RULES AND REGULATIONS
PENNSYLVANIA PUBLIC UTILITY COMMISSION
[52 PA. CODE CH. 54]
[30 Pa.B. 3445] [L-00980132]
Competitive Safeguards for the Electric Industry The Pennsylvania Public Utility Commission (Commission) on April 27, 2000, adopted a final-form rulemaking order establishing competitive safeguards for interaction between electric distribution companies, electric generation suppliers and customers in the competitive electric industry. The contact person is John Levin, Law Bureau, (717) 787-5978.
Executive Summary
With the passage of the Electricity Generation Customer Choice and Competition Act (act), 66 Pa.C.S. §§ 2801--2812 the General Assembly amended 66 Pa.C.S. (relating to Public Utility Code) (code) and established a comprehensive scheme for the restructuring of this Commonwealth's electric industry. This rulemaking establishes competitive safeguards for interaction between electric distribution companies, electric generation suppliers and customers in furtherance of the act's provisions directing the establishment of a new, vibrant and effective competitive retail market in electricity generation in this Commonwealth by January 1, 2001.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on April 28, 1998, the Commission submitted a copy of the proposed rulemaking published at 28 Pa.B. 2139 (May 9, 1998) to the Independent Regulatory Review Commission (IRRC) and the Chairpersons of the House Committee on Consumer Affairs and the Senate Committee on Consumer Protection and Professional Licensure for review and comment.
Under section 5(c) of the Regulatory Review Act, IRRC and the Committees were provided with copies of all comments received, as well as other documentation. In preparing these final-form regulations, the Commission has considered all comments received from IRRC, the Committees and the public.
These final-form regulations were approved by the House and Senate Committees. Under section 5.1(e) of the Regulatory Review Act, IRRC met on June 8, 2000, and approved the final-form regulations.
Public meeting held
April 27, 2000Commissioners Present: John M. Quain, Chairperson; Robert K. Bloom, Vice Chairperson; Terrance J. Fitzpatrick; Nora Mead Brownell; Aaron Wilson, Jr.
Final Rulemaking Order By the Commission:
This final-form rulemaking order establishes competitive safeguards in furtherance of the act. On February 13, 1998, we entered a notice of proposed rulemaking, published at 28 Pa.B. 2139 proposing competitive safeguards for the restructured electric power industry, and intended to assure the provision of direct access to all Commonwealth retail electric generation market participants at comparable rates, terms and conditions as well as to forestall the exercise of unlawful market power which would have the effect of inhibiting the development and continuation of that market. We invited comments from the public to be filed on or before June 8, 1998.
Comments were received from West Penn Power Company t/d/b/a/ Allegheny Power (WPP), joint comments from the Associated Builders and Contractors Inc. and the Pennsylvania Petroleum Association (ABC), the Office of the Consumer Advocate of Pennsylvania (OCA), Enron Energy Services, Inc. (Enron), the Clean Air Council, Environmental Defense Fund and the Pennsylvania Campaign for Clean Affordable Energy (an ad hoc group calling itself the Environmentalists), Electric Clearinghouse, Inc. (ECI), Horizon Energy Company (Horizon, an affiliate of PECO Energy Company), IRRC, the Honorable William R. Lloyd, Jr., formerly member of the Pennsylvania House of Representatives, the Mid-Atlantic Power Supply Association (MAPSA), NEV East, LLC (NEV), the Pennsylvania Electric Association (PEA), the Pennsylvania Gas Association (PGA), PP&L Inc. (PP&L), and the Pennsylvania Rural Electric Association jointly with Allegheny Electric Cooperative, Inc. (PREA).
The 15 sets of comments, by interest, include representation from local electric distribution companies and their generation affiliates (4), independent power marketers (5), LDC competitors in alternate and nonfuel markets (2), electric cooperatives (1), other governmental agencies (2), environmental interests (1) and elected representatives (1).
Additionally, a number of other jurisdictions have considered or promulgated code of conduct provisions similar to those proposed at this docket. To the extent relevant here, those provisions are discussed here.
The form and structure of these rules is as follows:
§ 54.121 outlines the purpose of these provisions.
§ 54.122(1) prohibits an electric distribution company from giving any electric generation supplier any preference or advantage in processing requests for retail electric service.
§ 54.122(2) requires fair dissemination of nonprivate customer information by distribution companies to generation suppliers.
§ 54.122(3) prohibits false or deceptive advertising.
§ 54.122(4) establishes dispute resolution procedures.
