I

106TH CONGRESS

1ST SESSION H. R. 2050

To provide consumers with a reliable source of electricity and a choice of

electric providers, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JUNE 8, 1999

Mr. LARGENT (for himself and Mr. MARKEY) introduced the following bill;

which was referred to the Committee on Commerce, and in addition to

the Committees on Ways and Means, Transportation and Infrastructure,

and Resources, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To provide consumers with a reliable source of electricity

and a choice of electric providers, 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 ‘‘Electric Consumers’ Power To Choose Act of 1999’’.

6 (b) TABLE OF CONTENTS.—

Sec. 1. Short title and table of contents.

Sec. 2. Findings and purpose.

TITLE I—CONSUMER CHOICE AND COMPETITION FOR ELECTRIC

UTILITIES
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Sec. 101. Competition for retail electric distribution systems.

‘‘Subtitle F—Retail Electric Competition

‘‘Sec. 151. Definitions.

‘‘Sec. 152. Retail competition for State-regulated local distribution systems.

‘‘Sec. 153. Retail competition for nonregulated local distribution systems.

‘‘Sec. 154. Grandfathering provision.

‘‘Sec. 155. Retail reciprocity.

‘‘Sec. 156. Aggregation for purchase of retail electric energy.

‘‘Sec. 157. State jurisdiction.

‘‘Sec. 158. Relation to NAFTA; imports.

‘‘Sec. 159. Privacy of consumer proprietary information.

Sec. 102. Electric reliability.

Sec. 103. Federal interconnection authorities.

Sec. 104. Consumer protection, market power, and unfair trade practices.

Sec. 105. Antitrust savings clause.

Sec. 106. Mandatory open access for all transmitting utilities.

Sec. 107. Clarification of State and Federal authority over retail transmission

services.

Sec. 108. Authority to establish regional transmission organizations.

Sec. 109. Special provisions respecting BPA and ERCOT transmission.

Sec. 110. Electric company mergers.

Sec. 111. Regional transmission planning agencies.

Sec. 112. Universal and affordable service.

Sec. 113. Conforming and technical amendments to the Federal Power Act.

Sec. 114. Study of grandfathered systems.

Sec. 115. Effective date.

TITLE II—PROVISIONS RESPECTING THE PUBLIC UTILITY

HOLDING COMPANY ACT OF 1935

Sec. 201. Short title.

Sec. 202. Reform of holding company regulation under PUHCA.

Sec. 203. Definitions.

Sec. 204. Federal access to books and records.

Sec. 205. State access to books and records.

Sec. 206. Exemption authority.

Sec. 207. Affiliate transactions.

Sec. 208. Applicability.

Sec. 209. Effect on other regulations.

Sec. 210. Enforcement.

Sec. 211. Savings provisions.

Sec. 212. Implementation.

Sec. 213. Transfer of resources.

Sec. 214. Authorization of appropriations.

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

TITLE III—PROVISIONS RESPECTING THE PUBLIC UTILITY

REGULATORY POLICIES ACT OF 1978

Sec. 301. Short title.

Sec. 302. Findings.

Sec. 303. Prospective repeal.

Sec. 304. Recovery of costs.
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TITLE IV—FEDERAL POWER MARKETING ADMINISTRATIONS AND

TENNESSEE VALLEY AUTHORITY

Subtitle A—Tennessee Valley Authority

Sec. 401. Definitions.

Sec. 402. Wholesale competition in the Tennessee Valley region.

Sec. 403. Tennessee Valley Authority power sales.

Sec. 404. Prohibition on acquisition of new generating resources.

Sec. 405. Renegotiation of long-term contracts.

Sec. 406. Regulation of Tennessee Valley Authority transmission system.

Sec. 407. Regulation of Tennessee Valley Authority distributors.

Sec. 408. Stranded cost recovery.

Sec. 409. Regional transmission planning agencies.

Sec. 410. Application of antitrust law.

Sec. 411. Disposition of surplus local distribution facilities.

Sec. 412. Commission regulations.

Sec. 413. Savings provision.

Subtitle B—Bonneville Power Administration

Sec. 421. Definitions.

Sec. 422. Application of Federal Power Act.

Sec. 423. Surcharge on transmission rates to recover otherwise nonrecoverable

costs.

Sec. 424. Complaints.

Sec. 425. Review of commission orders.

Sec. 426. Antitrust laws application to BPA.

Sec. 427. Conforming amendments.

Subtitle C—Other Power Marketing Administrations

Sec. 431. Definitions.

Sec. 432. Accounting.

Sec. 433. Regional transmission planning agencies.

Sec. 434. Application of antitrust law.

TITLE V—RENEWABLE ENERGY

Sec. 501. Renewable portfolio standard.

Sec. 502. Net metering.

TITLE VI—PROVISIONS RELATING TO THE INTERNAL REVENUE

CODE

Sec. 601. 5-year extension of credit for producing electricity from renewable resources.

Sec. 602. Credit for energy efficiency improvements to existing homes.

Sec. 603. Business credit for construction of new energy efficient home.

Sec. 604. Tax credit for combined heat and power system property.

Sec. 605. Tax-exempt bond financing of certain electric facilities.

1 SEC. 2. FINDINGS AND PURPOSE.

2 (a) FINDINGS.—The Congress finds the following:
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1 (1) Electricity is used in virtually every home,

2 commercial enterprise, and manufacturing facility in

3 the United States; is a basic element of the inter4 state and foreign commerce of the United States;

5 and immediately, directly, and substantially affects

6 interstate and foreign commerce.

7 (2) Americans consume electricity worth more

8 than $250,000,000,000 a year, approximately half of

9 which is for residential purposes, making the month10 ly electric utility bill one of the largest expenses for

11 most households.

12 (3) Traditional monopoly rate-of-return regula13 tion of electricity has failed. It has stifled competi14 tion, resulting in high electricity rates for many con15 sumers and few incentives for technological innova16 tion and good customer service by electric utilities.

17 (4) High electricity rates are regressive, placing

18 a disproportionate burden on poor ratepayers. A

19 competitive electric generation industry should pro20 vide benefits to all consumers by fostering innova21 tion and efficiency, rather than by allowing cost

22 shifting that lowers rates to some consumers but

23 raises rates to others.
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1 (5) The cost of electricity has a direct effect on

2 the price, profitability, and competitiveness of goods

3 and services produced in the United States.

4 (6) Lower priced electricity can be realized by

5 giving all American consumers the right to choose

6 among suppliers of electricity in a competitive mar7 ket, while maintaining, if not improving, the reli8 ability of service those consumers have come to ex9 pect.

10 (7) The development of vibrant competition in

11 the retail market for electric energy will—

12 (A) reduce the costs of electric energy to

13 even the smallest consumers of electricity;

14 (B) create jobs as American businesses are

15 able to lower costs and better compete in world

16 markets and against foreign competition here at

17 home; and

18 (C) result in a more efficient utility indus19 try.

20 (8) The Nation’s interconnected electricity gen21 eration, transmission, and local distribution systems

22 critically affect the economy and productivity of the

23 United States, and the health, safety, welfare, and

24 security of all Americans.
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1 (9) Congress has authority to enact laws, under

2 the Commerce Clause of the United States Constitu3 tion, regarding the generation, transmission, dis4 tribution, and sale of electric energy in interstate

5 commerce at the wholesale and retail levels.

6 (10) Only Congress can ensure that a competi7 tive retail electricity market is established through8 out the United States on an expeditious but orderly

9 basis. Regional and State variations, however, re10 quire that State regulatory authorities should receive

11 deference in implementing competition and consumer

12 choice in retail electricity markets.

13 (11) The success of competition in the whole14 sale electricity market under the Energy Policy Act

15 of 1992 and open access under Orders No. 888 and

16 889 of the Federal Energy Regulatory Commission,

17 as well as innovations in electricity generation and

18 transmission technologies, indicate that with appro19 priate transition measures, retail customer choice

20 and generation competition can substantially benefit

21 all classes of United States electricity consumers, in22 cluding residential, commercial, industrial, and other

23 consumers.

24 (12) In a competitive generation market, it is in

25 the national interest to continue to encourage the
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1 development of emerging energy technologies in

2 order to ensure energy diversity and security and to

3 protect the environment.

4 (b) PURPOSE.—The purpose of this Act is to allow

5 American electricity consumers to choose among com6 peting providers of electricity, in order to secure lower

7 electricity rates, higher quality services, and a more robust

8 United States economy, and for other purposes.

9 TITLE I—CONSUMER CHOICE

10 AND COMPETITION FOR

11 ELECTRIC UTILITIES

12 SEC. 101. COMPETITION FOR RETAIL ELECTRIC DISTRIBU13 TION SYSTEMS.

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

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

16 and following) is amended by adding the following new

17 subtitle at the end thereof:

18 ‘‘Subtitle F—Retail Electric Competition

19 ‘‘SEC. 151. DEFINITIONS.

20 ‘‘For purposes of this subtitle:

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

22 any person who purchases or offers to purchase any

23 retail electric supply.

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

25 supplier’ means any person who produces, generates,
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1 manufactures, aggregates, markets, brokers, sells, or

2 otherwise supplies electric energy.

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

4 term ‘local distribution company’ means any person

5 which owns, controls, or operates local distribution

6 facilities.

7 ‘‘(4) LOCAL DISTRIBUTION FACILITIES.—The

8 term ‘local distribution facilities’ means any facilities

9 used for the local distribution of electric energy, in10 cluding any facilities determined pursuant to section

11 201 of the Federal Power Act to be so used.

12 ‘‘(5) LOCAL DISTRIBUTION SERVICE.—The

13 term ‘local distribution service’ includes all services

14 necessary to, or customarily provided in the course

15 of, the delivery of electric energy to a consumer

16 through local distribution facilities, including the

17 construction, maintenance, and operation of local

18 distribution facilities, the metering and billing of re19 tail sales, and related management, accounting, and

20 other services. Such term shall not include the gen21 eration or sale of electric energy.

22 ‘‘(6) NONREGULATED LOCAL DISTRIBUTION

23 COMPANY.—The term ‘nonregulated local distribu24 tion company’ means any local distribution company
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1 other than any State-regulated local distribution

2 company.

3 ‘‘(7) PERSON.—The term ‘person’ means any

4 entity, including an individual, a foreign govern5 mental entity, the United States Government or any

6 instrumentality or authority thereof (including the

7 Tennessee Valley Authority), or a State, or any in8 strumentality, authority, or political subdivision

9 thereof, including any municipality.

10 ‘‘(8) PUBLIC UTILITY.—The term ‘public util11 ity’ means a public utility as defined in section

12 201(e)(1) of the Federal Power Act.

13 ‘‘(9) STATE REGULATED LOCAL DISTRIBUTION

14 COMPANY.—The term ‘State regulated local distribu15 tion company’ means any local distribution company

16 with respect to which a State regulatory authority

17 has ratemaking jurisdiction.

18 ‘‘(10) STATE REGULATORY AUTHORITY.—Not19 withstanding section 3(17) of this Act, the term

20 ‘State regulatory authority’ means any State agency

21 which has ratemaking authority with respect to the

22 provision of local distribution services by any local

23 distribution company (other than such State agen24 cy).
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1 ‘‘(11) TRANSMISSION FACILITIES.—The term

2 ‘transmission facilities’ means any facilities used for

3 the transmission of electric energy, including any fa4 cilities determined pursuant to section 201 of the

5 Federal Power Act to be so used.

6 ‘‘SEC. 152. RETAIL COMPETITION FOR STATE REGULATED

7 LOCAL DISTRIBUTION SYSTEMS.

8 ‘‘(a) STATE ELECTIONS.—

9 ‘‘(1) IN GENERAL.—Every State may elect to

10 require, by no later than January 1, 2002, retail

11 electric competition in accordance with paragraph

12 (2) of this subsection for every State regulated local

13 distribution company providing local distribution

14 service in such State. Such election shall be made by

15 January 1, 2001. No such election may be partial or

16 revocable. Such election shall be conclusively evi17 denced by the submission to the Commission from

18 the State regulatory authority by January 1, 2001,

19 of a notice that the State will require such retail

20 competition.

21 ‘‘(2) RETAIL ELECTRIC COMPETITION.—If a

22 State makes an election under paragraph (1), the

23 State regulatory authority for that State shall estab24 lish such terms and conditions as necessary and ap25 propriate to ensure that—
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1 ‘‘(A) all electric consumers in such State

2 served by State regulated local distribution

3 companies may choose from competing electric

4 suppliers; and

5 ‘‘(B) State regulated local distribution

6 companies shall provide local distribution serv7 ice under rates, charges, terms, and conditions

8 which—

9 ‘‘(i) are just and reasonable and not

10 unduly discriminatory or preferential;

11 ‘‘(ii) identify, offer, and sell local dis12 tribution service separately from any sales

13 of electric energy; and

14 ‘‘(iii) comply with State law and are

15 otherwise in the public interest; and

16 in the case of a local distribution company

17 which is also an electric supplier, such rates,

18 charges, terms, and conditions shall be com19 parable to those applicable to the use of local

20 distribution facilities owned, controlled, or oper21 ated by the company for the local distribution

22 of electric energy supplied by such company.

23 ‘‘(b) OPT OUT OF RETAIL COMPETITION.—If a State

24 regulatory authority does not make the election under sub25 section (a), subsection (c) shall apply unless the State reg-
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1 ulatory authority finds, after notice and opportunity for

2 hearing, that making such election will have a negative

3 impact on the residential class, the commercial class, or

4 the industrial class of customers in that State that cannot

5 be reasonably mitigated. The State regulatory authority

6 shall publish the finding and its basis and shall file a no7 tice with the Commission of its determination by January

8 1, 2001.

9 ‘‘(c) FAILURE TO ELECT OR OPT OUT.—Except for

10 a State covered by section 154 (relating to

11 grandfathering), if a State does not make an election

12 under subsection (a), or file an opt-out notice under sub13 section (b), by January 1, 2001, each State regulated local

14 distribution company providing local distribution service

15 in such State shall establish retail electric competition for

16 its local distribution facilities in accordance with sub17 section (a)(2) by January 1, 2002.

18 ‘‘(d) AUTHORITY TO REQUIRE CHARGES.—Except as

19 provided in subsection (b), nothing in this subtitle shall

20 affect the authority of a State or a State regulatory au21 thority to require, as a condition for the purchase or re22 ceipt by any person located in such State of any retail

23 electric energy or services described in section 201(h) of

24 the Federal Power Act, the payment of any charge deemed
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1 necessary by such State or State regulatory authority for

2 any of the following purposes:

3 ‘‘(1) To recover transition costs.

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

5 available to all customers served by a retail distribu6 tion system.

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

8 retail electric service.

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

11 ‘‘(5) To encourage, in a competitively neutral

12 fashion, environmental, emerging energy tech13 nologies, energy efficiency, or energy conservation

14 programs, or any combination of such programs.

15 ‘‘(6) To provide for transition costs of electric

16 utility workers adversely affected by restructuring.

17 ‘‘(7) To encourage research and development on

18 electric technologies.

19 ‘‘(8) Any combination of the purposes described

20 in paragraphs (1) through (7).

21 Nothing in this subsection shall require a State or State

22 regulatory authority to impose any charges under this sub23 section.

24 ‘‘(e) DISCRIMINATION PROHIBITED.—The calcula25 tion, assessment, or imposition of any fees and charges
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1 described in subsection (d), or imposed pursuant to any

2 other law, shall not unduly discriminate among different

3 classes or categories of electric utilities, local distribution

4 companies, electric energy consumers, or electric suppliers.

5 Nothing in this subtitle shall affect the authority of a

6 State under applicable State law to design rates for local

7 distribution service.

8 ‘‘(f) ENFORCEMENT.—Any person may bring an ac9 tion in the appropriate State court against any State regu10 latory authority or State regulated local distribution com11 pany to require compliance with this section.

12 ‘‘SEC. 153. RETAIL COMPETITION FOR NONREGULATED

13 LOCAL DISTRIBUTION SYSTEMS.

14 ‘‘(a) NONREGULATED LOCAL DISTRIBUTION COMPA15 NIES.—

16 ‘‘(1) ELECTION BY UTILITY.—Every nonregu17 lated local distribution company may elect to estab18 lish, by no later than January 1, 2002, retail com19 petition in accordance with paragraph (2) for its

20 local distribution facilities providing local distribu21 tion service. Such election shall be made by January

22 1, 2001. No such election may be partial or rev23 ocable. For a nonregulated local distribution com24 pany in any State, such election shall be conclusively

25 evidenced by the submission from such company to
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1 the Commission by January 1, 2001, of a notice

2 that the company will provide such retail competi3 tion.

4 ‘‘(2) RETAIL ELECTRIC COMPETITION.—If a

5 nonregulated local distribution company in any State

6 makes an election under paragraph (1), it shall es7 tablish such terms and conditions as it finds nec8 essary and appropriate to ensure that—

9 ‘‘(A) all electric consumers of local dis10 tribution service provided by such company may

11 choose from competing retail electric suppliers;

12 and

13 ‘‘(B) the company shall provide access to

14 its local distribution service under rates,

15 charges, terms, and conditions which—

16 ‘‘(i) are just and reasonable and not

17 unduly preferential or discriminatory;

18 ‘‘(ii) identify, offer, and sell local dis19 tribution service separately from any sales

20 of electric energy;

21 ‘‘(iii) comply with State law and are

22 otherwise in the public interest; and

23 in the case of a local distribution company

24 which is also an electric supplier, such rates,

25 charges, terms, and conditions shall be com-
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1 parable to those applicable to the use of local

2 distribution facilities owned, controlled, or oper3 ated by the company for the local distribution

4 of electric energy supplied by such company.

5 ‘‘(b) OPT OUT OF RETAIL COMPETITION.—If a non6 regulated local distribution company does not make the

7 election under subsection (a), subsection (c) shall apply

8 unless the company finds, after notice and opportunity for

9 hearing, that implementation of retail competition in ac10 cordance with subsection (a) will have a negative impact

11 on the residential class, the commercial class, or the indus12 trial class of customers of that company that cannot be

13 reasonably mitigated. The nonregulated local distribution

14 company shall publish such determination and its basis

15 and shall file a notice with the Commission of its deter16 mination by January 1, 2001.

17 ‘‘(c) FAILURE TO ELECT.—Except for a nonregu18 lated local distribution company covered by section 154

19 (relating to grandfathering), each nonregulated local dis20 tribution company that does not make an election under

21 subsection (a), or file an opt-out notice under subsection

22 (b), by January 1, 2001, shall provide retail competition

23 for its local distribution facilities providing local distribu24 tion service in accordance with subsection (a)(2) by Janu25 ary 1, 2002.
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1 ‘‘(d) CHARGES.—

2 ‘‘(1) AUTHORITY TO REQUIRE CHARGES.—Ex3 cept as provided in subsection (b), nothing in this

4 subtitle shall affect the authority of a nonregulated

5 local distribution company that provides local dis6 tribution service to require, as a condition for the

7 purchase or receipt by any electric consumers receiv8 ing local distribution service provided by such com9 pany, the payment of any charge deemed necessary

10 by such company for any of the following purposes:

11 ‘‘(A) To recover transition costs.

12 ‘‘(B) To ensure that adequate electric serv13 ice is available to all consumers served by such

14 company.

15 ‘‘(C) To ensure and enhance the reliability

16 of retail electric service.

17 ‘‘(D) To fund assistance to low-income

18 customers.

19 ‘‘(E) To encourage, in a competitively neu20 tral fashion, environmental, emerging energy

21 technologies, energy efficiency, or energy con22 servation programs, or any combination of such

23 programs.
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1 ‘‘(F) To provide for transition costs of

2 electric utility workers adversely affected by re3 structuring.

4 ‘‘(G) To encourage research and develop5 ment on electric technologies.

6 ‘‘(H) Any combination of the purposes de7 scribed in subparagraphs (A) through (G).

8 Nothing in this subsection shall require a nonregu9 lated local distribution company to impose any

10 charges under this section.

11 ‘‘(2) DISCRIMINATION PROHIBITED.—The cal12 culation, assessment, or imposition of any fees and

13 charges described in paragraph (1), or imposed pur14 suant to any other law, shall not unduly discriminate

15 among different classes or categories of electric utili16 ties, local distribution companies, consumers, or elec17 tric suppliers. Nothing in this subtitle shall affect

18 the authority of a nonregulated local distribution

19 company under applicable State law to design rates

20 for local distribution service.

21 ‘‘(e) ENFORCEMENT.—Any person may bring an ac22 tion the appropriate State court against any nonregulated

23 local distribution company to require compliance with this

24 section.
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1 ‘‘SEC. 154. GRANDFATHERING PROVISION.

2 ‘‘(a) STATE REGULATED COMPANIES.—A State shall

3 be exempt from section 152 if the State has—

4 ‘‘(1) adopted a plan to provide open access to

5 local distribution facilities of all State regulated local

6 distribution companies in the State for retail electric

7 suppliers seeking to make retail sales to all classes

8 of retail customers, and

9 ‘‘(2) submitted a notice to the Commission

10 within 30 days after the date of the enactment of

11 this section stating that such State has adopted such

12 plan..

13 ‘‘(b) NONREGULATED COMPANIES.—Any nonregu14 lated local distribution company shall be exempt from sec15 tion 153 if the company has—

16 ‘‘(1) adopted a plan to provide open access to

17 its local distribution facilities for retail electric sup18 pliers seeking to make retail sales to all classes of

19 retail customers, and

20 ‘‘(2) submitted a notice to the Commission

21 within 30 days after the date of the enactment of

22 this section stating that such company has adopted

23 such plan.

24 ‘‘SEC. 155. RETAIL RECIPROCITY.

25 ‘‘(a) STATE AUTHORITY.—
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1 ‘‘(1) ELECTRICITY GENERATED IN A NON2 COMPETITIVE STATE.—Any State may prohibit any

3 person from selling to retail electric consumers of

4 State regulated local distribution companies in such

5 State any electric energy generated in a second

6 State which has not made a timely election under

7 section 152(a) or which has filed an opt-out notice

8 under section 152(b) unless—

9 ‘‘(A) such electric energy is generated by a

10 nonregulated electric utility in such second

11 State;

12 ‘‘(B) such other State has submitted a

13 timely notice under section 154 (relating to

14 grandfathering); or

15 ‘‘(C) all local distribution facilities in such

16 second State owned, controlled, or operated by

17 State regulated local distribution companies

18 providing local distribution service in such sec19 ond State are subject to retail competition con20 sistent with section 152(a)(2).

21 ‘‘(2) ELECTRICITY GENERATED BY NON22 COMPETITIVE NONREGULATED ELECTRIC UTILITY.—

23 Any State may prohibit any person from selling to

24 retail electric consumers of State regulated local dis25 tribution companies in such State any electric en-
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1 ergy generated by a nonregulated electric utility

2 which has not made an election under section 153(a)

3 or which has filed an opt-out notice under section

4 153(b) unless—

5 ‘‘(A) such nonregulated electric utility has

6 submitted a timely notice under section 154 (re7 lating to grandfathering); or

8 ‘‘(B) all local distribution facilities of such

9 nonregulated electric utility are subject to retail

10 competition consistent with section 153(a)(2).

11 ‘‘(b) AUTHORITY OF NONREGULATED ELECTRIC

12 UTILITIES.—

13 ‘‘(1) ELECTRICITY GENERATED IN A NON14 COMPETITIVE STATE.—Any nonregulated eletric

15 utility in a State may prohibit any person from sell16 ing to its retail electric consumers any electric en17 ergy generated in a second State which has not

18 made a timely election under section 152(a) or

19 which has filed an opt-out notice under section

20 152(b) unless—

21 ‘‘(A) such electric energy is generated by a

22 nonregulated electric utility in such second

23 State;
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1 ‘‘(B) such other State has submitted a

2 timely notice under section 154 (relating to

3 grandfathering); or

4 ‘‘(C) all local distribution facilities in such

5 second State owned, controlled, or operated by

6 State regulated local distribution companies

7 providing local distribution service in such sec8 ond State are subject to retail competition con9 sistent with section 152(a)(2).

