[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 1526 Introduced in Senate (IS)]







104th CONGRESS
  2d Session
                                S. 1526

 To provide for retail competition among electric energy suppliers, to 
 provide for recovery of stranded costs attributable to an open access 
              electricity market, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 25, 1996

 Mr. Johnston introduced the following bill; which was read twice and 
       referred to the Committee on Energy and Natural Resources

_______________________________________________________________________

                                 A BILL


 
 To provide for retail competition among electric energy suppliers, to 
 provide for recovery of stranded costs attributable to an open access 
              electricity market, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Electricity Competition Act of 
1996''.

SEC. 2. DEFINITIONS.

    For purposes of this Act:
            (1) The term ``affiliate'' means, with respect to a person, 
        any other person that controls, is controlled by, or is under 
        common control with such person.
            (2) The term ``Commission'' means the Federal Energy 
        Regulatory Commission.
            (3) The term ``electric consumer'' has the meaning given 
        the term in section 3(5) of the Public Utility Regulatory 
        Policies Act of 1978 (16 U.S.C. 2602(5)).
            (4) The term ``electric utility'' has the meaning given the 
        term in section 3(4) of the Public Utility Regulatory Policies 
        Act of 1978 (16 U.S.C. 2602(4)).
            (5) The term ``Federal agency'' has the meaning given the 
        term in section 3(7) of the Public Utility Regulatory Policies 
        Act of 1978 (16 U.S.C. 2602(7)).
            (6) The term ``new contract electricity'' means electric 
        energy or capacity which is sought to be produced from a party 
        other than the purchaser for a period exceeding 60 days.
            (7) The term ``new generating source'' means electric 
        generating capacity requirements, planned to be acquired by 
        construction, which cannot be met from existing resources or 
        entitlements, and which may be met through procurement of 
        electric capacity.
            (8) The term ``new renewable electric generation'' means 
        electric generation from solar, wind, waste, biomass, 
        hydroelectric or geothermal resources constructed after the 
        enactment of this Act.
            (9) The term ``nonregulated retail electric utility'' means 
        any retail electric utility other than a State regulated retail 
        electric utility.
            (10) The term ``person'' has the meaning given the term in 
        section 3(4) of the Federal Power Act (16 U.S.C. 796(4)).
            (11) The term ``qualifying cogeneration facility'' has the 
        meaning given the term in section 3(18)(B) of the Federal Power 
        Act (16 U.S.C. 796(18)(B)).
            (12) The term ``qualifying cogenerator'' has the meaning 
        given the term in section 3(18)(C) of the Federal Power Act (16 
        U.S.C. 796(17)(D)).
            (13) The term ``qualifying small power producer'' has the 
        meaning given the term in section 3(17)(D) of the Federal Power 
        Act (16 U.S.C. 796(17)(D)).
            (14) The term ``qualifying small power production 
        facility'' has the meaning given the term in section 3(17)(C) 
        of the Federal Power Act (16 U.S.C. 796(17)(D)).
            (15) The term ``retail electric utility'' means any person, 
        State agency, or Federal agency which makes retail sales of 
        electric energy to the public or distributes such energy to the 
        public.
            (16) The term ``State'' means a State admitted to the Union 
        or the District of Columbia.
            (17) The term ``State agency'' has the meaning given the 
        term in section 3(16) of the Public Utility Regulatory Policies 
        Act of 1978 (16 U.S.C. 2602(16)).
            (18) The term ``State regulated retail electric utility'' 
        means any retail electric utility with respect to which a State 
        regulatory authority has ratemaking authority.
            (19) The term ``State regulatory authority'' means any 
        State agency which has ratemaking authority with respect to the 
        rates of any retail electric utility (other than such State 
        agency), and in the case of a retail electric utility with 
        respect to which the Tennessee Valley Authority has ratemaking 
        authority, such term means the Tennessee Valley Authority.
            (20) The term ``unbundled local distribution services'' 
        means local distribution services which are offered by the 
seller of such services without the requirement that the purchaser of 
such local distribution services also purchase electric energy as a 
condition of the purchase of such local distribution services.

SEC. 3. PURPA REFORM.

