General Description and Status Summary
In May 1997, the Public Service Commission authorized the establishment of a task force to study restructuring of the electric utility industry in West Virginia. The task force met throughout 1997 discussing various aspects of restructuring and attempting to arrive at a consensus plan for implementation of restructuring.
Although it could not arrive at full consensus, the task force did develop a set of recommended restructuring principals and guidelines that the Commission should consider. The task force issued a report in October, 1997. Many issues, such as the expected and/or appropriate structure for a deregulated electric supply market, potential state and local tax issues, principles to guide the Commission, statutory and/or rule changes, a restructuring blueprint, cross subsidization, and need for a code of conduct for participants in the competitive power supply market were explored by the task force and agreements were reached on many of these issues.
The October report describes the possible positives and negatives of either changing or maintaining the structure of the electric industry; the present power supply market with price information; stranded costs/benefits options; the appropriate structure for a competitive electric industry; tax revenue implications; guiding restructuring principles; proposed rule and statutory changes; and a blue print for restructuring.
During its 1998 regular session, the West Virginia Legislature enacted HB4277, which authorized the Commission to consider whether restructuring was in the public interest, and if so, to submit a plan for restructuring for Legislative approval.
In April, 1998, the Commission initiated a proceeding (Commission Case Number 98-0452-E-GI) to hold a series of restructuring work shops prior to receiving recommendations from interested parties regarding the public interest requirement of HB4277 and regarding a proposed plan or plans for restructuring. The work shops were held beginning in May, 1998 and continuing throughout 1998.
In 1999, the Commission conducted a number of hearings into the issues that had been presented in the 1997 and 1998 task force meetings and workshops. Then, in January of 2000, the Commission issued an order finding that restructuring of the supply component of the traditional electric utility function, deregulation of electric generation, opening workably competitive electric supply markets and offering customers choice of power suppliers; all within the parameters of a structured plan with a long-term transition period; was is the public interest, including the interest of West Virginia consumers. As part of that order, the Commission set forth its plan for a long-term transition to workably competitive power supply markets and customer choice.
During the 2000 legislative session, the West Virginia Legislature conditionally approved the Commission's Plan. However, the Legislature required that the Plan could not be implemented until it had reconvened after the regular 2000 legislative session and passed tax law changes that were necessary to assure that tax laws applicable to the electric industry reflected the restructured industry recommended in the Commission's Plan.
During 2000, the Commission initiated a Rulemaking Proceeding to determine appropriate new Rules that should apply after the implementation of its Plan. The Rulemaking Proceeding addressed new or modified rules applicable to electric distribution, competitive electric suppliers, codes of conduct, emergency service, reliability and interconnections, consumer protection, low income customer assistance and protections for employees in the electric and related industries. The Commission issued proposed Rules in mid-2000. Final Rules have not yet been issued.
Throughout 2000 the Commission met with Legislative Committees to provide information regarding necessary tax law changes. The Commission also addressed a growing concern that problems that may be either directly or indirectly associated with deregulation and customer choice in some States may be indicative that it was premature to move to a deregulated power supply market. Huge power supply price increases and supply disruptions within California and other western states continued to occur throughout the summer, fall and winter of 2000.
In late 2000, Legislative sub-committees studying the electric industry decided to delay immediate consideration of the tax law changes that were necessary before the Commission's Plan could be implemented. Part of the delay was to allow the Legislature an opportunity to seek independent advise regarding the necessary tax law changes, as well as independent advise on the differences between potential competitive markets in West Virginia, and those that were experiencing difficulty in the western states.
It is anticipated that the Legislature and the Governor will await independent evaluations of the Commission's proposed Plan before proceeding to implement deregulation of electric generation and the development of competitive power supply markets in the State.
Links to other information and documents are contained in the Electric Restructuring Index (see return link below).
To contact the Commission regarding restructuring you can email jlane@psc.state.wv.us
