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★(Star Print)

105TH CONGRESS

1ST SESSION S. 1401

To provide for the transition to competition among electric energy suppliers

for the benefit and protection of consumers, and for other purposes.

IN THE SENATE OF THE UNITED STATES

NOVEMBER 7, 1997

Mr. BUMPERS (for himself and Mr. GORTON) introduced the following bill;

which was read twice and referred to the Committee on Energy and Natural Resources

A BILL

To provide for the transition to competition among electric

energy suppliers for the benefit and protection of consumers, 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 AND TABLE OF CONTENTS.

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

5 ‘‘Transition to Electric Competition Act of 1997’’.

6 (b) TABLE OF CONTENTS.—The table of contents is

7 as follows:

Sec. 1. Short title and table of contents.

Sec. 2. Findings.

Sec. 3. Definitions.

Sec. 4. Severability.
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Sec. 5. Enforcement.

TITLE I—RETAIL COMPETITION

Sec. 101. Mandatory retail access.

Sec. 102. Aggregation.

Sec. 103. Prior implementation.

Sec. 104. State regulation.

Sec. 105. Retail stranded cost recovery.

Sec. 106. Wholesale stranded cost recovery.

Sec. 107. Lost retail benefits.

Sec. 108. Universal service.

Sec. 109. Public benefits.

Sec. 110. Renewable energy.

Sec. 111. Determination of local distribution facilities.

Sec. 112. Transmission.

Sec. 113. Competitive generation markets.

Sec. 114. Nuclear decommissioning costs.

Sec. 115. Right to know.

Sec. 116. Exemption of Alaska and Hawaii.

TITLE II—PUBLIC UTILITY HOLDING COMPANIES

Sec. 201. Repeal of the Public Utility Holding Company Act of 1935.

Sec. 202. Exemptions.

Sec. 203. Federal access to books and records.

Sec. 204. States access to books and records.

Sec. 205. Affiliate transactions.

Sec. 206. Clarification of regulatory authority.

Sec. 207. Effect on other regulation.

Sec. 208. Enforcement.

Sec. 209. Savings provision.

Sec. 210. Implementation.

Sec. 211. Resources.

TITLE III—PUBLIC UTILITY REGULATORY POLICIES ACT

Sec. 301. Definition.

Sec. 302. Facilities.

Sec. 303. Contracts.

Sec. 304. Savings clause.

Sec. 305. Effective date.

TITLE IV—ENVIRONMENTAL PROTECTION

Sec. 401. Study.

TITLE V—BONNEVILLE POWER ADMINISTRATION

Sec. 501. Findings and purposes.

Sec. 502. Columbia River fish and wildlife coordination and governance.

Sec. 503. Pacific Northwest federal transmission access.

Sec. 504. Transition cost mechanism.

Sec. 505. Independent system operator participation.

Sec. 506. Financial obligations.

Sec. 507. Prohibition on retail sales.

Sec. 508. Clarification of Commission authority.
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Sec. 509. Repealed statute.

TITLE VI—TENNESSEE VALLEY AUTHORITY

Sec. 601. Competition in service territory.

Sec. 602. Ability to sell electric energy.

Sec. 603. Termination of contracts.

Sec. 604. Rates for electric energy.

Sec. 605. Privatization study.

1 SEC. 2. FINDINGS.

2 The Congress finds that:

3 (a) Congress has the authority to enact laws, under

4 the Commerce Clause of the United States Constitution,

5 regarding the wholesale and retail generation, trans6 mission, distribution, and sale of electric energy in inter7 state commerce.

8 (b) Several States have taken steps to require com9 petition among retail electric suppliers and a large number

10 of other States are expected to act.

11 (c) It has been the policy of Congress and the Com12 mission to promote competition among wholesale electric

13 suppliers.

14 (d) It is in the public interest that the transition to15 wards competition in electric service ensures that all con16 sumers receive reliable and competitively-priced electric

17 service.

18 (e) Electric utility companies that prudently incurred

19 costs pursuant to a regulatory structure that required

20 them to provide electricity to consumers should not be pe21 nalized during the transition to competition.
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1 (f) Consumers will not benefit from the introduction

2 of competition among electric energy suppliers if certain

3 suppliers have undue market power.

4 (g) It is important to encourage conservation and the

5 use of renewable resources to reduce reliance on fossil

6 fuels, promote domestic energy security and protect the

7 environment.

8 (h) Competition among electric energy suppliers

9 should not degrade reliability nor cause consumers to lose

10 electric service.

11 SEC. 3. DEFINITIONS.

12 For purposes of this Act:

13 (a) The term ‘‘affiliate’’ of a specific company means

14 any company 5 percent or more of whose outstanding vot15 ing securities are owned, controlled, or held with power

16 to vote, directly or indirectly, by such specific company.

17 (b) The term ‘‘aggregator’’ means any person that

18 purchases or acquires retail electric energy on behalf of

19 two or more consumers.

20 (c) The term ‘‘ancillary services’’ shall have the same

21 meaning assigned to it by the Commission.

22 (d) The term ‘‘associate company’’ of a company

23 means any company in the same holding company system

24 with such company.
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1 (e) The term ‘‘Commission’’ means the Federal En2 ergy Regulatory Commission.

3 (f) The term ‘‘company’’ means a corporation, joint

4 stock company, partnership, association, business trust,

5 organized group of persons, whether incorporated or not,

6 or a receiver or receivers, trustee or trustees of any of

7 the foregoing.

8 (g) The term ‘‘corporation’’ means any corporation,

9 joint-stock company, partnership, association, rural elec10 tric cooperative, municipal utility, business trust, orga11 nized group of persons, whether incorporated or not, or

12 a receiver or receivers, trustee or trustees of any of the

13 foregoing.

14 (h) The term ‘‘electric utility company’’ means any

15 company that owns or operates facilities used for the gen16 eration, transmission or distribution of electric energy for

17 sale.

18 (i) The term ‘‘gas utility company’’ means any com19 pany that owns or operates facilities used for distribution

20 at retail (other than the distribution only in enclosed port21 able containers) of natural or manufactured gas for heat,

22 light or power.

23 (j) The term ‘‘holding company system’’ means a

24 holding company together with its subsidiary companies.
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1 (k) The term ‘‘large hydroelectric facility’’ means a

2 facility which has a power production capacity which, to3 gether with any other facilities located at the same site,

4 is greater than 80 megawatts.

5 (l) The term ‘‘local distribution facilities’’ means fa6 cilities used to provide retail electric energy for ultimate

7 consumption.

8 (m) The term ‘‘lost retail benefits’’ means the in9 creased cost of retail electric energy in a retail electric en10 ergy provider’s service territory resulting from the sale

11 subsequent to the implementation of retail electric com12 petition, outside such service territory, of electric energy

13 generated at facilities the cost of which were included in

14 the retail rate base of the retail electric energy provider

15 prior to the implementation of retail electric competition.

16 (n) The term ‘‘mitigation’’ means any widely accept17 ed business practice used by an electric utility company

18 to dispose of or reduce uneconomic assets or costs.

