) outstanding federal and state issues;
36        (3) appropriate regulatory approvals;
37        (4) legislative intent and public comment.
38      (D) The plan developed by the commission shall include a
39   program for making customers aware of their new rights and the
40   benefits and risks of customer choice through a customer education
41   process administered by the commission.

     [3297]                            7
 1      Section 58-28-50. In a time frame determined by the
 2   commission after the effective date of this chapter, each incumbent
 3   electric utility shall file a utility restructuring plan for review and
 4   comment before the commission providing for customer choice of
 5   an electric generation supplier for all customers as set forth in this
 6   chapter and establishing a protocol for the disaggregation of
 7   services as required by this chapter.
 9      Section 58-28-60. Pursuant to the timeliness established under
10   Section 58-28-20(10) and by the commission, all customers must
11   be permitted to choose their providers of electric generation
12   services no later than five years after the effective date of this
13   chapter through the following means:
14      (1) Customers may negotiate a bilateral contract with a
15   generator of electricity, under which contract electricity must be
16   transmitted and distributed to the customer, subject to the
17   provisions of Section 58-28-90(C).
18      (2) Customers may choose to receive generation and other
19   energy services from a market aggregator. Market aggregators
20   may generate electricity directly, buy and sell electricity, or enter
21   into financial contracts for electric generation resources. Market
22   aggregators may be brokers, cooperatives, buying clubs,
23   municipalities, or other entities which buy or arrange for electric
24   generation services through a power pool or through direct
25   contracts. In no event may a government entity acting as a market
26   aggregator deny its citizens direct access to any other market
27   aggregator.
28      (3) A default provider or providers for a customer who has not
29   chosen an alternative source of generation must be established by
30   the commission in accordance with Section 58-28-110(C). The
31   commission shall set standards to ensure the participation of
32   default providers serving all classes of customers.
34     Section 58-28-70. (A) All electricity suppliers must be
35   approved and certified by the commission. Approval and
36   certification shall include:
37         (1) generation capability of the supplier (owned, contracted,
38   quality of contracts);
39         (2) quality and reliability history of the supplier, such as
40   quantitative measures for quality performance;
41         (3) transmission processes which are acceptable to an ISO or
42   other entity should an ISO not be established, such as voltage and
43   output adaptation;

     [3297]                             8
 1        (4) such other matters, requirements, and information as may
 2   be required by the commission.
 3      (B) Suppliers shall be allowed market entry based on their
 4   compliance with commission regulations, procedures, and
 5   requirements. The commission shall not directly fix rates charged
 6   by the supplier but may take into account the conditions and
 7   circumstances surrounding the provision of such service and may
 8   regulate the rate structure. The commission may review such rate
 9   structures as to whether they are unreasonably discriminatory and
10   take appropriate action. Suppliers shall file current price lists with
11   the commission.
13      Section 58-28-80. (A) The commission plan for restructuring
14   of the incumbent electric utilities shall require that all existing
15   electric utilities operationally and financially separate electric
16   generation, transmission, and distribution assets and operations as
17   described in this section.
18      (B)(1) Both electric distribution companies and other
19   companies which are not electricity suppliers may own
20   transmission facilities.
21         (2) Affiliates of electricity suppliers and electric distribution
22   companies may own electric generation assets. The affiliates may
23   sell generation directly to a customer as long as generation assets
24   and services are operationally separated from transmission and
25   distribution affiliates, if any, and the transmission and generation
26   affiliate provides for comparability of service for all users and
27   nondiscriminatory pricing.
28         (3) Affiliates of electricity suppliers and electric distribution
29   companies may offer unbundled generation services as approved
30   by the commission. Prices for unbundled generation services shall
31   not be established directly by the commission but must be based on
32   competitive market forces.
33         (4) At a time considered appropriate by the commission, the
34   commission shall adopt a plan to provide for the unbundling of
35   charges for meters, meter reading, and customer bulling from the
36   charge for construction, operation, and maintenance of the
37   distribution system for purposes of determining the appropriate
38   payment to the electric distribution company in cases where
39   marketers or other electricity suppliers choose to install and read
40   meters. The metering and billing functions shall initially be under
41   the regulation of the commission and administered through the
42   distribution company which shall acquire, own, install, operate,
43   test, and maintain all meters. These costs must be incorporated

