[Congressional Record Volume 143, Number 10 (Thursday, January 30, 1997)]
[Senate]
[Pages S863-S871]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BUMPERS:
  S. 237. A bill to provide for retail competition among electric 
energy suppliers for the benefit and protection of consumers, and for 
other purposes; to the Committee on Energy and Natural Resources.


             the electric consumers protection act of 1997

  Mr. BUMPERS. Mr. President, I rise today to introduce the Electric 
Consumers Protection Act of 1997. This bill provides for the transition 
toward deregulation and competition in electricity generation.
  While very few people, including myself, find a discussion of the 
electric utility industry and the many laws and regulations governing 
the industry exciting, the fact is that electricity is an extremely 
important commodity which affects everyone on a daily basis. Any event 
that increases or reduces electric rates can impact: First, the lives 
of the poor and those on fixed incomes that

[[Page S864]]

depend on electricity to heat their homes in the winter and cool them 
in the summer; second, the price of goods we buy every day; as well as, 
third, the competitiveness of our factories. In addition, decisions 
made by electric generators often have a direct effect on our 
environment as well as our national security.
  So, it is not at all inconsequential that the electric industry, 
which has remained relatively static for the last 60 years, is about to 
undergo a fundamental change. Instead of the traditional vertically 
integrated local utility, which generates power at its own plants, 
transmits that power over its own lines, and sells that power to all 
consumers in a particular area, consumers will soon be bombarded with 
all sorts of offers from companies competing to become their power 
supplier, and other entrepreneurs will be seeking to buy large blocks 
of power to serve certain kinds of consumers. Naturally, these changes 
are bound to create considerable apprehension among utilities, their 
shareholders, and consumers.
  Mr. President, there are some who would prefer that we maintain the 
status quo. However, it is becoming increasingly certain that 
competition is inevitable. At least six States--California, New 
Hampshire, Rhode Island, Pennsylvania, Vermont, and Massachusetts--have 
already enacted legislation or promulgated regulations providing for 
competition. A number of other States have established proceedings to 
determine how to move toward competition. In all, more than 40 States 
have either ordered, or are examining the possibility of requiring, 
deregulation of the retail electric markets.
  Theoretically, introducing competition among electric power providers 
should produce greater efficiencies and lower electric rates. Certainly 
large industrial consumers of electricity would see significant 
reductions in their energy bills, but I am more concerned about the 
potential impact on residential and small commercial consumers--the 
biscuit cookers as we call them in Arkansas. Generating companies may 
be less eager to compete to serve these customers, especially those 
located in rural areas. This reduced bargaining power could also end up 
causing residential and small commercial customers to pay for those 
costs arising from the transition to competition--that is, stranded 
costs--costs that industrial consumers can more easily avoid.

  I believe it is the role of both Congress and the States to ensure 
that the biscuit cookers also benefit. It is not enough to simply 
proclaim that the days of the utilities' vertically integrated 
monopolies are over. We also have a solemn obligation to be fair to 
utility companies that have been operating in reliance on the ground 
rules we all created over the last 60 years. This will require a 
careful balancing of competing interests. Everyone will benefit by 
restructuring if it is done properly, and I consider this an absolutely 
essential result.
  Mr. President, I am introducing this bill to begin the debate in the 
105th Congress about how best to promote an orderly transition to a 
competitive retail electric market. This legislation is designed with 
the goals of allowing all consumers to enjoy the benefits of 
competition while not penalizing utilities for prudent decisions they 
made under the previous regulatory system.
  There is significant debate over whether Congress should even pass 
legislation on this subject. The argument that the States should decide 
these issues certainly has some merit. After all, retail electric 
service has generally been the domain of the States, although 
requirements imposed at the Federal level by both FERC and Congress 
have had a direct impact on retail rates and service.
  But I personally believe a State-by-State approach could produce a 
lot of unintended consequences which would limit the benefits 
associated with retail competition. Electric generation markets are 
becoming increasingly regional and even multiregional. What happens in 
one State can have direct and indirect impacts on consumers and 
utilities located in another State. Utilities operating in more than 
one State can be subjected to conflicting regulatory regimes which 
could impact the way they operate their systems and the electric rates 
paid by consumers.
  This phenomenon is best illustrated by the multistate utility holding 
companies registered under the Public Utility Holding Company Act 
[PUHCA}. I have had a lot of experience with registered holding 
companies because two of them serve my home State of Arkansas. These 
holding companies generally plan for, and operate, generating 
facilities on a systemwide basis for the benefit of customers in the 
entire region served by the company. If restructuring proceeds on a 
State-by-State basis, these holding companies would find themselves 
subjected to different requirements which could negatively impact 
consumers.

  For example, the Entergy System serves retail customers in parts of 
Louisiana, Texas, Mississippi, and Arkansas. If Louisiana and Texas 
were to order retail competition and Arkansas and Mississippi decided 
to delay competition, it would be difficult, if not impossible, for 
Entergy to operate a system of generating facilities designed to serve 
a particular load over a four-State area. It is quite possible that 
consumers in Arkansas and Mississippi would wind up paying more for 
their service. Entergy's captive customers in Arkansas and Mississippi 
could be further disadvantaged to the extent Entergy were to become 
financially imperiled as a result of the retail competition orders in 
Texas and Louisiana.
  A State-by-State approach to retail competition also presents 
problems where utilities operate entirely within a single State. It 
would make no sense for a utility in a State that does not require 
retail competition, to be able to sell power at retail in an adjoining 
State that requires retail competition, while a utility subjected to 
retail competition is unable to mitigate its losses by competing for 
customers in the adjoining State. Such a result both increases stranded 
costs and distorts the generation marketplace.
  My legislation requires that retail competition be implemented in 
each State by 2003. States will continue to have the option of choosing 
an earlier starting date. In addition, the States can individually 
oversee the transition to competition.
  Moreover, if Congress is going to mandate retail competition then I 
believe we have an obligation to provide for utility recovery of its 
stranded investment in facilities that become uneconomic as a result of 
the transition to retail competition. That is not to say that a utility 
is automatically entitled to recover every penny of its investment. 
Rather, my bill limits utilities to recovery of their investments that: 
First, were prudent when incurred; second, are legitimate and 
verifiable; and third, cannot be mitigated by selling power to others 
in the competitive market.
  My bill provides that if a utility seeks to recover stranded costs, a 
State commission would establish the level of such costs pursuant to an 
administrative determination or after the utility auctions off its 
assets to establish the market value of these facilities. Once the 
stranded costs are calculated, consumers would be assessed a wires 
charge to compensate the utility for its stranded costs.

  It is vital that, as we proceed with electric restructuring, we act 
to ensure that the generation markets are truly competitive. It will do 
no good to remove Federal and State rate regulation if consumers do not 
have access to a sufficient number of potential power marketers. We 
have already seen this problem in other industries that have 
deregulated, where after an initial flurry of competitors entering a 
particular market, significant consolidation occurred.
  Utilities obviously should not be allowed to use their advantageous 
positions with regard to transmission and distribution to gain a 
competitive advantage in the generation market. Utilities should not 
use funds from their transmission and distribution systems to subsidize 
their generation businesses. In addition, my bill requires the 
implementation of independent system operators [ISO's] to oversee the 
operation of transmission systems in each region.
  We also must be mindful that power suppliers might not be falling all 
over themselves to serve certain consumers, especially those located in 
rural areas. My bill contains a universal service requirement to ensure 
that everyone who wants electric service has the opportunity to buy it 
at reasonable rates.

