Substitute House Bill No. 5005
Substitute House Bill No. 5005
PUBLIC ACT NO. 98-28
AN ACT CONCERNING ELECTRIC RESTRUCTURING.
Be it enacted by the Senate and House of
Representatives in General Assembly convened:
Section 1. Subsection (a) of section 16-1 of
the general statutes is repealed and the following
is substituted in lieu thereof:
(a) Terms used in this title and in chapters
244, 244a, 244b, 245, 245a and 245b* shall be
construed as follows, unless another meaning is
expressed or is clearly apparent from the language
or context:
(1) "Authority" means the Public Utilities
Control Authority and "department" means the
Department of Public Utility Control;
(2) "Commissioner" means a member of said
authority;
(3) "Commissioner of Transportation" means the
Commissioner of Transportation appointed under
section 13b-3;
(4) "Public service company" includes
electric, ELECTRIC DISTRIBUTION, gas, telephone,
telegraph, pipeline, sewage, water and community
antenna television companies, owning, leasing,
maintaining, operating, managing or controlling
plants or parts of plants or equipment, and all
express companies having special privileges on
railroads within this state, but shall not include
telegraph company functions concerning intrastate
money order service, towns, cities, boroughs, any
municipal corporation or department thereof,
whether separately incorporated or not, [or] a
private power producer, as defined in section
16-243b OR AN EXEMPT WHOLESALE GENERATOR, AS
DEFINED IN 15 USC 79z-5a;
(5) "Plant" includes all real estate,
buildings, tracks, pipes, mains, poles, wires and
other fixed or stationary construction and
equipment, wherever located, used in the conduct
of the business of the company;
(6) "Railroad company" includes every
corporation, company, association, joint stock
association, partnership or person, or lessee
thereof, owning, leasing, maintaining, operating,
managing or controlling any railroad, or any cars
or other equipment employed thereon or in
connection therewith, for public or general use
within this state;
(7) "Street railway company" includes every
corporation, company, association, joint stock
association, partnership or person, or lessee
thereof, owning, leasing, maintaining, operating,
managing or controlling any street railway, or any
cars or other equipment employed thereon or in
connection therewith, for public or general use
within this state;
(8) "Electric company" includes, UNTIL AN
ELECTRIC COMPANY HAS BEEN UNBUNDLED IN ACCORDANCE
WITH THE PROVISIONS OF SECTION 5 OF THIS ACT,
every corporation, company, association, joint
stock association, partnership or person, or
lessee thereof, owning, leasing, maintaining,
operating, managing or controlling poles, wires,
conduits or other fixtures, along public highways
or streets, for the transmission or distribution
of electric current for sale for light, heat or
power within this state, or, engaged in generating
electricity to be so transmitted or distributed
for such purpose, but shall not include (A) a
private power producer, as defined in section
16-243b, (B) AN EXEMPT WHOLESALE GENERATOR, AS
DEFINED IN 15 USC 79z-5a, (C) a municipal electric
utility established under chapter 101, (D) a
municipal electric energy cooperative established
under chapter 101a, (E) an electric cooperative
established under chapter 597, or (F) any other
electric utility owned, leased, maintained,
operated, managed or controlled by any unit of
local government under any general statute or any
public or special act;
(9) "Gas company" includes every corporation,
company, association, joint stock association,
partnership or person, or lessee thereof, owning,
leasing, maintaining, operating, managing or
controlling mains, pipes or other fixtures, in
public highways or streets, for the transmission
or distribution of gas for sale for heat or power
within this state, or engaged in the manufacture
of gas to be so transmitted or distributed for
such purpose, but shall not include a municipal
gas utility established under chapter 101 or any
other gas utility owned, leased, maintained,
operated, managed or controlled by any unit of
local government under any general statute or any
public or special act;
(10) "Water company" includes every
corporation, company, association, joint stock
association, partnership or person, or lessee
thereof, owning, leasing, maintaining, operating,
managing or controlling any pond, lake, reservoir,
stream, well or distributing plant or system
employed for the purpose of supplying water to
fifty or more consumers. A water company does not
include homeowners, condominium associations
providing water only to their members, homeowners
associations providing water to customers at least
eighty per cent of whom are members of such
associations, a municipal waterworks system
established under chapter 102, a district,
metropolitan district, municipal district or
special services district established under
chapter 105, chapter 105a or any other general
statute or any public or special act which is
authorized to supply water, or any other
waterworks system owned, leased, maintained,
operated, managed, or controlled by any unit of
local government under any general statute or any
public or special act;
(11) "Consumer" means any private dwelling,
boardinghouse, apartment, store, office building,
institution, mechanical or manufacturing
establishment or other place of business or
industry to which water is supplied by a water
company;
(12) "Sewage company" includes every
corporation, company, association, joint stock
association, partnership or person, or lessee
thereof, owning, leasing, maintaining, operating,
managing or controlling, for general use in any
town, city or borough, or portion thereof, in this
state, sewage disposal facilities which discharge
treated effluent into any waterway of this state;
(13) "Pipeline company" includes every
corporation, company, association, joint stock
association, partnership or person, or lessee
thereof, owning, leasing, maintaining, operating,
managing or controlling mains, pipes or other
fixtures through, over, across or under any public
land, water, parkways, highways, parks or public
grounds for the transportation, transmission or
distribution of petroleum products for hire within
this state;
(14) "Community antenna television company"
includes every corporation, company, association,
joint stock association, partnership or person, or
lessee thereof, owning, leasing, maintaining,
operating, managing or controlling a community
antenna television system, in, under or over any
public street or highway, for the purpose of
providing community antenna television service for
hire and shall include any municipality which owns
or operates one or more plants for the manufacture
or distribution of electricity pursuant to section
7-213 or any special act and seeks to obtain or
obtains a certificate of public convenience and
necessity to construct or operate a community
antenna television system pursuant to section
16-331;
(15) "Community antenna television service"
means (1) the one-way transmission to subscribers
of video programming or information that a
community antenna television company makes
available to all subscribers generally, and
subscriber interaction, if any, which is required
for the selection of such video programming or
information and (2) noncable communications
service;
(16) "Community antenna television system"
means a facility, consisting of a set of closed
transmission paths and associated signal
generation, reception and control equipment that
is designed to provide community antenna
television service which includes video
programming and which is provided in, under or
over any public street or highway, for hire, to
multiple subscribers within a franchise, but such
term does not include (1) a facility that serves
only to retransmit the television signals of one
or more television broadcast stations; (2) a
facility that serves only subscribers in one or
more multiple unit dwellings under common
ownership, control or management, unless such
facility is located in, under or over a public
street or highway; (3) a facility of a common
carrier which is subject, in whole or in part, to
the provisions of Subchapter II of Chapter 5 of
the Communications Act of 1934, 47 USC 201 et
seq., as amended, except that such facility shall
be considered a community antenna television
system and the carrier shall be considered a
public service company to the extent such facility
is used in the transmission of video programming
directly to subscribers; or (4) a facility of an
electric company which is used solely for
operating its electric company systems;
(17) "Video programming" means programming
provided by, or generally considered comparable to
programming provided by, a television broadcast
station;
(18) "Noncable communications service" means
any telecommunications service, as defined in
section 16-247a, and which is not included in the
definition of "cable service" in the
Communications Act of 1934, 47 USC 522, as
amended. Nothing in this definition shall be
construed to affect service which is both
authorized and preempted pursuant to federal law;
(19) "Public service motor vehicle" includes
all motor vehicles used for the transportation of
passengers for hire;
(20) "Motor bus" includes any public service
motor vehicle operated in whole or in part upon
any street or highway, by indiscriminately
receiving or discharging passengers, or operated
on a regular route or over any portion thereof, or
operated between fixed termini, and any public
service motor vehicle operated over highways
within this state between points outside this
state or between points within this state and
points outside this state;
(21) "Cogeneration technology" means the use
for the generation of electricity of exhaust
steam, waste steam, heat or resultant energy from
an industrial, commercial or manufacturing plant
or process, or the use of exhaust steam, waste
steam or heat from a thermal power plant for an
industrial, commercial or manufacturing plant or
process, but shall not include steam or heat
developed solely for electrical power generation;
(22) "Renewable fuel resources" means energy
[derived from wind, hydro power, biomass or other
solar resources] SOURCES DESCRIBED IN SUBDIVISIONS
(26) AND (27) OF THIS SECTION;
(23) "Telephone company" means a
telecommunications company that provides one or
more noncompetitive or emerging competitive