     [3297]                             9
 1   into rates regulated by the commission. As competition for these
 2   services develops, the commission may provide that they be
 3   offered as unbundled competitive services through alternative
 4   suppliers.
 5        (5) Competition among electricity suppliers and buyers must
 6   be fair, nondiscriminatory, and consistent. In order to ensure a
 7   level playing field, all competitors shall be subject to the same
 8   legal, regulatory, and tax treatments in the future. Subsidies and
 9   disparate regulation or legal requirements that favor certain
10   competitors or disadvantage others shall be eliminated by the
11   commission.
12        (6) The commission shall adopt a plan designed to permit all
13   electricity suppliers to compete equally to supply power to South
14   Carolina customers and to mitigate concentrations of undue market
15   power.
16      (C) The billing process shall allow for two separate bills as
17   appropriate. The distribution company shall bill for transmission
18   and distribution services while the supplier shall bill for the supply
19   functions. Customers having an alternative supplier but desiring to
20   receive only one bill shall receive one bill if they so request and if
21   such a requirement is amenable to the supplier and the distributor.
22   The commission shall establish an initial format for billing of
23   unbundled services to ensure that customers have adequate
24   information to determine what services are being purchased.
25   Parties responsible for billing may propose alternative billing
26   formats, but any such alternative format must be approved by the
27   commission before it may be used.
28        (1) Customer bills shall contain unbundled charges sufficient
29   to enable the customer to determine the basis for those charges.
30        (2) Any entity responsible for billing customers for electric
31   services must prominently utilize the appropriate name of the
32   service providers on the bill.
33        (3) Any entity providing billing services must separate
34   components for all services, generation transmission, distribution,
35   stranded cost recovery charge, and social programs.
36      (D) The electric distribution company shall continue to provide
37   consumer service functions consistent with the regulations of the
38   commission, including meter reading, complaint resolution, and
39   other necessary services to the extent that the electric distribution
40   company continues to provide the services to its customers as part
41   of its unbundled distribution services. Customer services, at a
42   minimum, must be maintained at the same level of quality under
43   direct access.

     [3297]                            10
 1      (E) A service provider must comply with commission
 2   regulations, practices, and procedures for changing a customer‟s
 3   service provider. The commission shall develop a process for
 4   changing to an alternative provider. This process shall include
 5   guidelines for marketers and suppliers to follow. In addition the
 6   commission shall have the authority to directly fine and revoke the
 7   certification of those entities found guilty of slamming (zapping)
 8   electric customers.
 9      (F) The commission shall promulgate regulations to require
10   each electric distribution company, electricity supplier, marketer,
11   aggregator, and broker to provide adequate and accurate customer
12   information to enable customers to make informed choices
13   regarding the purchase of all electricity services offered by that
14   provider. Information must be provided to customers in an
15   understandable format that enables customers to compare prices
16   and services on a uniform basis.
17      (G) It is the responsibility of all entities who directly bill
18   customers or receive revenues from the sale of electricity and
19   distribution services to collect any and all charges mandated by
20   this chapter including, but not limited to, the stranded cost
21   recovery charge, the monthly distribution fee, transmission
22   charges, municipal franchise fees, taxes, and any other fees
23   mandated by the commission. If a customer elects to receive
24   separate bills for distribution and generation services, the entity
25   billing for distribution services is responsible for collection and
26   payment of these fees. These fees must be promptly forwarded to
27   the appropriate parties. Any billing electricity supplier that is to
28   receive any component of these fees must make arrangements to
29   ensure that these funds are promptly received by the parties to
30   whom they are due. Billing electricity suppliers shall ensure the
31   proper handling of these funds and shall provide assurances of
32   payment to other suppliers of electricity services by electing one of
33   the following two methods:
34         (1) the billing electricity supplier may arrange with a bank
35   authorized to do business in this State, either by the State of South
36   Carolina or the United States, to receive bill payments from
37   customers in a locked-box escrow account. The escrow agent shall
38   receive these funds and be responsible for the proper disbursement.
39   The escrow agent must forward all funds received from customers
40   in two days. Customer account information is the sole property of
41   the billing electricity supplier;
42         (2) the billing electricity supplier shall post a surety bond or
43   other performance guarantee in accordance with regulations

