GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

H	1 

HOUSE BILL 1127

Short Title:  Customer Choice in Electricity.	(Public)

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Sponsors: Representatives Miner; Braswell, Hardy, Reynolds, Starnes, and Wilkins.

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Referred to:  Rules, Calendar and Operations of the House.

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April 21, 1997

A BILL TO BE ENTITLED
AN ACT TO ENACT THE CUSTOMER CHOICE IN ELECTRICITY ACT, WHICH REQUIRES THE UTILITIES COMMISSION TO INITIATE A PROCEEDING TO RESTRUCTURE THE ELECTRIC UTILITY INDUSTRY, REQUIRES CERTAIN ELECTRIC UTILITIES TO FILE WITH THE UTILITIES COMMISSION RESTRUCTURING PLANS PROVIDING FOR CUSTOMER CHOICE, PROVIDES THAT ALL RETAIL CUSTOMERS SHALL BE PERMITTED TO CHOOSE THEIR ELECTRICITY SUPPLIERS BY A DATE CERTAIN, REQUIRES CERTAIN ELECTRIC UTILITIES TO SEPARATE GENERATION ASSETS AND OPERATIONS FROM TRANSMISSION AND DISTRIBUTION ASSETS AND OPERATIONS, REQUIRES CERTAIN ELECTRIC UTILITIES TO PROVIDE OPEN ACCESS TO THEIR TRANSMISSION AND DISTRIBUTION FACILITIES, REQUIRES THE UTILITIES COMMISSION TO ENSURE THAT RELIABLE AND SAFE ELECTRIC SERVICE IS MAINTAINED OR IMPROVED, PROVIDES FOR A SYSTEM BENEFITS CHARGE TO FUND RENEWABLE ENERGY RESOURCES, ENERGY EFFICIENCY, AND LOW-INCOME ENERGY ASSISTANCE, ALLOWS ELECTRIC UTILITIES TO RECOVER A PORTION OF THEIR STRANDED COSTS, AMENDS THE GENERAL STATUTES TO REMOVE PERSONS GENERATING ELECTRICITY FROM THE DEFINITION OF PUBLIC UTILITIES, AND PROVIDES FOR OTHER RELATED MATTERS.
The General Assembly of North Carolina enacts:
Section 1.  The General Statutes are amended by adding a new Chapter to read:
"Chapter 62B.
"Customer Choice in Electricity Act.
"§ 62B-1.  Short title.
This Chapter may be cited as the ‘Customer Choice in Electricity Act of 1997.'
"§ 62B-2.  Declaration of policy.
It is the intent of the General Assembly to allow competition in electric generation services in accordance with the following principles:
(1)	Customer choice. – Retail electric customers should be able to choose among and have access to competing, qualified electricity suppliers and should be fully informed of their rights to customer choice.  Competition should be implemented in a fair and equitable manner.
(2)	Unbundling of services. – Generation services should be operationally and financially separated from transmission and distribution services.  Generation services should become fully competitive, while transmission and distribution services should provide open access, comparability of service for all users, and nondiscriminatory pricing.  Companies that own transmission or distribution capacity as well as generation capacity should not be allowed to use any monopolistic position in those services as a barrier to competition in generation.
(3)	Open access. – Electricity suppliers and customers should have open access to the transmission and distribution system to ensure a fully competitive market.
(4)	Reliability and safety. – Reliable and safe electric service should be maintained or improved.
(5)	System benefits. – A nonbypassable surcharge should be levied by the Commission on retail electric customers for a limited period of time to ensure that renewable energy resources, energy efficiency, and low-income energy assistance are not disadvantaged in the transition to a competitive market.
(6)	Stranded costs. – Incumbent electric utilities, including electric membership corporations and municipalities that elect to participate in a competitive market, should be allowed to recover up to 50 percent (50%) of their prudently incurred, verifiable, net stranded costs after fully mitigating those costs as required by the Commission.  The mechanism for stranded cost recovery should be a nonbypassable charge levied on every customer for a period of five years that does not impede competition, disadvantage one class of customer or supplier over another, or cause the total price paid by the customer for comparable electric service to increase during the recovery period.  The Commission shall determine the amount of stranded costs that qualifies for recovery in accordance with the provisions of this Chapter.  Electric membership corporations and municipalities that elect to sell their electricity-related assets and cease providing electric services should be allowed to recover one hundred percent (100%) of their stranded costs, as determined by the Commission, over a period not to exceed 10 years.
"§ 62B-3.  Definitions.
As used in this Chapter, unless the context otherwise requires, the term:
(1)	'Affiliate' means a person who directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with, a specified person.
(2)	'Aggregator' means an entity, licensed by the Commission, that acts as an agent or intermediary in the sale and purchase of electric energy and aggregates multiple customers and electric supplies.
(3)	'Broker or marketer' means an entity, licensed by the Commission, that acts as an agent or intermediary in the sale and purchase of electric energy.
(4)	'Commission' means the North Carolina Utilities Commission.
(5)	'Customer' means a retail electric customer.
(6)	'Electric distribution company' means a public utility, or an electric membership corporation or municipality that elects to participate in a competitive market for electric generation services pursuant to G.S. 62B-6, which provides facilities for the regulated transmission or distribution of electricity to customers, except building or facility owners or operators that manage the internal distribution system serving the building or facility and that supply electric power and other related electric power services to occupants of the building or facility.
(7)	'Electricity supplier' means a person or corporation, including a municipal or electric membership corporation, broker or marketer, aggregator, or any other entity, that sells electricity or related services to customers utilizing the regulated transmission or distribution facilities of an electric distribution company or that purchases, brokers, arranges, or markets electricity or related services for sale to end-use customers utilizing the regulated transmission and distribution facilities of an electric distribution company.  The term does not include a building or facility owner or operator that manages the internal distribution system serving the building or facility that supplies electric power and other related power services to occupants of the building or facility.
(8)	'Energy efficiency' means projects, programs, and services that are designed to optimize or reduce the use of electricity.
(9)	'Incumbent electric utility' means a public utility, or an electric membership corporation or municipality that elects to participate in a competitive market for electric generation services pursuant to G.S. 62B-6, which was distributing electricity to the public for compensation on July 1, 1997.
(10)	'Low-income energy assistance' means policies, protections, and services that help low-income customers maintain electric service.  The term includes customer assistance programs, termination of service protection and policies, and services that help low-income customers reduce or manage energy consumption in a cost-effective manner.
(11)	'Open access' means the right of electricity suppliers and customers to utilize and interconnect with the electric distribution system on a nondiscriminatory basis at rates, terms, and conditions of service comparable to the electric  distribution companies' own use of the system to transport electricity.
(12)	'Renewable energy resources' means and includes technologies such as solar photovoltaic energy, solar thermal energy, wind power, low-head hydroelectric power, geothermal energy, landfill and mine-based methane gas, and sustainable biomass energy.
(13)	'Retail electric customer' means a direct purchaser of electric power.  The term does not include an occupant of a building or facility (i) in which the owners or operators manage the internal distribution system serving the building or facility and supply electric power and other related power services to occupants of the building or facility; (ii) in which the owners or operators are direct purchasers of electric power and in which the occupants are not direct purchasers.
(14)	'Stranded costs' means costs, liabilities, and investments, such as uneconomic assets, that electric utilities would reasonably expect to recover if the existing regulatory structure with retail rates for the bundled provision of electric service continued but that will not be recovered in a competitive market that allows for customer choice of electricity suppliers, unless a specific mechanism for such cost recovery is provided.  Stranded costs may only include costs of:
a.	Existing commitments or obligations incurred prior to July 1, 1997;
b.	Renegotiated commitments approved by the Commission; and
c.	New mandated commitments approved by the Commission.
(15)	'Stranded cost recovery charge' means a nonbypassable charge applied to every customer accessing the transmission or distribution network that is designed to recover an electric utility's stranded costs as determined by the Commission under G.S. 62B-17.
(16)	'System benefits charge' means a nonbypassable charge applied to every customer accessing the transmission or distribution network which charge is designed to support the development of renewable energy resources, energy efficiency, and low-income energy assistance.
(17)	'Transmission costs' and ‘distribution costs' means all costs directly or indirectly incurred to provide transmission and distribution services to retail electric customers, including the return of and return on facilities and other capital investments necessary to provide transmission and distribution services and associated operating expenses, including applicable taxes.
