It is enacted by the General Assembly as follows:

SECTION 1. Sections 39-1-2, 39-1-27 and 39-1-27.3 of the General Laws in Chapter 39-1 entitled "Public Utilities Commission" are hereby amended to read as follows:

39-1-2. Definitions. -- Terms used in this title shall be construed as follows, unless another meaning is expressed or is clearly apparent from the language or context.

(1) "Commission" means the public utilities commission;

(2) "Commissioner" means a member of the public utilities commission;

(3) "Chairperson" means the chairperson of the public utilities commission;

(4) "Division" means the division of public utilities and carriers.

(5) "Administrator" means the administrator of the division of public utilities and carriers.

(6) "Company" means and includes a person, firm, partnership, corporation, quasi-municipal corporation, association, joint stock association or company, and his, her, its, or their lessees, trustees or receivers appointed by any court;

(7) "Public utility" means and includes every company that is an electric distribution company and every company operating or doing business in intrastate commerce and in this state as a railroad, street railway, common carrier, gas, liquefied natural gas, water, telephone, telegraph, and pipeline company, and every company owning, leasing, maintaining, managing, or controlling any plant or equipment or any part of any plant or equipment within this state for manufacturing, producing, transmitting, distributing, delivering, or furnishing natural or manufactured gas, directly or indirectly to or for the public, or any cars or equipment employed on or in connection with any railroad or street railway for public or general use within this state, or any pipes, mains, poles, wires, conduits, fixtures, through, over, across, under, or along any public highways, parkways or streets, public lands, waters, or parks for the transmission, transportation, or distribution of gas for sale to the public for light, heat, cooling or power for providing audio or visual telephonic or telegraphic communication service within this state or any pond, lake, reservoir, stream, well or distributing plant or system employed for the distribution of water to the consuming public within this state including the water supply board of the city of Providence; provided, that, except as provided in section 39-16-9 and in chapter 2072 of the public laws, 1933, as amended, this definition shall not be construed to apply to any public waterworks or water service owned and furnished by any city, town, water district, fire district, or any other municipal or quasi-municipal corporation, excepting the water supply board of the city of Providence, unless any city, town, water district, fire district, municipal or quasi-municipal corporation obtains water from a source owned or leased by the water resources board, either directly or indirectly, or obtains a loan from the board pursuant to the provisions of chapter 15 of title 46, or sells water, on a wholesale or retail basis, inside and outside the territorial limits of the city or town, water district, fire district, municipal or quasi-municipal corporation, except, however, that a public waterworks or water service owned and furnished by any city, town, water district, fire district, or any other municipal or quasi-municipal corporation which sells water, on a wholesale or retail basis, inside and outside its territorial limits shall not be construed as a public utility if it has fewer than 1500 total customer service connections and provided outside sales do not exceed ten (10) percent of the total water service connections or volumetric sales and provided the price charged to outside customers, per unit of water, is not greater than the price charged to inside customers for the same unit of water, nor to the Rhode Island public transit authority, or to the production and/or distribution of steam, heat, or water by Rhode Island port authority and economic development corporation in the town of North Kingstown; and the term "public utility" shall also mean and include the Narragansett Bay water quality management district commission; and provided that the ownership or operation of a facility by a company which dispenses alternative fuel or energy sources at retail for use as a motor vehicle fuel or energy source, and the dispensing of alternative fuel or energy sources at retail from such a facility, does not make the company a public utility within the meaning of this title solely because of that ownership, operation, or sale; and provided further that this exemption shall not apply to presently regulated public utilities which sell natural gas or are dispensers of other energy sources; and provided further, that the term "public utility" shall not include any company;

(i) producing or distributing steam or heat from a fossil fuel fired cogeneration plant located at the university of Rhode Island in South Kingstown, Rhode Island, and

(ii) producing and/or distributing thermal energy and/or electricity to a state owned facility from a plant located on an adjacent site regardless of whether steam lines cross a public highway.

(7.1) "Nonregulated power producer" shall mean a company engaging in the business of producing, manufacturing, generating, buying, aggregating, marketing or brokering electricity for sale at wholesale or for retail sale to the public. A nonregulated power producer shall not be subject to regulation as a public utility except as specifically provided in the general laws.

(7.2) "Electric transmission company" shall mean a company engaging in the transmission of electricity or owning, operating, or controlling transmission facilities. An electric transmission company shall not be subject to regulation as a public utility except as specifically provided in the general laws, but shall be regulated by the Federal Energy Regulatory Commission and shall provide transmission service to all nonregulated power producers and customers, whether affiliated or not, on comparable, nondiscriminatory prices and terms. Electric transmission companies shall have the power of eminent domain exercisable following a petition to the commission pursuant to section 39-1-31.

(7.3) "Electric distribution company" shall mean a company engaging in the distribution of electricity or owning, operating, or controlling distribution facilities and shall be a public utility pursuant to section 39-1-2(7).

(7.4) "Transmission facility" shall mean plant or equipment used for the transmission of electricity as determined by the Federal Energy Regulatory Commission pursuant to federal law as of the date of the property transfers pursuant to section 39-1-27(c).

(7.5) "Distribution facility" shall mean plant or equipment used for the distribution of electricity and which is not a transmission facility.

(7.6) "Retail access" shall mean the use of transmission and distribution facilities owned by an electric transmission company or an electric distribution company to transport electricity sold by a nonregulated power producer to retail customers pursuant to section 39-1-27.3.

(7.7) "Manufacturing customers" shall mean all customers that have on file with an electric distribution company a valid certificate of exemption from the Rhode Island sales tax indicating the customer's status as a manufacturer pursuant to section 44-18-30.

(7.8) "Customer" shall mean a company taking service from an electric distribution company at a single point of delivery or meter location.

