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COMMONWEALTH OF VIRGINIA
STATE CORPORATION COMMISSION
Exhibits D-3 & D-4
AT RICHMOND, JUNE 29, 2000
APPLICATION OF
DELMARVA POWER & LIGHT COMPANY
For approval of a plan for CASE NO. PUE000086
functional separation of
generation pursuant to the
Virginia Electric Utility
Restructuring Act
APPLICATION OF
DELMARVA POWER & LIGHT COMPANY, CASE NO. PUA000032
CONECTIV DELMARVA GENERATION, INC,
and
CONECTIV ENERGY SUPPLY, INC.
For approval of transactions under
Chapters 4 and 5 of Title 56 of
the Code of Virginia
FINAL ORDER
History of the Case
On February 4, 2000, Delmarva Power & Light Company ("Delmarva" or the
"Company") filed an application, pursuant to Virginia Code Section 56-590 B of
the Virginia Electric Utility Restructuring Act ("Restructuring Act"), for
approval of a plan for the functional separation of its generation activities
from its transmission and distribution activities (the "Plan"). Delmarva's
proposed Plan provides for, among other things, a three-phased divestiture of
all its generating units. In a companion filing made on April 12, 2000, the
Company requested
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approvals under Chapter 4 ("Affiliates Act") and Chapter 5 ("Utility Transfers
Act") of Title 56 of the Code of Virginia for approval to transfer generating
facilities and related assets to its affiliates Conectiv Delmarva Generation,
Inc. ("CDG"), and Conectiv Energy Supply, Inc. ("CESI"), and approval of certain
transactions with those affiliates.
Delmarva also seeks approval of the following generation transfers: (1)
the sale to PECO Energy Company ("PECO") and PSEG Power, LLC ("PSEG"), of its
ownership interests in the Peach Bottom Nuclear Generating Station located in
York County, Pennsylvania, and the Salem Nuclear Power Generating Station
located in Salem County, New Jersey ("Phase I"); (2) the sale to NRG Energy,
Inc. ("NRG"), of its Indian River (Delaware) and Vienna (Maryland) plants, and
its ownership interests in the Keystone and Conemaugh (Pennsylvania) plants
("Phase II"); and (3) the transfer of its remaining intermediate and peaking
units to CDG ("Phase III").
As part of its filings, Delmarva also seeks Commission determinations
on behalf of itself and its affiliate Atlantic City Electric ("ACE") pursuant to
Section 32 of the Public Utility Holding Company Act of 1935 ("PUHCA"), 15
U.S.C. Section 79z-5a. Conectiv, Delmarva's parent, is a registered utility
holding company subject to PUHCA oversight and regulation by the Securities and
Exchange Commission ("SEC").
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The determinations sought under PUHCA are that the Phase I and Phase II
transfers of nuclear and fossil units, respectively, by Delmarva and ACE to
exempt wholesale generators and the designation of these units as "eligible
facilities:" (i) will benefit consumers, (ii) are in the public interest, and
(iii) do not violate state law. Similar declarations are sought for Phase III
transfers to Delmarva's affiliate CDG, and the transfers by ACE to Conectiv
Atlantic Generation, LLC ("CAG"). CDG and CAG anticipate filing applications
with the Federal Energy Regulatory Commission ("FERC") for exempt wholesale
generator ("EWG") status for eligible Phase III units within the next twelve
months or shortly thereafter.
As set forth in Delmarva's February 4, 2000, filing, the Plan also
included a proposal for incremental reductions in Delmarva's base rates
corresponding with the closing of the transfers in each of the phases described
above, with a final cumulative rate reduction of 2.58 percent for each customer
class which would remain in effect until January 1, 2004. The Company's Plan
also provides for scheduled annual increases in the fuel rates. Fuel rates
proposed as part of the Plan would have equaled the energy charges specified in
a power purchase agreement that Delmarva recently executed with PECO Energy
Company (the "PECO PPA"). Delmarva also proposed to collect over a twelve-month
period any deferred fuel balance that exists approximately 30 days after the
date of full divestiture of its generating units.