services, as defined in section 16-247a;
(24) "Domestic telephone company" includes any
telephone company which has been chartered by or
organized or constituted within or under the laws
of this state;
(25) "Telecommunications company" means a
corporation, limited liability company, company,
association, joint stock association, partnership
or person, or a lessee thereof, which provides
telecommunications service, as defined in section
16-247a, within the state, but shall not mean a
person, firm, corporation, limited liability
company, company, association, joint stock
association or partnership, or a lessee thereof,
which provides only (A) private telecommunications
service, as defined in section 16-247a, (B) the
one-way transmission of video programming or other
programming services to subscribers, (C)
subscriber interaction, if any, which is required
for the selection of such video programming or
other programming services, (D) the two-way
transmission of educational or instructional
programming to a public or private elementary or
secondary school, or a public or independent
institution of higher education, as required by
the department pursuant to a community antenna
television company franchise agreement, or
provided pursuant to a contract with such a school
or institution which contract has been filed with
the department, or (E) a combination of the
services set forth in subparagraphs (B) to (D),
inclusive, of this subdivision;
(26) "CLASS I RENEWABLE ENERGY SOURCE" MEANS
ENERGY DERIVED FROM SOLAR POWER; WIND POWER; A
FUEL CELL; METHANE GAS FROM LANDFILLS; OR A
BIOMASS FACILITY, PROVIDED SUCH FACILITY BEGINS
OPERATING ON OR AFTER JULY 1, 1998, AND SUCH
BIOMASS IS CULTIVATED AND HARVESTED IN A
SUSTAINABLE MANNER;
(27) "CLASS II RENEWABLE ENERGY SOURCE" MEANS
ENERGY DERIVED FROM A TRASH-TO-ENERGY FACILITY; OR
A BIOMASS FACILITY THAT DOES NOT MEET THE CRITERIA
FOR A CLASS I RENEWABLE ENERGY SOURCE OR A
HYDROPOWER FACILITY, PROVIDED SUCH FACILITY HAS A
LICENSE ISSUED BY THE FEDERAL ENERGY REGULATORY
COMMISSION, HAS BEEN EXEMPTED FROM SUCH LICENSURE,
IS THE SUBJECT OF A LICENSE APPLICATION OR NOTICE
OF INTENT TO SEEK A LICENSE FROM SAID COMMISSION,
HAS BEEN FOUND BY THE COMMISSIONER OF
ENVIRONMENTAL PROTECTION TO BE OPERATING IN
COMPLIANCE WITH THE FEDERAL CLEAN WATER ACT, OR
HAS BEEN FOUND BY THE CANADIAN ENVIRONMENTAL
ASSESSMENT AGENCY TO BE OPERATING IN COMPLIANCE
WITH SAID AGENCY'S RESOURCE OBJECTIVES;
(28) "ELECTRIC DISTRIBUTION SERVICES" MEANS
THE OWNING, LEASING, MAINTAINING, OPERATING,
MANAGING OR CONTROLLING OF POLES, WIRES, CONDUITS
OR OTHER FIXTURES ALONG PUBLIC HIGHWAYS OR
STREETS, FOR THE DISTRIBUTION OF ELECTRICITY, OR
ELECTRIC DISTRIBUTION-RELATED SERVICES;
(29) "ELECTRIC DISTRIBUTION COMPANY" OR
"DISTRIBUTION COMPANY" MEANS ANY PERSON PROVIDING
ELECTRIC TRANSMISSION OR DISTRIBUTION SERVICES
WITHIN THE STATE, INCLUDING AN ELECTRIC COMPANY,
SUBJECT TO SUBPARAGRAPH (F) OF THIS SUBDIVISION,
BUT DOES NOT INCLUDE: (A) A PRIVATE POWER
PRODUCER, AS DEFINED IN SECTION 16-243b; (B) A
MUNICIPAL ELECTRIC UTILITY ESTABLISHED UNDER
CHAPTER 101, OTHER THAN A PARTICIPATING MUNICIPAL
ELECTRIC UTILITY; (C) A MUNICIPAL ELECTRIC ENERGY
COOPERATIVE ESTABLISHED UNDER CHAPTER 101a; (D) AN
ELECTRIC COOPERATIVE ESTABLISHED UNDER CHAPTER
597; (E) ANY OTHER ELECTRIC UTILITY OWNED, LEASED,
MAINTAINED, OPERATED, MANAGED OR CONTROLLED BY ANY
UNIT OF LOCAL GOVERNMENT UNDER ANY GENERAL STATUTE
OR SPECIAL ACT; (F) AFTER AN ELECTRIC COMPANY HAS
BEEN UNBUNDLED IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5 OF THIS ACT, A GENERATION ENTITY OR
AFFILIATE OF THE FORMER ELECTRIC COMPANY; OR (G)
AN ELECTRIC SUPPLIER;
(30) "ELECTRIC SUPPLIER" MEANS ANY PERSON,
INCLUDING AN ELECTRIC AGGREGATOR OR PARTICIPATING
MUNICIPAL ELECTRIC UTILITY THAT IS LICENSED BY THE
DEPARTMENT OF PUBLIC UTILITY CONTROL IN ACCORDANCE
WITH SECTION 16-245, AS AMENDED BY THIS ACT, THAT
PROVIDES ELECTRIC GENERATION SERVICES TO END USE
CUSTOMERS IN THE STATE USING THE TRANSMISSION OR
DISTRIBUTION FACILITIES OF AN ELECTRIC
DISTRIBUTION COMPANY, REGARDLESS OF WHETHER OR NOT
SUCH PERSON TAKES TITLE TO SUCH GENERATION
SERVICES, BUT DOES NOT INCLUDE: (A) A MUNICIPAL
ELECTRIC UTILITY ESTABLISHED UNDER CHAPTER 101,
OTHER THAN A PARTICIPATING MUNICIPAL ELECTRIC
UTILITY; (B) A MUNICIPAL ELECTRIC ENERGY
COOPERATIVE ESTABLISHED UNDER CHAPTER 101a; (C) AN
ELECTRIC COOPERATIVE ESTABLISHED UNDER CHAPTER
597; (D) ANY OTHER ELECTRIC UTILITY OWNED, LEASED,
MAINTAINED, OPERATED, MANAGED OR CONTROLLED BY ANY
UNIT OF LOCAL GOVERNMENT UNDER ANY GENERAL STATUTE
OR SPECIAL ACT; OR (E) AN ELECTRIC DISTRIBUTION
COMPANY IN ITS PROVISION OF ELECTRIC GENERATION
SERVICES IN ACCORDANCE WITH SUBSECTION (a) OR,
PRIOR TO JANUARY 1, 2004, SUBSECTION (c) OF
SECTION 20 OF THIS ACT;
(31) "ELECTRIC AGGREGATOR" MEANS (A) A PERSON
OR MUNICIPALITY THAT GATHERS TOGETHER ELECTRIC
CUSTOMERS FOR THE PURPOSE OF NEGOTIATING THE
PURCHASE OF ELECTRIC GENERATION SERVICES FROM AN
ELECTRIC SUPPLIER OR (B) THE CONNECTICUT RESOURCES
RECOVERY AUTHORITY, IF IT GATHERS TOGETHER
ELECTRIC CUSTOMERS FOR THE PURPOSE OF NEGOTIATING
THE PURCHASE OF ELECTRIC GENERATION SERVICES FROM
AN ELECTRIC SUPPLIER, PROVIDED SUCH PERSON,
MUNICIPALITY OR AUTHORITY IS NOT ENGAGED IN THE
PURCHASE OR RESALE OF ELECTRIC GENERATION
SERVICES, AND PROVIDED FURTHER SUCH CUSTOMERS
CONTRACT FOR ELECTRIC GENERATION SERVICES DIRECTLY
WITH AN ELECTRIC SUPPLIER, AND MAY INCLUDE AN
ELECTRIC COOPERATIVE ESTABLISHED PURSUANT TO
CHAPTER 597;
(32) "ELECTRIC GENERATION SERVICES" MEANS
ELECTRIC ENERGY, ELECTRIC CAPACITY OR
GENERATION-RELATED SERVICES;
(33) "ELECTRIC TRANSMISSION SERVICES" MEANS
ELECTRIC TRANSMISSION OR TRANSMISSION-RELATED
SERVICES;
(34) "GENERATION ENTITY OR AFFILIATE" MEANS A
CORPORATE AFFILIATE OR, AS PROVIDED IN SUBDIVISION
(3) OF SUBSECTION (a) OF SECTION 5 OF THIS ACT, A
SEPARATE DIVISION OF AN ELECTRIC COMPANY AFTER
UNBUNDLING HAS OCCURRED PURSUANT TO SECTION 5 OF
THIS ACT, THAT PROVIDES ELECTRIC GENERATION
SERVICES;
(35) "PARTICIPATING MUNICIPAL ELECTRIC
UTILITY" MEANS A MUNICIPAL ELECTRIC UTILITY
ESTABLISHED UNDER CHAPTER 101 OR ANY OTHER
ELECTRIC UTILITY OWNED, LEASED, MAINTAINED,
OPERATED, MANAGED OR CONTROLLED BY ANY UNIT OF
LOCAL GOVERNMENT UNDER ANY GENERAL STATUTE OR ANY
PUBLIC OR SPECIAL ACT, THAT IS AUTHORIZED BY THE
DEPARTMENT IN ACCORDANCE WITH SECTION 19 OF THIS
ACT TO PROVIDE ELECTRIC GENERATION SERVICES TO END
USE CUSTOMERS OUTSIDE ITS SERVICE AREA, AS DEFINED
IN SECTION 19 OF THIS ACT;
(36) "PERSON" MEANS AN INDIVIDUAL, BUSINESS,
FIRM, CORPORATION, ASSOCIATION, JOINT STOCK
ASSOCIATION, TRUST, PARTNERSHIP OR LIMITED
LIABILITY COMPANY; AND
(37) "REGIONAL INDEPENDENT SYSTEM OPERATOR"
MEANS THE "ISO -NEW ENGLAND, INC.", OR ITS
SUCCESSOR ORGANIZATION AS APPROVED BY THE FEDERAL
ENERGY REGULATORY COMMISSION.
Sec. 2. Section 16-244 of the general statutes
is repealed and the following is substituted in
lieu thereof:
[Any corporation authorized to sell and
distribute electricity to electric light and power
companies, railroad companies or electric
companies may, within the territory within which
it is authorized to transmit or convey such
electricity for the purposes aforesaid and subject
to the restrictions contained in section 16-245,
sell, transmit, convey and deliver electricity
generated within the state to any person or
corporation desiring to use such electricity for
the purpose of power and for any use incidental to
or connected with manufacturing purposes.]
THE GENERAL ASSEMBLY FINDS AND DECLARES THAT:
(1) THE PROVISION OF AFFORDABLE, SAFE AND
RELIABLE ELECTRICITY IS KEY TO THE CONTINUING
GROWTH OF THIS STATE AND TO THE HEALTH, SAFETY AND
GENERAL WELFARE OF ITS RESIDENTS;
(2) RATES FOR ELECTRICITY IN THIS STATE AND IN
THE REGION ARE HIGHER THAN THE NATIONAL AVERAGE;
(3) CHANGES IN GENERATING TECHNOLOGY NOW
ENABLE THE PROVISION OF ELECTRIC SERVICE AT MUCH
LOWER RATES THAN ARE CURRENTLY BEING CHARGED IN
CONNECTICUT AND COMPETITIVE MARKET FORCES CAN PLAY
A ROLE IN THE REDUCTION OF CONNECTICUT RATES;
(4) IT IS IN THE BEST INTEREST OF THE STATE TO
REDUCE RATES FOR ELECTRICITY TO ALL CUSTOMER
CLASSES, TO PREVENT CROSS SUBSIDIZATION AMONG
CUSTOMER CLASSES AND TO ALLOW FOR THE COMPETITIVE
GENERATION OF ELECTRICITY WHILE RETAINING A
REGULATED DISTRIBUTION SYSTEM TO ENSURE
RELIABILITY;
(5) A COMPETITIVE GENERATION MARKET SHOULD
ALLOW CUSTOMERS TO CHOOSE AMONG ALTERNATIVE
GENERATION SERVICES AND ALLOW CUSTOMERS A
REASONABLE AND FAIR OPPORTUNITY TO SELF-GENERATE
AND INTERCONNECT;
(6) THOSE PUBLIC POLICY MEASURES UNDER CURRENT
LAW, INCLUDING, BUT NOT LIMITED TO, THOSE
PROTECTING CUSTOMERS UNDER THE WINTER MORATORIUM
AND HARDSHIP PROVISIONS AS WELL AS CONSERVATION
MEASURES AND INCENTIVES FOR USING RENEWABLE ENERGY
SOURCES, SHOULD BE PRESERVED;
(7) STATE REGULATIONS SHOULD ENCOURAGE AND
ALLOW FOR A SUFFICIENT NUMBER OF IN-STATE
GENERATING FACILITIES TO ENSURE AN ADEQUATE AND
RELIABLE POWER SUPPLY WITHIN THE STATE AND ENSURE
DEVELOPMENT OF A TRULY COMPETITIVE GENERATION
MARKET;
(8) THE ASSURANCE OF SAFE, RELIABLE AND
AVAILABLE ELECTRIC SERVICE TO ALL CUSTOMERS IN A
UNIFORM AND EQUITABLE MANNER IS AN ESSENTIAL
GOVERNMENTAL OBJECTIVE AND A RESTRUCTURED ELECTRIC
MARKET MUST PROVIDE ADEQUATE SAFEGUARDS TO ASSURE
UNIVERSAL SERVICE AND CUSTOMER SERVICE
PROTECTIONS;
(9) THE GENERATION OF ELECTRICITY MUST BE
ACHIEVED IN A MANNER THAT DOES NOT ENDANGER THE
PUBLIC HEALTH OR SAFETY AND THAT MINIMIZES
NEGATIVE ENVIRONMENTAL IMPACTS;
(10) THE RESTRUCTURING OF THE ELECTRIC
INDUSTRY MAY RESULT IN A REDUCTION IN STAFFING
LEVELS AT CONNECTICUT GENERATION FACILITIES AND
THOSE WORKERS ADVERSELY AFFECTED BY SUCH
RESTRUCTURING SHOULD BE PROTECTED;
(11) THE CURRENT METHOD OF PROVIDING ELECTRIC
SERVICE HAS INVOLVED A BALANCING OF COSTS, RISKS
AND REWARDS FOR ELECTRIC UTILITIES AND THEIR
CUSTOMERS, AND THEREFORE THE TRANSITION TO A
COMPETITIVE GENERATION MARKET, INCLUDING THE
DETERMINATION OF STRANDED COSTS, SHOULD BE BASED
ON THE PRINCIPLES OF FAIRNESS AND REASONABLENESS
AND THE RESULT OF A BALANCE OF THE INTERESTS OF
ELECTRIC CUSTOMERS, ELECTRIC UTILITIES AND THE
PUBLIC AT LARGE; AND
(12) IT IS IN THE BEST INTEREST OF THE STATE
FOR ALL CUSTOMERS TO USE ELECTRICITY AS
EFFICIENTLY AS POSSIBLE.
Sec. 3. (NEW) (a) For purposes of this
section, "base rates" means the total amount
charged by an electric company to each end use
customer class, as defined in its rate order in
effect on July 1, 1998, for the fully bundled
costs of electricity, including any customer
service charge and any demand charge.
