I

106TH CONGRESS

1ST SESSION H. R. 667

To remove Federal impediments to retail competition in the electric power

industry, thereby providing opportunities within electricity restructuring.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 10, 1999

Mr. BURR of North Carolina introduced the following bill; which was referred

to the Committee on Commerce

A BILL

To remove Federal impediments to retail competition in the

electric power industry, thereby providing opportunities

within electricity restructuring.

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 Power Bill’’.

6 (b) TABLE OF CONTENTS.—

Sec. 1. Short title and table of contents.

Sec. 2. Findings.

Sec. 3. Competitive retail electricity markets.

Sec. 4. PURPA.

Sec. 5. Public Utility Holding Company Act of 1935.

Sec. 6. Stranded cost.

Sec. 7. Disposition of property.
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Sec. 8. Savings clause.

Sec. 9. Study.

1 SEC. 2. FINDINGS.

2 The Congress finds that:

3 (1) Many States have moved to retail electric

4 competition.

5 (2) There are Federal barriers to full retail

6 electric competition.

7 (3) The executive branch projects that retail

8 competition will save the American taxpayer

9 $20,000,000,000.

10 (4) If Congress acts to remove Federal impedi11 ments to retail electric competition, States will have

12 greater ability to move to competition thereby allow13 ing the open market to govern electricity service,

14 quality, and price.

15 SEC. 3. COMPETITIVE RETAIL ELECTRICITY MARKETS.

16 (a) CLARIFICATION OF STATE AUTHORITY TO

17 ORDER RETAIL WHEELING.—Subsection (h) of section

18 212 of the Federal Power Act (16 U.S.C. 824k(h)) is

19 amended by striking the last sentence and inserting the

20 following: ‘‘Nothing in this subsection shall affect any au21 thority of any State or local government under State law

22 concerning the transmission or sale of electric energy di23 rectly to an ultimate consumer.’’.
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1 (b) CLARIFICATION OF STATE AUTHORITY TO IM2 POSE CONDITIONS REGARDING SALES OF ELEC3 TRICITY.—Section 201 of the Federal Power Act is

4 amended by adding the following new subsections at the

5 end thereof:

6 ‘‘(h) RECIPROCITY CONDITION.—

7 ‘‘(1) A State may permit an electric utility sub8 ject to its jurisdiction to deny access to its trans9 mission and local distribution facilities within the

10 State’s borders to any seller of electric energy for

11 the sale of electric energy directly to an ultimate

12 consumer within the State’s borders if, as deter13 mined by certification to the Commission in a form

14 the Commission shall prescribe within 180 days of

15 the enactment of this paragraph, the predominance

16 of the electric energy sold by that seller directly to

17 ultimate consumers is produced in a State or States

18 that maintain exclusive franchise or market areas

19 for the sale of electric energy directly to ultimate

20 consumers.

21 ‘‘(2) NONREGULATED UTILITIES.—If, as of the

22 date of the enactment of this paragraph, a State has

23 not established ratemaking authority with respect to

24 an electric utility in the State, the State may not

25 prohibit the utility from selling electric energy at re-
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1 tail in interstate commerce in any other State. Any

2 such utility may sell electric energy at retail in inter3 state commerce in another State only if the utility

4 provides nondiscriminatory open access to the local

5 distribution facilities of the utility and to any trans6 mission facilities of the utility that are not subject

7 to the jurisdiction of the Federal Energy Regulatory

8 Commission under sections 205 and 206 of this Act.

9 ‘‘(i) COOPERATIVE CHOICE.—Notwithstanding any

10 other provision of law, cooperatively owned sellers or dis11 tributors of electricity shall have the right, as consumer12 owned cooperatives, to engage in any activity or provide

13 any service that is lawfully carried out by any other seller

14 or distributor of electricity in that State.

