I

104TH CONGRESS

2D SESSION H. R. 2929

To amend title I of the Public Utility Regulatory Policies Act of 1978

to deregulate the electric power industry.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 1, 1996

Mr. MARKEY introduced the following bill; which was referred to the Committee on Commerce, and in addition to the Committee on the Judiciary, for

a period to be subsequently determined by the Speaker, in each case for

consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To amend title I of the Public Utility Regulatory Policies

Act of 1978 to deregulate the electric power industry.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Electric Power Competition Act of 1996’’.

6 (b) TABLE OF CONTENTS.—

Sec. 1. Short title and table of contents.

Sec. 2. Findings.

TITLE I—SUSPENSION OF PUBLIC UTILITY REGULATORY

POLICIES ACT PROVISIONS
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Sec. 101. Purchases from qualifying facilities.

TITLE II—STANDARDS OF COMPETITION FOR ELECTRIC

UTILITIES

Sec. 201. Standards of competition.

TITLE III—ANTITRUST LAWS

Sec. 301. State action doctrine.

1 SEC. 2. FINDINGS.

2 The Congress finds that equitable rates for electric

3 consumers and increased efficiency in the use of tech4 nology and resources for the generation of electric power

5 require—

6 (1) reliance on competition and market forces

7 rather than regulation of monopolies to generate the

8 most efficient and reliable electricity for ratepayers;

9 (2) access to transmission and distribution fa10 cilities for all suppliers and marketers of electricity

11 with pricing and terms and conditions on a com12 parable basis with those who own or control such fa13 cilities;

14 (3) a program to promote fuel diversity and

15 conservation and environmental protection through

16 the encouragement of renewable technologies and

17 other environmentally benign generation resources;

18 (4) the ability of electric utilities to recover le19 gitimate and verifiable stranded costs;

20 (5) the preservation of the benefits and exemp21 tions necessary for a competitive market, including
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1 mandatory power purchase provisions which are pro2 vided to qualifying small power production facilities

3 and qualifying cogeneration facilities under section

4 210 of the Public Utility Regulatory Policies Act of

5 1978 until and unless standards of competition are

6 adopted by the Federal Energy Regulatory Commis7 sion and implemented by the State regulatory au8 thorities removing structural or other barriers to

9 competition in electricity markets; and

10 (6) reform of Federal and State electric utility

11 regulatory laws and regulations, including eliminat12 ing certain exemptions from certain antitrust laws,

13 which create unnecessary obstacles to competition

14 and to prevention of anticompetitive behavior of en15 tities with market power.

16 TITLE I—SUSPENSION OF PUB17 LIC UTILITY REGULATORY

18 POLICIES ACT PROVISIONS

19 SEC. 101. PURCHASES FROM QUALIFYING FACILITIES.

20 Title II of the Public Utility Regulatory Policies Act

21 of 1978 is amended by adding the following new sections

22 at the end thereof:
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1 ‘‘SEC. 214. UTILITIES WITH CERTIFICATION OF COMPETI2 TION.

3 ‘‘(a) CERTAIN REQUIREMENTS OF SECTION 210 SUS4 PENDED.—If an electric utility has received a Certification

5 of Competition from a State regulatory authority in ac6 cordance with subtitle F of title I—

7 ‘‘(1) the provisions of section 210 requiring

8 electric utilities to offer to purchase electric energy

9 from qualifying cogeneration facilities and qualifying

10 small power production facilities shall be suspended;

11 and

12 ‘‘(2) for power purchase arrangements entered

13 into during the period of any such suspension, for

14 the duration of such power purchase arrangements

15 the rates for such purchase shall not be dependent

16 on the incremental cost to the electric utility of al17 ternative energy in section 210(b).

18 ‘‘(b) PROTECTION OF EXISTING CONTRACTUAL COM19 MITMENTS.—Nothing in this Act, directly or indirectly,

20 authorizes the Commission, a State regulatory authority,

21 or any electric utility to reopen, alter, curtail, force the

22 renegotiation of, or interfere with the enforcement of any

23 power purchase arrangements between a qualifying cogen24 eration facility or qualifying small power production facili25 ties and an electric utility purchaser.
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1 ‘‘(c) TERMS.—For purposes of this section the terms

2 ‘qualifying cogeneration facility’ and ‘qualifying small

3 power production facility’ shall have the meaning provided

4 for such terms by section 3(18) of the Federal Power Act.

