[Congressional Record Volume 143, Number 155 (Friday, November 7, 1997)]
[Senate]
[Pages S11968-S11977]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mr. BUMPERS (for himself and Mr. Gorton):
S. 1401. A bill to provide for the transition to competition around
electric energy suppliers for the benefit and protection of consumers,
and for other purposes; to the Committee on Energy and Natural
Resources.
the transition to electric competition act of 1997
Mr. BUMPERS. Mr. President, I rise to day to introduce the Transition
to Electric Competition Act of 1997 along with my colleague from the
State of Washington, Senator Gorton. This bill provides for the
transition toward deregulation and competition in the electric utility
industry.
While few people 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 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 energy security.
It is not at all inconsequential that the electric utility industry,
which has remained relatively static for the last 60 years, is
undergoing 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 in some States are starting
to 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 both utilities and consumers.
Mr. President, in January I introduced S. 237, the Electric Consumers
Protection Act, because I believed that retail electric competition was
inevitable and Federal legislation was necessary to ensure that certain
consumers were not disadvantaged in the process. Several States were
proceeding to introduce competition in their jurisdictions and a number
of others were examining the matter. Since that time I have become even
more convinced that competition is on the horizon. Eleven States have
now enacted legislation or issued regulations requiring retail
competition by a time certain. Almost every other State currently has
the matter under review.
Some argue that there is no need for the Federal Government to
intervene; that the States are doing just fine on their own and they
should decide when and how to proceed with retail electric competition.
Mr. President, I couldn't disagree more.
A State-by-State approach will likely produce a lot of unintended
consequences which will limit the benefits associated with retail
competition and could disadvantage certain consumers. Electric
generation markets are becoming increasingly regional and even multi-
regional. 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 [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
system-wide basis for the benefit of customers in the entire region
[[Page S11969]]
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.
A State-by-State approach to retail competition also present 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.
Moreover, the States can't adequately address issues associated with
the use of transmission lines that provide for the transportation
across a number of States or the ability of a utility with significant
market power to dominate electricity generation in an entire region.
Clearly these are issues that need to be resolved at the Federal level.
When I introduced S. 237 there weren't many calling for Federal
action. However, interested observers are increasingly coming to the
conclusion that Federal electric restructuring legislation is not only
helpful, but is necessary. Even some of the States are calling on the
Federal Government to act.
The legislation we are introducing today is an updated version of S.
237. The bill includes the following provisions: All consumers would
have the right to choose their power supplier by January 1, 2002.
States could choose an earlier date for their residents if they wish.
Utilities would be able to recover their legitimate, prudent and
verifiable costs that they would have been able to recover from
ratepayers if retail competition had not been implemented. Consumers
located in States that currently have low cost electricity would be
protected from rate increases by ensuring that utilities can't use
their existing assets to sell power in more lucrative markets to the
disadvantage of their existing customers. All utilities selling retail
power would be required to generate a portion of that power using
renewable resources. All of the interstate transmission facilities
throughout the country would be managed by independent system operators
to ensure that electricity flows in an efficient manner and that
markets are competitive. FERC would be given greater authority to
protect against the use of market power by utilities to inhibit
competition. Both the Public Utility Holding Company Act [PUHCA] and
the Public Utility Regulatory Policies Act [PURPA] would be repealed in
conjunction with the implementation of retail electric competition.
In addition, Mr. President, the legislation attempts to address some
of the issues that relate to the impact of retail electric competition
on two Federal entities--the Bonneville Power Administration [BPA] and
the Tennessee Valley Authority [TVA]. Senator Gorton is especially
knowledgeable about the special problems facing BPA and I expect that
he will work closely with the other Members of the Senate from the
Pacific Northwest in developing a consensus approach.
With regard to TVA, our bill attempts to develop an approach that
will enable retail competition to be smoothly introduced in the
Tennessee Valley and will help TVA pay off its tremendous debt. The
bill also requires the TVA board to prepare a study examining whether
TVA should be privatized. I know that some observers may be concerned
that this could be a first step toward the privatization of the Federal
Power Marketing Administration [PMA's]. Mr. President, there is no
connection whatsoever between TVA and the PMA's. The PMA's market power
generated at hydroelectric facilities located at Federal dams. These
dams perform a variety of public services and cannot be privatized.
TVA, on the other hand, generates the bulk of its power from coal and
nuclear plants that serve no public purposes. In addition, the Federal
PMA's pay for themselves through power sales. TVA, on the other hand,
has an enormous level of privately held debt which it must find a way
to pay off, since the Federal Government is not responsible for it.
Mr. President, I am especially pleased that Senator Gorton has
decided to join with me in the effort to enact comprehensive electric
restructuring legislation. He has a reputation as a very bright and
thoughtful Member of this body and is a distinguished member of the
Energy and Natural Resources Committee, which has jurisdiction over the
matter. I know that he shares my desire to move this legislation
through Congress quickly next year.
Senator Murkowski, the chairman of the Senate Energy Committee,
recently indicated that he expects the committee to mark up electric
restructuring legislation next year. Both Senator Gorton and I want to
work with him and the other members of the committee in moving forward.
I look forward to undertaking this important task.
Mr. President, I want to say how honored I am to have one of our most
distinguished Senators, Senator Gorton of Washington, as my chief
cosponsor on this bill.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
Mr. President, I ask unanimous consent that a section-by-section
analysis of the Transition to Electric Competition Act of 1997 be
printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 1401
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 ``Transition
to Electric Competition 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. Definitions.
Sec. 4. Severability.
Sec. 5. Enforcement.
TITLE I--RETAIL COMPETITION
Sec. 101. Mandatory retail access.