    (a) Definition.--For purposes of this section the term ``facility'' 
means a facility for the generation of electric energy or an addition 
to or expansion of the generating capacity of such a facility.
    (b) Facilities.--Section 210 of the Public Utility Regulatory 
Policies Act of 1978 (16 U.S.C. 824a-3) shall not apply to any facility 
which begins commercial operation after the effective date of this Act, 
except a facility for which a power purchase contract entered into 
under such section was in effect on the effective date of this Act.
    (c) Contracts.--After the effective date of this Act, no electric 
utility shall be required to enter into a new contract or obligation to 
purchase or sell electric energy pursuant to section 210 of the Public 
Utility Regulatory Policies Act of 1978.
    (d) Savings Clause.--Notwithstanding subsections (b) and (c), 
nothing in this Act shall be construed:
            (1) As granting authority to the Commission, a State 
        regulatory authority, electric utility, or electric consumer, 
        to reopen, force the renegotiation of, or interfere with the 
        enforcement of power purchase contracts or arrangements in 
        effect on the effective date of this Act between a qualifying 
        small power producer and any electric utility or electric 
        consumer, or any qualifying cogenerator and any electric 
        utility or electric consumer.
            (2) To affect the rights and remedies of any party with 
        respect to such a power purchase contract or arrangement, or 
        any requirement in effect on the effective date of this Act to 
        purchase or to sell electric energy from or to a qualifying 
        small power production facility or qualifying cogeneration 
        facility.

SEC. 4. COMPETITIVE ELECTRICITY PROCEEDINGS.

    (a) State Regulatory Authorities.--
            (1) Competitive options.--Not later than six months after 
        the date of enactment of this Act, each State regulatory 
        authority not exempted from this section by section 7 shall 
        initiate proceedings applicable to all State regulated retail 
        electric utilities in the State to examine and consider--
                    (A) requirements which establish competitive 
                electricity procurement markets that meet the minimum 
                requirements of section 5 of this Act;
                    (B) a retail access plan which requires all State 
                regulated retail electric utilities in the State to 
                provide nondiscriminatory and unbundled local 
                distribution services to all electric consumers of such 
                State regulated retail electric utilities, in order 
                that such electric consumers may choose among competing 
                electric energy suppliers by January 1, 2002; and
                    (C) an alternative plan which meets the minimum 
                requirements of section 6.
            (2) Criteria.--In selecting among competitive options under 
        paragraph (1), each State regulatory authority not exempted 
        from this section by section 7 shall determine which option 
        best serves the public interest, considering reliability, terms 
        of service, and price.
            (3) Decision and implementation.--Not later than 18 months 
        after the date of enactment of this Act, each State regulatory 
        authority not exempted from this section by section 7 shall--
                    (A) select a competitive option provided for in 
                paragraph (1) based on the proceedings required under 
                this subsection; and
                    (B) render a decision by rule or order adopting 
                such competitive option; and
                    (C) begin implementation of such competitive option 
                not later than 60 days after rendering such a decision.
    (b) Nonregulated Retail Electric Utilities.--
            (1) Competitive options.--Not later than six months after 
        the date of enactment of this Act, each nonregulated retail 
        electric utility not exempted from this section by section 7 
        shall examine and consider, or where applicable, initiate 
        proceedings to examine and consider--
                    (A) procedures for the acquisition of new contract 
                electricity and new generating sources by such 
                nonregulated retail electric utility which meet the 
                minimum requirements of section 5;
                    (B) a retail access plan which provides 
                nondiscriminatory and unbundled local distribution 
                services to all electric consumers of such nonregulated 
                retail electric utility, in order that such electric 
                consumers may choose among competing electric energy 
                suppliers by January 1, 2002; and
                    (C) an alternative plan which meets the minimum 
                requirements of section 6.
            (2) Criteria.--In selecting a competitive option under 
        paragraph (1), each nonregulated retail electric utility not 
        exempted from this section by section 7 shall determine which 
        option best serves the public interest, considering 
        reliability, terms of service, and price.
            (3) Decision and implementation.--Not later than 18 months 
        after the date of enactment of this Act each nonregulated 
        retail electric utility not exempted from this section by 
        section 7 shall--
                    (A) select a competitive option provided for in 
                paragraph (1) based on the examination and 
                consideration required under this subsection;
                    (B) provide public notice of such selection; and
                    (C) begin implementation of such competitive option 
                not later than 60 days after providing such notice.

SEC. 5. PROCUREMENT MARKETS.