{ADD (7.9) Notwithstanding any provision of this section or any provision of the act entitled, "An Act Relating to the Utility Restructuring Act of 1996" (hereinafter "Utility Restructuring Act"), upon request by the affected electric utility, the commission may exempt from the Utility Restructuring Act or any provision(s) thereof, an electric utility which meets the following requirements: (i) the utility is not selling or distributing electricity outside of the service territory in effect for that utility on the date of passage of the Utility Restructuring Act; and (ii) the number of kilowatt hours sold or distributed annually by the utility to the public is less than five percent (5%) of the total kilowatt hours consumed annually by the state. Provided however that nothing contained in this section shall prevent the commission from allowing competition in the generation of electricity in service territories of utilities exempted in whole or in part from the Utility Restructuring Act pursuant to this section, as long as such allowance of competition is conditioned upon payment to the exempted electric utility of a nonbypassable transition charge calculated to recover the elements comparable in nature to the elements in section 39-1-27.4(b) and (c) taking into consideration any unique circumstances applicable to the exempted electric utility. ADD}

(8) "Common carrier", except when used in chapters 12, 13 and 14 of this title, means and includes all carriers for hire or compensation including railroads, street railways, express, freight and freight line companies, dining car companies, steam boat, motor boat, power boat, hydrofoil, and ferry companies and all other companies operating any agency or facility for public use in this conveyance over fixed route, or between fixed termini within this state or persons or property by or by a combination of land, air, or water;

(9) "Charter carrier" means and includes all carriers for hire or compensation within this state not included in the definition of common carrier;

(10) "Railroad" means and includes every railroad other than a street railway, by whatsoever power operated for public use in the conveyance in this state of persons or property for compensation, with all bridges, ferries, tunnels, switches, spurs, tracks, stations, wharves, and terminal facilities of every kind, used, operated, controlled, leased, or owned by or in connection with any railroad;

(11) "Street railway" means and includes every railway by whatsoever power operated or any extension or extensions, branch, or branches thereof, for public use in the conveyance in this state of persons or property for compensation, being mainly upon, along, above, or below any street, avenue, road, highway, bridge, or public place in any city or town, and including all switches, spurs, tracks, rights of trackage, subways, tunnels, stations, terminals and terminal facilities of every kind, used, operated, controlled, or owned by or in connection with any street railway;

(12) "Airport" and "landing field" mean and include all airports and landing fields other than those owned by the state;

(13) "Plant" and "equipment" mean and include all real estate, easements, rights therein and appurtenances thereunto belonging, buildings, tracks, pipes, mains, poles, wires, and other fixed or stationary construction and equipment, machinery, apparatus, devices, rolling stock, and tangible property of whatsoever kind and nature and wherever located, used, controlled, operated, leased, or owned by a public utility in the conduct of its business;

(14) "Liquefied natural gas" means a fluid in the liquid state composed predominantly of methane and which may contain minor quantities of ethane, propane, nitrogen, or other components normally found in natural gas;

(15) "Natural gas" means the combustible gaseous mixture of low-molecular-weight, paraffin hydrocarbons, generated below the surface of the earth containing mostly methane and ethane with small amounts of propane, butane, and hydrocarbons, and sometimes nitrogen, carbon dioxide, hydrogen sulfide, and helium;

(16) "Nonprofit housing development corporation" means a nonprofit corporation, which has been approved as a section 501(c)(3) [26 U.S.C. section 501(c)(3)] corporation by the Internal Revenue Service, and which is organized and operated primarily for the purpose of providing housing for low and moderate income persons;

(17) "Motor carriers" means any carrier regulated by the administrator pursuant to chapters 3, 11, 12, 13 and 14 of this title.

(18) "Purchasing cooperatives" shall mean any association of electricity consumers which join for the purpose of negotiating the purchase of power from a nonregulated power producer, provided however, that purchasing cooperatives shall not be required to be legal entities and are prohibited from being engaged in the re-sale of electric power.

39-1-27. Electric distribution companies required to file restructuring plans. -- (a) {DEL On or before January 1, 1997, each DEL} {ADD Each ADD} electric distribution company shall file with the commission a plan for transferring ownership of generation {DEL , transmission, and distribution DEL} facilities into {ADD a ADD} separate affiliate {DEL s DEL} of the electric distribution company. The transmission facilities owned by the electric distribution company {DEL shall DEL} {ADD also may ADD} be transferred to an {ADD affiliated ADD} electric transmission company at a price that shall equal the book value of the transmission facilities on the electric distribution company's accounts net of depreciation and deferred taxes as of the date of transfer {ADD , but such a transfer is not required ADD} . The generation plant, equipment, and facilities owned by an electric distribution company shall be transferred to an affiliate that is a nonregulated power producer at a price that shall equal the book value of the generation plant, equipment, and facilities on the electric distribution company's accounts net of depreciation and deferred taxes as of the date of the transfer. Consistent with the schedule for implementing retail access in section 39-1-27.3, each electric transmission company shall file tariffs with the Federal Energy Regulatory Commission (FERC) and electric distribution companies shall file tariffs with the commission. The tariffs will provide the terms, conditions and rates for nondiscriminatory access to transmission and distribution facilities to wholesale and retail customers and to nonregulated power producers. The tariffs shall (1) conform to the standards, policies, and requirements of the Federal Energy Regulatory Commission or the commission as appropriate with respect to nondisriminatory access to transmission and distribution services, (2) fulfill such standards with respect to both transmission and distribution services for the benefit of both wholesale and retail customers and their suppliers, and (3) provide retail access in accordance with the schedule set forth in section 39-1-27.3. For purposes of this section, nondiscriminatory access shall mean access to transmission and distribution services on rates, terms and conditions found to be reasonable by the FERC or the commission as appropriate and applied consistently to all customers in a rate class regardless of their supplier. When establishing terms and conditions for distribution service, the commission shall implement standards, policies, and requirements consistent with those established by the Federal Energy Regulatory Commission for transmission service unless it determines that alternative terms and conditions are in the public interest.

(b) The commission shall review the plan within six (6) months of filing and if the plan is in compliance with chapter 3 of this title, shall authorize the property transfers, securities issuances and affiliate transactions pursuant to this title and shall grant all necessary regulatory approvals. All existing state and local rights, authorizations and approvals, including but not limited to, permits, licenses, locations, indentures, leases, orders, or similar rights associated with the ownership and operation of plant and equipment, and shall be deemed transferred with the associated plant and equipment upon the commission's authorization of the transfer effective as of the date of transfer. {ADD Notwithstanding any provisions of this section, if the electric distribution company's wholesale power supplier chooses to transfer its generation assets to a nonaffiliate of the electric distribution company for purposes of carrying out the market valuation required by section 39-1-27.4(g), and such transfer to a nonaffiliate is specified in the electric distribution company's restructuring plan filed with the commission pursuant to paragraph (a) above, the transfer of the electric distribution company's interest in the generation facilities may be made directly to the nonaffiliate. In the case of such a transfer directly to a nonaffiliate, all of the state and local rights, authorizations and approvals, including those enumerated above, shall be deemed transferred with the associated plant and equipment upon the commission's authorization of the transfer effective as of the date of the transfer. ADD}

(c) The electric distribution company shall implement the corporate reorganizations and property transfers specified in such restructuring plan, terminate its all requirements contract with its wholesale power supplier on the terms set forth in 39-1-27.4 and provide retail access for all customers in Rhode Island with a standard offer as set forth in 39-1-27.3 no later than three (3) months after retail access is available to forty percent (40%) or more of the kilowatt-hour sales in New England. The commission may extend this time if it determines that additional time is necessary to implement the transactions on reasonable terms and in accordance with a reasonable schedule; provided however, that nothing in this section shall be construed to limit the effect of 39-1-27.3 or permit the commission to unduly discriminate in providing retail access among or within rate classes.