19 (o) The term ‘‘municipal utility’’ means a city, coun20 ty, irrigation district, drainage district, or other political

21 subdivision or agency of a State competent under the laws

22 thereof to carry on the business of a retail electric energy

23 provider and/or a retail electric energy supplier.

24 (p) The term ‘‘person’’ means an individual or cor25 poration.
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1 (q) The term ‘‘public utility company’’ means an elec2 tric utility company or gas utility company but does not

3 mean a qualifying facility as defined in the Public Utility

4 Regulatory Policies Act, or an exempt wholesale generator

5 or a foreign utility company defined in the Energy Policy

6 Act of 1992.

7 (r) The term ‘‘public utility holding company’’ means

8 (A) any company that directly or indirectly owns, controls,

9 or holds with power to vote, 10 percent or more of the

10 outstanding voting securities of a public utility company

11 or of a holding company of any public utility company;

12 and (B) any person, determined by the Securities and Ex13 change Commission, after notice and opportunity for hear14 ing, to exercise directly or indirectly (either alone or pur15 suant to an arrangement or understanding with one or

16 more persons) such a controlling influence over the man17 agement or policies of any public utility or holding com18 pany as to make it necessary or appropriate for the protec19 tion of consumers with respect to rates that such person

20 be subject to the obligations, duties, and liabilities imposed

21 in this title upon holding companies.

22 (s) The term ‘‘renewable energy’’ means electricity

23 generated from solar, wind, waste, including municipal

24 solid waste, biomass, hydroelectric or geothermal re25 sources.
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1 (t) The term ‘‘Renewable Energy Credit’’ means a

2 tradable certificate of proof that one unit (as determined

3 by the Commission) of renewable energy was generated

4 by any person.

5 (u) The term ‘‘retail electric competition’’ means the

6 ability of each consumer in a particular State to purchase

7 retail electric energy from any person seeking to sell elec8 tric energy to such consumer.

9 (v) The term ‘‘retail electric energy’’ means electric

10 energy and ancillary services sold for ultimate consump11 tion.

12 (w) The term ‘‘retail electric energy provider’’ means

13 any person who distributes retail electric energy to con14 sumers regardless of whether the consumers purchase

15 such energy from the provider or an alternative supplier.

16 A retail electric energy provider may also be a retail elec17 tric energy supplier.

18 (x) The term ‘‘retail electric energy supplier’’ means

19 any person which sells retail electric energy to consumers.

20 (y) The term ‘‘retail stranded costs’’ means all legiti21 mate, prudent, verifiable and non-mitigatable costs in22 curred by an electric utility company in all of its genera23 tion assets which would have been recoverable in retail

24 rates but for the implementation of retail electric competi25 tion, less the total market value of these assets after retail
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1 electric competition is implemented. Binding power pur2 chase contracts and regulatory assets, the costs of which

3 would have been recovered but for the implementation of

4 retail electric competition, shall be considered generation

5 assets for purposes of this subsection.

6 (z) The term ‘‘rural electric cooperative’’ means a

7 corporation that is currently paying off a loan for the pur8 poses of providing electric service from the Administrator

9 of the Rural Electrification Administration or the Rural

10 Utilities Service under the Rural Electrification Act of

11 1936.

12 (aa) The term ‘‘State’’ means any State or the Dis13 trict of Columbia.

14 (bb) The term ‘‘State regulatory authority’’ means

15 the regulatory body of a State or municipality having sole

16 jurisdiction to regulate rates and charges for the distribu17 tion of electric energy to consumers within the State or

18 municipality.

19 (cc) The term ‘‘subsidiary company’’ of a holding

20 company means—

21 (1) any company 10 percent or more of the out22 standing voting securities of which are directly or in23 directly owned, controlled, or held with power to

24 vote, by such holding company; and
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1 (2) any person the management or policies of

2 which the Securities and Exchange Commission,

3 after notice and opportunity for hearing, determines

4 to be subject to a controlling influence, directly or

5 indirectly, by such holding company (either alone or

6 pursuant to an arrangement or understanding with

7 one or more other persons) so as to make it nec8 essary for the protection of consumers that such per9 son be subject to the obligations, duties, and liabil10 ities imposed upon subsidiary companies of public

11 utility holding companies.

12 (dd) The term ‘‘transmission system’’ means all fa13 cilities, including federally-owned facilities, transmitting

14 electricity in interstate commerce in a particular region,

15 including all facilities transmitting electricity in the State

16 of Texas and those providing international interconnec17 tions, but does not include local distribution facilities as

18 determined by the Commission.

19 (ee) The term ‘‘wholesale electric energy’’ means elec20 tric energy and ancillary services sold for resale.

21 (ff) The term ‘‘wholesale electric energy supplier’’

22 means any person which sells wholesale electric energy.

23 (gg) The term ‘‘wholesale stranded costs’’ shall have

24 the same meaning as in the Commission’s Order No. 888.
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1 (hh) The term ‘‘voting security’’ means any security

2 presently entitling the owner or holder thereof to vote in

3 the direction or management of the affairs of a company.

4 SEC. 4. SEVERABILITY.

5 If any provision of this Act, or the application of such

6 provision to any person or circumstance, shall be held in7 valid, the remainder of the Act, and the application of

8 such provision to persons or circumstances other than

9 those as to which it is held invalid, shall not be affected

10 thereby.

11 SEC. 5. ENFORCEMENT.

12 (a) VIOLATION OF THE ACT.—If any individual or

13 corporation or any other retail electric energy supplier or

14 provider fails to comply with the requirements of this Act,

15 any aggrieved person may bring an action against such

16 entity to enforce the requirements of this Act in the appro17 priate Federal district court.

18 (b) STATE OR COMMISSION ACTION.—Notwithstand19 ing any other provision of law, any person seeking redress

20 from an action taken by a State regulatory authority, the

21 Commission or a regulatory board pursuant to this Act

22 shall bring such action in the appropriate circuit of the

23 United States Court of Appeals.
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1 TITLE I—ELECTRIC COMPETITION

2 SEC. 101. MANDATORY RETAIL ACCESS.

3 (a) CUSTOMER CHOICE.—Beginning on January 1,

4 2002, each consumer shall have the right to purchase re5 tail electric energy from any person offering to sell retail

6 electric energy to such consumer, subject to any limita7 tions imposed pursuant to section 104(a) of this Act.

8 (b) LOCAL DISTRIBUTION AND RETAIL TRANS9 MISSION FACILITIES.—Beginning on January 1, 2002, all

10 persons seeking to sell retail electric energy shall have rea11 sonable and nondiscriminatory access, on an unbundled

12 basis, to the local distribution and retail transmission fa13 cilities of all retail electric energy providers and all ancil14 lary services.

15 SEC. 102. AGGREGATION.

16 Subject to any limitations imposed pursuant to sec17 tion 104(a) of this Act, a group of consumers or any per18 son acting on behalf of such group may purchase or ac19 quire retail electric energy for the members of the group

20 if they are located in a State or States where there is retail

21 electric competition.