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Delmarva's February 4, 2000, filing also requests that the Commission
find that the Company's participation in the PJM Interconnection, LLC ("PJM")
satisfies the requirements of Section 56-577 and 56-579 of the Restructuring
Act, or, alternatively, that the Company is not subject to these provisions of
the Restructuring Act because of the geographic isolation of its Virginia
service territory. These provisions of the Restructuring Act require that
incumbent utilities with an ownership interest in, or entitlement to,
transmission capacity join or establish regional transmission entities.
On June 12, 2000, Delmarva filed, by motion, a Memorandum of Agreement
("MOA") between the Company and the Staff. The MOA sets forth the agreements
reached between Delmarva and the Staff for resolution of the issues raised by
the Company's Plan. Delmarva's motion requests that the Commission adopt the
Company's Plan, as modified by the June 12, 2000, MOA. The Staff filed a Report
on June 15, 2000 ("Staff Report"), providing support for the MOA and furnishing
additional information regarding the numerous issues raised by Delmarva's
proposed Plan.
Summary of the Memorandum of Agreement
The Staff and Delmarva have proposed in the MOA that the Commission, in
conjunction with its review of Delmarva's filings described above, adopt certain
findings and recommendations.
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These proposed findings and recommendations are set forth in detail in Part III
of the MOA, and are briefly summarized as follows:
o That Delmarva be authorized to divest its generation assets in three
separate phases as described in its February 4, 2000, and April 12,
2000, filings in this matter, and as further modified by the MOA;
o That in conjunction with such divestitures, Delmarva's base rates for
its Virginia customers be cumulatively reduced by $727,542, in
intervals linked to the completion of each proposed phase of
generation divestiture;
o That Delmarva not seek an increase in its production (non-fuel),
transmission or distribution rates prior to January 1, 2001;
o That Delmarva waive its rights to collect any wires charge calculated
by the Commission pursuant to Section 56-583 during any period in
which such collection would otherwise be authorized under the
Restructuring Act;
o That Delmarva's current fuel factor of $0.01917 per kWh remain in
effect until the earlier of the first day of the month preceded by an
interval of at least 15 days following the closing date of whichever
divestiture phase is last to close ("Total Divestiture") or January 1,
2001;
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o That following the earlier of January 1, 2001, or the first day of the
month preceded by an interval of at least 15 days following the date
of Total Divestiture, Delmarva's fuel factor be reset at $0.021 per
kWh, which factor shall remain in effect at least until January 1,
2004, and that the action to reset such fuel rate be accomplished by
separate application to the Commission made pursuant to Section
56-249.6;
o That effective January 1, 2004, and subject to the conditions for
applicability set forth therein, Delmarva's fuel factor be modified
pursuant to the Rate Case Protocol (appended as Attachment 1 to the
MOA) established by the Staff and Delmarva, based upon (i) Delmarva's
1999 generation mix, and (ii) and the Fuel Index Procedure (Attachment
2 to the MOA);
o That, as of the earlier of the first day of the month preceded by an
interval of at least 15 days following the date of Total Divestiture
or January 1, 2001, an unrecovered fuel balance of $892,921 be
recovered over a 24 month period, subject to Commission approval under
a separate application by Delmarva pursuant to Section 56-249.6;
o That Delmarva's capped rate established pursuant to Section 56-582 and
the provisions of the MOA be deemed its default rate pursuant to
Section 56-585 whenever Delmarva is a provider of default service
during any period in which capped rates are also in effect;
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o That, if capped rates under Section 56-582 are terminated, by
Commission action or operation of law, on or before July 1, 2007, or
if such rates expire by operation of law on July 1, 2007 and Delmarva
is then, in either event, a designated provider of default service
within its certificated service territory pursuant to Section 56-585
on or after any such termination, Delmarva's rates for such default
service be determined or redetermined pursuant to the Rate Case
Protocol. Such rates shall become effective with the termination of
capped rates. The Rate Case Protocol shall remain operative thereafter
for purposes of determining or redetermining default rates until such
time as Delmarva is no longer designated as a provider of default
service by the Commission pursuant to Section 56-585;
o That pursuant to the provisions of Section 32 of PUHCA, 15 U.S.C.
