I

104TH CONGRESS

2D SESSION H. R. 3790

To give all American electricity consumers the right to choose among competitive providers of electricity, in order to secure lower electricity rates,

higher quality services, and a more robust United States economy, and

for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JULY 11, 1996

Mr. SCHAEFER introduced the following bill; which was referred to the

Committee on Commerce

A BILL

To give all American electricity consumers the right to choose

among competitive providers of electricity, in order to

secure lower electricity rates, higher quality services, and

a more robust United States economy, 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 1996’’.

6 (b) TABLE OF CONTENTS.—

Sec. 1. Short title and table of contents.

Sec. 2. Findings and purpose.
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Sec. 3. Severability.

TITLE I—COMPETITIVE RETAIL ELECTRIC ENERGY SERVICE

Sec. 101. Definitions.

Sec. 102. Customer choice.

Sec. 103. Retail competition for State regulated electric utilities.

Sec. 104. Retail competition for nonregulated electric utilities.

Sec. 105. Jurisdiction of State courts.

Sec. 106. FERC authority for certain utilities.

Sec. 107. Antitrust laws.

Sec. 108. FERC authority for transmission.

Sec. 109. Effect on other authorities.

Sec. 110. Barriers to entry.

Sec. 111. Illegal changes in customer selections.

Sec. 112. Renewable energy.

Sec. 113. Jurisdictional determinations of transmission and local distribution

facilities.

TITLE II—PUBLIC UTILITY HOLDING COMPANY ACT OF 1935

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

Sec. 202. Definitions.

Sec. 203. Application of title.

Sec. 204. Exemptions.

Sec. 205. Federal access to books and records.

Sec. 206. State access to books and records.

Sec. 207. Affiliate transactions.

Sec. 208. Effect on other regulation.

Sec. 209. Enforcement.

Sec. 210. Saving provision.

Sec. 211. Implementation.

Sec. 212. Transfers.

Sec. 213. Conforming change.

TITLE III—PUBLIC UTILITY REGULATORY POLICIES ACT OF 1978

Sec. 301. Application of PURPA provisions.

1 SEC. 2. FINDINGS AND PURPOSE.

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

3 (1) Low cost and reliable electricity is integral

4 to the vitality of the United States economy, the

5 competitiveness of domestically made goods and the

6 quality of life of all Americans.

7 (2) Americans consume electricity worth more

8 than $200 billion a year, approximately half of
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1 which is for residential purposes, making the month2 ly electric utility bill one of the largest expenses for

3 most households.

4 (3) The cost of electricity has a direct effect on

5 the price, profitability, and competitiveness of goods

6 and services produced in the United States.

7 (4) Lower priced electricity can be realized by

8 giving all American consumers the right to choose

9 among suppliers of electricity in a competitive mar10 ket, while maintaining, if not improving, the reliabil11 ity of service those consumers have come to expect.

12 (5) The development of vibrant competition in

13 the retail market for electric energy will—

14 (A) reduce the costs of electric energy to

15 even the smallest consumers of electricity;

16 (B) create jobs as American businesses are

17 able to lower costs and better compete in world

18 markets and against foreign competition here at

19 home; and

20 (C) result in a more efficient utility indus21 try.

22 (6) Monopoly rate-of-return regulation of elec23 tricity has failed. It has stifled competition, resulting

24 in high electricity rates for many consumers and few
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1 incentives for technological innovation and good cus2 tomer service by electric utilities.

3 (7) High electricity rates are regressive, placing

4 a disproportionate burden on poor ratepayers.

5 (8) High electricity rates divert consumer dol6 lars that would otherwise be spent for purchasing

7 necessary goods and services, savings, or invest8 ments that benefit the economy as a whole.

9 (9) Congress has authority to enact laws, under

10 the Commerce Clause of the United States Constitu11 tion, regarding the generation, transmission, dis12 tribution, and sale of electric energy in interstate

13 commerce at the wholesale and retail levels.

14 (10) Only Congress can ensure that a competi15 tive retail electricity market is established through16 out the United States on an expeditious but orderly

17 basis. Regional and State variations, however, re18 quire that State regulatory authorities should receive

19 deference in implementing competition and consumer

20 choice in retail electricity markets.

21 (11) Customers of all utilities, whether served

22 by regulated or nonregulated electric utilities (such

23 as municipally owned utilities or rural cooperatives)

24 should have the same rights to receive the benefits

25 of competition and consumer choice.
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1 (12) In a competitive generation market, it is in

2 the national interest to continue to encourage the

3 development of renewable energy technologies in

4 order to ensure energy diversity and security and to

5 protect the environment.

6 (13) A national program is needed to promote

7 renewable energy development that is market driven

8 and encourages competition among different renew9 able technologies. This program should be limited in

10 scope and should be terminated when the goals of

11 the program are achieved.

12 (14) Subjecting renewable energy technologies

13 to the discipline of the free market will better allo14 cate renewable resources and speed the commer15 cialization of renewable technologies than traditional

16 centralized government resource planning.

17 (b) PURPOSE.—The purpose of this Act is to give all

18 American electricity consumers the right to choose among

19 competitive providers of electricity, in order to secure

20 lower electricity rates, higher quality services, and a more

21 robust United States economy.

22 SEC. 3. SEVERABILITY.

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

24 provision to any person or circumstance, shall be held in25 valid, the remainder of the Act, and the application of
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1 such provision to persons or circumstances other than

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

3 thereby.