§ 54.122(5) prohibits illegal tying of any goods or services or limitations on dealing as a requirement for obtaining electric distribution service.
§ 54.122(6) prohibits distribution companies from providing any preference or advantage to any generation supplier in the provision of information about the operational status and availability of the distribution system.
§ 54.122(7) requires distribution companies to supply all regulated services and apply all tariffs on a nondiscriminatory manner.
§ 54.122(8) requires formal adoption of these rules by distribution companies and affiliated or divisional generation suppliers, and to train and instruct employes in them.
§ 54.122(9) requires that customer requests for information about generation suppliers made to distribution companies be handled fairly and impartially.
§ 54.122(10) forbids misrepresentation by a distribution company, affiliate or division that generation service bundled with the distribution service of the distribution company is superior solely on the basis of affiliation. It also requires that advertising by these affiliated companies contain a suitable disclaimer.
§ 54.122(11) requires functional separation of affiliated or divisional generation, distribution and transmission functions.
§ 54.122(12) provides that substantial, good faith compliance with these provisions will constitute a substantial factor in mitigation of any penalties that might otherwise be applied for a violation.
Comments and Discussion
As noted, 15 sets of comments were received from the public and from representatives of government entities. It should be observed that members of the same industry do not always agree with each other, and where significant disagreement occurs in the comments, it is noted.
Additionally, and as we noted in our notice of proposed rulemaking in 1998, the first ten provisions of this rulemaking, § 54.122(1)--(10) were the product of a consensus based Competitive Safeguards Working Group, which made its report to the Commission on October 5, 1997. We have made some modifications to these consensus provisions,1 in response to the comments and our experience with interim settlement Code of Conduct provisions. Most of the comments submitted on the proposed rules involved generalized policy considerations or focussed on the provisions proposed in § 54.122(11) and (12).
The most significant changes in the ''consensus'' provisions are as follows: § 54.122(4) was revised to prescribe a uniform Statewide mediation procedure to address grievances. Section 54.122(10) was revised to provide for standard disclaimer language when an electric distribution company engages in joint marketing with a divisional or affiliated electric generation supplier.
With respect to paragraphs (11) and (12), dealing with functional separation of affiliated generation and nongeneration lines of business by regulated utilities, we have made some modifications to simplify paragraph (11) and have deleted paragraph (12) in response to comments.
General Comments
Horizon Energy Company, a generation marketing affiliate of PECO Energy Company, observes that some restrictions on joint marketing may be appropriate, but that all market participants should be subject to the same rules (that is, that nonaffiliated generation suppliers should also be prohibited from engaging in the same kind of joint marketing). Horizon asserts that market share evaluations are not necessary, that separation of generation, distribution and transmission functions is not required under Pennsylvania law and should not be considered by the Commission, and that an ''emergency suspension'' provision should be considered.2
ABC represents a coalition of a trade association of builders and contractors engaged in the construction and the installation and maintenance of ''electrical and mechanical systems,'' and the Pennsylvania Petroleum Association, which is a trade association of marketers of oil, gas, propane and related equipment. ABC asks that we extend our competitive safeguards to protect industries other than the electric generation supply industry. We note that while the code gives us broad authority with respect to the regulation of the supply of electric generation and distribution services, we have no express authority with regard to other industries. To the extent that utilities engage, through a division or separate affiliate, in nonjurisdictional lines of business, the General Assembly has not given us authority to oversee the competitive health of these nonutility lines of business, nor have we the expertise or resources to so extend our supervision. To the extent that utilities enter nonutility businesses, they are subject to all existing regulations, including the competitive laws and regulations of the United States and this Commonwealth which apply to existing participants. We continue to enforce the ratemaking laws of the Commonwealth, including laws and rules against forcing utility ratepayers to subsidize nonutility enterprises through cross-subsidization.
The Environmentalists urge the need for publicly available market share studies performed by an unbiased consultant to be hired by the Commission, as well as consideration of changing the method of evaluating stranded costs and including the issues of competitive safeguards in the ongoing Statewide education campaign.
We intend to require that information regarding these safeguards be included in customer education programs. As to the Environmentalists' other suggestions, they are outside the scope of this rulemaking.
Section 54.121
This provision sets forth the general purpose of this rulemaking. IRRC suggests that open access be better defined. ''Open access'' is the same concept as ''direct access'' prescribed by statute. To avoid confusion, we have changed the wording to ''direct'' access.