     [3297]                            11
 1   promulgated by the commission. This bond or guarantee must
 2   remain in place while the billing electricity supplier is otherwise in
 3   compliance with this provision and until the electricity supplier
 4   ceases to sell electricity and collect revenues from customers in
 5   South Carolina.
 7      Section 58-28-90. (A) Owners, operators, and providers of
 8   transmission and distribution facilities and ancillary services,
 9   including all federal, state, and local public power agencies, unless
10   otherwise excluded herein, are required to provide access to those
11   facilities, ancillary services, and other services, including
12   maintenance, installation, repair, and meter reading, available to
13   any buyer or seller on a nondiscriminatory and comparable basis to
14   the extent permissible under federal and state law, including this
15   chapter. The commission shall promote nondiscriminatory open
16   access to the electric system for wholesale and retail transactions.
17      (B) companies providing transmission or distribution services
18   shall file at the Federal Energy Regulatory Commission or with the
19   commission, as appropriate, comparable service tariffs that provide
20   open access for all competitors. The commission shall monitor
21   jurisdictional companies providing transmission or distribution
22   services and take necessary measures to ensure that no supplier has
23   an unfair advantage in offering access to and pricing the services.
24      (C) The commission shall establish by regulation, in a manor
25   consistent with federal law, standards, and conditions for the
26   exchange of reciprocal rights for transmission and distribution
27   access between corporations located within this State and those
28   located outside the State. A corporation located outside South
29   Carolina may not be an electricity supplier within the State unless
30   the electric distribution company serving that customer has the
31   reciprocal right, whether exercised or not, by statute, regulation, or
32   voluntary tariff of the out-of-state corporation to serve a customer
33   of the out-of-state corporation, if any.
35      Section 58-28-100. Five years from the effective date of this
36   chapter, all intrastate owners and operators of transmission and
37   distribution facilities shall have comparable and reciprocal access
38   to the transmission and distribution customers of other
39   transmission and distribution facility owners and operators, for the
40   purpose of providing generation services to the customers. This
41   section does not impede any transactions involving interstate
42   commerce.

     [3297]                            12
 1      Section 58-28-110. (A) The local utility is relieved of its
 2   traditional obligation to serve, except as required to carry out the
 3   default service function, but has an obligation to connect all
 4   customers within its service territory on nondiscriminatory terms
 5   and conditions. The incumbent local utilities must be allowed to
 6   maintain their existing territorial assignments, but these
 7   assignments must be limited to distribution and transmission
 8   services only.
 9      (B) Consumers shall have the right to select their source of
10   power supply and shall have nondiscriminatory access to
11   interconnection with their host electric utility, which utility is
12   required to transport the electricity from the point of delivery by
13   the generation supplier to the consumer‟s facility through the
14   host‟s distribution facilities.
15      (C) Customers that do not elect an alternative generation
16   supplier, as well as those that experience supplier power delivery
17   failures and require emergency service shall obtain default services
18   from a default provider under such terms and conditions and in a
19   manner as provided by the commission. The default service
20   provider is the host utility, the distribution company that provides
21   distribution service to that customer. The default service function,
22   which must be provided initially by the distribution company, is
23   subject to competition following the period of transition and a
24   determination by the commission.
26      Section 58-28-120. The right of eminent domain may not be
27   used to:
28      (1) deny physical access or interconnection to transmission or
29   distribution facilities;
30      (2) restrict the construction of new transmission or distribution
31   facilities by any qualified party; or
32      (3) otherwise limit competition.
34      Section 58-28-130. (A) To the extent that the commission has
35   jurisdiction over transmission and distribution pricing, the
36   commission shall encourage pricing mechanisms to enhance
37   reliability, compensate transmission owners fairly, allow for the
38   widest possible markets, and relieve transmission congestion.
39      (B) The commission, pursuant to guidelines and procedures
40   established by it, shall conduct a proceeding to address and provide
41   for the unbundling of the utilities on both a functional basis and on
42   a service basis.

