§ 34–1510. Transition costs, transition benefits.

(a) The electric company shall be provided an opportunity to recover all of its prudently incurred and verifiable net transition costs, subject to full mitigation, following the Commission’s determination under subsection (b) of this section. In connection with the foregoing:

(1) A competitive transition charge, or other appropriate non-bypassable mechanism as determined by the Commission, may be included as part of the charge paid by every customer accessing the transmission or distribution system of the electric company.

(2) The competitive transition charge may be included on bills to customers for a period of limited duration to be determined by the Commission.

(3) The Commission may establish recovery periods of different lengths for different categories of transition costs.

(b)(1) The Commission shall determine the transition costs and the amount of the costs that the electric company may recover.

(2) In determining the electric company’s transition costs, the Commission shall:

(A) Conduct public hearings; and

(B) Consider evidence appropriate to an accurate determination of the electric company’s transition costs. Such evidence may include:

(i) Book value and fair market value;

(ii) Auctions and sales of comparable assets;

(iii) Appraisals;

(iv) The revenue the company would receive under rate-of-return regulation;

(v) The revenue the company would receive in a restructured electricity supply market; and

(vi) Computer simulations provided to the Commission.

(3) If the Commission determines that the electric company will incur transition costs, the Commission shall determine the extent of the permitted recovery based on the following factors:

(A) The prudence of the original investment and of the continued management of the investment;

(B) Whether the investment was mandated by law, regulation, or order;

(C) Whether the amount at issue has been fully verified and minimized;

(D) Whether the investment continues to be used and useful;

(E) Whether the loss is one of which investors can be said to have reasonably borne the risk;

(F) Whether investors have already been compensated for the risk;

(G) The financial integrity of the electric company;

(H) Whether the investment was made to satisfy the need to ensure the availability of reliable electric service;

(I) For costs incurred or to be incurred as a result of electric industry restructuring or the establishment of customer choice, whether the costs are reasonable; and

(J) The impact of a recovery of transition costs on the development of effective competition in the market for electricity supply or billing, or the market for any component of electric service declared by the Commission to be a potentially competitive service.

(c) The Commission shall establish procedures for an annual review of actual market conditions to determine if the authorized competitive transition charge is overcompensating or undercompensating the electric company for the transition costs established under subsection (b)(3) of this section. If an annual review demonstrates that the authorized competitive transition charge is overcompensating or undercompensating the electric company for the transition costs established under subsection (b)(3) of this section, the Commission shall adjust the competitive transition charge accordingly.