56-235.8 - Retail supply choice for natural gas customers.
§ 56-235.8. Retail supply choice for natural gas customers.
A. Notwithstanding any provision of law to the contrary, each public utilityauthorized to furnish natural gas service in Virginia (gas utility) isauthorized to offer to all of the gas utility's customers not eligible fortransportation service under tariffs in effect on the effective date of thissection, direct access to gas suppliers (retail supply choice) by filing aplan for implementing retail supply choice with the State CorporationCommission for approval. The provisions of this section shall not apply toany retail supply choice pilot program in effect on July 1, 1999. TheCommission shall accept such a plan for filing within thirty days of filingif it contains, at a minimum:
1. A schedule for implementing retail supply choice for all of its customers;
2. Tariff revisions, including proposed unbundled rates for firm andinterruptible service (which may utilize a cost allocation and rate designformulated to recover the gas utility's nongas fixed costs on a nonvolumetricbasis) and terms and conditions of service designed to providenondiscriminatory open access over its transportation system, comparable tothe transportation service provided by the gas utility to itself, to allowcompetitive suppliers to sell natural gas directly to the gas utility'scustomers. Any proposed unbundling rates shall include an explanation of themethodology used to develop the rates and a calculation of revenues, bycustomer class, thereby produced;
3. Nonbypassable, competitively neutral annual surcharges for the gas utilityto properly allocate and recover from its firm service customers not eligiblefor nonpilot transportation service under tariffs in effect on the effectivedate of this section, its nonmitigable costs associated with the provision ofretail supply choice, including prudently incurred contract obligation costsand transition costs. For the purposes of this section, contract obligationcosts are costs associated with acquiring, maintaining or terminatinginterstate and intrastate pipeline and storage capacity contracts, lessrevenues generated by mitigating such contract obligations, whether byoff-system sales, capacity release, pipeline supplier refunds or otherwise;and transition costs are costs incurred by the gas utility associated witheducating the public on retail supply choice and redesigning its facilities,operations and systems to permit retail supply choice;
4. Tariff provisions to balance the receipts and deliveries of gas suppliesto retail supply choice customers and allocate the gas utility's gas costs sothat one class of customers is not subsidized by another class of customers;
5. Tariff provisions requiring the gas utility, at a minimum, to offer gassuppliers or retail supply choice customers the right to acquire the gasutility's upstream transmission and/or storage capacity in a manner thatassures that one class of customers is not subsidized by another class ofcustomers, provided that nothing contained herein shall deny the gas utilitythe right to request Commission approval of such tariff provisions as aredesigned to ensure the safe and reliable delivery of natural gas to firmservice customers on its system, including provisions requiring gas suppliersto accept assignment of upstream transportation and storage capacity, and/orallowing the gas utility to retain a portion of its upstream transportationand storage capacity to ensure safe and reliable natural gas service to itscustomers;
6. A code of conduct governing the activities and relationships between thegas utility and gas suppliers to prevent anticompetitive or discriminatoryconduct and the unlawful exercise of market power. Such codes of conductshall incorporate or be consistent with any rule or guideline established bythe Commission; and
7. Any other requirement established by Commission rule or regulation.
The Commission may, by rule or regulation, impose such additional filingrequirements as it deems necessary in the public interest. The Commission mayalso require a gas utility to continue to serve as a gas supplier to itscustomers after the gas utility's plan becomes effective and under such termsand conditions as are necessary to protect the public interest.
B. After the Commission has accepted a filing as provided in subsection A,the Commission shall review and approve a plan filed by a gas utility unlessit determines, after notice and an opportunity for public hearing, that theplan would:
1. Adversely affect the quality, safety, or reliability of natural gasservice by the gas utility or the provision of adequate service to the gasutility's customers;
2. Result in rates charged by the gas utility that are not just andreasonable rates within the contemplation of § 56-235.2 or that are in excessof levels approved by the Commission under § 56-235.6, as the case may be;
3. Adversely affect the gas utility's customers not participating in theretail supply choice plan;
4. Unreasonably discriminate against one class of the gas utility's customersin favor of another class (provided, however, that a gas utility's recoveryof nongas fixed costs on a nonvolumetric basis shall not necessarilyconstitute unreasonable discrimination); or
5. Not be in the public interest.
The Commission shall, after the acceptance of a filing of a retail supplychoice plan, approve or disapprove the plan within 120 days. The 120-dayperiod may be extended by Commission order for an additional period not toexceed sixty days. The retail supply choice plan shall be deemed approved ifthe Commission fails to act within 120 days or any extended period ordered bythe Commission. The Commission shall approve a retail supply choice planfiled by a gas utility pursuant to this subsection regardless of whether ithas promulgated rules and regulations pursuant to subsection A. TheCommission may also modify a plan filed by a gas utility to ensure that itconforms to the provisions of this subsection and is otherwise in the publicinterest. Plans approved pursuant to this section shall not be placed intoeffect before July 1, 2000.
