[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 722 Introduced in Senate (IS)]
105th CONGRESS
1st Session
S. 722
To benefit consumers by promoting competition in the electric power
industry, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 8, 1997
Mr. Thomas introduced the following bill; which was read twice and
referred to the Committee on Energy and Natural Resources
_______________________________________________________________________
A BILL
To benefit consumers by promoting competition in the electric power
industry, 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 ``Electric Utility Restructuring
Empowerment and Competitiveness Act of 1997''.
SEC. 2. FINDINGS AND PURPOSES.
(a) Findings.--Congress finds that--
(1) the Nation's electricity generation, transmission, and
local distribution systems critically affect the economy and
productivity of the United States and the health, safety,
welfare, and security of all Americans;
(2) competition will provide greater choices, lower prices,
and innovative services and products to all consumers of
electricity;
(3)(A) States have traditionally regulated the rates,
terms, and conditions of selling electricity for end-use;
(B) regulation of the rates, terms, and conditions of
selling electricity for end-use is properly the exclusive
jurisdiction of States;
(C) virtually every State is considering reforms to
traditional methods of regulating the provision of retail
electric service to promote competition;
(D) many States, through legislation or by administrative
decision, have already approved plans to begin retail
competition; and
(E) States should--
(i) continue to take the lead in managing the
transition to a competitive electricity marketplace;
and
(ii) determine the retail electric policies that
provide the greatest benefits to consumers in a manner
that recognizes the unique characteristics of each
State;
(4) all classes of consumers of electric energy should
benefit from competition in electricity sales;
(5) consumers should have access to adequate, reliable, and
efficient supplies of electricity;
(6) the transition to competition among electricity
providers should not impair the ability of the States to
determine recovery of the substantial investments made by
electric utilities to serve their customers;
(7) reciprocity among competing retail electricity
providers will ensure that the States do not obtain undue
advantages or disadvantages from the timing of their decisions;
(8) the Federal Government must address the matters within
Federal jurisdiction as necessary to promote competition, but
such actions must not be made at the expense of State
authority; and
(9)(A) Congress should consider restricting governmental
utilities with respect to facilities financed with tax-exempt
debt;
(B) sales in a service territory in existence before the
restriction may continue to be financed using tax-exempt debt;
and
(C) a governmental utility should have to finance sales
outside its service territory on the same basis as other
competitors.
(b) Purpose.--The purpose of this Act is to promote competition in
the electric power industry through empowering the States,
deregulation, and streamlining.
SEC. 3. EMPOWERING STATES TO PROMOTE RETAIL COMPETITION.
(a) Retained State Jurisdiction.--Part II of the Federal Power Act
(16 U.S.C. 824 et seq.) is amended by adding at the end the following:
``SEC. 215. EMPOWERING STATES TO PROMOTE RETAIL COMPETITION.
``(a) Definitions.--
``(1) Nonregulated electric utility.--The term
`nonregulated electric utility' has the meaning given the term
in section 3 of the Public Utility Regulatory Policies Act of
1978 (16 U.S.C. 2602).
``(2) Retail electric supply.--
``(A) In general.--The term `retail electric
supply' means the production, generation, manufacture,
aggregation, retail marketing, retail brokering, retail
selling, or other retail supplying of electricity.
``(B) Exclusion.--The term `retail electric supply'
does not include the transmission of electricity in
interstate commerce.
``(3) Retail sale.--The term `retail sale' means any sale
of electric energy for ultimate consumption.
``(4) State regulated electric utility.--The term `State
regulated electric utility' has the meaning given the term in
section 3 of the Public Utility Regulatory Policies Act of 1978
(16 U.S.C. 2602).
``(b) Jurisdiction.--A State may regulate the provision of any
retail electric supply (including self-generation) or any local
distribution service provided to an ultimate consumer of electricity in
the State.
``(c) Performance Standards.--A State may establish and enforce
performance standards for the retail sale, marketing, or delivery of
electric energy to ensure system reliability, protect human health and
public safety, and protect retail consumers from unfair business
practices.