"§ 62B-4.  Commission proceeding to restructure electric industry and allow customer choice; time line.
No later than October 1, 1997, the Commission shall initiate a proceeding to require restructuring plans from each incumbent electric utility.  The Commission's order initiating the proceeding shall be consistent with the provisions of this Chapter and shall provide for restructuring and customer choice on the following schedule:
(1)	Residential customers shall have customer choice no later than October 1, 1998;
(2)	All commercial classes of customers shall have customer choice no later than January 1, 1999; and
(3)	All industrial classes of customers shall have customer choice no later than July 1, 1999.
"§ 62B-5.  Electric utility restructuring plans.
No later than 90 days after the issuance of the Commission's order on restructuring pursuant to G.S. 62B-4, each incumbent electric utility shall file with the Commission a restructuring plan providing for customer choice for residential customers as set forth in this Chapter and establishing a protocol for the unbundling of services as required by this Chapter.  Each incumbent electric utility shall file a supplemental restructuring plan concerning customer choice for commercial and industrial customers by April 1, 1998, unless its initial restructuring plan addressed customer choice for commercial and industrial customers.  The plan shall include:
(1)	A schedule for the introduction of customer choice for customers currently served by the incumbent electric utility; and
(2)	The manner in which the incumbent electric utility  will otherwise comply with each provision of this Chapter.
"§ 62B-6.  Electric membership corporations and municipalities.
(a)	An electric membership corporation or municipality providing electric service on July 1, 1997, may elect to participate in a competitive market for electric generation services by filing a restructuring plan with the Commission pursuant to G.S. 62B-5.
(b)	An electric membership corporation or municipality that files a restructuring plan with the Commission shall be eligible for stranded cost recovery as provided in G.S. 62B-17.
(c)	An electric membership corporation or municipality that does not file a restructuring plan with the Commission may prohibit electricity suppliers from serving customers within its service area.  However, such an electric membership corporation or municipality is prohibited from supplying electricity to customers outside its service area that it did not serve before July 1, 1997.
"§ 62B-7.  Customer choice.
(a)	Except as provided in G.S. 62B-6(c) and G.S. 62B-11(c), customers may choose to receive electric generation and other related services from any registered electricity supplier pursuant to the time line established under G.S. 62B-4 and by the Commission.
(b)	The Commission shall adopt a default provider plan for customers who fail or are unable to make their own arrangements for electric generation services.
"§ 62B-8.  Registration of electricity suppliers.
(a)	All electricity suppliers shall register with the Commission.  Information required by the Commission as a condition of registration shall include:
(1)	Documentation of the applicant's technical ability to obtain and deliver electricity and provide any other proposed services;
(2)	Documentation of the applicant's financial capability to provide the proposed services; and
(3)	A description of the applicant's form of ownership.
(b)	The Commission may not regulate prices for the generation of electricity or limit market entry by electricity suppliers in a manner that adversely affects competition.
"§ 62B-9.  Unbundling of services.
(a)	The Commission's order on restructuring pursuant to G.S. 62B-4 shall require all incumbent electric utilities to separate, both operationally and financially, generation assets and operations from transmission and distribution assets and operations.
(b)	An electric distribution company or an affiliate of an electric distribution company may own electric generation assets.  The electric distribution company or the affiliate may sell unbundled generation services to customers, provided that generation assets and services are operationally and financially separate from transmission and distribution assets and services, if any, and that the distribution company and the affiliate provide comparable service and nondiscriminatory pricing for all users.
"§ 62B-10.  Billing; disclosure.
(a)	Except as provided in subsection (b) of this section, each electric distribution company shall be responsible for billing its customers for all electric services, consistent with the rules of the Commission, regardless of the identity of the provider of those services.
(b)	A customer may elect to designate its electricity supplier as the billing party for all its electric services. A customer may elect to receive a separate bill from its electricity supplier or suppliers for services provided to the customer by the electricity supplier or suppliers.
(c)	If services are provided by an entity other than the billing party, the entity that provides those services shall furnish to the billing party billing data so that the billing party may bill customers in a single, monthly bill with separate components for all services, including generation, transmission, distribution, ancillary services, system benefits charges, and stranded cost-recovery charges.
(d)	The Commission shall adopt rules governing the handling of receipts by billing parties and the financial relationship between billing parties and other providers of electric services.
(e)	Customer bills shall contain unbundled charges sufficient to enable the customer to determine the basis for those charges.  Charges for meters, meter reading, and customer billing shall be separately itemized from charges for construction, operation, and maintenance of the distribution system.
(f)	The Commission shall adopt rules to require each electric distribution company, electricity supplier, marketer, aggregator, and broker to provide accurate information in sufficient detail to enable customers to make informed choices regarding the purchase of all electricity services offered by that provider.  Information shall be provided to customers in an understandable format that enables customers to compare prices and services on a uniform basis.
(g)	Each registered electricity supplier shall disclose to customers information concerning the resource mix and key environmental characteristics of the electricity it supplies, based upon current information. This information shall be included in marketing materials provided to prospective customers and shall periodically be provided to the electricity suppliers' existing customers.  The Commission shall adopt rules establishing the scope and frequency of these disclosures and shall develop a standard, simple, and understandable reporting format for disclosure to customers.  Disclosures shall include, at a minimum:
(1)	The percentage of each type of fuel used to generate electricity sold to customers;
(2)	Water use and wastewater discharges associated with electricity generation; and
(3)	Air emissions resulting from generation, including criteria pollutants (nitrogen oxides, sulfur dioxide, carbon monoxide, particulates, lead, and volatile organic compounds), hazardous air pollutants, and carbon dioxide.
(h)	Each electric distribution company shall provide customer service functions consistent with the regulations of the Commission, including meter reading, complaint resolution, and other services to the extent that the electric distribution company continues to provide the services to its customers as part of its unbundled distribution services.  Each electric distribution company shall maintain customer service functions at a level of quality equal to or greater than that provided prior to the implementation of customer choice.
(i)	The Commission shall adopt rules to ensure that an electric distribution company may not change a customer's electricity supplier without evidence of the customer's consent to a change of supplier.
"§ 62B-11.  Open access; reciprocity; distributed generation.
(a)	Each electric distribution company shall provide its customers and all electricity suppliers access to its regulated transmission and distribution facilities and ancillary services, including maintenance, installation, repair, and meter reading, on a nondiscriminatory and comparable basis.  The Commission shall promote nondiscriminatory open access to the electric system for wholesale and retail transactions.
(b)	Electric distribution companies shall file with the Federal Energy Regulatory Commission or with the Commission, as appropriate, comparable service tariffs that provide open access for all electricity suppliers.  The Commission shall ensure that no electric distribution company obtains an unfair advantage in offering access to or pricing its services.
(c)	The Commission shall adopt rules and, consistent with federal law, standards and conditions for the exchange of reciprocal rights for transmission and distribution access between electric distribution companies located within this State and those located outside the State.  An electric distribution company located outside North Carolina, or the affiliate of such a company, may not act as an electricity supplier to a customer within the State unless the electric distribution company serving that customer has the reciprocal right, whether exercised or not, by statute, regulation, or voluntary tariff of the out-of-state electric distribution company to serve a customer of that company.
(d)	The Commission shall develop a plan by October 1, 1997, to provide for the expedited review and resolution of disputes related to violations of the open access provisions of this section and the rules adopted pursuant to this section.
(e)	The Commission shall adopt rules to ensure that distributed generation sources have access to the transmission and distribution system on nondiscriminatory terms and conditions.
"§ 62B-12.  Eminent domain.
The right of eminent domain may not be used to:
(1)	Deny physical access or interconnection to transmission or distribution facilities;
(2)	Restrict the construction of new transmission or distribution facilities by any qualified party; or
(3)	Otherwise limit competition.
"§ 62B-13.  Transmission and distribution pricing.
(a)	To the extent that the Commission has jurisdiction over transmission and distribution pricing, the Commission shall encourage pricing mechanisms to enhance reliability, compensate transmission and distribution owners fairly, and avoid transmission and distribution congestion.
(b)	The Commission shall establish reasonable rates for unbundled distribution services.  Rates shall be based upon fair and equitable cost-of-service principles to promote efficient, safe, and reliable services at the lowest possible cost.  Distribution charges shall be structured as a monthly fee based on demand and shall be charged in a nondiscriminatory manner.  The monthly charge shall be set based upon a nondiscriminatory allocation of costs across customer classes, but may differ across customer classes based on the cost of providing service to the class of customer.