C. The Commission may, on its own motion, direct a gas utility to file aretail supply choice plan, which shall comply with subsection A, shallinclude such other details in the plan as the Commission may require, anddoes not cause the effects set forth in subsection B, or the Commission may,on its own motion, propose a plan for a gas utility for retail supply choicethat complies with the requirements of subsection A and does not cause theeffects set forth in subsection B. The Commission may approve any plans underthis subsection after notice to all affected parties and an opportunity forhearing.
D. Once a plan becomes effective pursuant to this section, if the Commissiondetermines, after notice and opportunity for hearing, that the plan iscausing, or is reasonably likely to cause, the effects set forth insubsection B, it may order revisions to the plan to remove such effects. Anysuch revisions to the plan will operate prospectively only.
E. If, upon application of at least twenty-five percent of retail supplychoice customers or of 500 retail choice customers, whichever number islesser, or by the gas utility, it is alleged that the marketplace for retailsupply choice customer is not reasonably competitive or results in ratesunreasonably in excess of what would otherwise be charged by the gas utility,or if the Commission renders such a determination upon its own motion, thenthe Commission may, after notice, and opportunity for hearing, terminate thegas utility's retail supply choice program and provide for an orderly returnof the retail choice customers to the gas utility's traditional retailnatural gas sales service. In such event, the gas utility shall be given theopportunity to acquire, under reasonable and competitive terms and conditionsand within a reasonable time period, such upstream transportation and storagecapacity as is necessary for it to provide traditional retail natural gassales service to former retail supply choice customers.
F. Licensure of gas suppliers.
1. No person, other than a gas utility, shall engage in the business ofselling natural gas to the residential and small commercial customers of agas utility that has an approved plan implementing retail supply choiceunless such person (for the purpose of this section, gas supplier) holds alicense issued by the Commission. An application for a gas supplier licensemust be made to the Commission in writing, be verified by oath or affirmationand be in such form and contain such information as the Commission may, byrule or regulation, require. For purposes of this subsection, the Commissionshall require a gas supplier to demonstrate that it has the means to providenatural gas to essential human needs customers. A gas supplier license shallbe issued to any qualified applicant within forty-five days of the date offiling such application, authorizing in whole or in part the service coveredby the application, unless the Commission determines otherwise for good causeshown. A person holding such a license shall not be considered a "publicservice corporation," "public service company" or a "public utility" andshall not be subject to regulation as such; however, nothing contained hereinshall be construed to affect the liability of such a person for any licensetax levied pursuant to Article 2 (§ 58.1-2620 et seq.) of Chapter 26 of Title58.1. No license issued under this chapter shall be transferred without priorCommission approval finding that such transfer is not inconsistent with thepublic interest. If the Commission determines, after notice and opportunityfor public hearing, that a gas supplier has failed to comply with theprovisions of this subsection or the Commission's rules, regulations ororders, the Commission may enjoin, fine, or punish any such failure pursuantto the Commission's authority under this statute and under Title 12.1 of theCode of Virginia. The Commission may also suspend or revoke the gassupplier's license or take such other action as is necessary to protect thepublic interest.
2. The Commission shall establish rules and regulations for theimplementation of this subsection, provided that:
a. The Commission's rules and regulations shall not govern the rates chargedby licensed gas suppliers, except that the Commission's rules and regulationsmay govern the terms and conditions of service of licensed gas suppliers toprotect the gas utility's customers from commercially unreasonable terms andconditions; and
b. The Commission's rules and regulations shall permit an affiliate of thegas utility to be licensed as a gas supplier and to participate in the gasutility's retail supply choice program under the same terms and conditions asgas suppliers not affiliated with the gas utility.
3. The Commission shall also have the authority to issue rules andregulations governing the marketing practices of gas suppliers.
G. Retail customers' private right of action; marketing practices.
1. No gas supplier shall use any deception, fraud, false pretense,misrepresentation, or any deceptive or unfair practices in providing ormarketing gas service.
2. Any person who suffers loss (i) as the result of fraudulent marketingpractices, including telemarketing practices, engaged in by any gas supplierproviding any service made competitive under this section, or of anyviolation of rules and regulations issued by the Commission pursuant tosubdivision F 3, or (ii) as the result of any violation of subdivision 1 ofthis subsection, shall be entitled to initiate an action to recover actualdamages, or $500, whichever is greater. If the trier of fact finds that theviolation was willful, it may increase damages to an amount not exceedingthree times the actual damages sustained, or $1,000, whichever is greater.Notwithstanding any other provisions of law to the contrary, in addition toany damages awarded, such person also may be awarded reasonable attorney'sfees and court costs.
