                                 CODE OF VIRGINIA

RETAIL SUPPLY CHOICE FOR NATURAL GAS CUSTOMERS (§ 56-235.8)

A. Notwithstanding any provision of law to the contrary, each public utility
authorized to furnish natural gas service in Virginia (gas utility) is
authorized to offer to all of the gas utility&#8217;s customers not eligible for
transportation service under tariffs in effect on the effective date of this
section, direct access to gas suppliers (retail supply choice) by filing a plan
for implementing retail supply choice with the State Corporation Commission for
approval. The provisions of this section shall not apply to any retail supply
choice pilot program in effect on July 1, 1999. The Commission shall accept such
a plan for filing within thirty days of filing if it contains, at a minimum:

   1. A schedule for implementing retail supply choice for all of its customers;

   2. Tariff revisions, including proposed unbundled rates for firm and
   interruptible service (which may utilize a cost allocation and rate design
   formulated to recover the gas utility&#8217;s nongas fixed costs on a
   nonvolumetric basis) and terms and conditions of service designed to provide
   nondiscriminatory open access over its transportation system, comparable to
   the transportation service provided by the gas utility to itself, to allow
   competitive suppliers to sell natural gas directly to the gas utility&#8217;s
   customers. Any proposed unbundling rates shall include an explanation of the
   methodology used to develop the rates and a calculation of revenues, by
   customer class, thereby produced;

   3. Nonbypassable, competitively neutral annual surcharges for the gas utility
   to properly allocate and recover from its firm service customers not eligible
   for nonpilot transportation service under tariffs in effect on the effective
   date of this section, its nonmitigable costs associated with the provision of
   retail supply choice, including prudently incurred contract obligation costs
   and transition costs. For the purposes of this section, contract obligation
   costs are costs associated with acquiring, maintaining or terminating
   interstate and intrastate pipeline and storage capacity contracts, less
   revenues generated by mitigating such contract obligations, whether by
   off-system sales, capacity release, pipeline supplier refunds or otherwise;
   and transition costs are costs incurred by the gas utility associated with
   educating the public on retail supply choice and redesigning its facilities,
   operations and systems to permit retail supply choice;

   4. Tariff provisions to balance the receipts and deliveries of gas supplies to
   retail supply choice customers and allocate the gas utility&#8217;s gas costs
   so that one class of customers is not subsidized by another class of
   customers;

   5. Tariff provisions requiring the gas utility, at a minimum, to offer gas
   suppliers or retail supply choice customers the right to acquire the gas
   utility&#8217;s upstream transmission and/or storage capacity in a manner that
   assures that one class of customers is not subsidized by another class of
   customers, provided that nothing contained herein shall deny the gas utility
   the right to request Commission approval of such tariff provisions as are
   designed to ensure the safe and reliable delivery of natural gas to firm
   service customers on its system, including provisions requiring gas suppliers
   to accept assignment of upstream transportation and storage capacity, and/or
   allowing the gas utility to retain a portion of its upstream transportation
   and storage capacity to ensure safe and reliable natural gas service to its
   customers;

   6. A code of conduct governing the activities and relationships between the
   gas utility and gas suppliers to prevent anticompetitive or discriminatory
   conduct and the unlawful exercise of market power. Such codes of conduct shall
   incorporate or be consistent with any rule or guideline established by the
   Commission; and

   7. Any other requirement established by Commission rule or regulation.
   				The Commission may, by rule or regulation, impose such additional filing
   requirements as it deems necessary in the public interest. The Commission may
   also require a gas utility to continue to serve as a gas supplier to its
   customers after the gas utility&#8217;s plan becomes effective and under such
   terms and conditions as are necessary to protect the public interest.

B. After the Commission has accepted a filing as provided in subsection A, the
Commission shall review and approve a plan filed by a gas utility unless it
determines, after notice and an opportunity for public hearing, that the plan
would:

   1. Adversely affect the quality, safety, or reliability of natural gas service
   by the gas utility or the provision of adequate service to the gas
   utility&#8217;s customers;

   2. Result in rates charged by the gas utility that are not just and reasonable
   rates within the contemplation of &#xA7; 56-235.2 or that are in excess of
   levels approved by the Commission under &#xA7; 56-235.6, as the case may be;

   3. Adversely affect the gas utility&#8217;s customers not participating in the
   retail supply choice plan;

   4. Unreasonably discriminate against one class of the gas utility&#8217;s
   customers in favor of another class (provided, however, that a gas
   utility&#8217;s recovery of nongas fixed costs on a nonvolumetric basis shall
   not necessarily constitute unreasonable discrimination); or

   5. Not be in the public interest.
   				The Commission shall, after the acceptance of a filing of a retail supply
   choice plan, approve or disapprove the plan within 120 days. The 120-day
   period may be extended by Commission order for an additional period not to
   exceed sixty days. The retail supply choice plan shall be deemed approved if
   the Commission fails to act within 120 days or any extended period ordered by
   the Commission. The Commission shall approve a retail supply choice plan filed
   by a gas utility pursuant to this subsection regardless of whether it has
   promulgated rules and regulations pursuant to subsection A. The Commission may
   also modify a plan filed by a gas utility to ensure that it conforms to the
   provisions of this subsection and is otherwise in the public interest. Plans
   approved pursuant to this section shall not be placed into effect before July
   1, 2000.

