(a) All electric distribution companies subject to the jurisdiction of the Commission shall be the standard offer service supplier and returning customer service supplier in their distribution service territories. Customers on returning customer service may return to standard offer service after receiving returning customer service for a minimum of 12 consecutive months.

(b) Subject to the approval of the Commission, the standard offer service provider to meet its electric supply requirements shall have the ability to:

(1) Enter into short- and long-term contracts for the procurement of power necessary to serve its customers;

(2) Own and operate facilities for the generation of electric power;

(3) Build generation and transmission facilities (subject to any other requirements in any other section of the Delaware Code regarding siting, etc.);

(4) Make investments in demand-side resources; and

(5) Take any other Commission-approved action to diversify their retail load.

In order to take such action, DP&L as a standard offer service supplier must file an application with the Commission or have had such action approved as part of its integrated resource plan pursuant to subsection (c) of this section. If DP&L as a standard offer service supplier files an application under this subsection, then the Commission shall hold an evidentiary hearing on DP&L’s request and shall approve the request if the Commission finds that such action is in the public interest. If the Commission approves such a request, the Commission shall review all reasonable incurred costs of the contracts, facilities or programs in accordance with subchapter III of Chapter 1 of this title. Costs from these projects which have been approved by the Commission shall be included in standard offer service rates.

(c) (1) DP&L is required to conduct integrated resource planning. On December 1, 2006, and on the anniversary date of the first filing date of every other year thereafter (i.e., 2008, 2010 et seq.), DP&L shall file with the Commission, the Controller General, the Director of the Office of Management and Budget and the Energy Office an integrated resource plan (“IRP”).After the filing of DP&L’s December 2016 IRP, an IRP filing shall be made when DP&L elects to change its source of supply pursuant to paragraphs (b)(2)-(5) of this section or as the Commission may otherwise direct. In its IRP, DP&L shall systematically evaluate all available supply options during a 10-year planning period in order to acquire sufficient, efficient and reliable resources over time to meet its customers’ needs at a minimal cost. The IRP shall set forth DP&L’s supply and demand forecast for the next 10-year period, and shall set forth the resource mix with which DP&L proposes to meet its supply obligations for that 10-year period (i.e., demand-side management programs, long-term purchased power contracts, short-term purchased power contracts, self generation, procurement through wholesale market by RFP, spot market purchases, etc.).

a. As part of its IRP process, DP&L shall not rely exclusively on any particular resource or purchase procurement process. In its IRP, DP&L shall explore in detail all reasonable short- and long-term procurement or demand-side management strategies, even if a particular strategy is ultimately not recommended by the company. At least 30 percent of the resource mix of DP&L shall be purchases made through the regional wholesale market via a bid procurement or auction process held by DP&L. Such process shall be overseen by the Commission subject to the procurement process approved in PSC Docket #04-391 as may be modified by future Commission action.

b. In developing the IRP, DP&L may consider the economic and environmental value of:

1. Resources that utilize new or innovative baseload technologies (such as coal gasification);

2. Resources that provide short- or long-term environmental benefits to the citizens of this State (such as renewable resources like wind and solar power);

3. Facilities that have existing fuel and transmission infrastructure;

4. Facilities that utilize existing brownfield or industrial sites;

5. Resources that promote fuel diversity;

6. Resources or facilities that support or improve reliability; or

7. Resources that encourage price stability.

The IRP must investigate all potential opportunities for a more diverse supply at the lowest reasonable cost.

c. The Commission shall have the authority to promulgate any rules and regulations it deems necessary to accomplish the development of IRPs by DP&L. Commencing in 2009, DP&L shall submit a report to the Commission, the Governor and the General Assembly detailing its progress in implementing its IRPs.

d. The costs that DP&L incurs in developing and submitting its IRPs shall be included and recovered in DP&L’s distribution rates.

(2) The DEC shall annually prepare a 10-year plan detailing its energy supply requirements and planned procurement strategies to meet forecasted demand. Said plan shall be submitted to the Public Service Commission, Controller General’s Office and Office of Management and Budget. Said plan shall be filed by January 31, 2007, and January 31 of each subsequent year thereafter.

(d) As part of the initial IRP process, to immediately attempt to stabilize the long-term outlook for standard offer supply in the DP&L service territory, DP&L shall file on or before August 1, 2006, a proposal to obtain long-term contracts. The application shall contain a proposed form of request for proposals (“RFP”) for the construction of new generation resources within Delaware for the purpose of serving its customers taking standard offer service. Such proposed RFP shall include a proposed form of output contract which shall include capacity and energy and may include ancillary electric products and environmental attributes between the electric distribution company and developers of new generation facilities, which contract shall have a term of no less than 10 years and no more than 25 years. Such RFP shall also set forth proposed selection criteria based on the cost-effectiveness of the project in producing energy price stability, reductions in environmental impact, benefits of adopting new and emerging technology, siting feasibility and terms and conditions concerning the sale of energy output from such facilities.

(1) The Commission and Energy Office may approve or modify the elements of the RFP prior to its issuance. The Commission and Energy Office shall ensure that each RFP elicits and recognizes the value of:

a. Proposals that utilize new or innovative baseload technologies;

b. Proposals that provide long-term environmental benefits to the state;

c. Proposals that have existing fuel and transmission infrastructure;

d. Proposals that promote fuel diversity;

e. Proposals that support or improve reliability; and

f. Proposals that utilize existing brownfield or industrial sites.

Such RFP shall be issued no later than November 1, 2006. Proposals will be due no later than December 22, 2006.

(2) DP&L shall publish such request for proposals in one or more newspapers or periodicals with general circulation, as selected by the Commission, and shall post such request for proposals on its web site. The Commission, the Director of the Office of Management and Budget, the Controller General and the Energy Office shall retain the services of an independent third-party entity with expertise in the area of energy procurement at the expense of DP&L to oversee the development of the request for proposals and to assist them in their review of proposals pursuant to paragraph (d)(3) of this section. Public service companies shall be eligible to participate in such RFP process through unregulated affiliated companies that meet the Commission’s criteria to ensure that such affiliates are sufficiently financially and functionally separate from the regulated utility operations to prevent subsidization of the generation project by the regulated operations and to eliminate any other advantages from the affiliation with regulated operations.

(3) The Commission, the Director of the Office of Management and Budget, the Controller General and the Energy Office shall, on or before February 28, 2007, evaluate such proposals and may determine to approve 1 or more of such proposals that result in the greatest long-term system benefits, including those identified in paragraph (1) of this subsection, in the most cost-effective manner. Once 1 or more of the contracts have been finalized and approved by the Commission, the Director of the Office of Management and Budget, the Controller General and the Energy Office, then DP&L shall enter into such contract or contracts.

(e) Electric distribution companies are required to provide returning customer service to qualifying returning customers.

72 Del. Laws, c. 10, § 3; 75 Del. Laws, c. 242, § 6; 81 Del. Laws, c. 315, § 1.