[[Page S865]]

The bill also authorizes States to collect fees from all consumers to 
help pay for the universal service obligation.
  Mr. President, there are currently a number of utility-based programs 
which provide societal benefits. For instance, the Public Utility 
Regulatory Policies Act [PURPA] provides for utility purchases of 
energy generated at certain plants which use renewable resources or 
cogeneration. In addition, many States have programs requiring 
utilities to contribute to energy conservation and to help low-income 
people pay their energy bills. The costs of these programs are passed 
through to ratepayers. It will be more difficult for utilities to 
continue to implement these programs in a competitive retail 
environment. My bill authorizes States to collect wire charges to help 
pay for these kinds of programs.
  Congressman Dan Schaefer has developed a proposal designed to promote 
the use of renewable generation. His portfolio approach would require 
each company selling power at retail to generate a portion of its power 
using renewable resources or to purchase credits from those companies 
that do generate in excess of the minimum requirements. I think it is 
very important that we do everything possible to promote the use of 
renewable energy and my bill contains a similar proposal.

  Mr. President, over the last 25 years we have made substantial 
progress in cleaning our air and rivers, lakes and streams. It has come 
at a fairly big cost, but I doubt anyone would turn the clock back on 
our successes.
  There are understandable conflicting positions about what will happen 
with the introduction of competition. Some argue that competition will 
increase the use of natural gas, which is more friendly to the 
environment than coal. Others argue that existing coal generating 
plants that were grandfathered in under the provisions of the Clean Air 
Act will be utilized more frequently. It is difficult to know who is 
right. But I think it is fair to say that we all have an obligation to 
protect our air quality and we shouldn't take this issue lightly. My 
bill requires EPA to submit a study to Congress within 2 years 
analyzing the issue and suggesting any changes to our laws that may 
need to be made to protect the environment.
  Mr. President, the issues addressed by the Electric Consumers 
Protection Act of 1997 are very complex and far reaching. It is going 
to take Congress some time in order to sort them out and develop a 
consensus for a comprehensive approach to electric generation 
deregulation. I am introducing this bill today to begin the debate and 
propose one roadmap as to how we may get there. I look forward to 
working with my colleagues and all interested parties as we proceed to 
examine this very important issue over the next 2 years.
  Mr. President, I ask unanimous consent that a copy of the bill and a 
summary of the bill be placed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 237

       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 Protection Act of 1997''.
       (b) Table of Contents.--The table of contents is as 
     follows:

Sec. 1. Short title and table of contents.
Sec. 2. Findings.
Sec. 3. Severability.

                      TITLE I--RETAIL COMPETITION

Sec. 101. Definitions.
Sec. 102. Mandatory retail access.
Sec. 103. Aggregation.
Sec. 104. Prior implementation.
Sec. 105. State regulation.
Sec. 106. Stranded cost recovery.
Sec. 107. Multistate utility company stranded costs.
Sec. 108. Universal service.
Sec. 109. Public benefits.
Sec. 110. Renewable energy.
Sec. 111. Transmission.
Sec. 112. Cross-subsidization.
Sec. 113. Competitive generation markets.
Sec. 114. Nuclear decommissioning costs.
Sec. 115. Tennessee Valley Authority.
Sec. 116. Enforcement.

               TITLE II--PUBLIC UTILITY HOLDING COMPANIES

Sec. 201. Repeal of the Public Utility Holding Company Act of 1935.
Sec. 202. Definitions.
Sec. 203. Exemptions.
Sec. 204. Federal access to books and records.
Sec. 205. State access to books and records.
Sec. 206. Affiliate transactions.
Sec. 207. Clarification of regulatory authority.
Sec. 208. Effect on other regulation.
Sec. 209. Enforcement.
Sec. 210. Savings provision.
Sec. 211. Implementation.
Sec. 212. Resources.

           TITLE III--PUBLIC UTILITY REGULATORY POLICIES ACT

Sec. 301. Definition.
Sec. 302. Facilities.
Sec. 303. Contracts.
Sec. 304. Savings clause.
Sec. 305. Effective date.

                   TITLE IV--ENVIRONMENTAL PROTECTION

Sec. 401. Study.

     SEC. 2. FINDINGS.

       The Congress finds that:
       (a) Congress has the authority to enact laws, under the 
     Commerce Clause of the United States Constitution, regarding 
     the wholesale and retail generation, transmission, 
     distribution, and sale of electric energy in interstate 
     commerce.
       (b) It is in the public interest that consumers receive 
     reliable and inexpensive electric service and competition 
     among electric suppliers can produce these benefits.
       (c) Electric utility companies that prudently incurred 
     costs pursuant to a regulatory structure that required them 
     to provide electricity to consumers should not be penalized 
     during the transition to competition.
       (d) Consumers will not benefit from the introduction of 
     competition among electric suppliers if certain suppliers 
     have undue market power.
       (e) It is important to encourage conservation and the use 
     of renewable resources to reduce reliance on fossil fuels and 
     to promote domestic energy security.
       (f) The transition to electric competition should not 
     degrade reliability nor cause consumers to lose electric 
     service.

     SEC. 3. SEVERABILITY.

       If any provision of this Act, or the application of such 
     provision to any person or circumstances, shall be held 
     invalid, the remainder of the Act, and the application of 
     such provision to persons or circumstances other than those 
     as to which it is held invalid, shall not be affected 
     thereby.
                      TITLE I--RETAIL COMPETITION

     SEC. 101. DEFINITIONS.

       For purposes of this title:
       (1) The term ``affiliate'' shall have the same meaning 
     given the term in section 202(10) of this Act.
       (2) The term ``aggregator'' means any person that purchases 
     or acquires retail electric energy on behalf of two or more 
     consumers.
       (3) The term ``Commission'' means the Federal Energy 
     Regulatory Commission.
       (4) The term ``consumer'' means a person who purchases 
     retail electric energy.
       (5) The term ``corporation'' means any corporation, joint-
     stock company, partnership, association, cooperative, 
     municipal utility, business trust, organized group of 
     persons, whether incorporated or not, or a receiver or 
     receivers, trustee or trustees of any of the foregoing.
       (6) The term ``large hydroelectric facility'' means a 
     facility which has a power production capacity, which 
     together with any other facilities located at the same site 
     is greater than 80 megawatts.
       (7) The terms ``local distribution facilities'' and 
     ``retail transmission facilities'' mean facilities used to 
     provide retail electric energy to consumers.
       (8) The term ``mitigation'' means any widely accepted 
     business practice used by a retail electric energy provider 
     to dispose of or reduce uneconomic assets or costs.
       (9) The term ``person'' means an individual or corporation.
       (10) The term ``public utility holding company'' shall have 
     the same meaning given the term in section 202(6) of this 
     Act.
       (11) The term ''renewable energy'' means electricity 
     generated from solar, wind, waste, except for municipal solid 
     waste, biomass, hydroelectric or geothermal resources.
       (12) The term ``Renewable Energy Credit'' means a tradable 
     certificate of proof that one unit (as determined by the 
     Commission) of renewable energy was generated by any person.
       (13) The term ``retail electric competition'' means the 
     ability of each consumer in a particular State to purchase 
     retail electric energy from any person seeking to sell 
     electric energy to such consumer.
       (14) The term ``retail electric energy'' means electric 
     energy and ancillary services sold for ultimate consumption.
       (15) The term ``retail electric energy provider'' means any 
     person who distributes retail electric energy to consumers 
     regardless of whether the consumers purchase such energy from 
     the provider or another supplier.
       (16) The term ``retail electric energy supplier'' means any 
     person which sells retail electric energy to consumers.
       (17) The term ``State'' means any State or the District of 
     Columbia.
       (18) The term ``State regulatory authority'' means any 
     State agency, including a municipality, which has ratemaking 
     authority with respect to the rates of any retail electric 
     energy provider and the Tennessee Valley Authority.

