Senate Bill No. 502
(By Senators Dittmar and Craigo)
[Introduced February 20, 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
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
ARTICLE 3A. UTILITY SALES AND SERVICES.
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.
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
§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
(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,
(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
(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
(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.
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.
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.