4 TITLE I—COMPETITIVE RETAIL

5 ELECTRIC ENERGY SERVICE

6 SEC. 101. DEFINITIONS.

7 For purposes of this title:

8 (1) The term ‘‘Commission’’ means the Federal

9 Energy Regulatory Commission.

10 (2) The terms ‘‘State regulatory authority’’,

11 ‘‘State regulated electric utility’’ and ‘‘nonregulated

12 electric utility’’ have the same meaning as such

13 terms have in the Public Utility Regulatory Policies

14 Act, as provided by section 3 of that Act.

15 (3) The term ‘‘retail electric energy services’’

16 means each of the following:

17 (A) electric energy sold for ultimate con18 sumption.

19 (B) Aggregating or marketing electric en20 ergy for sale for ultimate consumption.

21 (C) Billing and metering services and

22 equipment for electric energy sold for ultimate

23 consumption.
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1 (D) Energy management services and

2 equipment for electric energy sold for ultimate

3 consumption.

4 (E) Any other electric service or equipment

5 for which an alternative to that provided by an

6 electric utility is offered to an electric utility re7 tail customer of such utility by any person

8 other than such utility.

9 (4) The term ‘‘electric utility retail customer’’

10 means a person who purchases retail electric energy

11 services.

12 (5) The term ‘‘regulated electric utility retail

13 customer’’ means an electric utility retail customer

14 who is served by the local distribution system of a

15 State regulated electric utility.

16 (6) The term ‘‘nonregulated electric utility re17 tail customer’’ means an electric utility retail cus18 tomer who is served by the local distribution system

19 of a nonregulated electric utility.

20 (7) The term ‘‘affiliate’’ when used with respect

21 to an electric utility means any person that controls,

22 is controlled by, or is under common control with,

23 such utility.

24 (8) The term ‘‘renewable energy’’ means elec25 tricity generated from organic waste, biomass, dedi-
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1 cated energy crops, landfill gas, geothermal, solar or

2 wind resources.

3 (9) The term ‘‘Renewable Energy Credit’’

4 means a tradable certificate of proof that one unit

5 (as determined by the Commission) of renewable en6 ergy was generated by any person.

7 (10) The term ‘‘electric generator’’ means a

8 person generating electric energy.

9 (11) the term ‘‘State’’ means any State and the

10 District of Columbia.

11 SEC. 102. CUSTOMER CHOICE.

12 By no later than December 15, 2000, all electric util13 ity retail customers shall have the right to purchase retail

14 electric energy services from any person offering to pro15 vide those services to such customers.

16 SEC. 103. RETAIL COMPETITION FOR STATE REGULATED

17 ELECTRIC UTILITIES.

18 (a) STATE ELECTION.—A State may elect to estab19 lish, by no later than December 15, 2000, retail electric

20 service choice in accordance with this Act for retail cus21 tomers of State regulated electric utilities in such State.

22 Such election shall be made through submission by the

23 State regulatory authority exercising ratemaking jurisdic24 tion over such utilities of a notice to establish retail elec25 tric service choice to the Commission within 6 months
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1 after the enactment of this section. If, within such 6-

2 month period, the State regulatory authority notifies the

3 Commission that additional legislative authority is needed

4 in order for the State regulatory authority to make such

5 an election, the 6 month date shall be extended to a date

6 2 years after the enactment of this section.

7 (b) CUSTOMER CHOICE AND NONDISCRIMINATORY

8 ACCESS.—If a State elects to establish retail electric serv9 ice choice for State regulated electric utility customers, the

10 State regulatory authority exercising ratemaking authority

11 over each State regulated electric utility in the State shall

12 establish such rules as will provide for each of the follow13 ing:

14 (1) All State regulated electric utility retail cus15 tomers of all State regulated utilities under the rate16 making jurisdiction of the State regulatory authority

17 shall be able to purchase retail electric energy serv18 ices from any person offering to provide those serv19 ices to such customers.

20 (2) Any person seeking to provide any retail

21 electric energy service to such customers shall have

22 reasonable and nondiscriminatory access on an

23 unbundled basis, for the purposes of providing such

24 service, to local distribution facilities owned or oper25 ated by all such State regulated utilities. Access to
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1 local distribution facilities shall be provided under

2 rates, terms, and conditions that are just, reasonable

3 and not unduly discriminatory and that permit the

4 recovery by the facility owner or operator of all costs

5 incurred in connection with the local distribution

6 service and necessary ancillary services. The local

7 distribution services provided shall be at least equal

8 in quality to those provided by the utility to itself

9 or to any affiliate of the utility.

10 (3) The owner or operator of the local distribu11 tion facilities shall be prohibited from using any rev12 enue from such facilities to subsidize other services.

13 The State regulatory authority shall establish an effective

14 date for the application of the requirements set forth in

15 paragraphs (1) through (3) for all State regulated electric

16 utilities subject to the jurisdiction of such State regulatory

17 authority. Such date (hereinafter in this section referred

18 to as the ‘‘effective date for retail electric service choice’’)

19 shall not be later than December 15, 2000.

20 (c) PRICING FLEXIBILITY; INCENTIVE-BASED RATE

21 REGULATION.—Each State regulatory authority that

22 makes an election to establish retail electric service choice

23 for State regulated electric utility retail customers shall

24 implement, on the effective date of retail electric service

25 choice for customers of State regulated utilities subject to
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1 the jurisdiction of such State regulatory authority, appro2 priate flexible pricing procedures and incentive-based rate

3 regulation for each retail electric energy service provided

4 by each State regulated electric utility. Such procedures

5 shall afford the utility the opportunity to respond fairly

6 to competition.