    (a) Applicability.--
            (1) Requirements or procedures to be established by a State 
        regulatory authority or nonregulated retail electric utility 
        pursuant to this section may apply to all or part of the new 
        contract electricity and new generating sources to be procured 
        by State regulated retail electric utilities within the State 
        or, in the case of a nonregulated retail electric utility, to 
        all or part of the new contract electricity and new generating 
        sources to be procured by such nonregulated retail electric 
        utility.
            (2) If a State regulatory authority or nonregulated retail 
        electric utility establishes requirements or procedures 
        pursuant to this section that apply to only a part of the new 
        contract electricity and new electric generating capacity to be 
        procured by State regulated retail electric utilities within 
        the State or, in the case of a nonregulated retail electric 
        utility, to only a part of the new contract electricity and new 
        generating sources to be procured by such nonregulated retail 
        electric utility, such State regulatory authority or 
        nonregulated retail electric utility must ensure that any other 
        method of procuring new contract electricity and new generating 
        sources meets the requirements for an alternative plan pursuant 
        to section 6.
    (b) Minimum Requirements.--Requirements or procedures to be 
established by a State regulatory authority or nonregulated retail 
electric utility pursuant to this section shall, at a minimum--
            (1) apply to all or part of the new contract electricity or 
        new generating sources to be procured by the State regulated 
        retail electric utilities within the State after the effective 
        date of requirements adopted pursuant to section 4(a)(1)(A), or 
        in the case of a nonregulated retail electric utility, to all 
        or part of the new contract electricity or new generating 
        sources to be procured by such nonregulated retail electric 
        utility after the effective date of procedures adopted pursuant 
        to section 4(b)(1)(A);
            (2) provide for public notice, by electronic bulletin 
        board, electronic trading system, or otherwise, of the 
        purchaser's offer to acquire new contract electricity or new 
        generating sources;
            (3) provide an appropriate and reasonable time for 
        interested suppliers to respond to the notice of the 
        purchaser's offer to acquire, by electronic bulletin board, 
        electronic trading system, or otherwise, considering the size 
        and complexity of the offer to acquire;
            (4) provide that no source or supplier of new contract 
        electricity and new generating sources is excluded from 
        competing to supply such new contract electricity or new 
        generating source;
            (5) provide that the purchaser is not excluded from 
        supplying new electric generating capacity to itself, and that 
        any affiliate of the purchaser is not excluded from supplying 
        new contract electricity or new electric generating capacity to 
        the purchaser;
            (6) provide selection of the lowest cost supplier that 
        otherwise meets the terms and conditions of the offer, 
        consistent with reliability; and
            (7) permit the purchaser to rescind or modify the offer at 
        any time prior to the execution of a contract to supply 
        electric energy.

SEC. 6. ALTERNATIVE PLANS.

    (a) State Regulatory Authorities.--
            (1) Any alternative plan adopted by a State regulatory 
        authority must ensure that any State regulated retail electric 
        utility within the State may not unduly discriminate in favor 
        of its own sources of generation supply, or in favor of its 
        affiliate's sources of generation supply, or engage in other 
        forms of self dealing that could result in above market prices 
        to consumers; and
            (2) Notwithstanding section 10, any alternative plan 
        adopted by a State regulatory authority shall ensure that any 
        above market costs of new renewable electric generation are 
        allocated on a nondiscriminatory basis to all electric 
        consumers of all State regulated retail electric utilities 
        within the State, in order that no such electric consumer or 
        class of such electric consumers is required, without its 
        express consent, to subsidize the costs of such new renewable 
        electric generation to the advantage of any other such electric 
        consumer or class of such electric consumers.
    (b) Nonregulated Retail Electric Utilities.--Any alternative plan 
adopted by a nonregulated retail electric utility must ensure that such 
nonregulated retail electric utility does not unduly discriminate in 
favor of its own sources of generation supply, or engage in other forms 
of self dealing that could result in above market prices to consumers.

SEC. 7. EXEMPTIONS.