``(d) State Authority Over Retail Transactions.--Notwithstanding
any other provision of this Act, a State or a nonregulated electric
utility may require, as a condition of the purchase by any person or
municipality located in the State or service area of the nonregulated
electric utility, as appropriate, of a retail electric supply or local
distribution service, the payment of a charge determined by the State
or nonregulated electric utility to further public policy goals,
including--
``(1) recover electric industry transition costs;
``(2) ensure that adequate electric service is available to
all customers served by a retail electricity distribution
system;
``(3) ensure and enhance the reliability of retail electric
service;
``(4) fund assistance to low-income consumers of
electricity;
``(5) encourage environmental programs, renewable-energy
programs, energy-efficiency programs, or conservation programs;
``(6) provide for transition costs of electric utility
workers adversely affected by restructuring; and
``(7) encourage research and development on electric
technologies.
``(e) Wholesale Reciprocity.--A person may not provide any
wholesale electric supply in commerce using open and nondiscriminatory
transmission access unless the person, and every affiliate of the
person, provides comparable open and nondiscriminatory transmission
access over any facility owned, controlled, or operated by the person
or affiliate.
``(f) Retail Reciprocity.--A State may provide that a nonregulated
electric utility, a State regulated electric utility, or a cooperative
utility in the State may deny local distribution access to any other
nonregulated electric utility, State regulated electric utility, or
cooperative utility (or affiliate thereof) that is offering electric
energy for sale (referred to in this subsection as the `seller') to a
customer of the in-State utility if the seller or an affiliate of the
seller is not providing comparable access to any local distribution
facility owned, controlled, or operated by the seller or affiliate.''.
(b) State Authority Over Sales of Electricity to Federal
Facilities.--Section 201 of the Federal Power Act (16 U.S.C. 824) is
amended by adding at the end the following:
``(h) State Authority Over Sales of Electricity to Federal
Facilities.--The sale of electric energy to a facility of a department
or agency of the United States or a federally chartered corporation
shall be subject exclusively to the utility laws of the State in which
the facility is located.''.
(c) Universal Service.--Section 201(b) of the Federal Power Act (16
U.S.C. 824(b)) is amended by adding at the end the following:
``(3) Universal service.--Nothing in this Act deprives a
State of the authority to require, in accordance with State
law, all electricity providers that sell electricity to retail
customers in the State to assist in providing universal
service.''.
SEC. 4. DEREGULATION OF WHOLESALE SALES OF ELECTRIC ENERGY.
(a) Deregulation of Wholesale Sales of Electric Energy.--Section
205 of the Federal Power Act (16 U.S.C. 824d) is amended by adding at
the end the following:
``(g) Deregulation of Wholesale Sales of Electric Energy.--
``(1) In general.--A contract or an agreement for the sale
of electric energy for resale made after the date of enactment
of this subsection shall be exempt from regulation of rates and
charges under parts II and III of this Act.
``(2) State authority over retail sales unaffected.--
Nothing in this subsection affects the authority of a State or
State commission to regulate sales to an ultimate customer.''.
(b) Open Access Transmission From All Transmitting Utilities.--Part
II of the Federal Power Act (16 U.S.C. 824 et seq.) (as amended by
section 3(a)) is amended by adding at the end the following:
``SEC. 216. OPEN ACCESS TRANSMISSION FROM ALL TRANSMITTING UTILITIES.
``A transmitting utility and any other entity that owns, operates,
or controls transmission of electricity in interstate commerce--
``(1) shall be subject to the jurisdiction of the
Commission under this Act regarding any wholesale transmission
service; and
``(2) shall comply with all requirements applicable to a
public utility regarding the provision of any wholesale
transmission service.''.
SEC. 5. TAX BENEFITS TO UTILITIES.
Not later than 1 year after the date of enactment of this Act, the
Inspector General of the Treasury shall submit to Congress a report
detailing whether and how Internal Revenue Code provisions relating to
the following benefits should be addressed in order to foster a
competitive retail electricity market:
(1) Benefits received as a result of the Internal Revenue
Code by an investor-owned electric utility that is not received
by other nonutility private corporations under the Internal
Revenue Code.
(2) Benefits received as a result of the Internal Revenue
Code by a utility providing electric service to the public that
is--
(A) an instrumentality of a State;
(B) a political subdivision of a State;
(C) a corporation that has at any time received a
loan from the Rural Utilities Service or the Rural
Electrification Administration under the Rural
Electrification Act of 1936 (17 U.S.C. 901 et seq.) for
the purposes of providing electric service; or
(D) an entity that is owned, directly or
indirectly, by an entity described in subparagraph (A),
(B), or (C).
SEC. 6. PURPA REFORM.
