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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2570 Introduced in Senate (IS)]

106th CONGRESS
  2d Session
                                S. 2570

To provide for the fair and equitable treatment of the Tennessee Valley 
   Authority and its ratepayers in the event of restructuring of the 
                       electric utility industry.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                              May 16, 2000

 Mr. Frist (for himself, Mr. Thompson, and Mr. Cochran) introduced the 
 following bill; which was read twice and referred to the Committee on 
                      Environment and Public Works

_______________________________________________________________________

                                 A BILL

 
To provide for the fair and equitable treatment of the Tennessee Valley 
   Authority and its ratepayers in the event of restructuring of the 
                       electric utility industry.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. DEFINITIONS.

    In this Act:
            (1) Commission.--The term ``Commission'' means the Federal 
        Energy Regulatory Commission.
            (2) Distributor.--The term ``distributor'' means a 
        cooperative organization, municipal, or other publicly owned 
        electric power system that, on December 31, 1997, purchased all 
        or substantially all of its wholesale power requirements from 
        the Tennessee Valley Authority under a long-term power sales 
        agreement.
            (3) Distributor service area.--The term ``distributor 
        service area'' means a geographic area within which a 
        distributor is authorized by State law to sell electric power 
        to retail electric consumers on the date of enactment of this 
        Act.
            (4) Electric utility.--The term ``electric utility'' has 
        the meaning given the term in section 3 of the Federal Power 
        Act (16 U.S.C. 796).
            (5) Excess electric power.--The term ``excess electric 
        power'' means the amount of the electric power and capacity 
        that--
                    (A) is available to the Tennessee Valley Authority; 
                and
                    (B) exceeds the Tennessee Valley Authority's power 
                supply obligations to distributors and any Tennessee 
                Valley Authority retail electric consumers (or 
                predecessors in interest) that had a contract for the 
                purchase of electric power from the Tennessee Valley 
                Authority on the date of enactment of this Act.
            (6) Public utility.--The term ``public utility'' has the 
        meaning given the term in section 201 of the Federal Power Act 
        (16 U.S.C. 824).
            (7) Retail electric consumer.--The term ``retail electric 
        consumer'' has the meaning given the term in section 3 of the 
        Federal Power Act (16 U.S.C. 796).
            (8) Tennessee valley region.--The term ``Tennessee Valley 
        Region'' means the geographic area in which the Tennessee 
        Valley Authority or its distributors were the primary source of 
        electric power on December 31, 1997.

SEC. 2. WHOLESALE COMPETITION IN THE TENNESSEE VALLEY REGION.

    (a) Amendments to the Federal Power Act.--
            (1) Wheeling orders.--Section 212(f) of the Federal Power 
        Act (16 U.S.C. 824k(f)) is repealed.
            (2) Transmission.--Section 212(j) of the Federal Power Act 
        (16 U.S.C. 824k(j)) is repealed.
    (b) Amendments to the Tennessee Valley Authority Act.--
            (1) Sale or delivery of electric power.--The third sentence 
        of the first undesignated paragraph of section 15d(a) of the 
        Tennessee Valley Authority Act of 1933 (16 U.S.C. 831n-4(a)) is 
        repealed.
            (2) Additional amendments.--The second and third 
        undesignated paragraphs of section 15d(a) of the Tennessee 
        Valley Authority Act of 1933 (16 U.S.C. 831n-4(a)) are 
        repealed.

SEC. 3. TENNESSEE VALLEY AUTHORITY POWER SALES.