Sec. 102. Aggregation.
Sec. 103. Prior implementation.
Sec. 104. State regulation.
Sec. 105. Retail stranded cost recovery.
Sec. 106. Wholesale stranded cost recovery.
Sec. 107. Lost retail benefits.
Sec. 108. Universal service.
Sec. 109. Public benefits.
Sec. 110. Renewable energy.
Sec. 111. Determination of local distribution facilities.
Sec. 112. Transmission.
Sec. 113. Competitive generation markets.
Sec. 114. Nuclear decommissioning costs.
Sec. 115. Right to know.
Sec. 116. Exemption of Alaska and Hawaii.
TITLE II--PUBLIC UTILITY HOLDING COMPANIES
Sec. 201. Repeal of the Public Utility Holding Company Act of 1935.
Sec. 202. Exemptions.
Sec. 203. Federal access to books and records.
Sec. 204. State access to books and records.
Sec. 205. Affiliate transactions.
Sec. 206. Clarification of regulatory authority.
Sec. 207. Effect on other regulation.
Sec. 208. Enforcement.
Sec. 209. Savings provision.
Sec. 210. Implementation.
Sec. 211. 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.
TITLE V--BONNEVILLE POWER ADMINISTRATION
Sec. 501. Findings and purposes.
Sec. 502. Columbia River fish and wildlife coordination and governance.
Sec. 503. Pacific Northwest federal transmission access.
Sec. 504. Transition cost mechanism.
Sec. 505. Independent system operator participation.
Sec. 506. Financial obligations.
Sec. 507. Prohibition on retail sales.
Sec. 508. Clarification of Commission authority.
Sec. 509. Repealed statute.
TITLE VI--TENNESSEE VALLEY AUTHORITY
Sec. 601. Competition in service territory.
Sec. 602. Ability to sell electric energy.
Sec. 603. Termination of contracts.
Sec. 604. Rates for electric energy.
Sec. 605. Privatization study.
SEC. 2. FINDINGS.
The Congress finds that:
(a) Congress has the authority to enact laws, under the
Commerce Clause of the
[[Page S11970]]
United States Constitution, regarding the wholesale and
retail generation, transmission, distribution, and sale of
electric energy in interstate commerce.
(b) Several States have taken steps to require competition
among retail electric supplies and a large number of other
States are expected to act.
(c) It has been the policy of Congress and the Commission
to promote competition among wholesale electric suppliers.
(d) It is in the public interest that the transition
towards competition in electric service ensures that all
consumers receive reliable and competitively-priced electric
service.
(e) 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.
(f) Consumers will not benefit from the introduction of
competition among electric energy suppliers if certain
suppliers have undue market power.
(g) It is important to encourage conservation and the use
of renewable resources to reduce reliance on fossil fuels,
promote domestic energy security and protect the environment.
(h) Competition among electric energy suppliers should not
degrade reliability nor cause consumers to lose electric
service.
SEC. 3. DEFINITIONS.
For purposes of this Act:
(a) The term ``affiliate'' of a specific 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 such specific company.
(b) The term ``aggregator'' means any person that purchases
or acquires retail electric energy on behalf of two or more
consumers.
(c) The term ``ancillary services'' shall have the same
meaning assigned to it by the Commission.
(d) The term ``associate company'' of a company means any
company in the same holding company system with such company.
(e) The term ``Commission'' means the Federal Energy
Regulatory Commission.
(f) 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.
(g) The term ``corporation'' means any corporation, joint-
stock company, partnership, association, rural electric
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.
(h) 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.
(i) 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.
(j) The term ``holding company system'' means a holding
company together with its subsidiary companies.
(k) 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.
(l) The term ``local distribution facilities'' means
facilities used to provide retail electric energy for
ultimate consumption.
(m) The term ``lost retail benefits'' means the increased
cost of retail electric energy in a retail electric energy
provider's service territory resulting from the sale
subsequent to the implementation of retail electric
competition, outside such service territory, of electric
energy generated at facilities the cost of which were
included in the retail rate base of the retail electric
energy provider prior to the implementation of retail
electric competition.
(n) The term ``mitigation'' means any widely accepted
business practice used by an electric utility company to
dispose of or reduce uneconomic assets or costs.
(o) The term ``municipal utility'' means a city, county,
irrigation district, drainage district, or other political
subdivision or agency of a State competent under the laws
thereof to carry on the business of a retail electric energy
provider and/or a retail electric energy supplier.
(p) The term ``person'' means an individual or corporation.
(q) 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, or an exempt wholesale generator or
a foreign utility company defined in the Energy Policy Act of
1992.
(r) 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 Securities and Exchange
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.
(s) The term ``renewable energy'' means electricity
generated from solar, wind, waste, including municipal solid
waste, biomass, hydroelectric or geothermal resources.
(t) 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.
(u) 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.
(v) The term ``retail electric energy'' means electric
energy and ancillary services sold for ultimate consumption.
(w) 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 an alternative supplier. A retail electric
energy provider may also be a retail electric energy
supplier.
(x) The term ``retail electric energy supplier'' means any
person which sells retail electric energy to consumers.
(y) The term ``retail stranded costs'' means all
legitimate, prudent, verifiable and non-mitigatable costs
incurred by an electric utility company in all of its
generation assets which would have been recoverable in retail
rates but for the implementation of retail electric
competition, less the total market value of these assets
after retail electric competition is implemented. Binding
power purchase contracts and regulatory assets, the costs of
which would have been recovered but for the implementation of
retail electric competition, shall be considered generation
assets for purposes of this subsection.