(d) Following the complete implementation of the restructuring plans, electric distribution companies shall be prohibited from selling electricity at retail and from owning, operating, or controlling {DEL transmission facilities or DEL} generating facilities, although such facilities may be owned by affiliates of electric distribution companies. {ADD For purposes of this paragraph providing the standard offer service and last resort power supply in accordance with paragraph (d) and (f) of section 39-1-27.3 shall not be construed as selling electricity at retail. ADD}

(e) Following the termination of the electric distribution company's contracts with its wholesale power supplier, the wholesale power supplier shall become a nonregulated power producer, and shall be free, subject to the requirements of the standard offer set forth in 39-1-27.3(e) and retail electric licensing commission plan requirements pursuant to 39-1-27.1 to sell electricity generated from each of its facilities on either the wholesale or retail markets at market prices, either directly or through an affiliate, which shall also become a nonregulated power producer. The former wholesale power supplier and its affiliates shall be free to apply to become exempt wholesale generators pursuant to section 32 of the Public Utility Holding Company Act of 1935 [15 U.S.C. sec. 79z-5a] and other federal law, rules and regulations, and each and every generating facility of the former wholesale power supplier shall become an eligible facility pursuant to that statute. Accordingly, the legislature hereby finds and declares that the division has sufficient regulatory authority, resources, access to books and records to exercise its duties; and that the full participation of former wholesale power suppliers and affiliated nonregulated power producers in the market and the designation of each of the former wholesale power supplier's facilities as eligible facilities will benefit consumers, is consistent with state law, will not provide any unfair competitive advantage by virtue of their status as a former wholesale power supplier or as affiliates of electric distribution companies, and is in the public interest.

(f) Although reducing air emissions from power plants is a goal of electricity industry restructuring, power plants in Rhode Island already have low emissions relative to their counterparts in other states. For this reason, it is unnecessary for the restructuring plans required by this section to address in-state air emission reductions. However, to the extent a wholesale power supplier receiving contract termination fees pursuant to section 39-1-27.4(b)(iv) owns and operates as of December 31, 1995 fossil fired generation in another state which does not meet air emission standards applicable as of that date to new electric generating facilities in that state, such wholesale power suppliers shall cooperate with the appropriate environmental officials in the state or states where such generating facilities are located to develop a plan for reducing the emissions of nitrogen oxides, sulfur dioxide, and particulate matter from such plants on an overall basis through retirements, replacements, controls or offsets or any combination of the above toward the air emissions standards applicable to new electric generating facilities in effect in the state or states where the plants are located as of January 1, 1996. Such plans shall be implemented in connection with electric industry restructuring in the state or states where the generating facilities are located.

(g) An electric distribution company, whether public, quasi-municipal or investor owned, that as of January 1, 1996 did not purchase power at wholesale from a wholesale power supplier under an all requirements contract shall include proposals for recovering transition costs consistent with the elements which would be comparable in nature to the elements included in termination fees pursuant to Section 39-1-27.4(b) through (g) and for providing a standard offer consistent with requirements of Section 39-1-27.3(d) in its plan filed with the commission pursuant to this section. The filing by an electric distribution company that is a quasi-municipal corporation shall also address any unique circumstances affecting the electric distribution company including special contract requirements or charter restrictions and the conditions that the quasi-municipal corporation must satisfy in order to participate in retail competition. In reviewing the filing and determining the appropriate level of transition cost recovery, the commission shall apply standards consistent with those contained in Section 39-1-27.4(b) through (g) and with this subsection. The commission shall be authorized to take any action or to grant any approval necessary to maintain hydro-electric power purchases from the Niagara and St. Lawrence power projects by quasi-municipal corporations. Notwithstanding any other provision of this section, quasi-municipal electric distribution companies that purchase hydro-electric power from the Niagra and St. Lawrence power projects shall be authorized to continue to resell such power to residential customers within their service territories. After notice and public hearing, the commission may exempt electric distribution companies subject to this paragraph from (i) the requirement to transfer ownership of generation and transmission facilities to affiliated companies pursuant to paragraph (a) above, and (ii) the prohibition against selling electricity at retail pursuant to paragraph (d) above with respect to sales within the service territory of such electric distribution company, if it determines that such exemptions are in the public interest.

(h) With the exception of the requirements of the standard offer set forth in 39-1-27.3(e) and (h) and retail electric licensing commission plan requirements pursuant to 39-1-27.1, nothing in this section shall be construed or interpreted to constrain the application of anti-trust laws to nonregulated power producers, whether affiliated or not with an electric distribution company.

39-1-27.3. Electric distribution companies required to provide retail access and standard offer. -- (a) To promote economic development and the creation and preservation of employment opportunities within the state, on July 1, 1997, each electric distribution company shall offer retail access from nonregulated power producers to:

(i) All new commercial and industrial customers, including new manufacturing customers, commencing service on or after July 1, 1997, with an anticipated average annual demand of two hundred (200) kilowatts or greater;

(ii) All existing manufacturing customers with an average annual demand of fifteen hundred (1500) kilowatts or greater; and

(iii) All accounts in the name of the State of Rhode Island, provided, however, no electric distribution company shall be required to release more than ten percent (10%) of its total kilowatt-hour sales to retail access pursuant to this paragraph (a).

(b) On January 1, 1998, all electric distribution companies shall expand their offer of retail access to include existing manufacturing customers with an average annual demand of two hundred (200) kilowatts or greater and all accounts in the name of the cities and towns in Rhode Island, provided, however, no electric distribution company shall be required to release a total of more than twenty percent (20%) of its total kilowatt-hour sales to retail access pursuant to paragraphs (a) and (b) of this section.

