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V WO . Comprehensiv

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n Pla n AWi V JVI\A1

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COMPREHENSIVE ELECTRICIT Y COMPETITIO N

PLA N

INTRODUCTIO N Economi c force s are forgin g ane w er ai n electricity policy , wher e electricit y price s wil l b e determine dprimaril y b y th e marke t rathe r than b y regulation
. Unde r thi s ne w system , often calle d"retai l choice, " consumer s ar c allowe dt o choos e thei r electricity supplie r

muc h lik e th e choic e o f

lon g distanc e telephon e servic e tha t ha s existe dfo r

ove r adecade
. Electricit y polic y i s movin g in thi s directio n becaus e subjectin g utilitie s t o competitio n wil l lea dt o increase defficienc y i n th e industry an dthu s benefi t th e economy an dth e environment
. Th e importanc e of

thi s polic y chang e canno t b e overstated
. Th e electricit y secto r i s ou r nation' s mos t

capita l intensiv e industry , holdin g asset s with aboo k valu e i n 199 4 of

clos e t o S70 0 billion
. I t

ha dtotal sale s o f

$21 2 billio n i n 1996 , large r tha n th e telecommunication s industry
. Th e industry als o ha s asignifican t impac t on th e environment
. I n th e past , electricity customer s di dnot hav e th e ability t o choos e thei r supplier
. Instead , unde r Stat e law , utilitie s generall y wer e monopolie s wit h both aright

an dresponsibilit y t o serv e al l consumer s in aparticular area . Th e Stat e permitte dth e utility t o charg e customers a regulate drat e fo r

electri c powe r

base do n th e cos t

o f producin g suc h powe r

plu s a"rat e o f return " o n investment
. In general , th e electri c monopol y syste mha s provide dreliabl e powe r t o electri c consumer s in th e Unite dStates
. However , amonopol y syste mha s afundamental weakness : i t doe s not provid e incentive s t o b e cost-efficien t becaus e amonopol y supplie r doe s not hav e t o compet e an dessentiall y ha s aguarante e tha t it s cost s wil l b e recovered
. Unde r electricity restructuring , competitio n wil l replac e regulatio n a s th e primary mechanis mt o settin g electricity generatio n prices
. Utilitie s woul db e require dt o ope n u p thei r distributio n an dtransmissio n wire s t o al l qualifie dsellers
. Th e transmissio n an d distributio n o f

electricit y woul dcontinu e t o b e regulate dbecaus e the y wil l remai n monopolie s fo r

th e foreseeabl e future
. Th e syste mwoul db e restructured , no t completel y deregulated
.

lof2 1 3/25/9 8 12:33 P MP. 4 U3/25/H B Wfc

U 14I1 U frAA ZU Z 23 3 «5H 0 Comprehensiv e Electricit

y Competitio n Pla

n ACI D KAII> < IUVI&AU N http://www.hr.doe.gov/electric/pliin.ht m TH E NEE D FO RFEDERA L ACTIO N W e respec t

th e action s o f

thos e State s whic h ar e i n th e proces s o f implementin g retai l competition , an dsee k

t o buil don , rathe r

than disrupt , thos e efforts
. Nevertheless , effectiv e retai l competitio n canno t

happe n withou t

federal legislation
. First , basedo n th e law s of physics , electron s d o no t

respec t Stat e borders
. Accordingly , a s State s remov e th e constraint s of monopol y franchis e territories , electricit y market s wil l naturall y becom e mor e regionalized
. Onl y federa l legislatio n ca n adequatel y addres s th e need s o f thes e regiona l markets
. Th e electri c industr y i s als o hampere db y statute s whic h inhibi t th e developmen t

o f competitiv e markets
. Th e entir e federal electricity la w framewor k date s fro mth e New Dea l an di s premise dupo n State-regulate dmonopolie s rathe r tha n regiona l competitiv e markets
. Federal law mus t

b e update ds o tha t

i t stimulates , rathe r

tha n stifles , competition
. Finally , th e State s alon e canno t obtai n th e full economi c an denvironmenta l benefit s o f competitio n for

America n consumers . Without comprehensiv e Federa l electricit y restructurin g legislation , neithe r Stat e no r federal regulator s wil l hav e th e necessar y tool s t o ensur e that

regiona l electricity market s ar e trul y competitiv e an doperat e a s efficientl y a s possible
. Moreover , ther e wil l b e n o assurance s that support for renewabl e technologie s an d othe r importan t

publi c puipos e program s wil l continu e absen t afederal program . Withou t suc h tools , electricit y price s wil l likel y b e highe r an dth e environmenta l gain s whic h w e expec t unde r th e Administration' s pla

n wil l not b e fully realized
. BENEFIT S O FTH E ADMINISTRATION S COMPETITIO N PLA N Th e Comprehensiv e Electricity Competitio n Pla n embodie s th e overal l agend ao f th e Clinto n Administratio n t o expan dth e econom y an dimprov e th e environment
. W e believ e tha t amor e competitiv e electricity industry wil l provid e immens e benefit s t o individua l American consumer s a s wel l a s bein g a n overal l boo n t o ou r

economy . I t

wil l resul t

i n lowe r prices , acleane r

environment , greate r

innovatio n an dne w services , amor e reliabl e powe r suppl y grid , an dsav e th e governmen t money . Th e Departmen t

o f Energ y estimate s tha t

retai l competitio n wil l sav e consumer s at leas t $2 0 billio n ayear

o n thei r electricity bills
. Thi s translate s int o direc t saving s t o th e typica l famil y of four o f $10 4 pe r year . Indirec t

savings , whic h woul daris e fro mth e lowe r cost s of othe r good s an dservice s i n acompetitiv e market , are $ 12 8 pe r yea r for atypica l famil y of

four
. Thus , total projecte dsaving s for suc h afamil y are $23 2 ayear . Competitio n wil l als o spar k innovatio n in th e America n economy , creatin g ne w industries , jobs , product s an dservice s jus t a s telecommunication s reformspawne dcellular phone s an d othe r ne w technologies
. Thi s wil l further strengthe n ou r

nation' s positio n a s th e mos t vibran t anddynami c economy i n th e world
. Majo r benefit s wil l accru e t o th e federal , Stat e an dloca l government s throug h lowe r electricity prices
. Tota l governmen t spendin g o n electricity wa s $19. 5 billio n i n 1995
. Wit h competition , thes e cost s are likel y t o declin e b y at leas t 10% , asaving s of

clos e t o $ 2 billio n year . Thi s restructurin g dividen dwil l hel p government s maintai n balance dbudget s int o th e futur e whil e meetin g critica l publi c needs
.

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iof2 1 H*J u wi http://www.hr.doc.gov/clcctric/plan.ht m
Restrucrurin g wil l als o produc e significan t environmenta l benefit s throug h bot h marke t mechanism s an dpolicie s tha t promot e investmen t

i n energ y efficienc y an drenewabl e energy . Competitiv e force s wil l creat e aefficient , leane r an dcleane r

industry
. For , example , w e estimat e that

ou r Competitio n Plan wil l reduce greenhous e ga s emission s b y roughl y 2 5 t o 4 0 millio n metri c ton s i n 2010
. A generato r that wring s a s muc h energ y a s i t can fro m every uni t o f fue l wil l b e rewarde db y th e marke t Today , amonopol y supplie r recover s it s cost s regardles s o f

whethe r i t use s it s power]resource s efficiently
. Competitio n als o provide s opportunitie s fo r

consumer s t o vot e wit

h thei r wallet s fo r

gree n powe r

an dfacilitate s th e marketin g o f

energ y efficienc y service s alo r g wit h electricity
. Restructurin g als o make s possibl e th e intro c uctio n o f ne w polic y mechanism s suc h a s th e renewabl e portfoli o standar dan denhance dpubli c benefi t funding , whic h wil l guarante e substantia l environmenta l benefit s notwithstandin g marke t outcomes . W e believ e tha t th e environmenta l benefit s fro mth e Administration' s restructurin g plan , whic h include s th e renewabl e portfoli o standar dan dth e publi c benefi t fund , wil l outweig h an y negativ e effect s associate dwith th e deman dincreasin g effect s o f lowe r price s o r othe r factors
. Th e Administration' s specification s fo r electricity competitio n legislation , outline dbelow , reflec t th e nee dfor

th e simultaneou s calibratio n of man y element s i n a

n interconnecte d statutory framewor

k in orde r t o achiev e th e desire dbotto mline : achievin g th e economi c benefit s o f

competitio n i n amanne r tha t i s fai r t o al l American s an dimprove s th e environmenta l performanc e of th e electricity industry
. Our restructurin g proposa l i s bes t understoo di n term s o f

five mai n objectives : (1 ) encouragin g State s t o implement retai l competition ; (2 ) protectin g consumer s b y facilitatin g competitiv e markets ; (3 ) assurin g acces s t o an dreliability o f th e transmissio n system ; (4 ) promotin g an dpreservin g publi c benefits ; an d(5 ) amendin g existin g federa l statute s t o clarif y federal an dstat e authority Th e discussio n belo w follow s thi s structure . I
. ENCOURAGIN G STATE S T O IMPLEMEN T RETAI L COMPETITIO N Te n state s hav e enacte dlegislatio n implementin g retai l competition
. Nevertheless , i n mos t of th e country , electri c utilitie s remai n monopolies
. W e anticipat e tha t mos t State s wil l recogniz e the benefit s o f

retai l competition , San

dwil l implemen t

competitio n o n thei r

ow n initiative
. Nevertheless , th e polic y o f th e Aajministratio n i s t o encourag e all State s t o embrac e th e benefit s of

retai l competition
. A . Retai l Competition - Flexibl e Mandat e Proposal: Support

customerchoice throi utility to permit

all of its retai of their choice by January 1, utilities to opt

out of the public proceeding, that alternative policy such as a current monopoly system. Th e Administratio n believe s tha t federal le g mandat e i s th e bes t

mean s t o obtai n th e h a flexible mandate that

would require each customers to purchase powerfrom the supplier ', but would permit States ornon-regulated competition mandate if

they find, on the basis of a consumers in the State would be betterserved

by an -crafted retail competition plan orthe lei 2:003,
Stkteislatio n wit

h aflexibl e retai l competitio n economi c benefit s o f

competitio n whil e ensurin g 3/25/5) 8 12:3 3 PMP. 6 03/25/9 8 WED 14:1 1 FA X20 2 23 3 959 5 Comprehensiv

e Electricit

y Competitio

n Pla n ACI D RAI N DIVISIO N 100 5 http://www.hr.doc.gov/clcctric/plnn.hU n tha t State s hav e th e opportunit y t o tailo r thei r utility system s t o mee t

thei r uniqu e needs
. I

n ou r view , thi s approac h strike s th e prope r balanc e betwee n th e nee dfo r federa l polic y t o support competitio n an dth e traditio n o f Stat e determinatio n o f

retai l electricity policy
. I t als o addresse s th e concern s of som e low-cos t