(z) The term ``rural electric cooperative'' means a
corporation that is currently paying off a loan for the
purposes of providing electric service from the Administrator
of the Rural Electrification Administration or the Rural
Utilities Service under the Rural Electrification Act of
1936.
(aa) The term ``State'' means any State or the District of
Columbia.
(bb) The term ``State regulatory authority'' means the
regulatory body of a State or municipality having sole
jurisdiction to regulate rates and charges for the
distribution of electric energy to consumers within the State
or municipality.
(cc) The term ``subsidiary company'' of a holding company
means--
(1) 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
(2) any person the management or policies of which the
Securities and Exchange 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 that such
person be subject to the obligations, duties, and liabilities
imposed upon subsidiary companies of public utility holding
companies.
(dd) The term ``transmission system'' means all facilities,
including federally-owned facilities, transmitting
electricity in interstate commerce in a particular region,
including all facilities transmitting electricity in the
State of Texas and those providing international
interconnections, but does not include local distribution
facilities as determined by the Commission.
(ee) The term ``wholesale electric energy'' means electric
energy and ancillary services sold for resale.
(ff) The term ``wholesale electric energy supplier'' means
any person which sells wholesale electric energy.
(gg) The term ``wholesale stranded costs'' shall have the
same meaning as in the Commission's Order No. 888.
(hh) The term ``voting security'' means any security
presently entitling the owner or holder thereof to vote in
the direction or management of the affairs of a company.
SEC. 4. SEVERABILITY.
If any provision of this Act, or the application of such
provision to any person or circumstance, 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.
SEC. 5. 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.
[[Page S11971]]
TITLE I--ELECTRIC COMPETITION
SEC. 101. MANDATORY RETAIL ACCESS.
(a) Customer Choice.--Beginning on January 1, 2002, each
consumer shall have the right to purchase retail electric
energy from any person offering to sell retail electric
energy to such consumer, subject to any limitations imposed
pursuant to section 104(a) of this Act.
(b) Local Distribution and Retail Transmission
Facilities.--Beginning on January 1, 2002, 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 ancillary
services.
SEC. 102. AGGREGATION.
Subject to any limitations imposed pursuant to section
104(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. 103. PRIOR IMPLEMENTATION.
(a) State Action.--Nothing in the Federal Power Act (16
U.S.C. 824 et seq.) shall be deemed to prohibit a State or
State regulatory authority, if authorized under State law,
from requiring 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 facilities and all ancillary
services to any retail electric energy supplier prior to
January 1, 2002.
(b) Grandfather.--Legislation enacted by a State or a
regulation issued by a State regulatory authority which has
the effect of providing all consumers in such State the
opportunity to purchase retail electric energy from any
retail electric energy supplier by January 1, 2002 and
provides electric utility companies with the opportunity to
recover their retail stranded costs as defined by this Act
(unless there is an agreement between a State or State
regulatory authority and a retail electric energy provider
which provides for a different level of recovery), shall be
deemed to be in compliance with the requirements of sections
101 and 105 of this Act.
(c) Reciprocity.--A State or State regulatory authority
that provides for retail electric competition may preclude
any retail electric energy provider selling retail electric
energy to consumers in another State and their affiliates
from selling retail electric energy to consumers in the State
with retail electric competition if the retail electric
energy provider does not provide reasonable and
nondiscriminatory access, on an unbundled basis, to its local
distribution facilities to any retail electric energy
supplier.
SEC. 104. STATE REGULATION.
(a) State Requirements.--A State or a State regulatory
authority may impose 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 generation reliability and the
provision of information to consumers and other retail
electric energy 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.
(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 service currently subject to State regulation,
including billing and metering in any manner consistent with
this Act.
SEC. 105. RETAIL STRANDED COST RECOVERY.
(a) Application for Determination.--Except as provided in
subsection (b), an electric utility company subject to the
ratemaking 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 a
determination of its total stranded costs in that State if:
(1) 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 retail stranded costs; or
(2) the electric utility company's retail distribution
customers have access to retail competition as a result of
the requirements of Section 101 of this Act.
(3) If a State regulatory authority fails to determine the
electric utility company's retail stranded costs within 18
months after the date upon which the company applied for a
determination of its stranded costs, the Commission shall
determine the company's retail stranded costs.
(b) Nonregulated Utilities.--A municipal or rural electric
cooperative that seeks to recover its retail stranded costs
may determine its total retail stranded costs.
(c) Right of Recovery.--(1) An electric utility company,
municipal utility or retail electric cooperative shall be
entitled to full recovery of its retail stranded costs, as
determined pursuant to subsection (a) or (b), over a
reasonable period of time through a non-bypassable Stranded
Cost Recovery Charge imposed on its customers.
(2) A rural electric cooperative which sells wholesale
electric energy to rural electric cooperative retail electric
energy providers or a joint action agency which sells
wholesale electric energy to municipal retail electric energy
providers may recover wholesale stranded costs from such
rural electric cooperative or municipal retail electric
energy providers. Such cost recovery shall be deemed a retail
stranded cost of the rural electric cooperative or municipal
retail energy provider.
(d) Prohibition on Cost-Shifting.--(1) 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.
(2) Customers of a retail electric energy provider that
serves consumers 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.
(e) Prior Prudence Determinations.--Nothing in this Act is
intended to affect or modify or permit the modification of a
final determination made by the Commission or a State
regulatory authority or an agreement entered into by the
Commission or a State regulatory authority with regard to the
prudence of any costs associated with a particular generating
facility or contract.
SEC. 106. WHOLESALE STRANDED COST RECOVERY.
(a) Commission Regulation.--The Commission shall have sole
jurisdiction to determine and provide for the recovery of
wholesale stranded costs associated with wholesale electric
competition with regard to public utilities subject to the
jurisdiction of the Commission pursuant to the Federal Power
Act.
