The rules provide that on January 1, 1999, twenty (20%) of the customers whose peak demand is 1 MW or greater shall be able to participate in the competitive market and twenty percent (20%) of aggregated customers whose demand is between 40 KWs and 1 MW may also participate in the competitive market. The rules also state that one-half of one percent of all residential customers may participate in the market on January 1, 1999. Each quarter, an additional one-half of one percent of the residential customer base will be eligible to participate. Full competition will be implemented on January 1, 2001.
The rules provide that all competitive electric suppliers, including aggregators, must obtain a certificate of convenience and necessity (the "Certificate") from the Commission. To obtain the Certificate, the supplier must provide the Commission with a description of: the electric services to be provided; a tariff which states the maximum rate and the terms and conditions that will apply; and certain financial documentation, including the suppliers most recent income statement and balance sheet and projected financial statements. Under the rules, the Commission may refuse to issue the Certificate to a supplier if the supplier fails to demonstrate that issuance of the Certificate will serve the public interest.
The rules also require each supplier to file all long-term contracts with the Commission. If any such contract does not comply with the rules or with the suppliers approved tariff, then the contract will not become effective until it is approved by the Commission. A suppliers request for changes in the maximum rates or changes in the terms and conditions of service in its tariff must also be approved by the Commission prior to becoming effective.
The rules provide that after January 1, 2001, the distribution company shall be the supplier of last resort and must provide standard offer services to all requesting ratepayers under a regulated rate. The energy obtained by the distribution company to service the standard offer can be obtained either through purchases on the spot market or through a competitive bidding process. The rules also require each utility to file a report by September 15, 1998 detailing how it will reduce the rates to all standard offer customers by three to five percent.
Beginning January 1, 1999 the rules state that the energy portfolio of all competitive suppliers must contain at least .2% supply from new solar energy resources. The solar energy can either be purchased or generated by the seller and includes photovoltaic and solar thermal resources. The rules define new solar resources as those installed on or after January 1, 1997. This solar portfolio requirement increases annually such that by 2003 a suppliers portfolio must include at least one percent from new solar resources. For 1999 and 2000, the solar portfolio requirement applies only to competitive suppliers. After 2000, however, the requirement is generally applicable. If a competitive supplier fails to meet the solar portfolio requirement, then the Commission may impose a penalty and may void the suppliers contracts.
Utilities will have a reasonable opportunity to recover their unmitigated stranded costs under the rules. In a prior order, the Commission ruled that 100% recovery of stranded costs would be guaranteed if the utility divested itself of its generating assets. The rules provide that stranded costs will be recovered by a transition charge that will only be paid by customers who participate in the competitive market. The rules note that reductions in energy demand caused by self-generation shall not be used in the calculation or recovery of stranded costs.
Competitive suppliers serving customers with a demand of 1 MW or less must provide these customers with the following information: the price to be charged for energy; the average energy price by customer class; and fuel mix characteristics and emission characteristics of the suppliers portfolio. In addition, the rules provide that suppliers must include this information in a prominent position on their written marketing materials.