22 SEC. 103. PRIOR IMPLEMENTATION.

23 (a) STATE ACTION.—Nothing in the Federal Power

24 Act (16 U.S.C. 824 et seq.) shall be deemed to prohibit

25 a State or State regulatory authority, if authorized under
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1 State law, from requiring retail electric energy providers

2 selling retail electric energy to consumers in such State

3 to provide reasonable and nondiscriminatory access, on an

4 unbundled basis, to its local distribution facilities and all

5 ancillary services to any retail electric energy supplier

6 prior to January 1, 2002.

7 (b) GRANDFATHER.—Legislation enacted by a State

8 or a regulation issued by a State regulatory authority

9 which has the effect of providing all consumers in such

10 State the opportunity to purchase retail electric energy

11 from any retail electric energy supplier by January 1,

12 2002 and provides electric utility companies with the op13 portunity to recover their retail stranded costs as defined

14 by this Act (unless there is an agreement between a State

15 or State regulatory authority and a retail electric energy

16 provider which provides for a different level of recovery),

17 shall be deemed to be in compliance with the requirements

18 of sections 101 and 105 of this Act.

19 (c) RECIPROCITY.—A State or State regulatory au20 thority that provides for retail electric competition may

21 preclude any retail electric energy provider selling retail

22 electric energy to consumers in another State and their

23 affiliates from selling retail electric energy to consumers

24 in the State with retail electric competition if the retail

25 electric energy providers does not provide reasonable and
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1 nondiscriminatory access, on an unbundled basis, to its

2 local distribution facilities to any retail electric energy sup3 plier.

4 SEC. 104. STATE REGULATION.

5 (a) STATE REQUIREMENTS.—A State or a State reg6 ulatory authority may impose requirements on persons

7 seeking to sell retail electric energy to consumers in that

8 State which are intended to promote the public interest,

9 including requirements related to generation reliability

10 and the provision of information to consumers and other

11 retail electric energy suppliers. Any such requirements

12 must be applied on a nondiscriminatory basis and may not

13 be used to exclude any class of potential suppliers, such

14 as retail electric energy providers, from the opportunity

15 to sell retail electric energy.

16 (b) MAINTENANCE OF STATE AUTHORITY.—Nothing

17 in this Act is intended to prohibit a State from enacting

18 laws or imposing regulations related to retail electric en19 ergy service that are consistent with the requirements of

20 this Act.

21 (c) CONTINUED STATE AUTHORITY OVER DISTRIBU22 TION.—A State or State regulatory authority may con23 tinue to regulate local distribution service currently sub24 ject to State regulation, including billing and metering in

25 any manner consistent with this Act.
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1 SEC. 105. RETAIL STRANDED COST RECOVERY.

2 (a) APPLICATION FOR DETERMINATION.—Except as

3 provided in subsection (b) an electric utility company sub4 ject to the ratemaking jurisdiction of a State regulatory

5 authority prior to date of enactment of this Act may sub6 mit an application to the State regulatory authority seek7 ing a determination to its total stranded costs in that

8 State if—

9 (1) the State regulatory authority has issued a

10 regulation or the State has enacted legislation re11 quiring retail electric competition which does not

12 provide for the full recovery of retail stranded costs;

13 or

14 (2) the electric utility company’s retail distribu15 tion customers have access to retail competition as

16 a result of the requirements of Section 101 of this

17 Act.

18 (3) If a State regulatory authority fails to de19 termine the electric utility company’s retail stranded

20 costs within 18 months after the date upon which

21 the company applied for a determination of its

22 stranded costs, the Commission shall determine the

23 company’s retail stranded costs.

24 (b) NONREGULATED UTILITIES.—A municipal or

25 rural electric cooperative that seeks to recover its retail
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1 stranded costs may determine its total retail stranded

2 costs.

3 (c) RIGHT OF RECOVERY.—(1) An electric utility

4 company, municipal utility or retail electric cooperative

5 shall be entitled to full recovery of its retail stranded costs,

6 as determined pursuant to subsection (a) or (b), over a

7 reasonable period of time through a non-bypassable

8 Stranded Cost Recovery Charge imposed on its customers.

9 (2) A rural electric cooperative which sells wholesale

10 electric energy to rural electric cooperative retail electric

11 energy providers or a joint action agency which sells

12 wholesale electric energy to municipal retail electric energy

13 providers may recover wholesale stranded costs from such

14 rural electric cooperative or municipal retail electric en15 ergy providers. Such cost recovery shall be deemed a retail

16 stranded cost of the rural electric cooperative or municipal

17 retail energy provider.

18 (d) PROHIBITION ON COST-SHIFTING.—(1) No class

19 of consumers in a State shall be assessed a Stranded Cost

20 Recovery Charge that a State regulatory authority or the

21 Commission, whichever is applicable, determines is in ex22 cess of the class’ proportional responsibility for the retail

23 electric energy provider’s costs that existed prior to the

24 implementation of retail electric competition in such State.
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1 (2) Customers of a retail electric energy provider that

2 serves consumers in more than one State or that is affili3 ated with another retail electric energy provider shall only

4 be responsible for stranded costs associated with retail

5 electric competition in the State or area in which such cus6 tomers are located.

7 (e) PRIOR PRUDENCE DETERMINATIONS.—Nothing

8 in this Act is intended to affect or modify or permit the

9 modification of a final determination made by the Com10 mission or a State regulatory authority or an agreement

11 entered into by the Commission or a State regulatory au12 thority with regard to the prudence of any costs associated

13 with a particular generating facility or contract.

14 SEC. 106. WHOLESALE STRANDED COST RECOVERY.

15 (a) COMMISSION REGULATION.—The Commission

16 shall have sole jurisdiction to determine and provide for

17 the recovery of wholesale stranded costs associated with

18 wholesale electric competition with regard to public utili19 ties subject to jurisdiction of the Commission pursuant to

20 the Federal Power Act.

21 (b) REGIONAL GENERATING FACILITIES.—

22 (1) The consent of Congress is given for the

23 creation of a regional board if—

24 (A) each State regulatory authority regu25 lating an affiliate of a public utility holding
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1 company with affiliate retail electric energy pro2 viders serving customers in more than one

3 State elects to join such a board;

4 (B) an affiliate of the public utility holding

5 company owns and/or operates a generating fa6 cility and sells power from that facility to two

7 or more affiliates of the same holding company

8 and did not sell retail electric energy prior to

9 January 30, 1997 (hereinafter referred to as

10 the ‘‘wholesale generating company’’); and

11 (C) the public utility holding company no12 tifies each State regulatory authority which reg13 ulates a retail electric energy provider affiliated

14 with the holding company that it intends to

15 seek recovery of the wholesale stranded costs

16 associated with the generating facility or facili17 ties (described in subsection (b)(1)(B)) owned

18 by the wholesale generating company affiliated

19 with such holding company.