(b) Notwithstanding sections 16-19 and 16-19a
of the general statutes, for the period from July
1, 1998, until December 31, 1999, the base rates
paid to an electric company by any customer in the
state for electric services, other than a customer
receiving electric services under a special
contract, shall not exceed the base rates that
have been approved by the Department of Public
Utility Control for that electric company as of
December 31, 1996. Base rates shall be adjusted to
the extent of any increase or decrease in state
taxes attributable to sections 12-264 and 12-265
of the general statutes, as amended by this act,
and any other increase or decrease in state or
federal taxes resulting from a change in state or
federal law and shall continue to be adjusted
during such period pursuant to section 16-19b of
the general statutes. Base rates may be adjusted,
by an increase or decrease, to the extent approved
by the department, in the event that the revenue
requirements of the company are affected as the
result of changes in legislative enactments other
than this act, administrative requirements or
accounting standards occurring after July 1, 1998,
provided such accounting standards are adopted by
entities independent of the company that have
authority to issue such standards. Savings
attributable to a reduction in taxes shall not be
shifted between customer classes. The calculation
of base rates for purposes of this section shall
not be affected by the change in billing format
provided in subsection (b) of section 5 of this
act.
Sec. 4. (NEW) All customers of electric
distribution companies, as defined in section 16-1
of the general statutes, as amended by section 1
of this act, shall have the opportunity to
purchase electric generation services from their
choice of electric suppliers, as defined in said
section 16-1, in a competitive generation market
in accordance with the schedule provided in this
section. On and after January 1, 2000, up to
thirty-five per cent of the peak load of each rate
class of an electric company or electric
distribution company, as the case may be, may
choose an electric supplier to provide their
electric generation services, provided such
customers shall be located in distressed
municipalities, as defined in section 32-9p of the
general statutes. In the event that the number of
customers exceeds thirty-five per cent of such
load, preference shall be given to customers
located in distressed municipalities with a
population greater than one hundred thousand
persons. Participation shall be determined on a
first-come, first-served basis. As of July 1,
2000, all customers shall have the opportunity to
choose an electric supplier. On and after January
1, 2000, electric generation services shall be
provided in accordance with section 20 of this act
to any customer who has not chosen an electric
supplier or has declined, failed or been unable to
enter into or maintain a contract for electric
generation services with an electric supplier. The
Department of Public Utility Control may adopt
regulations in accordance with chapter 54 of the
general statutes to implement the phase-in
schedule provided in this subsection.
Sec. 5. (NEW) (a) (1) Not later than October
1, 1998, each electric company shall submit an
unbundling plan to the department to unbundle and
separate, by October 1, 1999, all the company's
generation assets that (A) prior to the date when
the department approves a divestiture plan
pursuant to section 6 or 7 of this act, are not
sold in accordance with section 16-43 of the
general statutes, and (B) on and after the date
when the department approves such plan, will not
be divested as of January 1, 2000, in accordance
with sections 6 and 7 of this act.
(2) For any nonnuclear generation asset that
will not be divested by January 1, 2000,
unbundling and separation shall occur by transfer
on a functional basis to one or more corporate
affiliates that are legally separate from the
company's transmission and distribution assets and
all related operations and functions, in which
case, no stranded costs shall be recovered.
(3) For any nuclear generation asset that will
not be sold by January 1, 2000, unbundling and
separation shall occur by (A) divestiture pursuant
to section 7 of this act, (B) transfer on a
functional basis to one or more corporate
affiliates that are legally separate from the
company's transmission and distribution assets and
all related operations and functions, or (C) if
required to comply with rules, regulations or
licensing requirements of the United States
Nuclear Regulatory Commission, transfer on a
functional basis to one or more divisions that are
structurally separate from the electric
distribution company.
(4) The unbundling plan and order shall
provide for the allocation of the rights and
responsibilities pursuant to sections 8 to 14,
inclusive, of this act between the electric
distribution company and any generation entities
or affiliates and shall provide for the allocation
of revenue under a special contract among those
components of a customer's bill specified in
subdivision (1) of subsection (a) of section 21 of
this act. Such plan shall include a proposed
modification or elimination to the adjustment
pursuant to section 16-19b of the general
statutes. Such plan shall not allow the transfer
of assets or liabilities allocable or belonging to
transmission or distribution functions or
facilities to the generation entity or affiliate
of an electric company, nor allow the transfer of
assets or liabilities, other than financial assets
or liabilities to be funded by the competitive
transition assessment pursuant to section 10 of
this act or the systems benefits charge pursuant
to section 18 of this act, allocable or belonging
to generation functions or facilities to the
electric distribution company, as defined in
section 16-1 of the general statutes, as amended
by section 1 of this act, unless federal law or
regulation requires such a transfer with regard to
nuclear generation assets. All entitlements and
obligations from any purchased power contract or
independent power producer contract entered into
before July 1, 1998, by the predecessor electric
company which are not bought out shall succeed to
the electric distribution company. Such plan shall
include a discussion of the impacts of the
proposed plan on the company's employees and plans
for mitigating such impact.
(5) The department shall hold a hearing and
issue a final order approving or modifying the
plan in a time frame that will allow unbundling to
be accomplished by October 1, 1999. Any hearing
shall be conducted as a contested case in
accordance with chapter 54 of the general
statutes. Such plan shall be submitted and such
order issued consistent with the determination and
implementation of the competitive transition
assessment, as provided in section 10 of this act.
(6) Once unbundling is completed to the
satisfaction of the department and consistent with
the provisions of section 16-244 of the general
statutes, as amended by section 2 of this act, any
corporate affiliate or separate division that
provides electric generation services as a result
of unbundling pursuant to this subsection shall be
considered a generation entity or affiliate of the
electric company, and the division or corporate
affiliate of the electric company that provides
transmission and distribution services shall be
considered an electric distribution company.
(b) Not later than August 1, 1998, the
Department of Public Utility Control shall hold a
hearing and issue a final order that unbundles
prices or rates for electric generation services
for each electric company from all other charges.
Any hearing shall be conducted as a contested case
in accordance with chapter 54 of the general
statutes. On and after July 1, 1999, each electric
company or electric distribution company, as the
case may be, shall provide all customers with a
bill that separates the electric generation
services component of those charges. Any
unbundling of charges for electric generation
services under this subsection shall not affect
the calculation of base rates under section 3 of
this act.
Sec. 6. (NEW) (a) As used in this section:
(1) "Generation assets" means electric
generation facilities and generation-related
operations and functions owned by an electric
company and includes associated contractual
obligations for energy or capacity from such
generation assets; and
(2) "Net proceeds" means the book income from
the sale or divestiture of assets, consisting of
sales price less reasonable expenses of sale,
related income and other taxes.
(b) (1) No electric company shall be eligible
to claim any stranded costs as provided in
sections 8 to 14, inclusive, of this act, unless
the electric company (A) prior to the date when
the department approves a divestiture plan, has
sold its nonnuclear generation assets in
accordance with section 16-43 of the general
statutes, and (B) on and after the date when the
department approves such plan, has submitted all
of its nonnuclear generation assets owned or held
as of the effective date of this act, to a public
auction held in a commercially reasonable manner
in accordance with this subsection.
(2) Each electric company that elects to
divest itself of nonnuclear generation assets
shall, not later than October 1, 1998, submit a
divestiture plan to the Department of Public
Utility Control. The divestiture plan shall
include (A) any documentation the department
determines is reasonably necessary to approve the
auction procedure, including a copy of the request
for proposal and a description of the solicitation
process, (B) a detailed description of the process
for the sale and transfer of nonnuclear generation
assets, and (C) the book value of all assets the
electric company intends to make available for
sale. In structuring the divestiture plan, the
electric company shall take into account the
findings set forth in section 16-244 of the
general statutes, as amended by section 2 of this
act. The department shall issue a final order
approving or modifying the plan in a time frame
that will allow divestiture to be accomplished by
January 1, 2000. The department shall, after
consultation with the Office of Consumer Counsel,
appoint a consultant who shall be an entity
unrelated to said company that meets
qualifications set by the department, to conduct
the auction process.
(3) The department shall not approve a sale
unless (A) the sale price of an asset or assets
equals or exceeds book value for the asset or
assets, except for any dual-fueled nonnuclear
generation unit that began operation between 1974
and 1976 and has a capacity of not less than four
hundred twenty megawatts, in which case the sale
price for that specific unit equals or exceeds the
minimum bid established by the department for the
unit, (B) the department determines the bidder
meets all applicable qualifications established by
federal law and regulation, (C) the sale is
conducted in accordance with the divestiture plan
as approved by the department, (D) the bidder
proves to the satisfaction of the department that
the bidder will preserve labor agreements in
effect at the time of the sale, and (E) the sale
will result in a net benefit to ratepayers, as
determined by the department. Transfer in
ownership of any asset shall not occur until the
department determines the purchaser is fully
qualified to provide electric generation services
pursuant to section 16-245 of the general
statutes, as amended by this act, or pursuant to
applicable federal law and regulation. If the
department approves a sale in accordance with the
provisions of this section, no further proceedings
under section 16-43 shall be required.
(4) The department shall determine the minimum
bid price for a dual-fueled nonnuclear generation
unit that began operation between 1974 and 1976
and has a capacity of not less than four hundred
twenty megawatts, by determining the future net
cash flow that a nonnuclear generation unit of
comparable size, age and technical characteristics
that is prudently and efficiently managed would be
expected to produce over its expected remaining
useful life, discounted to a present value.
(5) A generation entity or affiliate of an
electric company may bid on any nonnuclear
generation asset, provided such entity or
affiliate is qualified to bid, as provided in this
subsection.
(6) All net proceeds realized by an electric
company from the sale of assets pursuant to this
subsection that exceed the total book value of all
the assets sold pursuant to this section shall be
netted against the amount of stranded costs as
provided in subdivision (4) of subsection (h) and
subsection (i) of section 8 of this act.
(7) If an electric company complies with the
provisions of this subsection but does not receive
any bids for an asset by a qualified bidder that
equal or exceed the minimum bid as provided in
this subsection, the department shall calculate
the value of stranded costs for each such asset in
accordance with the provisions of subsection (g)
of section 8 of this act.
Sec. 7. (NEW) (a) As used in this section,
"generation assets" means "generation assets", as
defined in section 6 of this act, and "net
proceeds" means "net proceeds", as defined in
section 6 of this act.
(b) Not later than January 1, 2004, each
electric distribution company shall either (1)
submit its nuclear generation assets to a public
auction held in a commercially reasonable manner,
in accordance with subsection (c) of this section
in order to divest itself of remaining nuclear
generation assets, or (2) transfer remaining
nuclear generation assets to one or more legally
separate corporate affiliates at their book value,
in which case no stranded costs shall be
recovered.
(c) (1) Each electric distribution company
that elects to divest itself of its nuclear
generation assets shall, in a time frame that will
allow divestiture to occur by January 1, 2004,
submit a divestiture plan to the Department of
Public Utility Control. The divestiture plan shall
include (A) any documentation the department
determines is reasonably necessary to approve the
auction procedure, including a copy of the request
for proposal and a description of the solicitation
process, (B) a detailed description of the process
for the sale and transfer of nuclear generation
assets, and (C) information the department
determines is necessary for the department to
determine the value of the minimum bid for each
nuclear generation asset, as provided in
subdivision (3) of this subsection. The department
shall hold a hearing and issue a final order
approving or modifying the plan in a time frame
that will allow divestiture to be accomplished by
January 1, 2004. Any hearing shall be conducted as
a contested case in accordance with chapter 54 of
the general statutes. The department shall, after
consultation with the Office of Consumer Counsel,
appoint a consultant who shall be an entity
unrelated to the said company that meets
qualifications set by the department, to conduct
the auction process.
(2) The department shall not approve a sale
unless (A) the sale price equals or exceeds the
minimum bid established by the department for the
asset, (B) the department determines the bidder
meets all applicable qualifications established by
federal law and regulation, (C) the sale is
conducted in accordance with the divestiture plan
as approved by the department, (D) the bidder
proves to the satisfaction of the department that
the bidder will preserve labor agreements in
effect at the time of the sale, and (E) the sale
will result in a net benefit to ratepayers, as
determined by the department. Transfer in
ownership of any asset shall not occur until the
department determines the purchaser is fully
qualified to provide electric generation services
pursuant to section 16-245 of the general
statutes, as amended by this act, or pursuant to
applicable federal law and regulation. If the
department approves a sale in accordance with the
provisions of this section, no further proceedings
under section 16-43 of the general statutes shall
be required.