10 ‘‘(2) ELECTRICITY GENERATED BY NON11 COMPETITIVE NONREGULATED ELECTRIC UTILITY.—

12 Any nonregulated electric utility may prohibit any

13 person from selling to its retail electric consumers

14 any electric energy generated by a nonregulated elec15 tric utility which has not made an election under

16 section 153(a) or which has filed an opt-out notice

17 under section 153(b) unless—

18 ‘‘(A) such nonregulated electric utility has

19 submitted a timely notice under section 154 (re20 lating to grandfathering); or

21 ‘‘(B) all local distribution facilities of such

22 nonregulated electric utility are subject to retail

23 competition consistent with section 153(a)(2).
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1 ‘‘SEC. 156. AGGREGATION FOR PURCHASE OF RETAIL ELEC2 TRIC ENERGY.

3 ‘‘Notwithstanding any other provision of Federal or

4 State law, and subject to legitimate and nondiscriminatory

5 State requirements imposed on retail electric suppliers, a

6 group of customers or any entity acting on behalf of such

7 group may acquire retail electric energy on an aggregate

8 basis if the group of customers is served by 1 or more

9 local distribution companies for which a State regulatory

10 authority or nonregulated local distribution company has

11 filed a notice of retail competition under section 152(a)(1)

12 or 153(a)(1).

13 ‘‘SEC. 157. STATE JURISDICTION.

14 ‘‘(a) PRIMARY STATE JURISDICTION.—Except for re15 view of any action in the Supreme Court of the United

16 States in accordance with sections 1257 and 1258 of title

17 28, United States Code, no court of the United States

18 shall have jurisdiction over any action arising under the

19 provisions of section 152 or 153 (relating to retail electric

20 competition).

21 ‘‘(b) STATE COURT PROCEDURES.—Except for Su22 preme Court review, any appeal, review, or other action

23 in State court shall be pursuant to any applicable State

24 procedures.

25 ‘‘(c) PARITY OF FRANCHISE AND OTHER

26 CHARGES.—A State or local government, under State law,
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1 may impose or collect any franchise, license, permit fee,

2 or equivalent thereof, from any electric supplier as a condi3 tion for operating in the State or locality, only to the ex4 tent such charge is imposed on a just and reasonable and

5 not unduly discriminatory or preferential basis.

6 ‘‘SEC. 158. RELATION TO NAFTA; IMPORTS.

7 ‘‘(a) NATIONAL TREATMENT AS REQUIRED BY

8 NAFTA.—The provisions of section 155 (relating to retail

9 reciprocity) shall apply on a not unduly discriminatory or

10 preferential basis, and to the same extent, to any foreign

11 person or foreign electric utility which is a citizen of a

12 nation which has ratified the North American Free Trade

13 Agreement, as such provisions apply to any person or elec14 tric utility which is a citizen of the United States.

15 ‘‘(b) IMPORTS.—The provisions of section 155 (relat16 ing to respecting retail reciprocity) shall apply pursuant

17 to subsection (a) to any imports of electric energy into

18 the United States.

19 ‘‘SEC. 159. PRIVACY OF CONSUMER PROPRIETARY INFOR20 MATION.

21 ‘‘(a) PRIVACY REQUIREMENTS.—Except as required

22 by law or with the prior written affirmative approval of

23 the consumer, any person that receives or obtains cus24 tomer information by virtue of its provision of retail elec25 tric service or metering and billing service shall only use,
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1 disclose, or permit access to individually identifiable con2 sumer information in its provision of (1) retail electric

3 service or metering and billing service from which such

4 information is derived, or (2) services necessary to, or used

5 in, the provision of such service.

6 ‘‘(b) DISCLOSURE ON REQUEST BY CONSUMERS.—

7 An electric utility or metering and billing service provider

8 shall disclose consumer information, upon affirmative

9 written request by the consumer, to any person designated

10 by the consumer.

11 ‘‘(c) AGGREGATE CONSUMER INFORMATION.—Any

12 person that receives or obtains consumer information by

13 virtue of its provision of retail electric service or metering

14 and billing services may use, disclose, or permit access to

15 aggregate consumer information other than for the pur16 poses described in subsection (a). An electric utility or me17 tering or billing service provider may use, disclose, or per18 mit access to aggregate consumer information other than

19 for purposes described in subsection (a) only if it provides

20 such aggregate information to other retail electric service

21 providers on reasonable and nondiscriminatory terms and

22 conditions upon reasonable request therefor.

23 ‘‘(d) EXCEPTIONS.—Nothing in this section prohibits

24 an electric utility or metering and billing service provider

25 from using, disclosing, or permitting access to consumer
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1 information obtained from its consumers, either directly

2 or indirectly through its agents—

3 ‘‘(1) to initiate, render, bill, and collect for re4 tail electric services or metering and billing services;

5 ‘‘(2) to protect the rights or property of the

6 electric utility or metering and billing service pro7 vider, or to protect consumers of those services and

8 other service providers from fraudulent, abusive, un9 lawful use of, or subscription to such services; or

10 ‘‘(3) for purposes of compliance with any other

11 Federal or State law or regulation authorizing dis12 closure of information to a Federal or State agency.

13 ‘‘(e) DEFINITIONS.—As used in this section:

14 ‘‘(1) CONSUMER INFORMATION.—The term

15 ‘consumer information’ means—

16 ‘‘(A) information that relates to the quan17 tity, technical configuration, type, destination,

18 and amount of use of a retail electric service

19 subscribed to by any consumer, and that is

20 made available to an electric utility or metering

21 and billing service provider solely by virtue of

22 its business relationship; and

23 ‘‘(B) information contained in the bills per24 taining to retail electric service received by a

25 consumer.
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1 ‘‘(2) AGGREGATE CONSUMER INFORMATION.—

2 The term ‘aggregate consumer information’ means

3 collective data that relates to a group or category of

4 services or consumers, from which individual con5 sumer identities and characteristics have been re6 moved.’’.

7 (b) TABLE OF CONTENTS.—The table of contents for

8 title I of the Public Utility Regulatory Policies Act of 1978

9 (16 U.S.C. 2601 and following) is amended by adding the

10 following at the end thereof:

‘‘Subtitle F—Retail Electric Competition

‘‘Sec. 151. Definitions.

‘‘Sec. 152. Retail competition for State regulated local distribution systems.

‘‘Sec. 153. Retail competition for nonregulated local distribution systems.

‘‘Sec. 154. Grandfathering provision.

‘‘Sec. 155. Retail reciprocity.

‘‘Sec. 156. Aggregation for purchase of retail electric energy.

‘‘Sec. 157. State jurisdiction.

‘‘Sec. 158. Relation to NAFTA; imports.

‘‘Sec. 159. Privacy of consumer proprietary information.’’.

11 SEC. 102. ELECTRIC RELIABILITY.

12 The Federal Power Act (16 U.S.C. 791a et seq.) is

13 amended by adding the following new Part at the end

14 thereof:

15 ‘‘PART IV—ELECTRIC RELIABILITY

16 ‘‘SEC. 401. ELECTRIC RELIABILITY ORGANIZATION AND

17 OVERSIGHT.

18 ‘‘(a) DEFINITIONS.—As used in this section:

19 ‘‘(1) AFFILIATED REGIONAL LIABILITY ENTI20 TY.—The term ‘affiliated regional reliability entity’
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1 means an entity delegated authority under the provi2 sions of subsection (h).

3 ‘‘(2) BULK-POWER SYSTEM.—The term ‘bulk4 power system’ means all facilities and control sys5 tems necessary for operating an interconnected

6 transmission grid (or any portion thereof), including

7 high-voltage transmission lines, substations, control

8 centers, communications, data, and operations plan9 ning facilities, and the output of generating units

10 necessary to maintain transmission system reli11 ability.

12 ‘‘(3) ELECTRIC RELIABILITY ORGANIZATION, OR

13 ORGANIZATION.—The term ‘electric reliability orga14 nization’ or ‘organization’ means the organization

15 approved by the Commission under subsection

16 (d)(4).

17 ‘‘(4) ENTITY RULE.—The term ‘entity rule’

18 means a rule adopted by an affiliated regional reli19 ability entity for a specific region and designed to

20 implement or enforce one or more organization

21 standards. An entity rule shall be approved by the

22 Organization and once approved, shall be treated as

23 an organization standard.

24 ‘‘(5) INDUSTRY SECTOR.—The term ‘industry

25 sector’ means a group of users of the bulk power
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1 system with substantially similar commercial inter2 ests, as determined by the Board of the Electric Re3 liability Organization.

4 ‘‘(6) INTERCONNECTION.—The term ‘inter5 connection’ means a geographic area in which the

6 operation of bulk-power system components is syn7 chronized such that the failure of one or more of

8 such components may adversely effect the ability of

9 the operators of other components within the inter10 connection to maintain safe and reliable operation of

11 the facilities within their control.

12 ‘‘(7) ORGANIZATION STANDARD.—The term ‘or13 ganization standard’ means a policy or standard

14 duly adopted by the Electric Reliability Organization

15 to provide for the reliable operation of a bulk power

16 system.

17 ‘‘(8) PUBLIC INTEREST GROUP.—The term

18 ‘public interest group’ means any nonprofit private

19 or public organization that has an interest in the ac20 tivities of the Electric Reliability Organization, in21 cluding, but not limited to, ratepayer advocates, en22 vironmental groups, and State and local government

23 organizations that regulate market participants and

24 promulgate government policy.
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1 ‘‘(9) VARIANCE.—The term ‘variance’ means an

2 exception or variance from the requirements of an

3 organization standard (including a proposal for an

4 organization standard where there is no organization

5 standard) that is adopted by an affiliated regional

6 reliability entity and applicable to all or a part of the

7 region for which the affiliated regional reliability en8 tity responsible. A variance shall be approved by the

9 organization and once approved, shall be treated as

10 an organization standard.

11 ‘‘(10) SYSTEM OPERATOR.—The term ‘system

12 operator’ means any entity that operates or is re13 sponsible for the operation of a bulk-power system,

14 including but not limited to a control area operator,

15 an independent system operator, a transmission

16 company, a transmission system operator, or a re17 gional security coordinator.

18 ‘‘(11) USER OF THE BULK-POWER SYSTEM.—

19 The term ‘user of the bulk-power system’ means any

20 entity that sells, purchases, or transmits electric

21 power over a bulk-power system, or that owns, oper22 ates or maintains facilities or control systems that

23 are part of a bulk-power system, or that is a system

24 operator.
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1 ‘‘(b) COMMISSION AUTHORITY.—(1) Within the

2 United States, the Commission shall have jurisdiction over

3 the Electric Reliability Organization, all affiliated regional

4 reliability entities, all system operators, and all users of

5 the bulk-power system, for purposes of approving and en6 forcing compliance with the requirements of this section.

7 ‘‘(2) The Commission may, by rule, define any other

8 term used in this section, provided such definition is con9 sistent with the definitions in, and the purpose and intent

10 of, this Act.

11 ‘‘(c) EXISTING RELIABILITY STANDARDS.—Fol12 lowing enactment of this section, and prior to the approval

13 of an organization under subsection (d), any person, in14 cluding the North American Electric Reliability Council

15 and its member regional reliability councils, may file any

16 reliability standard, guidance or practice that they would

17 propose to be made mandatory and enforceable. The Com18 mission, after allowing interested persons an opportunity

19 to submit comments, may approve any such proposed

20 mandatory standard, guidance or practice, or any amend21 ment thereto, if it finds that the standard, guidance, or

22 practice, or amendment is just, reasonable, not unduly dis23 criminatory or preferential, and in the public interest. The

24 Commission may, without further proceeding or finding,

25 grant its approval to any standard, guidance or practice
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1 for which no substantive objections are filed in the com2 ment period. Filed standards, guidances, or practices, in3 cluding any amendments thereto, shall be mandatory and

4 applicable according to their terms following approval by

5 the Commission and shall remain in effect until (1) with6 drawn, disapproved or superseded by an organization

7 standard, issued or approved by the Electric Reliability

8 Organization and made effective by the Commission under

9 subsection (e); or (2) disapproved or suspended by the

10 Commission if, upon complaint or upon its own motion

11 and after notice and an opportunity for comment, the

12 Commission finds the standard, guidance or practice un13 just, unreasonable, unduly discriminatory, or preferential

14 or not in the public interest. Standards, guidances or prac15 tices in effect pursuant to the provisions of this subsection

16 shall be enforceable by the Commission.

17 ‘‘(d) ORGANIZATION APPROVAL.—(1) Not later than

18 90 days after the date of enactment of this section, the

19 Commission shall issue proposed rules specifying proce20 dures and requirements for an entity to apply for approval

21 as the Electric Reliability Organization. The Commission

22 shall provide notice and opportunity for comment on the

23 proposed rules. The Commission shall issue a final rule

24 under this subsection within 180 days after the date of

25 enactment of this section.
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•HR 2050 IH

1 ‘‘(2) Following the issuance of a final Commission

2 rule under paragraph (1), an entity may submit an appli3 cation to the Commission for approval as the Electric Reli4 ability Organization. The applicant shall specify in its ap5 plication its governance and procedures, as well as its

6 funding mechanism and initial funding requirements.

7 ‘‘(3) The Commission shall provide public notice of

8 the application and afford interested parties an oppor9 tunity to comment.

10 ‘‘(4) The Commission shall approve the application

11 if the Commission determines that the applicant—

12 ‘‘(A) has the ability to develop, implement and

13 enforce standards that provide for an adequate level

14 of reliability of the bulk-power system;

15 ‘‘(B) permits voluntary membership to any user

16 of the bulk-power system or public interest group;

17 ‘‘(C) assures fair representation of its members

18 in the selection of its directors and fair management

19 of its affairs, taking into account the need for effi20 ciency and effectiveness in decisionmaking and oper21 ations and the requirements for technical com22 petency in the development of organization stand23 ards and the exercise of oversight of bulk-power sys24 tem reliability;
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1 ‘‘(D) assures that no two industry sectors have

2 the ability to control, and no one industry sector has

3 the ability to veto, the Electric Reliability Organiza4 tion’s discharge of its responsibilities (including ac5 tions by committees recommending standards to the

6 board or other board actions to implement and en7 force standards);

8 ‘‘(E) provides for governance by a board wholly

9 comprised of independent directors;

10 ‘‘(F) provides a funding mechanism and re11 quirements that are just, reasonable and not unduly

12 discriminatory or preferential and are in the public

13 interest, and which satisfies the requirements of sub14 section (l);

15 ‘‘(G) establishes procedures for development of

16 organization standards that provide reasonable no17 tice and opportunity for public comment, taking into

18 account the need for efficiency and effectiveness in

19 decisionmaking and operations and the requirements

20 for technical competency in the development of orga21 nization standards, and which standards develop22 ment process has the following attributes:

23 ‘‘(i) openness,

24 ‘‘(ii) balance of interests, and
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1 ‘‘(iii) due process, except that the proce2 dures may include alternative procedures for

3 emergencies;

4 ‘‘(H) establishes fair and impartial procedures

5 for implementation and enforcement of organization

6 standards, either directly or through delegation to

7 an affiliated regional reliability entity, including the

8 imposition of penalties, limitations on activities,

9 functions, or operations, or other appropriate sanc10 tions;

11 ‘‘(I) establishes procedures for notice and op12 portunity for public observation of all meetings, ex13 cept that the procedures for public observation may

14 include alternative procedures for emergencies or for

15 the discussion of information the directors determine

16 should take place in closed session, such as litiga17 tion, personnel actions, or commercially sensitive in18 formation;

19 ‘‘(J) provides for the consideration of rec20 ommendations of States and State commissions, and

21 ‘‘(K) addresses other matters that the Commis22 sion may deem necessary or appropriate to ensure

23 that the procedures, governance, and funding of the

24 Electric Reliability Organization are just, reason-
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1 able, not unduly discriminatory or preferential, and

2 are in the public interest.

3 ‘‘(5) The Commission shall approve only one electric

4 reliability organization. If the Commission receives two or

5 more timely applications that satisfy the requirements of

6 this subsection, the Commission shall approve only the ap7 plication it concludes will best implement the provisions

8 of this section.

9 ‘‘(e) ESTABLISHMENT OF AND MODIFICATIONS TO

10 ORGANIZATION STANDARDS.—(1) The Electric Reliability

11 Organization shall file with the Commission any new or

12 modified organization standards, including any variances

13 or entity rules, and the Commission shall follow the proce14 dures under paragraph (2) for review of that filing.

15 ‘‘(2) Submissions under paragraph (1) shall include:

16 ‘‘(A) a concise statement of the purpose of the

17 proposal, and

18 ‘‘(B) a record of any proceedings conducted

19 with respect to such proposal.

20 The Commission shall provide notice of the filing of such

21 proposal and afford interested persons 30 days to submit

22 comments. The Commission, after taking into consider23 ation any submitted comments, shall approve or dis24 approve such proposal not later than 60 days after the

25 deadline for the submission of comments, except that the
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1 Commission may extend the 60-day period for an addi2 tional 90 days for good cause, and except further that if

3 the Commission does not act to approve or disapprove a

4 proposal within the foregoing periods the proposal shall

5 go into effect subject to its terms, without prejudice to

6 the authority of the Commission thereafter to suspend or

7 modify the proposal in accordance with the standards and

8 requirements of this section. Proposals approved by the

9 Commission shall take effect according to their terms but

10 not earlier than 30 days after the effective date of the

11 Commission’s order, except as provided in paragraph (3)

12 of this subsection.

13 ‘‘(3)(A) In the exercise of its review responsibilities

14 under this subsection, the Commission shall give due

15 weight to the technical expertise of the Electric Reliability

16 Organization with respect to the content of a new or modi17 fied organization standard, but shall not defer to the Or18 ganization with respect to the effect of the standard on

19 competition. The Commission shall approve a proposed

20 new or modified organization standard if it determines the

21 proposal to be just, reasonable, not unduly discriminatory

22 or preferential, and in the public interest. The Commis23 sion, either upon complaint or upon its own motion, shall

24 suspend an existing organization standard, if it determines
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1 the standard to be unjust, unreasonable, unduly discrimi2 natory or preferential or not in the public interest.

3 ‘‘(B) An existing or proposed organization standard

4 which is disapproved or suspended in whole or in part by

5 the Commission shall be remanded to the Electric Reli6 ability Organization for further consideration.

7 ‘‘(C) The Commission, on its own motion or upon

8 complaint, may direct the Electric Reliability Organization

9 to develop an organization standard, including modifica10 tion to an existing organization standard, addressing a

11 specific matter by a date certain if the Commission con12 siders such new or modified organization standard nec13 essary or appropriate to further the purposes of this sec14 tion. The Electric Reliability Organization shall file any

15 such new or modified organization standard in accordance

16 with this subsection.

17 ‘‘(D) An affiliated regional reliability entity may pro18 pose a Variance or Entity Rule to the Electric Reliability

19 Organization. The affiliated regional reliability entity may

20 request that the Electric Reliability Organization expedite

21 consideration of the proposal, and may file a notice of such

22 request with the Commission, if expedited consideration

23 is necessary to provide for bulk-power system reliability.

24 If the Electric Reliability Organization fails to adopt the

25 variance or entity rule, either in whole or in part, the affili-
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1 ated regional reliability entity may request that the Com2 mission review such action. If the Commission determines,

3 after its review of such a request, that the action of the

4 Electric Reliability Organization did not conform to the

5 applicable standards and procedures approved by the

6 Commission, or if the Commission determines that the

7 variance or entity rule is just, reasonable, not unduly dis8 criminatory or preferential, and in the public interest, and

9 that the Electric Reliability Organization has unreason10 ably rejected the proposed variance or entity rule, then

11 the Commission may remand the proposed variance or en12 tity rule for further consideration by the Electric Reli13 ability Organization or may direct the Electric Reliability

14 Organization or the affiliated regional reliability entity to

15 develop a variance or entity rule consistent with that re16 quested by the affiliated regional reliability entity. Any

17 such variance or entity rule proposed by an affiliated re18 gional reliability entity shall be submitted to the Electric

19 Reliability Organization for review and filing with the

20 Commission in accordance with the procedures specified

21 in this subsection.

22 ‘‘(E) Notwithstanding any other provision of this sub23 section, a proposed organization standard or amendment

24 shall take effect according to its terms if the Electric Reli25 ability Organization determines that an emergency exists
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1 requiring that such proposed organization standard or

2 amendment take effect without notice or comment. The

3 Electric Reliability Organization shall notify the Commis4 sion immediately following such determination and shall

5 file such emergency organization standard or amendment

6 with the Commission not later than 5 days following such

7 determination and shall include in such filing an expla8 nation of the need for such emergency standard. Subse9 quently, the Commission shall provide notice of the organi10 zation standard or amendment for comment, and shall fol11 low the procedures set out in paragraphs (2) and (3) for

12 review of the new or modified organization standard. Any

13 such organization standard that has gone into effect shall

14 remain in effect unless and until suspended or disapproved

15 by the Commission. If the Commission determines at any

16 time that the emergency organization standard or amend17 ment is not necessary, the Commission may suspend such

18 emergency organization standard or amendment.

19 ‘‘(4) All users of the bulk-power system shall comply

20 with any organization standard that takes effect under

21 this section.

22 ‘‘(f) COORDINATION WITH CANADA AND MEXICO.—

23 The Electric Reliability Organization shall take all appro24 priate steps to gain recognition in Canada and Mexico.

25 The United States shall use its best efforts to enter into
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1 international agreements with the appropriate govern2 ments of Canada and Mexico to provide for effective com3 pliance with organization standards and to provide for the

4 effectiveness of the Electric Reliability Organization in

5 carrying out its mission and responsibilities. All actions

6 taken by the Electric Reliability Organization, any affili7 ated regional reliability entity, and the Commission shall

8 be consistent with the provisions of such international

9 agreements.

10 ‘‘(g) CHANGES IN PROCEDURES, GOVERNANCE, OR

11 FUNDING.—(1) The Electric Reliability Organization shall

12 file with the Commission any proposed change in its proce13 dures, governance, or funding, or any changes in the affili14 ated regional reliability entity’s procedures, governance or

15 funding relating to delegated functions, and shall include

16 with the filing an explanation of the basis and purpose

17 for the change.

18 ‘‘(2) A proposed procedural change may take effect

19 90 days after filing with the Commission if the change

20 constitutes a statement of policy, practice, or interpreta21 tion with respect to the meaning or enforcement of an ex22 isting procedure. Otherwise, a proposed procedural change

23 shall take effect only upon a finding by the Commission,

24 after notice and opportunity for comments, that the

25 change is just, reasonable, not unduly discriminatory or
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1 preferential, is in the public interest, and satisfies the re2 quirements of subsection (d)(4).

3 ‘‘(3) A change in governance or funding shall not

4 take effect unless the Commission finds that the change

5 is just, reasonable, not unduly discriminatory or pref6 erential, and is in the public interest, and satisfies the re7 quirements of subsection (d)(4).

8 ‘‘(4)(A) The Commission, either upon complaint or

9 upon its own motion, may suspend a procedure or govern10 ance or funding provision if it determines the procedure

11 or provision does not meet the requirements of subsection

12 (d)(4) or is unjust, unreasonable, unduly discriminatory

13 or preferential, or otherwise not in the public interest.

14 ‘‘(B) The Commission, upon complaint or upon its

15 own motion, may require the Electric Reliability Organiza16 tion to amend the procedures, governance or funding if

17 the Commission determines that the amendment is nec18 essary to meet the requirements of this section. The Elec19 tric Reliability Organization shall file the amendment in

20 accordance with paragraph (1) of this subsection.