    (a) State Regulatory Authorities.--A State regulatory authority 
shall be exempt from the requirements of section 4(a) if such State 
regulatory, as of the date of enactment of this Act--
            (1) has adopted requirements which establish competitive 
        electricity procurement markets that meet the minimum 
        requirements of section 5 of this Act; or
            (2) has adopted a retail access plan which requires all 
        State regulated retail electric utilities in the State to 
        provide nondiscriminatory and unbundled local distribution 
        services to all electric consumers of such regulated retail 
        electric utilities, in order that such electric consumers may 
        choose among competing electric energy suppliers by January 1, 
        2004.
    (b) Nonregulated Retail Electric Utilities.--A nonregulated retail 
electric utility shall be exempt from the requirements of section 4(b) 
if such nonregulated retail electric utility, as of the date of 
enactment of this Act--
            (1) has adopted procedures for its acquisition of new 
        contract electricity and new generating sources which meet the 
        minimum requirements of section 5; or
            (2) has adopted a retail access plan which provides 
        nondiscriminatory and unbundled local distribution services to 
        all electric consumers of such nonregulated retail electric 
        utility, in order that such electric consumers may choose among 
        competing electric energy suppliers by January 1, 2004.
    (c) Certification.--If a State regulatory authority or nonregulated 
retail electric utility intends to attain exempt status under this 
section, it shall certify its intention by public notice no later than 
six months after the enactment of this Act. Such notice shall specify 
the grounds upon which the exemption is asserted. The notice shall 
constitute a final decision of the State regulatory authority or 
nonregulated retail electric utility for purposes of section 9.
    (d) Voluntary Retail Access.--Any State regulated retail electric 
utility shall be exempt from any requirement imposed under sections 4, 
5, or 6(a)(1) if such State regulated retail electric utility has filed 
a tariff for nondiscriminatory and unbundled local distribution 
services, approved by its State regulatory authority, which provides 
such local distribution services to all electric consumers of such 
State regulated retail electric utility, in order that such electric 
consumers may choose among competing electric energy suppliers.

SEC. 8. MANDATORY RETAIL ACCESS.

    (a) Effective Date.--Beginning on January 1, 2010, no retail 
electric utility shall prohibit any electric consumer from purchasing 
nondiscriminatory and unbundled local distribution service or otherwise 
prohibit such electric consumers from choosing among competing electric 
energy suppliers.
    (b) Enforcement.--If a State, State regulatory authority, or retail 
electric utility fails to comply with the requirements of this section, 
any aggrieved person may bring an action against such person or persons 
to enforce the requirements of this section in the appropriate Federal 
district court, which court may grant appropriate relief.

SEC. 9. REVIEW AND ENFORCEMENT.

    (a) State Authority.--Notwithstanding any other provision of this 
section, neither the Commission nor any court of the United States 
shall have jurisdiction to review the selection by a State regulatory 
authority or a nonregulated electric utility of a competitive option 
that meets the requirements of sections 4(a)(1)(B), 4(b)(1)(B), 5, and 
6. Appeal from such a decision may be taken in accordance with 
applicable State law.
    (b) Commission Review.--(1) Any person aggrieved by--
            (A) a final order of a State regulatory authority or a 
        nonregulated retail electric utility under section 4 or 7, or
            (B) the failure of a State regulatory authority or 
        nonregulated retail electric utility to initiate a proceeding 
        or render a final decision in accordance with section 4 or 7
may petition the Commission to enforce the requirements of sections 
4(a)(1)(B), 4(b)(1)(B), 5, and 6.
    (2) In any proceeding under this section, the Commission may--
            (A) determine--
                    (i) whether the requirements or plan adopted by a 
                State regulatory authority or nonregulated retail 
                electric utility under sections 4(a)(1)(B), 4(b)(1)(B), 
                5, and 6 complies with the requirements of this Act, or
                    (ii) whether any action taken by the State 
                regulatory authority or nonregulatory retail electric 
                utility to implement the requirements or plan complies 
                with the requirements of this Act; and
            (B) grant appropriate relief.
    (c) Rehearing and Appeal.--Section 313 of the Federal Power Act 
shall apply to orders of the Commission issued pursuant to this 
section.

SEC. 10. RENEWABLE ELECTRIC GENERATION.

    Except as provided in subsection 6(a)(2), nothing in this Act shall 
be construed to prohibit--
          (1) a State from encouraging the production of renewable 
        electric generation under applicable State law; or
            (2) the voluntary purchase of renewable electric generation 
        by any electric utility or electric consumer.

SEC. 11. AMENDMENTS TO FEDERAL POWER ACT.