(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 wholesale 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 18 months after the date
it is formed to determine, on a unanimous basis, the
wholesale stranded costs associated with the generating
facility which is the subject of the proceeding 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 wholesale 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 wholesale stranded
cost payment obligations pursuant to this subsection shall be
deemed retail stranded costs for the purposes of section 105
of this Act.
SEC. 107. LOST RETAIL BENEFITS.
A State may require a retail electric energy provider to
compensate its retail customers for lost retail benefits if,
after retail competition is implemented, the market value of
all of the provider's generating assets in the rate base
prior to the implementation of retail electric competition is
greater than the total costs of these assets that would have
been recoverable in retail rates but for the implementation
of retail electric competition. No retail electric energy
provider shall be required to compensate its customers in an
amount that exceeds the increased market value of its
generating assets resulting from the implementation of retail
electric competition.
SEC. 108. UNIVERSAL SERVICE
(a) State Universal Service Programs.--A State may
establish a Universal Service
[[Page S11972]]
Program that ensures that all consumers have access to
purchase retail electric energy from at least one retail
electric energy supplier at a just and reasonable rate.
(b) Service Obligation.--(1) After January 1, 2002, each
retail electric energy provider located in a State that has
not yet established a Universal Service Program described in
subsection (a) shall be obligated to sell retail electric
energy to, or purchase retail electric energy on behalf of,
any of its customers in a particular geographic area in which
a State regulatory authority or the Commission, if the State
regulatory authority fails to make a determination pursuant
to a request by an affected person, determines that there is
not effective retail electric competition in such area and
the consumer has not affirmatively chosen a retail electric
energy supplier.
(2) The retail electric energy provider performing the
service described in subsection (b)(1) is entitled to a just
and reasonable rate from the consumer receiving such service.
(c) Universal Service Fund.--A State or a State regulatory
authority, if authorized by the State, may impose a
nonbypassable Universal Service Charge on all customers of
every retail electric energy provider in such State to fund
all or part of the costs of a Universal Service Program,
including the partial or full payment of the charges a
provider may recover pursuant to subsection (b)(2).
SEC. 109. PUBLIC BENEFITS.
Nothing in this Act shall prohibit a State or State
regulatory authority from assessing charges on retail
consumers of energy to fund public benefits 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) Use of Proceeds by BPA.--The Administrator of the
Bonneville Power Administration shall use the proceeds from
the sale of any Renewable Energy Credit issued to the
Bonneville Power Administration under this section for its
retail electric energy sales to repay the Administration's
outstanding debt to the United States Treasury and
bondholders of securities backed by the Bonneville Power
Administration.
(h) 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 which is supplied by 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.
(i) 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.
(j) Sunset.--The requirements of this section shall cease
to apply on December 31, 2019.
SEC. 111. DETERMINATION OF LOCAL DISTRIBUTION FACILITIES.
(a) Application by State Regulatory Authority.--A State
regulatory authority may apply to the Commission for a
determination whether a particular facility used for the
transportation of electric energy located in such State is a
local distribution facility subject to the jurisdiction of
that State regulatory authority or is a transmission facility
subject to the jurisdiction of the Commission.
(b) Commission Findings.--If an application is submitted
pursuant to subsection (a) the Commission shall make a
determination giving the maximum practicable deference to the
position taken by the State regulatory authority, in
accordance with the following factors associated with the
facility:
(1) function and purpose;
(2) size;
(3) location;
(4) voltage level and other technical characteristics;
(5) historic, current and planned usage patterns;
(6) interconnection and coordination with other facilities;
and
(7) any other factor the Commission deems relevant.
SEC. 112. 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 January 1,
2002. 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) Transmission Regulation.--
(1) 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.
(2) The Commission shall have authority over the
transmission of electric energy in interstate commerce
between two or more transmission regions designated by the
Commission.
(3) Sections 212(f) and 212(j) of the Federal Power Act (16
U.S.C. 824k(f) and 824k(j)) are repealed effective January 1,
2002.
(4) Section 212(g) of the Federal Power Act (16 U.S.C.
824k(g)) is amended by adding ``prior to January 1, 2002''
immediately following ``utilities''.
(5) Section 212(h) of the Federal Power Act (16 U.S.C.
824k(h))--
(A) shall not apply after the date of enactment of this Act
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 January 1,
2002; or
(B) is repealed effective January 1, 2002.
(f) Rules.--On or before January 1, 2001, the Commission
shall issue binding rules governing oversight of the
Independent System Operators and 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 S11973]]
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) Section 203 of the Federal Power Act (16 U.S.C. 824b)
is further amended by adding at the end the following:
``(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 transportation 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 may take such actions as
it determines are necessary, including the following:
(1) ordering the physical connection of generating or
transmission facilities,
(2) ordering a transmitting utility (as defined in section
3(23) of the Federal Power Act (16 U.S.C. 796(23)) to provide
transmission services (including any enlargement of
transmission capacity (consistent with applicable state law)
necessary to provide such services), or
(3) requiring the divestiture of generating or transmission
facilities,
in order to prohibit any retail or wholesale 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, any retail and
wholesale electric energy supplier owning nuclear generating
units prior to the date of enactment of this Act shall
recover all reasonable costs (as determined by the Commission
and relevant State regulatory authorities) associated with
Federal and State requirements for the decommissioning of
such nuclear generating units pursuant to a non-bypassable
charge imposed on all consumers located in the service
territories purchasing power, or that had purchased power,
from such nuclear generating units. In overseeing the non-
bypassable charge, a State regulatory authority may take
into account the greater cost responsibility of those
consumers which continue to purchase power generated at a
nuclear unit.
