CHAPTER 48

FORMERLY

HOUSE BILL NO. 69

AS AMENDED BY

HOUSE AMENDMENT NOS. 1 AND 2

AN ACT TO AMEND TITLES 26 AND 29 OF THE DELAWARE CODE RELATING TO THE REGULATION OF PUBLIC UTILITIES.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. Amend Subchapter II, §201(c), Title 26, Delaware Code by striking said subsection (c) in its entirety and substituting in lieu thereof a new subsection (c) to read as follows:

"(c) (1) In the exercise of supervision and regulation over public utilities, the Commission may, upon application or on its own motion, after notice and hearing, forbear from ("deregulate") in whole or in part, its supervision and regulation over some or all public utility products or services and over some or all public utilities where the Commission determines that a competitive market exists for such products and services and where the Commission finds that such deregulation will be in the public interest.

(2) Any application under this subsection shall, at a minimum, include specific proposal(s), supporting statements or testimony, an analysis of the effects on the utility's regulated customers and an implementation plan. The application shall affirmatively establish that the deregulation being considered will not adversely affect the availability, cost, or quality of utility services provided to the utility's regulated customers.

(3) The Commission shall approve or disapprove any such deregulation applications within 180 days after submission thereof, except that, for good cause found, the Commission may enter an Order extending this period for an additional 90 days.

(4) The Commission shall determine how a public utility shall account for such deregulated products or services (including cost allocations where found to be appropriate) so as to ensure that the utility's regulated customers neither benefit unduly from nor unduly provide a subsidy to the deregulated products or services; provided that such accounting determination shall not thereafter be changed by the Commission except for good cause shown.

(5) In connection with any application under this subsection for forbearance from Commission supervision and regulation, the Commission shall find, among other relevant things, the following:

"(a) Whether a competitive market exists for the particular utility product or service being requested to be wholly or partly deregulated. Conditions and factors to be considered may include, but are not limited to, the following:

(i) the existing or prospective market power of the utility with respect to its products or services for which deregulation is sought; and

(ii) if there are significant entry or exit costs or other barriers to potential competitors; and

(iii) if there is a reasonable basis to expect that prices of wholly or partly deregulated products or services will reflect the incremental costs of supply;

(b) Whether any safeguards are necessary to prevent a material adverse effect on utility service quality or rate levels;

(c) Whether or not an option to remain under the Commission's supervision and regulation should be made available for customers whose utility products and services would be deregulated by the proposal;

(d) Whether or not the public utility shall unbundle each service or function on which a service depends to its fundamental elements and shall make those elements separately available to any customer whose utility service is being deregulated by the proposal under terms and conditions, including price, that are the same or comparable to those used by the public utility in providing its own service. The public utility shall not unreasonably discriminate between affiliated and unaffiliated providers of services in offering unbundled features, functions and capabilities; and

(e) Whether the Commission should forbear from regulating competing providers of such products or services.

(6) Where the Commission has made a determination to forbear from its supervision and regulation under this section, the Commission shall have the ongoing right to review, examine and audit the books and records of the applicable utility, and the relevant books and records of any relevant non-regulated affiliate. This right shall be the same as the Commission's right of access to inspection and examination of the utility's regulated books, accounts and records and appropriate safeguards regarding disclosure of confidential information shall be provided.

(6) Thirty months after any approval of forbearance from regulation hereunder, the utility shall file a report with the Commission summarizing its activities for that wholly or partly deregulated activity during its first 24 months of operation. Such report shall, at a minimum, address the criteria that the Commission deemed relevant in approving the request to deregulate such product or service. The report shall also describe the service provider's investment during the previous 24 months. Such report shall also describe the level of planned investment over the next five years. The Commission may require that similar reports be submitted biannually thereafter.

(7) The Commission, after notice and hearing, may prospectively revoke or reverse any forbearance of regulation granted hereunder where it finds that doing so is in the public interest. Where the Commission revokes or reverses a prior decision made under paragraph (1) of this subsection, the Commission shall determine that the current rates for the related products or services are just and reasonable or shall establish new rates that are just and reasonable.