7 (d) TERMINATION OF PRICE AND CERTAIN OTHER

8 REGULATION.—Each State regulatory authority that

9 makes an election to establish retail electric service choice

10 for State regulated electric utility retail customers shall,

11 on the effective date of retail electric service choice for

12 customers of State regulated utilities subject to the juris13 diction of such State regulatory authority, cease to carry

14 out each of the following with respect to any entity that

15 is not providing local distribution services to such cus16 tomers:

17 (1) Regulation of the prices for retail electric

18 energy services provided by such entity to such cus19 tomers.

20 (2) Requiring such entity to file a schedule of

21 charges for retail electric energy services provided by

22 such entity to such customers.

23 (3) Requiring such entity to file cost or revenue

24 projections for retail electric energy services provided

25 by such entity to such customers.
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1 (4) Regulation of depreciation charges for facili2 ties used by such entity to provide retail electric en3 ergy services to such customers.

4 Each such State regulatory authority shall also cease to

5 carry out the activities referred to in paragraphs (1)

6 through (4), and cease to implement subsection (c), with

7 respect to any retail electric energy service provided within

8 a geographic area by a State regulated electric utility that

9 is providing local distribution services within such area if

10 the State regulatory authority determines that such serv11 ice is subject to effective competition.

12 (e) EARLIER ADOPTION OF CUSTOMER CHOICE.—

13 Nothing in this title shall be construed to prohibit any

14 State regulatory authority from establishing or enforcing

15 any rules or regulations relating to retail electric service

16 competition prior to December 15, 2000, or to require any

17 State regulatory authority to establish or enforce any rules

18 or regulations relating to retail electric service competition

19 prior to December 15, 2000.

20 (f) CONSIDERATION OF CERTAIN TERMS AND CONDI21 TIONS.—Each State regulatory authority that makes an

22 election to establish retail electric service choice for State

23 regulated electric utility retail customers shall consider

24 each of the following terms and conditions and make a

25 determination concerning whether or not it is appropriate
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1 to apply such terms and conditions to the local distribution

2 or sale of retail electric energy services to carry out the

3 purposes of this Act:

4 (1) Terms and conditions intended to insure

5 that adequate electric service is available on a com6 petitively neutral and nondiscriminatory basis to all

7 customers served by the retail distribution system

8 concerned.

9 (2) Terms and conditions designed to ensure

10 and enhance the reliability of electric service to all

11 electric energy consumers.

12 (3) Terms and conditions allowing any electric

13 utility subject to the ratemaking jurisdiction of such

14 State regulatory authority to recover costs incurred

15 prior to July 11, 1996.

16 (4) Terms and conditions to promote electric

17 energy efficiency, conservation, and environmental

18 programs.

19 Such terms and conditions may only be imposed on a non20 discriminatory and competitively neutral basis.

21 SEC. 104. RETAIL COMPETITION FOR NONREGULATED

22 ELECTRIC UTILITIES.

23 (a) NONREGULATED UTILITY ELECTION.—A non24 regulated electric utility may elect to establish retail elec25 tric service choice for its customers. Such election shall
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1 be made through submission of a notice to establish retail

2 electric service choice to the State regulatory authority for

3 the State in which such nonregulated utility is located

4 within 6 months after the enactment of this section. If,

5 within such 6-month period, the utility notifies the State

6 regulatory authority that additional legislative authority is

7 needed in order for the utility to make such an election,

8 the 6 month date shall be extended to a date 2 years after

9 the enactment of this section. If a nonregulated electric

10 utility does not elect to establish retail electric service

11 choice for its customers within the required period, such

12 utility shall be subject to the election made under section

13 103 by the State regulatory authority that has ratemaking

14 authority for State regulated electric utilities in the State.

15 (b) CUSTOMER CHOICE AND NONDISCRIMINATORY

16 ACCESS.—If a nonregulated electric utility elects to estab17 lish retail electric service choice for its retail electric cus18 tomers, the utility shall establish such rules as will provide

19 for each of the following:

20 (1) All nonregulated electric utility retail cus21 tomers of the utility shall be able to purchase retail

22 electric energy services from any person offering to

23 provide those services to such customers.

24 (2) Any person seeking to provide retail electric

25 energy services to such customers shall have reason-
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1 able and nondiscriminatory access on an unbundled

2 basis, for the purposes of providing such services, to

3 all local distribution facilities owned or operated by

4 the utility. Access to local distribution facilities shall

5 be provided under rates, terms, and conditions that

6 are just, reasonable and not unduly discriminatory

7 and that permit the recovery by the utility of all

8 costs incurred in connection with the local distribu9 tion services and necessary associated services. The

10 local distribution services provided shall be at least

11 equal in quality to those provided by the utility to

12 itself or to any affiliate of the utility.

13 (3) The utility shall be prohibited from using

14 any revenue from local distribution facilities to sub15 sidize retail electric services provided by such utility

16 to any person.

17 The nonregulated electric utility shall establish an effec18 tive date for the application of the requirements set forth

19 in paragraphs (1) through (3). Such date (hereinafter in

20 this section referred to as the ‘‘effective date for retail

21 electric service choice’’) shall not be later than December

22 15, 2000.

23 (c) EARLIER ADOPTION OF CUSTOMER CHOICE.—

24 Nothing in this title shall be construed to prohibit any

25 nonregulated utility from establishing or enforcing any
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1 rules or regulations relating to retail electric service com2 petition prior to December 15, 2000, or to require any

3 nonregulated utility to establish or enforce any rules or

4 regulations relating to retail electric service competition

5 prior to December 15, 2000.

