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S.62

AN ACT RELATING TO ELECTRIC INDUSTRY RESTRUCTURING AND ELECTRIC PRICE STABILIZATION

It is hereby enacted by the General Assembly of the State of Vermont: Sec. 1. FINDINGS AND PURPOSE

(a) The general assembly finds that:

(1) The franchise system of regulated electric utilities, created to maximize the benefits of electricity to America's families and businesses, has served the nation and Vermont well. However, developments in the past few decades have shown that regulation alone cannot prevent substantial inefficiency in the electric utility industry, resulting in the prices for electricity charged to ratepayers being higher than the costs of that electricity. Energy systems have been marked by profound technological and market changes, including free trade agreements, new energy marketers, new and refined energy efficiency technologies, combined-cycle gas generation, more effective wind and biomass technologies, new dispersed load management systems, and many others. While new technologies, suppliers, and regulatory techniques permit the introduction of customer choice and competition to electricity markets, the essential benefits of the existing system must be preserved, with its environmental protections; its encouragement of the development of sustainable, renewable energy supplies; and its emphasis upon the efficient use of energy resources and cost-effective, demand-side management.

(2) Most Vermont utility rates are above national averages for every customerclass, and Vermont utilities now face a period of substantially increasing power costs while the other states in our region are expecting declining electricity prices. Neighboring states and competitors elsewhere are pursuing reforms to further drive their electricity costs down. Pursuing comparable reforms will enhance the long-term competitiveness of Vermont’s businesses and economy.

(3) Investment in energy efficiency, which has accomplished significant energy savings and has avoided the need for electric energy and capacity in Vermont, is declining. Demand-side management programs have traditionally been provided by franchised utilities. However, with increasing emphasis on price competition, investment in cost-effective savings is declining. In Vermont, these investments declined by 20 percent between 1994 and 1995. Moreover, potential innovations in energy service industries are hindered by the lack of choice among electricity providers. In a restructured electric industry, new ways to deliver these benefits must be found.

(4) Investment in renewable energy technologies, which over the past 15 years has enabled Vermont to meet all of its growth in electric demand, is declining. In recent years, new investment has declined precipitously, to the detriment of the system's long-term price-stability, reliability, and the environment.

(5) Existing and new environmental challenges, from emissions of mercury and harmful small particulates to global warming, to the management of nuclear waste, and to the adverse ecological and societal effects of other forms of electrical generation should be addressed by a system which moves toward the sustainable, environmentallysound production of electricity and which encourages acquisition of cost-effective, end-use efficiency resources consistent with the principles of least cost integrated planning and state energy policy. The pressures to reduce internalized, short-term costs have improved the economic efficiency of certain utilities, but they also threaten to increase reliance on energy resources that may appear less costly, in the short term, or to the immediate user of the energy, but which are more environmentally damaging over time and which may have greater overall societal costs.

(6) Support for low income households has also been declining. Between 1994 and 1996, federal funds for the Low-Income Home Energy Assistance Program were reduced by 45 percent. Vermont eliminated electric costs from the fuel assistance program in 1996. Retail choice may affect how electricity is bought and sold, and the prices paid for electricity, in ways that require action by the state to protect low income households.

(7) Currently, some of the state's large commercial and industrial customers enjoy significant flexibility in electric services and rates from their local franchise utility. Special contracts for interruptible and other services provide them with flexibility and lower prices and offer benefits for the system as a whole. However, such alternative arrangements are not now available to smaller commercial and residential customers.

(8) The need to preserve system reliability calls for the swift but careful resolution of the many issues facing the industry.

(9) The market for electricity in which Vermont operates is regional in nature and has been managed for a quarter of a century as a single pool. As other New Englandstates also move to direct retail access, it appears that new regional structures and institutions must be designed to give Vermont customers an equal opportunity to participate in these new markets. This requires reform within Vermont as well as continuing participation in regional restructuring activities.

(b) It is the purpose of this act to create an efficiently competitive electric system, subject to regulatory oversight, that will:

(1) produce gains in economic efficiency that can improve the well-being of society and promote the economic vitality of the state;

(2) maximize customer value at the lowest life cycle cost, including environmental and economic costs, to society;

(3) lower electricity costs to all classes of customers, and enhance the competitiveness of Vermont's businesses and economy, without adversely affecting environmental values;

(4) treat all consumers fairly, taking into account the costs they impose and the benefits they derive, both during and after the transition to a restructured industry, while understanding that in a competitive market prices charged to different customers may not be equal;

(5) treat fairly all competing providers and sellers of electricity, taking into account their responsiveness to the public policies of this state. Nothing in this chapter is intended to increase the competitive advantage of energy generators who externalize societal costs in order to obtain an unfair price advantage over competitors whointernalize those costs;

(6) provide opportunities and incentives for continued improvement in the technical efficiency of the production, delivery, and use of electricity;

(7) improve the well-being of residential electric customers, and minimize the risk of harm to low income customers, by lowering electricity costs and by implementing measures to ensure that low income customers can afford and manage their electricity usage;

(8) provide an environmentally-responsible, sustainable electric supply system for the long-term good of Vermont, that encourages the efficient use of energy resources and the use of cost-effective demand-side management measures; and

(9) ensure the continuation of reliable transmission and distribution services.

(c) In order to achieve these goals, the general assembly concludes that significant structural, financial, and regulatory reform of the Vermont electric system is now essential. Moreover, Vermont will be best served by charting its own plan of action, and not merely by reacting to changes imposed by the federal government, the region’s largest utilities, neighboring states, or other entities. Vermont’s own policies and goals, such as those identified in the 14 principles of the Vermont Roundtable on Electric Industry Restructuring and contained in Appendix E of "The Power to Choose," the December 30, 1996 report of the public service board in its Docket 5854, should guide the restructuring of the electric industry.

(d) By this act, the general assembly intends to authorize customer choice ofelectricity suppliers, effective competition among those suppliers, and the structural reforms and regulatory oversight needed to promote competition, enhance the protection of the environment, encourage the efficient use of energy resources and the use of cost-effective demand-side management measures, and advance the public good.

(e) Because continued regulatory oversight of the electric industry will remain essential to promote effective competition, and to protect consumers and the public good, the general assembly intends to authorize and direct the public service board to develop rules, regulations, and procedures to allow the board, the department of public service, and the attorney general to supervise, monitor, and adjust both the transition to and the ongoing operation of a restructured electric industry.

Sec. 2. 30 V.S.A. chapter 89 is added to read:

CHAPTER 89. ELECTRIC INDUSTRY RESTRUCTURING

§ 8001. ELECTRIC INDUSTRY GOALS

(a) The regulation of the electric industry shall be designed and implemented to achieve the following goals:

(1) Meaningful choice. All classes of consumers shall be allowed to participate equitably in the benefits of restructuring. Retail consumers shall be able to freely choose the retail company and the fuel source or fuel source mix from which they will receive electricity, and to combine with other consumers for such purposes, or to generate electricity for their own consumption. Retail consumers shall be provided with the necessary information to make informed, meaningful choices for electrical services andfor environmental outcomes. Markets and regulatory environments for the electric industry are to be made more flexible to increase consumers’ opportunities, to obtain reduced costs, improved efficiency, and less environmental degradation in the production, delivery, and use of electricity, and to increase consumer value at the least cost to society by promoting new service offerings, improved productivity, and technological innovations in energy supply, and by enhancing the competitive position of environmentally sound technologies that use renewable energy and are sustainable.

(2) Fair treatment. All producers and consumers shall be treated fairly, according to the costs they impose and benefits they derive, both during and after the transition to a restructured industry, understanding that in a competitive market, prices charged to different customers may not be equal.

(3) Quality service. Universal access to safe, efficient and reliable electric distribution service shall be preserved. Public health and safety shall be maintained or improved.

(4) Consumer protection. Customer service protections and related safeguards shall be preserved, and public accountability and public participation shall be preserved.

(5) Environmental quality. Environmental quality shall be protected and promoted.

(6) Renewable energy. Renewable energy resources shall be developed, commercialized and used at the existing or an improved rate, in facilities that are environmentally sound, and by means of technologies that are sustainable.

(7) Energy efficiency. The continued acquisition of cost-effective end-use energy efficiency measures shall be preserved and enhanced in a manner consistent with the principles of least cost integrated planning and with state energy policy.

(8) Competition. The transition and restructuring of the electric utility industry shall prevent anticompetitive effects. Where prevention is not possible, regulatory and law enforcement agencies shall be available to take ameliorative actions to protect the public.

(9) Recovery of above-market costs. Existing utilities may request the opportunity to recover a fair portion of their prudently incurred above-market costs, provided that recovery of such costs is just and reasonable, and will promote the public good of the state. In determining who should pay for discretionary utility investment decisions that appeared to be reasonable at the time of the decision but have now turned out to be unsuccessful, a fair apportionment of the costs of such decisions would split payments evenly between utility shareholders and ratepayers, provided that such an apportionment is constitutionally permissible, preserves the continued financial integrity of existing utilities, and does not adversely affect the public good.

(b) The public service board shall provide, by order or rule, such regulations and procedures as are necessary to allow the board and the department of public service to implement and supervise, in accordance with the provisions of this title, both a transition to and the ongoing operation of a restructured electric industry.

§ 8002. DEFINITIONS

For purposes of this chapter:

(1) "Above-market costs" means the excess of the book value of an existing utility’s generation and generation-related assets over the assumed market value of such assets.

(2) "Aggregating agent" means an entity that organizes retail consumers into buying groups, but that is not a retail company.

(3) "Bundled electric service" means the combining and delivery of electricity services with other services not directly related to the provision of electricity under a single retail sales agreement between a retail company and a final consumer.

(4) "Competitive service" means generation, retail sales, and such other products, services, and functions relating to electricity other than transmission and distribution services for which the public service board by rule or order determines competition will be of benefit to consumers.

(5) "Distribution company" means any person or company under the jurisdiction of the public service board that is engaged in the provision of distribution service to retail consumers.

(6) "Distribution service" means the delivery of electricity other than electricity from self-generation from any source to a retail consumer.

(7) "Efficiency utility" means the company designated by the public service board under section 8025 of this title to acquire energy efficiency resources throughout the state as provided for in this chapter.

(8) "Emerging technology" means a technology that the board has determined possesses proven technical feasibility, but requires a process of orderly sustained development to become competitive in a market.

(9) "Existing utility" means a company, except for a municipal electric utility subject to the provisions of chapter 79 of this title or an electric cooperative subject to the provisions of chapter 81 of this title providing electric transmission or distribution service under the supervision of the board on January 1, 1997.

(10) "Functional separation" means the implementation by a company of at least one of the following:

(A) separation of transmission and distribution company functions, as defined in this chapter, into a legal entity or entities, which may be partially or wholly owned by a company which also owns companies performing competitive services, but for which the board has found:

(i) that the legal entity or entities performing transmission and distribution functions have and will have, with respect to any affiliate or parent company, no joint or common debt, obligations, or securities, nor any joint or common directors, officers, or other personnel, including marketing, sales, public relations, legal, or regulatory personnel, except for the chief executive officer and chief financial officer of the transmission or distribution company; and

(ii) that codes of conduct, regulations and any other necessary provisions are in place and enforceable by the board and department to prevent, where possible, andotherwise to minimize, detect and correct any anticompetitive activities; or

(B) separation of transmission and distribution company functions, as defined in this chapter, into legal entities separate from any legal entities performing competitive services that are without:

(i) any joint or common ownership or control;

(ii) any joint or common debt, obligations, or securities;

(iii) any joint or common directors or other personnel; or

(iv) any other relationship with such competitive services such that employees, officers and owners of the transmission or distribution company have any interest in common with those of a company performing a competitive service.

(11) "Generation company" means any person or company owning or operating electric generation resources within the state, and under the jurisdiction of the public service board.

(12) "Mitigation" means net reductions to an existing utility's costs that would not have occurred but for the actions of that utility.

(13) "Monopoly service" means transmission, distribution, and other products, services, and functions relating to electricity for which the public service board by rule or order determines competition will not be of benefit to consumers.

(14) "Renewable technology" means a technology that relies on a resource that is being consumed at a harvest rate at or below its natural regeneration rate.

(A) For purposes of this section, methane gas and other flammable gasesproduced by the decay of landfill and agricultural wastes shall be considered renewable energy resources, but no form of solid waste, other than agricultural or silvicultural waste, shall be considered renewable.

(B) For purposes of this section, no form of nuclear fuel shall be considered renewable.

(C) A technology may be deemed to be renewable, even for installations currently using nonrenewable fuels, if the board finds all of the following:

(i) that the technology is an emerging technology that holds special promise for enabling or enhancing the future sustainable use of renewable resources,

(ii) that the technology is significantly less polluting than existing technologies for using similar fossil fuels, and as such, warrants special consideration in the public interest,

(iii) that the technology is not in widespread use for utility applications, will be readily convertible to renewable fuels, and is significantly less expensive with fossil than renewable fuels, and

(iv) that the use of the technology with fossil fuels will accelerate its use with renewable fuels.

(15) "Retail company" means any person or company under the jurisdiction of the public service board that is engaged in the sale of electricity to retail consumers in this state.

(16) "Retail consumer" means any end-use consumer of electricity other than self-generation electricity, whether or not delivered by a distribution company.

(17) "Retail consumption" means the use of electricity other than electricity from self-generation by a retail consumer.

(18) "Retail service" means the provision of electricity other than electricity from self-generation to a retail consumer.

(19) "Self-generation" means the production of electricity by an end-use consumer of electricity for its own consumption on the same premises where that energy is consumed and using a generation facility owned and controlled by the same consumer.

(20) "Small electric company" means an existing utility engaged in the manufacture, distribution, or retail sale of electricity, excluding municipal or cooperative electric utilities, that served less than 2,000 retail consumers on January 1, 1997.

(21) "Sustainable technology" means a technology that the board has determined meets the needs of the present without compromising the ability of future generations to meet their needs and, specifically, depletes renewable resources at harvest rates at or below their natural regeneration rates, depletes nonrenewable resources at a rate limited to the rate of creation of renewable substitutes, and results in waste streams or pollution emissions that do not exceed the relevant assimilative capacities of affected ecosystems. In determining technologies that are deemed sustainable for purposes of this chapter, the board shall consider the environmental effects, economic impacts and sustainability of the fuel cycle employed and other resources consumed, as well as the technology’s visual and land use impacts. For purposes of this chapter, no form of nuclear fuel or solidwaste, other than agricultural or silvicultural waste, shall be considered sustainable.

(22) "Tier one renewable technology" means any renewable and sustainable electric generation technology employed at a specific generating facility that has a capacity under 80 megawatts and, in the case of a hydroelectric facility:

(A) possesses and operates in compliance with a Federal Energy Regulatory Commission operating license and a water quality certification from each applicable state, or

(B) in case of a Vermont hydroelectric facility that is not required to obtain water quality certification, has complied with the Vermont water quality standards and all other applicable provisions of Vermont law, and taken any actions required under 10 V.S.A. § 1003.

(23) "Tier two renewable technology" means a technology that has been found by the board to be a renewable, sustainable and emerging electric generating technology and that is employed at a specific generating facility that entered commercial service (or, for self-generation, began regular production of electricity) for the first time after January 1, 1998, or that was built by construction that commenced after July 1, 1997.

(24) "Transmission company" means any person or company that is engaged in transmission of electricity other than the provision of distribution service to retail consumers.

§ 8003. PREREQUISITES TO A COMPETITIVE MARKET FOR ELECTRICITY THAT

IS IN THE PUBLIC INTEREST

(a) The general assembly finds that a competitive market for the purchase and sale of electricity and other competitive services is in the long-term interests of the public, but that there are certain prerequisites needed to create an effectively competitive market that is in the public interest.

(b)(1) On or before March 1, 1998, the public service board shall issue an order determining whether, and for which services, competition in electricity will promote the general good of the state. The board’s order making such determination shall include findings and conclusions concerning whether the following prerequisites to effective competition exist in Vermont:

(A) An effectively competitive market structure for electricity exists, including the readiness of municipal and cooperative electric companies, of consumers and consumer aggregators, and of others necessary to perform the functions for each competitive service, that is consistent with effective competition, sufficient to permit reduction or elimination of price regulation without harm to consumers. In considering this matter the board shall by order or rule establish a definition of "effective competition".

(B) A final determination has been made, pursuant to section 8004 of this title, concerning whether existing utilities may retain functionally separate affiliates in both monopoly and competitive services, and if affiliated companies are permitted, a finaldetermination has been made concerning the process by which functionally separate affiliates will operate without adverse effects on the competitive market.

(C) Consumers are sufficiently familiar with their opportunities and responsibilities in a competitive market for electricity such that they are ready to act in their own economic interests, and will be protected from the exercise of market power, without prior regulatory approval of prices.

(D) Vermont has the regulatory standards and enforcement capacity so that consumer protection expectations can be achieved, including expectations relating to labeling, environmental outcomes, and unfair or deceptive trade practices.

(E) Vermont has adequate antitrust enforcement capacity to protect the interests of the state and its retail consumers in the competitive market for electricity in Vermont and the region.

(F) The public benefit programs established by this chapter are ready to begin operation.

(G) Consumers, companies, and regulators are prepared to implement the provisions of section 8012 of this title relating to basic service.

(H) Vermont has adopted and is ready to implement its portfolio environmental standards and its portfolio standards for renewable energy resources.

