SB 882 - This act phases in retail electric choice and removes much of the existing regulation of the sale of electric generation service.

RETAIL ELECTRIC CHOICE -After December 31, 2004, retail customers of investor-owned electric utilities and electric cooperatives may choose to take electric supply service from any approved electric supplier. The date will be extended if comprehensive reform of utility sales, use, gross receipts and franchise taxes has not been adopted by July 1, 2004.

TRADITIONAL UTILITY SERVICE - A utility must continue offering traditional utility services to residential retail customers until January 31, 2008, and electric utilities must cease to offer traditional utility service after that date. A customer who has not chosen an alternative electric service will have the right to continue taking unbundled electric supply service from the electric utility or electric cooperative that is serving the customer. If the customer elects an alternate supplier, he cannot return to traditional or unbundled service unless no more than 90 days have passed since the election became effective and the customer did not previously leave tariffed services and return to such service.

APPROVAL OF RATE CHANGES - The Public Service Commission also cannot approve a request to increase rates unless it finds that certain specified criteria are met.

UNBUNDLING OF RATES - On or before July 1, 2003, an electric utility must file unbundled distribution service and electric supply service rates with the Commission. An electric utility may propose other regulated, unbundled rates associated with distribution and transmission service.

A utility may to collect nuclear decommissioning charges from all customers, either through unbundled charges or through the electric utility's distribution rates.

Electric utilities, rural electric cooperatives, and competing municipal systems may issue a single consolidated bill both for electric supply service and for distribution service.

MUNICIPAL UTILITIES AND COOPERATIVES - The act specifies procedure by which a municipal system may elect to participate in competition in electric supply service. To become certified to compete, a municipal system must file with the Commission an agreement to collect and remit all state and local sales and use taxes and local business license taxes to the proper collecting authority. Cooperatives must offer retail electric choice.

TRANSITION OR "STRANDED" COSTS - an electric utility may implement transition charges between December 31, 2004 and December 31, 2014. The act establishes a formula for calculating those charges and criteria for Commission review and modifications.

UNIVERSAL SERVICE - All providers of electric supply are obligated to contribute to the support of universal service.

MARKET POWER - The Commission may adopt rules requiring functional separation of an electric utility's distribution operations from its generation operations. An affiliate of an electric utility, rural electric cooperative or municipal system must disclose its relationship with the electric utility.

The act establishes standards of conduct for utilities regarding services provided to affiliates and others that are providing electric supply services. The Commission may adopt accounting rules applicable to all electric suppliers to ensure against cross-subsidization, and the Commission may require suppliers that own transmission facilities to join a Regional Transmission Organization (RTO) or similar entity.

The act limits the Commission's authority to review plant transfers or corporate reorganizations.

The Commission is directed to monitor the implementation of the act, its effects on customers, and development of the market, and to report to the General Assembly on or before December 31, 2005, and once every two years thereafter until 2014, identifying any barriers to entry or impediments to the establishment of a fully competitive market for electric supply.

CONSUMER PROTECTION - Retail customers with a choice of electric supplier may: aggregate with other customers, receive nondiscriminatory access to electric supply services and distribution services, be connected to the electric grid, receive traditional, unbundled or temporary electric supply service, receive a free, yearly report of historical usage information, maintain privacy of their account information. OBLIGATIONS OF SELLERS - Electric utilities and electric cooperatives may provide electric supply service anywhere in the state once customer choice becomes effective. The act establishes the rights and duties of electric utilities, electrical cooperatives, and municipal systems with respect to providing distribution services, connecting customers and disconnecting services. The act provides that electric utilities will not have an obligation to build new generation to supply retail customers, to supply such customers from their own generation facilities, or to purchase or maintain reserve supplies of electricity in order to provide temporary service.

The act lists the responsibilities of all providers of competitive electric supply services.

The Commission may order a electric utility that owns generation facilities and serves an urban area with a specified number of customers to run generation plants during peak periods as necessary to relieve transmission constraints.

RELIABILITY - Electric utilities, electric cooperatives, and municipal systems may take any steps necessary in emergency circumstances to ensure the reliability of the transmission and distribution systems.

LICENSURE OF ELECTRIC PROVIDERS - Electric suppliers that are not already electric utilities or electric cooperatives must obtain a certificate of service authority before serving retail customers.

CONSUMER EDUCATION - The commission shall form a working group to design consumer education materials, and to implement and maintain a consumer education program.

NONSEVERABILITY - Certain sections are specified as nonseverable, and if any of these sections is held invalid by a court decision, such decision will invalidate all of the remaining provisions of all such sections.

SECURITIZATION - Electric utilities may use securitization to mitigate the costs of the transition to a competitive environment.
OTTO FAJEN