[Congressional Record Volume 145, Number 33 (Wednesday, March 3, 1999)]
[Senate]
[Pages S2211-S2212]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. THOMAS:
  S. 516. 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 1999 (eureca)

  Mr. THOMAS. Mr. President, I rise today to introduce the Electric 
Utility Restructuring Empowerment and Competitiveness Act of 1999. This 
legislation empowers the states to restructure their electric 
industries at the rate and in the way they decide. My legislation 
imposes no ``retail choice mandate'' or deadline on the States so as to 
fully allow the best market ideas and approaches to occur. As well, 
EURECA removes Federal impediments to competition and deregulates and 
streamlines the industry.
  My bill gives the States the leading role in implementing competition 
in the electric power industry. This approach contrasts with the bills 
introduced in the House and Senate last Congress that required 
competition nationwide by a date certain. A Federal mandate on the 
States requiring retail competition by a date certain is not in the 
best interest of all classes of consumers. I am concerned such an 
approach would cause increased prices for low density States with 
relatively low cost power. This bill will protect States' rights and 
allow States maximum latitude to adapt competition to their own 
individual needs.
  I believe States are in the best position to deal with this complex 
issue. Although the cost of electricity varies across the country, 
electric industry restructuring can result in lower consumer prices for 
everyday goods and services, the development of innovative new products 
and services, and a growing, more productive economy.
  We have spent the last two Congresses holding hearings to review the 
state of competition in the electric power industry and discussing 
numerous pieces of legislation dealing with restructuring. Meanwhile, 
20 individual States have passed their own legislation introducing 
competition into the retail electric industry and many other States are 
considering such proposals. According to industry statistics, nearly 50 
percent of all Americans now live in States committed to retail 
competition. States are clearly taking the lead--they should continue 
to have that role--and this bill encourages more innovation by 
affirming States' ability to implement retail choice policies.
  It is critical to the welfare of the States that each one have an 
opportunity to ready and equip themselves for a successful transition 
to a deregulated environment. By learning from the States which have 
already implemented competition, other states can take precautions and 
adopt laws that will best protect them as they adjust to this new 
competitive environment. With FERC's Order 888, which created 
competitive wholesale power supply markets through the availability of 
non-discriminatory open-access transmission service under tariff, we 
have seen at both the State and Federal levels that we are now in a 
critical testing period in the implementation of market-based policies. 
Specifically, we saw the price spikes that occurred last summer in the 
Midwest. After holding a hearing on the subject, the experts agreed 
that we are indeed in a transition period. Although no one could point 
to one specific reason for the occurrence, and many were suggested, all 
seemed to agree for the need of national reliability standards.

  Traditionally, reliability of the transmission system was managed by 
a voluntary, industry-led organization known as the North American 
Electric Reliability Council. We have added many new players to the 
transmission grid, making for an increasingly decentralized and 
competitive U.S. electricity industry. And, as determined by a recently 
issued DOE Task Force Report, ``the old institutions of reliability are 
no longer sufficient.'' I have added a section on reliability to my 
legislation. The industry collectively came up with a legislative 
proposal that would transform NERC from a voluntary system of 
reliability management to NAERO, an organization that is mandatory in 
nature and subject to FERC oversight. Sustaining system reliability is 
crucial for protecting all classes of consumers and such an 
organization can help ensure that power markets function efficiently.
  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. All 
classes of consumers should have access to adequate, safe, reliable and 
efficient energy services at fair and reasonable prices, as a result of 
competition.
  Mr. President, my proposal will create greater competition at the 
wholesale level by prospectively deregulating wholesale sales of 
electricity. We did this in natural gas and it worked--I am confident 
it will work in electricity. 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 PUCs will continue to 
regulate retail distribution services and sales.
  When FERC issued Order 888, 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 
generation 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 Power Marketing 
Administration (PMAs), the Tennessee Valley Authority (TVA), 
municipalities and cooperatives which own transmission to provide 
wholesale open access transmission service. Since 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, there is 
widespread belief that the Acts have fulfilled their original 
obligations and 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

[[Page S2212]]

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've included Senators Shelby's and Dodd's 
``Public Utility Holding Company Act of 1999.'' This language is 
identical to the bipartisan legislation reported by the Committee on 
Banking, Housing, and Urban Affairs in the 105th Congress. Under this 
proposal, PUHCA would be repealed. Furthermore, all books and records 
of each holding company and each associate company would be transferred 
to the Securities and Exchange Commission (SEC)--which currently has 
jurisdiction over the 19 registered holding companies--to 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 that must be resolved in order for a true 
competitive environment to exist is that of utilities receiving 
``subsidies'' by the federal government and the U.S. tax code. For 
years, investor owned utilities (IOUs) have claimed inequity because of 
tax-exempt financing and low-interest loans that municipalities and 
rural cooperative receive. On the other side of the equation, these 
public power systems maintain that IOUs receive benefits in the tax 
code such as accelerated depreciation, investment tax credits and 
deferred income tax and many use tax-exempt debt for pollution control 
bonds. Are these in a way, ``subsidies?'' The jury is still out on how 
best to tackle these difficult issues but without a doubt, we will need 
to come to a resolution.
  Finally, my bill directs the Inspector General of the Department of 
the 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.
  Mr. President, with respect to federal comprehensive restructuring 
legislation, it is the states themselves that hold the key to ultimate 
success. EURECA allows states to continue to move forward and craft 
electricity proposals that best fit their own particular needs. This 
legislation is the best solution to move forward with a better product 
for all classes of consumers and the industry as a whole.
                                 ______