II

Calendar No. 690

106TH CONGRESS

2D SESSION S. 2886

To provide for retail competition for the sale of electric power, to authorize

States to recover transition costs, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JULY 18, 2000

Mr. GRAMM (for himself and Mr. SCHUMER) introduced the following bill;

which was read the first time

JULY 19, 2000

Read the second time and placed on the calendar

A BILL

To provide for retail competition for the sale of electric

power, to authorize States to recover transition costs,

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; TABLE OF CONTENTS.

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

5 ‘‘Consumer Empowerment and Electricity Deregulation

6 Act of 2000’’.
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1 (b) TABLE OF CONTENTS.—The table of contents of

2 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—CONSUMER CHOICE AND COMPETITION FOR ELECTRIC

SUPPLIERS

Sec. 101. Competition for retail electric sales.

Sec. 102. Termination of new contract requirement under section 210 of the

Public Utility Regulatory Policies Act of 1978.

Sec. 103. Reliability and interstate transmission.

TITLE II—PUBLIC UTILITY HOLDING COMPANIES

Sec. 201. Short title.

Sec. 202. Findings and purposes.

Sec. 203. Definitions.

Sec. 204. Repeal of the Public Utility Holding Company Act of 1935.

Sec. 205. Federal access to books and records.

Sec. 206. State access to books and records.

Sec. 207. Exemption authority.

Sec. 208. Affiliate transactions.

Sec. 209. Applicability.

Sec. 210. Effect on other regulations.

Sec. 211. Enforcement.

Sec. 212. Savings provisions.

Sec. 213. Implementation.

Sec. 214. Transfer of resources.

Sec. 215. Conforming amendment to the Federal Power Act.

Sec. 216. Authorization of appropriations.

Sec. 217. Effective date.

TITLE III—TAX PROVISIONS

Sec. 301. Tax-exempt bond financing of certain electric facilities.

Sec. 302. Modifications to special rules for nuclear decommissioning costs.

Sec. 303. Treatment of certain revenues of electric cooperatives.

3 TITLE I—CONSUMER CHOICE

4 AND COMPETITION FOR

5 ELECTRIC SUPPLIERS

6 SEC. 101. COMPETITION FOR RETAIL ELECTRIC SALES.

7 (a) AMENDMENT OF PURPA.—Title I of the Public

8 Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601

9 et seq.) is amended by adding at the end the following:
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1 ‘‘Subtitle F—Retail Electric

2 Competition

3 ‘‘SEC. 151. FINDINGS.

4 ‘‘Congress finds that—

5 ‘‘(1) the opportunity for all consumers to pur6 chase electric energy in interstate commerce from

7 the supplier of choice is essential to a dynamic, fully

8 integrated, and competitive national market for elec9 tric energy;

10 ‘‘(2) the establishment, maintenance, or en11 forcement of exclusive rights to sell electric energy

12 and other State action that unduly discriminates

13 against any consumer that seeks to purchase electric

14 energy in interstate commerce from the supplier of

15 its choice constitutes an unwarranted and unaccept16 able discrimination against and burden on interstate

17 commerce;

18 ‘‘(3) in today’s technologically driven market19 place, there is no justification for the discrimination

20 against and burden imposed on interstate commerce

21 by the granting of exclusive rights to sell electric en22 ergy or other State action that unduly discriminates

23 against consumers that seek to purchase electric en24 ergy in interstate commerce from the suppliers of

25 their choice;
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1 ‘‘(4) the electric energy transmission and local

2 distribution facilities of all of the utilities of the

3 United States are essential facilities for the conduct

4 of a competitive interstate retail market in electric

5 energy in which all consumers have the opportunity

6 to purchase electric energy in interstate commerce

7 from the suppliers of their choice; and

8 ‘‘(5) in a competitive electricity generation mar9 ket, it is in the national interest to encourage the

10 development of energy technologies to promote en11 ergy efficiency and ensure energy security.

12 ‘‘SEC. 152. DEFINITIONS.

13 ‘‘In this subtitle:

14 ‘‘(1) CONSUMER.—The term ‘consumer’ means

15 a person that purchases or offers to purchase elec16 tric energy at retail.

17 ‘‘(2) ELECTRIC SUPPLIER.—The term ‘electric

18 supplier’ means a person or entity that produces,

19 generates, manufactures, aggregates, markets, bro20 kers, sells, or otherwise supplies electric energy.

21 ‘‘(3) LOCAL DISTRIBUTION COMPANY.—The

22 term ‘local distribution company’ means a person

23 that owns, controls, or operates a local distribution

24 facility.

25 ‘‘(4) LOCAL DISTRIBUTION FACILITY.—
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1 ‘‘(A) IN GENERAL.—The term ‘local dis2 tribution facility’ means a facility used for the

3 local distribution of electric energy.

4 ‘‘(B) INCLUSION.—The term ‘local dis5 tribution facility’ includes a facility determined

6 under section 201(b)(1) of the Federal Power

7 Act (16 U.S.C. 824(b)(1)) to be used for the

8 local distribution of electric energy.

9 ‘‘(5) LOCAL DISTRIBUTION SERVICE.—

10 ‘‘(A) IN GENERAL.—The term ‘local dis11 tribution service’ means service that is nec12 essary to, or customarily provided in the course

13 of, the delivery of electric energy to a consumer

14 through a local distribution facility.