State s tha t

aone-size-fits-al l approac h t o retai l competitio n coul dlea dt o increase dcost s i n thei r States
. Finally , th e flexibl e mandat e build s on State-restructurin g plan s tha t hav e bee n enacte dt o date , rathe r than disruptin g them
. Th e flexibl e mandat e avoid s th e constitutiona l question s tha t hav e arise n concernin g othe r retai l choic e proposals , becaus e i t doe s no t requir e that

State s administe r

afederal law
. Instead , State s hav e th e ability t o op t out o f retai l competition
. Se e Print 2 v . Unite dStates
. 11 7 S.CT
. 236 5 (1997)
. B
. Strande dCos t

Principl e Proposal: The Administration endorses the principle that utilities should

be able to recover prudently incurred, legitimate and verifiable retail

stranded costs that cannot be reasonably mitigated. States would continue to determine recovery of investments, including stranded cost recovery, under

State law. This policy should also encourage the use of competitively neutral

mechanisms that minimize to the maximum extent possible any effect

of stranded cost recovery on the choice of

supplier or product offering by purchasers of electricity. FERC would have "backup"

authority to establish a stranded cost recovery mechanism if

a State lacks such authority.. Man y industry observer s expec t tha t lowe r price s resultin g fro mth e pressur e o f competitio n wil l eliminat e o r

sharpl y reduc e th e ability o f som e utilitie s t o recove r

thei r pas t investments
. Th e inability t o recove r

suc h pas t investment s result s i n "strande dcosts. " Pu t simply , th e implementatio n o f

astrande dcos t

polic y require s adeterminatio n o f wh o i s responsibl e fo r payin g th e differenc e betwee n th e cos t o f productio n fro mpowe r

plant s tha t

wer e buil t

whe n cost s were hig h an dtoday' s lowe r price s —utilit

y shareholders , ratepayers , o r both
. Bu t thes e ar c no t "new " costs . Customer s ar e payin g the mtoday
. However , the y mus t b e addresse da s par t of th e transitio n t o competitio n o r numerou s utilitie s coul db e bankrupted
. Th e Administratio n endorse s th e principl e that utilitie s shoul db e abl e t o recove r prudentl y incurred , legitimate , an dverifiabl e retai l strande dcost s arisin g fro mth e transitio n t o retai l competition , i f

suc h cost s canno t

reasonabl y b e mitigated. Thi s federa l polic y shoul d encourag e State s t o provid e for recovery o f

strande dcost s becaus e resolutio n o f thi s issu e i s on e o f th e ke y stumblin g block s tha t mus t b e surmounte di n orde r

t o provid e choic e t o consumers . A t

th e sam e time , th e fundamental authority o f State s t o addres s thi s difficul t issu e shoul db e preserved
. Recovery o f investmen t

i n generatin g capacit y ha s traditionall y bee n oversee n o r

regulate db y Stat e publi c utility commissions
. I n fac t thu s far , al l State s tha t plan t o implemen t

retai l competitio n hav e provide dfor utility strande dcos i recovery in some manner . Unde r

th e Administration' s proposal , State s woul dcontinu e t o determin e recovery of

investments , includin g strande dcos t recovery , unde r

Stat e law
. Nevertheless , t o provid e State s wit h th e ability t o ensur e tha t utilitie s withi n thei r

border s ca n recover strande dcosts , th e Administratio n recommends tha t th e Federa l Energ y Regulatory Commissio n b e give n th e authority t o provid e aback-u p mechanis mfo r strande d cos t recovery i n particular

instance s wher e aStat e lack s authority t o provid e suc h recovery du e t o Stat e constitutiona l constraint s o r othe r jurisdictiona l gaps . Th e Unite dState s

o f 2 1 3/25/9 8 12:33 P MP. 7 03/25/9 8 WED 14:1 1 FA X20 2 23 3 959 5 Comprehensiv

e Electricit

y Competition Pla

n ACI D RAI N DIVISIO N (g)00 6 http://www.hr410c.gov/clcctric/plan.bu n governmen t

woul dno t

assum e any strande dcos t liability in th e exercis e b y FER C o f it s backu p authority o n strande dcosts . II.PROTECTIN G CONSUMER S B Y FACILITATIN G COMPETITIV E MARKET S Encouragin g State s t o implement competitio n i s anecessary bu t no t sufficien t conditio n fo r th e realizatio n o f

competitiv e markets
. Customers , wh o lac k experienc e with competitiv e electricity markets , mus t

hav e adequat e informatio n s o the y ca n ge t th e lowes t

possibl e pric e o n electricity
. Moreover , eliminatin g monopol y franchise s an dcost-of-servic e regulatio n stil l leave s i n plac e th e traditiona l vertically-integrate dutility structur e that ma y no t b e suite dfo r efficien t an deffectiv e competitiv e markets
. A
. Consume r

Informatio n Proposal: The Secretary of Energy would

be authorized

to conduct

a rulemaking to require all

suppliers of

electricity to disclose information on price, terms, and conditions of

their offerings; the type of

generation source; and

generation emissions characteristics.. Unde r aretai l monopol y structure , electricity consumer s hav e n o ability t o choos e suppliers , s o ther e i s generall y n o nee dfo r informatio n comparin g th e pric e an denvironmenta l qualitie s o f

differen t electricity suppliers
. I n competitiv e markets , man y differen t supplier s wil l offe r adivers e men u o f

energ y product s an dservice s with differen t pricin g an dbillin g options
. Consequently , consumer s wil l nee dreliabl e informatio n s o the y can compar e th e product s an dprice s offere db y supplier s an dmak e informe dchoices
. T o addres s thi s need , th e Administratio n recommend s tha t al l electricit y supplier s b e require dt o disclos e i n a uniform , eas y t o rea dlabel , basi c informatio n o n th e price , term s an dcondition s o f servic e sufficient t o enabl e consumer s to mak e comparison s amon g variou s offers
. Unifor man deas y t o understan dlabelin g alon g th e line s of th e Foo dan dDru g Administration' s highl y successfu l nutritiona l labelin g syste mwil l eas e custome r choice
. Researc h performe db y th e Nationa l Counci l o n Competitio n an dth e Electri c Industr y showe dthat

almos t 60 % o f consumer s the y interviewe dbelieve dtha t the y ha denoug h informatio n t o mak e a

n informe dchoic e whe n electricity product s wer e uniforml y labele d compare dt o 21 % whe n n o product s wer e labeled
. Both consume r an denvironmenta l group s hav e advocate da

n approac h that

woul db e modele dafte

r th e "nutritio n facts " no w o n food
. Detail s o f suc h alabelin g approac h woul db e develope db y DOE , with ampl e opportunit y fo r publi c comment . I n addition , customers may wis h t o mak e thei r choic e of supplie r base do n aconsideratio n o f environmenta l factor s affecte db y thei r suppliers ' generatio n mix
. Customer s intereste di n purchasin g electricity produce dusin g renewabl e resources , natural ga s o r othe r powe r source s wil l nee dassurance s that representations a s t o general sourc e an denvironmenta l characteristic s are true . Participant s i n Stat e pilo t program s hav e frequentl y trie dt o differentiat e thei r

product s b y advertisin g the ma s "green. " Som e o f thei r claim s hav e bee n misleading , i f

not fraudulent
. Fo r

example , i n th e New Hampshir e pilo t program , on e supplie r offere delectricity whic h i t claime dwas generate db y hydroelectri c facilities
. However , suc h powe r

was , i n fact , generate db y pumpe dstorag e facilities
. Anothe r supplie r claime dthat

th e powe r

i t wa s sellin g was no t

generate db

y eithe r nuclear o r coa l facilities
.
5 o f 2 1

. 11 . 3/25/9 8 12:3 3 P MP. 8 03/25/9 8 WED 14:1 2 FA X20 2 23 3 959 5 Comprehensive'Electricit

y Competitio

n Pla n ACI D RAI N DIVISIO N I2)oo 7 http://www.hr.doc.gov/clcctric/plBn.htr n However , it

wa s late r learne dtha t

th e powe r

th e supplie r

wa s sellin g a s "green " powe r wa s i n fac t powe r generated , in part , fro mnuclear an dcoa l facilities
. I n additio n t o protectin g consumers , adisclosur e provisio n wil l als o protec t marketer s that are sellin g trul y "green " power , thereb y encouragin g greate r participatio n by marketer s in th e "green " powe r

market
. Fo r

example , i n California , si x powe r marketer s agree dt o participat e i n th e "Green-E " log o program , whic h require s eac h participan t t o marke t

product s that

ar e base do n at

leas t 5 0 percen t

renewable-energ y supply
. Becaus e us e o f th e "Green-E " log o i s limite donl y t o participant s i n th e program , suc h participant s ar e give n assurance s tha t thei r fello w marketer s o f

