                                 CODE OF VIRGINIA

ORGANIZATION AND PURPOSE (§ 56-231.39)

A. Subject to &#xA7; 56-231.50:1, any utility consumer service cooperative or
utility aggregation cooperative may form a cooperative in accordance with this
article, either stock or nonstock, not for pecuniary profit, with the exception
of for-profit affiliates, for the purpose of purchasing, generating or
transmitting energy products and services for sale or resale, operating or
participating in an independent system operator, regional transmission entity,
regional power exchange, or both, and any other lawful purpose, consistent with
sound business principles and prudent management practices; (i) provided,
however, that within the certificated service territory of any member
distribution cooperative that existed as of January 1, 1999, no such cooperative
shall, prior to July 1, 2000, undertake or initiate any new program (a) to buy
or maintain an inventory of HVACR equipment or household appliances, (b) to
install or service any such equipment or household appliances for customers,
unless such service is not provided by the cooperative but by a third party
individual, firm or corporation licensed to perform such service, (c) to sell
HVACR equipment or household appliances to customers who are metered and billed
on residential rates, (d) to sell HVACR equipment to customers other than those
metered and billed on residential rates except where such sale is an incidental
part of providing other energy services or providing traditional cooperative
activities, (e) to sell or distribute propane or fuel oil; sell, install or
service propane or fuel oil equipment; or maintain or buy an inventory of
propane or fuel oil equipment for resale, or (f) to serve as a coordinator of
nonelectric energy services or provide engineering consulting services except
when such energy or engineering services are an incidental part of a marketing
effort to provide other energy or engineering services or as a part of providing
services that are traditional cooperative activities; (ii) provided further,
that notwithstanding clause (i), such cooperative may, within the certificated
service territory of a specific distribution cooperative that existed as of
January 1, 1999, and then only to the extent that such specific distribution
cooperative could lawfully do so, engage in any of the activities enumerated in
clause (i) that (a) have received State Corporation Commission approval prior to
February 1, 1998, (b) such cooperative is ordered or required to undertake by
any jurisdictional court or regulatory authority, (c) were lawfully undertaken
prior to February 1, 1998, (d) are specifically permitted by statute, or (e) are
undertaken by any other regulated public service company or its unregulated
affiliate within such distribution cooperative&#8217;s certificated service
territory; and (iii) also provided that such cooperative or its affiliate may
not undertake such activities as are prohibited by clause (i) within the
certificated service territory of another public service company unless such
activities are undertaken by such public service company or its unregulated
affiliate within the certificated service territory of a specific distribution
cooperative existing as of January 1, 1999, and the certificated service
territories of the public service company and the specific distribution
cooperative overlap. In addition, such cooperative may establish one or more
subsidiaries to engage in any other business activities not prohibited by law.
Notwithstanding the foregoing, no such subsidiary may engage in any business
activities that the cooperatives are prohibited from engaging in under this
section. For purposes of determining whether a cooperative is formed not for
pecuniary profit, the establishment of one or more affiliates thereof on a
for-profit basis shall not disqualify such entity from being formed as a
cooperative pursuant to this article.

B. Nothing in this article shall be construed to authorize a cooperative formed
pursuant to this article, or any affiliate thereof, to engage, within any
political subdivision of the Commonwealth on a not-for-profit basis, in the sale
of products, the provision of services, or other business activity, except for
electric power services and traditional cooperative activities. However, if such
business activities are not currently provided by any person other than a
cooperative formed under or subject to this chapter or its affiliate and the
Commission determines that no such other person is likely, within a reasonable
time, to effectively provide such products and services in such political
subdivision, an affiliate of a cooperative may provide such products or services
on a not-for-profit basis. The Commission shall also permit an affiliate of a
cooperative formed under or subject to this chapter to provide such products or
services on a not-for-profit basis upon a finding that the affiliate will not
receive the benefit of any federal income tax exemption that is not available to
persons other than cooperatives and will not receive the benefit of any
federally guaranteed or subsidized financing that is not available to persons
other than cooperatives; and provided further, that nothing in this subsection
shall prohibit the continued operation of any business activities of any
not-for-profit cooperative or affiliate formed, operating, and actively
providing products or services to customers on or before July 1, 1999.

HISTORY: 1999, c. 874; 2000, cc. 964, 989.