H. B. 2741


(By Delegate Pino)
[Introduced February 24, 1995; referred to the
Committee on the Judiciary.]




A BILL to amend chapter twenty-four of the code of West Virginia,
one thousand nine hundred thirty-one, as amended, by adding thereto a new article, designated article three-a, relating to free and open competition in the sale and servicing of energy and nonenergy related products and equipment; defining certain terms; prohibiting utilities from selling certain goods and services not used for measuring and delivering utility services; prohibiting utilities from engaging in certain practices; providing that utility affiliates comply with certain business requirements; providing a fine for violations; requiring the public service commission to conduct reviews, inspections and audits; and requiring the public service commission to issue rules.

Be it enacted by the Legislature of West Virginia:
That chapter twenty-four of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new article, designated article three-a, to read as follows:
ARTICLE 3A. UTILITY SALES AND SERVICES.

§24-3A-1. Findings.

The Legislature finds and declares it to be the public policy of this state to promote free and open competition in the sale and servicing of energy and nonenergy-related products and equipment. Free and open competition in the sale and servicing of energy and nonenergy-related products and equipment promotes the development of energy-efficient, quality products and equipment at reasonable cost to the consumer. Free and open competition promotes the development of a service industry providing quality service at reasonable cost to the consumer. Free and open competition is vital to the continued life of the nonutility, energy-related small business. Free and open competition for energy service contracts promotes the public good. Free and open competition can only be achieved if the market for goods and services is not distorted or dominated by utilities that, by virtue of their special status as regulated monopolies in the development and distribution of energy, have an unfair competitive advantage in other energy-related enterprises.
The purpose of the Legislature is to prohibit utilities from engaging in the sale or service of energy-consuming products and equipment, including household appliances, the sale of construction services, and the sale of energy efficient modernization or retrofit services, except in circumstances that guard against subsidization by utilities or affiliates and unfair contracting practices and that otherwise ensure fair competition and a free and open market for products and services unaffected by the special competitive advantage enjoyed by the utilities.
§24-3A-2. Definitions.

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
(a) "Affiliate" means a person, including an individual, corporation, corporate subsidiary, firm, partnership, incorporated or unincorporated association, political subdivision including a public utility district, city, code city, town and county; and combinations of political subdivisions, that controls, is controlled by, or is under common control with a utility and that is engaged in the sale, lease, rental, installation, construction, modernization, retrofit, maintenance or repair of equipment products, including household appliances.
(b) "Emergency service" means service performed by a utility to correct malfunctions or interruptions in the generation, transmission, distribution, or use of natural gas or electricity that, if not corrected, may endanger life or property or otherwise affect public safety.
(c) "Utility" means a person, corporation, political subdivision or other legal entity, or authorized representative, operating, maintaining, or controlling equipment or facilities for furnishing at retail natural, manufactured or mixed gas or electric service to offer the public.
The term utility includes: (1) Those engaged in the production of gas or electric service for retail sale and regulated by the utilities and transportation commission; (2) public utility districts; (3) municipalities; (4) cooperative and mutual electric associations that produce or furnish gas or electric service; (5) those furnishing gas or electric service to another utility for resale; or (6) those possessing the exclusive grant or privilege to furnish gas or electric service at retail to consumers in an area or political subdivision in this state.
The term utility does not include: (1) Those selling compressed natural gas at retail for use as a vehicular fuel who purchase the gas from a utility; (2) those furnishing gas or electric service only to tenants or cooperative or condominium owners in buildings owned, leased or operated by the person, corporation, or other legal entity or authorized representative; (3) those furnishing gas or electric service to occupants of a manufactured home or trailer park, owned, leased or operated by the person, corporation or other legal entity, or authorized representative; or (4) producing or furnishing gas or electric service to fewer than twenty-five persons.
(d) "Utility contractor" means a person, including an individual, corporation, firm, incorporated or unincorporated association or other business or legal entity, that contracts, whether in writing or not in writing, with a utility to provide the sales and services engaged in by affiliates as defined in subsection (a) of this section; utility contractor includes a contractor, subcontractor, material supplier or other person. Utility contractor does not include an official or employee of a utility.
§24-3A-3. Prohibited activities of utilities.