(2) An order under subdivision (1) of this subsection determining that competition will not promote the general good of the state shall be reconsidered every three months to consider whether changed circumstances warrant a determination that competition inelectricity will promote the general good of the state.

(c)(1) An order of the board determining that competition will promote the general good of the state shall contain a plan describing how competition will be implemented, including such orders and rules as are necessary to implement the plan. The plan shall include provisions relating to the following matters, and such other matters as the board determines are needed for an orderly transition to a competitive market, and for the achievement of the goals established in section 8001 of this title:

(A) how basic service required under this chapter will be provided;

(B) how the public benefit programs established under this chapter will be administered and implemented;

(C) how the renewable resource portfolio standards established under section 8026 of this title will be administered and implemented;

(D) how the environmental portfolio standards established under section 8028 of this title will be administered and implemented; and

(E) the process by which companies will undertake functional separation.

(2) If the public service board determines that one or more of the prerequisites to competition set forth in subdivision (b)(1) of this section have not been met, but that competition will promote the general good of the state, the board's plan under this subsection shall include measures designed to ensure that any negative conditions or problems relating to such prerequisite will be corrected by the date when competition begins.

(3) Where the plan required by this section includes orders relating to particular actions by an electric utility, distribution company, or transmission company needed to create an effectively competitive market, such as unbundling of services, separation of affiliates, or the provision of basic service, the board shall require each electric utility to submit a plan describing how it will perform these actions.

(d) Unless the public service board finds that the introduction of competition for a particular competitive service will not promote the general good of the state, all customers in Vermont shall have the right to obtain competitive services from any retail company on or before October 1, 1998.

(e) The board shall prescribe by rule or order such filing fees, filing requirements, and requirements for the continued reporting of information as the board deems necessary for the efficient and effective administration of the provisions of this chapter.

§ 8004. MIXING OF MONOPOLY AND COMPETITIVE SERVICES

(a) No company shall perform both monopoly and competitive services unless such services are provided by functionally separate legal entities.

(b) Where a company providing competitive services is an affiliate of a company providing monopoly services, the board shall prohibit such affiliation, notwithstanding the functional separation of the two companies, if the board finds that the affiliation is inconsistent with the orderly development and maintenance of effective competition.

(c) In the event that the board finds that for a particular company functional separation pursuant to section 8002(10)(A) of this title fails to result in conditionsconsistent with the orderly development of effective competition, the board shall order functional separation pursuant to section 8002(10)(B) of this title, and create an orderly procedure by which the company determines which businesses it will continue to conduct in Vermont. Where the company is an existing electric utility, and such utility chooses to no longer be a distribution or transmission company, the board shall afford such existing utility a reasonable opportunity to recover the previously incurred, and otherwise recoverable, costs associated with its actions as a distribution or transmission company.

(d) Nothing provided in this section shall preclude any seller of a monopoly or competitive service from offering the customer a single bill containing all charges to that customer for all electric services. Where the customer has indicated a desire for a single bill, no provider of any electric service to a customer shall unreasonably refuse the request of a provider of some other service for the information necessary to offer a single bill.

§ 8005. MARKETS IN WHICH COMPETITION IS INEFFECTIVE

Whenever the board, on its own motion or the motion of any person determines that the market for a competitive service is not or will not be consistent with effective competition, as determined under the standards established by the board under section 8003(b)(1)(A) of this title, and under such other rules adopted or orders made by the board, the board shall by rule or order establish the prices, terms and conditions for such service which are just and reasonable, and not unduly discriminatory. Such rules or orders may authorize the setting of price ceilings for such services. Upon a subsequentfinding by the board that the market for such services has become effectively competitive, such rules or orders establishing the prices, terms and conditions for such services shall not apply.

§ 8006. ABOVE-MARKET COSTS

(a) In order to facilitate an orderly transition to a restructured electric industry, the general assembly finds that ratepayers should benefit from cost reductions that will bring prices to competitive levels on a reasonable and sustainable basis, and that Vermont utilities should have an opportunity to recover a just and reasonable portion of their legitimate, verifiable, otherwise recoverable and prudently incurred above-market costs. In implementing cost reduction and cost recovery decisions under this section, the board shall consider and balance the following legislative standards:

(1) utilities must take substantial, comprehensive, and effective actions to reduce and mitigate such costs;

(2) rates that include above-market costs shall be just and reasonable; the board shall not permit the recovery of above-market costs relating to power purchase contracts, including but not limited to power purchase contracts between existing utilities and Hydro-Quebec, without first conducting a review of the prudence of such utilities in entering into such contracts:

(3) net, prudently incurred, discretionary above-market costs should be shared evenly between utilities and customers;

(4) the continuing financial integrity of the existing utility should be preserved andthe just interests of investors respected; and

(5) cost allocation decisions must promote the general good of the state.

(b) The board shall prescribe by rule or order standards and procedures for the determination of above-market costs, including standards for the level of cost reductions and mitigation that will be required of electric utilities. In reviewing any application for the recovery of above-market costs, the board shall consider the following criteria:

(1) the degree to which the assignment of costs is consistent with the legislative standards established in subsection (a) of this section, recognizing that balancing these standards may be necessary to prevent an adverse effect on the public good of the state;

(2) the prudence of the circumstances under which the above-market costs were incurred, including the extent to which the electric utility should be considered culpable or negligent in undertaking or agreeing to the investment or obligation resulting in the above-market costs, including all decisions to continue, extend, or otherwise modify the nature of the commitment or failure to exercise opportunities to do so, and the utility's effectiveness in controlling the cost of such commitments. As part of its determination of whether costs were prudently incurred, the board shall review all discretionary actions taken or not taken by the utility related to power purchase contracts;

(3) evidence of mitigation of above-market costs in accordance with the rules and standards adopted by the board, including in the case of long-term power contracts, the extent to which the utility has succeeded in renegotiating and reducing its power costs under such contracts to a level that is competitive with current market costs forelectricity;

(4) the full market value of existing utility generation and retail assets and services. In determining the market value of a utility's generation resources, the board shall take into account all discretionary utility decisions which could increase the value of such resources, including changes in operation, management, and ownership of such resources;

(5) the savings associated with the projected effect of any qualified rate orders approved by the board under chapter 90 of this title;

(6) the rate impacts of above-market cost recovery compared to anticipated trends in the retail electric rates in competing service territories and their effects on the state's retail consumers and economy;

(7) the degree to which the utility implements competitive safeguards or, where required, achieves functional separation; and

(8) the public health, safety and welfare.

(c) Within 240 days of the effective date of this chapter, the board, after notice and hearing, shall determine the above-market costs of existing utilities and the share of those costs to be recovered from ratepayers for all existing utilities, taking into consideration the legislative standards and criteria established in subsections (a) and (b) of this section. The board shall apply the standards and procedures established in subsections (a) and (b) of this section to all existing utilities on a nondiscriminatory basis. The board shall seek to ensure that the customers of all existing utilities receivebenefits from mitigation and cost reductions at a level equivalent to those accomplished through application of the provisions of subsection (d) of this section. Upon the request of an existing utility, or upon finding that the determination required by this subsection cannot be made within 240 days, the board may extend the time for making such a determination.

(d) In no event shall the costs assigned to customers pursuant to this section be greater than the entire effect of the assignment of such costs on customers proposed in the "informational filing" submitted to the public service board on March 10, 1997 by the department of public service, Green Mountain Power Corporation, and Central Vermont Public Service Corporation, taking into account the entire proposed agreement of the parties. The board shall not unreasonably restrict the ability of any aggrieved person to review and present evidence and claims concerning whether any proposed agreement between the department and an existing utility relating to above-market costs complies with the requirements of this title.

(e) This subsection shall apply with respect to any major nuclear investments owned by existing Vermont utilities. For purposes of this subsection, a "major nuclear investment" means a nuclear facility with respect to which Vermont utilities, considered together, own an ownership interest comparable to ownership of 200 megawatts of power, or more. Within eight months from the effective date of this chapter, Vermont utilities owning a major nuclear investment shall declare in a filing before the board whether or not the utilities as a group choose to continue operation of that investment ina restructured environment.

(1) The Vermont public service board shall direct a study to determine the economic impacts of operating or ceasing to operate any nuclear facility presently operating within the state of Vermont. This study shall include components that look at the cost to purchase replacement power were the plant to close; ongoing costs and benefits to Vermont of operating the plant; possible scenarios and the associated costs for decommissioning of the facility; impacts on contractual obligations and other issues that the public service board deems appropriate. The public service board shall report to the Vermont legislature by December 1, 1998 for the legislature to determine appropriate action.

(2) If the owners elect to cease operation of a major nuclear investment, the facility shall be retired at the end of the current fueling cycle, unless the board extends this deadline by up to two more refueling cycles, upon finding that it is necessary to take this action in the public interest or in order to avoid a power shortage. If the utilities elect to cease operation under this provision, the board shall compute the competition transition charge so as to collect:

(A) the funds necessary to cover each utility's share of the decommissioning cost for the facility;

(B) the utility's share, as of January 1, 1997, of prudent investment in the plant, minus accumulated depreciation, allowing a reasonable return on the unrecovered balance of total plant investment;

(C) all prudent post-shutdown costs for maintenance, property taxes and other costs the board finds to be unavoidable.

(3) If Vermont utilities which own a major nuclear investment decide to operate in a restructured environment, this decision shall be deemed to constitute a determination by those utilities that the facility is cost effective to operate on an ongoing basis. In this situation, the board shall compute the competition transition charge so as to collect:

(A) the funds necessary to cover each utility's share of the decommissioning cost for the facility, but limited to the costs that would have been incurred if the facility had elected to cease operation under subdivision (1) of this subsection;

(B) that portion of the utility's share of investment in the plant, minus accumulated depreciation, as of March 1998 that would be recoverable under the principles and procedures applicable to utility generation facilities set out in this section.

(4) In order to assist in determinations that may be made under subdivision (2)(A) of this subsection, the board, as soon as practicable after a decision to operate in a restructured environment, shall direct a baseline study to determine costs that would have been incurred if the election had been made to cease operation under subdivision (1) of this subsection. This study shall include components that: determine current radiation levels of plant components; contain an inventory of current contents of the plant; specify tasks that would be required currently to decommission the plant and the current costs of those tasks; identify a current site available for waste disposal and current costs of that disposal; identify other current costs that would have been incurredif the facility had ceased to operate under subdivision (1) of this subsection. The board shall periodically update the study to ensure recovery allowed under subdivision (2)(A) of this subsection.

(5) The board shall assure that costs determined under subdivision (2)(A) of this subsection are included in the competition transition charge. On an annual basis thereafter, the board shall review each utility's share of decommissioning costs and shall ascertain that funds available are adequate to cover the difference between that share and the amount computed under subdivision (2)(A) of this subsection. If adequate funds are not available to cover the difference, the board shall take necessary steps, consistent with federal law, to assure that the funds required are available and to impose other appropriate remedies.

(6) The board may order the collection of additional funds for decommissioning purposes, upon finding that it is necessary to collect those additional funds in order to accomplish decommissioning and to protect the public health and safety.

(7) The board shall investigate the feasibility of using the facility site, upon the completion of decommissioning, for the generation of electricity.

(f) The board may periodically adjust above-market costs assigned for payment by customers, based on changes from the board's previous projections in market prices or other factors the board deems relevant, to provide reasonable assurance of fair recovery for a utility's generation-related assets.

(g)(1) The board shall by order or rule establish a charge on all retail consumption,including back-up service, and including self-generation to the extent that such self-generation displaces retail consumption by consumers who were taking service from an existing utility on January 1, 1997, of electricity delivered within the service area of an existing utility and dedicated to the recovery of above-market costs of that utility as determined pursuant to this section. The charge shall be known as the competition transition charge. Prior to the board's determination of recovery of above-market costs in subsection (c) of this section, and after notice and hearing, the board may establish an interim competition transition charge for an existing utility.

(2) The competition transition charge shall be nonbypassable, nondiscriminatory, and shall be established in a manner that is consistent with effective competition. In designing rates for the competition transition charge, the board shall ensure that such rates are just and reasonable, and that all categories of consumers are treated fairly according to the proportion of above-market costs they have imposed and the benefits they derive from competition.

(3) Prior to December 31, 1997, and annually thereafter, the competition transition charge shall be set by order or rule of the board for each existing utility that applies to the board, and thereafter adjusted as required. The board may, in its discretion, direct any distribution company or other company subject to the provisions of this chapter to collect the charge from customers and transfer all or part of the charge to the system benefits administrator in accordance with section 8017 of this title, but solely for the purpose of accounting for and balancing such collections or other necessaryadministrative functions. The board shall by rule or order direct persons using self-generated electricity, to the extent that such self-generation displaces retail consumption by consumers who were taking service from an existing utility on January 1, 1997, to periodically account for such self-generation and pay the competition transition charge established by the board under this subsection to the system benefits administrator.

(4) Competition transition charges due to a company subject to this chapter may be assigned by that company with consent of the board. All such charges shall expire on or before January 1, 2008 provided that the board may extend the expiration date for the competition transition charge upon finding that such extension is in the public good of the state.

(h)(1) The public service board may establish an irrevocable trust for the deposit of a portion or all of its competition transition charges. The board, after an opportunity for hearing, may qualify a portion or all of the utility's competition transition charges as appropriate for inclusion in such a trust as the board determines appropriate.

(2) Any funds designated to the trust pursuant to this section may be pledged or assigned for the purpose of lowering a distribution company's above-market costs, as determined by the board proceedings described in chapter 90 of this title. The board shall take into account the availability of the cost reduction mechanism provided by this subsection and chapter 90 of this title in determining a utility's above-market costs.

(i) A petition submitted by an existing utility, a municipal electric utility subject to the provisions of chapter 79 of this title, or an electric cooperative subject to the provisionsof chapter 81 of this title, for the establishment of a competition transition charge pursuant to subsection (c) of this section shall include a proposed plan for financing for the prepayment of contracts or other obligations giving rise to above-market costs or for other mitigation of above-market costs. 8The board shall take into account the proposed mitigation and financing plan in establishing the competition transition charge and may impose such conditions as it deems necessary to achieve the goals of this chapter.

§ 8007. DISTRIBUTION COMPANIES

(a) No person, partnership or other entity shall commence to operate a distribution company without first obtaining a certificate of public good under section 231 of this title. However, an existing utility that provided distribution service on January 1, 1997 shall be deemed a distribution company and subject to this chapter unless it requests and the board grants an amendment to its certificate of public good. Nothing in this subsection shall be construed to grant a vested right to operate a distribution company in this state.

(b) Each distribution company shall operate within a service territory as provided in sections 249, 250, and 251 of this title. Before, during and after restructuring, each distribution company shall have an obligation to provide distribution service to all consumers within its service territory subject to the terms and conditions of any tariffs or contracts in effect at the time.

(c) No distribution company may engage in the business of a retail company or a generation company, but may engage in the business of a transmission company.

(d) Each distribution company shall issue its own stocks, bonds, notes or other evidences of indebtedness and shall not charge its shares, nor mortgage nor pledge any of its assets, nor assume or be responsible for any debt, risk or obligation of any other entity including, but not limited to, current or former affiliates, whether regulated or not.

(e) On or before a date ordered by the board, each distribution company shall file with the board, pursuant to standards established by the board, one or more distribution service tariffs available to retail companies and to retail consumers, including at a minimum tariffs for firm distribution service for retail consumers and firm distribution service for retail companies. If operating under an alternative regulation plan approved under section 8009 of this title, a distribution company may be exempted, in whole or in part, by the board from rate of return regulation under sections 218 through 227 of this title.

(f) A distribution company shall retain condemnation authority for transmission and distribution, but shall not have condemnation rights as defined in section 110 of this title for retail and generation services.

(g) A distribution company shall not abandon or curtail distribution, transmission, or basic service unless approved by the board pursuant to section 231 of this title.

(h) A distribution company may conduct a competitive solicitation for generation services, or services ancillary to such generation services, upon a finding by the board that the services for which the solicitation is conducted are not provided to any retail customer, and that such services are necessary to maintain the reliability and stability ofdistribution service, and to comply with any least cost integrated plan for distribution service approved by the board under section 218c of this title. Only that portion of such generation costs properly assigned to the distribution support function may be recovered as a cost of the utility's distribution service.

§ 8008. TRANSMISSION COMPANIES

(a) No person, partnership or other entity shall commence to operate a transmission company without first obtaining a certificate of public good under section 231 of this title. However, an existing utility that provided transmission service on January 1, 1997 shall be deemed a transmission company and subject to this chapter unless it requests and the board grants an amendment to its certificate of public good. Nothing in this subsection shall be construed to grant a vested right to operate a transmission company in this state.

(b) No transmission company may engage in the business of a retail company or a generation company, but may engage in the business of a distribution company within a service territory as provided in sections 249, 250, and 251 of this title.

(c) Each transmission company shall issue its own stocks, bonds, notes or other evidences of indebtedness and shall not charge its shares, nor mortgage nor pledge any of its assets, nor assume or be responsible for any debt, risk or obligation of any other entity including, but not limited to, current or former affiliates, whether regulated or not.

(d) Each transmission company shall be subject to rate of return regulation under sections 218 through 227 of this title to the same extent it was before January 1, 1997. Atransmission company may, to the extent permitted by federal law, operate under an alternative regulation plan under section 8009 of this title.

(e) A transmission company shall not abandon or curtail service except as provided in section 231 of this title.