The PREA suggests language changes which would, in its opinion, clarify the broad statement of principles to more clearly establish the goals of the Code of Conduct. We decline to adopt most of these proposed language changes as they primarily involve matters of form or emphasis, rather than substance.
Section 54.122
The PEA submitted comments on behalf of seven of its members (Allegheny Power, Duquesne Light Company, GPU Energy, PP&L, Inc., Pennsylvania Power Company, PECO Energy Company and UGI Utilities, Inc.). It also submitted comments by Alfred E. Kahn, a Nationally known economist and former regulator who held posts in New York State and in the Federal Government under the administration of President Jimmy Carter. The PEA states that it generally supports the paragraphs (1)--(10), inasmuch as they were derived from the 1997 consensus working group process in which the PEA participated. The proffered commentators of Dr. Kahn also supportthose provisions. In general, the local distribution company commentators likewise support these principles.
PP&L echoes many of the comments offered by the PEA. It supports paragraphs (1)--(10).
Enron, an independent electric generation supplier, urges the Commission both to adopt the ''consensus'' rules (paragraphs (1)--(10)), but also to go beyond them in five respects.
First, Enron recommends that the Commission create ''virtual'' subsidiaries with no sharing of operational or managerial personnel, facilities and information and adopt detailed cost allocation rules for common costs shared between these ''virtual'' subsidiaries. We decline to take that step. We believe that the provisions of paragraph (11) as amended, provide sufficient direction against affiliate abuses. As to cross subsidization, local distribution utilities continue to be subject to negotiated or statutory rate caps, under section 2804(c) of the act (relating to standards for restructuring of electric industry). It appears unlikely that any of our jurisdictional local distribution companies will file a major rate case with us for several years. In the event that we discover that existing accounting and ratemaking rules and procedures are insufficient to deter cross subsidization, we may choose to revisit this topic.
Second, Enron suggests that we establish detailed rules to govern the use of generation assets by an affiliated distribution company. With the advent of competition not merely in this Commonwealth, but in neighboring states as well, the need for these rules seems less urgent than when Enron's comments were filed in 1998. With the exception of West Penn Power (presently trading and doing business as Allegheny Power), Duquesne Light and Penn Power, this Commonwealth utilities are members of a well formed independent system operator, PJM, Inc. LLC, which has established a strong self governance process, market rules and a market monitoring unit capable of investigating and deterring attempted exercises of market power by generation asset owners. We anticipate that the three Pennsylvania utilities which are not members of an ISO at present will be in compliance by the close of 2001 with the provisions of FERC Order 2000 requiring formation or membership in a regional transmission organization with identical or similar functions and other protections for market participants and end users. It is apparent to us that a combination of self governed regional transmission organizations, market rules and monitoring by an independent RTO market monitor should be superior in deterring the sort of anticompetitive behavior Enron asks us to address through prescriptive Pennsylvania-only rules.
Third, Enron urges us to prohibit joint marketing between an electric distribution company and its affiliated or divisional electric generation supplier. This issue was raised and extensively discussed in the Competitive Safeguards Working Group and rejected. While we are willing to revisit this issue in the future in the event that joint marketing is conducted in a manner that is deceptive or injurious to the public interest in a way that cannot be addressed on an ad hoc basis, we are unwilling to adopt this proposal at present. However, we will amend these proposed regulations to improve affiliation disclosure requirements in paragraph (10).
Fourth, Enron urges us to prohibit an electric distribution company-affiliated generation supplier from using the utility name or logo, or in the alternative, to impose disclosure requirements to properly inform customers about affiliation. Again, we are unwilling to flatly prohibit use of utility name or logo. While it may be that there is some initial customer confusion concerning retail competition and the role of utilities, their affiliates and competitors, we have adopted a strong and ongoing customer education program that we believe has been successful in acquainting the people of this Commonwealth with their retail options. This Commonwealth continues to have one of the highest retail electric generation shopping rates in the Nation. However, we do accept Enron's suggestion that we include disclosure language such as that adopted in the PECO settlement and have modified paragraph (10) accordingly.
Fifth, we are urged to permit customers who have signed long-term contracts with a utility to ''opt out'' of such contracts and switch to a competitive energy supplier without incurring contractual penalties. This is assertedly necessary to permit customers locked into long- term generation contracts to take advantage of retail competition, which commenced in 1998. We decline to do that. Retail competition has been discussed in public forums at least since 1994. Those signing long-term contracts are, in general, reasonably sophisticated large commercial or industrial customers who have been aware of the changing nature of the market. We are generally reluctant to interfere in the provisions of these contracts, absent a convincing demonstration that the provisions were obtained by misrepresentation, fraud, coercion or other duress. A blanket cancellation of these contracts is therefore not warranted, especially since many of them will have already expired or will shortly expire.
