48:3-59. Requirements for electric public utility after retail choice

11. a. On or after the starting date for the implementation of retail choice as determined by the board pursuant to subsection a. of section 5 of this act and for the duration of the transition charges established pursuant to subsection i. of section 13 and subsection a. of section 14 of this act, the board may require that an electric public utility either:

(1) Functionally separate its non-competitive business functions from its competitive electric generation service or its electric power generator functions so that such services or functions are provided by a related competitive business segment of the public utility or the public utility holding company. A related competitive business segment of the public utility holding company that is providing competitive electric generation services or performing electric power generator functions shall not be considered a public utility for the purposes of regulation under Title 48 of the Revised Statutes or any other State law or rule or regulation, except that the interrelationships between the related competitive business segment and the electric public utility shall be subject to board authority and oversight consistent with the provisions of this section; or

(2) Divest to an unaffiliated company all or a portion of its electric generation assets and operations, upon a finding by the board, that such divestiture is necessary because the concentration or location of electric generation facilities under the electric public utility's ownership or control enable it to exercise market control that adversely affects the formation of a competitive electricity generation market and adversely affects retail electric supply customers by enabling the electric public utility or its related competitive business segment to gain an unfair competitive advantage or otherwise charge non-competitive prices.

b. Prior to the commencement by an electric public utility or a related competitive business segment of an electric public utility of any solicitation of bids for the sale of generating assets subject to recovery pursuant to sections 13 and 14 of this act or of the public utility holding company of any solicitation of bids for the sale of generating assets which have not been previously approved by the board for transfer from the electric public utility to the electric public utility holding company and are subject to recovery pursuant to sections 13 and 14 of this act, whether ordered by the board or not, the board shall establish standards for the conduct of such sale by the utility. Such standards shall include provisions for the board to monitor the progress of the bid process to ensure that the process is conducted by parties acting in their own best interest and in a manner designed to ensure a fair market value determination and does not unreasonably preclude participation by prospective purchasers. An order by the board, pursuant to paragraphs (1) and (2) of subsection a. of this section, ordering a public utility to functionally separate or divest its competitive services to a related competitive business segment of the public utility, a public utility, a public utility holding company or an unaffiliated company shall include a provision that the related competitive business segment of the public utility, public utility holding company or unaffiliated company shall:

(1) Recognize the existing employee bargaining unit and shall continue to honor and abide by an existing collective bargaining agreement for the duration of the agreement. The new entity shall be required to bargain in good faith with the existing collective bargaining unit when the existing collective bargaining agreement has expired;

(2) Shall hire its initial employee complement from among qualified employees of the electric public utility employed at the generating facility at the time of the functional separation or divestiture; and

(3) Continue such terms and conditions of employment of employees as are in existence at the generating facility at the time of the functional separation or divestiture.

c. Prior to completing any sale of generating assets subject to recovery pursuant to sections 13 and 14 of this act, an electric public utility shall file for and obtain approval by the board of the sale. The board shall approve the filing, subject to the provisions of subsection d. of this section, if it finds that:

(1) The sale reflects the full market value of the assets;

(2) The sale is otherwise in the best interest of the electric public utility's ratepayers;

(3) The sale will not jeopardize the reliability of the electric power system;

(4) The sale will not result in undue market control by the prospective buyer;

(5) The impacts of the sale on the utility's workers have been reasonably mitigated;

(6) The sale process is consistent with standards established by the board pursuant to subsection b. of this section;

(7) The sale, merger, or acquisition of the generation or other utility assets includes a provision that the purchasing, merging or new entity shall recognize the existing employee bargaining unit and shall continue to honor and abide by any existing collective bargaining agreement for the duration of the agreement. The new entity shall be required to bargain in good faith with the existing collective bargaining unit when the existing collective bargaining agreement has expired;

(8) The sale, merger, or acquisition of the generation or other utility assets includes a provision that the purchasing, merging or new entity shall hire its initial employee complement from among the employees of the electric public utility employed at the generating facility at the time of the sale, merger or acquisition; and

(9) The sale, merger or acquisition of the generation or other utility assets includes a provision that the purchasing, merging or new entity shall continue such terms and conditions of employment of employees as are in existence at the generating facility at the time of the sale, merger or acquisition.

d. Whenever an electric public utility sells generating assets subject to recovery pursuant to sections 13 and 14 of this act and the net proceeds from such sale exceed the level of market value used in determining the level of stranded costs being recovered through a market transition charge or equivalent rate mechanism established pursuant to section 13 of this act, the board shall require that all such excess revenues derived by the electric public utility or its related competitive business segment from that sale be applied:

(1) To offset any market transition charge or equivalent rate mechanism assessed to customers pursuant to section 13 of this act; or

(2) If the electric public utility is not assessing a market transition charge, to offset the rates charged to customers for distribution service.

e. Notwithstanding this subsection no transfer of assets shall affect the whole value of the assessment of the transitional energy facility assessment set forth in P.L.1997, c.162 (C.54:30A-100 et seq.).

L.1999,c.23,s.11.