[Congressional Record Volume 142, Number 10 (Thursday, January 25, 1996)]
[Senate]
[Pages S378-S382]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. JOHNSTON:
  S. 1526. A bill to provide for retail competition among electric 
energy suppliers, to provide for recovery of standard costs 
attributable to an open access electricity market, and for other 
purposes; to the Committee on Energy and Natural Resources.


                THE ELECTRICITY COMPETITION ACT OF 1996

  Mr. JOHNSTON. Mr. President, I am pleased today to introduce the 
Electricity Competition Act of 1996. This bill is intended to establish 
a framework for the transition of the electric industry from a 
regulated industry to a competitive, and deregulated, industry. Where 
markets are competitive, society should be saved the costs of unneeded 
regulation. America's electric system is the most technologically 
advanced and operationally safe electric system in the world. There is 
no doubt today that electric service can be supplied to all consumers--
even retail consumers--in a fully competitive market.
  Our goal then, should be to ensure that electricity markets will 
become competitive so that regulation will be unnecessary. Our goal 
must be to ensure price competition for electricity, which will create 
savings, efficiencies, and innovation.
  This is not pie-in-the-sky economic theory. This bill will mean real 
savings for real people. For American families in the lowest 20-percent 
income bracket, a household's total utility bills are about equal to 
the total of mortgage/rent payments, taxes, and maintenance costs. 
Utility bills take slightly less of a middle-class family's disposable 
income, but the fact remains--a decrease in the average electric bill 
for the majority of middle-class Americans could achieve even greater 
benefits than a middle-class tax cut, without the drain on revenue 
which a tax cut would mean. We have the potential to gain these 
benefits, and we must seize this opportunity to do so.
  There are six main elements of this legislation:
  First, retail access. It's essential to clarify that the States are 
not preempted from ordering retail access. This clarification will 
enable the States to go forward with retail access programs without the 
fear of Federal preemption. Overlooking this clarification will bring 
years of litigation, impeding American consumers from receiving the 
benefits of lower electricity prices.
  Second, stranded costs. When this industry moves from regulation to 
competition, there will be created what industry insiders refer to as 
``stranded costs.'' This means the high costs of serving all customers 
under the old regulatory system, which cannot be recovered in a 
competitive market.
  It is true that similar predicaments faced firms in other once 
regulated markets--railroads, airlines, natural gas, and 
telecommunications, for instance. But the electric utility industry is 
completely unique, and therefore, we must account for this difference.
  First, the electric industry transition cannot take the same course 
as deregulatory efforts in other industries due to the staggering 
capital requirements necessary to generate electricity. The electric 
industry is the most capital intensive industry by far. The Edison 

[[Page S379]]
Electric Institute [EEI] estimates that for every dollar of electricity 
revenue, on average, $3.03 of capital assets is required. This is 
almost twice the amount of capital necessary for the next highest 
industry--mining, $1.74 and, three times higher than the communications 
industry--$1.09. Moodys Investors Service estimates that 87 of the 
largest investor owned utilities could lose $135 billion in stranded 
investment in the next 10 years. This is more than 80 percent of the 
total equity of these companies. Make no mistake about it. If we force 
the utilities to eat stranded costs, we will have a bankrupt industry.
  Second, the vast majority of potential stranded costs--nuclear 
generation and alternative energy contracts under the Public Utility 
Regulatory Policies Act of 1978 [PURPA]--are the direct result of past 
Government energy policies. One analyst estimates that stranded cost 
potential for the nuclear industry is about $70 billion. This is just 
under two-thirds of the book value of the Nation's 108 nuclear 
operating plants. In addition, EEI estimates that PURPA contracts have 
committed utilities to pay at least $38 billion above market prices. 
Cambridge Energy Research Associates has estimated that standard costs 
attributable to PURPA in California alone are between $6.6 billion and 
$10.8 billion.
  The old regulatory compact almost guaranteed recovery of the costs of 
Government energy policies. With competition, however, the market--not 
regulators--determines cost recovery. It is simply unfair to leave 
utilities holding the bag for the energy policies of the past.