(f) A transmission company shall retain condemnation authority for transmission and, if assigned a distribution service territory, for distribution, but shall not have condemnation rights as defined in section 110 of this title for retail and generation services.

§ 8009. ALTERNATIVE REGULATION OF DISTRIBUTION AND TRANSMISSION

COMPANIES

(a) Notwithstanding section 218, and sections 225 through 227 of this title, an electric distribution or transmission company may be regulated under an alternative regulation plan. An alternative regulation plan may include:

(1) performance-based regulation, incentive regulation, earnings sharing, categorization of services for the purpose of pricing, price or revenue caps, price indexing formulae, ranges of authorized returns, and reduction or suspension of regulatory requirements;

(2) exemption from rate of return economic regulation;

(3) terms and conditions for establishing new services, withdrawing services, changing the price of services, and providing services by contract to individual consumers;

(4) imposition of structural and nonstructural safeguards; and

(5) other rates, terms, and conditions that the board finds to be consistent with the general good of the state.

(b) The public service board may establish requirements for a petition to approve an alternative regulation plan. A petition may be filed by the affected company or by the department of public service.

(c) In reviewing a petition to approve alternative forms of regulation, the board shall follow procedures substantially similar to those contained in sections 225 through 227 of this title, except that if the board has not acted on the petition within nine months after the board has ordered suspension and investigation, the petition shall be deemed granted.

(d) The board shall approve an alternative regulation plan, conditionally or unconditionally, if, after opportunity for hearing, the petitioner has established that the plan:

(1) is consistent with the state electric energy plan established under section 202 of this title and the state energy policy under section 202a and the state energy plan under section 202b of this title;

(2) will produce fair, just and reasonable rates for all classes of ratepayers;

(3) will maintain safe, adequate and reliable service and will maintain or improve preexisting service quality and consumer protection safeguards; and

(4) will promote the general good of the state.

(e) An alternative regulation plan shall take effect not sooner than 30 days following its approval by the board.

(f) The board may establish, and may amend from time to time, standards and procedures by which the effectiveness of the alternative form of regulation can be determined.

(g) The board on its own motion, or the motion of the department of public service, or any aggrieved person, may investigate any alternative regulation plan that is in effect. Following notice and an opportunity for hearing, the board may terminate or modify the alternative regulation plan upon a finding of good cause. Where the board revokes prior approval, the board shall determine whether the company’s current rates are just and reasonable, and if not, shall establish new rates that are just and reasonable.

§ 8010. RETAIL COMPANIES

(a) No person, partnership or other entity shall commence to operate a retail company without first obtaining a certificate of public good under section 231 of this title, except that hearings required under that section may be held in a place designated by the board.

(b) Each retail company may operate throughout this state.

(c) Retail companies shall comply with all applicable statutes, board orders and rules, including, but not limited to those concerning consumer protection standards, renewable energy resource standards, and portfolio environmental standards.

(d) Except as provided in sections 8005 and 8020 of this title, retail companies shallnot be subject to regulation of the prices charged for electricity.

(e) Each retail company shall provide information to the system benefit administrator, the department, and the board as determined by board rule or order.

(f) Each retail company shall coordinate consumer requests and complaints about, and participate in all necessary activities of all programs created by this chapter, and do nothing to impede or interfere with those programs.

(g) Before granting a certificate of public good under section 231 of this title to a retail company, the board shall find that the company:

(1) will comply with the renewable resources standard;

(2) will comply with the environmental portfolio standard;

(3) will comply with all consumer protection standards;

(4) has paid required filing fees;

(5) has identified its board of directors and owners;

(6) has complied with board requirements regarding functional separation and other competitive safeguards;

(7) will market its services without unreasonable discrimination as to the location of customers in different geographic regions of any service territory;

(8) has agreed to submit to the tax jurisdiction of this state; and

(9) has made appropriate financial security and assurances, including bonding, to ensure the recovery of all charges imposed under this chapter, to ensure the recovery of customer deposits, and to provide liability coverage for any other activities of the retailcompany.

(h) A retail company may discontinue offering new service without advance approval as provided in section 231 of this title, but may halt or curtail existing service which has not expired by its own terms only with permission of the board. Each retail company shall remain subject to the supervision of the board and department until the board has found that the company has complied with all existing obligations under current laws or contracts, including customer deposits, payment of wires charges and amounts owed for distribution and transmission service, and provision of information necessary for an orderly transfer of customers to a retail service of their choice.

(i) A retail company shall not have condemnation rights as defined in section 110 of this title.

(j)(1) No aggregating agent may impose obligations on its members to purchase or continue purchasing retail electric service through the agent, except as provided for under the terms of service agreed to by individual consumers.

(2) Each aggregating agent shall register with the board before offering to act or acting on behalf of any resident of this state. The board may impose a fee sufficient to support the costs of registration, and may require the filing of such information as the board determines is needed to protect the public from potential abuses by aggregating agents.

§ 8011. BUNDLING OF ELECTRIC SERVICES AND UNRELATED SERVICES

For two years after the date on which competition begins pursuant to an order of theboard under section 8003 of this title, no retail company may bundle the retail sale of electricity with any product, service or benefit which is not related to the efficient production or consumption of energy. The board may grant exemptions from the requirement of this section where the board determines that such exemption will promote the general good of the state.

§ 8012. BASIC SERVICE

(a) The board shall conduct a competitive solicitation to select one or more companies to provide basic service to all retail consumers who have not chosen a retail company for electricity, whom no retail company has been willing to serve, or who are no longer receiving electricity from a retail company. In order to ensure that all retail customers have access to a basic service offer the board may:

(1) hold a competitive bid, and select one or more retail companies;

(2) assign a share of those customers eligible for basic service to retail companies licensed by the board, while allowing each retail company to transfer its obligation to provide basic service to some other entity according to procedures determined by the board; or

(3) assign the customers to the distribution company, subject to the limitations established under subsection (d) of this section.

(b) The board, by order or rule, shall establish minimum terms and conditions under which basic service is provided, but may select competitive bids having terms and conditions which differ from, but exceed the attractiveness of, those terms and conditions. The board, by order or rule, may establish minimum terms and conditions applicable to a customer who is assigned to a company providing basic service, including a minimum period of time during which a customer must continue to take service from that company.

(c) If a distribution company is selected to provide basic service, such utility shall provide such service through an affiliate whose sole business activity is the provision of basic service. Where the company selected to provide basic service is affiliated with a company providing competitive services, the relationship between such affiliates shall be governed by section 8004 of this title.

(d) The board shall not assign the customers of basic service to a distribution company unless the board has determined that competitive bidding or assignment to retail companies under subdivisions (a)(1) and (2) of this section is not feasible or is otherwise contrary to the interests of such customers, or will not ensure the provision of basic service at those minimum terms and conditions which the board determines are appropriate. Notwithstanding the foregoing, a distribution company may be selected to provide basic service under this subsection if such company is not affiliated with any company providing a competitive service, and such selection is found by the board to be the most effective means of providing basic service.

§ 8013. GENERATION COMPANIES

(a) Each generation company shall first obtain a certificate of public good under section 231 of this title before it begins to operate, except that hearings required under that section may be held in a place designated by the board.

(b) Except as provided by sections 8005 and 8020 of this title, generation companies shall not be subject to regulation of the prices charged for electricity.

(c) Before granting a certificate of public good under section 231 of this title to a generation company, the board shall find that the company:

(1) has paid the filing fee as set by the board;

(2) has identified its board of directors and owners;

(3) has complied with board requirements regarding functional separation and other competitive safeguards;

(4) has agreed to submit to the tax jurisdiction of this state; and

(5) has provided appropriate financial security and assurances, including bonding, to ensure the recovery of all appropriate charges under this chapter, to ensure the ability to decommission any instate generation plants, and to provide liability coverage for any other activities of the generation company.

(d) Each generation company may do business throughout every service territory in this state.

(e) Any certificate issued pursuant to subsection (a) of this section after July 1, 1997 shall include procedures for the decommissioning of any generation facility owned or operated by the company within the state. In addition, the generation-related resources of each generation company shall be subject to the requirements of section 248 of this title, except that in lieu of the finding required by section 248(b)(2) of this title the board shall find that the public benefits of the facility, taken as a whole, outweigh the publiccosts of the facility, including but not limited to the facility’s land use and environmental impacts and other relevant factors affecting the public good.

(f) Each generation company shall provide information to the system benefit administrator, the department, and the board as determined by board rule or order.

(g) A generation company may discontinue offering new service without advance approval as provided in section 231 of this title. Each generation company shall remain subject to the supervision of the board and department until the board has found that the company has complied with all existing obligations under current laws or contracts, including decommissioning obligations, and amounts owed for transmission or distribution service.

(h) A generation company shall not have condemnation rights as defined in section 110 of this title.

§ 8014. CONSUMER COOPERATIVES

(a) For purposes of this title, consumer cooperative means a retail company organized as a consumer cooperative under this section.

(b) A consumer cooperative shall have the power:

(1) To sue and be sued in its corporate name;

(2) To have perpetual existence;

(3) To adopt a corporate seal and alter the same;

(4) To purchase, acquire, distribute, sell, resell, supply and dispose of electricity or other goods and services which are subject to the jurisdiction of the public service board;

(5) To purchase, acquire, distribute, sell, resell, supply, provide, and dispose of any energy related goods and services to retail customers;

(6) To borrow money and otherwise contract indebtedness and to issue notes, bonds and other evidence of indebtedness; and to secure payment thereof by mortgage, pledge or deed of trust of, or other encumbrance upon, any of all of its then owned or after-acquired real or personal property, assets, franchises, revenues or income;

(7) To become a member of other cooperatives upon the majority vote of its members;

(8) To allow natural persons, firms, corporations, business trusts, partnerships, public and private agencies, not-for-profit organizations and corporations, and municipalities to become members of the cooperative and thus be able to access any services the consumer cooperative has to offer. Each member shall have only one vote in all matters pertaining to the management of the consumer cooperative;

(9) To conduct its business and exercise its powers within or without this state;

(10) To adopt, amend and repeal bylaws; and

(11) To do and perform any other acts and things and to have and exercise any other powers which may be necessary or appropriate to accomplish the purpose for which the consumer cooperative is organized.

(c) Consumer cooperatives formed under this chapter shall be governed in all respects not specifically addressed in this chapter by the laws set forth in chapter 7 of Title 11. The law as set forth in this chapter shall take precedence in any and allstatutory conflicts.

§ 8015. PUBLIC POWER; MUNICIPAL AND COOPERATIVE ELECTRIC UTILITIES;

SMALL ELECTRIC COMPANIES

(a) This section shall define the manner and extent to which other provisions of this chapter apply to a municipal electric utility subject to the provisions of chapter 79 of this title, or an electric cooperative subject to the provisions of chapter 81 of this title. Except as provided by this section, any specific provisions of this chapter governing the activities of:

(1) a retail company shall apply to a particular municipal electric utility or electric cooperative if it engages in the activities of a retail company;

(2) a generation company shall apply to a particular municipal electric utility or electric cooperative if it engages in the activities of a generation company;

(3) a transmission company shall apply to a particular municipal electric utility or electric cooperative if it engages in the activities of a transmission company; and

(4) a distribution company shall apply to a particular municipal electric utility or electric cooperative if it engages in the activities of a distribution company.

(b) Nothing in this chapter shall alter the authority existing on the effective date of this chapter of a municipal electric utility under chapter 79 of this title and chapter 53 of Title 24 to contract with bondholders to set, revise, and collect rates to cover all obligations for indebtedness incurred for municipal utility plant improvements and operations for distribution and transmission, except that a municipal electric utility shallat all times have the right to set, revise, and collect revenues sufficient, after paying prudent operating costs, to repay all principal and interest costs on bonded indebtedness outstanding as of January 1, 1997, and issued by or on behalf of the municipal electric utility, including amounts or reserves needed to meet any financial covenants such as may be contained in bond indentures, notes, loan agreements, and other evidence of indebtedness. Such charges shall be included in the competition transition charge or the distribution charge, as provided for in section 8006(c) of this title, as the board may direct in connection with its review and approval of the rates of a municipal distribution company pursuant to section 218 and sections 225 through 227 of this title. Nothing in this chapter shall grant to the board the authority to set rates or take any other action which would have the effect of shifting the repayment of prudently incurred obligations outstanding as of January 1, 1997, and issued by or on behalf of the municipal electric utility, from ratepayers to municipal taxpayers.

(c) A municipal electric utility or electric cooperative, acting individually or jointly with other municipal electric utilities or electric cooperatives, may issue debt or other obligations to the same extent and under the same conditions that were authorized before January 1, 1997.

(d)(1) A municipal electric utility may continue to own and operate any generation facilities existing as of January 1, 1997 and located within its distribution service area. Any above-market costs associated with such facilities shall be recoverable as part of the competition transition charge provided for in section 8006(c) of this title, after adetermination by the board as to the magnitude of such costs remaining after the municipal electric utility has implemented its best reasonably achievable mitigation efforts. Notwithstanding any other provision of law to the contrary, the board may allow recovery of such costs over a term equal to the duration of municipal obligations existing as of January 1, 1997, or the refinancing of such obligations after approval of the board, which are associated with such facilities.

(2) In the case of municipal, cooperative, and small electric companies, the unseparated or affiliated activities of the utility, and the continued ownership by a municipal utility of any native generation existing as of January 1, 1997 authorized pursuant to subsection (d) of this section, are presumed not to create significant anticompetitive effects. Such utilities shall not be required to functionally separate, but shall otherwise comply with such requirements of this chapter as the board deems necessary to prevent significant anticompetitive effects.

(e) Each municipal or cooperative distribution company shall continue to have the option to distribute to each eligible distribution ratepayer within its service territory, in accordance with an approved tariff, the available power from the Niagara and St. Lawrence hydroelectric projects, irrespective of the retail electric supplier chosen by any ratepayer. Unless the board determines that changes in federal law or regulation warrant a different result that will promote the general good of the state, delivery by a municipal or cooperative distribution company of such preference power to a distribution ratepayer shall be deemed a component of the provision of such service exclusivelyavailable to the distribution utility customers of the municipal or cooperative distribution company as a matter of state law. For the purposes of ratemaking and rate design, such preference power shall be considered to be generation service of the distribution utility as a matter of state law. For purposes of ratemaking and cost recovery, such preference power shall be considered to be competitive generation service not subject to price regulation except as provided in this chapter.

(f) A municipal electric utility shall have the authority, acting individually or with one or more other municipal distribution companies, to form an independent retail company, which shall be functionally and financially independent from any municipal distribution company, and which shall be organized and have all of the powers granted under Title 11B (nonprofit corporations).

(g) A municipal electric utility, an electric cooperative, or a small electric company:

(1) may also engage in the business of a retail company, provided that it shall be subject to the requirements of this chapter applicable to retail companies, and the rules and orders of the board; and

(2) may also engage in the business of a generation company, provided that it shall be subject to the requirements of this chapter applicable to generation companies, and the rules and orders of the board.

(h) The Vermont public power supply authority created pursuant to chapter 84 of this title, if granted a certificate of public good as a retail company, may sell electric power and energy and other energy related products or projects to any person or utility insideor outside this state.

(i) A municipality, acting individually or with one or more other municipalities, may act as the aggregating agent for the residents of, and enterprises doing business in such municipality, provided that such residents, by majority vote at an annual or special meeting, approve such activities.

(j) In the case of small electric companies, the public service board may grant such exemptions to the provisions of this chapter as will promote the public good of the state, and that are designed to achieve the goals for competition established under section 8001 of this title.

(k) Except as provided for in this section, a municipal electric utility, an electric cooperative, or a small electric company engaged in the provision of competitive retail and generation services after January 1, 1997, shall not be assured recovery of costs associated with those activities through distribution charges of the distribution company nor through a competition transition charge.

§ 8016. WIRES CHARGES

(a) The public service board shall by order or rule establish, and may from time to time amend, rates and procedures for the nonbypassable, nondiscriminatory collection of the charges authorized by this chapter, to be referred to collectively as wires charges, from all retail consumers of electricity on all retail consumption of electricity in this state, and on all self-generation in this state to the extent that such self-generation displaces retail consumption by consumers who were taking service from an existingutility on January 1, 1997, and on any self-generators who contract for backup service. Such orders and rules shall apply to any entity engaged in or necessary to the collection of those charges. Notwithstanding the above, the competition transition charge shall not apply to self-generators of 150 kilowatts or less, nor shall it apply to self-generation from cogeneration facilities to the extent that the waste heat associated with such electric generation is used for space or process heating or cooling.

(b) The board may order that the collection and payment of some or all of the charges established under this chapter shall be the responsibility of the distribution company, in which case, such charges shall either be collected directly by distribution companies from their own retail consumers or collected by retail companies from their retail consumers under collection agreements with distribution companies. The board shall by rule or order direct that persons using self-generated electricity periodically account for such self-generation and pay charges comparable to and in lieu of the wires charges authorized by this chapter.

(c) The funds collected under this section shall not be funds of this state, are not available to meet the general obligations of the government, and shall not be included in the financial reports of this state.

§ 8017. ELECTRIC SYSTEM BENEFITS ADMINISTRATOR

(a) The public service board shall appoint an electric system benefits administrator for the purposes of this section for a term of no more than three years which may be renewed by the board. The compensation and terms and conditions of employment of theadministrator shall be determined by contract with the board.