Section 79z-5a, the Commission find that the transfer of generation
plants and facilities by Delmarva and its affiliate ACE to exempt
wholesale generators, as more fully described in paragraphs 50-56 of
Delmarva's February 4, 2000, filing (i) will benefit consumers, (ii)
is in the public interest, and (iii) is not contrary to state law; and
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o That Delmarva agree to operate and maintain the distribution system of
its Virginia service territory at or above current levels of service
quality and reliability.
These proposed recommendations and findings are discussed in detail in
the June 15, 2000, Staff Report.
Other parties appearing in the case
On June 12, 2000, the Company filed a motion with the Commission
seeking disposition of its Plan pursuant to the terms of the MOA. As noted in
the motion, three parties filed Comments in Case No. PUE000086. They are
Virginia Electric and Power Company ("Virginia Power"), Old Dominion Electric
Cooperative ("Old Dominion"), and Commonwealth Chesapeake Company, LLC
("Commonwealth Chesapeake").
None of these parties opposed Delmarva's application or requested a
hearing. Moreover, these three parties have reviewed the MOA and do not oppose
it. Attached to the Company's June 12, 2000, motion were letters from each of
these three parties stating that they have no opposition to the MOA or to
expedited disposition of this matter by the Commission. The attached letters
also acknowledge that no hearing has been scheduled in this matter, and none
requests a hearing.
The Restructuring Act's provisions governing functional separation
As noted in the Staff Report, Delmarva's application to divest its
generating assets as part of a functional separation
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plan represents the first such proposal received by the Commission.1 As such,
Delmarva's proposed Plan raises a number of issues where there is no precedent.
These issues bear directly on the balancing of utility and ratepayer interests
that is recognized in the Restructuring Act. The Restructuring Act sets forth a
number of conditions and considerations for functional separation. Specific
requirements for separation are set forth in Section 56-590 of the Code of
Virginia. In particular, Section 56-590.B 3 states:
Consistent with this chapter, the Commission may impose
conditions, as the public interest requires, upon its approval
of any incumbent electric utility's plan for functional
separation, including requirements that (i) the incumbent
electric utility's generation assets or their equivalent
remain available for electric service during the capped rate
period as provided in Section 56-582 and, if applicable,
during any period the incumbent electric utility serves as a
default provider as provided for in Section 56-585, and (ii)
the incumbent electric utility receive Commission approval for
the sale, transfer or other disposition of generation assets
during the capped rate period and, if applicable, during any
period the incumbent electric utility serves as a default
provider.
The Company's proposed Plan may also have implications with respect to
the pricing of default services as provided for under the Restructuring Act.
Section 56-585.C states that:
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1 Moreover, Delmarva's filings were received prior to the Commission's April 18,
2000, Order Prescribing Notice and Inviting Comments concerning proposed
functional separation rules in Case No. PUA000029. Final rules have not been
promulgated in that case.
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The Commission shall, after notice and opportunity for
hearing, determine the rates, terms and conditions for such
services consistent with the provisions of subdivision B 3 and
Chapter 10 (Section 56-232 et seq.) of this title and shall
establish such requirements for providers and customers as it
finds necessary to promote the reliable and economic provision
of such services and to prevent the inefficient use of such
services. The Commission may use any rate method that promotes
the public interest and may establish different rates, terms
and conditions for different classes of customers.
As noted in the Staff Report, subdivision B 3 of Section 56-585
indicates that rates for default service should provide fair compensation for
utilities and reflect any cost of energy prudently procured, including energy
procured from the competitive market. Chapter 10 of Title 56 of the Code of
Virginia provides for traditional cost of service ratemaking, which may, in
appropriate circumstances, include the cost of energy prudently procured from
the competitive market. Divestiture of the Company's generating units without
provisions requiring the availability of alternative resources that are
equivalent with respect to both price and reliability could ultimately produce
higher rates for default services if the market cost of power is in excess of
what costs would have been absent divestiture. Alternatively, similarly priced
but less reliable service might result. The Company's original Plan sought to
assure that equivalent resources would be made available from a reliability
perspective but not from a price perspective.