20 (2) The regional board shall be formed if each

21 State regulatory authority elects to create the board

22 within six months after receiving the notification de23 scribed in subsection (b)(1)(C). If such elections are

24 not made within the requisite time period, the Com-
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1 mission shall assume the responsibilities of the board

2 as described in this section.

3 (3) The regional board shall have 18 months

4 after the date it is formed to determine, on a unani5 mous basis, the wholesale stranded costs associated

6 with the generating facility which is the subject of

7 the proceeding and to allocate such costs among the

8 retail electric energy provider affiliates of the public

9 utility holding company on a just and reasonable

10 and nondiscriminatory basis.

11 (4) If the regional board fails to make either or

12 both determinations, as described in subsection

13 (b)(3) in the requisite time period, the Commission

14 shall make the determination or determinations that

15 have yet to be made.

16 (5) After its level of wholesale stranded costs is

17 determined pursuant to this subsection, the whole18 sale generating company affiliate of the holding com19 pany shall be entitled to fully recover its stranded

20 costs, over a reasonable period of time, from the re21 tail electric energy provider affiliates to which it sells

22 electric energy pursuant to the procedures estab23 lished by this subsection.

24 (6) A retail electric energy provider’s wholesale

25 stranded cost payment obligations pursuant to this
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1 subsection shall be deemed retail stranded costs for

2 the purposes of section 105 of this Act.

3 SEC. 107. LOST RETAIL BENEFITS.

4 A State may require a retail electric energy provider

5 to compensate its retail customers for lost retail benefits

6 if, after retail competition is implemented, the market

7 value of all of the provider’s generating assets in the rate

8 base prior to the implementation of retail electric competi9 tion is greater than the total costs of these assets that

10 would have been recoverable in retail rates but for the im11 plementation of retail electric competition. No retail elec12 tric energy provider shall be required to compensate its

13 customers in an amount that exceeds the increased market

14 value of its generating assets resulting from the implemen15 tation of retail electric competition.

16 SEC. 108. UNIVERSAL SERVICE.

17 (a) STATE UNIVERSAL SERVICE PROGRAMS.—A

18 State may establish a Universal Service Program that en19 sures that all consumers have access to purchase retail

20 electric energy from at least one retail electric energy sup21 plier at a just and reasonable rate.

22 (b) SERVICE OBLIGATION.—(1) After January 1,

23 2002, each retail electric energy provider located in a

24 State that has not yet established a Universal Service Pro25 gram described in subsection (a) shall be obligated to sell
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1 retail electric energy to, or purchase retail electric energy

2 on behalf of, any of its customers in a particular geo3 graphic area in which a State regulatory authority or the

4 Commission, if the State regulatory authority fails to

5 make a determination pursuant to a request by an affected

6 person, determines that there is not effective retail electric

7 competition in such area and the consumer has not affirm8 atively chosen a retail electric energy supplier.

9 (2) The retail electric energy provider performing the

10 service described in subsection (b)(1) is entitled to a just

11 and reasonable rate from the consumer receiving such

12 service.

13 (c) UNIVERSAL SERVICE FUND.—A State or a State

14 regulatory authority, if authorized by the State, may im15 pose a non-bypassable Universal Service Charge on all

16 customers of every retail electric energy provider in such

17 State to fund all or part of the costs of a Universal Service

18 Program, including the partial or full payment of the

19 charges a provider may recover pursuant to subsection

20 (b)(2).

21 SEC. 109. PUBLIC BENEFITS.

22 Nothing in this Act shall prohibit a State or State

23 regulatory authority from assessing charges on retail con24 sumers of energy to fund public benefits programs such

25 as those designed to aid low-income energy consumers,
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1 promote energy research and development or achieve en2 ergy efficiency and conservation.

3 SEC. 110. RENEWABLE ENERGY.

4 (a) MINIMUM RENEWABLE REQUIREMENT.—Begin5 ning on January 1, 2004 and each year thereafter, every

6 retail electric energy supplier shall submit to the Commis7 sion Renewable Energy Credits in an amount equal to the

8 required annual percentage of the total retail electric en9 ergy sold by such supplier in the preceding calendar year.

10 (b) STATE RENEWABLE ENERGY PROGRAMS.—Noth11 ing in this section shall be construed to prohibit any State

12 or any State regulatory authority from requiring addi13 tional renewable energy generation in that State under

14 any program adopted by the State.

15 (c) REQUIRED ANNUAL PERCENTAGE.—Beginning in

16 calendar year 2003, the required annual percentage for

17 each retail electric energy supplier shall be 5 percent.

18 Thereafter, the required annual percentage for each such

19 supplier shall be 9 percent beginning in calendar year

20 2008 and 12 percent beginning in calendar year 2013.

21 (d) SUBMISSION OF CREDITS.—A retail electric en22 ergy supplier may satisfy the requirements of subsection

23 (a) through the submission of—
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1 (1) Renewable Energy Credits issued by the

2 Commission under this section for renewable energy

3 sold by such supplier in such calendar year.

4 (2) Renewable Energy Credits issued by the

5 Commission under this section to any other retail

6 electric energy supplier for renewable energy sold in

7 such calendar year by such other supplier and ac8 quired by such retail electric energy supplier.

9 (3) Any combination of the foregoing.

10 A Renewable Energy Credit that is submitted to the Com11 mission for any year may not be used for any other pur12 pose thereafter.

13 (e) ISSUANCE OF RENEWABLE ENERGY CREDITS.—

14 (1) The Commission shall establish by rule

15 after notice and opportunity for hearing but not

16 later than one year after the date of enactment of

17 this Act, a National Renewable Energy Trading Pro18 gram to issue Renewable Energy Credits to retail

19 electric suppliers. Renewable Energy Credits shall be

20 identified by type of generation and the State in

21 which the facility is located. Under such program,

22 the Commission shall issue—

23 (A) one-half of one Renewable Energy

24 Credit to any retail electric energy supplier who
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1 sells one unit of renewable energy generated at

2 a large hydroelectric facility;

3 (B) one Renewable Energy Credit to any

4 retail electric energy supplier who sells one unit

5 of renewable energy generated at a facility,

6 other than a large hydroelectric facility, built

7 prior to the date of enactment of this Act; and

8 (C) two Renewable Energy Credits to any

9 retail electric supplier who sells one unit of re10 newable energy generated at a facility, other

11 than a large hydroelectric facility, built on or

12 after the date of enactment of this Act.

13 (2) The Commission shall impose and collect a

14 fee on recipients of Renewable Energy Credits in an

15 amount equal to the administrative costs of issuing,

16 recording, monitoring the sale or exchange, and

17 tracking such Credits.