(3) The department shall determine the minimum
bid price for each nuclear generation asset by
determining the future net cash flow that a
nuclear generation asset of comparable size, age
and technical characteristics that is prudently
and efficiently managed would be expected to
produce over its expected remaining useful life,
discounted to a present value.
(4) A generation entity or affiliate of an
electric distribution company may bid on any
nuclear generation asset, provided such entity or
affiliate is qualified to bid, as provided in this
subsection.
(5) If a final bid is less than book value for
an asset, the electric distribution company shall
be entitled to recover the difference between the
bid price and the book value as stranded costs
pursuant to subdivision (2) of subsection (h) of
section 8 of this act. If a final bid exceeds book
value for an asset, the net proceeds realized by
the electric distribution company that are above
book value shall be netted against the amount of
stranded costs as provided in subdivision (4) of
subsection (h) of section 8 of this act.
(d) (1) If an electric distribution company
elects to sell all its remaining nuclear
generation assets by public auction and complies
with the provisions of subsection (c) of this
section but does not receive any bids for an asset
by a qualified bidder that equal or exceed the
minimum bid price, as determined by the department
in accordance with the provisions of subsection
(c) of this section, the department shall
calculate the value of stranded costs for each
such asset in accordance with subdivision (3) of
subsection (h) of section 8 of this act.
(2) Not later than January 1, 2004, the
electric distribution company shall transfer the
nuclear generation assets described in subdivision
(1) of this subsection to one or more legally
separate corporate affiliates. If in order to
comply with rules, regulations or licensing
requirements of the United States Nuclear
Regulatory Commission an electric distribution
company is unable to legally separate its nuclear
assets to one or more corporate affiliates, the
generation assets may remain in separate divisions
of the electric distribution company.
(e) (1) On and after January 1, 2000, and
prior to the date when a nuclear generation asset
is sold at public auction or transferred to a
corporate affiliate, the difference between the
return of and on capital costs allowed in rates
for the nuclear generation asset and the income
capitalization value established for such asset
for such interim period pursuant to the
methodology described in subdivision (3) of
subsection (c) of this section shall be collected
through the competitive transition assessment in
accordance with section 10 of this act.
(2) On or after the date when a nuclear
generation asset is sold at public auction or
transferred to a corporate affiliate, the
department shall calculate the stranded costs for
nuclear generation assets in accordance with
subsection (h) of section 8 of this act.
(3) In no event shall any costs described in
this subsection be funded at any time with the
proceeds of rate reduction bonds pursuant to
sections 8 to 14, inclusive, of this act.
Sec. 8. (NEW) (a) As used in this section and
sections 9 to 14, inclusive, of this act:
(1) "Rate reduction bonds" means bonds, notes,
certificates of participation or beneficial
interest, or other evidences of indebtedness or
ownership, issued pursuant to an executed
indenture or other agreement of a financing
entity, in accordance with this section and
sections 9 to 14, inclusive, of this act, the
proceeds of which are used, directly or
indirectly, to provide, recover, finance, or
refinance stranded costs, and which, directly or
indirectly, are secured by, evidence ownership
interests in, or are payable from, transition
property;
(2) "Competitive transition assessment" means
those non-bypassable rates and other charges, that
are authorized by the department (A) in a
financing order to recover those stranded costs
that are eligible to be funded with the proceeds
of rate reduction bonds pursuant to section 9 of
this act and the costs of providing, recovering,
financing, or refinancing such stranded costs
through a plan approved by the department in the
financing order, including the costs of issuing,
servicing, and retiring rate reduction bonds, (B)
to recover those stranded costs determined under
this section but not eligible to be funded with
the proceeds of rate reduction bonds pursuant to
section 9 of this act, or (C) to recover costs
determined under subdivision (1) of subsection (e)
of section 7 of this act. If requested by the
electric company or electric distribution company,
the department shall include in the competitive
transition assessment non-bypassable rates and
other charges to recover federal and state taxes
whose recovery period is modified by the
transactions contemplated in this section and
sections 9 to 14 of this act;
(3) "Customer" means any individual, business,
firm, corporation, association, tax-exempt
organization, joint stock association, trust,
partnership, limited liability company, the United
States or its agencies, this state, any political
subdivision thereof or state agency that purchases
electric generation or distribution services as a
retail end user in the state from any electric
supplier, electric company or electric
distribution company;
(4) "Finance authority" means the state,
acting through the office of the State Treasurer;
(5) "Net proceeds" means "net proceeds" as
defined in section 6 of this act;
(6) "Stranded costs" means that portion of
generation assets, generation-related regulatory
assets or long-term contract costs determined by
the department in accordance with the provisions
of subsections (e), (f), (g) and (h) of this
section;
(7) "Generation assets" means the total
construction and other capital asset costs of
generation facilities approved for inclusion in
rates before July 1, 1997, but does not include
any costs relating to the decommissioning of any
such facility or any costs which the department
found during a proceeding initiated before July 1,
1998, were incurred because of imprudent
management;
(8) "Generation-related regulatory assets"
means generation-related costs authorized or
mandated before July 1, 1998, by the Department of
Public Utility Control, approved for inclusion in
the rates, and include, but are not limited to,
costs incurred for deferred taxes, conservation
programs, environmental protection programs,
public policy costs and research and development
costs, net of any applicable credits payable to
customers, but does not include any costs which
the department found during a proceeding initiated
before July 1, 1998, were incurred because of
imprudent management;
(9) "Long-term contract costs" mean the
above-market portion of the costs of contractual
obligations approved for inclusion in the rates
that were entered into before January 1, 2000,
arising from independent power producer contracts
required by law or purchased power contracts
approved by the Federal Energy Regulatory
Commission;
(10) "Department" means the Department of
Public Utility Control;
(11) "Financing entity" means the finance
authority or any special purpose trust or other
entity that is authorized by the finance authority
to issue rate reduction bonds or acquire
transition property pursuant to such terms and
conditions as the finance authority may specify,
or both;
(12) "Financing order" means an order of the
department adopted in accordance with this section
and sections 9 to 14, inclusive, of this act; and
(13) "Transition property" means the property
right created pursuant to this section and
sections 9 to 14, inclusive, of this act, in
respect of those stranded costs that are eligible
to be funded with the proceeds of rate reduction
bonds pursuant to section 9 of this act,
including, without limitation, the right, title,
and interest of an electric company or electric
distribution company or its transferee (A) in and
to the rates and charges established pursuant to a
financing order, as adjusted from time to time in
accordance with subdivision (2) of subsection (b)
of section 12 of this act and the financing order,
(B) to be paid the amount that is determined in a
financing order to be the amount that the electric
company or electric distribution company or its
transferee is lawfully entitled to receive
pursuant to the provisions of this section and
sections 9 to 14, inclusive, of this act, and the
proceeds thereof, and in and to all revenues,
collections, claims, payments, money, or proceeds
of or arising from the rates and charges or
constituting the competitive transition assessment
that is the subject of a financing order including
those non-bypassable rates and other charges
referred to in subdivision (2) of this subsection,
and (C) in and to all rights to obtain adjustments
to the rates and charges pursuant to the terms of
subdivision (2) of subsection (b) of section 12 of
this act and the financing order. "Transition
property" shall constitute a current property
right notwithstanding the fact that the value of
the property right will depend on consumers using
electricity or, in those instances where consumers
are customers of a particular electric company or
electric distribution company, the electric
company or electric distribution company
performing certain services.
(b) The department shall, in accordance with
the provisions of this section, identify and
calculate, upon application by an electric
company, those stranded costs that may be
collected through the competitive transition
assessment which shall be calculated and collected
in accordance with the provisions of section 10 of
this act. No electric distribution company shall
be eligible to claim stranded costs unless a
public auction has been held to divest itself of
all nonnuclear generation assets in accordance
with subsection (b) of section 6 of this act or
the electric company has sold its nonnuclear
generation assets in accordance with section 16-43
of the general statutes.
(c) (1) Notwithstanding subdivision (1) of
subsection (e) of section 7 of this act, any
electric company seeking to claim stranded costs
shall, in accordance with this subsection,
mitigate such costs to the fullest extent
possible. Prior to the approval by the department
of any stranded costs, the electric company shall
show to the satisfaction of the department that
the electric company has taken all reasonable
steps to mitigate to the maximum extent possible
the total amount of stranded costs that it seeks
to claim and to minimize the cost to be recovered
from customers. Mitigation shall include: (A)
Except to the extent provided in collective
bargaining agreements or agreements to purchase
generation assets entered into prior to July 1,
1998, the obtaining of written commitments from
purchasers of generation facilities divested
pursuant to sections 6 and 7 of this act, that the
purchasers will offer employment to persons who
were employed in nonmanagerial positions by a
divested generation facility at any time during
the three-month period prior to the divestiture,
at levels of wages and overall compensation not
lower than the employees' lowest level during the
six-month period prior to the date the contract to
divest the asset was entered into; (B) good faith
efforts to negotiate the buyout, buydown or
renegotiation of independent power producer
contracts and purchased power contracts approved
by the Federal Energy Regulatory Commission
provided the fixed present value of any contract
to which a political subdivision of the state is a
party shall be calculated using the political
subdivision's tax exempt borrowing rate as the
discount rate; and (C) the reasonable costs of the
consultants appointed to conduct the auctions of
generation assets pursuant to sections 6 and 7 of
this act. Mitigation may include, but is not
limited to, reallocation of depreciation reserves
to existing generation assets to the extent
consistent with generally accepted accounting
principles; reduction of book assets by
application of net proceeds of any sale of
existing assets; maximization of market revenues
from existing generation assets; efforts to
maximize current and future operating efficiency,
including appropriate and timely maintenance,
trouble shooting, aggressive identification and
correction of potential problem areas; voluntary
write-offs of above-market generation assets; the
decision to retire uneconomical generation assets
and efforts to divest generating sites at market
prices reflective of best use of sites. Mitigation
shall not include any expenditures to restart a
nuclear generation asset that was not operating
for reasons other than scheduled maintenance or
refueling at the time such expenditure was made.
Any mitigation efforts and associated costs shall
be subject to approval by the department.
(2) The department shall allow the cost of
such mitigation efforts to be included in the
calculation of stranded costs to the extent that
such mitigation costs are reasonable relative to
the amount of the reduction in stranded costs
resulting from the mitigation.
(d) An electric company shall submit to the
department an application for recovery of that
portion of generation-related regulatory assets,
long-term contract costs, generation assets and
mitigation costs which are determined by the
department in accordance with subsections (c),
(e), (f) and (g) of this section and subdivision
(1) of subsection (e) of section 7 of this act.
The application shall include a description of
mitigation efforts and a request for recovery
through the competitive transition assessment and
may include a request for a financing order. The
department shall hold a hearing for each electric
company and issue a finding of the calculation of
stranded costs in a time frame that allows for
collection of the competitive transition
assessment to begin on January 1, 2000. Any
hearing shall be conducted as a contested case in
accordance with chapter 54 of the general
statutes.
(e) The department shall calculate the
stranded costs for generation-related regulatory
assets to be their book value as of January 1,
2000. In calculating the value of
generation-related regulatory assets that are
being provided in a lump sum as the result of a
funding with the proceeds of rate reduction bonds,
the department shall adjust the value of each such
asset to reflect the time value of such lump sum,
if any.
(f) (1) The department shall calculate the
stranded costs for long-term contract costs that
have been reduced to a fixed present value through
the buyout, buydown, or renegotiation of
independent power producer contracts and purchased
power contracts approved by the Federal Energy
Regulatory Commission as such present value. In
making such calculation, the department shall net
purchased power contracts approved by the Federal
Energy Regulatory Commission that are below market
value against any such contracts that are
above-market value.
(2) The department shall calculate the
stranded costs for any portion of a long-term
contract cost that has not been reduced to a fixed
present value by comparing the contract price to
the market price at least annually. In making such
calculation, the department shall net purchased
power contracts approved by the Federal Energy
Regulatory Commission that are below market value
against any such contracts that are above-market
value. The costs described in this subdivision
shall be included in the competitive transition
assessment pursuant to section 10 of this act but
shall not be included in any funding with the
proceeds of rate reduction bonds.
