[Congressional Record Volume 143, Number 59 (Thursday, May 8, 1997)]
[Senate]
[Pages S4233-S4234]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. THOMAS:
  S. 722. A bill to benefit consumers by promoting competition in the 
electric power industry, and for other purposes; to the Committee on 
Energy and Natural Resources.


The Electric Utility Restructuring Empowerment and Competitiveness Act 
                            of 1997 [EURECA]

  Mr. THOMAS. Mr. President, I rise today to introduce the Electric 
Utility Restructuring Empowerment and Competitiveness Act of 1997. This 
legislation, which gives states the authority to order the delivery of 
electric energy to all retail consumers, is based on the idea that less 
government intervention is the best way to achieve affordable, reliable 
and competitive options for retail electric energy services.
  This is a substantially different approach from other measures that 
have been introduced in both the House and Senate to restructure the 
nation's electric utility industry. I do not believe that a federal 
mandate on the states requiring retail competition by a date certain is 
in the best interest of all classes of customers. I am concerned that 
this method could result in increased electricity rates for low-density 
states or states that have relatively low-cost power. Electricity is an 
essential commodity critical to everyday life in this country. It is 
also an industry heavily regulated at the Federal and State levels. If 
the Congress is going to make fundamental changes to the last major 
regulated monopoly, its role should be to help implement competitive 
changes in a positive manner, rather than interject the heavy hand of 
government with a ``Washington-knows-best'' mentality.
  This legislation comes down on the side of States' rights. Having 
been involved in the electric power industry, I understand the unique 
characteristics of each State. As most everyone knows, California was 
the first State to

[[Page S4234]]

pass a retail choice law. Since that time, Arizona, Massachusetts, New 
Jersey, Pennsylvania, New Hampshire, Texas, Montana, Oklahoma and 
others have followed suit.
  According to Bruce Ellsworth, President of the National Association 
of Regulatory Utility Commissioners [NARUC], ``more than one-third of 
the Nation's population live in states that have chosen within the last 
year to move to open-access, customer choice markets.'' All told, every 
state except one is in the process of either examining or implementing 
policies for retail consumers of electric energy. States are clearly 
taking the lead--they should continue to have that role--and this bill 
confirms their authority by affirming States' ability to implement 
retail choice policies.
  This initiative leaves important functions, including the ability to 
recover stranded costs, establish and enforce reliability standards, 
promote renewable energy resources and support public benefit and 
assistance to low-income and rural consumer programs in the hands of 
State Public Service Commissions [PUC's]. If a State desires to impose 
a funding mechanism--such as wires charges--to encourage that a certain 
percentage of energy production comes from renewable alternatives, they 
should have that opportunity. However, I do not believe a nationally 
mandated set-aside is the best way to promote competition. Likewise, 
individual states would have the authority over retail transactions. 
This ensures that certain customers could not bypass their local 
distribution system and avoid responsibility for paying their share of 
stranded costs.

