II

103D CONGRESS

1ST SESSION S. 1638

To provide a more effective, efficient, and responsive Department of Energy.

IN THE SENATE OF THE UNITED STATES

NOVEMBER 8 (legislative day, NOVEMBER 2), 1993

Mr. JOHNSTON introduced the following bill; which was read twice and

referred to the Committee on Energy and Natural Resources

A BILL

To provide a more effective, efficient, and responsive

Department of Energy.

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 referred to as the ‘‘Department of

5 Energy Reform and Savings Act of 1993’’.

6 TITLE I—ALASKA POWER ADMIN7 ISTRATION SALE AUTHORIZA8 TION ACT

9 SEC. 101. SHORT TITLE.

10 This subtitle may be cited as the ‘‘Alaska Power Ad11 ministration Sale Authorization Act’’.
2

S 1638 IS

1 SEC. 102. SALE OF SNETTISHAM AND EKLUTNA HYDRO2 ELECTRIC PROJECTS.

3 (a) The Secretary of Energy may sell the Snettisham

4 Hydroelectric Project (referred to in this subtitle as

5 ‘‘Snettisham’’) to the State of Alaska Power Authority

6 (now known as the Alaska Industrial Development and

7 Export Authority, and referred to in this subtitle as the

8 ‘‘Authority’’), or its successor, in accordance with the Feb9 ruary 10, 1989, Snettisham Purchase Agreement between

10 the Alaska Power Administration of the United States De11 partment of Energy and the Authority.

12 (b) The Secretary of Energy may sell the Eklutna

13 Hydroelectric Project (referred to in this subtitle as

14 ‘‘Eklutna’’) to the Municipality of Anchorage doing busi15 ness as Municipal Light and Power, the Chugach Electric

16 Association, Inc., and the Matanuska Electric Association,

17 Inc. (referred to in this subtitle as ‘‘Eklutna Purchasers’’)

18 in accordance with the August 2, 1989, Eklutna Purchase

19 Agreement between the United States Department of En20 ergy and the Eklutna Purchasers.

21 (c) The heads of other affected Federal departments

22 and agencies, including the Secretary of the Interior, shall

23 assist the Secretary of Energy in implementing the sales

24 authorized by this Act.
3

S 1638 IS

1 (d) The Secretary of Energy shall deposit sale pro2 ceeds in the Treasury of the United States to the credit

3 of miscellaneous receipts.

4 (e) There are authorized to be appropriated such

5 sums as are necessary to prepare or acquire Eklutna and

6 Snettisham assets for sale and conveyance, such prepara7 tions to provide sufficient title to ensure the beneficial use,

8 enjoyment, and occupancy to the purchasers of the assets

9 to be sold.

10 (f) No later than one year after both of the sales au11 thorized in section 102 have occurred, as measured by the

12 Transaction Dates stipulated in the Purchase Agreements,

13 the Secretary of Energy shall—

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

15 Alaska Power Administration; and

16 (2) prepare and submit to Congress a report

17 documenting the sales.

18 SEC. 103. ASSESSMENT OF ALTERNATIVE OPTIONS.

19 Before taking any action authorized in section 102,

20 the Secretary shall assess the feasibility of alternative op21 tions for maximizing the return to the Treasury from the

22 sale of the Alaska Power Marketing Administration.
4

S 1638 IS

1 TITLE II—FEDERAL-PRIVATE CO2 GENERATION OF ELEC3 TRICITY

4 SEC. 201. FEDERAL-PRIVATE COGENERATION OF ELEC5 TRICITY.

6 Section 804(2)(B) of the National Energy Conserva7 tion Policy Act (42 U.S.C. 8287c(2)(B)) is amended by

8 striking ‘‘, excluding any cogeneration process for other

9 than a federally owned building or buildings or other fed10 erally owned facilities.’’.

