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ELECTRIC DEREGULATION: STATE BY STATE

The U.S. is steadily moving toward a functioning deregulated energy
marketplace and more than half the country's population is scheduled
to be able to choose their electricity supplier by 2004. Read on about
deregulation efforts in the states in which your company has operations
.

The following information is subject to change, check with the
State PUC for latest information)

Alabama
In October 2000, the Alabama Public Service Commission (PSC) decided,
docket 26427, to close an investigation into electric restructuring. In closing
the docket, the PSC cites a lack of benefit to consumers and will revisit the
issue on a later date.

Alaska
The Public Utility Commission was replaced with the Regulatory Commission
of Alaska and a 5-member commission panel. In a study commissioned by
the Joint Committee on Electric Utility Restructuring, consultants
recommended postponing any pilot-programs before regulatory reform. The
final report recommended to begin a specific set of market informed regulatory
reforms, and minimization of stranded-cost among other detailed strategies.

Arizona
In May 1998, legislation was enacted to allow retail competition by October 1,
1999. The bill appoints investor owned utilities to become providers of last
resort for customers who do not choose an alternative provider.

All customers in Salt River Project territory are now allowed to choose an
alternative supplier. SRP has raised their shopping credit and reduced their
distribution charge passing the savings on the customers.

The Commission has approved Tucson Electric Power's (TEP's) settlement
agreement freezing rates for 8 years with full access by January 1, 2001. TEP
will be allowed to recover stranded costs through a fixed charge and a floating
charge that varies with market prices.

Arkansas
Legislation enacted in 1999 required retail electric competition to commence by January 2002. In February 2001, Gov. Mike Huckabee signed SB 236 which delays retail electric competition until October 2003 and gives the Public Service Commission ("PSC") the authority to delay until October 2005. In July 2001, the PSC opened an investigation to determine whether retail competition should be further delayed to 2005. The PSC's findings will be further reported to the General Assembly.

California
AB 1890 was enacted in September 1996 allowing retail electric competition to begin in March 1998. Following the transition period, utilities can purchase electricity from any independent party or exchange.

Pacific Gas & Electric (PG&E), Southern California Edison (SoCal Edison), and San Diego Gas & Electric (SDG&E) can now procure power from any qualified power exchange during the electric restructuring transition period. SDG&E is required to refund rate reduction bond proceeds to residential and small commercial customers.

On February 1, 2001, Governor Davis signed AB1X, which authorizes the California Department of Water Resources to enter into contracts through January 1, 2003 to purchase electric power and to resell the power to public utilities at no more than its acquisition cost. The bill created the DWR Electric Power Fund in the State Treasury and transfers $500 million from the state's General Fund to the DWR-EPF to finance its activities.

Colorado
The Legislature enacted Study Bill 152 in May 1998. The measure created a
29 member Advisory Panel to study the benefits of unbundling retail electric
rates. The results of the study proved retail electric competition would raise
rates for consumers and that competition was not in their best interest. The
study also revealed that incumbent utilities would have little or no stranded
costs.

Connecticut
The Legislature enacted House Bill 5005 in April of 1998. The bill provided electric retail customers with the opportunity to choose an electric supplier in January 2000. The bill also requires utilities to provide standard offer service at a 10% rate reduction through 2004. Utilities must divest their generating assets in order to recover stranded costs. The PUC has approved the state's jurisdictional utility implementation and transition plans.


Delaware
House Bill 10 was enacted in March 1999 allowing full competition through a
phase-in process. Residential rates were reduced 7.5% and then frozen for
four years, with all other customer class rates' frozen for three years. Both
Delmarva Power & Light and Conectiv will serve as default providers and
continue suppling meter and bill services during the transition period, which
ends September 30, 2002.

District of Columbia
A two-year phase-in of electric competition begins in January 2002. Residential customers will receive a 7% rate reduction, while commercial and governmental customers will receive a 6.5% rate reduction over a four-year period. Utilities are permitted to recover non-bypassable competition transition charges and net transition cost. Potomac Electric Power Company�s sell of generating assets in Maryland was approved; proceeds will be used to recover stranded costs and above book value proceeds will be shared with customers.

