(2) A COMPETITIVE TRANSITION CHARGE, OR OTHER APPROPRIATE
MECHANISM THAT THE COMMISSION DETERMINES, MAY BE INCLUDED AS, PART OF
THE CHARGE PAID BY EACH CUSTOMER FOR CUSTOMERS WHO ACCESSES ACCESS
THE TRANSMISSION OR DISTRIBUTION SYSTEM OF THE ELECTRIC COMPANY IN
WHOSE DISTRIBUTION TERRITORY THE CUSTOMER IS LOCATED. THE COSTS
AUTHORIZED BY THE COMMISSION TO BE RECOVERED SHALL BE ALLOCATED TO
CUSTOMER CLASSES IN A MANNER THAT, AS NEARLY AS REASONABLY POSSIBLE,
DOES NOT EXCEED THE COST OF PROVIDING THE SERVICE TO THOSE CLASSES OF
CUSTOMERS, AVOIDING WHERE REASONABLY POSSIBLE ANY INTERCLASS OR
INTRACLASS CROSS SUBSIDY .

(3) THE COMPETITIVE TRANSITION CHARGE MAY BE INCLUDED ON
BILLS TO CUSTOMERS, FOR A PERIOD DETERMINED BY THE COMMISSION. THE
COMMISSION MAY ESTABLISH RECOVERY PERIODS OF DIFFERENT LENGTHS FOR
EACH ELECTRIC COMPANY AND FOR DIFFERENT CATEGORIES OF TRANSITION
COSTS.

(4) (I) A COMPETITIVE TRANSITION CHARGE, OR OTHER APPROPRIATE
MECHANISM DETERMINED BY THE COMMISSION, MAY NOT BE PAID FOR APPLY TO
ANY ON SITE GENERATED ELECTRICITY TO THE EXTENT OF;

1. THE EXISTING FACILITIES' INSTALLED GENERATING
CAPACITY AS OF JANUARY 1, 1999; OR

2. THE GENERATING CAPACITY OF AN EXISTING FACILITY
TO BE INSTALLED UNDER A LEGALLY BINDING CONTRACT.

A. EXECUTED ON OR BEFORE JANUARY 1, 1999; OR

B. EXECUTED ON OR BEFORE SEPTEMBER 30, 1999, IF THE
COMMISSION, ON A CASE BY CASE REVIEW OF THE EVIDENCE, DETERMINES THAT
NEGOTIATIONS IN GOOD FAITH CONCERNING THE CONTRACT WERE ONGOING AS OF
JANUARY 1, 1999; OR

3. THE GENERATING CAPACITY OF ON SITE GENERATING
FACILITIES INSTALLED AFTER JANUARY 1, 2000, AS DETERMINED BY THE
COMMISSION, FROM MICRO-TURBINES, PHOTOVOLTAICS, FUEL CELLS, AND WIND
MACHINES THAT HAVE A CAPACITY OF 500 KILOWATTS OR LESS WITH FUEL
UTILIZATION EFFICIENCY OF AT LEAST 40%.

(II) 1. ONLY THE FIRST 10 MEGAWATTS, ON A STATEWIDE BASIS,
OF THE AGGREGATE GENERATING CAPACITY OF ON SITE GENERATING FACILITIES
MAY QUALIFY UNDER SUBPARAGRAPH (1)2 B OF THIS PARAGRAPH.

2. ONLY THE FIRST 10 MEGAWATTS, ON A STATEWIDE BASIS,
OF THE AGGREGATE GENERATING CAPACITY OF ON SITE GENERATING FACILITIES
MAY QUALIFY UNDER SUBPARAGRAPH (1)3 OF THIS PARAGRAPH.

(B) THE COMMISSION SHALL DETERMINE THE TRANSITION COSTS AND THE
AMOUNTS OF THE TRANSITION COSTS THAT AN ELECTRIC COMPANY SHALL BE