CHAPTER 73

FORMERLY

SENATE BILL NO. 48

AS AMENDED BY

SENATE AMENDMENT NO. 2

AN ACT TO AMEND CHAPTER 10 OF TITLE 26 OF THE DELAWARE CODE RELATING TO ELECTRIC UTILITY RESTRUCTURING AND ADDING PROVISIONS CONFIRMING THE DUTY OF STANDARD OFFER SUPPLIERS, ELECTRIC SUPPLIERS AND ELECTRIC DISTRIBUTION COMPANIES TO MAINTAIN SAFE, EFFICIENT, ADEQUATE, AND RELIABLE SERVICES, AND ALSO ADDING A NEW SECTION AUTHORIZING THE PUBLIC SERVICE COMMISSION TO ASSESS CIVIL PENALTIES, TO SUSPEND AND REVOKE AUTHORIZATIONS, AND TO ENTER PRELIMINARY AND FINAL REMEDIAL ORDERS.

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

Section 1. Declaration of Policy.

It is the policy of this State that its citizens be assured that their electricity needs will be met. This Act provides the Commission, in a partially deregulated environment, enforcement powers to require standard offer service suppliers, electric suppliers, and electric distribution companies to provide sufficient, efficient, adequate, and reliable public utility facilities, products, and services to the citizens of the State.

Section 2. This Act may be known and referred to as the "Electric Service Reliability and Adequacy Act of 2003."

Section 3. Amend Chapter 10, Title 26 of the Delaware Code by striking the present §1008 in its entirety and substituting in lieu thereof the following:

"§1008. Duties of electric distribution companies.

Each electric distribution company shall maintain its facilities and provide products and services which are safe, efficient, sufficient, adequate, and reliable. Each electric distribution company shall implement procedures to require all electric suppliers to deliver energy to the electric distribution company at locations and in amounts which are adequate to meet each supplier's obligations to its customers."

Section 4. Amend §1010(a)(2), Title 26 of the Delaware Code by striking in its entirety the last sentence thereof beginning with the phrase "Any standard offer service" and ending with the phrase "safe and reliable" and substituting in lieu thereof as the final paragraph thereof the following:

"The standard offer service supplier shall provide standard offer service which is safe, efficient, adequate, and reliable. The Commission may take appropriate actions to ensure that the standard offer service supplier provides such safe, adequate, efficient, and reliable standard offer service."

Section 5. Amend §1010(b)(2), Title 26 of the Delaware Code by striking in its entirety the last sentence thereof which begins with the words "The Commission" and ends with the words "public necessity and convenience" and substituting in lieu thereof as the final paragraph thereof the following:

"In fulfilling this obligation to provide standard offer service, DEC shall provide electric supply service which is safe, adequate, efficient, and reliable. The Commission may take appropriate actions to ensure that DEC provides such safe, adequate, efficient, and reliable standard offer service. The Commission may choose another electric supplier to provide standard offer service to the DEC's customers, through a Commission-supervised competitive bidding process or otherwise, only if DEC is unable to provide standard offer service in its service territory or if it is established, after notice and hearing, that the standard offer service rendered by DEC is inadequate or unreliable.”

Section 6. Amend Title 26, Chapter 10, of the Delaware Code by adding a new section, §1019, to read as follows:

"§1019. Enforcement, penalties, and sanctions.

(a) If after hearing, upon notice the Commission determines that any standard offer service supplier, electric supplier or electric distribution company has, as a matter of past or present fact arising after enactment of this section:

(1) failed to comply with or violated any term or condition in any certificate, permit, or other instrument or authorization granted by the Commission;

(2) failed to comply with or violated any of the provisions of this Title or any rule, or regulation, promulgated by the Commission;

(3) failed to comply with or violated any order entered by the Commission; or

(4) materially failed to provide facilities, products, or services which are safe, efficient, adequate, or reliable;

then such standard offer service supplier, electric supplier or electric distribution company shall be liable to the State for a civil penalty; provided however, that no penalty shall be assessed under paragraph (4) unless the material failure is of the type that the standard offer service supplier, the electric supplier, or electric distribution company knew or should have known as a result of standards, policies or procedures previously articulated by the Commission or through generally accepted industry standards or practices that its action(s) or inaction(s) would have been reasonably likely to cause the material failure. Such penalty shall not exceed $5,000 (five thousand dollars) for each violation, with the overall penalty not to exceed an amount reasonable and appropriate for the violation. Each day of non-compliance shall be treated as a separate violation.