21 ‘‘(h) DELEGATIONS OF AUTHORITY.—(1) The Elec22 tric Reliability Organization shall, upon request by an en23 tity, enter into an agreement with such entity for the dele24 gation of authority to implement and enforce compliance

25 with organization standards in a specified geographic area
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1 if the Organization finds that the entity requesting the

2 delegation satisfies the requirements of subsection (d)(4)

3 (A), (B), (C), (D), (F), and (K), and if the delegation pro4 motes the effective and efficient implementation and ad5 ministration of bulk-power system reliability. The Electric

6 Reliability Organization may enter into an agreement to

7 delegate to the entity any other authority, except that the

8 Electric Reliability Organization shall reserve the right to

9 set and approve standards for bulk-power system reli10 ability.

11 ‘‘(2) The Electric Reliability Organization shall file

12 with the Commission any agreement entered into under

13 this subsection and any information the Commission re14 quires with respect to the affiliated regional reliability en15 tity to which authority is to be delegated. The Commission

16 shall approve the agreement, following public notice and

17 an opportunity for comment, if it finds that the agreement

18 meets the requirements of paragraph (1), and is just, rea19 sonable, not unduly discriminatory or preferential, and is

20 in the public interest. A proposed delegation agreement

21 with an affiliated regional reliability entity organized on

22 an interconnection-wide basis shall be rebuttably pre23 sumed by the Commission to promote the effective and

24 efficient implementation and administration of bulk-power

25 system reliability. No delegation by the Electric Reliability
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1 Organization shall be valid unless approved by the Com2 mission.

3 ‘‘(3)(A) A delegation agreement entered into under

4 this subsection shall specify the procedures for an affili5 ated regional reliability entity to propose entity rules or

6 variances for review by the Electric Reliability Organiza7 tion. With respect to any such proposal that would apply

8 on an interconnection-wide basis, the Electric Reliability

9 Organization shall presume such proposal valid if made

10 by an interconnection-wide affiliated regional reliability

11 entity unless the Electric Reliability Organization makes

12 a written finding that the proposal:

13 ‘‘(i) was not developed in a fair and open proc14 ess that provided an opportunity for all interested

15 parties to participate;

16 ‘‘(ii) has a significant adverse impact on reli17 ability or commerce in other interconnections;

18 ‘‘(iii) fails to provide a level of reliability of the

19 bulk-power system within the interconnection such

20 that it would constitute a serious and substantial

21 threat to public health, safety, welfare, or national

22 security; or

23 ‘‘(iv) creates a serious and substantial burden

24 on competitive markets within the interconnection

25 that is not necessary for reliability.
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1 ‘‘(B) With respect to any such proposal that would

2 apply only to part of an interconnection, the Electric Reli3 ability Organization shall find such proposal valid if the

4 affiliated regional reliability entity or entities making the

5 proposal demonstrate that it:

6 ‘‘(i) was developed in a fair and open process

7 that provided an opportunity for all interested par8 ties to participate;

9 ‘‘(ii) would not have an adverse impact on com10 merce that is not necessary for reliability;

11 ‘‘(iii) provides a level of bulk-power system reli12 ability adequate to protect public health, safety, wel13 fare, and national security, and would not have a

14 significant adverse impact on reliability; and

15 ‘‘(iv) in the case of a Variance, is based on le16 gitimate differences between regions or between sub17 regions within the affiliated regional reliability enti18 ty’s geographic area.

19 The Electric Reliability Organization shall approve or dis20 approve such proposal within 120 days, or the proposal

21 shall be deemed approved. Following approval of any such

22 proposal under this paragraph, the Electric Reliability Or23 ganization shall seek Commission approval pursuant to

24 the procedures prescribed under subsection (e)(3). Affili25 ated regional reliability entities may not make requests for
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1 approval directly to the Commission except pursuant to

2 subsection (e)(3)(D).

3 ‘‘(4) If an affiliated regional reliability entity re4 quests, consistent with paragraph (1) of this subsection,

5 that the Electric Reliability Organization delegate author6 ity to it, but is unable within 180 days to reach agreement

7 with the Electric Reliability Organization with respect to

8 such requested delegation, such entity may seek relief

9 from the Commission. If, following notice and opportunity

10 for comment, the Commission determines that a delega11 tion to the entity would meet the requirements of sub12 section (1) above, and that the delegation would be just,

13 reasonable, not unduly discriminatory or preferential, and

14 in the public interest, and that the Electric Reliability Or15 ganization has unreasonably withheld such delegation, the

16 Commission may, by order, direct the Electric Reliability

17 Organization to make such delegation.

18 ‘‘(5)(A) The Commission may, upon its own motion

19 or upon complaint, and with notice to the appropriate af20 filiated regional reliability entity or entities, direct the

21 Electric Reliability Organization to propose a modification

22 to an agreement entered into under this subsection if the

23 Commission determines that—

24 ‘‘(i) the affiliated regional reliability entity no

25 longer has the capacity to carry out effectively or ef-
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1 ficiently its implementation or enforcement respon2 sibilities under that agreement, has failed to meet its

3 obligations under that agreement, or has violated

4 any provision of this section,

5 ‘‘(ii) the rules, practices, or procedures of the

6 affiliated regional reliability entity no longer provide

7 for fair and impartial discharge of its implementa8 tion or enforcement responsibilities under the agree9 ment,

10 ‘‘(iii) the geographic boundary of a transmission

11 entity approved by the Commission is not wholly

12 within the boundary of an affiliated regional reli13 ability entity and such difference is inconsistent with

14 the effective and efficient implementation and ad15 ministration of bulk-power system reliability, or

16 ‘‘(iv) the agreement is inconsistent with another

17 delegation agreement as a result of actions taken

18 under paragraph (4) of this subsection.

19 ‘‘(B) Following an order of the Commission issued

20 under subparagraph (A), the Commission may suspend

21 the affected agreement if the Electric Reliability Organiza22 tion or the affiliated regional reliability entity does not

23 propose an appropriate and timely modification. If the

24 agreement is suspended, the Electric Reliability Organiza25 tion shall assume the previously delegated responsibilities.
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1 The Commission shall allow the Electric Reliability Orga2 nization and the affiliated regional reliability entity an op3 portunity to appeal the suspension.

4 ‘‘(i) ORGANIZATION MEMBERSHIP.—Every System

5 Operator shall be required to be a member of the Electric

6 Reliability Organization and shall be required also to be

7 a member of any affiliated regional reliability entity oper8 ating under an agreement effective pursuant to subsection

9 (h) applicable to the region in which the system operator

10 operates or is responsible for the operation of bulk-power

11 system facilities.

12 ‘‘(j) INJUNCTIONS AND DISCIPLINARY ACTION.—(1)

13 Consistent with the range of actions approved by the Com14 mission under subsection (d)(4)(H), the Electric Reli15 ability Organization may impose a penalty, limitation of

16 activities, functions, or operations, or other disciplinary

17 action the Electric Reliability Organization finds appro18 priate against a user of the bulk-power system if the Elec19 tric Reliability Organization, after notice and an oppor20 tunity for interested parties to be heard, issues a finding

21 in writing that the user of the bulk-power system has vio22 lated an organization standard. The Electric Reliability

23 Organization shall immediately notify the Commission of

24 any disciplinary action imposed with respect to an act or

25 failure to act of a user of the bulk-power system that af-
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•HR 2050 IH

1 fected or threatened to affect bulk-power system facilities

2 located in the United States, and the sanctioned party

3 shall have the right to seek modification or rescission of

4 such disciplinary action by the Commission. If the Organi5 zation finds it necessary to prevent a serious threat to reli6 ability, the Organization may seek injunctive relief in a

7 Federal Court in the district in which the affected facili8 ties are located.

9 ‘‘(2) A disciplinary action taken under paragraph (1)

10 may take effect not earlier than the 30th day after the

11 Electric Reliability Organization files with the Commission

12 its written finding and record of proceedings before the

13 Electric Reliability Organization and the Commission

14 posts its written finding, unless the Commission, on its

15 own motion or upon application by the user of the bulk16 power system which is the subject of the action, suspends

17 the action. The action shall remain in effect or remain

18 suspended unless and until the Commission, after notice

19 and opportunity for hearing, affirms, sets aside, modifies,

20 or reinstates the action, but the Commission shall conduct

21 such hearing under procedures established to ensure expe22 dited consideration of the action taken.

23 ‘‘(3) The Commission, on its own motion, may order

24 compliance with an organization standard and may impose

25 a penalty, limitation of activities, functions, or operations,
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1 or take such other disciplinary action as the Commission

2 finds appropriate, against a user of the bulk-power system

3 with respect to actions affecting or threatening to affect

4 bulk-power system facilities located in the United States

5 if the Commission finds, after notice and opportunity for

6 a hearing, that the user of the bulk-power system has vio7 lated or threatens to violate an organization standard.

8 ‘‘(4) The Commission may take such action as is nec9 essary against the Electric Reliability Organization or an

10 affiliated regional reliability entity to assure compliance

11 with an organization standard, or any Commission order

12 affecting the Electric Reliability Organization or an affili13 ated regional reliability entity.

14 ‘‘(k) RELIABILITY REPORTS.—The Electric Reli15 ability Organization shall conduct periodic assessments of

16 the reliability and adequacy of the interconnected bulk17 power system in North America and shall report annually

18 to the Secretary of Energy and the Commission its find19 ings and recommendations for monitoring or improving

20 system reliability and adequacy.

21 ‘‘(l) ASSESSMENT AND RECOVERY OF CERTAIN

22 COSTS.—The reasonable costs of the Electric Reliability

23 Organization, and the reasonable costs of each affiliated

24 regional reliability entity that are related to implementa25 tion and enforcement of organization standards or other
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1 requirements contained in a delegation agreement ap2 proved under subsection (h), shall be assessed by the Elec3 tric Reliability Organization and each affiliated regional

4 reliability entity, respectively, taking into account the rela5 tionship of costs to each region and based on an allocation

6 that reflects an equitable sharing of the costs among all

7 end-users. The Commission shall provide by rule for the

8 review of such costs and allocations, pursuant to the

9 standards in this subsection and subsection (d)(4)(F).

10 ‘‘SEC. 402. APPLICATION OF ANTITRUST LAWS.

11 ‘‘Notwithstanding any other provision of law, each of

12 the following activities are rebuttably presumed to be in

13 compliance with the antitrust laws of the United States:

14 ‘‘(1) Activities undertaken by the Electric Reli15 ability Organization under section 401 or affiliated

16 regional reliability entity operating under an agree17 ment in effect under section 401(h).

18 ‘‘(2) Activities of a member of the Electric Reli19 ability Organization or affiliated regional reliability

20 entity in pursuit of organization objectives under

21 section 401 undertaken in good faith under the rules

22 of the organization.

23 Primary jurisdiction, and immunities and other affirma24 tive defenses, shall be available to the extent otherwise ap25 plicable.’’.
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1 SEC. 103. FEDERAL INTERCONNECTION AUTHORITIES.

2 (a) INTERCONNECTIONS FOR CERTAIN FACILI3 TIES.—Section 210 of the Federal Power Act is amended

4 by adding the following at the end thereof:

5 ‘‘(f) SPECIAL RULE FOR CERTAIN FACILITIES.—

6 ‘‘(1) DEFINITION.—As used in this subsection

7 the term ‘facility’ means—

8 ‘‘(A) a small-scale electric power genera9 tion facility that is designed to serve customers

10 at or near the facility, or

11 ‘‘(B) a facility using a single fuel source to

12 produce at the point of use either electric or

13 mechanical power and thermal energy.

14 ‘‘(2) INTERCONNECTION.—A local distribution

15 company (as defined in section 151 of the Public

16 Utility Regulatory Policies Act of 1978) shall allow

17 a facility to interconnect with the local distribution

18 facilities of such company if the facility owner (A)

19 is an electric customer provided local distribution

20 service by such company and (B) complies with the

21 final rule issued under paragraph (3).

22 ‘‘(3) RULES.—Within 1 year from the date of

23 enactment of this subsection, the Commission shall

24 issue a final rule to implement paragraph (2) and

25 issue related safety and power quality standards. To

26 the extent feasible, the Commission shall develop the
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1 standards through a process involving interested

2 parties. The Commission shall enforce the rule es3 tablished under this subsection using its authority

4 under this Act.’’.

5 (b) AMENDMENTS TO EXISTING INTERCONNECTION

6 AUTHORITIES.—Section 210 of the Federal Power Act is

7 amended as follows:

8 (1) In section 210(a)(1) (16 U.S.C.

9 824i(a)(1))—

10 (A) by inserting ‘‘transmitting utility,’’

11 after ‘‘electric utility,’’;

12 (B) by inserting ‘‘any transmitting utility,’’

13 after ‘‘small power production facility,’’ in sub14 paragraph (A); and

15 (C) by inserting ‘‘or distribution’’ after

16 ‘‘transmission’’ in subparagraph (D).

17 (2) In section 210(b)(2) (16 U.S.C. 824i(b)(2))

18 by striking ‘‘an evidentiary hearing’’ and inserting

19 ‘‘a hearing’’.

20 (3) In section 210(d) by deleting the last sen21 tence.

22 SEC. 104. CONSUMER PROTECTION, MARKET POWER AND

23 UNFAIR TRADE PRACTICES.

24 (a) ELECTRIC SUPPLIER INFORMATION DISCLOSURE.
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1 (1) DISCLOSURE RULES.—Not later than Janu2 ary 1, 2000, the Federal Trade Commission, in con3 sultation with the Federal Energy Regulatory Com4 mission, the Secretary of Energy, and the Adminis5 trator of the Environmental Protection Agency shall

6 issue rules prescribing the form, placement, content,

7 and timing of the supplier disclosure required under

8 this subsection.

9 (2) DISCLOSURE TO ELECTRIC CONSUMERS.—

10 In order to assist consumers in making informed

11 purchasing decisions, any electric supplier with a ca12 pacity in excess of 5 megawatts that sells or makes

13 an offer to sell electric energy to consumers, or solic14 its consumers to purchase electric energy, shall pro15 vide the consumers, in accordance with rules issued

16 under this subsection, a statement containing the

17 following information:

18 (A)(i) The nature of the service being of19 fered, including information about

20 interruptibility of service.

21 (ii) The price of electric energy, including

22 a description of any variable charges.

23 (iii) A description of all other charges that

24 are associated with the service being offered in25 cluding, but not limited to, access charges, exit
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1 charges, back-up service charges, stranded cost

2 recovery charges, and customer service charges.

3 (iv) Such other information concerning the

4 product or price as the Federal Trade Commis5 sion determines can be feasibly provided and

6 would be useful to consumers in making pur7 chasing decisions.

8 (B)(i) The share of electric energy that is

9 generated by each of the following types of en10 ergy generation resource: coal, natural gas, oil,

11 nuclear, hydroelectric, solar, geothermal, wind,

12 biomass, waste, and other.

13 (ii) Such information concerning genera14 tion emissions characteristics as the Federal

15 Trade Commission determines can be provided

16 feasibly and would be useful to consumers in

17 making purchasing decisions, including (I)

18 emissions in each of the following categories per

19 magawatt-hour of generation from the sup20 plier’s energy portfolio dedicated to the energy

21 product being offered: sulfur dioxide, nitrogen

22 oxides, and carbon dioxide and (II) the average

23 emissions of the pollutants identified in sub24 clause (I) for all generation in any regional
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1 power pool or control area in which such sup2 plier participates.

3 (3) DISCLOSURE TO WHOLESALE CUS4 TOMERS.—In every sale of electric energy for resale,

5 the seller shall provide to the purchaser such infor6 mation respecting generation source and emissions

7 characteristics as may be required by rules under

8 this subsection.

9 (4) AUTHORITY TO OBTAIN BOOKS AND

10 RECORDS.—Authority to obtain information under

11 section 11 of the Energy Supply and Environmental

12 Coordination Act of 1974 (15 U.S.C. 796) shall be

13 available to the Federal Trade Commission to ad14 minister and enforce this section.

15 (5) PROHIBITED ACTS AND ENFORCEMENT.—

16 The failure of any person to provide information re17 quired under the rules issued under this subsection

18 or the providing by any person of false or misleading

19 information with respect to the disclosures required

20 by this section or the rules issued under this sub21 section shall be treated as a violation of a rule under

22 section 18 of the Federal Trade Commission Act (15

23 U.S.C. 41 and following) regarding unfair or decep24 tive acts or practices in or affecting commerce.
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1 (6) STATE AUTHORITY.—Nothing in this sub2 section shall affect the authority of any State to pre3 scribe disclosure requirements in addition to and not

4 inconsistent with this section.

5 (b) MARKET POWER.—

6 (1) AMENDMENT OF FEDERAL POWER ACT.—

7 Part II of the Federal Power Act is amended by

8 adding after section 214 the following new section:

9 ‘‘SEC. 215. MARKET POWER IN ELECTRIC SALES.

10 ‘‘(a) FERC DETERMINATION.—On its own motion or

11 upon complaint of any affected person, the Commission

12 may, after notice and opportunity for a hearing on the

13 record, make a determination that—

14 ‘‘(1) any electric utility is exercising, or has ex15 ercised, market power in the sale of electric energy

16 by reason of its ownership or control of local dis17 tribution facilities (as defined in section 151 of the

18 Public Utility Regulatory Policies Act of 1978) or

19 transmission facilities;

20 ‘‘(2) such exercise of market power results in

21 prices for electric energy that exceed the prices that

22 would be charged in a fully competitive market; and

23 ‘‘(3) action under this section is required to re24 duce or eliminate such market power.
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1 ‘‘(b) MITIGATION PLAN.—Whenever the Commission

2 makes a determination under subsection (a) with respect

3 to any electric utility, the Commission shall issue an order

4 requiring the utility to submit to the Commission a plan

5 to reduce or eliminate the market power concerned and

6 to implement such plan.

7 ‘‘(c) ADDITIONAL REMEDIES.—If the Commission

8 disapproves a plan submitted under subsection (b) or de9 termines that the utility is failing to properly implement

10 any such plan, the Commission shall—

11 ‘‘(1) issue an order under subsection (h) of sec12 tion 202 requiring the utility to relinquish control

13 over any transmission facilities owned or controlled

14 by such utility to any entity established under such

15 subsection (h) for the purpose of independent oper16 ation, control, and planning of interconnected trans17 mission facilities;

18 ‘‘(2) require the utility to establish just and

19 reasonable rates and charges for the retail sale of

20 electric energy that are based on the cost of service,

21 plus a reasonable rate of return on investment, not22 withstanding any provision of Federal or State law;

23 and

24 ‘‘(3) require the utility to establish just and

25 reasonable rates and charges for the wholesale sale
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1 of electric energy that are based on the cost of serv2 ice, plus a reasonable rate of return on investment.

3 The Commission may elect not to take action under para4 graph (1), (2), or (3) in any case in which the Commission

5 finds that such action will not mitigate the market power

6 issues involved.

7 ‘‘(d) RELIABILITY.—No order or plan under this sub8 section shall unreasonably impair the reliability of any

9 local distribution system affected by such order or plan.

10 ‘‘(e) STATE AUTHORITY.—Nothing in this section

11 shall be construed to preempt any State authority to re12 quire any State regulated electric utility to take any ac13 tion, or cease taking any action, in addition to the actions

14 required by the Commission or by a plan under this sec15 tion to remedy the exercise of market power by such utility

16 to the extent such State actions are not inconsistent with

17 any order or plan under this section.

18 ‘‘(f) RETURN TO MARKET-BASED RATES.—The

19 Commission shall terminate an order issued under sub20 section (c)(2) to any electric utility whenever, on its own

21 motion or upon petition of any affected person, the Com22 mission determines that such order is no longer necessary

23 to reduce or eliminate the exercise of market power by

24 such utility.
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1 ‘‘(g) EFFECTIVE DATE.—This section shall take ef2 fect on January 1, 2002.’’.

3 (2) CONFORMING AMENDMENT.—Section

4 201(b)(2) of the Federal Power Act (relating to

5 Commission jurisdiction) is amended by striking

6 ‘‘and 212’’ and inserting ‘‘212, and 215’’.

7 (c) UNFAIR TRADE PRACTICES.—The Federal Trade

8 Commission Act (15 U.S.C. 41 et seq.) is amended by in9 serting the following new section after section 5:

10 ‘‘SEC. 5A. ELECTRICITY SUPPLY UNFAIR TRADE PRAC11 TICES.

12 ‘‘(a) DEFINITION.—For purposes of this section the

13 term, ‘retail electric supplier’ has the meaning given that

14 term in section 3(25) of the Public Utility Regulatory

15 Policies Act of 1978.

16 ‘‘(b) SLAMMING.—(1) The Federal Trade Commis17 sion shall establish rules in accordance with section 553

18 of title 5, United States Code, for the submittal and

19 verification of a retail electric customer’s selection or

20 change in selection of a retail electric supplier and for the

21 assessment of penalties for violation of these rules. These

22 rules shall ensure that the customer receives electric serv23 ice from the retail electric supplier of the customer’s

24 choice.
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1 ‘‘(2) A person shall not submit or change the selec2 tion made by a retail electric customer except in accord3 ance with procedures established in paragraph (1).

4 ‘‘(c) CRAMMING.—(1) The Federal Trade Commis5 sion shall establish rules in accordance with section 553

6 of title 5, United States Code, for obtaining the consent

7 of a retail electric customer for purchase of goods and

8 services other than those expressly authorized by law or

9 by the customer’s electricity supply and metering agree10 ment and for the assessment of penalties for violation of

11 these rules.

12 ‘‘(2) A person shall not charge a retail electric

13 customer for a particular service except in accord14 ance with procedures established in paragraph (1).

15 ‘‘(d) FEDERAL TRADE COMMISSION ENFORCE16 MENT.—Violation of this section or of a rule prescribed

17 under this section constitutes an unfair and deceptive act

18 or practice in violation of section 5 of this Act and shall

19 be treated as a violation of a rule under section 18 of this

20 Act. All functions and powers of the Federal Trade Com21 mission under this Act are available to the Federal Trade

22 Commission to enforce compliance with this section not23 withstanding any jurisdictional limitations in this Act.

24 ‘‘(e) STATE PROCEEDINGS AND OTHER REMEDIES.—

25 (1) This section does not preclude a State or State com-
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1 mission from prescribing and enforcing additional laws,

2 regulations, or procedures regarding the practices which

3 are the subject of this section, so long as such laws, regu4 lations, or procedures do not conflict with the provisions

5 of this section or with any rule prescribed by the Federal

6 Trade Commission pursuant to it.

7 ‘‘(2) The remedies provided by this section are in ad8 dition to any other remedies available by law.’’.

9 SEC. 105. ANTITRUST SAVINGS CLAUSE.

10 Nothing in this title or any amendment made by this

11 title shall be construed to modify, impair, or supersede the

12 operation of the antitrust laws. For purposes of this sec13 tion, the term ‘‘antitrust laws’’ has the meaning given it

14 in subsection (a) of the first section of the Clayton Act

15 (15 U.S.C. 12(a)), except that such term includes the Act

16 of June 19, 1936 (15 U.S.C. 13 and following), commonly

17 known as the Robinson-Patman Act, and section 5 of the

18 Federal Trade Commission Act (15 U.S.C. 45) to the ex19 tent that such section 5 applies to unfair methods of com20 petition.

21 SEC. 106. MANDATORY OPEN ACCESS FOR ALL TRANSMIT22 TING UTILITIES.

23 (a) DEFINITION OF PUBLIC UTILITY.—Section

24 201(e) of the Federal Power Act (16 U.S.C. 824(e)) is

25 amended to read as follows:
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1 ‘‘(e) DEFINITION OF PUBLIC UTILITY.—The term

2 ‘public utility’, when used in this Part and Parts III and

3 IV, means—

4 ‘‘(1) any person who owns or operates facilities

5 subject to the jurisdiction of the Commission under

6 this Part (other than facilities subject to such juris7 diction solely by reason of section 210, 211, or 212);

8 or

9 ‘‘(2) any transmitting utility (other than the

10 Federal power marketing administrations and the

11 Tennessee Valley Authority) which owns or operates

12 transmission facilities not otherwise subject to the

13 jurisdiction of the Commission under this Part, but

14 only with respect to determining, fixing, and other15 wise regulating the rates, terms, and conditions for

16 the transmission of electric energy under this Part.’’.