(c) Retail access shall be implemented for all customers in Rhode Island within three (3) months after retail access is available to forty percent (40%) or more of the kilowatt-hour sales in New England including the total kilowatt-hour sales in Rhode Island; provided however, that if such retail access in New England has not occurred by July 1, 1998, then each electric distribution company shall expand its offer of retail access to all of the electric distribution company's remaining customers. The commission may extend this deadline for up to six (6) months for some or all customers if it determines that additional time is necessary to ensure that retail access can be extended to all customers on reasonable terms. Each electric distribution company shall notify all customers in its service territory of the options available to them to procure electric service at least ninety (90) days before such customers become eligible for retail access. Upon request from any nonregulated power producer, an electric distribution company shall make available a list of the names and addresses of its customers that are, or within sixty (60) days are expected to become, eligible for retail access; provided, however, such lists shall not include customers that have submitted written requests to the electric distribution company that they be excluded from such lists.

(d) Within three (3) months after retail access is available to forty percent (40%) or more of the kilowatt-hour sales in New England and extending through year 2009, each electric distribution company shall arrange {DEL with its wholesale power supplier DEL} for a standard power supply offer ("Standard Offer") to customers that have not elected to enter into power supply arrangements with other nonregulated power suppliers. {ADD The power supply contract required for the standard offer shall be awarded by public competitive bidding to the lowest priced power supplier. ADD} The standard offer shall be priced such that the average revenue per kilowatt-hour received from the customer for such power together with approved distribution, transmission and transition charges shall equal the price that would have been paid under rates in effect during the twelve (12) month period ending September 30, 1996 adjusted annually for eighty percent (80%) of the change in the consumer price index for the immediately preceding twelve (12) month period, and also for other factors reasonably beyond the control of the electric distribution company and its former wholesale power supplier including but not limited to changes in federal, state or local taxes or extraordinary fuel costs; provided, however, that adjustments to the standard offer for factors other than inflation must be approved by the commission. The standard offer is to be a price cap and may, after notice to the commission, be less than the maximum allowed at anytime for the generation component of the standard offer. Once a customer has elected to enter into a power supply arrangement with a nonregulated power producer, the electric distribution company shall not be required to arrange for the standard offer to such customer. No customer who initially elects the standard offer and then chooses an alternative supplier shall be required to pay any withdrawal fee or penalty to the provider of the standard offer unless such a penalty or withdrawal fee was agreed to as part of a contract; however, no residential customer shall be required to pay a penalty or withdrawal fee for choosing an alternative supplier. Nothing in this paragraph shall be construed to restrict the right of any nonregulated power producer to offer to sell power to customers at a price comparable to that of the standard offer specified pursuant to this paragraph.

(e) On or before January 1, 1997, each retail distribution company shall file with the commission unbundled rates which separately identify charges for use of transmission and distribution facilities and provide for retail access in accordance with the schedule set forth in section 39-1-27.3. Such unbundled rates shall also include transition charges calculated in accordance with 39-1-27.4 and shall become effective on July 1, 1997. Such unbundled rates shall also include just and reasonable terms, conditions, and procedures for interconnection with small scale generating units located on the distribution system. If the Federal Energy Regulatory Commission (FERC) also requires such filings, then the retail distribution or transmission company may submit to the commission the same filing as provided to FERC to meet the intent of this paragraph.

(f) In recognition that electricity is an essential service, each electric distribution company shall, within three (3) months after retail access is available to forty percent (40%) or more of the kilowatt-hour sales in New England, arrange for a last resort power supply for customers who are no longer eligible to receive service under the standard offer and not adequately supplied by the market because they are unable to obtain or retain electric service from nonregulated power producers. The electric distribution company shall periodically solicit bids from nonregulated power producers for such service at market prices plus a fixed contribution from the electric distribution company. Acceptance of bids by the electric distribution company and the terms and conditions for such last resort service shall be subject to approval by the commission. The bids requiring the lowest fixed contribution from the electric distribution company shall be accepted. Nothing in this section shall be construed to prohibit an electric distribution company or nonregulated power producer from terminating service provided hereunder in accordance with commission rules and regulations in the event of nonpayment of such service. All fixed contributions and any reasonable costs incurred by the electric distribution company in arranging this service shall be included in the distribution rates charged to all other customers. The commission may promulgate regulations to implement this section.

SECTION 2. Section 39-1.1-3 of the general laws in chapter 39-1.1 entitled "Termination of Service to Elderly, Handicapped and Seriously Ill" is hereby amended as follows:

39-1.1-3. Attempt to collect debt. -- The commission shall promulgate such rules and regulations as are necessary to ensure that termination of utility service for outstanding indebtedness shall be authorized only after the utility has complied with reasonable methods of debt collection as defined by the division.

{ADD In promulgating such rules and regulations the commission shall confer with the Retail Electric Licensing Commission and shall give reasonable consideration to any and all recommendations of the Retail Electric Licensing Commission. ADD}

SECTION 3. Section 39-2-1 of the General Laws in chapter 39-2 entitled "Duties of Utilities and Carriers" is hereby amended to read as follows:

39-2-1. Reasonable and adequate services -- Reasonable and just charges. -- (a) Every public utility is required to furnish safe, reasonable, and adequate services and facilities. The rate, toll, or charge, or any joint rate made, exacted, demanded, or collected by any public utility for the conveyance or transportation of any persons or property, including sewage, between points within the state, or for any heat, light, water, or power produced, transmitted, distributed, delivered, or furnished, or for any telephone or telegraph message conveyed or for any service rendered or to be rendered in connection therewith, shall be reasonable and just, and every unjust or unreasonable charge for the service is prohibited and declared unlawful, and no public utility providing heat, light, water, or power produced, transmitted, distributed, delivered or furnished shall terminate such service or deprive any home or building, or whatsoever, of service if the reason therefor is nonpayment of the service without first notifying the user of the service, or the owner or owners of the building as recorded with the utility of the impending service termination by written notice at least ten (10) days prior to the effective date of the proposed termination of service.

(b) Any existing rules and regulations dealing with the termination of utility service and establishing reasonable methods of debt collection promulgated by the commission pursuant to this chapter and the provisions of section 39-1.1-3, including but not limited to, any rules and regulations dealing with deposit and deferred payment arrangements, winter moratorium and medical emergency protections, and customer dispute resolution procedures, shall be applicable to any public utility which distributes electricity.

(c) The commission shall promulgate such further rules and regulations as are necessary to protect consumers following the introduction of competition in the electric industry and which are consistent with this chapter and the provisions of section 39-1.1-3. {ADD In promulgating such rules and regulations, the commission shall confer with the Retail Electric Licensing Commission and shall give reasonable consideration to any and all recommendations of the Retail Electric Licensing Commission. ADD}

SECTION 4. Section 39-3-37.3 of the general laws in chapter 39-3 entitled "Regulatory Powers of Administration" is hereby amended to read as follows:

39-3-37.3. Informational notice on electric bills -- Electrical distribution company. -- {ADD (1) ADD} Every electric distribution company {DEL who DEL} {ADD which ADD} shall charge for the distribution of electricity to any house, building, tenement or estate shall conspicuously display upon the bill or statement for any customer the following information:

(a) The total number of kilowatt hours consumed;

(b) The total cost of distributing the consumer power to the customer;

(c) Transition charges;

(d) Conservation costs;

(e) The total cost of transmitting the consumed power to the appropriate distribution site;

(f) All applicable credits;

(g) Applicable street light rental costs;

(h) Applicable taxes;

(i) The cost of power delivered; and

(j) All other costs, charges or fees added to the bill or statement.

