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Update: Virginia Bill Introduced To Enact Retail Electric Choice, Require Utility Exit From Retail & Generation

Earlier Bill Envisions Texas-Style Model (Retailer Separated From EDC Inherits All Customers, Charges Price To Beat)

January 7, 2020

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Copyright 2010-19
Reporting by Paul Ring •

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Legislation will be introduced for Virginia's 2020 General Assembly session, "that would end monopoly control over Virginia’s electricity system, creating competition in the retail sector," proponents of the bill, the Virginia Energy Reform Act, announced today

The bill’s sponsor is Delegate Mark Keam (D), and the chief co-patron, is Delegate Lee Ware (R)

According to a news release, the Virginia Energy Reform Act would:

• "Establish a well-designed, competitive market for electricity retailers to give families and businesses a choice."

• "Require monopoly electric utilities to exit the retail services and generation businesses and be limited to just owning and maintaining the distribution system."

• "Establish a nonprofit independent entity that has no financial stake in electricity market outcomes to coordinate operation of the distribution system."

A copy of the measure to be introduced, said to be about 80 pages, was not immediately available.

Supporters of the Virginia Energy Reform Act include the Virginia Policy Law Center, Virginia Institute for Public Policy, and the R Street Institute, along with the bipartisan Virginia Energy Reform Coalition, which itself includes a range of groups such as Appalachian Voices, Clean Virginia, and Reason Foundation

Earlier, Ware pre-filed an electric choice bill, but the Virginia Energy Reform Act to be introduced will reflect various revisions

Under Ware's earlier bill, HB206 each retail customer in the Commonwealth shall have customer choice by January 1, 2022.

HB206 would provide that, not later than September 1, 2021, each incumbent electric utility shall separate from its regulated utility activities its customer energy services business activities that are otherwise also already widely available in the competitive market.

HB206 provides that, not later than January 1, 2022, each incumbent electric utility shall separate its business activities from one another into the following units:

1. An electric distribution utility;

2. An electric transmission utility;

3. A power generation company; and

4. A retail electric provider.

--- An incumbent electric utility may separate its business activities into a single electric transmission and distribution utility.

Under HB206, an electric utility shall accomplish the required separation by:

1. The creation of separate investor-owned companies, cooperatives, or municipal electric authorities; or

2. Through the sale of assets to a third party.

HB206 provides that an electric distribution utility or electric transmission utility shall not be an affiliate of any person that:

1. Owns, controls, or operates a facility that produces electricity for sale within the same power region as the utility; or

2. Sells electricity to retail customers within the same power region as the utility.

HB206 provides that the retail electric provider created under the utility's business separation would inherit and continue to serve customers at the initiation of choice

A retail electric provider separated from an incumbent electric utility under § 56-615 that is serving a retail customer on December 31, 2021, may continue to serve that customer until the customer chooses service from a different retail electric provider. For purposes of the bill, such a retail electric provider is an incumbent retail electric provider.

HB206 would set up a price to beat mechanism for the incumbent REPs

Under the bill, From January 1, 2022, until January 1, 2027, an incumbent retail electric provider shall make available to residential and small commercial retail electric customers in the service area of the incumbent electric utility from which it separated under § 56-615 utility rates that, on a bundled basis, are six percent less than the incumbent electric utility's corresponding average residential and small commercial retail electric rates, on a bundled basis, that were in effect on January 1, 2019, adjusted to reflect the wholesale power cost basis determined as provided by additional sections of the bill These rates on a bundled basis shall be known as the "price to beat" for residential and small commercial retail electric customers.

The bill sets forth mechanisms to terminate the price to beat, based on either migration and/or time.

Retail providers would serve in the POLR role.

Retail providers would handle billing and be authorized to order disconnection of customers, subject to various safeguards, including those related to weather conditions.

Under the bill, beginning on the date of introduction of customer choice in a region served by an incumbent electric utility, the electric distribution utility providing the customer's energy requirements shall bill a customer's retail electric provider for non-bypassable delivery charges as determined under § 56-628. The retail electric provider shall pay these charges.

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