(c)	Each incumbent electric utility that is subject to the jurisdiction of the Commission shall file unbundled service tariffs to provide distribution services to all eligible customers on a nondiscriminatory basis.
"§ 62B-14.  Fair dealing; market power; obligation to connect.
(a)	Except as provided in G.S. 62B-6(c) and G.S. 62B-11(c), all electricity suppliers shall be allowed to compete equally to supply electric generation services to North Carolina customers.
(b)	Competition among electricity suppliers shall be fair, nondiscriminatory, and consistent.  All electricity suppliers shall be subject to the same legal, regulatory, and tax treatment.  Except as authorized by G.S. 62B-16 or other provisions of State or federal law, the Commission shall eliminate subsidies and disparate regulation, or legal requirements that favor certain electricity suppliers or disadvantage others.
(c)	The Commission shall adopt rules to prevent the concentration of undue market power, self-dealing, and other anticompetitive practices.
(d)	Each electric distribution company shall have the obligation to connect all customers within its service territory and to provide transmission, distribution, and ancillary services on nondiscriminatory terms and conditions.
"§ 62B-15.  Reliability and safety.
(a)	The Commission shall adopt rules to establish minimum consumer service safeguards and otherwise to ensure that reliable and safe electric service is maintained or improved.
(b)	The Commission shall adopt rules to ensure that electric distribution companies have in place sufficient measures to preserve the integrity, safety, reliability, and quality of electric service in North Carolina.
"§ 62B-16.  System benefits.
(a)	There is established in the Office of State Treasurer the Electric System Benefits Fund to fund renewable energy resources, energy efficiency, and low-income energy assistance as authorized in this section.  The Fund shall consist of revenues generated by the systems benefits charge established under subsection (c) of this section and any other revenues appropriated to the Fund by the General Assembly.
(b)	The State Treasurer shall hold the Fund separate and apart from all other monies, funds, and accounts.  Investment earnings credited to the assets of the Fund shall become part of the Fund.  Any balance remaining in the Fund at the end of any fiscal year shall be carried forward in the Fund for the next succeeding fiscal year.  The Fund shall be administered by the Energy Division of the Department of Commerce in accordance with rules adopted by the Commission.
(c)	The Commission shall provide for a system benefits charge to be charged by billing parties to all electric customers.  The Commission shall set the system benefits charge at a rate that does not exceed twenty-five one thousandths of one cent ($.00025) per kilowatt-hour.  The system benefits charge shall be assessed for a period not to exceed five years.
(d)	The Commission shall adopt rules establishing the manner in which the system benefits charge is assessed, the administration of the Electric System Benefits Fund established in subsection (a) of this section, the manner in which that Fund is used to support renewable energy resources, energy efficiency, and low-income energy assistance, and other related matters the Commission deems appropriate and necessary.
(e)	The purpose and amount of the system benefits charge shall be clearly delineated in electric bills so that the customer can readily determine that portion of the customer's monthly payment that is being used for the purposes of this section.  Each entity responsible for billing and collecting the system benefits charge shall remit the sums collected through the charge to the State Treasurer for deposit in the Electric System Benefits Fund.
"§ 62B-17.  Stranded costs.
(a)	Each incumbent electric utility is entitled to recover up to fifty percent (50%) of its prudently incurred, verifiable, net stranded costs.
(b)	An electric membership corporation or a municipality providing electricity services on July 1, 1997, may elect to sell all its electricity-related assets at a bona fide market price, cease providing electricity services and recover one hundred percent (100%) of its prudently incurred, verifiable, net stranded costs.  The Commission shall determine whether these stranded costs should be recovered only from customers within the service territory of the electric membership corporation or municipality or from customers in a broader service territory, up to and including statewide.  If those costs are recovered from customers outside the service territory of the electric membership corporation or municipality, a separate stranded cost recovery charge for those stranded costs shall be itemized in the bills to those customers.
(c)	In calculating the stranded costs of an electric membership corporation that is a member of the North Carolina Electric Membership Corporation, the Commission shall include the corporation's pro rata share of the assets and liabilities of the North Carolina Electric Membership Corporation.  In calculating the stranded costs of a municipality that is a member of a municipal power agency, the Commission shall include the municipality's pro rata share of the assets and liabilities of the municipal power agency.
(d)	Each electric utility may file a stranded cost recovery plan within 90 days after issuance of the Commission's order on restructuring.  The recovery plan shall:
(1)	Document anticipated stranded costs, mitigation proposals, and offsetting value of other assets;
(2)	Provide for recovery of stranded costs over a period of five years or 10 years in the case of an electric membership corporation or municipality making an election under subsection (b) of this section; and
(3)	Propose a stranded cost recovery charge, which shall be a monthly charge, allocated to all customers pursuant to the most recent rate design approved by the Commission, provided that the recovery period and the amount of stranded costs to be recovered shall yield a stranded cost recovery charge that shall not, during the recovery period, cause the total price per kilowatt-hour charged to any customer by the incumbent electric utility for comparable electric services, including transmission and distribution services, to exceed the price charged on July 1, 1997.
(e)	Stranded costs shall be determined on a net basis, and shall be verifiable.  Stranded costs for incumbent electric utilities shall not include transmission and distribution assets, and shall be reconciled annually to actual electricity market conditions subject to the limitations of subsection (i) of this section. Except as otherwise provided in this subsection, any utility asset whose market value exceeds the book value, including any assets, domestic or foreign, obtained or controlled by an electric utility by purchase, acquisition, merger, or other means within five years before July 1, 1997,  shall be used to reduce stranded costs.
(f)	In order to recover stranded costs, electric utilities shall take all reasonable measures to prudently, thoroughly, and aggressively mitigate those costs, including:
(1)	Reduction of expenses;
(2)	Renegotiation of existing contracts;
(3)	Refinancing of existing debt; and
(4)	Sale, write-off, or write-down of uneconomic or surplus assets, including regulatory assets not directly related to the provision of electricity service.
(g)	Prior to the introduction of customer choice, the Commission shall approve and publish a stranded cost recovery plan for each electric utility submitting a plan.  In approving stranded cost recovery plans and establishing stranded cost recovery charges, the Commission shall balance the interests of customers and utility investors.  Nothing in this section is intended to provide any greater stranded cost recovery than is available under applicable regulation or provision of law on July 1, 1997.
(h)	Any recovery of stranded costs shall be through a nonbypassable, nondiscriminatory wires charge that is limited in duration and consistent with the promotion of fully competitive markets.  Except as provided for in subsection (b) of this section, stranded cost recovery charges shall only apply to customers within an electric utility's retail service territory.  Stranded cost recovery charges shall not apply to wheeling-through transactions nor to any competitive alternative which existed before July 1, 1997, including self-generation and the sale of nonfirm electricity.  Stranded cost recovery charges shall be based on load and customer class as determined by the Commission.  The stranded cost recovery charge must be assessed as a separate line item on a customer's bill with the designation, ‘stranded cost recovery charge'.
(i)	The Commission shall not approve stranded cost recovery charges or plans that:
(1)	Include mechanisms that impede competition, such as entry and exit fees; or
(2)	Penalize customers for changes in usage occurring in the normal course of business, including those resulting from changes in business cycles, termination of operations, weather conditions, reduced production, changes in manufacturing processes, installation or expansion of new self-generation, or co-generation equipment, performance of existing self-generation, or co-generation equipment, energy conservation efforts, or other similar factors.
(j)	The burden of proof for any stranded cost recovery claim must be borne by the electric utility making the claim.
(k)	This Chapter provides the exclusive mechanism for stranded cost recovery by electric utilities.  Any stranded costs not recovered under this Chapter and the recovery plan, as modified and approved by the Commission, shall not be recoverable by the electric utility.  Approval of a recovery plan and collection of any stranded costs shall constitute a settlement of all the claims by an electric utility for recovery of stranded costs.  An electric utility that seeks to establish claims for recovery of stranded costs through any other means is not eligible for recovery pursuant to a recovery plan or the collection of a stranded cost recovery charge.
"§ 62B-18.  Remedies.
No electric distribution company shall be liable for damages to a current or future customer if the customer's chosen electricity supplier or provider of unbundled services fails to deliver the service in accordance with the terms of its bilateral contract with the customer.  This provision shall not relieve  an electric distribution company of liability arising from its own actions or failure to act.
"§ 62B-19.  Jurisdiction.