Section 210 of the Public Utility Regulatory Policies Act of 1978
(16 U.S.C. 824a-3) is amended by adding at the end the following:
``(m) Limitation on Rules.--
``(1) Definition of facility.--In this subsection, the term
`facility' means a facility for the generation of electric
energy or an addition to or expansion of the generating
capacity of a facility for the generation of electric energy.
``(2) Limitation.--This section shall not apply to a
facility that begins commercial operation after the date of
enactment of this subsection, except for a facility for which a
power purchase contract was entered into under this section
before the date of enactment of this subsection.
``(3) Contracts.--After the date of enactment of this
subsection, an electric utility shall not be required to enter
into a new contract or obligation to purchase or sell electric
energy under this section.''.
SEC. 7. REPEAL OF PUHCA.
(a) Findings and Purposes.--
(1) Findings.--Congress finds that--
(A) the Public Utility Holding Company Act of 1935
was intended to facilitate the work of Federal and
State regulators by placing certain constraints on the
activities of holding company systems;
(B) developments since 1935, including changes in
other regulation and in the electric and gas
industries, have called into question the continued
relevance of the model of regulation established by
that Act;
(C) there is a continuing need for limited Federal
and State regulation in order to provide rate
protection for electric and gas utility customers; and
(D) limited Federal regulation is necessary to
supplement the work of State commissions in providing
rate protection for electric and gas utility customers.
(2) Purposes.--The purposes of this section are--
(A) to eliminate unnecessary regulation, yet
continue to provide for consumer rate protection by
facilitating existing rate regulatory authority through
improved Federal and State commission access to books
and records of all companies in a holding company
system, to the extent that such information is relevant
to rates paid by utility customers, while affording
companies the flexibility required to compete in the
energy markets; and
(B) to address protection of electric and gas
utility customers by providing for Federal and State
access to books and records of all companies in a
holding company system that are relevant to utility
rates.
(b) Definitions.--In this section--
(1) Affiliate.--The term ``affiliate'', with respect to a
company, means a company 5 percent or more of the outstanding
voting securities of which are owned, controlled, or held with
power to vote, directly or indirectly, by the other company.
(2) Associate company.--The term ``associate company'',
with respect to a company, means a company in the same holding
company system with the other company.
(3) Commission.--The term ``Commission'' means the Federal
Energy Regulatory Commission.
(4) Company.--The term ``company'' means a corporation,
partnership, association, joint stock company, business trust,
or any organized group of persons, or a receiver, trustee, or
other liquidating agent of any of the foregoing.
(5) Electric utility company.--The term ``electric utility
company'' means a company that owns or operates facilities used
for the generation, transmission, or distribution of electric
energy for sale.
(6) Exempt wholesale generator.--The term ``exempt
wholesale generator'' means any person determined by the
Federal Energy Regulatory Commission to be engaged directly, or
indirectly through 1 or more affiliates, and exclusively in the
business of owning or operating, or both owning and operating,
all or part of 1 or more eligible facilities and selling
electric energy at wholesale. No person shall be considered an
exempt wholesale generator under this section unless the person
has applied to the Federal Energy Regulatory Commission for a
determination under this paragraph. A person applying in good
faith for a determination shall be considered an exempt
wholesale generator under this section, with all of the
exemptions provided by this section, until the Federal Energy
Regulatory Commission makes a determination. The Federal Energy
Regulatory Commission shall make the determination not later
than 60 days after the date of receiving the application and
shall notify the Commission whenever a determination is made
under this paragraph that a person is an exempt wholesale
generator.
(7) Foreign utility company.--The term ``foreign utility
company'' means a company that--
(A) owns or operates facilities that are not
located in any State and that are used for the
generation, transmission, or distribution of electric
energy for sale or the distribution at retail of
natural or manufactured gas for heat, light, or power,
if the company--
(i) derives no part of its income, directly
or indirectly, from the generation,
transmission, or distribution of electric
energy for sale or the distribution at retail
of natural or manufactured gas for heat, light,
or power, within the United States; and
(ii) neither the company nor any of its
subsidiary companies is a public utility
company operating in the United States; and
(B) provides notice to the Commission, in such form
as the Commission may prescribe, that the company is a
foreign utility company.
(8) Gas utility company.--The term ``gas utility company''
means a company that owns or operates a facility used for
distribution at retail (other than the distribution only in
enclosed portable containers or distribution to tenants or
employees of the company operating the facility for their own
use and not for resale) of natural or manufactured gas for
heat, light, or power.
