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General Laws

Section 1A. (a) The department is hereby authorized and directed to require electric companies organized pursuant to the provisions of this chapter to accommodate retail access to generation services and choice of suppliers by retail customers, unless otherwise provided by this chapter. Such companies shall file plans that include, but shall not be limited to, the provisions set forth in this section.

On or before January 1, 1998, each electric company organized under the provisions of this chapter, which has not filed a plan prior to the enactment of this section, shall file with the department a detailed plan for restructuring its operations to allow for the introduction of retail competition in generation supply in accordance with the provisions of this chapter. The department shall review each plan and make an express finding to determine whether such plan is consistent or substantially complies with the provisions of this chapter. An electric company that has filed a plan which substantially complies or is consistent with this chapter as determined by the department shall not be required to file a new plan, and the department shall allow such plans previously approved or pending before the department to be implemented. Approval of such previously filed or approved plans shall be deemed to satisfy the requirements contained in section 1G including for the department to conduct an audit of previously incurred costs and find reasonable mitigation of transition costs, and shall allow the department to approve charges for transition costs, provided that the department shall audit, review and reconcile the difference between projected transition costs and actual transition costs by March 1, 2000, and every 18 months, thereafter and provided that such approved plans provide a reduction of at least 10 per cent for customers choosing the standard service transition rate from the average of undiscounted rates for the sale of electricity in effect during August 1997 or such other date as the department may determine. Each plan shall be designed to implement a restructured electric generation market by March 1, 1998. Each electric company shall offer retail access to all customers as of said date. The department may issue an initial order prior to March 1, 1998, approving any plan filed pursuant to this section subject to further review and reconciliation in order to allow implementation of retail access for all customers after March 1, 1998.

Each restructuring plan shall include, without limitation, the following: an estimate and detailed accounting of total transition costs eligible for recovery pursuant to subsection (b) of section 1G; a description of the company’s strategies to mitigate such transition costs; unbundled prices or rates for generation, distribution, transmission, and other services; proposed charges for the recovery of transition costs; proposed programs to provide universal service for all customers; proposed programs and recovery mechanisms to promote energy conservation and demand-side management; procedures for ensuring direct retail access to all electric generation suppliers; and discussions of the impact of the plan on the company’s employees and the communities served by the company.

The department shall review the restructuring plan filed by each electric company and shall issue an order accepting, modifying, or rejecting such plan at the earliest date possible. If the department rejects a restructuring plan, the department shall state the specific reasons for rejection and direct the company to file an alternative plan addressing these objections within 30 days of the department’s order rejecting the plan. The department shall review this alternative plan and issue a final order within 60 days of the filing of the revised plan.

(b)(1) If an electric company chooses to divest itself of its existing non-nuclear generation facilities, such electric company shall transfer or separate ownership of generation, transmission, and distribution facilities into independent affiliates of the electric company or functionally separate such facilities within 30 business days of federal approval. The transmission facilities owned by the electric company, including all rights-of-way, property, fiber optic cable, and other tangible or intangible assets used directly or indirectly by the utility in the transmission of electricity, as of December 31, 1996, or acquired thereafter, shall be transferred to a transmission company at a price that shall equal the book value of said transmission facilities on the electric company’s accounts net of depreciation as of the date of transfer. The distribution facilities owned by an electric company, including all rights-of-way, property, fiber optic cable, and other tangible or intangible assets used directly or indirectly by the utility in the distribution of electricity, as of December 31, 1996, or acquired thereafter, shall be transferred to a successor distribution company at a price that shall equal the book value of the distribution facilities on the electric company’s accounts net of depreciation as of the date of transfer. The newly created distribution companies shall be prohibited from selling electricity at retail, except as provided in sections 1B to 1F, inclusive, and shall be prohibited from directly owning, operating, or controlling transmission facilities, generating facilities, or marketing affiliates, and shall be prohibited from selling, leasing, renting, or otherwise transferring all or a portion of any assets it obtains from the utility pursuant to this section without the expressed approval of the department. In providing such approval, the department shall conduct evidentiary hearings and must issue a finding that such transfers will mitigate to the maximum extent possible the total amount of transition costs of the utility and will minimize the impact of recovery of transition costs on ratepayers in the commonwealth. Except as otherwise provided in this section, an electric company divesting existing non-nuclear generation facilities shall be in no way disadvantaged by virtue of the fact that it has or plans to divest its existing electricity generating facilities. In the event that an electric company chooses to divest its existing generation facilities, such electric company shall demonstrate to the department that the sale process is equitable and maximizes the value of the existing generation facilities being sold.

(2) For the purposes of this section and sections 1B to 1H, inclusive, the requirement to divest generation facilities shall be deemed satisfied if an electric company divests its non-nuclear generation facilities by (i) selling such non-nuclear facilities in a competitive auction or sale in a process approved by the department which shall ensure complete, uninhibited, non-discriminatory access to all data and information by any and all interested parties seeking to participate in such auction or sale; provided, however, that an affiliated company may participate and bid in such competitive auction or sale; or (ii) transferring such non-nuclear generation facilities and purchase power contracts to an affiliated company at a value determined to be reasonable and appropriate by the department including but not limited to a value based on the sale value of comparable plants through prior divestiture actions; provided, however, that in no instance shall such minimum price be lower than the highest price per kilowattage of capacity for any capacity sold in New England, as determined by the department; provided, further, that in the case of the divestiture of any non-nuclear generation facility currently containing only combustion turbine generation capacity of less than 50 megawatts but situated on a site containing free standing retired or unused structures formerly containing steam electric generating units of greater than 200 megawatts capacity, the electric company so divesting shall cause, either through its own efforts prior to said divestiture or through assignment of such obligation to the purchaser of each facility in an agreement approved by the department, said unused structures to be appropriately removed and decommissioned, which may be subject to a re-use plan. The minimum price for the transfer of such assets pursuant to this paragraph shall be determined and approved by the department prior to any such proceeding.