Any existing jurisdictional uncertainties or disputes regarding electric distribution companies or electricity suppliers shall not delay the implementation of this Chapter."
Section 2.  G.S. 62-2 reads as rewritten:
"§ 62-2.  Declaration of policy.
Upon investigation, it has been determined that the rates, services and operations of public utilities as defined herein, are affected with the public interest and that the availability of an adequate and reliable supply of electric power and natural gas to the people, economy and government of North Carolina is a matter of public policy. It is hereby declared to be the policy of the State of North Carolina:
(1)	To provide fair regulation of public utilities in the interest of the public;
(2)	To promote the inherent advantage of regulated public utilities;
(3)	To promote adequate, reliable and economical utility service to all of the citizens and residents of the State;
	(4)	To provide just and reasonable rates and charges for public utility services without unjust discrimination, undue preferences or advantages, or unfair or destructive competitive practices and consistent with long-term management and conservation of energy resources by avoiding wasteful, uneconomic and inefficient uses of energy;
(4a)	To assure that facilities necessary to meet future growth can be financed by the utilities operating in this State on terms which are reasonable and fair to both the customers and existing investors of such utilities; and to that end to authorize fixing of rates in such a manner as to result in lower costs of new facilities and lower rates over the operating lives of such new facilities by making provisions in the rate-making process for the investment of public utilities in plants under construction;
(5)	To encourage and promote harmony between public utilities, their users and the environment;
(6)	To foster the continued service of public utilities on a well-planned and coordinated basis that is consistent with the level of energy needed for the protection of public health and safety and for the promotion of the general welfare as expressed in the State energy policy;
	(8)	To cooperate with other states and with the federal government in promoting and coordinating interstate and intrastate public utility service and reliability of public utility energy supply; and
(9)	To facilitate the construction of facilities in and the extension of natural gas service to unserved areas in order to promote the public welfare throughout the State and to that end to authorize the creation of an expansion fund for each natural gas local distribution company to be administered under the supervision of the North Carolina Utilities Commission.
To these ends, therefore, authority shall be vested in the North Carolina Utilities Commission to regulate public utilities generally, their rates, services and operations, and their expansion in relation to long-term energy conservation and management policies and statewide development requirements, and in the manner and in accordance with the policies set forth in this Chapter. Nothing in this Chapter shall be construed to imply any extension of Utilities Commission regulatory jurisdiction over any industry or enterprise that is not subject to the regulatory jurisdiction of said Commission.
Because of technological changes in the equipment and facilities now available and needed to provide telephone and telecommunications services, changes in regulatory policies by the federal government, and changes resulting from the court-ordered divestiture of the American Telephone and Telegraph Company, competitive offerings of certain types of telephone and telecommunications services may be in the public interest. Consequently, authority shall be vested in the North Carolina Utilities Commission to allow competitive offerings of local exchange, exchange access, and long distance services by public utilities defined in G.S. 62-3(23)a.6. and certified in accordance with the provisions of G.S. 62-110, and the Commission is further authorized after notice to affected parties and hearing to deregulate or to exempt from regulation under any or all provisions of this Chapter: (i) a service provided by any public utility as defined in G.S. 62-3(23)a.6. upon a finding that such service is competitive and that such deregulation or exemption from regulation is in the public interest; or (ii) a public utility as defined in G.S. 62-3(23)a.6., or a portion of the business of such public utility, upon a finding that the service or business of such public utility is competitive and that such deregulation or exemption from regulation is in the public interest.
The policy and authority stated in this section shall be applicable to common carriers of passengers by motor vehicle and their regulation by the North Carolina Utilities Commission only to the extent that they are consistent with the provisions of the Bus Regulatory Reform Act of 1985.
The North Carolina Utilities Commission may develop regulatory policies to govern the provision of telecommunications services to the public which promote efficiency, technological innovation, economic growth, and permit telecommunications utilities a reasonable opportunity to compete in an emerging competitive environment, giving due regard to consumers, stockholders, and maintenance of reasonably affordable local exchange service and long distance service."
Section 3.  G.S. 62-3 reads as rewritten:
"§ 62-3.  Definitions.
As used in this Chapter, unless the context otherwise requires, the term:
(1)	'Broker,' with regard to motor carriers of passengers, means any person not included in the term ‘motor carrier' and not a bona fide employee or agent of any such carrier, who or which as principal or agent engages in the business of selling or offering for sale any transportation of passengers by motor carrier, or negotiates for or holds himself, or itself, out by solicitation, advertisements, or otherwise, as one who sells, provides, furnishes, contracts, or arranges for such transportation for compensation, either directly or indirectly.
(1a)	'Bus company' means any common carrier by motor vehicle which holds itself out to the general public to engage in the transportation by motor vehicle in intrastate commerce of passengers over fixed routes or in charter operations, or both, except as exempted in G.S. 62-260.
(2)	'Certificate' means a certificate of public convenience and necessity issued by the Commission to a public utility or a certificate of authority issued by the Commission to a bus company.
(3)	'Certified mail' means such mail only when a return receipt is requested.
(4)	'Charter operations' with regard to bus companies means the transportation of a group of persons for sightseeing purposes, pleasure tours, and other types of special operations, or the transportation of a group of persons who, pursuant to a common purpose and under a single contract, and for a fixed charge for the vehicle, have acquired the exclusive use of a passenger-carrying motor vehicle to travel together as a group to a specified destination or for a particular itinerary, either agreed upon in advance or modified by the chartered group after having left the place of origin.
(5)	'Commission' means the North Carolina Utilities Commission.
(6)	'Common carrier' means any person which holds itself out to the general public to engage in transportation of persons or household goods for compensation, including transportation by train, bus, truck, boat or other conveyance, except as exempted in G.S. 62-260.
(7)	'Common carrier by motor vehicle' means any person which holds itself out to the general public to engage in the transportation by motor vehicle in intrastate commerce of persons or household goods or any class or classes thereof for compensation, whether over regular or irregular routes, or in charter operations, except as exempted in G.S. 62-260.
(7a)	'Competing local provider' means any person applying for a certificate to provide local exchange or exchange access services in competition with a local exchange company.
(8),	(9) Repealed by Session Laws 1995, c. 523, s. 1.
(9a)	'Fixed route' means the specific highway or highways over which a bus company is authorized to operate between fixed termini.
(10)	'Foreign commerce' means commerce between any place in the United States and any place in a foreign country, or between places in the United States through any foreign country.
(11)	'Franchise' means the grant of authority by the Commission to any person to engage in business as a public utility, whether or not exclusive or shared with others or restricted as to terms and conditions and whether described by area or territory or not, and includes certificates, and all other forms of licenses or orders and decisions granting such authority.
(12)	'Highway' means any road or street in this State used by the public or dedicated or appropriated to public use.
(13)	'Industrial plant' means any plant, mill, or factory engaged in the business of manufacturing.
(14)	'Interstate commerce' means commerce between any place in a state and any place in another state or between places in the same state through another state.
(15)	'Intrastate commerce' means commerce between points and over a route or within a territory wholly within this State, which commerce is not a part of a prior or subsequent movement to or from points outside of this State in interstate or foreign commerce, and includes all transportation within this State for compensation in interstate or foreign commerce which has been exempted by Congress from federal regulation.
(16)	'Intrastate operations' means the transportation of persons or household goods for compensation in intrastate commerce.
(16a)	'Local exchange company' means a person holding, on January 1, 1995, a certificate to provide local exchange services or exchange access services.
(17)	'Motor carrier' means a common carrier by motor vehicle.
(18)	'Motor vehicle' means any vehicle, machine, tractor, semi-trailer, or any combination thereof, which is propelled or drawn by mechanical power and used upon the highways within the State.
(19)	'Municipality' means any incorporated community, whether designated in its charter as a city, town, or village.
(20)	Repealed by Session Laws 1995, c. 523, s. 1.
(21)	'Person' means a corporation, individual, copartnership, company, association, or any combination of individuals or organizations doing business as a unit, and includes any trustee, receiver, assignee, lessee, or personal representative thereof.
(22)	'Private carrier' means any person not included in the definitions of common carrier, which transports in intrastate commerce in its own vehicle or vehicles property of which such person is the owner, lessee, or bailee, when such transportation is for the purpose of sale, lease, rent, or bailment, or when such transportation is purely an incidental adjunct to some other established private business owned and operated by such person other than the transportation of household goods for compensation.