15 ‘‘(j) BYPASS PROHIBITED.—(1) Notwithstanding any

16 provision of this Act or any other law, a State or a State

17 regulatory authority (in carrying out its authority to regu18 late facilities used for the local distribution of electric en19 ergy or for the provision of local distribution service) may

20 require, as a condition for the purchase by any person or

21 municipality of retail electric energy services, the payment

22 of a charge deemed necessary by the State or State regu23 latory authority for any policy purpose, including follow24 ing:
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1 ‘‘(A) To recover costs incurred by an electric

2 utility that become unrecoverable due to the avail3 ability of retail electric service choice.

4 ‘‘(B) To ensure that adequate electric service is

5 available to all customers served by the retail dis6 tribution system concerned.

7 ‘‘(C) To ensure and enhance the reliability of

8 retail electric service.

9 ‘‘(D) To fund assistance to low-income cus10 tomers.

11 ‘‘(E) To encourage environmental, renewable

12 energy, energy efficiency, conservation programs, or

13 any combination of such programs.

14 ‘‘(F) To provide for retraining of electric em15 ployees.

16 ‘‘(G) To provide payment of all reasonable costs

17 associated with Federal and State requirements re18 garding the decommissioning of nuclear generating

19 units.

20 ‘‘(H) Any combination of the purposes de21 scribed in subparagraphs (A) through (G).

22 ‘‘(2) For purposes of this subsection, the term ‘local

23 distribution service’ includes the receipt of electric energy

24 by an end user whether or not such receipt requires the

25 use of local distribution facilities.’’.
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1 SEC. 4. PURPA.

2 (a) FINDINGS.—The Congress finds that—

3 (1) implementation of section 210 of the Public

4 Utility Regulatory Policies Act of 1978 (16 U.S.C.

5 824a–3) resulted in many consumers paying exces6 sive rates for electricity;

7 (2) the Energy Policy Act of 1992 gives non8 regulated producers of electricity additional access to

9 the wholesale electric market through transmission

10 access and exemption from the Public Utility Hold11 ing Company Act of 1935; and

12 (3) in light of the competitive wholesale electric

13 marketplace brought about by the Energy Policy Act

14 of 1992, section 210 of the Public Utility Regulatory

15 Policies Act of 1978 need no longer exist.

16 (b) PROSPECTIVE REPEAL.—

17 (1) NEW CONTRACTS.—After the date of the

18 enactment of this Act no electric utility shall be re19 quired to enter into a new contract or obligation to

20 purchase or to sell electric energy or capacity pursu21 ant to section 210 of the Public Utility Regulatory

22 Policies Act of 1978.

23 (2) EXISTING RIGHTS AND REMEDIES NOT AF24 FECTED.—Nothing in this section affects the rights

25 or remedies of any party with respect to the pur26 chase or sale of electric energy or capacity from or
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1 to a facility determined to be a qualifying small

2 power production facility or a qualifying cogenera3 tion facility under section 210 of the Public Utility

4 Regulatory Policies Act of 1978 pursuant to any

5 contract or obligation to purchase or to sell electric

6 energy or capacity in effect on the date of the enact7 ment of this Act including the right to recover the

8 costs of purchasing such electric energy or capacity.

9 (3) INTERPRETATIONS AND ACTIONS TAKEN.—

10 Nothing in this Act may be deemed or construed as

11 implying congressional ratification of any interpreta12 tion of, or any action taken pursuant to, the Public

13 Utility Regulatory Policies Act of 1978.

14 (c) RECOVERY OF COSTS.—In order to assure recov15 ery by electric utilities purchasing electric energy or capac16 ity from a qualifying facility pursuant to any legally en17 forceable obligation entered into or imposed pursuant to

18 section 210 of the Public Utility Regulatory Policies Act

19 of 1978 prior to the date of the enactment of this Act

20 of all costs associated with such purchases, the Commis21 sion shall promulgate and enforce such regulations as may

22 be required to assure that no utility shall be required di23 rectly or indirectly to absorb the costs associated with such

24 purchases from a qualifying facility. Such regulations shall
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1 be treated as a rule enforceable under the Federal Power

2 Act (16 U.S.C. 791a–825r).

3 (d) DEFINITIONS.—For purposes of this section:

4 (1) The term ‘‘Commission’’ means the Federal

5 Energy Regulatory Commission.

6 (2) The term ‘‘electric utility’’ means any per7 son (including a corporation), State agency, or Fed8 eral agency, which sells electric energy.