15 ‘‘(B) INCLUSIONS.—The term ‘local dis16 tribution service’ includes service required for—

17 ‘‘(i) the construction, maintenance,

18 and operation of a local distribution facil19 ity; and

20 ‘‘(ii) related management, accounting,

21 and other services.

22 ‘‘(C) EXCLUSION.—The term ‘local dis23 tribution service’ does not include the genera24 tion or sale of electric energy.
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1 ‘‘(6) NONREGULATED LOCAL DISTRIBUTION

2 COMPANY.—The term ‘nonregulated local distribu3 tion company’ means a local distribution company

4 that is not a State-regulated local distribution com5 pany.

6 ‘‘(7) PERSON.—For the purposes of paragraphs

7 (2) and (3), the term ‘person’ includes—

8 ‘‘(A) the Federal Government;

9 ‘‘(B) a State (including a municipality or

10 any other instrumentality, authority, or political

11 subdivision of a State); and

12 ‘‘(C) any other entity (including an electric

13 cooperative and a foreign governmental entity).

14 ‘‘(8) STATE-REGULATED LOCAL DISTRIBUTION

15 COMPANY.—The term ‘State-regulated local distribu16 tion company’ means a local distribution company

17 with respect to which a State regulatory authority

18 has ratemaking jurisdiction.

19 ‘‘(9) STATE REGULATORY AUTHORITY.—The

20 term ‘State regulatory authority’ means a State

21 agency that has ratemaking authority with respect

22 to the provision of local distribution services by any

23 local distribution company.

24 ‘‘(10) STRANDED COST.—The term ‘stranded

25 cost’ means a cost allocable to the construction or
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1 upgrade of an electric generation facility or to pur2 chased electric power that an electric supplier sus3 tained while subject to cost-of-service regulation but

4 is unable to recover because—

5 ‘‘(i) the electric supplier is unable to assess

6 consumers charges at the rate charged during

7 calendar year 2000;

8 ‘‘(ii) the market value of the generation fa9 cility is less than the depreciated value of the

10 facility; or

11 ‘‘(iii) the electric supplier is unable to miti12 gate costs through the renegotiation of power

13 supply contracts and other means.

14 ‘‘SEC. 153. RETAIL ELECTRIC COMPETITION.

15 ‘‘(a) REQUIREMENTS.—

16 ‘‘(1) IN GENERAL.—Markets for the purchase

17 of electric energy by consumers in a State shall—

18 ‘‘(A) separate (unbundle) all competitive

19 electric energy supply activities from the trans20 mission and local distribution of electric energy;

21 ‘‘(B) allow each consumer in the State to

22 select from among competing electric suppliers;

23 and
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1 ‘‘(C) require each local distribution com2 pany to provide local distribution service under

3 rates, charges, terms, and conditions that—

4 ‘‘(i) are just, reasonable, and not un5 duly discriminatory or preferential; and

6 ‘‘(ii) identify, offer, and sell (directly

7 or for resale) local distribution service sep8 arately from any sales of electric energy.

9 ‘‘(2) NONDISCRIMINATION.—In the case of a

10 local distribution company that is also an electric

11 supplier, the rates, charges, terms, and conditions

12 described in paragraph (1)(B) shall be the same as

13 those applicable to the use of a local distribution fa14 cility by that local distribution company.

15 ‘‘(b) STATE-REGULATED LOCAL DISTRIBUTION COM16 PANIES.—

17 ‘‘(1) IN GENERAL.—Not later than January 1,

18 2002, each State legislature and State regulatory

19 authority shall require each State-regulated local

20 distribution company in the State to meet the re21 quirements of subsection (a).

22 ‘‘(2) FAILURE TO IMPLEMENT.—If a State fails

23 to implement paragraph (1) by January 1, 2002,

24 each State-regulated local distribution company in

25 the State shall comply, by that date, with the re-
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1 quirement applicable to nonregulated local distribu2 tion companies under subsection (c).

3 ‘‘(c) NONREGULATED LOCAL DISTRIBUTION COMPA4 NIES.—Not later than January 1, 2002, each nonregu5 lated local distribution company shall meet the require6 ments of subsection (a).

7 ‘‘(d) RECOVERY OF STRANDED COSTS.—

8 ‘‘(1) APPLICABILITY.—This subsection applies

9 only in a State in which the State legislature has not

10 enacted, before July 1, 2000, a stranded cost recov11 ery scheme.

12 ‘‘(2) AUTHORITY TO IMPOSE CHARGE.—

13 ‘‘(A) IN GENERAL.—Until January 1,

14 2013, a State regulatory authority may require

15 each local distribution company in the State to

16 include in charges to its customers a stranded

17 cost recovery charge for use as described in

18 paragraph (3).

19 ‘‘(B) RATE.—A stranded cost recovery

20 charge—

21 ‘‘(i) shall initially be set at a rate esti22 mated to generate not more than a per23 centage determined by the State (not to

24 exceed 50 percent) of the amount of
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1 stranded costs estimated to be sustained

2 by each supplier in the State; and

3 ‘‘(ii) shall be reviewed annually, and

4 subsequently be reduced, to the extent that

5 collections exceed the most recent estimate,

6 or increased to the extent that the estimate

7 exceeds the collections.