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Similarly, the Company's proposed divestiture has implications
regarding capped rates as provided for in Section 56-582 of the Restructuring
Act. Section 56-582.B provides for the adjustment of capped rates in connection
with fuel costs, which have traditionally included certain costs associated with
purchased power. As emphasized in the Staff Report, the Company's Plan would
effectively remove the embedded cost of its generating assets from base rates
and recover purchased power costs through the fuel factor. As such, the
Company's overall rates could potentially exceed what Delmarva's capped rates
would have been if the Company had not divested its generating assets.
Consequently, ratepayers would be deprived of rate cap protections if energy
acquired from competitive markets reflects a higher cost than would have been
incurred had Delmarva continued to own its generation and these higher purchased
power costs were recovered through the fuel factor.
The proposed divestitures
Delmarva's Plan calls for the complete divestiture of its generation
assets. The MOA proposes a timeline, different from the Company's original
proposal, in which as soon after May 31, 2000, as regulatory approvals can be
obtained, including those of this Commission, the following transactions would
be completed: (i) the sale of Delmarva's Phase I minority interests in certain
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nuclear facilities; (ii) the Phase III transfers of certain fossil-fueled
intermediate and peak-load facilities to an affiliate; and (iii) the
intermediate transfer of Delmarva's minority interests in the Keystone and
Conemaugh plants (part of the Phase II transfers) to CDG, a Delmarva affiliate.
This interim transfer will provide federal income tax benefits to Conectiv,
Delmarva's parent company. Phase II is scheduled for completion on or about
August 31, 2000, when (i) CDG transfers the Keystone and Conemaugh plant
interests to NRG, (ii) Delmarva transfers its Indian River and Vienna power
plants to NRG, and (iii) Delmarva and ACE transfer certain land, facilities and
interests to NRG.
In connection with these proposed transfers and sales, Delmarva has
agreed to Staff's proposal of an overall base rate revenue decrease of $727,542.
The reduced base rates would be calculated based on billing determinants
consistent with a test year ending July 31, 1999, as reflected in the February
4, 2000, filing. These base rate reductions would be implemented in phases
concurrent with the overall phasing of the generation asset divestitures
proposed by Delmarva.
The MOA further provides that the Phase I transfers will trigger a base
rate decrease of $197,566, which will be applied by reducing residential,
general service-secondary, general service-primary, and lighting base rates by
$96,835, $62,127, $35,499, and $3,105, respectively. The Phase III transfer will
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prompt a base rate decrease of $277,740, and the Phase II sales will initiate a
further base rate reduction of $252,236. The Phase II decrease will be
implemented by applying reductions of $123,631, $79,318, $45,322, and $3,965 to
residential, general service-secondary, general service-primary, and lighting
base rates, respectively. The Phase III reduction will be applied to
residential, general service-secondary, general service-primary, and lighting
base rates by $136,132, $87,338, $49,905, and $4,365, respectively. Delmarva and
Staff propose to defer for later consideration by the Commission the issue of
whether the base rate reductions set forth in the MOA should be assigned to the
production component of rates or proportionately assigned among production,
transmission, and distribution components of rates.
Findings concerning capped rate service
As discussed in the Staff Report, as originally proposed, Delmarva's
Plan would have decreased overall rate revenues by 2.58 percent once all three
phases of the Company's proposed divestiture had been completed. As set forth in
the Company's February 4, 2000, filing, this rate change would have been
accomplished through a 24.12 percent base rate reduction and a fuel factor
increase of 64.01 percent. Interim base rate reductions would have been
implemented with each phase of the proposed divestiture. The proposal also
provided for scheduled increases in purchased power costs as provided for in the
PECO
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PPA. The reduced base rates and fuel factor, with scheduled increases, would
have remained in effect until January 1, 2004. From that point forward, Delmarva
had proposed to reset its fuel factor at a level sufficient to recover the cost
of power prudently procured from the competitive market. The Company also
proposed to recover any deferred fuel balance existing at the time of full
divestiture over a 12-month period.