9 (3) The term ‘‘qualifying small power produc10 tion facility’’ has the same meaning as provided in

11 section 3(17)(C) of the Federal Power Act.

12 (4) The term ‘‘qualifying cogeneration facility’’

13 has the same meaning as provided in section

14 3(18)(A) of the Federal Power Act.

15 (5) The term ‘‘qualifying facility’’ means either

16 a small power production facility or a qualifying co17 generation facility.

18 SEC. 5. PUBLIC UTILITY HOLDING COMPANY ACT OF 1935.

19 (a) FINDINGS.—The Congress finds that—

20 (1) the Public Utility Holding Company Act of

21 1935 was intended to facilitate the work of Federal

22 and State regulators by placing certain constraints

23 on the activities of holding company systems;

24 (2) developments since 1935, including changes

25 in other regulation and in the electric and gas indus-
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1 tries, have called into question the continued rel2 evance of the model of regulation established by that

3 Act;

4 (3) there is a continuing need for limited Fed5 eral and State regulation in order to ensure the rate

6 protection of utility customers; and

7 (4) limited Federal regulation is necessary to

8 supplement the work of State commissions for the

9 continued rate protection of electric and gas utility

10 customers.

11 (b) PURPOSES.—The purposes of this section are—

12 (1) to eliminate unnecessary regulation, yet

13 continue to provide for consumer protection by facili14 tating existing rate regulatory authority through im15 proved Federal and State commission access to

16 books and records of all companies in a holding com17 pany system, to the extent that such information is

18 relevant to rates paid by utility customers, while af19 fording companies the flexibility required to compete

20 in the energy markets; and

21 (2) to address protection of electric and gas

22 utility customers by providing for Federal and State

23 access to books and records of all companies in a

24 holding company system that are relevant to utility

25 rates.
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1 (c) DEFINITIONS.—For purposes of this section:

2 (1) The term ‘‘affiliate’’ of a company means

3 any company 5 percent or more of the outstanding

4 voting securities of which are owned, controlled, or

5 held with power to vote, directly or indirectly, by

6 such company.

7 (2) The term ‘‘associate company’’ of a com8 pany means any company in the same holding com9 pany system with such company.

10 (3) The term ‘‘Commission’’ means the Federal

11 Energy Regulatory Commission.

12 (4) The term ‘‘company’’ means a corporation,

13 partnership, association, joint stock company, busi14 ness trust, or any organized group of persons,

15 whether incorporated or not, or a receiver, trustee,

16 or other liquidating agent of any of the foregoing.

17 (5) The term ‘‘electric utility company’’ means

18 any person that owns or operates facilities used for

19 the generation, transmission, or distribution of elec20 tric energy for sale.

21 (6) The terms ‘‘exempt wholesale generator’’

22 and ‘‘foreign utility company’’ have the same mean23 ings as in sections 32 and 33, respectively, of the

24 Public Utility Holding Company Act of 1935, as
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1 those sections existed on the day before the effective

2 date of this Act.

3 (7) The term ‘‘gas utility company’’ means any

4 company that owns or operates facilities used for

5 distribution at retail (other than the distribution

6 only in enclosed portable containers or distribution

7 to tenants or employees of the company operating

8 such facilities for their own use and not for resale)

9 of natural or manufactured gas for heat, light, or

10 power.

11 (8) The term ‘‘holding company’’ means—

12 (A) any company that directly or indirectly

13 owns, controls, or holds, with power to vote, 10

14 percent or more of the outstanding voting secu15 rities of a public utility company or of a holding

16 company of any public utility company; and

17 (B) any person, determined by the Com18 mission, after notice and opportunity for hear19 ing, to exercise directly or indirectly (either

20 alone or pursuant to an arrangement or under21 standing with one or more persons) such a con22 trolling influence over the management or poli23 cies of any public utility company or holding

24 company as to make it necessary or appropriate

25 for the rate protection of utility customers with
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1 respect to rates that such person be subject to

2 the obligations, duties, and liabilities imposed

3 by this Act upon holding companies.