     [3297]                           13
 1      (C) The commission shall establish reasonable rates for
 2   unbundled local distribution services and, to the extent the
 3   commission retains jurisdiction, for unbundled transmission
 4   services. The rates shall provide for jurisdictional transmission
 5   costs and distribution costs of providing distribution services.
 6      (D) Each incumbent electric utility shall file unbundled service
 7   tariffs to provide services to all eligible customers on a
 8   nondiscriminatory basis.
 9      (E) The commission shall have jurisdiction over all aspects of
10   transmission rates and services not subject to the exclusive
11   jurisdiction of the Federal Energy Regulatory Commission.
13      Section 58-28-140. The subsidies for environmental, universal
14   service, energy conservation, and other mandated programs must
15   be unbundled from electric rates and clearly shown on the
16   customer‟s bill. The commission annually shall prepare and
17   submit a report to the General Assembly that recommends
18   legislative action, as appropriate, to remove barriers to fair
19   competition.
21      Section 58-28-150. All electric distribution companies are
22   subject to:
23      (1) the jurisdiction of the commission and must be regulated on
24   the same basis including, but not limited to, regulation of rates,
25   terms, and conditions; and
26      (2) uniform tax obligations to the extent that the electric
27   distribution companies are subject to taxation on the effective date
28   of this chapter.
30      Section 58-28-160. (A)(1) Following the process established
31   in this section, utilities are entitled to recover prudently incurred,
32   net, verifiable stranded costs and investments.
33        (2) It is the intent of the General Assembly to provide
34   appropriate tools and reasonable guidance to the commission in
35   order to assist the commission in addressing claims for stranded
36   cost recovery and fulfilling the commission‟s responsibility to
37   determine rates which are equitable, appropriate, balanced, and in
38   the public interest. In making its determinations, the commission
39   shall balance the interests of the customers and utility investors
40   during the limited recovery period. Pursuant to guidelines and
41   procedures established by the commission, the commission shall
42   conduct a proceeding to address the issue of stranded costs and
43   provide for the recovery of prudently incurred, net, verifiable

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 1   stranded costs as determined by the commission under definitions,
 2   procedures, and methodology adopted by the commission.
 3   Stranded costs are recoverable through a nonbypassable stranded
 4   costs charge referred to as a Competitive Transition Charge (CTC),
 5   which must be levied on the bills of all retail customers.
 6   Whenever a customer acquires electricity directly from a supplier
 7   and bypasses the transmission and distribution system of a utility,
 8   arrangements must by developed between the customer,
 9   customer‟s supplier, and the utility which allows the customer to
10   pay the CTC or that customer‟s appropriate share of the stranded
11   costs. A period not to exceed ten years for the recovery of
12   stranded costs, beginning with the implementation of restructuring,
13   is a reasonable time frame. The time period allowed for recovery
14   is a function of the size total stranded costs estimate for all electric
15   utilities in South Carolina. At the end of the phase-in period, the
16   commission shall conduct a true-up proceeding to reevaluate the
17   appropriate level of stranded costs. This proceeding shall reflect
18   events subsequent to the initial hearing and shall provide a
19   stranded costs estimate to be used for the initial year of full
20   implementation. Thereafter, true-up hearings regarding stranded
21   costs must be held annually, or as determined by the commission,
22   until the time period of recovery has elapsed or stranded costs have
23   been recovered.
24         (3) Stranded costs recovery must begin at the time of the
25   phase-in for those customers exercising customer choice. Other
26   customers shall continue at existing rate levels.
27      (B) Electric utilities shall prudently, thoroughly, and
28   aggressively mitigate stranded costs as of the effective date of this
29   chapter.
30      (C)(1)(a) The commission shall approve and publish a recovery
31   plan for each utility.
32            (b) All electricity suppliers shall provide or supply direct
33   access to customers pursuant to this chapter and are eligible for
34   stranded cost recovery according to the provisions of this section.
35   The commission shall establish an appropriate timetable for the
36   examination and determination of all electricity supplier‟s stranded
37   costs.
38            (c) Any stranded costs not recovered under this chapter
39   and the recovery plan, as modified and approved by the
40   commission, within ten years shall not be recoverable by the public
41   utility.