(b) The administrator shall:

(1) receive copies of all annual reports and other filings of distribution and retail companies and such other information as it shall properly need to carry out its duties under this chapter;

(2) at least annually review and report to the board and the department on the compliance of each retail company with the renewable energy resources standards;

(3) at least annually review and report to the board and the department on the compliance of each retail company with portfolio environmental standards;

(4) at least annually review and report to the board and the department on the compliance of each retail company with standards for the disclosure of source-mix and environmental impact;

(5) at least annually review and report to the board and the department on the compliance of each distribution company with the rule and orders of the board concerning the electric energy affordability program;

(6) receive and handle all wires charges paid to it in trust, disbursing them as provided for in this chapter and in accordance with the orders of the board; and

(7) not be subject to taxation on receipts that are held in trust.

(c) If the administrator determines that a retail company does not comply with applicable standards for renewable energy resources, environmental portfolios, or disclosures, the administrator shall so notify the board and the department of publicservice. The department may petition the board for, or the board on its own motion may order an investigation and, after opportunity for a hearing, may order corrective action, including but not limited to revocation of the company’s certificate of public good, and may impose penalties as provided for in this title on the company.

(d) Funds collected through this section shall be paid into one or more trust accounts established by the board. These funds shall not be funds of this state, are not available to meet the general obligations of the government, and shall not be included in the financial reports of this state.

(e) As directed by the public service board, costs of the system benefits administration under this chapter may be:

(A) allocated among all providers from the funds administered by the system benefits administrator under this chapter; or

(B) applied to individual providers in proportion to the costs of the programs and activities administered by the system benefits administrator, in accordance with the standards and procedures established under section 21 of this title.

(f) The system benefits administrator shall be audited on a periodic basis by a certified public accountant in a manner determined by and under the direction of the public service board.

§ 8018. CONSUMER PROTECTION STANDARDS

The public service board shall prescribe, after notice and hearing, standards for the protection of retail consumers, including certification criteria for substantiation ofportfolio claims and enforcement procedures and penalties. Those standards shall include or provide for, at a minimum:

(1) Disclosure standards to enable retail consumers to base their selection of supplies on resource preference, and to knowledgeably compare retail service offerings. These standards shall include provisions for the form and content of disclosures and labeling required for retail offerings and transactions, which shall include, at a minimum:

(A) information on price, and risk of price variability;

(B) terms and conditions of service;

(C) types of generation resources in a seller’s mix and percentage of power produced from each source;

(D) quantity of major environmental impacts per unit of energy, as required under section 8027 of this title, and as otherwise required by order of the board; and

(E) energy efficiency opportunities, if any, that accompany retail sales.

(2) A consumer bill of rights addressing, at minimum, consumers’ right:

(A) to know and control what they are buying and from whom;

(B) to know the full price and terms of purchases;

(C) to purchase under reasonable payment terms;

(D) to receive fair treatment by all providers, including clear and stable divisions of responsibility between providers;

(E) to join with other consumers for mutual benefit;

(F) to obtain impartial resolution of disputes concerning matters over which the board has jurisdiction;

(G) to receive reasonable consideration for missed appointments;

(H) to participate in the design and evaluation of restructuring in a manner determined by the board;

(I) to have access to distribution service and to retail electric service from any retail company regardless of payment or other disputes with retail providers of electricity as long as distribution charges and wires charges are paid;

(J) to be free of discrimination in price, terms, conditions or offers on any basis that is improper or inconsistent with the provisions of this chapter;

(K) to control the disclosure of information about the consumer, including information about the consumer's electric usage;

(L) to be free from unreasonable privacy intrusions, including access to an organization that assures that consumers do not receive unwanted telephone call solicitations and other unwanted solicitations; and

(M) to be able to assess the respective environmental impacts of competing sources of electricity, when making electricity purchase selections.

(3) Fair treatment of retail consumers by any company subject to this chapter, including but not limited to service, deposits, billing, notices, connection, disconnection and reconnection, dispute resolution, due process and appeal, liability, and service quality. Such protections shall include a prohibition against altering any retailconsumer's choice of retail company without the consumer's prior written consent. Such protections shall be at least as protective of consumers' interests as the applicable standards established by the board prior to the effective date of this chapter.

(4) Provision by existing utilities, distribution companies, and retail companies of notices to retail customers regarding the establishment and operation of electric industry restructuring, including notices of the availability of distribution and basic service offers.

(5) The manner in which payments by retail consumers and benefits provided under the electric energy affordability program shall be handled, including that they shall be applied first to tariffed distribution service, second to wires charges authorized by the board, and thereafter to retail electric service.

§ 8019. CONSUMER INFORMATION AND EDUCATION

(a) The department shall provide programs of consumer information and consumer education for Vermont’s residential and commercial customers. Such programs shall be designed to promote and maintain an active and healthy market for electricity, maximize public participation in decision making, minimize customer confusion, maximize the ability of the public to promote specific environmental outcomes when making electricity source decisions, equip all customers to know their rights under a restructured electric industry and to fully understand and participate competently in the market, and curtail discriminatory and abusive market practices. In developing such programs, the department shall consider the need to show consumers how to protect their interests in a competitive electric market, to motivate consumers to make informed choices, tocoordinate consumer education efforts with existing programs, to target different consumer groups and specialize information and education for the characteristics of such groups, to rely on personalized contacts more than media campaigns, and to develop a broad range of partnerships in personalized information and education, including using economic incentives where necessary and appropriate.

(b) Distribution and retail companies shall cooperate with the consumer information and consumer education programs authorized by this section. Such programs shall begin as soon as practicable, and shall include appropriate phases for the periods prior to, during, and after restructuring. The board shall support the department's public education programs to the extent practicable in the board’s rule makings, orders, information collection and filing requirements. The programs shall initially concentrate on the transitional requirements of restructuring. The department shall seek comment on the appropriate scope and nature of the programs from the public and relevant organizations.

§ 8020. CONSUMER PROTECTION AND ANTI-TRUST LAW ENFORCEMENT

(a) The attorney general, the department of public service, and the public service board shall have concurrent responsibility for consumer protection and anti-trust law enforcement under the provisions of this title.

(b) Any company subject to this chapter who engages in unlawful practices regarding any matter subject to the supervision of the public service board and public service department, violates any provision in this title, or fails to obey a board rule or ordershall pay a penalty imposed by the board under section 30 of this title, and may be subjected to cost-of-service regulation on retail or generation activities and punitive damages by the board.

(c) Violation of any provision of section 8018 of this title, or the standards prescribed thereunder, shall constitute a violation of section 2453 of Title 9, and shall be subject to the rights and remedies established under chapter 63 of Title 9. Nothing in section 8018 of this title, or the standards prescribed thereunder, supersedes the requirements of section 2453 of Title 9, or the authority of the attorney general to investigate and prosecute violations thereof.

(d)(1)(A) The board and the department shall monitor the markets for the electric services affected by this chapter, and the board, on its own motion or upon the petition of the department or any other affected person shall take action to identify, prevent, terminate and provide appropriate remedies for any anticompetitive conduct. Such actions shall include:

(i) establishing standards of conduct related to anticompetitive conduct, including affiliate transaction rules, and including appropriate penalties for violation of such standards, and procedures for imposing such penalties; and

(ii) establishing limitations on corporate structure or ownership of assets as necessary to reduce the opportunities for such conduct, provided that any such limitations shall take into account, where relevant, any financial obligations which an electric utility had to incur, before enactment of this chapter, to carry out its statutoryobligations as a public utility.

(B) To the extent consistent with the provisions of this title permitting the regulation of public service companies, the board shall not establish standards of conduct and limitations on corporate structure or ownership of assets under subdivision (A) of this subdivision (1) that are less protective of consumers than the standards and limitations that result from the application of state and federal anti-trust laws and regulations.

(2) No later than 12 months after the beginning of competition, and annually thereafter, the board, in consultation with the attorney general and the department, shall publish a report to the general assembly evaluating the development of competition in the electric industry in Vermont. Such report shall be based on an investigation which shall include, but not be limited to, the effect on the markets of (i) mergers, consolidations, acquisition or disposition of assets or securities of electricity suppliers, (ii) transmission congestion and constraints, and (iii) anticompetitive or discriminatory conduct.

(3) The board, on its own motion or at the request of the department or the attorney general may require any company subject to the jurisdiction of the board to provide such information as is necessary to carry out the responsibilities of the board, the department, and the attorney general under this section.

(4) If the board has reason to believe that anticompetitive or discriminatory conduct, including the unlawful exercise of market power is preventing retail electricity consumers from obtaining the benefits of effective competition in the markets for electricservices, the board, on its own motion or at the request of the department shall transmit any evidence of violations to the attorney general, the United States Department of Justice, and the Federal Trade Commission and other appropriate federal agencies. Nothing in this subdivision shall affect the authority of the attorney general to investigate and take such actions on his or her own initiative as the attorney general deems proper.

(5) Upon the receipt of any evidence from the board or the department of anticompetitive or discriminatory conduct, or upon the receipt of a substantial complaint from any aggrieved person, the attorney general shall investigate and, within six months, issue a report to the general assembly explaining the action it has taken or declined to take and the reasons therefor, provided that the failure to bring an action within six months does not eliminate the attorney general's otherwise existing authority to act, and provided further that such report shall not contain any information which may compromise any investigation.

(6) The board, in consultation with the attorney general and the department, and after consulting with the counterparts to the board and the attorney general in the other five New England states, and in such other states as needed, shall evaluate the potential for coordinated monitoring of competition and enforcement of statutes and rules related to effective competition in New England. Such evaluation shall be published in a report filed with the general assembly to be issued no later than 24 months after enactment of this chapter.

(7) The attorney general may allocate, charge, and collect from any companysubject to the jurisdiction of the board under this chapter the reasonable costs of investigating and prosecuting any civil or criminal action taken against a company which violates the provisions of this chapter, or the provisions of section 2453 of Title 9. Such allocations may be made from time to time during the progress of the work of the attorney general. The presiding judge of the superior court shall hear any appeals, on an expedited basis, from the decisions of the attorney general relating to the allocation, charging, and collection of reasonable costs under this subsection.

(e)(1) The board shall by order or rule establish a charge for the support of consumer information and consumer education programs authorized by section 8019 of this title, and consumer protection and anti-trust law enforcement authorized by this section. The charge shall be known as the "consumer information and protection charge." The charge shall be paid to the system benefits administrator in accordance with section 8017 of this title. Beginning January 1, 2000, the charge shall be one one-thousandth of a cent per kilowatt-hour, or one cent per consumer per month, whichever is greater.

(2) A consumer information and protection fund is created, for the purpose of supporting the activities of the public service board, the department of public service, and the attorney general under this section, and section 8019 of this title. All balances at the end of each fiscal year shall be carried forward and remain in the fund. The consumer information and protection fund shall be managed as a special fund under the provisions of subchapter 5 of chapter 7 of Title 32. The system benefits administrator shall deposit the consumer information and protection charge imposed by this subsectioninto the fund. Upon warrants of the commissioner of finance and management, the treasurer shall disburse monies in the fund to the department, the board, and the attorney general as appropriated by the general assembly.

(f) For a proceeding under this chapter regarding the establishment of or a transition to electric industry restructuring:

(1) The board shall, with respect to issues to be determined under sections 8003, 8006 and 8018 of this title, and may, with respect to other issues to be determined under this chapter, appoint three special consumer advocates, to represent residential, small commercial-agricultural, and small industrial consumers, with adequate resources to participate in the proceedings.

(2) The board may, pursuant to sections 20 and 21 of this title, appoint or retain expert witnesses, legal counsel, and other advisors to develop or review evidence and testify regarding issues to be determined under this chapter.

(3) The board may, if it determines that an issue will not otherwise be adequately presented, compensate a party who has been permitted to intervene, other than a company as defined in section 201 or subdivision 501(3) of this title, for some or all of the reasonable costs of its participation in that proceeding, pursuant to sections 20 and 21 of this title.

(A) Within 30 days after a prehearing conference is held, or at any other time established by the board, any party seeking compensation shall state the party’s intention to seek compensation and shall demonstrate how the party will meet the requirements ofthis subdivision (3). Before awarding compensation, the board shall find that:

(i) this participation is necessary to provide an adequate presentation of a significant position on issues affecting the public interest, and that an adequate presentation of that position would not be possible without a reasonable expectation of an award of compensation; and

(ii) this participation has provided a significant contribution to the resolution of issues significant to the public interest and would impose a significant financial hardship on the participant, absent a compensation award.

(B) In the case of a group or organization, "significant financial hardship" means that the economic interests of the individual members of the group or organization are small in comparison to the costs of effective participation in the proceeding.

(C) The board may, in the interest of judicial economy, require intervenors participating under this subdivision (3) to consolidate their representation on issues in particular proceedings.

(D) The board rules adopted to implement this chapter shall define procedures under which interested parties may seek preliminary rulings as to the likelihood that the criteria of this subsection will be met.

§ 8021. ELECTRIC ENERGY AFFORDABILITY PROGRAM

(a) A statewide electrical energy program is established to assure the affordability of electric energy to all Vermonters, to decrease uncollectible bills, and to reduce the transaction costs of bill collection, disconnections, reconnections and support programsduring and after transition to competitive electrical energy markets. Prior to the beginning of competition in the electric industry, the department of public service shall propose, and the public service board shall prescribe by rule or order, standards and procedures for the program in accordance with this section, including provisions requiring that all information about an applicant or recipient provided to any company subject to this title in connection with this program shall be confidential, shall not be disclosed to any person, whether or not an employee of the company, for any other purpose. All such orders and rules shall be applicable as necessary to effect the purposes of this section to all companies subject to supervision by the board and the department, and shall be reconsidered at the board's discretion or upon petition of the department.

(b) To be eligible for the benefits of the program an applicant must be a low income customer and file a timely application with the commissioner of taxes.

(c) Applications must be filed between January 1 and April 15 for the next succeeding benefit year on a form approved by the commissioner of taxes. Upon request, the commissioner of taxes shall extend the filling date to June 1. Upon request, in case of disability or when, in the judgment of the commissioner of taxes, good cause exists, the commissioner of taxes may further extend the time for filing such claims. In no event shall the time for filing be extended beyond the first day of December. Each applicant shall designate a distribution company on his or her application. The filing of the application is a waiver of the confidentiality provisions of section 3102 of Title 32 to theextent necessary to implement the program.

(d) Prior to June 1, the commissioner of taxes shall provide to each distribution company a list of the eligible applicants who designated that company, the household incomes of such applicants, and such other information as is necessary for the distribution companies to calculate and deliver the benefits of the program. With respect to applications received after April 15 under an extension, the commissioner of taxes shall supplement such lists no later than January 1.

(e) If the commissioner of taxes finds that an applicant is not eligible for the program or that household income or household size is greater than reported on the application, the commissioner of taxes shall notify the applicant by mail of ineligibility or adjustment. If the commissioner of taxes determines subsequent to notifying a distribution company that an applicant is eligible, that the applicant was, in fact, not eligible, or that an applicant’s household income or household size was greater than reported on his or her application, the commissioner of taxes shall notify the applicant and the distribution company indicated on such application of that determination. The distribution company shall then either remove the recipient from the program or reduce the recipient’s benefit in accordance with the determination. An applicant who is aggrieved by a determination of the commissioner of taxes under this section (except ineligibility based upon late filing of the application) may appeal in writing to the commissioner of taxes within 60 days of the mailing of the notice.

(f) Distribution companies shall calculate and deliver benefits due under the programto eligible applicants in the manner specified by the board. Distribution companies shall require in all retail distribution tariffs and retail distribution special contracts that any affected retail company shall apply the benefits in accordance with the program. Distribution companies and retail companies shall diligently coordinate their activities so as to provide efficient and accurate exchange of information and payments, and to ensure convenient and uninterrupted delivery of benefits to recipients who move between service territories, retail companies, or retail products. No distribution or retail company shall discriminate against any person because of his or her status as an applicant or recipient. Information received from the commissioner of taxes pursuant to subsection (d) of this section shall be treated as confidential by distribution and retail companies, and they shall be considered agents of the commissioner of taxes for purposes of section 3102 of Title 32.

(g) Benefits shall commence only at the beginning of a benefit year or as soon thereafter as the distribution company has been notified by the commissioner of taxes of an applicant’s eligibility.

(h) A least three and one-half months prior to the commencement of electric industry restructuring under this chapter, and annually thereafter prior to August 1, the board shall set a charge for the support of the program, which shall be known as the electric energy affordability charge, and which shall be paid to the system benefits administrator in accordance with section 8017 of this title.

(i) The board shall determine annually the benefits provided under the program. Thelevel of benefits in the first benefit year shall be based on a projection of the funds available from the electric energy affordability charge as initially set by the legislature, less projected administrative start-up costs not otherwise funded, and less recurring annual administrative costs. For the second and succeeding benefit years, the board shall establish a new level of benefits reflecting the first year’s benefit level adjusted upward by omitting administrative start-up costs not otherwise funded, if any. The board shall adjust the electrical energy affordability charge in the second and succeeding years of the program to reflect that adjusted benefit level.

(j) The system benefits administrator shall make payments to each distribution company from the proceeds of the electric energy affordability program in a manner directed by the board. At a minimum, the board shall require each company to account for the collection and disbursement of these funds and charges in a manner that allows the administrator to verify the amount of money collected, the payments due, and the proper operation of the program. Each distribution company shall expend those funds in accordance with the board-approved program. These funds shall not be funds of this state, are not available to meet the general obligations of the government, and shall not be included in the financial reports of this state.

