[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2050 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 2050

To provide consumers with a reliable source of electricity and a choice 
             of electric providers, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              June 8, 1999

Mr. Largent (for himself and Mr. Markey) introduced the following bill; 
which was referred to the Committee on Commerce, and in addition to the 
 Committees on Ways and Means, Transportation and Infrastructure, and 
 Resources, for a period to be subsequently determined by the Speaker, 
 in each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
To provide consumers with a reliable source of electricity and a choice 
             of electric providers, 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 AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Electric 
Consumers' Power To Choose Act of 1999''.
    (b) Table of Contents.--

Sec. 1. Short title and table of contents.
Sec. 2. Findings and purpose.
    TITLE I--CONSUMER CHOICE AND COMPETITION FOR ELECTRIC UTILITIES

Sec. 101. Competition for retail electric distribution systems.
               ``Subtitle F--Retail Electric Competition

        ``Sec. 151. Definitions.
        ``Sec. 152. Retail competition for State-regulated local 
                            distribution systems.
        ``Sec. 153. Retail competition for nonregulated local 
                            distribution systems.
        ``Sec. 154. Grandfathering provision.
        ``Sec. 155. Retail reciprocity.
        ``Sec. 156. Aggregation for purchase of retail electric energy.
        ``Sec. 157. State jurisdiction.
        ``Sec. 158. Relation to NAFTA; imports.
        ``Sec. 159. Privacy of consumer proprietary information.
Sec. 102. Electric reliability.
Sec. 103. Federal interconnection authorities.
Sec. 104. Consumer protection, market power, and unfair trade 
                            practices.
Sec. 105. Antitrust savings clause.
Sec. 106. Mandatory open access for all transmitting utilities.
Sec. 107. Clarification of State and Federal authority over retail 
                            transmission services.
Sec. 108. Authority to establish regional transmission organizations.
Sec. 109. Special provisions respecting BPA and ERCOT transmission.
Sec. 110. Electric company mergers.
Sec. 111. Regional transmission planning agencies.
Sec. 112. Universal and affordable service.
Sec. 113. Conforming and technical amendments to the Federal Power Act.
Sec. 114. Study of grandfathered systems.
Sec. 115. Effective date.
TITLE II--PROVISIONS RESPECTING THE PUBLIC UTILITY HOLDING COMPANY ACT 
                                OF 1935

Sec. 201. Short title.
Sec. 202. Reform of holding company regulation under PUHCA.
Sec. 203. Definitions.
Sec. 204. Federal access to books and records.
Sec. 205. State access to books and records.
Sec. 206. Exemption authority.
Sec. 207. Affiliate transactions.
Sec. 208. Applicability.
Sec. 209. Effect on other regulations.
Sec. 210. Enforcement.
Sec. 211. Savings provisions.
Sec. 212. Implementation.
Sec. 213. Transfer of resources.
Sec. 214. Authorization of appropriations.
Sec. 215. Conforming amendment to the Federal Power Act.
TITLE III--PROVISIONS RESPECTING THE PUBLIC UTILITY REGULATORY POLICIES 
                              ACT OF 1978

Sec. 301. Short title.
Sec. 302. Findings.
Sec. 303. Prospective repeal.
Sec. 304. Recovery of costs.
TITLE IV--FEDERAL POWER MARKETING ADMINISTRATIONS AND TENNESSEE VALLEY 
                               AUTHORITY

                 Subtitle A--Tennessee Valley Authority

Sec. 401. Definitions.
Sec. 402. Wholesale competition in the Tennessee Valley region.
Sec. 403. Tennessee Valley Authority power sales.
Sec. 404. Prohibition on acquisition of new generating resources.
Sec. 405. Renegotiation of long-term contracts.
Sec. 406. Regulation of Tennessee Valley Authority transmission system.
Sec. 407. Regulation of Tennessee Valley Authority distributors.
Sec. 408. Stranded cost recovery.
Sec. 409. Regional transmission planning agencies.
Sec. 410. Application of antitrust law.
Sec. 411. Disposition of surplus local distribution facilities.
Sec. 412. Commission regulations.
Sec. 413. Savings provision.
              Subtitle B--Bonneville Power Administration

Sec. 421. Definitions.
Sec. 422. Application of Federal Power Act.
Sec. 423. Surcharge on transmission rates to recover otherwise 
                            nonrecoverable costs.
Sec. 424. Complaints.
Sec. 425. Review of commission orders.
Sec. 426. Antitrust laws application to BPA.
Sec. 427. Conforming amendments.
           Subtitle C--Other Power Marketing Administrations

Sec. 431. Definitions.
Sec. 432. Accounting.
Sec. 433. Regional transmission planning agencies.
Sec. 434. Application of antitrust law.
                       TITLE V--RENEWABLE ENERGY

Sec. 501. Renewable portfolio standard.
Sec. 502. Net metering.
       TITLE VI--PROVISIONS RELATING TO THE INTERNAL REVENUE CODE

Sec. 601. 5-year extension of credit for producing electricity from 
                            renewable resources.
Sec. 602. Credit for energy efficiency improvements to existing homes.
Sec. 603. Business credit for construction of new energy efficient 
                            home.
Sec. 604. Tax credit for combined heat and power system property.
Sec. 605. Tax-exempt bond financing of certain electric facilities.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--The Congress finds the following:
            (1) Electricity is used in virtually every home, commercial 
        enterprise, and manufacturing facility in the United States; is 
        a basic element of the interstate and foreign commerce of the 
        United States; and immediately, directly, and substantially 
        affects interstate and foreign commerce.
            (2) Americans consume electricity worth more than 
        $250,000,000,000 a year, approximately half of which is for 
        residential purposes, making the monthly electric utility bill 
        one of the largest expenses for most households.
            (3) Traditional monopoly rate-of-return regulation of 
        electricity has failed. It has stifled competition, resulting 
        in high electricity rates for many consumers and few incentives 
        for technological innovation and good customer service by 
        electric utilities.
            (4) High electricity rates are regressive, placing a 
        disproportionate burden on poor ratepayers. A competitive 
        electric generation industry should provide benefits to all 
        consumers by fostering innovation and efficiency, rather than 
        by allowing cost shifting that lowers rates to some consumers 
        but raises rates to others.
            (5) The cost of electricity has a direct effect on the 
        price, profitability, and competitiveness of goods and services 
        produced in the United States.
            (6) Lower priced electricity can be realized by giving all 
        American consumers the right to choose among suppliers of 
        electricity in a competitive market, while maintaining, if not 
        improving, the reliability of service those consumers have come 
        to expect.
            (7) The development of vibrant competition in the retail 
        market for electric energy will--
                    (A) reduce the costs of electric energy to even the 
                smallest consumers of electricity;
                    (B) create jobs as American businesses are able to 
                lower costs and better compete in world markets and 
                against foreign competition here at home; and
                    (C) result in a more efficient utility industry.
            (8) The Nation's interconnected 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.
            (9) Congress has authority to enact laws, under the 
        Commerce Clause of the United States Constitution, regarding 
        the generation, transmission, distribution, and sale of 
        electric energy in interstate commerce at the wholesale and 
        retail levels.
            (10) Only Congress can ensure that a competitive retail 
        electricity market is established throughout the United States 
        on an expeditious but orderly basis. Regional and State 
        variations, however, require that State regulatory authorities 
        should receive deference in implementing competition and 
        consumer choice in retail electricity markets.
            (11) The success of competition in the wholesale 
        electricity market under the Energy Policy Act of 1992 and open 
        access under Orders No. 888 and 889 of the Federal Energy 
        Regulatory Commission, as well as innovations in electricity 
        generation and transmission technologies, indicate that with 
        appropriate transition measures, retail customer choice and 
        generation competition can substantially benefit all classes of 
        United States electricity consumers, including residential, 
        commercial, industrial, and other consumers.
            (12) In a competitive generation market, it is in the 
        national interest to continue to encourage the development of 
        emerging energy technologies in order to ensure energy 
        diversity and security and to protect the environment.
    (b) Purpose.--The purpose of this Act is to allow American 
electricity consumers to choose among competing providers of 
electricity, in order to secure lower electricity rates, higher quality 
services, and a more robust United States economy, and for other 
purposes.

    TITLE I--CONSUMER CHOICE AND COMPETITION FOR ELECTRIC UTILITIES

SEC. 101. COMPETITION FOR RETAIL ELECTRIC DISTRIBUTION SYSTEMS.

    (a) Amendment of PURPA.--Title I of the Public Utility Regulatory 
Policies Act of 1978 (16 U.S.C. 2601 and following) is amended by 
adding the following new subtitle at the end thereof:

               ``Subtitle F--Retail Electric Competition

``SEC. 151. DEFINITIONS.

    ``For purposes of this subtitle:
            ``(1) Consumer.--The term `consumer' means any person who 
        purchases or offers to purchase any retail electric supply.
            ``(2) Electric supplier.--The term `electric supplier' 
        means any person who produces, generates, manufactures, 
aggregates, markets, brokers, sells, or otherwise supplies electric 
energy.
            ``(3) Local distribution company.--The term `local 
        distribution company' means any person which owns, controls, or 
        operates local distribution facilities.
            ``(4) Local distribution facilities.--The term `local 
        distribution facilities' means any facilities used for the 
        local distribution of electric energy, including any facilities 
        determined pursuant to section 201 of the Federal Power Act to 
        be so used.
            ``(5) Local distribution service.--The term `local 
        distribution service' includes all services necessary to, or 
        customarily provided in the course of, the delivery of electric 
        energy to a consumer through local distribution facilities, 
        including the construction, maintenance, and operation of local 
        distribution facilities, the metering and billing of retail 
        sales, and related management, accounting, and other services. 
        Such term shall not include the generation or sale of electric 
        energy.
            ``(6) Nonregulated local distribution company.--The term 
        `nonregulated local distribution company' means any local 
        distribution company other than any State-regulated local 
        distribution company.
            ``(7) Person.--The term `person' means any entity, 
        including an individual, a foreign governmental entity, the 
        United States Government or any instrumentality or authority 
        thereof (including the Tennessee Valley Authority), or a State, 
        or any instrumentality, authority, or political subdivision 
        thereof, including any municipality.
            ``(8) Public utility.--The term `public utility' means a 
        public utility as defined in section 201(e)(1) of the Federal 
        Power Act.
            ``(9) State regulated local distribution company.--The term 
        `State regulated local distribution company' means any local 
        distribution company with respect to which a State regulatory 
        authority has ratemaking jurisdiction.
            ``(10) State regulatory authority.--Notwithstanding section 
        3(17) of this Act, the term `State regulatory authority' means 
        any State agency which has ratemaking authority with respect to 
        the provision of local distribution services by any local 
        distribution company (other than such State agency).
            ``(11) Transmission facilities.--The term `transmission 
        facilities' means any facilities used for the transmission of 
        electric energy, including any facilities determined pursuant 
        to section 201 of the Federal Power Act to be so used.

``SEC. 152. RETAIL COMPETITION FOR STATE REGULATED LOCAL DISTRIBUTION 
              SYSTEMS.

    ``(a) State Elections.--
            ``(1) In general.--Every State may elect to require, by no 
        later than January 1, 2002, retail electric competition in 
        accordance with paragraph (2) of this subsection for every 
        State regulated local distribution company providing local 
        distribution service in such State. Such election shall be made 
        by January 1, 2001. No such election may be partial or 
        revocable. Such election shall be conclusively evidenced by the 
        submission to the Commission from the State regulatory 
        authority by January 1, 2001, of a notice that the State will 
        require such retail competition.
            ``(2) Retail electric competition.--If a State makes an 
        election under paragraph (1), the State regulatory authority 
        for that State shall establish such terms and conditions as 
        necessary and appropriate to ensure that--
                    ``(A) all electric consumers in such State served 
                by State regulated local distribution companies may 
                choose from competing electric suppliers; and
                    ``(B) State regulated local distribution companies 
                shall provide local distribution service under rates, 
                charges, terms, and conditions which--
                            ``(i) are just and reasonable and not 
                        unduly discriminatory or preferential;
                            ``(ii) identify, offer, and sell local 
                        distribution service separately from any sales 
                        of electric energy; and
                            ``(iii) comply with State law and are 
                        otherwise in the public interest; and
                in the case of a local distribution company which is 
                also an electric supplier, such rates, charges, terms, 
                and conditions shall be comparable to those applicable 
                to the use of local distribution facilities owned, 
                controlled, or operated by the company for the local 
                distribution of electric energy supplied by such 
                company.
    ``(b) Opt Out of Retail Competition.--If a State regulatory 
authority does not make the election under subsection (a), subsection 
(c) shall apply unless the State regulatory authority finds, after 
notice and opportunity for hearing, that making such election will have 
a negative impact on the residential class, the commercial class, or 
the industrial class of customers in that State that cannot be 
reasonably mitigated. The State regulatory authority shall publish the 
finding and its basis and shall file a notice with the Commission of 
its determination by January 1, 2001.
    ``(c) Failure To Elect or Opt Out.--Except for a State covered by 
section 154 (relating to grandfathering), if a State does not make an 
election under subsection (a), or file an opt-out notice under 
subsection (b), by January 1, 2001, each State regulated local 
distribution company providing local distribution service in such State 
shall establish retail electric competition for its local distribution 
facilities in accordance with subsection (a)(2) by January 1, 2002.
    ``(d) Authority To Require Charges.--Except as provided in 
subsection (b), nothing in this subtitle shall affect the authority of 
a State or a State regulatory authority to require, as a condition for 
the purchase or receipt by any person located in such State of any 
retail electric energy or services described in section 201(h) of the 
Federal Power Act, the payment of any charge deemed necessary by such 
State or State regulatory authority for any of the following purposes:
            ``(1) To recover transition costs.
            ``(2) To ensure that adequate electric service is available 
        to all customers served by a retail distribution system.
            ``(3) To ensure and enhance the reliability of retail 
        electric service.
            ``(4) To fund assistance to low-income customers.
            ``(5) To encourage, in a competitively neutral fashion, 
        environmental, emerging energy technologies, energy efficiency, 
        or energy conservation programs, or any combination of such 
        programs.
            ``(6) To provide for transition costs of electric utility 
        workers adversely affected by restructuring.
            ``(7) To encourage research and development on electric 
        technologies.
            ``(8) Any combination of the purposes described in 
        paragraphs (1) through (7).
Nothing in this subsection shall require a State or State regulatory 
authority to impose any charges under this subsection.
    ``(e) Discrimination Prohibited.--The calculation, assessment, or 
imposition of any fees and charges described in subsection (d), or 
imposed pursuant to any other law, shall not unduly discriminate among 
different classes or categories of electric utilities, local 
distribution companies, electric energy consumers, or electric 
suppliers. Nothing in this subtitle shall affect the authority of a 
State under applicable State law to design rates for local distribution 
service.
    ``(f) Enforcement.--Any person may bring an action in the 
appropriate State court against any State regulatory authority or State 
regulated local distribution company to require compliance with this 
section.

``SEC. 153. RETAIL COMPETITION FOR NONREGULATED LOCAL DISTRIBUTION 
              SYSTEMS.

    ``(a) Nonregulated Local Distribution Companies.--
            ``(1) Election by utility.--Every nonregulated local 
        distribution company may elect to establish, by no later than 
        January 1, 2002, retail competition in accordance with 
        paragraph (2) for its local distribution facilities providing 
        local distribution service. Such election shall be made by 
        January 1, 2001. No such election may be partial or revocable. 
        For a nonregulated local distribution company in any State, 
        such election shall be conclusively evidenced by the submission 
        from such company to the Commission by January 1, 2001, of a 
        notice that the company will provide such retail competition.
            ``(2) Retail electric competition.--If a nonregulated local 
        distribution company in any State makes an election under 
        paragraph (1), it shall establish such terms and conditions as 
        it finds necessary and appropriate to ensure that--
                    ``(A) all electric consumers of local distribution 
                service provided by such company may choose from 
                competing retail electric suppliers; and
                    ``(B) the company shall provide access to its local 
                distribution service under rates, charges, terms, and 
                conditions which--
                            ``(i) are just and reasonable and not 
                        unduly preferential or discriminatory;
                            ``(ii) identify, offer, and sell local 
                        distribution service separately from any sales 
                        of electric energy;
                            ``(iii) comply with State law and are 
                        otherwise in the public interest; and
                in the case of a local distribution company which is 
                also an electric supplier, such rates, charges, terms, 
                and conditions shall be comparable to those applicable 
                to the use of local distribution facilities owned, 
                controlled, or operated by the company for the local 
                distribution of electric energy supplied by such 
                company.
    ``(b) Opt Out of Retail Competition.--If a nonregulated local 
distribution company does not make the election under subsection (a), 
subsection (c) shall apply unless the company finds, after notice and 
opportunity for hearing, that implementation of retail competition in 
accordance with subsection (a) will have a negative impact on the 
residential class, the commercial class, or the industrial class of 
customers of that company that cannot be reasonably mitigated. The 
nonregulated local distribution company shall publish such 
determination and its basis and shall file a notice with the Commission 
of its determination by January 1, 2001.
    ``(c) Failure To Elect.--Except for a nonregulated local 
distribution company covered by section 154 (relating to 
grandfathering), each nonregulated local distribution company that does 
not make an election under subsection (a), or file an opt-out notice 
under subsection (b), by January 1, 2001, shall provide retail 
competition for its local distribution facilities providing local 
distribution service in accordance with subsection (a)(2) by January 1, 
2002.
    ``(d) Charges.--
            ``(1) Authority to require charges.--Except as provided in 
        subsection (b), nothing in this subtitle shall affect the 
        authority of a nonregulated local distribution company that 
        provides local distribution service to require, as a condition 
        for the purchase or receipt by any electric consumers receiving 
        local distribution service provided by such company, the 
        payment of any charge deemed necessary by such company for any 
        of the following purposes:
                    ``(A) To recover transition costs.
                    ``(B) To ensure that adequate electric service is 
                available to all consumers served by such company.
                    ``(C) To ensure and enhance the reliability of 
                retail electric service.
                    ``(D) To fund assistance to low-income customers.
                    ``(E) To encourage, in a competitively neutral 
                fashion, environmental, emerging energy technologies, 
                energy efficiency, or energy conservation programs, or 
                any combination of such programs.
                    ``(F) To provide for transition costs of electric 
                utility workers adversely affected by restructuring.
                    ``(G) To encourage research and development on 
                electric technologies.
                    ``(H) Any combination of the purposes described in 
                subparagraphs (A) through (G).
        Nothing in this subsection shall require a nonregulated local 
        distribution company to impose any charges under this section.
            ``(2) Discrimination prohibited.--The calculation, 
        assessment, or imposition of any fees and charges described in 
        paragraph (1), or imposed pursuant to any other law, shall not 
        unduly discriminate among different classes or categories of 
        electric utilities, local distribution companies, consumers, or 
        electric suppliers. Nothing in this subtitle shall affect the 
        authority of a nonregulated local distribution company under 
        applicable State law to design rates for local distribution 
        service.
    ``(e) Enforcement.--Any person may bring an action the appropriate 
State court against any nonregulated local distribution company to 
require compliance with this section.

``SEC. 154. GRANDFATHERING PROVISION.

    ``(a) State Regulated Companies.--A State shall be exempt from 
section 152 if the State has--
            ``(1) adopted a plan to provide open access to local 
        distribution facilities of all State regulated local 
        distribution companies in the State for retail electric 
        suppliers seeking to make retail sales to all classes of retail 
        customers, and
            ``(2) submitted a notice to the Commission within 30 days 
        after the date of the enactment of this section stating that 
        such State has adopted such plan..
    ``(b) Nonregulated Companies.--Any nonregulated local distribution 
company shall be exempt from section 153 if the company has--
            ``(1) adopted a plan to provide open access to its local 
        distribution facilities for retail electric suppliers seeking 
        to make retail sales to all classes of retail customers, and
            ``(2) submitted a notice to the Commission within 30 days 
        after the date of the enactment of this section stating that 
        such company has adopted such plan.

``SEC. 155. RETAIL RECIPROCITY.