5 ‘‘SEC. 215. ENCOURAGEMENT OF PARTICULAR GENERA6 TION TECHNOLOGIES.

7 ‘‘Nothing in this Act, the Federal Power Act, or any

8 other provision of Federal law prevents a State regulatory

9 authority from favoring or disfavoring particular types of

10 generation in its determination for purposes of section 210

11 of the incremental cost to a purchasing electric utility of

12 alternative electric energy. Where a State regulatory au13 thority determines that an electric utility’s incremental

14 cost of alternative electric energy shall be determined by

15 competitive bidding, the State regulatory authority may

16 segment the bid by generation technology or by groups

17 of generation technologies.’’.

18 TITLE II—STANDARDS OF COM19 PETITION FOR ELECTRIC

20 UTILITIES

21 SEC. 201. STANDARDS OF COMPETITION.

22 Title I of the Public Utility Regulatory Policies Act

23 of 1978 is amended by adding the following new subtitle

24 at the end thereof:
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1 ‘‘Subtitle F—Standards of

2 Competition for Electric Utilities

3 ‘‘SEC. 151. CERTIFICATION OF COMPETITION BY STATE

4 REGULATORY AUTHORITIES.

5 ‘‘(a) VOLUNTARY STATE CERTIFICATION.—A State

6 regulatory authority may elect to issue a State certifi7 cation of compliance with standards and requirements of

8 competition under this subtitle to a State regulated elec9 tric utility for which it has ratemaking authority. Such

10 election shall be voluntary. Nothing in this subtitle pro11 hibits any State regulatory authority from determining

12 that it is not appropriate to issue or deny any such certifi13 cation in the case of any electric utility for which the State

14 regulatory authority has ratemaking authority. Nothing in

15 this subtitle prohibits or limits any State regulatory au16 thority from implementing any other process regarding

17 competition for electric utilities subject to the jurisdiction

18 of such State regulatory authority.

19 ‘‘(b) CRITERIA FOR CERTIFICATION.—After notice

20 and opportunity for hearing, the Commission shall estab21 lish, by rule, in accordance with standards of competition

22 set forth in section 152 criteria for the certification by

23 a State regulatory authority that a State regulated electric

24 utility for which it has ratemaking authority has met—
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1 ‘‘(1) the minimum certification requirements of

2 section 153,

3 ‘‘(2) either—

4 ‘‘(A) the Federal retail competition stand5 ard set forth in section 152(a), or

6 ‘‘(B) the Federal divestiture standard com7 petition set forth in section 152(b); and

8 ‘‘(3) such other requirements as the Commis9 sion shall prescribe consistent with the public inter10 est and the purposes of this title.

11 ‘‘SEC. 152. FEDERAL STANDARDS OF COMPETITION.

12 ‘‘(a) RETAIL COMPETITION STANDARD.—(1) A State

13 regulated electric utility meets the retail competition

14 standard if the State regulatory authority which has rate15 making authority over such utility determines, in accord16 ance with criteria established by the Commission under

17 section 151(b), and after notice and opportunity for hear18 ing, that—

19 ‘‘(A) the utility permits competition in retail

20 sales of electric energy to all consumers within its

21 service territory;

22 ‘‘(B) the opportunity to build, own, and operate

23 all new generating capacity approved by a State reg24 ulatory authority is open to competition by all

25 sources, and
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1 ‘‘(C) the electric utility does not gain any ad2 vantage over other competitors by virtue of its status

3 as a regulated buyer and seller of electricity in its

4 service territory.

5 ‘‘(2) Certification under paragraph (1) of this sub6 section shall be withdrawn if the State regulatory author7 ity finds that—

8 ‘‘(A) an electric utility affiliate is competing un9 fairly by using assets, goods, or services obtained

10 from the electric utility at a price below the market

11 value; or

12 ‘‘(B) the electric utility or its affiliate has dis13 criminatory access to any asset, service, or informa14 tion which would be helpful to a competitor where

15 the access is attributable to the electric utility’s sta16 tus as a regulated integrated monopoly or the asset

17 or information is an essential facility that is not eco18 nomically duplicable by a competitor.

