[Congressional Record Volume 147, Number 74 (Friday, May 25, 2001)]
[Senate]
[Page S5704]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. MURKOWSKI (for himself, Mr. Breaux, Mr. Thompson, and Mr. 
        Jeffords):
  S. 972. A bill to amend the Internal Revenue Code of 1986 to improve 
electric reliability, enhance transmission infrastructure, and to 
facilitate access to the electric transmission grid; to the Committee 
on Finance.
  Mr. MURKOWSKI. Mr. President, I rise to introduce legislation that 
will add stability to the Nation's electric power grid. I am pleased to 
be joined by Senators, Breaux, Thompson, and Jeffords in this effort 
that reflects a comprise that was reached last year by the investor 
owned and municipal electric power generators. Identical legislation 
has been introduced in the House, H.R. 1459.
  In the past year, there has been a great deal of controversy over the 
concept of electric deregulation because of the chaos that has occurred 
in California. Unfortunately, California is not a useful model of a 
deregulated environment because California only deregulated the 
wholesale part of the industry while retaining price controls at the 
retail level. Coupled with the State's failure to build new generation 
in more than 10 years, the California model was bound to collapse.
  However, I believe that the successes we have seen in deregulating 
electricity, most notably in states like Pennsylvania, suggest that 
ultimately the entire industry will be deregulated and consumers of 
electric power will see significant benefits from such deregulation. In 
order to facilitate the day when competition comes to the industry, we 
must update the tax laws that were written in day when electricity was 
a regulated utility.
  One of the major problems that the current tax rules create is to 
undermine the efficiency of the entire electric system in a deregulated 
environment because these rules effectively preclude public power 
entities from participating in State open access restructuring plans, 
without jeopardizing the exempt status of their bonds.
  No one wants to see bonds issued to finance public power become 
retroactively taxable because a municipality chooses to participate in 
a state open access plan. That would cause havoc in the financial 
markets and could undermine the financial stability of many 
municipalities.
  Our legislation resolves this problem by allowing municipal systems 
to elect to terminate the issuance of new tax exempt bonds for 
generation facilities in return for grandfathering existing bonds.
  Our bill also modifies current rules regarding the treatment of 
nuclear decommissioning costs to make certain that utilities will have 
the resources to meet future costs and clarifies the tax treatment of 
the funds, if a nuclear facility is sold. The bill also provides tax 
relief for utilities that spin off or sell transmission facilities to 
independent participants in FERC approved regional transmission 
organizations.
  This bill will not resolve all of the tax issues surrounding the 
deregulation of the industry. One participant in the industry, the tax-
exempt cooperatives also have tax problems associated with 
deregulation--they may not participate in wheeling power through their 
lines because of concern that they will violate the so-called 85-15 
test which could endanger their tax exempt status. It is my hope that 
the coops will sit down with the other utilities and reach an accord so 
that when we consider this legislation, the coops will be included in 
the tax bill.
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