11 TITLE III—POWER MARKETING

12 ADMINISTRATION DEBT BUYOUT

13 PART 1—BONNEVILLE POWER ADMINISTRATION

14 DEBT BUYOUT

15 SEC. 301. SHORT TITLE.

16 This part may be cited as the ‘‘Bonneville Power Ad17 ministration Repayment Bonds Act’’.

18 SEC. 302. SALE OF BONDS.

19 Notwithstanding any other law and without fiscal

20 year limitation—

21 (1) in addition to the authority in section 13 of

22 the Federal Columbia River Transmission System

23 Act (16 U.S.C. 838k), the Administrator may issue

24 and sell bonds, notes, and other evidences of indebt25 edness (referred to in this part as ‘‘Bonds’’) in the
5

S 1638 IS

1 manner and amounts the Administrator, considers

2 appropriate in the name of and for and on behalf of

3 the Bonneville Power Administration, to—

4 (A) satisfy the unpaid repayment obliga5 tion associated with the appropriated capital in6 vestment made in the Federal Columbia River

7 Power System before the issuance of the Bonds

8 authorized under this part takes place, but not

9 including Federal irrigation investments as10 signed to be repaid from power revenues; and

11 (B) refund Bonds;

12 (2) the Administrator shall transfer, and the

13 Secretary of the Treasury shall accept for the ac14 count of the General Fund, the net proceeds of the

15 Bonds referred to in paragraph (1)(A), and when

16 the Secretary of the Treasury receives the net pro17 ceeds, the repayment obligation associated with the

18 part of the appropriated capital investment in the

19 Federal Columbia River Power System covered by

20 the Bonds is considered to be satisfied forever;

21 (3) the Secretary of the Treasury, in consulta22 tion with the Administrator, shall establish the

23 amount of proceeds needed to satisfy the unpaid re24 payment obligation associated with the part of the

25 capital investment referred to in paragraph (1)(A)
6

S 1638 IS

1 as the amount necessary to increase the sum of the

2 net proceeds and the discounted present value of the

3 remaining Federal debt service of the Federal Co4 lumbia River Power System by $100 million relative

5 to the discounted present value of the total Federal

6 debt service of the Federal Columbia River Power

7 system as provided by the Administrator based upon

8 the repayment schedule that would have been paid

9 under repayment policy and practices in effect on

10 September 1, 1993;

11 (4) to determine the discounted present values

12 in paragraph (3), the Secretary of the Treasury

13 shall use discount rates based on the secondary mar14 ket’s average yield for the most recently issued 30-

15 year Treasury bonds when the Bonds authorized in

16 paragraph (1) are issued;

17 (5) these Bonds shall be in the forms and de18 nominations, bear the maturities (without respect to

19 the remaining average service life of the capital in20 vestment associated with the repayment obligation

21 satisfied by the Bonds issued under this part), be is22 sued and sold at the times, prices, discounts, and

23 yields, and be subject to other terms and conditions

24 (including variable rates) as the Administrator con25 siders appropriate;
7

S 1638 IS

1 (6) under section 2(f) of the Bonneville Project

2 Act of 1937 (16 U.S.C. 832a(f)) and this part, the

3 Administrator may enter into any contract that the

4 Administrator considers necessary for the purposes

5 of carrying out this part including, but not limited

6 to, contracts for—

7 (A) the payment of the principal, interest,

8 and premium, if any, on Bonds issued under

9 this part;

10 (B) the purchase or redemption of those

11 Bonds;

12 (C) the payment of costs and expenses in13 cidental to this payment, purchase, and re14 demption; or

15 (D) the creation of reserve and other funds

16 to be held by a trustee, which funds the Admin17 istrator may pledge exclusively to pay those

18 costs for which the funds were created and es19 tablish a lien on the funds in favor of the bene20 ficiaries of the funds under any indenture, reso21 lution, or other agreement entered into in con22 nection with the issuance of Bonds under this

23 part;

24 (7) Bonds issued under this part—
8

S 1638 IS

1 (A) shall be issuable and payable through

2 the Federal wire system;

3 (B) are negotiable instruments that may

4 be accepted as security for all fiduciary, trust,

5 and public funds, the investment or deposit of

6 which is under the authority or control of any

7 officer or agency of the United States;

8 (C) may be held without limitation by na9 tional banks;

10 (D) qualify as legal investments for banks,

11 savings and loan institutions, and credit unions;

12 and

13 (E) are eligible collateral for Federal ad14 vances and discounts, for deposits of the United