(b) The Commission shall determine the amount of any penalty to be assessed under subsection (a) of this section. In making such determination, the Commission shall consider:

(1) the nature, circumstances, extent, and gravity of the violation;

(2) the standard offer service supplier, electric supplier or electric distribution company's level of culpability, history of prior violations, and ability to pay;

(3) the good faith efforts of the standard offer service supplier, electric supplier or electric distribution company in attempting to resolve the violation after notification of non-compliance;

(4) in the case of an electric cooperative, the Commission shall not assess any monetary penalty that would adversely impact the financial stability of such an entity and any monetary penalty that is assessed against an electric cooperative shall not exceed $1,000 (one thousand dollars) for each violation, which each day of non-compliance shall be treated as a separate violation.

(c) Any penalty imposed under this section may be recovered by an action instituted in the name of the State in the Superior Court. In such an action for recovery, the validity and amount of such penalty shall not be subject to review. In any such action, the State may recover the penalty, interest, costs, and reasonable attorney's fees.

(d) If the Commission determines that a standard offer service supplier, electric supplier or electric distribution company will, as a result of present conditions or future threatened or contemplated action:

(1) fail to comply with or violate any term or condition in any certificate, permit, or other instrument or authorization granted by the Commission;

(2) fail to comply with or violate any of the provisions in this Title or any rule, or regulation, promulgated by the Commission;

(3) fail to comply with or violate any order entered by the Commission; or

(4) materially fail to provide facilities, products, or services, which are safe, efficient, adequate, or reliable;

then the Commission may after hearing, upon notice, enter such orders to ensure compliance by the standard offer service supplier, electric supplier or electric distribution company. In exercising this authority, the Commission may enter immediate or prompt preliminary orders, to ensure compliance pending a final determination and order, in those instances where the public interest requires immediate or prompt action or relief. In its process for considering whether to issue a preliminary order, the Commission shall conduct an appropriate proceeding, upon appropriate notice, given the relief sought. If such a preliminary order is issued, the Commission shall thereafter, promptly schedule and begin the process to consider a final determination and order, which proceeding for final determination and order shall be conducted with notice and hearings consistent with the requirement of 29 Del. C. Ch. 101.

(e) If after hearing, upon notice, the Commission determines that any standard offer service supplier, electric supplier or electric distribution company has, as a matter of past or present fact occurring after enactment of this section:

(1) failed to comply with or violated any term or condition in any certificate, permit or other instrument or authorization granted by the Commission;

(2) failed to comply with or violated any of the provisions of this Title or any rule, or regulation, promulgated by the Commission;

(3) failed to comply with or violated any order entered by the Commission; or

(4) materially failed to provide facilities, products, or services, which are safe, efficient, adequate, or reliable;

then the Commission may enter an order modifying, suspending, or revoking any certificate, permit, or authorization previously granted by the Commission to such standard offer service supplier, electric supplier or electric distribution company. Such remedy shall only be applied when the gravity of the violation warrants such relief. Revocation of a certificate, permit, or authorization shall only be permitted, when there is a finding of a gross violation(s) or a pervasive pattern of conduct in violation of this section. Additionally, such remedy shall only be applied with respect to paragraph (4) if the material failure is of the type that the standard offer service supplier, the electric supplier, or electric distribution company knew or should have known as a result of standards, policies or procedures previously articulated by the Commission or through generally accepted industry standards or practices that its action(s) or inaction(s) would have been reasonably likely to cause the material failure.

(f) In making the determination under subsection (e) to modify, suspend, or revoke any prior certificate, permit, or authorization, the Commission shall consider:

(1) the factors listed in subsection (b) of this section;

(2) the ability of penalties and other sanctions to ensure compliance without the need to suspend or revoke; and

(3) the impact on the public interest by such modification, suspension, or revocation.

(g) The penalty and other sanctions authorized by this section shall be in addition to any other penalties or sanctions authorized by law. The Commission may exercise the power granted in subsection (e) of this section in addition to the imposition of any penalty or other sanction imposed under this section or any other provision of the law. A final order with respect to any findings made or penalties or other sanctions imposed under this section shall be subject to the appeal procedures of 26 Del. C. §510.

(h) The Commission may recover the costs of any proceeding instituted under this section in accordance with the provisions of §§114 and 1012(c)(2) of this Title.

(i) This section shall apply to electric distribution companies, electric suppliers, DP & L and DEC, and any successors or assigns, except that this section shall not apply to electric distribution companies that are exempt from the jurisdiction of the Commission pursuant to §202 of this Title.”

Section 7. This Act shall become effective upon its enactment into law.

Approved June 30, 2003