(3) All proceeds from any such divestiture and sale of generation facilities pursuant to paragraphs (1) and (2), net of tax effects and less any other adjustments approved by the department that inure to the benefit of ratepayers, shall be applied to reduce the amount of the selling electric company’s transition costs.

(c) If an electric company chooses not to sell its existing non-nuclear generation facilities, then the electric company’s recovery of transition costs shall be net of any market value in excess of book value of the non-divested non-nuclear facilities, as determined in this section and in accordance with section 1G, and it shall transfer all of its non-nuclear generation facilities and purchased power contracts to an affiliate that is a generating company at a price to be determined and approved by the department herein prior to any such proceeding; and in accordance with subsection (b). Such generation company affiliate shall exist separate from and independent of the distribution and transmission operations of such electric company. There shall exist strict separation between such generation affiliate and the distribution and transmission operations of such electric company. Both nuclear and non-nuclear generation facilities and the electric company’s purchased power contracts shall be subject to a valuation by the department where such facilities are either sold or assessed by an assessor independent of the electric company or otherwise valued pursuant to the provisions of this chapter, to determine the maximum market value of such assets that could reasonably be realized after an open and competitive sale, and the electric company’s recovery of transition costs shall be net of any market value in excess of book value as determined in this section in a competitive market. A generation company formed pursuant to this section shall be prohibited from acquiring new generation facilities as of March 1, 1998. If an electric company chooses not to divest all of its non-nuclear generating facilities, then the electric company’s recovery of transition costs shall be net of any market value in excess of book value of the non-divested non-nuclear facilities, as determined in this section and in accordance with section 1G. Such electric company shall not be assessed or charged any costs through its rates established by the department to transfer such generation facilities to an unregulated affiliate or subsidiary or as a consequence of transferring such generation facilities to an unregulated affiliate or subsidiary; provided, however, that should any generation facility so transferred to an unregulated subsidiary be further sold, transferred to, or disposed of, to a third party within 48 months of the generation facility’s transfer to an unregulated affiliate or subsidiary of the electric company, then any amount recovered in such a sale, transfer, or disposition in excess of the remaining net book value of the generation facility shall be applied to reduce the amount of the selling electric company’s transition costs. Except as otherwise provided in this section, an electric company retaining all or a portion of its existing generation facilities shall be in no way disadvantaged by virtue of the fact that it is so retaining existing generation facilities.

(d) In the event that (i) an electric company with generation facilities in the commonwealth owns, or has an affiliate that owns, generation facilities in another state in the New England region, and (ii) an electric company or its affiliate continues to operate one or more generation facilities in another state in the New England region, then the electric company, should it choose not to divest its existing fossil-fuel fired generation facilities and its existing hydroelectric generation facilities, shall be allowed for purposes of efficiency and local ownership of local generation facilities, to retain any such facilities as set forth in subsection (c); provided, however, that an electric company not divesting its existing fossil-fuel fired and hydroelectric generation facilities shall not recover through rates, charges, or elsewhere any amount of transition costs associated with the retained existing fossil-fuel fired generation facilities and existing hydroelectric generation facilities. Each reference to existing generation facilities in this section shall include, without limitation, existing generation facilities, regardless of size, and associated property. The department should determine a value for any facilities retained pursuant to this subsection and reduce the amount of the electric company’s transition costs by such value in accordance with subsection (b).

(e) A generation company shall not be subject to regulation as a public utility or as an electric company, except as specifically provided in this chapter. A wholesale generation company shall be subject to regulation only as specifically provided in this chapter.

(f) Neither this section nor sections 1B to 1H, inclusive, shall preclude an electric company or a distribution company from constructing, owning and operating generation facilities that produce solar energy; provided, however, that such company shall not construct, own or operate more than 25 megawatts of such facilities; provided further, that such generation facilities shall receive department approval for cost recovery prior to June 30, 2014 and are constructed prior to June 30, 2015. Electric companies and distribution companies shall be prohibited from selling, leasing, renting or otherwise transferring all or a portion of a solar generation facility without prior approval by the department. Upon the filing by an electric company or a distribution company of a petition for pre-approval of cost recovery for a solar energy generating facility, the department shall determine whether the proposal is consistent with the commonwealth’s energy policy and could be used to satisfy, in part, the renewable energy portfolio standard requirements under section 11F of chapter 25A. The department shall issue an order within 6 months after the date of filing by the electric company or distribution company. The department may adopt such rules and regulations as may be necessary to implement this subsection. Electric and distribution companies shall not sell, lease, rent or otherwise transfer all or a portion of a solar generation facility without prior approval by the department.

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