"green " powe r

ar e satisfyin g th e sam e minimu mstandard s fo r "green " powe r sales
. !
i A numbe r o f State s considerin g th e implementatio n o f retai l competitio n ar e als o explorin g th e nee dfo r

consume r

disclosur e requirements
. I n fact , th e Nationa l Associatio n o f Regulatory Utility Commissioner s passe daresolutio n i n Novembe r 1996 , supportin g initiative s t o requir e consume r disclosure
. Whil e th e Administratio n encourage s State s t o pursu e suc h efforts , w e nevertheles s believ e that , give n th e curren t movemen t

toward regional markets , disclosur e label s withi n an dbetwee n region s mus t b e uniform
. Absen t unifor mdisclosur e labels , consumer s ma y b e unabl e t o effectivel y compar e product s offere d by man y supplier s fromman y differen t part s o f th e country . Moreover , uniformity i n disclosur e requirement s wil l bette r enabl e th e relevan t

governmenta l agencie s t o verif y th e claim s mad e by suppliers
. B
. Publi c Utility Holdin g Compan y Ac t Repeal
. Proposal: Repeal

of substantive requirements of PUHCA. Provide FERC and State Commissions with additional access to the books and

records of

holding companies and

affiliates of

public utilities within holding companies to assist them in guarding against interaffiliate abuse

following repeal

of PUHCA, in .combination with the other reforms, such as additional merger and market power authority. Congres s enacte dth e Publi c Utility Holdin g Compan y Ac t ("PUHCA" ) i n 193 5 t o break u p th e gian t interstat e utility holdin g companie s that ha dforme dan dt o preclud e th e recurrenc e of holdin g compan y financia l abuses
. However , man y o f PUHCA' s requirements , suc h a s th e requiremen t

that aholdin g compan y operat e asingl e integrate dutility system , ar e no t compatibl e with amor e competitiv e electricity market
. Indeed , on e o f th e objective s of competitio n i s t o encourag e efficien t builder s an doperator s o f generatin g capacity t o participat e i n market s throughou t th e nation
. Accordingly , th e Administratio n support s th e repeal of PUHC A a s pa n o f

acomprehensiv e Electricit y restructuring bill
. Nevertheless , protectio n of consume r

interests-

- particularl y guardin g agains t cross-subsidizatio n an dabusiv e marke t power;'-

- remain s necessary . T o assis t i n guardin g agains t interaffiliate abuse s that

may disadvantag e customer s payin g cost-of-scrvic c rates , FER C an dStat e Commission s nee dgreate r acces s t o th e book s an drecord s o f holdin g companie s an dth e affiliate s of publi c utilitie s withi n th e holdin g companies , a s wel l a s additional authoritie s t o addres s merger s an dmarke t power , whic h ar e discusse di n th e nex t tw o sections
. Th e Administratio n woul dsuppor t enactmen t

o f S.621 , b y Senator s D'Amat o an dDodd , a s part

of comprehensiv e electri c industry refor mlegislation
.
«ot"2 1 3/25/9 8 12:33 P MP. 9 03/25./9 8 WED , 14:1 2 FAX20 2 23 3 959 5 Comprehensiv

e Electricit

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n ACI D RAI N DIVISIO N @00 8 http://www.hr.doe.gov/eleclric/pliln.ht m
C
. Merge r

Review
. •. Proposal: Establish FERC jurisdiction over

the mergerorconsolidation of electricity utility holding companies and generation-only companies. FERC's review of mergers should

be streamlined. A simpl e repea l o f

PUHC A woul dcreat e aga p wit h regar dt o th e regulation o f merger s o f publi c utility holdin g companies
. Currently , FER C doe s no t hav e clea r

jurisdictio n ove r publi c utility holdin g company merger s o r consolidations ; suc h merger s ar e no w subjec t t o revie w b y th e SE C unde r PUHCA
. Accordingly , sectio n 20 3 of th e Federa l Powe r

Ac t shoul db e modifie dt o provid e FER C with jurisdictio n ove r th e merge r

o f publi c utility holdin g companies
. In addition , FER C doc s no t hav e jurisdictio n ove r

generatio n facilities
. I n alargel y deregulate dgeneratio n market , merger s o f generation-onl y utilitie s coul dresult i n marke t powe r i n th e generatio n marke t an dth e FP A shoul dtherefor e b e amende dt o provid e FER C wit h jurisdictio n ove r th e merge r

of thes e entities
. Finally , t o further streamlin e th e Commission' s revie w process , sectio n 20 3 o f th e FP A shoul db e amende dt o clarif y that a n on-the-recor dhearin g i s no t require dfor

eac h merge r

application
. D
. Authority t o Addres s Marke t Powe r Proposal: Authorize FERC to remedy wholesale market powerif FERC finds market powerin wholesale markets. Authorize FERC, upon petition from a State, to remedy market

powerin retail

markets if

the State is implementing retail competition, finds market power, and

has insufficient

authority to remedy the market power. FERC

would be authorized

in these circumstances to require generators with market

powerto submit

a plan to mitigate market power, which FERC

could approve with orwithout

modification. FERC

would be authorized

to orderdivestiture to the extent necessary to mitigate market power.. Th e Commission' s recentl y issue drule s requirin g ope n an dcomparabl e acces s t o transmissio n service s an dinformatio n (Orde r Nos
. 88 8 an d889 ) should , whe n fully implemented , largel y mitigat e marke t powe r associate dwit

h th e contro l o f

transmissio n facilities
. However , ope n transmissio n acces s wil l not , b y itself , preven t th e exercis e al l form s o f marke t powe r in electricity markets
. A utility can posses s marke t powe r simpl y a s th e resul t of it s ownershi p o f

al l o r substantiall y al l of

th e generatio n facilitie s withi n a market
. However , th e mer e presenc e o f marke t powe r woul dno t

trigge r applicatio n of

th e antitrus t prohibitions
. In addition , physica l transmissio n constraint s coul dlimi t th e geographi c scop e o f

market s especiall y durin g certai n season s o r tim e periods
. FER C currentl y ha s th e authority t o conditio n merge r applications t o remed y an y potentia l marke t power . Absen t

amerge r application , FERC s onl y othe r availabl e too l t o addres s marke t powe r i s t o den y areques t

fo r market-base drates . However , suc h actio n woul d severel y imped e th e Commission' s ability t o promot e wholesal e competition
. T o ensur e tha t th e developmen t

o f competitio n i s not

hindere db y th e exercis e o f marke t power , th e FP A shoul db e amende dt o giv e th e Commissio n th e authority t o remed y concentration s o f marke t powe r i n th e wholesal e market , includin g th e authority t o orde r th e divestitur e of assets , if suc h marke t

powe r i s found
.

7 o f 2 1 3/25/9 8 12:3 3 P MP.1 0 03/25/9 8 WE

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e Electricit

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N lg]00 B

htt p 7/www. hr.dne.gov/eleciric/plun.hi m
Unde r di e Administration' s approach , State s n tai n th e primary responsibilit y fo r implementin g retai l competition
. In openin g t ieir market s t o competition , State s ar e likel y t o addres s marke t

powe r problems
. However , b e ;aus e o f th e regiona l natur e o f

man y markets , aStat e may b e presente dwith amarke t powe r proble mthat

extend s beyon dit s border s an d it s jurisdiction
. Accordingly , th e Administratio n recommend s tha t FER C b e authorize dt o provid e "backup " marke t powe r remedies , includin g divestitur e o f assets , i f aStat e i s implementin g retail competition , find s tha t onp o r mor e supplier s hav e marke t powe r in thos e retai l markets , ha s insufficien t authority FER C t o tak e action
. Give n tha t arequireme n t o remed y th e marke t powe r itself , an dask s t o dives t asset s i s a n extraordinar y remedy , FER C shoul di n th e firs t

instanc e conside r

pr e posal s b y th e generator s possessin g marke t powe r o n ho w t o mitigat e marke t powe r throug h les s intrusiv e means . FER C would'b e authorize dt o orde r

divestitur e onl y t o th e ext t nt necessary t o mitigat e marke t power . HLASSURIN C ACCES S T O AN D RELIABILIT Y O FTH E TRANSMISSIO N SYSTE M T o realiz e afully competitiv e market , transmissio n mus t b e availabl e o n a non-discriminatory basis , mus t b e reliable , an amus t

b e adequat e t o accommodat e th e man y an drequire dtransactions
. In aregulate dmarket , th e regulate dutilitie s worke di n tande m wit h thei r regulator s an dneighborin g utilitie s t o ensur e that th e transmissio n syste mwa s adequat e an dsecure . However , acompetitiv e marke t wil l requir e adifferen t

approach
. A
. Strengthe n Electri c Syste mReliability Proposal: The Federal

Power Act should Be amended

to require FERC

to approve the formation of

and oversee a private self-regulatory organization that prescribes and

enforces mandatory reliability standards.. Th e electri c utility industry , diroug h atraditi ha s performe dadmirabl y i n maintainin g relia