C. The Commission may, on its own motion, direct a gas utility to file a retail
supply choice plan, which shall comply with subsection A, shall include such
other details in the plan as the Commission may require, and does not cause the
effects set forth in subsection B, or the Commission may, on its own motion,
propose a plan for a gas utility for retail supply choice that complies with the
requirements of subsection A and does not cause the effects set forth in
subsection B. The Commission may approve any plans under this subsection after
notice to all affected parties and an opportunity for hearing.

D. Once a plan becomes effective pursuant to this section, if the Commission
determines, after notice and opportunity for hearing, that the plan is causing,
or is reasonably likely to cause, the effects set forth in subsection B, it may
order revisions to the plan to remove such effects. Any such revisions to the
plan will operate prospectively only.

E. If, upon application of at least twenty-five percent of retail supply choice
customers or of 500 retail choice customers, whichever number is lesser, or by
the gas utility, it is alleged that the marketplace for retail supply choice
customer is not reasonably competitive or results in rates unreasonably in
excess of what would otherwise be charged by the gas utility, or if the
Commission renders such a determination upon its own motion, then the Commission
may, after notice, and opportunity for hearing, terminate the gas
utility&#8217;s retail supply choice program and provide for an orderly return
of the retail choice customers to the gas utility&#8217;s traditional retail
natural gas sales service. In such event, the gas utility shall be given the
opportunity to acquire, under reasonable and competitive terms and conditions
and within a reasonable time period, such upstream transportation and storage
capacity as is necessary for it to provide traditional retail natural gas sales
service to former retail supply choice customers.

F. Licensure of gas suppliers.

   1. No person, other than a gas utility, shall engage in the business of
   selling natural gas to the residential and small commercial customers of a gas
   utility that has an approved plan implementing retail supply choice unless
   such person (for the purpose of this section, gas supplier) holds a license
   issued by the Commission. An application for a gas supplier license must be
   made to the Commission in writing, be verified by oath or affirmation and be
   in such form and contain such information as the Commission may, by rule or
   regulation, require. For purposes of this subsection, the Commission shall
   require a gas supplier to demonstrate that it has the means to provide natural
   gas to essential human needs customers. A gas supplier license shall be issued
   to any qualified applicant within forty-five days of the date of filing such
   application, authorizing in whole or in part the service covered by the
   application, unless the Commission determines otherwise for good cause shown.
   A person holding such a license shall not be considered a &#8220;public
   service corporation,&#8221; &#8220;public service company&#8221; or a
   &#8220;public utility&#8221; and shall not be subject to regulation as such;
   however, nothing contained herein shall be construed to affect the liability
   of such a person for any license tax levied pursuant to Article 2 (&#xA7;
   58.1-2620 et seq.) of Chapter 26 of Title 58.1. No license issued under this
   chapter shall be transferred without prior Commission approval finding that
   such transfer is not inconsistent with the public interest. If the Commission
   determines, after notice and opportunity for public hearing, that a gas
   supplier has failed to comply with the provisions of this subsection or the
   Commission&#8217;s rules, regulations or orders, the Commission may enjoin,
   fine, or punish any such failure pursuant to the Commission&#8217;s authority
   under this statute and under Title 12.1 of the Code of Virginia. The
   Commission may also suspend or revoke the gas supplier&#8217;s license or take
   such other action as is necessary to protect the public interest.

   2. The Commission shall establish rules and regulations for the implementation
   of this subsection, provided that:
   				a. The Commission&#8217;s rules and regulations shall not govern the rates
   charged by licensed gas suppliers, except that the Commission&#8217;s rules
   and regulations may govern the terms and conditions of service of licensed gas
   suppliers to protect the gas utility&#8217;s customers from commercially
   unreasonable terms and conditions; and
   				b. The Commission&#8217;s rules and regulations shall permit an affiliate
   of the gas utility to be licensed as a gas supplier and to participate in the
   gas utility&#8217;s retail supply choice program under the same terms and
   conditions as gas suppliers not affiliated with the gas utility.

   3. The Commission shall also have the authority to issue rules and regulations
   governing the marketing practices of gas suppliers.

G. Retail customers&#8217; private right of action; marketing practices.

   1. No gas supplier shall use any deception, fraud, false pretense,
   misrepresentation, or any deceptive or unfair practices in providing or
   marketing gas service.

   2. Any person who suffers loss (i) as the result of fraudulent marketing
   practices, including telemarketing practices, engaged in by any gas supplier
   providing any service made competitive under this section, or of any violation
   of rules and regulations issued by the Commission pursuant to subdivision F 3,
   or (ii) as the result of any violation of subdivision 1 of this subsection,
   shall be entitled to initiate an action to recover actual damages, or $500,
   whichever is greater. If the trier of fact finds that the violation was
   willful, it may increase damages to an amount not exceeding three times the
   actual damages sustained, or $1,000, whichever is greater. Notwithstanding any
   other provisions of law to the contrary, in addition to any damages awarded,
   such person also may be awarded reasonable attorney&#8217;s fees and court
   costs.