[[Page S866]]

       (19) The term ``transmission system'' means all facilities, 
     including federally-owned facilities, transmitting 
     electricity in interstate commerce in a particular region, 
     including those located in the State of Texas and those 
     providing international interconnections, but does not 
     include local distribution and retail transmission facilities 
     as defined by the Commission.
       (20) The term ``wholesale electric energy'' means electric 
     energy and related services sold for resale.
       (21) The term ``wholesale electric energy supplier'' means 
     any person which sells wholesale electric energy.

     SEC. 102. MANDATORY RETAIL ACCESS.

       (a) Customer Choice.--Beginning on December 15, 2003 each 
     consumer shall have the right to purchase retail electric 
     energy from any person, subject to any limitations imposed 
     pursuant to section 105(a) of this Act, offering to sell 
     retail electric energy to such consumer.
       (b) Local Distribution and Retail Transmission 
     Facilities.--Beginning on December 15, 2003 all persons 
     seeking to sell retail electric energy shall have reasonable 
     and nondiscriminatory access, on an unbundled basis, to the 
     local distribution and retail transmission facilities of all 
     retail electric energy providers and all related services.

     SEC. 103. AGGREGATION.

       Subject to any limitations imposed pursuant to section 
     105(a) of this Act, a group of consumers or any person acting 
     on behalf of such group may purchase or acquire retail 
     electric energy for the members of the group if they are 
     located in a State or States where there is retail electric 
     competition.

     SEC. 104. PRIOR IMPLEMENTATION.

       (a) State Action.--A State or State regulatory authority, 
     if authorized under State law, may require retail electric 
     energy providers selling retail electric energy to consumers 
     in such State to provide reasonable and nondiscriminatory 
     access, on an unbundled basis, to its local distribution and 
     retail transmission facilities and all related services to 
     competing retail electric energy suppliers prior to December 
     15, 2003.
       (b) Nonregulated Providers.--A retail electric energy 
     provider not subject to the jurisdiction of a State 
     regulatory authority may elect to provide reasonable and 
     nondiscriminatory access, on an unbundled basis, to its local 
     distribution and retail transmission facilities and all 
     related services to competing retail electric energy 
     suppliers prior to December 15, 2003.
       (c) Grandfather.--Legislation enacted by a State or a 
     regulation issued by a State regulatory authority prior to 
     January 30, 1997 which has the effect of requiring retail 
     electric competition on or before December 15, 2003, shall be 
     deemed to be in compliance with the requirements of sections 
     102, 106 and 107 of this Act, for so long as such retail 
     electric competition exists.

     SEC. 105. STATE REGULATION.

       (a) State Requirements.--Nothing in this Act shall prohibit 
     a State or a State regulatory authority from imposing 
     requirements on persons seeking to sell retail electric 
     energy to consumers in that State which are intended to 
     promote the public interest, including requirements related 
     to reliability and the provision of information to consumers 
     and other retail electric suppliers. Any such requirements 
     must be applied on a nondiscriminatory basis and may not 
     be used to exclude any class of potential suppliers, such 
     as retail electric energy providers, from the opportunity 
     to sell retail electric energy providers, from the 
     opportunity to sell retail electric energy.
       (b) Maintenance of State Authority.--Nothing in this Act is 
     intended to prohibit a State from enacting laws or imposing 
     regulations related to retail electric energy service that 
     are consistent with the requirements of this Act.
       (c) Continued State Authority Over Distribution.--A State 
     or State regulatory authority may continue to regulate local 
     distribution and retail transmission service currently 
     subject to State regulation in any manner consistent with 
     this Act.

     SEC. 106. STRANDED COST RECOVERY.

       (a) Application for Recovery.--A retail electric energy 
     provider that was subject to the jurisdiction of a State 
     regulatory authority prior to the date of enactment of this 
     Act may submit an application to the State regulatory 
     authority seeking calculation of its total stranded costs in 
     that State if--
       (1) subsequent to January 30, 1997, the State regulatory 
     authority has issued a regulation or the State has enacted 
     legislation requiring retail electric competition which does 
     not provide for the full recovery of stranded costs; of
       (2) the retail electric energy provider's customers have 
     access to retail competition as a result of the requirements 
     of Section 102 of this Act.
       (b) Calculation of Stranded Costs.--
       (1) If a State regulatory authority calculates the 
     applicant's stranded costs pursuant to subsection (a), the 
     authority shall choose, within six months after the receipt 
     of the application, between the calculation methodologies 
     described in subsection (f) of this section.
       (2) If a State regulatory authority does not calculate the 
     retail electric energy provider's total stranded costs, the 
     Commission shall calculate the provider's stranded costs 
     using the methodology described in subsection (f)(2) of this 
     section.
       (c) Nonregulated Utilities.--A retail electric energy 
     provider that is not subject to regulation by a State 
     regulatory authority prior to the date of enactment of this 
     Act may calculate the amount of its total stranded costs 
     pursuant to either methodology described in subsection (f) of 
     this section.
       (d) Right of Recovery.--A retail electric energy provider 
     shall be entitled to full recovery of its stranded costs, 
     over a reasonable period of time, through a non-bypassable 
     Stranded Cost Recovery Charge imposed on its distribution and 
     retail transmission customers.
       (e) Prohibition on Cost-Shifting.--No class of consumers in 
     a State shall be assessed a Stranded Cost Recovery Charge 
     that a State regulatory authority or the Commission, 
     whichever is applicable, determines is in excess of the 
     class' proportional responsibility for the retail electric 
     energy provider's costs that existed prior to the 
     implementation of retail electric competition in such State.
       (f) Calculation of Stranded Costs.--For purposes of this 
     section and section 107 of this Act, the term ``stranded 
     costs'' means either (1) all legitimate, prudently incurred 
     and verifiable investments made by a retail electric energy 
     provider in generation assets, including binding power 
     purchase contracts, and related regulatory assets which would 
     have been recoverable but for the implementation of retail 
     electric competition following the date of enactment of this 
     Act, and which cannot be reasonably mitigated or (2) if a 
     retail electric energy provider sells all of its generating 
     facilities, the difference between the book value of such 
     facilities less the amount received from their sale. Nothing 
     in this title is intended to permit a reassessment of 
     prudence with regard to the incurrence of costs related to a 
     particular generating facility or contract in the event a 
     State Regulatory Authority or the Commission has already made 
     a legally binding determination.

     SEC. 107. MULTISTATE UTILITY COMPANY STRANDED COSTS.