Finally, Enron urges us to change the proposed regulations to conform in several respects to the language of the PECO settlement code of conduct3 with respect to replacing the term ''comparable'' with ''equal and nondiscriminatory,'' to replace the term ''unlawful discrimination'' with ''undue discrimination'' or simply ''discrimination,'' to replace the term ''unlawful cross-subsidization'' with ''cross subsidization.'' We agree that these proposed changes are appropriate and are in better accord with the intent of the act. In any complaint under this code of conduct, we would in any event necessarily be called upon to determine whether a specific arrangement offered to an electric generation supplier was equal and nondiscriminatory. While we do not interpret ''equal'' to mean ''identical'' in every situation, the term ''comparable'' is overly ambiguous and does not sufficiently address the issues.
Several of IRRC's comments suggest that portions of these rules dealing with requirements to be imposed on electric generation suppliers (specifically, portions of § 54.122(3), (8) and (11)) are already covered in § 54.43 (relating to standards of conduct and disclosure for licensees). IRRC appears to misunderstand the different scope of those provisions. Section 54.43 deals with consumer protection issues, that is, the relationship and communications between electric generation supplier and end users. The instant provisions deal with competitive issues, more specifically, relationship and communications between competitors. It may be that competitors will seek to disadvantage other competitors through misleading or erroneous communications or behavior with respect to end users. These issues are clearly to be dealt with through the licensing provisions of § 54.43. Those provisions were not drafted, and are not intended to deal with competitive relationships or to forestall exercise of market power or gain unfair advantage from leveraging monopoly assets.
Accordingly, we believe that all competitive issues belong together in this section and we decline IRRC's suggestion that we remove electric generation supplier related provisions from the final rule and amend § 54.43 to add these provisions.
IRRC also proposes a number of technical and language amendments, some of which we have adopted elsewhere or will adopt without further comment.
§ 54.122(3)
This provision prohibits false or deceptive advertising by generation suppliers or distributing companies. Representative Lloyd suggested that paragraph (3) be amended to include ''misleading'' advertising as a prohibited activity. We believe that ''deceptive'' advertising includes ''misleading'' advertising and thus decline to make the suggested change.
Horizon suggests that additional language be added to paragraph (3). Horizon's amendment would prohibit any electric generation supplier from competing ''unfairly in the market through, inter alia, anticompetitive practices or cross subsidies from corporate affiliates.'' We decline to make the suggested revision. ''Cross-subsidies'' are a term of regulatory art, and are so defined in public utility ratemaking law because these subsidies involve forced ratepayers to subsidize (through unjust utility rates) the costs and profits of unregulated, competitive enterprises. We have full jurisdiction to investigate and ameliorate these abuses. Horizon's additional and somewhat vague suggestion that we prohibit ''anticompetitive practices'' lacks any specificity and Horizon does not explain in detail what it intends us to prohibit.
In general, these rules are intended to address the potential for anticompetitive actions or cross subsidization by regulated utilities subject to the Commission's jurisdiction. While we retain considerable authority over the rates, rules and practices of regulated distribution companies, and must continue to assure that the regulated rates, rules and practices are ''just and reasonable'' within the meaning of the code, we believe that the Legislature did not intend us to apply regulated principles to unregulated entities wholly outside our jurisdiction. If Horizon believes that any electric generation supplier is violating the terms of its Pennsylvania license, it is free to file a complaint with the Commission to remedy the violation.
As to general ''anticompetitive'' behavior by unregulated entities, the Legislature has provided that Horizon may file a complaint, under section 2811(f) of the act (relating to market power remediation), asking the Commission to remedy the behavior, insofar as it is within our power to do so. In any event, Horizon retains all remedies available to it or any other market participant to complain to a Federal District Court that the behavior is in violation of the competition laws of the United States, and to ask for remedies and damages. That is a far more effective remedy than any we can fashion in the context of the present rulemaking.
§ 54.122(4)
This provision establishes dispute resolution procedures. Representative Lloyd suggested that paragraph (4) be deleted as it improperly allows parties to negotiate compromises among themselves concerning appropriate dispute resolution procedures. We note that it is our policy to encourage negotiated arrangements of the sort permitted, but have amended the provision to clarify the procedural steps of informally resolving disputes.