(g) The department shall calculate the
stranded cost for each generation asset described
in subdivision (7) of subsection (b) of section 6
of this act to be the difference between its book
value and the market value of a prudently and
efficiently managed nonnuclear generating facility
of comparable size, age and technical
characteristics in a competitive market. In
determining the market value of any such asset,
the department may consider (A) the dollars per
kilowatt received from the sale of similar
generation facilities, if any, (B) income
capitalization based on the operating history and
capacity of the facility, the market rates for
power, and any existing long-term contracts for
the sale of power or capacity, (C) independent
market appraisals, or (D) other relevant factors.
The department shall calculate the stranded costs
for generation assets described in subdivision (7)
of subsection (b) of section 6 of this act at
least every three years. The costs described in
this subsection shall be included in the
competitive transition assessment pursuant to
section 10 of this act but shall not be included
in any funding with the proceeds of rate reduction
bonds.
(h) (1) On or before January 1, 2004, an
electric company may submit to the department an
application for recovery of that portion of
nuclear generation assets which is determined by
the department in accordance with this subsection,
which application shall include a request for
recovery through the competitive transition
assessment. The department shall hold a hearing
for each electric company and issue a finding of
the calculation of such nuclear generation assets
in accordance with the provisions of this
subsection. Any hearing shall be conducted as a
contested case proceeding in accordance with
chapter 54 of the general statutes. The costs
described in this subsection shall be included in
the competitive transition assessment pursuant to
section 10 of this act but shall not be included
in any funding with proceeds of rate reduction
bonds.
(2) The department shall calculate the
stranded costs for each nuclear generation asset
that was divested at a price less than book value
as described in subdivision (5) of subsection (c)
of section 7 of this act as the difference between
the book value of this asset and the final bid
price of the asset. The department's calculation
of stranded costs pursuant to this subdivision
shall be final and shall not be subject to further
adjustment by the department.
(3) The department shall calculate the
stranded costs for each nondivested nuclear
generation asset described in subdivision (1) of
subsection (d) of section 7 of this act to be the
difference between its book value and the market
value of a prudently and efficiently managed
nuclear generating facility of comparable size,
age and technical characteristics in a competitive
market. In determining the market value of any
such asset, the department may consider (A) the
dollars per kilowatt received from the sale of
similar generation facilities, if any, (B) income
capitalization based on the operating history and
capacity of the facility, the market rates for
power, and any existing long-term contracts for
the sale of power or capacity, (C) the provision
for decommissioning and related costs to be paid
from the systems benefits charge provided in
section 18 of this act, (D) independent market
appraisals, or (E) other relevant factors. At
least every four years after the date when the
department issues an initial finding of the
calculation of the stranded costs for such
nondivested nuclear generation assets as provided
in this subdivision until the earlier of (i) the
expiration of the collection of the competitive
transition assessment, or (ii) the date when such
an asset is divested, the department shall hold a
hearing and issue a finding to adjust the stranded
cost calculation of each such asset and to adjust
the competitive transition assessment accordingly
to true up the stranded cost recovery for the
difference between the market value projected in
such initial finding and the actual market value
of a prudently and efficiently managed nuclear
generating facility of comparable size, age and
technical characteristics during the time period
between the initial finding and the adjustment
date, provided the second and subsequent
adjustments shall reflect the difference during
the time period since the most recent true-up. The
department shall calculate the value of each such
asset in accordance with the methodology provided
in this subdivision. Any hearing shall be
conducted as a contested case in accordance with
chapter 54 of the general statutes.
(4) After the department has calculated the
total value of stranded costs for all nuclear
generation assets, the department shall (A) reduce
such amount by the net proceeds that are above
book value realized by an electric company from
the sale of nonnuclear generation assets pursuant
to subdivision (6) of subsection (b) of section 6
of this act, (B) reduce such valuation to reflect
the total net proceeds that are above book value
realized by an electric distribution company from
the sale of any nuclear generation assets pursuant
to subsection (c) of section 7 of this act, and
(C) reduce such amount by the net proceeds that
are above book value received by an electric
company for the sale or lease of any real property
after July 1, 1998.
(i) If any net proceeds described in
subdivision (4) of subsection (h) of this section
remain after the reduction in the calculation of
nuclear generation assets pursuant to said
subdivision (4) or are realized after said
reduction is calculated, the additional amount of
such net proceeds shall be netted against
long-term contract costs described in subdivision
(2) of subsection (f) of this section, and the
competitive transition assessment shall be
adjusted accordingly.
(j) (1) No electric company shall be eligible
to claim any stranded costs for a nuclear
generation asset or for any generation-related
regulatory asset related to such generation asset,
if the generation asset is not operating as a
result of an order issued by the United States
Nuclear Regulatory Commission that applies
specifically to such asset. Any such asset that is
not eligible to be claimed as a stranded cost
shall be eligible after it is permitted to and has
resumed operation and is selling power.
(2) Any asset with a Nuclear Regulatory
Commission capacity rating of 641 megawatts that
does not resume operation after such order is no
longer in effect shall not be eligible to be
claimed as a stranded cost. An electric company or
electric distribution company may apply to the
department for retirement of such unit for
economic reasons pursuant to section 16-19 of the
general statutes. The department shall include any
recovery ordered in such proceeding in the
competitive transition assessment but shall not
include any costs relating to the decommissioning
of any such facility or any costs which the
department found during a proceeding initiated
before July 1, 1998, were incurred because of
imprudent management. Notwithstanding the
provisions of this subdivision, nothing herein
shall modify or supersede any statute or
regulation in effect on the effective date of this
act pertaining to applications for retirement of
nuclear generating facilities.
(k) If an electric company elected to transfer
any of its nuclear generation assets and related
operations and functions to a separate corporate
affiliate or to a division that is functionally
separate from the electric distribution company
pursuant to section 7 of this act and subsequently
sold any such assets in an arm's length
transaction to an unrelated entity prior to
January 1, 2012, the net proceeds realized from
such sale that exceed book value for such assets
shall be netted against the total amount of
stranded costs, and the competitive transition
assessment shall be adjusted accordingly and, if
appropriate, other reimbursement shall be ordered
by the department.
Sec. 9. (NEW) An electric company or electric
distribution company may submit to the department
an application for a financing order with respect
to the following stranded costs: (1) The cost of
mitigation efforts, as calculated pursuant to
subsection (c) of section 8 of this act; (2)
generation-related regulatory assets, as
calculated pursuant to subsection (e) of section 8
of this act; and (3) those long-term contract
costs that have been reduced to a fixed present
value through the buyout, buydown, or
renegotiation of such contracts, as calculated
pursuant to subsection (f) of section 8 of this
act. No stranded costs shall be funded with the
proceeds of rate reduction bonds unless (A) the
electric company or electric distribution company
proves to the satisfaction of the department that
the savings attributable to such funding will be
directly passed on to customers through lower
rates, and (B) the department determines such
funding will not result in giving the electric
distribution company or any generation entities or
affiliates an unfair competitive advantage. The
department shall hold a hearing for each such
electric distribution company to determine the
portion of stranded costs that may be included in
such funding and thereby constitute transition
property. Any hearing shall be conducted as a
contested case in accordance with chapter 54 of
the general statutes.
Sec. 10. (NEW) (a) The Department of Public
Utility Control shall assess and beginning January
1, 2000, impose the competitive transition
assessment which shall be imposed on all customers
of each electric distribution company to provide
funds for the purposes described in subsection (d)
of this section. The department shall hold a
hearing that shall be conducted as a contested
case in accordance with chapter 54 of the general
statutes to determine the amount of the
competitive transition assessment.
(b) The department shall consider the effect
on all customer rates and other factors relevant
to reducing rates in determining the amount of the
competitive transition assessment and the manner
in which and the period over which it shall be
imposed in any decision of the department to set
or adjust the competitive transition assessment.
(c) The competitive transition assessment
shall be determined by the department in a general
and equitable manner and shall be imposed on all
customers at a rate that is applied equally to all
customers of the same class in accordance with
methods of allocation in effect on July 1, 1998,
provided the competitive transition assessment
shall not be imposed on customers receiving
services under a special contract which is in
effect on the effective date of this act until
such special contract expires. The competitive
transition assessment shall be imposed beginning
on January 1, 2000, on all customers receiving
services under a special contract which is entered
into or renewed after the effective date of this
act. The competitive transition assessment shall
have a generally applicable manner of
determination that may be measured on the basis of
percentages of total costs of retail sales of
electric generation services. The competitive
transition assessment shall be payable by
customers on an equal basis on the same payment
terms and shall be eligible or subject to
prepayment on an equal basis. Any exemption of the
competitive transition assessment by customers
under a special contract shall not result in an
increase in rates to any customer.
(d) The department shall establish, fix and
revise the competitive transition assessment in an
amount sufficient at all times to: (1) Pay the
principal of and the interest on rate reduction
bonds as the same shall become due and payable;
(2) to pay all reasonable and necessary expenses
relating to the financing; and (3) to pay an
electric company stranded costs that are not
funded with the proceeds of rate reduction bonds
and interim capital costs determined under
subdivision (1) of subsection (e) of section 7 of
this act.
(e) The competitive transition assessment
shall be charged to customers until the rate
reduction bonds are paid in full by the financing
entity and stranded costs not funded with the
proceeds of rate reduction bonds are fully
recovered by the electric company or electric
distribution company. Amounts collected from a
customer shall be allocated on a pro rata basis
among (1) rates and charges described in
subparagraph (A) of subdivision (2) of subsection
(a) of section 8 of this act, (2) rates and
charges described in subparagraph (B) of
subdivision (2) of subsection (a) of section 8 of
this act, and (3) other charges. To the extent
that the department, when issuing a financing
order, determines that special treatment on
customers' bills is necessary or desirable to
distinguish rates and charges described in
subparagraph (A) of subdivision (2) of subsection
(a) of section 8 of this act from rates and
charges described in subparagraph (B) of
subdivision (2) of subsection (a) of section 8 of
this act in order to facilitate the successful
issuance and sale of rate reduction bonds, it may
so provide as part of such financing order.
Sec. 11. (NEW) (a) The competitive transition
assessment described in subparagraph (A) of
subdivision (2) of subsection (a) of section 8 of
this act shall constitute transition property
when, and to the extent that, a financing order
authorizing such portion of the competitive
transition assessment has become effective in
accordance with sections 8 to 14, inclusive, of
this act, and the transition property shall
thereafter continuously exist as property for all
purposes with all of the rights and privileges of
sections 8 to 14, inclusive, of this act for the
period and to the extent provided in the financing
order, but in any event until the rate reduction
bonds are paid in full, including all principal,
interest, premium, costs, and arrearages on such
bonds. Prior to its sale or other transfer by the
electric company or electric distribution company
pursuant to sections 8 to 14, inclusive, of this
act, transition property shall be a vested
contract right of the electric company or electric
distribution company, notwithstanding any contrary
treatment thereof for accounting, tax, or other
purpose.
(b) Any surplus competitive transition
assessment described in subparagraph (A) of
subdivision (2) of subsection (a) of section 8 of
this act in excess of the amounts necessary to pay
principal, premium, if any, interest and expenses
of the issuance of the rate reduction bonds shall
be remitted to the financing entity and may be
used to benefit customers if this would not result
in a recharacterization of the tax, accounting,
and other intended characteristics of the
financing, including, but not limited to, the
following:
(1) Avoiding the recognition of debt on the
electric company's or the electric distribution
company's balance sheet for financial accounting
and regulatory purposes;
(2) Treating the rate reduction bonds as debt
of the electric company or electric distribution
company or its affiliates for federal income tax
purposes;
(3) Treating the transfer of the transition
property by the electric company or electric
distribution company as a true sale for bankruptcy
purposes; or
(4) Avoiding any adverse impact of the
financing on the credit rating of the rate
reduction bonds or the electric company or
electric distribution company.
(c) Electric companies and electric
distribution companies may sell and assign all or
portions of their interest in transition property
to an affiliate. Electric companies and electric
distribution companies or their affiliates may
sell or assign their interests to one or more
financing entities that make that property the
basis for issuance of rate reduction bonds to the
extent approved in the pertinent financing orders.