8 ‘‘(3) STRANDED COST RECOVERY PAYMENTS.—

9 Of amounts collected under paragraph (2) for any

10 billing period, each electric supplier that sustained

11 stranded costs for the billing period shall be entitled

12 to a stranded cost recovery payment equal to—

13 ‘‘(A) the amount of stranded costs that the

14 electric supplier sustained; multiplied by

15 ‘‘(B) the percentage of stranded cost recov16 ery determined by the State under paragraph

17 (2)(B).

18 ‘‘SEC. 154. PROHIBITION OF DISCRIMINATION.

19 ‘‘The calculation, assessment, or imposition of any fee

20 or charge imposed under this Act or any other law shall

21 not unduly discriminate among different classes or cat22 egories of electric utilities, local distribution companies,

23 electric energy consumers, or electric suppliers.
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1 ‘‘SEC. 155. ENFORCEMENT.

2 ‘‘(a) ADMINISTRATIVE PROCEEDING.—The Commis3 sion may order a State regulatory authority, State regu4 lated local distribution company, or nonregulated local dis5 tribution company to comply with this subtitle if the Com6 mission determines, after notice and an opportunity for

7 a hearing on the record, that the State regulatory author8 ity, State regulated local distribution company, or non9 regulated local distribution company does not comply with

10 section 153(a).

11 ‘‘(b) JUDICIAL ENFORCEMENT OR REVIEW.—A con12 sumer, State regulatory authority, State regulated local

13 distribution company, or nonregulated local distribution

14 company may file a petition appealing a determination

15 under subsection (a) in the United States court of ap16 peals.’’.

17 (b) CONFORMING AMENDMENT.—The table of con18 tents in section 1(b) of the Public Utility Regulatory Poli19 cies Act of 1978 (16 U.S.C. prec. 2601) is amended by

20 inserting at the end of the items for title I the following:

‘‘Subtitle F—Retail Electric Competition

‘‘Sec. 151. Findings.

‘‘Sec. 152. Definitions.

‘‘Sec. 153. Retail electric competition.

‘‘Sec. 154. Prohibition of discrimination.

‘‘Sec. 155. Enforcement.’’.
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1 SEC. 102. TERMINATION OF NEW CONTRACT REQUIREMENT

2 UNDER SECTION 210 OF THE PUBLIC UTILITY

3 REGULATORY POLICIES ACT OF 1978.

4 Section 210 of the Public Utility Regulatory Policies

5 Act of 1978 (16 U.S.C. 824a–3) is amended by adding

6 at the end the following:

7 ‘‘(m) TERMINATION OF NEW CONTRACT REQUIRE8 MENT.—

9 ‘‘(1) IN GENERAL.—On or after the date of en10 actment of this subsection, no electric utility shall be

11 required to enter into a new contract or obligation

12 to purchase or to sell electric energy or capacity

13 under this section.

14 ‘‘(2) EXISTING RIGHTS AND REMEDIES NOT AF15 FECTED.—

16 ‘‘(A) IN GENERAL.—Nothing in this sub17 section affects the rights or remedies of any

18 party with respect to the purchase or sale of

19 electric energy or capacity from or to a facility

20 determined to be a qualifying small power pro21 duction facility or a qualifying cogeneration fa22 cility under this section under any contract or

23 obligation to purchase or to sell electric energy

24 or capacity in effect on the date of enactment

25 of this subsection, including the right to recover
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1 (consistent with section 153) the costs of pur2 chasing such electric energy or capacity.

3 ‘‘(B) EXCEPTION.—Any contract entered

4 into before, on, or after the date of enactment

5 of this Act by a qualifying small power produc6 tion facility or qualifying cogeneration facility

7 that provides for a purchase or sale of electric

8 energy or capacity on or after the date that is

9 5 years after the date of enactment of this sub10 section at a rate exceeding 150 percent of

11 wholesale market rates prevailing during cal12 endar year 2000 shall become voidable by either

13 party to the contract on the date that is 5 years

14 after the date of enactment of this subsection.

15 ‘‘(3) EFFECT OF SUBSECTION.—Nothing in this

16 subsection implies congressional ratification of any

17 interpretation of this Act or any action taken under

18 this Act by any person before the date of enactment

19 of this subsection.’’.

20 SEC. 103. RELIABILITY AND INTERSTATE TRANSMISSION.

21 (a) DEFINITIONS.—Section 3 of the Federal Power

22 Act (16 U.S.C. 796) is amended by adding at the end the

23 following:

24 ‘‘(26) RETAIL CUSTOMER.—The term ‘retail

25 customer’ means a person that purchases electric en-
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1 ergy for use by the person other than for resale to

2 another person.

3 ‘‘(27) WHOLESALE CUSTOMER.—The term

4 ‘wholesale customer’ means a person that purchases

5 electric energy for resale to another person.

6 ‘‘(28) BUNDLED TRANSMISSION SERVICE.—The

7 term ‘bundled transmission service’ means trans8 mission service in which electric energy and trans9 mission service are not sold separately.