18 (f) SALE OR EXCHANGE.—Renewable Energy Credits

19 may be sold or exchanged by the person issued or the per20 son who acquires the Credit. A Renewable Energy Credit

21 for any year that is not used to satisfy the minimum re22 newable sales requirement of this section for that year

23 may not be carried forward for use in another year. The

24 Commission shall promulgate regulations to provide for

25 the issuance, recording, monitoring the sale or exchange,
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1 and tracking of such Credits. The Commission shall main2 tain records of all sales and exchanges of Credits. No such

3 sale or exchange shall be valid unless recorded by the

4 Commission.

5 (g) USE OF PROCEEDS BY BPA.—The Administrator

6 of the Bonneville Power Administration shall use the pro7 ceeds from the sale of any Renewable Energy Credit is8 sued to the Bonneville Power Administration under this

9 section for its retail electric energy sales to repay the Ad10 ministration’s outstanding debt to the United States

11 Treasury and bondholders of securities backed by the Bon12 neville Power Administration.

13 (h) RULES AND REGULATIONS.—The Commission

14 shall promulgate such rules and regulations as may be

15 necessary to carry out this section, including such rules

16 and regulations requiring the submission of such informa17 tion as may be necessary to verify the annual electric gen18 eration and renewable energy generation which is supplied

19 by any person applying for Renewable Energy Credits

20 under this section or to verify and audit the validity of

21 Renewable Energy Credits submitted by any person to the

22 Commission.

23 (i) ANNUAL REPORTS.—The Commission shall gath24 er available data and measure compliance with the re25 quirements of this section and the success of the National
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1 Renewable Energy Trading Program established under

2 this section. On an annual basis not later than May 31

3 of each year, the Commission shall publish a report for

4 the previous year that includes compliance data, National

5 Renewable Energy Trading Program results, and steps

6 taken to improve the Program results.

7 (j) SUNSET.—The requirements of this section shall

8 cease to apply on December 31, 2019.

9 SEC. 111. DETERMINATION OF LOCAL DISTRIBUTION

10 FACILITIES.

11 (a) APPLICATION BY STATE REGULATORY AUTHOR12 ITY.—A State regulatory authority may apply to the Com13 mission for a determination whether a particular facility

14 used for the transportation of electric energy located in

15 such State is a local distribution facility subject to the ju16 risdiction of that State regulatory authority or is a trans17 mission facility subject to the jurisdiction of the Commis18 sion.

19 (b) COMMISSION FINDINGS.—If an application is

20 submitted pursuant to subsection (a) the Commission

21 shall make a determination giving the maximum prac22 ticable deference to the position taken by the State regu23 latory authority, in accordance with the following factors

24 associated with the facility:

25 (1) function and purpose;
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1 (2) size;

2 (3) location;

3 (4) voltage level and other technical characteris4 tics;

5 (5) historic, current and planned usage pat6 terns;

7 (6) interconnection and coordination with other

8 facilities; and

9 (7) any other factor the Commission deems rel10 evant.

11 SEC. 112. TRANSMISSION.

12 (a) TRANSMISSION REGIONS.—Within two years

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

14 shall establish the broadest feasible transmission regions

15 and designate an Independent System Operator to manage

16 and operate the transmission system in each region begin17 ning on January 1, 2002. In establishing transmission re18 gions and designating Independent System Operators the

19 Commission shall give deference to Independent System

20 Operators approved by the Commission prior to the date

21 of enactment of this Act, if it would be consistent with

22 the requirements of this section.

23 (b) INDEPENDENT SYSTEM OPERATORS.—A person

24 designated as an Independent System Operator shall not

25 be subject to the control of—
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1 (1) any person owning any transmission facili2 ties located in the region in which the Independent

3 System Operator will operate; or

4 (2) any retail electric energy supplier selling re5 tail electric energy to consumers in the region in

6 which the Independent System Operator will oper7 ate.

8 (c) TRANSMISSION REGULATION.—

9 (1) The Commission shall continue to have au10 thority over the transmission of electric energy in

11 interstate commerce by the Independent System Op12 erator within the transmission region designated by

13 the Commission.

14 (2) The Commission shall have authority over

15 the transmission of electric energy in interstate com16 merce between two or more transmission regions

17 designated by the Commission.

18 (3) Sections 212(f) and 212(j) of the Federal

19 Power Act (16 U.S.C. 824k(f)) are repealed effective

20 January 1, 2002.

21 (4) Section 212(g) of the Federal Power Act

22 (16 U.S.C. 824k(g)) is amended by adding ‘‘prior to

23 January 1, 2002’’ immediately following ‘‘utilities’’.

24 (5) Section 212(h) of the Federal Power Act

25 (16 U.S.C. 824k(h)—
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1 (A) shall not apply after the date of enact2 ment of this Act where a retail electric energy

3 supplier is seeking access to a transmission fa4 cility for the purpose of selling retail electric en5 ergy to a consumer located in a State that has

6 authorized retail electric competition prior to

7 January 1, 2002; or

8 (B) is repealed effective January 1, 2002.

9 (f) RULES.—On or before January 1, 2001, the Com10 mission shall issue binding rules governing oversight of the

11 Independent System Operators and designed to promote

12 transmission reliability and efficiency and competition

13 among retail and wholesale electric energy suppliers, in14 cluding rules related to transmission rates that inhibit

15 competition and efficiency.

16 SEC. 113. COMPETITIVE GENERATION MARKETS.

17 (a) MERGERS.—

18 (1) Section 203(a) of the Federal Power Act

19 (16 U.S.C. 824(a)) is amended by adding ‘‘including

20 the promotion of competitive wholesale and retail

21 electric generation markets,’’ immediately following

22 ‘‘public interest’’.

23 (2) Section 203 of the Federal Power Act (16

24 U.S.C. 824b) is further amended by adding at the

25 end the following:
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1 ‘‘(c) ACQUISITION OF NATURAL GAS UTILITY COM2 PANY.—No public utility shall acquire the facilities or se3 curities of a natural gas utility company unless the Com4 mission finds that such acquisition is in the public inter5 est.

6 ‘‘(d) DEFINITION.—For purposes of this section, the

7 term ‘natural gas utility company’ means any company

8 that owns or operates facilities used for the transportation

9 at wholesale, or the distribution at retail (other than the

10 distribution only in enclosed portable containers) of natu11 ral or manufactured gas for heat, light, or power.’’.

12 (b) MARKET POWER.—The Commission may take

13 such actions as it determines are necessary, including the

14 following:

15 (1) ordering the physical connection of generat16 ing or transmission facilities,

17 (2) ordering a transmitting utility (as defined

18 in section 3(23) of the Federal Power Act (16

19 U.S.C. 796(23)) to provide transmission services (in20 cluding any enlargement of transmission capacity

21 (consistent with applicable state law) necessary to

22 provide such services), or

23 (3) requiring the divestiture of generating or

24 transmission facilities,
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1 in order to prohibit any retail or wholesale electric energy

2 supplier or retail electric energy provider or any affiliate

3 thereto, from using its ownership or control of resources

4 to maintain a situation inconsistent with effective competi5 tion among retail and wholesale electric suppliers.