  It is clear that we need a healthy utility industry. One analyst 
surveying utility executives found that 50 percent of them believed 
that utility bankruptcies would increase in the near future. Under 
competition there will remain a very important role for utilities to 
serve core customers, including poor and rural customers. Many 
customers will want to stay with a traditional company, or will not 
shop for their electricity. Also, the market is best served by having 
many different players compete, including utilities. Because of the 
important role these companies play, the public interest is not served 
if utilities go bankrupt.
  The final reason for stranded cost recovery is the legitimate 
expectation of investors. Utility investors stand to lose billions of 
dollars if stranded costs are not recovered. Who are these investors? 
Not Wall Street sharks--they are ordinary citizens who considered 
utility stocks to be a safe investment. According to an EEI survey of 
shareholder demographics, the majority of utility investors are of 
retirement age, or are approaching retirement age. The economic effect 
on these investors of stranded cost losses must not be forgotten.
  We must encourage utilities to embrace competition. To do this, we 
must ensure that all costs incurred under the old regulatory compact 
are fully recovered in the transition to competition. Competition in 
this industry must be on a level playing field.
  Recovery of all stranded costs is imperative. The Federal Energy 
Regulatory Commission has taken the lead on wholesale stranded cost 
recovery, and has done a great job. I believe FERC has the authority to 
also permit recovery of retail stranded costs, but it is essential that 
we clarify this authority through legislation. It is important to 
mandate that FERC ensure recovery of legitimate, prudent and verifiable 
retail stranded costs--only to the extent those costs slip through the 
cracks at the retail level. I would note that the Nuclear Regulatory 
Commission, which is primarily a licensing commission, certainly does 
not have the authority to require recovery of nuclear investments or 
nuclear decommissioning costs.
  In short, if we do not enact legislation ensuring stranded cost 
recovery, most utilities will be reluctant to embrace competition. If 
we do not enact legislation, the transition to competition and lower 
electricity prices will be slower. If we do not enact legislation, 
corporate risk becomes unmanageable, and bankruptcies may occur. This 
is not in the public interest.
  The third aspect of the bill is shared Federal and State 
responsibility. This bill respects the historical jurisdictional divide 
over the electric industry. The bill gives States the opportunity to 
structure their retail markets with programs suited to their local 
situations. Yet, the bill still holds State programs to one key Federal 
benchmark: competition. This gives a broad Federal policy ensuring 
competition, but leaves implementation to the States.
  This bill would require States to begin proceedings to examine their 
local markets. States have three choices.
  No. 1: set up a competitive wholesale procurement market.
  No. 2: establish a program of retail access for all consumers; or
  No. 3: devise their own program, as long as it ensures no self 
dealing and no unfair subsidies to alternative energy generators.
  Utilities who aren't regulated by FERC or State PUC's would be 
required to make similar decisions. Also, States which are already in 
the process of moving forward with their own competitive programs would 
not have to start all over again.
  The bill establishes a balanced framework. The Federal/State 
jurisdiction issue is a fine line to walk. Some will say the States 
should be given unfettered authority. Others will say that competition 
cannot wait, and that a federally mandated competitive market cannot 
come soon enough. In my view, a balanced policy which respects 
traditional federalism is the best policy.
  Fourth, we have to establish a timetable for the transition to 
competition. We need a date certain when retail access will be the law 
of the land, although that may be some years down the road. A definite 
timetable for restructuring would remove this uncertainty. The 
timetable in the bill--2010--recognizes the need for the States to 
implement their own competition programs, and for the industry to get 
comfortable with retail competition.