6 (d) CONSIDERATION OF CERTAIN TERMS AND CON7 DITIONS.—Each nonregulated electric utility that makes

8 an election to establish retail electric service choice for its

9 customers shall consider each of the following terms and

10 conditions and make a determination concerning whether

11 or not it is appropriate to apply such terms and conditions

12 to the local distribution or sale of retail electric energy

13 services to carry out the purposes of this Act:

14 (1) Terms and conditions intended to insure

15 that adequate electric service is available on a com16 petitively neutral and nondiscriminatory basis to all

17 customers served by the retail electric distribution

18 system concerned.

19 (2) Terms and conditions designed to ensure

20 and enhance the reliability of electric service to all

21 retail electric customers of the utility.

22 (3) Terms and conditions allowing the nonregu23 lated electric utility to recover investment costs in24 curred prior to July 11, 1996.
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1 (4) Terms and conditions to promote electric

2 energy efficiency, conservation, and environmental

3 programs.

4 Such terms and conditions may only be imposed on a non5 discriminatory and competitively neutral basis.

6 (e) PREFERENCE POWER.—No person may resell

7 electric energy purchased by such person pursuant to a

8 long-term firm power contract from any Federal power

9 marketing authority to any other person not directly

10 served by retail distribution facilities owned or operated

11 by such person.

12 SEC. 105. JURISDICTION OF STATE COURTS.

13 In addition to the prohibitions on Federal court juris14 diction set forth in section 1342 of title 28, notwithstand15 ing any other provision of law, no court of the United

16 States shall have jurisdiction over any action arising under

17 any provision of section 102, 103, 104, or 110 except for

18 review of any action in the Supreme Court of the United

19 States in accordance with sections 1257 and 1258 of title

20 28 of the United States Code. Any person may bring an

21 action in the appropriate State court to enforce the re22 quirements of sections 102, 103, 104, and 110. Except

23 for Supreme Court review, any appeal, review, or other

24 action in State court shall be pursuant to any applicable

25 State procedures.
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1 SEC. 106. FERC AUTHORITY FOR CERTAIN UTILITIES.

2 (a) IN GENERAL.—If an election under section 103

3 or 104 to establish retail electric service choice is not made

4 by the date set forth in section 103(a) or 104(a) for a

5 State regulated or a nonregulated electric utility, the Com6 mission shall exercise the authorities that would otherwise

7 be exercised by the State regulatory authority or nonregu8 lated electric utility under section 103 and 104 as if such

9 election had been made by such date. The exercise of such

10 authorities pursuant to this section shall preempt any

11 State law that is inconsistent with the exercise of such

12 authorities.

13 (b) STATES WITHOUT STATE REGULATORY AU14 THORITIES.—For any State without a State regulatory

15 authority exercising ratemaking jurisdiction over State

16 regulated electric utilities, if a nonregulated electric utility

17 elects not to establish retail electric service choice for its

18 customers or fails to submit an election within the re19 quired period, the Commission shall exercise the authori20 ties of section 104 that would otherwise be exercised by

21 the nonregulated electric utility if the nonregulated elec22 tric utility had elected to establish retail electric service

23 choice.

24 (c) FEDERAL COURTS.—The provisions of section

25 105 (relating to jurisdiction of State courts) shall not

26 apply to any action arising under this section. Any person
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1 aggrieved by any action of the Commission pursuant to

2 this section may bring an action in the appropriate United

3 States district court for appropriate relief.

4 SEC. 107. ANTITRUST LAWS.

5 Nothing in this title or the amendments made by this

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

7 applicability of any of the antitrust laws. As used in this

8 section the term ‘‘antitrust laws’’ includes the Sherman

9 Antitrust Act (15 U.S.C. 1 et seq.) and amendments

10 thereto, the Clayton Act (15 U.S.C. 12 et seq.) and

11 amendments thereto, regulations promulgated under such

12 laws, and Federal court decisions interpreting such laws.

13 SEC. 108. FERC AUTHORITY FOR TRANSMISSION.

14 (a) IN GENERAL.—The Commission may, by rule or

15 order, require a transmitting utility (as defined in the

16 Federal Power Act) to provide transmission of electric en17 ergy in interstate commerce (including any enlargement

18 of transmission capacity necessary to provide such service)

19 under such terms and conditions as the Commission finds

20 are necessary and appropriate to ensure that customers

21 have access to transmission services under terms and con22 ditions (including charges) that are comparable to those

23 under which the transmitting utility uses its own system

24 and are otherwise in the public interest.
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1 (b) LIMITATION.—The Commission may not exercise

2 the authority of subsection (a) to require the transmission

3 of electric energy to any electric utility retail customer

4 prior to the effective date for retail electric choice (as de5 termined under section 103 or 104) for the electric utility

6 that provides local distribution service to such customer.

7 SEC. 109. EFFECT ON OTHER AUTHORITIES.

8 Nothing in this title shall be construed to prohibit

9 the Commission from using any authority of the Commis10 sion under Part II of the Federal Power Act in fulfilling

11 the requirements of this title, to the extent that such au12 thority is not exercised in a manner inconsistent with the

13 provisions of this title.