Delmarva's original Plan could have resulted in higher rates. Capped
rates would be higher in the future if the cost of power procured from the
competitive market is higher than what the embedded costs of the Company's
generating assets would have been. The proposed MOA sets forth a number of
provisions that seek to resolve this potential problem and to assure that the
Company's customers are not adversely impacted by the proposed divestiture. The
estimated revenue impacts of these provisions were summarized as Attachment A to
Delmarva's June 12, 2000, motion. Under the MOA, Delmarva has agreed to:
o reduce base rates in phases with an ultimate reduction of $727,542;
o forego any collection of wires charges as provided for under the
Restructuring Act;
o not seek an increase in its production (non-fuel), transmission or
distribution rates prior to January 1, 2001;
o maintain its currently operative fuel factor of 1.917 cents per
kilowatt hour ("(cent)/kWh") until the earlier of the first day of the
month preceded by an interval of at least 15 days following complete
divestiture or January 1, 2001, without a continued deferral of fuel
costs;
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o reset its fuel factor to 2.1(cent)/kWh through a separate application
upon the earlier of complete divestiture or January 1, 2001, and to
freeze the fuel factor at that level without any further deferral of
fuel costs until January 1, 2004;
o establish a fuel index mechanism for determining its fuel factor
effective January 1, 2004, and until the end of the capped rate period
and the elimination of Delmarva's default service obligations; and
o lock-in and collect a reduced deferred fuel balance of $892,921 over a
24-month period.
We find that the above provisions are in the public interest and that
they will benefit Delmarva's customers. Clearly the base rate reductions and the
Company's willingness to forego any collection of wires charges as provided for
under the Restructuring Act provide benefits to ratepayers. Additionally,
Delmarva's waiver of its statutory entitlement under Section 56-582 of the
Restructuring Act to seek a rate increase prior to January 1, 2001, also
provides potential benefits to customers since the Company could have requested
a one-time increase in its capped rates for the period ending January 1, 2004,
As pointed out in the Staff Report, however, the Company's filings in
this matter did not provide public notice of the proposed fuel factor increase
included in the MOA and described above. Accordingly, this increase must be
formally requested in a separate filing by the Company.
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Findings concerning default service
As noted earlier and as discussed in the Staff Report, Delmarva's
original Plan detailed in its February 4, 2000, filing stated that in
conjunction with the proposed divestitures, the Company would commit to purchase
power from competitive markets for the purposes of meeting any on-going default
service requirements imposed by the Commission pursuant to Section 56-585 of the
Restructuring Act. As discussed in the Staff Report, the Company's application
indicated that the proposed Plan would satisfy any requirement that it be
required to retain generating assets or their equivalent pursuant to Section
56-590.B since Delmarva was committed to acquiring capacity and energy to serve
its Virginia retail load through purchased power agreements and its membership
in PJM. On page 19 of its February 4, 2000, application, the Company stated that
reliability would not be affected under this approach since "a change in
ownership of the power plants, by itself, will neither change the availability
of power in the PJM region nor the amount of power delivered into Delmarva's
Virginia service area." The Staff Report observes that the Company's filing
apparently did not contemplate the possibility that an equivalency requirement
could be construed to require pricing equivalency given the ratemaking
provisions for default service as set forth in Section 56-585 of the
Restructuring Act.
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The Staff was concerned that the Company's proposed divestiture could
ultimately produce higher rates for default service provided by Delmarva since
competitive power costs could exceed costs that would have been associated with
continued ownership of the Company's existing generating assets. Given these
uncertainties, the Staff stated that it felt it could not support Delmarva's
original Plan.
The MOA, however, seeks to resolve this issue by establishing a Rate
Case Protocol that would assure that the generation component of future rates is
no higher than it would have been had Delmarva continued to own its existing
generating assets. The Rate Case Protocol also recognizes that Delmarva's
embedded cost of generation could change over time and establishes mechanisms
for adjusting future rates accordingly. We agree with Staff that the Rate Case
Protocol represents an effective means of meeting the requirements of the
Restructuring Act, thus allowing Delmarva to move forward with its proposed
divestiture relatively quickly.
Findings concerning separation of transmission function
Delmarva also seeks a Commission determination that the Company's
participation in PJM satisfies elements of the Restructuring Act requiring
incumbent utilities with an interest in transmission capacity to join or
establish regional transmission entities. In the MOA and its report, Staff
generally concurs that Delmarva's participation in PJM will likely be in
compliance with the Restructuring Act.