    ``(a) State Authority.--
            ``(1) Electricity generated in a noncompetitive State.--Any 
        State may prohibit any person from selling to retail electric 
        consumers of State regulated local distribution companies in 
        such State any electric energy generated in a second State 
        which has not made a timely election under section 152(a) or 
        which has filed an opt-out notice under section 152(b) unless--
                    ``(A) such electric energy is generated by a 
                nonregulated electric utility in such second State;
                    ``(B) such other State has submitted a timely 
                notice under section 154 (relating to grandfathering); 
                or
                    ``(C) all local distribution facilities in such 
                second State owned, controlled, or operated by State 
                regulated local distribution companies providing local 
                distribution service in such second State are subject 
                to retail competition consistent with section 
                152(a)(2).
            ``(2) Electricity generated by noncompetitive nonregulated 
        electric utility.--Any State may prohibit any person from 
        selling to retail electric consumers of State regulated local 
        distribution companies in such State any electric energy 
        generated by a nonregulated electric utility which has not made 
        an election under section 153(a) or which has filed an opt-out 
        notice under section 153(b) unless--
                    ``(A) such nonregulated electric utility has 
                submitted a timely notice under section 154 (relating 
                to grandfathering); or
                    ``(B) all local distribution facilities of such 
                nonregulated electric utility are subject to retail 
                competition consistent with section 153(a)(2).
    ``(b) Authority of Nonregulated Electric Utilities.--
            ``(1) Electricity generated in a noncompetitive State.--Any 
        nonregulated eletric utility in a State may prohibit any person 
        from selling to its retail electric consumers any electric 
        energy generated in a second State which has not made a timely 
        election under section 152(a) or which has filed an opt-out 
        notice under section 152(b) unless--
                    ``(A) such electric energy is generated by a 
                nonregulated electric utility in such second State;
                    ``(B) such other State has submitted a timely 
                notice under section 154 (relating to grandfathering); 
                or
                    ``(C) all local distribution facilities in such 
                second State owned, controlled, or operated by State 
                regulated local distribution companies providing local 
                distribution service in such second State are subject 
                to retail competition consistent with section 
                152(a)(2).
            ``(2) Electricity generated by noncompetitive nonregulated 
        electric utility.--Any nonregulated electric utility may 
        prohibit any person from selling to its retail electric 
        consumers any electric energy generated by a nonregulated 
        electric utility which has not made an election under section 
        153(a) or which has filed an opt-out notice under section 
        153(b) unless--
                    ``(A) such nonregulated electric utility has 
                submitted a timely notice under section 154 (relating 
                to grandfathering); or
                    ``(B) all local distribution facilities of such 
                nonregulated electric utility are subject to retail 
                competition consistent with section 153(a)(2).

``SEC. 156. AGGREGATION FOR PURCHASE OF RETAIL ELECTRIC ENERGY.

    ``Notwithstanding any other provision of Federal or State law, and 
subject to legitimate and nondiscriminatory State requirements imposed 
on retail electric suppliers, a group of customers or any entity acting 
on behalf of such group may acquire retail electric energy on an 
aggregate basis if the group of customers is served by 1 or more local 
distribution companies for which a State regulatory authority or 
nonregulated local distribution company has filed a notice of retail 
competition under section 152(a)(1) or 153(a)(1).

``SEC. 157. STATE JURISDICTION.

    ``(a) Primary State Jurisdiction.--Except for review of any action 
in the Supreme Court of the United States in accordance with sections 
1257 and 1258 of title 28, United States Code, no court of the United 
States shall have jurisdiction over any action arising under the 
provisions of section 152 or 153 (relating to retail electric 
competition).
    ``(b) State Court Procedures.--Except for Supreme Court review, any 
appeal, review, or other action in State court shall be pursuant to any 
applicable State procedures.
    ``(c) Parity of Franchise and Other Charges.--A State or local 
government, under State law, may impose or collect any franchise, 
license, permit fee, or equivalent thereof, from any electric supplier 
as a condition for operating in the State or locality, only to the 
extent such charge is imposed on a just and reasonable and not unduly 
discriminatory or preferential basis.

``SEC. 158. RELATION TO NAFTA; IMPORTS.

    ``(a) National Treatment as Required by NAFTA.--The provisions of 
section 155 (relating to retail reciprocity) shall apply on a not 
unduly discriminatory or preferential basis, and to the same extent, to 
any foreign person or foreign electric utility which is a citizen of a 
nation which has ratified the North American Free Trade Agreement, as 
such provisions apply to any person or electric utility which is a 
citizen of the United States.
    ``(b) Imports.--The provisions of section 155 (relating to 
respecting retail reciprocity) shall apply pursuant to subsection (a) 
to any imports of electric energy into the United States.

``SEC. 159. PRIVACY OF CONSUMER PROPRIETARY INFORMATION.

    ``(a) Privacy Requirements.--Except as required by law or with the 
prior written affirmative approval of the consumer, any person that 
receives or obtains customer information by virtue of its provision of 
retail electric service or metering and billing service shall only use, 
disclose, or permit access to individually identifiable consumer 
information in its provision of (1) retail electric service or metering 
and billing service from which such information is derived, or (2) 
services necessary to, or used in, the provision of such service.
    ``(b) Disclosure on Request by Consumers.--An electric utility or 
metering and billing service provider shall disclose consumer 
information, upon affirmative written request by the consumer, to any 
person designated by the consumer.
    ``(c) Aggregate Consumer Information.--Any person that receives or 
obtains consumer information by virtue of its provision of retail 
electric service or metering and billing services may use, disclose, or 
permit access to aggregate consumer information other than for the 
purposes described in subsection (a). An electric utility or metering 
or billing service provider may use, disclose, or permit access to 
aggregate consumer information other than for purposes described in 
subsection (a) only if it provides such aggregate information to other 
retail electric service providers on reasonable and nondiscriminatory 
terms and conditions upon reasonable request therefor.
    ``(d) Exceptions.--Nothing in this section prohibits an electric 
utility or metering and billing service provider from using, 
disclosing, or permitting access to consumer information obtained from 
its consumers, either directly or indirectly through its agents--
            ``(1) to initiate, render, bill, and collect for retail 
        electric services or metering and billing services;
            ``(2) to protect the rights or property of the electric 
        utility or metering and billing service provider, or to protect 
        consumers of those services and other service providers from 
        fraudulent, abusive, unlawful use of, or subscription to such 
        services; or
            ``(3) for purposes of compliance with any other Federal or 
        State law or regulation authorizing disclosure of information 
        to a Federal or State agency.
    ``(e) Definitions.--As used in this section:
            ``(1) Consumer information.--The term `consumer 
        information' means--
                    ``(A) information that relates to the quantity, 
                technical configuration, type, destination, and amount 
                of use of a retail electric service subscribed to by 
                any consumer, and that is made available to an electric 
                utility or metering and billing service provider solely 
                by virtue of its business relationship; and
                    ``(B) information contained in the bills pertaining 
                to retail electric service received by a consumer.
            ``(2) Aggregate consumer information.--The term `aggregate 
        consumer information' means collective data that relates to a 
        group or category of services or consumers, from which 
        individual consumer identities and characteristics have been 
        removed.''.
    (b) Table of Contents.--The table of contents for title I of the 
Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 and 
following) is amended by adding the following at the end thereof:

               ``Subtitle F--Retail Electric Competition

        ``Sec. 151. Definitions.
        ``Sec. 152. Retail competition for State regulated local 
                            distribution systems.
        ``Sec. 153. Retail competition for nonregulated local 
                            distribution systems.
        ``Sec. 154. Grandfathering provision.
        ``Sec. 155. Retail reciprocity.
        ``Sec. 156. Aggregation for purchase of retail electric energy.
        ``Sec. 157. State jurisdiction.
        ``Sec. 158. Relation to NAFTA; imports.
        ``Sec. 159. Privacy of consumer proprietary information.''.

SEC. 102. ELECTRIC RELIABILITY.

    The Federal Power Act (16 U.S.C. 791a et seq.) is amended by adding 
the following new Part at the end thereof:

                    ``PART IV--ELECTRIC RELIABILITY

``SEC. 401. ELECTRIC RELIABILITY ORGANIZATION AND OVERSIGHT.

    ``(a) Definitions.--As used in this section:
            ``(1) Affiliated regional liability entity.--The term 
        `affiliated regional reliability entity' means an entity 
        delegated authority under the provisions of subsection (h).
            ``(2) Bulk-power system.--The term `bulk-power system' 
        means all facilities and control systems necessary for 
        operating an interconnected transmission grid (or any portion 
        thereof), including high-voltage transmission lines, 
        substations, control centers, communications, data, and 
        operations planning facilities, and the output of generating 
        units necessary to maintain transmission system reliability.
            ``(3) Electric reliability organization, or organization.--
        The term `electric reliability organization' or `organization' 
        means the organization approved by the Commission under 
        subsection (d)(4).
            ``(4) Entity rule.--The term `entity rule' means a rule 
        adopted by an affiliated regional reliability entity for a 
        specific region and designed to implement or enforce one or 
        more organization standards. An entity rule shall be approved 
        by the Organization and once approved, shall be treated as an 
        organization standard.
            ``(5) Industry sector.--The term `industry sector' means a 
        group of users of the bulk power system with substantially 
        similar commercial interests, as determined by the Board of the 
        Electric Reliability Organization.
            ``(6) Interconnection.--The term `interconnection' means a 
        geographic area in which the operation of bulk-power system 
        components is synchronized such that the failure of one or more 
        of such components may adversely effect the ability of the 
        operators of other components within the interconnection to 
        maintain safe and reliable operation of the facilities within 
        their control.
            ``(7) Organization standard.--The term `organization 
        standard' means a policy or standard duly adopted by the 
        Electric Reliability Organization to provide for the reliable 
        operation of a bulk power system.
            ``(8) Public interest group.--The term `public interest 
        group' means any nonprofit private or public organization that 
        has an interest in the activities of the Electric Reliability 
        Organization, including, but not limited to, ratepayer 
        advocates, environmental groups, and State and local government 
        organizations that regulate market participants and promulgate 
        government policy.
            ``(9) Variance.--The term `variance' means an exception or 
        variance from the requirements of an organization standard 
        (including a proposal for an organization standard where there 
        is no organization standard) that is adopted by an affiliated 
        regional reliability entity and applicable to all or a part of 
        the region for which the affiliated regional reliability entity 
        responsible. A variance shall be approved by the organization 
        and once approved, shall be treated as an organization 
        standard.
            ``(10) System operator.--The term `system operator' means 
        any entity that operates or is responsible for the operation of 
        a bulk-power system, including but not limited to a control 
        area operator, an independent system operator, a transmission 
        company, a transmission system operator, or a regional security 
        coordinator.
            ``(11) User of the bulk-power system.--The term `user of 
        the bulk-power system' means any entity that sells, purchases, 
        or transmits electric power over a bulk-power system, or that 
        owns, operates or maintains facilities or control systems that 
        are part of a bulk-power system, or that is a system operator.
    ``(b) Commission Authority.--(1) Within the United States, the 
Commission shall have jurisdiction over the Electric Reliability 
Organization, all affiliated regional reliability entities, all system 
operators, and all users of the bulk-power system, for purposes of 
approving and enforcing compliance with the requirements of this 
section.
    ``(2) The Commission may, by rule, define any other term used in 
this section, provided such definition is consistent with the 
definitions in, and the purpose and intent of, this Act.
    ``(c) Existing Reliability Standards.--Following enactment of this 
section, and prior to the approval of an organization under subsection 
(d), any person, including the North American Electric Reliability 
Council and its member regional reliability councils, may file any 
reliability standard, guidance or practice that they would propose to 
be made mandatory and enforceable. The Commission, after allowing 
interested persons an opportunity to submit comments, may approve any 
such proposed mandatory standard, guidance or practice, or any 
amendment thereto, if it finds that the standard, guidance, or 
practice, or amendment is just, reasonable, not unduly discriminatory 
or preferential, and in the public interest. The Commission may, 
without further proceeding or finding, grant its approval to any 
standard, guidance or practice for which no substantive objections are 
filed in the comment period. Filed standards, guidances, or practices, 
including any amendments thereto, shall be mandatory and applicable 
according to their terms following approval by the Commission and shall 
remain in effect until (1) withdrawn, disapproved or superseded by an 
organization standard, issued or approved by the Electric Reliability 
Organization and made effective by the Commission under subsection (e); 
or (2) disapproved or suspended by the Commission if, upon complaint or 
upon its own motion and after notice and an opportunity for comment, 
the Commission finds the standard, guidance or practice unjust, 
unreasonable, unduly discriminatory, or preferential or not in the 
public interest. Standards, guidances or practices in effect pursuant 
to the provisions of this subsection shall be enforceable by the 
Commission.
    ``(d) Organization Approval.--(1) Not later than 90 days after the 
date of enactment of this section, the Commission shall issue proposed 
rules specifying procedures and requirements for an entity to apply for 
approval as the Electric Reliability Organization. The Commission shall 
provide notice and opportunity for comment on the proposed rules. The 
Commission shall issue a final rule under this subsection within 180 
days after the date of enactment of this section.
    ``(2) Following the issuance of a final Commission rule under 
paragraph (1), an entity may submit an application to the Commission 
for approval as the Electric Reliability Organization. The applicant 
shall specify in its application its governance and procedures, as well 
as its funding mechanism and initial funding requirements.
    ``(3) The Commission shall provide public notice of the application 
and afford interested parties an opportunity to comment.
    ``(4) The Commission shall approve the application if the 
Commission determines that the applicant--
            ``(A) has the ability to develop, implement and enforce 
        standards that provide for an adequate level of reliability of 
        the bulk-power system;
            ``(B) permits voluntary membership to any user of the bulk-
        power system or public interest group;
            ``(C) assures fair representation of its members in the 
        selection of its directors and fair management of its affairs, 
        taking into account the need for efficiency and effectiveness 
        in decisionmaking and operations and the requirements for 
        technical competency in the development of organization 
        standards and the exercise of oversight of bulk-power system 
        reliability;
            ``(D) assures that no two industry sectors have the ability 
        to control, and no one industry sector has the ability to veto, 
        the Electric Reliability Organization's discharge of its 
        responsibilities (including actions by committees recommending 
        standards to the board or other board actions to implement and 
        enforce standards);
            ``(E) provides for governance by a board wholly comprised 
        of independent directors;
            ``(F) provides a funding mechanism and requirements that 
        are just, reasonable and not unduly discriminatory or 
        preferential and are in the public interest, and which 
        satisfies the requirements of subsection (l);
            ``(G) establishes procedures for development of 
        organization standards that provide reasonable notice and 
        opportunity for public comment, taking into account the need 
        for efficiency and effectiveness in decisionmaking and 
        operations and the requirements for technical competency in the 
        development of organization standards, and which standards 
        development process has the following attributes:
                    ``(i) openness,
                    ``(ii) balance of interests, and
                    ``(iii) due process, except that the procedures may 
                include alternative procedures for emergencies;
            ``(H) establishes fair and impartial procedures for 
        implementation and enforcement of organization standards, 
        either directly or through delegation to an affiliated regional 
        reliability entity, including the imposition of penalties, 
        limitations on activities, functions, or operations, or other 
        appropriate sanctions;
            ``(I) establishes procedures for notice and opportunity for 
        public observation of all meetings, except that the procedures 
        for public observation may include alternative procedures for 
        emergencies or for the discussion of information the directors 
        determine should take place in closed session, such as 
        litigation, personnel actions, or commercially sensitive 
        information;
            ``(J) provides for the consideration of recommendations of 
        States and State commissions, and
            ``(K) addresses other matters that the Commission may deem 
        necessary or appropriate to ensure that the procedures, 
        governance, and funding of the Electric Reliability 
        Organization are just, reasonable, not unduly discriminatory or 
        preferential, and are in the public interest.
    ``(5) The Commission shall approve only one electric reliability 
organization. If the Commission receives two or more timely 
applications that satisfy the requirements of this subsection, the 
Commission shall approve only the application it concludes will best 
implement the provisions of this section.
    ``(e) Establishment of and Modifications to Organization 
Standards.--(1) The Electric Reliability Organization shall file with 
the Commission any new or modified organization standards, including 
any variances or entity rules, and the Commission shall follow the 
procedures under paragraph (2) for review of that filing.
    ``(2) Submissions under paragraph (1) shall include:
            ``(A) a concise statement of the purpose of the proposal, 
        and
            ``(B) a record of any proceedings conducted with respect to 
        such proposal.
The Commission shall provide notice of the filing of such proposal and 
afford interested persons 30 days to submit comments. The Commission, 
after taking into consideration any submitted comments, shall approve 
or disapprove such proposal not later than 60 days after the deadline 
for the submission of comments, except that the Commission may extend 
the 60-day period for an additional 90 days for good cause, and except 
further that if the Commission does not act to approve or disapprove a 
proposal within the foregoing periods the proposal shall go into effect 
subject to its terms, without prejudice to the authority of the 
Commission thereafter to suspend or modify the proposal in accordance 
with the standards and requirements of this section. Proposals approved 
by the Commission shall take effect according to their terms but not 
earlier than 30 days after the effective date of the Commission's 
order, except as provided in paragraph (3) of this subsection.
    ``(3)(A) In the exercise of its review responsibilities under this 
subsection, the Commission shall give due weight to the technical 
expertise of the Electric Reliability Organization with respect to the 
content of a new or modified organization standard, but shall not defer 
to the Organization with respect to the effect of the standard on 
competition. The Commission shall approve a proposed new or modified 
organization standard if it determines the proposal to be just, 
reasonable, not unduly discriminatory or preferential, and in the 
public interest. The Commission, either upon complaint or upon its own 
motion, shall suspend an existing organization standard, if it 
determines the standard to be unjust, unreasonable, unduly 
discriminatory or preferential or not in the public interest.
    ``(B) An existing or proposed organization standard which is 
disapproved or suspended in whole or in part by the Commission shall be 
remanded to the Electric Reliability Organization for further 
consideration.
    ``(C) The Commission, on its own motion or upon complaint, may 
direct the Electric Reliability Organization to develop an organization 
standard, including modification to an existing organization standard, 
addressing a specific matter by a date certain if the Commission 
considers such new or modified organization standard necessary or 
appropriate to further the purposes of this section. The Electric 
Reliability Organization shall file any such new or modified 
organization standard in accordance with this subsection.
    ``(D) An affiliated regional reliability entity may propose a 
Variance or Entity Rule to the Electric Reliability Organization. The 
affiliated regional reliability entity may request that the Electric 
Reliability Organization expedite consideration of the proposal, and 
may file a notice of such request with the Commission, if expedited 
consideration is necessary to provide for bulk-power system 
reliability. If the Electric Reliability Organization fails to adopt 
the variance or entity rule, either in whole or in part, the affiliated 
regional reliability entity may request that the Commission review such 
action. If the Commission determines, after its review of such a 
request, that the action of the Electric Reliability Organization did 
not conform to the applicable standards and procedures approved by the 
Commission, or if the Commission determines that the variance or entity 
rule is just, reasonable, not unduly discriminatory or preferential, 
and in the public interest, and that the Electric Reliability 
Organization has unreasonably rejected the proposed variance or entity 
rule, then the Commission may remand the proposed variance or entity 
rule for further consideration by the Electric Reliability Organization 
or may direct the Electric Reliability Organization or the affiliated 
regional reliability entity to develop a variance or entity rule 
consistent with that requested by the affiliated regional reliability 
entity. Any such variance or entity rule proposed by an affiliated 
regional reliability entity shall be submitted to the Electric 
Reliability Organization for review and filing with the Commission in 
accordance with the procedures specified in this subsection.
    ``(E) Notwithstanding any other provision of this subsection, a 
proposed organization standard or amendment shall take effect according 
to its terms if the Electric Reliability Organization determines that 
an emergency exists requiring that such proposed organization standard 
or amendment take effect without notice or comment. The Electric 
Reliability Organization shall notify the Commission immediately 
following such determination and shall file such emergency organization 
standard or amendment with the Commission not later than 5 days 
following such determination and shall include in such filing an 
explanation of the need for such emergency standard. Subsequently, the 
Commission shall provide notice of the organization standard or 
amendment for comment, and shall follow the procedures set out in 
paragraphs (2) and (3) for review of the new or modified organization 
standard. Any such organization standard that has gone into effect 
shall remain in effect unless and until suspended or disapproved by the 
Commission. If the Commission determines at any time that the emergency 
organization standard or amendment is not necessary, the Commission may 
suspend such emergency organization standard or amendment.
    ``(4) All users of the bulk-power system shall comply with any 
organization standard that takes effect under this section.
    ``(f) Coordination With Canada and Mexico.--The Electric 
Reliability Organization shall take all appropriate steps to gain 
recognition in Canada and Mexico. The United States shall use its best 
efforts to enter into international agreements with the appropriate 
governments of Canada and Mexico to provide for effective compliance 
with organization standards and to provide for the effectiveness of the 
Electric Reliability Organization in carrying out its mission and 
responsibilities. All actions taken by the Electric Reliability 
Organization, any affiliated regional reliability entity, and the 
Commission shall be consistent with the provisions of such 
international agreements.
    ``(g) Changes in Procedures, Governance, or Funding.--(1) The 
Electric Reliability Organization shall file with the Commission any 
proposed change in its procedures, governance, or funding, or any 
changes in the affiliated regional reliability entity's procedures, 
governance or funding relating to delegated functions, and shall 
include with the filing an explanation of the basis and purpose for the 
change.
    ``(2) A proposed procedural change may take effect 90 days after 
filing with the Commission if the change constitutes a statement of 
policy, practice, or interpretation with respect to the meaning or 
enforcement of an existing procedure. Otherwise, a proposed procedural 
change shall take effect only upon a finding by the Commission, after 
notice and opportunity for comments, that the change is just, 
reasonable, not unduly discriminatory or preferential, is in the public 
interest, and satisfies the requirements of subsection (d)(4).
    ``(3) A change in governance or funding shall not take effect 
unless the Commission finds that the change is just, reasonable, not 
unduly discriminatory or preferential, and is in the public interest, 
and satisfies the requirements of subsection (d)(4).
    ``(4)(A) The Commission, either upon complaint or upon its own 
motion, may suspend a procedure or governance or funding provision if 
it determines the procedure or provision does not meet the requirements 
of subsection (d)(4) or is unjust, unreasonable, unduly discriminatory 
or preferential, or otherwise not in the public interest.
    ``(B) The Commission, upon complaint or upon its own motion, may 
require the Electric Reliability Organization to amend the procedures, 
governance or funding if the Commission determines that the amendment 
is necessary to meet the requirements of this section. The Electric 
Reliability Organization shall file the amendment in accordance with 
paragraph (1) of this subsection.
    ``(h) Delegations of Authority.--(1) The Electric Reliability 
Organization shall, upon request by an entity, enter into an agreement 
with such entity for the delegation of authority to implement and 
enforce compliance with organization standards in a specified 
geographic area if the Organization finds that the entity requesting 
the delegation satisfies the requirements of subsection (d)(4) (A), 
(B), (C), (D), (F), and (K), and if the delegation promotes the 
effective and efficient implementation and administration of bulk-power 
system reliability. The Electric Reliability Organization may enter 
into an agreement to delegate to the entity any other authority, except 
that the Electric Reliability Organization shall reserve the right to 
set and approve standards for bulk-power system reliability.
    ``(2) The Electric Reliability Organization shall file with the 
Commission any agreement entered into under this subsection and any 
information the Commission requires with respect to the affiliated 
regional reliability entity to which authority is to be delegated. The 
Commission shall approve the agreement, following public notice and an 
opportunity for comment, if it finds that the agreement meets the 
requirements of paragraph (1), and is just, reasonable, not unduly 
discriminatory or preferential, and is in the public interest. A 
proposed delegation agreement with an affiliated regional reliability 
entity organized on an interconnection-wide basis shall be rebuttably 
presumed by the Commission to promote the effective and efficient 
implementation and administration of bulk-power system reliability. No 
delegation by the Electric Reliability Organization shall be valid 
unless approved by the Commission.
    ``(3)(A) A delegation agreement entered into under this subsection 
shall specify the procedures for an affiliated regional reliability 
entity to propose entity rules or variances for review by the Electric 
Reliability Organization. With respect to any such proposal that would 
apply on an interconnection-wide basis, the Electric Reliability 
Organization shall presume such proposal valid if made by an 
interconnection-wide affiliated regional reliability entity unless the 
Electric Reliability Organization makes a written finding that the 
proposal:
            ``(i) was not developed in a fair and open process that 
        provided an opportunity for all interested parties to 
        participate;
            ``(ii) has a significant adverse impact on reliability or 
        commerce in other interconnections;
            ``(iii) fails to provide a level of reliability of the 
        bulk-power system within the interconnection such that it would 
        constitute a serious and substantial threat to public health, 
        safety, welfare, or national security; or
            ``(iv) creates a serious and substantial burden on 
        competitive markets within the interconnection that is not 
        necessary for reliability.
    ``(B) With respect to any such proposal that would apply only to 
part of an interconnection, the Electric Reliability Organization shall 
find such proposal valid if the affiliated regional reliability entity 
or entities making the proposal demonstrate that it:
            ``(i) was developed in a fair and open process that 
        provided an opportunity for all interested parties to 
        participate;
            ``(ii) would not have an adverse impact on commerce that is 
        not necessary for reliability;
            ``(iii) provides a level of bulk-power system reliability 
        adequate to protect public health, safety, welfare, and 
        national security, and would not have a significant adverse 
        impact on reliability; and
            ``(iv) in the case of a Variance, is based on legitimate 
        differences between regions or between subregions within the 
        affiliated regional reliability entity's geographic area.
The Electric Reliability Organization shall approve or disapprove such 
proposal within 120 days, or the proposal shall be deemed approved. 
Following approval of any such proposal under this paragraph, the 
Electric Reliability Organization shall seek Commission approval 
pursuant to the procedures prescribed under subsection (e)(3). 
Affiliated regional reliability entities may not make requests for 
approval directly to the Commission except pursuant to subsection 
(e)(3)(D).
    ``(4) If an affiliated regional reliability entity requests, 
consistent with paragraph (1) of this subsection, that the Electric 
Reliability Organization delegate authority to it, but is unable within 
180 days to reach agreement with the Electric Reliability Organization 
with respect to such requested delegation, such entity may seek relief 
from the Commission. If, following notice and opportunity for comment, 
the Commission determines that a delegation to the entity would meet 
the requirements of subsection (1) above, and that the delegation would 
be just, reasonable, not unduly discriminatory or preferential, and in 
the public interest, and that the Electric Reliability Organization has 
unreasonably withheld such delegation, the Commission may, by order, 
direct the Electric Reliability Organization to make such delegation.
    ``(5)(A) The Commission may, upon its own motion or upon complaint, 
and with notice to the appropriate affiliated regional reliability 
entity or entities, direct the Electric Reliability Organization to 
propose a modification to an agreement entered into under this 
subsection if the Commission determines that--
            ``(i) the affiliated regional reliability entity no longer 
        has the capacity to carry out effectively or efficiently its 
        implementation or enforcement responsibilities under that 
        agreement, has failed to meet its obligations under that 
        agreement, or has violated any provision of this section,
            ``(ii) the rules, practices, or procedures of the 
        affiliated regional reliability entity no longer provide for 
        fair and impartial discharge of its implementation or 
        enforcement responsibilities under the agreement,
            ``(iii) the geographic boundary of a transmission entity 
        approved by the Commission is not wholly within the boundary of 
        an affiliated regional reliability entity and such difference 
        is inconsistent with the effective and efficient implementation 
        and administration of bulk-power system reliability, or
            ``(iv) the agreement is inconsistent with another 
        delegation agreement as a result of actions taken under 
        paragraph (4) of this subsection.
    ``(B) Following an order of the Commission issued under 
subparagraph (A), the Commission may suspend the affected agreement if 
the Electric Reliability Organization or the affiliated regional 
reliability entity does not propose an appropriate and timely 
modification. If the agreement is suspended, the Electric Reliability 
Organization shall assume the previously delegated 
responsibilities. The Commission shall allow the Electric Reliability 
Organization and the affiliated regional reliability entity an 
opportunity to appeal the suspension.
    ``(i) Organization Membership.--Every System Operator shall be 
required to be a member of the Electric Reliability Organization and 
shall be required also to be a member of any affiliated regional 
reliability entity operating under an agreement effective pursuant to 
subsection (h) applicable to the region in which the system operator 
operates or is responsible for the operation of bulk-power system 
facilities.
    ``(j) Injunctions and Disciplinary Action.--(1) Consistent with the 
range of actions approved by the Commission under subsection (d)(4)(H), 
the Electric Reliability Organization may impose a penalty, limitation 
of activities, functions, or operations, or other disciplinary action 
the Electric Reliability Organization finds appropriate against a user 
of the bulk-power system if the Electric Reliability Organization, 
after notice and an opportunity for interested parties to be heard, 
issues a finding in writing that the user of the bulk-power system has 
violated an organization standard. The Electric Reliability 
Organization shall immediately notify the Commission of any 
disciplinary action imposed with respect to an act or failure to act of 
a user of the bulk-power system that affected or threatened to affect 
bulk-power system facilities located in the United States, and the 
sanctioned party shall have the right to seek modification or 
rescission of such disciplinary action by the Commission. If the 
Organization finds it necessary to prevent a serious threat to 
reliability, the Organization may seek injunctive relief in a Federal 
Court in the district in which the affected facilities are located.
    ``(2) A disciplinary action taken under paragraph (1) may take 
effect not earlier than the 30th day after the Electric Reliability 
Organization files with the Commission its written finding and record 
of proceedings before the Electric Reliability Organization and the 
Commission posts its written finding, unless the Commission, on its own 
motion or upon application by the user of the bulk-power system which 
is the subject of the action, suspends the action. The action shall 
remain in effect or remain suspended unless and until the Commission, 
after notice and opportunity for hearing, affirms, sets aside, 
modifies, or reinstates the action, but the Commission shall conduct 
such hearing under procedures established to ensure expedited 
consideration of the action taken.
    ``(3) The Commission, on its own motion, may order compliance with 
an organization standard and may impose a penalty, limitation of 
activities, functions, or operations, or take such other disciplinary 
action as the Commission finds appropriate, against a user of the bulk-
power system with respect to actions affecting or threatening to affect 
bulk-power system facilities located in the United States if the 
Commission finds, after notice and opportunity for a hearing, that the 
user of the bulk-power system has violated or threatens to violate an 
organization standard.
    ``(4) The Commission may take such action as is necessary against 
the Electric Reliability Organization or an affiliated regional 
reliability entity to assure compliance with an organization standard, 
or any Commission order affecting the Electric Reliability Organization 
or an affiliated regional reliability entity.
    ``(k) Reliability Reports.--The Electric Reliability Organization 
shall conduct periodic assessments of the reliability and adequacy of 
the interconnected bulk-power system in North America and shall report 
annually to the Secretary of Energy and the Commission its findings and 
recommendations for monitoring or improving system reliability and 
adequacy.
    ``(l) Assessment and Recovery of Certain Costs.--The reasonable 
costs of the Electric Reliability Organization, and the reasonable 
costs of each affiliated regional reliability entity that are related 
to implementation and enforcement of organization standards or other 
requirements contained in a delegation agreement approved under 
subsection (h), shall be assessed by the Electric Reliability 
Organization and each affiliated regional reliability entity, 
respectively, taking into account the relationship of costs to each 
region and based on an allocation that reflects an equitable sharing of 
the costs among all end-users. The Commission shall provide by rule for 
the review of such costs and allocations, pursuant to the standards in 
this subsection and subsection (d)(4)(F).