(k) The board, upon request of the system benefits administrator or the public service department or at its own discretion, may review and adjust the electric energy affordability charge as needed to fund the program provided for in this section.

(l) The public service department shall report to the speaker of the house, thepresident pro tem of the senate, and the legislative committees having oversight of the program annually on or before the fifteenth of the third month following the end of the previous benefit year on the implementation and effectiveness of the electric energy affordability program in the previous benefit year, including information on program participation, benefit levels, and administrative costs.

(m) An electric energy affordability administrative fund is created, for the purpose of supporting the department of taxes in implementing the electric energy affordability program. All balances at the end of each fiscal year shall be carried forward and remain in the fund. The electric energy affordability fund shall be managed as a special fund under the provisions of subchapter 5 of chapter 7 of Title 32. The system benefits administrator shall deposit into the electric energy affordability fund such portion of the electric energy affordability charge sufficient to permit the annual expenditure of funds appropriated by the general assembly for the department of taxes' costs in administering the electric energy affordability program.

(n) As used in this section:

(1) "Benefit year" means a year commencing on July 1 and ending on June 30.

(2) "Board" means public service board.

(3) "Low income customer" means any residential retail consumer of electricity who is a natural person and whose household income for the calendar year preceding the benefit year is at or below 150 percent of the federal poverty guidelines published by the United States Department of Health and Human Services with respect to the number ofpersons in the household. Household income has the same meaning for purposes of the program as in section 5961(4) of Title 32.

(4) "Program" means electric energy affordability program.

(5) "Recipient" means a person who is receiving benefits under the electric energy affordability program.

§ 8022. UTILITY EMPLOYEE TRANSITION SERVICES AND BENEFITS;

COLLECTIVE BARGAINING AGREEMENTS

(a) Prior to the beginning of competition in the electric industry, the board shall establish by rule or order standards and procedures for providing transition services and benefits for eligible employees of existing utilities.

(b) The standards and procedures established by the board shall include a requirement that each existing utility file an employee transition plan. The employee transition plan shall recognize and make effective use of the experience and expertise of the utility’s existing workforce, provide a positive program to assist affected employees in maintaining employment and existing fringe benefits and obtaining employment that makes full use of their potential, contain reasonable nondiscriminatory provisions to minimize hardships on employees, and comply with the provisions of this section.

(c) From January 1, 1997, until three years after the commencement of retail competition in an existing utility's service territory, the company shall provide retraining services, outplacement services, including intensive vocational interest and aptitude screening, and benefits to its eligible employees as prescribed by the board. Thecompany may provide early retirement benefits. Required services and benefits shall include, at a minimum:

(1) at the discretion of the employee, full tuition for two years at any Vermont state college, the University of Vermont, or a Vermont vocational or technical school, or other reasonable retraining services of value equal to full tuition for two years at the University of Vermont;

(2) continued health care insurance coverage, at the benefit and contribution levels existing during employment with the utility, for 24 months or until permanent replacement coverage is obtained through reemployment, whichever comes first; and

(3) severance pay equal to three weeks of base pay for each year of full-time employment.

(d) Prior to filing an employee transition plan under this section, each existing utility shall inform its employees and their certified representatives of the provisions of the proposed plan and shall confer with its employees or their certified representatives, as provided for by applicable law, regarding the impact of the proposed plan on its employees and measures to minimize any resulting hardships on its employees. While a plan is in effect for a company, the company shall file notice with the board and department of any closure or relocation of facilities, any revaluation of facilities on the books of the company, and any action or reorganization that has the effect of layoffs. The notice shall include a description of the actions and the reasons for them, an assessment of their effects on the company's employees, local communities, Vermont stateand local social services, and Vermont state and municipal tax revenues.

(e) If an electric utility company or one or more of its subsidiary or parent companies is party to a collective bargaining agreement recognized by federal or state law, and if, as a result of the restructuring of the electric utility industry, the company creates, acquires or merges with any other entity, that company shall continue to recognize and bargain with the union representing the employees employed by the electric utility company at the time of the creation, acquisition or merger, and shall refrain from making unilateral changes in the employees’ terms and conditions of employment. In addition, any successor employer shall remain bound to the terms of the collective bargaining agreement to the extent permitted by federal law. Nothing in this section shall prevent any company, corporation or other business from entering into any collective agreement as allowed by state or federal law.

(f) The board shall allocate the costs of the services and benefits required under this section equally between any applicable company and ratepayers. The ratepayers' allocation of the reasonable and necessary actual incremental costs of services and benefits approved by the board under this section shall be included in an employee transition charge established by the board by rule or order, and collected and transferred to the system benefits administrator in accordance with section 8017 of this title, for use by companies to provide services and benefits pursuant to the requirements of this section.

(g) As used in this section, "eligible employees" means all employees of an existingutility, not including the officers of the utility, employed as of January 1, 1997, whose employment, pay or benefits are adversely affected by restructuring. An adverse effect on an employee's employment, pay or benefits shall be deemed to have been due to restructuring absent just cause. An employee shall not be considered an eligible employee by reason of the transfer of his or her job duties or assignment within a company or within affiliated companies at similar levels of compensation.

§ 8023. ENERGY EFFICIENCY PROGRAMS

(a) The public service board shall prescribe by rule or order programs and funding mechanisms for the aggressive acquisition of cost-effective, end-use efficiency resources consistent with the principles of least cost integrated planning and state energy policy. The board shall:

(1) ensure that all retail consumers, regardless of retail electricity provider, will have an opportunity to participate in and benefit from a comprehensive set of cost-effective energy efficiency programs and initiatives designed to overcome barriers to participation;

(2) require that continued or improved efficiencies be made in the production, delivery and use of electric services;

(3) preserve and build on the energy efficiency expertise and services that have developed or may develop in the state;

(4) give priority to market transformation programs and to programs driven by market opportunities while appropriately supporting other program opportunities andmarket segments, especially those that address the needs of persons or businesses facing the most significant barriers to participation;

(5) assiduously maximize the cost savings and program benefits available through coordinated program delivery, including coordination with low income weatherization programs, other efficiency programs, and distribution company programs whose purpose is to avoid or delay the need for transmission or distribution investment through end-use efficiency;

(6) solicit and consider innovative approaches to delivering energy efficiency;

(7) provide a reasonably stable multi-year budget and planning cycle and consistent directives to promote program improvement, program stability and maturation of programs and delivery resources, while ensuring that program designs, measure selections, and delivery mechanisms reasonably reflect current market conditions and technological options; and

(8) provide for delivery of these programs as rapidly as possible, taking into consideration the need for these services, the financial constraints of the efficiency company organized under the provisions of section 8025 of this title, and cost-effective delivery mechanisms.

(b) The board shall establish by order or rule a charge for the support of energy efficiency programs. The charge shall be known as the energy efficiency charge. The charge shall be paid to the system benefits administrator in accordance with section 8017 of this chapter. Beginning in January, 2001, and on an annual basis thereafter, thecharge shall be set by order or rule of the board and thereafter adjusted as required in accordance with this section.

(c) These programs and funding mechanisms shall be in addition to the energy efficiency, least cost integrated planning and implementation responsibilities of transmission and distribution companies with respect to their transmission and distribution activities.

§ 8024. ENERGY EFFICIENCY PROGRAM DEVELOPMENT

The department of public service shall from time to time, but at least once in 1997 and at least triennially thereafter, determine the potential for cost-effective energy efficiency improvements, establish goals for acquiring cost-effective energy efficiency resources consistent with the duly adopted electric and energy plans pursuant to sections 202 and 202b of this title, and may propose specific program designs and strategies, screening and selection procedures, budgets and savings targets for the acquisition of cost-effective efficiency resources. The department shall file this information with the public service board and any efficiency utility certified by the board. The efficiency utility may also file proposals. After notice and an opportunity for hearing, the board shall approve such programs and initiatives as it finds comply with the provisions of this chapter and are in the public interest. The first such filing shall be made and the first such order issued prior to the approval of utility restructuring plans that provide for customer choice of retail service providers. That first filing and order may be limited to transitional programs, but if it is so limited, the department shall file a full proposal by July 1, 1998,and the board shall issue appropriate orders within seven months.

§ 8025. EFFICIENCY UTILITY

(a) Prior to the approval of utility restructuring plans that provide for customer choice of retail service providers, the public service board shall certify a corporation as an efficiency utility for the purpose of implementing the programs provided for in sections 8023 and 8024 of this title. Certification shall be for a term of no more than five years, shall be subject to such terms and conditions, consistent with this chapter, as are determined by the board, and may be renewed by the board. Contract termination by the board shall be based upon an evidentiary record and findings by the board. The board shall prescribe by rule or order the duties, standards and procedures that shall apply to the efficiency utility, the required information and procedure for application to become the efficiency utility, and the criteria for its selection. The board shall conduct a competitive application process with the assistance of the department and may either select among the applicants or reject all applicants and conduct a new process. The directors and staff of the efficiency utility shall be knowledgeable about and capable of effectively administering and overseeing programs to deliver board approved efficiency programs, technologies, and marketing strategies.

(b) The efficiency utility shall, and any distribution company may, be a party to proceedings under section 8024 of this title. Others seeking party status shall do so under the board’s rules.

(c) The efficiency utility shall implement board approved energy efficiency programsexpeditiously, in a nondiscriminatory and cost-effective manner, including the use of solicitation, review, negotiation, and the acceptance of competitive contract bids for the delivery of energy efficiency goods and services. Bid selection shall consider factors relevant to the quality, reliability, cost effectiveness and consistency of services with the program goals. In addition, the efficiency utility may also arrange for test, demonstration or experimental energy efficiency services, directly or indirectly acquire and provide energy efficiency goods or other incidental goods and services to be delivered by contractors, accept unsolicited proposals for innovative programs consistent with the approved energy efficiency plan, and contract or enter into agreements with community action agencies, government entities, and other entities for the provision of coordinated services or related activities pursuant to and consistent with the approved energy efficiency plan.

(d) The system benefits administrator shall pay each year the amounts ordered by the board to the efficiency utility from the proceeds of the energy efficiency charge. These funds shall not be funds of this state, are not available to meet the general obligations of the government, and shall not be included in the financial reports of this state. The efficiency utility shall ensure that the minimum feasible proportion of the proceeds from the energy efficiency charge is expended on program administration.

(e) The efficiency utility shall report annually to the board, department and legislature on its activities and plans. The efficiency utility shall be audited annually by a public accountant, and shall make its books and records available to the board anddepartment.

(f) This section shall be repealed on July 1, 2003.

§ 8026. RENEWABLE ENERGY RESOURCE STANDARDS AND MONITORING

(a) No company shall sell or otherwise provide or offer to sell or provide electricity in the state of Vermont without ownership of sufficient tradeable renewable energy credits as provided for by the renewable energy portfolio standards to be established pursuant to this section.

(b) The public service board shall prescribe by rule or order, and may from time to time amend, a standard for renewable energy resources, as well as requirements for implementation of that standard and compliance with that standard. The standard shall include a two-part portfolio requirement that shall be applicable to all providers of electricity to retail consumers in this state. The first part shall require that a percentage of each provider’s sales in Vermont shall be generated by tier one renewable technologies, and the second part shall require that an additional percentage of each provider’s sales in Vermont shall be generated by tier two renewable technologies, each as defined in this section and the standard established by the board. The standard shall establish required levels of renewable resources under each part of the standard. The required level for part one shall be at least equal to that proportion of the retail electric consumption and associated transmission and distribution losses in 1995 in Vermont that met the standard for part one. The required level for part two shall increase each year, beginning in 1998, and in the year 2007 shall be at least equal to four percent ofVermont retail electric consumption and associated transmission and distribution losses in that year.

(c) Renewable energy facilities that qualify for tradeable renewable energy credits shall be sustainable, environmentally sound facilities and shall be determined by factors which include the following:

(1) Fuel type, which may include wind, solar, biomass other than municipal solid waste, and other nondepletable fuels identified by rule or order of the board, subject to the criteria established in subdivision (3) of this subsection;

(2) Technology, which may include renewable fuel conversion technologies such as solar-thermal, photovoltaics, fuel cells, biomass gasification, biomass combustion and other technologies that may be approved by rule or order of the board, subject to the criteria established in subdivision (3) of this subsection;

(3) Environmental impacts of the facility. Renewable energy facilities eligible for tier one or tier two renewable energy credits shall not result in undue adverse air, water or land use impacts, including impacts associated with the gathering of generation feedstocks. The board may, by rule or order, establish a certification process, or may otherwise provide for certification through other entities selected by the board, to ascertain whether a particular facility has met these criteria and has such impacts, and is otherwise eligible to obtain tier one or tier two renewable energy credits. Until the board has established such a certification process, the board may grant temporary certification. For the purpose of such temporary certification, evidence that a facility has obtained andis in compliance with all applicable state, local and federal siting and environmental permits shall create a rebuttable presumption that it does not have those adverse impacts. Determination of eligibility for purposes of this section shall be made by the public service board by order or rule of general applicability or case-by-case, as determined by the board.

(d) For each tier, the board shall establish a system of tradeable credits that may be earned by electric generation qualifying for one of the parts of the standard. Under the system, the owner of a facility may apply for a certificate entitling the facility to earn tradeable credits based on its electric energy production.

(1) These certificates shall be issued to the specific facility, shall establish any necessary conditions for the certificate to continue in force, and shall be for a stated period of time no longer than the economic life of the facility.

(2) Certificates for tier two tradeable credits shall be for no more than 10 years, but may be renewed for a period determined by the board, if the board finds that the facility’s technology remains eligible for tier two credits.

(3) A certificate for tier two credits may be converted to a tier one certificate, if eligible.

(4) Owners of self-generation and customer-producers may apply for and may be awarded certificates upon meeting all other applicable conditions.

(5) The standard may provide for the issuance of a certificate entitling a facility to earn tradeable credits, in addition to those that it would normally earn under thisstandard, if that facility employs a tier two fuel type or technology that the board has found requires special incentives to promote orderly, sustained commercialization.

(6) Tradeable credits of independent power producers that are defined as qualifying facilities under board rule shall be assigned to distribution utilities pro rata, based on their energy purchases from these facilities.

(e) To assist the public service board in determining environmental sustainability, the department of public service, the agency of natural resources, and the environmental board shall conduct a public process and prepare a report assessing windpower development potential throughout Vermont, and shall present an interim report to the general assembly by January 15, 1999. The report shall include an analysis of potential sites, projected energy production, environmental impacts, including aesthetics, and an analysis of effects on Vermont’s tourism and recreation economy. The report shall develop wind-siting criteria based upon this analysis, and make appropriate recommendations for implementation.

(f) To assist the public service board in determining environmental sustainability, the agency of natural resources and the department of public service shall conduct a public process, shall prepare a report assessing additional biomass generation development throughout Vermont, and shall present an interim report to the general assembly by January 15, 1999. The report shall include an analysis of estimated sustainable harvest rates, energy production, environmental impacts, including forest health, aesthetics, and biodiversity, and an analysis of effects on Vermont’s tourism and recreation economy. The report shall include recommended forest practices requirements to assure protection of wildlife habitat, biodiversity, water quality, and wetlands.

§ 8027. RENEWABLE AND SUSTAINABLE ENERGY TECHNOLOGY RESEARCH,

DEVELOPMENT AND DEMONSTRATION

(a) The department of public service shall be responsible for planning and implementing a program of research, development and demonstration to identify, improve, and promote renewable and sustainable energy systems and technologies that have a high likelihood of providing benefits to Vermont’s citizens, environment, and economy. This program may include grant programs, contracts, competitive solicitations, provision of matching funds, participation in or contributions to regional, national or other joint efforts with the potential to provide significant Vermont benefits. The program may also include internal department research, planning, and administrative activities, subject to appropriation by the legislature; however, the cost of such activities shall not exceed 10 percent of the total program expense in any year, except the first year in which the limit shall be 15 percent. The department shall report annually to the legislature on the activities, finances, plans and accomplishments of the program.

(b)(1) The board shall establish by order or rule a charge for the development and commercialization of new renewable technologies. The charge shall be known as the "renewable energy technology charge." The renewable energy technology charge shall be paid to the system benefits administrator in accordance with section 8017 of this title. Beginning in January, 2001, and on an annual basis thereafter, the charge shall be set by order or rule of the board and thereafter adjusted as required in accordance with this section.

(2) The board may direct that the renewable energy technology charge and the energy efficiency charge pursuant to section 8023 of this title be set in a single board proceeding and may be combined by the board, but only for the purposes of collection and payment to the system benefits administrator. If combined, they shall be referred to collectively as the efficiency and renewables charge.

(3) The renewable and sustainable energy fund is created as a special fund subject to the provisions of subchapter 5 of chapter 7 of Title 32, to support the activities of the department of public service authorized in this section, and any other activities authorized by law. All balances at the end of each fiscal year shall be carried forward and remain in the fund. Into the fund shall be deposited the renewable energy technology charge, or during fiscal years 1998 through 2000 that portion of the combined efficiency and renewables charge necessary to support the department's renewable energy technology research, development and demonstration programs. Monies in the fund shall be disbursed by the department for the department's renewable energy technology research, development and demonstration program, in accordance with the sums appropriated by the general assembly for these purposes. It is the intent of the general assembly that such appropriations be in the amount of $500,000.00 annually.