l highl y competitiv e marke t environment , ad

i wil l b e pressure s t o cu t

cost s an dt o driv e th e economi c valu e ou t

o f the ma s possibl e witho ] sinc e man y transmissio n owner s wil l als o b e business , ther e ma

y als o b e a

n incentiv e t o ex

i transmissio n syste mfor

economi c purposes , of voluntary self-regulatio n an dcooperation , ilit y ove r th e pas t thirt y years . However , i n a feren t mi x o f incentive s wil l b e a t

work
. Ther e owc r grid s harder , t o squeez e a s muc h t causin g asyste mbreakdown
. Moreover , th e powe r generatio n an dmarketin g rcis e contro l ove r

strategi c part s o f

th e rhap s usin g reliability concern s a s apretext . A s aresult , w e nee dt o establis h throug h fedeta l legislatio n aframewor k tha t wil l buil dupo n an dmaintai n th e industry' s traditio n o f sel f regulation , but

requir e al l panicipant s i n physica l electri c transaction s o n th e gri dt o compl y wit h mandatory reliability standards
. Th e FP A shoul db e amende di o giv e FER C th e authority t o approv e an doverse e aself-regulatin g organizatio n that

wil l prescrib e an denforc e rnandatory electri c reliabilit y standards
. Federa l oversigh t i s require dt o provid e lega l support fo r aprivat e self-regulatin g structure . Unde r thi s approach , FER C wil l b e give n th e authorn y t o revie w al l mandator y reliabilit y standard s develope db y th e self-regulatin g organizatio n t o ensur e that the y ar e i n th e publi c interes t an dreflec t

a n appropriat e leve l o f

reliability
. fERC s revie w o f suc h standard s wil l als o giv e recognitio n t o th e technica l expertis e o f th e si self-regulatin g syste mwil l b e ope n t o al l enti i ie s that us e th e bulk-powe r

syste man dshoul d
Sof2 1 f-regulatin g organization
. Membershi p i n th e

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e Electricit

y Competitio

n Pl» n ACI D RAI N DIVISIO N Eioi o http://www.hr.doe.gov/electric/plan.ht m b e require dfor

al l entitie s whos e behavio r i s c itica l t o syste mreliability
. Unde r th e oversigh t of FERC , th e privat e self-regulatin g organizatio n syste mwil l monito r complianc e wit h th e reliability standard s and , whe n neccs s ary , enforc e complianc e wit h th e standards
. Th e Departmen t

of Energy' s Tas k

Forc e o n Ellsctri c Syste mReliability , a n independen t advisory bod y chaire db y Dr
. Phili p Sharp , th e forme r Chai r o f th e U.S
. Hous e o f Representative s Energ y an dPowe r Subcommi [tee , ha s submitte dfinding s an d recommendation s t o DO E regardin g a n appro ] dat e reliability framework
. Thes e recommendation s serv e a s th e foundatio n fo r ou r proposal
. B
. Authority t o Establis h an dRequir e Independen t Syste mOperatio n Proposal: Amend

the FPA to provide FERtV with the authority to require transmitting utilities to turn over

operational\control

of transmission facilities to an -independent

system operator. . A s aresul t

of Orde r No
. 888 , al l publi c utilitie s are require dt o provid e ope n an dno n discriminatory acces s t o transmissio n facilitie s for wholesal e buyer s an dsellers
. Thi s rul e i s intende dt o reduc e atransmissio n owne r o r o p srator' s ability t o discriminat e i n th e provisio n of transmissio n services
. However , separatio n of th e operatio n an dcontro l o f transmissio n facilitie s fromgeneratio n throug h participatio : i i n a n independen t

syste moperato r

(ISO ) structure woul dgreatl y reduc e th e risk that o p sratio n of

th e transmissio n syste mcoul db e distorte dt o favo r

som e generator s o r

customer s ove r

others
. Th e benefit s of

th e independen t

operatio n o f regional-scal e ISO s addresse s concern s abou t owners . A n efficientl y dispatche dan dproper ! absen t th e establishmen t

o f regiona l independ

j some transmissio n operator s t o joi n a n IS O c entities
. l e transmissio n syste mar e clear
. A network of th e exercis e of

marke t powe r b y transmissio n price dbul k

powe r syste mmigh t

not develo p :n t syste moperators . Yet , th e unwillingnes s of ildpreven t

th e successfu l formatio n o f suc h FERC' s authority t o requir e a n investor-ownej l utility t o joi n a n IS O i s not

clear , an di t appear s t o hav e n o authority t o requir e eithe r publi c powe r

o r cooperativ e entitie s t o joi n a n ISO
. W e propos e that

FER C b e give n th e authority t o requir e that an y transmissio n owner , regardless o f

it s ownershi p structur e o r FER C s jurisdictio n ove r othe r aspect s o f

it s operations , participat e i n a n ISO , an dt o se t

o t le r requirement s pertainin g t o ISO s a s neede d t o serv e th e publi c interest
. C
. Regional Transmissio n Plannin g Agencie s Proposal: Amend

federal law to encouragt

the development

of regional transmission planning and

siting groups..

recog tiz e Th e electri c utility industry i s movin g regiona l Independen t

Syste mOperator s t o achiev e greate r

economi c an dsyste meffic i regional marke t

require s th e effectiv e planni n an ddistributio n facilities
. A regional th e need s o f

a n evolvin g regiona l market
.

towardfregional markets
. Th e recen t proposal s for th e importanc e of

aidin g regiona l market s ncy . However , a

n effectiv e an defficient ; an dsitin g of

ne w generation , transmissio n transmissio n plannin g agenc y woul dbes t respondt o

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e Electricit

y Competitio

n Pla n ACI D RAI N DIVISIO N ©Oi l http://www.hr.doc.gov/cleClric/plun.ho n
A n interstat e compac t

woul db e necessary t o t

ursu e regiona l plannin g an dsiting , an dsuc h a compac t mus t b e approve dby Congress
. Th e < Administratio n support s legislatio n whic h woul dprovid e th e require dCongressiona l co r sen t fo r compact s whic h FER C find s mee t th e specifie dcriteri arelatin g t o th e workability oi l th e structure , tha t is , eac h participatin g Stat e ha s give n th e regiona l agenc y auniformgrantjo f authority an ddecisionmakin g rule s d o no t involv e supermajority requirement s tha t coul dstalemat e th e body
. Thi s authority t o approv e regiona l plannin g bodie s woul dsupplement , t o t replace , th e curren t

join t boar dauthority foun di n sectio n 20 9 of

th e FPA
. IV . PROMOTIN G AN D PRESERVIN G PUBLI C BENEFIT S Existin g program s providin g support for rene \ benefit s wer e designe dfo r asyste mo f

regu l < modificatio n t o continu e thei r importan t

con t economi c polic y goal s withi n th e contex t o f a proposa l o n restructurin g include s provision s iia t promot e th e continue dpursui t o f publi c abl e energ y an dothe r

importan t

publi c dmarkets
. Thes e program s requir e butio n toward s meetin g environmenta l an d competitiv e marke t

Th e Administration' s interes t goals , includin g improvin g ai r quality markets
. withi n th e framewor k o f competitiv e A
. Secure Th e Futur e of

Renewabl e Electricity Throug h aRenewabl e Portfoli o Standar d Proposal: Adopt

a federal Renewable Port

foil minimum level

of additional

renewable States. The RPS would

require theirelectricity sales with ge.nerh.tion ft technologies such as wind, solai, requirement

would be initially s it to retail electricity sales project

'.d an intermediate increase in RPS to 5.5% in 2010. Th e RP S shoul db e subjec t t o acos t cap . o Standard

(RPS) to guarantee thai a generation is developed

in the United ectricity sellers to covera percentage of torn non-hydroelectric renewable biomass orgeothermal

generation. The RPS close to the ratio of

RPS-eligible generation underbaseline conditions. There would he requirement

in 2005, followed

by an increase

\y"> Repeal prospectively the "must buy" provision of

section 210 of

the Public Utility Regulatory Policies Act (mJRPA), but

preserve existing contracts and exemptions. Retai l competitio n itsel f

ha s th e potentia l t o s : gnificantl y increas e renewabl e energy' s shar e of th e electricity market , becaus e i t wil l allo w environmentally-consciou s consumer s t o support gree n energ y technologie s with thei r wallets
. Nonetheless , th e inheren t uncertaint y of th e transitio n t o competition , th e recognitio n o f importan t

environmenta l an denerg y diversificatio n benefit s fromrenewables , andjth e fac t that existin g PURP A requirement s an d Stat e initiative s t o promot e renewabl e energylar e bot h incompatibl e with competitio n an d ineffectiv e unde r

presen t marke t condition s a l sugges t

tha t federal polic y toward s renewabl e electricity shoul db e revisite di n th e contex t c r restructuring
. T o thi s end , th e Administratio n support s afederal Renewabl e Portfoli o Stan dlrdtha t woul drequir e al l electricit y sellers t o cove r apercentag e o f

thei r electricity sale s w

i t h generatio n fromnon-hydroelectri c renewabl e source s suc h a s wind , solar , biomaE s o r geotherma l energy .