``SEC. 402. APPLICATION OF ANTITRUST LAWS.

    ``Notwithstanding any other provision of law, each of the following 
activities are rebuttably presumed to be in compliance with the 
antitrust laws of the United States:
            ``(1) Activities undertaken by the Electric Reliability 
        Organization under section 401 or affiliated regional 
        reliability entity operating under an agreement in effect under 
        section 401(h).
            ``(2) Activities of a member of the Electric Reliability 
        Organization or affiliated regional reliability entity in 
        pursuit of organization objectives under section 401 undertaken 
        in good faith under the rules of the organization.
Primary jurisdiction, and immunities and other affirmative defenses, 
shall be available to the extent otherwise applicable.''.

SEC. 103. FEDERAL INTERCONNECTION AUTHORITIES.

    (a) Interconnections for Certain Facilities.--Section 210 of the 
Federal Power Act is amended by adding the following at the end 
thereof:
    ``(f) Special Rule for Certain Facilities.--
            ``(1) Definition.--As used in this subsection the term 
        `facility' means--
                    ``(A) a small-scale electric power generation 
                facility that is designed to serve customers at or near 
                the facility, or
                    ``(B) a facility using a single fuel source to 
                produce at the point of use either electric or 
                mechanical power and thermal energy.
            ``(2) Interconnection.--A local distribution company (as 
        defined in section 151 of the Public Utility Regulatory 
        Policies Act of 1978) shall allow a facility to interconnect 
        with the local distribution facilities of such company if the 
        facility owner (A) is an electric customer provided local 
        distribution service by such company and (B) complies with the 
        final rule issued under paragraph (3).
            ``(3) Rules.--Within 1 year from the date of enactment of 
        this subsection, the Commission shall issue a final rule to 
        implement paragraph (2) and issue related safety and power 
        quality standards. To the extent feasible, the Commission shall 
        develop the standards through a process involving interested 
parties. The Commission shall enforce the rule established under this 
subsection using its authority under this Act.''.
    (b) Amendments to Existing Interconnection Authorities.--Section 
210 of the Federal Power Act is amended as follows:
            (1) In section 210(a)(1) (16 U.S.C. 824i(a)(1))--
                    (A) by inserting ``transmitting utility,'' after 
                ``electric utility,'';
                    (B) by inserting ``any transmitting utility,'' 
                after ``small power production facility,'' in 
                subparagraph (A); and
                    (C) by inserting ``or distribution'' after 
                ``transmission'' in subparagraph (D).
            (2) In section 210(b)(2) (16 U.S.C. 824i(b)(2)) by striking 
        ``an evidentiary hearing'' and inserting ``a hearing''.
            (3) In section 210(d) by deleting the last sentence.

SEC. 104. CONSUMER PROTECTION, MARKET POWER AND UNFAIR TRADE PRACTICES.

    (a) Electric Supplier Information Disclosure.
            (1) Disclosure rules.--Not later than January 1, 2000, the 
        Federal Trade Commission, in consultation with the Federal 
        Energy Regulatory Commission, the Secretary of Energy, and the 
        Administrator of the Environmental Protection Agency shall 
        issue rules prescribing the form, placement, content, and 
        timing of the supplier disclosure required under this 
        subsection.
            (2) Disclosure to electric consumers.--In order to assist 
        consumers in making informed purchasing decisions, any electric 
        supplier with a capacity in excess of 5 megawatts that sells or 
        makes an offer to sell electric energy to consumers, or 
        solicits consumers to purchase electric energy, shall provide 
        the consumers, in accordance with rules issued under this 
        subsection, a statement containing the following information:
                    (A)(i) The nature of the service being offered, 
                including information about interruptibility of 
                service.
                    (ii) The price of electric energy, including a 
                description of any variable charges.
                    (iii) A description of all other charges that are 
                associated with the service being offered including, 
                but not limited to, access charges, exit charges, back-
                up service charges, stranded cost recovery charges, and 
                customer service charges.
                    (iv) Such other information concerning the product 
                or price as the Federal Trade Commission determines can 
                be feasibly provided and would be useful to consumers 
                in making purchasing decisions.
                    (B)(i) The share of electric energy that is 
                generated by each of the following types of energy 
                generation resource: coal, natural gas, oil, nuclear, 
                hydroelectric, solar, geothermal, wind, biomass, waste, 
                and other.
                    (ii) Such information concerning generation 
                emissions characteristics as the Federal Trade 
                Commission determines can be provided feasibly and 
                would be useful to consumers in making purchasing 
                decisions, including (I) emissions in each of the 
                following categories per magawatt-hour of generation 
                from the supplier's energy portfolio dedicated to the 
                energy product being offered: sulfur dioxide, nitrogen 
                oxides, and carbon dioxide and (II) the average 
                emissions of the pollutants identified in subclause (I) 
                for all generation in any regional power pool or 
                control area in which such supplier participates.
            (3) Disclosure to wholesale customers.--In every sale of 
        electric energy for resale, the seller shall provide to the 
        purchaser such information respecting generation source and 
        emissions characteristics as may be required by rules under 
        this subsection.
            (4) Authority to obtain books and records.--Authority to 
        obtain information under section 11 of the Energy Supply and 
        Environmental Coordination Act of 1974 (15 U.S.C. 796) shall be 
        available to the Federal Trade Commission to administer and 
        enforce this section.
            (5) Prohibited acts and enforcement.--The failure of any 
        person to provide information required under the rules issued 
        under this subsection or the providing by any person of false 
        or misleading information with respect to the disclosures 
        required by this section or the rules issued under this 
        subsection shall be treated as a violation of a rule under 
        section 18 of the Federal Trade Commission Act (15 U.S.C. 41 
        and following) regarding unfair or deceptive acts or practices 
        in or affecting commerce.
            (6) State authority.--Nothing in this subsection shall 
        affect the authority of any State to prescribe disclosure 
        requirements in addition to and not inconsistent with this 
        section.
    (b) Market Power.--
            (1) Amendment of federal power act.--Part II of the Federal 
        Power Act is amended by adding after section 214 the following 
        new section:

``SEC. 215. MARKET POWER IN ELECTRIC SALES.

    ``(a) FERC Determination.--On its own motion or upon complaint of 
any affected person, the Commission may, after notice and opportunity 
for a hearing on the record, make a determination that--
            ``(1) any electric utility is exercising, or has exercised, 
        market power in the sale of electric energy by reason of its 
        ownership or control of local distribution facilities (as 
        defined in section 151 of the Public Utility Regulatory 
        Policies Act of 1978) or transmission facilities;
            ``(2) such exercise of market power results in prices for 
        electric energy that exceed the prices that would be charged in 
        a fully competitive market; and
            ``(3) action under this section is required to reduce or 
        eliminate such market power.
    ``(b) Mitigation Plan.--Whenever the Commission makes a 
determination under subsection (a) with respect to any electric 
utility, the Commission shall issue an order requiring the utility to 
submit to the Commission a plan to reduce or eliminate the market power 
concerned and to implement such plan.
    ``(c) Additional Remedies.--If the Commission disapproves a plan 
submitted under subsection (b) or determines that the utility is 
failing to properly implement any such plan, the Commission shall--
            ``(1) issue an order under subsection (h) of section 202 
        requiring the utility to relinquish control over any 
        transmission facilities owned or controlled by such utility to 
        any entity established under such subsection (h) for the 
        purpose of independent operation, control, and planning of 
        interconnected transmission facilities;
            ``(2) require the utility to establish just and reasonable 
        rates and charges for the retail sale of electric energy that 
        are based on the cost of service, plus a reasonable rate of 
        return on investment, notwithstanding any provision of Federal 
        or State law; and
            ``(3) require the utility to establish just and reasonable 
        rates and charges for the wholesale sale of electric energy 
        that are based on the cost of service, plus a reasonable rate 
        of return on investment.
The Commission may elect not to take action under paragraph (1), (2), 
or (3) in any case in which the Commission finds that such action will 
not mitigate the market power issues involved.
    ``(d) Reliability.--No order or plan under this subsection shall 
unreasonably impair the reliability of any local distribution system 
affected by such order or plan.
    ``(e) State Authority.--Nothing in this section shall be construed 
to preempt any State authority to require any State regulated electric 
utility to take any action, or cease taking any action, in addition to 
the actions required by the Commission or by a plan under this section 
to remedy the exercise of market power by such utility to the extent 
such State actions are not inconsistent with any order or plan under 
this section.
    ``(f) Return to Market-Based Rates.--The Commission shall terminate 
an order issued under subsection (c)(2) to any electric utility 
whenever, on its own motion or upon petition of any affected person, 
the Commission determines that such order is no longer necessary to 
reduce or eliminate the exercise of market power by such utility.
    ``(g) Effective Date.--This section shall take effect on January 1, 
2002.''.
            (2) Conforming amendment.--Section 201(b)(2) of the Federal 
        Power Act (relating to Commission jurisdiction) is amended by 
        striking ``and 212'' and inserting ``212, and 215''.
    (c) Unfair Trade Practices.--The Federal Trade Commission Act (15 
U.S.C. 41 et seq.) is amended by inserting the following new section 
after section 5:

``SEC. 5A. ELECTRICITY SUPPLY UNFAIR TRADE PRACTICES.

    ``(a) Definition.--For purposes of this section the term, `retail 
electric supplier' has the meaning given that term in section 3(25) of 
the Public Utility Regulatory Policies Act of 1978.
    ``(b) Slamming.--(1) The Federal Trade Commission shall establish 
rules in accordance with section 553 of title 5, United States Code, 
for the submittal and verification of a retail electric customer's 
selection or change in selection of a retail electric supplier and for 
the assessment of penalties for violation of these rules. These rules 
shall ensure that the customer receives electric service from the 
retail electric supplier of the customer's choice.
    ``(2) A person shall not submit or change the selection made by a 
retail electric customer except in accordance with procedures 
established in paragraph (1).
    ``(c) Cramming.--(1) The Federal Trade Commission shall establish 
rules in accordance with section 553 of title 5, United States Code, 
for obtaining the consent of a retail electric customer for purchase of 
goods and services other than those expressly authorized by law or by 
the customer's electricity supply and metering agreement and for the 
assessment of penalties for violation of these rules.
            ``(2) A person shall not charge a retail electric customer 
        for a particular service except in accordance with procedures 
        established in paragraph (1).
    ``(d) Federal Trade Commission Enforcement.--Violation of this 
section or of a rule prescribed under this section constitutes an 
unfair and deceptive act or practice in violation of section 5 of this 
Act and shall be treated as a violation of a rule under section 18 of 
this Act. All functions and powers of the Federal Trade Commission 
under this Act are available to the Federal Trade Commission to enforce 
compliance with this section notwithstanding any jurisdictional 
limitations in this Act.
    ``(e) State Proceedings and Other Remedies.--(1) This section does 
not preclude a State or State commission from prescribing and enforcing 
additional laws, regulations, or procedures regarding the practices 
which are the subject of this section, so long as such laws, 
regulations, or procedures do not conflict with the provisions of this 
section or with any rule prescribed by the Federal Trade Commission 
pursuant to it.
    ``(2) The remedies provided by this section are in addition to any 
other remedies available by law.''.