    (a) Limit on Retail Sales by Tennessee Valley Authority.--
Notwithstanding sections 10, 11, and 12 of the Tennessee Valley 
Authority Act (16 U.S.C. 831i, 831j, 831k), the Tennessee Valley 
Authority may sell electric power at retail only to--
            (1) a retail electric consumer (or predecessor in interest) 
        that had a contract for the purchase of electric power from the 
        Tennessee Valley Authority on the date of enactment of this 
        Act; or
            (2) a retail electric consumer that consumes the electric 
        power within a distributor service area, if the applicable 
        regulatory authority (other than the Tennessee Valley 
        Authority) permits any other power supplier to sell electric 
        power to the retail electric consumer.
    (b) Construction of Retail Electric Service Facilities.--No person 
shall construct or modify a facility in the service area of a 
distributor for the purpose of serving a retail electric consumer 
within the distributor service area without the consent of the 
distributor, except when the electric consumer is already being served 
by such a person.
    (c) Wholesale Power Sales.--
            (1) Existing sales.--Nothing in this title shall modify or 
        alter the existing obligations of the Tennessee Valley 
        Authority under the first sentence of section 10 of the 
        Tennessee Valley Authority Act (16 U.S.C. 831i) to sell power 
        to a distributor, provided that this paragraph shall not apply 
        to access to power being supplied to another entity under an 
        existing contract with a term of 1 year or longer by a 
        distributor that--
                    (A) has made a prior election under section 5(b); 
                and
                    (B) requests to increase its power purchases from 
                the Tennessee Valley Authority.
            (2) Sales of excess electric power.--
                    (A) In general.--Notwithstanding sections 10, 11, 
                and 12, or any other provision of the Tennessee Valley 
                Authority Act of 1933 (16 U.S.C. 831i, 831j, 831k), the 
                sale of electric power at wholesale by the Tennessee 
                Valley Authority for use outside the Tennessee Valley 
                Region shall be limited to excess electric power.
                    (B) No excess electric power.--The Tennessee Valley 
                Authority shall not offer excess electric power under a 
                firm power agreement with a term of 3 or more years to 
                any new wholesale customer at rates, terms, and 
                conditions more favorable than those offered to any 
                distributor for comparable electric power, taking into 
                account such factors as the amount of electric power 
                sold, the firmness of such power, and the length of the 
                contract term, unless the distributor or distributors 
                that are purchasing electric power under equivalent 
                firm power contracts agree to the sale to the new 
                customer.
                    (C) No effect on exchange power arrangements.--
                Nothing in this subsection precludes the Tennessee 
                Valley Authority from making exchange power 
                arrangements with other electric utilities when 
                economically feasible.
    (d) Application of Tennessee Valley Authority Act to Sales Outside 
Tennessee Valley Region.--The third proviso of section 10 of the 
Tennessee Valley Authority Act of 1933 (16 U.S.C. 831i) and the second 
and third provisos of section 12 of the Tennessee Valley Authority Act 
of 1933 (16 U.S.C. 831k) shall not apply to any sale of excess electric 
power by the Tennessee Valley Authority for use outside the Tennessee 
Valley Region.

SEC. 4. TENNESSEE VALLEY AUTHORITY ELECTRIC GENERATION FACILITIES.

    Section 15d(a) of the Tennessee Valley Authority Act of 1933 (16 
U.S.C. 831n-4(a)) is amended--
            (1) in the second sentence, by inserting before the period 
        at the end the following: ``, if the Corporation determines 
        that the construction, acquisition, enlargement, improvement, 
        or replacement of any plant or facility used or to be used for 
        the generation of electric power is necessary to supply the 
        demands of distributors and retail electric consumers of the 
        Corporation''; and
            (2) by inserting after the second sentence the following: 
        ``Commencing on the date of enactment of this sentence, the 
        Tennessee Valley Authority shall provide to distributors and 
        their duly authorized representatives, on a confidential basis, 
        detailed information on its projections and plans regarding the 
        potential acquisition of new electric generating facilities, 
        and, not less than 45 days before a decision by the Tennessee 
        Valley Authority to make such an acquisition, shall provide 
        distributors an opportunity to comment on the acquisition. 
        Notwithstanding any other provision of law, confidential 
        information described in the preceding sentence shall not be 
        disclosed by a distributor to a source other than the Tennessee 
        Valley Authority, except (1) in response to process validly 
        issued by any court or governmental agency having jurisdiction 
        over the distributor; (2) to any officer, agent, employee, or 
        duly authorized representative of a distributor who agrees to 
        the same confidentiality and non-disclosure obligation 
        applicable to distributor; (3) in any judicial or 
        administrative proceeding initiated by distributor contesting 
        action by the Tennessee Valley Authority to cause the 
        construction of new electric generation facilities; or (4) on 
        or after a date that is at least 3 years after the commercial 
        operating date of the electric generating facilities.''.

SEC. 5. RENEGOTIATION OF POWER CONTRACTS.