1 0 o f 2 1 3/25/9 8 12:33 P MP.1 3 03/25/9 8 WED 14:1 4 FA X20 2 23 3 959 5 xmprchensive'Electricit

y Competitio

n Pla n ACI D RAI N DIVISIO N (2)01 2 http://www.hr.doe.gov/electric/plan.ht m Retai l seller s coul dmee t

th e propose dRP S re

t uiremen t b y generatin g sufficient

renewabl e electricity t o mee t

th e coverag e ratio , b y pure r asin g tradeabl e renewabl e electricity credit s (RECs ) that

woul db e create dan dtracke dfor i sac h uni t of RPS-cligibl c renewabl e electricity produced , o r

b y som e combinatio n o f

thes e strategies
. I n contras t t o th e facility-base d requiremen t

of PURPA , ou r

propose ddefinitio n o f

eligibl e renewable generatio n focuse s directl y o n th e us e o f

renewable fuel s o r

sources . Al l generatio n usin g RPS-cligibl c renewable fuel s o r

source s coul dreceiv e RECs , regardles s o f whethe r th e fuel s ar e use di n ne w o r existin g facilitie s o r

whethe r th e electricity generate dfro meligibl e renewabl e source s i s sol do n th e grid
. Wher e RPS-cligibj c an dnon-RP S eligibl e fuel s ar e use di n th e sam e facility , REC s woul db e awarde dbase do n th e proportio n o f RPS-cligibl e renewabl e fue l multiplie db y tota l generation
. However , source s that elec t th e kin dof

ne t meterin g discusse di n alate r

sectio n o f

thi s Pla n coul dnot

als o receiv e RECs
. Th e Administratio n propose s tha t th e RP S requiremen t

b e initiall y se t

clos e t o th e rati o o f RP S eligibl e generatio n t o retail electricity safe s projecte dunde r baselin e conditions
. Ther e woul db e a

n intermediat e increas e i n th e RP S requiremen t i n 2005 , followe dby a

n increas e t o 5.5 % i n 2010
. Th e RP S woul dexpir e i n 20&5 , whe n m e economic s an dbenefit s of renewabl e technologie s are expecte dto b e finel y established
. Th e RP S woul dinclud e a provisio n for

bankin g o f

RECs , t o encourag e asmoot h an dcontinuou s ramp-u p of renewabl e electricity productio n durin g di e interval betwee n RP S adjustmen t points
. In addition , ou r

proposa l provide s fo r

abacku p cos t

ca p t o hol dprogra mcost s belo w a pre-specifie dceiling
. Th e market-base dapproac h o f th e RP S mechanism s an dth e cos t cap wil l assur e diat

w c maintai n areasonabl e balanc e betwee n th e cost s o f th e RP S progra man d it s environmenta l an denerg y independenc e benefits, an dwil l strongl y encourag e effort s t o reduc e th e cost s o f

renewabl e electricity gene : atio n technologies
. PURPA , enacte di n 1978 , fostere dth e commercializatio n o f renewabl e energ y throug h sectio n 210' s requiremen t dia t autility purchas e powe r

fromcogenerator s an drenewabl e energ y facilitie s (QFs ) at

th e utility' s avoide d:ost . Sectio n 21 0 ha s ha ddi e incidental benefi t of introducin g competitiv e procuremen t practice s i n th e electri c utilit y industry
. However , in competitiv e markets , th e marke t acces s protection s fo r

qualifyin g facilitie s (QFs ) provide d b y Sectio n 21 0 o f

PURP A ar e n o longe r

neede dt o ensur e fai r

opportunitie s fo r

non-utility powe r producers
. Moreover , i t

i s unreasonabl e t o appl y a"mus t buy " requiremen t

t o electri c utilitie s i n acompetitiv e market , wher e the y hav e n o captiv e customer s require dt o pay a premiu mfor

Q Fpower . Further , unde r presen t marke t conditions , PURP A i s no t a n effectiv e mechanis mt o suppor t renewable energ y technologies
. Th e RP S employ s marke t force s throug h renewabl e energ y credi t trading , an dspread s th e cos t o f supportin g renewabl e generatio n mor e evenl y acros s th e retai l electricity marke t tha n doe s PURPA' s "mus t

buy " provision
. I t

als o avoid s th e nee dfor

troublesom e regulatory determination s regardin g "avoide dcost. " W e therefor e propos e t o repea l th e "mus t buy " provisio n of

sectio n 21 0 o f

PURP A prospectivel y i n favo r of amor e flexibl e an d economicall y efficien t

renewabl e portfoli o standard
. However , di e amendment s t o PURP A shoul dclarif

y tha i existin g contract s woul dno t b e affecte db y an y prospectiv e chang e in th e obligatio n t o purchas e unde r sectio n 210
. Moreover , th e regulatory exemption s unde r applicabl e federal an dStat e la w fo r existin g QF s shoul dals o b e preserve dtogethe r with thei r righ t t o interconnection , backu p an dstarjdb y powe r o n reasonabl e terms . I t shoul db e note dtha

t odie r element s o f

th e Administratio n proposa l wil l als o encourage th e developmen t

o f renewabl e electricity generation
. Thes e includ e consume r disclosur e

1 1 of 2 1 3/25/9 8 12:33 P MP.1 4 03/25/9 8 WED 14:1 4 FA X20 2 23 3 959 5 CornpTchcnsiY.

i Electricit y Competition Pla

n ACI D RAI N DIVISIO N 0)01 3 http://www.hr.doe.gov/clcctric/plRti.ht m requirements, whic h shoul dfurther hel p th e developmen t

of renewabl e energy , an danet meterin g provisio n that

i s likel y t o b e of

particular

benefi t t o smal l scal e solar

generatio n technologies
. I n addition , State s may provid e idditional support t o renewable technologie s throug h th e publi c benefi t fund
. B
. Encourag e an dSupport Continue dFundin g fo r

Publi c Benefi t

Program s Proposal: Create a $3 billion per year public benefit

fund to provide matching funds to States for low-income assistance*energy efficiency programs, consumer

- education and

the development

and demonstration of

emerging technologies, particularly renewables. Th e Administratio n support s th e creatio n o f a$ 3 billio n pe r

year publi c benefi t

fun d(PBF ) t o provid e matchin g fund s t o State s for low-i n com e assistance , energ y efficienc y programs , consume r educatio n an dth e developmen t an ddemonstratio n o f

emergin g technologies , particularl y renewables
. Th e PB Fwoul db e f i nde dthroug h ageneratio n o r transmissio n interconnectio n fe e o n al l electricity , cappe dat 1/1 0 o f on e cen t ( 1 mill ) pe r

kilowatt-hour
. I t woul db e oversee n b y aJoin t Boar dcompose do f

Federa l an dStat e official s wh o woul dse t standard s for

fundeligibility
. State s woul dhav e th e flexibility t o decid e whethe r t o seek fund s an dho w to allocat e fund s amon g publi c purposes . Withi n eac h State , program s suc h a s renewabl e developmen t an denerg y efficienc y shoul dcompet e fo r fund s o n th e basi s of cost-effectiveness
. Th e PB Fwil l sunse t after 5 year s o f

operation
. Th e introductio n o f

competitio n itsel f

shoul d provid e importan tpubli c benefits , a s seller s wil l hav e astron g incentiv e t o ad dvalu e t o an ddifferentiat e thei r product s i n way s diat

wil l provid e suc h benefits
. Initia l experienc e with pilot program s an dnascen t

competitio n sugges t that , a s strategie s t o attrac t an dretai n customers , companie s wil l provid e bundle d package s o f

electricity an defficienc y service s i sell renewabl e ("green" ) powe r a s apremiu mproduc t

t o environmentally-consciou s consumers . (instea do f a"ra w electricity " commodity ) an d
Nevertheless , if

no t properl y implemented , retai l competitio n coul dlea dt o reducedsupport

. i for electricity-relate dprogram s ma t provid e importan t

publi c benefits
. Unde r

cost-of-servic e regulation, program s supportin g an dpromotin g renewabl e generation , energ y efficienc y an d lo w incom e assistanc e were supporte di n part throug h utility rat e structures , an dutilitie s recovere dth e cost s of

approve dprogram s witfiin thei r monopol y servic e are aa s apart of m e overal l cos t

o f service
. A s utilitie s prepar e foi includ e i n thei r

rate s di e cos t

o f program s no t competition , suc h entitie s wil l b e unwillin g t o

include di n th e rate s o f

thei r competitors
. Moreover , althoug h transmissio n an ddistributio n wil l remai n regulated , publi c benefit s program s wil l suffer

i f State s d o no t

continu e t o requir e fundin g for tiiese programs . A number of State s tha t

pla n t o ope n thei r

electricity alread y plannin g t o recove r di e cost s of

certa i i non-bypassabl c distributio n charg e o n al l elecjtricit y encourag e an dsupport

di e creatio n of

dies e structure dt o giv e State s th e flexibility t o allocat e addresse s uniqu e Stat e o r loca l needs
. A fedei a

l th e activitie s i n questio n provid e publi c benefit s propose dmatchin g fundamoun t o f $ 3 billio n preserv e th e curren t

leve l of support State s provid e
1 2 of 2 1 market s t o retai l competitio n ar e publi c benefi t

program s throug h a customers . A federal PB Fwil l bot h program s at

th e Stat e level , an dcan b e publi c benefi t

fundin g i n amanne r

that PB Fi s als o justifie db y th e fac t tha t man y of s tha t transcen dStat e boundaries
. Finally , th e wil l encourage States , a t

aminimum , t o for publi c purpos e programs , estimate d

3/25/9 8 12:3 3 P MP.1 5 03/25/9 8 WE

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n Pla n

a t abou t $ 6 billio n i n 1996
. ACI D RAI N DIVISIO N

!3of2 1 wind ,

Lower-cos t

renewabl e technologie s suc h a s considerabl e support

throug h curren t

utility Renewabl e Portfoli o Standard
. N o "doubl e projects
. Suc h project s coul donl y receiv e instanc e coul dreceiv e support fro mboth mechanism s

geotherma l an dbiomass , whic h receiv e rates , woul db e supporte dprimaril y throug h th e dipping " woul db e permitte dfo r renewabl e su p por t fro meithe r

th e RP S o r

di e PBF , bu t

in n o C. Ne t Meterin g Proposal: Make all

consumers eligible for service providers assure the appropriate nondiscriminatory only to very small

