                                 CODE OF VIRGINIA

REGIONAL TRANSMISSION ENTITIES (§ 56-579)

A. As set forth in § 56-577, each incumbent electric utility owning, operating,
controlling, or having an entitlement to transmission capacity shall join or
establish a regional transmission entity, which hereafter may be referred to as
&#8220;RTE,&#8221; to which such utility shall transfer the management and
control of its transmission assets, subject to the following:

   1. No such incumbent electric utility shall transfer to any person any
   ownership or control of, or any responsibility to operate, any portion of any
   transmission system located in the Commonwealth prior to July 1, 2004, and
   without obtaining, following notice and hearing, the prior approval of the
   Commission, as hereinafter provided. However, each incumbent electric utility
   shall file an application for approval pursuant to this section by July 1,
   2003, and shall transfer management and control of its transmission assets to
   a regional transmission entity by January 1, 2005, subject to Commission
   approval as provided in this section.

   2. The Commission shall develop rules and regulations under which any such
   incumbent electric utility owning, operating, controlling, or having an
   entitlement to transmission capacity within the Commonwealth, may transfer all
   or part of such control, ownership or responsibility to an RTE, upon such
   terms and conditions that the Commission determines will:
   				a. Promote:

      1. Practices for the reliable planning, operating, maintaining, and
      upgrading of the transmission systems and any necessary additions thereto;
      and

      2. Policies for the pricing and access for service over such systems that
      are safe, reliable, efficient, not unduly discriminatory and consistent with
      the orderly development of competition in the Commonwealth;
      					b. Be consistent with lawful requirements of the Federal Energy
      Regulatory Commission;
      					c. Be effectuated on terms that fairly compensate the transferor;
      					d. Generally promote the public interest, and are consistent with (i)
      ensuring that consumers&#8217; needs for economic and reliable transmission
      are met and (ii) meeting the transmission needs of electric generation
      suppliers both within and without this Commonwealth, including those that do
      not own, operate, control or have an entitlement to transmission capacity.

B. The Commission shall also adopt rules and regulations, with appropriate
public input, establishing elements of regional transmission entity structures
essential to the public interest, which elements shall be applied by the
Commission in determining whether to authorize transfer of ownership or control
from an incumbent electric utility to a regional transmission entity.

C. The Commission shall, to the fullest extent permitted under federal law,
participate in any and all proceedings concerning regional transmission entities
furnishing transmission services within the Commonwealth, before the Federal
Energy Regulatory Commission. Such participation may include such intervention
as is permitted state utility regulators under Federal Energy Regulatory
Commission rules and procedures.

D. Nothing in this section shall be deemed to abrogate or modify:

   1. The Commission&#8217;s authority over transmission line or facility
   construction, enlargement or acquisition within this Commonwealth, as set
   forth in Chapter 10.1 (&#xA7; 56-265.1 et seq.) of this title;

   2. The laws of this Commonwealth concerning the exercise of the right of
   eminent domain by a public service corporation pursuant to the provisions of
   Article 5 (&#xA7; 56-257 et seq.) of Chapter 10 of this title; or

   3. The Commission&#8217;s authority over retail electric energy sold to retail
   customers within the Commonwealth by licensed suppliers of electric service,
   including necessary reserve requirements, all as specified in &#xA7; 56-587.

E. For purposes of this section, transmission capacity shall not include
capacity that is primarily operated in a distribution function, as determined by
the Commission, taking into consideration any binding federal precedents.

F. Any request to the Commission for approval of such transfer of ownership or
control of or responsibility for transmission facilities shall include a study
of the comparative costs and benefits thereof, which study shall analyze the
economic effects of the transfer on consumers, including the effects of
transmission congestion costs. The Commission may approve such a transfer if it
finds, after notice and hearing, that the transfer satisfies the conditions
contained in this section.

G. The Commission shall report annually to the Commission on Electric Utility
Regulation its assessment of the practices and policies of the RTE. Such report
shall set forth actions taken by the Commission regarding requests for the
approval of any transfer of ownership or control of transmission facilities to
an RTE, including a description of the economic effects of such proposed
transfers on consumers.

HISTORY: 1999, c. 411; 2001, c. 576; 2003, cc. 885, 990; 2007, cc. 888, 933;
2008, c. 883.