10 ‘‘(29) UNBUNDLED TRANSMISSION SERVICE.—

11 The term ‘unbundled transmission service’ means

12 transmission service in which electric energy and

13 transmission service are sold separately.’’.

14 (b) DECLARATION OF POLICY; APPLICATION OF

15 PART II OF THE FEDERAL POWER ACT.—Section 201 of

16 the Federal Power Act (16 U.S.C. 824) is amended by

17 striking subsections (a) and (b)(1) and inserting the fol18 lowing:

19 ‘‘(a) DECLARATION OF POLICY.—Congress declares

20 that—

21 ‘‘(1) the business of transmitting and selling

22 electric energy for ultimate distribution to the public

23 is affected with a public interest; and

24 ‘‘(2) Federal regulation of matters relating to

25 the transmission of electric energy in interstate com-
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1 merce (including transmission service to wholesale

2 customers, unbundled transmission service to retail

3 customers, and bundled transmission service to retail

4 customers) and to the sale of such energy at whole5 sale in interstate commerce, is necessary to establish

6 just and reasonable rates and to prevent interference

7 with interstate commerce and threats to the reli8 ability of the interstate bulk power grid.

9 ‘‘(b) APPLICABILITY OF PART.—

10 ‘‘(1) IN GENERAL.—This part applies to—

11 ‘‘(A) bundled transmission service in inter12 state commerce;

13 ‘‘(B) unbundled transmission service in

14 interstate commerce; and

15 ‘‘(C) the sale of electric energy at whole16 sale in interstate commerce.

17 ‘‘(2) JURISDICTION OF THE COMMISSION.—The

18 Commission shall have jurisdiction over all facilities

19 used—

20 ‘‘(A) to provide bundled or unbundled

21 transmission of electric energy in interstate

22 commerce;

23 ‘‘(B) to make sales of electric energy in

24 which the purchaser intends to resell the elec25 tric energy to another person; or
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1 ‘‘(C) to establish and enforce reliability

2 standards implemented by a regional trans3 mission organization for the reliable operation

4 of the bulk power system.

5 ‘‘(3) LIMIT ON JURISDICTION.—Except as spe6 cifically provided in this part and part III, the Com7 mission shall not have jurisdiction over—

8 ‘‘(A) facilities used for the generation of

9 electric energy;

10 ‘‘(B) facilities used in local distribution or

11 used only for the transmission of electric energy

12 in intrastate commerce; or

13 ‘‘(C) facilities for the transmission of elec14 tric energy consumed wholly by the trans15 mitter.’’.

16 TITLE II—PUBLIC UTILITY

17 HOLDING COMPANIES

18 SEC. 201. SHORT TITLE.

19 This title may be cited as the ‘‘Public Utility Holding

20 Company Act of 2000’’.

21 SEC. 202. FINDINGS AND PURPOSES.

22 (a) FINDINGS.—Congress finds that—

23 (1) the Public Utility Holding Company Act of

24 1935 (15 U.S.C. 79a et seq.) was intended to facili25 tate the work of Federal and State regulators by
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1 placing certain constraints on the activities of hold2 ing company systems;

3 (2) developments since 1935, including changes

4 in other regulation and in the electric and gas indus5 tries, have called into question the continued rel6 evance of the model of regulation established by that

7 Act;

8 (3) there is a continuing need for State regula9 tion in order to ensure the rate protection of utility

10 customers; and

11 (4) limited Federal regulation is necessary to

12 supplement the work of State commissions for the

13 continued rate protection of electric and gas utility

14 customers.

15 (b) PURPOSES.—The purposes of this title are—

16 (1) to eliminate unnecessary regulation, yet

17 continue to provide for consumer protection by facili18 tating existing rate regulatory authority through im19 proved Federal and State commission access to

20 books and records of all companies in a holding com21 pany system, to the extent that such information is

22 relevant to rates paid by utility customers, while af23 fording companies the flexibility required to compete

24 in the energy markets; and
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1 (2) to address protection of electric and gas

2 utility customers by providing for Federal and State

3 access to books and records of all companies in a

4 holding company system that are relevant to utility

5 rates.

6 SEC. 203. DEFINITIONS.

7 In this title:

8 (1) AFFILIATE.—The term ‘‘affiliate’’ of a com9 pany means any company, 5 percent or more of the

10 outstanding voting securities of which are owned,

11 controlled, or held with power to vote, directly or in12 directly, by another company.

13 (2) ASSOCIATE COMPANY.—The term ‘‘associate

14 company’’, in relation to another company, means a

15 company in the same holding company system as the

16 other company.

17 (3) COMMISSION.—The term ‘‘Commission’’

18 means the Federal Energy Regulatory Commission.

19 (4) COMPANY.—The term ‘‘company’’ means a

20 corporation, partnership, association, joint stock

21 company, business trust, or any organized group of

22 persons, whether incorporated or not, or a receiver,

23 trustee, or other liquidating agent of any of the fore24 going.
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1 (5) ELECTRIC UTILITY COMPANY.—The term

2 ‘‘electric utility company’’ means a company that

3 owns or operates facilities used for the generation,

4 transmission, or distribution of electric energy for

5 sale.