§ 8028. STANDARDS AND MONITORING FOR ENVIRONMENTAL EFFECTS

(a) It is the purpose of this section to ensure that the adverse environmental effects from the production and delivery of electricity are not increased by restructuring and are lessened over time. The public service board and public service department shall develop and implement, in accordance with the provisions of this section, such standards as are necessary to achieve these purposes and shall do so in a manner that encourages and coordinates with the development of related standards and programs in other jurisdictions, to the extent that coordination can occur without compromising the purposes of this section.

(b) The board, by rule or order, shall establish and may amend standards for the environmental effects of electric generation. Standards shall be set for environmental effects that cause or have the potential to cause material harm to human health, the environment, or the economy in Vermont, and shall be set so as to maintain, at a minimum, current levels of overall environmental quality and to move at a reasonable pace to improve overall environmental quality as it pertains to the production and delivery of electricity.

(c) Each standard shall be stated as a portfolio requirement by type of environmental effect and, to the extent practicable, shall be expressed as a limit, averaged over each retail company’s sales to Vermont retail consumers, on the amount of an environmental emission or other adverse environmental effect per unit quantity of electricity delivered at retail. The standards shall be applicable to all retail providers of electricity to retailconsumers in this state whether the electricity provided is generated within or outside the state. These standards shall be known collectively as "portfolio environmental standards."

(d) No retail company shall sell or otherwise provide or offer to sell or provide electricity at retail in Vermont unless that electricity was produced in compliance with the portfolio environmental standards. Any disclosures required under the consumer protection standards of this chapter and any offer whatsoever to provide electricity in Vermont shall include a statement, in a form and manner directed by the board, of the adverse environmental effects of the production and delivery of that electricity, expressed using the same terms and definitions established for setting and monitoring the portfolio environmental standards.

§ 8029. INDEPENDENT SYSTEM OPERATOR

(a) The public service board and the department of public service shall take action to ensure that the system of dispatching generation resources and transmitting electric power in this state:

(1) ensures reliable delivery of electricity; and

(2) provides open access to all generators and sellers of wholesale electric energy.

(b) As used in subsection (a) of this section, action includes, as necessary, adopting rules, issuing orders and participating in federal and regional regulatory proceedings.

§ 8030. NET METERING

(a) For purposes of this section,

(1) "Customer-producer" means a retail electric consumer in this state:

(A) who produces self-generation electricity using an electric generating facility that:

(i) is of no more than 10 kilowatts,

(ii) operates in parallel with the distribution company’s facilities, and

(iii) is intended primarily to offset part or all of the consumer’s own electrical requirements; and

(B) who has obtained or is eligible to obtain a certificate entitling that electric generating facility to earn tier two tradeable credits, except the consumer need not comply with the construction date provisions or the commercial service entry date provisions that apply to tier two renewable technology.

(2) "Net metering" means measuring the difference between the electricity supplied to a retail consumer who is a consumer-producer and the electricity fed back by the consumer over the consumer’s billing period, using a single, nondemand meter that would otherwise be applicable to the customer’s usage.

(b) The public service board shall ensure that each distribution company’s tariffs provide that customer-producers may receive both distribution service and basic service as defined in this chapter under net metering. A customer-producer shall pay the same rates, fees or other payments and be subject to the same conditions as all other consumers of the same type, except for appropriate and necessary conditions approved by the board to preserve the safety and reliability of the distribution system, and exceptthat a customer-producer shall pay for the reasonable and necessary cost of providing such metering and protective equipment as is approved by the board. A customer-producer whose net metered service for any billing period is less than zero shall be paid by the distribution company for the electricity fed back into the electric distribution system at the same price charged in that period for service provided under the basic service provisions of this chapter, less twice the handling charge approved by the board for basic service.

(c) Net metering facilities regulated under this section need not obtain a certificate of public good under the provisions of 30 V.S.A. § 248.

Sec. 3. 30 V.S.A. chapter 90 is added to read:

CHAPTER 90. FINANCING OF QUALIFYING EXISTING

UTILITY ASSETS AND OBLIGATIONS

§ 9001. DEFINITIONS

For the purposes of this chapter:

(1) "Existing utility" means a company, cooperative, or municipal utility providing electric transmission or distribution service under the supervision of the board on January 1, 1997.

(2) "Assignee" means any party to whom an existing utility shall have assigned or transferred all or a portion of its interest (other than as security) in special intangibles property, or any other party to whom such interest is subsequently assigned or transferred.

(3) "Qualified rate order" means an order of the public service board, adopted in accordance with this chapter, approving one or more specific rates or charges as part of the competition transition charge provided for in section 8006 of this title, in order to provide for the recovery of qualified expenditures incurred by or on behalf of an existing utility or assignee.

(4) "Qualified expenditures" means (i) expenditures incurred or to be incurred by an existing utility, or assignee, as approved by the board; and (ii) costs, as approved by the board, including interest and premium (if any) (or, with respect to certificates of participation, beneficial interest or ownership, amounts corresponding thereto), and other fees and related charges, incurred to obtain, carry, or administer financing for such expenditures, and federal, state or local tax expense arising to the existing utility from the financing transaction.

(5) "Financing party" means a holder of qualified bonds, including trustees, collateral agents and other such parties acting for the benefit of such a holder.

(6) "Special intangibles property" shall have the meaning set forth in section 9003 of this chapter.

(7) "Charges" means the amounts authorized to be imposed and collected in respect of qualified expenditures pursuant to the rates or charges under a qualified rate order, whether or not such rates or charges are fixed, contingent or unliquidated.

(8) "Qualified bonds" means bonds, debentures, notes, certificates of participation or beneficial interest, and other evidences of indebtedness or ownership, issued pursuantto an executed trust indenture or other agreement of an existing utility or assignee, including the Vermont public power supply authority, the proceeds of which are to be used to provide, reimburse or finance qualified expenditures, and which are secured by or payable from special intangibles property.

§ 9002. QUALIFIED RATE ORDERS

(a) Qualified Rate Orders. Notwithstanding any other provision of law, the public service board is authorized to issue qualified rate orders in accordance with the provisions of this section.

(b) Irrevocability. Notwithstanding any other provision of law, if the board determines that a financing transaction pursuant to a qualified rate order would result in savings to the customers of the existing utility from the sale or other transfer or financing of special intangibles property, the board shall have power to specify that all or a portion of a qualified rate order shall be irrevocable; and, to the extent so specified, the order shall be irrevocable and neither the order nor the charges authorized to be imposed and collected thereunder shall be subject to reduction, postponement, impairment, alteration, limitation or termination by any subsequent action; provided, however, to the extent provided in the qualified rate order, upon a sale of assets by the existing utility that has the effect of reducing the number of the existing utility's customers, the qualified expenditures to be recovered pursuant to the qualified rate order shall be reduced in the manner specified therein by the portion thereof properly allocable to the customers that by reason of the sale are no longer customers of the existing utility. The qualified rateorder shall, however, include a procedure by which the board will periodically review the charges authorized therein at least annually, and within not more than 30 days after each such review shall adjust the charges if and to the extent necessary to ensure the adequacy of revenues sufficient to provide for the timely payment of all principal, interest, premium (if any) and other charges (or, with respect to certificates of beneficial interest, participation or ownership, amounts corresponding thereto) in respect of qualified bonds approved by the board as a part of or in conjunction with a qualified rate order. All such related conditions, restrictions and limitations, if any, shall be incorporated into the terms of the qualified rate order.

(c) Assignment or pledge to grantor trusts or other assignees. Notwithstanding any other provision of law, on such conditions as the board may approve, all or portions of the interest of an existing utility or assignee in a qualified rate order and in special intangibles property arising therefrom may be sold or otherwise transferred to an assignee and by one assignee to another assignee, and may be pledged or assigned as security by an existing utility or assignee to or for the benefit of one or more financing parties. The consideration received by an existing utility for any such sale, transfer, pledge or assignment of any such interest and the collection of the charges shall not be subject to any income tax imposed by the state or any municipality or subdivision of the state; provided, however, any amounts collected by an existing utility pursuant to a qualified rate order on behalf of any assignee of special intangibles property may be treated for purposes of such taxes as having been collected by the existing utility on itsown behalf. To the extent that any such interest is so sold or transferred, or is so pledged or assigned as security, the board shall authorize the existing utility to contract with any assignee or financing party, or both, that the existing utility will continue to operate its system to provide service to its customers, and will impose and collect the applicable charges for the benefit and account of the assignee or financing party, and will account for and remit the same to or for the account of such party.

(d) Successors and assigns. Notwithstanding any other provision of law, if the existing utility contracts as provided in the preceding subsection (c), then, to the extent provided in the qualified rate order, such obligations of the existing utility shall be binding upon the existing utility and its successors and assigns. Such obligations under a qualified rate order shall be independent legal obligations that shall survive and continue in full force and effect notwithstanding the breach, rejection, or termination of any such contract with an assignee or financing party or both. Any successor to an existing utility pursuant to any bankruptcy, reorganization, or other insolvency proceeding shall perform and satisfy all obligations of the existing utility relating to the subject matter of a qualified rate order, in the same manner and to the same extent as such existing utility before any proceeding, including without limitation collecting and paying to any applicable assignee or financing party or their representatives revenues arising with respect to the special intangibles property pledged to secure qualified bonds.

(e) Qualified bonds do not constitute a debt or liability of the state or of any political subdivision thereof and do not constitute a pledge of the full faith and credit of the stateor any of its political subdivisions. The qualified bonds and offering documents must contain a statement to the following effect:

"Neither the full faith and credit nor the taxing power of the State of Vermont is pledged to the payment of the principal of, or interest on, this security."

The issuance of qualified bonds shall not directly, indirectly, or contingently obligate the state or any political subdivision thereof to levy or to pledge any form of taxation thereof or to make any appropriation for their payment.

(f) Nonbypass. The public service board shall establish rates and procedure for the nonbypassable, nondiscriminatory collection of the charges authorized pursuant to a qualified rate order from all retail consumers of the existing utility on all retail consumption of electricity.

(g) Lapse. The irrevocable status of any portion of a qualified rate order, as provided in this section, shall lapse and terminate to the extent that a sale or transfer or debt financing of the special intangibles property resulting therefrom is not effected on the basis and within the period or periods specified in the qualified rate order.

§ 9003. SPECIAL INTANGIBLES PROPERTY

(a) Nature of property. The term "special intangibles property" shall mean the right, title and interest of an existing utility or assignee in a qualified rate order, including all rights in, to, under and pursuant to such order (which rights shall include all rights to revenues, collections, claims, payments, money or other property and amounts arising from the imposition of charges pursuant to such order), to the extent that, in accordancewith this chapter, the order and rates and other charges authorized thereunder are declared to be irrevocable. Property or amounts collected or recovered in respect of the foregoing rights or the disposition thereof are proceeds of the special intangibles property, whenever realized.

(b) Creation and existence of property. Special intangibles property shall arise and exist when the applicable qualified rate order becomes effective in accordance with section 9002 of this title and shall thereafter continuously exist as provided in the order, which shall be for a period at least equal to the period to which the agreement of the state applies with respect to the qualified rate order, pursuant to section 9006 of this title.

(c) Security interests; other effects. A security interest in special intangibles property may be created and shall attach and be perfected only in the manner set forth in section 9007 of this title. To the extent specified in a qualified rate order, a direct or indirect transfer to an assignee of all or any portion of an electric supplier's or assignee's interest in the order or in special intangibles property arising therefrom shall also be effective to establish the legal and equitable rights or interests of such assignee therein for all other purposes of Vermont law. A transfer of all or any portion of an existing utility's or assignee's interest in special intangibles property to an assignee, which transfer the parties have in the governing documentation expressly stated to be a sale or other absolute transfer of such interest, in a transaction approved in an order issued by the board and in connection with the issuance of qualified bonds, shall be treated as a truesale or other absolute transfer, and not as a pledge or other financing, of such interest; except that it is understood that such transfer may be treated as a pledge or financing for purposes of U.S. federal, state income or franchise or other taxes measured by or based on income or gross receipts. Interests in special intangibles property shall not be defeated or otherwise adversely affected by the commingling of such special intangibles property with other funds or assets.

§ 9004. EFFECT ON CONTRACTS

Nothing in this chapter shall be construed as relieving an existing utility of any contractual obligations to which it would otherwise be subject.

§ 9005. JUDICIAL REVIEW

(a) In order to preserve the customer rate savings expected to result from a qualified rate order, which may be time-sensitive to financial market conditions affecting the feasibility and terms of qualified bonds approved therein, any judicial review of a qualified rate order shall be on an expedited basis, in accordance with rules adopted by the public service board and the Vermont supreme court, which are hereby authorized to adopt and implement such rules.

(b) In the event that the terms and conditions of a qualified rate order are required to be modified or set aside in any part as a result of judicial review (other than in any manner provided in the original terms of the order), the order shall take effect only after the board shall have adopted the terms and conditions thereof as so modified, and the existing utility shall have filed with the board its written consent to all terms andconditions of the order as modified, whereupon the board shall implement and publish an appropriate form of notice in accordance with the rules of the board described in subsection (a) of this section (limited, however, to a description of any changes reflected in the modified order), and the modified order shall be subject to judicial review (similarly limited to the effect of such changes) only in accordance with rules of the board and of the Vermont supreme court described in subsection (a) of this section.

§ 9006. AGREEMENT OF THE STATE

The state of Vermont does hereby pledge to and agree with any holder of any qualified bonds issued under the authority of this chapter and with any existing utility with respect to which a qualified rate order is adopted pursuant to this chapter and any assignee or financing party who may enter into contracts with an existing utility or assignee pursuant to such provisions of Title 30, that the state will not limit or alter the rights vested in any such holder of qualified bonds, an existing utility, assignee, or financing party pursuant to such provisions of this title, or any irrevocable portion of a qualified rate order, until the principal of, interest on and premium (if any) and any related costs or expenses with respect to such qualified bonds (or, with respect to certificates of participation, beneficial interest or ownership, amounts corresponding thereto) are fully paid and discharged and such contracts are fully performed on the part of the existing utility, its successors and assigns, and any other party providing electric service as described in section 9002(d) of this title.

§ 9007. SPECIAL INTANGIBLES PROPERTY; SECURITY INTEREST; ASSIGNMENT

(a) Nature of property. For purposes of section 9-106 of the Uniform Commercial Code, Title 9A, neither special intangibles property nor any right, title or interest of an existing utility or assignee described in section 9003(a) of this title, whether before or after the issuance of the qualified rate order, shall be considered "accounts" or "general intangibles"; nor, for purposes of Article 9 of the Uniform Commercial Code, Title 9A, shall a qualified rate order or any such right, title or interest pertaining thereto (including the associated special intangibles property and any revenues, collections, claims, payments, money or other property and amounts arising from charges pursuant to such order) be deemed proceeds of any right or interest other than such order and the special intangibles property arising therefrom.

(b) Attachment, perfection, and priority of security interest. A valid and enforceable security interest in special intangibles property shall be created by the terms of the applicable qualified rate order, or by the execution and delivery of a security agreement between the existing utility, or assignee, and a financing party in such form as shall be approved in such order, and shall attach (and shall be perfected only by means of a separate filing with the board) under such rules as the board may prescribe. Any filing (in accordance with the rules of the board) in respect of a security interest securing qualified bonds issued pursuant to a qualified rate order shall have priority over any filing in respect of a security interest not securing such bonds, whenever effected. The relative priority of a security interest in special intangibles property, when perfected inaccordance with the rules of the board, shall not be adversely affected by subsequent changes to the qualified rate order or to the charges to be paid by any customer pursuant thereto, as contemplated in section 9002(b) of this title. A security interest in special intangibles property, when perfected in accordance with the rules of the board, shall have priority over the claim of any judgment lien creditor, other lien creditor, unsatisfied execution creditor of the debtor, or any purchaser from the debtor, whose lien or other property interest becomes perfected or attached after perfection of such security interest.

(c) Filing system. The public service board shall establish and maintain a separate system of records to reflect the date and time of receipt of all filings made pursuant to this section, and shall provide that transfers of special intangibles property to an assignee shall be filed in accordance with the same system.

(d) Assignment; perfection. A transfer to an assignee, of any interest in a qualified rate order (including any special intangibles property arising therefrom, and any revenues or other proceeds arising in respect of such property, whenever realized) shall be perfected as against third parties (including any other purchaser from the transferor) when the related qualified rate order becomes effective; a written instrument of assignment has been executed by the assignor and delivered to the assignee; and a statement describing the assignment has been filed with the board in accordance with its rules. A filing shall be effective as of the date of assignment, if made on or before the date of the assignment or within 10 days thereafter. The relative priority of interest of two or more assignees for value, and without notice, who have filed in accordance withthe rules of the board, shall be determined by reference to the order in which their statements have been filed; and, if an assignment (with respect to which a complying filing has been made) shall for any purpose of law be treated as a security interest, the filing shall be deemed effective as a filing with respect to such security interest.

(e) Events of default; foreclosure. Except as may otherwise be provided in a qualified rate order, upon the occurrence of an event of default with respect to qualified bonds issued pursuant thereto and which are secured by a security interest perfected in accordance with this subsection, the holders of such bonds or their authorized representatives or any other financing party shall have the same rights as those of a secured party under Article 9 of the Uniform Commercial Code, Title 9A, and, subject to the rights of other parties (if any) holding prior security interests perfected in the manner provided in this subsection, shall be entitled to foreclose upon and otherwise enforce their security interest and to request that the board order (and, if so requested, the board shall have authority to order and shall order) the sequestration and payment to the holders or their authorized representatives or any other financing party of all revenues and other amounts arising from the imposition of charges included in the qualified intangibles property in which such holders or any other financing party has a security interest.

