56-590 - Divestiture, functional separation and other corporate relationships.
§ 56-590. Divestiture, functional separation and other corporaterelationships.
A. The Commission shall not require any incumbent electric utility to divestitself of any generation, transmission or distribution assets pursuant to anyprovision of this chapter.
B. 1. The Commission shall, however, direct the functional separation ofgeneration, retail transmission and distribution of all incumbent electricutilities in connection with the provisions of this chapter to be completedby January 1, 2002.
2. By January 1, 2001, each incumbent electric utility shall submit to theCommission a plan for such functional separation which may be accomplishedthrough the creation of affiliates, or through such other means as may beacceptable to the Commission.
3. Consistent with this chapter, the Commission may impose conditions, as thepublic interest requires, upon its approval of any incumbent electricutility's plan for functional separation, including requirements that (i) theincumbent electric utility's generation assets or, at the election of theincumbent electric utility and if approved by the Commission pursuant tosubdivision 4 of this subsection, their equivalent are made available forelectric service during the capped rate period as provided in § 56-582 and,if applicable, during any period the distributor serves as a default provideras provided for in § 56-585; (ii) the incumbent electric utility receiveCommission approval for the sale, transfer or other disposition of generationassets during the capped rate period and, if applicable, during any periodthe distributor serves as a default provider; and (iii) any such generationasset sold, transferred, or otherwise disposed of by the incumbent electricutility with Commission approval shall not be further sold, transferred, orotherwise disposed of during the capped rate period and, if applicable,during any period the distributor serves as default provider, withoutadditional Commission approval.
4. If an incumbent electric utility proposes that the equivalent to itsgeneration assets be made available pursuant to subdivision 3 of thissubsection, the Commission shall determine the adequacy of such proposal andshall approve or reject such proposal based on the public interest.
5. In exercising its authority under the provisions of this section and under§ 56-90, the Commission shall have no authority to regulate, on acost-of-service basis or other basis, the price at which generation assets ortheir equivalent are made available for default service purposes. Suchrestriction on the Commission's authority to regulate, on a cost-of-servicebasis or other basis, prices for default service shall not affect the abilityof a distributor to offer to provide, and of the Commission to approve ifappropriate the provision of, such services on a cost plus basis or any otherbasis. The Commission's authority to regulate the price of default serviceshall be consistent with the pricing provisions applicable to a distributorpursuant to § 56-585. In addition, the Commission shall, in exercising itsresponsibilities under this section and under § 56-90, consider, among otherfactors, the potential effects of any such transfer on: (i) rates andreliability of capped rate service under § 56-582, and of default serviceunder § 56-585, and (ii) the development of a competitive market in theCommonwealth for retail generation services. However, the Commission may notdeny approval of a transfer proposed by an incumbent electric utility,pursuant to subdivisions 2 and 4 of subsection B, due to an inability todetermine, at the time of consideration of the transfer, default serviceprices under § 56-585.
C. The Commission shall, to the extent necessary to promote effectivecompetition in the Commonwealth, promulgate rules and regulations to carryout the provisions of this section, which rules and regulations shall includeprovisions:
1. Prohibiting cost-shifting or cross-subsidies between functionally separateunits;
2. Prohibiting functionally separate units from engaging in anticompetitivebehavior or self-dealing;
3. Prohibiting affiliated entities from engaging in discriminatory behaviortowards nonaffiliated units; and
4. Establishing codes of conduct detailing permissible relations betweenfunctionally separate units.
D. Neither a covered entity nor an affiliate thereof may be a party to acovered transaction without the prior approval of the Commission. Any suchperson proposing to be a party to such transaction shall file an applicationwith the Commission. The Commission shall approve or disapprove suchtransaction within sixty days after the filing of a completed application;however, the sixty-day period may be extended by Commission order for aperiod not to exceed an additional 120 days. The application shall be deemedapproved if the Commission fails to act within such initial or extendedperiod. The Commission shall approve such application if it finds, afternotice and opportunity for hearing, that the transaction will comply with therequirements of subsection E, and may, as a part of its approval, establishsuch conditions or limitations on such transaction as it finds necessary toensure compliance with subsection E.
E. A transaction described in subsection D shall not:
1. Substantially lessen competition among the actual or prospective providersof noncompetitive electric service or of a service which is, or is likely tobecome, a competitive electric service; or
2. Jeopardize or impair the safety or reliability of electric service in theCommonwealth, or the provision of any noncompetitive electric service at justand reasonable rates.
F. Except as provided in subdivision B 5, nothing in this chapter shall bedeemed to abrogate or modify the Commission's authority under Chapter 3 (§56-55 et seq.), 4 (§ 56-76 et seq.) or 5 (§ 56-88 et seq.) of this title.However, any person subject to the requirements of subsection D that is alsosubject to the requirements of Chapter 5 of this title may be exempted fromcompliance with the requirements of Chapter 5 of this title.
(1999, c. 411; 2000, c. 991; 2001, c. 748; 2007, cc. 888, 933.)