17 (b) APPLICATION OF PART TO GOVERNMENT UTILI18 TIES.—Section 201(f) of the Federal Power Act (16

19 U.S.C. 824(f)) is amended by striking ‘‘No provision’’ and

20 inserting ‘‘Except as provided in subsection (e)(2) and sec21 tion 3(23), no provision’’.

22 (c) NONJURISDICTIONAL STATUS RESULTING FROM

23 COMPLIANCE WITH ORDERS UNDER SECTIONS 210 AND

24 211; LIMITATION.—Section 201(b)(2) of the Federal

25 Power Act (16 U.S.C. 824(b)(2)) is amended by striking
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1 the period at the end of the second sentence and inserting

2 the following: ‘‘except with respect to determining, fixing,

3 and otherwise regulating the rates, terms, and conditions

4 for the transmission of electric energy under this Part

5 pursuant to subsection (e)(2).’’.

6 (d) DEFINITION.—Section 3(23) of the Federal

7 Power Act (16 U.S.C. 796) is amended to read as follows:

8 ‘‘(23) TRANSMITTING UTILITY.—The term

9 ‘transmitting utility’ means any entity that owns or

10 operates facilities used for the transmission of elec11 tric energy.’’.

12 SEC. 107. CLARIFICATION OF STATE AND FEDERAL AU13 THORITY OVER RETAIL TRANSMISSION SERV14 ICES.

15 (a) NONPREEMPTION OF STATE AUTHORITY TO

16 ORDER RETAIL WHEELING AND TO IMPOSE LOCAL DE17 LIVERY CHARGES.—Section 201(b) of the Federal Power

18 Act is amended by adding the following new paragraph

19 after paragraph (2):

20 ‘‘(3) This Act shall not preempt or otherwise affect

21 any authority under the law of a State or municipality

22 to—

23 ‘‘(A) require unbundled transmission and local

24 distribution service (as defined in section 151 of the

25 Public Utility Regulatory Policies Act of 1978) for
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1 the delivery of electric energy directly to an ultimate

2 consumer, or

3 ‘‘(B) impose a delivery charge on an ultimate

4 consumer’s receipt of electric energy.

5 If such unbundled transmission is in interstate commerce,

6 the rate, terms, and conditions of the transmission shall

7 be subject to the exclusive jurisdiction of the Commission

8 under this part.’’.

9 (b) OPEN ACCESS TRANSMISSION AUTHORITY; RE10 TAIL WHEELING IN RETAIL COMPETITION STATES.—

11 (1) APPLICABILITY OF OPEN ACCESS TRANS12 MISSION RULES.—Section 206 of the Federal Power

13 Act is amended by adding the following new sub14 section after subsection (d):

15 ‘‘(e) OPEN ACCESS TRANSMISSION SERVICES.—(1)

16 Under section 205 and this section, the Commission may

17 require, by rule or order, public utilities and transmitting

18 utilities to provide open access transmission services, sub19 ject to section 212(h), and may authorize recovery of

20 stranded costs, as defined by the Commission, arising

21 from any requirement to provide open access transmission

22 services. This section applies to any rule or order issued

23 by the Commission before, on, or after the date of enact24 ment of this Act.’’.
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1 (2) AUTHORITY TO ORDER RETAIL WHEEL2 ING.—Section 212(h) of the Federal Power Act is

3 amended as follows:

4 (A) By inserting ‘‘(1)’’ before ‘‘No’’.

5 (B) By striking ‘‘(1)’’, ‘‘(2)’’, ‘‘(A)’’, and

6 ‘‘(B)’’ and inserting in their places ‘‘(A)’’,

7 ‘‘(B)’’, ‘‘(i)’’, and ‘‘(ii)’’ respectively.

8 (C) By striking from redesignated para9 graph (1)(B)(ii) ‘‘the date of enactment of this

10 subsection’’ and inserting ‘‘October 24, 1992,’’.

11 (D) By adding the following new para12 graphs at the end:

13 ‘‘(2) Notwithstanding paragraph (1), the Commission

14 may issue an order that requires the transmission of elec15 tric energy directly or indirectly to an ultimate consumer

16 if a notice of retail competition under section 152(a)(1)

17 or section 153(a)(1) of the Public Utility Regulatory Poli18 cies Act of 1978 has been filed and is in effect with respect

19 to the ultimate consumer or if a distribution utility offers

20 open access to its delivery facilities to the ultimate con21 sumer.

22 ‘‘(3) Notwithstanding any provision of this Part to

23 the contrary, and whether or not a notice of retail competi24 tion under section 152(a)(1) or section 153(a)(1) of the

25 Public Utility Regulatory Policies Act of 1978 has been
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1 filed, upon application by a designated representative of

2 (A) a military base facility of the Department of Defense

3 or a supplier or proposed supplier of electric energy there4 to, or (B) an Indian tribe, or a supplier or proposed sup5 plier thereto, the Commission shall issue an order requir6 ing the transmission of electric energy directly or indi7 rectly to such facility or Indian tribe. Any order under

8 this paragraph shall establish rates, terms and conditions

9 that are consistent with the requirements for open access

10 transmission services provided pursuant to this Act. Noth11 ing in this paragraph shall affect the authority of a State

12 under section 152(d) and 153(d) of the Public Utility Reg13 ulatory Policies Act of 1978.’’.

14 (3) CONFORMING AMENDMENTS.—

15 (A) Section 3(24) of the Federal Power

16 Act is amended to read as follows:

17 ‘‘(24) ‘transmission services’ means the trans18 mission of electric energy sold or to be sold.’’.

19 (B) Section 211(a) of the Federal Power

20 Act is amended by striking ‘‘for resale’’.

21 (C) Section 212(a) of the Federal Power

22 Act is amended by striking ‘‘wholesale’’ each

23 time it appears, except the last time.
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1 (D) Section 3 of the Federal Power Act is

2 amended by adding the following new para3 graph at the end thereof:

4 ‘‘(26) INDIAN TRIBE.—The term ‘Indian tribe’

5 means any Indian tribe, band group, and nation, in6 cluding Alaska Indians, Aleuts, and Eskimos, and

7 any Alaskan Native Village, of the United States,

8 which is considered an eligible recipient under the

9 Indian Self Determination and Education Assistance

10 Act (Public Law 93–638) or was considered an eligi11 ble recipient under chapter 67 of title 31, United

12 States Code, prior to the repeal of such chapter.’’.

13 (c) DETERMINATION OF LOCAL DISTRIBUTION AND

14 TRANSMISSION FACILITIES.—Section 201 of the Federal

15 Power Act is amended by adding the following new sub16 section at the end thereof:

17 ‘‘(h) DETERMINATION OF LOCAL DISTRIBUTION AND

18 TRANSMISSION FACILITIES.—

19 ‘‘(1) APPLICATION BY STATE REGULATORY AU20 THORITY.—A State regulatory authority, a transmit21 ting utility, or a local distribution company may

22 apply to the Commission for a determination wheth23 er a particular facility used for the transportation of

24 electric energy located in such State is a local dis25 tribution facility subject to the jurisdiction of that
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1 State regulatory authority or is a transmission facil2 ity subject to the jurisdiction of the Commission.

3 The Commission may make such determination pur4 suant to such a request or on its own motion.

5 ‘‘(2) COMMISSION FINDINGS.—If an application

6 is submitted pursuant to this subsection by a State

7 regulatory authority, the Commission shall make a

8 determination giving the maximum practicable def9 erence to the position taken by the State regulatory

10 authority, in accordance with the following factors

11 associated with the facility:

12 ‘‘(A) function and purpose;

13 ‘‘(B) size;

14 ‘‘(C) location;

15 ‘‘(D) voltage level and other technical char16 acteristics;

17 ‘‘(E) historic, current and planned usage

18 patterns;

19 ‘‘(F) interconnection and coordination with

20 other facilities; and

21 ‘‘(G) any other factor the Commission

22 deems relevant.’’.
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1 SEC. 108. AUTHORITY TO ESTABLISH REGIONAL TRANS2 MISSION ORGANIZATION.

3 Section 202 of the Federal Power Act is amended by

4 adding the following new subsections after subsection (g):

5 ‘‘(h) REGIONAL TRANSMISSION ORGANIZATION.—(1)

6 Upon its own motion or upon application or complaint and

7 after notice and an opportunity for a hearing, the Com8 mission may order the establishment of entities for the

9 purpose of independent ownership or independent oper10 ation, control, and planning of interconnected trans11 mission facilities; order a transmitting utility to relinquish

12 ownership or control over operation of its transmission fa13 cilities to an entity for the purpose of independent owner14 ship or independent operation, control, and planning of

15 interconnected transmission facilities; subject generators

16 to the control of such entity consistent with other laws

17 to the extent necessary to permit reliable operation of the

18 transmission facilities; or take any combination of these

19 actions, if the Commission finds that—

20 ‘‘(A) this action is appropriate to promote com21 petitive electricity markets and efficient, economical,

22 and reliable operation of the interstate transmission

23 grid;

24 ‘‘(B) the entity established for the purpose of

25 independent ownership or independent operation,

26 control, and planning of interconnected transmission
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1 facilities will manage the transmission facilities in a

2 manner that assures that—

3 ‘‘(i) ownership of transmission facilities

4 provides no advantage in competitive electricity

5 markets;

6 ‘‘(ii) the transmission customers of the

7 Tennessee Valley Authority, the Bonneville

8 Power Administration, the Administrator of the

9 Southwestern Power Administration, and the

10 Administrator of the Western Area Power Ad11 ministration will not pay an unreasonable share

12 of the entity’s costs and will not experience un13 reasonable transmission rate increases resulting

14 from the establishment of the entity; and

15 ‘‘(iii) as applicable, the respective statutory

16 and treaty obligations and contractual obliga17 tions existing on the date of enactment of this

18 Act of the Board of Directors of the Tennessee

19 Valley Authority, the Administrator of the Bon20 neville Power Administration, the Administrator

21 of the Southwestern Power Administration, the

22 Administrator of the Western Area Power Ad23 ministration, the Bureau of Reclamation, and

24 the Corps of Engineers can be met;
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1 ‘‘(C) any transmitting utility ordered to trans2 fer ownership or control of its transmission facilities

3 will receive just and reasonable compensation for the

4 use of its facilities; and

5 ‘‘(D) adequate reliability of the affected trans6 mission facilities will be maintained.

7 Nothing in this subsection limits States from addressing

8 transmission facility maintenance, planning, siting, and

9 other utility functions in a manner consistent with this

10 Act or Commission action under this Act.

11 ‘‘(2) If not ordered under paragraph (1), the Ten12 nessee Valley Authority, the Administrator of the Bonne13 ville Power Administration, the Administrator of the

14 Southwestern Power Administration, or the Administrator

15 of the Western Area Power Administration is authorized

16 to participate in a regional transmission organization after

17 conducting a public process in the relevant service area

18 to receive comments. Notwithstanding any other law, par19 ticipation may include delegation of operation and control

20 of the Authority or Administration’s transmission system

21 to that entity, or other method of participation, under

22 terms and conditions the Authority or Administrator de23 termines necessary or appropriate, including being bound

24 by operational and other orders of the entity and by the
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1 results of arbitration of disputes with the entity or with

2 other participants.

3 ‘‘(3) If the Commission determines, after notice and

4 opportunity for hearing, that the rates, charges, or classi5 fications demanded, observed, charged, or collected by any

6 entity established for the purpose of independent owner7 ship or independent operation, control, and planning of

8 interconnected transmission facilities for any transmission

9 or sale, or that any rule, regulation, practice, or contract

10 affecting such rate, charge, or classification is unjust, un11 reasonable, unduly discriminatory or preferential, or fur12 thers or maintains the existence of market power, the

13 Commission shall, pursuant to the standards and proce14 dures in section 206 of this Act, determine the rate,

15 charge, classification, rule, regulation, practice or contract

16 that eliminates such market power and is just and reason17 able, and shall fix the same by order.

18 ‘‘(4) Upon request by an entity established for the

19 purpose of independent ownership or independent oper20 ation, control, and planning of interconnected trans21 mission facilities or any other person, the Commission

22 shall issue a declaratory order determining whether such

23 entity covers a sufficiently broad geographic region so as

24 to ensure the development of efficient regional electricity
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1 markets that encourage regional efficiencies in both gen2 eration dispatch and reliability of service.’’.

3 SEC. 109. SPECIAL PROVISIONS RESPECTING BPA AND

4 ERCOT TRANSMISSION.

5 (a) REPEAL OF SPECIAL BPA WHEELING PROVI6 SIONS.—Section 212(i) of the Federal Power Act (16

7 U.S.C. 824k(i)), relating to laws applicable to the Federal

8 Columbia River Transmission System, is repealed.

9 (b) REPEAL OF SPECIAL ERCOT WHEELING PROVI10 SIONS.—Section 212(k) of the Federal Power Act (16

11 U.S.C. 824k(k)), relating to ERCOT utilities, is repealed.

12 SEC. 110. ELECTRIC COMPANY MERGERS.

13 Section 203(a) of the Federal Power Act is amended

14 as follows:

15 (1) By striking ‘‘public utility’’ each place it ap16 pears and inserting ‘‘electric utility company’’.

17 (2) By inserting after the first sentence the fol18 lowing: ‘‘Except as the Commission may otherwise

19 provide by rule, no holding company in a holding

20 company system that includes an electric utility com21 pany shall, directly or indirectly, purchase, acquire,

22 or take any security of any electric utility company

23 or of a holding company in a holding company sys24 tem that includes an electric utility company, with-
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1 out first having secured an order of the Commission

2 authorizing it to do so.’’.

3 (3) By striking ‘‘hearing’’ in the last sentence

4 and inserting ‘‘oral or written presentation of

5 views’’.

6 (4) By adding at the end the following: ‘‘For

7 purposes of this subsection, the terms ‘electric utility

8 company’, ‘holding company’, and ‘holding company

9 system’ have the meaning given them in section 2 of

10 the Public Utility Holding Company Act of 1935.

11 Notwithstanding section 201(b)(1), generation facili12 ties shall be subject to the jurisdiction of the Com13 mission for purposes of this section, except as the

14 Commission may otherwise provide by rule.’’.

15 SEC. 111. REGIONAL TRANSMISSION PLANNING AGENCIES.

16 Part II of the Federal Power Act is amended by add17 ing after section 215, as added by this Act, the following

18 new section:

19 ‘‘SEC. 216. REGIONAL TRANSMISSION PLANNING AGENCIES.

20 ‘‘(a) CONSENT.—The consent of Congress is given for

21 agreements among two or more States to establish re22 gional transmission planning agencies to—

23 ‘‘(1) facilitate coordination among the States

24 within a particular region with regard to the plan-
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1 ning of future transmission and distribution facili2 ties;

3 ‘‘(2) carry out State siting responsibilities more

4 effectively;

5 ‘‘(3) facilitate regulation of transmission system

6 operation within the region;

7 ‘‘(4) meet the other requirements of this section

8 and rules prescribed by the Commission under this

9 section; and

10 ‘‘(5) otherwise be consistent with the public in11 terest.

12 ‘‘(b) AUTHORITY.—(1) If the Commission determines

13 that an agreement meets the requirements of subsection

14 (a), the agency established under the agreement has such

15 authority with respect to matters otherwise within the ju16 risdiction of the Commission as is expressly provided in

17 the agreement and is necessary or appropriate for carrying

18 out the planning, siting, and regulatory responsibilities of

19 the agency.

20 ‘‘(2) The Commission’s approval under this section

21 may be subject to any terms and conditions the Commis22 sion determines are necessary to ensure that the agree23 ment is in the public interest.

24 ‘‘(c) RULES.—(1) The Commission shall prescribe by

25 rule—
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1 ‘‘(A) criteria for use in making the determina2 tion regarding a regional transmission planning

3 agreement under subsection (a) (including criteria

4 specifying the extent to which a tribal government is

5 treated as a State for purposes of this section); and

6 ‘‘(B) standards for its administration of a re7 gional transmission planning agency established

8 under the agreement.

9 ‘‘(2) The rule shall require that—

10 ‘‘(A) a regional transmission planning agency

11 operate within a region that includes all or part of

12 each State that is a party to the agreement;

13 ‘‘(B) a regional transmission planning agency

14 be composed of 1 or more members from each State

15 that is a party to the agreement;

16 ‘‘(C) each participating State vest in the re17 gional transmission planning agency the authority

18 that otherwise would be exercised by the State and

19 that is necessary to provide for a comprehensive pro20 gram for planning and siting of transmission facili21 ties and to carry out the agreement and this section;

22 and

23 ‘‘(D) the agency follow reasonable procedures in

24 making its decisions, in governing itself, and in reg25 ulating the entities subject to its jurisdiction, includ-
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1 ing a requirement that all decisions of the agency be

2 made by majority vote (or majority of weighted

3 votes) of the members present and voting.

4 ‘‘(3) The rule may include any other requirement to

5 ensure that the regional transmission planning agency’s

6 organization, practices, and procedures are sufficient to

7 carry out this section and the rules issued under it.

8 ‘‘(d) TERMINATION.—The Commission, after notice

9 and opportunity for comment, may terminate the approval

10 of an agreement under this section at any time if it deter11 mines that the regional transmission planning agency fails

12 to comply with the provisions of this section or Commis13 sion rules under subsection (c) or that the agreement is

14 contrary to the public interest.

15 ‘‘(e) APPLICATION OF SECTION 313.—Section 313

16 shall apply to rehearing before a regional transmission

17 planning agency and judicial review of any action of a re18 gional transmission planning agency in the same manner

19 as that section applies to rehearing and judicial review of

20 orders of the Commission.’’.

21 SEC. 112. UNIVERSAL AND AFFORDABLE SERVICE.

22 Section 201 of the Federal Power Act (16 U.S.C.

23 824) is amended by adding at the end thereof the fol24 lowing new subsection:
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1 ‘‘(i) UNIVERSAL AND AFFORDABLE SERVICE.—It is

2 the sense of the Congress that—

3 ‘‘(1) every consumer of electric energy should

4 have access to electric energy at reasonable and af5 fordable rates; and

6 ‘‘(2) the Commission and the States should en7 sure that competition in the electric energy business

8 does not result in the loss of service to rural, resi9 dential, or low-income consumers.’’.

10 SEC. 113. CONFORMING AND TECHNICAL AMENDMENTS TO

11 THE FEDERAL POWER ACT.

12 Subsections (a) and (b) of section 316A of the Fed13 eral Power Act (16 U.S.C. 791a et seq.) are each amended

14 by striking ‘‘section 211, 212, 213, or 214,’’ in each place

15 such phrase appears and inserting ‘‘section 211, 212, 213,

16 214, 215, or 216’’.

17 SEC. 114. STUDY OF GRANDFATHERED SYSTEMS.

18 The Federal Energy Regulatory Commission shall

19 undertake a study of the extent to which retail electric

20 customers of local distribution companies subject to sec21 tion 154 of the Public Utility Regulatory Policies Act of

22 1978 (relating to grandfathering) benefit from the adop23 tion of retail electric competition and submit a report to

24 Congress not later than January 1, 2005, containing the

25 results of such study.
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1 SEC. 115. EFFECTIVE DATE.

2 The amendments made by this subtitle shall be effec3 tive on the date of enactment of this Act.

4 TITLE II—PROVISIONS RESPECT5 ING THE PUBLIC UTILITY

6 HOLDING COMPANY ACT OF

7 1935

8 SEC. 201. SHORT TITLE.

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

10 Company Act of 1999’’.

11 SEC. 202. REFORM OF HOLDING COMPANY REGULATION

12 UNDER PUHCA.

13 Eighteen months after the enactment of this Act, the

14 provisions of this title shall apply in lieu of the provisions

15 of the Public Utility Holding Company Act of 1935, except

16 that the Public Utility Holding Company Act of 1935 shall

17 remain in effect with respect to any holding-company sys18 tem which includes one or more subsidiary companies that

19 are public-utility companies, if such public-utility company

20 or companies provide retail electric or gas service in two

21 or more States in which the State regulatory authority has

22 not provided notice of retail competition pursuant to sec23 tion 152 of the Public Utility Regulatory Policies Act of

24 1978 or which has not otherwise required distribution util25 ities to provide open access service over the distribution
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1 facilities of each distribution utility subject to its jurisdic2 tion.

3 SEC. 203. DEFINITIONS.

4 For purposes of this title:

5 (1) AFFILIATE.—The term ‘‘affiliate’’ of a com6 pany means any company 5 percent or more of the

7 outstanding voting securities of which are owned,

8 controlled, or held with power to vote, directly or in9 directly, by such company.

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

11 company’’ of a company means any company in the

12 same holding company system with such company.

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

14 means the Federal Energy Regulatory Commission.

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

16 corporation, partnership, association, joint stock

17 company, business trust, or any organized group of

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

19 trustee, or other liquidating agent of any of the fore20 going.

21 (5) ELECTRIC UTILITY COMPANY.—The term

22 ‘‘electric utility company’’ means any company that

23 owns or operates facilities used for the generation,

24 transmission, or distribution of electric energy for

25 sale.
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1 (6) EXEMPT WHOLESALE GENERATOR AND

2 FOREIGN UTILITY COMPANY.—The terms ‘‘exempt

3 wholesale generator’’ and ‘‘foreign utility company’’

4 have the same meanings as in section 32 and 33, re5 spectively, of the Public Utility Holding Company

6 Act of 1935.

7 (7) GAS UTILITY COMPANY.—The term ‘‘gas

8 utility company’’ means any company that owns or

9 operates facilities used for distribution at retail

10 (other than the distribution only in enclosed portable

11 containers, or distribution to tenants or employees of

12 the company operating such facilities for their own

13 use and not for resale) of natural or manufactured

14 gas for heat, light, or power.

15 (8) HOLDING COMPANY.—The term ‘‘holding

16 company’’ means—

17 (A) any company that directly or indirectly

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

19 percent or more of the outstanding voting secu20 rities of a public utility company or of a holding

21 company of any public utility company; and

22 (B) any person, determined by the Com23 mission, after notice and opportunity for hear24 ing, to exercise directly or indirectly (either

25 alone or pursuant to an arrangement or under-
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1 standing with one or more persons) such a con2 trolling influence over the management or poli3 cies of any public utility company or holding

4 company as to make it necessary or appropriate

5 for the rate protection of utility customers with

6 respect to rates that such person be subject to

7 the obligations, duties, and liabilities imposed

8 by this Act upon holding companies.

9 (9) HOLDING COMPANY SYSTEM.—The term

10 ‘‘holding company system’’ means a holding com11 pany, together with its subsidiary companies.

12 (10) JURISDICTIONAL RATES.—The term ‘‘ju13 risdictional rates’’ means rates established by the

14 Commission for the transmission of electric energy,

15 the sale of electric energy at wholesale in interstate

16 commerce, the transportation of natural gas, and the

17 sale in interstate commerce of natural gas for resale

18 for ultimate public consumption for domestic, com19 mercial, industrial, or any other use.

20 (11) NATURAL GAS COMPANY.—The term ‘‘nat21 ural gas company’’ means a person engaged in the

22 transportation of natural gas in interstate commerce

23 or the sale of such gas in interstate commerce for

24 resale.
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1 (12) PERSON.—The term ‘‘person’’ means an

2 individual or company.

3 (13) PUBLIC UTILITY.—The term ‘‘public util4 ity’’ means any person who owns or operates facili5 ties used for transmission of electric energy or sales

6 of electric energy at wholesale in interstate com7 merce.

8 (14) PUBLIC UTILITY COMPANY.—The term

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

10 company or a gas utility company.