(f) "True sale." In the event that all or a portion of the interest of an existing utility or assignee in a qualified rate order (including any special intangibles property arising therefrom) is transferred in a transaction that is approved in the qualified rate order andwhich the governing documentation expressly states to be a sale or other absolute transfer of the transferor's right, title and interest in the portion of such order and special intangibles property so transferred, then such transfer shall be treated as a sale or other absolute transfer, to an assignee, of the interest so transferred (as in a true sale), and not as a pledge or other financing thereof. According the holders of qualified bonds or any other financing party a preferred right to revenues of the existing utility or assignee, or the provision by the existing utility or assignee of credit enhancement with respect to qualified bonds, does not impair or negate the characterization of any such transfer as a true sale or other absolute transfer under this subsection. Such treatment shall be without prejudice to the characterization of the effect of such transaction for U.S. federal or state income tax purposes. Notwithstanding such sale or other absolute transfer, the board shall retain exclusive jurisdiction to take such further actions as are required or permitted to be taken with respect to the qualified rate order, in accordance with the terms of such order.

(g) Commingling. The validity of the interest of an assignee or secured party in special intangibles property (and in all revenues or other proceeds arising in respect of such property, whenever realized), as herein provided, and the relative priority of the security interest of a secured party therein, when perfected in accordance with the rules of the board, shall not be defeated or adversely affected by the commingling of any such revenues or other proceeds with other funds, including those of the existing utility or assignee, a successor to either such party, another party providing distribution service asdescribed in section 9002(d) of this title, or a party performing collection functions on behalf of any of the foregoing (all of the foregoing parties being referred to for purposes of this subsection as a "collection party"), or by the existence of any security interest in a deposit account of any such collection party perfected under Article 9 (commencing with section 9-101) of the Uniform Commercial Code, Title 9A, in which such revenues or other proceeds may have been deposited. For this purpose:

(1) An assignee of special intangibles property arising under a qualified rate order shall have a perfected interest, and the holders of a perfected security interest in special intangibles property of the existing utility or assignee arising under such order shall have a perfected security interest, in all cash and deposit accounts of any collection party in which amounts collected, recovered or received in respect of charges pursuant to such order have been deposited and commingled with other funds, provided, that if such party is the debtor of the party holding the perfected security interest, in the event of the institution of insolvency proceedings by or against the existing utility or assignee or a successor thereof, the perfected security interest in special intangibles property of such insolvent party and any revenues or other proceeds arising in respect of such property shall be limited to an amount not greater than the amounts collected or recovered by such party in respect of charges (whether or not actually deposited in the deposit accounts of such party) within the one year preceding the institution of the insolvency proceedings, less the sum of such amounts paid to or for the account of the holders of such security interest in special intangibles property or transferred to a segregatedaccount held solely for their benefit, during such one-year period; and

(2) In the event that proceeds of special intangibles property which havebeen recovered, collected or otherwise received by a collection party shall have been transferred by such party from a commingled account that includes other funds to a segregated account identified as held solely for the benefit of holders of qualified bonds (which bonds are secured by a security interest, perfected in accordance with the rules of the public service board, in the special intangibles property and all revenues and other proceeds arising in respect of such property), such security interest of the holders of the qualified bonds shall apply to any such segregated account, and shall have priority over any other interest or security interest therein, and over the lien of any judgment lien creditor or other entity to which the security interest of the qualified bonds is senior, in accordance with subsection (b) of this section.

Sec. 4. 9A V.S.A. § 9-104 (Uniform Commercial Code) is amended to read:

§ 9-104. TRANSACTIONS EXCLUDED FROM ARTICLE

This article does not apply

* * *

(m) to special intangibles property as defined in section 9003 of Title 30, except to the extent that provisions of this article are expressly incorporated in, and made applicable to special intangibles property by, such law.

* * * CONFORMING AMENDMENTS * * *

Sec. 5. 10 V.S.A. § 1003 is amended to read:

§ 1003. CONFERENCE; RECOMMENDATIONS

Whenever, in the opinion of the department, it appears that the artificial regulation of stream flow as maintained by any person threatens the public interest or welfare or an emergency exists or is threatened, the department may call to conference the owner or owners of the dam causing the artificial regulation and other persons having an interest therein, for the purpose of seeking cooperation in altered regulation to minimize damage to the public interest under the policy of this chapter. As a result of the conference, the department may require action be taken by the person owning the dam with respect to the release of water as it may consider necessary and proper in the public interest giving due consideration to the Vermont water quality standards, and shall issue findings of fact developed at the conference. For dams or diversions not licensed under 16 U.S.C. § 800, existing permits may be amended where those permits do not contain conditions with respect to minimum stream flow. For federally licensed facilities, the secretary may negotiate the modification of stream flow, and if the secretary's recommendations are not agreed to, the secretary may petition the Federal Energy Regulatory Commission (FERC) for license amendments. According to a timetable not to exceed ten years established by procedure of the department, the department shall review hydroelectric facilities that are not subject to federal jurisdiction and shall require that actions be taken that the department deems-necessary and proper in the public interest.

Sec. 6. 10 V.S.A. § 1024(a) is amended to read:

(a) Any person aggrieved by the decision of the secretary or the department under *[section 1023 or section 1004]* sections 1003, 1004, or 1023 of this title may file an appeal with the board within fifteen days of issuance of notice of the secretary's action. The filing of an appeal shall stay the action of the secretary. Within five days of receipt of an appeal, the board shall schedule a hearing giving notice to all persons required to receive notice under section 1023. The hearing before the board shall be de novo and shall be conducted as a contested case.

Sec. 7. 11 V.S.A. § 991(2) is amended to read:

(2) "Association" means any corporation organized under this chapter or consumer cooperatives organized under section 8014 of Title 30.

Sec. 8. 11 V.S.A. § 992 is amended to read:

§ 992. USE OF "COOPERATIVE"

The use of the word "cooperative" as part of the name of any individual, partnership, corporation, or association is hereby limited to such associations as are legally organized and chartered under the provisions of this subchapter or chapters 1, 8, 14 or 17 of this title or section 8014 of Title 30.

Sec. 9. 30 V.S.A. § 30(a) is amended to read:

(a)(1) A person, company or corporation subject to the supervision of the board or the department of public service who refuses the board or the department of public service access to the books, accounts or papers of such person, company or corporationwithin this state, so far as may be necessary under the provisions of this title, or who fails, other than through negligence, to furnish any returns, reports or information lawfully required by it, or who willfully hinders, delays or obstructs it in the discharge of the duties imposed upon it, or who fails within a reasonable time to obey a final order or decree of the board, or who violates a provision of chapters 7, *[or]* 75 or 89 of this title, or a provision of sections 231 or 248 of this title, or a rule of the board, shall be required to pay a civil penalty as provided in subsection (b) of this section, after notice and opportunity for hearing.

(2) A person who violates a provision of chapters 3, *[or]* 5, or 89 of this title, except for the provisions of sections 231 or 248 of this title, shall be required to pay a civil penalty, after notice and opportunity for hearing. If the board determines that the violation substantially harmed or might have substantially harmed the public health, safety or welfare, the interests of utility customers, the environment, the reliability of utility service, or the financial stability of the company, the board may impose a civil penalty as provided in subsection (b) of this section. If the board determines that the violation did not cause or was not likely to cause such harm, the board may impose a civil penalty of not more than $10,000.00.

Sec. 10. 30 V.S.A. § 107 is amended to read:

§ 107. ACQUISITION OF CONTROL OF ONE UTILITY COMPANY BY ANOTHER;

SUPERVISION

(a) No company shall directly or indirectly acquire a controlling interest in anycompany subject to the jurisdiction of the public service board, or in any company which, directly or indirectly has a controlling interest in such a company, or acquire a competitively significant interest in any assets of such a company as defined by the board by order or rule, without the prior approval of the public service board. Nothing in this section shall be deemed to affect the direct or indirect acquisition of a controlling interest in a company as defined in section 501(3) of this title. The direct acquisition of the voting securities of a company defined in section 501(3) shall continue to be regulated pursuant to section 515 of this title. The board may, by order or rule, exempt from the requirement of prior approval of the acquisition of company assets acquisitions which because of their de minimis nature will not have a significant effect on competition in electricity in Vermont.

(b) Any company seeking to acquire such a controlling interest shall file a petition with the public service board which describes the acquisition and sets forth the reasons why such an acquisition should be approved. The public service board shall give notice of the petition to the department of public service and other interested persons, and may conduct a hearing. The board may grant such approval only after due notice and opportunity for hearing and upon finding that such an acquisition will promote the public good. Such finding shall include a determination that such an acquisition will not be adverse to the orderly development and maintenance of competition in Vermont.

(c) If any company acquires such a controlling interest without the prior approval of the public service board, the board may then, after due notice and hearing,

(1) approve the acquisition; or

(2) modify any existing certificates or orders authorizing either or both companies to own or operate a public utility business under the provisions of this title; or

(3) revoke any such existing certificates or orders, or revoke any orders approving the articles of association of such companies; or

(4) declare the acquisition null and void, all as necessary to promote the public good.

(d) The board may by rule specify terms and conditions upon which companies shall give prior notice of acquisitions regulated by this section. Any such rule may specify categories of acquisitions that may be deemed to be approved if timely notice has been filed and an investigation has not been initiated by the board.

(e) Notwithstanding any other provision of law to the contrary, a company shall not be eligible to recover above-market costs under section 8006 of this title unless the public service board has determined that the company has agreed to abide by standards and procedures established by the board, by order or rule, protecting the interests of customers in the event of an acquisition subject to review under this section, where the value of the company or asset has been enhanced as a result of the recovery of above-market costs. Such standards and procedures shall include criteria defining the events that will trigger a review of enhanced value acquisitions, methodologies to determine the magnitude of the enhancement, and criteria for determining an equitable sharing of the enhanced value between customers and shareholders.

*[(e)]*(f) For the purposes of this section,

(1) "Controlling interest" means ten percent or more of the outstanding voting securities of a company; or such other interest as the public service board determines, upon notice and hearing following its own investigation or a petition filed by the department of public service or other interested party, to constitute the means to direct or cause the direction of the management or policies of a company. The presumption that ten percent or more of the outstanding voting securities of a company constitutes a controlling interest may be rebutted by a company under procedures established by the board by rule.

(2) "Voting security" means any stock or security presently entitling the owner or holder thereof to vote in the direction or management of the affairs of a company or any security issued under or pursuant to any agreement, trust or arrangement whereby a trustee or trustees or agent or agents for the owner or holder of such a security are presently entitled to vote in the direction or management of the affairs of a company.

(3) A specified per centum of the "outstanding voting securities of a company" means such amount of outstanding voting securities of such company as entitles the holder or holders thereof to cast that specified per centum of the aggregate votes which the holders of all the outstanding voting securities of such company are entitled to cast in the direction or management of the affairs of such company.

Sec. 11. 30 V.S.A. § 214(a) is amended to read:

(a) The public service board, upon application of any electric company, municipal,cooperative, or privately owned, engaged or authorized to engage in the manufacture, transmission, distribution or sale of electric energy may by order direct an electric company, municipal, cooperative, or privately owned, engaged in the *[manufacture,]* transmission, or distribution *[or sale]* of electric energy, to establish physical connection of its transmission or distribution facilities with the facilities of one or more other such electric company or companies, to sell energy to, to exchange energy with, to transmit or distribute energy for any other such electric company or companies. In addition the board, upon application of the department of public service, may by order direct an electric company engaged in the transmission of electric energy to transmit energy for the department. In addition the board, after notice and hearing, may order any company providing transmission or distribution service to expand the capacity of the company’s transmission or distribution system, upon finding that such expansion will promote the orderly development of effective competition, and complies with all other applicable laws relating to transmission and distribution facilities and services. For the purposes of this section, a company "authorized to engage" means a municipal company authorized under chapter 79 of this title, a cooperative authorized under chapter 81 of this title, or a privately-owned company authorized by its articles of association, charter or bylaws. However, the board shall have no authority to compel any electric company to sell or exchange, transmit or distribute energy when to do so would impair its ability to render adequate service to its customers. The board's order may only be issued after due notice to all interested parties and findings based upon adequate evidence that the board'saction will be consistent with the general good of the state and that it is not detrimental to the interest of investors or consumers. The board may prescribe the terms and conditions of the arrangement to be made between the electric companies, including the department of public service, affected by the order including the compensation or reimbursement reasonably due to any of them, and in the case of a new physical connection the apportionment of costs between or among them, provided that a company making application for a connection which will inure to its sole benefit shall assume the entire cost of the connection.

Sec. 12. 30 V.S.A. § 249 is amended to read:

§ 249. SERVICE TERRITORIES; BOARD JURISDICTION

(a) The public service board shall have jurisdiction to establish exclusive service territories for electric distribution companies subject to its supervision *[which are ]**[engaged in the distribution of electrical energy in the state and to alter those territories]* from time to time as conditions warrant. In establishing or in altering service territories, the board shall give consideration to:

(1) Existing service areas;

(2) Any voluntary agreements between or among two or more such companies filed with the board which define service territories of the companies;

(3) Consistency with the orderly development of the region;

(4) Natural geographical boundaries;

(5) Compatibility with the interests of all consumers; and

(6) All other relevant factors.

(b) The board shall have power to exercise the jurisdiction conferred in this section only after due notice to all interested parties and hearing, and after making findings that the service territories established or altered are consistent with the general good of Vermont.

(c) In establishing service territories, the board may declare that specified areas are not within the service territory of any company, and may leave the assignment of such areas for later determination.

Sec. 13. 30 V.S.A. § 250 is amended to read:

§ 250. APPLICATION; MAPS

*[Within six months after July 1, 1970, or at such later date as the public service board ]**[may establish, each company engaged in the distribution of electrical energy in the state ]**[shall apply to the board for a service territory consisting of the distribution area served ]**[by it on July 1, 1970, and any areas not presently served by it or any other electric utility ]**[company which it believes it is entitled to serve. After consideration of the factors set ]**[forth in section 249 of this title the board shall establish the service territory of each ]**[company.]* The service territory *[thus established]* of each electric distribution company shall be defined on a map or maps approved by the board. In the event applications under this section are filed by more than one electric company for an area, the board shall, after notice and hearing, determine what part of the area as to which competing claims are filed should be awarded to the respective applicants. In the event thedistribution facilities of the competing applicants are so intertwined or commingled as to make establishment of exclusive service territories impracticable, the board may authorize two or more distribution companies which have filed competing applications to serve the area in conflict, subject to the provisions of section 251 of this title.

Sec. 14. 30 V.S.A. § 251 is amended to read:

§ 251. AREAS SERVED BY SEVERAL COMPANIES

(a) In any area which two or more companies distributing electrical energy are authorized to serve, a company shall not construct or extend its distribution facilities, *[or ]**[furnish or offer to furnish its service to any person or property presently served by ]**[another public utility,]* without the written consent of the other public utility, or unless the public service board, after notice and hearing, finds and determines that the service rendered by the serving public utility is inadequate and is not likely to be made adequate.

(b) In the event service is requested for premises in an area which two or more companies distributing electrical energy are authorized to serve and have facilities available for service to the property, the public utility company the existing service facilities of which are nearest the metering point on the premises to be served shall, subject to the other applicable provisions of this section, be entitled to *[serve]* provide distribution service to the premise.

(c) In the event that service is requested for premises not within the distribution service territory of any company, and if more than one other *[public]* distribution utility is available for service to the property, the *[public utility]* distribution company whoseexisting service facilities are nearest the metering point on the premises to be served shall, subject to the other applicable provisions of this section, be entitled to *[serve]* provide distribution service to said premises.

(d) A company shall not construct or extend its distribution facilities *[or furnish or ]**[offer to furnish its services to premises within the service territory of another company]* without being requested to do so by the company in whose distribution territory the premises are located, or unless the public service board, upon petition of the person served or to be served, after notice and hearing, finds and determines that the service rendered by such public utility in whose distribution territory and premises are located is inadequate and will not be likely to be made adequate.

(e) In resolving any dispute under subsections (b), (c) and (d) of this section the board shall consider the factors set forth in section 249 of this title.

Sec. 15. 30 V.S.A. § 2902(a) is amended to read:

(a) In accordance with this chapter, a municipality may buy, generate, transmit, distribute and sell *[electric current]* electricity for domestic use and for commercial purposes and construct, purchase or lease, and maintain and operate one or more plants for the manufacture (including for the support of electric distribution stability and reliability), distribution, purchase and sale of gas or electricity for the use of such municipality and for the use of the residents of such municipality *[and]*. Notwithstanding any provision in a municipal charter, those services may also be provided for *[such]* other customers outside such municipality as the voters may approve, provided thatdistribution services shall be provided outside the municipality only as the board may approve *[unless otherwise provided for in this chapter]* under sections 249 to 251 of this title. For such purposes a municipality may purchase and hold in fee simple or otherwise any real or personal estate and any rights therein, including water rights and may do all other things necessary for carrying into effect the purposes of this chapter and may excavate and dig conduits and ditches in any highway or other land or place, and erect poles, place wires, and lay pipes for the transmission and distribution of electricity and gas, in such places as may be deemed necessary and proper and in all such respects such municipality shall have the same privileges and be subject to the same restrictions as are provided for public service corporations in chapters 71, 73 and 75 of this title. Such municipality may change, enlarge and extend the same from time to time within its service territory and, with the permission of the board, without its service territory, and maintain the same, having due regard for the safety and welfare of its citizens and security of the public travel.