SEC. 115. RIGHT TO KNOW.
Beginning on January 1, 2002, the Commission shall ensure
that each retail electric energy supplier discloses to the
public information on the types of fuel used to generate the
electricity sold by the supplier, including the percentage of
the electric energy sold by the supplier that is generated by
each fuel type.
SEC. 116. EXEMPTION OF ALASKA AND HAWAII.
This title shall not apply to any person located in Alaska
or Hawaii with regard to any activity or transaction
occurring in Alaska or Hawaii.
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. 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
regulatory authorities 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 retail electric competition
and each State regulatory authority regulating the retail
electric energy provider subsidiaries of the holding company
certify that they will have sufficient access to the holding
company's books and records relevant to their regulatory
responsibilities.
SEC. 203. 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. 204. STATE ACCESS TO BOOKS AND RECORDS.
(a) Provision of Books and Records.--Every holding company
and associate company thereof, shall maintain, and make
available to each State regulatory authority regulating the
rates of any public utility subsidiary of such holding
company, such books, records, accounts, and other documents
as the State regulatory authority 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 regulatory authority 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 regulatory authority or a court.
SEC. 205. AFFILIATE TRANSACTIONS.
(a) Interaffiliate Transactions.--Both the Commission, with
regard to wholesale rates, and State regulatory authorities,
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 the date of
enactment 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 regulatory authorities, 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 regulatory authority 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 regulatory authority.
(2) Each State regulatory authority 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 regulatory authority, 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. 206. 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 (other than wholesale or retail stranded
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 regulatory
authority, with regard to retail rates, explicitly consents.
SEC. 207. EFFECT ON OTHER REGULATION.
Nothing in this Act shall preclude a State regulatory
authority from exercising its jurisdiction under otherwise
application law to protect utility consumers.
SEC. 208. ENFORCEMENT.
The Commission shall have the same powers as set forth in
sections 306 through 317 of the Federal Power Act (16 U.S.C.
825d-825p) to enforce the provisions of this title.
SEC. 209. 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. 210. 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 Act.
SEC. 211. RESOURCES.
All books and records that relate primarily to the function
hereby vested in the Commission shall be transferred from the
Securities
[[Page S11974]]
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 company 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 company, 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 January 1, 2002.
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.
TITLE V--BONNEVILLE POWER ADMINISTRATION
SEC. 501. FINDINGS AND PURPOSES.
(a) FINDINGS.--The Congress finds that:
(1) The multi-purpose Federal Columbia River Power System's
Federal and non-Federal dams have provided immeasurable
benefits to the Pacific Northwest by providing flood control,
renewable hydroelectric power, irrigation, navigation, and
recreation;
(2) The dams provide the Northwest with a continuing source
of clean and renewable power but, along with over-fishing and
other natural and human impacts on the ecosystem, have
adversely affected the Columbia Basin's fish and wildlife;
(3) Enactment of the Energy Policy Act of 1992 established
competition for the wholesale supply of electricity, and
market forces have driven the cost of power down nationally,
the Northwest included, and has allowed utilities and large
users to buy power at rates below those offered by the
Bonneville Power Administration;
(4) Realizing the new economic forces impacting
electricity, the four Northwest State Governors undertook a
year-long review in 1996 of the regional electricity
system and made recommendations for the future of the
system;
(5) Among these recommendations is the separation of the
transmission and power marketing functions of the Bonneville
Power Administration, with Commission oversight of access to
Bonneville's transmission system, and undertaking this
separation in a way that does not impair Bonneville's ability
to meet its obligations to the U.S. Treasury, fish and
wildlife programs, and bondholders of the Washington Public
Power Supply System;
(6) There are ongoing efforts by Bonneville to reduce its
costs and require accountability of its funds, including
those of its funds used for salmon recovery; and
(7) There is a need to provide a regional process involving
the Federal Government, state governments, tribal
governments, utilities and other users of the water of the
Columbia and Snake River System, to balance the multiple
objectives of the river system.
(b) Purposes.--The purposes of this title are:
(1) To establish authority in a consolidated regional
governing body that will balance the multiple uses of the
Columbia and Snake river system, for hydroelectric
production, for irrigation, for recreation, for the
protection and enhancement of fish and wildlife populations,
and for flood control, with that body to be responsible and
accountable for spending funds for these purposes;
(2) To facilitate the maintenance of an open transmission
system in the Northwest based on Commission rules and to
ensure its reliability; and
(3) To assure that the Bonneville Power Administration
retains the ability to meet its unique financial obligations
to the U.S. Treasury, to fish and wildlife projects, to the
bondholders of the Washington Public Power Supply System, and
to remain a competitive wholesale supplier of electricity.
SEC. 502. COLUMBIA RIVER FISH AND WILDLIFE COORDINATION AND
GOVERNANCE.
This section is reserved.
SEC. 503. PACIFIC NORTHWEST FEDERAL TRANSMISSION ACCESS.
The Commission's rules on nondiscriminatory open access to
transmission services provided by public utilities, including
its rules on standards of conduct, shall also apply to
transmission services provided by the Bonneville Power
Administration, except as otherwise provided by the
Commission by rule if it is in the public interest, or except
as necessitated by the requirements of section 504 or 506 of
this Act. Except as provided in sections 504 and 508 of this
Act, rates for transmission imposed by the Administrator
shall continue to be established and reviewed and approved in
accordance with the provisions of otherwise applicable
Federal laws.
SEC. 504. TRANSITION COST MECHANISM.