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 1        (2) Electricity suppliers shall cooperate with the commission
 2   in the implementation of this chapter as a condition for recovery of
 3   stranded costs. Approval of a recovery plan and collection and the
 4   disbursement to the electrical supplier of any stranded costs is
 5   deemed a settlement of all the claims by an electricity supplier. No
 6   electricity supplier seeking to establish claims for recovery of
 7   stranded costs through any other means is eligible for recovery
 8   pursuant to a recovery plan or the collection of a stranded cost
 9   recovery charge. All electricity suppliers shall provide direct
10   access to customers pursuant to this chapter and are eligible for
11   stranded cost recovery according to the provisions of this section,
12   and the commission shall establish an appropriate timetable for the
13   examination and determination of all electricity suppliers‟ stranded
14   costs.
15        (3) The commission shall make the final determination of
16   permissible stranded cost recovery charges for each electricity
17   supplier and for approval of the recovery plan, subject to its
18   determination in a rate case proceeding that the charge and the plan
19   are equitable, appropriate, balanced, and promote customer choice.
20      (D)(1) Electricity suppliers must be allowed to recover the net
21   unmitigatable stranded costs associated with required
22   environmental mandates currently approved for cost recovery and
23   power acquisitions mandated by federal statutes.
24        (2) Electricity suppliers shall take all reasonable measures to
25   prudently, thoroughly, and aggressively mitigate stranded costs.
26   Mitigation measures may include, but are not limited to:
27           (a) reduction of expenses;
28           (b) renegotiation of existing contracts;
29           (c) refinancing of existing debt;
30           (d) sale, write-off, or write-down of uneconomic or
31   surplus assets, including regulatory assets not directly related to
32   the provision of electricity service.
33      (3) Power purchase contract obligations shall continue for the
34   duration of the contract. Costs arising pursuant to the contracts or
35   associated with any buy-out, buy-down, or renegotiation of the
36   contracts shall be eligible for recovery through the Competitive
37   Transition Charge.
38      (4) Stranded benefits must be used to offset stranded costs.
39      (5) Any recovery of stranded costs must be through a
40   nonbypassable, nondiscriminatory, appropriately structured access
41   charge that is fair to all customer classes, lawful, constitutional,
42   limited in duration, and consistent with the promotion of fully
43   competitive markets. Stranded cost recovery charges must be

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 1   based on the energy consumption and class of each customer as
 2   determined by the commission.
 3      (6) The commission is authorized to allow electricity suppliers
 4   to collect a Competitive Transition Charge. The burden of proof
 5   for any stranded cost recovery claim must be borne by the
 6   electricity supplier making the claim. The stranded cost recovery
 7   charge must be assessed as a separate line item on a customer‟s
 8   bill.
10      Section 58-28-170. (A) the commission shall promulgate
11   regulations which ensure that reliable and safe electric service,
12   with residential consumer service safeguards, is maintained or
13   improved.
14      (B) all electric utilities and providers of electric power delivery
15   and ancillary services shall have in place sufficient measures to
16   preserve the integrity, safety, reliability, and quality of electric
17   service in South Carolina. Market entrants shall have appropriate
18   provisions for capacity reserves, spinning reserves, and other
19   ancillary services while maintaining the integrity of the bulk
20   transmission network.
22      Section 58-28-180. Nothing in this chapter shall be construed
23   to interfere with the rights of parties under contract. Electric rates
24   which by court decision or contract were frozen as of a particular
25   date must remain at that level after the effective date of this
26   chapter regardless of the electric power provider, unless the
27   customer affected agrees otherwise.
29      Section 58-28-190. No electric distribution company is liable
30   for damages to a current or future customer if the customer‟s
31   chosen generation supplier or provider of unbundled services fails
32   to deliver the service in accordance with the terms of its bilateral
33   contract with the customer. This provision may not be applied to
34   relieve liability arising from the electric distribution company‟s
35   own actions or failure to act.
37      Section 58-28-200. The commission shall develop a plan in a
38   timely manner following the effective date of this chapter to
39   provide for the expedited review and resolution of disputes related
40   to violations of the open access provisions of Section 58-28-90.