4 (9) The term ‘‘holding company system’’ means

5 a holding company, together with its subsidiary com6 panies.

7 (10) The term ‘‘jurisdictional rates’’ means

8 rates established by the Commission for the trans9 mission of electric energy in interstate commerce,

10 the sale of electric energy at wholesale in interstate

11 commerce, the transportation of natural gas in inter12 state commerce, and the sale in interstate commerce

13 of natural gas for resale for ultimate public con14 sumption for domestic, commercial, industrial, or

15 any other use.

16 (11) The term ‘‘natural gas company’’ means a

17 person engaged in the transportation of natural gas

18 in interstate commerce or the sale of such gas in

19 interstate commerce for resale.

20 (12) The term ‘‘person’’ means an individual or

21 company.

22 (13) The term ‘‘public utility’’ means any per23 son who owns or operates facilities used for trans24 mission of electric energy in interstate commerce or
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1 sales of electric energy at wholesale in interstate

2 commerce.

3 (14) The term ‘‘public utility company’’ means

4 an electric utility company or a gas utility company.

5 (15) The term ‘‘State commission’’ means any

6 commission, board, agency, or officer, by whatever

7 name designated, of a State, municipality, or other

8 political subdivision of a State that, under the laws

9 of such State, has jurisdiction to regulate public util10 ity companies.

11 (16) The term ‘‘subsidiary company’’ of a hold12 ing company means—

13 (A) any company, 10 percent or more of

14 the outstanding voting securities of which are

15 directly or indirectly owned, controlled, or held

16 with power to vote, by such holding company;

17 and

18 (B) any person, the management or poli19 cies of which the Commission, after notice and

20 opportunity for hearing, determines to be sub21 ject to a controlling influence, directly or indi22 rectly, by such holding company (either alone or

23 pursuant to an arrangement or understanding

24 with 1 or more other persons) so as to make it

25 necessary for the rate protection of utility cus-
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1 tomers with respect to rates that such person

2 be subject to the obligations, duties, and liabil3 ities imposed by this Act upon subsidiary com4 panies of holding companies.

5 (17) The term ‘‘voting security’’ means any se6 curity presently entitling the owner or holder thereof

7 to vote in the direction or management of the affairs

8 of a company.

9 (d) REPEAL OF THE PUBLIC UTILITY HOLDING

10 COMPANY ACT OF 1935.—The Public Utility Holding

11 Company Act of 1935 (15 U.S.C. 79a et seq.) is repealed,

12 effective 12 months after the date of enactment of this

13 Act.

14 (e) FEDERAL ACCESS TO BOOKS AND RECORDS.—

15 (1) IN GENERAL.—Each holding company and

16 each associate company thereof shall maintain, and

17 shall make available to the Commission, such books,

18 accounts, memoranda, and other records as the

19 Commission deems to be relevant to costs incurred

20 by a public utility or natural gas company that is an

21 associate company of such holding company and nec22 essary or appropriate for the protection of utility

23 customers with respect to jurisdictional rates for the

24 transmission of electric energy in interstate com25 merce, the sale of electric energy at wholesale in
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1 interstate commerce, the transportation of natural

2 gas in interstate commerce, and the sale in inter3 state commerce of natural gas for resale for ultimate

4 public consumption for domestic, commercial, indus5 trial, or any other use.

6 (2) AFFILIATE COMPANIES.—Each affiliate of a

7 holding company or of any subsidiary company of a

8 holding company shall maintain, and make available

9 to the Commission, such books, accounts, memo10 randa, and other records with respect to any trans11 action with another affiliate, as the Commission

12 deems to be relevant to costs incurred by a public

13 utility or natural gas company that is an associate

14 company of such holding company and necessary or

15 appropriate for the protection of utility customers

16 with respect to jurisdictional rates.