6 (6) EXEMPT WHOLESALE GENERATOR.—The

7 term ‘‘exempt wholesale generator’’ has the meaning

8 given the term in section 32(a) of the Public Utility

9 Holding Company Act of 1935 (15 U.S.C. 79z–

10 5a(a)), as in effect on the day before the effective

11 date of this title.

12 (7) FOREIGN UTILITY COMPANY.—The term

13 ‘‘foreign utility company’’ has the meaning given the

14 term in section 33(b) of the Public Utility Holding

15 Company Act of 1935 (15 U.S.C. 79z–5b(b)), as in

16 effect on the day before the effective date of this

17 title.

18 (8) GAS UTILITY COMPANY.—The term ‘‘gas

19 utility company’’ means a company that owns or op20 erates facilities used for distribution at retail (other

21 than the distribution only in enclosed portable con22 tainers or distribution to tenants or employees of the

23 company operating such facilities for their own use

24 and not for resale) of natural or manufactured gas

25 for heat, light, or power.
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1 (9) HOLDING COMPANY.—The term ‘‘holding

2 company’’ means—

3 (A) a company that directly or indirectly

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

5 percent or more of the outstanding voting secu6 rities of a public utility company or of a holding

7 company of any public utility company; and

8 (B) a person, determined by the Commis9 sion, after notice and opportunity for hearing,

10 to exercise directly or indirectly (either alone or

11 under an arrangement or understanding with

12 one or more persons) such a controlling influ13 ence over the management or policies of any

14 public utility company or holding company as to

15 make it necessary or appropriate for the rate

16 protection of utility customers with respect to

17 rates that the person be subject to the obliga18 tions, duties, and liabilities imposed by this title

19 on holding companies.

20 (10) HOLDING COMPANY SYSTEM.—The term

21 ‘‘holding company system’’ means a holding com22 pany, together with its subsidiary companies.

23 (11) JURISDICTIONAL RATE.—The term ‘‘juris24 dictional rate’’ means a rate established by the Com25 mission for—
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1 (A) the transmission of electric energy in

2 interstate commerce, the sale of electric energy

3 at wholesale in interstate commerce;

4 (B) the transportation of natural gas in

5 interstate commerce; or

6 (C) the sale in interstate commerce of nat7 ural gas for resale for ultimate public consump8 tion for domestic, commercial, industrial, or any

9 other use.

10 (12) NATURAL GAS COMPANY.—The term ‘‘nat11 ural gas company’’ means a person engaged in the

12 transportation of natural gas in interstate commerce

13 or the sale of natural gas in interstate commerce for

14 resale.

15 (13) PERSON.—The term ‘‘person’’ means an

16 individual or company.

17 (14) PUBLIC UTILITY.—The term ‘‘public util18 ity’’ means a person that owns or operates a facility

19 used for transmission of electric energy in interstate

20 commerce or sales of electric energy at wholesale in

21 interstate commerce.

22 (15) PUBLIC UTILITY COMPANY.—The term

23 ‘‘public utility company’’ means an electric utility

24 company or a gas utility company.
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1 (16) STATE COMMISSION.—The term ‘‘State

2 commission’’ means a commission, board, agency, or

3 officer, by whatever name designated, of a State,

4 municipality, or other political subdivision of a State

5 that, under the laws of the State, has jurisdiction to

6 regulate public utility companies.

7 (17) SUBSIDIARY COMPANY.—The term ‘‘sub8 sidiary company’’, in relation to a holding company,

9 means—

10 (A) a company, 10 percent or more of the

11 outstanding voting securities of which are di12 rectly or indirectly owned, controlled, or held

13 with power to vote, by the holding company;

14 and

15 (B) a person, the management or policies

16 of which the Commission, after notice and op17 portunity for hearing, determines to be subject

18 to a controlling influence, directly or indirectly,

19 by the holding company (either alone or under

20 an arrangement or understanding with 1 or

21 more other persons) so as to make it necessary

22 for the rate protection of utility customers with

23 respect to rates that the person be subject to

24 the obligations, duties, and liabilities imposed
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1 by this title on subsidiary companies of holding

2 companies.

3 (18) VOTING SECURITY.—The term ‘‘voting se4 curity’’ means a security presently entitling the

5 owner or holder of the security to vote in the direc6 tion or management of the affairs of a company.

7 SEC. 204. REPEAL OF THE PUBLIC UTILITY HOLDING COM8 PANY ACT OF 1935.

9 The Public Utility Holding Company Act of 1935 (15

10 U.S.C. 79a et seq.) is repealed.

11 SEC. 205. FEDERAL ACCESS TO BOOKS AND RECORDS.

12 (a) IN GENERAL.—Each holding company and each

13 associate company of a holding company shall maintain,

14 and shall make available to the Commission, such books,

15 accounts, memoranda, and other records as the Commis16 sion deems to be relevant to costs incurred by a public

17 utility or natural gas company that is an associate com18 pany of the holding company and necessary or appropriate

19 for the protection of utility customers with respect to ju20 risdictional rates for the transmission of electric energy

21 in interstate commerce, the sale of electric energy at

22 wholesale in interstate commerce, the transportation of

23 natural gas in interstate commerce, and the sale in inter24 state commerce of natural gas for resale for ultimate pub-
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1 lic consumption for domestic, commercial, industrial, or

2 any other use.