The OCA recommends that we adopt the PECO Energy Interim Code of Conduct provisions regarding dispute resolution process. We have had some experience with those provisions and agree that they are better suited to dispute resolution than the draft provisions and have amended paragraph (4) accordingly. This will have the additional benefit of making dispute resolution procedures under this Code of Conduct uniform throughout this Commonwealth.
§ 54.122(5)
This provision prohibits illegal tying of goods and services as a requirement for obtaining electric distribution service. Representative Lloyd recommended that paragraph (5) be amended to delete the word ''illegally.'' This provision is based upon negotiated stakeholder language and was intended to reach and prohibit only illegal tying arrangements. Accordingly, we decline to make the suggested editorial change.
§ 54.122(6)
Representative Lloyd recommended that we add the phrase ''affiliated or division electric generation supplier'' to paragraph (6), which prohibits distribution companies from providing any advantage to a generation supplier in the provision of information about the operational status and availability of the distribution system. The language as presently drafted is ''any electric generation supplier,'' which includes, but is not limited to, affiliated and divisional suppliers. This language was intentional, and was intended to prevent preference being given to any electric generation supplier, whether or not affiliated with a distribution company. Businesses often enter into joint ventures or other contractual arrangements that may advantage the contracting parties to the disadvantage of others.
§ 54.122(9)
This provision requires that customer requests for information about generation suppliers be handled fairly and impartially by distribution companies. Representative Lloyd recommended that paragraph (9) be amended to state that the customer, not the electric distribution company, has the right to determine how the list of electric generation customers will be provided (that is, whether over the telephone, in writing or by some other means). We have licensed approximately 125 electric generation suppliers in this Commonwealth, many with limited geographical areas or which serve only certain kinds of retail customers. Electric generation suppliers are constantly changing their conditions of service or service areas. We believe that it is best to permit some managerial discretion in the mode of provision of the list information.
§ 54.122(10)
This provision prohibits a distribution company affiliate or division from claiming that generation bundled with distribution service is superior solely on the basis of the affiliation. Representative Lloyd recommended deleting from this provision the phrase ''solely on the basis of their affiliation with the electric distribution company,'' as he believes that distribution companies should be forbidden from stating or implying that purchasing power from affiliates or divisions is inherently superior under any circumstances. Section 54.6(3)(c) requires any claims about power be based upon available information substantiating the claims. Likewise, it is not our intent that distribution companies be prohibited from making any advertising claim which is truthful and not misleading to the public. The recommendation would effectively ban any advertising or customer relations regarding a distribution company's generation affiliate, a result that is extreme, in our judgment. Also, we note that the language sought to be amended was a product of the collaborative working group process. We therefore decline to make the proposed amendment.
However, we believe that it is appropriate to impose a disclosure requirement similar to that suggested by Enron, and have adopted language similar to that adopted in the PECO interim code of conduct, as suggested by the OCA.
§ 54.122(11) and (12)
Paragraph (11) requires functional separation of affiliated or divisional generation, distribution and transmission functions. Paragraph (12) provides that an adequate functional separation would be a substantial factor in the mitigation of penalties in an action brought against a distribution company under section 2811(f) of the act.
The OCA calls our attention to California and Massachusetts Codes of Conduct which, in the OCA's opinion, ''ensure that functional separation between the monopoly distribution function and any retail sales operation is real and complete.'' In effect, the OCA believes that these rules should be amended to require complete physical separation of the retail generation and distribution functions. The OCA would also prohibit (as does the PECO interim settlement code of conduct) joint marketing or packaging of regulated distribution services with the generation services of an affiliate or division. While those are theoretically ''purer'' approaches, they are also far more prescriptive and we do not adopt them.
The WPP warns that the proposed paragraph (11) ''has an ominous quality'' and unreasonably regulates ''speech'' in that it prevents employes engaged in generation supply activities from private discussions with employes of related distribution or transmission businesses concerning current or future operations. It also argues that the provision would cover conduct ''well beyond'' FERC regulations at 18 CFR Part 37.4, which restricts only the interchange of competitive information about the transmission system. The WPP argues that it is ''absolutely necessary for Allegheny's affiliated electric generation supplier to provide information to Allegheny Power's power control center transmission staff to allow the staff to operate the control area reliability (sic).'' The WPP argues as well that communications are also necessary between Allegheny Power's transmission and distribution center and its power control center with respect to outages and performance conditions.