   3. The Attorney General, the attorney for the Commonwealth or the attorney for
   the city, county or town may cause an action to be brought in the appropriate
   circuit court for relief of violations referenced in subdivision 2 of this
   subsection.

   4. Notwithstanding any other provision of law to the contrary, in addition to
   any damages awarded, such person or governmental agency initiating an action
   pursuant to this section may be awarded reasonable attorney&#8217;s fees and
   court costs.

   5. Any action pursuant to this subsection shall be commenced by persons other
   than the Commission within two years after its accrual. The cause of action
   shall accrue as provided in &#xA7; 8.01-230. However, if the Commission
   initiates proceedings, or any other governmental agency files suit for
   violations under this section, the time during which such proceeding or
   governmental suit and all appeals therefrom are pending shall not be counted
   as any part of the period within which an action under this section shall be
   brought.

   6. The circuit court may make such additional orders or decrees as may be
   necessary to restore to any identifiable person any money or property, real,
   personal, or mixed, tangible or intangible, which may have been acquired from
   such person by means of any act or practice violative of this subsection,
   provided that such person shall be identified by order of the court within 180
   days from the date of any order permanently enjoining the unlawful act or
   practice.

   7. In any case arising under this subsection, no liability shall be imposed
   upon any gas supplier who shows by a preponderance of the evidence that (i)
   the act or practice alleged to be in violation of subdivision 1 of this
   subsection was an act or practice over which the same had no control or (ii)
   the alleged violation resulted from a bona fide error notwithstanding the
   maintenance of procedures reasonably adopted to avoid a violation. However,
   nothing in this section shall prevent the court from ordering restitution and
   payment of reasonable attorney&#8217;s fees and court costs pursuant to
   subdivision 4 of this subsection to individuals aggrieved as a result of an
   unintentional violation of this subsection.

H. Authorized public utilities shall file with the Commission tariff revisions
reflecting the net effect of the elimination of taxes pursuant to subsection B
of &#xA7; 58.1-2904 and the addition of state income taxes pursuant to &#xA7;
58.1-400. Such tariffs shall be effective for service rendered on and after
January 1, 2001, and shall be filed at least forty-five days prior to the
effective date. Such filing shall not constitute a rate increase for the
purposes of &#xA7; 56-235.4.

I. Consumer education.

   1. The Commission shall develop a consumer education program designed to
   provide the following information to retail customers concerning retail supply
   choice for natural gas customers:
   				a. Opportunities and options in choosing natural gas suppliers;
   				b. Marketing and billing information gas suppliers will be required to
   furnish retail customers;
   				c. Retail customers&#8217; rights and obligations concerning the purchase
   of natural gas and related services; and
   				d. Such other information as the Commission may deem necessary and
   appropriate and in the public interest.

   2. The consumer education program authorized herein may be conducted in
   conjunction with the program provided for in &#xA7; 56-592.

   3. The Commission shall establish or maintain a complaint bureau for the
   purpose of receiving, reviewing and investigating complaints by retail
   customers against gas utilities, public service companies, licensed suppliers
   and other providers of any services affected by this section. Upon the request
   of any interested person or the Attorney General, or upon its own motion, the
   Commission shall be authorized to inquire into possible violations of &#xA7;
   56-235.8 and to enjoin or punish any violations thereof pursuant to its
   authority under &#xA7; 56-235.8, this title, or Title 12.1. The Attorney
   General shall have a right to participate in such proceedings consistent with
   the Commission&#8217;s Rules of Practice and Procedure.

   4. For all billing statements sent on and after August 1, 2000, all gas
   utilities, as defined in subsection A, shall enclose the following information
   in all billing statements for retail natural gas service:
   				a. Gas utilities shall separately state an approximate amount of the tax
   imposed under &#xA7;&#xA7; 58.1-2626, 58.1-2660 and 58.1-3731 which is
   included in the customer&#8217;s bill until such tax is no longer imposed; and
   				b. For all such billing statements, a statement which reads as follows
   shall be included: &#8220;Beginning January 1, 2001, the current state and
   local gross receipts taxes on sales of natural gas will be replaced by a tax
   based on the consumption of natural gas by consumers. In the past, the current
   gross receipts tax has always been included in the rate charged for natural
   gas. Now, this tax is being separately stated. The total gross receipts tax
   imposed by Virginia and the localities is approximately two percent of the
   amount charged to consumers. The new state and local consumption tax will be
   charged at an approximate rate of $0.02 per 100 cubic feet (CCF) of natural
   gas consumed. While this rate was designed to be less than, or equal to, the
   effect of the current gross receipts tax which is being replaced, the tax you
   pay may actually be higher in your locality. This statement is being provided
   for your information.&#8221;

HISTORY: 1999, c. 494; 2000, cc. 691, 706.