11 (15) STATE COMMISSION.—The term ‘‘State

12 commission’’ means any commission, board, agency,

13 or officer, by whatever name designated, of a State,

14 municipality, or other political subdivision of a State

15 that, under the laws of such State, has jurisdiction

16 to regulate public utility companies.

17 (16) SUBSIDIARY COMPANY.—The term ‘‘sub18 sidiary company’’ of a holding company means—

19 ‘‘(A) any company, 10 percent or more of

20 the outstanding voting securities of which are

21 directly or indirectly owned, controlled, or held

22 with power to vote, by such holding company;

23 and

24 (B) any person, the management or poli25 cies of which the Commission, after notice and
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1 opportunity for hearing, determines to be sub2 ject to a controlling influence, directly or indi3 rectly, by such holding company (either alone or

4 pursuant to an arrangement or understanding

5 with one or more other persons) so as to make

6 it necessary for the rate protection of utility

7 customers with respect to rates that such per8 son be subject to the obligations, duties, and li9 ability imposed by this Act upon subsidiary

10 companies of holding companies.

11 (17) VOTING SECURITY.—The term ‘‘voting se12 curity’’ means any security presently entitling the

13 owner or holder thereof to vote in the direction or

14 management of the affairs of a company.

15 SEC. 204. FEDERAL ACCESS TO BOOKS AND RECORDS.

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

17 associate company thereof shall maintain, and shall make

18 available to the Commission, such books, accounts, memo19 randa, and other records as are relevant to costs incurred

20 by a public utility or natural gas company that is an asso21 ciate company of such holding company and that provides

22 goods or services to, obtains goods or services from, or

23 engages in any transactions with such public utility com24 pany or natural gas company, and necessary or appro25 priate for the protection of utility customers with respect
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1 to jurisdictional rates for the transmission of electric en2 ergy in interstate commerce, the sale of electric energy at

3 wholesale in interstate commerce, the transportation of

4 natural gas in interstate commerce, and the sale in inter5 state commerce of natural gas for resale for ultimate pub6 lic consumption for domestic, commercial, industrial, or

7 any other use.

8 (b) AFFILIATE COMPANIES.—Each affiliate of a hold9 ing company or of any subsidiary company of a holding

10 company shall maintain, and make available to the Com11 mission, such books, accounts, memoranda, and other

12 records with respect to any transaction with a public util13 ity or natural gas company that is an associate company

14 of such holding company as are relevant to costs incurred

15 by such public utility or natural gas company and nec16 essary or appropriate for the protection of utility cus17 tomers with respect to jurisdictional rates.

18 (c) HOLDING COMPANY SYSTEMS.—The Commission

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

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

21 any affiliate thereof that provides goods or services to, ob22 tains goods or services from, or engages in any transaction

23 with a public utility or natural gas company that is an

24 associate company in such holding company system, as are

25 relevant to costs incurred by a public utility or natural
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1 gas company within such holding company system and

2 necessary or appropriate for the protection of utility cus3 tomers with respect to jurisdictional rates.

4 (d) CONFIDENTIALITY.—No member, officer, or em5 ployee of the Commission shall divulge any fact or infor6 mation that may come to his or her knowledge during the

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

8 other records as provided in this section, except as may

9 be directed by the Commission, by a committee of Con10 gress, or by a court of competent jurisdiction.

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

12 (a) IN GENERAL.—Upon the written request of a

13 State commission having jurisdiction to regulate a public

14 utility company in a holding company system, the holding

15 company or any associate company or affiliate thereof,

16 other than such public utility company, wherever located,

17 that provides goods or services to, obtains goods or serv18 ices from, or engages in any transactions with such public

19 utility company, shall produce for inspection such books,

20 accounts, memoranda, and other records that—

21 (1) have been identified in reasonable detail in

22 a proceeding before the State commission;

23 (2) the State commission deems are relevant to

24 costs incurred by such public utility company; and
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1 (3) are necessary for the effective discharge of

2 the responsibilities of the State commission with re3 spect to such proceeding.

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

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

6 ownership of one or more qualifying facilities under sec7 tion 210 of the Public Utility Regulatory Policies Act of

8 1978.

9 (c) CONFIDENTIALITY OF INFORMATION.—The pro10 duction of books, accounts, memoranda, and other records

11 under subsection (a) shall be subject to such terms and

12 conditions as may be necessary and appropriate to safe13 guard against unwarranted disclosure to the public of any

14 trade secrets or sensitive commercial information.

15 (d) EFFECT ON STATE LAW.—Nothing in this sec16 tion shall preempt applicable State law concerning the pro17 vision of books, records, or any other information, or in

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

19 records, or any other information under any other Federal

20 law, contract, or otherwise.

21 (e) COURT JURISDICTION.—Any United States dis22 trict court located in the State in which the State commis23 sion referred to in subsection (a) is located shall have ju24 risdiction to enforce compliance with this section.
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1 SEC. 206. EXEMPTION AUTHORITY.

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

3 date of enactment of this Act, the Commission shall pro4 mulgate a final rule to exempt from the requirements of

5 section 204 any person that is a holding company, solely

6 with respect to one or more of the following:

7 (1) Qualifying facilities under the Public Utility

8 Regulatory Policies Act of 1978.

9 (2) Exempt wholesale generators.

10 (3) Foreign utility companies.

11 (4) Exempt telecommunications companies.

12 (b) OTHER AUTHORITY.—If, upon application or

13 upon its own motion, the Commission finds that the books,

14 records, accounts, memoranda, and other records of any

15 person are not relevant to the jurisdictional rates of a pub16 lic utility or natural gas company, or if the Commission

17 finds that any class of transactions is not relevant to the

18 jurisdictional rates of a public utility or natural gas com19 pany, the Commission shall exempt such person or trans20 action from the requirements of section 204.

21 SEC. 207. AFFILIATE TRANSACTIONS.

22 Nothing in this title shall preclude the Commission

23 or a State commission from exercising its jurisdiction

24 under otherwise applicable law to determine whether a

25 public utility company, public utility, or natural gas com26 pany may recover in rates any costs of an activity per-
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1 formed by an associate company, or any costs of goods

2 or services acquired by such public utility company from

3 an associate company.

4 SEC. 208. APPLICABILITY.

5 No provision of this title shall apply to, or be deemed

6 to include—

7 (1) the United States;

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

9 State;

10 (3) any foreign governmental authority not op11 erating in the United States;

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

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

14 or

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

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

17 such in the course of official duty.

18 SEC. 209. EFFECT ON OTHER REGULATIONS.

19 Nothing in this title precludes the Commission or a

20 State commission from exercising its jurisdiction under

21 otherwise applicable law to protect utility customers from

22 paying too much for goods and services provided by asso23 ciate companies and from other cross subsidization of as24 sociate companies by regulated public utility companies.
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1 SEC. 210. ENFORCEMENT.

2 The Commission shall have the same powers as set

3 forth in sections 306 through 317 of the Federal Power

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

5 this title.

6 SEC. 211. SAVINGS PROVISIONS.

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

8 person from engaging in or continuing to engage in activi9 ties or transactions in which it is legally engaged or au10 thorized to engage on the effective date of this title.

11 (b) EFFECT ON OTHER COMMISSION AUTHORITY.—

12 Nothing in this title limits the authority of the Commis13 sion under the Federal Power Act (16 U.S.C. 791a et seq.)

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

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

16 Act).

17 SEC. 212. IMPLEMENTATION.

18 Not later than 18 months after the date of enactment

19 of this title, the Commission shall—

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

22 than section 205); and

23 (2) submit to the Congress detailed rec24 ommendations on technical and conforming amend25 ments to Federal law necessary to carry out this

26 title and the amendments made by this title.
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1 SEC. 213. TRANSFER OF RESOURCES.

2 All books and records that relate primarily to the

3 functions transferred to the Commission under this title

4 shall be transferred from the Securities and Exchange

5 Commission to the Commission.

6 SEC. 214. AUTHORIZATION OF APPROPRIATIONS.

7 There are authorized to be appropriated such funds

8 as may be necessary to carry out this title.

9 SEC. 215. CONFORMING AMENDMENT TO THE FEDERAL

10 POWER ACT.

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

12 825q) is repealed.

13 TITLE III—PROVISIONS RE14 SPECTING THE PUBLIC UTIL15 ITY REGULATORY POLICIES

16 ACT OF 1978

17 SEC. 301. SHORT TITLE.

18 This title may be cited as the ‘‘Ratepayer Protection

19 Act of 1999’’.

20 SEC. 302. FINDINGS.

21 The Congress finds that—

22 (1) implementation of the mandatory power

23 purchase provisions of section 210 of the Public

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

25 824a–3) has resulted in many consumers paying ex26 cessive rates for electric energy;
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1 (2) the Energy Policy Act of 1992 gives non2 regulated producers of electricity additional access to

3 the wholesale electric market through transmission

4 access and exemption from the Public Utility Hold5 ing Company Act of 1935; and

6 (3) in light of the competitive wholesale electric

7 marketplace brought about by the Energy Policy Act

8 of 1992 and Part IV of the Federal Power Act, the

9 purchase mandate in section 210 of the Public Util10 ity Regulatory Policies Act of 1978 is no longer

11 needed.

12 SEC. 303. PROSPECTIVE REPEAL.

13 Section 210 of the Public Utility Regulatory Policies

14 Act of 1978 is amended by adding the following new sub15 section at the end thereof:

16 ‘‘(m) PROSPECTIVE REPEAL.—

17 ‘‘(1) NEW CONTRACTS.—After the enactment of

18 this subsection, no electric utility shall be required

19 to enter into a new contract or obligation to pur20 chase or to sell electric energy or capacity pursuant

21 to this section.

22 ‘‘(2) EXISTING RIGHTS AND REMEDIES NOT AF23 FECTED.—Nothing in this subsection affects the

24 rights or remedies of any party with respect to the

25 purchase or sale of electric energy or capacity from
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1 or to a facility determined to be a qualifying small

2 power production facility or a qualifying cogenera3 tion facility under this section 210 pursuant to any

4 contract or obligation to purchase or to sell electric

5 energy or capacity in effect on the date of enactment

6 of this subsection, including the right to recover the

7 costs of purchasing such electric energy or capac8 ity.’’.

9 SEC. 304. RECOVERY OF COSTS.

10 Section 210 of the Public Utility Regulatory Policies

11 Act of 1978 is amended by adding the following new sub12 section at the end thereof:

13 ‘‘(n) RECOVERY OF COSTS.—The Commission shall

14 promulgate and enforce such regulations as may be re15 quired to assure that no electric utility shall be required

16 directly or indirectly to absorb the costs associated with

17 purchases of electric energy or capacity from a qualifying

18 facility pursuant to any legally enforceable obligation en19 tered into or imposed pursuant to this section prior to the

20 date of enactment of this subsection, to the extent that

21 the electric utility cannot otherwise reasonably mitigate

22 such costs. Such regulations shall be treated as a rule en23 forceable under the Federal Power Act (16 U.S.C. (16

24 U.S.C. 791a–825r).’’.
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1 TITLE IV—FEDERAL POWER

2 MARKETING ADMINISTRA3 TIONS AND TENNESSEE VAL4 LEY AUTHORITY

5 Subtitle A—Tennessee Valley

6 Authority

7 SEC. 401. DEFINITIONS.

8 For purposes of this subtitle:

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

10 Energy Regulatory Commission.

11 (2) The term ‘‘distributor’’ means a State,

12 county, municipality, or cooperative organization

13 which owns, controls, or operates local distribution

14 facilities and which on April 1, 1999, purchased

15 electric energy at wholesale from the Tennessee Val16 ley Authority under an all-requirements power con17 tract.

18 (3) The term ‘‘distributor service area’’ means

19 that geographic area which is either assigned to or

20 statutorily defined under State law as the area with21 in which a distributor has the right or privilege to

22 provide electric energy at retail to the ultimate con23 sumer and ratepayer.

24 (4) The term ‘‘electric supplier’’ means any per25 son who provides any electric supply.
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1 (5) The term ‘‘excess electric energy’’ means

2 electric energy that has become surplus to the firm

3 contractual obligations of the Tennessee Valley Au4 thority under section 10 of the Tennessee Valley Au5 thority Act of 1933 (16 U.S.C. 831i) due to any re6 duction in the quantity of electric energy that the

7 Tennessee Valley Authority was contractually re8 quired to supply on the date of enactment of this

9 Act where such reduction results from the election

10 by customers of the Tennessee Valley Authority not

11 to purchase from Tennessee Valley Authority electric

12 energy that the Tennessee Valley Authority was con13 tractually required to supply on the date of enact14 ment of this Act.

15 (6) The term ‘‘generating resource’’ means elec16 tric energy, including the actual or planned electric

17 energy capability of generating facilities.

18 (7) The term ‘‘major generating resource’’

19 means any generating resource that—

20 (A) has a planned capability greater than

21 50 average megawatts, and

22 (B) if acquired by the Tennessee Valley

23 Authority, is acquired for a period of more than

24 five years.
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1 (8) The term ‘‘person’’ means a person as de2 fined in section 3(4) of the Federal Power Act.

3 (9) The term ‘‘public utility’’ means a public

4 utility as defined in section 201(e)(1) of the Federal

5 Power Act.

6 (10) The term ‘‘Tennessee Valley Region’’

7 means the geographic area in which the Tennessee

8 Valley Authority or its distributors were the primary

9 source of power supply on the date of enactment of

10 this Act.

11 SEC. 402. WHOLESALE COMPETITION IN THE TENNESSEE

12 VALLEY REGION.

13 (a) AMENDMENTS TO THE FEDERAL POWER ACT.—

14 (1) Section 212(f) of the Federal Power Act (16 U.S.C.

15 824k(f)), relating to interconnection or wheeling orders

16 that result in the sale or delivery of electric energy outside

17 the Tennessee Valley Region, is repealed.

18 (2) Section 212(j) of the Federal Power Act (16

19 U.S.C. 824k(j)), relating to equitability within territory

20 restricted electric systems, is repealed.

21 (b) AMENDMENTS TO THE TENNESSEE VALLEY AU22 THORITY ACT.—(1) The third sentence of the first para23 graph of section 15d(a) of the Tennessee Valley Authority

24 Act of 1933 (16 U.S.C. 831n–4(a)), limiting the sale or

25 delivery of electric energy outside the area for which the
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1 Tennessee Valley Authority or its distributors were the

2 primary source of power supply on July 1, 1957, is re3 pealed.

4 (2) The second and third paragraphs of section

5 15d(a) of the Tennessee Valley Authority Act of 1933 (16

6 U.S.C. 831n–4(a)), which clarify the limitations imposed

7 by the third sentence of the first paragraph of the sub8 section, are repealed.

9 SEC. 403. TENNESSEE VALLEY AUTHORITY POWER SALES.

10 (a) BAR ON TENNESSEE VALLEY AUTHORITY RE11 TAIL SALES.—Notwithstanding section 10 of the Ten12 nessee Valley Authority Act of 1933 (16 U.S.C. 831i), the

13 Tennessee Valley Authority shall not sell or deliver electric

14 energy to any end use or retail customers that did not

15 have a contract for the purchase of electric energy with

16 the Tennessee Valley Authority for services to specific fa17 cilities on the date of enactment of this Act.

18 (b) REGIONAL PREFERENCE FOR WHOLESALE

19 POWER SALES.—

20 (1) REGIONAL PREFERENCE.—Notwithstanding

21 section 10, 11, and 12, or any other provision of the

22 Tennessee Valley Authority Act of 1933 (16 U.S.C.

23 831 and following), the sale and delivery of electric

24 energy at wholesale by the Tennessee Valley Author-
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1 ity for use outside the Tennessee Valley Region shall

2 be limited to excess electric energy.

3 (2) FIRM POWER SALES OF EXCESS ELECTRIC

4 ENERGY.—Any sale or delivery of excess electric en5 ergy by Tennessee Valley Authority pursuant to

6 paragraph (1) may be made only if each of the fol7 lowing requirements are met:

8 (A) NOTICE.—At least 30 days prior to

9 the execution of any contract for the sale or de10 livery of such electric energy the Tennessee Val11 ley Authority shall give the distributors written

12 notice that negotiations for such contract are

13 pending, and thereafter, at any distributor’s re14 quest, make available for its inspection current

15 drafts of the proposed contract.

16 (B) TERM.—The contract term for the sale

17 of such energy may not exceed 7 years.

18 (C) OFFER TO EXISTING CUSTOMERS.—

19 The excess electric energy to be sold pursuant

20 to paragraph (1) shall first be offered for a rea21 sonable period of time and under the same es22 sential rates, terms, and conditions to distribu23 tors.

24 (3) ECONOMY EXCHANGES.—Nothing in this

25 subsection shall prevent the Tennessee Valley Au-
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1 thority from making exchange power arrangements

2 with other electric suppliers when economically fea3 sible.

4 (c) APPLICATION OF FEDERAL POWER ACT TO EX5 CESS POWER SALES OF ELECTRIC ENERGY AT WHOLE6 SALE BY THE TENNESSEE VALLEY AUTHORITY.—Sales of

7 electric energy at wholesale by the Tennessee Valley Au8 thority for use outside the Tennessee Valley Region shall

9 be subject to the provisions of Parts II and III of the Fed10 eral Power Act (16 U.S.C. 791a) (except sections 204,

11 207, 209, 214, and 305), and the Commission shall have

12 jurisdiction under such Parts II and III over the rates,

13 terms, and conditions of such sales. Such provisions of the

14 Federal Power Act and the rules, regulations and policies

15 of the Commission thereunder, shall apply to such sales

16 by the Tennessee Valley Authority to the same extent and

17 in the same manner as such provisions apply to wholesale

18 sales of electric energy in interstate commerce by a public

19 utility otherwise subject to the jurisdiction of the Commis20 sion under Part II of such Act.

21 (d) APPLICATION OF TENNESSEE VALLEY AUTHOR22 ITY ACT TO SALES OUTSIDE TENNESSEE VALLEY RE23 GION.—The third proviso of section 10 of the Tennessee

24 Valley Authority Act of 1933 (16 U.S.C. 831i) and the

25 second and third provisos of section 12 of the Tennessee
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1 Valley Authority Act of 1933 (16 U.S.C. 831k) shall not

2 apply to any sale of excess electric energy by the Ten3 nessee Valley Authority for use outside the Tennessee Val4 ley Region.

5 SEC. 404. PROHIBITION ON ACQUISITION OF NEW GENER6 ATING RESOURCES.

7 Notwithstanding any other provision of law, the Ten8 nessee Valley Authority shall not acquire any new major

9 generating resource after the date of enactment of this

10 Act unless contractual or other financial arrangements

11 have been made to ensure that the customer or customers

12 on whose behalf the resource is acquired commit to pay

13 the full costs of the resource, and the Tennessee Valley

14 Authority shall not acquire any new generating resource

15 that it reasonably expects will necessitate the use of its

16 authority to recover otherwise nonrecoverable costs pro17 vided in section 408.

18 SEC. 405. RENEGOTIATION OF LONG-TERM CONTRACTS.

19 The Tennessee Valley Authority and its distributors

20 shall, within one year following the date of enactment of

21 this Act, renegotiate their existing long-term contracts

22 with respect to the remaining term, the length of the ter23 mination notice, the amount of electric energy that dis24 tributors may purchase from electric suppliers other than

25 the Tennessee Valley Authority, including access to the
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1 Tennessee Valley Authority transmission system, and pro2 visions for stranded cost recovery. Such renegotiated con3 tracts shall not grant any undue preference or advantage

4 to any person or subject any person to any undue preju5 dice or disadvantage. If the parties are unable to reach

6 agreement with regard to any of the issues under this sec7 tion within the 1-year period set forth above, they shall

8 submit the issue in dispute to the Federal Energy Regu9 latory Commission for final resolution.

10 SEC. 406. REGULATION OF TENNESSEE VALLEY AUTHORITY

11 TRANSMISSION SYSTEM.

12 (a) FEDERAL POWER ACT JURISDICTION.—The

13 transmission and local distribution of electric energy by

14 the Tennessee Valley Authority shall be subject to the pro15 visions of parts II and III of the Federal Power Act (ex16 cept sections 204, 207, 209, 214, and 305), the Commis17 sion shall have jurisdiction under such Parts II and III

18 over the rates, terms, and conditions of such transmission

19 and local distribution. Such provisions of the Federal

20 Power Act and the rules, regulations and policies of the

21 Commission thereunder, shall apply to such transmission

22 and local distribution by the Tennessee Valley Authority

23 to the same extent and in the same manner as such provi24 sions apply to the transmission of electric energy by a pub-
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1 lic utility otherwise subject to the jurisdiction of the Com2 mission under Part II of such Act.

3 (b) TRANSMISSION PLANT INVESTMENT.—Except as

4 otherwise provided by the Commission, the Tennessee Val5 ley Authority shall not make any transmission plant in6 vestment that is significant (as defined by regulations

7 issued by the Commission) without the Commission’s prior

8 approval as to the need for such investment, taking into

9 account possible alternate investments, project partici10 pants or transmission providers, the reasonableness of the

11 cost estimate and the prudence of the investment.

12 (c) RATE PHASE-IN.—If the Commission determines

13 that the initial application of this subtitle in the develop14 ment of any Tennessee Valley Authority rates for trans15 mission services would result in an excessive increase in

16 any rate, as determined by the Commission, the Commis17 sion may phase in the effect of the application of this sub18 title to such rate over a reasonable period of time to the

19 same extent it would ordinarily do so for public utility

20 rates.

21 SEC. 407. REGULATION OF TENNESSEE VALLEY AUTHORITY

22 DISTRIBUTORS.

23 (a) REPEAL OF TENNESSEE VALLEY AUTHORITY

24 REGULATION OF DISTRIBUTORS.—Upon the election of a

25 municipality or cooperative organization to which the Ten-
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1 nessee Valley Authority sells electric energy, the third pro2 viso of section 10 of the Tennessee Valley Authority Act

3 of 1933 (16 U.S.C. 831i) and the second and third pro4 visos of section 12 of the Tennessee Valley Authority Act

5 of 1933 (16 U.S.C. 831k) shall not apply to future whole6 sale sales by the Tennessee Valley Authority in the Ten7 nessee Valley Region, and the Tennessee Valley Authority

8 shall not be authorized to regulate, by means of rules, con9 tract provisions, resale rate schedules, contract termi10 nation rights, or any other method, any rates, terms, or

11 conditions imposed on the resale of such electric energy

12 by such municipality or cooperative organization.

13 (b) REMOVAL OF PURPA RATEMAKING AUTHOR14 ITY.—Section 3(17) of the Public Utility Regulatory Poli15 cies Act of 1978 (16 U.S.C. 2602(17)) is amended by

16 striking ‘‘, and in the case of an electric utility with re17 spect to which the Tennessee Valley Authority has rate18 making authority, such term means the Tennessee Valley

19 Authority’’.

20 (c) AUTHORITY OF GOVERNING BODIES OF MUNICI21 PALITIES AND COOPERATIVE ORGANIZATIONS.—Upon the

22 election by any municipality or cooperative organization

23 pursuant to subsection (a) of this section, any regulatory

24 authority currently exercised by the Tennessee Valley Au25 thority over any municipality or cooperative organization
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1 shall henceforth be exercised by the governing body of

2 such municipality or cooperative organization, in accord3 ance with the laws of the State in which it is organized.