19 ‘‘(b) DIVESTITURE STANDARD.—A State regulated

20 electric utility that is an integrated electric utility that

21 owns or controls a monopoly distribution franchise, mo22 nopoly transmission facilities, or both, meets the divesti23 ture standard of competition if the State regulatory au24 thority which has ratemaking authority over such utility

25 determines, in accordance with criteria established by the
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1 Commission under section 151(b), and after notice and

2 opportunity for hearing, that the utility has—

3 ‘‘(1) divested itself of all existing generation fa4 cilities and is prohibited under State law from di5 rectly or indirectly acquiring ownership or control of

6 any generation facilities for so long as it owns or

7 controls a monopoly distribution franchise or trans8 mission facilities, and

9 ‘‘(2) in the case of a utility that owns or con10 trols transmission facilities, adopted open access

11 transmission tariffs that have been approved as just,

12 reasonable, and not unduly preferential.

13 ‘‘SEC. 153. MINIMUM CERTIFICATION REQUIREMENTS.

14 ‘‘A State regulatory authority may not issue a certifi15 cation of competition under this subtitle to any electric

16 utility unless the authority has made each of the following

17 determinations:

18 ‘‘(1) A determination that all suppliers of en19 ergy services to the utility or to electricity consumers

20 in the service territory of the utility have both the

21 incentive and opportunity to provide energy-effi22 ciency and renewable energy resources that are less

23 costly on a life-cycle basis than displaced generation.

24 ‘‘(2) A determination that nonbypassable

25 charges on use of, or access to, the local distribution
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1 services or facilities of the utility are in effect and

2 adequate to ensure sustained and equitable alloca3 tion of costs associated with low-income services and

4 other investments, including those in fuel diversity

5 and energy efficiency, that deliver system wide bene6 fits in the form of equity among, or reduced life7 cycle costs of service to, electricity consumers in the

8 service territory of the utility: Provided, That the

9 fuel diversity objective may also be met by minimum

10 portfolio standards that ensure maintenance or im11 provement of current levels of reliance on renewable

12 energy resources.

13 ‘‘(3) A determination that any systems of retail

14 competition among electric-service suppliers are

15 structured to protect customers from price discrimi16 nation or undue price increases and to ensure that

17 no customer class can avoid its equitable share of

18 the electric utility’s legitimate and verifiable strand19 ed costs.

20 ‘‘(4) A determination that under applicable

21 State laws and regulations, any recovery of sunk

22 costs associated with existing generation assets, is

23 not contingent on continued operation of the genera24 tion assets for which recovery is approved.’’.
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1 TITLE III—ANTITRUST LAWS

2 SEC. 301. STATE ACTION DOCTRINE.

3 (a) GENERAL RULE.—In order to ensure that rem4 edies for anticompetitive abuses are available to entities

5 competing in the electric generation market, utilities exer6 cising monopoly functions under State regualtion may not

7 use the ‘‘State action’’ doctrine of antitrust jurisprudence

8 as a defense against charges of anticompetitive behavior

9 in unregulated generation markets.

10 (b) TERMS.—For purposes of this section—

11 (1) The terms used in this title shall have the

12 same meaning as when used in title I of the Public

13 Utility Regulatory Policies Act of 1978.

14 (2) The term ‘‘antitrust laws’’ includes the

15 Sherman Antitrust Act (15 U.S.C. 1 et seq.) and

16 amendments thereto, the Clayton Act (15 U.S.C. 12

17 et seq.) and amendments thereto, regulations pro18 mulgated under such laws, and Federal court deci19 sions interpreting such laws.

20 (3) The term ‘‘State action doctrine’’ means the

21 judicial rule first articulated by the United States

22 Supreme Court in Parker v. Brown, 317 U.S. 341,

23 352 (1943) by which any act would be exempt from

24 compliance with Federal antitrust laws because

25 taken pursuant to direction or authorization by the
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1 laws, regulations, or governmental activity of any

2 State.

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