(up to 20 kW) a cap determined

at the state 1001 4 http7/www.hr.doe.Bov/elcctric/plan.ht m

net metering and

require that

all distribution availability of

interconnection, subject to safety standards. The provision should apply renewable energy projects, and be subject

to level. Ne t meterin g provide s a

n incentiv e fo r

electricit y user s t o instal l small-scal e on-sit e renewabl e generatio n source s (suc h a s th e roofto p solar photovoltai c panel s feature di n th e President' s Million Solar

Roofs Initiative announce di n June , 1997 ) i n orde r t o reduc e electricity generatio n fro mconventiona l sources . Th e ne t meterin g custome r

maintain s th e benefi t o f connectio n t o th e powe r

network , bi t

save s o n bot h transmissio n an ddistributio n charge s an dpowe r

charge s whe n renewabl e e lerg y i s bein g generate deithe r fo r us e o r for resal e t o th e grid
. A federal requiremen t

t o provid e ne t

meterin g arrangement s woul dprovid e suppor t fo r dispersed , small , renewable generatio n resources . Accordingly , di e Administratio n recommend s mat

al l consumer s b e mad e eligibl e fo r ne t metering
. Th e provisio n shoul dals o requir e that

al l distributio n servic e provider s assur e th e availability o f interconnection , subjec t t o appropriat e nondiscriminatory safet y standards
. Suc h non-discriminatory interconnectio n standard s woul dappl y t o al l reasonabl e interconnectio n requests. Finally , th e provisio n shoul dappl y onl y t o very smal l (up t o 2 0 kW ) renewabl e energ y projects
. P
. Nitroge n Oxid e Tradin g Authority Proposal: Clarify EPA authority to require a cost-effective interstate trading system for

nitrogen oxide (NOx) pollutant rzductions addressing the regional transport contributions needed

to attain a rd

maintain the Primary National Ambient AirQuality Standards (PNAAQ11) for ozone. No change is proposed to existing EPA authority to determine geographic coverage orlevel of reductions required

in addressb \g regional

transport contributions. Ou r restructurin g proposa l i s likel y t o provid e emission s of

nitroge n oxide s (NOx) an dcarbo n 2010
. Notwithstandin g tiiese benefits , th e wor k (OTAG) , amulti-year

consultativ e proces s t

h it interes t groups , an delectri c utilitie s throughou t furthe r substantia l reductio n i n NO x emission s ambien t health-base dstandar dfo r ozon e i n thp sourc e o f NO x emissions
. ne t benefit s t o th e environmen t b y reducin g dioxid e relativ e t o baselin e projection s fo r of di e Ozon e Transpor t

Assessmen t

Grou p include drepresentative s fro mstates , publi c th e Eastern Unite dStates , suggeste dtha t a ove r awid e are ai s neede dt o attai n th e Nortfieas t

Electri c generator s ar e amajo r

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1 4 of 2 1 I n Novembe r

1997 , th e Environmenta l regional transport

of NO X emission s tiiat Ai r Quality Standar dfo r

Ozon e diroug h ase t eastern State s an dth e Distric t o f Columbi a Clean Ai r Act
. EPA' s proposa l i s base do n di e Protectio n Agenc y (EPA ) propose dt o addres s th e contibut e t o violation s o f th e Primary Ambien t c i f NO X emission s budget s t o appl y t o 2 2 undfe r audiorit y provide di n Sectio n 11 0 o f th e wor k of OTAG
. th e Bo mai r quality an deconomi c interest s favo r t o achiev e th e emission s reduction s necessary T o mi s end , EP A ha s propose dt o allo w interstat e However , State s ma y b e reluctan t t o tak e advantag e therefore propose s t o clarif y EPA' s authority t o oxides
. us e o f efficien t market-base dinstrument s t o addres s advers e regiona l transpor t impacts
. tradin g of budgete demission s allowances , o f thi s flexibility
. Th e Administratio n requir e aca p an dtrad e syste mfor nitroge n Our proposa l woul dno t

affect eithe r th e leve l are aove r whic h reduction s shoul db e made , t c ongoin g regulator y processe s unde r existin g addressin g thes e technica l issues
. a f emission s reductions , o r th e geographi c jaddres s regiona l transpor t o f emissions
. Th e statutory authority ar e th e appropriat e venu e fo r E
. Ai r Emission s Th e Administratio n believe s that retai l compe ' ai r an dadown-paymen t

o n greenhous e ga s Competitio n Plan wil l reduc e greenhous e ga s th e year 2010
. A s previousl y discussed , ou r plan include s a annuall y (1. 0 mill/kWh, ) t o matc h Stat e renewabl e energy , an dothe r publi c benefi t consumer s identif

y an dchoos e powe r

fro m Renewabl e Portfoli o Standard , t o requir e that generate dfro mnon-hydroelectri c renewabl e provisio n encouragin g th e installatio n of smal NO X for emissions , t o facilitat e cost-effectiv e w e expec t tha t retai l competitio n wil l strength reduc e th e iwo-diird s wast e of energ y currentl y electricity —tiicreby further cuttin g greenhous e pollution , an dconservin g fuel
. W e believ e that

ou r plan wil l produc e cleane r http://www.hr.drtt.gov/electric/plan.ht m

i'tio n wil l delive r

economi c savings , cleane r emission s reductions
. W e estimat e dia t ou r amission s b y 2 5 t o 4 0 millio n metri c ton s b y Rubli c Benefit s Fun dof

u p t o $ 3 billio n comnltment s fo r

financin g energ y efficiency , programs ; "gree n labeling " provision s t o hel p environmentall y friendl y generators ; a a t leas t 5. 5 percen t

o f electricity sale s b e sources , subjec t

t o acos t cap ; ane t

meterin g renewabl e systems ; an dtradin g authority ,'•• market-drive n NO X reductions
. I n addition , s n incentive s t o improv e efficiency , an d associate dwith fossil-fue l generatio n o f : ga s emissions , savin g money , reducing ai r an dreduce dgreenhous e ga s reductions , althoug h th e precis e impact s are difficul t t o predic t

W e inten dt o wor

k wit h di e Congres s t o ensur e that

an y unanticipate dconsequence s atj e addresse dquickl y an di n keepin g with di e Administration' s climat e chang e policies
. Therefore , tiiose makin g investmen t decision s recogniz e th e Administration' s stron g commitmen t th e timetabl e se t

ou t in th e President' s climat e Congres s fo r

carbo n cap-an dtrad e authority restructurin g proposal
. Th e Administration' s authority t o b e i n plac e b y 2008 , an dth e Administratio n Congres s whateve r

legislativ e vehicl e i s mos t throug h th e perio dof restructurin g shoul d t o reducin g greenhous e ga s emission s o n chang e policy
. W e ar e no t askin g thi s jipar t of di e Administration' s electricit y climat e chang e polic y call s for cap-and-trad e wil l conside r

in consultatio n with appropriat e for

thi s purpose .

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In Ui e meanwhile , di e Administratio n wil l sec] : t o ensur e tiiat w e hav e accurate , accessibl e dat aon th e progres s towardcleane r ai r an dcarbo n dioxid e reduction
. Unde r curren t law , th e utility industry report s variou s type s o f emissions
. Th e Administratio n intend s t o ensur e tha t th e relevan t

Federa l agencie s coordinat e di e dat areceive do n emission s fro mth e utility secto r an dthe n provid e suc h dat ai n annual report s t o th e President
. F
. Rural Safet

y Ne t Th e Administratio n i s confiden t dia t aproper l y structure dretai l competitio n syste mwil l benefi t consumer s i n al l part s o f th e nation , i n :ludin g rura l areas . Nevertheless , th e Administratio n i s mindfu l o f th e possibilit y dia t

i n cenai n case s competitio n coul dhav e advers e impact s in rura l area s wher e th e cos t o f deliverin g electricit y t o consumer s i s relativel y high
. Accordingly , arura l safet y ne t should , if

necessary , b e establishe dt o addres s any unintende dconsequence s arisin g fro mdie transitio n t o retai l competition
. DO E an d USD A staf

f ar e currenti y workin g togedie r o n competitio n o n rura l areas . V
. AMENDIN G EXISTIN G FEDERA L STATUTE S T O CLARIF Y FEDERA L AN D analysi s t o determin e di e likel y impac t of

STAT E AUTHORIT Y Th e existin g Federal regulatory framewor k f o • di e electri c powe r

industr y was establishe d earl y i n di e Ne w Dea l wid i th e enactmen t o f th e Federa l Powe r

Ac t an dth e Publi c Utility Holdin g Compan y Act
. Th e Stat e regulatory structure , for di e mos t part , precede dtiiese federal statutes . Thi s regulator y framewor k ha s remaine dessentiall y unchanged : vertically-integrate dutilitie s enjo y di e advantage s o f monopol y franchis e territorie s an d authorize drate s o f

return o n investment , i n exchang e fo r a n obligatio n t o serv e al l customers widii n tiieir

respectiv e servic e territorie s a t regulate drates . Th e federal statutory framewor k doe s not re adil y accommodat e individua l Stat e initiative s t o institut e competitio n amon g retai l suppliers
. In fact , certai n federal statute s whic h wer e drafte di n th e contex t

o f cost-of-servic e regulatio n may prov e unworkabl e in arestructure d market
. Moreover , FER C may b e unabl e t o fully implemen t it s open-acces s polic y absen t increase daudiority unde r di e Federa l Powe r