    (a) Renegotiation.--The Tennessee Valley Authority and the 
distributors shall make good faith efforts to renegotiate their power 
contracts in effect on and after the date of enactment of this Act.
    (b) Distributor Contract Termination or Reduction Right.--If a 
distributor and the Tennessee Valley Authority are unable by 
negotiation to arrive at a mutually acceptable replacement contract to 
govern their post-enactment relationship, the Tennessee Valley 
Authority shall allow the distributor to give notice 1 time each 
calendar year, within the 60-day period beginning on the date of 
enactment of this Act or on any anniversary of that date, of the 
distributor's decision to (1) terminate the contract to purchase 
wholesale electric energy from the Tennessee Valley Authority that was 
in effect on the date of enactment of this Act, to take effect on the 
date that is 3 years after the date on which notice is given under this 
subsection; or (2) reduce the quantity of wholesale power requirements 
under the contract to purchase wholesale electric energy from the 
Tennessee Valley Authority that was in effect on the date of enactment 
of this Act by up to 10 percent of its requirements, to take effect on 
the date that is 2 years after the date on which notice is given under 
this subsection, or more than 10 percent of its requirements, to take 
effect on the date that is 3 years after the date on which notice is 
given under this subsection, and to negotiate with the Tennessee Valley 
Authority to amend the contract that was in effect on the date of 
enactment to reflect a partial requirements relationship.
    (c) Partial Requirements Notice.--As part of a notice under 
subsection (b), a distributor shall identify--
            (1) the annual quantity of electric energy that the 
        distributor will acquire from a source other than the Tennessee 
        Valley Authority as the result of an election by the 
        distributor; and
            (2) the times of the day and year that specified amounts of 
        the energy will be received by the distributor.
    (d) Nondiscrimination.--The Tennessee Valley Authority shall not 
unduly discriminate against any distributor as the result of--
            (1) the exercise of notice under paragraph (1) or (2) of 
        subsection (b) by the distributor; or
            (2) the status of the distributor as a partial requirements 
        customer.

SEC. 6. REGULATION OF TENNESSEE VALLEY AUTHORITY TRANSMISSION SYSTEM.

    Notwithstanding sections 201(b)(1) and 201(f) of the Federal Power 
Act (16 U.S.C. 824(b)(1), 824(f)), sections 202(h), 205, 206, 208, 210 
through 213, 301 through 304, 306, 307 (except the last sentence of 
307(c)), 308, 309, 313, and 317 of that Act (16 U.S.C. 824a(h), 824d, 
824e, 824g, 824i-824l, 825-825c, 825e, 825f, 825g, 825h, 825l, 825p) 
apply to the transmission and local distribution of electric power by 
the Tennessee Valley Authority to the same extent and in the same 
manner as the provisions apply to the transmission of electric power in 
interstate commerce by a public utility otherwise subject to the 
jurisdiction of the Commission under part II of that Act (16 U.S.C. 824 
et seq.).

SEC. 7. REGULATION OF TENNESSEE VALLEY AUTHORITY DISTRIBUTORS.

    (a) Election To Repeal Tennessee Valley Authority Regulation of 
Distributors.--On the election of a distributor, the third proviso of 
section 10 of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 
831i) and the second and third provisos of section 12 of the Tennessee 
Valley Authority Act of 1933 (16 U.S.C. 831k) shall not apply to a 
wholesale sale of electric power by the Tennessee Valley Authority in 
the Tennessee Valley Region after the date of enactment of this Act, 
and the Tennessee Valley Authority shall not be authorized to regulate, 
by means of a rule, contract provision, resale rate schedule, contract 
termination right, or any other method, any rate, term, or condition 
that is--
            (1) imposed on the resale of the electric power by the 
        distributor; or
            (2) for the use of a local distribution facility.
    (b) Authority of Governing Bodies of Distributors.--
            (1) In general.--Any regulatory authority exercised by the 
        Tennessee Valley Authority over any distributor making an 
        election under subsection (a) shall be exercised by the 
        governing body of the distributor in accordance with the laws 
        of the State in which the distributor is organized.
            (2) No election.--If a distributor does not make an 
        election under subsection (a), the third proviso of section 10 
        of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831i) 
        and the second and third provisos of section 12 of the 
        Tennessee Valley Authority Act of 1933 (16 U.S.C. 831k) shall 
        continue to apply for the duration of any wholesale power 
        contract between the Tennessee Valley Authority and the 
        distributor, in accordance with the terms of the contract.
    (c) Use of Funds.--In any contract between the Tennessee Valley 
Authority and a distributor for the purchase of at least 70 percent of 
the distributor's requirements for the sale of electric power, the 
Tennessee Valley Authority shall include such terms and conditions as 
may be reasonably necessary to ensure that the financial benefits of a 
distributor's electric system operations are allocated to the 
distributor's retail electric consumers.
    (d) Removal of PURPA Ratemaking Authority.--Section 3(17) of the 
Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2602(17)) is 
amended by striking ``, and in the case of an electric utility with 
respect to which the Tennessee Valley Authority has ratemaking 
authority, such term means the Tennessee Valley Authority''.

SEC. 8. STRANDED COST RECOVERY.