15 States, and the Treasury tax and loan accounts;

16 (8) Bonds issued under this part are not in17 tended to be and are not secured by the full faith

18 and credit of the United States;

19 (9) Bonds issued under this part are exempt

20 both as to principal and interest from all taxation by

21 any State or local taxing authority, except estate, in22 heritance, and gift taxes;

23 (10) Bonds issued under this part shall contain

24 a recital that they are issued under this part and

25 this recital is conclusive evidence of the regularity of
9

S 1638 IS

1 the issuance and sale of the Bonds and their valid2 ity;

3 (11) the Bonds issued under this part, all re4 ceipts of the Secretary of the Treasury under this

5 part, any portion of the fund established under the

6 Federal Columbia River Transmission System Act

7 (16 U.S.C. 838 et seq.) related to these Bonds, all

8 receipts and disbursements of that fund related to

9 these Bonds, and all expenditures by the Adminis10 trator related to these Bonds—

11 (A) are exempt from any general budget

12 limitation imposed by statute on expenditures

13 and net lending (budget outlays) of the United

14 States Government, sequestration order, or dis15 cretionary spending limit;

16 (B) are exempt from any order issued pur17 suant to sections 251, 252, or 253 of the Bal18 anced Budget and Emergency Deficit Control

19 Act of 1985 (2 U.S.C. 900 et seq.); and

20 (C) are not subject to apportionment under

21 subchapter II of chapter 15 of title 31, United

22 States Code;

23 (12) in all future contracts for the sale of elec24 tric power, transmission, or other services, the Ad25 ministrator shall include provisions specifying that
10

S 1638 IS

1 after the repayment obligation is fully and forever

2 satisfied, the Administrator’s rates for electric

3 power, transmission, or other services shall not in4 clude any form of economic rent to be returned to

5 the United States Government, including, without

6 limitation, a falling water charge or any other fee for

7 use of Federal facilities for power generation or

8 transmission, that relates to a project, facility, or

9 separable unit of a project or facility associated with

10 the satisfied repayment obligation, other than a

11 charge necessary to repay the new indebtedness in12 curred under this part. Amounts provided under sec13 tion 1304 of title 31, United States Code, shall be

14 the sole source for payment of a judgment against

15 the Administrator or the United States on a claim

16 for a violation of the contract provision required by

17 this paragraph;

18 (13) the Administrator shall offer to amend the

19 Administrator’s existing contracts for the sale of

20 electric power, transmission, or other services to in21 clude the provisions described in paragraph (12);

22 and

23 (14) the Administrator shall consult with the

24 Secretary of the Treasury regarding the timing and

25 structure of the bonds issued under this part.
11

S 1638 IS

1 SEC. 303. PAYMENT OF BOND COSTS.

2 Section 11(b)(6) of the Federal Columbia River

3 Transmission System Act (16 U.S.C. 838i(b)(6)), is

4 amended by striking ‘‘or’’ before ‘‘(iv)’’ and by inserting

5 before the semicolon ‘‘, or (v) to pay the cost of financing

6 and debt service including premiums, if any, on Bond is7 sued by the Bonneville Power Administration’’.

8 SEC. 304. COMBINED REPAYMENT STUDY.

9 Section 7(a) of the Pacific Northwest Electric Power

10 Planning and Conservation Act (16 U.S.C. 893e(a)), is

11 amended by adding after paragraph (2) the following:

12 ‘‘(3) In establishing power and transmission

13 rates, the Administrator may base them on a single,

14 combined generation and transmission repayment

15 study which demonstrates that all indebtedness is

16 repaid by its due date. The use of such a study is

17 sufficient for the commission to approve the rates as

18 meeting repayment requirements.’’.