  Fifth, we must have a level playing field, and this means PURPA 
reform and repeal of the Public Utility Holding Company Act.
  The bill provides for prospective PURPA reform. Utilities relied on 
the old regulatory system, and their legitimate expectations of 
recovery should be respected. The same is true for the contractual 
expectations of non-utility generators. Reform of PURPA is therefore 
appropriate on a prospective basis.
  I believe PUHCA repeal is also essential even though it is not a part 
of this bill. I am the cosponsor of a bill with Senator D'Amato and 
others which is currently before the Senate Banking Committee. The goal 
of that legislation is to put all electric utility companies on a level 
playing field, and to remove regulatory barriers which are no longer 
appropriate. I believe PUHCA repeal, with certain consumer protections, 
can go forward on a stand alone basis, but must be a part of 
comprehensive restructuring.
  Sixth, the bill ensures nuclear decommissioning cost recovery, which 
is essential for the protection of public health and safety. Nuclear 
decommissioning costs are an extremely large percentage of many 
utilities' embedded costs. Several utilities have estimated their 
decommissioning liability to be in the billions of dollars. The law of 
the land should be that all nuclear decommissioning costs are 
recoverable. Moreover, no nuclear licensee should be able to avoid 
decommissioning liability.
  This Nation cannot afford to miss this opportunity. This legislation 
is needed to avoid a patchwork of state policies, to bring competition 
to consumers on a rational timetable, and to standardize stranded cost 
recovery. It is essential that we make this commitment now, and set 
competition in motion. Every year, every month, every day that we lose 
debating the fine points of this transition means a loss of prosperity 
for this Nation. We are now fighting tooth and nail in a global economy 
where every dollar counts. Accordingly, this legislation is essential.
  We all know that competition and deregulation have lowered prices in 
the national economy. What may not be so apparent is the huge ripple 
effect which lower electricity prices will create America. Consider 
these figures:
  Some 90 percent of the U.S. gross domestic product is produced by the 
residential, commercial and industrial sectors. These sectors use 99.9 
percent of 

[[Page S380]]
the Nation's electricity, and yet account for only 34 percent of the 
Nation's oil consumption The other 10 percent of the Nation's GDP--
transportation--uses 66 percent of the Nation's oil. In many ways, 
electricity is overwhelmingly more important to America's economy than 
oil.
  America recently spent $262 billion on electricity in 1 year. The 
data suggest that electricity consumption is almost three times the 
amount spent on the next highest commodity, natural gas. Also, 
electricity consumption is almost four times the amount spent on 
unleaded gasoline.
  In addition, the economy has become increasingly dependent on 
electricity. Between 1973 and 1993 the U.S. industrial sector grew 70 
percent. Industrial electricity use increased 45 percent during that 
time period, while combustible fuel use declined 12 percent.
  This trend is expected to continue. The Energy Information 
Administration estimates that by the year 2010, 60 percent of all 
industrial, commercial, and residential fuel use will be consumed by 
utilities to generate electricity in order to meet electricity demand. 
In contrast, in 1973, only about 30 percent of all fuel use for these 
purposes went to generate electricity.
  As these statistics demonstrate, changes in electricity prices have 
profound economic consequences. Lower electricity prices mean more 
jobs, more economic output, and more personal income. States with the 
lowest electricity prices are the most likely to attract new businesses 
and jobs.
  The benefits of lowering electricity prices are staggering. 
Technological changes have enabled new generators to produce 
electricity at a price between 3 and 5 cent/kWh. However, costs in some 
regions of the Nation are anywhere between 9 and 15 cents/kWh. That's 
at least a factor of two, and at the most, a factor of five between 
regional delivered electricity prices. Considering that electricity 
makes up about 30 percent of production costs for steel manufacturing, 
to give an example, you can see that lower electricity prices will have 
a significant impact.
  From this point forward, competition must be the electric industry 
standard. This bill will accomplish that goal.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1526

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

     SECTION. 1. SHORT TITLE.

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

     SEC. 2. DEFINITIONS.

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

     SEC. 3. PURPA REFORM.

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

     SEC. 4. COMPETITIVE ELECTRICITY PROCEEDINGS.