Except as otherwise set forth in this article, a utility may not engage in the sale, lease, rental, installation, construction, modernization, retrofit, maintenance or repair of products or equipment, including household appliances, that are not used for delivering or measuring utility service.
(a) A utility may not engage in the sale, lease, rental, installation, construction, modernization, retrofit, maintenance or repair of products or equipment, including household appliances except by an affiliate.
(b) A utility may not grant an unfair preference or privilege to an affiliate in the transaction of business between them or to a utility contractor in awarding a contract; except that the commissioner, under the authority of section eight of this article, shall adopt rules governing the awarding of a contract by a utility to a utility contractor, and guidelines for waiver of those rules, such as lack of competitors or other circumstances when a waiver would not thwart the legislative declaration and purpose expressed in section one of this article.
(c) A utility or its agent, employee or representative may not refer or steer customers to specific individuals or companies engaged in the sale or servicing of energy-consuming products, equipment or appliances, including an affiliate or utility contractor.
(d) A utility may not lend money to or guarantee, endorse or act as a surety on the debts, liabilities, bonds, notes, contracts or other obligations, or otherwise assist financially, an affiliate.
(e) A utility may not purchase, receive, hold or otherwise acquire the stock, shares, bonds, debentures, notes or other securities, or other interest in an affiliate unless the utility pays at least the fair market value for the interest acquired.
(f) A utility may not sell, lease, rent, assign or transfer real or personal property to an affiliate, unless the utility receives at least the fair market value for the property sold, leased, rented, assigned or transferred.
(g) The section does not prohibit a utility from providing emergency service, or providing any service required by law.
(h) A utility that violates this section is subject to a fine not to exceed twenty-five thousand dollars for each separate and distinct offense.
§24-3A-4. Authorized activities of affiliates.

An affiliate may engage in the sale, lease, rental, installation, maintenance or repair of equipment, products or appliances that are dependent upon energy supplied by a utility for their operation only if in compliance with the following requirements:
(a) The name of the affiliate may not resemble the name of the utility. Neither the utility nor the affiliate may trade upon, promote or advertise their affiliated status.
(b) The affiliate may not have a place of business at or on premises owned or occupied by the utility. The affiliate may not share the use of premises, equipment, inventory, personnel or other resources of the utility.
(c) The affiliate may not advertise, promote or market its products or services through mailings of the utility or advertisements in which the utility's name is set forth.
(d) The affiliate shall maintain accounts, books and records separate and distinct from those of the utility.
(e) Costs and expenses involved in operating the affiliate shall be borne by the affiliate and not by the utility. Revenues from the affiliate may not be provided or disbursed to the utility.
(f) Assets of the affiliate shall be maintained separate and distinct from the assets of the utility.
(g) The affiliate shall transact its business in the state separate and independent of the utility so as to gain no competitive advantage by virtue of its status as an affiliate.
§24-3A-5. Penalty.

Any affiliate found to have violated any of the provisions of section four of this article may be fined by the public service commission in an amount not to exceed twenty-five thousand dollars for each distinct and separate violation.
§24-3A-6. Jurisdiction of the public service commission.

The public service commission has jurisdiction over utilities, affiliates and utility contractors to ensure compliance with this article.
§24-3A-7. Responsibilities of the public service commission.

The public service commission shall:
(1) Review, inspect and audit books, accounts and other records kept by a utility, affiliate or utility contractor and make the findings available to the commission;
(2) Investigate the operations of a utility, affiliate or utility contractor and their relationship to each other for the purpose of ensuring compliance with this article and rules adopted under section eight of this article.
§24-3A-8. Rules.

The public service commission shall adopt rules and conduct hearings to administer and ensure compliance with this article.





NOTE: The purpose of this bill is to regulate sales and services of energy and nonenergy related products and equipment. The bill gives the Public Service Commission jurisdiction over sales and services of energy and nonenergy related products and equipment. The bill also prohibits utilities from conducting businesses not used for measuring and delivering service, prohibits sales by utilities of household appliances; prohibits unfair preference for or referral to an affiliate by a utility and prohibits other conduct by a utility which gives an affiliate an advantage. The bill authorizes affiliates of utilities to engage in certain activities and it provides that the Public Service Commission may fine an affiliate for violations. Under the bill, the Public Service Commission is required to adopt rules, review, inspect and audit books and investigate utilities.

This article is new; therefore, strike-throughs and underscoring have been omitted.