The PEA opposes adoption of paragraphs (11) and (12), asserting that they contravene section 2804(5) of the act (relating to standards for restructuring of electric industry) which states (in its entirety) ''The Commission may permit, but shall not require, an electric utility to divest itself of facilities or to reorganize its corporate structure.''
In effect, the PEA argues that in addition to the plain language of that provision, which forbids the Commission from ordering divestment of facilities or corporate re-rganization (structural reorganization), the General Assembly also intended to forbid the Commission from regulating anticompetitive utility behavior through a nonstructural remedy.
It is a hard stretch to interpret this language to prohibit the Commission from directing that monopoly utilities arrange their internal operations to prevent them from unfairly disadvantaging competitors or potential competitors. The statute, as stated, simply prohibits the Commission from directing that structural corporate changes be made, leaving restructuring to the judgment of utility management.
The PGA, in a single page letter, supports the PEA's opposition to § 54.122(11)(ii)--(v) and (12).
PP&L opposes paragraphs (11) and (12). PP&L makes the same point as does the WPP, that regulated distribution companies must coordinate operations with transmission systems and should not be barred from communicating in the ordinary course of business.
The ECI suggests a number of minor language changes that we decline to accept, as they consist mainly of changes in emphasis, rather than substance. However, we accept the ECI's suggestion that ''related'' should be changed to ''affiliate or division'' for § 54.122(11)(i)--(vi), in parallel with language proposed elsewhere in these rules. In addition to other editorial changes, we have modified this provision to apply to affiliates and divisions.
The ECI recommends that electric distribution companies be obligated to include the provisions of this regulation in their tariffs. The only substantial advantage to tariff publication is that it might, in theory, provide a more general notification to the public, as tariffs required to be available at company offices and to be posted on company internet web sites and are often more widely available for customer review.
In reality, electric generation suppliers and large end-use customers can be expected to be well aware of the obligations of the act and this Code of Conduct. For less sophisticated consumers, direct customer education programs, as implemented by the Commission from the outset of restructuring, are far more effective in conveying the rules, rights and obligations of retail electric competition. It should also be noted that all of Pennsylvania's regulations are now available to the public at no charge on the internet at http://www.pacode.com. In addition, we require that information about direct access and electric competition be disclosed in all bills, under §§ 54.1--54.7. Accordingly, we decline to require that the Code of Conduct be filed as part of electric distribution company tariffs.
The MAPSA faults the proposed regulations (in criticizing paragraphs (11) and (12) as not going far enough) for not barring joint marketing by affiliated generation suppliers and distribution companies. It also asks that we mandate physical separation between affiliated or divisional electric generation suppliers and electric distribution utilities. As noted elsewhere in this order, we decline to adopt either suggestion. The MAPSA also asks that we include a provision which would regulate the transfer of nonpower goods and services between an affiliated or divisional distribution company and generation supplier. We decline to do that, too.
However, that does not mean that the effect of and terms of the transfers between related entities will be ignored for ratemaking purposes. Cross-subsidization of nonutility enterprises by utility customers has been unlawful under the code for many years. Transfers of goods and services made between a utility and an affiliated or divisional entity which constitute a cross-subsidy may not be recovered from utility ratepayers. Moreover, these transactions, to the extent they are made between affiliated interests within the meaning of section 2101 of the code (relating to definition of affiliated interest) must follow the rules of Chapter 21 of the code (relating to affiliated interests) at the risk of being disallowed or voided under those statutory provisions.
Accordingly, we decline to adopt the MAPSA's additional provisions and will rely upon existing law to provide safeguards to the public interest. The NEV also proposes joint marketing prohibitions, goods and services transfer rules and physical separation of related electric generation suppliers and electric distribution utilities. We decline, for the reasons stated previously.
After consideration of comments on paragraphs (11) and (12), we have decided to amend paragraph (11) and delete paragraph (12). We are troubled by the attempt at proscription in paragraph (11). We are not even sure that this attempt succeeds and covers every possible permutation of inter-employe contacts and information sharing. It appears that paragraph (11), in attempting to capture every possible element of the independence required to be observed, has also become too procedurally complex.
While we do not agree that paragraph (11) amounts to de facto divestiture, the proposed rulemaking is unnecessarily complicated and should be simplified. Further, as a State commission with jurisdiction over intrastate facilities we do not wish to exceed our jurisdiction by attempting to dictate the actions of transmission company affiliate employes. FERC has primary jurisdictional authority over the actions of transmission utilities, and Order No. 888 and its successive orders should be invoked by complaining market participants if they believe that the rates, terms and conditions of transmission service have been the subject of any anticompetitive acts by the transmission owner.