17 (3) HOLDING COMPANY SYSTEMS.—The Com18 mission may examine the books, accounts, memo19 randa, and other records of any company in a hold20 ing company system, or any affiliate thereof, as the

21 Commission deems to be relevant to costs incurred

22 by a public utility or natural gas company within

23 such holding company system and necessary or ap24 propriate for the protection of utility customers with

25 respect to jurisdictional rates.
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1 (4) CONFIDENTIALITY.—No member, officer, or

2 employee of the Commission shall divulge any fact or

3 information that may come to his or her knowledge

4 during the course of examination of books, accounts,

5 memoranda, or other records as provided in this sec6 tion, except as may be directed by the commission

7 or by a court of competent jurisdiction.

8 (f) STATE ACCESS TO BOOKS AND RECORDS.—

9 (1) IN GENERAL.—Upon the written request of

10 a State commission having jurisdiction to regulate a

11 public utility company in a holding company system,

12 and subject to such terms and conditions as may be

13 necessary and appropriate to safeguard against un14 warranted disclosure to the public of any trade se15 crets or sensitive commercial information, the hold16 ing company or any associate company or affiliate

17 thereof, other than such public utility company,

18 wherever located, shall produce for inspection books,

19 accounts, memoranda, and other records that—

20 (A) have been identified in reasonable de21 tail in a proceeding before the State commis22 sion;

23 (B) the State commission deems are rel24 evant to costs incurred by such public utility

25 company; and
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1 (C) are necessary for the effective dis2 charge of the responsibilities of the State com3 mission with respect to such proceeding.

4 (2) LIMITATION.—Paragraph (1) shall not

5 apply to any person that is a holding company solely

6 by reason of ownership of 1 or more qualifying fa7 cilities under the Public Utility Regulatory Policies

8 Act.

9 (3) CONFIDENTIALITY OF INFORMATION.—The

10 production of books, accounts, memoranda, and

11 other records under paragraph (1) shall be subject

12 to such terms and conditions as may be necessary

13 and appropriate to safeguard against unwarranted

14 disclosure to the public of any trade secrets or sen15 sitive commercial information.

16 (4) EFFECT ON STATE LAW.—Nothing in this

17 section shall preempt applicable State law concern18 ing the provision of books, records, or any other in19 formation, or in any way limit the rights of any

20 State to obtain books, records, or any other informa21 tion under any other Federal law, contract, or other22 wise.

23 (5) COURT JURISDICTION.—Any United States

24 district court located in the State in which the State

25 commission referred to in paragraph (1) is located
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1 shall have jurisdiction to enforce compliance with

2 this section.

3 (g) EXEMPTION AUTHORITY.—

4 (1) RULEMAKING.—Not later than 90 days

5 after the date of enactment of this Act, the Commis6 sion shall promulgate a final rule to exempt from the

7 requirements of subsection (e) any person that is a

8 holding company, solely with respect to 1 or more—

9 (A) qualifying facilities under the Public

10 Utility Regulatory Policies Act of 1978;

11 (B) exempt wholesale generators; or

12 (C) foreign utility companies.

13 (2) OTHER AUTHORITY.—If, upon application

14 or upon its own motion, the Commission finds that

15 the books, records, accounts, memoranda, and other

16 records of any person are not relevant to the juris17 dictional rates of a public utility or natural gas com18 pany, or if the Commission finds that any class of

19 transaction is not relevant to the jurisdictional rates

20 of a public utility or natural gas company, the Com21 mission shall exempt such person or transaction

22 from the requirements of subsection (e).

23 (h) AFFILIATE TRANSACTIONS.—Nothing in this sec24 tion shall preclude the Commission or a State commission

25 from exercising its jurisdiction under otherwise applicable
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1 law to determine whether a public utility company, public

2 utility, or natural gas company may recover in rates any

3 costs of an activity performed by an associate company,

4 or any costs of goods or services acquired by such public

5 utility company from an associate company.

6 (i) APPLICABILITY.—No provision of this section

7 shall apply to, or be deemed to include—

8 (1) the United States;

9 (2) a State or any political subdivision of a

10 State;

11 (3) any foreign governmental authority not op12 erating in the United States;

13 (4) any agency, authority, or instrumentality of

14 any entity referred to in paragraph (1), (2), or (3);

15 or

16 (5) any officer, agent, or employee of any entity

17 referred to in paragraph (1), (2), or (3) acting as

18 such in the course of his or her official duty.