(23)	a.	'Public utility' means a person, whether organized under the laws of this State or under the laws of any other state or country, now or hereafter owning or operating in this State equipment or facilities for:
1. 	Producing, generating, transmitting, delivering or furnishing piped gas;
1a.	Transmitting or distributing electricity to or for the public for compensation.  The term ‘public utility' shall not include electricity suppliers as defined in Chapter 62B-3(7).
2.	Diverting, developing, pumping, impounding, distributing or furnishing water to or for the public for compensation, or operating a public sewerage system for compensation; provided, however, that the term ‘public utility' shall not include any person or company whose sole operation consists of selling water to less than 10 residential customers, except that any person or company which constructs a water system in a subdivision with plans for 10 or more lots and which holds itself out by contracts or other means at the time of said construction to serve an area containing more than 10 residential building lots shall be a public utility at the time of such planning or holding out to serve such 10 or more building lots, without regard to the number of actual customers connected;
3.	Transporting persons or household goods by street, suburban or interurban bus or railways for the public for compensation;
4.	Transporting persons or household goods by railways or motor vehicles, or any other form of transportation for the public for compensation, except motor carriers exempted in G.S. 62-260, and except carriers by air;
5.	Transporting or conveying gas, crude oil or other fluid substance by pipeline for the public for compensation;
6.	Conveying or transmitting messages or communications by telephone or telegraph, or any other means of transmission, where such service is offered to the public for compensation.
b.	The term 'public utility' shall for rate-making purposes include any person producing or furnishing any of the foregoing services to another person for distribution to or for the public for compensation, except that the term shall not include persons who own or operate facilities for electricity generation.
c.	The term 'public utility' shall include all persons affiliated through stock ownership with a public utility doing business in this State as parent corporation or subsidiary corporation as defined in G.S. 55-2 to such an extent that the Commission shall find that such affiliation has an effect on the rates or service of such public utility.
d.	The term 'public utility,' except as otherwise expressly provided in this Chapter, shall not include a municipality, an authority organized under the North Carolina Water and Sewer Authorities Act, electric or telephone membership corporation or nonprofit water membership or consumer-owned corporations financed by the Farmers Home Administration, the United States Department of Housing and Urban Development, or any similar or successor federal financing agency, provided, that (i) any such financing administration, department or agency exercise substantial control over and regulation of any such corporation's rates and terms and conditions of service, and (ii) the members or consumer-owners of any such corporation, pursuant to the corporation's articles of incorporation and bylaws, shall elect the governing board of the corporation; or any person not otherwise a public utility who furnishes such service or commodity only to himself, his employees or tenants when such service or commodity is not resold to or used by others; provided, however, that any person other than a nonprofit organization serving only its members, who distributes or provides utility service to his employees or tenants by individual meters or by other coin-operated devices with a charge for metered or coin-operated utility service shall be a public utility within the definition and meaning of this Chapter with respect to the regulation of rates and provisions of service rendered through such meter or coin-operated device imposing such separate metered utility charge. If any person conducting a public utility shall also conduct any enterprise not a public utility, such enterprise is not subject to the provisions of this Chapter. A water or sewer system owned by a homeowners' association that provides water or sewer service only to members or leaseholds of members is not subject to the provisions of this Chapter.
e.	The term 'public utility' shall include the University of North Carolina insofar as said University supplies telephone service, electricity or water to the public for compensation from the University Enterprises defined in G.S. 116-41.1(9).
f.	The term 'public utility' shall include the Town of Pineville insofar as said town supplies telephone services to the public for compensation. The territory to be served by the Town of Pineville in furnishing telephone services, subject to the Public Utilities Act, shall include the town limits as they exist on May 8, 1973, and shall also include the area proposed to be annexed under the town's ordinance adopted May 3, 1971, until January 1, 1975.
g.	The term 'public utility' shall not include a hotel, motel, time share or condominium complex operated primarily to serve transient occupants, which imposes charges to occupants for local, long-distance, or wide area telecommunication services when such calls are completed through the use of facilities provided by a public utility, and provided further that the local services received are rated in accordance with the provisions of G.S. 62-110(d) and the applicable charges for telephone calls are prominently displayed in each area where occupant rooms are located.
h.	The term 'public utility' shall not include the resale of electricity by (i) a campground operated primarily to serve transient occupants, or (ii) a marina; provided that (i) the campground or marina charges no more than the actual cost of the electricity supplied to it, (ii) the amount of electricity used by each campsite or marina slip occupant is measured by an individual metering device, (iii) the applicable rates are prominently displayed at or near each campsite or marina slip, and (iv) the campground or marina only resells electricity to campsite or marina slip occupants.
i.	The term 'public utility' shall not include the State, the Office of the State Controller, or the Microelectronics Center of North Carolina in the provision or sharing of switched broadband telecommunications services with non-State entities or organizations of the kind or type set forth in G.S. 143B-426.39.
j.	The term 'public utility' shall not include any person, not otherwise a public utility, conveying or transmitting messages or communications by mobile radio communications service. Mobile radio communications service includes one-way or two-way radio service provided to mobile or fixed stations or receivers using mobile radio service frequencies.
(24)	'Rate' means every compensation, charge, fare, tariff, schedule, toll, rental and classification, or any of them, demanded, observed, charged or collected by any public utility, for any service product or commodity offered by it to the public, and any rules, regulations, practices or contracts affecting any such compensation, charge, fare, tariff, schedule, toll, rental or classification.
(25)	'Route' means the course or way which is traveled; the road or highway over which motor vehicles operate.
(26)	'Securities' means stock, stock certificates, bonds, notes, debentures, or other evidences of ownership or of indebtedness, and any assumption or guaranty thereof.
(27)	'Service' means any service, other than the generation of electricity, furnished by a public utility, including any commodity furnished as a part of such service and any ancillary service or facility used in connection with such service.
	(28)	The word 'State' means the State of North Carolina; ‘state' means any state.
(29)	'Town' means any unincorporated community or collection of people having a geographical name by which it may be generally known and is so generally designated.
(30)	'Panel' means a panel of three commissioners, a division of the Utilities Commission authorized for the purpose of carrying out certain functions of the Commission."
Section 4.  G.S. 62-82 is repealed.
Section 5.  G.S. 62-110.1 is repealed.
Section 6.  G.S. 62-110.2 reads as rewritten:
"§ 62-110.2.  Electric distribution service areas outside of municipalities.
(a)	As used in this section, unless the context otherwise requires, the term:
(1)	‘Premises' means the building, structure, or facility to which electricity is being or is to be furnished; provided, that two or more buildings, structures, or facilities which are located on one tract or contiguous tracts of land and are utilized by one electric consumer for commercial, industrial, institutional, or governmental purposes, shall together constitute one ‘premises,' except that any such building, structure, or facility shall not, together with any other building, structure, or facility, constitute one ‘premises' if the electric distribution service to it is separately metered and the charges for such service are calculated independently of charges for service to any other building, structure, or facility; and
(2)	‘Line' means any conductor for the distribution or transmission of electricity, other than
a.	In the case of overhead construction, a conductor from the pole nearest the premises of a consumer to such premises, or a conductor from a line tap to such premises, and
b.	In the case of underground construction, a conductor from the transformer (or junction point, if there be one) nearest the premises of a consumer to such premises.
(3)	‘Electric distribution company' means a person providing facilities for the regulated transmission or distribution of electricity of customers, except building or facility owners or operators that manage the internal distribution system serving the building or facility and that supply electric power and other related electric power services to occupants of the building or facility.
(b)	In areas outside of municipalities, electric distribution companies shall have rights and be subject to restrictions as follows:
(1)	Every electric distribution company shall have the right to serve all premises being served by it, or to which any of its facilities for distribution service are attached, on July 1, 1997.
(2)	Every electric distribution company shall have the right, subject to subdivision (4) of this subsection, to serve all premises initially requiring electric distribution service after July 1, 1997, which are located wholly within 300 feet of such electric distribution company's lines as such lines exist on July 1, 1997, except premises which, on said date, are being served by another electric distribution company or to which any of another electric distribution company's facilities for distribution service are attached.
(3)	Every electric distribution company shall have the right, subject to subdivision (4) of this subsection, to serve all premises initially requiring electric service after July 1, 1997, which are located wholly within 300 feet of lines that such electric distribution company constructs after July 1, 1997, to serve consumers that it has the right to serve, except premises located wholly within a service area assigned to another electric distribution company pursuant to subsection (c) hereof.