6 SEC. 114. NUCLEAR DECOMMISSIONING COSTS.

7 To ensure safety with regard to the public health and

8 safe decommissioning of nuclear generating units, any re9 tail and wholesale electric energy supplier owning nuclear

10 generating units prior to the date of enactment of this

11 Act shall recover all reasonable costs (as determined by

12 the Commission and relevant State regulatory authorities)

13 associated with Federal and State requirements for the

14 decommissioning of such nuclear generating units pursu15 ant to a non-bypassable charge imposed on all consumers

16 located in the service territories purchasing power, or that

17 had purchased power, from such nuclear generating units.

18 In overseeing the non-bypassable charge, a State regu19 latory authority may take into account the greater cost

20 responsibility of those consumers which continue to pur21 chase power generated at a nuclear unit.

22 SEC. 115. RIGHT TO KNOW.

23 Beginning on January 1, 2002, the Commission shall

24 ensure that each retail electric energy supplier discloses

25 to the public information on the types of fuel used to gen-
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1 erate the electricity sold by the supplier, including the per2 centage of the electric energy sold by the supplier that is

3 generated by each fuel type.

4 SEC. 116. EXEMPTION OF ALASKA AND HAWAII.

5 This title shall not apply to any person located in

6 Alaska or Hawaii with regard to any activity or trans7 action occurring in Alaska or Hawaii.

8 TITLE II—PUBLIC UTILITY HOLDING

9 COMPANIES

10 SEC. 201. REPEAL OF THE PUBLIC UTILITY HOLDING COM11 PANY ACT OF 1935.

12 The Public Utility Holding Company Act of 1935, as

13 amended, 15 U.S.C. 79 et seq., is hereby repealed, effec14 tive one year from the date of enactment of this Act.

15 SEC. 202. EXEMPTIONS.

16 (a) FEDERAL AND STATE AGENCIES.—No provision

17 of this title shall apply to: (1) the United States, (2) a

18 State or any political subdivision of a State, (3) any for19 eign governmental authority not operating in the United

20 States, (4) any agency, authority, or instrumentality of

21 any of the foregoing, or (5) any officer, agent, or employee

22 of any of the foregoing acting as such in the course of

23 his official duty.

24 (b) UNNECESSARY PROVISIONS.—The Commission,

25 by rule or order, may conditionally or unconditionally ex-
33

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1 empt any person or transaction, or any class or classes

2 of persons or transactions, from any provision or provi3 sions of this title or of any rule or regulation thereunder,

4 if the Commission finds that regulation of such person or

5 transaction is not relevant to the rates of a public utility

6 company. The Commission shall not grant such as exemp7 tion, except with regard to section 204 of this Act, unless

8 all affected State regulatory authorities consent.

9 (c) RETAIL COMPETITION.—The provisions of this

10 title shall not apply to a holding company and every asso11 ciate company of such holding company if the Commission

12 certifies that the retail customers of every public utility

13 subsidiary of such holding company have access to retail

14 electric competition and each State regulatory authority

15 regulating the retail electric energy provider subsidiaries

16 of the holding company certify that they will have suffi17 cient access to the holding company’s books and records

18 relevant to their regulatory responsibilities.

19 SEC. 203. FEDERAL ACCESS TO BOOKS AND RECORDS.

20 (a) PROVISION OF BOOKS AND RECORDS.—Every

21 holding company and associate company thereof shall

22 maintain, and make available to the Commission, such

23 books, records, accounts, and other documents as the

24 Commission deems relevant to costs incurred by a public

25 utility company that is an associate company of such hold-
34

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1 ing company and necessary or appropriate for the protec2 tion of consumers with respect to rates.

3 (b) EXAMINATION OF BOOKS AND RECORDS.—The

4 Commission may examine the books and records of any

5 company in a holding company system, or any affiliate

6 thereof, as the Commission deems relevant to costs in7 curred by a public utility company within such holding

8 company system and necessary or appropriate for the pro9 tection of consumers with respect to rates.

10 (c) PROTECTED INFORMATION.—No member, officer,

11 or employee of the Commission shall divulge any fact or

12 information that may come to his knowledge during the

13 course of examination of books, accounts, or other infor14 mation as hereinbefore provided, except insofar as he may

15 be directed by the Commission or by a court.

16 SEC. 204. STATE ACCESS TO BOOKS AND RECORDS.

17 (a) PROVISION OF BOOKS AND RECORDS.—Every

18 holding company and associate company thereof, shall

19 maintain, and make available to each State regulatory au20 thority regulating the rates of any public utility subsidiary

21 of such holding company, such books, records, accounts,

22 and other documents as the State regulatory authority

23 deems relevant to costs incurred by a public utility com24 pany that is an associate company of such holding com-
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1 pany and necessary or appropriate for the protection of

2 consumers with respect to rates.

3 (b) PROTECTED INFORMATION.—No member, officer,

4 or employee of a State regulatory authority shall divulge

5 any fact or information that may come to his knowledge

6 during the course of examination of books, accounts, or

7 other information as hereinbefore provided, except insofar

8 as he may be directed by the State regulatory authority

9 or a court.

10 SEC. 205. AFFILIATE TRANSACTIONS.

11 (a) INTERAFFILIATE TRANSACTIONS.—Both the

12 Commission, with regard to wholesale rates, and State

13 regulatory authorities, with regard to retail rates, shall

14 have the authority to determine whether a public utility

15 company may recover in rates any costs of goods and serv16 ices acquired by such public utility company from an asso17 ciate company after the date of enactment regardless of

18 when the contract for the acquisition of such goods and

19 services was entered into.

20 (b) ASSOCIATE COMPANIES.—Both the Commission,

21 with regard to wholesale rates, and State regulatory au22 thorities, with regard to retail rates, shall have the author23 ity to determine whether a public utility company may re24 cover in rates any costs associated with an activity per25 formed by an associate company.
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1 (c) INTERAFFILIATE POWER TRANSACTIONS.—

2 (1) Each State regulatory authority shall have

3 the authority to examine the prudence of a wholesale

4 electric power purchase made by a public utility,

5 which is not an associate company of a public utility

6 holding company, providing retail electric service

7 subject to regulation by the State regulatory author8 ity.

9 (2) Each State regulatory authority shall have

10 the authority to examine the prudence of a wholesale

11 electric power purchase made by a public utility,

12 which is an associate company of a public utility

13 holding company, providing retail electric service

14 subject to regulation by the State regulatory author15 ity, provided that the costs related to such purchase

16 have not been allocated among two or more associ17 ated companies of such public utility holding com18 pany, by the Commission prior to the date of enact19 ment and there is no subsequent reallocation after

20 the date of enactment.

21 SEC. 206. CLARIFICATION OF REGULATORY AUTHORITY.

22 No public utility which is an associate company of

23 a holding company may recover in rates from wholesale

24 or retail customers any costs (other than wholesale or re25 tail stranded costs) not associated with the provision of
37

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1 electric service to such customers, including those direct

2 and indirect costs related to investments not associated

3 with the provision of electric service to those customers,

4 unless the Commission, with regard to wholesale rates, or

5 a State regulatory authority, with regard to retail rates,

6 explicitly consents.

7 SEC. 207. EFFECT ON OTHER REGULATION.

8 Nothing in this Act shall preclude a State regulatory

9 authority from exercising its jurisdiction under otherwise

10 application law to protect utility consumers.