Electric companies, electric distribution
companies, their affiliates, or financing entities
may pledge transition property as collateral,
directly or indirectly, for rate reduction bonds
to the extent approved in the pertinent financing
orders providing for a security interest in the
transition property, in the manner as set forth in
section 14 of this act. In addition, transition
property may be sold or assigned by (1) the
financing entity or a trustee for the holders of
rate reduction bonds in connection with the
exercise of remedies upon a default, or (2) any
person acquiring the transition property after a
sale or assignment pursuant to this subsection.
(d) To the extent that any interest in
transition property is so sold or assigned, or is
so pledged as collateral, the department shall
authorize the electric company or electric
distribution company to contract with the
financing entity that it will continue to operate
its system to provide service to its customers,
will collect amounts in respect of the competitive
transition assessment for the benefit and account
of the financing entity, and will account for and
remit these amounts to or for the account of the
financing entity. Contracting with the financing
entity in accordance with that authorization shall
not impair or negate the characterization of the
sale, assignment, or pledge as an absolute
transfer, a true sale, or security interest, as
applicable.
Sec. 12. (NEW) (a) The department may issue
financing orders in accordance with sections 8 to
14, inclusive, of this act, to facilitate the
provision, recovery, financing, or refinancing of
stranded costs. A financing order may be adopted
only upon the application of an electric company
or electric distribution company, pursuant to
section 9 of this act and shall become effective
in accordance with its terms only after the
electric company or electric distribution company
files with the department the electric company's
or the electric distribution company's written
consent to all terms and conditions of the
financing order.
(b) (1) Notwithstanding any general or special
law, rule, or regulation to the contrary, except
as otherwise provided in this subsection with
respect to transition property that has been made
the basis for the issuance of rate reduction
bonds, the financing orders and the competitive
transition assessment shall be irrevocable and the
department shall not have authority either by
rescinding, altering, or amending the financing
order or otherwise, to revalue or revise for
ratemaking purposes the stranded costs, or the
costs of providing, recovering, financing, or
refinancing the stranded costs, determine that the
competitive transition assessment is unjust or
unreasonable, or in any way reduce or impair the
value of transition property either directly or
indirectly by taking the competitive transition
assessment into account when setting other rates
for the electric company or electric distribution
company; nor shall the amount of revenues arising
with respect thereto be subject to reduction,
impairment, postponement, or termination. (2)
Notwithstanding any other provision of this
section, the department shall approve the
adjustments to the competitive transition
assessment as may be necessary to ensure timely
recovery of all stranded costs that are the
subject of the pertinent financing order, and the
costs of capital associated with the provision,
recovery, financing, or refinancing thereof,
including the costs of issuing, servicing, and
retiring the rate reduction bonds contemplated by
the financing order. (3) Notwithstanding any
general or special law, rule, or regulation to the
contrary, any requirement under sections 8 to 14,
inclusive, of this act or a financing order that
the department take action with respect to the
subject matter of a financing order shall be
binding upon the department, as it may be
constituted from time to time, and any successor
agency exercising functions similar to the
department and the department shall have no
authority to rescind, alter, or amend that
requirement in a financing order. Section 16-43 of
the general statutes shall not apply to any sale,
assignment, or other transfer of or grant of a
security interest in any transition property or
the issuance of rate reduction bonds under
sections 8 to 14, inclusive, of this act.
(c) The department shall provide in any
financing order for a procedure for the timely
approval by the department of periodic adjustments
to the competitive transition assessment that is
the subject of the pertinent financing order, as
required by subdivision (2) of subsection (b) of
this section. The procedure shall require the
department to determine whether the adjustments
are required on each anniversary of the issuance
of the financing order, and at the additional
intervals as may be provided for in the financing
order, and for the adjustments, if required, to be
approved within 90 days of each anniversary of the
issuance of the financing order, or of each
additional interval provided for in the financing
order.
Sec. 13. (NEW) (a) A financing entity may
issue rate reduction bonds upon approval by the
department in the pertinent financing order. Rate
reduction bonds shall be nonrecourse to the credit
or any assets of the electric company or electric
distribution company, other than the transition
property as specified in the pertinent financing
order.
(b) Except as otherwise provided in this
subsection, the state of Connecticut does hereby
pledge and agree with the owners of transition
property and holders of rate reduction bonds that
the state shall neither limit nor alter the
competitive transition assessment, transition
property, financing orders, and all rights
thereunder until the obligations, together with
the interest thereon, are fully met and
discharged, provided nothing contained in this
subsection shall preclude the limitation or
alteration if and when adequate provision shall be
made by law for the protection of the owners and
holders. The finance authority as agent for the
state is authorized to include this pledge and
undertaking for the state in these obligations.
(c) (1) Financing orders and rate reduction
bonds shall not be deemed to constitute a debt or
liability of the state or of any political
subdivision thereof, other than the financing
entity, shall not constitute a pledge of the full
faith and credit of the state or any of its
political subdivisions, other than the financing
entity, but shall be payable solely from the funds
provided under sections 8 to 14, inclusive, of
this act, and shall not constitute an indebtedness
of the state within the meaning of any
constitutional or statutory debt limitation or
restriction and, accordingly, shall not be subject
to any statutory limitation on the indebtedness of
the state and shall not be included in computing
the aggregate indebtedness of the state in respect
to and to the extent of any such limitation. This
subsection shall in no way preclude bond
guarantees or enhancements pursuant to sections 8
to 14, inclusive, of this act. All rate reduction
bonds shall contain on the face thereof a
statement to the following effect: "Neither the
full faith and credit nor the taxing power of the
State of Connecticut is pledged to the payment of
the principal of, or interest on, this bond."
(2) The issuance of rate reduction bonds under
sections 8 to 14, inclusive, of this act shall not
directly, indirectly, or contingently obligate the
state or any political subdivision thereof to levy
or to pledge any form of taxation therefor or to
make any appropriation for their payment.
(3) The exercise of the powers granted by
sections 8 to 14, inclusive, of this act shall be
in all respects for the benefit of the people of
this state, for the increase of their commerce,
welfare, and prosperity, and as the exercise of
such powers shall constitute the performance of an
essential public function, neither the finance
authority, any electric company or electric
distribution company, any affiliate of any
electric company or electric distribution company,
any financing entity, or any collection or other
agent of any of the foregoing shall be required to
pay any taxes or assessments upon or in respect of
any revenues or property received, acquired,
transferred, or used by the finance authority, any
electric company or electric distribution company,
any affiliate of any electric company or electric
distribution company, any financing entity, or any
collection or other agent of any of the foregoing
under the provisions of sections 8 to 14,
inclusive, of this act or upon or in respect of
the income therefrom, and any rate reduction bonds
shall be treated as issued by or on behalf of a
public instrumentality created under the laws of
the state for purposes of chapter 229 of the
general statutes.
(4) The proceeds of any rate reduction bonds
shall be used for the purposes approved by the
department in the financing order, including but
not limited to, the costs of refinancing or
retiring of debt of the electric company or
electric distribution company, and associated
federal and state tax liabilities; provided such
proceeds shall not be applied to purchase
generation assets or to purchase or redeem stock
or to pay dividends to shareholders or operating
expenses other than taxes resulting from the
receipt of such proceeds.
(5) Rate reduction bonds are made and declared
(A) securities in which all public officers and
public bodies of the state and its political
subdivisions, all insurance companies, state banks
and trust companies, national banking
associations, savings banks, savings and loan
associations, investment companies, executors,
administrators, trustees and other fiduciaries may
properly and legally invest funds, including
capital in their control or belonging to them, and
(B) securities which may properly and legally be
deposited with and received by any state or
municipal officer or any agency or political
subdivision of the state for any purpose for which
the deposit of bonds or obligations of the state
is now or may be authorized.
(6) Rate reduction bonds shall mature at such
time or times approved by the department in the
financing order; provided that such maturity shall
not be later than December 31, 2011.
(7) Rate reduction bonds issued and at any
time outstanding may, if and to the extent
permitted under the indenture or other agreement
pursuant to which they are issued, be refunded by
other rate reduction bonds.
(d) Any rate reduction bonds issued or sold
pursuant to or in reliance on and in accordance
with any financing order issued by the department
pursuant to sections 8 to 14, inclusive, of this
act shall be valid and binding in accordance with
their terms notwithstanding such financing order
is later vacated, modified, or otherwise held to
be wholly or partly invalid, unless operation of
such financing order has been enjoined, stayed, or
suspended by the department or a court of
competent jurisdiction prior to such issuance.
Sec. 14. (NEW) (a) A security interest in
transition property is valid, is enforceable
against the pledgor and third parties, subject to
the rights of any third parties holding security
interests in the transition property perfected in
the manner described in this section, and attaches
when all of the following have taken place:
(1) The department has issued the financing
order authorizing the competitive transition
assessment included in the transition property.
(2) Value has been given by the pledgees of
the transition property.
(3) The pledgor has signed a security
agreement covering the transition property.
(b) A valid and enforceable security interest
in transition property is perfected when it has
attached and when a financing statement has been
filed in accordance with part 4 of article 9 of
title 42a of the general statutes naming the
pledgor of the transition property as "debtor" and
identifying the transition property. Any
description of the transition property shall be
sufficient if it refers to the financing order
creating the transition property. A copy of the
financing statement shall be filed with the
department by the electric company or electric
distribution company that is the pledgor or
transferor of the transition property, and the
department may require the electric company or
electric distribution company to make other
filings with respect to the security interest in
accordance with procedures it may establish,
provided that the filings shall not affect the
perfection of the security interest.
(c) A perfected security interest in
transition property is a continuously perfected
security interest in all revenues and proceeds
arising with respect thereto, whether or not the
revenues or proceeds have accrued. Conflicting
security interests shall rank according to
priority in time of perfection. Transition
property shall constitute property for all
purposes, including for contracts securing rate
reduction bonds, whether or not the revenues and
proceeds arising with respect thereto have
accrued.
(d) Subject to the terms of the security
agreement covering the transition property and the
rights of any third parties holding security
interests in the transition property perfected in
the manner described in this section, the validity
and relative priority of a security interest
created under this section are not defeated or
adversely affected by the commingling of revenues
arising with respect to the transition property
with other funds of the electric company or
electric distribution company that is the pledgor
or transferor of the transition property, or by
any security interest in a deposit account of that
electric company or electric distribution company
into which the revenues are deposited or in such
revenues themselves perfected under article 9 of
title 42a of the general statutes or otherwise.
Subject to the terms of the security agreement,
the pledgees of the transition property shall have
a perfected security interest in all cash and
deposit accounts of the electric company or
electric distribution company in which revenues
arising with respect to the transition property
have been commingled with other funds, but the
perfected security interest shall be limited to an
amount not greater than the amount of the revenues
with respect to the transition property received
by the electric company or electric distribution
company within twelve months before (1) any
default under the security agreement or (2) the
institution of insolvency proceedings by or
against the electric company or electric
distribution company, less payments from the
revenues to the pledgees during that twelve-month
period.
(e) If an event of default occurs under the
security agreement covering the transition
property, the pledgees of the transition property,
subject to the terms of the security agreement,
shall have all rights and remedies of a secured
party upon default under article 9 of title 42a of
the general statutes, and shall be entitled to
foreclose or otherwise enforce their security
interest in the transition property, subject to
the rights of any third parties holding prior
security interests in the transition property
perfected in the manner provided in this section.
In addition, the department may require, in the
financing order creating the transition property,
that, in the event of default by the electric
company or electric distribution company in
payment of revenues arising with respect to the
transition property, the department and any
successor thereto, upon the application by the
pledgees or transferees, including transferees
under this section, of the transition property,
and without limiting any other remedies available
to the pledgees or transferees by reason of the
default, shall order the sequestration and payment
to the pledgees or transferees of revenues arising
with respect to the transition property. Any order
shall remain in full force and effect
notwithstanding any bankruptcy, reorganization, or
other insolvency proceedings with respect to the
debtor, pledgor, or transferor of the transition
property. Any surplus in excess of amounts
necessary to pay principal, premium, if any,
interest, costs, and arrearages on the rate
reduction bonds, and other costs arising under the
security agreement, shall be remitted to the
debtor or to the pledgor or transferor.