Florida
In May 2000, Governor Bush issued an executive order creating a 17-member task force to study electric reliability and gas supply issues. The task force will conclude it's study with recommendations to the Governor in December 2001. In January 2001, the Florida Energy 20/20 Study Commission proposed a plan to restructure the wholesale electric market. To date, Florida has not enacted comprehensive legislation to unbundle electric rates.

Georgia
No legislative action was taken in the 2000 Legislative Session this year and
there is no anticipation that the issue will be pursued the following year. The
Commission has been a supporter of electric restructuring; as a result they
released a report calling for the legislature to introduce deregulation
legislation.

Idaho
In March 1997, the Legislature passed HB 399, requiring the unbundling of
costs by electric utilities, cooperatives and municipalities, providing service to
1,000 residents or more, into generation, transmission and distribution
components. The commission has required some of the utilities in the state to
submit unbundled cost analyses. A legislative committee study found, that
with some of the lowest electricity rates in the country, Idaho's electric
consumers would not benefit from retail competition.

Illinois
IIn June of 1999, Senate Bill 24 was enacted to amend the Electric Choice and Rate Relief Act (HB362). The measure gives residential customers a 5% base rate cut in October 2001. Originally, Commonwealth Edison was included in a four-stage phase-in process that began in October 1999. Under the amendment Commonwealth Edison must spend a minimum of $2 billion enhancing its transmission and distribution systems and $250 million to support environmental programs. Utilities are allowed to recover stranded cost through securitization and a competition transition charge that will be in place through December 2006.

Indiana
During the last three years, the General Assembly has considered electric
competition proposals. A bill was introduced to restructure electricity with
retail access by January 2001 and capped rates for customers from July 1,
1999 through December 31, 2005. The bill did not pass. Since the state has
fairly low electricity prices, the issue of restructuring is not a priority.

Iowa
Since, the legislation to open competition in October 2002 failed in the 2000
session, there seems to be little chance that the next session will bring
success. Iowans already have such low energy prices it's difficult to gain
support for an electric restructuring bill. Other reasons for restructuring
resistance are how to protect worker benefits in case of divestiture and
consumer protection issues.

Kansas
The 2000 legislative session failed to debate or pass any of their introduced retail competition bills. Senator Ranson stated that deregulation could bring higher rates for residential customers, but that legislators should move toward open access before its becomes federally mandated. July 2001, there is little interest in unbundling electric rates.

Kentucky
Electric competition studies have been conducted by the Electricity
Restructuring Task Force, which was established in 1998. The study urges
against retail choice since electric prices are so low, but the task force will
continue to monitor the issue. The task force believes customers would end
up paying more over the next ten years for electricity because utilities would
have to incur the additional cost of complying with federal environmental
regulations.

Louisiana
In February 1999, the Louisiana Public Service Commission ("PSC") determined that electric competition was not in the public interest at that time. In January 2001, the PSC opened a proceeding to evaluate restructuring of the retail electric market. Interested parties have submitted comments and PSC Staff has recommended that industrial customers be given the opportunity to choose their suppliers beginning 01/01/03. Although the PSC Staff did not recommend PSC approval of retail choice for small commercial and residential customers at this time, PSC Staff has suggested that this be re-evaluated at a future date.

Maine
As of March 2000, all electric consumers in Maine have the option to choose their own electric service provider. "An Act to Restructure the State's Electric Industry" was enacted in May of 1997, making this option possible. The act requires the phasing-in of retail competition and metering & billing services during January 2000 to January 2002. Residential rates are reduced up to 7.5% followed by a four-year rate freeze. Utilities are permitted to recover stranded cost through competition transition charges or CTC's. Standard offer providers are determined by holding open bids. Standard offer rates have been raised to increase competition.

Maryland
In March 1999, the Legislature enacted SB 300. The measure opened the retail electric market to competition in July 2000. Provisions in SB 300 allow utilities to recover 100% of their stranded cost and provides utilities with the option of selling or spining-off their generating assets to an affiliate. Baltimore Gas & Electric implemented customer choice in August 2000, after a battle ensued over the Public Service Commission's (PSC's) order allowed all customers to have choice in July 2000. SB 344, also enacted in March 1999, allows a 2% gross receipts tax on all Investor Owned Utilities. The PSC has approved competitive metering and billing, consumer protection and supplier tariff provisions.