  One of the most important aspects of this debate--assuring that 
universal service is maintained--is a critical function that each State 
PUC should have the ability to oversee and enforce. In my legislation, 
nothing would prohibit a state from requiring all electricity providers 
that sell electricity to retail customers in that state to provide 
electricity service to all classes and consumers of electric power.
  Mr. President, at the wholesale level, my proposal attempts to create 
greater competition by prospectively exempting the sale of electricity 
for resale from rates determined by the Federal Energy Regulatory 
Commission [FERC]. Although everyone talks about ``deregulating'' the 
electricity industry, it is really the generation segment that will be 
deregulated. The FERC will continue to regulate transmission in 
interstate commerce, and State PUC's will continue to regulate retail 
distribution services and sales.
  When FERC issued Order 888 last year, it allowed utilities to seek 
market-based rates for new generating capacity. This provision goes a 
step further and allows utilities to purchase wholesale power from 
existing generating facilities, after the date of enactment of this 
Act, at prices solely determined by market forces.
  Furthermore, the measure expands FERC authority to require non-public 
utilities that own, operate or control transmission to open their 
systems. Currently, the Commission cannot require the Federal Power 
Marketing Administrations [PMA's], the Tennessee Valley Authority 
[TVA], municipalities and cooperatives that own transmission, to 
provide wholesale open access transmission service. According to 
Elizabeth Moler, Chairwoman of FERC, approximately 22 percent of all 
transmission is beyond open access authority. Requiring these non-
public utilities to provide this service will help ensure that a true 
wholesale power market exists.
  One of the key elements of this measure is streamlining and 
modernizing the Public Utility Regulatory Policies Act of 1978 [PURPA] 
and the Public Utility Holding Company Act of 1935 [PUHCA]. While both 
of these initiatives were enacted with good intentions, and their 
obligations fulfilled, there is widespread consensus that the Acts have 
outlived their usefulness.
  My bill amends section 210 of PURPA on a prospective basis. Current 
PURPA contracts would continue to be honored and upheld. However, upon 
enactment of this legislation, a utility that begins operating would 
not be required to enter into a new contract or obligation to purchase 
electricity under section 210 of PURPA.
  With regard to PUHCA, I chose to incorporate Senator D'Amato's 
recently introduced legislation in my bill. As Chairman of the Senate 
Banking Committee, which has jurisdiction over the issue, he has 
crafted a proposal that I believe will successfully reform the statute 
and I support his efforts. Under his proposal, the provisions of PUHCA 
would be repealed 18 months after the Act is signed into law. 
Furthermore, all books and records of each holding company and each 
associate company would be transferred from the Securities and Exchange 
Commission [SEC]--which currently has jurisdiction over the 15 
registered holding companies--to the FERC. This allows energy 
regulators, who truly know the industry, to oversee the operations of 
these companies and review acquisitions and mergers. These consumer 
protections are an important part of PUHCA reform.
  Mr. President, an issue which must be resolved in order for a true 
competitive environment to exist is that of utilities receiving special 
``subsidies'' by the federal government and the U.S. tax code. For 
years, investor-owned utilities [IOU's] have claimed inequity because 
of tax-exempt financing and low-interest loans that municipalities and 
rural cooperatives receive. On the other side of the equation, these 
public power systems maintain that IOU's are able to receive special 
tax treatment, not offered to them, which amounts to a ``tax free'' 
loan. The jury is still out on how best to deal with this thorny and, 
undoubtedly complex matter, but make no mistake about it, changes will 
be made.
  A viable option the Congress should consider is to ``build a fence'' 
around governmental utilities. Sales in existing service territories 
could continue to be financed using current methods. However, for sales 
outside of their traditional boundaries, these systems should operate 
on the same basis and play by the same rules as other competitors.
  The Congress should also address existing tax structures to determine 
if the ``benefits'' tax-paying utilities receive results in unfair 
advantages against their competitors. While tax initiatives, such as 
accelerated depreciation and investment tax credits, are available to 
all businesses that pay income tax, if this amounts to ``subsidies'' 
reforms may have to be made.
  My bill would direct the Inspector General of the Department of 
Treasury to file a report to the Congress detailing whether and how tax 
code incentives received by all utilities should be reviewed in order 
to foster a competitive retail electricity market in the future. 
Furthermore, I am pleased that Senator Murkowski, Chairman of the 
Senate Energy and Natural Resources Committee, requested a report by 
the Joint Committee on Taxation to review all subsidies and incentives 
that investor-owned, publicly-owned and cooperatively-owned utilities 
receive.
  Mr. President, I believe EURECA is a common-sense approach that 
attempts to build consensus to solve some of the critical questions 
associated with this important issue. The states are moving and should 
continue to have the ability to craft electricity restructuring plans 
that recognize the uniqueness of each state. This legislation is the 
best solution to foster the debate and allow us to move forward with a 
better product for all classes of consumers and the industry as a 
whole.
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