(f) Sections 42a-9-204 and 42a-9-205 of the
general statutes shall apply to a pledge of
transition property by an electric company or
electric distribution company, an affiliate of an
electric company or electric distribution company,
or a financing entity.
(g) This section sets forth the terms by which
a consensual security interest can be created and
perfected in the transition property. Unless
otherwise ordered by the department with respect
to any series of rate reduction bonds on or prior
to the issuance of the series, there shall exist a
statutory lien as provided in this subsection.
Upon the effective date of the financing order,
there shall exist a first priority lien on all
transition property then existing or thereafter
arising pursuant to the terms of the financing
order. This lien shall arise by operation of this
section automatically without any action on the
part of the electric company or electric
distribution company, any affiliate thereof, the
financing entity, or any other person. This lien
shall secure all obligations, then existing or
subsequently arising, to the holders of the rate
reduction bonds issued pursuant to the financing
order, the trustee or representative for the
holders, and any other entity specified in the
financing order. The persons for whose benefit
this lien is established shall, upon the
occurrence of any defaults specified in the
financing order, have all rights and remedies of a
secured party upon default under article 9 of
title 42a of the general statutes, and shall be
entitled to foreclose or otherwise enforce this
statutory lien in the transition property. This
lien shall attach to the transition property
regardless of who shall own, or shall subsequently
be determined to own, the transition property
including any electric company or electric
distribution company, any affiliate thereof, the
financing entity, or any other person. This lien
shall be valid, perfected, and enforceable against
the owner of the transition property and all third
parties upon the effectiveness of the financing
order without any further public notice; provided,
however, that any person may, but shall not be
required to, file a financing statement in
accordance with subsection (b) of this section.
Financing statements so filed may be "protective
filings" and shall not be evidence of the
ownership of the transition property. A perfected
statutory lien in transition property is a
continuously perfected lien in all revenues and
proceeds arising with respect thereto, whether or
not the revenues or proceeds have accrued.
Conflicting liens shall rank according to priority
in time of perfection. Transition property shall
constitute property for all purposes, including
for contracts securing rate reduction bonds,
whether or not the revenues and proceeds arising
with respect thereto have accrued. In addition,
the department may require, in the financing order
creating the transition property, that, in the
event of default by the electric company or
electric distribution company in payment of
revenues arising with respect to transition
property, the department and any successor
thereto, upon the application by the beneficiaries
of the statutory lien, and without limiting any
other remedies available to the beneficiaries by
reason of the default, shall order the
sequestration and payment to the beneficiaries of
revenues arising with respect to the transition
property. Any order shall remain in full force and
effect notwithstanding any bankruptcy,
reorganization, or other insolvency proceedings
with respect to the debtor, pledgor, or transferor
of the transition property. Any surplus in excess
of amounts necessary to pay principal, premium, if
any, interest, costs, and arrearages on the rate
reduction bonds, and other costs arising in
connection with the documents governing the rate
reduction bonds, shall be remitted to the debtor
or to the pledgor or transferor.
(h) A transfer of transition property by an
electric company or electric distribution company
to an affiliate or to a financing entity, or by an
affiliate of an electric company or electric
distribution company or a financing entity to
another financing entity, which the parties have
in the governing documentation expressly stated to
be a sale or other absolute transfer, in a
transaction approved in a financing order, shall
be treated as an absolute transfer of all of the
transferor's right, title, and interest, as in a
true sale, and not as a pledge or other financing,
of the transition property, in each case
notwithstanding any contrary treatment of such
transfer for accounting, tax, or other purposes.
Granting to holders of rate reduction bonds a
preferred right to revenues of the electric
company or electric distribution company, or the
provision by the company of other credit
enhancement with respect to rate reduction bonds,
shall not impair or negate the characterization of
any transfer as a true sale, in each case
notwithstanding any contrary treatment of such
transfer for accounting, tax or other purposes.
(i) A transfer of transition property shall be
deemed perfected as against third persons when
both of the following have taken place:
(1) The department has issued the financing
order authorizing the competitive transition
assessment included in the transition property.
(2) An assignment of the transition property
in writing has been executed and delivered to the
transferee.
(j) As between bona fide assignees of the same
right for value without notice, the assignee first
filing a financing statement in accordance with
part 4 of article 9 of title 42a of the general
statutes naming the assignor of the transition
property as debtor and identifying the transition
property has priority. Any description of the
transition property shall be sufficient if it
refers to the financing order creating the
transition property. A copy of the financing
statement shall be filed by the assignee with the
department, and the department may require the
assignor or the assignee to make other filings
with respect to the transfer in accordance with
procedures it may establish, but these filings
shall not affect the perfection of the transfer.
(k) Any successor to the electric company or
electric distribution company, whether pursuant to
any bankruptcy, reorganization, or other
insolvency proceeding, or pursuant to any merger,
sale, or transfer, by operation of law, or
otherwise, shall perform and satisfy all
obligations of the electric company or electric
distribution company pursuant to sections 8 to 14,
inclusive, of this act in the same manner and to
the same extent as the electric company or
electric distribution company, including, but not
limited to, collecting and paying to the holders
of rate reduction bonds or their representatives
or the applicable financing entity revenues
arising with respect to the transition property
sold to the applicable financing entity or pledged
to secure rate reduction bonds.
(l) The authority of the department to issue
financing orders pursuant to sections 8 to 14,
inclusive, of this act shall expire on December
31, 2008. The expiration of the authority shall
have no effect upon financing orders adopted by
the department pursuant to sections 8 to 14,
inclusive, of this act or any transition property
arising therefrom, or upon the charges authorized
to be levied thereunder, or the rights, interests,
and obligations of the electric company or
electric distribution company or a financing
entity or holders of rate reduction bonds pursuant
to the financing order, or the authority of the
department to monitor, supervise, or take further
action with respect to the financing order in
accordance with the terms of sections 8 to 14,
inclusive, of this act and of the financing order.
Sec. 15. (NEW) (a) Not later than January 1,
1999, the Department of Public Utility Control
shall, by regulations adopted pursuant to chapter
54 of the general statutes, establish a code of
conduct which shall apply to electric distribution
companies, as defined in section 16-1 of the
general statutes, as amended by section 1 of this
act, their generation entities or affiliates and
electric suppliers. The code of conduct shall
become effective upon the completion of unbundling
but not later than July 1, 1999.
(b) The code of conduct shall include: (1)
Measures to ensure information, revenues,
expenses, costs, assets, liabilities or other
resources derived from or associated with
providing electric transmission or distribution
services by an electric distribution company are
not used to subsidize any generation entity or
affiliate; (2) safeguards to assure fair dealing
between electric distribution companies and all
other electric suppliers, as defined in section
16-1 of the general statutes, as amended by
section 1 of this act, including any generation
entities or affiliates of the electric company;
(3) procedures for ensuring electric suppliers
nondiscriminatory access to the transmission and
distribution facilities of the electric
distribution company; and (4) measures to ensure
that an electric distribution company provides
transmission and distribution service, applies
tariffs to generation entities or affiliates and
to unaffiliated electric suppliers in a
nondiscriminatory manner and enforces such tariff
provisions. The code of conduct shall, at a
minimum, (A) prohibit any employee of a generation
entity or affiliate from conducting distribution
system operations or having access to system
control centers or similar facilities used by
distribution operations in any way that differs
from the access available to employees of
unaffiliated electric suppliers, (B) prohibit an
employee of a generation entity or affiliate from
having preferential access to any information
concerning the electric distribution company's
customers or distribution system that is not
available on an equivalent basis to unaffiliated
electric suppliers, (C) prohibit an employee of an
electric distribution company from disclosing to
an employee of a generation entity or affiliate
information concerning its customers, the
distribution system or other market information
through nonpublic communications that is not
available on an equivalent basis to all
unaffiliated electric suppliers, (D) require
employees of electric distribution companies to
apply all tariff provisions relating to the sale
or purchase of any retail access distribution
service in a fair, impartial and nondiscriminatory
manner, and (E) prohibit joint marketing
activities between an electric distribution
company and its generation entity or affiliate.
The code of conduct shall not prohibit
communications necessary for standard offer
service pursuant to section 19 of this act or when
necessary to restore service or to prevent or
respond to emergency conditions. Each electric
distribution company shall annually submit to the
department such information as the department may
require in order to evaluate the actual
effectiveness of the code of conduct in fulfilling
the purposes of this section. The department shall
consult with the independent system operator on a
regular basis regarding issues raised under this
section. The department may, upon its own motion
or upon receipt of a complaint from any person
alleging a violation of the code of conduct,
investigate an electric distribution company's
compliance with the code of conduct, and any such
investigation shall be considered a contested case
as defined in section 4-166 of the general
statutes. The department may enter into
appropriate orders to enforce the code, including
cease and desist orders, and it may levy civil
penalties against these entities subject to the
code after notice and hearing pursuant to section
16-41 of the general statutes. Any person
aggrieved by a violation of the code of conduct
shall also have a private right of action for
damages against the electric distribution company
or generation entity or affiliate, as the case may
be.
Sec. 16. (NEW) (a) The Department of Public
Utility Control shall continue to regulate
electric distribution companies, as defined in
section 16-1 of the general statutes, as amended
by section 1 of this act, in accordance with the
provisions of section 16-19 and subsection (a) of
section 16-19e of the general statutes and in
accordance with existing rate orders except for
assets for which funds have been received by the
company pursuant to sections 10 to 14, inclusive,
of this act. Each electric distribution company
shall maintain the integrity of the distribution
system in conformity with the National Electric
Safety Code and such other standards found
applicable by the department that are practiced by
the electric distribution industry, in a manner
sufficient to provide safe and reliable service,
regardless of whether or not its generation entity
or affiliate is the electric supplier, to all
customers connected to the system consistent with
title 16 of the general statutes and regulations
adopted thereunder. Each electric distribution
company shall provide nondiscriminatory access of
its distribution facilities to every electric
supplier, as defined in said section 16-1,
provided no electric distribution company shall
provide access of its distribution facilities to
an entity that is not licensed as an electric
supplier pursuant to section 16-245 of the general
statutes, as amended by this act, except as
provided under federal law.
(b) Each electric distribution company shall
have the obligation to connect all customers to
the company's distribution system, subject to
rates, terms and conditions as may be approved by
the Department of Public Utility Control in
accordance with section 16-19 of the general
statutes and the principles in subsection (a) of
section 16-19e of the general statutes.
(c) Each electric distribution company shall
continue to provide metering, billing and
collection services. The department shall
determine billing and metering protocols and any
appropriate cost-sharing allocations among
electric distribution companies and electric
suppliers.
(d) The department shall oversee quality and
reliability of service for each electric
distribution company and ensure that quality and
reliability are the same as or better than levels
that existed on July 1, 1998.
Sec. 17. (NEW) (a) Not later than December 1,
1998, the Department of Public Utility Control
shall develop a comprehensive public education
outreach program to educate customers about the
implementation of retail competition among
electric suppliers, as defined in section 16-1 of
the general statutes, as amended by section 1 of
this act. The goals of the program shall be to
maximize public information, minimize customer
confusion and equip all customers to participate
in a restructured generation market. The program
shall include, but not be limited to: (1) The
dissemination of information through mass media,
interactive approaches and written materials with
the goal of reaching every electric customer; (2)
the conduct of public forums in different
geographical areas of the state to foster public
input and provide opportunities for an exchange of
questions and answers; (3) involvement of
community-based organizations in developing
messages and in devising and implementing
education strategies; (4) targeted efforts to
reach rural, low income, elderly, foreign
language, disabled, ethnic minority and other
traditionally underserved populations; and (5)
periodic evaluations of the effectiveness of
educational efforts. The department shall assign
one individual within the department to coordinate
the outreach program and oversee the education
process. The department shall begin to implement
the outreach program not later than January 1,
1999.