As edited, paragraph (11) now simply declares that affiliated or divisional entities covered under these provisions shall ensure that their employes act independently of each other. We have deleted paragraph (12) to further simplify these rules. It should be noted that we agree with comments that suggest that it appears pointless to accord a regulated company any mitigation of penalties for compliance with lawful regulations. In any case before the Commission, a utility may argue mitigation however it chooses.
Accordingly, under 66 Pa.C.S. §§ 501, 502, 504--506, 508, 701, 1301, 1304, 1501, 1502, 1505, 1701--1705, 2101--2107 and 2801--2811, the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and the regulations promulgated thereunder in 1 Pa. Code §§ 7.1--7.4, we adopt the rules to read as set forth in Annex A; Therefore,
It Is Ordered That:
1. The regulations of the Commission, 52 Pa. Code Chapter 54, are amended by adding §§ 54.121 and 54.122 to read as set forth in Annex A.
2. The Secretary shall submit this order and Annex A for review by the designated standing committees of both Houses of the General Assembly, and for review by IRRC.
3. A copy of this order and Annex A shall be served upon all commentators to our proposed rulemaking at this docket, including the OCA, the Office of Small Business Advocate, the Office of Trial Staff, all members of the Competitive Safeguards Working Group, all jurisdictional electric companies, all licensed electric providers and the PEA.
4. The Secretary shall submit this order and Annex A to the Office of Attorney General for approval as to legality, and to the Governor's Budget Office for review of fiscal impact.
5. This order shall become effective upon final publication in the Pennsylvania Bulletin.
6. The contact person is John Levin, Assistant Counsel, Pennsylvania Public Utility Commission, P. O. Box 3265, Harrisburg, PA 17105-3265, (717) 787-5978.
JAMES J. MCNULTY,
Secretary(Editor's Note: For the text of the order of the Independent Regulatory Review Commission, relating to this document, see 30 Pa.B. 3239 (June 24, 2000).)
Fiscal Note: Fiscal Note 57-195 remains valid for the final adoption of the subject regulations.
Annex A
TITLE 52. PUBLIC UTILITIES
PART I. PENNSYLVANIA PUBLIC UTILITY COMMISSION
Subpart C. FIXED SERVICE UTILITIES
CHAPTER 54. ELECTRIC GENERATION CUSTOMER CHOICE
Subchapter E. COMPETITIVE SAFEGUARDS Sec.
54.121. Purpose. 54.122. Code of conduct. § 54.121. Purpose.
The purpose of these competitive safeguards is to assure the provision of direct access on equal and nondiscriminatory terms to all customers and generation suppliers, prevent discrimination in rates, terms or conditions of service by electric distribution companies, prevent the cross subsidization of service amongst customers, customer classes or between related electric distribution companies and electric generation suppliers, to forbid unfair or deceptive practices by electric generation companies and electric generation suppliers, and to establish and maintain an effective and vibrant competitive market in the purchase and sale of retail electric energy in this Commonwealth.
§ 54.122. Code of conduct.
Electric generation suppliers and electric distribution companies shall comply with the following requirements:
(1) An electric distribution company may not give an electric generation supplier, including without limitation, its affiliate or division, any preference or advantage over any other electric generation supplier in processing a request by a distribution company customer for retail generation supply service.
(2) Subject to customer privacy or confidentiality constraints, an electric distribution company may not give an electric generation supplier, including without limitation its affiliate or division, any preference or advantage in the dissemination or disclosure of customer information and any dissemination or disclosure shall occur at the same time and in an equal and nondiscriminatory manner. ''Customer information'' means all information pertaining to retail electric customer identity and current and future retail electric customer usage patterns, including appliance usage patterns, service requirements or service facilities.
(3) An electric distribution company or electric generation supplier may not engage in false or deceptive advertising to customers with respect to the retail supply of electricity in this Commonwealth.
(4) Each electric distribution company shall adopt the following dispute resolution procedures to address alleged violations of this section:
(i) Regarding any dispute between an electric distribution company or a related supplier, or both, and an electric generation supplier (each individually referred to as a ''party'' and collectively referred to as ''parties''), alleging a violation of any of the provisions of this section, the electric generation supplier shall provide the electric distribution company or related supplier, or both, as applicable, a written notice of dispute which includes the names of the parties and customers, if any involved and a brief description of the matters in dispute.