       (a) Limitation on Obligation.--Customers of a retail 
     electric energy provider that serves customers in more than 
     one State or that is affiliated with another retail electric 
     energy provider shall only be responsible for stranded costs 
     associated with retail electric competition in the State or 
     area in which such customers are located.
       (b) Regional Generating Facilities.--
       (1) The consent of Congress is given for the creation of a 
     regional board if--
       (A) each State regulatory authority regulating an affiliate 
     of a public utility holding company with affiliate retail 
     electric energy providers serving customers in more than one 
     state elects to join such a board;
       (B) an affiliate of the public utility holding company owns 
     and/or operates a generating facility and sells power from 
     that facility to two or more affiliates of the same holding 
     company and did not sell retail electric energy prior to 
     January 30, 1997 (hereinafter referred to as the ``wholesale 
     generating company''); and
       (C) the public utility holding company notifies each State 
     regulatory authority which regulates a retail electric energy 
     provider affiliated with the holding company that it intends 
     to seek recovery of the stranded costs associated with the 
     generating facility or facilities (described in subsection 
     (b)(1)(B)) owned by the wholesale generating company 
     affiliated with such holding company.
       (2) The regional board shall be formed if each State 
     regulatory authority elects to create the board within six 
     months after receiving the notification described in 
     subsection (b)(1)(C). If such elections are not made within 
     the requisite time period, the Commission shall assume the 
     responsibilities of the board as described in this section.
       (3) The regional board shall have one year after the date 
     it is formed to calculate, on a unanimous basis, the stranded 
     costs associated with the generating facility which is the 
     subject of the proceeding in accordance with the definition 
     contained in section 106(f) of the Act and to allocate such 
     costs among the retail electric energy provider affiliates of 
     the public utility holding company on a just and reasonable 
     and nondiscriminatory basis.
       (4) If the regional board fails to make either or both 
     determinations, as described in subsection (b)(3) in the 
     requisite time period, the Commission shall make the 
     determination or determinations that have yet to be made.
       (5) After its level of stranded costs is determined 
     pursuant to this subsection, the wholesale generating company 
     affiliate of the holding company shall be entitled to fully 
     recover its stranded costs, over a reasonable period of time, 
     from the retail electric energy provider affiliates to which 
     it sells electric energy pursuant to the procedures 
     established by this subsection.
       (6) A retail electric energy provider's stranded cost 
     payment obligations pursuant to this subsection shall be 
     deemed stranded costs for the purposes of sections 106 and 
     107 of this Act.

     SEC. 108. UNIVERSAL SERVICE.

       (a) Service Obligation.--After December 15, 2003, each 
     retail electric energy provider shall be obligated to sell 
     retail electric energy to, or purchase retail electric energy 
     on behalf of, any consumer in a particular State served by 
     such retail electric energy provider if the State regulatory 
     authority located in such State has determined that such 
     consumer does not have reasonable access to

[[Page S867]]

     competing retail electric energy suppliers and the consumer 
     has not chosen an alternative supplier.
       (b) Compensation.--
       (1) If the retail electric energy provider performing the 
     service described in subsection (a) is subject to 
     State regulatory authority regulation of its distribution 
     services, such provider shall be compensated at a just and 
     reasonable rate established by such regulatory authority.
       (2) If the retail electric energy provider performing the 
     service described in subsection (a) is not subject to 
     distribution service regulation by a State regulatory 
     authority, such provider shall establish the appropriate 
     level of compensation.
       (3) A State or a State regulatory authority, if authorized 
     by the State, may impose a nonbypassable Universal Service 
     Charge imposed on the distribution and retail transmission 
     customers of all retail electric energy providers in such 
     State to fund all or part of the compensation provided in 
     subsections (b)(1) and (b)(2).
       (4) A State regulatory authority or the retail electric 
     energy provider, if it establishes its own level of 
     compensation pursuant to subsection (b)(2), may require the 
     consumer receiving retail electric energy pursuant to 
     subsection (a) to pay for all or part of the compensation 
     provided in subsections (b)(1) and (b)(2).

     SEC. 109. PUBLIC BENEFITS.

       Nothing in this Act shall prohibit a State or State 
     regulatory authority from assessing charges on consumers to 
     fund public benefit programs such as those designed to aid 
     low-income energy consumers, promote energy research and 
     development or achieve energy efficiency and conservation.

     SEC. 110. RENEWABLE ENERGY.

       (a) Minimum Renewable Requirement.--Beginning on January 1, 
     2004 and each year thereafter, every retail electric energy 
     supplier shall submit to the Commission Renewable Energy 
     Credits in an amount equal to the required annual percentage 
     of the total retail electric energy sold by such supplier in 
     the preceding calendar year.
       (b) State Renewable Energy Programs.--Nothing in this 
     section shall be construed to prohibit any State or any State 
     regulatory authority from requiring additional renewable 
     energy generation in that State under any program adopted by 
     the State.
       (c) Required Annual Percentage.--Beginning in calendar year 
     2003, the required annual percentage for each retail electric 
     energy supplier shall be 5 percent. Thereafter, the required 
     annual percentage for each such supplier shall be 9 percent 
     beginning in calendar year 2008 and 12 percent beginning in 
     calendar year 2013.
       (d) Submission of Credits.--A retail electric energy 
     supplier may satisfy the requirements of subsection (a) 
     through the submission of--
       (1) Renewable Energy Credits issued by the Commission under 
     this section for renewable energy sold by such supplier in 
     such calendar year.
       (2) Renewable Energy Credits issued by the Commission under 
     this section to any other retail electric energy supplier for 
     renewable energy sold in such calendar year by such other 
     supplier and acquired by such retail electric energy 
     supplier.
       (3) Any combination of the foregoing.

     A Renewable Energy Credit that is submitted to the Commission 
     for any year may not be used for any other purposes 
     thereafter.
       (e) Issuance of Renewable Energy Credits.--
       (1) The Commission shall establish by rule after notice and 
     opportunity for hearing but not later than one year after the 
     date of enactment of this Act, a National Renewable Energy 
     Trading Program to issue Renewable Energy Credits to retail 
     electric suppliers. Renewable Energy Credits shall be 
     identified by type of generation and the State in which the 
     facility is located. Under such program, the Commission shall 
     issue--
       (A) one-half of one Renewable Energy Credit to any retail 
     electric energy supplier who sells one unit of renewable 
     energy generated at a large hydroelectric facility;
       (B) one Renewable Energy Credit to any retail electric 
     energy supplier who sells one unit of renewable energy 
     generated at a facility, other than a large hydroelectric 
     facility, built prior to the date of enactment of this Act; 
     and
       (C) two Renewable Energy Credits to any retail electric 
     supplier who sells one unit of renewable energy generated at 
     a facility, other than a large hydroelectric facility, built 
     on or after the date of enactment of this Act.
       (2) The Commission shall impose and collect a fee on 
     recipients of Renewable Energy Credits in an amount equal to 
     the administrative costs of issuing, recording, monitoring 
     the sale or exchange, and tracking such Credits.
       (f) Sale or Exchange.--Renewable Energy Credits may be sold 
     or exchanged by the person issued or the person who acquires 
     the Credit. A Renewable Energy Credit for any year that is 
     not used to satisfy the minimum renewable sales requirement 
     of this section for that year may not be carried forward for 
     use in another year. The Commission shall promulgate 
     regulations to provide for the issuance, recording, 
     monitoring the sale or exchange, and tracking of such 
     Credits. The Commission shall maintain records of all sales 
     and exchanges of Credits. No such sale or exchange shall be 
     valid unless recorded by the Commission.
       (g) Rules and Regulations.--The Commission shall promulgate 
     such rules and regulations as may be necessary to carry out 
     this section, including such rules and regulations requiring 
     the submission of such information as may be necessary to 
     verify the annual electric generation and renewable energy 
     generation of any person applying for Renewable Energy 
     Credits under this section or to verify and audit the 
     validity of Renewable Energy Credits submitted by any person 
     to the Commission.
       (h) Annual Reports.--The Commission shall gather available 
     data and measure compliance with the requirements of this 
     section and the success of the National Renewable Energy 
     Trading Program established under this section. On an annual 
     basis not later than May 31 of each year, the Commission 
     shall publish a report for the previous year that includes 
     compliance data, National Renewable Energy Trading Program 
     results, and steps taken to improve the Program results.
       (i) Sunset.--The requirements of this section shall cease 
     to apply on December 31, 2019.