(8) This subsection shall not apply to a telecommunications service provider for so long as such provider is governed under the provisions of Subchapter VII-A, Chapter 1 of this Title."

Section 2. Amend Subchapter II, §201, Title 26, Delaware Code by adding a new subsection to read as follows:

"(d)(1) In the exercise of supervision and regulation over public utilities, the Commission may, upon application or on its own motion, after notice and hearing, alter, in whole or in part, its supervision and regulation over some or all public utility products or services and over some or all public utilities to the extent necessary to promote and sustain adequate service at just and reasonable rates where the Commission determines that alternatives to supervision and regulation including the competitive provision of such products and services are in the public interest, Alternatives include, but are not limited to: incentive regulation, earnings sharing, categorization of services for the purposes of pricing, price caps, price indexing, ranges of authorized returns, and different returns for different services. The Commission is specifically authorized to depart from rate base, rate of return regulation when it is in the public interest and when such departure is found to promote just and reasonable rates. Any application under this subsection shall, at a minimum, include specific proposal(s), supporting statements or testimony, an analysis of the effects on the utility's regulated services provided to its customers and an implementation plan. The application shall affirmatively establish that the alteration of regulation will not adversely affect the availability, cost or quality of the regulated utility services provided to the utility's customers.

(2) The Commission shall approve or disapprove any such requests for alternative supervision and regulation within 180 days after submission thereof, except that, for good cause found, the Commission may enter an Order extending this period for an additional 90 days.

(3) The Commission shall determine how a public utility shall account for such alternatives (including cost allocations where found to be appropriate) so as to ensure that public utility customers to which such alternatives are not made available neither benefit unduly from nor unduly provide a subsidy to public utility customers to whom such alternatives are made available; provided that such accounting determination shall not thereafter be changed by the Commission except for good cause shown.

(4) The Commission, after notice and hearing, may prospectively revoke or reverse any alternative form of regulation granted hereunder where it finds that doing so is in the public interest. Where the Commission revokes or reverses a prior decision made under paragraph (1) of this subsection, the Commission shall determine that the current rates for the related products or services are just and reasonable or shall establish new rates that are just and reasonable.

(5) This subsection shall not apply to a telecommunications service provider for so long as such provider is governed by the provisions of Subchapter VII-A, Chapter 1 of this Title."

Section 3. Amend §215, Chapter 1, Title 26, Delaware Code by redesignating (e) and (f) as "(f)" and "(g)" respectively.

Section 4. Amend §215 (e), Chapter 1, Title 26, Delaware Code by adding a new subsection (e) to read as follows:

"(e)(1) Any public utility may satisfy the requirements of Section (a) (2) and (3) hereof by filing with the Commission a statement of a financing plan stating in detail:

a. those issuances or assumptions described in subsections paragraph (a) (2) and (3) hereof that it intends to make within three years following the filing; and

b. the anticipated times thereof, and

c. the anticipated costs thereof; and

d. the anticipated capitalization ratios for the public utility during that period; and

e. such other information as the Commission may require.

(2) The Commission shall review the plan for consistency with efficient and reasonable financing principles. The Commission may make such investigation and hold such hearings in the matter as it deems necessary, and thereafter may approve the plan in whole or in part with such modification and upon such terms and conditions as it deems appropriate. The Commission shall approve any financing plan when the proposed financings are to be made in accordance with law, for proper purposes and are consistent with the public interest. The Commission may require the filing of periodic reports as to the action taken pursuant to the plan. The Commission shall approve, modify, refuse, or prescribe appropriate terms and conditions with respect to any such plan within 60 days of its filing. In the absence of such action within such period of time, the proposed plan shall be deemed to be approved as filed as if the Commission itself had acted favorably theron.

The public utility may then, without further application to the Commission, make any issuance or assumption approved by the Commission.