Massachusetts
Retail competition began in March 1998; all customers severed by
investor-owned utilities were eligible to choose a competitive supplier. The
Department of Telecommunication and Electricity is investigating whether
metering and billing services should be competitive. Legislation, HB 5117,
was signed into law November 1997 giving customers a 10% rate reduction;
however, there has been little switching activity. Since the switching activity
was so poor and supporters of deregulation have always encouraged that
higher standard offer rates (available until 2004) increase competitiveness, the
department decided to raise the standard offer price for electricity.
The department only approved stranded cost if the utilities divest its
generation facilities, complete retail competition implementation plans,
mitigate transition cost, and comply with rate reduction requirements. Hence,
Massachusetts Electric, Eastern Utilities, Boston Edison, Western
Massachusetts Electric Company, and Commonwealth Electric Company
settlement agreements have all been approved by the department.

Michigan
SSB937 was signed June 3, 2000 providing all customer retail access by
January 1, 2002. Residential customers receive a mandatory 5% rate
discount. Utilities are allowed to securitize and divestiture is not required. The
Michigan Public Service Commission has issued a series of regulatory orders
intended for retail competition.
The Michigan Supreme Court ruled that the Commission did not have the
authority to mandate utilities to open their territories. Nevertheless, both
Detroit Edison and Consumer's Energy plan to voluntarily go along with the
Commission's implementation plan for all customers to have access by
January 2002.

Minnesota
The legislature has not enacted a comprehensive electric restructuring bill but
continues to review numerous bills in the 1999 session. The Commission, on
May 21, 1999, opened an investigation into the unbundling and restructuring of
electric services. The Legislative Electric Restructuring Task Force continues
to address the key components for properly unbundling the industry.

Mississippi
State regulator's report show that electric restructuring is not in the best
interest of the public, and as a result suspended its generic electric
restructuring docket, but will continue to monitor the issues in other states.

Missouri
Though, several restructuring bills have been introduced and debated during
this legislative session, none where passed. Missouri's Retail Electric
Competition Task Force recommended retail competition only if it can benefit
all classes of consumers. The commission was conducting a pilot program
that recently ended in January 2000.

Montana
In December 2000, the Public Service Commission (PSC) ordered retail
electric competition delayed until 2004. In January 2001, SB 243 was
introduced and if enacted delays retail competition until 2007. In March 2001,
the PSC determined that under SB 390, it is authorized to regulate MTP
supply rates through 2004.

Nebraska
The 1996 Legislature enacted Legislative Resolution (LR) 455. The resolution required a study of retail competition and the benefits to consumers. LR 455 was referred to the Natural Resource Committee, which was comprised of an advisory panel and a forty-one-member task force. In December 1999, the committee issued a final report concluding the state had little incentive to implement competition. 2001- There is little interest in the unbundling of electric rates.

Nevada
Governor Guinn delayed competition indefinitely. All customer classes will start choosing their electricity supplier at the same time. Many issues such as stranded cost and provider of last resort have yet to be resolved. Utilities are to provide all noncompetitive services to their territory unless the Commission authorizes another entity to provide such services.

New Hampshire
The Commission, Governor's Office, State Attorney General Office and Public Service of New Hampshire reached an "Agreement to Settle PSNH Restructuring" providing a resolution to stranded cost and rate reduction issues. The agreement calls for immediate implementation of electric choice; 18.3% rate reduction; stranded cost recovery and securitization bonds. The commission has approved restructuring plans for Granite State and New Hampshire Electric Cooperative. Implementation of Public Service New Hampshire�s service territory for retail competition has been delayed because securitization has not occurred, the company is waiting for an IRS letter regarding the tax effects and the statutory period for petitioning order has not expired.