     SEC. 111. TRANSMISSION.

       (a) Transmission Regions.--Within two years after the date 
     of enactment of this Act, the Commission shall establish the 
     broadest feasible transmission regions and designate an 
     Independent System Operator to manage and operate the 
     transmission system in each region beginning on December 15, 
     2003. In establishing transmission regions and designating 
     Independent System Operators the Commission shall give 
     deference to Independent System Operators approved by the 
     Commission prior to the date of enactment of this Act, if it 
     would be consistent with the requirements of this section.
       (b) Independent System Operators.--A person designated as 
     an Independent System Operator shall not be subject to the 
     control of--
       (1) any person owning any transmission facilities located 
     in the region in which the Independent System Operator will 
     operate; or
       (2) any retail electric energy supplier selling retail 
     electric energy to consumers in the region in which the 
     Independent System Operator will operate.
       (c) Regional Transmission Oversight Board.--After the 
     Commission has designated an Independent System Operator for 
     a particular transmission system, each State that is part of 
     the transmission region established by the Commission may 
     elect to join a Regional Transmission Oversight Board. If all 
     States within the transmission region so elect within 180 
     days after the Commission designates an Independent System 
     Operator for the transmission region, the Board shall be 
     formed.
       (d) Board Membership.--The Regional Transmission Oversight 
     Board shall be composed of an equal number of members from 
     each State which is a member of the Board. The Board shall 
     prescribe its own rules for organization, practice and 
     procedure for carrying out the functions assigned by this 
     section.
       (e) Transmission Regulation.--
       (1) If a Regional Transmission Oversight Board is formed, 
     it shall have the same authority as the Commission has 
     pursuant to sections 205, 206, 211, and 212 of the Federal 
     Power Act (16 U.S.C. 824d, 824e, 824j, and 824k), as amended 
     by this Act, with respect to the transmission of electric 
     energy in interstate commerce by the Independent System 
     Operator within the transmission region designated by the 
     Commission. Any actions taken by such Board pursuant to this 
     subsection shall be consistent with Commission precedent.
       (2) If a Regional Transmission Oversight Board is not 
     formed for a particular region, the Commission shall continue 
     to have authority over the transmission of electric energy in 
     interstate commerce by the Independent System Operator within 
     the transmission region designated by the Commission.
       (3) The Commission shall have authority over the 
     transmission of electric energy in interstate commerce 
     between two or more transmission regions designated by the 
     Commission.
       (4) Section 212(f) of the Federal Power Act (16 U.S.C. 
     824k(f) shall be repealed on the date the Tennessee Valley 
     Authority becomes a retail electric energy supplier.
       (5) Section 212(g) of the Federal Power Act (16 U.S.C. 
     824k(g) is amended by adding ``prior to December 15, 2003'' 
     immediately following ``utilities''.
       (6) The prohibition outlined by section 212(h) of the 
     Federal Power Act (16 U.S.C. 824k(h)) shall be inapplicable 
     either:
       (A) in any situation where a retail electric energy 
     supplier is seeking access to a transmission facility for the 
     purpose of selling retail electric energy to a consumer 
     located in a State that has authorized retail electric 
     competition prior to December 15, 2003; or
       (B) in all cases beginning on December 15, 2003.
       (f) Rules.--On or before January 1, 2002, the Commission 
     shall issue binding rules for it and the various Regional 
     Transmission Boards, governing oversight of the Independent 
     System Operators, designed to promote transmission 
     reliability and efficiency and competition among retail and 
     wholesale electric energy suppliers, including rules related 
     to transmission rates that inhibit competition and 
     efficiency.

[[Page S868]]

     SEC. 112. CROSS-SUBSIDIZATION.

       Nothing in this Act is intended to permit retail electric 
     energy providers from recovering in its distribution and 
     retail transmission rates any costs associated with 
     unregulated activities.

     SEC. 113. COMPETITIVE GENERATION MARKETS.

       (a) Mergers.--
       (1) Section 203(a) of the Federal Power Act (16 U.S.C. 
     824b(a)) is amended by adding ``including the promotion of 
     competitive wholesale and retail electric generation 
     markets,'' immediately following ``public interest''.
       (2) Add the following new subsections at the end of section 
     203 of the Federal Power Act (16 U.S.C. 824b):
       ``(c) Acquisition of Natural Gas Utility Company.--No 
     public utility shall acquire the facilities or securities of 
     a natural gas utility company unless the Commission finds 
     that such acquisition is in the public interest.
       ``(d) Definition.--For purposes of this section, the term 
     ``natural gas utility company'' means any company that owns 
     or operates facilities used for the transmission at 
     wholesale, or the distribution at retail (other than the 
     distribution only in enclosed portable containers) of natural 
     or manufactured gas for heat, light, or power.
       (b) Market Power.--The Commission shall take such actions 
     as it determines are necessary to prohibit any retail 
     electric energy supplier or retail electric energy provider 
     or any affiliate thereof, from using its ownership or control 
     of resources to maintain a situation inconsistent with 
     effective competition among retail and wholesale electric 
     suppliers.

     SEC. 114. NUCLEAR DECOMMISSIONING COSTS.

       To ensure safety with regard to the public health and safe 
     decommissioning of nuclear generating units, retail and 
     wholesale electric energy suppliers and retail electric 
     energy providers owning nuclear generating units prior to the 
     date of enactment of this Act shall be entitled and obligated 
     to recover, from their customers, all reasonable costs 
     associated with Federal and State requirements for the 
     decommissioning of such nuclear generating units.

     SEC. 115. TENNESSEE VALLEY AUTHORITY.