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

[[Page S381]]
     where applicable, initiate proceedings to examine and consider--
       (A) procedures for the acquisition of new contract 
     electricity and new generating sources by such nonregulated 
     retail electric utility which meet the minimum requirements 
     of section 5;
       (B) a retail access plan which provides nondiscriminatory 
     and unbundled local distribution services to all electric 
     consumers of such nonregulated retail electric utility, in 
     order that such electric consumers may choose among competing 
     electric energy suppliers by January 1, 2002; and
       (C) an alternative plan which meets the minimum 
     requirements of section 6.
       (2) Criteria.--In selecting a competitive option under 
     paragraph (1), each nonregulated retail electric utility not 
     exempted from this section by section 7 shall determine which 
     option best serves the public interest, considering 
     reliability, terms of service, and price.
       (3) Decision and implementation.--Not later than 18 months 
     after the date of enactment of this Act each nonregulated 
     retail electric utility not exempted from this section by 
     section 7 shall--
       (A) select a competitive option provided for in paragraph 
     (1) based on the examination and consideration required under 
     this subsection;
       (B) provide public notice of such selection; and
       (C) begin implementation of such competitive option not 
     later than 60 days after providing such notice.

     SEC. 5. PROCUREMENT MARKETS.

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

     SEC. 6. ALTERNATIVE PLANS.

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

     SEC. 7. EXEMPTIONS.

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

     SEC. 8. MANDATORY RETAIL ACCESS.

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

     SEC. 9. REVIEW AND ENFORCEMENT.

       (a) State Authority.--Notwithstanding any other provision 
     of this section, neither the Commission nor any court of the 
     United States shall have jurisdiction to review the selection 
     by a state regulatory authority or a nonregulated electric 
     utility of a competitive option that meets the requirements 
     of sections 4(a)(1)(B), 4(b)(1)(B), 5, and 6. Appeal from 
     such a decision may be taken in accordance with applicable 
     state law.
       (b) Commission Review.--(1) Any person aggrieved by--
       (A) a final order of a state regulatory authority or a 
     nonregulated retail electric utility under section 4 or 7, or
       (B) the failure of a state regulatory authority or 
     nonregulated retail electric utility to initiate a proceeding 
     or render a final decision in accordance with section 4 or 
     7--

     may petition the Commission to enforce the requirements of 
     sections 4(a)(1)(B), 4(b)(1)(B), 5, and 6.
       (2) In any proceeding under this section, the Commission 
     may:
       (A) determine--
       (i) whether the requirements or plan adopted by a state 
     regulatory authority or nonregulated retail electric utility 
     under sections 4(a)(1)(B), 4(b)(1)(B), 5, and 6 complies with 
     the requirements of this Act, or
       (ii) whether any action taken by the state regulatory 
     authority or nonregulated retail electric utility to 
     implement the requirements or plan complies with the 
     requirements of this Act; and
       (B) grant appropriate relief.
       (c) Rehearing And Appeal.--Section 313 of the Federal Power 
     Act shall apply to orders 

[[Page S382]]
     of the Commission issued pursuant to this section.

     SEC. 10. RENEWABLE ELECTRIC GENERATION.

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

     SEC. 11. AMENDMENTS TO FEDERAL POWER ACT.

       (a) Transmission Access.--Section 212(h) of the Federal 
     Power Act (16 U.S.C. 824k(h)) is amended by striking the 
     following:
       ``Nothing in this subsection shall affect any authority of 
     any State or local government under State law concerning the 
     transmission of electric energy directly to an ultimate 
     consumer.'',

     and inserting in lieu thereof:
       ``Notwithstanding the other provisions of this subsection, 
     the Commission may order, or condition orders upon, the 
     transmission of electric energy to an ultimate consumer if 
     the delivery of such electric energy would be accomplished 
     through the provision of unbundled local distribution 
     services under sections 4(a)(1)(B), 4(b)(1)(B), 7(a)(2) or 
     7(d) of the Electricity Competition Act of 1996.''.
       (b) Retail Access and Stranded Costs.--The Federal Power 
     Act is amended further by adding the following new sections 
     after section 214.

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

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

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

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

     ``SEC. 217. RECIPROCITY.

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

     SEC. 12. NUCLEAR DECOMMISSIONING COSTS.

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

     SEC. 13. AMENDMENTS TO BANKRUPTCY REFORM ACT.

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