4 SEC. 408. STRANDED COST RECOVERY.

5 Within one year of the date of enactment of this Act,

6 the Commission shall promulgate regulations with respect

7 to recovery of stranded costs (as determined by the Com8 mission) imposed on the Tennessee Valley Authority by

9 any departing power customer and providing for recovery

10 of the costs of any stranded transmission facilities (as de11 termined by the Commission) imposed upon the Tennessee

12 Valley Authority by any departing transmission customer.

13 These regulations shall provide that customers that did

14 not impose stranded costs upon the Tennessee Valley Au15 thority are not obligated to pay such costs on behalf of

16 other customers. The Commission’s methodology for de17 termining recovery of the Tennessee Valley Authority’s

18 stranded costs shall be consistent with the methodology

19 used by the Commission in determining stranded cost re20 covery for public utilities. The Tennessee Valley Authority

21 is authorized to recover such of its stranded costs as are

22 approved by the Commission. The Commission may not

23 impose a stranded cost recovery charge after September

24 30, 2007, unless the person against whom such charges

25 are assessed agrees otherwise. Any stranded cost recovery
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1 charge assessed by the Tennessee Valley Authority on ex2 isting retail or wholesale customers shall be unbundled

3 from the otherwise applicable retail or wholesale rate ap4 plicable to that customer and stated on the customer’s bill

5 as a separate charge.

6 SEC. 409. REGIONAL TRANSMISSION PLANNING AGENCIES.

7 The Tennessee Valley Authority is authorized to par8 ticipate, under such terms and conditions as it deems ap9 propriate, after conducting a public process to receive

10 comment on the Tennessee Valley Authority’s participa11 tion, in a Commission approved and regulated regional

12 transmission planning agency that operates in the Ten13 nessee Valley Region. The Tennessee Valley Authority

14 shall not join any regional transmission planning agency

15 which would require it, or the combined users of the Ten16 nessee Valley Authority’s transmission system, to pay a

17 disproportionate share of the regional transmission plan18 ning agency’s costs. The Tennessee Valley Authority shall

19 not participate in any regional transmission planning

20 agency that would result in undue cost shifts among cus21 tomers, as determined by the Commission. This section

22 shall not be construed to require the Tennessee Valley

23 Authority’s participation in any regional transmission

24 planning agency.
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1 SEC. 410. APPLICATION OF ANTITRUST LAW.

2 (a) IN GENERAL.—The Tennessee Valley Authority

3 shall be subject to the antitrust laws of the United States.

4 For purposes of this section, the term ‘‘antitrust laws’’

5 has the meaning given it in subsection (a) of the first sec6 tion of the Clayton Act (15 U.S.C. 12(a)), except that

7 such term includes the Act of June 19, 1936 (15 U.S.C.

8 13 and following), commonly known as the Robinson-Pat9 man Act, and section 5 of the Federal Trade Commission

10 Act (15 U.S.C. 45) to the extent that such section 5 ap11 plies to unfair methods of competition.

12 (b) JUDICIAL REVIEW.—Any person injured by viola13 tion of the antitrust laws by the Tennessee Valley Author14 ity may bring a civil action against the Tennessee Valley

15 Authority in Federal district court for injunctive relief or

16 civil damages. No action under the antitrust laws may be

17 maintained against the Tennessee Valley Authority, its of18 ficers, attorneys, employees, agents or representatives

19 arising out of any activity that is obligated or directed to

20 be performed under any Federal statute.

21 SEC. 411. DISPOSITION OF SURPLUS LOCAL DISTRIBUTION

22 FACILITIES.

23 The Tennessee Valley Authority shall offer for sale,

24 under such terms and conditions as established by the

25 Commission through regulation or order, all the following
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1 local distribution facilities owned by the Tennessee Valley

2 Authority:

3 (1) Facilities used solely for delivery to a single

4 customer.

5 (2) Facilities used solely for delivery to a group

6 of customers all of whom are willing to purchase

7 such facilities jointly.

8 Such customers may in any event elect that the Tennessee

9 Valley Authority shall retain such existing local distribu10 tion facilities, in which event the cost of such facilities

11 shall not be included in the Tennessee Valley Authority’s

12 transmission rates. In the case of any Tennessee Valley

13 Authority facility used in local distribution used solely to

14 serve any customer entitled to purchase electric energy di15 rectly from the Tennessee Valley Authority, such customer

16 shall have priority in the purchase of such facility. The

17 Tennessee Valley Authority shall not construct after the

18 date of enactment of this Act facilities designed to operate

19 at electric voltages below 35 kilovolts.

20 SEC. 412. COMMISSION REGULATIONS.

21 In addition to the regulations which the Commission

22 is required to adopt pursuant to this subtitle, the Commis23 sion may adopt other regulations and issue such orders

24 as it deems appropriate to implement the provisions of this

25 subtitle.
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1 SEC. 413. SAVINGS PROVISION.

2 (a) IN GENERAL.—This subtitle shall be interpreted

3 and implemented in a manner that does not adversely af4 fect the obligation of the Tennessee Valley Authority to

5 repay bonds issued by the Authority.

6 (b) TENNESSEE VALLEY AUTHORITY BONDS NOT

7 OBLIGATIONS OF THE UNITED STATES.—Nothing in this

8 subtitle shall affect section 15d(b) of the Tennessee Valley

9 Authority Act of 1933 (16 U.S.C. 831n–4(b)), providing

10 that bonds issued by the Tennessee Valley Authority shall

11 not be obligations of, nor shall payment of the principal

12 thereof or interest thereon be guaranteed by, the United

13 States.

14 Subtitle B—Bonneville Power

15 Administration

16 SEC. 421. DEFINITIONS.

17 Section 3 of the Federal Power Act is amended by

18 adding the following new paragraphs after paragraph

19 (27):

20 ‘‘(27) BONNEVILLE ADMINISTRATOR.—The

21 term ‘Bonneville Administrator’ means the Adminis22 trator of the Bonneville Power Administration;

23 ‘‘(28) PACIFIC NORTHWEST.—The term ‘Pacific

24 Northwest’ has the meaning given that term in sec25 tion 3(14) of the Pacific Northwest Electric Power
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1 Planning and Conservation Act (16 U.S.C.

2 839a(14));

3 ‘‘(29) BONNEVILLE TRANSMISSION SYSTEM.—

4 The term ‘Bonneville Transmission System’ means

5 transmission facilities owned or leased by the United

6 States, acting through the Bonneville Administrator,

7 and operated by the Bonneville Administrator or an8 other entity under section 202(h) or (i) of this Act;’’.

9 SEC. 422. APPLICATION OF FEDERAL POWER ACT.

10 After September 30, 2001, sections 202(h) and (i),

11 203 (with respect to dispositions of transmission facili12 ties), 205, 206, 208, and 210 through 213 of the Federal

13 Power Act and sections 301 through 304, 306, 307 (ex14 cept the last sentence of paragraph (c)), 308, 309, 313,

15 and 317 of the Federal Power Act apply to transmission

16 facilities and transmission of electric energy and the provi17 sion of necessary associated services over the Bonneville

18 Transmission System, provided that—

19 (1) any determination made under those sec20 tions as to whether an action or matter is just, rea21 sonable, not unduly discriminatory or preferential

22 shall be subject to—

23 (A) phasing in Commission-ordered

24 changes in transmission rates or charges that

25 would cause unreasonable cost shifts among
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1 users of the Bonneville Transmission System if

2 implemented at once;

3 (B) mitigating unreasonable adverse im4 pacts on remote transmission customers in the

5 Pacific Northwest that would otherwise result

6 from Commission-ordered changes in the his7 toric treatment of costs to acquire transmission

8 to serve customers historically served by Gen9 eral Transfer Agreements entered into between

10 the Bonneville Administrator and other trans11 mission providers;

12 (C) complying with requirements of other

13 laws applicable to the Bonneville Administrator;

14 (D) assuring the Bonneville Administra15 tor’s transmission rates and charges are estab16 lished sufficient to—

17 (i) recover existing and future Federal

18 investment in the Bonneville Transmission

19 System over a reasonable number of years

20 after first meeting all the Bonneville Ad21 ministrator’s other transmission costs and

22 expenses; and

23 (ii) produce the revenues necessary to

24 assure timely payment of all transmission
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1 related costs and expenses, including reve2 nues to establish reserves;

3 (E) rules established by the Commission

4 to—

5 (i) assure transmission access is pro6 vided over the Bonneville Transmission

7 System for hydroelectric power that must

8 be generated and transmitted at a par9 ticular time in order to reduce spill and

10 levels of dissolved nitrogen gas harmful to

11 fish; and

12 (ii) govern compensation to adversely

13 affected transmission users when capacity

14 is made available for transmission of hy15 droelectric power in those circumstances;

16 and

17 (F) subsection 205(g) of the Federal

18 Power Act; and

19 (2) these sections shall not apply to—

20 (A) the Bonneville Administrator’s activi21 ties other than transmission of electric energy

22 and provision of necessary associated services

23 over the facilities of the Bonneville Trans24 mission System; or
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1 (B) a contract in effect on the date of en2 actment of this section, except for rates which

3 are adjustable by the Administrator under the

4 contract; a Treaty of the United States; or a

5 contract concerning the physical delivery of en6 ergy and capacity entered into by entities des7 ignated pursuant to such a Treaty.

8 SEC. 423. SURCHARGE ON TRANSMISSION RATES TO RE9 COVER OTHERWISE NONRECOVERABLE

10 COSTS.

11 Section 205 of the Federal Power Act is amended by

12 adding the following after subsection (f):

13 ‘‘(g)(1) Subject to the requirements of paragraph (2),

14 the Bonneville Administrator shall propose and the Com15 mission shall establish a mechanism pursuant to this sec16 tion that enables the Administrator to place a surcharge

17 on rates or charges for transmission services over the Bon18 neville Transmission System when necessary in order to

19 recover power costs unable to be recovered through power

20 revenues in time to meet the cost recovery requirements

21 of section 7(a) of the Pacific Northwest Electric Power

22 Planning and Conservation Act (16 U.S.C. 839e(a)(1)).

23 ‘‘(2) The transmission surcharge mechanism set forth

24 in paragraph (1) shall—
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1 ‘‘(A) recover not more than $600,000,000 in

2 total and no more than $100,000,000 in any fiscal

3 year;

4 ‘‘(B) be available only between October 1, 2001,

5 and October 1, 2016;

6 ‘‘(C) be implemented by the Bonneville Admin7 istrator of only when the Bonneville Administrator

8 projects that available financial reserves attributable

9 to the power function will be less than

10 $150,000,000; and

11 ‘‘(D) to the fullest extent possible, be designed

12 and established to recover the costs from trans13 mission users in a manner that—

14 ‘‘(i) minimizes any effect on transmission

15 users’ choices among competing suppliers or

16 products;

17 ‘‘(ii) does not apply to use of the Bonne18 ville Transmission System for power sales out19 side the Pacific Northwest; and

20 ‘‘(iii) minimizes bypass of the Bonneville

21 Transmission System by transmission users

22 seeking to avoid the surcharge.

23 ‘‘(3) The Bonneville Administrator shall have sole

24 discretion to determine whether to implement the cost re25 covery mechanism established by the Commission under
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1 paragraph (1). Before imposing the surcharge, the Bonne2 ville Administrator shall conduct a public process in the

3 Pacific Northwest to receive comment on implementation

4 of the surcharge. As a part of that public process, the

5 Bonneville Administrator shall make available information

6 concerning the need for and amount of the surcharge. If

7 the Bonneville Administrator decides to implement a sur8 charge, it shall take effect on the Bonneville Administra9 tor’s proposed effective date, but no earlier than 60 days

10 following the Administrator’s filing of the proposed sur11 charge to the Commission for approval.

12 ‘‘(4)(A) Within 120 days after the effective date of

13 the surcharge, the Commission shall approve, reject, or

14 modify the surcharge and communicate its decision to the

15 Bonneville Administrator. In conducting its review, the

16 Commission shall not consider the appropriateness of the

17 cost recovery mechanism established by the Commission

18 under paragraph (1).

19 ‘‘(B) If the Commission rejects or modifies the sur20 charge, the Commission may order the Bonneville Admin21 istrator to refund, with interest, the portion of the sur22 charge the Commission found not justified or the Commis23 sion may authorize the Administrator to recover amounts

24 from customers who underpaid or did not pay the sur25 charge. If the Commission orders modification of the Bon-
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1 neville Administrator’s surcharge, such modified charge

2 shall be effective on the date and for the time period speci3 fied by the Commission.

4 ‘‘(5) Any payment of power costs through application

5 of transmission revenues collected by surcharge or other6 wise shall be treated as a loan to the Bonneville Adminis7 trator’s power function. The Bonneville Administrator

8 shall repay the loan as soon as possible from power func9 tion revenues once the Bonneville Administrator is able

10 to meet other power cost recovery and Treasury repay11 ment obligations on an annual basis using power revenues

12 and, to the extent practicable, refund such revenues to all

13 transmission customers charged the surcharge. The bor14 rowed revenues shall bear interest at a rate determined

15 appropriate by the Commission.

16 ‘‘(6) For the recovery of costs relating to any genera17 tion or conservation resources financed by debt issued by

18 a non-Federal party before October 1, 1998, and secured

19 by an obligation of the Bonneville Administrator to make

20 payments or net bill power and transmission service that

21 cannot be recovered through power rates and charges and

22 paid in accordance with the application of revenues and

23 the priority of payments specified by section 13(b) of the

24 Federal Columbia River Transmission System Act of 1974

25 (16 U.S.C. 838k(b)), the provisions of this section apply,
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1 except for the recovery limitations under paragraph (2)(A)

2 and the time limits under paragraph (2)(B), but only to

3 the extent such recovery would have been allowed under

4 laws applicable to the Bonneville Administrator as of Oc5 tober 1, 1998. In reviewing this surcharge request, the

6 Commission shall apply the standard of review applicable

7 as of October 1, 1998.’’.

8 SEC. 424. COMPLAINTS.

9 Section 306 of the Federal Power Act is amended by

10 inserting ‘‘agency or instrumentality of the United

11 States,’’ after ‘‘person,’’ in the first sentence.

12 SEC. 425. REVIEW OF COMMISSION ORDERS.

13 Section 313 of the Federal Power Act is amended by

14 inserting ‘‘agency or instrumentality of the United

15 States,’’ after ‘‘person,’’ in the first sentence in subsection

16 (a).

17 SEC. 426. ANTITRUST LAWS APPLICATION TO BPA.

18 (a) IN GENERAL.—Subject to subsection (b), effec19 tive January 1, 2003, the Bonneville Power Authority is

20 subject to the antitrust laws of the United States with re21 spect to the operation of its electric power system. For

22 purposes of this section, the term ‘antitrust laws’ has the

23 meaning given it in subsection (a) of the first section of

24 the Clayton Act (15 U.S.C. 12(a)), except that it includes

25 the Act of June 19, 1936 (15 U.S.C. 13 et. seq.), com-
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1 monly known as the Robinson-Patman Act, and section

2 5 of the Federal Trade Commission Act (15 U.S.C. 45),

3 to the extent that section 5 applies to unfair methods of

4 competition.

5 (b) EXCEPTION.—No damages, interest on damages,

6 costs, or attorney’s fees may be recovered under section

7 4, 4A, or 4C of the Clayton Act (15 U.S.C. 15, 15a, or

8 15c) from the Bonneville Power Authority.

9 SEC. 427. CONFORMING AMENDMENTS.

10 (a) Section 201(f) of the Federal Power Act is

11 amended by striking ‘‘No’’ and inserting ‘‘(1) Except as

12 provided in section 202(h)–(i), no’’.

13 (b) Section 212(i) of the Federal Power Act (16

14 U.S.C. 824(i)) is repealed.

15 (c) Section 6 of the Federal Columbia River Trans16 mission System Act (16 U.S.C. 838(d)) is repealed.

17 (d) Section 9 of the Federal Columbia River Trans18 mission System Act (16 U.S.C. 838g) is amended to read

19 as follows:

20 ‘‘SEC. 9. RATES AND CHARGES.

21 ‘‘Schedules of rates and charges for the sale, includ22 ing dispositions to a Federal agency, of all electric power

23 made available to the Administrator pursuant to section

24 8 of this Act or otherwise acquired shall be established—
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1 ‘‘(1) with a view to encouraging the widest pos2 sible diversified use of electric power at the lowest

3 possible rates to consumers consistent with sound

4 business principles;

5 ‘‘(2) having regard to the recovery (upon the

6 basis of the application of such rate schedules to the

7 capacity of the electric facilities of the projects) of

8 the cost of producing such electric power, including

9 the amortization of the capital investment allocated

10 to power over a reasonable period of years and pay11 ments provided for in section 11(b)(9) of this Act;

12 and

13 ‘‘(3) at levels to produce such additional power

14 revenues as may be required, in the aggregate with

15 all other power revenues of the Administrator, to

16 pay when due the principal of, premiums, discounts,

17 and expenses in connection with the issuance of and

18 interest on all bonds issued and outstanding pursu19 ant to this Act for other than the construction, ac20 quisition, and replacement of the Federal trans21 mission system, and amounts required to establish

22 and maintain reserve and other funds and accounts

23 established in connection therewith.

24 Electric power rates under this section shall be established

25 by the Administrator in accordance with section 7 of the
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1 Pacific Northwest Electric Power Planning and Conserva2 tion Act.’’.

3 (e) Section 10 of the Federal Columbia River Trans4 mission Act (16 U.S.C 838h) is repealed.

5 (f) Section 6 of the Pacific Northwest Regional Pref6 erence Act (16 U.S.C. 837e) is amended by striking ‘‘Fed7 eral energy or’’ in the first sentence and by striking the

8 second sentence.

9 (g) Section 7(a)(1) of the Pacific Northwest Electric

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

11 839e(a)(1)) is amended to read as follows:

12 ‘‘(1) The Administrator shall establish, and periodi13 cally review and revise, rates for the sale and disposition

14 of electric power and shall periodically review and, if nec15 essary, propose revisions to rates for the transmission of

16 electric power. Rates for the sale and disposition of electric

17 power shall be established and, as appropriate, revised to

18 recover, in accordance with sound business principles, the

19 costs associated with the acquisition and conservation of

20 electric power, including the amortization of the Federal

21 investment allocable to electric power rates in the Federal

22 Columbia River Power system (including irrigation elec23 tric-power-related costs required to be repaid out of elec24 tric power revenues) over a reasonable period of years and

25 the other costs and expenses incurred by the Adminis-
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1 trator pursuant to this Act and other provisions of law.

2 Rates for the sale and disposition of electric power shall

3 be established in accordance with section 9 of the Federal

4 Columbia River Transmission System Act (16 U.S.C.

5 838g), section 5 of the Flood Control Act of 1944 (16

6 U.S.C. 825s), and this Act.’’.

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

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

9 839e(a)(2)) is amended by—

10 (1) striking ‘‘Rates’’ and inserting ‘‘Power

11 rates’’;

12 (2) inserting ‘‘and’’ after the comma in sub13 paragraph (A);

14 (3) striking ‘‘, and’’ and inserting a period at

15 the end of subparagraph B; and

16 (4) striking subparagraph (C).

17 (i) Section 7(i) of the Pacific Northwest Electric

18 Power Planning and Conservation Act (16 U.S.C. 839(i))

19 is amended by inserting ‘‘power’’ immediately after ‘‘es20 tablishing’’ in the first sentence.

21 (j) Section 9(d) of the Pacific Northwest Electric

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

23 839f(d)) is amended by striking ‘‘transmission access,’’

24 and inserting ‘‘power’’ immediately before ‘‘services’’ in

25 the second sentence.
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1 (k) Section 9(i)(3) of the Pacific Northwest Electric

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

3 839f(i)(3)) is amended in the first sentence—

4 (1) by inserting ‘‘power’’ before ‘‘services’’ each

5 place such term appears; and

6 (2) by striking ‘‘transmission, storage, and’’

7 and inserting ‘‘storage and’’.

8 (l) Section 2(e) of the Act of August 20, 1937 (chap9 ter 720; 50 Stat. 731) (commonly known as the Bonneville

10 Project Act of 1937) is amended by striking the colon and

11 and all that follows and inserting a period.

12 Subtitle C—Other Power

13 Marketing Administrations

14 SEC. 431. DEFINITIONS.

15 For purposes of this subtitle:

16 (1) The term ‘‘Administrator’’ means the ad17 ministrator of a Federal power marketing adminis18 tration.

19 (2) The term ‘‘Commission’’ means the Federal

20 Energy Regulatory Commission.

21 (3) The term ‘‘Federal power marketing admin22 istrations’’ means the Western Area Power Adminis23 tration, Southwestern Power Administration, and

24 Southeastern Power Administration.
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1 (4) The term ‘‘power generating agencies’’

2 means the Bureau of Reclamation, the Army Corps

3 of Engineers, and the International Boundary and

4 Water Commission.

5 (5) The term ‘‘public utility’’ means a public

6 utility as defined in section 201(e)(1) the Federal

7 Power Act.

8 (6) The term ‘‘Secretary’’ means the Secretary

9 of Energy.

10 SEC. 432. ACCOUNTING.

11 Not later than 6 months after the date of enactment

12 of this Act, the Secretary of Energy shall promulgate rules

13 containing each of the following:

14 (1) ACCOUNTING PRINCIPLES AND REQUIRE15 MENTS.—Procedures to ensure that the Federal

16 power marketing administrations utilize the same

17 accounting principles and requirements as are appli18 cable to public utilities pursuant to Parts II and III

19 of the Federal Power Act (16 U.S.C. 792 and fol20 lowing) with respect to accounting for revenue, ex21 penses, investments, and depreciation.

22 (2) COMPLIANCE.—Procedures for the filing of

23 complaints with the Secretary of Energy by inter24 ested persons seeking to ensure compliance with the

25 procedures of this section.
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1 (3) ADMINISTRATIVE RECONCILIATION.—Proce2 dures to insure that the Bureau of Reclamation, the

3 United States Army Crops of Engineers, and the

4 Administrators of the Federal power marketing ad5 ministrations maintain a consistent set of books and

6 records for purposes of repayment obligations.

7 SEC. 433. REGIONAL TRANSMISSION PLANNING AGENCIES.

8 Each Federal power marketing administration is au9 thorized to participate, under such terms and conditions

10 as it deems appropriate, after conducting a public process

11 to receive comment on each Federal power marketing ad12 ministration’s participation, in a Commission approved

13 and regulated regional transmission planning agency, ex14 cept that—

15 (1) a Federal power marketing administration

16 shall not join any regional transmission planning

17 agency which would require it, or the combined

18 users of its transmission system, to pay a dispropor19 tionate share of the regional transmission planning

20 agency’s costs, and

21 (2) a Federal power marketing administration

22 shall not participate in any regional transmission

23 planning agency that would result in undue cost

24 shifts among its customers, as determined by the

25 Commission.
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1 This section shall not be construed to require the partici2 pation of the Federal power marketing administrations in

3 regional transmission planning agencies.

4 SEC. 434. APPLICATION OF ANTITRUST LAW.

5 (a) IN GENERAL.—The Federal power marketing ad6 ministrations shall be subject to the antitrust laws of the

7 United States. For purposes of this section, the term

8 ‘‘antitrust laws’’ has the meaning given it in subsection

9 (a) of the first section of the Clayton Act (15 U.S.C.

10 12(a)), except that such term includes the Act of June

11 19, 1936 (15 U.S.C. 13 and following), commonly known

12 as the Robinson-Patman Act, and section 5 of the Federal

13 Trade Commission Act (15 U.S.C. 45) to the extent that

14 such section 5 applies to unfair methods of competition.

15 (b) JUDICIAL REVIEW.—Any person injured by viola16 tion of the antitrust laws by any of the Federal power

17 marketing administrations may bring a civil action against

18 the agency in Federal district court for injunctive relief,

19 but neither the Federal power marketing administrations

20 nor their officers, attorneys, employees, agents or rep21 resentatives shall be held liable for civil damages or attor22 ney’s fees. No action under the antitrust laws may be

23 maintained against any of the Federal power marketing

24 administrations, their officers, attorneys, employees,

25 agents or representatives arising out of any activity that
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1 is obligated or directed to be performed under any Federal

2 statute.

3 TITLE V—RENEWABLE ENERGY

4 SEC. 501. RENEWABLE PORTFOLIO STANDARD.

5 (a) STANDARD.—Title II of the Public Utility Regu6 latory Polices Act of 1978 is amended by adding after sec7 tion 214 the following new section:

8 ‘‘SEC. 215. FEDERAL RENEWABLE PORTFOLIO STANDARD.