       (a) Competition in Service Territory.--Notwithstanding any 
     other provision of law, all retail and wholesale electric 
     energy suppliers shall have the right to sell retail and 
     wholesale electric energy to consumers that currently 
     purchase retail or wholesale electric energy either directly 
     from the Tennessee Valley Authority or persons purchasing 
     electric energy from the Tennessee Valley Authority, 
     beginning on December 15, 2003 or, if the Tennessee Valley 
     Authority, in its capacity as a State regulatory authority, 
     chooses an earlier date, such earlier date.
       (b) Ability To Sell Electric Energy.--Notwithstanding any 
     other provision of law, the Tennessee Valley Authority shall 
     be able to sell retail electric energy and wholesale electric 
     energy to any person, subject to any State restrictions 
     imposed pursuant to section 105 of this Act, beginning on the 
     date retail electric competition in the Authority's service 
     territory, as described in subsection (a), become effective.
       (c) Protection of U.S. Treasury.--This section shall be 
     inapplicable if the Secretary of Energy, in consultation with 
     the Office of Management and Budget, determines that the 
     application of this section is contrary to the financial 
     interest of the United States.

     SEC. 116. ENFORCEMENT.

       (a) Violation of the Act.--If any individual or corporation 
     or any other retail electric energy supplier or provider 
     fails to comply with the requirements of this Act, any 
     aggrieved person may bring an action against such entity to 
     enforce the requirements of this Act in the appropriate 
     Federal district court.
       (b) State or Commission Action.--Notwithstanding any other 
     provision of law, any person seeking redress from an action 
     taken by a State Regulatory Authority, the Commission or a 
     regulatory board pursuant to this Act shall bring such action 
     in the appropriate circuit of the United States Court of 
     Appeals.
               TITLE II--PUBLIC UTILITY HOLDING COMPANIES

     SEC. 201. REPEAL OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 
                   1935.

       The Public Utility Holding Company Act of 1935, as amended, 
     15 U.S.C. 79 et seq., is hereby repealed, effective one year 
     from the date of enactment of this Act.

     SEC. 202. DEFINITIONS.

       For purposes of this title:
       (1) The term ``person'' means an individual or company.
       (2) The term ``company'' means a corporation, joint stock 
     company, partnership, association, business trust, organized 
     group of persons, whether incorporated or not, or a receiver 
     or receivers, trustee or trustees of any of the foregoing.
       (3) 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.
       (4) 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) of natural or manufactured gas for heat, light or 
     power.
       (5) The term ``public utility company'' means an electric 
     utility company or gas utility company but does not mean a 
     qualifying facility as defined in the Public Utility 
     Regulatory Policies Act of 1992, or an exempt wholesale 
     generator or a foreign utility company defined by the Energy 
     Policy Act of 1992.
       (6) The term ``public utility 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 or holding 
     company as to make it necessary or appropriate for the 
     protection of consumers with respect to rates that such 
     person be subject to the obligations, duties, and liabilities 
     imposed in this title upon holding companies.
       (7) 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 
     protection of consumers with respect to rates that such 
     person be subject to the obligations, duties, and liabilities 
     imposed in this title upon subsidiary companies of holding 
     companies.
       (8) The term ``holding company system'' means a holding 
     company together with its subsidiary companies.
       (9) The term ``associate company'' of a company means any 
     company in the same holding company system with such company.
       (10) The term ``affiliate'' of a company means any company 
     5 percent or more of whose outstanding voting securities are 
     owned, controlled, or held with power to vote, directly or 
     indirectly, by a company.
       (11) 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.
       (12) The term ``Commission'' means the Federal Energy 
     Regulatory Commission.
       (13) 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 law of such State has jurisdiction to 
     regulate public utility companies.

     SEC. 203. EXEMPTIONS.

       (A) Federal and State Agencies.--No provision of this title 
     shall apply to: (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 of the 
     foregoing, or (5) any officer, agent, or employee of any of 
     the foregoing acting as such in the course of his official 
     duty.
       (b) Unnecessary Provisions.--The Commission, by rule or 
     order, may conditionally or unconditionally exempt any person 
     or transaction, or any class or classes of persons or 
     transactions, from any provision or provisions of this 
     title or of any rule or regulation thereunder, if the 
     Commission finds that regulation of such person or 
     transaction is not relevant to the rates of a public 
     utility company. The Commission shall not grant such an 
     exemption, except with regard to section 204 of this Act, 
     unless all affected State commissions consent.
       (c) Retail Competition.--The provisions of this title shall 
     not apply to a holding company and every associate company of 
     such holding company if the Commission certifies that the 
     retail customers of every public utility subsidiary of such 
     holding company have access to alternative sources of 
     electricity in a manner that no longer requires regulation of 
     the holding company for the protection of consumers.

     SEC. 204. FEDERAL ACCESS TO BOOKS AND RECORDS.

       (a) Provision of Books and Records.--Every holding company 
     and associate company thereof shall maintain, and make 
     available to the Commission, such books, records, accounts, 
     and other documents as the Commission deems relevant to costs 
     incurred by a public utility company that is an associate 
     company of such holding company and necessary or appropriate 
     for the protection of consumers with respect to rates.
       (b) Examination of Books and Records.--The Commission may 
     examine the books and records of any company in a holding 
     company system, or any affiliate thereof, as the Commission 
     deems relevant to costs incurred by a public utility company 
     within such holding company system and necessary or 
     appropriate for the protection of consumers with respect to 
     rates.
       (c) Protected Information.--No member, officer, or employee 
     of the Commission shall divulge any fact or information that 
     may come to his knowledge during the course of examination of 
     books, accounts, or other information as hereinbefore 
     provided, except insofar as he may be directed by the 
     Commission or by a court.

     SEC. 205. STATE ACCESS TO BOOKS AND RECORDS.

       (a) Provision of Books and Records.--Every holding company 
     and associate company thereof, shall maintain, and make

[[Page S869]]

     available to each State Commission regulating the rates of 
     any public utility subsidiary of such holding company, such 
     books, records, accounts, and other documents as the State 
     Commission deems relevant to costs incurred by a public 
     utility company that is an associate company of such holding 
     company and necessary or appropriate for the protection of 
     consumers with respect to rates.
       (b) Protected Information.--No member, officer, or employee 
     of a State Commission shall divulge any fact or information 
     that may come to his knowledge during the course of 
     examination of books, accounts, or other information as 
     hereinbefore provided, except insofar as he may be directed 
     by the State Commission or a court.

     SEC. 206. AFFILIATE TRANSACTIONS.

       (a) Interaffiliate Transactions.--Both the Commission, with 
     regard to wholesale rates, and State Commissions, with regard 
     to retail rates, shall have the authority to determine 
     whether a public utility company may recover in rates any 
     costs of goods and services acquired by such public utility 
     company from an associate company after July 1, 1994, 
     regardless of when the contract for the acquisition of such 
     goods and services was entered into.
       (b) Associate Companies.--Both the Commission, with regard 
     to wholesale rates, and State Commissions, with regard to 
     retail rates, shall have the authority to determine whether a 
     public utility company may recover in rates any costs 
     associated with an activity performed by an associate 
     company.
       (c) Interaffiliate Power Transactions.--
       (1) Each State Commission shall have the authority to 
     examine the prudence of a wholesale electric power purchase 
     made by a public utility, which is not an associate company 
     of a public utility holding company, providing retail 
     electric service subject to regulation by the State 
     Commission.
       (2) Each State Commission shall have the authority to 
     examine the prudence of a wholesale electric power purchase 
     made by a public utility, which is an associate company of a 
     public utility holding company, providing retail electric 
     service subject to regulation by the State Commission, 
     provided that the costs related to such purchase have not 
     been allocated among two or more associated companies of such 
     public utility holding company, by the Commission prior to 
     the date of enactment and there is no subsequent reallocation 
     after the date of enactment.