{ADD (2) The electric distribution company shall issue a single bill for electric service to all customers in its service territory; provided however, that customers of nonregulated power producers may request the nonregulated power producers to provide separate bills for electricity supply. ADD}

SECTION 5. Section 44-3-3 of the General Laws in Chapter 44-3 entitled "Property Subject to Taxation" is hereby amended to read as follows:

44-3-3. Property exempt. -- The following property shall be exempt from taxation:

(1) Property belonging to the state except as provided in section 44-4-4.1;

(2) Lands ceded or belonging to the United States;

(3) The bonds and other securities issued and exempted from taxation by the government of the United States, or of this state;

(4) Real estate, used exclusively for military purposes, owned by chartered or incorporated organizations approved by the adjutant general, and composed members of the national guard, the naval militia, or the independent chartered military organizations;

(5) Buildings for free public schools, buildings for religious worship, and the land upon which they stand and immediately surrounding them, to an extent not exceeding five (5) acres so far as the buildings and land are occupied and used exclusively for religious or educational purposes;

(6) Dwelling houses and the land on which they stand, not exceeding one acre in size, or the minimum lot size for zone in which the dwelling house is located, whichever is the greater, owned by or held in trust for any religious organization and actually used by its officiating clergy, to an amount not exceeding one hundred fifty thousand dollars ($150,000) for each house and land so owned and used except in Bristol where the property described above shall be exempt to an amount not exceeding five hundred thousand dollars ($500,000) provided also, dwelling houses and the land on which they stand in Bristol, not exceeding one (1) acre in size, or the minimum lot size for zone in which the dwelling house is located, whichever is the greater, owned by or held in trust for any religious organization and actually used as a convent or nunnery by its religious order, to an amount not exceeding five hundred thousand dollars ($500,000) for each house and land so owned and used;

(7) The intangible personal property owned by, or held in trust for, any religious or charitable organization, if the principal or income shall be used or appropriated for religious or charitable purposes;

(8) The buildings and personal estate owned by any corporation used for a school, academy, or seminary of learning, and of any incorporated public charitable institution, and the land upon which the buildings stand and immediately surrounding them to an extent not exceeding one acre, so far as they are used exclusively for educational purposes, but no property or estate whatever shall hereafter be exempt from taxation in any case where any part of the income or profits thereof or of the business carried on thereon is divided among its owners or stockholders;

(9) The estates, persons, and families of the president and professors for the time being of Brown University for not more than ten thousand dollars ($10,000) for each officer, his estate, person, and family included;

(10) Property especially exempt by charter unless the exemption shall have been waived in whole or in part;

(11) Lots of land used exclusively for burial grounds;

(12) The property, real and personal, held for or by an incorporated library, society, or any free public library, or any free public library society, so far as the property shall be held exclusively for library purposes, or for the aid or support of the aged poor, or for the aid or support of poor friendless children, or for the aid or support of the poor generally, or for a hospital for the sick or disabled;

(13) The real or personal estate belonging to or held in trust for the benefit of incorporated organizations of veterans of any war in which the United States has been engaged, the parent body of which has been incorporated by act of congress, to the extent of two hundred and fifty thousand dollars ($250,000) if actually used and occupied by the association; provided, however, that the city council of the city of Cranston may by ordinance exempt the real or personal estate as described above located within the city of Cranston to the extent of five hundred thousand dollars ($500,000.);

(14) The property real and personal, held for or by the fraternal corporation, association, or body created to build and maintain a building or buildings for its meetings or the meetings of the general assembly of its members, or subordinate bodies of the fraternity, and for the accommodation of other fraternal bodies or associations, the entire net income of which real and personal property is exclusively applied or to be used to build, furnish, and maintain an asylum or asylums, a home or homes, a school or schools, for the free education or relief of the members of the fraternity, or the relief, support and care of worthy and indigent members of the fraternity, their wives, widows, or orphans, and any fund given or held for the purpose of public education, almshouses, and the land and buildings used in connection therewith;

(15) The real estate and personal property of any incorporated volunteer fire engine company in active service;

(16) The estate of any person who in the judgment of the assessors is unable from infirmity or poverty to pay the tax; any person claiming the exemption aggrieved by an adverse decision of an assessor shall appeal the decision to the local board of tax review, and thereafter according to the provisions of section 44-5-26;

(17) The household furniture and family stores of a housekeeper in the whole, including clothing, bedding, and other white goods, books, and all other tangible personal property items which are common to the normal household;

(18) The improvements made to any real property to provide a shelter and fall-out protection from nuclear radiation, to the amount of one thousand five hundred dollars ($1,500) thereof; provided, that the improvements meet applicable standards for shelter construction established from time to time by the Rhode Island defense civil preparedness agency. The improvements shall be deemed to comply with the provisions of any building code or ordinance with respect to the materials or the methods of construction used therein and any shelter or the establishment thereof shall be deemed to comply with the provisions of any zoning code or ordinance;

(19) Aircraft for which the fee required by section 1-4-6 of the general laws has been paid to the tax administrator;

(20) Manufacturer's inventory;

(i) For the purposes of sections 44-4-10, 44-5-3, 44-5-20, and 44-5-38, a person is deemed to be a manufacturer within a city or town within this state if that person uses any premises, room, or place therein primarily for the purpose of transforming raw materials into a finished product for trade through any or all of the following operations: adapting, altering, finishing, making, and ornamenting; provided, however, that public utilities, {ADD nonregulated power producers, commencing commercial operation, selling electricity at retail or taking title to generating facilities on or after July 1, 1997 ADD} building and construction contractors, warehousing operations including distribution bases or outlets of out-of-state manufacturers, fabricating processes incidental to warehousing or distribution of raw materials such as alteration of stock for the convenience of a customer, shall be excluded from this definition.