SEC. 105. ANTITRUST SAVINGS CLAUSE.

    Nothing in this title or any amendment made by this title shall be 
construed to modify, impair, or supersede the operation of the 
antitrust laws. For purposes of this section, the term ``antitrust 
laws'' has the meaning given it in subsection (a) of the first section 
of the Clayton Act (15 U.S.C. 12(a)), except that such term includes 
the Act of June 19, 1936 (15 U.S.C. 13 and following), commonly known 
as the Robinson-Patman Act, and section 5 of the Federal Trade 
Commission Act (15 U.S.C. 45) to the extent that such section 5 applies 
to unfair methods of competition.

SEC. 106. MANDATORY OPEN ACCESS FOR ALL TRANSMITTING UTILITIES.

    (a) Definition of Public Utility.--Section 201(e) of the Federal 
Power Act (16 U.S.C. 824(e)) is amended to read as follows:
    ``(e) Definition of Public Utility.--The term `public utility', 
when used in this Part and Parts III and IV, means--
            ``(1) any person who owns or operates facilities subject to 
        the jurisdiction of the Commission under this Part (other than 
        facilities subject to such jurisdiction solely by reason of 
        section 210, 211, or 212); or
            ``(2) any transmitting utility (other than the Federal 
        power marketing administrations and the Tennessee Valley 
        Authority) which owns or operates transmission facilities not 
        otherwise subject to the jurisdiction of the Commission under 
        this Part, but only with respect to determining, fixing, and 
        otherwise regulating the rates, terms, and conditions for the 
        transmission of electric energy under this Part.''.
    (b) Application of Part to Government Utilities.--Section 201(f) of 
the Federal Power Act (16 U.S.C. 824(f)) is amended by striking ``No 
provision'' and inserting ``Except as provided in subsection (e)(2) and 
section 3(23), no provision''.
    (c) Nonjurisdictional Status Resulting From Compliance With Orders 
Under Sections 210 and 211; Limitation.--Section 201(b)(2) of the 
Federal Power Act (16 U.S.C. 824(b)(2)) is amended by striking the 
period at the end of the second sentence and inserting the following: 
``except with respect to determining, fixing, and otherwise regulating 
the rates, terms, and conditions for the transmission of electric 
energy under this Part pursuant to subsection (e)(2).''.
    (d) Definition.--Section 3(23) of the Federal Power Act (16 U.S.C. 
796) is amended to read as follows:
            ``(23) Transmitting utility.--The term `transmitting 
        utility' means any entity that owns or operates facilities used 
        for the transmission of electric energy.''.

SEC. 107. CLARIFICATION OF STATE AND FEDERAL AUTHORITY OVER RETAIL 
              TRANSMISSION SERVICES.

    (a) Nonpreemption of State Authority to Order Retail Wheeling and 
to Impose Local Delivery Charges.--Section 201(b) of the Federal Power 
Act is amended by adding the following new paragraph after paragraph 
(2):
    ``(3) This Act shall not preempt or otherwise affect any authority 
under the law of a State or municipality to--
            ``(A) require unbundled transmission and local distribution 
        service (as defined in section 151 of the Public Utility 
        Regulatory Policies Act of 1978) for the delivery of electric 
        energy directly to an ultimate consumer, or
            ``(B) impose a delivery charge on an ultimate consumer's 
        receipt of electric energy.
If such unbundled transmission is in interstate commerce, the rate, 
terms, and conditions of the transmission shall be subject to the 
exclusive jurisdiction of the Commission under this part.''.
    (b) Open Access Transmission Authority; Retail Wheeling in Retail 
Competition States.--
            (1) Applicability of open access transmission rules.--
        Section 206 of the Federal Power Act is amended by adding the 
        following new subsection after subsection (d):
  ``(e) Open Access Transmission Services.--(1) Under section 205 and 
this section, the Commission may require, by rule or order, public 
utilities and transmitting utilities to provide open access 
transmission services, subject to section 212(h), and may authorize 
recovery of stranded costs, as defined by the Commission, arising from 
any requirement to provide open access transmission services. This 
section applies to any rule or order issued by the Commission before, 
on, or after the date of enactment of this Act.''.
            (2) Authority to order retail wheeling.--Section 212(h) of 
        the Federal Power Act is amended as follows:
                    (A) By inserting ``(1)'' before ``No''.
                    (B) By striking ``(1)'', ``(2)'', ``(A)'', and 
                ``(B)'' and inserting in their places ``(A)'', ``(B)'', 
                ``(i)'', and ``(ii)'' respectively.
                    (C) By striking from redesignated paragraph 
                (1)(B)(ii) ``the date of enactment of this subsection'' 
                and inserting ``October 24, 1992,''.
                    (D) By adding the following new paragraphs at the 
                end:
    ``(2) Notwithstanding paragraph (1), the Commission may issue an 
order that requires the transmission of electric energy directly or 
indirectly to an ultimate consumer if a notice of retail competition 
under section 152(a)(1) or section 153(a)(1) of the Public Utility 
Regulatory Policies Act of 1978 has been filed and is in effect with 
respect to the ultimate consumer or if a distribution utility offers 
open access to its delivery facilities to the ultimate consumer.
    ``(3) Notwithstanding any provision of this Part to the contrary, 
and whether or not a notice of retail competition under section 
152(a)(1) or section 153(a)(1) of the Public Utility Regulatory 
Policies Act of 1978 has been filed, upon application by a designated 
representative of (A) a military base facility of the Department of 
Defense or a supplier or proposed supplier of electric energy thereto, 
or (B) an Indian tribe, or a supplier or proposed supplier thereto, the 
Commission shall issue an order requiring the transmission of electric 
energy directly or indirectly to such facility or Indian tribe. Any 
order under this paragraph shall establish rates, terms and conditions 
that are consistent with the requirements for open access transmission 
services provided pursuant to this Act. Nothing in this paragraph shall 
affect the authority of a State under section 152(d) and 153(d) of the 
Public Utility Regulatory Policies Act of 1978.''.
            (3) Conforming amendments.--
                    (A) Section 3(24) of the Federal Power Act is 
                amended to read as follows:
            ``(24) `transmission services' means the transmission of 
        electric energy sold or to be sold.''.
                    (B) Section 211(a) of the Federal Power Act is 
                amended by striking ``for resale''.
                    (C) Section 212(a) of the Federal Power Act is 
                amended by striking ``wholesale'' each time it appears, 
                except the last time.
                    (D) Section 3 of the Federal Power Act is amended 
                by adding the following new paragraph at the end 
                thereof:
            ``(26) Indian Tribe.--The term `Indian tribe' means any 
        Indian tribe, band group, and nation, including Alaska Indians, 
        Aleuts, and Eskimos, and any Alaskan Native Village, of the 
        United States, which is considered an eligible recipient under 
        the Indian Self Determination and Education Assistance Act 
        (Public Law 93-638) or was considered an eligible recipient 
        under chapter 67 of title 31, United States Code, prior to the 
        repeal of such chapter.''.
    (c) Determination of Local Distribution and Transmission 
Facilities.--Section 201 of the Federal Power Act is amended by adding 
the following new subsection at the end thereof:
    ``(h) Determination of Local Distribution and Transmission 
Facilities.--
            ``(1) Application by state regulatory authority.--A State 
        regulatory authority, a transmitting utility, or a local 
        distribution company may apply to the Commission for a 
        determination whether a particular facility used for the 
        transportation of electric energy located in such State is a 
        local distribution facility subject to the jurisdiction of that 
        State regulatory authority or is a transmission facility 
        subject to the jurisdiction of the Commission. The Commission 
        may make such determination pursuant to such a request or on 
        its own motion.
            ``(2) Commission Findings.--If an application is submitted 
        pursuant to this subsection by a State regulatory authority, 
        the Commission shall make a determination giving the maximum 
        practicable deference to the position taken by the State 
        regulatory authority, in accordance with the following factors 
        associated with the facility:
                    ``(A) function and purpose;
                    ``(B) size;
                    ``(C) location;
                    ``(D) voltage level and other technical 
                characteristics;
                    ``(E) historic, current and planned usage patterns;
                    ``(F) interconnection and coordination with other 
                facilities; and
                    ``(G) any other factor the Commission deems 
                relevant.''.

SEC. 108. AUTHORITY TO ESTABLISH REGIONAL TRANSMISSION ORGANIZATION.

    Section 202 of the Federal Power Act is amended by adding the 
following new subsections after subsection (g):
    ``(h) Regional Transmission Organization.--(1) Upon its own motion 
or upon application or complaint and after notice and an opportunity 
for a hearing, the Commission may order the establishment of entities 
for the purpose of independent ownership or independent operation, 
control, and planning of interconnected transmission facilities; order 
a transmitting utility to relinquish ownership or control over 
operation of its transmission facilities to an entity for the purpose 
of independent ownership or independent operation, control, and 
planning of interconnected transmission facilities; subject generators 
to the control of such entity consistent with other laws to the extent 
necessary to permit reliable operation of the transmission facilities; 
or take any combination of these actions, if the Commission finds 
that--
            ``(A) this action is appropriate to promote competitive 
        electricity markets and efficient, economical, and reliable 
        operation of the interstate transmission grid;
            ``(B) the entity established for the purpose of independent 
        ownership or independent operation, control, and planning of 
        interconnected transmission facilities will manage the 
        transmission facilities in a manner that assures that--
                    ``(i) ownership of transmission facilities provides 
                no advantage in competitive electricity markets;
                    ``(ii) the transmission customers of the Tennessee 
                Valley Authority, the Bonneville Power Administration, 
                the Administrator of the Southwestern Power 
                Administration, and the Administrator of the Western 
                Area Power Administration will not pay an unreasonable 
                share of the entity's costs and will not experience 
                unreasonable transmission rate increases resulting from 
                the establishment of the entity; and
                    ``(iii) as applicable, the respective statutory and 
                treaty obligations and contractual obligations existing 
                on the date of enactment of this Act of the Board of 
                Directors of the Tennessee Valley Authority, the 
                Administrator of the Bonneville Power Administration, 
                the Administrator of the Southwestern Power 
                Administration, the Administrator of the Western Area 
                Power Administration, the Bureau of Reclamation, and 
                the Corps of Engineers can be met;
            ``(C) any transmitting utility ordered to transfer 
        ownership or control of its transmission facilities will 
        receive just and reasonable compensation for the use of its 
        facilities; and
            ``(D) adequate reliability of the affected transmission 
        facilities will be maintained.
Nothing in this subsection limits States from addressing transmission 
facility maintenance, planning, siting, and other utility functions in 
a manner consistent with this Act or Commission action under this Act.
    ``(2) If not ordered under paragraph (1), the Tennessee Valley 
Authority, the Administrator of the Bonneville Power Administration, 
the Administrator of the Southwestern Power Administration, or the 
Administrator of the Western Area Power Administration is authorized to 
participate in a regional transmission organization after conducting a 
public process in the relevant service area to receive comments. 
Notwithstanding any other law, participation may include delegation of 
operation and control of the Authority or Administration's transmission 
system to that entity, or other method of participation, under terms 
and conditions the Authority or Administrator determines necessary or 
appropriate, including being bound by operational and other orders of 
the entity and by the results of arbitration of disputes with the 
entity or with other participants.
    ``(3) If the Commission determines, after notice and opportunity 
for hearing, that the rates, charges, or classifications demanded, 
observed, charged, or collected by any entity established for the 
purpose of independent ownership or independent operation, control, and 
planning of interconnected transmission facilities for any transmission 
or sale, or that any rule, regulation, practice, or contract affecting 
such rate, charge, or classification is unjust, unreasonable, unduly 
discriminatory or preferential, or furthers or maintains the existence 
of market power, the Commission shall, pursuant to the standards and 
procedures in section 206 of this Act, determine the rate, charge, 
classification, rule, regulation, practice or contract that eliminates 
such market power and is just and reasonable, and shall fix the same by 
order.
    ``(4) Upon request by an entity established for the purpose of 
independent ownership or independent operation, control, and planning 
of interconnected transmission facilities or any other person, the 
Commission shall issue a declaratory order determining whether such 
entity covers a sufficiently broad geographic region so as to ensure 
the development of efficient regional electricity markets that 
encourage regional efficiencies in both generation dispatch and 
reliability of service.''.

SEC. 109. SPECIAL PROVISIONS RESPECTING BPA AND ERCOT TRANSMISSION.

    (a) Repeal of Special BPA Wheeling Provisions.--Section 212(i) of 
the Federal Power Act (16 U.S.C. 824k(i)), relating to laws applicable 
to the Federal Columbia River Transmission System, is repealed.
    (b) Repeal of Special ERCOT Wheeling Provisions.--Section 212(k) of 
the Federal Power Act (16 U.S.C. 824k(k)), relating to ERCOT utilities, 
is repealed.

SEC. 110. ELECTRIC COMPANY MERGERS.

    Section 203(a) of the Federal Power Act is amended as follows:
            (1) By striking ``public utility'' each place it appears 
        and inserting ``electric utility company''.
            (2) By inserting after the first sentence the following: 
        ``Except as the Commission may otherwise provide by rule, no 
        holding company in a holding company system that includes an 
        electric utility company shall, directly or indirectly, 
        purchase, acquire, or take any security of any electric utility 
        company or of a holding company in a holding company system 
        that includes an electric utility company, without first having 
        secured an order of the Commission authorizing it to do so.''.
            (3) By striking ``hearing'' in the last sentence and 
        inserting ``oral or written presentation of views''.
            (4) By adding at the end the following: ``For purposes of 
        this subsection, the terms `electric utility company', `holding 
        company', and `holding company system' have the meaning given 
        them in section 2 of the Public Utility Holding Company Act of 
        1935. Notwithstanding section 201(b)(1), generation facilities 
        shall be subject to the jurisdiction of the Commission for 
        purposes of this section, except as the Commission may 
        otherwise provide by rule.''.

SEC. 111. REGIONAL TRANSMISSION PLANNING AGENCIES.

    Part II of the Federal Power Act is amended by adding after section 
215, as added by this Act, the following new section:

``SEC. 216. REGIONAL TRANSMISSION PLANNING AGENCIES.

    ``(a) Consent.--The consent of Congress is given for agreements 
among two or more States to establish regional transmission planning 
agencies to--
            ``(1) facilitate coordination among the States within a 
        particular region with regard to the planning of future 
        transmission and distribution facilities;
            ``(2) carry out State siting responsibilities more 
        effectively;
            ``(3) facilitate regulation of transmission system 
        operation within the region;
            ``(4) meet the other requirements of this section and rules 
        prescribed by the Commission under this section; and
            ``(5) otherwise be consistent with the public interest.
    ``(b) Authority.--(1) If the Commission determines that an 
agreement meets the requirements of subsection (a), the agency 
established under the agreement has such authority with respect to 
matters otherwise within the jurisdiction of the Commission as is 
expressly provided in the agreement and is necessary or appropriate for 
carrying out the planning, siting, and regulatory responsibilities of 
the agency.
    ``(2) The Commission's approval under this section may be subject 
to any terms and conditions the Commission determines are necessary to 
ensure that the agreement is in the public interest.
    ``(c) Rules.--(1) The Commission shall prescribe by rule--
            ``(A) criteria for use in making the determination 
        regarding a regional transmission planning agreement under 
        subsection (a) (including criteria specifying the extent to 
        which a tribal government is treated as a State for purposes of 
        this section); and
            ``(B) standards for its administration of a regional 
        transmission planning agency established under the agreement.
    ``(2) The rule shall require that--
            ``(A) a regional transmission planning agency operate 
        within a region that includes all or part of each State that is 
        a party to the agreement;
            ``(B) a regional transmission planning agency be composed 
        of 1 or more members from each State that is a party to the 
        agreement;
            ``(C) each participating State vest in the regional 
        transmission planning agency the authority that otherwise would 
        be exercised by the State and that is necessary to provide for 
        a comprehensive program for planning and siting of transmission 
        facilities and to carry out the agreement and this section; and
            ``(D) the agency follow reasonable procedures in making its 
        decisions, in governing itself, and in regulating the entities 
        subject to its jurisdiction, including a requirement that all 
        decisions of the agency be made by majority vote (or majority 
        of weighted votes) of the members present and voting.
    ``(3) The rule may include any other requirement to ensure that the 
regional transmission planning agency's organization, practices, and 
procedures are sufficient to carry out this section and the rules 
issued under it.
    ``(d) Termination.--The Commission, after notice and opportunity 
for comment, may terminate the approval of an agreement under this 
section at any time if it determines that the regional transmission 
planning agency fails to comply with the provisions of this section or 
Commission rules under subsection (c) or that the agreement is contrary 
to the public interest.
    ``(e) Application of Section 313.--Section 313 shall apply to 
rehearing before a regional transmission planning agency and judicial 
review of any action of a regional transmission planning agency in the 
same manner as that section applies to rehearing and judicial review of 
orders of the Commission.''.

SEC. 112. UNIVERSAL AND AFFORDABLE SERVICE.

    Section 201 of the Federal Power Act (16 U.S.C. 824) is amended by 
adding at the end thereof the following new subsection:
    ``(i) Universal and Affordable Service.--It is the sense of the 
Congress that--
            ``(1) every consumer of electric energy should have access 
        to electric energy at reasonable and affordable rates; and
            ``(2) the Commission and the States should ensure that 
        competition in the electric energy business does not result in 
        the loss of service to rural, residential, or low-income 
        consumers.''.

SEC. 113. CONFORMING AND TECHNICAL AMENDMENTS TO THE FEDERAL POWER ACT.

    Subsections (a) and (b) of section 316A of the Federal Power Act 
(16 U.S.C. 791a et seq.) are each amended by striking ``section 211, 
212, 213, or 214,'' in each place such phrase appears and inserting 
``section 211, 212, 213, 214, 215, or 216''.

SEC. 114. STUDY OF GRANDFATHERED SYSTEMS.

    The Federal Energy Regulatory Commission shall undertake a study of 
the extent to which retail electric customers of local distribution 
companies subject to section 154 of the Public Utility Regulatory 
Policies Act of 1978 (relating to grandfathering) benefit from the 
adoption of retail electric competition and submit a report to Congress 
not later than January 1, 2005, containing the results of such study.

SEC. 115. EFFECTIVE DATE.

    The amendments made by this subtitle shall be effective on the date 
of enactment of this Act.

TITLE II--PROVISIONS RESPECTING THE PUBLIC UTILITY HOLDING COMPANY ACT 
                                OF 1935

SEC. 201. SHORT TITLE.

    This title may be cited as the ``Public Utility Holding Company Act 
of 1999''.

SEC. 202. REFORM OF HOLDING COMPANY REGULATION UNDER PUHCA.

    Eighteen months after the enactment of this Act, the provisions of 
this title shall apply in lieu of the provisions of the Public Utility 
Holding Company Act of 1935, except that the Public Utility Holding 
Company Act of 1935 shall remain in effect with respect to any holding-
company system which includes one or more subsidiary companies that are 
public-utility companies, if such public-utility company or companies 
provide retail electric or gas service in two or more States in which 
the State regulatory authority has not provided notice of retail 
competition pursuant to section 152 of the Public Utility Regulatory 
Policies Act of 1978 or which has not otherwise required distribution 
utilities to provide open access service over the distribution 
facilities of each distribution utility subject to its jurisdiction.

SEC. 203. DEFINITIONS.

    For purposes of this title:
            (1) Affiliate.--The term ``affiliate'' of a company means 
        any 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 such company.
            (2) Associate company.--The term ``associate company'' of a 
        company means any company in the same holding company system 
        with such 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, whether incorporated or not, 
        or a receiver, trustee, or other liquidating agent of any of 
        the foregoing.
            (5) Electric utility company.--The term ``electric utility 
        company'' means any company that owns or operates facilities 
        used for the generation, transmission, or distribution of 
        electric energy for sale.
            (6) Exempt wholesale generator and foreign utility 
        company.--The terms ``exempt wholesale generator'' and 
        ``foreign utility company'' have the same meanings as in 
        section 32 and 33, respectively, of the Public Utility Holding 
        Company Act of 1935.
            (7) Gas utility company.--The term ``gas utility company'' 
        means any company that owns or operates facilities used for 
        distribution at retail (other than the distribution only in 
        enclosed portable containers, or distribution to tenants or 
        employees of the company operating such facilities for their 
        own use and not for resale) of natural or manufactured gas for 
        heat, light, or power.
            (8) Holding company.--The term ``holding company'' means--
                    (A) any 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, 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 one 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 
                rate protection of utility customers with respect to 
                rates that such person be subject to the obligations, 
                duties, and liabilities imposed by this Act upon 
                holding companies.
            (9) Holding company system.--The term ``holding company 
        system'' means a holding company, together with its subsidiary 
        companies.
            (10) Jurisdictional rates.--The term ``jurisdictional 
        rates'' means rates established by the Commission for the 
        transmission of electric energy, the sale of electric energy at 
        wholesale in interstate commerce, the transportation of natural 
        gas, and the sale in interstate commerce of natural gas for 
        resale for ultimate public consumption for domestic, 
        commercial, industrial, or any other use.
            (11) 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 such gas in interstate 
        commerce for resale.
            (12) Person.--The term ``person'' means an individual or 
        company.
            (13) Public utility.--The term ``public utility'' means any 
        person who owns or operates facilities used for transmission of 
        electric energy or sales of electric energy at wholesale in 
        interstate commerce.
            (14) Public utility company.--The term ``public utility 
        company'' means an electric utility company or a gas utility 
        company.
            (15) State commission.--The term ``State commission'' means 
        any 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 such State, has 
        jurisdiction to regulate public utility companies.
            (16) Subsidiary company.--The term ``subsidiary company'' 
        of a holding company means--
                    ``(A) any 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 such holding company; and
                    (B) any 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 such holding 
                company (either alone or pursuant to an arrangement or 
                understanding with one or more other persons) so as to 
                make it necessary for the rate protection of utility 
                customers with respect to rates that such person be 
                subject to the obligations, duties, and liability 
                imposed by this Act upon subsidiary companies of 
                holding companies.
            (17) Voting security.--The term ``voting security'' means 
        any security presently entitling the owner or holder thereof to 
        vote in the direction or management of the affairs of a 
        company.