9 ‘‘(a) EFFECTIVE DATE.—The Administrator of the

10 Energy Information Administration in the Department of

11 Energy shall publish a notice on or before January 1,

12 2005, specifying the percentage of total electric energy

13 generation in the United States that the Administrator es14 timates to be supplied by renewable energy during the cal15 endar year 2004. If such percentage is less than 3 percent,

16 this section shall take effect on January 1, 2005.

17 ‘‘(b) MINIMUM RENEWABLE GENERATION REQUIRE18 MENT.—(1) For each calendar year beginning after the

19 effective date of this section, a retail electric supplier shall

20 submit to the Secretary of Energy (referred to in this sec21 tion as the ‘Secretary’) Renewable Energy Credits in an

22 amount equal to 3 percent of the total electric energy sold

23 by the retail electric supplier to electric consumers in the

24 calendar year. The retail electric supplier shall make this

25 submission before April 1 of the following calendar year.
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1 ‘‘(2) For purposes of this section, a ‘renewable en2 ergy’ resource means solar energy, wind, geothermal, or

3 biomass.

4 ‘‘(3) This section does not preclude a State from re5 quiring additional renewable energy generation in that

6 State.

7 ‘‘(c) SUBMISSION OF CREDITS.—A retail electric sup8 plier may satisfy the requirements of subsection (a)

9 through the submission of—

10 ‘‘(1) Renewable Energy Credits issued under

11 subsection (d) for renewable energy generated by the

12 retail electric supplier in the calendar year for which

13 Credits are being submitted or any previous calendar

14 year;

15 ‘‘(2) Renewable Energy Credits issued under

16 subsection (d) to any renewable energy generator for

17 renewable energy generated in the calendar year for

18 which Credits are being submitted or a previous cal19 endar year and acquired by the retail electric sup20 plier; or

21 ‘‘(3) any combination of Credits under para22 graphs (1) and (2).

23 ‘‘(d) ISSUANCE OF CREDITS.—(1) The Secretary

24 shall establish a program to issue, monitor the sale or ex25 change of, and track Renewable Energy Credits.
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1 ‘‘(2) Under the program, an entity that generates

2 electric energy through the use of a renewable energy re3 source may apply to the Secretary for the issuance of Re4 newable Energy Credits. The application shall indicate—

5 ‘‘(A) the type of renewable energy resource used

6 to produce the electricity;

7 ‘‘(B) the State in which the electric energy was

8 produced; and

9 ‘‘(C) any other information the Secretary deter10 mines appropriate.

11 ‘‘(3)(A) Except as provided in subparagraph (B), the

12 Secretary shall issue to an entity 1 Renewable Energy

13 Credit for each kilowatt-hour of electric energy the entity

14 generates through the use of a renewable energy resource

15 in any State in 2005 and any succeeding year.

16 ‘‘(B) The Secretary shall issue 2 Renewable Energy

17 Credits for each kilowatt-hour of electric energy generated

18 through the use of a renewable energy resource in any

19 State in 2005 and any succeeding year, if the generating

20 facility is located on Indian land. For purposes of this

21 paragraph, renewable energy generated by biomass cofired

22 with other fuels is eligible for 2 credits only if the biomass

23 was grown on the land eligible under this subparagraph.

24 ‘‘(C) To be eligible for a Renewable Energy Credit,

25 the unit of electricity generated through the use of a re-
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1 newable energy resource may be sold or may be used by

2 the generator. If both a renewable energy resource and

3 a nonrenewable energy resource are used to generate the

4 electric energy, the Secretary shall issue credits based on

5 the proportion of the renewable energy resource used. The

6 Secretary shall identify Renewable Energy Credits by type

7 of generation and by the State in which the generating

8 facility is located.

9 ‘‘(4) In order to receive a Renewable Energy Credit,

10 the recipient of a Renewable Energy Credit shall pay a

11 fee, calculated by the Secretary, in an amount that is

12 equal to the administrative costs of issuing, recording,

13 monitoring the sale or exchange of, and tracking the Cred14 it, or does not exceed 5 percent of the dollar value of the

15 Credit, whichever is lower. The Secretary shall retain the

16 fee and use it to pay these administrative costs.

17 ‘‘(5) When a generator sells electric energy generated

18 through the use of a renewable energy resource to a retail

19 electric supplier under a contract subject to section 210

20 of this Act, the retail electric supplier is treated as the

21 generator of the electric energy for the purposes of this

22 section for the duration of the contract.

23 ‘‘(6) The Secretary shall disqualify an otherwise eligi24 ble renewable energy generator from receiving a Renew-
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1 able Energy Credit if the generator has elected to partici2 pate in net metering under section 216.

3 ‘‘(e) SALE OR EXCHANGE.—A Renewable Energy

4 Credit may be sold or exchanged by the entity to which

5 it was issued or by any other entity that acquires the Cred6 it. A Renewable Energy Credit for any year that is not

7 used to satisfy the minimum renewable generation require8 ment of subsection (a) for that year may be carried for9 ward for use in another year.

10 ‘‘(f) RENEWABLE ENERGY CREDIT COST CAP.—Be11 ginning on the effective date of this section, the Secretary

12 shall offer Renewable Energy Credits for sale. The Sec13 retary shall charge 1.5 cents for each Renewable Energy

14 Credit sold during calendar year 2005, and on January

15 1 of each following year, the Secretary shall adjust for

16 inflation, based on the Consumer Price Index, the price

17 charged per Credit for that calendar year. The Secretary

18 shall deposit in a separate account the amount received

19 from a sale under this subsection. Amounts in the separate

20 account shall be available, without further appropriation,

21 to the Secretary to be used for purposes of providing as22 sistance for research and development of cleaner burning

23 fuels and renewable energy.

24 ‘‘(g) ENFORCEMENT.—The Secretary may bring an

25 action in the appropriate United States district court to
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1 impose a civil penalty on a retail electric supplier that does

2 not comply with subsection (b). A retail electric supplier

3 that does not submit the required number of Renewable

4 Energy Credits under subsection (b) is subject to a civil

5 penalty of not more than 3 times the value of the Renew6 able Energy Credits not submitted. For purposes of this

7 subsection, the value of a Renewable Energy Credit is the

8 price of a Credit determined under subsection (f) for the

9 year the Credits were not submitted.

10 ‘‘(h) INFORMATION COLLECTION.—The Secretary

11 may collect the information necessary to verify and

12 audit—

13 ‘‘(1) the annual electric energy generation and

14 renewable energy generation of any entity applying

15 for Renewable Energy Credits under this section;

16 ‘‘(2) the validity of Renewable Energy Credits

17 submitted by a retail electric supplier to the Sec18 retary; and

19 ‘‘(3) the quantity of electricity sales of all retail

20 electric suppliers.

21 ‘‘(i) SUNSET.—This section expires December 31,

22 2015.’’.

23 (b) DEFINITIONS.—Section 3 of the Public Utility

24 Regulatory Polices Act of 1978 is amended by adding

25 after paragraph (24) the following new paragraph:
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1 ‘‘(25) The term ‘retail electric supplier’ means

2 a person, State agency, or Federal agency that sells

3 electric energy to an electric consumer.

4 ‘‘(26) The term ‘Indian land’ means—

5 ‘‘(A) any land within the limits of any In6 dian reservation, pueblo, or rancheria;

7 ‘‘(B) any land not within the limits of any

8 Indian reservation, pueblo, or rancheria title to

9 which was on the date of passage of the Elec10 tric Consumers’ Power to Choose Act of 1999

11 either held in trust by the United States for the

12 benefit of any Indian tribe or individual or held

13 by any Indian tribe or individual subject to re14 striction by the United States against alien15 ation;

16 ‘‘(C) any dependent Indian community;

17 and

18 ‘‘(D) any land conveyed to any Alaska Na19 tive corporation under the Alaska Native

20 Claims Settlement Act.

21 ‘‘(27) The term ‘Indian tribe’ means any Indian

22 tribe, band, group, or nation, including Alaska Indi23 ans, Aleuts, or Eskimos, or any Alaskan Native Vil24 lage of the United States, which is considered an eli25 gible recipient under the Indian Self-Determination
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1 and Education Assistance Act (Public Law 93–638)

2 or was considered an eligible recipient under chapter

3 67 of title 31, United States Code, prior to the re4 peal of such chapter.’’.

5 (c) TABLE OF CONTENTS.—The table of contents for

6 title II of the Public Utility Regulatory Policies Act of

7 1978 (16 U.S.C. 2601 and following) is amended by add8 ing the following at the end thereof:

‘‘Sec. 215. Federal renewable portfolio standard.’’.

9 SEC. 502. NET METERING.

10 (a) AMENDMENT OF PURPA.—The Public Utility

11 Regulatory Polices Act of 1978 is amended by adding the

12 following new section after section 215, as added by sec13 tion 501 of this Act:

14 ‘‘SEC. 216. NET METERING FOR RENEWABLE ENERGY.

15 ‘‘(a) DEFINITIONS.—For purposes of this section—

16 ‘‘(1) the term ‘eligible on-site generating facil17 ity’ means a facility on the site of an electric con18 sumer with a peak generating capacity of 20 kilo19 watts or less that is fueled solely by a renewable en20 ergy resource.

21 ‘‘(2) The term ‘renewable energy resource’

22 means solar energy, wind, geothermal, or biomass.

23 ‘‘(3) The term ‘net metering service’ means

24 service to an electric consumer under which elec25 tricity generated by that consumer from an eligible
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1 on-site generating facility and delivered to the dis2 tribution system through the same meter through

3 which purchased electricity is received may be used

4 to offset electricity provided by the retail electric

5 supplier to the electric consumer during the applica6 ble billing period so that an electric consumer is

7 billed only for the net electricity consumed during

8 the billing period, but in no event shall the net be

9 less than zero during the applicable billing period.

10 ‘‘(b) REQUIREMENT TO PROVIDE NET METERING

11 SERVICE.—Each retail electric supplier shall make avail12 able upon request net metering service to any retail elec13 tric consumer that the supplier currently serves or solicits

14 for service.

15 ‘‘(c) STATE AUTHORITY.—This section does not pre16 clude a State from imposing additional requirements con17 sistent with the requirements in this section, including the

18 imposition of a cap limiting the amount of net metering

19 available in the State. Nothing in this Act or any other

20 Federal law preempts or otherwise affects authority under

21 State law to require a retail electric supplier to make avail22 able net metering service to a retail electric consumer

23 which the supplier serves or offers to serve.’’.

24 (c) TABLE OF CONTENTS.—The table of contents for

25 title II of the Public Utility Regulatory Policies Act of
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1 1978 (16 U.S.C. 2601 and following) is amended by add2 ing the following at the end thereof:

‘‘Sec. 216. Net metering for renewable energy.’’.

3 TITLE VI—PROVISIONS RELAT4 ING TO THE INTERNAL REV5 ENUE CODE

6 SEC. 601. 5-YEAR EXTENSION OF CREDIT FOR PRODUCING

7 ELECTRICITY FROM RENEWABLE RE8 SOURCES.

9 Subsection (c) of section 45 of the Internal Revenue

10 Code of 1986 (relating to credit for electricity produced

11 from certain renewable resources) is amended to read as

12 follows:

13 ‘‘(c) DEFINITIONS.—For purposes of this

14 subsection—

15 ‘‘(1) QUALIFIED ENERGY RESOURCES.—The

16 term ‘qualified energy resources’ means—

17 ‘‘(A) wind,

18 ‘‘(B) solar power,

19 ‘‘(C) geothermal power, and

20 ‘‘(D) biomass.

21 ‘‘(2) BIOMASS.—The term ‘biomass’ means

22 closed-loop biomass and forest and agricultural bio23 mass.

24 ‘‘(3) CLOSED-LOOP BIOMASS.—The term

25 ‘closed-loop biomass’ means any organic material
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1 from a plant which is planted exclusively for pur2 poses of being used at a qualified facility to produce

3 electricity.

4 ‘‘(4) FOREST AND AGRICULTURAL BIOMASS.—

5 The term ‘forest and agricultural biomass’ means

6 any solid, nonhazardous, cellulosic waste material,

7 that is segregated from other waste materials, and

8 that is derived from the following forest-related re9 sources: mill residues, pre-commercial thinnings, and

10 slash and brush, but not including old growth tim11 ber, waste pallets, crates, dunnage, unsegregated

12 municipal solid waste (garbage), landscape or right13 of-way tree trimmings, and biomass derived from ag14 riculture sources, including orchard tree crops, vine15 yard grain, legumes, sugar, and other crop-by-prod16 ucts or residues.

17 ‘‘(5) QUALIFIED FACILITY.—The term ‘quali18 fied facility’ means any facility owned by the tax19 payer which is originally placed in service—

20 ‘‘(A) in the case of a facility using wind to

21 produce electricity, after December 31, 1993,

22 and before July 1, 2015,

23 ‘‘(B) in the case of a facility using solar

24 power or geothermal power to produce elec-
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1 tricity, after the date of the enactment of this

2 subparagraph and before July 1, 2015, and

3 ‘‘(C) in the case of a facility using biomass

4 to produce electricity, after December 31, 1992,

5 and before July 1, 2015.’’.

6 SEC. 602. CREDIT FOR ENERGY EFFICIENCY IMPROVE7 MENTS TO EXISTING HOMES.

8 (a) IN GENERAL.—Subpart A of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of

10 1986 (relating to nonrefundable personal credits) is

11 amended by inserting after section 25A the following new

12 section:

13 ‘‘SEC. 25B. ENERGY EFFICIENCY IMPROVEMENTS TO EXIST14 ING HOMES.

15 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in16 dividual, there shall be allowed as a credit against the tax

17 imposed by this chapter for the taxable year an amount

18 equal to 20 percent of the amount paid or incurred by

19 the taxpayer for qualified energy efficiency improvements

20 installed during such taxable year.

21 ‘‘(b) LIMITATIONS.—

22 ‘‘(1) MAXIMUM CREDIT.—The credit allowed by

23 this section with respect to a dwelling shall not ex24 ceed $2,000.
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1 ‘‘(2) PRIOR CREDIT AMOUNTS FOR TAXPAYER

2 ON SAME DWELLING TAKEN INTO ACCOUNT.—If a

3 credit was allowed to the taxpayer under subsection

4 (a) with respect to a dwelling in 1 or more prior tax5 able years, the amount of the credit otherwise allow6 able for the taxable year with respect to that dwell7 ing shall not exceed the amount of $2,000 reduced

8 by the sum of the credits allowed under subsection

9 (a) to the taxpayer with respect to the dwelling for

10 all prior taxable years.

11 ‘‘(c) CARRYFORWARD OF UNUSED CREDIT.—If the

12 credit allowable under subsection (a) exceeds the limita13 tion imposed by section 26(a) for such taxable year re14 duced by the sum of the credits allowable under subpart

15 A of part IV of subchapter A (other than this section),

16 such excess shall be carried to the succeeding taxable year

17 and added to the credit allowable under subsection (a) for

18 such taxable year.

19 * ‘‘(d) QUALIFIED ENERGY EFFICIENCY IMPROVE20 MENTS.—For purposes of this section, the term ‘qualified

21 energy efficiency improvements’ means any energy effi22 cient building envelope component, and any energy effi23 cient heating, cooling, or water heating appliance, the in24 stallation of which, by itself or in combination with other

25 such components or appliances, is certified to improve the
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1 annual energy performance of the existing home by at

2 least 30 percent, if—

3 ‘‘(1) such component or appliance is installed in

4 or on a dwelling—

5 ‘‘(A) located in the United States, and

6 ‘‘(B) owned and used by the taxpayer as

7 the taxpayer’s principal residence (within the

8 meaning of section 121),

9 ‘‘(2) the original use of such component or ap10 pliance commences with the taxpayer, and

11 ‘‘(3) such component or appliance reasonably

12 can be expected to remain in use for at least 5

13 years.

14 Such certification shall be made by the contractor who in15 stalled such improvements, a local building regulatory au16 thority, or a qualified energy consultant (such as a utility

17 or an accredited home energy rating system provider).

18 ‘‘(e) SPECIAL RULES.—

19 ‘‘(1) TENANT-STOCKHOLDER IN COOPERATIVE

20 HOUSING CORPORATION.—In the case of an indi21 vidual who is a tenant-stockholder (as defined in sec22 tion 216) in a cooperative housing corporation (as

23 defined in such section), such individual shall be

24 treated as having paid his tenant-stockholder’s pro25 portionate share (as defined in section 216(b)(3)) of
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1 the cost of qualified energy efficiency improvements

2 made by such corporation.

3 ‘‘(2) CONDOMINIUMS.—

4 ‘‘(A) IN GENERAL.—In the case of an indi5 vidual who is a member of a condominium man6 agement association with respect to a condo7 minium which he owns, such individual shall be

8 treated as having paid his proportionate share

9 of the cost of qualified energy efficiency im10 provements made by such association.

11 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO12 CIATION.—For purposes of this paragraph, the

13 term ‘condominium management association’

14 means an organization which meets the require15 ments of paragraph (1) of section 528(c) (other

16 than subparagraph (E) thereof) with respect to

17 a condominium project substantially all of the

18 units of which are used as residences.

19 ‘‘(f) BASIS ADJUSTMENT.—For purposes of this sub20 title, if a credit is allowed under this section for any ex21 penditure with respect to any property, the increase in the

22 basis of such property which would (but for this sub23 section) result from such expenditure shall be reduced by

24 the amount of the credit so allowed.
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1 ‘‘(g) TERMINATION.—Subsection (a) shall apply to

2 qualified energy efficiency improvements installed during

3 the period beginning on January 1, 1999, and ending on

4 December 31, 2003.’’.

5 (b) CONFORMING AMENDMENTS.—

6 (1) Subsection (c) of section 23 of such Code

7 is amended by inserting ‘‘, section 25B, and section

8 1400C’’ after ’’other than this section’’.

9 (2) Subparagraph (C) of section 25(e)(1) of

10 such Code is amended by striking ‘‘section 23’’ and

11 inserting ‘‘sections 23, 25B, and 1400C’’.

12 (3) Subsection (d) of section 1400C of such

13 Code is amended by inserting ‘‘and section 25B’’

14 after ‘‘other than this section’’.

15 (4) Subsection (a) of section 1016 of such Code

16 is amended by striking ‘‘and’’ at the end of para17 graph (26), by striking the period at the end of

18 paragraph (27) and inserting ‘‘; and’’, and by add19 ing at the end the following new paragraph:

20 ‘‘(28) to the extent provided in section 25B(f),

21 in the case of amounts with respect to which a credit

22 has been allowed under section 25B.’’.

23 (5) The table of sections for subpart A of part

24 IV of subchapter A of chapter 1 of such Code is
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1 amended by inserting after the item relating to sec2 tion 25A the following new item:

‘‘Sec. 25B. Energy efficiency improvements to existing homes.’’.

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

4 this section shall apply to taxable years ending after De5 cember 31, 1998.

6 SEC. 603. BUSINESS CREDIT FOR CONSTRUCTION OF NEW

7 ENERGY EFFICIENT HOME.

8 (a) IN GENERAL.—Subpart D of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of

10 1986 (relating to business related credits) is amended by

11 inserting after section 45C the following new section:

12 ‘‘SEC. 45D. NEW ENERGY EFFICIENT HOME CREDIT.

13 ‘‘(a) IN GENERAL.—For purposes of section 38, in

14 the case of an eligible contractor, the credit determined

15 under this section for the taxable year is an amount equal

16 to the aggregate adjusted bases of all energy efficient

17 property installed in a qualified new energy efficient home

18 during construction of such home.

19 ‘‘(b) LIMITATIONS.—

20 ‘‘(1) MAXIMUM CREDIT.—

21 ‘‘(A) IN GENERAL.—The credit allowed by

22 this section with respect to a dwelling shall not

23 exceed $2,000.

24 ‘‘(B) PRIOR CREDIT AMOUNTS ON SAME

25 DWELLING TAKEN INTO ACCOUNT.—If a credit
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1 was allowed under subsection (a) with respect

2 to a dwelling in 1 or more prior taxable years,

3 the amount of the credit otherwise allowable for

4 the taxable year with respect to that dwelling

5 shall not exceed the amount of $2,000 reduced

6 by the sum of the credits allowed under sub7 section (a) with respect to the dwelling for all

8 prior taxable years.

9 ‘‘(2) COORDINATION WITH REHABILITATION

10 AND ENERGY CREDITS.—For purposes of this

11 section—

12 ‘‘(A) the basis of any property referred to

13 in subsection (a) shall be reduced by that por14 tion of the basis of any property which is attrib15 utable to qualified rehabilitation expenditures

16 (as defined in section 47(c)(2)) or to the energy

17 percentage of energy property (as determined

18 under section 48(a)), and

19 ‘‘(B) expenditures taken into account

20 under either section 47 or 48(a) shall not be

21 taken into account under this section.

22 ‘‘(c) QUALIFIED NEW ENERGY EFFICIENT HOME.—

23 ‘‘(1) IN GENERAL.—Property is a qualified new

24 energy efficient home if—
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1 ‘‘(A) the original use of such property com2 mences with the taxpayer and is, at the time of

3 such use, the principal residence of the tax4 payer, and

5 ‘‘(B) such property—

6 ‘‘(i) reduces calculated environmental

7 emissions for heating and cooling by 50

8 percent compared to a reference house that

9 complies with minimum standard practice,

10 as determined according to the require11 ments specified under paragraph (2)(B),

12 and

13 ‘‘(ii) is certified before such use com14 mences as meeting the requirements of

15 clause (i).

16 ‘‘(2) CERTIFICATION.—

17 ‘‘(A) IN GENERAL.—The Secretary of En18 ergy shall establish requirements for the certifi19 cation under paragraph (1)(B)(ii) after exam20 ining the requirements for energy consultants

21 and home energy ratings providers specified by

22 the Mortgage Industry National Accreditation

23 Procedures for Home Energy Rating Systems.

24 Any certification under such paragraph shall be
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1 conveyed to the taxpayer seeking the credit

2 under this section.

3 ‘‘(B) METHODS FOR DEMONSTRATING

4 COMPLIANCE.—(i) Compliance with the require5 ments of paragraph (1)(B)(i) shall be dem6 onstrated by either the component method de7 scribed in clause (ii) or the performance method

8 described in clause (iii).

9 ‘‘(ii) The component method is a method

10 in which all of the components of a home com11 ply with the additional requirements established

12 by the Secretary of Energy, resulting in

13 achievement of results equivalent to the results

14 of using the performance method.

15 ‘‘(iii) The performance method is a method

16 in which compliance with the requirements of

17 paragraph (1)(B)(i) is demonstrated by the use

18 of computer software that meets specifications

19 promulgated in regulations by the Secretary of

20 Energy in consultation with the Secretary of

21 Treasury. Such regulations shall contain proce22 dures and methods for calculating emissions

23 and emissions reductions and for reporting the

24 results, and shall be based on the 1998 Cali25 fornia residential ACM manual, except that the
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1 calculational procedures shall allow a home to

2 qualify for the tax credit under this section re3 gardless of whether the home uses a gas or oil

4 furnace or boiler, or an electric heat pump. The

5 regulations shall require that the software allow

6 for the printing of IRS forms needed for the

7 tax credit under this section, and explanations

8 for the taxpayer of the energy efficiency fea9 tures that were used to comply with the re10 quirements for the tax credit under this section.

11 The Secretary of Energy shall approve software

12 submissions that comply with the calculational

13 requirements of the regulations.

14 ‘‘(C) PERSONS MAKING CERTIFICATION.—

15 The certification under paragraph (1)(B)(ii)

16 shall be made to the Secretary of Energy by an

17 individual qualified to determine compliance

18 with such paragraph. Individuals qualified to

19 determine such compliance shall be only those

20 individuals who are recognized by an organiza21 tion certified by the Secretary of Energy for

22 such purposes.