/ >ct . Amendment s t o th e Federa l Powe r Ac t wil l b e necessary i n orde r t o enabl e boti i FER C an dth e State s t o implemen t competitio n effectively
. A
. Clarif y Federa l Jurisdictio n

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n Pla n ACI D RAI N DIVISIO N 12101 7 http://www.hr.doe.gov/electric/plan.ht m Proposal: Provide FERC with clearauthority to orderretail transmission in a transmission system other than where the end

user is located

to complete an authorized

retail sale. Reinforce FERC

jurisdiction overrales, terms, and conditions of

unbundled retail transmission. Reinforce FERC

authority relied

upon to promulgate OrderNo. 888. Provide that

FERC's open access rules apply to municipal utilities, cooperatives, the Tennessee Valley Authority (TVA), and Federal power marketing administrations (PMAs), with the proviso that, with respect to the PMAs, TVA, and

cooperatives financed by the Rural Utilities Service, it

may be necessary in some instances to adopt special stranded cost mechanisms to take into account

the unique facts and

circumstances surrounding these federal investments or

loans. A numbe r o f technica l change s t o th e Federa l Powe r Ac t (FPA ) ar e neede dt o ensur e that th e jurisdictio n o f

th e Federa l Energ y Regulatory Commissio n (FERC ) i s sufficien t t o protec t consumer s in th e newl y competitiv e framewor k i n electricity markets
. First , FER C shoul d hav e clear authority t o orde r

transmittin g utilitie s t o provid e retai l transmissio n in autility syste mothe r

than wher e th e en duse r

i s locate di

f neede dt o complet e aState-authorize d retai l sale
. Thi s clarificatio n of th e law i s necessary t o ensur e tha t transmissio n syste m owner s in on e syste md o no t hav e th e ability t o frustrat e State-sanctione dretai l sale s i n another system . I n addition , FERCVjurisdictio n ove r rates , terms , an dcondition s fo r unbundle dretai l transmissio n shoul db e clarifie dt o avoi dth e potentia l burde n o f duplicative an dpotentiall y conflictin g regulatio n in thi s are ab y providin g FER C wit h jurisdictio n ove r suc h transmission
. I n 1996 , FER C issue dit s landmark order s (Orde r

Nos
. 88 8 an d889 ) requirin g jurisdictiona l utilitie s t o fil e ope n acces s transmissio n tariffs
. Thi s wa s acritica l ste p i n openin g market s t o competition
. However , FERC' s authoritie s t o require th e filin g o f ope n acces s tariff

s an dt o allo w fo r di e recovery o f

strande dcost s resultin g fro mdi e implementatio n o f ope n acces s hav e bee n challenged
. T o ensur e tha t ope n acces s wil l b e implemente dwidiou t any clou do

f legal uncertainty , th e FP A shoul db e amende dt o remov e any doub t tha t FER C ha s di e autfiorit y t o requir e di e filin g of

ope n acces s tariff

s by rul e withou t

ahearin g an dtha t

FER C ha s di e authority t o allo w utilitie s t o recove r strande dcost s resulting fro mimplementatio n of th e ope n transmissio n acces s requirement
. Orde r No
. 88 8 applie s t o publi c utilities , bu t i t doe s no t appl y directl y t o entitie s suc h a s th e Federal powe r

marketin g administration s (PMAs) , rura l electri c cooperatives , an d municipalities
. Effectiv e wholesal e competitio n requires dia t supplier s an dpurchaser s of electricity have 1 comparabl e acces s t o al l necessary transmissio n facilities
. Limitin g ope n acces s tarif

f requirement s t o thos e utilitie s subjec t t o th e Commission' s ratemakin g jurisdictio n woul dconstrai n an ddistort th e developmen t

o f competitiv e powe r

markets
. Accordingly , t o provid e for greate r an dmor e efficient

competition , th e transmissio n rates , term s an dcondition s o f

non-jurisdictiona l utilitie s shoul db e subjec t t o th e Commission' s jurisdictio n an dope n acces s rules
. Whil e th e Administratio n support s th e mandatory applicatio n o f th e Commission' s ope n
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acces s requirement s t o non-jurisdictiona l utilities , with regar dt o th e PMAs , th e Tennesse e Valle y Audiority (TVA) , an drura l electri c cooperative s finance di n par t b y th e Departmen t o f Agricultur e Rura l Utility Servic e (RUS) , th e Administratio n support s suc h applicatio n wit h di e provis o tha t

i t may b e necessary i n som e instance s t o adop t specia l strande dcos t aumoritie s dia t

tak e int o accoun t

th e uniqu e fact s an dcircumstance s surroundin g thes e -federa l investment s o r

loans
. Thi s i s a

n imponan t

issu e becaus e th e combine ddeb t of RUS , TVA
. an dih e Bonnevill e Powe r Administratio n (BPA) i s ove r $7 0 billion
. On e possibl e approac h i s t o autiioriz e th e Commissio n t o suspen do r modif y th e applicatio n o f

ope n acces s requirement s t o thes e entitie s fo r specifie dperiod s if

i t find s tha t

adequat e strande d cos t mechanism s are no t

i n plac e (se e als o discussio n belo w regardin g rol e of Federa l powe r agencies)
. W c ar c please dt o not e dia t flic PMA s ar e actin g voluntaril y t o compl y witi i FER C ope n acces s requirements
. Th e Bonnevill e Powe r Administration' s (BPA ) ope n acces s transmissio n tarif

f ha s bee n conditionall y approve db y di e Commissio n an ddi e othe r PMA s that ow n transmission , di e Western Are aan dSouthwestern Powe r Administrations , file d ope n acces s tariff

s i n Decembe r

199 7 fo r revie w an dapprova l b y di e Commission
. B
. Clarif y Stat e Jurisdictio n t o Implemen t Retai l Competitio n Proposal: Amend

the Federal

Power Act (FPA) to clarify that

it does not preempt States from ordering retail

competition. Amend the FPA to clarify that

it does not preempt States from imposing a charge on the ultimate consumers receipt of electric energy. Th e FP A shoul db e amende dt o clarif y tha t i t doe s not preemp t State s fro morderin g retail competition
. A t

leas t tw o Stat e retai l competitio n plan s hav e bee n challenge do n thes e grounds , an dothe r

suc h challenge s ar e likel y i f thi s matte r

i s no t addressed
. Th e FP A shoul d als o b e amende dt o clarif

y mat i t doe s no t preemp t State s fro mimposin g acharg e o n th e ultimat e customer's receip t of electri c energy . Suc h charge s ar c bein g use db y State s t o allo w for th e recovery of

strande dcost s an dt o fundpubli c benefit s programs . C
. Clarif y Stat e Authority t o Impos e Reciprocity Requirement s Proposal: Provide States that have implemented

retail competition with the authority to preclude an out-of-state utility with a retail monopoly

from selling within the State unless that

out-of-state utility permits customer choice. Retai l competitio n wil l enabl e currentl y captiv e retai l customer s t o purchas e powe r fro m alternativ e suppliers
. Suc h competitio n wil l likel y resul t in som e utilitie s losin g aportio n of diei r existin g loa dt o outsid e suppliers
. I f neighborin g utilitie s allo w retai l competition , th e utility with surplu s powe r du e t o th e adven t

of retai l competitio n i n it s ow n formerl y exclusiv e servic e are acoul dmitigat e o r eliminat e strande dcost s b y sellin g it s surplu s t o di e customers of

thes e utilities
. However , if neighborin g utilitie s ar e not subjec t t o aretai l competitio n requirement , autility i n thi s situatio n woul dhav e greate r difficult y i n mitigatin g it s losse s an dth e amoun t

of it s strande dcost s woul dlikel y increase
. State s can assis t

utilitie s i n gainin g acces s t o di e customers o f utilitie s ove r

whic h th e Stat e

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n Pla n ACI D RAI N DIVISIO N @01 9 http://www.hr.doc.gov/eleCtric/pkn.hi m ha s n o ratemakin g audiority ("extra-jurisdictiona l utilities" ) b y imposin g areciprocit y requirement
. Suc h arequiremen t woul dconditio n a

n extra-jurisdictiona l utility' s acces s t o customer s of

th e jurisdictiona l utility o n th e extra-jurisdictiona l utility' s providin g retail acces s t o it s ow n customers . However , som e State s hav e expresse dconcern tha t th e Commerc e Claus e woul dlimi t thei r ability t o impos e reciprocity requirement s o n extra-jurisdictiona l suppliers
. T o provid e State s with clea r authority , th e Federa l Powe r Ac t shoul db e amende dt o provid e State s wid i th e audiority t o impos e areciprocit y requiremen t o n al l extra-jurisdictiona l supplier s o f electricity withi n di e Unite dStates
. A Commerc e Claus e challeng e coul dals o b e raise dwit h respec t t o aState' s attemp t

t o preven t lo w cos t indigenou s powe r

fro mbein g sol dt o customer s outside di e Stat e followin g implementatio n o f

retai l competition , whic h coul dhav e di e effec t of increasin g electricit y rate s fo r in-Stat e consumers . W e ar e considerin g whethe r State s shoul db e give n specifi c authority t o preserv e suc h low-cos t indigenou s powe r

followin g implementatio n o f retail competition
. D.Th e Appropriat e Rol e of Federa l Powe r

Agencie s Th e Administratio n i s als o considerin g di e questio n of th e appropriat e rol e o f

th e federal powe r agencies , particularl y BP A an dth e Tennesse e Valle y Authority (TVA) , in th e ne w competitiv e market
. Th e Administratio n i s favorabl y incline dtowarddi e recommendations mad e concernin g BP A b y th e Comprehensive ' Revie w o f th e Northwes t