     SEC. 207. CLARIFICATION OF REGULATORY AUTHORITY.

       No public utility which is an associate company of a 
     holding company may recover in rates from wholesale or retail 
     customers any costs not associated with the provision of 
     electric service to such customers, including those direct 
     and indirect costs related to investments not associated with 
     the provision of electric service to those customers, unless 
     the Commission, with regard to wholesale rates, or a State 
     Commission, with regard to retail rates, explicitly consents.

     SEC. 208. EFFECT ON OTHER REGULATION.

       Nothing in this Act shall preclude a State Commission from 
     exercising its jurisdiction under otherwise application law 
     to protect utility consumers.

     SEC. 209. 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 Act.

     SEC. 210. SAVINGS PROVISION.

       Nothing in this title prohibits a person from engaging in 
     activities in which it is legally engaged or authorized to 
     engage on the date of enactment of this title provided that 
     it continues to comply with the terms of any authorization, 
     whether by rule or by order.

     SEC. 211. IMPLEMENTATION.

       The Commission shall promulgate regulations necessary or 
     appropriate to implement this title not later than six months 
     after the date of enactment of this title.

     SEC. 212. RESOURCES.

       All books and records that relate primarily to the function 
     hereby vested in the Commission shall be transferred from the 
     Securities and Exchange Commission to the Commission.
           TITLE III--PUBLIC UTILITY REGULATORY POLICIES ACT

     SEC. 301. DEFINITION.

       For purposes of this title, 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.

     SEC. 302. 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 title, except a facility for which a power purchase 
     contract entered into under such section was in effect on 
     such effective date.

     SEC. 303. CONTRACTS.

       After the effective date of this title or after the date on 
     which retail electric competition, as defined in title I of 
     this Act, is implemented in all of its service territories, 
     whichever is earlier, no public 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.

     SEC. 304. SAVINGS CLAUSE.

       Notwithstanding sections 302 and 303, nothing in this title 
     shall be construed:
       (a) 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.
       (b) 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. 305. EFFECTIVE DATE.

       This title shall take effect on December 15, 2003.
                   TITLE IV--ENVIRONMENTAL PROTECTION

     SEC. 401. STUDY.

       The Environmental Protection Agency, in consultation with 
     other relevant Federal agencies, shall prepare and submit a 
     report to Congress by January 1, 2000, which examines the 
     implications of differences in applicable air pollution 
     emissions standards for wholesale and retail electric 
     generation competition and for public health and the 
     environment. The report shall recommend changes to Federal 
     law, if any are necessary, to protect public health and the 
     environment.
                                  ____


 Electric Consumers Protection Act of 1997--Section-by-Section Analysis


                      Title I--Retail Competition

                        Section 101--Definitions

                  Section 102--Mandatory Retail Access

       All consumers (including current customers of investor-
     owned, municipal and rural cooperative electric utilities) 
     have the right to purchase retail electric energy beginning 
     on December 15, 2003.
       All retail electric energy suppliers (entities selling 
     retail electric energy) have access to local distribution and 
     retail transmission facilities beginning on December 15, 
     2003.

                        Section 103--Aggregation

       A group of consumers or any entity acting on behalf of such 
     group is authorized to aggregate to purchase retail electric 
     energy for the members of the group if they live in a State 
     where retail electric competition exists.

                   Section 104--Prior Implementation

       States may require retail electric competition prior to 
     January 1, 2003.
       Municipal electric utilities and rural electric cooperative 
     utilities (not regulated by State regulatory authorities) may 
     provide for retail electric competition in their service 
     territories prior to December 15, 2003.
       If a State enacted legislation or imposed a regulation 
     prior to January 30, 1997, which requires retail electric 
     competition prior to December 15, 2003, the legislation or 
     regulation is deemed consistent with the mandatory retail 
     access and stranded costs sections of the Act.

                     Section 105--State Regulation

       States may impose requirements on retail electric energy 
     suppliers to protect the public interest.
       No class of potential retail electric energy suppliers can 
     be excluded from selling retail electric energy.
       States may continue to regulate local distribution and 
     retail transmission service provided by retail electric 
     energy providers (local distribution companies).

                  Section 106--Stranded Cost Recovery

       A utility providing retail electric service subject to 
     State regulation prior to the date of enactment, which is 
     seeking recovery of its stranded costs, must request the 
     State regulatory authority to calculate the amount of its 
     stranded costs associated with the implementation of retail 
     competition.
       If the State regulatory authority agrees to calculate the 
     utility's stranded costs it has two options: A. Determine the 
     level of the utility's legitimate, prudently incurred and 
     verifiable investments in generating assets and related 
     regulatory assets that can't be mitigated; or B. require the 
     utility to sell all of its generating facilities and then 
     subtract the revenue received from the book value of the 
     assets sold.
       If the State does not calculate the stranded costs, FERC 
     must require the utility to sell its generating facilities in 
     order to calculate stranded costs.
       A municipal electric utility or a rural electric 
     cooperative not subject to regulation by a State regulatory 
     authority may calculate its own stranded costs through either 
     method authorized for State regulatory authorities 
     calculating regulated utility stranded costs.
       Once a utility has had its stranded costs calculated, it is 
     entitled to recover such costs from its retail customers 
     taking distribution or retail transmission service pursuant 
     to a nonbypassable Stranded Cost Recovery Charge.
       No class of customers (such as a utility's residential 
     customers) can be required to pay a Stranded Cost Recovery 
     Charge in excess of its proportional responsibility for 
     utility costs prior to the implementation of retail electric 
     competition.

[[Page S870]]

         Section 107--Multistate Utility Company Stranded Costs

       Customers served by utility companies operating in more 
     than one state either directly or through an affiliate are 
     only responsible for stranded costs arising from retail 
     electric competition in the State they reside.
       All of the states regulating utility subsidiaries of a 
     multistate utility holding company may form a regional board 
     to calculate the stranded costs of a wholesale electric 
     supplier subsidiary of the holding company that does not sell 
     any retail electric energy and to allocate such costs among 
     the utility subsidiaries of the holding company.
       If the regional board is not formed or if the members of 
     the regional board fail to produce a consensus on either 
     determination required of the board, FERC shall perform the 
     board's responsibilities.
       Once the wholesale subsidiary's stranded costs have been 
     determined, the subsidiary is entitled to recover such costs 
     from its affiliated utility companies in the manner allocated 
     by the board or FERC and the utility companies are entitled 
     to recover such costs from its customers.

                     Section 108--Universal Service

       If, after December 15, 2003, a State regulatory authority 
     determines that a consumer does not have sufficient access to 
     competing retail electric energy suppliers, the retail 
     electric energy provider is obligated to sell power to or 
     purchase power on behalf of the consumer.
       The retail electric energy provider is entitled to just and 
     reasonable compensation for the service performed.
       States may impose a nonbypassable Universal Service Charge 
     on distribution and retail transmission consumers to help pay 
     for the retail electric energy provider's compensation.

                      Section 109--Public Benefits

       States are not prohibited by the Act from imposing charges 
     on retail electric energy consumers to fund public benefit 
     programs (i.e. low-income and energy efficiency).