(ii) Within 5 days of receipt of the notice by the electric distribution company or related supplier, or both, a designated senior representative of each of the parties shall attempt to resolve the dispute on an informal basis.
(iii) If the designated representatives are unable to resolve the dispute by mutual agreement within 30 days of the referral, the dispute shall be referred for mediation through the Commission's Office of Administrative Law Judge. A party may request mediation prior to that time if it appears that informal resolution is not productive.
(iv) If mediation is not successful, the matter shall be converted to a formal proceeding before a Commission administrative law judge, and the prosecuting parties shall be directed to file a formal pleading in the nature of a complaint, petition or other appropriate pleading with the Commission within 30 days or the matter will be dismissed for lack of prosecution. Any party may file a complaint, petition or other appropriate pleading concerning the dispute under any relevant provision of 66 Pa.C.S. (relating to the Public Utility Code).
(5) An electric distribution company may not illegally tie the provision of any electric distribution service within the jurisdiction of the Commission to one of the following:
(i) The purchase, lease or use of any other goods or services offered by the electric distribution company or its affiliates.
(ii) A direct or indirect commitment not to deal with any competing electric generation supplier.
(6) An electric distribution company may not provide any preference or advantage to any electric generation supplier in the disclosure of information about operational status and availability of the distribution system.
(7) An electric distribution company shall supply all regulated services and apply tariffs to nonaffiliated electric generation suppliers in the same manner as it does for itself and its affiliated or division electric generation supplier, and shall uniformly supply all regulated services and apply its tariff provisions in a nondiscriminatory manner.
(8) Every electric distribution company and its affiliated or divisional electric generation supplier shall formally adopt and implement these provisions as company policy and shall take appropriate steps to train and instruct its employes in their content and application.
(9) If an electric distribution company customer requests information about electric generation suppliers, the electric distribution company shall provide the latest list as compiled by the Commission to the customer over the telephone, or in written form or by other equal and nondiscriminatory means. In addition, an electric distribution company may provide the address and telephone number of an electric generation supplier if specifically requested by the customer by name. To enable electric distribution companies to fulfill this obligation, the Commission will maintain a written list of licensed electric generation suppliers. The Commission will regularly update this list and provide the updates to electric distribution companies as soon as reasonably practicable. The Commission will compile the list in a manner that is fair to all electric generation suppliers and that is not designed to provide any particular electric generation supplier with a competitive advantage.
(10) An electric distribution company or its affiliate or division may not state or imply that any delivery services provided to an affiliate or division or customer of either are inherently superior, solely on the basis of their affiliation with the electric distribution company, to those provided to any other electric generation supplier or customer or that the electric distribution company's delivery services are enhanced should supply services be procured from its affiliate or division. When an electric distribution company's affiliated or divisional supplier markets or communicates to the public using the electric distribution company's name or logo, it shall include a disclaimer stating that the affiliated or divisional supplier is not the same company as the electric distribution company, that the prices of the affiliated or divisional supplier are not regulated by the Commission and that a customer is not required to buy electricity or other products from the affiliated or divisional supplier to receive the same quality service from the electric distribution company. When an affiliated or divisional supplier advertises or communicates through radio, television or other electronic medium to the public using the electric distribution company's name or logo, the affiliated or divisional supplier shall include at the conclusion of any communication a disclaimer that includes all of the disclaimers listed in this paragraph.
(11) An electric distribution company which is related as an affiliate or division of an electric generation supplier or transmission supplier (meaning any public utility that owns, operates, or controls facilities used for the transmission of electric energy) which serves any portion of this Commonwealth; and any electric generation supplier which is related as an affiliate or division of any electric distribution company or transmission supplier which serves any portion of this Commonwealth, shall insure that its employes function independently of other related companies.
______1 Modifications have been made to § 54.122(4) and (10).
2 While we are not amending the proposed rules to include such a provision, we call the public's attention to 52 Pa. Code §§ 3.1--3.12 which provides for the issuance of ex parte emergency orders by the Commission.
3 Application of PECO Energy Company for Approval of its Restructuring Plan Under Section 2806 of the Public Utility Code, R-00973953, Joint Petition for Full Settlement, ¶39a, Appendix H.
[Pa.B. Doc. No. 00-1161. Filed for public inspection July 7, 2000, 9:00 a.m.]
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