19 (j) EFFECT ON OTHER REGULATIONS.—Nothing in

20 this section precludes the Commission or a State commis21 sion from exercising its jurisdiction under otherwise appli22 cable law to protect utility customers.

23 (k) ENFORCEMENT.—The Commission shall have the

24 same powers as set forth in sections 306 through 317 of
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1 the Federal Power Act (16 U.S.C. 825d–825p) to enforce

2 the provisions of this section.

3 (l) SAVINGS PROVISIONS.—

4 (1) IN GENERAL.—Nothing in this section pro5 hibits a person from engaging in or continuing to

6 engage in activities or transactions in which it is le7 gally engaged or authorized to engage on the effec8 tive date of this Act, if that person continues to

9 comply with the terms of any such authorization,

10 whether by rule or by order.

11 (2) EFFECT ON OTHER COMMISSION AUTHOR12 ITY.—Nothing in this section limits the authority of

13 the Commission under the Federal Power Act (16

14 U.S.C. 791a et seq.) (including section 301 of that

15 Act) or the Natural Gas Act (15 U.S.C. 717 et seq.)

16 (including section 8 of that Act).

17 (m) IMPLEMENTATION.—Not later than 18 months

18 after the date of enactment of this Act, the Commission

19 shall—

20 (1) promulgate such regulations as may be nec21 essary or appropriate to implement this section

22 (other than subsection (f)); and

23 (2) submit to the Congress detailed rec24 ommendations on technical and conforming amend-
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1 ments to Federal law necessary to carry out this sec2 tion and the amendments made by this section.

3 (n) TRANSFER OF RESOURCES.—All books and

4 records that relate primarily to the functions transferred

5 to the Commission under this section shall be transferred

6 from the Securities and Exchange Commission to the

7 Commission.

8 (o) EFFECTIVE DATE.—This section shall take effect

9 18 months after the date of enactment of this Act.

10 (p) AUTHORIZATION OF APPROPRIATIONS.—There

11 are authorized to be appropriated such funds as may be

12 necessary to carry out this section.

13 (q) CONFORMING AMENDMENT TO THE FEDERAL

14 POWER ACT.—Section 318 of the Federal Power Act (16

15 U.S.C. 825q) is repealed.

16 SEC. 6. STRANDED COST.

17 As a condition of recieving Federal energy assistance,

18 each State that has by law or regulation adopted provi19 sions to provide for the recovery of stranded costs as de20 fined by State law or regulation shall provide, for informa21 tional purposes, all such provisions with the Federal En22 ergy Regulatory Commission and shall not change, amend,

23 modify or repeal such provisions for 7 years after the date

24 on which the provisions are provided to the Commission.

25 The Commission shall determine by rule the scope of Fed-
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1 eral energy assistance covered by this section, taking care

2 to encourage to the fullest extent stability concerning the

3 recovery of stranded costs. The Commission also shall

4 compile and make available to the public all such provi5 sions and may require any State, as a further condition

6 of recieving energy assistance, to prepare and file an ex7 planation of the provision that it has placed on file.

8 SEC. 7. DISPOSITION OF PROPERTY.

9 Section 203 of the Federal Power Act is repealed.

10 SEC. 8. SAVINGS CLAUSE.

11 Nothing in this Act shall be construed to prohibit any

12 State from dealing with public welfare issues.

13 SEC. 9. STUDY.

14 The Secretary of Energy shall report to Congress

15 within 2 years after the enactment of this Act on the ex16 tent to which actions taken by the States have removed

17 regulatory and statutory barriers to interstate commerce

18 in electricity. The report shall describe any remaining bar19 riers to interstate commerce and shall make recommenda20 tions to the Congress for additional action that may be

21 necessary to lower and/or eliminate barriers to interstate

22 commerce in electricity consistent with the development of

23 a fully competitive marketplace.

Æ