Energ y System , a publi c stakeholde r

proces s sponsore db y th e Governor s o f Washington , Oregon , Idah o an d Montana
. However , issue s suc h a s strande dcosts , whic h wer e no t adequatel y addresse db y th e Review , mus t

b e resolve dbefor e w e hav e acomplet e blueprin t fo r adaptin g BP A t o competition
. Appropriat e resolutio n of thi s matte r

i s critica l t o assurin g tha t th e cost s an d liabilitie s associate dwit

h Bonneville , includin g Federa l an dWashingto n Publi c Powe r Suppl y Syste mdebt , continu e t o b e born e b y di e beneficiarie s of th e Bonnevill e system , no t Federal taxpayers . Th e Northwes t Governor s Transitio n Boar di s addressin g di e strande d cos t issue , an dw e loo k

forwar dt o receivin g it s recommendations
. Th e Administratio n i s als o considerin g th e issu e of th e introductio n o f

boti i wholesal e an d retai l competitio n t o th e TV A servic e area . A s afirs t step , w e hav e establishe dth e independen t

Tennesse e Valle y Electri c Syste mAdvisor y Committee , unde r th e audiority o f th e Secretary o f

Energ y Advisory Board , an dchaire db y former Congressma n Butie r Derrick
. Th e Committe e i s comprise do f abroa dspectru mo f

TV A stakeholde r

an di s workin g togedie r

t o develo p recommendation s fo r restructurin g th e powe r

activitie s o f

TVA
. W e expec t

the mt o provid e u s with abroa dframewor k fo r bringin g competitio n t o TV A an d restructurin g it s operations
. W e loo k forwar dt o th e committee' s recommendations , whic h i t intend s t o produc e b y Marc h 31 , 1998
. VI
. MISCELLANEOU S PROVISION S A.Amendmen t

t o Bankruptc y ReformAc t R Proposal: Amend

the Bankruptcy Act

to make nuclear

decommissioning costs a nondischargeable priority claim. Nuclear decommissionin g cost s shoul db e anondischargcabl c priority clai mi n abankruptc y proceeding , whic h woul densur e that n o license e woul db e abl e t o avoi ddecommissionin g
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n ACI D RAI N DIVISIO N 102 0 http://www.hr.doe.gov/eleetric/plan.ht m liability
. Sectio n 503(b ) of th e Bankruptc y Refor

mAc t of 197 8 shoul db e amende dt o provid e dia t

suc h cost s shoul db e anondischargeabl e priorit y claim
. B.EI A Stud y o f

Impact s o f

Competitio n Proposal: The Energy Information Administration should be directed

to study the impacts of

wholesale and

retail competition. Th e collectio n o f

informatio n relating t o th e impact s of wholesal e an dretai l competitio n wil l b e critica l t o di e Federa l an dStat e governments ' respectiv e examination s o f whethe r customer s ar e receiving di e economi c benefit s of a n efficien t competitiv e market , t o suppliers ' effort s t o operat e an dplan efficiently , an dt o consumers ' decision s a s t o whic h supplie r of electricit y bes t

meet s thei r

needs
. Provision s whic h woul dmor e thoroughl y specif y di e informatio n autiiorize dt o b e collecte db y th e Administrato r fo r astud y o n th e impact s o f

competitio n woul denabl e di e Energ y Informatio n Administratio n t o justif y collectio n o f

thi s information , especiall y t o reluctan t informatio n providers
. Accordingly , th e Administratio n recommend s legislatio n t o direc t suc h an EI A study , an dt o authoriz e EI A t o collec t th e necessary information
. C.Effec t on operatio n o f

antitrus t law s Proposal: Provide that nothing in the new legislation affects operation of antitrust laws. Continue dan deffectiv e operatio n of th e antitrus t

law s i s o f

critica l importanc e i

n th e successfu l implementatio n o f retai l competition
. Accordingly , di e Administratio n recommend s di e inclusio n o f a n antitrus t saving s claus e whic h provide s tha t nothin g in th e legislatio n woul db e construe di o modify , impair , o r supersed e di e operatio n o f th e antitrus t laws
. D.EIiminat e antitrus t

revie w b v Nuclear

Regulatory Commissio n Proposal: Eliminate antitrust review by NRC. Sectio n 105 c o f

th e Atomi c Energ y Ac t

(AEA) require s antitrus t

review s b y th e Nuclear Regulatory Commissio n i n connectio n wit h applications fo r

a n NR C licens e t o construc t o r operat e acommercia l utilizatio n o r productio n facility
. However , suc h review s ar e n o longe r necessary i n ligh t

o f th e authority o f

di e Justic e Departmen t

an ddi e Federa l Energ y Regulatory Commissio n witi i respect t o utility marke t

powe r issues
. Thus , di e Administratio n recommend s diat sectio n 105 c b e stricke n fro mth e Atomi c Energ y Act
. Thi s amendmen t

t o th e AE A woul dnevertheles s leav e intac t existin g antitrus t

licens e condition s an dth e NRC' s authority t o enforc e thos e existin g conditions
. E
. Taxe s (1 ) Nuclear

Decommissionin g Cost s Proposal: Amend

the Internal

Revenue Code relating to deductions to a qualified nucleardecommissioning fiend. Th e amoun t

o f contribution s t o aqualifie dnuclear decommissionin g fun dautility i s entitle d t o deduc t unde r sectio n 468 A of

di e Interna l Revenu e Cod e i s th e lesse r o f th e

19of2 1 3/25/9 8 12:3 3 PN 'P.2 2 03/25/9 8 WED,14:1 8 FA X20 2 23 3 959 5 teriprchcpsivc Electricit

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n ACI D RAI N DIVISIO N (2)02 1 http://www.hr.due.gov/electric/plivn.ht m "cost-of-service " amoun t

o r th e "rulin g amount. " I n arestructuredmarket , if anuclear powe r plan t i s n o longe r

subjec t t o cost-of-servic e ratemaking , i t coul db e determine dtha t th e amoun t of decommissionin g cost s include di n cost-of-servic e woul db e zero . Becaus e th e amoun t qualifie dfo r

di e ta x deductio n i s th e lesse r o f th e amoun t

include di n th e cos t

o f servic e o r th e rulin g amount , di e ta x deductio n woul dthe n b e zero . T o addres s thi s problem , sectio n 468 A need s t o b e amended
. (2 ) Tax-Exemp t

Bond s Proposal: Amend

the Internal

Revenue Code to provide that (I) private use limitations are inapplicable to outstanding bonds for publicly-owned

generation, transmission or

distribution facilities if

used in connection with retail competition or

open access transmission, and (2) tax-exempt

financing is unavailable

for new generation or

transmission

facilities. Tax-exempt financing would

continue to be availablefor distribution facilities subject to current law private use limitations. Restructurin g of

th e electri c utility industry force s areexamination o f th e rule s governin g th e us e of tax-exemp t

bond s t o financ e facilitie s for th e generation , transmissio n an d distributio n of

electricity
. Th e basi c framewor k of curren t law rule s wa s establishe dt o fi t a n er awhe n individua l electri c systems , whethe r privatel y o r

publicly-owned , operate dwitiii n clearl y define dservic e territorie s an dwhe n th e wheelin g of powe r was no t widel y practiced
. Th e basi c premis e o f

thes e rule s i s tha t

tax-exemp t

bon dfinancing i s no t

generall y availabl e fo r facilitie s use di o asignifican t exten t b y privat e persons i n acapacit y othe r tha n a s a membe r of th e general public
. A s di e industry move s towardamor e efficient , integrate d structure , transmissio n an ddistributio n facilitie s finance di n prio r year s with tax-exemp t bond s nee dt o b e ope n t o us e b y privat e firms i n th e busines s o f generatin g electricity
. Publi c powe r system s are expecte dt o participat e i n restructure denvironment s tha t allo w competing , privat e generator s of electricit y t o sel l t o customers wh o formerl y ha dn o optio n bu t to b e supplie db y thos e publi c systems . Th e efficienc y an dequity o f arestructure dindustry depend s upo n levelin g th e playin g field wit h respec t t o capita l cost s whil e a

t th e sam e tim e ensurin g diat publicly-owne dfacilitie s ar e no t discourage db y th e federal incom e ta x rule s fro mfully participating
. Accordingly , th e Administratio n recommend s tha t facilitie s finance dwith.outstandin g tax-exemp t

bond s shoul db e fre e fromdi e privat e us e limitation s provide dtha t (i ) suc h facilitie s continu e t o b e owne dby publi c entities , an d(ii ) suc h generation , transmissio n an d distributio n facilitie s ar e use di n connectio n with retai l competitio n o r ope n acces s transmission

- Th e Administratio n furthe r recommend s tha t

ne w generatio n an dtransmissio n facilitie s b e ineligibl e fo r tax-exemp t

bon dfinancing. Th e Administratio n recognize s that certai n situation s may warran t transitio n o r

othe r relie f an dwoul dlik e t o wor

k wit h Congres s t o identif

y suc h situation s an ddevelo p appropriat e relie f measures . Tax-exemp t financing woul dcontinu e t o b e availabl e for distributio n facilitie s subjec t t o curren t

law privat e us e limitations
.

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e Electricit

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n ACI D RAI N DIVISIO N 0)02 2 http://www.hr.doe.gov/electr i c/plnn.ht m r^mgntctoWrhmftste r| PPI.. TM t n r>OF. Hom e Pag e I Updated : 03/25/9 8

2 1 o f 2 1 3/25/9B 12:33 P N