(4)	Any premises initially requiring electric distribution service after July 1, 1997, which are located wholly or partially within 300 feet of the lines of one electric distribution company and also wholly or partially within 300 feet of the lines of another electric distribution company, supplier, as each of such supplier's lines exist on July 1, 1997, or as extended to serve consumers that the distribution company has the right to serve, may be served by such one of said electric distribution companies which the consumer chooses, and any electric distribution company supplier not so chosen by the consumer shall not thereafter furnish distribution service to such premises.
(5)	Any premises initially requiring electric distribution service after July 1, 1997, which are not located wholly within 300 feet of the lines of any electric distribution company and are not located partially within 300 feet of the lines of two or more electric distribution companies may be served by any electric distribution company which the consumer chooses, unless such premises are located wholly or partially within an area assigned to an electric distribution company pursuant to subsection (c) hereof, and any electric distribution company not so chosen by the consumer shall not thereafter furnish service to such premises.
(6)	Any premises initially requiring electric distribution service after July 1, 1997, which are located partially within a service area assigned to one electric distribution company and partially within a service area assigned to another electric distribution company pursuant to subsection (c) hereof, or are located partially within a service area assigned to one electric distribution company pursuant to subsection (c) hereof and partially within 300 feet of the lines of another electric distribution company, as such lines exist on July 1, 1997, or as extended to serve consumers it has the right to serve, may be served by such one of said electric distribution companies which the consumer chooses, and the electric distribution company not so chosen shall not thereafter furnish distribution service to such premises.
(7)	Any premises initially requiring electric distribution service after July 1, 1997, which are located only partially within a service area assigned to one electric distribution company pursuant to subsection (c) hereof and are located wholly outside the service areas assigned to other electric distribution companies and are located wholly more than 300 feet from other electric distribution companies lines, may be served by any electric distribution company which the consumer chooses, and any electric distribution company not so chosen by the consumer shall not thereafter furnish distribution service to such premises.
(8)	Every electric distribution company shall have the right to serve all premises located wholly within the service area assigned to it pursuant to subsection (c) hereof.
(9)	No electric distribution company shall furnish temporary electric distribution service for the construction of premises which it would not have the right to serve under this subsection if such premises were already constructed. The construction of lines for, and the furnishing of, temporary distribution service for the construction of premises which any other electric distribution company, if chosen by the consumer, would have the right to serve if such premises were already constructed, shall not impair the right of such other electric distribution company to furnish distribution service to such premises after the construction thereof, if then chosen by the consumer; nor, unless the consumer chooses to have such premises served by the distribution company which furnished the temporary service, shall the furnishing of such temporary service or the construction of a line therefor impair the right of any other electric distribution company to furnish distribution service to any other premises which, without regard to the construction of such temporary service line, it has the right to serve.
(10)	No electric distribution company shall furnish  electric distribution service to any premises in this State outside the limits of any incorporated city or town except as permitted by this section; provided, that nothing in this section shall restrict the right of an electric distribution company to furnish electric distribution service to itself or to exchange or interchange electric energy with, purchase electric energy from or sell electric energy to any other electric distribution company.
(c)	(1)	In order to avoid unnecessary duplication of electric facilities, the Commission is authorized and directed to assign, as soon as practicable after January 1, 1998, to electric distribution companies all areas, by adequately defined boundaries, that are outside the corporate limits of municipalities and that are more than 300 feet from the lines of all electric distribution companies as such lines exist on the dates of the assignments; provided, that the Commission may leave unassigned any area in which the Commission, in its discretion, determines that the existing lines of two or more electric distribution companies are in such close proximity that no substantial avoidance of duplication of facilities would be accomplished by assignment of such area. The Commission shall make assignments of areas in accordance with public convenience and necessity, considering, among other things, the location of existing lines and facilities of electric distribution companies and the adequacy and dependability of the service of electric distribution companies, but not considering rate differentials among electric distribution companies.
(2)	The Commission, upon agreement of the affected electric distribution companies, is authorized to reassign to one electric distribution company any area or portion thereof theretofore assigned to another; and the Commission, notwithstanding the lack of such agreement, is authorized to reassign to one electric distribution company any area or portion thereof theretofore assigned to another, except premises being served by the other electric distribution company or to which any of its facilities for distribution service are attached and except such portions of such area as are within 300 feet of the other electric distribution company's lines, upon finding that such reassignment is required by public convenience and necessity. In determining whether public convenience and necessity requires such reassignment, the Commission shall consider, among other things, the adequacy and dependability of the service of the affected electric distribution companies, but shall not consider rate differentials between such electric distribution companies.
(d)	Notwithstanding the provisions of subsections (b) and (c) of this section:
(1)	Any electric distribution company may furnish electric distribution service to any consumer who desires distribution service from such electric distribution company at any premises being served by another electric distribution company, or at premises which another electric distribution company has the right to serve pursuant to other provisions of this section, upon agreement of the affected electric distribution companies; and
(2)	The Commission shall have the authority and jurisdiction, after notice to all affected electric distribution companies and after hearing, if a hearing is requested by any affected electric distribution company or any other interested party, to order any electric distribution company which may reasonably do so to furnish electric distribution service to any consumer who desires distribution service from such electric distribution company at any premises being served by another electric distribution company, or at premises which another electric distribution company has the right to serve pursuant to other provisions of this section, and to order such other electric distribution company to cease and desist from furnishing electric distribution service to such premises, upon finding that distribution service to such consumer by the electric distribution company which is then furnishing distribution service, or which has the right to furnish distribution service, to such premises, is or will be inadequate or undependable, or that the rates, conditions of service or service regulations, applied to such consumer, are unreasonably discriminatory.
(e)	The furnishing of electric distribution service in any area which becomes a part of any municipality after July 1, 1997, either by annexation or incorporation, (whether or not such area, or any portion thereof, shall have been assigned pursuant to subsection (c) of this section) shall be subject to the provisions of Part 2, Article 16 of Chapter 160A of the General Statutes, and any provisions of this section inconsistent with said Article shall not be applicable within such area after the effective date of such annexation or incorporation."
Section 7.  G.S. 62-155 reads as rewritten:
"§ 62-155.  Electric power conservation.
(a)	It is the policy of the State to conserve energy through efficient utilization of all resources.
(b)	If the Utilities Commission after study determines that conservation of electricity and economy of operation for the public utility will be furthered thereby, it shall direct each electric public utility to notify its customers by the most economical means available of the anticipated periods in the near future when electricity consumption is likely to be near peak demand and urge its customers to refrain from using electricity at these peak times of the day. In addition, each public utility shall, insofar as practicable, investigate, develop, and put into service, with approval of the Commission, procedures and devices that will temporarily curtail or cut off certain types of appliances or equipment for short periods of time whenever an unusual peak demand threatens to overload its system.
(c)	The Commission itself shall inform the general public as to the necessity for controlling demands for electricity at peak periods and shall require the several electric public utilities to carry out its program of information and education in any reasonable manner.
		."
Section 8.  G.S. 62-156 is repealed.
Section 9.  G.S. 160A-312 reads as rewritten:
"§ 160A-312.  Authority to operate public enterprises.
(a)	A city shall have authority to acquire, construct, establish, enlarge, improve, maintain, own, operate, and contract for the operation of any or all of the public enterprises as defined in this Article to furnish services to the city and its citizens. Subject to Part 2 of this Article, a city may acquire, construct, establish, enlarge, improve, maintain, own, and operate any public enterprise outside its corporate limits, within reasonable limitations, but in no case shall a city be held liable for damages to those outside the corporate limits for failure to furnish any public enterprise service.
(b)	A city shall have full authority to protect and regulate any public enterprise system belonging to or operated by it by adequate and reasonable rules. The rules shall be adopted by ordinance, shall apply to the public enterprise system both within and outside the corporate limits of the city, and may be enforced with the remedies available under any provision of law.
(c)	A city may operate that part of a gas system involving the purchase and/or lease of natural gas fields, natural gas reserves and natural gas supplies and the surveying, drilling or any other activities related to the exploration for natural gas, in a partnership or joint venture arrangement with natural gas utilities and private enterprise.
(d)	Notwithstanding any other provision of this section, a city that elects pursuant to G.S. 62B-6 to participate in a competitive market for electric generation services:
(1)	Shall do so in accordance with the requirements of Chapter 62B of the General Statutes; and
(2)	Shall not have the exclusive right to provide electric generation services to customers inside its corporate limits, but shall compete with other electricity suppliers for the business of those customers."
