[Congressional Record Volume 145, Number 47 (Wednesday, March 24, 1999)]
[Extensions of Remarks]
[Page E539]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     LEGISLATION TO PROMOTE FAIR COMPETITION IN ELECTRICITY MARKETS

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                           HON. PHIL ENGLISH

                            of pennsylvania

                    in the house of representatives

                       Wednesday, March 24, 1999

  Mr. ENGLISH. Mr. Speaker, today, I am reintroducing legislation I 
sponsored last year that would promote fair competition in electricity 
markets. Many states have passed or are considering plans to allow 
customers to choose among competing providers of electricity. Although 
action on certain aspects of competition should be left to states, the 
federal government needs to address competition issues as they relate 
to the Internal Revenue Code.
  The use of tax-exempt bonds and other tax exemptions granted to 
government-owned utilities are a significant problem in integrating 
them into the competitive marketplace. Such exemptions, in the context 
of competition, subsidize the costs of a competitor, giving it an 
unfair advantage against all private, tax-paying participants. I 
believe that if government-owned utilities want to compete in the open 
marketplace, then they must be restricted in issuing tax-exempt bonds 
and should give up income tax exemptions on sales outside their 
traditional service territory. Tax-free financing and exemption from 
federal income taxes pose no problem to electric competition if, and 
only if, government-owned utilities limit the use of these subsidies to 
serving their traditional service areas.
  My legislation, The Private Sector Enhancement and Taxpayer 
Protection Act of 1999, addresses these concerns by prohibiting tax-
free bonds from being used to finance generation and transmission by 
government-owned utilities if such utilities choose to compete in open 
electricity markets. If such utilities elect to do so, any sales 
outside of their traditional service area should be, like other 
commercial operations, subject to federal income tax.
  This legislation will not affect government-owned utilities that do 
not elect to sell generation or provide transmission in the new 
competitive marketplace. Since the vast majority of municipal 
utilities, of which there are more than 2,000, do not generate 
electricity, this bill will not affect them. This bill does not affect 
rural electric cooperatives or federal government utilities. My bill 
attempts to address the issue of large government-owned utilities that 
want to act like, and compete with, taxpaying entities in the electric 
marketplace. In a somewhat similar approach, the Administration has 
addressed the issue in their FY2000 budget proposal.
  I believe my legislation is a balanced, fair approach to establishing 
a level playing field for all power companies with none enjoying any 
special tax or financial advantages. I look forward to working with the 
Administration and my colleagues on this important issue.

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