    (a) Commission Jurisdiction.--
            (1) Recovery of costs.--
                    (A) In general.--Subject to subparagraph (B), 
                notwithstanding the absence of 1 or more provisions 
                addressing wholesale stranded cost recovery in a power 
                sales agreement between the Tennessee Valley Authority 
                and a distributor that is executed after the date of 
                enactment of this Act, the Tennessee Valley Authority 
                may recover any wholesale stranded costs that may arise 
                from the exercise of rights by a distributor under 
                section 5, to the extent authorized by the Commission 
                based on application of the rules and principles that 
                the Commission applies to wholesale stranded cost 
                recovery by other electric utilities within its 
                jurisdiction.
                    (B) No recovery of costs related to loss of sales 
                revenues.--In any recovery under subparagraph (A), the 
                Tennessee Valley Authority shall not be authorized to 
                recover from any distributor any wholesale stranded 
                costs related to loss of sales revenues by the 
                Tennessee Valley Authority, or its expectation of 
                continuing to sell electric energy, for any period 
                after September 30, 2007.
            (2) No effect on claim.--The exercise of rights by a 
        distributor under section 5 shall not affect any claim by the 
        Tennessee Valley Authority that the Tennessee Valley Authority 
        may have for the recovery of stranded costs before October 1, 
        2007.
    (b) Debt.--
            (1) In general.--Stranded costs recovered by the Tennessee 
        Valley Authority under subsection (a) shall be used to pay down 
        the debt of the Tennessee Valley Authority, to the extent 
        determined by the Tennessee Valley Authority to be consistent 
        with proper financial management.
            (2) Generation capacity.--The Tennessee Valley Authority 
        shall not use any amount recovered under paragraph (1) to pay 
        for additions to the generation capacity of the Tennessee 
        Valley Authority.
    (c) Unbundling.--
            (1) In general.--Any stranded cost recovery charge to a 
        customer authorized by the Commission to be assessed by the 
        Tennessee Valley Authority shall be--
                    (A) unbundled from the otherwise applicable rates 
                and charges to the customer; and
                    (B) separately stated on the bill of the customer.
            (2) No wholesale stranded cost recovery.--The Tennessee 
        Valley Authority shall not recover wholesale stranded costs 
        from any customer through any rate, charge, or mechanism.
    (d) Report.--Beginning in fiscal year 2001, as part of the annual 
management report submitted by the Tennessee Valley Authority to 
Congress, the Tennessee Valley Authority shall include in the report--
            (1) the status of the Tennessee Valley Authority's long-
        range financial plans and the progress toward its goal of 
        competitively priced electric power (including a general 
        discussion of the Tennessee Valley Authority's prospects on 
        meeting the objectives of the Ten Year Business Outlook issued 
        on July 22, 1997);
            (2) any changes in assumptions since the previous report 
        that may have a material effect on the Tennessee Valley 
        Authority's long-range financial plans;
            (3) the source of funds used for any generation and 
        transmission capacity additions;
            (4) the use or other disposition of amounts recovered by 
        the Tennessee Valley Authority under the Tennessee Valley 
        Authority Act of 1933 (16 U.S.C. 831 et seq.) and this Act;
            (5) the amount by which the Tennessee Valley Authority's 
        publicly held debt was reduced; and
            (6) the projected amount by which the Tennessee Valley 
        Authority's publicly held debt will be reduced.

SEC. 9. APPLICATION OF ANTITRUST LAW

    (a) In General.--
            (1) Definition of antitrust laws.--
                    (A) In general.--Except as provided in subparagraph 
                (B), in this section, the term ``antitrust laws'' has 
                the meaning given the term in subsection (a) of the 
                first section of the Clayton Act (15 U.S.C. 12(a)).
                    (B) Inclusion.--In this section, the term 
                ``antitrust laws'' includes section 5 of the Federal 
                Trade Commission Act (15 U.S.C. 45), to the extent that 
                section 5 applies to unfair methods of competition.
            (2) Applicability of antitrust law.--Except as provided in 
        subsection (b), the Tennessee Valley Authority shall be subject 
        to the antitrust laws with respect to the operation of its 
        electric power and transmission systems.
    (b) Damages.--No damages, interest on damages, costs, or attorneys' 
fees may be recovered under section 4, 4A, or 4C of the Clayton Act (15 
U.S.C. 15, 15a, 15c) from the Tennessee Valley Authority.
    (c) Effect on Other Rights.--Nothing in this Act diminishes or 
impairs any privilege, immunity, or exemption in effect on the day 
before the date of enactment of this Act that would have been accorded 
any person by virtue of the association of the person together in 
advocating a cause or point of view to--
            (1) the Tennessee Valley Authority; or
            (2) any other agency or branch of Federal, State or local 
        government.

SEC. 10. SAVINGS PROVISION.

    Nothing in this Act shall affect section 15d(b) of the Tennessee 
Valley Authority Act of 1933 (16 U.S.C. 831n-4(b)), providing that 
bonds issued by the Tennessee Valley Authority shall not be obligations 
of, nor shall payment of the principal thereof or interest thereon be 
guaranteed by, the United States.
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