3 (b) AFFILIATE COMPANIES.—Each affiliate of a hold4 ing company or of any subsidiary company of a holding

5 company shall maintain, and make available to the Com6 mission, such books, accounts, memoranda, and other

7 records with respect to any transaction with another affil8 iate, as the Commission deems to be relevant to costs in9 curred by a public utility or natural gas company that is

10 an associate company of the holding company and nec11 essary or appropriate for the protection of utility cus12 tomers with respect to jurisdictional rates.

13 (c) HOLDING COMPANY SYSTEMS.—The Commission

14 may examine the books, accounts, memoranda, and other

15 records of any company in a holding company system, or

16 any affiliate of a holding company, as the Commission

17 deems to be relevant to costs incurred by a public utility

18 or natural gas company within the holding company sys19 tem and necessary or appropriate for the protection of

20 utility customers with respect to jurisdictional rates.

21 (d) CONFIDENTIALITY.—No member, officer, or em22 ployee of the Commission shall divulge any fact or infor23 mation that may come to his or her knowledge during the

24 course of examination of books, accounts, memoranda, or

25 other records as provided in this section, except as may
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1 be directed by the Commission or by a court of competent

2 jurisdiction.

3 SEC. 206. STATE ACCESS TO BOOKS AND RECORDS.

4 (a) IN GENERAL.—On the written request of a State

5 commission having jurisdiction to regulate a public utility

6 company in a holding company system, the holding com7 pany or any associate company or affiliate of the holding

8 company, other than the public utility company, wherever

9 located, shall produce for inspection books, accounts,

10 memoranda, and other records that—

11 (1) have been identified in reasonable detail in

12 a proceeding before the State commission;

13 (2) the State commission deems are relevant to

14 costs incurred by the public utility company; and

15 (3) are necessary for the effective discharge of

16 the responsibilities of the State commission with re17 spect to the proceeding.

18 (b) LIMITATION.—Subsection (a) does not apply to

19 any person that is a holding company solely by reason of

20 ownership of one or more qualifying facilities under the

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

22 2601 et seq.).

23 (c) CONFIDENTIALITY OF INFORMATION.—The pro24 duction of books, accounts, memoranda, and other records

25 under subsection (a) shall be subject to such terms and
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1 conditions as may be necessary and appropriate to safe2 guard against unwarranted disclosure to the public of any

3 trade secrets or sensitive commercial information.

4 (d) EFFECT ON STATE LAW.—Nothing in this sec5 tion shall preempt applicable State law concerning the pro6 vision of books, records, or any other information, or in

7 any way limit the rights of any State to obtain books,

8 records, or any other information under any other Federal

9 law, contract, or otherwise.

10 (e) COURT JURISDICTION.—Any United States dis11 trict court located in the State in which the State commis12 sion referred to in subsection (a) is located shall have ju13 risdiction to enforce compliance with this section.

14 SEC. 207. EXEMPTION AUTHORITY.

15 (a) RULEMAKING.—Not later than 90 days after the

16 effective date of this title, the Commission shall promul17 gate a final rule to exempt from the requirements of sec18 tion 205 any person that is a holding company, solely with

19 respect to one or more—

20 (1) qualifying facilities under the Public Utility

21 Regulatory Policies Act of 1978 (16 U.S.C. 2601 et

22 seq.);

23 (2) exempt wholesale generators; or

24 (3) foreign utility companies.
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1 (b) OTHER AUTHORITY.—If, on application or on its

2 own motion, the Commission finds that the books, records,

3 accounts, memoranda, and other records of any person are

4 not relevant to the jurisdictional rates of a public utility

5 or natural gas company, or if the Commission finds that

6 any class of transactions is not relevant to the jurisdic7 tional rates of a public utility or natural gas company,

8 the Commission shall exempt the person or transaction

9 from the requirements of section 205.

10 SEC. 208. AFFILIATE TRANSACTIONS.

11 Nothing in this title precludes the Commission or a

12 State commission from exercising its jurisdiction under

13 otherwise applicable law to determine whether a public

14 utility company, public utility, or natural gas company

15 may recover in rates any costs of an activity performed

16 by an associate company, or any costs of goods or services

17 acquired by the public utility company from an associate

18 company.

19 SEC. 209. APPLICABILITY.

20 Nothing in this title applies to or includes—

21 (1) the United States;

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

23 State;

24 (3) any foreign governmental authority not op25 erating in the United States;
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1 (4) any agency, authority, or instrumentality of

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

3 or

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

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

6 such in the course of official duty.

7 SEC. 210. EFFECT ON OTHER REGULATIONS.

8 Nothing in this title precludes the Commission or a

9 State commission from exercising its jurisdiction under

10 otherwise applicable law to protect utility customers.

11 SEC. 211. ENFORCEMENT.

12 The Commission shall have the same powers as are

13 set forth in sections 306 through 317 of the Federal

14 Power Act (16 U.S.C. 825d–825p) to enforce this title.

15 SEC. 212. SAVINGS PROVISIONS.

16 (a) IN GENERAL.—Nothing in this title prohibits a

17 person from engaging in or continuing to engage in activi18 ties or transactions in which it is legally engaged or au19 thorized to engage on the effective date of this title.

