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affiliate, shall not remove or otherwise provide or use confidential
property or information gained from the utility or affiliated service
company in a discriminatory or exclusive fashion, to the benefit of
the competitive affiliate or to the detriment of non-affiliated electric
suppliers. Movement of an employee engaged in transmission or distribution
system operations, including a person employed by a service company
affiliated with the utility who is engaged in transmission or distribution
system operations on a day-to-day basis or has knowledge of transmission
or distribution system operations from a utility to a competitive
affiliate or vice versa, may be accomplished through either the employee's
termination of employment with one company and acceptance of employment
with the other, or a transfer to another company, as long as the transfer
of an employee from the utility to an affiliate results in the utility
bearing no ongoing costs associated with that employee. Transferring
employees shall sign a statement indicating that they are aware of
and understand the restrictions and penalties set forth in this section.
The utility also shall post a conspicuous notice of such a transfer
on its Internet site or other public electronic bulletin board within
24 hours and for at least 30 consecutive calendar days. The exception
to this provision is that employees may be temporarily assigned to
an affiliate or non-affiliated utility to assist in restoring power
in the event of a major service interruption or assist in resolving
emergency situations affecting system reliability. Consistent with §25.84(h)
of this title (relating to Reporting of Affiliate Transactions for
Electric Utilities), however, within 30 days of such a deviation from
the code of conduct, the utility shall report this information to
the commission and shall conspicuously post the information on its
Internet site or other public electronic bulletin board for 30 consecutive
calendar days.
(5) Sharing of office space. A utility's office space
shall be physically separate from that of its competitive affiliates,
where physical separation is accomplished by having office space in
separate buildings or, if within the same building, by a method such
as having offices on separate floors or with separate access, unless
otherwise approved by the commission.
(6) Separate books and records. A utility and its affiliates
shall keep separate books of accounts and records, and the commission
may review records relating to a transaction between a utility and
an affiliate.
(A) In accordance with generally accepted accounting
principles or state and federal guidelines, as appropriate, a utility
shall record all transactions with its affiliates, whether they involve
direct or indirect expenses.
(B) A utility shall prepare financial statements that
are not consolidated with those of its affiliates.
(C) A utility and its affiliates shall maintain sufficient
records to allow for an audit of the transactions between the utility
and its affiliates. At any time, the commission may, at its discretion,
require a utility to initiate, at the utility's expense, an audit
of transactions between the utility and its affiliates performed by
an independent third party.
(7) Limited credit support by a utility. A utility
may share credit, investment, or financing arrangements with its competitive
affiliates if it complies with subparagraphs (A) and (B) of this paragraph.
(A) The utility shall implement adequate safeguards
precluding employees of a competitive affiliate from gaining access
to information in a manner that would allow or provide a means to
transfer confidential information from a utility to an affiliate,
create an opportunity for preferential treatment or unfair competitive
advantage, lead to customer confusion, or create significant opportunities
for cross-subsidization of affiliates.
(B) The utility shall not allow an affiliate to obtain
credit under any arrangement that would include a specific pledge
of any assets in the rate base of the utility or a pledge of cash
reasonably necessary for utility operations. This subsection does
not affect a utility's obligations under other law or regulations,
such as the obligations of a public utility holding company under §25.271(c)(2)
of this title (relating to Foreign Utility Company Ownership by Exempt
Holding Companies).
(e) Transactions between a utility and its affiliates.
(1) Transactions with all affiliates. A utility shall
not subsidize the business activities of any affiliate with revenues
from a regulated service. In accordance with PURA and the commission's
rules, a utility and its affiliates shall fully allocate costs for
any shared services, including corporate support services, offices,
employees, property, equipment, computer systems, information systems,
and any other shared assets, services, or products.
(A) Sale of products or services by a utility. Unless
otherwise approved by the commission and except for corporate support
services, any sale of a product or service by a utility shall be governed
by a tariff approved by the commission. Products and services shall
be made available to any third party entity on the same terms and
conditions as the utility makes those products and services available
to its affiliates.
(B) Purchase of products, services, or assets by a
utility from its affiliate. Products, services, and assets shall be
priced at levels that are fair and reasonable to the customers of
the utility and that reflect the market value of the product, service,
or asset.
(C) Transfers of assets. Except for asset transfers
implementing unbundling pursuant to PURA §39.051, asset valuation
in accordance with PURA §39.262, and transfers of property pursuant
to a financing order issued under PURA, Chapter 39, Subchapter G,
assets transferred from a utility to its affiliates shall be priced
at levels that are fair and reasonable to the customers of the utility
and that reflect the market value of the assets or the utility's fully
allocated cost to provide those assets.
(D) Transfer of assets implementing restructuring legislation.
The transfer from a utility to an affiliate of assets implementing
unbundling pursuant to PURA §39.051, asset valuation in accordance
with PURA §39.262, and transfers of property pursuant to a financing
order issued under PURA, Chapter 39, Subchapter G will be reviewed
by the commission pursuant to the applicable provisions of PURA, and
any rules implementing those provisions.
(2) Transactions with competitive affiliates. Unless
otherwise allowed in this subsection, transactions between a utility
and its competitive affiliates shall be at arm's length. A utility
shall maintain a contemporaneous written record of all transactions
with its competitive affiliates, except those involving corporate
support services and those transactions governed by tariffs. Such
records, which shall include the date of the transaction, name of
affiliate involved, name of a utility employee knowledgeable about
the transaction, and a description of the transaction, shall be maintained
by the utility for three years. In addition to the requirements specified
in paragraph (1) of this subsection, the following provisions apply
to transactions between utilities and their competitive affiliates.
(A) Provision of corporate support services. A utility
may engage in transactions directly related to the provision of corporate
support services with its competitive affiliates. Such provision of
corporate support services shall not allow or provide a means for
the transfer of confidential information from the utility to the competitive
affiliate, create the opportunity for preferential treatment or unfair
competitive advantage, lead to customer confusion, or create significant
opportunities for cross-subsidization of the competitive affiliate.
(B) Purchase of products or services by a utility from
its competitive affiliate. Except for corporate support services,
a utility may not enter into a transaction to purchase a product or
service from a competitive affiliate that has a per unit value of
$75,000 or more, or a total value of $1 million or more, unless the
transaction is the result of a fair, competitive bidding process formalized
in a contract subject to the provisions of §25.273 of this title
(relating to Contracts Between Electric Utilities and Their Competitive
Affiliates).
(C) Transfers of assets. Except for asset transfers
facilitating unbundling pursuant to PURA §39.051, asset valuation
in accordance with PURA §39.262, and transfers of property pursuant
to a financing order issued under PURA, Chapter 39, Subchapter G,
any transfer from a utility to its competitive affiliates of assets
with a per unit value of $75,000 or more, or a total value of $1 million
or more, must be the result of a fair, competitive bidding process
formalized in a contract subject to the provisions of §25.273
of this title.
(f) Safeguards relating to provision of products and
services.
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