19 SEC. 305. DEFINITIONS.

20 For the purposes of this part—

21 (1) ‘‘Administrator’’ means the Administrator

22 of the Bonneville Power Administration; and

23 (2) ‘‘appropriated capital investment made in

24 the Federal Columbia River Power System’’ means

25 an investment made by the United States that—

26 (A) is made using Federal appropriations;
12

S 1638 IS

1 (B) is for a project or separable feature of

2 a project that is placed in service;

3 (C) is allocated to power and required by

4 law to be repaid from the power revenues by

5 the Administrator;

6 (D) is not allocated or suballocated to irri7 gation; and

8 (E) excludes an investment made using

9 funds borrowed under section 13 of the Federal

10 Columbia River Transmission System Act.

11 PART 2—OTHER POWER MARKETING

12 ADMINISTRATIONS DEBT BUYOUT

13 SEC. 306. SHORT TITLE.

14 This part may be cited as the ‘‘Power Marketing Ad15 ministrations Financing Act’’.

16 SEC. 307. DEFINITIONS.

17 For the purposes of this part—

18 (1) ‘‘Administrator’’ means the Administrator

19 of the Southeastern Power Administration, the Ad20 ministrator of the Southwestern Power Administra21 tion, and the Administrator of the Western Area

22 Power Administration;

23 (2) ‘‘Fund’’ means the Power Marketing Ad24 ministration Sinking Fund established under section

25 309; and
13

S 1638 IS

1 (3) ‘‘Power marketing administration’’ means

2 the Southeastern Power Administration, the South3 western Power Administration, and the Western

4 Area Power Administration.

5 SEC. 308. REPAYMENT OF EXISTING INDEBTEDNESS.

6 (a) Notwithstanding any other law, within 12 months

7 after the enactment of this Act, each Administrator shall

8 develop, in consultation with the Secretary of the Treas9 ury, and shall implement a plan for paying the United

10 States Treasury the discounted present value of principal

11 and interest payments on power investments scheduled to

12 be paid to the United States Treasury as provided by the

13 Administrator under existing law and repayment practices

14 by that power marketing administration, as well as a one15 time additional payment of $12,500,000 by the Southeast16 ern Power Administration, $12,500,000 by the Southwest17 ern Power Administration, and $50,000,000 by the West18 ern Area Power Administration. Each Administrator shall

19 issue revenue bonds as provided in section 310 to pay the

20 obligation to the United States Treasury addressed in this

21 section, except that the issuance of these bonds shall occur

22 only if each Administrator determines by means of finan23 cial studies that the refinancing will not cause an increase

24 in power rates over existing repayment practices. When

25 the Treasury receives full payment from an Administrator,
14

S 1638 IS

1 it shall consider the repayment obligation of the Adminis2 tration associated with the payment fully and forever dis3 charged.

4 (b) In all future contracts for the sale of electric

5 power, transmission, or other services, each Administrator

6 shall include provisions agreeing that when the repayment

7 obligation is fully and forever discharged under subsection

8 (a), the Administrator’s rates for electric power, trans9 mission, or other services shall not, other than is necessary

10 to repay the new indebtedness incurred under this Act,

11 include any charge in place of the satisfied obligation or

12 include any other similar form of economic rent by or re13 turned to the United States (including, without limitation,

14 a falling water charge or any other type of user fee for

15 use of Federal facilities for the purpose of power genera16 tion and transmission) on account of any project, facility,

17 or separable unit of a project or facility associated with

18 the repayment obligation satisfied.

19 (c) Each Administrator shall offer to amend existing

20 contracts for the sale of electric power, transmission, or

21 other services to include the provision described in sub22 section (b).
15

S 1638 IS

1 SEC. 309. POWER MARKETING ADMINISTRATION SINKING

2 FUND.

3 (a) There is established in the Treasury of the United

4 States a Power Marketing Administration Sinking Fund.

5 The Secretary of the Treasury, acting as trustee for the

6 power marketing administrations, shall establish and

7 maintain a separate account in the Fund for each power

8 marketing administration, and monies of one power mar9 keting administration shall not be commingled with mon10 ies of another power marketing administration. Within the

11 separate account for each power marketing administra12 tion, separate projects or systems shall be accounted for

13 separately. An Administrator may deposit into the Fund

14 the monies derived from revenues that the Administrator

15 considers appropriate to ensure that the bonds issued

16 under section 310 are refunded in a timely manner.

17 (b) Balances in the Fund shall earn interest at a rate

18 determined by the Secretary of the Treasury.

19 (c) An Administrator may make expenditures from

20 the Administrator’s account in the Fund without further

21 appropriation and without fiscal year limitation to pay in22 debtedness incurred from bonds issued under section 310.