If the Bonneville Power Administration proposes a charge to
recover its transition costs resulting from this Act, the
Energy Policy Act, or the Commission's Order No. 888, a
transition cost recovery mechanism shall be developed and
adopted by the Commission within 180 days of the filing of
the proposal with the Commission.
SEC. 505. INDEPENDENT SYSTEM OPERATOR PARTICIPATION.
Notwithstanding any other provision of law, the
Administrator of the Bonneville Power Administration may
participate in a regulated Independent System Operator
subject to the jurisdiction of the Commission pursuant to
section 112 of this Act.
SEC. 506. FINANCIAL OBLIGATIONS.
Sections 503, 504 and 505 of this Act shall be interpreted
and implemented in a manner that does not adversely affect
the security of the Bonneville Power Administration's
Washington Public Power Supply System net-billing and other
third-party financing arrangements.
SEC. 507. PROHIBITION ON RETAIL SALES.
Except as provided in section 5(d) of the Northwest Power
Act (16 U.S.C. 839c(d)), the Administrator shall not market,
sell or dispose of electric power to any end use or retail
customers that did not have a contract for the purchase of
electric power with the Administrator for services to
specific facilities as of October 1, 1997.
SEC. 508. CLARIFICATION OF COMMISSION AUTHORITY.
Section 7(a)(2) of the Pacific Northwest Electric Power
Planning and Conservation Act (16 U.S.C. 839e(a)(2)) is
amended--
(1) by deleting the word ``costs,'' in paragraph (B);
(2) by striking the period at the end of paragraph (C) and
inserting in lieu thereof ``, and''; and
(3) by adding at the end thereof the following new
paragraph:
``(D) insofar as transmission rates are concerned, the
rates do not discriminate between transmission users or
classes of users in a manner that has the effect of
unreasonably denying transmission access under section 503 of
this Act.''
SEC. 509. REPEALED STATUTE.
Section 6 of the Federal Columbia River Transmission System
Act (16 U.S.C. 838d) is hereby repealed.
TITLE VI--TENNESSEE VALLEY AUTHORITY
SEC. 601. COMPETITION IN SERVICE TERRITORY.
Notwithstanding any other provision of law, beginning on
January 1, 2002, all retail and wholesale electric energy
suppliers shall have the right to sell retail and wholesale
electric energy to persons 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.
SEC. 602. ABILITY TO SELL ELECTRIC ENERGY.
(a) TVA.--Notwithstanding any other provision of law, the
Tennessee Valley Authority may sell wholesale electric energy
to any person, subject to any restrictions imposed pursuant
to Section 104(a) of this Act, beginning on January 1, 2002.
(b) Power Customers.--Notwithstanding any other provision
of law, persons that currently purchase wholesale electric
energy from the Tennessee Valley Authority may sell wholesale
and retail electric energy to any persons subject to any
restrictions imposed pursuant to section 104(a) of this Act,
beginning on January 1, 2002.
SEC. 603. TERMINATION OF CONTRACTS.
(a) Notice.--Beginning on January 1, 2001, the Tennessee
Valley Authority shall allow any person that has executed a
contract to purchase retail or wholesale electric energy from
it to terminate such contract upon one year's notice.
(b) Stranded Costs.--Each person holding a contract that is
terminated pursuant to subsection (a) shall be responsible
for retail or wholesale stranded costs as determined by the
Commission.
[[Page S11975]]
SEC. 604. RATES FOR ELECTRIC ENERGY.
(a) Establishment.--Notwithstanding any other provision of
law, the Board of Directors of the Tennessee Valley Authority
shall establish, and periodically review and revise, rates
for the sale and disposition of wholesale and retail electric
energy and for the transmission of electric energy by the
Tennessee Valley Authority. Such rates shall be established
and, as appropriate, revised to recover, in accordance with
sound business principles, the costs associated with the
generation, acquisition, conservation, transmission, and
distribution of electric energy, including the payment of
principal and interest on the Authority's bonds over a
reasonable period.
(b) Commission Review.--Rates established under this
section shall become effective only upon confirmation and
approval by the Commission, upon a finding by the Commission
that such rates are sufficient to ensure repayment of the
Authority's bonds over a reasonable number of years after
first meeting the Authority's legitimate, prudent, and
verifiable costs.
SEC. 605. PRIVATIZATION STUDY.
(a) Requirement for Preparation of Study.--The Board of
Directors the Tennessee Valley Authority shall prepare a
study for selling its electric power program (excluding dams
and appurtenant works and structures) to private investors
and, not later than two years after the date of enactment of
this Act, shall submit such plan to the Congress.
(b) Contents of Study.--The study shall consider the
following--
(1) both the sale of the authority's electric power program
as a whole and the sale of some or all of its component
parts;
(2) alternative means of selling the Authority's electric
power program or its component parts, including a public
stock offering, a private placement of stock, or the sale of
assets; and
(3) the effect of any sale on--
(A) electric rates and competition in the regional
electricity market,
(B) the operation of the Authority's nonpower programs, and
(C) the repayment of the Authority's debt.
(c) Additional Elements.--The study shall also include--
(1) An estimate of the amount of revenue that the United
States Treasury would receive under each of the alternatives
considered;
(2) the Board's analysis of the feasibility of each of the
alternatives considered and its recommendation either for
retaining the Authority's power program under federal
ownership or the preferred alternative for selling it to
private investors; and
(3) the Board's recommendation of whether the Authority's
dams should--
(A) be transferred to the Department of the Army Corps of
Engineers and responsibility for marketing electric energy
produced by such dams assigned to the Southeastern Power
Marketing Administration, or
(B) continue to be controlled by, and the electric energy
they produce continue to be marketed by the Tennessee Valley
Authority.