11 SEC. 208. ENFORCEMENT.

12 The Commission shall have the same powers as set

13 forth in sections 306 through 317 of the Federal Power

14 Act (16 U.S.C. 825d–825p) to enforce the provisions of

15 this title.

16 SEC. 209. SAVINGS PROVISION.

17 Nothing in this title prohibits a person from engaging

18 in activities in which it is legally engaged or authorized

19 to engage on the date of enactment of this title provided

20 that it continues to comply with the terms of any author21 ization, whether by rule or by order.

22 SEC. 210. IMPLEMENTATION.

23 The Commission shall promulgate regulations nec24 essary or appropriate to implement this title not later than

25 six months after the date of enactment of this Act.
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1 SEC. 211. RESOURCES.

2 All books and records that relate primarily to the

3 function hereby vested in the Commission shall be trans4 ferred from the Securities and Exchange Commission to

5 the Commission.

6 TITLE III—PUBLIC UTILITY REGULATORY

7 POLICIES ACT

8 SEC. 301. DEFINITION.

9 For purposes of this title, the term ‘‘facility’’ means

10 a facility for the generation of electric energy or an addi11 tion to or expansion of the generating capacity of such

12 a facility.

13 SEC. 302. FACILITIES.

14 Section 210 of the Public Utility Regulatory Policies

15 Act of 1978 (16 U.S.C. 824a–3) shall not apply to any

16 facility which begins commercial operation after the effec17 tive date of this title, except a facility for which a power

18 purchase contract entered into under such section was in

19 effect on such effective date.

20 SEC. 303. CONTRACTS.

21 After the effective date of this title or after the date

22 on which retail electric competition, as defined in title I

23 of this Act, is implemented in all of its service territories,

24 whichever is earlier, no public utility company shall be re25 quired to enter into a new contract or obligation to pur-
39

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1 chase or sell electric energy pursuant to section 210 of

2 the Public Utility Regulatory Policies Act of 1978.

3 SEC. 304. SAVINGS CLAUSE.

4 Notwithstanding sections 302 and 303, nothing in

5 this title shall be construed:

6 (a) As granting authority to the Commission, a State

7 regulatory authority, electric utility company, or electric

8 consumer, to reopen, force, the renegotiation of, or inter9 fere with the enforcement of power purchase contracts or

10 arrangements in effect on the effective date of this Act

11 between a qualifying small power producer and any elec12 tric utility or electric consumer, or any qualifying co13 generator and any electric utility or electric consumer.

14 (b) To affect the rights and remedies of any party

15 with respect to such a power purchase contract or arrange16 ment, or any requirement in effect on the effective date

17 of this Act to purchase or to sell electric energy from or

18 to a qualifying small power production facility or qualify19 ing cogeneration facility.

20 SEC. 305. EFFECTIVE DATE.

21 This title shall take effect on January 1, 2002.

22 TITLE IV—ENVIRONMENTAL PROTECTION

23 SEC. 401. STUDY

24 The Environmental Protection Agency, in consulta25 tion with other relevant federal agencies, shall prepare and
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1 submit a report to Congress by January 1, 2000, which

2 examines the implications of differences in applicable air

3 pollution emissions standards for wholesale and retail elec4 tric generation competition and for public health and the

5 environment. The report shall recommend changes to fed6 eral law, if any are necessary, to protect public health and

7 the environment.

8 TITLE V—BONNEVILLE POWER

9 ADMINISTRATION

10 SEC. 501. FINDINGS AND PURPOSES.

11 (a) FINDINGS.—The Congress finds that:

12 (1) The multi-purpose Federal Columbia River

13 Power System’s Federal and non-Federal dams have

14 provided immeasurable benefits to the Pacific North15 west by providing flood control, renewable hydro16 electric power, irrigation, navigation, and recreation;

17 (2) The dams provide the Northwest with a

18 continuing source of clean and renewable power but,

19 along with over-fishing and other natural and

20 human impacts on the ecosystem, have adversely af21 fected the Columbia Basin’s fish and wildlife;

22 (3) Enactment of the Energy Policy Act of

23 1992 established competition for the wholesale sup24 ply of electricity, and market forces have driven the

25 cost of power down nationally, the Northwest in-
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1 cluded, and has allowed utilities and large users to

2 buy power at rates below those offered by the Bon3 neville Power Administration;

4 (4) Realizing the new economic forces impact5 ing electricity, the four Northwest state governors

6 undertook a year-long review in 1996 of the regional

7 electricity system and made recommendations for

8 the future of the system;

9 (5) Among these recommendations is the sepa10 ration of the transmission and power marketing

11 functions of the Bonneville Power Administration,

12 with Commission oversight of access to Bonneville’s

13 transmission system, and undertaking this separa14 tion in a way that does not impair Bonneville’s abil15 ity to meet its obligations to the U.S. Treasury, fish

16 and wildlife programs, and bondholders of the Wash17 ington Public Power Supply System;

18 (6) There are ongoing efforts by Bonneville to

19 reduce its costs and require accountability of its

20 funds, including those of its funds used for salmon

21 recovery; and

22 (7) There is a need to provide a regional proc23 ess involving the Federal Government, state govern24 ments, tribal governments, utilities and other users

25 of the water of the Columbia and Snake River Sys-
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1 tem, to balance the multiple objectives of the river

2 system.

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

4 (1) To establish authority in a consolidated re5 gional governing body that will balance the multiple

6 uses of the Columbia and Snake River system, for

7 hydroelectric production, for irrigation, for recre8 ation, for the protection and enhancement of fish

9 and wildlife populations, and for flood control, with

10 that body to be responsible and accountable for

11 spending funds for these purposes;

12 (2) To facilitate the maintenance of an open

13 transmission system in the Northwest based on

14 Commission rules and to ensure its reliability; and

15 (3) To assure that the Bonneville Power Ad16 ministration retains the ability to meet its unique fi17 nancial obligations to the U.S. Treasury, to fish and

18 wildlife projects, to the bondholders of the Washing19 ton Public Power Supply System, and to remain a

20 competitive wholesale supplier of electricity.

21 SEC. 502. COLUMBIA RIVER FISH AND WILDLIFE COORDI22 NATION AND GOVERNANCE.

23 This section is reserved.
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1 SEC. 503. PACIFIC NORTHWEST FEDERAL TRANSMISSION

2 ACCESS.

3 The Commission’s rules on nondiscriminatory open

4 access to transmission services provided by public utilities,

5 including its rules on standards of conduct, shall also

6 apply to transmission services provided by the Bonneville

7 Power Administration, except as otherwise provided by the

8 Commission by rule if it is in the public interest, or except

9 as necessitated by the requirements of section 504 or 506

10 of this Act. Except as provided in sections 504 and 508

11 of this Act, rates for transmission imposed by the Admin12 istrator shall continue to be established and reviewed and

13 approved in accordance with the provisions of otherwise

14 applicable Federal laws.