SEC. 204. FEDERAL ACCESS TO BOOKS AND RECORDS.

    (a) In General.--Each holding company and each associate company 
thereof shall maintain, and shall make available to the Commission, 
such books, accounts, memoranda, and other records as are relevant to 
costs incurred by a public utility or natural gas company that is an 
associate company of such holding company and that provides goods or 
services to, obtains goods or services from, or engages in any 
transactions with such public utility company or natural gas 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 any other use.
    (b) 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 a public utility or 
natural gas company that is an associate company of such holding 
company as are relevant to costs incurred by such public utility or 
natural gas company and necessary or appropriate for the protection of 
utility customers with respect to jurisdictional rates.
    (c) 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 thereof that provides goods or 
services to, obtains goods or services from, or engages in any 
transaction with a public utility or natural gas company that is an 
associate company in such holding company system, as are relevant to 
costs incurred by a public utility or natural gas company within such 
holding company system and necessary or appropriate for the protection 
of utility customers with respect to jurisdictional rates.
    (d) Confidentiality.--No member, officer, or employee of the 
Commission shall divulge any fact or information that may come to his 
or her knowledge during the course of examination of books, accounts, 
memoranda, or other records as provided in this section, except as may 
be directed by the Commission, by a committee of Congress, or by a 
court of competent jurisdiction.

SEC. 205. STATE ACCESS TO BOOKS AND RECORDS.

    (a) In General.--Upon the written request of a State commission 
having jurisdiction to regulate a public utility company in a holding 
company system, the holding company or any associate company or 
affiliate thereof, other than such public utility company, wherever 
located, that provides goods or services to, obtains goods or services 
from, or engages in any transactions with such public utility company, 
shall produce for inspection such books, accounts, memoranda, and other 
records that--
            (1) have been identified in reasonable detail in a 
        proceeding before the State commission;
            (2) the State commission deems are relevant to costs 
        incurred by such public utility company; and
            (3) are necessary for the effective discharge of the 
        responsibilities of the State commission with respect to such 
        proceeding.
    (b) Limitation.--Subsection (a) does not apply to any person that 
is a holding company solely by reason of ownership of one or more 
qualifying facilities under section 210 of the Public Utility 
Regulatory Policies Act of 1978.
    (c) Confidentiality of Information.--The production of books, 
accounts, memoranda, and other records under subsection (a) shall be 
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.
    (d) Effect on State Law.--Nothing in this section shall preempt 
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 any other Federal 
law, contract, or otherwise.
    (e) Court Jurisdiction.--Any United States district court located 
in the State in which the State commission referred to in subsection 
(a) is located shall have jurisdiction to enforce compliance with this 
section.

SEC. 206. EXEMPTION AUTHORITY.

    (a) 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 section 204 any person that is a holding 
company, solely with respect to one or more of the following:
            (1) Qualifying facilities under the Public Utility 
        Regulatory Policies Act of 1978.
            (2) Exempt wholesale generators.
            (3) Foreign utility companies.
            (4) Exempt telecommunications companies.
    (b) Other Authority.--If, upon application or upon 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 or natural gas company, or if the Commission 
finds that any class of transactions is not relevant to the 
jurisdictional rates of a public utility or natural gas company, the 
Commission shall exempt such person or transaction from the 
requirements of section 204.

SEC. 207. AFFILIATE TRANSACTIONS.

    Nothing in this title shall preclude the Commission or a State 
commission from exercising its jurisdiction under otherwise applicable 
law to determine whether a public utility company, public utility, or 
natural gas company may recover in rates any costs of an activity 
performed by an associate company, or any costs of goods or services 
acquired by such public utility company from an associate company.

SEC. 208. APPLICABILITY.

    No provision of this title shall apply to, or be deemed to 
include--
            (1) the United States;
            (2) a State or any political subdivision of a State;
            (3) any foreign governmental authority not operating in the 
        United States;
            (4) any agency, authority, or instrumentality of any entity 
        referred to in paragraph (1), (2), or (3); or
            (5) any officer, agent, or employee of any entity referred 
        to in paragraph (1), (2), or (3) acting as such in the course 
        of official duty.

SEC. 209. EFFECT ON OTHER REGULATIONS.

    Nothing in this title precludes the Commission or a State 
commission from exercising its jurisdiction under otherwise applicable 
law to protect utility customers from paying too much for goods and 
services provided by associate companies and from other cross 
subsidization of associate companies by regulated public utility 
companies.

SEC. 210. ENFORCEMENT.

    The Commission shall have the same powers as set forth in sections 
306 through 317 of the Federal Power Act (16 U.S.C. 825d-825p) to 
enforce the provisions of this title.

SEC. 211. SAVINGS PROVISIONS.

    (a) In General.--Nothing in this title prohibits a person from 
engaging in or continuing to engage in activities or transactions in 
which it is legally engaged or authorized to engage on the effective 
date of this title.
    (b) Effect on Other Commission Authority.--Nothing in this title 
limits the authority of the Commission under the Federal Power Act (16 
U.S.C. 791a et seq.) (including section 301 of that Act) or the Natural 
Gas Act (15 U.S.C. 717 et seq.) (including section 8 of that Act).

SEC. 212. IMPLEMENTATION.

    Not later than 18 months after the date of enactment of this title, 
the Commission shall--
            (1) promulgate such regulations as may be necessary or 
        appropriate to implement this title (other than section 205); 
        and
            (2) submit to the Congress detailed recommendations on 
        technical and conforming amendments to Federal law necessary to 
        carry out this title and the amendments made by this title.

SEC. 213. TRANSFER OF RESOURCES.

    All books and records that relate primarily to the functions 
transferred to the Commission under this title shall be transferred 
from the Securities and Exchange Commission to the Commission.

SEC. 214. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated such funds as may be 
necessary to carry out this title.

SEC. 215. CONFORMING AMENDMENT TO THE FEDERAL POWER ACT.

    Section 318 of the Federal Power Act (16 U.S.C. 825q) is repealed.

TITLE III--PROVISIONS RESPECTING THE PUBLIC UTILITY REGULATORY POLICIES 
                              ACT OF 1978

SEC. 301. SHORT TITLE.

    This title may be cited as the ``Ratepayer Protection Act of 
1999''.

SEC. 302. FINDINGS.

    The Congress finds that--
            (1) implementation of the mandatory power purchase 
        provisions of section 210 of the Public Utility Regulatory 
        Policies Act of 1978 (16 U.S.C. 824a-3) has resulted in many 
        consumers paying excessive rates for electric energy;
            (2) the Energy Policy Act of 1992 gives nonregulated 
        producers of electricity additional access to the wholesale 
        electric market through transmission access and exemption from 
        the Public Utility Holding Company Act of 1935; and
            (3) in light of the competitive wholesale electric 
        marketplace brought about by the Energy Policy Act of 1992 and 
        Part IV of the Federal Power Act, the purchase mandate in 
        section 210 of the Public Utility Regulatory Policies Act of 
        1978 is no longer needed.

SEC. 303. PROSPECTIVE REPEAL.

    Section 210 of the Public Utility Regulatory Policies Act of 1978 
is amended by adding the following new subsection at the end thereof:
    ``(m) Prospective Repeal.--
            ``(1) New contracts.--After the enactment of this 
        subsection, no electric utility shall be required to enter into 
        a new contract or obligation to purchase or to sell electric 
        energy or capacity pursuant to this section.
            ``(2) Existing rights and remedies not affected.--Nothing 
        in this subsection affects the rights or remedies of any party 
        with respect to the purchase or sale of electric energy or 
        capacity from or to a facility determined to be a qualifying 
        small power production facility or a qualifying cogeneration 
        facility under this section 210 pursuant to any contract or 
        obligation to purchase or to sell electric energy or capacity 
        in effect on the date of enactment of this subsection, 
        including the right to recover the costs of purchasing such 
        electric energy or capacity.''.

SEC. 304. RECOVERY OF COSTS.

    Section 210 of the Public Utility Regulatory Policies Act of 1978 
is amended by adding the following new subsection at the end thereof:
    ``(n) Recovery of Costs.--The Commission shall promulgate and 
enforce such regulations as may be required to assure that no electric 
utility shall be required directly or indirectly to absorb the costs 
associated with purchases of electric energy or capacity from a 
qualifying facility pursuant to any legally enforceable obligation 
entered into or imposed pursuant to this section prior to the date of 
enactment of this subsection, to the extent that the electric utility 
cannot otherwise reasonably mitigate such costs. Such regulations shall 
be treated as a rule enforceable under the Federal Power Act (16 U.S.C. 
(16 U.S.C. 791a-825r).''.

TITLE IV--FEDERAL POWER MARKETING ADMINISTRATIONS AND TENNESSEE VALLEY 
                               AUTHORITY

                 Subtitle A--Tennessee Valley Authority

 SEC. 401. DEFINITIONS.

    For purposes of this subtitle:
            (1) The term ``Commission'' means the Federal Energy 
        Regulatory Commission.
            (2) The term ``distributor'' means a State, county, 
        municipality, or cooperative organization which owns, controls, 
        or operates local distribution facilities and which on April 1, 
        1999, purchased electric energy at wholesale from the Tennessee 
        Valley Authority under an all-requirements power contract.
            (3) The term ``distributor service area'' means that 
        geographic area which is either assigned to or statutorily 
        defined under State law as the area within which a distributor 
        has the right or privilege to provide electric energy at retail 
        to the ultimate consumer and ratepayer.
            (4) The term ``electric supplier'' means any person who 
        provides any electric supply.
            (5) The term ``excess electric energy'' means electric 
        energy that has become surplus to the firm contractual 
        obligations of the Tennessee Valley Authority under section 10 
        of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831i) 
        due to any reduction in the quantity of electric energy that 
        the Tennessee Valley Authority was contractually required to 
        supply on the date of enactment of this Act where such 
        reduction results from the election by customers of the 
        Tennessee Valley Authority not to purchase from Tennessee 
        Valley Authority electric energy that the Tennessee Valley 
        Authority was contractually required to supply on the date of 
        enactment of this Act.
            (6) The term ``generating resource'' means electric energy, 
        including the actual or planned electric energy capability of 
        generating facilities.
            (7) The term ``major generating resource'' means any 
        generating resource that--
                    (A) has a planned capability greater than 50 
                average megawatts, and
                    (B) if acquired by the Tennessee Valley Authority, 
                is acquired for a period of more than five years.
            (8) The term ``person'' means a person as defined in 
        section 3(4) of the Federal Power Act.
            (9) The term ``public utility'' means a public utility as 
        defined in section 201(e)(1) of the Federal Power Act.
            (10) The term ``Tennessee Valley Region'' means the 
        geographic area in which the Tennessee Valley Authority or its 
        distributors were the primary source of power supply on the 
        date of enactment of this Act.

SEC. 402. WHOLESALE COMPETITION IN THE TENNESSEE VALLEY REGION.

    (a) Amendments to the Federal Power Act.--(1) Section 212(f) of the 
Federal Power Act (16 U.S.C. 824k(f)), relating to interconnection or 
wheeling orders that result in the sale or delivery of electric energy 
outside the Tennessee Valley Region, is repealed.
    (2) Section 212(j) of the Federal Power Act (16 U.S.C. 824k(j)), 
relating to equitability within territory restricted electric systems, 
is repealed.
    (b) Amendments to the Tennessee Valley Authority Act.--(1) The 
third sentence of the first paragraph of section 15d(a) of the 
Tennessee Valley Authority Act of 1933 (16 U.S.C. 831n-4(a)), limiting 
the sale or delivery of electric energy outside the area for which the 
Tennessee Valley Authority or its distributors were the primary source 
of power supply on July 1, 1957, is repealed.
    (2) The second and third paragraphs of section 15d(a) of the 
Tennessee Valley Authority Act of 1933 (16 U.S.C. 831n-4(a)), which 
clarify the limitations imposed by the third sentence of the first 
paragraph of the subsection, are repealed.

SEC. 403. TENNESSEE VALLEY AUTHORITY POWER SALES.

    (a) Bar on Tennessee Valley Authority Retail Sales.--
Notwithstanding section 10 of the Tennessee Valley Authority Act of 
1933 (16 U.S.C. 831i), the Tennessee Valley Authority shall not sell or 
deliver electric energy to any end use or retail customers that did not 
have a contract for the purchase of electric energy with the Tennessee 
Valley Authority for services to specific facilities on the date of 
enactment of this Act.
    (b) Regional Preference for Wholesale Power Sales.--
            (1) Regional preference.--Notwithstanding section 10, 11, 
        and 12, or any other provision of the Tennessee Valley 
        Authority Act of 1933 (16 U.S.C. 831 and following), the sale 
        and delivery of electric energy at wholesale by the Tennessee 
        Valley Authority for use outside the Tennessee Valley Region 
        shall be limited to excess electric energy.
            (2) Firm power sales of excess electric energy.--Any sale 
        or delivery of excess electric energy by Tennessee Valley 
        Authority pursuant to paragraph (1) may be made only if each of 
        the following requirements are met:
                    (A) Notice.--At least 30 days prior to the 
                execution of any contract for the sale or delivery of 
                such electric energy the Tennessee Valley Authority 
                shall give the distributors written notice that 
                negotiations for such contract are pending, and 
                thereafter, at any distributor's request, make 
                available for its inspection current drafts of the 
                proposed contract.
                    (B) Term.--The contract term for the sale of such 
                energy may not exceed 7 years.
                    (C) Offer to existing customers.--The excess 
                electric energy to be sold pursuant to paragraph (1) 
                shall first be offered for a reasonable period of time 
                and under the same essential rates, terms, and 
                conditions to distributors.
            (3) Economy exchanges.--Nothing in this subsection shall 
        prevent the Tennessee Valley Authority from making exchange 
        power arrangements with other electric suppliers when 
        economically feasible.
    (c) Application of Federal Power Act to Excess Power Sales of 
Electric Energy at Wholesale by the Tennessee Valley Authority.--Sales 
of electric energy at wholesale by the Tennessee Valley Authority for 
use outside the Tennessee Valley Region shall be subject to the 
provisions of Parts II and III of the Federal Power Act (16 U.S.C. 
791a) (except sections 204, 207, 209, 214, and 305), and the Commission 
shall have jurisdiction under such Parts II and III over the rates, 
terms, and conditions of such sales. Such provisions of the Federal 
Power Act and the rules, regulations and policies of the Commission 
thereunder, shall apply to such sales by the Tennessee Valley Authority 
to the same extent and in the same manner as such provisions apply to 
wholesale sales of electric energy in interstate commerce by a public 
utility otherwise subject to the jurisdiction of the Commission under 
Part II of such Act.
    (d) Application of Tennessee Valley Authority Act to Sales Outside 
Tennessee Valley Region.--The third proviso of section 10 of the 
Tennessee Valley Authority Act of 1933 (16 U.S.C. 831i) and the second 
and third provisos of section 12 of the Tennessee Valley Authority Act 
of 1933 (16 U.S.C. 831k) shall not apply to any sale of excess electric 
energy by the Tennessee Valley Authority for use outside the Tennessee 
Valley Region.

SEC. 404. PROHIBITION ON ACQUISITION OF NEW GENERATING RESOURCES.

    Notwithstanding any other provision of law, the Tennessee Valley 
Authority shall not acquire any new major generating resource after the 
date of enactment of this Act unless contractual or other financial 
arrangements have been made to ensure that the customer or customers on 
whose behalf the resource is acquired commit to pay the full costs of 
the resource, and the Tennessee Valley Authority shall not acquire any 
new generating resource that it reasonably expects will necessitate the 
use of its authority to recover otherwise nonrecoverable costs provided 
in section 408.

SEC. 405. RENEGOTIATION OF LONG-TERM CONTRACTS.

    The Tennessee Valley Authority and its distributors shall, within 
one year following the date of enactment of this Act, renegotiate their 
existing long-term contracts with respect to the remaining term, the 
length of the termination notice, the amount of electric energy that 
distributors may purchase from electric suppliers other than the 
Tennessee Valley Authority, including access to the Tennessee Valley 
Authority transmission system, and provisions for stranded cost 
recovery. Such renegotiated contracts shall not grant any undue 
preference or advantage to any person or subject any person to any 
undue prejudice or disadvantage. If the parties are unable to reach 
agreement with regard to any of the issues under this section within 
the 1-year period set forth above, they shall submit the issue in 
dispute to the Federal Energy Regulatory Commission for final 
resolution.

 SEC. 406. REGULATION OF TENNESSEE VALLEY AUTHORITY TRANSMISSION 
              SYSTEM.

    (a) Federal Power Act Jurisdiction.--The transmission and local 
distribution of electric energy by the Tennessee Valley Authority shall 
be subject to the provisions of parts II and III of the Federal Power 
Act (except sections 204, 207, 209, 214, and 305), the Commission shall 
have jurisdiction under such Parts II and III over the rates, terms, 
and conditions of such transmission and local distribution. Such 
provisions of the Federal Power Act and the rules, regulations and 
policies of the Commission thereunder, shall apply to such transmission 
and local distribution by the Tennessee Valley Authority to the same 
extent and in the same manner as such provisions apply to the 
transmission of electric energy by a public utility otherwise subject 
to the jurisdiction of the Commission under Part II of such Act.
    (b) Transmission Plant Investment.--Except as otherwise provided by 
the Commission, the Tennessee Valley Authority shall not make any 
transmission plant investment that is significant (as defined by 
regulations issued by the Commission) without the Commission's prior 
approval as to the need for such investment, taking into account 
possible alternate investments, project participants or transmission 
providers, the reasonableness of the cost estimate and the prudence of 
the investment.
    (c) Rate Phase-in.--If the Commission determines that the initial 
application of this subtitle in the development of any Tennessee Valley 
Authority rates for transmission services would result in an excessive 
increase in any rate, as determined by the Commission, the Commission 
may phase in the effect of the application of this subtitle to such 
rate over a reasonable period of time to the same extent it would 
ordinarily do so for public utility rates.

SEC. 407. REGULATION OF TENNESSEE VALLEY AUTHORITY DISTRIBUTORS.

    (a) Repeal of Tennessee Valley Authority Regulation of 
Distributors.--Upon the election of a municipality or cooperative 
organization to which the Tennessee Valley Authority sells electric 
energy, the third proviso of section 10 of the Tennessee Valley 
Authority Act of 1933 (16 U.S.C. 831i) and the second and third 
provisos of section 12 of the Tennessee Valley Authority Act of 1933 
(16 U.S.C. 831k) shall not apply to future wholesale sales by the 
Tennessee Valley Authority in the Tennessee Valley Region, and the 
Tennessee Valley Authority shall not be authorized to regulate, by 
means of rules, contract provisions, resale rate schedules, contract 
termination rights, or any other method, any rates, terms, or 
conditions imposed on the resale of such electric energy by such 
municipality or cooperative organization.
    (b) Removal of PURPA Ratemaking Authority.--Section 3(17) of the 
Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2602(17)) is 
amended by striking ``, and in the case of an electric utility with 
respect to which the Tennessee Valley Authority has ratemaking 
authority, such term means the Tennessee Valley Authority''.
    (c) Authority of Governing Bodies of Municipalities and Cooperative 
Organizations.--Upon the election by any municipality or cooperative 
organization pursuant to subsection (a) of this section, any regulatory 
authority currently exercised by the Tennessee Valley Authority over 
any municipality or cooperative organization shall henceforth be 
exercised by the governing body of such municipality or cooperative 
organization, in accordance with the laws of the State in which it is 
organized.

SEC. 408. STRANDED COST RECOVERY.