20 (b) EFFECT ON OTHER COMMISSION AUTHORITY.—

21 Nothing in this title limits the authority of the Commis22 sion under the Federal Power Act (16 U.S.C. 791a et seq.)

23 (including section 301 of that Act) or the Natural Gas

24 Act (15 U.S.C. 717 et seq.) (including section 8 of that

25 Act).
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1 SEC. 213. IMPLEMENTATION.

2 Not later than 18 months after the date of enactment

3 of this Act, the Commission shall—

4 (1) promulgate such regulations as may be nec5 essary or appropriate to implement this title (other

6 than section 206); and

7 (2) submit to Congress detailed recommenda8 tions on technical and conforming amendments to

9 Federal law necessary to carry out this title and the

10 amendments made by this title.

11 SEC. 214. TRANSFER OF RESOURCES.

12 All books and records that relate primarily to the

13 functions transferred to the Commission under this title

14 shall be transferred from the Securities and Exchange

15 Commission to the Commission.

16 SEC. 215. CONFORMING AMENDMENT TO THE FEDERAL

17 POWER ACT.

18 Section 318 of the Federal Power Act (16 U.S.C.

19 825q) is repealed.

20 SEC. 216. AUTHORIZATION OF APPROPRIATIONS.

21 There are authorized to be appropriated such sums

22 as are necessary to carry out this title.

23 SEC. 217. EFFECTIVE DATE.

24 This title takes effect on the date that is 18 months

25 after the date of enactment of this Act.
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1 TITLE III—TAX PROVISIONS

2 SEC. 301. TAX-EXEMPT BOND FINANCING OF CERTAIN

3 ELECTRIC FACILITIES.

4 (a) PERMITTED OPEN ACCESS TRANSACTIONS NOT

5 A PRIVATE BUSINESS USE.—Section 141(b)(6) of the In6 ternal Revenue Code of 1986 (defining private business

7 use) is amended by adding at the end the following:

8 ‘‘(C) PERMITTED OPEN ACCESS TRANS9 ACTIONS NOT A PRIVATE BUSINESS USE.—

10 ‘‘(i) IN GENERAL.—For purposes of

11 this subsection, the term ‘private business

12 use’ shall not include a permitted open ac13 cess transaction.

14 ‘‘(ii) PERMITTED OPEN ACCESS

15 TRANSACTION DEFINED.—For purposes of

16 clause (i), the term ‘permitted open access

17 transaction’ means any of the following

18 transactions or activities with respect to an

19 electric output facility (as defined in sub20 section (f)(4)(A)) owned by a governmental

21 unit:

22 ‘‘(I) Providing open access trans23 mission services and ancillary services

24 that meet the reciprocity requirements

25 of Federal Energy Regulatory Com-
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1 mission Order No. 888, or that are

2 ordered by the Federal Energy Regu3 latory Commission, or that are pro4 vided in accordance with a trans5 mission tariff of an independent sys6 tem operator approved by such Com7 mission, or are consistent with state

8 administered laws, rules or orders

9 providing for open transmission ac10 cess.

11 ‘‘(II) Participation in an inde12 pendent system operator agreement

13 (which may include transferring con14 trol of transmission facilities to an

15 independent system operator), in a re16 gional transmission group, or in a

17 power exchange agreement approved

18 by such Commission.

19 ‘‘(III) Delivery on an open access

20 basis of electric energy sold by other

21 entities to end-users served by such

22 governmental unit’s distribution facili23 ties.

24 ‘‘(iii) GOVERNMENT-OWNED FACIL25 ITY.—For purposes of this subparagraph,
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1 an electric output facility (as defined in

2 subsection (f)(4)(A)) shall be treated as

3 owned by a governmental unit only if the

4 facility is owned by such governmental unit

5 for the purposes of serving 1 or more cus6 tomers to which such governmental unit

7 had a service obligation on July 1, 2000.’’.

8 (b) ELECTION TO TERMINATE TAX EXEMPT FI9 NANCING.—Section 141 of the Internal Revenue Code of

10 1986 (relating to private activity bond; qualified bond) is

11 amended by adding at the end the following:

12 ‘‘(f) ELECTION TO TERMINATE TAX-EXEMPT BOND

13 FINANCING FOR CERTAIN ELECTRIC OUTPUT FACILI14 TIES.—

15 ‘‘(1) IN GENERAL.—An issuer may make an ir16 revocable election under this paragraph to terminate

17 certain tax-exempt financing for electric output fa18 cilities. If the issuer makes such election, then—

19 ‘‘(A) except as provided in paragraph (2),

20 no bond the interest on which is exempt from

21 tax under section 103 may be issued on or after

22 the date of such election with respect to an elec23 tric output facility; and

24 ‘‘(B) notwithstanding paragraph (1) or (2)

25 of subsection (a) or paragraph (5) of subsection
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1 (b), with respect to an electric output facility no

2 bond that was issued before the date of enact3 ment of this subsection, the interest on which

4 was exempt from tax on such date, shall be

5 treated as a private activity bond, for so long

6 as such facility continues to be owned by a gov7 ernmental unit.