New Jersey
Electric competition laws where enacted January 1999 giving customers an immediate 5% discount off their electric bills and another 5% over the next three years. Competition was delayed by several months to allow alternative suppliers the opportunity to ensure their computer system could handle the customer needs. Retail access began November 14, 1999. The law provides for stranded cost recovery up to four years through a market transition charge and securitization of up to 75% of generation related stranded costs. For three years after the onset of retail competition utilities must provide basic generation service for customers who do not select an alternative provider. Competitive metering and billing is permitted. The commission has issued rules for licensing and consumer protection standard.

New Mexico
Governor Johnson of New Mexico signed "The Electric Utility Industry Restructuring Act of 1999". In January 2001, the Legislature enacted Senate Bill 266. The bill delayed customer choice for small commercial and residential customers until January 1, 2007 and for remaining customers until July 1, 2007.

New York
In New York, retail competition is being phased in at different times in each utility�s service territory through restructuring plans or �settlements� approved by the PSC. All of the state is open to electric competition, as of July 2001, but customers have been slow to switch. In June 2001, 3.5% of electric customers had switched to an electric service provider. The Commission's Energy Competition Committee issued a Recommended Decision on July 17, 2001 setting forth the parameters for provider of last resort.

North Carolina
The Study Commission submitted its recommendations to the General
Assembly. Fully competitive retail electric service as of January 1, 2006, with
retail choice available to up to 50% of each power supplier's load as of
January 1, 2005; and stranded costs recovery for investor owned utilities with
a rate freeze effective through December 31, 2004, and a proceeding before
the NCUC to determine further recovery, if any. As of January 8, 2001, the
General Assembly has said it will not produce any comprehensive
restructuring legislation in the 2001 season.

North Dakota
No action was taken on the issue of electric restructuring in the 1999 session
of the North Dakota Legislature. For six years a legislative committee has
been studying the issue and is due to file a report in the 2001 session.

Ohio
On July 6, 1999, the Governor signed Senate Bill 3 allowing electric customer choice to began in January 2001. According to restructuring laws, electric rates are to be frozen for five years and residential customers will receive a rate cut of five percent and shopping credits. Stranded cost is recoverable until 2005 and all utilities are required to join an independently operated transmission system. Dayton Power & Light, First Energy subsidiaries, Cincinnati Gas & Electric, and Monongahela Power�s restructuring plans have all been approved. Real competition in FirstEnergy's areas of northern Ohio has been quite limited after the 1120 MW of Market Support Generation (MSG) was purchased by 3rd party energy companies then resold.

Oklahoma
Oklahoma has several complementing enacted bills requiring implementation
of retail choice by July 1, 2002. Utilities are to functionally separate
transmission and distribution services. Generation assets are to be
transferred to a separate affiliate.

Oregon
In 1999, regulators adopted Senate Bill 1149, which granted large industrial and commercial customers access to customer choice by 10/01. Small commercial and residential customers will continue to be served by their incumbent utility. In light of the energy crisis in the West, the Oregon 2001 Legislature enacted House Bill 3633, delaying retail competition until March 2002.

Pennsylvania
The Electric Generation Customer Choice and Competition Act, HB 1509, was enacted 12/96. The law permits consumers to choose among competitive generation suppliers under a phase-in program. The first phase gave one-third of the state's consumers the ability to choose their supplier in 01/99; two-thirds in 01/00; and the final third in 01/01. More than 72,000 customers participated in the pilot programs that expired 01/99. On June 20, 2001, the PUC issued a final order conditionally approving the proposed merger of GPU, Inc. and FirstEnergy.

Rhode Island
Restructuring legislation was passed in 1996. The law initiated retail competition in 07/97. In order to foster a more competitive market, the Commission ordered the incumbent utilities to increase their standard offer rates. Standard offer service will be available through 2009 at a discount from present rates for non-selecting customers. The standard offer rate will decrease over time. Once customers purchase electricity from an alternative supplier, the incumbent utility is not required to make standard offer service available for those customers.

South Carolina
Although several restructuring bills have been introduced, there has been little
activity on the issue. One of the bills proposed retail access by 01/01/03 with
a five-year transition period. Another bill would have allowed utilities to recover
verifiable stranded costs and investments. However, since electric rates in
South Carolina are among the lowest in the nation, there is little chance of an
electric restructuring bill being signed into law in the near term.