(ii) For the purpose of sections 44-3-3, 44-4-10, and 44-5-38, the term "manufacturer's inventory" or any similar term shall mean and include the manufacturer's raw materials, the manufacturer's work in process, and finished products which have been manufactured by the manufacturer in this state, and not sold, leased, or traded by the manufacturer or the title or right to possession thereof otherwise divested, provided, however, that the term shall not include any finished products which are held by the manufacturer in any retail store or other similar selling place operated by the manufacturer whether or not the retail establishment is located in the same building in which the manufacturer operates the manufacturing plant.

(iii) For the purpose of section 44-11-2, a manufacturer is a person whose principal business in this state consists of transforming raw materials into a finished product for trade through any or all of the operations described in subdivision (i) of this subdivision. A person will be deemed to be thus principally engaged if the gross receipts which that person derived from the manufacturing operations in this state during the calendar year or fiscal year mentioned in section 44-11-1 amounted to more than fifty percent (50%) of the total gross receipts which that person derived from all the business activities in which that person engaged in this state during the taxable year. For the purpose of computing the percentage, gross receipts derived by a manufacturer from the sale, lease, or rental of finished products manufactured by the manufacturer in this state, even though the manufacturer's store or other selling place therein may be at a different location from the location of the manufacturer's manufacturing plant in this state, shall be deemed to have been derived from manufacturing.

(iv) Within the meaning of the preceding subdivisions of this subdivision, the term "manufacturer" shall also include persons who are principally engaged in any of the general activities respectively coded and listed as establishments engaged in manufacturing in the standard industrial classification manual prepared by the technical committee on industrial classification, office of statistical standards, executive office of the president, United States bureau of the budget, as revised from time to time, but eliminating as manufacturers those persons, who, because of their limited type of manufacturing activities, are classified in the manual as falling within a trade rather than an industrial classification of manufacturers. Among those thus eliminated, and accordingly also excluded as manufacturers within the meaning of this subdivision, are persons primarily engaged in selling, to the general public, products produced on the premises from which they are sold, such as neighborhood bakeries, candy stores, ice cream parlors, shade shops, and custom tailors, except, however, that a person who manufactures bakery products for sale primarily for home delivery, or through one or more nonbaking retail outlets, and whether or not retail outlets are operated by person, shall be a manufacturer within the meaning of this subdivision.

(v) The term "person" means and includes, as appropriate, a person, partnership, or corporation.

(vi) The department of administration shall provide to the local assessors such assistance as is necessary in determining the proper application of the foregoing definitions.

(21) Real and tangible personal property acquired to provide a treatment facility used primarily to control the pollution or contamination of the waters or the air of the state, as defined in chapter 12 of title 46 and chapter 25 of title 23, respectively, the facility having been constructed, reconstructed, erected, installed, or acquired in furtherance of federal or state requirements or standards for the control of water or air pollution or contamination, and certified as approved in an order entered by the director of environmental management. The property shall be exempt as long as it is operated properly in compliance with the order of approval of the director of environmental management, provided further, that any grant of the exemption by the director of environmental management in excess of ten (10) years shall be approved by the city or town in which the property is situated. This provision shall apply only to water and air pollution control properties and facilities installed for the treatment of waste waters and air contaminants resulting from industrial processing; furthermore, it shall apply only to water or air pollution control properties and facilities placed in operation for the first time after April 13, 1970;

(22) New manufacturing machinery and equipment acquired or used by a manufacturer and purchased after December 31, 1974. Manufacturing machinery and equipment is defined:

(i) As that machinery and equipment which is used exclusively in the actual manufacture or conversion of raw materials or goods in the process of manufacture by a manufacturer as set forth in subdivision (20) of this section, and machinery, fixtures, and equipment used exclusively by a manufacturer for research and development or for quality assurance of its manufactured products; and

(ii) As that machinery and equipment which is partially used in the actual manufacture or conversion of raw materials or goods in process of manufacture by a manufacturer as set forth in subdivision (20) of this section, and machinery, fixtures, and equipment used by a manufacturer for research and development or for quality assurance of its manufactured products, to the extent to which the machinery and equipment is used for the manufacturing processes, research, and development or quality assurance. In the instances where machinery and equipment is used in both manufacturing and/or research, and development, and/or quality assurance activities and nonmanufacturing activities, the assessment on machinery and equipment shall be prorated by applying the percentage of usage of the equipment for the manufacturing, research, and development and quality assurance activity to the value of the machinery and equipment for purposes of taxation, and the portion of the value used for manufacturing, research, and development, and quality assurance shall be exempt from taxation. The burden of demonstrating this percentage usage of machinery and equipment for manufacturing and for research, and development, and/or quality assurance of its manufactured products shall rest with manufacturer; and

(iii) As that machinery and equipment described in sections 44-18-30(7) and 44-18-30(22) that was purchased after July 1, 1997, provided that, the city council or the town council of the city or town in which such machinery and equipment is located adopts an ordinance exempting such machinery and equipment from taxation. For purposes of this subsection, city councils and town councils of any municipality may by ordinance wholly or partially exempt from taxation the machinery and equipment discussed in this subsection for the period of time set forth in such ordinance and may by ordinance establish the procedures for taxpayers to avail themselves of the benefit of any exemption permitted hereunder. Provided, however, that the ordinance shall not apply to any machinery or equipment of a business, subsidiary or any affiliated business which locates or relocates from a city or town in Rhode Island to another city or town in Rhode Island.

(23) Precious metal bullion, meaning thereby any elementary metal which has been put through a process of melting or refining, and which is in such state or condition that its value depends upon its content and not upon its form. The term does not include fabricated precious metal which has been processed or manufactured for some one or more specific and customary industrial, professional, or artistic uses;

(24) Hydroelectric power generation equipment, which includes but is not limited to, turbines, generators, switchgear, controls, monitoring equipment, circuit breakers, transformers, protective relaying, bus bars, cables, connections, trash racks, headgates, and conduits. The hydroelectric power generation equipment must have been purchased after July 1, 1979 and acquired or used by a person or corporation who owns or leases a dam and utilizes the equipment to generate hydroelectric power;

(25) Subject to authorization by formal action of the council of any city or town, any real or personal property owned by, held in trust for, or leased to an organization incorporated under chapter 6 of title 7, as amended, or an organization meeting the definition of "charitable trust" set out in section 18-9-4, as amended, or an organization incorporated under the not for profits statutes of another state or the District of Columbia, the purpose of which is the conserving of open space, as that term is defined in title 45, chapter 36, as amended, provided the property is used exclusively for the purposes of the organization;

(26) Tangible personal property, the primary function of which is the recycling, reuse, or recovery of materials (other than precious metals, as defined in section 44-18-30 (Y) (1)) from or the treatment of "hazardous wastes", as defined in section 23-19.1-4, where the "hazardous wastes" are generated primarily by the same taxpayer and where the personal property is located at, in, or adjacent to a generating facility of the taxpayer. The taxpayer may, but need not, procure an order from the director of the department of environmental management certifying that the tangible personal property has this function, which order shall effect a conclusive presumption that the tangible personal property qualifies for the exemption hereunder. If any information relating to secret processes or methods of manufacture, production, or treatment is disclosed to the department of environmental management only to procure an order and is a "trade secret" as defined in section 28-21-10(b), it shall not be open to public inspection or publicly disclosed unless disclosure is otherwise required under chapter 21 of title 28 or chapter 24.4 of title 23.