23 (d) Each power marketing administration shall main24 tain its books of account in substantial conformance with

25 the Uniform System of Accounts of the Federal Energy

26 Regulatory Commission.
16

S 1638 IS

1 (e) The financial transactions of an Administrator

2 shall be audited by independent financial auditors, and re3 ports of the results of each audit shall be made to the

Congress within 61 4 ⁄2 months following the end of the fiscal

5 year covered by the audit.

6 SEC. 310. REVENUE BONDS.

7 (a) Each Administrator, in consultation with the Sec8 retary of the Treasury, may issue and sell from time to

9 time in the name of, and for and on behalf of, the respec10 tive power marketing administration bonds, notes, and

11 other evidences of indebtedness (in this section collectively

12 referred to as ‘‘bonds’’) to refinance existing indebtedness

13 as provided in section 308 and to issue and sell bonds to

14 refund those bonds. The bonds shall be in the forms and

15 denominations, bear maturities (without respect to the re16 maining average service life of facilities), and be subject

17 to terms and conditions as prescribed by the Adminis18 trator taking into account terms and conditions prevailing

19 in the market for similar bonds and financing practices

20 of the utility industry. Provisions for early retirement of

21 bonds may be prescribed by each Administrator. The

22 bonds shall bear interest at a rate determined by the Ad23 ministrator.

24 (b) Each Administrator may enter into any contract

25 that the Administrator considers necessary for the pur-
17

S 1638 IS

1 poses of carrying out this part including, but not limited

2 to, contracts for—

3 (1) the payment of the principal, interest, and

4 premium, if any, on bonds issued under this part;

5 (2) their purchase or redemption;

6 (3) the payment of costs and expenses inciden7 tal to their payment, purchase, and redemption; or

8 (4) the creation of reserve and other funds to

9 be held by the Secretary of the Treasury as trustee,

10 which funds the Administrator may pledge exclu11 sively to pay those costs for which the funds were

12 created and may establish a lien on the funds in

13 favor of the beneficiaries of the funds under any in14 denture, resolution, or other agreement entered into

15 in connection with the issuance of bonds under this

16 part.

17 (c) Bonds issued under this part—

18 (1) shall be issuable and negotiable through the

19 Federal wire system;

20 (2) are negotiable instruments that may be ac21 cepted as security for all fiduciary, trust, and public

22 funds, the investment or deposit of which is under

23 the authority or control of any officer or agency of

24 the United States;
18

S 1638 IS

1 (3) may be held, without limitation, by national

2 banks;

3 (4) qualify as legal instruments for banks, sav4 ings and loan institutions, and credit unions; and

5 (5) are eligible collateral for Federal advances

6 and discounts, for deposits of the United States, and

7 for Treasury tax and loan accounts.

8 (d) Bonds issued under this part are exempt both as

9 to principal and interest from all taxation by any State

10 or local taxing authority, except estate, inheritance, and

11 gift taxes.

12 (e) Bonds issued under this part shall contain a re13 cital that they are issued under this part and such a recital

14 is conclusive evidence of the regularity of the issuance and

15 sale of the bonds and their validity.

16 (f) These bonds are not intended to be and are not

17 secured by the full faith and credit of the United States.

18 (g) The bonds issued under this part, all receipts of

19 the Secretary of the Treasury under this part, any portion

20 of the Fund established under section 310 related to these

21 bonds, all receipts and disbursements of the Fund related

22 to these bonds, and all expenditures by an Administrator

23 related to these bonds—

24 (1) are exempt from any general budget limita25 tion imposed by statute on expenditures and net
19

S 1638 IS

1 lending (budget outlays) of the United States Gov2 ernment, sequestration order, or discretionary

3 spending limit;

4 (2) are exempt from any order issued pursuant

5 to sections 251, 252, or 253 of the Balanced Budget

6 and Emergency Deficit Control Act of 1985 (2

7 U.S.C. 900 et seq.); and

8 (3) are not subject to apportionment under sub9 chapter II of chapter 15 of title 31, United States

10 Code.

11 (h) With respect to the Western Area Power Adminis12 tration, except as otherwise provided, this Act is consid13 ered to be a supplement to the Federal reclamation laws.

Æ

S 1638 IS——2