Sec. 16. 30 V.S.A. § 3002(4), (5), (6), (10) and (11) are amended to read:

A cooperative shall have power:

* * *

(4) To generate, manufacture, purchase, acquire, accumulate and transmit electric energy and other energy related goods and services; and to distribute, sell, supply and dispose of electric energy *[to its members]* and other energy related goods and services to members or other consumers, to governmental agencies and political subdivisions,provided, however, that furnishing by a cooperative of electric cold storage or processing plant service shall not be deemed to be distributing, selling, supplying or disposing of electric energy; providing further, that in the generation of electric energy by water power, a cooperative shall comply with the provisions of sections 1081-1099 of Title 10, relating to the construction and maintenance of dams; provided further, however, that a cooperative shall not distribute, sell, supply or dispose of electric energy to any person or premises receiving and using central station electric service on March 26, 1943, without the consent of the person supplying such central station electric service, or to buildings situated less than one mile, which distance shall be computed on the most direct line, from the electric distribution line located nearest such buildings and constructed and operated prior to the above named date, except with the consent of the person operating such electric distribution line or with the consent of the public service board; provided further that, if any owner or occupant of such buildings shall make written demand for electric service to such buildings from the person operating such electric distribution line, such person shall forthwith supply electric service to such buildings at rates and charges no greater than the rates and charges demanded by a cooperative for electric service to such buildings; and provided also that, in the event of the neglect or refusal of the person operating such electric distribution line to furnish electric service pursuant to this subdivision, the public service board shall forthwith approve cooperative service to such buildings, unless such neglect or refusal to furnish such service is due to governmental restrictions upon or prohibitions of the use ofmaterials required for furnishing such service, in which event the person operating such distribution line shall not be required to furnish such service until such restrictions or prohibitions are removed;

(5) To assist persons to whom electric energy *[is]* or other energy related goods and services are or will be supplied by the cooperative *[in wiring their premises and]* by providing technical, financial or other assistance in acquiring and installing electrical *[and]*, plumbing, or other appliances, equipment, fixtures and apparatus *[by the financing ]**[thereof or otherwise, and in connection therewith to wire or cause to be wired, such ]**[premises]*, and to purchase, acquire, lease as lessor or lessee, sell, distribute, install and repair such electric *[and]*, plumbing, or other appliances, equipment, fixtures and apparatus;

(6) To assist persons to whom electric energy *[is]* or other energy related goods and services are or will be supplied by the cooperative in constructing, equipping, maintaining and operating electric cold storage or processing plants, or other types of energy related storage or processing facilities, by financing the same or otherwise;

(10) To construct, maintain and operate electric or other transmission and distribution lines along, upon, under and across publicly owned land and public thoroughfares, including, without limitation, all roads, highways, streets, alleys, bridges and causeways in the manner provided by chapters 71, 73 and 75 of this title;

(11) To become a member of other cooperatives *[formed pursuant to this chapter]* or form other cooperatives, subject however, to the rights of creditors and minoritymembers of each cooperative, and in the event that one cooperative proposes to become a member of another cooperative, upon the majority vote of the members of each cooperative. If any creditor or minority member or group of members of either or both cooperatives feels that its interests will be adversely affected thereby, it may appeal to the superior court, of the county wherein the office or principal place of business of either cooperative is located, for relief. A minority group in or a member of a cooperative *[formed under this chapter]* may apply for relief to the superior court in the county in which the cooperative of which such person or group is a member has its office or principal place of business, if such person or group believes that its interests on matters of policy, consolidation, merger or dissolution are to be adversely affected by the action of the majority or the governing body of the cooperative;

Sec. 17. 30 V.S.A. § 3003 is amended to read:

§ 3003. NAME

The name of a cooperative shall include the words "electric" or "energy" and "cooperative" and the abbreviation "inc." unless, in an affidavit made by its president or vice president and filed with the secretary of state, or in an affidavit made by a person signing articles of incorporation, consolidation, merger or conversion, which relate to such cooperative and filed, together with such articles, with the secretary of state, it shall appear that the cooperative desires to do business in another state and is or would be precluded therefrom by reason of the inclusion of such words or either thereof in its name. The name of a cooperative shall be distinct from the name of any othercooperative or corporation organized under the laws of, or authorized to do business in, this state. Only a cooperative or corporation doing business in this state pursuant to this chapter shall use *[both]* the words "electric" or "energy" and "cooperative" in its name.

Sec. 18. 30 V.S.A. § 3007 is amended to read:

§ 3007. MEMBERS, QUALIFICATIONS

Each incorporator of a cooperative shall be a member thereof, but no other person may become a member thereof unless such other person *[agrees to use]* receives electric or other energy related goods or *[other]* services *[furnished]* distributed by the cooperative when they are made available through its facilities. A member of a cooperative *[who ]**[agrees to use electric energy]* shall cease to be a member *[if he does not use electric ]**[energy supplied by the cooperative within six months after it is made available to him, or ]**[if electric energy is not made available to him by the cooperative within two years after ]**[he becomes a member or some lesser period as the bylaws of the cooperative may ]**[provide]* if they cease to receive electricity or other energy related goods or services distributed by the cooperative. A husband and wife may hold a joint membership in a cooperative. Membership in a cooperative shall not be transferable, except as provided by the bylaws. The bylaws may prescribe additional qualifications and limitations in respect to membership.

Sec. 19. 30 V.S.A. § 3013 is amended to read:

§ 3013. TRUSTEES, QUALIFICATIONS

The business of a cooperative shall be managed by a board of not less than fivetrustees, each of whom shall be a member of the cooperative or of another cooperative which is a member thereof and a majority of whom shall reside in this state. The bylaws shall prescribe the number of trustees, their qualifications, other than those prescribed in this chapter, the manner of holding meetings of the board of trustees and of electing successors to trustees who shall resign, die or otherwise be incapable of acting. The bylaws may also provide for the removal of trustees from office and for the election of their successors. Trustees shall receive no compensation for their services as such and, except in emergencies, shall not be employed by the cooperative in any capacity involving compensation without the approval of the members. However, the bylaws may provide that a fixed fee and expenses of attendance may be allowed to each trustee for attendance at each meeting of the board of trustees, meeting of committees of the board of trustees, and for attendance or participation in other cooperative related functions necessary to fulfill their responsibilities as a trustee of the cooperative. If a husband and wife hold a joint membership in a cooperative, either, but not both, may be elected a trustee. The board of trustees may exercise all of the powers of a cooperative not conferred upon the members by this chapter or its articles of incorporation or bylaws.

Sec. 20. 30 V.S.A. § 3026 is amended to read:

§ 3026. PRIVATE CORPORATION, CHANGE

A corporation organized under the laws of this state and *[supplying or authorized to ]**[supply electric energy]* engaged in any of the activities described in subdivision (4) of section 3002 of this chapter may be converted into a cooperative by complying with thefollowing requirements and shall thereupon become subject to this chapter with the same effect as if originally organized under this chapter:

(1) The proposition for the conversion of such corporation into a cooperative and proposed articles of conversion to give effect thereto shall be submitted to a meeting of the members or stockholders of such corporation, the notice of which shall have attached thereto a copy of the proposed articles of conversion;

(2) If the proposition for the conversion of such corporation into a cooperative and the proposed articles of conversion, with amendments, are approved by the affirmative vote of not less than two-thirds of those members of such corporation voting thereon at such meeting, or, if such corporation is a stock corporation, by the affirmative vote of the holders of not less than two-thirds of the shares of the capital stock of such corporation represented at such meeting and voting thereon, articles of conversion in the form approved shall be executed and acknowledged on behalf of such corporation by its president or vice president and its seal shall be affixed thereto and attested by its clerk.

(3) The articles of conversion shall recite that they are executed pursuant to this chapter and shall state: (A) the name of the corporation and the address of its principal office prior to its conversion into a cooperative; (B) the statute or statutes under which it was organized; (C) a statement that such corporation elects to become a cooperative, nonprofit, nonstock membership corporation subject to this chapter; (D) its name as a cooperative; (E) the address of the principal office of the cooperative; (F) the names and addresses of the trustees of the cooperative; and (G) the manner in which members orstockholders of such corporation may become members of the cooperative; and may contain any provisions not inconsistent with law or this chapter deemed necessary or advisable for the conduct of the business of the cooperative. The president or vice president executing such articles of conversion shall make and annex thereto an affidavit stating that the provisions of this section were duly complied with in respect of such articles. The articles of conversion shall be deemed to be the articles of incorporation of the cooperative.

Sec. 21. 30 V.S.A. § 3033 is amended to read:

§ 3033. PERSONAL LIABILITY AND EQUITY

A member shall not be liable or responsible for debts of the cooperative and the property of the members shall not be subject to attachment or execution therefor. Nor shall a member’s patronage capital account, if any, in the cooperative be diminished by actions taken by the public service board without approval from the general membership of the cooperative.

Sec. 22. 30 V.S.A. § 3043 is amended to read:

§ 3043. FORMATION OF COOPERATIVES BY COOPERATIVES

(a) Notwithstanding any other provision of this chapter, one or more cooperatives formed under the provisions of this chapter may organize and control a cooperative having as its principal purpose the generation, manufacture, purchase, acquisition, accumulation, transmission, sale, supply and disposal of *[electric]* electricity or other energy related goods or services. Such a cooperative shall have all of the powers ofcooperatives formed under the provisions of this chapter.

(b) Members of a cooperative organized pursuant to subsection (a) of this section shall be the cooperative or cooperatives organizing it and may include any individual, partnership, association, corporation, municipality or cooperative engaged in the generation, transmission or distribution of *[electric]* electricity or other energy related goods or services within or without the state of Vermont. The bylaws of a cooperative organized pursuant to subsection (a) of this section may provide for more than one class of membership, including a class or classes with no rights or with limited rights to vote on matters requiring the vote of members under this chapter, and including a class or classes with no rights or limited rights to receive distributions of patronage refunds.

Sec. 23. 30 V.S.A. § 4002(2) is amended to read:

Any cooperative or municipal electric utility shall have:

* * *

(2) authority to act in participation with other such utilities in arranging for the purchase of supplies of capacity and energy from other utilities, either within or without the state of Vermont, including purchases from private electric utilities, municipal electric utilities, cooperatives, associations of utilities, or public authorities, and including, notwithstanding any other provision of law to the contrary, agreements whereby one or more private electric utilities, municipal electric utilities, cooperatives, associations of utilities, or public authorities assume responsibility for all or a portion of the power supply requirements or arrangements for the procurement and transmission ofelectric energy and capacity on behalf of such cooperative or municipal utility, and assume responsibility for all or a portion of the least cost integrated planning and demand side management programs on behalf of such cooperative or municipal utility;

Sec. 24. 32 V.S.A. § 5837 is added to read:

§ 5837. ELECTRIC GENERATION COMPANIES

(a) A tax is imposed for each calendar year, or fiscal year ending during that calendar year, upon any company which owns electric generation resources within Vermont, and makes sales from such resources to customers located within Vermont at rates approved pursuant to the jurisdiction of the public service board under 30 V.S.A. §209(a)(8). The tax shall be upon the Vermont net income earned pursuant to such arrangements from the ownership of generation resources associated with sales to customers located within Vermont. The rate of tax shall be:

(1) 95 percent of the Vermont net income that exceeds 20 percent of such company's return on equity in generation assets associated with sales in Vermont;

(2) 90 percent of the Vermont net income that exceeds 17 percent of such company's return on equity in generation assets associated with sales in Vermont; and

(3) 85 percent of the Vermont net income that exceeds 14 percent of such company's return on equity in generation assets associated with sales in Vermont.

(b) The tax imposed by this section shall not apply to income earned from new sales contracts entered into on or after January 1, 1997, provided that such contracts are not revisions of contracts entered into before January 1, 1997.

(c) Revenue from the tax imposed by this section shall be deposited into a special fund administered by the public service board, and distributed in amounts approved by the board to reduce ratepayer payments of above-market costs to electric utilities pursuant to chapters 89 and 90 of Title 30.

(d) The tax imposed by this section shall take effect on January 1, 1997.

* * * LEGISLATIVE OVERSIGHT COMMITTEE * * *

Sec. 25. LEGISLATIVE OVERSIGHT OF ELECTRIC INDUSTRY RESTRUCTURING

(a) An electric industry restructuring legislative oversight committee is created to monitor changes in the electric industry authorized by the provisions of this act, and to provide a forum for legislators and persons and companies affected by restructuring to communicate with each other concerning implementation of the provisions of this act. The committee shall consist of five senators not all from the same party appointed by the Committee on Committees, and five representatives not all from the same party appointed by the Speaker of the House. The legislative oversight committee shall report to the General Assembly and the governor on or before December 31 of each year on electric industry restructuring, and whether the legislative goals established by section 8001 of Title 30 have been achieved. The committee shall review the role of the department of public service in the regulation of public service companies under chapter 89 of Title 30, and consider whether any alternative regulatory structure would better serve the public interest. The public service board shall report to the committee on or before October 1, 1997 with any recommendations relating to the registration ofaggregating agents under 30 V.S.A. §8010(j), and the bundling of electric services and unrelated services under 30 V.S.A. § 8011.

(b) The legislative council and the joint fiscal office shall provide staff support to the legislative oversight committee. All agencies of state government, and all persons and companies subject to the provisions of this act shall provide such assistance and information as the committee determines is needed to carry out the provisions of this section.

(c) The legislative council shall convene an organizational meeting of the committee on or before 30 days following passage of this act. The legislative oversight committee may meet as often as is needed to carry out the purposes of this section. For attendance at meetings which are held when the General Assembly is not in session, the members of the committee shall be entitled to the same per diem compensation and reimbursement for necessary expenses as provided to members of standing committees under 2 V.S.A. § 406. The committee shall cease to exist on December 31, 2000 unless reauthorized by further act of the General Assembly.

(d) $12,000.00 is appropriated from the general fund to the legislature in fiscal year 1998 to carry out the provisions of this section.

* * * TRANSITIONAL PROVISIONS; APPROPRIATIONS; POSITIONS ADDED * * *

Sec. 26. TRANSITIONAL PROVISIONS

(a) From January 1, 1998 until July 1, 2001, the renewable energy technology charge and the energy efficiency charge shall be combined as provided for in this act and shalltogether be three-tenths of a cent per kilowatt-hour. During fiscal year 1998 and in each fiscal year thereafter until fiscal year 2000, the revenue from the combined charge sufficient to support the appropriation authorized in Sec. 27(d) of this act, and any appropriation in subsequent fiscal years, shall be deposited into the renewable and sustainable energy fund.

(b) From July 1, 1997 until December 31, 1999, the consumer information and protection charge shall be six one-thousandths of a cent per kilowatt-hour, or one cent per customer per month, whichever is greater.

(c) From January 1, 1998, until December 31, 1998, the electric energy affordability charge shall be one and one-half tenths of a cent per kilowatt-hour unless otherwise ordered by the public service board.

(d) The public service board may adopt emergency rules as necessary to implement the provisions of this act.

(e) In order to permit an orderly transition to a restructured electric industry and to promote a rapid and efficient transition to statewide energy efficiency service delivery, the department of public service is authorized to contract for and supervise the delivery of transitional statewide energy efficiency programs as contemplated by this act, and with the consent of an existing utility as defined in this act, or as authorized by the board, to receive in trust and expend for that purpose any funds transferred to it by an existing utility for electric utility energy efficiency programs or activities until the efficiency utility provided for in section 8024 of Title 30 commences operation under a planapproved by the public service board. Any funds received by the department under this provision from an existing utility shall be deemed to be a fully recoverable above-market cost.

Sec. 27. APPROPRIATIONS; POSITIONS ADDED

(a) In fiscal year 1998, the sum of $50,000.00 is appropriated to the attorney general from the consumer information and protection special fund to support personnel and operating expenses related to utility restructuring and other anti-trust activities of the attorney general’s office.

(b) The sum of $250,000.00 is appropriated to the department of public service from the consumer information and protection special fund to support the consumer information and education activities authorized in 30 V.S.A. § 8019.

(c) The sum of $150,000.00 is appropriated to the department of taxes from the petroleum violation escrow fund in fiscal year 1998 to support the department's administrative start-up costs in implementing the electric energy affordability program. The sum of $60,000.00 is appropriated in fiscal year 1998 to the department of taxes from the electric energy affordability special fund to support the department's annual costs of administration of the electric energy affordability program.

(d) The sum of $250,000.00 is appropriated to the department of public service in fiscal year 1998 from the renewable and sustainable energy fund to support the activities authorized in 30 V.S.A. § 8027, and any other activities authorized by law.

(e)(1) The following positions are established in the public service board in fiscal year 1998:

(A) one utilities analyst.

(B) four limited service positions to expire on June 30, 2000: one utilities analyst; two attorneys; and one secretary.

(2) The following limited service positions, to expire on June 30, 2000, are established in the department of public service in fiscal year 1998:

(A) two attorneys.

(B) one utilities analyst.