(27) Motorboats as defined in section 46-22-2 for which the annual fee required in section 46-22-4 has been paid.

(28) The real and personal property of Providence Performing Arts Center, a Rhode Island non-business corporation as of December 31, 1986.

(29) The tangible personal property owned by, and used exclusively for the purposes of, any religious organization in the city of Cranston.

SECTION 6. Sections 44-11-1 and 44-11-14 of the General Laws in Chapter 44-11 entitled "Business Corporation Tax" are hereby amended to read as follows:

44-11-1. Definition of terms. -- For the purpose of this chapter:

(1) "Corporation" means every corporation, joint-stock company, or association, wherever incorporated, and also a trustee or trustees conducting a business wherein interest or ownership is evidenced by certificates or other written instruments, deriving any income from sources within this state or engaging in any activities or transactions within this state for the purpose of profit or gain, whether or not an office or place of business is maintained in this state, or whether or not such income, activities, or transactions are connected with intrastate, interstate, or foreign commerce, except:

(i) State banks, mutual savings banks, federal savings banks, trust companies, national banking associations, building and loan associations, credit unions, and loan and investment companies organized under chapter 20 of title 19;

(ii) Public service corporations included in chapter 13 of this title {DEL ; DEL} {ADD , except as otherwise provided in section 44-13-2.2; ADD}

(iii) Insurance and surety companies;

(iv) Corporations specified in section 7-6-4, incorporated hospitals, schools, colleges, and other institutions of learning not organized for business purposes and not doing business for profit and no part of the net earnings of which inures to the benefit of any private stockholder or individual, whether incorporated under any general law of this state or by any special act of the general assembly of this state;

(v) Fraternal beneficiary societies as set forth in section 27-25-1;

(vi) Any corporation expressly exempt from taxation by charter;

(vii) Corporations (A) which together with all corporations under direct or indirect, common ownership that satisfy the other requirements of this paragraph employ not less than five (5) full-time equivalent employees in the state; (B) which maintain an office in the state; and (C) the activities of which within the state are confined to the maintenance and management of their intangible investments or of the intangible investments of corporations or business trusts registered as investment companies under the Investment Company Act of 1940, 15 U.S.C. 80a-1 et seq., and the collection and distribution of the income from such investments or from tangible property physically located outside the state. For purposes of this paragraph, "intangible investments" shall include, without limitation, investments in stocks, bonds, notes, and other debt obligations including debt obligations of affiliated corporations, patents, patent applications, trademarks, trade names, copyrights, and similar types of intangible assets.

(2) "Fiscal year" means an accounting period of twelve (12) months ending on the last day of any month other than December.

(3) "Place of business" means a regular place of business, which, in turn, means any bona fide office, other than a statutory office, factory, warehouse, or other space which is regularly used by the taxpayer in carrying on its business. Where, as a regular course of business, property of the taxpayer is stored by it in a public warehouse until it is shipped to customers, the warehouse is considered a regular place of business of the taxpayer and, where as a regular course of business, raw material or partially finished goods of a taxpayer are delivered to an independent contractor to be converted, processed, finished, or improved and the finished goods remain in the possession of the independent contractor until shipped to customers, the plant of the independent contractor is considered a regular place of business of the taxpayer. The mere consignment of goods by the taxpayer to an independent factor outside this state for sale at the consignee's discretion does not constitute the taxpayer as having a regular place of business outside this state.

(4) "Taxable year" means the calendar year or the fiscal year ending during such calendar year upon the basis of which the net income is computed under this chapter. "Taxable year" means, in the case of a return made for a fractional part of a year under the provisions of this chapter or under regulations prescribed by the tax administrator, the period for which such return is made.

(5) "Taxpayer" means and includes any corporation subject to the provisions of this chapter.

44-11-14. Allocation of income from business partially within state. -- {ADD (a) ADD} In the case of a taxpayer deriving its income from sources both within and without this state or engaging in any activities or transactions both within and without this state for the purpose of profit or gain, its net income shall be apportioned to this state by means of an allocation fraction to be computed as a simple arithmetical mean of three (3) fractions:

(1) The first of these fractions shall represent that part held or owned within this state of the average net book value of the total tangible property (real estate and tangible personal property) held or owned by the taxpayer during the taxable year, without deduction on account of any encumbrance thereon;

(2) The second fraction shall represent that part of the taxpayer's total receipts from sales or other sources during the taxable year which is attributable to the taxpayer's activities or transactions within this state during the taxable year; meaning and including within that part, as being thus attributable, receipts from:

(i) gross sales of its tangible personal property (inventory sold in the ordinary course of business) where shipments are made to points within this state.

(ii) gross income from services performed within the state.

(iii) gross income from rentals from property situated within the state.

(iv) net income from the sale of real and personal property, other than inventory sold in the ordinary course of business as described in subdivision, or other capital assets located in the state.

(v) net income from the sale or other disposition of securities or financial obligations, and

(vi) gross income from all other receipts within the state;

(3) The third fraction shall represent that part of the total wages, salaries, and other compensation to officers, employees, and agents paid or incurred by the taxpayer during the taxable year which is attributable to services performed in connection with the taxpayer's activities or transactions within this state during the taxable year.

{ADD (b) Notwithstanding any of the provisions of this section, revenue and expenses subject to the gross earnings tax pursuant to chapter 13 of this title shall not be included in the calculation described in this section. ADD}

SECTION 7. Chapter 44-13 of the General Laws entitled "Public Service Corporation Tax" is hereby amended by adding thereto the following section:

{ADD 44-13-2.2. Gross earnings of certain corporations and public service companies. -- ADD} {ADD (a) A corporation or public service company whose principal business in this state is not an activity enumerated in section 44-13-4 but engages in such activity in this state, shall be subject to tax pursuant to this chapter as measured by the gross earnings derived from such activity in this state and computed at the rates set forth in section 44-13-4. Such corporation or public service company shall also be subject to the tax imposed pursuant to chapters 11 or 30 of this title; provided, however, that the gross earnings subject to tax pursuant to this section and direct and indirect costs associated therewith shall be excluded from the calculation of net income subject to tax pursuant to chapters 11 or 30 of this title.