Section 10.  G.S. 160A-313 reads as rewritten:
"§ 160A-313. Financing public enterprise.
Subject to the restrictions, limitations, procedures, and regulations otherwise provided by law, a city shall have full authority to finance the cost of any public enterprise by levying taxes, borrowing money, and appropriating any other revenues therefor, and by accepting and administering gifts and grants from any source on behalf thereof, except that a city may not use taxes, appropriations, or other public funds to subsidize the operation of an electric generation system."
Section 11.  G.S. 160A-314 reads as rewritten:
"§ 160A-314.  Authority to fix and enforce rates.
(a)	A city may establish and revise from time to time schedules of rents, rates, fees, charges, and penalties for the use of or the services furnished by any public enterprise. Schedules of rents, rates, fees, charges, and penalties may vary according to classes of service, and different schedules may be adopted for services provided outside the corporate limits of the city.
(a1)	Before it establishes or revises a schedule of rates, fees, charges, or penalties for structural and natural stormwater and drainage systems under this section, the city council shall hold a public hearing on the matter. A notice of the hearing shall be given at least once in a newspaper having general circulation in the area, not less than seven days before the public hearing. The hearing may be held concurrently with the public hearing on the proposed budget ordinance.
The fees established under this subsection must be made applicable throughout the area of the city. Schedules of rates, fees, charges, and penalties for providing structural and natural stormwater and drainage system service may vary according to whether the property served is residential, commercial, or industrial property, the property's use, the size of the property, the area of impervious surfaces on the property, the quantity and quality of the runoff from the property, the characteristics of the watershed into which stormwater from the property drains, and other factors that affect the stormwater drainage system. Rates, fees, and charges imposed under this subsection may not exceed the city's cost of providing a stormwater and drainage system.
No stormwater utility fee may be levied under this subsection whenever two or more units of local government operate separate structural and natural stormwater and drainage system services in the same area within a county. However, two or more units of local government may allocate among themselves the functions, duties, powers, and responsibilities for jointly operating a single structural and natural stormwater and drainage system service in the same area within a county, provided that only one unit may levy a fee for the service within the joint service area. For purposes of this subsection, a unit of local government shall include a regional authority providing structural and natural stormwater and drainage system services.
(a2)	A fee for the use of a disposal facility provided by the city may vary based on the amount, characteristics, and form of recyclable materials present in solid waste brought to the facility for disposal. This section does not prohibit a city from providing aid to low-income persons to pay all or part of the cost of solid waste management services for those persons.
(a3)	If a city elects pursuant to G.S. 62B-6 to participate in a competitive market for electric generation services, it shall comply with the requirements of Chapter 62B of the General Statutes.
(b)	A city shall have power to collect delinquent accounts by any remedy provided by law for collecting and enforcing private debts, and may specify by ordinance the order in which partial payments are to be applied among the various enterprise services covered by a bill for the services.  A city may also discontinue service to any customer whose account remains delinquent for more than 10 days. When service is discontinued for delinquency, it shall be unlawful for any person other than a duly authorized agent or employee of the city to do any act that results in a resumption of services. If a delinquent customer is not the owner of the premises to which the services are delivered, the payment of the delinquent account may not be required before providing services at the request of a new and different tenant or occupant of the premises, but this restriction shall not apply when the premises are occupied by two or more tenants whose services are measured by the same meter.
(c)	Except as provided in subsection (d) and G.S. 160A-314.1, rents, rates, fees, charges, and penalties for enterprisory services shall be legal obligations of the person contracting for them, and shall in no case be a lien upon the property or premises served, provided that no contract shall be necessary in the case of structural and natural stormwater and drainage systems.
(d)	Rents, rates, fees, charges, and penalties for enterprisory services shall be legal obligations of the owner of the premises served when:
(1)	The property or premises is leased or rented to more than one tenant and services rendered to more than one tenant are measured by the same meter.
(2)	Charges made for use of a sewage system are billed separately from charges made for the use of a water distribution system.
(e)	Nothing in this section shall repeal any portion of any city charter inconsistent herewith."
Section 12.  G.S. 160A-319 reads as rewritten:
"§ 160A-319.  Utility franchises.
(a)	A city shall have authority to grant upon reasonable terms franchises for the operation within the city of any of the enterprises listed in G.S. 160A-311 and for for the operation of telephone systems, except that a city that elects pursuant to G.S. 62B-6 to participate in a competitive market for electric generation services shall not have the authority to grant a franchise for electric generation services.  No franchise shall be granted for a period of more than 60 years, except that a franchise for solid waste collection or disposal systems and facilities shall not be granted for a period of more than 30 years and cable television franchises shall not be granted for a period of more than 20 years. Except as otherwise provided by law, when a city operates an enterprise, or upon granting a franchise, a city may by ordinance make it unlawful to operate an enterprise without a franchise.
(b)	For the purposes of this section, ‘cable television system' means any system or facility that, by means of a master antenna and wires or cables, or by wires or cables alone, receives, amplifies, modifies, transmits, or distributes any television, radio, or electronic signal, audio or video or both, to subscribing members of the public for compensation. ‘Cable television system' does not include providing master antenna services only to property owned or leased by the same person, firm, or corporation, nor communication services rendered to a cable television system by a public utility that is regulated by the North Carolina Utilities Commission or the Federal Communications Commission in providing those services."
Section 13.  G.S. 160A-332 reads as rewritten:
"§ 160A-322.  Contracts for electric power and water.
A city is authorized to enter into contracts for a period not exceeding 40 years for the supply of water, and, subject to the requirements of Chapter 62B of the General Statutes, for a period not exceeding 30 years for the supply of electric power or other public commodity or services."
Section 14.  G.S. 160A-323 reads as rewritten:
"§ 160A-323.  Load management and peak load pricing of electric power.
In addition and supplemental to the powers conferred upon municipalities by the laws of the State and for the purposes of conserving electricity and increasing the economy of operation of municipal electric systems, any municipality owning or operating an electric distribution system, any municipality engaging in a joint project pursuant to Chapter 159B of the General Statutes and any joint agency created pursuant to Chapter 159B of the General Statutes, shall have and may exercise the power and authority to investigate, study, develop, and place into effect procedures and to investigate, study, develop, purchase, lease, own, operate, maintain, and put into service devices, which will temporarily curtail or cut off certain types of appliances or equipment for short periods of time whenever an unusual peak demand threatens to overload the electric system.
		."
Section 15.  Part 2 of Article 16 of Chapter 160A reads as rewritten:
"Part 2.  Electric Distribution Service in Urban Areas.
"§ 160A-331.  Definitions.
Unless the context otherwise requires, the following words and phrases shall have the meanings indicated when used in this Part:
(1)	The 'determination date' is
a.	July 1, 1997, with respect to areas within the corporate limits of any city as of July 1, 1997;
b.	The effective date of annexation with respect to areas annexed to any city after July 1, 1997;
c.	The date a primary distribution company comes into being with respect to any city first incorporated after July 1, 1997.
(1a)	'Electric distribution company' means a person providing facilities for the regulated transmission or distribution of electricity to customers, except building or facility owners or operators that manage the internal distribution system serving the building or facility and that supply electric power and other related electric power services to occupants of the building or facility.
(2)	'Line' means any conductor located inside the city for distributing or transmitting electricity, other than
a.	For overhead construction, a conductor from the pole nearest the premises of a consumer to such premises, or a conductor from a line tap to such premises, and
b.	For underground construction, a conductor from the transformer (or the junction point, if there be one) nearest the premises of a consumer to such premises.
(3)	'Premises' means the building, structure, or facility to which electricity is being or is to be furnished.  Two or more buildings, structures, or facilities that are located on one tract or contiguous tracts of land and are used by one electric consumer for commercial, industrial, institutional, or governmental purposes, shall together constitute one ‘premises,' except that any such building, structure, or facility shall not, together with any other building, structure, or facility, constitute one ‘premises' if the electric service to it is separately metered and the charges for such service are calculated independently of charges for service to any other building, structure, or facility.
(4)	'Primary distribution company' means a city that owns and maintains its own electric distribution system, or a person, firm, or corporation that furnishes electric distribution service within a city pursuant to a franchise granted by, or contract with, a city, or that, having furnished service pursuant to a franchise or contract, is continuing to furnish service within a city after the expiration of the franchise or contract.