14 SEC. 110. BARRIERS TO ENTRY.

15 (a) NONDISCRIMINATORY ACCESS.—After the effec16 tive date for retail electric choice (as determined under

17 section 103 or 104) for an electric utility, no State or local

18 legal requirement (other than a facility siting requirement)

19 may prohibit or have the effect of prohibiting any entity

20 from offering to any electric utility retail customer of such

21 utility any retail service related to electric energy or from

22 providing any retail electric energy service directly or indi23 rectly to any such customer.

24 (b) STATE REGULATORY AUTHORITY.—A State may,

25 under State law, impose requirements relating to retail
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1 electric energy services necessary to preserve universal

2 service, protect public safety and welfare, ensure the con3 tinued quality of electric services and safeguard the rights

4 to consumers the extent such requirements are imposed

5 on a nondiscriminatory and competitively neutral basis.

6 (c) PARITY OF FRANCHISE AND OTHER CHARGES.—

7 A State or local government, under State law, may impose

8 or collect any franchise, license, permit fee, or equivalent

9 thereof, from any person providing any retail electric en10 ergy service as a condition for operating in the State or

11 locality, only to the extent such charge is imposed on a

12 nondiscriminatory and competitively neutral basis.

13 SEC. 111. ILLEGAL CHANGES IN CUSTOMER SELECTIONS.

14 (a) PROHIBITION.—No person shall submit or exe15 cute a change in the selection made by a regulated utility

16 retail customer or nonregulated utility retail customer of

17 a provider of electric energy services except in accordance

18 with such verification procedures as the Commission shall

19 prescribe. Nothing in this section shall preclude any State

20 regulatory authority from proscribing such additional pro21 cedures regarding changes in customer selection with re22 spect to intrastate retail electric energy services.

23 (b) LIABILITY FOR CHARGES.—Any person who vio24 lates the verification procedures described in subsection
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1 (a) and that collects charges from a customer shall be lia2 ble—

3 (1) to the customer in an amount equal to all

4 charges paid by such customer after violation; and

5 (2) to the provider of electric energy service

6 previously selected by the customer in an amount

7 equal to all charges paid by such customer after vio8 lation.

9 The Commission may prescribe procedures for the recov10 ery of the amounts referred to in paragraphs (1) and (2).

11 The remedies provided by this section are in addition to

12 any other remedies available by law.

13 SEC. 112. RENEWABLE ENERGY.

14 (a) MINIMUM RENEWABLE GENERATION REQUIRE15 MENT.—For calendar years after the effective date for re16 tail electric choice (as determined under section 103) for

17 State regulated electric utilities in any State, each electric

18 generator in the State that sells electric energy to any

19 other person shall submit to the Commission Renewable

20 Energy Credits in an amount equal to the required annual

21 percentage of the total electric energy generated by such

22 generator in the preceding calendar year. Nothing in this

23 section shall be construed to prohibit any State from re24 quiring additional renewable energy generation in that

25 State under any program adopted by the State.
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1 (b) REQUIRED ANNUAL PERCENTAGE.—From the

2 first calendar year following the effective date for retail

3 electric choice (as determined under section 103) for State

4 regulated electric utilities in a State through calendar year

5 2004, the required annual percentage for each electric

6 generator in the State shall be 2 percent. Thereafter the

7 required annual percentage for each such generator shall

8 be as set forth in the following table :

Minimum

Calendar year: Percentage:

2005 ......................................................................................... 3

2010 ......................................................................................... 4

9 (c) SUBMISSION OF CREDITS.—An electric generator

10 may satisfy the requirements of subsection (a) through the

11 submission of—

12 (1) Renewable Energy Credits issued by the

13 Commission under this section for renewable energy

14 generated by such electric generator in such cal15 endar year.

16 (2) Renewable Energy Credits issued by the

17 Commission under this section to any other electric

18 generator for renewable energy generated in such

19 calendar year by such other generator and acquired

20 by such electric generator.

21 (3) Any combination of the foregoing.
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1 A Renewable Energy Credit that is submitted to the Com2 mission for any year may not be used for any other pur3 poses thereafter.

4 (d) ISSUANCE OF RENEWABLE ENERGY CREDITS.—

5 (1) IN GENERAL.—The Commission shall estab6 lish, by rule after notice and opportunity for hearing

7 but not later than 120 days after the enactment of

8 this Act, a program to issue Renewable Energy

9 Credits to electric generators. Renewable Energy

10 Credits shall be identified by type of generation and

11 facility location (State). Under such program, the

12 Commission shall issue one Renewable Energy Cred13 it to any person who generates in any State (in any

14 year after the calendar year after the effective date

15 for retail electric choice (as determined under sec16 tion 103) for State regulated electric utilities in the

17 State) one unit of electric energy through the use of

18 renewable energy generation.

19 (2) FEES.—The Commission shall impose and

20 collect a fee on recipients of Renewable Energy

21 Credits in an amount equal to the administrative

22 costs of issuing, recording, monitoring the sale or ex23 change, and tracking of such credits. The failure or

24 refusal of any person to pay such fee shall be subject

25 to a civil penalty equal to 2 and one-half times the
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1 amount of the unpaid fees. The Commission shall

2 bring an action in the appropriate United States dis3 trict court to collect any unpaid fees and to impose

4 a civil penalty on any person who fails or refuses to

5 pay such fee imposed under this section.

6 (3) PURPA CONTRACTS.—In the case of renew7 able energy sold by the generator to an electric util8 ity under a contract (including but not limited to a

9 contract entered into before the date of enactment of

10 this Act) that is subject to section 210 of the Public

11 Utility Regulatory Policies Act of 1978, for the du12 ration of such contract, the utility shall be treated

13 for purposes of the other provisions of this section

14 as the generator of such energy unless such genera15 tor and utility agree to terminate such contract prior

16 to the expiration date set forth in the contract.