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As noted by the Staff, however, the Commission has initiated Case No.
PUE990349 to promulgate rules regarding utility participation in regional
transmission entities and such rules could potentially set forth requirements
that are not satisfied by Delmarva's participation in PJM. Consequently, we will
defer any ruling regarding the Company's RTE participation until such rules are
adopted.
Findings concerning proposed transfers of generation and related assets
On April 12, 2000, Delmarva, CDG, and CESI, filed an application
seeking approval to transfer to CDG and CESI certain Delmarva generation assets
and related land, inventories, and other assets, which requires approval under
the Affiliates Act. Delmarva is also requesting approval under the Utility
Transfers Act to transfer two peak-load power plants that are physically located
in the Commonwealth to CDG. Such filing was subsequently supplemented with
certain forms of agreements and contracts filed on May 8 and May 26, 2000,
respectively. Delmarva also seeks a Commission determination required by PUHCA
for the transfer of Delmarva and ACE generation facilities and their subsequent
treatment as "eligible facilities."(2)
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2 The facilities of Delmarva and ACE are set forth in Appendices A and B,
respectively, of Delmarva's February 4, 2000, application.
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In its April 12 application, Delmarva specifically requests (i)
approval to transfer several power plants and related ancillary assets,
inventories, permits, licenses, contracts, its interest in a natural gas
pipeline, and its rights and obligations in the Merrill Creek Reservoir to CDG;
(ii) approval to transfer fuel inventories, fuel, and associated fuel
transportation contracts to CESI; (iii) approval of Interconnection Agreements
with CDG to the extent the Commission does not believe it is preempted by the
FERC; (iv) approval of a Service Agreement and any related transaction
agreements of less than one-year's duration with CESI; (v) approval to transfer
wholesale and retail electric and gas contracts that have been executed in
price-deregulated markets and the related portfolios of supply contracts used to
support such sales to CESI; and (vi) approval to transfer the peaking units
located at Bayview and Tasley, Virginia, to CDG.
We agree with Staff that approvals sought pursuant to the Affiliates
Act and Utility Transfers Act described above should be granted in this
proceeding consistent with the statutory requirements of Section 56-77 of the
Affiliates Act and Section 56-90 of the Utility Transfers Act. Specifically, we
find that the approvals sought pursuant to the Affiliates Act are in the public
interest. Additionally, we find that the approval sought pursuant to the Utility
Transfers Act will not impair or jeopardize adequate service at just and
reasonable rates. Finally, we find that the transfer of the Bayview and Tasley
peaking units to CDG is also in the public interest, as required under the
Affiliates Act.
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We note that the Staff has proposed conditions to be placed on these
transactions under the Affiliates Act and the Utility Transfers Act. We find
these conditions to be reasonable, and we understand that the Company has no
objection to them. Accordingly, we will incorporate them into our Order in this
matter, as set forth below.
Finally, because of the protections afforded Delmarva's customers
embodied in the MOA, including the Rate Case Protocol, and upon consideration of
the laws of Virginia, we find that the transfer of generation facilities by
Delmarva and ACE, resulting in such plants becoming "eligible facilities" under
PUHCA, (i) will benefit consumers, (ii) is in the public interest, and (iii)
does not violate state law.
Accordingly, IT IS ORDERED THAT:
(1) Delmarva's Plan for the functional separation of its generation
from transmission and distribution, through divestiture of its generation
assets, as modified by the June 12, 2000, Memorandum of Agreement between
Delmarva and the Commission Staff is hereby approved.
(2) Delmarva shall make a separate application pursuant to Section
56-249.6 for authority to increase its fuel rates in accordance with the
provisions of the June 12, 2000, Memorandum of Agreement.
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(3) In accordance with the provisions of Section 32 of PUHCA, 15 U.S.C.
Section 79z-5a, we find that the transfer of generation facilities by Delmarva
and ACE to exempt wholesale generators and to affiliates that may seek to
qualify as exempt wholesale generators, as more fully described in paragraphs
50-56 of Delmarva's February 4, 2000, filing: (i) will benefit consumers; (ii)
is in the public interest; and (iii) is not contrary to Virginia law.