    Within one year of the date of enactment of this Act, the 
Commission shall promulgate regulations with respect to recovery of 
stranded costs (as determined by the Commission) imposed on the 
Tennessee Valley Authority by any departing power customer and 
providing for recovery of the costs of any stranded transmission 
facilities (as determined by the Commission) imposed upon the Tennessee 
Valley Authority by any departing transmission customer. These 
regulations shall provide that customers that did not impose stranded 
costs upon the Tennessee Valley Authority are not obligated to pay such 
costs on behalf of other customers. The Commission's methodology for 
determining recovery of the Tennessee Valley Authority's stranded costs 
shall be consistent with the methodology used by the Commission in 
determining stranded cost recovery for public utilities. The Tennessee 
Valley Authority is authorized to recover such of its stranded costs as 
are approved by the Commission. The Commission may not impose a 
stranded cost recovery charge after September 30, 2007, unless the 
person against whom such charges are assessed agrees otherwise. Any 
stranded cost recovery charge assessed by the Tennessee Valley 
Authority on existing retail or wholesale customers shall be unbundled 
from the otherwise applicable retail or wholesale rate applicable to 
that customer and stated on the customer's bill as a separate charge.

 SEC. 409. REGIONAL TRANSMISSION PLANNING AGENCIES.

    The Tennessee Valley Authority is authorized to participate, under 
such terms and conditions as it deems appropriate, after conducting a 
public process to receive comment on the Tennessee Valley Authority's 
participation, in a Commission approved and regulated regional 
transmission planning agency that operates in the Tennessee Valley 
Region. The Tennessee Valley Authority shall not join any regional 
transmission planning agency which would require it, or the combined 
users of the Tennessee Valley Authority's transmission system, to pay a 
disproportionate share of the regional transmission planning agency's 
costs. The Tennessee Valley Authority shall not participate in any 
regional transmission planning agency that would result in undue cost 
shifts among customers, as determined by the Commission. This section 
shall not be construed to require the Tennessee Valley Authority's 
participation in any regional transmission planning agency.

 SEC. 410. APPLICATION OF ANTITRUST LAW.

    (a) In General.--The Tennessee Valley Authority shall be subject to 
the antitrust laws of the United States. For purposes of this section, 
the term ``antitrust laws'' has the meaning given it in subsection (a) 
of the first section of the Clayton Act (15 U.S.C. 12(a)), except that 
such term includes the Act of June 19, 1936 (15 U.S.C. 13 and 
following), commonly known as the Robinson-Patman Act, and section 5 of 
the Federal Trade Commission Act (15 U.S.C. 45) to the extent that such 
section 5 applies to unfair methods of competition.
    (b) Judicial Review.--Any person injured by violation of the 
antitrust laws by the Tennessee Valley Authority may bring a civil 
action against the Tennessee Valley Authority in Federal district court 
for injunctive relief or civil damages. No action under the antitrust 
laws may be maintained against the Tennessee Valley Authority, its 
officers, attorneys, employees, agents or representatives arising out 
of any activity that is obligated or directed to be performed under any 
Federal statute.

 SEC. 411. DISPOSITION OF SURPLUS LOCAL DISTRIBUTION FACILITIES.

    The Tennessee Valley Authority shall offer for sale, under such 
terms and conditions as established by the Commission through 
regulation or order, all the following local distribution facilities 
owned by the Tennessee Valley Authority:
            (1) Facilities used solely for delivery to a single 
        customer.
            (2) Facilities used solely for delivery to a group of 
        customers all of whom are willing to purchase such facilities 
        jointly.
Such customers may in any event elect that the Tennessee Valley 
Authority shall retain such existing local distribution facilities, in 
which event the cost of such facilities shall not be included in the 
Tennessee Valley Authority's transmission rates. In the case of any 
Tennessee Valley Authority facility used in local distribution used 
solely to serve any customer entitled to purchase electric energy 
directly from the Tennessee Valley Authority, such customer shall have 
priority in the purchase of such facility. The Tennessee Valley 
Authority shall not construct after the date of enactment of this Act 
facilities designed to operate at electric voltages below 35 kilovolts.

 SEC. 412. COMMISSION REGULATIONS.

    In addition to the regulations which the Commission is required to 
adopt pursuant to this subtitle, the Commission may adopt other 
regulations and issue such orders as it deems appropriate to implement 
the provisions of this subtitle.

 SEC. 413. SAVINGS PROVISION.

    (a) In General.--This subtitle shall be interpreted and implemented 
in a manner that does not adversely affect the obligation of the 
Tennessee Valley Authority to repay bonds issued by the Authority.
    (b) Tennessee Valley Authority Bonds Not Obligations of the United 
States.--Nothing in this subtitle shall affect section 15d(b) of the 
Tennessee Valley Authority Act of 1933 (16 U.S.C. 831n-4(b)), providing 
that bonds issued by the Tennessee Valley Authority shall not be 
obligations of, nor shall payment of the principal thereof or interest 
thereon be guaranteed by, the United States.

              Subtitle B--Bonneville Power Administration

SEC. 421. DEFINITIONS.

    Section 3 of the Federal Power Act is amended by adding the 
following new paragraphs after paragraph (27):
            ``(27) Bonneville administrator.--The term `Bonneville 
        Administrator' means the Administrator of the Bonneville Power 
        Administration;
            ``(28) Pacific northwest.--The term `Pacific Northwest' has 
        the meaning given that term in section 3(14) of the Pacific 
        Northwest Electric Power Planning and Conservation Act (16 
        U.S.C. 839a(14));
            ``(29) Bonneville transmission system.--The term 
        `Bonneville Transmission System' means transmission facilities 
        owned or leased by the United States, acting through the 
        Bonneville Administrator, and operated by the Bonneville 
        Administrator or another entity under section 202(h) or (i) of 
        this Act;''.

SEC. 422. APPLICATION OF FEDERAL POWER ACT.

    After September 30, 2001, sections 202(h) and (i), 203 (with 
respect to dispositions of transmission facilities), 205, 206, 208, and 
210 through 213 of the Federal Power Act and sections 301 through 304, 
306, 307 (except the last sentence of paragraph (c)), 308, 309, 313, 
and 317 of the Federal Power Act apply to transmission facilities and 
transmission of electric energy and the provision of necessary 
associated services over the Bonneville Transmission System, provided 
that--
            (1) any determination made under those sections as to 
        whether an action or matter is just, reasonable, not unduly 
        discriminatory or preferential shall be subject to--
                    (A) phasing in Commission-ordered changes in 
                transmission rates or charges that would cause 
                unreasonable cost shifts among users of the Bonneville 
                Transmission System if implemented at once;
                    (B) mitigating unreasonable adverse impacts on 
                remote transmission customers in the Pacific Northwest 
                that would otherwise result from Commission-ordered 
                changes in the historic treatment of costs to acquire 
                transmission to serve customers historically served by 
                General Transfer Agreements entered into between the 
                Bonneville Administrator and other transmission 
                providers;
                    (C) complying with requirements of other laws 
                applicable to the Bonneville Administrator;
                    (D) assuring the Bonneville Administrator's 
                transmission rates and charges are established 
                sufficient to--
                            (i) recover existing and future Federal 
                        investment in the Bonneville Transmission 
                        System over a reasonable number of years after 
                        first meeting all the Bonneville 
                        Administrator's other transmission costs and 
                        expenses; and
                            (ii) produce the revenues necessary to 
                        assure timely payment of all 
transmission related costs and expenses, including revenues to 
establish reserves;
                    (E) rules established by the Commission to--
                            (i) assure transmission access is provided 
                        over the Bonneville Transmission System for 
                        hydroelectric power that must be generated and 
                        transmitted at a particular time in order to 
                        reduce spill and levels of dissolved nitrogen 
                        gas harmful to fish; and
                            (ii) govern compensation to adversely 
                        affected transmission users when capacity is 
                        made available for transmission of 
                        hydroelectric power in those circumstances; and
                    (F) subsection 205(g) of the Federal Power Act; and
            (2) these sections shall not apply to--
                    (A) the Bonneville Administrator's activities other 
                than transmission of electric energy and provision of 
                necessary associated services over the facilities of 
                the Bonneville Transmission System; or
                    (B) a contract in effect on the date of enactment 
                of this section, except for rates which are adjustable 
                by the Administrator under the contract; a Treaty of 
                the United States; or a contract concerning the 
                physical delivery of energy and capacity entered into 
                by entities designated pursuant to such a Treaty.

SEC. 423. SURCHARGE ON TRANSMISSION RATES TO RECOVER OTHERWISE 
              NONRECOVERABLE COSTS.

    Section 205 of the Federal Power Act is amended by adding the 
following after subsection (f):
    ``(g)(1) Subject to the requirements of paragraph (2), the 
Bonneville Administrator shall propose and the Commission shall 
establish a mechanism pursuant to this section that enables the 
Administrator to place a surcharge on rates or charges for transmission 
services over the Bonneville Transmission System when necessary in 
order to recover power costs unable to be recovered through power 
revenues in time to meet the cost recovery requirements of section 7(a) 
of the Pacific Northwest Electric Power Planning and Conservation Act 
(16 U.S.C. 839e(a)(1)).
    ``(2) The transmission surcharge mechanism set forth in paragraph 
(1) shall--
            ``(A) recover not more than $600,000,000 in total and no 
        more than $100,000,000 in any fiscal year;
            ``(B) be available only between October 1, 2001, and 
        October 1, 2016;
            ``(C) be implemented by the Bonneville Administrator of 
        only when the Bonneville Administrator projects that available 
        financial reserves attributable to the power function will be 
        less than $150,000,000; and
            ``(D) to the fullest extent possible, be designed and 
        established to recover the costs from transmission users in a 
        manner that--
                    ``(i) minimizes any effect on transmission users' 
                choices among competing suppliers or products;
                    ``(ii) does not apply to use of the Bonneville 
                Transmission System for power sales outside the Pacific 
                Northwest; and
                    ``(iii) minimizes bypass of the Bonneville 
                Transmission System by transmission users seeking to 
                avoid the surcharge.
    ``(3) The Bonneville Administrator shall have sole discretion to 
determine whether to implement the cost recovery mechanism established 
by the Commission under paragraph (1). Before imposing the surcharge, 
the Bonneville Administrator shall conduct a public process in the 
Pacific Northwest to receive comment on implementation of the 
surcharge. As a part of that public process, the Bonneville 
Administrator shall make available information concerning the need for 
and amount of the surcharge. If the Bonneville Administrator decides to 
implement a surcharge, it shall take effect on the Bonneville 
Administrator's proposed effective date, but no earlier than 60 days 
following the Administrator's filing of the proposed surcharge to the 
Commission for approval.
    ``(4)(A) Within 120 days after the effective date of the surcharge, 
the Commission shall approve, reject, or modify the surcharge and 
communicate its decision to the Bonneville Administrator. In conducting 
its review, the Commission shall not consider the appropriateness of 
the cost recovery mechanism established by the Commission under 
paragraph (1).
    ``(B) If the Commission rejects or modifies the surcharge, the 
Commission may order the Bonneville Administrator to refund, with 
interest, the portion of the surcharge the Commission found not 
justified or the Commission may authorize the Administrator to recover 
amounts from customers who underpaid or did not pay the surcharge. If 
the Commission orders modification of the Bonneville Administrator's 
surcharge, such modified charge shall be effective on the date and for 
the time period specified by the Commission.
    ``(5) Any payment of power costs through application of 
transmission revenues collected by surcharge or otherwise shall be 
treated as a loan to the Bonneville Administrator's power function. The 
Bonneville Administrator shall repay the loan as soon as possible from 
power function revenues once the Bonneville Administrator is able to 
meet other power cost recovery and Treasury repayment obligations on an 
annual basis using power revenues and, to the extent practicable, 
refund such revenues to all transmission customers charged the 
surcharge. The borrowed revenues shall bear interest at a rate 
determined appropriate by the Commission.
    ``(6) For the recovery of costs relating to any generation or 
conservation resources financed by debt issued by a non-Federal party 
before October 1, 1998, and secured by an obligation of the Bonneville 
Administrator to make payments or net bill power and transmission 
service that cannot be recovered through power rates and charges and 
paid in accordance with the application of revenues and the priority of 
payments specified by section 13(b) of the Federal Columbia River 
Transmission System Act of 1974 (16 U.S.C. 838k(b)), the provisions of 
this section apply, except for the recovery limitations under paragraph 
(2)(A) and the time limits under paragraph (2)(B), but only to the 
extent such recovery would have been allowed under laws applicable to 
the Bonneville Administrator as of October 1, 1998. In reviewing this 
surcharge request, the Commission shall apply the standard of review 
applicable as of October 1, 1998.''.

SEC. 424. COMPLAINTS.

    Section 306 of the Federal Power Act is amended by inserting 
``agency or instrumentality of the United States,'' after ``person,'' 
in the first sentence.

SEC. 425. REVIEW OF COMMISSION ORDERS.

    Section 313 of the Federal Power Act is amended by inserting 
``agency or instrumentality of the United States,'' after ``person,'' 
in the first sentence in subsection (a).

SEC. 426. ANTITRUST LAWS APPLICATION TO BPA.

    (a) In General.--Subject to subsection (b), effective January 1, 
2003, the Bonneville Power Authority is subject to the antitrust laws 
of the United States with respect to the operation of its electric 
power system. For purposes of this section, the term `antitrust laws' 
has the meaning given it in subsection (a) of the first section of the 
Clayton Act (15 U.S.C. 12(a)), except that it includes the Act of June 
19, 1936 (15 U.S.C. 13 et. seq.), commonly known as the Robinson-Patman 
Act, and section 5 of the Federal Trade Commission Act (15 U.S.C. 45), 
to the extent that section 5 applies to unfair methods of competition.
    (b) Exception.--No damages, interest on damages, costs, or 
attorney's fees may be recovered under section 4, 4A, or 4C of the 
Clayton Act (15 U.S.C. 15, 15a, or 15c) from the Bonneville Power 
Authority.

SEC. 427. CONFORMING AMENDMENTS.

    (a) Section 201(f) of the Federal Power Act is amended by striking 
``No'' and inserting ``(1) Except as provided in section 202(h)-(i), 
no''.
    (b) Section 212(i) of the Federal Power Act (16 U.S.C. 824(i)) is 
repealed.
    (c) Section 6 of the Federal Columbia River Transmission System Act 
(16 U.S.C. 838(d)) is repealed.
    (d) Section 9 of the Federal Columbia River Transmission System Act 
(16 U.S.C. 838g) is amended to read as follows:

``SEC. 9. RATES AND CHARGES.

    ``Schedules of rates and charges for the sale, including 
dispositions to a Federal agency, of all electric power made available 
to the Administrator pursuant to section 8 of this Act or otherwise 
acquired shall be established--
            ``(1) with a view to encouraging the widest possible 
        diversified use of electric power at the lowest possible rates 
        to consumers consistent with sound business principles;
            ``(2) having regard to the recovery (upon the basis of the 
        application of such rate schedules to the capacity of the 
        electric facilities of the projects) of the cost of producing 
        such electric power, including the amortization of the capital 
        investment allocated to power over a reasonable period of years 
        and payments provided for in section 11(b)(9) of this Act; and
            ``(3) at levels to produce such additional power revenues 
        as may be required, in the aggregate with all other power 
        revenues of the Administrator, to pay when due the principal 
        of, premiums, discounts, and expenses in connection with the 
        issuance of and interest on all bonds issued and outstanding 
        pursuant to this Act for other than the construction, 
        acquisition, and replacement of the Federal transmission 
        system, and amounts required to establish and maintain reserve 
        and other funds and accounts established in connection 
        therewith.
Electric power rates under this section shall be established by the 
Administrator in accordance with section 7 of the Pacific Northwest 
Electric Power Planning and Conservation Act.''.
    (e) Section 10 of the Federal Columbia River Transmission Act (16 
U.S.C 838h) is repealed.
    (f) Section 6 of the Pacific Northwest Regional Preference Act (16 
U.S.C. 837e) is amended by striking ``Federal energy or'' in the first 
sentence and by striking the second sentence.
    (g) Section 7(a)(1) of the Pacific Northwest Electric Power 
Planning and Conservation Act (16 U.S.C. 839e(a)(1)) is amended to read 
as follows:
    ``(1) The Administrator shall establish, and periodically review 
and revise, rates for the sale and disposition of electric power and 
shall periodically review and, if necessary, propose revisions to rates 
for the transmission of electric power. Rates for the sale and 
disposition of electric power shall be established and, as appropriate, 
revised to recover, in accordance with sound business principles, the 
costs associated with the acquisition and conservation of electric 
power, including the amortization of the Federal investment allocable 
to electric power rates in the Federal Columbia River Power system 
(including irrigation electric-power-related costs required to be 
repaid out of electric power revenues) over a reasonable period of 
years and the other costs and expenses incurred by the Administrator 
pursuant to this Act and other provisions of law. Rates for the sale 
and disposition of electric power shall be established in accordance 
with section 9 of the Federal Columbia River Transmission System Act 
(16 U.S.C. 838g), section 5 of the Flood Control Act of 1944 (16 U.S.C. 
825s), and this Act.''.
    (h) Section 7(a)(2) of the Pacific Northwest Electric Power 
Planning and Conservation Act (16 U.S.C. 839e(a)(2)) is amended by--
            (1) striking ``Rates'' and inserting ``Power rates'';
            (2) inserting ``and'' after the comma in subparagraph (A);
            (3) striking ``, and'' and inserting a period at the end of 
        subparagraph B; and
            (4) striking subparagraph (C).
    (i) Section 7(i) of the Pacific Northwest Electric Power Planning 
and Conservation Act (16 U.S.C. 839(i)) is amended by inserting 
``power'' immediately after ``establishing'' in the first sentence.
    (j) Section 9(d) of the Pacific Northwest Electric Power Planning 
and Conservation Act (16 U.S.C. 839f(d)) is amended by striking 
``transmission access,'' and inserting ``power'' immediately before 
``services'' in the second sentence.
    (k) Section 9(i)(3) of the Pacific Northwest Electric Power 
Planning and Conservation Act (16 U.S.C. 839f(i)(3)) is amended in the 
first sentence--
            (1) by inserting ``power'' before ``services'' each place 
        such term appears; and
            (2) by striking ``transmission, storage, and'' and 
        inserting ``storage and''.
    (l) Section 2(e) of the Act of August 20, 1937 (chapter 720; 50 
Stat. 731) (commonly known as the Bonneville Project Act of 1937) is 
amended by striking the colon and and all that follows and inserting a 
period.

           Subtitle C--Other Power Marketing Administrations

SEC. 431. DEFINITIONS.

    For purposes of this subtitle:
            (1) The term ``Administrator'' means the administrator of a 
        Federal power marketing administration.
            (2) The term ``Commission'' means the Federal Energy 
        Regulatory Commission.
            (3) The term ``Federal power marketing administrations'' 
        means the Western Area Power Administration, Southwestern Power 
        Administration, and Southeastern Power Administration.
            (4) The term ``power generating agencies'' means the Bureau 
        of Reclamation, the Army Corps of Engineers, and the 
        International Boundary and Water Commission.
            (5) The term ``public utility'' means a public utility as 
        defined in section 201(e)(1) the Federal Power Act.
            (6) The term ``Secretary'' means the Secretary of Energy.

SEC. 432. ACCOUNTING.

    Not later than 6 months after the date of enactment of this Act, 
the Secretary of Energy shall promulgate rules containing each of the 
following:
            (1) Accounting principles and requirements.--Procedures to 
        ensure that the Federal power marketing administrations utilize 
        the same accounting principles and requirements as are 
        applicable to public utilities pursuant to Parts II and III of 
        the Federal Power Act (16 U.S.C. 792 and following) with 
        respect to accounting for revenue, expenses, investments, and 
        depreciation.
            (2) Compliance.--Procedures for the filing of complaints 
        with the Secretary of Energy by interested persons seeking to 
        ensure compliance with the procedures of this section.
            (3) Administrative reconciliation.--Procedures to insure 
        that the Bureau of Reclamation, the United States Army Crops of 
        Engineers, and the Administrators of the Federal power 
        marketing administrations maintain a consistent set of books 
        and records for purposes of repayment obligations.

SEC. 433. REGIONAL TRANSMISSION PLANNING AGENCIES.

    Each Federal power marketing administration is authorized to 
participate, under such terms and conditions as it deems appropriate, 
after conducting a public process to receive comment on each Federal 
power marketing administration's participation, in a Commission 
approved and regulated regional transmission planning agency, except 
that--
            (1) a Federal power marketing administration shall not join 
        any regional transmission planning agency which would require 
        it, or the combined users of its transmission system, to pay a 
        disproportionate share of the regional transmission planning 
        agency's costs, and
            (2) a Federal power marketing administration shall not 
        participate in any regional transmission planning agency that 
        would result in undue cost shifts among its customers, as 
        determined by the Commission.
This section shall not be construed to require the participation of the 
Federal power marketing administrations in regional transmission 
planning agencies.

SEC. 434. APPLICATION OF ANTITRUST LAW.