(d) Further Action.--The Board of Directors shall take no
action to implement the sale of the Authority's power program
without further legislation authorizing such action.
____
Transition to Electric Competition Act of 1997--Section-by-Section
Analysis
title i--electric competition
Section 101--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 January 1, 2002.
All retail electric energy suppliers (entities selling
retail electric energy) have access to local distribution
facilities and all ancillary services beginning on January 1,
2002.
Section 102--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 103--Prior Implementation
Nothing in the Federal Power Act shall prohibit States from
requiring retail electric competition prior to January 1,
2002.
A State requiring retail electric competition prior to
January 1, 2002 and providing utilities with the opportunity
to recover stranded costs is exempt from the Act's
requirements related to retail competition and stranded
costs.
A State may impose reciprocity requirements if it has
provided for retail competition to prevent utilities that
aren't subject to retail competition from selling power to
retail customers in its state.
Section 104--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.
Section 105--Retail Stranded Cost Recovery
An investor-owned utility providing retail electric service
prior to the date of enactment which is seeking recovery of
its stranded costs must request the State regulatory
authority to determine the amount of its stranded costs
associated with the implementation of retail electric
competition.
If a State regulatory authority fails to determine the
amount of stranded costs within 18 months of the request,
FERC will determine the amount.
A municipal electric utility or a rural electric
cooperative may determine the amount of its stranded costs.
A utility is entitled to recover its stranded costs from
its customers pursuant to a nonbypassable Stranded Cost
Recovery Charge.
A rural electric cooperative or municipal joint action
agency that sells wholesale power to rural electric
cooperative or municipal distribution companies may recover
its stranded costs from the distribution companies.
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.
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.
For purposes of determining stranded cost amounts, prior
prudence determinations are binding.
Section 106--Wholesale Stranded Cost Recovery
FERC has sole jurisdiction to determine and provide for the
recovery of the wholesale stranded costs associated with
utilities subject to the Federal Power Act.
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 107--Lost Retail Benefits
A state may require a retail electric energy provider to
compensate its customers for any increase in power costs
resulting from the implementation of retail electric
competition if the market value of the provider's generating
assets increase and the provider sells power elsewhere due to
the implementation of retail electric competition.
Section 108--Universal Service
A state may establish a Universal Service Program to ensure
that all consumers have access to electric service at a just
and reasonable rate.
If a state has not established a Universal Service Program
prior to January 1, 2002, each retail electric energy
provider located in that state is obligated to sell power to
or purchase power on behalf of consumers that do not have
sufficient access to competing retail electric energy
suppliers.
The retail electric energy provider is entitled to just and
reasonable compensation for the service performed.
States may impose a nonbypassable Universal Service Charge
to help pay for the retail electric energy provider's
compensation.
Section 109--Public Benefits
States may impose charges on retail electric energy
consumers to fund public benefit programs (i.e. low-income
and energy efficiency).
Section 110--Renewable Energy
Beginning of 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.
\1/2\ 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 Bonneville Power Administration must use proceeds from
the sale of Credits issued to it to repay the
Administration's outstanding debt to the U.S. Treasury and
the Washington Public Power supply System Bondholders.
Section 111--Determination of Local Distribution Facilities
A State regulatory authority may apply with FERC for a
determination of whether a
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particular facility constitutes a local distribution
facility.
FERC will give the position of the State regulatory
authority maximum practicable deference.
Section 112--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 January
1, 2002.
The ISO can't be affiliated with any person owning
transmission facilities in the region or any retail electric
energy supplier selling retail electric energy in the region.
FERC is required to issue rules by January 1, 2001
applicable to its oversight of the ISO's 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, 2002 or at an earlier date for a
particular retail wheeling request in a State that retail
electric competition prior to January 1, 2002.
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.
Sectioin 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 pursuant
to a non-bypassable charge.
Section 115--Right to Know
Each retail electric energy supplier must publicly disclose
information on the types of fuel used to generate the
electricity sold by the supplier.
Section 116--Exemption of Alaska and Hawaii
Title I does not apply to any transaction occurring in
Alaska or Hawaii.
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--Exemption
Title II 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 203--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 204--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 205--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 the date
of enactment.
State regulatory authorities have the authority to review
the prudence of a utility's wholesale power purchases form
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 206--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 207--Effect on Other Regulation
State regulatory authorities can exercise their
jurisdiction under otherwise applicable law to protect
utility consumers.
Section 208--Enforcement
FERC has the same enforcement authority under this Title as
it does under the Federal Power Act.
Section 209--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 210--Implementation
FERC must promulgate regulations to implement the Title
within 6 months of the date of enactment.
Section 211--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 this 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 there is
retail electric competition in their service territories.
Section 304--Savings Clause
This Title does not affect existing power purchase
contracts under PURPA.
Section 305--Effective Date
The effective date of this Title is January 1, 2002.
title iv--environmental protection
Section 401--Study
EPA must submit a study to Congress by January 1, 2002,
which examines the implications of wholesale and retail
electric competition on the emission of pollutants and
recommends changes to law, if any are necessary to protect
public health and the environment.
title v--bonneville power administration
Section 501--Findings and Purposes
Section 502--Columbia River Fish and Wildlife Coordination
and Governance
This section is reserved for future versions of the bill.
Section 503--Pacific Northwest Federal Transmission Access
BPA is subject to FERC's open access transmission
requirements unless FERC determines it is not in the public
interest or it would prevent BPA from paying its debt.
Section 504--Transition Cost Mechanism
FERC is required to develop a transition cost recovery
mechanism for BPA if BPA makes a proposal.