(b) There shall be established a Consumer
Education Advisory Council which shall advise the
outreach program coordinator on the development
and implementation of the outreach program until
the termination of the standard offer under
section 20 of this act. Membership of the advisory
council shall be established by the Consumer
Counsel not later than December 1, 1998, and shall
include, but not be limited to, representatives of
the Department of Public Utility Control, the
Office of Consumer Counsel, the Office of the
Attorney General, the Office of Policy and
Management, the Department of Environmental
Protection, community and business organizations,
consumer groups, including, but not limited to, a
group that represents hardship customers, as
defined in section 16-262c of the general
statutes, as amended by this act, electric
distribution companies and electric suppliers. The
advisory council shall determine the information
to be distributed to customers as part of the
education effort such as customers' rights and
obligations in a restructured environment, how
customers can exercise their right to participate
in retail access, the types of electric suppliers
expected to be licensed including the possibility
of load aggregation, electric generation services
options that will be available, the environmental
characteristics of different types of generation
facilities and other information determined by the
advisory council to be necessary for customers.
The advisory council shall advise the outreach
program coordinator on the methods of distributing
information in accordance with subsection (a) of
this section and the timing of such distribution.
The advisory council shall meet on a regular basis
and report to the outreach program coordinator as
it deems appropriate until termination of the
advisory council's role upon the termination of
the standard offer under section 20 of this act.
(c) Not later than December 1, 1998, the
Department of Public Utility Control shall submit
a report to the joint standing committee of the
General Assembly having cognizance of matters
relating to energy, outlining the scope of the
education outreach program developed by the
department and identifying the individual acting
as outreach program coordinator and the membership
of the advisory council.
(d) The department may retain a consultant in
accordance with section 16-18a of the general
statutes, as amended by this act, to assist in
developing and implementing the public education
outreach program, provided the authorization to
retain such consultant shall expire December 31,
2000. The reasonable and proper expenses for
retaining the consultant and implementing the
outreach program shall be reimbursed through the
systems benefits charge as provided in subsection
(b) of said section 16-18a of the general
statutes, as amended by this act.
(e) The advisory council shall, in
consultation with the Connecticut Academy of
Science and Engineering and the New England
Conference of Public Utility Commissioners,
analyze the environmental costs and benefits of
the following categories of energy sources: (1)
Class I renewable energy sources by type; (2)
Class II renewable energy sources by type; (3)
facilities using coal, natural gas, oil or other
petroleum products as fuel which facilities are
subject to the New Source Performance Standards in
the federal Clean Air Act for such facilities; (4)
facilities using coal, natural gas, oil or other
petroleum products as fuel which facilities are
not subject to the New Source Performance
Standards; (5) nuclear power generating
facilities; and (6) hydropower that does not meet
the criteria for a Class II renewable energy
source. The advisory council shall establish
uniform standards for the disclosure of
information to allow customers to easily compare
rates of air pollutant emissions and the resource
mix of various energy sources of electric
suppliers.
Sec. 18. (NEW) (a) The Department of Public
Utility Control shall establish and each electric
distribution company shall collect a systems
benefits charge to be imposed against all end use
customers of each electric distribution company
beginning January 1, 2000. The department shall
hold a hearing that shall be conducted as a
contested case in accordance with chapter 54 of
the general statutes to establish the amount of
the systems benefits charge. The department may
revise the systems benefits charge or any element
of said charge as the need arises. The systems
benefits charge shall be used to fund (1) the
expenses of the public education outreach program
developed under subsection (a) of section 17 of
this act other than expenses for department staff,
(2) the reasonable and proper expenses of the
education outreach consultant pursuant to
subsection (d) of section 17 of this act, (3) the
cost of hardship protection measures under
sections 16-262c and 16-262d of the general
statutes, as amended by this act, and other
hardship protections, including but not limited
to, electric service bill payment programs,
funding and technical support for energy
assistance, fuel bank and weatherization programs
and weatherization services, (4) the payment
program to offset tax losses described in section
48 of this act, (5) any sums paid to a resource
recovery authority pursuant to subsection (b) of
section 16-243e, as amended by this act, (6) low
income conservation programs approved by the
Department of Public Utility Control, (7)
displaced worker protection costs, (8) unfunded
storage and disposal costs for spent nuclear fuel
generated before January 1, 2000, approved by the
appropriate regulatory agencies, (9)
postretirement safe shutdown and site protection
costs that are incurred in preparation for
decommissioning, and (10) decommissioning fund
contributions. As used in this subsection,
"displaced worker protection costs" means the
reasonable costs incurred, prior to January 1,
2006, by an electric company or a generation
entity or affiliate arising from the dislocation
of any employee other than an officer, provided
such dislocation is a result of restructuring of
the electric generation market and such
dislocation occurs on or after July 1, 1998; and
provided further such costs result from either the
execution of agreements reached through collective
bargaining for union employees or from the
company's or entity's or affiliate's programs and
policies for nonunion employees. "Displaced worker
protection costs" includes costs incurred or
projected for severance, retraining, early
retirement, outplacement and related expenses.
"Displaced worker protection costs" does not
include those costs included in determining a tax
credit pursuant to section 47 of this act.
(b) The amount of the systems benefits charge
shall be determined by the department in a general
and equitable manner and shall be imposed on all
end use customers of each electric distribution
company at a rate that is applied equally to all
customers of the same class in accordance with
methods of allocation in effect on July 1, 1998,
provided the system benefits charge shall not be
imposed on customers receiving services under a
special contract which is in effect on the
effective date of this act until such special
contracts expire. The system benefits charge shall
be imposed beginning on January 1, 2000, on all
customers receiving services under a special
contract which are entered into or renewed after
the effective date of this act. The systems
benefits charge shall have a generally applicable
manner of determination that may be measured on
the basis of percentages of total costs of retail
sales of generation services. The systems benefits
charge shall be payable on an equal basis on the
same payment terms and shall be eligible or
subject to prepayment on an equal basis. Any
exemption of the systems benefits charge by
customers under a special contract shall not
result in an increase in rates to any customer.
Sec. 19. (NEW) (a) As used in this section,
"service area" means the geographic area in which
a municipal electric utility is authorized to
provide electric generation or distribution
services to an end use customer pursuant to
section 7-214 of the general statutes or special
act.
(b) No municipal electric utility established
under chapter 101 of the general statutes shall
use the transmission or distribution system or
facilities of an electric distribution company, as
defined in section 16-1 of the general statutes,
as amended by section 1 of this act, for the
purpose of providing electric generation services
to an end use customer outside its service area,
unless the municipal electric utility is
authorized to do so by the Department of Public
Utility Control, in which case it shall be
considered a participating municipal electric
utility.
(c) As of the date that a municipal electric
utility is authorized to be a participating
municipal electric utility, the participating
municipal electric utility may provide electric
generation services to customers outside of its
service area. Each participating municipal
electric utility shall provide open and
nondiscriminatory access of all distribution
facilities it owns or operates to all electric
suppliers, as defined in section 16-1 of the
general statutes, as amended by section 1 of this
act, and shall allow customers within its service
area to choose among electric suppliers for
electric generation services in a manner
comparable to all other end use customers of an
electric distribution company.
(d) Each participating municipal electric
utility that provides electric generation services
shall be licensed by the department as an electric
supplier in accordance with section 16-245 of the
general statutes, as amended by this act.
Notwithstanding the provisions of any municipal
charter or special act to the contrary, no such
license shall be granted unless, in addition to
the requirements set forth in section 16-245 of
the general statutes, as amended by this act, the
participating municipal electric utility has (1)
unbundled and separated all of its generation
assets and all generation-related operations and
functions by (A) sale or transfer to an unrelated
entity, (B) transfer on a functional basis to one
or more separate divisions of the participating
municipal electric utility that are structurally
separate from the participating municipal electric
utility's transmission and distribution assets and
all related operations and functions, or (C) such
other substantially equivalent measure deemed
appropriate by the department, after taking into
account the size of the participating municipal
electric utility and its existing structure and
operations; and (2) the buyer or transferee of
each such asset proves to the satisfaction of the
department that the buyer or transferee will
preserve labor agreements in effect at the time of
the sale or transfer.
(e) Any municipal electric utility created on
or after July 1, 1998, pursuant to section 7-214
of the general statutes or a special act and any
municipal electric utility that expands its
service area on or after July 1, 1998, shall
collect from its new customers the competitive
transition assessment imposed pursuant to section
10 of this act, the systems benefits charge
imposed pursuant to section 18 of this act and the
assessments charged under sections 33 and 44 of
this act in such manner and at such rate as the
department prescribes, provided the department
shall order the collection of said assessment and
said charge in a manner and rate equal to that to
which the customers would have been subject had
the municipal electric utility not been created or
expanded.
(f) The department shall, within a period of
time to ensure that any municipal electric utility
that intends to become a participating municipal
electric utility can do so in a timely manner,
establish procedures by regulations adopted in
accordance with chapter 54 of the general
statutes, to authorize a municipal electric
utility to become a participating municipal
electric utility. Such procedures shall include
those measures the department determines are
necessary for the participating municipal electric
utilities to function in a competitive
environment.
(g) No municipal electric energy cooperative
shall be allowed to be an electric supplier or to
request authorization to provide electric
generation services to any end use customers.
Sec. 20. (NEW) (a) (1) On and after January 1,
2000, each electric distribution company, as
defined in section 16-1 of the general statutes,
as amended by section 1 of this act, shall make
available to all customers in its service area,
the provision of electric generation and
distribution services through a standard offer.
Under the standard offer, a customer shall receive
electric services at a rate established by the
Department of Public Utility Control pursuant to
subdivision (2) of this subsection. Each electric
distribution company shall provide electric
generation services in accordance with such option
to any customer who affirmatively chooses to
receive electric generation services pursuant to
the standard offer or does not or is unable to
arrange for or maintain electric generation
services with an electric supplier, as defined in
said section 16-1. The standard offer shall
automatically terminate on January 1, 2004, unless
extended by the General Assembly pursuant to
section 74 of this act. While providing electric
generation services under the standard offer, an
electric distribution company may provide electric
generation services through any of its generation
entities or affiliates, provided such entities or
affiliates are licensed pursuant to section 16-245
of the general statutes, as amended by this act.
(2) Not later than October 1, 1999, the
Department of Public Utility Control shall
establish the standard offer for each electric
distribution company, effective January 1, 2000,
which shall allocate the costs of such company
among electric transmission and distribution
services, electric generation services, the
competitive transition assessment and the systems
benefits charge. The department shall hold a
hearing that shall be conducted as a contested
case in accordance with chapter 54 of the general
statutes to establish the standard offer. The
standard offer shall provide that the total rate
charged under the standard offer, including
electric transmission and distribution services,
the conservation and load management program
charge described in section 33 of this act, the
renewable energy investment charge described in
section 44 of this act, electric generation
services, the competitive transition assessment
and the systems benefits charge shall be at least
ten per cent less than the base rates, as defined
in section 3 of this act, in effect on December
31, 1996. The standard offer shall be adjusted to
the extent of any increase or decrease in state
taxes attributable to sections 12-264 and 12-265
of the general statutes, as amended by this act,
and any other increase or decrease in state or
federal taxes resulting from a change in state or
federal law and shall continue to be adjusted
during such period pursuant to section 16-19b of
the general statutes. Notwithstanding the
provisions of section 16-19b of the general
statutes, the provisions of said section 16-19b
shall apply to electric distribution companies.
The standard offer may be adjusted, by an increase
or decrease, to the extent approved by the
department, in the event that (A) the revenue
requirements of the company are affected as the
result of changes in legislative enactments other
than this act, administrative requirements or
accounting standards occurring after July 1, 1998,
provided such accounting standards are adopted by
entities independent of the company that have
authority to issue such standards, or (B) an
electric distribution company incurs extraordinary
and unanticipated expenses required for the
provision of safe and reliable electric service to
the extent necessary to provide such service.
Savings attributable to a reduction in taxes shall
not be shifted between customer classes.
(3) The price reduction provided in
subdivision (2) of this subsection shall not apply
to customers who, on or after July 1, 1998, are
purchasing electric services from an electric
company or electric distribution company, as the
case may be, under a special contract or flexible
rate tariff, and the company's filed standard
offer tariffs shall reflect that such customers
shall not receive the standard offer price
reduction.
(b) On and after January 1, 2004, each
electric distribution company shall serve any
customer who does not or is unable to arrange for
or maintain electric generation services with an
electric supplier. The electric distribution
company shall procure electric generation services
for such customers through a competitive bidding
process. An electric distribution company may
procure electric generation services through any