    (a) In General.--The Federal power marketing administrations shall 
be subject to the antitrust laws of the United States. For purposes of 
this section, the term ``antitrust laws'' has the meaning given it in 
subsection (a) of the first section of the Clayton Act (15 U.S.C. 
12(a)), except that such term includes the Act of June 19, 1936 (15 
U.S.C. 13 and following), commonly known as the Robinson-Patman Act, 
and section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to the 
extent that such section 5 applies to unfair methods of competition.
    (b) Judicial Review.--Any person injured by violation of the 
antitrust laws by any of the Federal power marketing administrations 
may bring a civil action against the agency in Federal district court 
for injunctive relief, but neither the Federal power marketing 
administrations nor their officers, attorneys, employees, agents or 
representatives shall be held liable for civil damages or attorney's 
fees. No action under the antitrust laws may be maintained against any 
of the Federal power marketing administrations, their officers, 
attorneys, employees, agents or representatives arising out of any 
activity that is obligated or directed to be performed under any 
Federal statute.

                       TITLE V--RENEWABLE ENERGY

SEC. 501. RENEWABLE PORTFOLIO STANDARD.

    (a) Standard.--Title II of the Public Utility Regulatory Polices 
Act of 1978 is amended by adding after section 214 the following new 
section:

``SEC. 215. FEDERAL RENEWABLE PORTFOLIO STANDARD.

    ``(a) Effective Date.--The Administrator of the Energy Information 
Administration in the Department of Energy shall publish a notice on or 
before January 1, 2005, specifying the percentage of total electric 
energy generation in the United States that the Administrator estimates 
to be supplied by renewable energy during the calendar year 2004. If 
such percentage is less than 3 percent, this section shall take effect 
on January 1, 2005.
    ``(b) Minimum Renewable Generation Requirement.--(1) For each 
calendar year beginning after the effective date of this section, a 
retail electric supplier shall submit to the Secretary of Energy 
(referred to in this section as the `Secretary') Renewable Energy 
Credits in an amount equal to 3 percent of the total electric energy 
sold by the retail electric supplier to electric consumers in the 
calendar year. The retail electric supplier shall make this submission 
before April 1 of the following calendar year.
    ``(2) For purposes of this section, a `renewable energy' resource 
means solar energy, wind, geothermal, or biomass.
    ``(3) This section does not preclude a State from requiring 
additional renewable energy generation in that State.
    ``(c) Submission of Credits.--A retail electric supplier may 
satisfy the requirements of subsection (a) through the submission of--
            ``(1) Renewable Energy Credits issued under subsection (d) 
        for renewable energy generated by the retail electric supplier 
        in the calendar year for which Credits are being submitted or 
        any previous calendar year;
            ``(2) Renewable Energy Credits issued under subsection (d) 
        to any renewable energy generator for renewable energy 
        generated in the calendar year for which Credits are being 
        submitted or a previous calendar year and acquired by the 
        retail electric supplier; or
            ``(3) any combination of Credits under paragraphs (1) and 
        (2).
    ``(d) Issuance of Credits.--(1) The Secretary shall establish a 
program to issue, monitor the sale or exchange of, and track Renewable 
Energy Credits.
    ``(2) Under the program, an entity that generates electric energy 
through the use of a renewable energy resource may apply to the 
Secretary for the issuance of Renewable Energy Credits. The application 
shall indicate--
            ``(A) the type of renewable energy resource used to produce 
        the electricity;
            ``(B) the State in which the electric energy was produced; 
        and
            ``(C) any other information the Secretary determines 
        appropriate.
    ``(3)(A) Except as provided in subparagraph (B), the Secretary 
shall issue to an entity 1 Renewable Energy Credit for each kilowatt-
hour of electric energy the entity generates through the use of a 
renewable energy resource in any State in 2005 and any succeeding year.
    ``(B) The Secretary shall issue 2 Renewable Energy Credits for each 
kilowatt-hour of electric energy generated through the use of a 
renewable energy resource in any State in 2005 and any succeeding year, 
if the generating facility is located on Indian land. For purposes of 
this paragraph, renewable energy generated by biomass cofired with 
other fuels is eligible for 2 credits only if the biomass was grown on 
the land eligible under this subparagraph.
    ``(C) To be eligible for a Renewable Energy Credit, the unit of 
electricity generated through the use of a renewable energy resource 
may be sold or may be used by the generator. If both a renewable energy 
resource and a nonrenewable energy resource are used to generate the 
electric energy, the Secretary shall issue credits based on the 
proportion of the renewable energy resource used. The Secretary shall 
identify Renewable Energy Credits by type of generation and by the 
State in which the generating facility is located.
    ``(4) In order to receive a Renewable Energy Credit, the recipient 
of a Renewable Energy Credit shall pay a fee, calculated by the 
Secretary, in an amount that is equal to the administrative costs of 
issuing, recording, monitoring the sale or exchange of, and tracking 
the Credit, or does not exceed 5 percent of the dollar value of the 
Credit, whichever is lower. The Secretary shall retain the fee and use 
it to pay these administrative costs.
    ``(5) When a generator sells electric energy generated through the 
use of a renewable energy resource to a retail electric supplier under 
a contract subject to section 210 of this Act, the retail electric 
supplier is treated as the generator of the electric energy for the 
purposes of this section for the duration of the contract.
    ``(6) The Secretary shall disqualify an otherwise eligible 
renewable energy generator from receiving a Renewable Energy Credit if 
the generator has elected to participate in net metering under section 
216.
    ``(e) Sale or Exchange.--A Renewable Energy Credit may be sold or 
exchanged by the entity to which it was issued or by any other entity 
that acquires the Credit. A Renewable Energy Credit for any year that 
is not used to satisfy the minimum renewable generation requirement of 
subsection (a) for that year may be carried forward for use in another 
year.
    ``(f) Renewable Energy Credit Cost Cap.--Beginning on the effective 
date of this section, the Secretary shall offer Renewable Energy 
Credits for sale. The Secretary shall charge 1.5 cents for each 
Renewable Energy Credit sold during calendar year 2005, and on January 
1 of each following year, the Secretary shall adjust for inflation, 
based on the Consumer Price Index, the price charged per Credit for 
that calendar year. The Secretary shall deposit in a separate account 
the amount received from a sale under this subsection. Amounts in the 
separate account shall be available, without further appropriation, to 
the Secretary to be used for purposes of providing assistance for 
research and development of cleaner burning fuels and renewable energy.
    ``(g) Enforcement.--The Secretary may bring an action in the 
appropriate United States district court to impose a civil penalty on a 
retail electric supplier that does not comply with subsection (b). A 
retail electric supplier that does not submit the required number of 
Renewable Energy Credits under subsection (b) is subject to a civil 
penalty of not more than 3 times the value of the Renewable Energy 
Credits not submitted. For purposes of this subsection, the value of a 
Renewable Energy Credit is the price of a Credit determined under 
subsection (f) for the year the Credits were not submitted.
    ``(h) Information Collection.--The Secretary may collect the 
information necessary to verify and audit--
            ``(1) the annual electric energy generation and renewable 
        energy generation of any entity applying for Renewable Energy 
        Credits under this section;
            ``(2) the validity of Renewable Energy Credits submitted by 
        a retail electric supplier to the Secretary; and
            ``(3) the quantity of electricity sales of all retail 
        electric suppliers.
    ``(i) Sunset.--This section expires December 31, 2015.''.
    (b) Definitions.--Section 3 of the Public Utility Regulatory 
Polices Act of 1978 is amended by adding after paragraph (24) the 
following new paragraph:
            ``(25) The term `retail electric supplier' means a person, 
        State agency, or Federal agency that sells electric energy to 
        an electric consumer.
            ``(26) The term `Indian land' means--
                    ``(A) any land within the limits of any Indian 
                reservation, pueblo, or rancheria;
                    ``(B) any land not within the limits of any Indian 
                reservation, pueblo, or rancheria title to which was on 
                the date of passage of the Electric Consumers' Power to 
                Choose Act of 1999 either held in trust by the United 
                States for the benefit of any Indian tribe or 
                individual or held by any Indian tribe or individual 
                subject to restriction by the United States against 
                alienation;
                    ``(C) any dependent Indian community; and
                    ``(D) any land conveyed to any Alaska Native 
                corporation under the Alaska Native Claims Settlement 
                Act.
            ``(27) The term `Indian tribe' means any Indian tribe, 
        band, group, or nation, including Alaska Indians, Aleuts, or 
        Eskimos, or any Alaskan Native Village of the United States, 
        which is considered an eligible recipient under the Indian 
        Self-Determination and Education Assistance Act (Public Law 93-
        638) or was considered an eligible recipient under chapter 67 
        of title 31, United States Code, prior to the repeal of such 
        chapter.''.
    (c) Table of Contents.--The table of contents for title II of the 
Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 and 
following) is amended by adding the following at the end thereof:

        ``Sec. 215. Federal renewable portfolio standard.''.

SEC. 502. NET METERING.

    (a) Amendment of PURPA.--The Public Utility Regulatory Polices Act 
of 1978 is amended by adding the following new section after section 
215, as added by section 501 of this Act:

``SEC. 216. NET METERING FOR RENEWABLE ENERGY.

    ``(a) Definitions.--For purposes of this section--
            ``(1) the term `eligible on-site generating facility' means 
        a facility on the site of an electric consumer with a peak 
        generating capacity of 20 kilowatts or less that is fueled 
        solely by a renewable energy resource.
            ``(2) The term `renewable energy resource' means solar 
        energy, wind, geothermal, or biomass.
            ``(3) The term `net metering service' means service to an 
        electric consumer under which electricity generated by that 
        consumer from an eligible on-site generating facility and 
        delivered to the distribution system through the same meter 
        through which purchased electricity is received may be used to 
        offset electricity provided by the retail electric supplier to 
        the electric consumer during the applicable billing period so 
        that an electric consumer is billed only for the net 
        electricity consumed during the billing period, but in no event 
        shall the net be less than zero during the applicable billing 
        period.
    ``(b) Requirement To Provide Net Metering Service.--Each retail 
electric supplier shall make available upon request net metering 
service to any retail electric consumer that the supplier currently 
serves or solicits for service.
    ``(c) State Authority.--This section does not preclude a State from 
imposing additional requirements consistent with the requirements in 
this section, including the imposition of a cap limiting the amount of 
net metering available in the State. Nothing in this Act or any other 
Federal law preempts or otherwise affects authority under State law to 
require a retail electric supplier to make available net metering 
service to a retail electric consumer which the supplier serves or 
offers to serve.''.
    (c) Table of Contents.--The table of contents for title II of the 
Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 and 
following) is amended by adding the following at the end thereof:

        ``Sec. 216. Net metering for renewable energy.''.

       TITLE VI--PROVISIONS RELATING TO THE INTERNAL REVENUE CODE

SEC. 601. 5-YEAR EXTENSION OF CREDIT FOR PRODUCING ELECTRICITY FROM 
              RENEWABLE RESOURCES.

    Subsection (c) of section 45 of the Internal Revenue Code of 1986 
(relating to credit for electricity produced from certain renewable 
resources) is amended to read as follows:
    ``(c) Definitions.--For purposes of this subsection--
            ``(1) Qualified energy resources.--The term `qualified 
        energy resources' means--
                    ``(A) wind,
                    ``(B) solar power,
                    ``(C) geothermal power, and
                    ``(D) biomass.
            ``(2) Biomass.--The term `biomass' means closed-loop 
        biomass and forest and agricultural biomass.
            ``(3) Closed-loop biomass.--The term `closed-loop biomass' 
        means any organic material from a plant which is planted 
        exclusively for purposes of being used at a qualified facility 
        to produce electricity.
            ``(4) Forest and agricultural biomass.--The term `forest 
        and agricultural biomass' means any solid, nonhazardous, 
        cellulosic waste material, that is segregated from other waste 
        materials, and that is derived from the following forest-
        related resources: mill residues, pre-commercial thinnings, and 
        slash and brush, but not including old growth timber, waste 
        pallets, crates, dunnage, unsegregated municipal solid waste 
        (garbage), landscape or right-of-way tree trimmings, and 
        biomass derived from agriculture sources, including orchard 
        tree crops, vineyard grain, legumes, sugar, and other crop-by-
        products or residues.
            ``(5) Qualified facility.--The term `qualified facility' 
        means any facility owned by the taxpayer which is originally 
        placed in service--
                    ``(A) in the case of a facility using wind to 
                produce electricity, after December 31, 1993, and 
                before July 1, 2015,
                    ``(B) in the case of a facility using solar power 
                or geothermal power to produce electricity, after the 
                date of the enactment of this subparagraph and before 
                July 1, 2015, and
                    ``(C) in the case of a facility using biomass to 
                produce electricity, after December 31, 1992, and 
                before July 1, 2015.''.

SEC. 602. CREDIT FOR ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to nonrefundable 
personal credits) is amended by inserting after section 25A the 
following new section:

``SEC. 25B. ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to 20 percent of the amount paid 
or incurred by the taxpayer for qualified energy efficiency 
improvements installed during such taxable year.
    ``(b) Limitations.--
            ``(1) Maximum credit.--The credit allowed by this section 
        with respect to a dwelling shall not exceed $2,000.
            ``(2) Prior credit amounts for taxpayer on same dwelling 
        taken into account.--If a credit was allowed to the taxpayer 
        under subsection (a) with respect to a dwelling in 1 or more 
        prior taxable years, the amount of the credit otherwise 
        allowable for the taxable year with respect to that dwelling 
        shall not exceed the amount of $2,000 reduced by the sum of the 
        credits allowed under subsection (a) to the taxpayer with 
        respect to the dwelling for all prior taxable years.
    ``(c) Carryforward of Unused Credit.--If the credit allowable under 
subsection (a) exceeds the limitation imposed by section 26(a) for such 
taxable year reduced by the sum of the credits allowable under subpart 
A of part IV of subchapter A (other than this section), such excess 
shall be carried to the succeeding taxable year and added to the credit 
allowable under subsection (a) for such taxable year.
*    ``(d) Qualified Energy Efficiency Improvements.--For purposes of 
this section, the term `qualified energy efficiency improvements' means 
any energy efficient building envelope component, and any energy 
efficient heating, cooling, or water heating appliance, the 
installation of which, by itself or in combination with other such 
components or appliances, is certified to improve the annual energy 
performance of the existing home by at least 30 percent, if--
            ``(1) such component or appliance is installed in or on a 
        dwelling--
                    ``(A) located in the United States, and
                    ``(B) owned and used by the taxpayer as the 
                taxpayer's principal residence (within the meaning of 
                section 121),
            ``(2) the original use of such component or appliance 
        commences with the taxpayer, and
            ``(3) such component or appliance reasonably can be 
        expected to remain in use for at least 5 years.
Such certification shall be made by the contractor who installed such 
improvements, a local building regulatory authority, or a qualified 
energy consultant (such as a utility or an accredited home energy 
rating system provider).
    ``(e) Special Rules.--
            ``(1) Tenant-stockholder in cooperative housing 
        corporation.--In the case of an individual who is a tenant-
        stockholder (as defined in section 216) in a cooperative 
        housing corporation (as defined in such section), such 
        individual shall be treated as having paid his tenant-
        stockholder's proportionate share (as defined in section 
        216(b)(3)) of the cost of qualified energy efficiency 
        improvements made by such corporation.
            ``(2) Condominiums.--
                    ``(A) In general.--In the case of an individual who 
                is a member of a condominium management association 
                with respect to a condominium which he owns, such 
                individual shall be treated as having paid his 
                proportionate share of the cost of qualified energy 
                efficiency improvements made by such association.
                    ``(B) Condominium management association.--For 
                purposes of this paragraph, the term `condominium 
                management association' means an organization which 
                meets the requirements of paragraph (1) of section 
                528(c) (other than subparagraph (E) thereof) with 
                respect to a condominium project substantially all of 
                the units of which are used as residences.
    ``(f) Basis Adjustment.--For purposes of this subtitle, if a credit 
is allowed under this section for any expenditure with respect to any 
property, the increase in the basis of such property which would (but 
for this subsection) result from such expenditure shall be reduced by 
the amount of the credit so allowed.
    ``(g) Termination.--Subsection (a) shall apply to qualified energy 
efficiency improvements installed during the period beginning on 
January 1, 1999, and ending on December 31, 2003.''.
    (b) Conforming Amendments.--
            (1) Subsection (c) of section 23 of such Code is amended by 
        inserting ``, section 25B, and section 1400C'' after ''other 
        than this section''.
            (2) Subparagraph (C) of section 25(e)(1) of such Code is 
        amended by striking ``section 23'' and inserting ``sections 23, 
        25B, and 1400C''.
            (3) Subsection (d) of section 1400C of such Code is amended 
        by inserting ``and section 25B'' after ``other than this 
        section''.
            (4) Subsection (a) of section 1016 of such Code is amended 
        by striking ``and'' at the end of paragraph (26), by striking 
        the period at the end of paragraph (27) and inserting ``; 
        and'', and by adding at the end the following new paragraph:
            ``(28) to the extent provided in section 25B(f), in the 
        case of amounts with respect to which a credit has been allowed 
        under section 25B.''.
            (5) The table of sections for subpart A of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 25A the following new item:

                              ``Sec. 25B. Energy efficiency 
                                        improvements to existing 
                                        homes.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 1998.

SEC. 603. BUSINESS CREDIT FOR CONSTRUCTION OF NEW ENERGY EFFICIENT 
              HOME.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by inserting after section 45C the following new 
section:

``SEC. 45D. NEW ENERGY EFFICIENT HOME CREDIT.

