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104TH CONGRESS

1ST SESSION H. R. 1801

To privatize certain Federal power generation and transmission assets, and

for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JUNE 8, 1995

Mr. FOLEY introduced the following bill; which was referred to the Committee

on Resources, and in addition to the Committee on Commerce, 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 privatize certain Federal power generation and

transmission assets, and for other purposes.

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.

4 This Act may be cited as the ‘‘Federal Power Asset

5 Privatization Act of 1995’’.

6 SEC. 2. FINDINGS.

7 The Congress finds that:
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1 (1) the Federal Power Marketing Administra2 tions, over the years, have served to help bring elec3 tricity to many areas in the Nation;

4 (2) they have done so with the investment of

5 the American taxpayer;

6 (3) the necessity of federally owned power gen7 eration and transmission facilities has passed and

8 halting this practice is in the best national interest

9 of the United States;

10 (4) in fairness to the longtime consumers of

11 Federal Power Marketing Administrations, any proc12 ess of sale should be open to them;

13 (5) the taxpayers, through investing in the con14 struction and operation, have established equity in

15 the facilities; and

16 (6) this equity entitles the American taxpayer

17 to expect the highest possible return in the sale

18 process.

19 SEC. 3. SALE OF ASSETS.

20 (a) SALE OF ASSETS.—The Secretary of Energy

21 (hereinafter referred to as ‘‘the Secretary’’) is authorized

22 and directed to take such steps as necessary to sell all

23 electric power generation facilities and transmission facili24 ties, that are currently owned and operated by Federal

25 departments and agencies under the supervision of, or co-
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1 ordination with, the Federal Power Marketing Administra2 tions. No foreign person or corporation may purchase any

3 such facilities; such facilities may be sold only to a United

4 States citizen or to a corporation or partnership organized

5 under the laws of a State. After such sales are completed

6 the Secretary shall terminate the operations of the Federal

7 Power Marketing Administrations. The heads of other af8 fected Federal departments and agencies shall assist the

9 Secretary of Energy in implementing the sales authorized

10 by this section.

11 (b) PRICE; STRUCTURE OF SALE.—

12 (1) PRICE.—The Secretary shall obtain the

13 highest possible price for such facilities. In determin14 ing the highest possible price, the value of future tax

15 revenues shall be included.

16 (2) RETENTION OF FINANCIAL ADVISOR.—In

17 order to conduct the sales authorized by this section

18 in such manner as will produce the highest possible

19 price for the facilities to be sold consistent with this

20 Act, within 30 days of enactment of this section, the

21 Secretary shall, through a competitive bidding proc22 ess, retain an experienced private sector firm to

23 serve as financial advisor to the Secretary with re24 spect to such sales.
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1 (3) FINANCIAL ADVISOR’S REPORT.—Within 90

2 days of being retained by the Secretary, the financial

3 advisor shall provide to the Secretary a report con4 taining—

5 (A) a description of those assets described

6 in subsection (a) which, in the opinion of the fi7 nancial advisor, can be successfully transferred

8 to private sector ownership or operation;

9 (B) the value of each such asset, calculated

10 on the basis of the valuation method or meth11 ods which the financial advisor deems most ap12 propriate to a particular asset;

13 (C) the appropriate alternative trans14 actional methods for transferring each such

15 asset to private sector ownership or operation;

16 (D) the amount of proceeds which the fi17 nancial advisor estimates would be paid to the

18 United States Government as a result of such

19 transaction, including the present value of fu20 ture revenue from taxes and any other future

21 payments to be made to the United States Gov22 ernment; and

23 (E) an estimate of the average market rate

24 for wholesale electric power sales within each
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1 region served by a Federal Power Marketing

2 Administration.

3 (c) TIME OF SALE.—Sales of facilities under this sec4 tion shall be conducted in accordance with the time of sale

5 schedule set forth in section 4. At least one year before

6 the date of any sale specified in such schedule, the Sec7 retary, in consultation with the Secretary of the Army and

8 the Secretary of the Interior, and based on the rec9 ommendations of the financial advisor, shall select the fa10 cilities or groups of facilities to be sold and establish the

11 terms and conditions of the sale.

12 (d) FORMER EMPLOYEES OF PMAS.—It is the sense

13 of the Congress that the purchaser of any such facilities

14 should offer to employ, where possible, former employees

15 of the Federal Power Marketing Administrations in con16 nection with the operation of the facilities following their

17 purchase.

18 (e) PROCEEDS.—The Secretary of Energy shall de19 posit sale proceeds in the Treasury of the United States

20 to the credit of miscellaneous receipts.

21 (f) PREPARATION.—The Secretary of Energy is au22 thorized to use funds appropriated to the Department of

23 Energy for the Federal Power Marketing Administrations

24 and funds otherwise appropriated to other Federal agen25 cies for power generation and related activities in order
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1 to prepare these assets for sale and conveyance. Such

2 preparation shall provide sufficient title to ensure the ben3 eficial use, enjoyment, and occupancy to the purchasers

4 of the assets to be sold and shall include identification of

5 all associated laws and regulations to be amended for the

6 purpose of these sales. The Secretary of Energy shall un7 dertake a study of the effect of sales of facilities under

8 this Act on existing contracts for the sale of electric power

9 generated at such facilities.