    (a) Transmission Access.--Section 212(h) of the Federal Power Act 
(16 U.S.C. 824k(h)) is amended by striking the following: ``Nothing in 
this subsection shall affect any authority of any State or local 
government under State law concerning the transmission of electric 
energy directly to an ultimate consumer.'', and inserting in lieu 
thereof: ``Notwithstanding the other provisions of this subsection, the 
Commission may order, or condition orders upon, the transmission of 
electric energy to an ultimate consumer if the delivery of such 
electric energy would be accomplished through the provision of 
unbundled local distribution services under sections 4(a)(1)(B), 
4(b)(1)(B), 7(a)(2), or 7(d) of the Electricity Competition Act of 
1996.''.
    (b) Retail Access and Stranded Costs--The Federal Power Act is 
amended further by adding the following new sections after section 214.

``SEC. 215. STATE AUTHORITY TO ORDER RETAIL ACCESS.

    ``Nothing in this Act shall preclude a State regulatory authority, 
acting under authority of State law, from requiring an electric utility 
to provide local distribution service to any electric consumer.

``SEC. 216. AUTHORITY TO PROVIDE FOR STRANDED COSTS.

    ``(a) Definitions.--For purposes of this section--
            ``(1) the term `utility' shall include any public utility, 
        transmitting utility or electric utility;
            ``(2) the term `stranded cost' shall be defined by the 
        Commission, and shall include any legitimate, prudently 
        incurred and verifiable cost previously incurred by a utility 
        in order to provide service to an electric consumer, which 
        cost:
                    ``(A) is not being, and except as provided in this 
                section would not otherwise be, recovered in rates; and
                    ``(B) the utility has made reasonable attempts to 
                mitigate.
    ``(b) Authority.--Notwithstanding any other provision of law, in 
determining or fixing rates, charges, terms and conditions under 
sections 205 and 206 of this part, the Commission shall provide for the 
recovery of all stranded costs incurred by any utility transmitting or 
distributing electric energy not sold by such utility or any of its 
affiliates (which electric energy is sold to a customer and serves load 
of such customer previously served in whole or in part by such 
utility), including costs incurred to serve such customer not fully 
recovered at the time such distribution or transmission service is 
undertaken.
    ``(c) Unbundled Local Distribution.--In acting pursuant to 
subsection (b) when determining or fixing rates subject to its 
jurisdiction, the Commission shall permit the recovery of all stranded 
costs to the extent a State or State regulatory authority requiring the 
provision of unbundled local distribution service has not permitted the 
recovery of all such costs in rates or lacks the authority under State 
law to permit such recovery.
    ``(d) Limitation.--The Commission shall have authority to determine 
or fix rates or charges under sections 205 and 206 for the provision of 
unbundled local distribution service by a utility solely as necessary 
to permit the recovery of stranded costs in accordance with this 
section.

``SEC. 217. RECIPROCITY.

    ``No retail electric utility or any affiliate of such utility may 
sell electric energy to or for the benefit of an ultimate consumer if 
the delivery of such electric energy will be accomplished through the 
provision of unbundled local distribution service by another utility, 
unless such retail electric utility is itself providing unbundled local 
distribution service under sections 4(a)(1)(B), 4(b)(1)(B), 7(a)(2), 
7(b)(2) or 7(d) of the Electricity Competition Act of 1996.''.

SEC. 12. NUCLEAR DECOMMISSIONING COSTS.

    To ensure safety with regard to the public health and safe 
decommissioning of nuclear generating units, the Commission, and all 
State regulatory authorities, shall authorize and ensure the recovery 
in rates subject to their respective jurisdictions, of all costs 
associated with Federal and State requirements for the decommissioning 
of such nuclear generating units.

SEC. 13. AMENDMENTS TO BANKRUPTCY REFORM ACT.

    Section 503(b) of the Bankruptcy Reform Act of 1978, 11 U.S.C. 
503(b), is amended by adding at the end the following new paragraph:
            ``(7) costs incurred in complying with Nuclear Regulatory 
        Commission regulations or orders governing the decontamination 
        and decommissioning of nuclear power reactors licensed under 
        section 103 or 104b. of the Atomic Energy Act of 1954, 42 
        U.S.C. 2133 and 2134(b), regardless of whether such costs are 
        reduced to a fixed amount.''.
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