    ``(a) In General.--For purposes of section 38, in the case of an 
eligible contractor, the credit determined under this section for the 
taxable year is an amount equal to the aggregate adjusted bases of all 
energy efficient property installed in a qualified new energy efficient 
home during construction of such home.
    ``(b) Limitations.--
            ``(1) Maximum credit.--
                    ``(A) In general.--The credit allowed by this 
                section with respect to a dwelling shall not exceed 
                $2,000.
                    ``(B) Prior credit amounts on same dwelling taken 
                into account.--If a credit was allowed under subsection 
                (a) with respect to a dwelling in 1 or more prior 
                taxable years, the amount of the credit otherwise 
                allowable for the taxable year with respect to that 
                dwelling shall not exceed the amount of $2,000 reduced 
                by the sum of the credits allowed under subsection (a) 
                with respect to the dwelling for all prior taxable 
                years.
            ``(2) Coordination with rehabilitation and energy 
        credits.--For purposes of this section--
                    ``(A) the basis of any property referred to in 
                subsection (a) shall be reduced by that portion of the 
                basis of any property which is attributable to 
                qualified rehabilitation expenditures (as defined in 
                section 47(c)(2)) or to the energy percentage of energy 
                property (as determined under section 48(a)), and
                    ``(B) expenditures taken into account under either 
                section 47 or 48(a) shall not be taken into account 
                under this section.
    ``(c) Qualified New Energy Efficient Home.--
            ``(1) In general.--Property is a qualified new energy 
        efficient home if--
                    ``(A) the original use of such property commences 
                with the taxpayer and is, at the time of such use, the 
                principal residence of the taxpayer, and
                    ``(B) such property--
                            ``(i) reduces calculated environmental 
                        emissions for heating and cooling by 50 percent 
                        compared to a reference house that complies 
                        with minimum standard practice, as determined 
                        according to the requirements specified under 
                        paragraph (2)(B), and
                            ``(ii) is certified before such use 
                        commences as meeting the requirements of clause 
                        (i).
            ``(2) Certification.--
                    ``(A) In general.--The Secretary of Energy shall 
                establish requirements for the certification under 
                paragraph (1)(B)(ii) after examining the requirements 
                for energy consultants and home energy ratings 
                providers specified by the Mortgage Industry National 
                Accreditation Procedures for Home Energy Rating 
                Systems. Any certification under such paragraph shall 
                be conveyed to the taxpayer seeking the credit under 
                this section.
                    ``(B) Methods for demonstrating compliance.--(i) 
                Compliance with the requirements of paragraph (1)(B)(i) 
                shall be demonstrated by either the component method 
                described in clause (ii) or the performance method 
                described in clause (iii).
                    ``(ii) The component method is a method in which 
                all of the components of a home comply with the 
                additional requirements established by the Secretary of 
                Energy, resulting in achievement of results equivalent 
                to the results of using the performance method.
                    ``(iii) The performance method is a method in which 
                compliance with the requirements of paragraph (1)(B)(i) 
                is demonstrated by the use of computer software that 
                meets specifications promulgated in regulations by the 
                Secretary of Energy in consultation with the Secretary 
                of Treasury. Such regulations shall contain procedures 
                and methods for calculating emissions and emissions 
                reductions and for reporting the results, and shall be 
                based on the 1998 California residential ACM manual, 
                except that the calculational procedures shall allow a 
home to qualify for the tax credit under this section regardless of 
whether the home uses a gas or oil furnace or boiler, or an electric 
heat pump. The regulations shall require that the software allow for 
the printing of IRS forms needed for the tax credit under this section, 
and explanations for the taxpayer of the energy efficiency features 
that were used to comply with the requirements for the tax credit under 
this section. The Secretary of Energy shall approve software 
submissions that comply with the calculational requirements of the 
regulations.
                    ``(C) Persons making certification.--The 
                certification under paragraph (1)(B)(ii) shall be made 
                to the Secretary of Energy by an individual qualified 
                to determine compliance with such paragraph. 
                Individuals qualified to determine such compliance 
                shall be only those individuals who are recognized by 
                an organization certified by the Secretary of Energy 
                for such purposes.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Eligible contractor.--The term `eligible contractor' 
        means the person who constructed the new energy efficient home.
            ``(2) Energy efficient property.--The term `energy 
        efficient property' means any energy efficient building 
        envelope component, and any energy efficient heating, cooling, 
        or water heating appliance.
            ``(3) Principal residence.--The term `principal residence' 
        has the same meaning as when used in section 121, except that 
        the period for which a building is treated as the principal 
        residence of the taxpayer shall also include the 60-day period 
        ending on the 1st day on which it would (but for this 
        paragraph) first be treated as his principal residence.
    ``(e) Basis Adjustment.--For purposes of this subtitle, if a credit 
is allowed under this section for any expenditure with respect to any 
property, the increase in the basis of such property which would (but 
for this subsection) result from such expenditure shall be reduced by 
the amount of the credit so allowed.
    ``(f) Termination.--Subsection (a) shall apply to dwellings 
purchased during the period beginning on January 1, 1999, and ending on 
December 31, 2003.''.
    (b) Credit Made Part of General Business Credit.--Subsection (b) of 
section 38 of such Code (relating to current year business credit) is 
amended by striking ``plus'' at the end of paragraph (11), by striking 
the period at the end of paragraph (12) and inserting ``, plus'', and 
by adding at the end thereof the following new paragraph:
            ``(13) the new energy efficient home credit determined 
        under section 45D.''.
    (c) Denial of Double Benefit.--Section 280C of such Code (relating 
to certain expenses for which credits are allowable) is amended by 
adding at the end thereof the following new subsection:
    ``(d) New Energy Efficient Home Expenses.--No deduction shall be 
allowed for that portion of expenses for a new energy efficient home 
otherwise allowable as a deduction for the taxable year which is equal 
to the amount of the credit determined for such taxable year under 
section 45D.''.
    (d) Credit Allowed Against Regular and Minimum Tax.--
            (1) In general.--Subsection (c) of section 38 of such Code 
        (relating to limitation based on amount of tax) is amended by 
        redesignating paragraph (3) as paragraph (4) and by inserting 
        after paragraph (2) the following new paragraph:
            ``(3) Special rules for new energy efficient home credit.--
                    ``(A) In general.--In the case of the new energy 
                efficient home credit--
                            ``(i) this section and section 39 shall be 
                        applied separately with respect to the credit, 
                        and
                            ``(ii) in applying paragraph (1) to the 
                        credit--
                                    ``(I) subparagraph (A) thereof 
                                shall not apply, and
                                    ``(II) the limitation under 
                                paragraph (1) (as modified by subclause 
                                (I)) shall be reduced by the credit 
                                allowed under subsection (a) for the 
                                taxable year (other than the new energy 
                                efficient home credit).
                    ``(B) New energy efficient home credit.--For 
                purposes of this subsection, the term `new energy 
                efficient home credit' means the credit allowable under 
                subsection (a) by reason of section 45D.''.
            (2) Conforming amendment.--Subclause (II) of section 
        38(c)(2)(A)(ii) of such Code is amended by inserting ``or the 
        new energy efficient home credit'' after ``employment credit''.
    (e) Limitation on Carryback.--Subsection (d) of section 39 of such 
Code is amended by adding at the end the following new paragraph:
            ``(9) No carryback of new energy efficient home credit 
        before effective date.--No portion of the unused business 
        credit for any taxable year which is attributable to the credit 
        determined under section 45D may be carried back to any taxable 
        year ending before the date of the enactment of section 45D.''.
    (f) Deduction for Certain Unused Business Credits.--Subsection (c) 
of section 196 of such Code is amended by striking ``and'' at the end 
of paragraph (7), by striking the period at the end of paragraph (8) 
and inserting ``, and'', and by adding after paragraph (8) the 
following new paragraph:
            ``(9) the new energy efficient home credit determined under 
        section 45D.''.
    (g) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by 
inserting after the item relating to section 45C the following new 
item:

                              ``Sec. 45D. New energy efficient home 
                                        credit.''.
    (h) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 1998.

SEC. 604. TAX CREDIT FOR COMBINED HEAT AND POWER SYSTEM PROPERTY.

    (a) In General.--Subpart E of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 48 the following new section:

``SEC. 48A. ENERGY CREDIT.

    ``(a) In General.--For purposes of section 46, the energy credit 
for any taxable year is the amount equal to the energy percentage of 
the basis of each energy property placed in service during such taxable 
year.
    ``(b) Energy Percentage.--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, the energy percentage is 10 percent.
            ``(2) Combined heat and power property.--The energy 
        percentage is 8 percent in the case of combined heat and power 
        property.
            ``(3) Period for which credit is allowed for combined heat 
        and power property.--In the case of combined heat and power 
        property, the credit under subsection (a) shall be allowed only 
        for the period beginning on January 1, 2000, and ending on 
        December 31, 2002.
            ``(4) Transition rules.--Rules similar to the rules of 
        section 48(m) (as in effect on the day before the date of the 
        enactment of the Revenue Reconciliation Act of 1990) shall 
        apply for purposes of this subsection.
    ``(c) Energy Property Defined.--
            ``(1) In general.--For purposes of this subpart, the term 
        `energy property' means any property--
                    ``(A) which is--
                            ``(i) solar energy property,
                            ``(ii) geothermal energy property, or
                            ``(iii) combined heat and power system 
                        property,
                    ``(B)(i) the construction, reconstruction, or 
                erection of which is completed by the taxpayer, or
                    ``(ii) which is acquired by the taxpayer if the 
                original use of such property commences with the 
                taxpayer, or
                    ``(iii) with respect to which depreciation (or 
                amortization in lieu of depreciation) is allowable, and
                    ``(C) which meets--
                            ``(i) the performance and quality standards 
                        (if any), and the certification requirements 
                        (if any), which have been prescribed by the 
                        Secretary by regulations (after consultation 
                        with the Secretary of Energy or the EPA 
                        Administrator, as appropriate), and
                            ``(ii) are in effect at the time the 
                        property is placed in service.
            ``(2) Exception.--Such term shall not include any property 
        which is public utility property (as defined in section 
        46(f)(5) as in effect on the day before the date of the 
        enactment of the Revenue Reconciliation Act of 1990). The 
        preceding sentence shall not apply to combined heat and power 
        system property.
    ``(d) Definitions Relating to Types of Energy Property.--For 
purposes of this section--
            ``(1) Solar energy property.--The term `solar energy 
        property' means equipment which uses solar energy--
                    ``(A) to generate electricity,
                    ``(B) to heat or cool (or provide hot water for use 
                in) a structure, or
                    ``(C) to provide solar process heat.
            ``(2) Geothermal energy property.--The term `geothermal 
        energy property' means equipment used to produce, distribute, 
        or use energy derived from a geothermal deposit (within the 
        meaning of section 613(e)(2)), but only, in the case of 
        electricity generated by geothermal power, up to (but not 
        including) the electrical transmission stage.
            ``(3) Combined heat and power system property.--
                    ``(A) In general.--The term `combined heat and 
                power system property' means property comprising a 
                system--
                            ``(i) which uses the same energy source for 
                        the simultaneous or sequential generation of 
                        electrical power, mechanical shaft power, or 
                        both, in combination with the generation of 
                        steam or other forms of useful thermal energy 
                        (including heating and cooling applications),
                            ``(ii) which has an electrical capacity of 
                        more than 50 kilowatts or a mechanical energy 
                        capacity of more than 67 horsepower or an 
                        equivalent combination of electrical and 
                        mechanical energy capacities,
                            ``(iii) which produces--
                                    ``(I) at least 20 percent of its 
                                total useful energy in the form of 
                                thermal energy, and
                                    ``(II) at least 20 percent of its 
                                total useful energy in the form of 
                                electrical or mechanical power (or a 
                                combination thereof), and
                            ``(iv) the energy efficiency percentage of 
                        which exceeds 60 percent.
                    ``(B) Special rules.--
                            ``(i) Accounting rule.--If the combined 
                        heat and power system property is public 
                        utility property (as defined in section 
                        46(f)(5) as in effect on the day before the 
                        date of the enactment of the Revenue 
                        Reconciliation Act of 1990), the taxpayer may 
                        claim the credit under subsection (a)(1) only 
                        if, with respect to such property, the taxpayer 
                        uses a normalization method of accounting.
                            ``(ii) Depreciation.--No credit shall be 
                        allowed for any combined heat and power system 
                        property unless the taxpayer elects to treat 
                        such property for purposes of section 168 as 
                        having a class life of not less than 22 years.
    ``(e) Special Rules.--For purposes of this section--
            ``(1) Special rule for property financed by subsidized 
        energy financing or industrial development bonds.--
                    ``(A) Reduction of basis.--For purposes of applying 
                the energy percentage to any property, if such property 
                is financed in whole or in part by --
                            ``(i) subsidized energy financing, or
                            ``(ii) the proceeds of a private activity 
                        bond (within the meaning of section 141) the 
                        interest on which is exempt from tax under 
                        section 103, the amount taken into account as 
                        the basis of such property shall not exceed the 
                        amount which (but for this subparagraph) would 
                        be so taken into account multiplied by the 
                        fraction determined under subparagraph (B).
                    ``(B) Determination of fraction.--For purposes of 
                subparagraph (A), the fraction determined under this 
                subparagraph is 1 reduced by a fraction--
                            ``(i) the numerator of which is that 
                        portion of the basis of the property which is 
                        allocable to such financing or proceeds, and
                            ``(ii) the denominator of which is the 
                        basis of the property.
                    ``(C) Subsidized energy financing.--For purposes of 
                subparagraph (A), the term `subsidized energy 
                financing' means financing provided under a Federal, 
                State, or local program a principal purpose of which is 
                to provide subsidized financing for projects designed 
                to conserve or produce energy.
            ``(2) Certain progress expenditure rules made applicable.--
        Rules similar to the rules of subsections (c)(4) and (d) of 
        section 46 (as in effect on the day before the date of the 
        enactment of the Revenue Reconciliation Act of 1990) shall 
        apply for purposes of this section.''.
    (b) Conforming Amendments.--
            (1) Section 48 of such Code is amended to read as follows:

``SEC. 48. REFORESTATION CREDIT.

    ``(a) In General.--For purposes of section 46, the reforestation 
credit for any taxable year is 10 percent of the portion of the 
amortizable basis of any qualified timber property which was acquired 
during such taxable year and which is taken into account under section 
194 (after the application of section 194(b)(1)).
    ``(b) Definitions.--For purposes of this subpart, the terms 
`amortizable basis' and `qualified timber property' have the respective 
meanings given to such terms by section 194.''.
            (2) Subsection (d) of section 39 of such Code is amended by 
        adding at the end of the following new paragraph:
            ``(9) No carryback of energy credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the energy credit determined 
        under section 48A, except for the credit determined with 
        respect to solar energy property and geothermal energy 
        property, may be carried back to a taxable year ending before 
        the date of the enactment of section 48A.''.
            (3) Paragraph (3) of section 50(c) of such Code is amended 
        by adding at the end the following flush sentence: ``In the 
        case of the energy credit, the preceding sentence shall apply 
        only to so much of such credit as relates to solar energy 
        property and geothermal property (as such terms are defined in 
        section 48A(d)).''.
            (4) Subclause (III) of section 29(b)(3)(A)(i) of such Code 
        is amended by striking ``section 48(a)(4)(C)'' and inserting 
        ``section 48A(e)(1)(C)''.
            (5) Subparagraph (E) of section 50(a)(2) of such Code is 
        amended by striking ``section 48(a)(5)'' and inserting 
        ``section 48A(e)(2)''.
            (6) Subparagraph (B) of section 168(e)(3) of such Code is 
        amended--
                    (A) in clause (vi)(I) by striking ``subparagraph 
                (A) of section 48(a)(3)'' and inserting ``paragraphs 
                (1) and (2) of section 48A(d)'', and
                    (B) in the last sentence by striking ``section 
                48(a)(3)'' and inserting ``section 48A(c)(2)''.
            (7) Subparagraph (E) of section 168(e)(3) of such Code, as 
        amended by section 803(a), is further amended by striking 
        ``and'' at the end of clause (iii), by striking the period at 
        the end of clause (iv) and inserting ``, and'', and by 
        inserting after clause (iv) the following new clause:
                            ``(v) any combined heat and power system 
                        property (as defined in section 48A(d)(3)) for 
                        which a credit is allowed under section 48A and 
                        which, but for this clause, would have a 
                        recovery period of less than 15 years.''.
            (8) The table contained in subparagraph (b) of section 
        168(g)(3) of such Code, as amended by section 803(b)(2), is 
        further amended by adding at the end the following: 
        ``(E)(v)....... 22''.
    (c) Clerical Amendment.--The table of sections for subpart E of 
part IV of subchapter A of chapter 1 of such Code is amended by 
striking the item relating to section 48 and inserting the following 
new items:

                              ``Sec. 48. Reforestation credit.
                              ``Sec. 48A. Energy credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 1999, under rules similar to the 
rules of section 48(m) of the Internal Revenue Code of 1986 (as in 
effect on the day before the date of the enactment of the Revenue 
Reconciliation Act of 1990).

SEC. 605. TAX-EXEMPT BOND FINANCING OF CERTAIN ELECTRIC FACILITIES.

    (a) Permitted Open Access Transactions Not a Private Business 
Use.--Section 141(b)(6) of the Internal Revenue Code of 1986 (defining 
private business use) is amended by adding at the end the following:
                    ``(C) Permitted open access transactions not a 
                private business use.--
                            ``(i) In general.--For purposes of this 
                        subsection, the term `private business use' 
                        shall not include a permitted open access 
                        transaction.
                            ``(ii) Permitted open access transaction 
                        defined.--For purposes of clause (i), the term 
                        `permitted open access transaction' means any 
                        of the following transactions or activities 
                        with respect to an electric output facility (as 
                        defined in subsection (f)(4)(A)) owned by a 
                        governmental unit:
                                    ``(I) Providing open access 
                                transmission services and ancillary 
                                services that meet the reciprocity 
                                requirements of Federal Energy 
                                Regulatory Commission Order No. 888, or 
                                that are ordered by the Federal Energy 
                                Regulatory Commission, or that are 
                                provided in accordance with a 
                                transmission tariff of an independent 
                                system operator approved by such 
                                Commission, or that are consistent with 
                                State-administered laws, rules, or 
                                orders providing for open transmission 
                                access.
                                    ``(II) Participation in an 
                                independent system operator agreement 
                                (which may include transferring control 
                                of transmission facilities to an 
                                independent system operator), in a 
                                regional transmission group, or in a 
                                power exchange agreement approved by 
                                such Commission.
                                    ``(III) Delivery on an open access 
                                basis of electric energy sold by other 
                                entities to end-users served by such 
                                governmental unit's distribution 
                                facilities.
                                    ``(IV) If open access service is 
                                provided under subclause (I) or (III), 
                                the sale of electric output of electric 
                                output facilities on terms other than 
                                those available to the general public 
                                if such sale is to an on-system 
                                purchaser or is an existing off-system 
                                sale.
                                    ``(V) Such other transactions or 
                                activities as may be provided in 
                                regulations prescribed by the 
                                Secretary.
                            ``(iii) Definitions; special rules.--For 
                        purposes of this subparagraph--
                                    ``(I) On-system purchaser.--The 
                                term `on-system purchaser' means a 
                                person who purchases electric energy 
                                from a governmental unit and whose 
                                electric facilities or equipment are 
                                directly connected with transmission or 
                                distribution facilities that are owned 
                                by such governmental unit.
                                    ``(II) Off-system purchaser.--The 
                                term `off-system purchaser' means a 
                                purchaser of electric energy from a 
                                governmental unit other than an on-
                                system purchaser.
                                    ``(III) Existing off-system sale.--
                                The term `existing off-system sale' 
                                means a sale of electric energy to a 
                                person that was an off-system purchaser 
                                of electric energy in the base year, 
                                but not in excess of the kilowatt hours 
                                purchased by such person in such year.
                                    ``(IV) Base year.--The term `base 
                                year' means 1998 (or, at the election 
                                of such unit, 1996 or 1997).
                                    ``(V) Joint action agencies.--A 
                                member of a joint action agency that is 
                                entitled to make a sale described in 
                                clause (ii)(IV) in a year may transfer 
                                that entitlement to the joint action 
                                agency in accordance with rules of the 
                                Secretary.
                                    ``(VI) Government-owned facility.--
                                An electric output facility (as defined 
                                in subsection (f)(4)(A)) shall be 
                                treated as owned by a governmental unit 
                                if it is owned or leased by such 
                                governmental unit or if such 
                                governmental unit has capacity rights 
                                therein acquired before July 9, 1996, 
                                for the purposes of serving one or more 
                                customers to which such governmental 
                                unit had a service obligation on such 
                                date under State law or a requirements 
                                contract.''.
    (b) Election To Terminate Tax-Exempt Financing.--Section 141 of the 
Internal Revenue Code of 1986 (relating to private activity bond; 
qualified bond) is amended by adding at the end the following:
    ``(f) Election To Terminate Tax-Exempt Bond Financing for Certain 
Electric Output Facilities.--
            ``(1) In general.--An issuer may make an irrevocable 
        election under this paragraph to terminate certain tax-exempt 
        financing for electric output facilities. If the issuer makes 
        such election, then--
                    ``(A) except as provided in paragraph (2), no bond 
                the interest on which is exempt from tax under section 
                103 may be issued on or after the date of such election 
                with respect to an electric output facility; and
                    ``(B) notwithstanding paragraph (1) or (2) of 
                subsection (a) or paragraph (5) of subsection (b), with 
                respect to an electric output facility no bond that was 
                issued before the date of enactment of this subsection, 
                the interest on which was exempt from tax on such date, 
                shall be treated as a private activity bond, for so 
long as such facility continues to be owned by a governmental unit.
            ``(2) Exceptions.--An election under paragraph (1) does not 
        apply to--
                    ``(A) any qualified bond (as defined in subsection 
                (e)),
                    ``(B) any eligible refunding bond,
                    ``(C) any bond issued to finance a qualifying T&D 
                facility, or
                    ``(D) any bond issued to finance equipment 
                necessary to meet Federal or State environmental 
                requirements applicable to, or repair of, electric 
                output facilities in service on the date of enactment 
                of this subsection. Repairs or equipment may not 
                increase by more than a de minimis degree the capacity 
                of the facility beyond its original design.
            ``(3) Form and effect of elections.--An election under 
        paragraph (1) shall be made in such a manner as the Secretary 
        prescribes and shall be binding on any successor in interest to 
        the electing issuer.
            ``(4) Definitions.--For purposes of this subsection--
                    ``(A) Electric output facility.--The term `electric 
                output facility' means an output facility that is an 
                electric generation, transmission, or distribution 
                facility.
                    ``(B) Eligible refunding bond.--The term `eligible 
                refunding bond' means State or local bonds issued after 
                an election described in paragraph (1) that directly or 
                indirectly refund State or local bonds issued before 
                such election, if the weighted averaged maturity of the 
                refunding bonds do not exceed the remaining weighted 
                average maturity of the bonds issued before the 
                election.
                    ``(C) Qualifying t&d facility.--The term 
                `qualifying T&D facility' means--
                            ``(i) transmission facilities over which 
                        services described in subsection 
                        (b)(6)(C)(ii)(I) are provided, or
                            ``(ii) distribution facilities over which 
                        services described in subsection 
                        (b)(6)(C)(ii)(III) are provided.''.
    (c) Effective Date, Applicability, and Transition Rules.--
            (1) Effective date.--The amendments made by this section 
        take effect on the date of enactment of this Act, except that a 
        governmental unit may elect to apply section 141(b)(6)(C) of 
        the Internal Revenue Code of 1986, as added by subsection (a), 
        with respect to permitted open access transactions on or after 
        July 9, 1996.
            (2) Applicability.--References in this Act to sections of 
        the Internal Revenue Code of 1986 shall be deemed to include 
        references to comparable sections of the Internal Revenue Code 
        of 1954.
            (3) Transition rules.--
                    (A) Private business use.--Any activity that was 
                not a private business use prior to the effective date 
                of the amendment made by subsection (a) shall not be 
                deemed to be a private business use by reason of the 
                enactment of such amendment.
                    (B) Election.--An issuer making the election under 
                section 141(f) of the Internal Revenue Code of 1986, as 
                added by subsection (b), shall not be liable under any 
                contract in effect on the date of enactment of this Act 
                for any claim arising from having made the election.
                                 <all>