23 ‘‘(d) DEFINITIONS.—For purposes of this section—
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1 ‘‘(1) ELIGIBLE CONTRACTOR.—The term ‘eligi2 ble contractor’ means the person who constructed

3 the new energy efficient home.

4 ‘‘(2) ENERGY EFFICIENT PROPERTY.—The

5 term ‘energy efficient property’ means any energy

6 efficient building envelope component, and any en7 ergy efficient heating, cooling, or water heating ap8 pliance.

9 ‘‘(3) PRINCIPAL RESIDENCE.—The term ‘prin10 cipal residence’ has the same meaning as when used

11 in section 121, except that the period for which a

12 building is treated as the principal residence of the

13 taxpayer shall also include the 60-day period ending

14 on the 1st day on which it would (but for this para15 graph) first be treated as his principal residence.

16 ‘‘(e) BASIS ADJUSTMENT.—For purposes of this sub17 title, if a credit is allowed under this section for any ex18 penditure with respect to any property, the increase in the

19 basis of such property which would (but for this sub20 section) result from such expenditure shall be reduced by

21 the amount of the credit so allowed.

22 ‘‘(f) TERMINATION.—Subsection (a) shall apply to

23 dwellings purchased during the period beginning on Janu24 ary 1, 1999, and ending on December 31, 2003.’’.
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1 (b) CREDIT MADE PART OF GENERAL BUSINESS

2 CREDIT.—Subsection (b) of section 38 of such Code (re3 lating to current year business credit) is amended by strik4 ing ‘‘plus’’ at the end of paragraph (11), by striking the

5 period at the end of paragraph (12) and inserting ‘‘, plus’’,

6 and by adding at the end thereof the following new para7 graph:

8 ‘‘(13) the new energy efficient home credit de9 termined under section 45D.’’.

10 (c) DENIAL OF DOUBLE BENEFIT.—Section 280C of

11 such Code (relating to certain expenses for which credits

12 are allowable) is amended by adding at the end thereof

13 the following new subsection:

14 ‘‘(d) NEW ENERGY EFFICIENT HOME EXPENSES.—

15 No deduction shall be allowed for that portion of expenses

16 for a new energy efficient home otherwise allowable as a

17 deduction for the taxable year which is equal to the

18 amount of the credit determined for such taxable year

19 under section 45D.’’.

20 (d) CREDIT ALLOWED AGAINST REGULAR AND MIN21 IMUM TAX.—

22 (1) IN GENERAL.—Subsection (c) of section 38

23 of such Code (relating to limitation based on amount

24 of tax) is amended by redesignating paragraph (3)
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1 as paragraph (4) and by inserting after paragraph

2 (2) the following new paragraph:

3 ‘‘(3) SPECIAL RULES FOR NEW ENERGY EFFI4 CIENT HOME CREDIT.—

5 ‘‘(A) IN GENERAL.—In the case of the new

6 energy efficient home credit—

7 ‘‘(i) this section and section 39 shall

8 be applied separately with respect to the

9 credit, and

10 ‘‘(ii) in applying paragraph (1) to the

11 credit—

12 ‘‘(I) subparagraph (A) thereof

13 shall not apply, and

14 ‘‘(II) the limitation under para15 graph (1) (as modified by subclause

16 (I)) shall be reduced by the credit al17 lowed under subsection (a) for the

18 taxable year (other than the new en19 ergy efficient home credit).

20 ‘‘(B) NEW ENERGY EFFICIENT HOME

21 CREDIT.—For purposes of this subsection, the

22 term ‘new energy efficient home credit’ means

23 the credit allowable under subsection (a) by rea24 son of section 45D.’’.
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1 (2) CONFORMING AMENDMENT.—Subclause (II)

2 of section 38(c)(2)(A)(ii) of such Code is amended

3 by inserting ‘‘or the new energy efficient home cred4 it’’ after ‘‘employment credit’’.

5 (e) LIMITATION ON CARRYBACK.—Subsection (d) of

6 section 39 of such Code is amended by adding at the end

7 the following new paragraph:

8 ‘‘(9) NO CARRYBACK OF NEW ENERGY EFFI9 CIENT HOME CREDIT BEFORE EFFECTIVE DATE.—

10 No portion of the unused business credit for any

11 taxable year which is attributable to the credit deter12 mined under section 45D may be carried back to

13 any taxable year ending before the date of the enact14 ment of section 45D.’’.

15 (f) DEDUCTION FOR CERTAIN UNUSED BUSINESS

16 CREDITS.—Subsection (c) of section 196 of such Code is

17 amended by striking ‘‘and’’ at the end of paragraph (7),

18 by striking the period at the end of paragraph (8) and

19 inserting ‘‘, and’’, and by adding after paragraph (8) the

20 following new paragraph:

21 ‘‘(9) the new energy efficient home credit deter22 mined under section 45D.’’.

23 (g) CLERICAL AMENDMENT.—The table of sections

24 for subpart D of part IV of subchapter A of chapter 1

25 of such Code is amended by inserting after the item relat-
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1 ing to section 45C the following new item:

‘‘Sec. 45D. New energy efficient home credit.’’.

2 (h) EFFECTIVE DATE.—The amendments made by

3 this section shall apply to taxable years ending after De4 cember 31, 1998.

5 SEC. 604. TAX CREDIT FOR COMBINED HEAT AND POWER

6 SYSTEM PROPERTY.

7 (a) IN GENERAL.—Subpart E of part IV of sub8 chapter A of chapter 1 of the Internal Revenue Code of

9 1986 is amended by inserting after section 48 the fol10 lowing new section:

11 ‘‘SEC. 48A. ENERGY CREDIT.

12 ‘‘(a) IN GENERAL.—For purposes of section 46, the

13 energy credit for any taxable year is the amount equal to

14 the energy percentage of the basis of each energy property

15 placed in service during such taxable year.

16 ‘‘(b) ENERGY PERCENTAGE.—

17 ‘‘(1) IN GENERAL.—Except as otherwise pro18 vided in this subsection, the energy percentage is 10

19 percent.

20 ‘‘(2) COMBINED HEAT AND POWER PROP21 ERTY.—The energy percentage is 8 percent in the

22 case of combined heat and power property.

23 ‘‘(3) PERIOD FOR WHICH CREDIT IS ALLOWED

24 FOR COMBINED HEAT AND POWER PROPERTY.—In

25 the case of combined heat and power property, the
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1 credit under subsection (a) shall be allowed only for

2 the period beginning on January 1, 2000, and end3 ing on December 31, 2002.

4 ‘‘(4) TRANSITION RULES.—Rules similar to the

5 rules of section 48(m) (as in effect on the day before

6 the date of the enactment of the Revenue Reconcili7 ation Act of 1990) shall apply for purposes of this

8 subsection.

9 ‘‘(c) ENERGY PROPERTY DEFINED.—

10 ‘‘(1) IN GENERAL.—For purposes of this sub11 part, the term ‘energy property’ means any

12 property—

13 ‘‘(A) which is—

14 ‘‘(i) solar energy property,

15 ‘‘(ii) geothermal energy property, or

16 ‘‘(iii) combined heat and power system

17 property,

18 ‘‘(B)(i) the construction, reconstruction, or

19 erection of which is completed by the taxpayer,

20 or

21 ‘‘(ii) which is acquired by the taxpayer if

22 the original use of such property commences

23 with the taxpayer, or
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1 ‘‘(iii) with respect to which depreciation (or

2 amortization in lieu of depreciation) is allow3 able, and

4 ‘‘(C) which meets—

5 ‘‘(i) the performance and quality

6 standards (if any), and the certification re7 quirements (if any), which have been pre8 scribed by the Secretary by regulations

9 (after consultation with the Secretary of

10 Energy or the EPA Administrator, as ap11 propriate), and

12 ‘‘(ii) are in effect at the time the

13 property is placed in service.

14 ‘‘(2) EXCEPTION.—Such term shall not include

15 any property which is public utility property (as de16 fined in section 46(f)(5) as in effect on the day be17 fore the date of the enactment of the Revenue Rec18 onciliation Act of 1990). The preceding sentence

19 shall not apply to combined heat and power system

20 property.

21 ‘‘(d) DEFINITIONS RELATING TO TYPES OF ENERGY

22 PROPERTY.—For purposes of this section—

23 ‘‘(1) SOLAR ENERGY PROPERTY.—The term

24 ‘solar energy property’ means equipment which uses

25 solar energy—
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1 ‘‘(A) to generate electricity,

2 ‘‘(B) to heat or cool (or provide hot water

3 for use in) a structure, or

4 ‘‘(C) to provide solar process heat.

5 ‘‘(2) GEOTHERMAL ENERGY PROPERTY.—The

6 term ‘geothermal energy property’ means equipment

7 used to produce, distribute, or use energy derived

8 from a geothermal deposit (within the meaning of

9 section 613(e)(2)), but only, in the case of electricity

10 generated by geothermal power, up to (but not in11 cluding) the electrical transmission stage.

12 ‘‘(3) COMBINED HEAT AND POWER SYSTEM

13 PROPERTY.—

14 ‘‘(A) IN GENERAL.—The term ‘combined

15 heat and power system property’ means prop16 erty comprising a system—

17 ‘‘(i) which uses the same energy

18 source for the simultaneous or sequential

19 generation of electrical power, mechanical

20 shaft power, or both, in combination with

21 the generation of steam or other forms of

22 useful thermal energy (including heating

23 and cooling applications),

24 ‘‘(ii) which has an electrical capacity

25 of more than 50 kilowatts or a mechanical
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1 energy capacity of more than 67 horse2 power or an equivalent combination of elec3 trical and mechanical energy capacities,

4 ‘‘(iii) which produces—

5 ‘‘(I) at least 20 percent of its

6 total useful energy in the form of

7 thermal energy, and

8 ‘‘(II) at least 20 percent of its

9 total useful energy in the form of elec10 trical or mechanical power (or a com11 bination thereof), and

12 ‘‘(iv) the energy efficiency percentage

13 of which exceeds 60 percent.

14 ‘‘(B) SPECIAL RULES.—

15 ‘‘(i) ACCOUNTING RULE.—If the com16 bined heat and power system property is

17 public utility property (as defined in sec18 tion 46(f)(5) as in effect on the day before

19 the date of the enactment of the Revenue

20 Reconciliation Act of 1990), the taxpayer

21 may claim the credit under subsection

22 (a)(1) only if, with respect to such prop23 erty, the taxpayer uses a normalization

24 method of accounting.
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1 ‘‘(ii) DEPRECIATION.—No credit shall

2 be allowed for any combined heat and

3 power system property unless the taxpayer

4 elects to treat such property for purposes

5 of section 168 as having a class life of not

6 less than 22 years.

7 ‘‘(e) SPECIAL RULES.—For purposes of this

8 section—

9 ‘‘(1) SPECIAL RULE FOR PROPERTY FINANCED

10 BY SUBSIDIZED ENERGY FINANCING OR INDUSTRIAL

11 DEVELOPMENT BONDS.—

12 ‘‘(A) REDUCTION OF BASIS.—For purposes

13 of applying the energy percentage to any prop14 erty, if such property is financed in whole or in

15 part by —

16 ‘‘(i) subsidized energy financing, or

17 ‘‘(ii) the proceeds of a private activity

18 bond (within the meaning of section 141)

19 the interest on which is exempt from tax

20 under section 103, the amount taken into

21 account as the basis of such property shall

22 not exceed the amount which (but for this

23 subparagraph) would be so taken into ac24 count multiplied by the fraction deter25 mined under subparagraph (B).
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1 ‘‘(B) DETERMINATION OF FRACTION.—For

2 purposes of subparagraph (A), the fraction de3 termined under this subparagraph is 1 reduced

4 by a fraction—

5 ‘‘(i) the numerator of which is that

6 portion of the basis of the property which

7 is allocable to such financing or proceeds,

8 and

9 ‘‘(ii) the denominator of which is the

10 basis of the property.

11 ‘‘(C) SUBSIDIZED ENERGY FINANCING.—

12 For purposes of subparagraph (A), the term

13 ‘subsidized energy financing’ means financing

14 provided under a Federal, State, or local pro15 gram a principal purpose of which is to provide

16 subsidized financing for projects designed to

17 conserve or produce energy.

18 ‘‘(2) CERTAIN PROGRESS EXPENDITURE RULES

19 MADE APPLICABLE.—Rules similar to the rules of

20 subsections (c)(4) and (d) of section 46 (as in effect

21 on the day before the date of the enactment of the

22 Revenue Reconciliation Act of 1990) shall apply for

23 purposes of this section.’’.

24 (b) CONFORMING AMENDMENTS.—
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1 (1) Section 48 of such Code is amended to read

2 as follows:

3 ‘‘SEC. 48. REFORESTATION CREDIT.

4 ‘‘(a) IN GENERAL.—For purposes of section 46, the

5 reforestation credit for any taxable year is 10 percent of

6 the portion of the amortizable basis of any qualified timber

7 property which was acquired during such taxable year and

8 which is taken into account under section 194 (after the

9 application of section 194(b)(1)).

10 ‘‘(b) DEFINITIONS.—For purposes of this subpart,

11 the terms ‘amortizable basis’ and ‘qualified timber prop12 erty’ have the respective meanings given to such terms by

13 section 194.’’.

14 (2) Subsection (d) of section 39 of such Code

15 is amended by adding at the end of the following

16 new paragraph:

17 ‘‘(9) NO CARRYBACK OF ENERGY CREDIT BE18 FORE EFFECTIVE DATE.—No portion of the unused

19 business credit for any taxable year which is attrib20 utable to the energy credit determined under section

21 48A, except for the credit determined with respect to

22 solar energy property and geothermal energy prop23 erty, may be carried back to a taxable year ending

24 before the date of the enactment of section 48A.’’.
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1 (3) Paragraph (3) of section 50(c) of such Code

2 is amended by adding at the end the following flush

3 sentence: ‘‘In the case of the energy credit, the pre4 ceding sentence shall apply only to so much of such

5 credit as relates to solar energy property and geo6 thermal property (as such terms are defined in sec7 tion 48A(d)).’’.

8 (4) Subclause (III) of section 29(b)(3)(A)(i) of

9 such Code is amended by striking ‘‘section

10 48(a)(4)(C)’’ and inserting ‘‘section 48A(e)(1)(C)’’.

11 (5) Subparagraph (E) of section 50(a)(2) of

12 such Code is amended by striking ‘‘section 48(a)(5)’’

13 and inserting ‘‘section 48A(e)(2)’’.

14 (6) Subparagraph (B) of section 168(e)(3) of

15 such Code is amended—

16 (A) in clause (vi)(I) by striking ‘‘subpara17 graph (A) of section 48(a)(3)’’ and inserting

18 ‘‘paragraphs (1) and (2) of section 48A(d)’’,

19 and

20 (B) in the last sentence by striking ‘‘sec21 tion 48(a)(3)’’ and inserting ‘‘section

22 48A(c)(2)’’.

23 (7) Subparagraph (E) of section 168(e)(3) of

24 such Code, as amended by section 803(a), is further

25 amended by striking ‘‘and’’ at the end of clause (iii),
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1 by striking the period at the end of clause (iv) and

2 inserting ‘‘, and’’, and by inserting after clause (iv)

3 the following new clause:

4 ‘‘(v) any combined heat and power

5 system property (as defined in section

6 48A(d)(3)) for which a credit is allowed

7 under section 48A and which, but for this

8 clause, would have a recovery period of less

9 than 15 years.’’.

10 (8) The table contained in subparagraph (b) of

11 section 168(g)(3) of such Code, as amended by sec12 tion 803(b)(2), is further amended by adding at the

13 end the following: ‘‘(E)(v)....... 22’’.

14 (c) CLERICAL AMENDMENT.—The table of sections

15 for subpart E of part IV of subchapter A of chapter 1

16 of such Code is amended by striking the item relating to

17 section 48 and inserting the following new items:

‘‘Sec. 48. Reforestation credit.

‘‘Sec. 48A. Energy credit.’’.

18 (d) EFFECTIVE DATE.—The amendments made by

19 this section shall apply to periods after December 31,

20 1999, under rules similar to the rules of section 48(m)

21 of the Internal Revenue Code of 1986 (as in effect on the

22 day before the date of the enactment of the Revenue Rec23 onciliation Act of 1990).
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1 SEC. 605. TAX-EXEMPT BOND FINANCING OF CERTAIN

2 ELECTRIC FACILITIES.

3 (a) PERMITTED OPEN ACCESS TRANSACTIONS NOT

4 A PRIVATE BUSINESS USE.—Section 141(b)(6) of the In5 ternal Revenue Code of 1986 (defining private business

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

7 ‘‘(C) PERMITTED OPEN ACCESS TRANS8 ACTIONS NOT A PRIVATE BUSINESS USE.—

9 ‘‘(i) IN GENERAL.—For purposes of

10 this subsection, the term ‘private business

11 use’ shall not include a permitted open ac12 cess transaction.

13 ‘‘(ii) PERMITTED OPEN ACCESS

14 TRANSACTION DEFINED.—For purposes of

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

16 transaction’ means any of the following

17 transactions or activities with respect to an

18 electric output facility (as defined in sub19 section (f)(4)(A)) owned by a governmental

20 unit:

21 ‘‘(I) Providing open access trans22 mission services and ancillary services

23 that meet the reciprocity requirements

24 of Federal Energy Regulatory Com25 mission Order No. 888, or that are

26 ordered by the Federal Energy Regu-
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1 latory Commission, or that are pro2 vided in accordance with a trans3 mission tariff of an independent sys4 tem operator approved by such Com5 mission, or that are consistent with

6 State-administered laws, rules, or or7 ders providing for open transmission

8 access.

9 ‘‘(II) Participation in an inde10 pendent system operator agreement

11 (which may include transferring con12 trol of transmission facilities to an

13 independent system operator), in a re14 gional transmission group, or in a

15 power exchange agreement approved

16 by such Commission.

17 ‘‘(III) Delivery on an open access

18 basis of electric energy sold by other

19 entities to end-users served by such

20 governmental unit’s distribution facili21 ties.

22 ‘‘(IV) If open access service is

23 provided under subclause (I) or (III),

24 the sale of electric output of electric

25 output facilities on terms other than
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1 those available to the general public if

2 such sale is to an on-system purchaser

3 or is an existing off-system sale.

4 ‘‘(V) Such other transactions or

5 activities as may be provided in regu6 lations prescribed by the Secretary.

7 ‘‘(iii) DEFINITIONS; SPECIAL

8 RULES.—For purposes of this

9 subparagraph—

10 ‘‘(I) ON-SYSTEM PURCHASER.—

11 The term ‘on-system purchaser’

12 means a person who purchases electric

13 energy from a governmental unit and

14 whose electric facilities or equipment

15 are directly connected with

16 transmission or distribution facilities

17 that are owned by such governmental

18 unit.

19 ‘‘(II) OFF-SYSTEM PUR20 CHASER.—The term ‘off-system pur21 chaser’ means a purchaser of electric

22 energy from a governmental unit

23 other than an on-system purchaser.

24 ‘‘(III) EXISTING OFF-SYSTEM

25 SALE.—The term ‘existing off-system
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1 sale’ means a sale of electric energy to

2 a person that was an off-system pur3 chaser of electric energy in the base

4 year, but not in excess of the kilowatt

5 hours purchased by such person in

6 such year.

7 ‘‘(IV) BASE YEAR.—The term

8 ‘base year’ means 1998 (or, at the

9 election of such unit, 1996 or 1997).

10 ‘‘(V) JOINT ACTION AGENCIES.—

11 A member of a joint action agency

12 that is entitled to make a sale de13 scribed in clause (ii)(IV) in a year

14 may transfer that entitlement to the

15 joint action agency in accordance with

16 rules of the Secretary.

17 ‘‘(VI) GOVERNMENT-OWNED FA18 CILITY.—An electric output facility

19 (as defined in subsection (f)(4)(A))

20 shall be treated as owned by a govern21 mental unit if it is owned or leased by

22 such governmental unit or if such gov23 ernmental unit has capacity rights

24 therein acquired before July 9, 1996,

25 for the purposes of serving one or
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1 more customers to which such govern2 mental unit had a service obligation

3 on such date under State law or a re4 quirements contract.’’.

5 (b) ELECTION TO TERMINATE TAX-EXEMPT FI6 NANCING.—Section 141 of the Internal Revenue Code of

7 1986 (relating to private activity bond; qualified bond) is

8 amended by adding at the end the following:

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

10 FINANCING FOR CERTAIN ELECTRIC OUTPUT FACILI11 TIES.—

12 ‘‘(1) IN GENERAL.—An issuer may make an ir13 revocable election under this paragraph to terminate

14 certain tax-exempt financing for electric output fa15 cilities. If the issuer makes such election, then—

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

17 no bond the interest on which is exempt from

18 tax under section 103 may be issued on or after

19 the date of such election with respect to an elec20 tric output facility; and

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

22 of subsection (a) or paragraph (5) of subsection

23 (b), with respect to an electric output facility no

24 bond that was issued before the date of enact25 ment of this subsection, the interest on which
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1 was exempt from tax on such date, shall be

2 treated as a private activity bond, for so long

3 as such facility continues to be owned by a gov4 ernmental unit.

5 ‘‘(2) EXCEPTIONS.—An election under para6 graph (1) does not apply to—

7 ‘‘(A) any qualified bond (as defined in sub8 section (e)),

9 ‘‘(B) any eligible refunding bond,

10 ‘‘(C) any bond issued to finance a quali11 fying T&D facility, or

12 ‘‘(D) any bond issued to finance equipment

13 necessary to meet Federal or State environ14 mental requirements applicable to, or repair of,

15 electric output facilities in service on the date

16 of enactment of this subsection. Repairs or

17 equipment may not increase by more than a de

18 minimis degree the capacity of the facility be19 yond its original design.

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

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

22 a manner as the Secretary prescribes and shall be

23 binding on any successor in interest to the electing

24 issuer.
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1 ‘‘(4) DEFINITIONS.—For purposes of this

2 subsection—

3 ‘‘(A) ELECTRIC OUTPUT FACILITY.—The

4 term ‘electric output facility’ means an output

5 facility that is an electric generation, trans6 mission, or distribution facility.

7 ‘‘(B) ELIGIBLE REFUNDING BOND.—The

8 term ‘eligible refunding bond’ means State or

9 local bonds issued after an election described in

10 paragraph (1) that directly or indirectly refund

11 State or local bonds issued before such election,

12 if the weighted averaged maturity of the re13 funding bonds do not exceed the remaining

14 weighted average maturity of the bonds issued

15 before the election.

16 ‘‘(C) QUALIFYING T&D FACILITY.—The

17 term ‘qualifying T&D facility’ means—

18 ‘‘(i) transmission facilities over which

19 services described in subsection

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

21 ‘‘(ii) distribution facilities over which

22 services described in subsection

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

24 (c) EFFECTIVE DATE, APPLICABILITY, AND TRANSI25 TION RULES.—
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1 (1) EFFECTIVE DATE.—The amendments made

2 by this section take effect on the date of enactment

3 of this Act, except that a governmental unit may

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

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

6 with respect to permitted open access transactions

7 on or after July 9, 1996.

8 (2) APPLICABILITY.—References in this Act to

9 sections of the Internal Revenue Code of 1986 shall

10 be deemed to include references to comparable sec11 tions of the Internal Revenue Code of 1954.

12 (3) TRANSITION RULES.—

13 (A) PRIVATE BUSINESS USE.—Any activity

14 that was not a private business use prior to the

15 effective date of the amendment made by sub16 section (a) shall not be deemed to be a private

17 business use by reason of the enactment of such

18 amendment.

19 (B) ELECTION.—An issuer making the

20 election under section 141(f) of the Internal

21 Revenue Code of 1986, as added by subsection

22 (b), shall not be liable under any contract in ef23 fect on the date of enactment of this Act for
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1 any claim arising from having made the elec2 tion.

Æ