(4) Delmarva shall make such additional and further filings as may be
required in conjunction with the Commission's promulgation of final rules
governing functional separation pursuant to Section 56-590 and regional
transmission entities pursuant to Section Section 56-577 and 56-579 of the
Restructuring Act.
(5) The approvals sought by Delmarva, CDG, and CESI pursuant to the
Affiliates Act and Utility Transfers Act, are granted in this proceeding
consistent with (i) the terms of the Memorandum of Agreement and (ii) the
requirements of Section 56-77 of the Affiliates Act and Section 56-90 of the
Utility Transfers Act. In conjunction with Delmarva's filings under the
Affiliates Act and Utility Transfers Act, the following conditions shall be
placed on such transactions:
a) That there will be no change in the terms and conditions in
the form of the Asset Transfer Agreements, Assignment and
Assumption Agreements, Easement and License Agreement, and
the Merrill Creek Sublease included in the application
without prior Commission approval;
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b) That neither Delmarva, CDG, nor CESI shall assert in any
forum that the Commission's jurisdiction over rates,
charges, terms, and conditions of utility service, or
services, transfers of utility assets, the determination of
appropriate capital and corporate structure, and
establishment of retail rates is preempted;
c) That any approvals granted shall have no ratemaking
implications except as provided for in the Memorandum of
Agreement;
d) That in regard to the Service Agreement between Delmarva and
CESI, the Commission shall not be precluded from exercising
its authority under the provisions of Section Section 56-78
through 56-80 of the Affiliates Act;
e) That the Commission reserves the right to examine the books
and records of any affiliate in connection with the
authority granted whether or not the Commission regulates
such affiliate;
f) That neither Delmarva, CDG, nor CESI shall assert, in any
future proceeding, that the Commission's ratemaking
authority is preempted by federal law with respect to the
Commission's retail ratemaking treatment of any charges from
any affiliate to Delmarva or from Delmarva to any affiliate;
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g) That the transfer or assignment by Delmarva of any real or
personal property not included in the application to any
affiliate or non-affiliate shall require additional
Commission approval in accordance with Section 56-77;
h) That within 60 days following the completion of all
transactions under all agreements in the application,
Delmarva shall file a report with the Commission's Division
of Public Utility Accounting. Such report shall include date
of transfer, description of each asset, book value, and the
accounting entries reflecting the transactions;
i) That Delmarva shall file with the Commission's Division of
Public Utility Accounting a copy of the quarterly FERC
reports summarizing each transaction with CESI;
j) That Delmarva shall include all transactions under the O&M
Agreement with CDG, Interconnection Agreements with CDG, and
Service Agreement and related Short-term Transaction
Agreements with CESI in its Annual Report of Affiliated
Transactions filed with the Commission's Director of Public
Utility Accounting; and
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k) That any approvals granted may be subject to modification or
revoked in connection with the Commission's promulgation of
rules in Case Nos. PUE990349 and PUA000029 under the
Restructuring Act.
(6) This matter shall be continued generally, subject to the continuing
review, audit, and appropriate directive of the Commission.
AN ATTESTED COPY hereof shall be sent by the Clerk of the Commission
to: Guy T. Tripp, III, Esquire, Hunton & Williams, Riverfront Plaza, East Tower,
951 East Byrd Street, Richmond, Virginia 23219-4074; Randall V. Griffin,
Esquire, Delmarva Power & Light Company, Legal Department, P.O. Box 231,
Wilmington, Delaware 19899; Thomas B. Nicholson, Esquire, Williams, Mullen,
Clark & Dobbins, P.C., Two James Center, 1021 East Cary Street, P.O. Box 1320,
Richmond, Virginia 23218-1320; Karen L. Bell, Esquire, Virginia Electric and
Power Company, P.O. Box 26666, Richmond, Virginia 23261; John A. Pirko, Esquire,
LeClair Ryan, P.C., 4201 Dominion Boulevard, Suite 200, Glen Allen, Virginia
23060; and the Commission's Office of General Counsel and Divisions of Energy
Regulation, Economics and Finance, and Public Utility Accounting.
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