10 (g) REPORTING OF SALES.—Not later than one year

11 after the sale of the assets of each Federal Power Market12 ing Administration in accordance with this Act, the Sec13 retary of Energy shall—

14 (1) complete the business of, and close out,

15 such administration; and

16 (2) prepare and submit to Congress a report

17 documenting the sales.

18 (h) TREATMENT OF SALES FOR PURPOSES OF CER19 TAIN LAWS.—The sales of assets under this Act shall not

20 be considered a disposal of Federal surplus property under

21 the following provisions of law:

22 (1) Section 203 of the Federal Property and

23 Administrative Services Act of 1949 (40 U.S.C.

24 484).
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1 (2) Section 13 of the Surplus Property Act of

2 1944 (50 U.S.C. App. 1622).

3 SEC. 4. TIME OF SALES.

4 (a) SCHEDULE.—During the next 5 years, the Sec5 retary of Energy shall complete the sale of the electric

6 power generation and transmission assets referred to in

7 section 3 in accordance with the following schedule:

Power Administration Sale Completion Date

Alaska Before September 30, 1996

Southeastern Before September 30, 1997

Southwestern Before September 30, 1998

Western Area Before September 30, 1999

Bonneville Before September 30, 2000

8 (b) UNEXPENDED BALANCES.—Following the sale of

9 the assets of each of the Federal Power Marketing Admin10 istrations and their associated power generation facilities,

11 the Secretary of Energy shall return the unexpended bal12 ances of funds appropriated for that administration to the

13 Treasury of the United States.

14 SEC. 5. RATE STABILIZATION FOR AFFECTED CONSUMERS.

15 So that the affected consumers of each Federal

16 Power Marketing Administration are not impacted by se17 vere rate increases, each purchaser of electric power gen18 eration facilities providing electric power to customers

19 within any region shall be required, as part of the agree20 ment to purchase such facilities, to insure that the price

21 at which electric power is sold to such consumers does not
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1 increase above the baseline price at a rate greater than

2 10 percent annually. For purposes of this section, the term

3 ‘‘baseline price’’ means the price for the sale of electric

4 power to a consumer that is in effect on the date of the

5 sale of the facility. The preceding sentence shall cease to

6 apply when the price at which electric power is sold to

7 a consumer is at least equal to the average market rate

8 for wholesale electric power sales within the region con9 cerned, as determined by the Financial Advisor.

10 SEC. 6. LICENSING OF PROJECTS TO PRESERVE CURRENT

11 OPERATING CONDITIONS.

12 (a) ORIGINAL LICENSE.—Simultaneously with the

13 sale of hydroelectric generation facility under this Act, the

14 Federal Energy Regulatory Commission shall issue an

15 original license under part 1 of the Federal Power Act

16 (16 U.S.C. 791a–823b) to the purchaser for the construc17 tion, operation, and maintenance of such facility. Such li18 cense shall expire on the date 10 years after the date of

19 the sale facility and shall contain standard terms and con20 ditions for hydroelectric power licenses issued under part

21 1 of such Act for facilities installed at Federal water

22 projects, together with such additional terms and condi23 tions as the Commission deems necessary, in consultation

24 with the department or agency which operates such water

25 project, to further the project purposes and insure that
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1 the project will continue operations in the same manner

2 and subject to the same procedures, contracts, and other

3 requirements as were applicable prior to the sale. The

4 Commission shall publish such license terms and condi5 tions for each facility to be sold under this Act as promptly

6 as practicable after the date of the enactment of this Act

7 but not later than one year prior to the date established

8 for the sale of the facility.

9 (b) LICENSE REQUIRED.—Notwithstanding any

10 other provision of law, the Federal Energy Regulatory

11 Commission shall have jursidiction under part 1 of the

12 Federal Power Act over any hydroelectric generation facil13 ity sold under this Act.

14 SEC. 7. ENABLING FEDERAL STUDIES.

15 Section 505 of the Energy and Water Development

16 Appropriations Act of 1993 (Public Law 102–377) is

17 hereby repealed.

18 SEC. 8. DEFINITION OF POWER GENERATION FACILITY.

19 For purposes of this Act, the term ‘‘power generation

20 facility’’ means a facility used for the generation of electric

21 energy. If any portion of a structure or other facility is

22 used for flood control, water supply or other purposes in

23 addition to the generation of electric energy, such term

24 refers only to that portion of the structure or facility used

25 exclusively for the generation of electric energy, including
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1 turbines, generators, controls, substations, and primary

2 lines used for transmitting electric energy therefrom to the

3 point of juncture with the interconnected primary trans4 mission system. Such term shall not include any portion

5 of a facility used for navigation, flood control, irrigation,

6 water supply, or recreation.

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