South Dakota
A study conducted by South Dakota University suggested that electric
restructuring would not be beneficial to the state. However, two laws were
enacted in 1996 giving regulators authority to use incentive rates and allow
flexible and competitive ratemaking.

Tennessee
Tennessee Valley Authority, a federal utility, serves a majority of Tennessee
and is exempt from state regulation. Although a study commission has taken
up the issue of electric restructuring, to date, no legislation has passed.

Texas
In 1999, Texas enacted retail competition legislation that gives all customers retail choice by 2002. Under SB 7, cooperatives and municipals can opt-in or opt-out at their discretion. A rate freeze went into effect 9/01/99 and will expire 12/31/01. A 6% rate reduction will go into effect at the start of competition, which begins 01/01/02. Prior to the start of competition, IOUs must split into 3 separate companies: (1) regulated transmission and distribution company; (2) unregulated power generation company; and (3) unregulated retail electric provider. The pilot program was scheduled to begin 06/01/01 but has been delayed due to computer problems. A maximum of 5% of a utility's load in each customer class can participate. The maximum participation limits have not been met for the residential segment of the market. However, more than the maximum 5% of commercial and industrial customers volunteered, so actual participants were chosen through a lottery process.

Utah
Lawmakers in Utah have adopted a "go slow" approach toward electric
restructuring. Their preference is to observe restructuring and the expeReinces
gained in other states prior to the passage of restructuring legislation.

Vermont
During the 2001 Vermont legislative session which ended June 4th, several measures were introduced to unbundle electric rates. Due to the lack of support, however, the legislature failed to enact a comprehensive retail electric bill. The Governor�s working group, the Public Service Commission (PSC) and state�s jurisdictional utilities have spent a considerable amount of time addressing the questions surrounding the unbundling of electric rates and the impact it would have on consumers. The result is the same each time; Vermont will take the �go slow� approach.

Virginia
In March 1999, Virginia�s governor signed Senate Bill 1269. The measure allows retail electric competition to be phased-in over a two-year period beginning in January 2002. Rates will be capped through mid-2007 and all incumbent utilities must separate transmission, distribution, and generation by 2002. The commission has released rules for utilities� participation, proposed rules to implement the functional separation requirements, and interim rules for electric/gas retail pilot program. The pilot program has two phases: the first took place in 06/00 and 37,000 customers had the opportunity to choose their retail providers; in the second phase, which began on 01/01, over 74,000 customers have been given the opportunity to expeReince retail choice.

Washington
In 1998, following the trend of surrounding states, the Washington Legislature
enacted Engrossed Substitute Senate Bill (ESSB) 6560. The bill required the
WUTC and the Department of Community Trade and Economic Development
to study the benefits of retail electric competition on Washington's electric
system. In 1999, the Commission and the Department submitted a report
identifying those trends affecting the industry and consumers, and strategies
for achieving policy objectives, however, there were no conclusions or
recommendations made.

There is little expectation that a comprehensive electric unbundling measure
will pass during the 2001 legislative session.

West Virginia
The Restructuring Task Force of West Virginia could not come to an agreement on a restructuring plan for the state. Therefore, the Commission ordered a proposed plan for electric utility restructuring, HR 27. With this bill customers will be able to select an alternative supplier beginning in mid-2001. Large customers will be able to choose their metering and billing service, as will residential customers within four years. Utilities will be permitted to sell, transfer, or assign their generation assets. Transmission and distribution rates will continue to be capped for six years, while utilities will be required to provide default service for six years.

Wisconsin
The state adopted a 7-step plan for implementing electric restructuring. But,
the Public Service Commission postponed the implementation process
because there were issues with reliability and inadequate wholesale
competition.

Wyoming
In 1997, the Public Service Commission (PSC) initiated a series of workshops
to evaluate the benefits of electric competition but subsequently cancelled the
initiative after the Legislature expressed concern. Since that time, the PSC
has not revisited the restructuring issue and may not for years to come.