(9) Holding company.--The term ``holding company'' means--
(A) a company that directly or indirectly owns,
controls, or holds, with power to vote, 10 percent or
more of the outstanding voting securities of a public
utility company or of a holding company of any public
utility company; and
(B) any person that is determined by the
Commission, after notice and opportunity for hearing,
to exercise directly or indirectly (either alone or
pursuant to an arrangement or understanding with 1 or
more persons) such a controlling influence over the
management or policies of any public utility company or
holding company as to make it necessary or appropriate
for the protection of utility customers with respect to
rates that the person be subject to the obligations,
duties, and liabilities imposed by this section on
holding companies.
(10) Holding company system.--The term ``holding company
system'' means a holding company and its subsidiary companies.
(11) Jurisdictional rates.--The term ``jurisdictional
rates'' means rates established by the Commission for the
transmission of electric energy in interstate commerce, the
sale of electric energy at wholesale in interstate commerce, the
transportation of natural gas in interstate commerce, and the sale in
interstate commerce of natural gas for resale for ultimate public
consumption for residential, commercial, industrial, or any other use.
(12) Natural gas company.--The term ``natural gas company''
means a person engaged in the transportation of natural gas in
interstate commerce or the sale of natural gas in interstate
commerce for resale.
(13) Person.--The term ``person'' means an individual or
company.
(14) Public utility.--The term ``public utility'' means a
person who owns or operates a facility used for the
transmission of electric energy in interstate commerce or the
sale of electric energy at wholesale in interstate commerce.
(15) Public utility company.--The term ``public utility
company'' means an electric utility company or a gas utility
company.
(16) State commission.--The term ``State commission'' means
a commission, board, agency, or officer, by whatever name
designated, of a State, municipality, or other political
subdivision of a State that, under the laws of the State, has
jurisdiction to regulate public utility companies.
(17) Subsidiary company.--The term ``subsidiary company''
of a holding company means--
(A) a company, 10 percent or more of the
outstanding voting securities of which are directly or
indirectly owned, controlled, or held with power to
vote, by the holding company; and
(B) a person, the management or policies of which
the Commission, after notice and opportunity for
hearing, determines to be subject to a controlling
influence, directly or indirectly, by the holding
company (either alone or pursuant to an arrangement or
understanding with 1 or more other persons) so as to
make it necessary for the rate protection of utility
customers with respect to rates of the person be
subject to the obligations, duties, and liabilities
imposed by this section on subsidiary companies of
holding companies.
(18) Voting security.--The term ``voting security'' means a
security that entitles the owner or holder of the security to
vote in the direction or management of the affairs of a
company.
(c) Repeal of the Public Utility Holding Company Act of 1935.--The
Public Utility Holding Company Act of 1935 (15 U.S.C. 79a et seq.) is
repealed.
(d) Federal Access to Books and Records.--
(1) In general.--Each holding company and each associate
company of a holding company shall maintain, and shall make
available to the Commission, such books, accounts, memoranda,
and other records as the Commission considers to be relevant to
costs incurred by a public utility or natural gas company that
is an associate company of the holding company and necessary or
appropriate for the protection of utility customers with
respect to jurisdictional rates for the transmission of
electric energy in interstate commerce, the sale of electric
energy at wholesale in interstate commerce, the transportation
of natural gas in interstate commerce, and the sale in
interstate commerce of natural gas for resale for ultimate
public consumption for domestic, commercial, industrial, or
other use.
(2) Affiliate companies.--Each affiliate of a holding
company or of any subsidiary company of a holding company shall
maintain, and make available to the Commission, such books,
accounts, memoranda, and other records with respect to any
transaction with another affiliate, as the Commission considers
relevant to costs incurred by a public utility or natural gas
company that is an associate company of the holding company and
necessary or appropriate for the protection of utility
customers with respect to jurisdictional rates.
(3) Holding company systems.--The Commission may examine
the books, accounts, memoranda, and other records of any
company in a holding company system, or any affiliate of a
company in a holding company system, as the Commission
considers relevant to costs incurred by a public utility or
natural gas company in the holding company system and necessary
or appropriate for the protection of utility customers with
respect to jurisdictional rates.
(4) Confidentiality.--No member, officer, or employee of
the Commission shall divulge any fact or information that may
come to the knowledge of the member, officer, or employee
during the course of examination of a book, account,
memorandum, or other record under this section, except as may
be directed by the Commission or by a court of competent
jurisdiction.