(5)	'Secondary distribution company' means a person, firm, or corporation that furnishes electric distribution service to one or more consumers other than itself within the limits of a city but is not a primary distribution company.  A primary distribution company that furnishes electric distribution service within a city pursuant to a franchise or contract that limits or restricts the classes of consumers or types of electric distribution service permitted to such supplier shall, in and with respect to any area annexed by the city after July 1, 1997, be a primary distribution company for such classes of consumers or types of service, and if it furnishes other electric distribution service in the annexed area on the effective date of annexation, shall be a secondary distribution company, in and with respect to such annexed area, for all other electric distribution service.  A primary distribution company that continues to furnish electric distribution service after the expiration of a franchise or contract that limited or restricted such primary distribution company with respect to classes of consumers or types of electric distribution service shall, in and with respect to any area annexed by the city after July 1, 1997, be a secondary distribution company for all electric distribution service if it is furnishing electric distribution service in the annexed area on the effective date of annexation.
"§ 160A-332.  Electric distribution service within city limits.
(a)	The electric distribution companies providing service inside the corporate limits of any city in which a secondary distribution company was furnishing electric distribution service on the determination date (as defined in G.S. 160A-331(1)) shall have rights and be subject to restrictions as follows:
(1)	The secondary distribution company shall have the right to serve all premises being served by it, or to which any of its facilities are attached, on the determination date.
(2)	The secondary distribution company shall have the right, subject to subdivision (3) of this section, to serve all premises initially requiring electric distribution service after the determination date which are located wholly within 300 feet of its lines and located wholly more than 300 feet from the lines of the primary distribution company, as such distribution companies' lines existed on the determination date.
(3)	Any premises initially requiring electric distribution service after the determination date which are located wholly within 300 feet of a secondary distribution company's lines and wholly within 300 feet of another secondary distribution company's lines, but wholly more than 300 feet from the primary distribution company's lines, as the lines of all distribution companies existed on the determination date, may be served by the secondary distribution company which the consumer chooses, and no other distribution company shall thereafter furnish electric service to such premises, except with the written consent of the distribution company then serving the premises.
(4)	A primary distribution company shall not furnish electric distribution service to any  premises which a secondary distribution company has the right to serve as set forth in subdivisions (1), (2), and (3) of this section, except with the written consent of the secondary distribution company.
(5)	Any premises initially requiring electric distribution service after the determination date which are located wholly or partially within 300 feet of the primary distribution company's lines and are located wholly or partially within 300 feet of the secondary distribution company's lines, as such distribution companies' lines existed on the determination date, may be served by either the secondary distribution company or the primary distribution company, whichever the consumer chooses, and no other distribution company shall thereafter furnish distribution service to such premises, except with the written consent of the distribution company then serving the premises.
(6)	Any premises initially requiring electric distribution service after the determination date, which are located only partially within 300 feet of the secondary distribution company's lines and are located wholly more than 300 feet from the primary distribution company's lines, as such distribution company's lines existed on the determination date, may be served either by the secondary distribution company or the primary distribution company, whichever the consumer chooses, and no other distribution company shall thereafter furnish service to such premises, except with the written consent of the distribution company then serving  the premises.
(7)	Except as provided in subdivisions (1), (2), (3), (5), and (6) of this section, a secondary distribution company shall not furnish electric distribution service within the corporate limits of any city unless it first obtains the written consent of the city and the primary distribution company.
(b)	In any city that is first incorporated after July 1, 1997, in which, on the effective date of the incorporation, there is more than one distribution company of electric service, all electric distribution companies therein shall continue to have the rights and be subject to the restrictions in effect before the city was incorporated until there is a primary distribution company within the city. 
"§ 160A-333.  Temporary electric distribution service.
No electric distribution company shall furnish temporary electric distribution service for the construction of premises which it would not have the right to serve under this Part if such premises were already constructed. The construction of lines for, and the furnishing of, temporary electric distribution service for the construction of premises which any other electric distribution company, if chosen by the consumer, would have the right to serve if such premises were already constructed, shall not impair the right of such other electric distribution company to furnish service to such premises after the construction thereof, if then chosen by the consumer; nor, unless the consumer chooses to have such premises served by the distribution company that furnished the temporary distribution service, shall the furnishing of such temporary distribution service or the construction of a line therefor impair the right of any other electric distribution company to furnish distribution service to any other premises which, without regard to the construction of such temporary service line, it has the right to serve.
"§ 160A-334.  Authority and jurisdiction of Utilities Commission.
Notwithstanding G.S. 160A-332 and 160A-333, if the North Carolina Utilities Commission finds that distribution service being furnished to or to be furnished to the consumer by a secondary distribution company is or will be inadequate or undependable, or that rates, conditions of service or service regulations, applied to such consumer, are unreasonably discriminatory, the Commission shall have the authority and jurisdiction, after notice to each affected electric distribution company, and after hearing, if a hearing is requested by an interested party, to:
(1)	Order a primary distribution company that is subject to the jurisdiction of the Commission to furnish electric distribution service to any consumer who desires service from the primary distribution company at any premises served by a secondary distribution company, or at premises which a secondary distribution company has the right to serve pursuant to other sections of this Part, and to order such secondary distribution company to cease and desist from furnishing electric distribution service to such premises, or
(2)	Order any secondary distribution company to cease and desist from furnishing electric distribution service to any premises being served by it or to any premises which it has the right to serve pursuant to other sections of this Part, if the consumer desires distribution service from a primary distribution company that is not subject to the jurisdiction of the Commission and which is willing to furnish service to such premises.
"§ 160A-335. Discontinuance of service and transfer of facilities by secondary distribution company.
A secondary distribution company may voluntarily discontinue its service to any premises and remove any of its electric facilities located inside the corporate limits of a city or sell and transfer such facilities to a primary distribution company in such city, subject to approval by the North Carolina Utilities Commission, if the Commission determines that the public interest will not thereby be adversely affected.
"§ 160A-336.  Electric distribution service for city facilities.
No provisions of this Part shall prevent a city that is a primary distribution company from furnishing its own electric distribution service for city facilities, or prevent any other primary distribution company from furnishing electric distribution service to a city inside its corporate limits.
"§ 160A-337.  Effect of Part on rights and duties of primary distribution company.
Except for the rights granted to and restrictions upon primary distribution companies contained in the provisions of this Part, nothing in this Part shall diminish, enlarge, alter, or affect in any way the rights and duties of a primary distribution company to furnish electric distribution service to premises within the corporate limits of a city.
"§ 160A-338.  Electric distribution companies subject to police power.
No provisions of this Part shall restrict the exercise of the police power of a city over the erection and maintenance of poles, wires, and other facilities of electric distribution companies in streets, alleys, and other public ways.
Section 16.  G.S. 117-10.1 reads as rewritten:
"§ 117-10.1. Municipal franchises.
An electric membership corporation shall be eligible to receive a franchise pursuant to 	G.S. 160A-319 from any city or town:
(1)	In which such electric membership corporation is on July 1, 1997, furnishing electric distribution service at retail to a majority of the electric meters; or
(2) 	To which such electric membership corporation is on July 1, 1997, furnishing the entire supply of electricity at wholesale; or
(3) 	Which is newly incorporated subsequent to July 1, 1997, and in which on the effective date of such incorporation the electric membership corporation is furnishing electric distribution service at retail to a majority of the meters."
Section 17.  G.S. 117-10.2 reads as rewritten:
"§ 117-10.2.  Restriction on municipal service.
No electric membership corporation shall furnish electric distribution service to, or within the limits of, any incorporated city or town, except pursuant to a franchise that may be granted under the provisions of G.S. 160A-319, or as permitted under G.S. 160A-331, 160A-332, and 160A-333; provided, that an electric membership corporation may furnish electric distribution service to, or within the limits of, any incorporated city or town if the city or town and all electric distribution companies, including public utilities, other electric membership corporations and other cities or towns, then furnishing electric distribution service to or within such city or town consent thereto in writing."
Section 18.  The Utilities Commission shall study whether a regional or State independent system operator should be established to enhance system reliability or achieve other goals.  The Utilities Commission shall report its findings and recommendations to the General Assembly by April 1, 1998.
Section 19.  The provisions of this act are severable.  If any provision of this act is held invalid by a court of competent jurisdiction, the invalidity does not affect other provisions of the act that can be given effect without the invalid provision.
Section 20.  This act becomes effective July 1, 1997.