(3) Thereafter, the public utility may file an application for approval of an amendment to an approved plan or for approval of a substitute for an approved plan, which application will be reviewed under the criteria and by the procedures provided therein for review of and action on a filing of a financing plan except that the period of review shall be 30 days. In the absence of action by the Commission within such period of time, the amendment or substitute shall be deemed to be approved."

Section 5. Amend §303 (c), Title 26, Delaware Code by striking said subsection (c) in its entirety and substituting in lieu thereof a new subsection (c) to read as follows:

"(c) (1) The Commission shall authorize a public utility to establish an individual or joint rate for any product supplied or service rendered within the State for the purposes of ensuring the State's current and future economic well-being and growth where prior to authorizing such individual or joint rate the Commission finds:

(a) that such rate is in the public interest;

(b) that such rate prevents the loss of customers, encourages customers to expand present facilities and operations in Delaware and/or attracts new customers where necessary or appropriate to promote economic development in Delaware. This finding shall include, but is not limited to, a determination that the new or existing customer or the growth in an existing customer represents at least 25 jobs and/or at least $2 million in capital expenditures;

(c) that such rate shall provide recovery of at least the incremental cost (including capital cost) of providing the relevant utility services;

(d) if, how, and to what extent any discount being authorized below a relevant standard tariff rate shall be recovered; and,

(e) the period of time during which such rate shall remain in effect, normally up to five years.

(2) In addition to the above specific findings, the Commission shall also consider, among other things, the following items:

(a) the utility's load and capacity situation;

(b) the portion that the relevant utility service makes up of the customer's total operating expenses;

(c) viable economic alternatives to the utility service available to the customer;

(d) the customer's ability to relocate, if relevant;

(e) reasonable efforts that the customer has made to secure government grants and/or other concessions; and,

(f) the effect, if any, on competitors located in Delaware of the customer(s) to which such rate may apply."

Section 6. Amend §304, Title 26, Delaware Code by designating the current section as (a) and adding a subsection (b) to read as follows:

"(b) In prescribing conditions for rate changes, the Commission is specifically authorized and empowered to conduct proceedings in which it limits the number or type of issues it will consider in determining whether or not to permit or allow such changes. The Commission may adopt or change regulations to govern such limited issue rate proceedings."

Section 7. Amend §306 (c) of Title 26 of the Delaware Code by deleting the symbol and number "$1,000,000"and substituting in lieu thereof "$2,500,000" and by adding at the end of the subsection the following:

This subsection shall not apply to any proposed rate change sought by a public utility under regulations adopted pursuant to §304 (b) of this chapter."

Section 8. Amend Subchapter V, Chapter 1, Title 26, Delaware Code by adding a new §512 to read as follows:

"§512. Settlements Are To Be Encouraged.

(a) Insofar as practicable, the Commission shall encourage the resolution of matters brought before it through the use of stipulations and settlements.

(b) The Commission's staff may be an active participant in the resolution of such matters.

(c) The Commission may upon hearing approve the resolution of matters brought before it by stipulations or settlements whether or not such stipulations or settlements are agreed to or approved by all parties where the Commission finds such resolutions to be in the public interest."

Section 9. Amend §8827 (a), Title 29, Delaware Code by striking the words "$30,000 annually" and substituting in lieu thereof the words "set as appropriate".

Section 10. Amend §8828 (4), Title 29, Delaware Code by sriking the words "and, to the extent staff of the Public Service Commission cannot be utilized" as they appear in the first sentence; and by striking the word "transportation" as it appears in the first sentence and substituting in lieu thereof the word "other" and by striking the words An aggregate sum of not less than $10,000" as it appears in the second sentence and substituting in lieu thereof the words "A budget", and by striking the words "in the budget, and if not used for this purpose shall revert to the General Fund" as they appear in the second sentence and substituting in lieu thereof the words "through the Delaware Public Service Commission Regulatory Revolving Fund".

Section 11. Amend §8830, Title 29, Delaware Code by deleting it in its entirety.

Approved July 12, 1995