(e) State Access to Books and Records.--
(1) In general.--On the written request of a State
commission having jurisdiction to regulate a public utility
company in a holding company system, and subject to such terms
and conditions as may be necessary and appropriate to safeguard
against unwarranted disclosure to the public of any trade
secrets or sensitive commercial information, a holding company
or an associate or affiliate of a holding company, whether
inside or outside the State, shall produce for inspection any
book, account, memorandum, or other record that--
(A) has been identified in reasonable detail in a
proceeding before the State commission;
(B) the State commission considers relevant to
costs incurred by the company; and
(C) is necessary for the effective discharge of the
responsibilities of the State commission with respect
to the proceeding.
(2) Effect on state law.--Nothing in this section preempts
applicable State law concerning the provision of books,
records, or any other information, or in any way limit the
rights of any State to obtain books, records, or any other
information under Federal law, contract, or otherwise.
(3) Court jurisdiction.--Any United States district court
located in the State in which the State commission referred to
in paragraph (1) is located shall have jurisdiction to enforce
compliance with this section.
(f) Exemption Authority.--
(1) Rulemaking.--Not later than 90 days after the date of
enactment of this Act, the Commission shall promulgate a final
rule to exempt from the requirements of subsection (d) any
person that is a holding company, solely with respect to 1 or
more--
(A) qualifying cogeneration facilities or
qualifying small power production facilities under
section 210 of the Public Utility Regulatory Policies
Act of 1978 (16 U.S.C. 824a-3 et seq.);
(B) exempt wholesale generators; or
(C) foreign utility companies.
(2) Other authority.--If, on application or on its own
motion, the Commission finds that the books, records, accounts,
memoranda, and other records of any person are not relevant to
the jurisdictional rates of a public utility company, or if the
Commission finds that any class of transactions is not relevant
to the jurisdictional rates of a public utility company, the
Commission shall exempt the person or transaction from the
requirements of subsection (d).
(g) Affiliate Transactions.--Nothing in this section shall preclude
the Commission or a State commission from exercising its jurisdiction
under otherwise applicable law to determine whether a public utility
company may recover in rates any costs of an activity performed by an
associate company, or any costs of goods or services acquired by the
public utility company from an associate company.
(h) Applicability.--This section does not shall apply to--
(1) the United States;
(2) a State or a political subdivision of a State;
(3) a foreign governmental authority not operating in the
United States;
(4) an agency, authority, or instrumentality of an entity
referred to in paragraph (1), (2), or (3); or
(5) an officer, agent, or employee of an entity referred to
in paragraph (1), (2), or (3) acting as such in the course of
the official duties of the officer, agent, or employee.
(i) Effect on Other Regulations.--Nothing in this section precludes
the Commission or a State commission from exercising jurisdiction under
other law to protect utility customers.
(j) Enforcement.--The Commission shall have the powers set forth in
sections 306 through 317 of the Federal Power Act (16 U.S.C. 825d et
seq.) to enforce this section.
(k) Savings Provisions.--
(1) In general.--Nothing in this section prohibits a person
from engaging in or continuing to engage in an activity or
transaction in which the person is legally engaged or
authorized to engage (whether by rule, order, or otherwise) on
the day before the date of enactment of this Act, if the person
continues to comply with the terms of any authorization.
(2) Effect on other commission authority.--Nothing in this
section shall limit the authority of the Commission under the
Federal Power Act (16 U.S.C. 791a et seq.) or the Natural Gas
Act (15 U.S.C. 717 et seq.).
(l) Implementation.--Not later than 18 months after the date of
enactment of this Act, the Commission shall--
(1) promulgate such regulations as are necessary or
appropriate to implement this section; and
(2) submit to Congress detailed recommendations on
technical and conforming amendments to Federal law necessary to
carry out this section and the amendments made by this section.
(m) Transfer of Resources.--Any books and records in the possession
of the Securities and Exchange Commission that relate primarily to
responsibilities of the Commission under this section shall be
transferred from the Securities and Exchange Commission to the
Commission.
(n) Conforming Amendment to the Federal Power Act.--Section 318 of
the Federal Power Act (16 U.S.C. 825q) is repealed.
(o) Effective Date.--This section shall take effect on the date
that is 18 months after the date of enactment of this Act.
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