Section 505--Independent System Operator Participation
BPA is not prohibited from participating in an Independent
System Operator.
Section 506--Financial Obligations
The use of BPA's transmission facilities for competitive
generation transmission shall not adversely affect BPA's
ability to pay its debt.
Section 507--Prohibition on Retail Sales
BPA is prohibited from selling retail electric energy to
customers that did not have a contract with BPA as of October
1, 1997.
Section 508--Clarification of Commission Authority
Pacific Northwest transmission rates can't be used to
unreasonably deny transmission access.
Section 509--Repealed Statute
Section 6 of the Federal Columbia River Transmission System
is repealed.
Title VI--Tennessee Valley Authority
Section 601--Competition in Service Territory
Beginning on January 1, 2002, TVA's retail and wholesale
customers are permitted to purchase power from other sellers.
Section 602--Ability to Sell Electric Energy
Beginning on January 1, 2002, TVA may sell wholesale
electric energy outside of its current service territory.
Section 603--Termination of Contracts
Any person that currently holds a wholesale or retail
contract with TVA may cancel the contract with one year
notice beginning on January 1, 2001.
Section 604--Rates for Electric Energy
TVA's Board of Directors will establish the rates for the
sale and transmission of electric energy by TVA.
The rates must be sufficient to recover TVA's costs,
including the payment of principal and interest on its bonds
over a reasonable period.
FERC must review and approve the Board's rates if they are
sufficient to ensure the repayment of TVA's legitimate,
prudent and verifiable costs over a reasonable period of time
and ensure the recovery of TVA's stranded retail and
wholesale costs.
Section 605--Privatization Plan
TVA's Board of Directors must prepare a plan within two
years of the date of enactment for selling its electric power
program to private investors.
No action on the sale of TVA may occur without subsequent
congressional actions.
Mr. GORTON. Mr. President, the Senator from Arkansas has eloquently
and adequately described the bill which we are introducing jointly
today. He is a leader in this field, and introduced the bill on this
subject early this year. He and I, and the occupant of the Chair, have
had the opportunity to go
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through seven workshops on electric power marketing restructuring.
During the course of this time, the Senator from Arkansas and I found
that we thought very similarly in this field, and we are here together
on the floor today to introduce a bill that modifies somewhat, but not
in its general philosophy, the proposal that he introduced almost a
year ago.
The goal that we set in this bill is to provide for competition for
choice, and ultimately for lower prices for electric power consumers
from the largest industry to the individual homeowner all across the 50
States of the United States. We set a deadline for that competition to
exist on the 1st of January of the year 2002. We encourage States,
several of which have already acted, to provide for their own free and
open competition by allowing States that have met the general
requirements of this bill before 2002 to do it in their own way--in the
way in which their legislatures have decided or may have decided.
We cover, as the Senator from Arkansas pointed out, the legitimate
stranded costs of utilities that have been required to build
facilities, some of which may not be completely competitive in an
entirely free and open market. We set up a system of independent system
operators so that the entire transmission system of the United States
will be free and open on equal terms to all potential competitors.
We encourage the increased use of renewable energy sources by
requiring certain minimums increasing in three steps throughout the
course of the next 15 years or so but providing credit for those who
already have renewable resources--hydropower, solar power, and the
other forms of renewable resources which exist at the present time and
may exist in the future, and allow the sale of credit from those who
already meet or exceed the renewable requirements of the bill--credits
that they can sell to others.
Senator Bumpers has been a true leader in this field, and I am
honored and delighted to now join with him in what I believe is the
first bipartisan approach to this subject, a bipartisan approach which
is going to be absolutely essential to any success.
At the same time that he has been working with his constituents
across the country, I have been listening to my own, and my privately
owned and public utility districts, those that produce electricity and
those that do not, and the wide range of other existing utilities or
potential competitors in the Northwest.
I represent a State that already has very low power charges. We want
to be a part of this process, not so that we can slow down the benefits
to others--the entire American economy must and will benefit from this
bill--but so that my constituents and consumers will benefit as well
from the advent of competition. I am convinced that the outline of this
bill does just exactly that.
We must deal with the peculiar challenges of the largest power
marketing authority, the Bonneville Power Administration. We do so in a
way that reflects the regional review sponsored by the four Governors
of the four Pacific Northwest States during the course of last year. We
also call in general terms for a more effective and broad-based
management of the Columbia River State System, reflecting all of the
multitude of uses of water in that system, and calling for a far more
effective use of the billions of dollars that we are spending on salmon
recovery.
So I believe for my own region that we can provide lower power costs,
greater competition, better salmon recovery, and a more rational
management of the Columbia-Snake River System.
I believe for the people of the United States as a whole that we can
provide for lower power costs, a greater use of renewable energy, more
competition, and a better America.
For those reasons, I am delighted to have been a part at this point
of a joint operation with my friend from Arkansas.
Mr. BUMPERS addressed the Chair.
The PRESIDING OFFICER. The Senator from Arkansas.
Mr. BUMPERS. Mr. President, I thank my distinguished colleague from
Washington State for his eloquent remarks. I just wanted to say how
honored I am to have him join me on this bill, and reiterate one other
thing because Senator Gorton and I want to be totally honest to the
people of this country as we go forward with this bill.
I think one thing that I must say is that, in my opinion, this $220
billion industry can cope with this bill--not only cope with it, but
that industry, business, and the consumers of this country will all
benefit from this, and the Nation will benefit because it is a global
economy where we are competing so strenuously with the other nations of
the world.
Electricity is such a big part of our producing industry, and the
less they pay the more competitive we become. That ought to be a real
incentive for the people of this body to look very seriously at this
bill.
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