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 1      Section 58-28-210. Any existing jurisdictional uncertainties or
 2   disputes regarding electric distributors or suppliers shall not delay
 3   the implementation of this chapter.
 5     Section 58-28-220. If any provision or application of this
 6   chapter to a person or circumstance is held invalid, the invalidity
 7   shall not affect other provisions, or applications of the chapter
 8   which shall be given effect without the invalid provision or
 9   application, and to this end, the provision of this chapter are
10   declared severable.”
12   SECTION 2. (A) Section 57 of Act 173 of 1987 is designated as
13   Section 58-27-690 of the 1976 Code.
15     (B) Section 58-27-690 of the 1976 Code, as enacted by Section
16   57 of Act 173 of 1987 and amended by Section 1567 of Act 181 of
17   1993, is further amended to read:
19     “Section 58-27-690. Nothing in Title 28, Chapter 2 (Sections
20   28-2-10 et seq.), and Sections 1-11-110, 3-5-50, 3-5-100, 3-5-330,
21   4-17-20, 5-27-150, 5-31-420, 5-31-430, 5-31-440, 5-31-610,
22   5-35-10, 6-11-130, 6-23-290, 13-1-350, 13-11-80, 24-1-230,
23   28-3-20, 28-3-30, 28-3-140, 28-3-460, 46-19-130, 48-11-110,
24   48-15-30, 48-15-50, 48-17-30, 48-17-50, 49-17-1050, 49-19-1060,
25   49-19-1440, 50-13-1920, 50-19-1320, 51-1-560, 54-3-150,
26   55-9-80, 55-11-10, 57-3-700, 57-5-370, 57-5-380, 57-21-200,
27   57-25-190, 57-25-470, 57-25-680, 57-27-70, 58-9-2030,
28   58-15-410, 58-17-1200, 13-1-1330, 58-27-130, 58-31-50,
29   59-19-200, 59-105-40, 59-117-70, 59-123-90 shall modify,
30   abridge, or repeal Sections 58-27-650, 58-27-670, 58-27-680,
31   58-27-1280, or 58-27-1360.”
33   SECTION 3. Prior to July 15, 2000, the Public service
34   Commission shall provide to the Governor and the General
35   Assembly a report of its findings and implementation plan in
36   anticipation of commencement of the implementation schedule for
37   customer choice as provided by Chapter 28 of Title 58 of the 1976
38   Code, as enacted pursuant to Section 1 of this Act. The schedule
39   for phase-in of direct access provided by Section 58-28-40 shall
40   not commence unless approved by joint resolution of the General
41   Assembly.

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1   SECTION 4. Article 3 of Chapter 27 of Title 58 and Sections
2   58-27-610, 58-27-620, 58-27-630, 58-27-640, 58-27-650,
3   58-27-660, 58-27-670, and 58-27-680 of the 1976 Code are
4   repealed ninety days after the effective date of Chapter 28 of Title
5   58, as enacted pursuant to Section 1 of this Act.
7   SECTION 5. Except as otherwise provided by this act, this act
8   takes effect upon approval by the Governor.
9                               ----XX----

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