3. The Attorney General, the attorney for the Commonwealth or the attorneyfor the city, county or town may cause an action to be brought in theappropriate circuit court for relief of violations referenced in subdivision2 of this subsection.
4. Notwithstanding any other provision of law to the contrary, in addition toany damages awarded, such person or governmental agency initiating an actionpursuant to this section may be awarded reasonable attorney's fees and courtcosts.
5. Any action pursuant to this subsection shall be commenced by persons otherthan the Commission within two years after its accrual. The cause of actionshall accrue as provided in § 8.01-230. However, if the Commission initiatesproceedings, or any other governmental agency files suit for violations underthis section, the time during which such proceeding or governmental suit andall appeals therefrom are pending shall not be counted as any part of theperiod within which an action under this section shall be brought.
6. The circuit court may make such additional orders or decrees as may benecessary to restore to any identifiable person any money or property, real,personal, or mixed, tangible or intangible, which may have been acquired fromsuch person by means of any act or practice violative of this subsection,provided that such person shall be identified by order of the court within180 days from the date of any order permanently enjoining the unlawful act orpractice.
7. In any case arising under this subsection, no liability shall be imposedupon any gas supplier who shows by a preponderance of the evidence that (i)the act or practice alleged to be in violation of subdivision 1 of thissubsection was an act or practice over which the same had no control or (ii)the alleged violation resulted from a bona fide error notwithstanding themaintenance of procedures reasonably adopted to avoid a violation. However,nothing in this section shall prevent the court from ordering restitution andpayment of reasonable attorney's fees and court costs pursuant to subdivision4 of this subsection to individuals aggrieved as a result of an unintentionalviolation of this subsection.
H. Authorized public utilities shall file with the Commission tariffrevisions reflecting the net effect of the elimination of taxes pursuant tosubsection B of § 58.1-2904 and the addition of state income taxes pursuantto § 58.1-400. Such tariffs shall be effective for service rendered on andafter January 1, 2001, and shall be filed at least forty-five days prior tothe effective date. Such filing shall not constitute a rate increase for thepurposes of § 56-235.4.
I. Consumer education.
1. The Commission shall develop a consumer education program designed toprovide the following information to retail customers concerning retailsupply choice for natural gas customers:
a. Opportunities and options in choosing natural gas suppliers;
b. Marketing and billing information gas suppliers will be required tofurnish retail customers;
c. Retail customers' rights and obligations concerning the purchase ofnatural gas and related services; and
d. Such other information as the Commission may deem necessary andappropriate and in the public interest.
2. The consumer education program authorized herein may be conducted inconjunction with the program provided for in § 56-592.
3. The Commission shall establish or maintain a complaint bureau for thepurpose of receiving, reviewing and investigating complaints by retailcustomers against gas utilities, public service companies, licensed suppliersand other providers of any services affected by this section. Upon therequest of any interested person or the Attorney General, or upon its ownmotion, the Commission shall be authorized to inquire into possibleviolations of § 56-235.8 and to enjoin or punish any violations thereofpursuant to its authority under § 56-235.8, this title, or Title 12.1. TheAttorney General shall have a right to participate in such proceedingsconsistent with the Commission's Rules of Practice and Procedure.
4. For all billing statements sent on and after August 1, 2000, all gasutilities, as defined in subsection A, shall enclose the followinginformation in all billing statements for retail natural gas service:
a. Gas utilities shall separately state an approximate amount of the taximposed under §§ 58.1-2626, 58.1-2660 and 58.1-3731 which is included in thecustomer's bill until such tax is no longer imposed; and
b. For all such billing statements, a statement which reads as follows shallbe included: "Beginning January 1, 2001, the current state and local grossreceipts taxes on sales of natural gas will be replaced by a tax based on theconsumption of natural gas by consumers. In the past, the current grossreceipts tax has always been included in the rate charged for natural gas.Now, this tax is being separately stated. The total gross receipts taximposed by Virginia and the localities is approximately two percent of theamount charged to consumers. The new state and local consumption tax will becharged at an approximate rate of $0.02 per 100 cubic feet (CCF) of naturalgas consumed. While this rate was designed to be less than, or equal to, theeffect of the current gross receipts tax which is being replaced, the tax youpay may actually be higher in your locality. This statement is being providedfor your information."
(1999, c. 494; 2000, cc. 691, 706.)