17 (e) SALE OR EXCHANGE.—Renewable Energy Credits

18 may be sold or exchanged by the person to whom issued

19 or by any other person who acquires the credit. A Renew20 able Energy Credit for any year that is not used to satisfy

21 the minimum renewable generation requirement of sub22 section (a) for that year may be not be carried forward

23 for use in another year. The Commission shall promulgate

24 regulations to provide for the issuance, recording, monitor25 ing the sale or exchange, and tracking of such credits. The
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1 Commission shall maintain records of all sales and ex2 changes of credits. No such sale or exchange shall be valid

3 unless recorded by the Commission.

4 (f) ENFORCEMENT.—The Commission shall bring an

5 action in the appropriate United States district court to

6 impose a civil penalty on any person who fails or refuses

7 to comply with subsection (a). The failure or refusal of

8 any person to submit any required quantity of Renewable

9 Energy Credits shall be subject to a civil penalty of not

10 more than 2 and one-half times the estimated national av11 erage market value (as determined by the Commission)

12 for the calendar year concerned of such quantity of Re13 newable Energy Credits.

14 (g) RULES AND REGULATIONS.—The Commission

15 shall promulgate such rules and regulations as may be

16 necessary to carry out this section, including such rules

17 and regulations requiring the submission of such informa18 tion as may be necessary to verify the annual electric en19 ergy generation and renewable energy generation of any

20 person applying for Renewable Energy Credits under this

21 section or to verify and audit the validity of Renewable

22 Energy Credits submitted by any person to the Commis23 sion.

24 (h) ANNUAL REPORTS.—The Commission shall gath25 er available data and devise measures to gauge compliance
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1 with the requirements of this section and the success of

2 the National Renewable Energy Trading Program estab3 lished under this section. On an annual basis not later

4 than May 31 of each year, the Commission shall publish

5 a report for the previous year that includes compliance

6 data, National Renewable Energy Trading Program re7 sults, and steps taken to improve the Program results.

8 (i) SUNSET.—The requirements of this section shall

9 cease to apply 90 days after the Commission certifies in

10 the annual report under subsection (h) that for the preced11 ing year the market value of Renewable Energy Credits

12 or the number of credits traded or both has declined to

13 such nominal levels that the costs incurred by the Com14 mission for issuance, recording, monitoring sale or ex15 change, and tracking of credits is no longer justified.

16 SEC. 113. JURISDICTIONAL DETERMINATIONS OF TRANS17 MISSION AND LOCAL DISTRIBUTION FACILI18 TIES.

19 Section 201(b) of the Federal Power Act is amended

20 by inserting the following new paragraphs after paragraph

21 (1) and redesignating paragraph (2) as paragraph (7):

22 ‘‘(2)(A) Any person that provides unbundled retail

23 transmission or distribution of electric energy in interstate

24 commerce shall obtain a jurisdictional determination from

25 the Commission as to which facilities owned, controlled,
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1 or operated by such person are or will be facilities used

2 for retail transmission in interstate commerce and there3 fore subject to Commission jurisdiction, and which facili4 ties are or will be used for local distribution and therefore

5 subject to State jurisdiction.

6 ‘‘(B) A person providing services referred to in sub7 paragraph (A) as of the date of enactment of this para8 graph shall file, within 90 days of the date of enactment

9 of this paragraph, an application for jurisdictional deter10 mination under this paragraph. The Commission, after

11 consultation with representatives of affected State com12 missions, shall make a jurisdictional determination with

13 respect to the facilities of such person no later than 18

14 months after the date the application is filed.

15 ‘‘(C) A person that first provides services referred to

16 in subparagraph (A) after the date of enactment of this

17 paragraph shall file an application for jurisdictional deter18 mination under this paragraph no later than 90 days prior

19 to the date that unbundled retail transmission or distribu20 tion service is to commence. The Commission, after con21 sultation with representatives of the affected State com22 missions, shall make a determination with respect to the

23 facilities of such person no later than 1 year after the date

24 the application is filed.
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1 ‘‘(3) In making a jurisdictional determination under

2 paragraph (2), the Commission shall consider the follow3 ing nonexclusive list of factors as indicating that facilities

4 constitute local distribution facilities subject to State ju5 risdiction:

6 ‘‘(A) Local distribution facilities normally are in

7 close proximity to retail customers.

8 ‘‘(B) Local distribution facilities are primarily

9 radial in character.

10 ‘‘(C) Power flows into, but rarely out of, local

11 distribution systems.

12 ‘‘(D) When power enters a local distribution

13 system, it is not reconsigned or transported on to

14 some other market.

15 ‘‘(E) Power entering a local distribution system

16 is consumed in a comparatively restricted geographi17 cal area.

18 ‘‘(F) Meters are based at the transmission/local

19 distribution interface to measure flows into the local

20 distribution system.

21 ‘‘(G) Local distribution systems will be of re22 duced voltage.

23 The Commission shall also consider the historical uses of

24 facilities used to deliver electric energy to end users and

25 other technical factors that may be relevant to a jurisdic-
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1 tional determination. The Commission shall give deference

2 to State commission recommendations that take into ac3 count the factors described in this subsection and shall

4 take into account other factors identified by a State com5 mission as relevant to a jurisdictional determination with

6 respect to facilities located in such State.