8 ‘‘(2) EXCEPTIONS.—

9 ‘‘(A) IN GENERAL.—An election under

10 paragraph (1) does not apply to—

11 ‘‘(i) any bond issued to finance a

12 qualifying T&D facility, or

13 ‘‘(ii) any bond issued to finance equip14 ment necessary to meet Federal or state

15 environmental requirements applicable to

16 electric output facilities in service on the

17 date of enactment of this subsection.

18 ‘‘(B) INCREASE IN CAPACITY.—For pur19 poses of subparagraph (A)(ii), equipment may

20 not increase by more than a de minimus degree

21 the capacity of the facility beyond its original

22 design.

23 ‘‘(3) FORM AND EFFECT OF ELECTIONS.—An

24 election under paragraph (1) shall be made in such

25 a manner as the Secretary prescribes and shall be
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1 binding on any successor in interest to the electing

2 issuer.

3 ‘‘(4) DEFINITIONS.—For purposes of this

4 subsection—

5 ‘‘(A) ELECTRIC OUTPUT FACILITY.—The

6 term ‘electric output facility’ means an output

7 facility that is an electric generation, trans8 mission, or distribution facility.

9 ‘‘(B) QUALIFYING T&D FACILITY.—The

10 term ‘qualifying T&D facility’ means—

11 ‘‘(i) transmission facilities over which

12 services described in subsection

13 (b)(6)(C)(ii)(I) are provided, or

14 ‘‘(ii) distribution facilities over which

15 services described in subsection

16 (b)(6)(C)(ii)(III) are provided.’’.

17 (c) APPLICATION WITH OTHER LAWS.—Nothing in

18 this section, or the amendments made by this section, shall

19 be interpreted as affecting the requirement of a municipal

20 facility to provide open access under section 153 of the

21 Public Utilities Regulatory Policies Act of 1978 (as added

22 by section 101(a)).

23 (d) EFFECTIVE DATE AND TRANSITION RULES.—

24 (1) EFFECTIVE DATE.—The amendments made

25 by this section take effect on the date of enactment
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1 of this Act, except that a governmental unit may

2 elect to apply section 141(b)(6)(C) of the Internal

3 Revenue Code of 1986, as added by subsection (a),

4 with respect to permitted open access transactions

5 on or after July 9, 1996.

6 (2) TRANSITION RULE FOR PRIVATE BUSINESS

7 USE.—Any activity that was not a private business

8 use prior to the effective date of the amendment

9 made by subsection (a) shall not be deemed to be a

10 private business use by reason of the enactment of

11 such amendment.

12 SEC. 302. MODIFICATIONS TO SPECIAL RULES FOR NU13 CLEAR DECOMMISSIONING COSTS.

14 (a) REPEAL OF LIMITATION ON DEPOSITS INTO

15 FUND BASED ON COST OF SERVICE.—Subsection (b) of

16 section 468A of the Internal Revenue Code of 1986 (relat17 ing to special rules for nuclear decommissioning costs) is

18 amended to read as follows:

19 ‘‘(b) LIMITATION ON AMOUNTS PAID INTO FUND.—

20 The amount which a taxpayer may pay into the Fund for

21 any taxable year shall not exceed the ruling amount appli22 cable to such taxable year.’’.

23 (b) CLARIFICATION OF TREATMENT OF FUND

24 TRANSFERS.—Section 468A(e) of the Internal Revenue

25 Code of 1986 (relating to Nuclear Decommissioning Re-
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1 serve Fund) is amended by adding at the end the fol2 lowing:

3 ‘‘(8) TREATMENT OF FUND TRANSFERS.—If, in

4 connection with the transfer of the taxpayer’s inter5 est in a nuclear powerplant, the taxpayer transfers

6 the Fund with respect to such powerplant to the

7 transferee of such interest and the transferee elects

8 to continue the application of this section to such

9 Fund—

10 ‘‘(A) the transfer of such Fund shall not

11 cause such Fund to be disqualified from the ap12 plication of this section, and

13 ‘‘(B) no amount shall be treated as distrib14 uted from such Fund, or be includible in gross

15 income, by reason of such transfer.’’.

16 (c) EFFECTIVE DATE.—The amendments made by

17 this section shall apply to taxable years beginning after

18 December 31, 2000.

19 SEC. 303. TREATMENT OF CERTAIN REVENUES OF ELEC20 TRIC COOPERATIVES.

21 (a) IN GENERAL.—Section 501(c)(12)(C) of the In22 ternal Revenue Code of 1986 (relating to list of exempt

23 organizations) is amended—

24 (1) in clause (i), by striking ‘‘or’’ at the end;
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1 (2) in clause (ii), by striking the period at the

2 end and inserting ‘‘, or’’;

3 (3) by adding at the end the following:

4 ‘‘(iii) from revenues received from

5 nonmembers solely as a result of con6 forming transmission and distribution op7 erations to meet provisions of an applicable

8 Federal or State plan designed to provide

9 customer choice in electric power supply.’’.

10 (b) EFFECTIVE DATE.—The amendments made by

11 this section shall apply to amounts received after Decem12 ber 31, 2000.
Calendar No. 690

106TH CONGRESS

2D SESSION S. 2886

A BILL

To provide for retail competition for the sale of

electric power, to authorize States to recovertransition costs, and for other purposes.

JULY 19, 2000

Read the second time and placed on the calendar