                     Section 110--Renewable Energy

       Beginning in 2003, all retail electric energy suppliers are 
     required to either (1) sell at least a minimum amount of 
     renewable energy as part of the total amount of energy it 
     sells or (2) purchase credits from retail electric energy 
     suppliers that sell renewable energy in excess of the minimum 
     requirements.
       One-half of one Renewable Energy Credit will be provided to 
     retail electric energy suppliers selling power generated from 
     a large hydroelectric facility (more than 80 MW). One 
     Renewable Energy Credit will be provided to retail electric 
     energy suppliers selling power generated at all other 
     renewable electric facilities built prior to the date of 
     enactment. Two Renewable Energy Credits will be provided to 
     retail electric energy suppliers selling power generated at 
     all other renewable electric facilities built subsequent to 
     the date of enactment.
       Retail electric energy suppliers are required to have 
     Credits worth 5% of its generation beginning in 2003, 9% of 
     its generation beginning in 2008 and 12% of its generation 
     beginning in 2013.
       The requirements of this section expire on December 31, 
     2019.

                       Section 111--Transmission

       Within two years of the date of enactment FERC must 
     establish transmission regions and designate an Independent 
     System Operator (ISO) to manage and operate all of the 
     transmission facilities in each region beginning on December 
     15, 2003.
       The ISO can't be affiliated with any person owning 
     transmission facilities in the region or any retail electric 
     energy supplier selling retail energy in the region.
       The States making up a particular transmission region can 
     form a Regional Transmission Oversight Board to oversee the 
     ISO. If the Board is formed, it shall have the same authority 
     FERC currently has over transmission pursuant to the Federal 
     Power Act. If the Board is not formed; FERC shall retain 
     authority.
       FERC is required to issue rules by January 1, 2002 
     applicable to its and the Board's oversight of the ISOs to 
     promote transmission reliability and efficiency and 
     competition among retail and wholesale electric energy 
     suppliers.
       The Federal Power Act prohibition on FERC requiring 
     transmission access for the purposes of retail wheeling is 
     repealed on January 1, 2003 or at an earlier date for a 
     particular retail wheeling request in a State that has retail 
     electric competition prior to December 15, 2003.

                    Section 112--Cross-Subsidization

       Retail electric energy providers are not authorized by this 
     Act to recover costs related to unregulated activities in the 
     rates it charges for retail transmission and distribution 
     services.

              Section 113--Competitive Generation Markets

       FERC's authority over utility mergers pursuant to the 
     Federal Power Act is extended to electric utility mergers 
     with natural gas utility companies.
       FERC review of mergers must take into account the impact of 
     a merger on competitive wholesale and retail electric 
     generation markets.
       FERC has authority to take actions necessary to prohibit 
     retail electric energy suppliers and providers from using 
     their control of resources to inhibit retail and wholesale 
     electric competition.

               Section 114--Nuclear Decommissioning Costs

       Utilities owning nuclear power plants prior to the date of 
     enactment are entitled to recover costs to fund 
     decommissioning of the plants from their customers.

                Section 115--Tennessee Valley Authority

       Beginning on December 15, 2003 (or an earlier date if it so 
     decides) the Tennessee Valley Authority (TVA) can sell retail 
     and wholesale electric energy outside of its service 
     territory and its retail and wholesale customers can buy 
     energy from other sellers.
       If the Secretary of Energy, in consultation with OMB, 
     determines that this section would be contrary to the 
     financial interest of the U.S., the section shall not be 
     applicable.

                        Section 116--Enforcement

       All aggrieved persons may bring actions in U.S. District 
     Court to enforce a provision of the Act against individuals, 
     corporations and other retail electric energy providers and 
     suppliers.
       An appeal of a decision made by FERC or a State regulatory 
     authority shall be filed in a U.S. Circuit Court of Appeals.


               TITLE II--PUBLIC UTILITY HOLDING COMPANIES

                      Section 201--Repeal of PUHCA

       PUHCA is repealed one year from the date of enactment of 
     the Act.

                        Section 202--Definitions

                        Section 203--Exemptions

       The title does not apply to federal or state agencies or 
     foreign governmental authorities not operating in the U.S.
       FERC may exempt anyone from any of the requirements of the 
     title if the Commission finds the particular regulation not 
     relevant to public utility company rates and the affected 
     States consent.
       The provisions of the title don't apply to a particular 
     holding company when retail electric competition exists in 
     the service territory of each utility subsidiary of the 
     holding company.

            Section 204--Federal Access to Books and Records

       Each holding company and associate company of the holding 
     company must make its books and records available to FERC.

             Section 205--State Access to Books and Records

       Each holding company and associate company of the holding 
     company must make its books and records available to each 
     State regulatory authority regulating a utility subsidiary of 
     the holding company.

                  Section 206--Affiliate Transactions

       FERC, with regard to wholesale rates and States, with 
     regard to retail rates, have the authority to determine 
     whether a public utility affiliate of a holding company may 
     recover its costs associated with a non-power transaction 
     with an affiliated company if such costs arose after July 1, 
     1994.
       State regulatory authorities have the authority to review 
     the prudence of a utility's wholesale power purchases from 
     nonaffiliated sellers.
       State regulatory authorities have the authority to review 
     the prudence of a utility's wholesale power purchase from an 
     affiliated seller in the same holding company system unless 
     FERC has allocated the costs of the purchase among two or 
     more utility subsidiaries of the holding company prior to the 
     date of enactment and there is no subsequent reallocation.

           Section 207--Clarification of Regulatory Authority

       FERC, with regard to wholesale rates, and State regulatory 
     authorities, with regard to retail rates, must explicitly 
     consent, before a utility affiliate of a utility holding 
     company can recover costs in rates that are not directly 
     related to the provision of electric service to its 
     customers.

                Section 208--Effect on Other Regulation

       State regulatory authorities can exercise their 
     jurisdiction under otherwise applicable law to protect 
     utility consumers.

                        Section 209--Enforcement

       FERC has the same enforcement authority under this title as 
     it does under the Federal Power Act.

                     Section 210--Savings Provision

       A person engaging in an activity it was legally entitled to 
     engage in on the date of enactment may continue to be 
     entitled to engage in the activity.

                      Section 211--Implementation

       FERC must promulgate regulations to implement the title 
     within 6 months of the date of enactment.

                         Section 212--Resources

       The SEC must transfer its books and records related to 
     holding company regulation to the FERC.


           title iii--public utility regulatory policies act

                        Section 301--Definition

                        Section 302--Facilities

       Section 210 of PURPA doesn't apply to facilities beginning 
     commercial operation after the effective date of the title 
     unless the power purchase contract related to the facility 
     was in effect on the effective date.

                         Section 303--Contracts

       Public utilities are no longer required to enter into new 
     purchase contracts under Section 210 of PURPA once their is 
     retail electric competition in their service territories.

                      Section 304--Savings Clause

       This title does not affect existing power purchase 
     contracts under PURPA.

[[Page S871]]

                      Section 305--Effective Date

       The effective date of the title is December 15, 2003.


                   title iv--environmental protection

                           Section 401--Study

       EPA must submit a study to Congress by January 1, 2000 
     which examines the implications of wholesale and retail 
     electric competition on the emission of pollutants and 
     recommends and changes to law, if any are necessary, to 
     protect public health and the environment.
                                 ______