7 ‘‘(4) Once the Commission makes a jurisdictional de8 termination under paragraph (2), such determination may

9 not be modified unless the Commission determines there

10 is a material change in facts or circumstances since the

11 time the prior determination was made, or finds that prior

12 representations or facts were incorrect. The Commission

13 may modify a prior jurisdictional determination only after

14 consultation with representatives of the affected State

15 commission.

16 ‘‘(5) Any person, State, or State commission ag17 grieved by an order making a jurisdictional determination

18 under paragraph (2) may obtain a review of such order

19 in the Circuit Court of Appeals of the United States for

20 any circuit wherein the person to which the order relates

21 is located or has its principal place of business or in the

22 United States Court of Appeals for the District of Colum23 bia Circuit, pursuant to section 313.’’
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1 TITLE II—PUBLIC UTILITY

2 HOLDING COMPANY ACT OF 1935

3 SEC. 201. APPLICATION OF THE PUBLIC UTILITY HOLDING

4 COMPANY ACT OF 1935.

5 The Public Utility Holding Company Act of 1935

6 shall cease to apply to any public utility company and to

7 any holding company of such public utility company if

8 each State in which such public utility company is provid9 ing retail electric or natural gas distribution service and

10 each State in which any subsidiary, affiliate, or associate

11 company of such public utility company and of such hold12 ing company is providing retail electric or natural gas dis13 tribution service—

14 (1) determines that the retail customers of such

15 public utility company and of each such subsidiary,

16 affiliate, or associate company are able to purchase

17 at retail electric energy services and natural gas

18 from any person offering those services to the pur19 chaser on a competitively neutral and nondiscrim20 inatory basis; and

21 (2) notifies the Commission and the Securities

22 and Exchange Commission of such determination.

23 SEC. 202. DEFINITIONS.

24 For purposes of this title:
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1 (1) The term ‘‘person’’ means an individual or

2 company.

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

4 joint stock company, partnership, association, busi5 ness trust, organized group of persons, whether in6 corporated or not, or a receiver or receivers, trustee

7 or trustees of any of the foregoing.

8 (3) The term ‘‘electric utility company’’ means

9 any company that owns or operates facilities used

10 for the generation, transmission, or distribution of

11 electric energy for sale.

12 (4) The term ‘‘gas utility company’’ means any

13 company that owns or operates facilities used for the

14 distribution at retail (other than the distribution

15 only in enclosed portable containers) of natural or

16 manufactured gas for heat, light, or power.

17 (5) The term ‘‘public utility company’’ means

18 an electric utility company or a gas utility company

19 but does not mean a qualifying facility as defined in

20 the Public Utility Regulatory Policies Act of 1978,

21 or an exempt wholesale generator or a foreign utility

22 company as defined by the Energy Policy Act of

23 1992.

24 (6) The term ‘‘holding company’’ means (A)

25 any company that directly or indirectly owns, con-
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1 trols, or holds with power to vote, 10 percent or

2 more of the outstanding voting securities of a public

3 utility company or of a holding company of any pub4 lic utility company; and (B) any person, determined

5 by the Commission, after notice and opportunity for

6 hearing, to exercise directly or indirectly (either

7 alone or pursuant to an arrangement or understand8 ing with 1 or more other persons) such a controlling

9 influence over the management or policies of any

10 public utility or holding company as to make it nec11 essary or appropriate for the protection of consum12 ers with respect to rates that such person be subject

13 to the obligations, duties, and liabilities imposed in

14 this title upon holding companies.

15 (7) The term ‘‘subsidiary company’’ of a hold16 ing company means (A) any company 10 percent or

17 more of the outstanding voting securities of which

18 are directly or indirectly owned, controlled, or held

19 with power to vote, by such holding company; and

20 (B) any person the management or policies of which

21 the Commission, after notice and opportunity for

22 hearing, determines to be subject to a controlling in23 fluence, directly or indirectly, by such holding com24 pany (either alone or pursuant to an arrangement or

25 understanding with 1 or more other persons) so as
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1 to make it necessary or appropriate for the protec2 tion of consumers with respect to rates that such

3 person be subject to the obligations, duties, and li4 abilities imposed in this title upon subsidiary compa5 nies of holding companies.

6 (8) The term ‘‘holding company system’’ means

7 a holding company together with its subsidiary com8 panies.

9 (9) The term ‘‘associate company’’ of a com10 pany means any company in the same holding com11 pany system with such company.

12 (10) The term ‘‘affiliate’’ of a company means

13 (A) any company 5 percent or more of whose out14 standing voting securities are owned, controlled, or

15 held with power to vote, directly or indirectly, by

16 such company; and (B) any person or class of per17 sons that the Commission determines, after appro18 priate notice and opportunity for hearing, to stand

19 in such relation, directly or indirectly, to such com20 pany that there is likely to be such an absence of

21 arm’s length bargaining in transactions between

22 them as to make it necessary or appropriate in the

23 public interest or for the protection of consumers

24 that such person be subject to the obligations, du-
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1 ties, and liabilities imposed in this title upon affili2 ates of a company.

3 (11) The term ‘‘voting security’’ means any se4 curity presently entitling the owner or holder thereof

5 to vote in the direction or management of the affairs

6 of a company.

7 (12) The term ‘‘Commission’’ means the Fed8 eral Energy Regulatory Commission.

9 (13) The term ‘‘State commission’’ means any

10 commission, board, agency, or officer, by whatever

11 name designated, of a State, municipality, or other

12 political subdivision of a State that under the law of

13 such State has jurisdiction to regulate public utility

14 companies.

