(a) As used in this section, “service area” means the geographic area in which a municipal electric utility is authorized to provide electric generation or distribution services to an end use customer pursuant to § 7-214 or special act.

(b) No municipal electric utility established under chapter 101 shall use the transmission or distribution system or facilities of an electric distribution company, as defined in § 16-1, for the purpose of providing electric generation services to an end use customer outside its service area, unless the municipal electric utility is authorized to do so by the Public Utilities Regulatory Authority, in which case it shall be considered a participating municipal electric utility.

(c) As of the date that a municipal electric utility is authorized to be a participating municipal electric utility, the participating municipal electric utility may provide electric generation services to customers outside of its service area. Each participating municipal electric utility shall provide open and nondiscriminatory access of all distribution facilities it owns or operates to all electric suppliers, as defined in § 16-1, and shall allow customers within its service area to choose among electric suppliers for electric generation services in a manner comparable to all other end use customers of an electric distribution company.

(d) Each participating municipal electric utility that provides electric generation services shall be licensed by the authority as an electric supplier in accordance with § 16-245. Notwithstanding the provisions of any municipal charter or special act to the contrary, no such license shall be granted unless, in addition to the requirements set forth in § 16-245, the participating municipal electric utility has (1) unbundled and separated all of its generation assets and all generation-related operations and functions by (A) sale or transfer to an unrelated entity, (B) transfer on a functional basis to one or more separate divisions of the participating municipal electric utility that are structurally separate from the participating municipal electric utility’s transmission and distribution assets and all related operations and functions, or (C) such other substantially equivalent measure deemed appropriate by the authority, after taking into account the size of the participating municipal electric utility and its existing structure and operations; and (2) the buyer or transferee of each such asset proves to the satisfaction of the authority that the buyer or transferee will preserve labor agreements in effect at the time of the sale or transfer.

(e) Any municipal electric utility created on or after July 1, 1998, pursuant to § 7-214 or a special act and any municipal electric utility that expands its service area on or after July 1, 1998, shall collect from its new customers the competitive transition assessment imposed pursuant to § 16-245g, the systems benefits charge imposed pursuant to § 16-245l, three mills per kilowatt hour of electricity sold for the conservation adjustment mechanisms described in § 16-245m, and the assessments charged under § 16-245n in such manner and at such rate as the authority prescribes, provided the authority shall order the collection of said assessment and said charge in a manner and rate equal to that to which the customers would have been subject had the municipal electric utility not been created or expanded.

(f) The authority shall, within a period of time to ensure that any municipal electric utility that intends to become a participating municipal electric utility can do so in a timely manner, establish procedures by regulations adopted in accordance with chapter 54 to authorize a municipal electric utility to become a participating municipal electric utility. Such procedures shall include those measures the authority determines are necessary for the participating municipal electric utilities to function in a competitive environment.

(g) No municipal electric energy cooperative shall be allowed to be an electric supplier or to request authorization to provide electric generation services to any end use customers.