15 SEC. 504. TRANSITION COST MECHANISM.

16 If the Bonneville Power Administration proposes a

17 charge to recover its transition costs resulting from this

18 Act, the Energy Policy Act, or the Commission’s Order

19 No. 888, a transition cost recovery mechanism shall be

20 developed and adopted by the Commission within 180 days

21 of the filing of the proposal with the Commission.

22 SEC. 505. INDEPENDENT SYSTEM OPERATOR PARTICIPA23 TION.

24 Notwithstanding any other provision of law, the Ad25 ministrator of the Bonneville Power Administration may

26 participate in a regulated Independent System Operator
44

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1 subject to the jurisdiction of the Commission pursuant to

2 section 112 of this Act.

3 SEC. 506. FINANCIAL OBLIGATIONS.

4 Section 503, 504 and 505 of this Act shall be inter5 preted and implemented in a manner that does not ad6 versely affect the security of the Bonneville Power Admin7 istration’s Washington Public Power Supply System net8 billing and other third-party financing arrangements.

9 SEC. 507. PROHIBITION ON RETAIL SALES.

10 Except as provided in section 5(d) of the Northwest

11 Power Act (16 U.S.C. 839c(d)), the Administrator shall

12 not market, sell or dispose of electric power to any end

13 use or retail customers that did not have a contract for

14 the purchase of electric power with the Administrator for

15 services to specific facilities as of October 1, 1997.

16 SEC. 508. CLARIFICATION OF COMMISSION AUTHORITY.

17 Section 7(a)(2) of the Pacific Northwest Electric

18 Power Planning and Conservation Act (16 U.S.C.

19 839e(a)(2)) is amended—

20 (1) by deleting the word ‘‘costs,’’ in paragraph

21 (B);

22 (2) by striking the period at the end of para23 graph (C) and inserting in lieu thereof ‘‘, and’’; and

24 (3) by adding at the end thereof the following

25 new paragraph:
45

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1 ‘‘(D) insofar as transmission rates are con2 cerned, the rates do not discriminate between

3 transmission users or classes of users in a man4 ner that has the effect of unreasonably denying

5 transmission access under section 503 of this

6 Act.’’

7 SEC. 509. REPEALED STATUTE.

8 Section 6 of the Federal Columbia River Trans9 mission System Act (16 U.S.C. 838d) is hereby repealed.

10 TITLE VI—TENNESSEE VALLEY AUTHORITY

11 SEC. 601. COMPETITION IN SERVICE TERRITORY.

12 Notwithstanding any other provision of law, begin13 ning on January 1, 2002, all retail and wholesale electric

14 energy suppliers shall have the right to sell retail and

15 wholesale electric energy to persons that currently pur16 chase retail or wholesale electric energy either directly

17 from the Tennessee Valley Authority or persons purchas18 ing electric energy from the Tennessee Valley Authority.

19 SEC. 602. ABILITY TO SELL ELECTRIC ENERGY.

20 (a) TVA.—Notwithstanding any other provision of

21 law, the Tennessee Valley Authority may sell wholesale

22 electric energy to any person, subject to any restrictions

23 imposed pursuant to Section 104(a) of this Act, beginning

24 on January 1, 2002.
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1 (b) POWER CUSTOMERS.—Notwithstanding any

2 other provision of law, persons that currently purchase

3 wholesale electric energy from the Tennessee Valley Au4 thority may sell wholesale and retail electric energy to any

5 persons subject to any restrictions imposed pursuant to

6 section 104(a) of this Act, beginning on January 1, 2002.

7 SEC. 603. TERMINATION OF CONTRACTS.

8 (a) NOTICE..—Beginning on January 1, 2001, the

9 Tennessee Valley Authority shall allow any person that

10 has executed a contract to purchase retail or wholesale

11 electric energy from it to terminate such contract upon

12 one year’s notice.

13 (b) STRANDED COSTS.—Each person holding a con14 tract that is terminated pursuant to subsection (a) shall

15 be responsible for retail or wholesale stranded costs as de16 termined by the Commission.

17 SEC. 604. RATES FOR ELECTRIC ENERGY.

18 (a) ESTABLISHMENT.—Notwithstanding any other

19 provision of law, the Board of Directors of the Tennessee

20 Valley Authority shall establish, and periodically review

21 and revise, rates for the sale and disposition of wholesale

22 and retail electric energy and for the transmission of elec23 tric energy by the Tennessee Valley Authority. Such rates

24 shall be established and, as appropriate, revised to recover,

25 in accordance with sound business principles, the costs as-
47

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1 sociated with the generation, acquisition, conservation,

2 transmission, and distribution of electric energy, including

3 the payment of principal and interest on the Authority’s

4 bonds over a reasonable period.

5 (b) COMMISSION REVIEW.—Rates established under

6 this section shall become effective only upon confirmation

7 and approval by the Commission, upon a finding by the

8 Commission that such rates are sufficient to ensure repay9 ment of the Authority’s bonds over a reasonable number

10 of years after first meeting the Authority’s legitimate, pru11 dent, and verifiable costs.

12 SEC. 605. PRIVATIZATION STUDY.

13 (a) REQUIREMENT FOR PREPARATION OF STUDY.—

14 The Board of Directors of the Tennessee Valley Authority

15 shall prepare a study for selling its electric power program

16 (excluding dams and appurtenant works and structures)

17 to private investors and, not later than two years after

18 the date of enactment of this Act, shall submit such plan

19 to the Congress.

20 (b) CONTENTS OF STUDY.—The study shall consider

21 the following—

22 (1) both the sale of the Authority’s electric

23 power program as a whole and the sale of some or

24 all of its component parts;
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1 (2) alternative means of selling the Authority’s

2 electric power program or its component parts, in3 cluding a public stock offering, a private placement

4 of stock, or the sale of assets; and

5 (3) the effect of any sale on—

6 (A) electric rates and competition in the

7 regional electricity market,

8 (B) the operation of the Authority’s

9 nonpower programs, and

10 (C) the repayment of the Authority’s debt.

11 (c) ADDITIONAL ELEMENTS.—The study shall also

12 include—

13 (1) An estimate of the amount of revenue that

14 the United States Treasury would receive under

15 each of the alternatives considered;

16 (2) the Board’s analysis of the feasibility of

17 each of the alternatives considered and its rec18 ommendation either for retaining the Authority’s

19 power program under federal ownership or the pre20 ferred alternative for selling it to private investors;

21 and

22 (3) the Board’s recommendation of whether the

23 Authority’s dams should—

24 (A) be transferred to the Department of

25 the Army Corps of Engineers and responsibility
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1 for marketing electric energy produced by such

2 dams assigned to the Southeastern Power Mar3 keting Administration, or

4 (B) continue to be controlled by, and the

5 electric energy they produce continue to be

6 marketed by the Tennessee Valley Authority.

7 (d) FURTHER ACTION.—The Board of Directors

8 shall take not action to implement the sale of the

9 Authority’s power program without further legislation au10 thorizing such action.

Æ