(b) Every such corporation or public service company shall maintain records that substantiate proper calculation of net income subject to tax pursuant to chapters 11 or 30 of this title and shall also maintain records of gross earnings subject to tax pursuant to this section and records of associated costs. ADD}

SECTION 8. Sections 44-13-4, 44-13-10, 44-13-35 and 44-13-36 of the General Laws in Chapter 44-13 entitled "Public Service Corporation Tax" are hereby amended to read as follows:

44-13-4. Rate of taxation. -- The tax hereby imposed will be at the following rates:

(1) In the case of every corporation the principal business of which is a steamboat or ferryboat business as a common carrier, every common carrier steam or electric railroad corporation, every street railway corporation, every common carrier dining, sleeping, chair, or parlor car corporation, every corporation the principal business of which is selling and distributing water to the public, and every toll bridge corporation, one and one-fourth percent (1.25%) of its gross earnings;

(2) In the case of every corporation whose principal business is manufacturing, selling, {DEL and DEL} distributing {ADD and/or transmitting ADD} currents of electricity to be used for light, heat, or motive power, four percent (4%) of its gross earnings, but deductions shall be made of gross earnings from the {ADD transmission or ADD} sale of electricity to other public utility corporations{ADD , non-regulated power producers, ADD} or municipal utilities for resale, whether within or without this state, provided that the tax measured by the portion of the utility's gross earnings as is derived from the manufacture and sale of illuminating and heating gas and its by-products and the merchandising of gas appliances shall be computed at the rate of three percent (3%);

(3) In the case of every express corporation carrying on its business on steamboats, steam or electric railroads, or street railways and of every public service corporation the principal business of which is that of a telegraph corporation, four percent (4%) of its gross earnings;

(4) In the case of every telecommunications corporation providing telecommunications service, ten percent (10%) of its gross earnings; provided, however, that the rate shall be nine percent (9%) effective July 1, 1985, eight percent (8%) effective July 1, 1986, seven percent (7%) effective July 1, 1987, six percent (6%) effective July 1, 1988, and five percent (5%) effective July 1, 1997. For purposes of this chapter, "telecommunications service" means the transmission of any interactive two way electromagnetic communications including voice, image, data, and other information, by means of wire, cable, including fiber optical cable, microwave, and radio wave, or any combinations of these media. This definition does not include value added nonvoice services in which computer processing applications are used to act on the form, content, code, and protocol of the information to be transmitted;

(5) In the case of every public service cable corporation, eight percent (8%) of its gross earnings;

(6) In the case of every corporation the principal business of which is manufacturing, selling {DEL , DEL} and {ADD /or ADD} distributing to the public illuminating or heating gas, three percent (3%) of its gross earnings.

44-13-10. Apportionment of earnings from business partially within state. -- In the case of every corporation carrying on business both within and without this state, its entire gross earnings from its operation for the preceding calendar year, or for the portion of the year that the corporation has carried on business within this state, shall be apportioned to this state as follows:

(1) In the case of an express corporation carrying on its business on steamboats, steam or electric railroads, or street railways, and in the case of a corporation the principal business of which is a steamboat or ferryboat business as a common carrier, the total amount of gross earnings from all sources within this state for the calendar year or portion thereof next preceding;

(2) In the case of a common carrier steam or electric railroad or street railway corporation such a proportion as the total mileage of tracks operated by the corporation for steam or electric railroad or street railway purposes within this state, exclusive of sidings and turnouts, on December 31 next preceding, bears to the total mileage of tracks then operated by the corporation for these purposes, both within and without this state;

(3) In the case of any corporation operating as a common carrier dining, sleeping, chair, or parlor car corporation, but not in the case of a public steam or electric railroad or street railway corporation operating cars as a part of or incidental to its railroad or railway business within this state, such a proportion as the number of miles the cars were operated in this state during the year ending December 31st next preceding bears to the total number of miles the cars were then operated for these purposes both within and without this state;

(4) In the case of a public service telegraph, cable, or telecommunications corporation {DEL , DEL} {ADD or corporation which is manufacturing, selling, distributing and/or transmitting to the public currents of electricity to be used for light, heat, or motive power, ADD} the total amount of gross earnings within this state for the calendar year;

(5) In the case of a corporation the principal business of which is manufacturing, selling {DEL , DEL} and {ADD /or ADD} distributing to the public illuminating or heating gas {DEL , DEL} {ADD or ADD} water, {DEL or currents of electricity to be used for light, heat, or motive power, DEL} such a proportion as the total miles of mains {DEL or wires DEL} operated by the corporation within this state on December 31st next preceding bears to the total mileage of mains {DEL or wires DEL} then operated by the corporation both within and without this state;

(6) In any case to which these proportions are not equitably applicable, in such proportion as is equitable.

44-13-35. Gross earnings exempt from the public service corporation tax. -- Notwithstanding the provisions of sections 44-13-1 and 44-13-4, the gross earnings from the sale and from the storage, use or other consumption in this state of electricity and natural gas when purchased for the purpose of being manufactured into a finished product for resale, as further defined by section 44-18-30(7), are hereby subject to the following public service corporation tax rates:

(1) In the case of every corporation whose principal business is manufacturing, selling, {DEL and DEL} distributing {ADD and/or transmitting ADD} currents of electricity to be used for light, heat, or motive power, three percent (3%) of those gross earnings effective July 1, 1994, provided, however, that the rate shall be two percent (2%) effective July 1, 1995, one percent (1%) July 1, 1996, and zero percent (0%) effective July 1, 1997.

(2) In the case of every corporation the principal business of which is manufacturing, selling {DEL , DEL} and {ADD /or ADD} distributing to the public illuminating or heating gas, two percent (2%) of those gross earnings effective July 1, 1994, provided, however, that the rate shall be one percent (1%) effective July 1, 1995, and zero percent (0%) effective July 1, 1996.

44-13-36. Public service corporation tax included in utility rates. -- Every corporation whose principal business is manufacturing, selling {DEL and DEL} {ADD , ADD} distributing {ADD and/or transmitting ADD} electricity or heating gas shall directly reflect in its rates charged for the electricity or gas used in the manufacturing process, as defined in section 44-18-30(7), the actual public service corporation tax rates in effect for those sales of electricity and gas.

SECTION 9. This act shall take effect upon passage.