15 SEC. 203. APPLICATION OF TITLE.

16 No provision in this title shall apply to, or be deemed

17 to include—

18 (1) the United States,

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

20 State,

21 (3) any foreign governmental authority not op22 erating in the United States,

23 (4) any agency, authority, or instrumentality of

24 any of the foregoing, or of any corporation that is
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1 wholly owned, directly or indirectly by 1 or more of

2 the foregoing, or

3 (5) any officer, agent, or employee of any of the

4 foregoing acting as such in the course of his official

5 duty.

6 SEC. 204. EXEMPTION AUTHORITY.

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

8 enactment of this Act, the Commission shall promulgate

9 a final rule to exempt from the requirements of section

10 205 any person that is a holding company, solely with re11 spect to—

12 (1) one or more qualifying facilities under the

13 Public Utility Regulatory Policies Act of 1978;

14 (2) one or more exempt wholesale generators;

15 or

16 (3) one or more foreign utility companies.

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

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

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

20 person are not relevant to the jurisdictional rates of a pub21 lic utility company, or if the Commission finds that any

22 class of transactions is not relevant to the jurisdictional

23 rates of a public utility company, the Commission shall

24 exempt such person or transaction from the requirements

25 of section 205.
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1 SEC. 205. FEDERAL ACCESS TO BOOKS AND RECORDS.

2 (a) HOLDING COMPANIES AND SUBSIDIARIES.—

3 Every holding company and associate company thereof

4 shall maintain, and make available to the Commission,

5 such books, records, accounts, and other documents as the

6 Commission deems relevant to costs incurred by a public

7 utility company that is an associate company of such hold8 ing company and necessary or appropriate for the protec9 tion of consumers with respect to rates.

10 (b) AFFILIATES AND SUBSIDIARIES.—Every affiliate

11 of a holding company or of any subsidiary company there12 of shall maintain, and make available to the Commission,

13 such books, records, accounts, and other documents with

14 respect to any transaction that is subject to this title, as

15 the Commission deems relevant to costs incurred by a pub16 lic utility company that is an associate company of such

17 holding company and necessary or appropriate for the pro18 tection of consumers with respect to rates.

19 (c) AUTHORITY TO EXAMINE.—The Commission

20 may examine the books, records, accounts, and other docu21 ments of any company in a holding company system, or

22 any affiliate thereof, as the Commission deems relevant

23 to costs incurred by a public utility company within such

24 holding company system and necessary or appropriate for

25 the protection of consumers with respect to rates. No

26 member, officer, or employee of the Commission shall di-
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1 vulge any fact or information that may come to his knowl2 edge during the course of examination of books, records,

3 accounts, or other documents as hereinbefore provided, ex4 cept insofar as he may be directed by the Commission or

5 by a court.

6 (d) OTHER AUTHORITY.—Nothing in this section

7 shall be construed to limit the Commission’s authority

8 under section 301 of the Federal Power Act.

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

10 (a) AUTHORITY.—Upon the written request of a

11 State commission having jurisdiction to regulate a public

12 utility company in a holding company system, and subject

13 to such terms and conditions as may be necessary and ap14 propriate to safeguard against unwarranted disclosure to

15 the public of any trade secrets or sensitive commercial in16 formation, a holding company or its associate company or

17 affiliate thereof, wherever located, shall produce for in18 spection such books, records, accounts, and other docu19 ments as have been identified in reasonable detail in a pro20 ceeding before the State commission and as are relevant

21 to costs incurred by such public utility company and are

22 necessary for the effective discharge of the State commis23 sion’s responsibilities with respect to such proceeding.

24 (b) SAVINGS.—Nothing in this section shall preempt

25 applicable State law concerning the provision of books,
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1 records, accounts, and other documents, or in any way

2 limit State’s rights to obtain books, records, accounts, and

3 other documents under Federal law, contracts, or other4 wise.

5 SEC. 207. AFFILIATE TRANSACTIONS.

6 Nothing in this Act shall preclude the Commission

7 or a State commission from exercising its jurisdiction

8 under otherwise applicable law to determine whether a

9 public utility company may recover in rates any costs of

10 an activity performed by an associate company, or any

11 costs of goods or services acquired by such public utility

12 company from an associate company.

13 SEC. 208. EFFECT ON OTHER REGULATION.

14 Nothing in this title shall preclude a State commis15 sion from exercising its jurisdiction under otherwise appli16 cable law to protect utility consumers.

17 SEC. 209. ENFORCEMENT.

18 The Commission shall have the same powers as set

19 forth in sections 206 through 317 of the Federal Power

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

21 this Act.

22 SEC. 210. SAVING PROVISION.

23 Nothing in this title prohibits a person from engaging

24 in activities in which it is legally engaged or authorized

25 to engage on the date on which the Public Utility Holding
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1 Company Act of 1935 ceases to apply to such person pur2 suant to this title, provided that it complies with the terms

3 of any authorization, whether by rule or by order.

4 SEC. 211. IMPLEMENTATION.

5 The Commission shall promulgate regulations nec6 essary or appropriate to implement this title not later than

7 one year after the date of enactment of this title.

8 SEC. 212. TRANSFERS.

9 All books, records, accounts, and other documents

10 that relate primarily to the functions hereby vested in this

11 Commission shall be transferred from the Securities and

12 Exchange Commission to the Commission.

13 SEC. 213. CONFORMING CHANGE.

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

15 825q), is repealed.

16 TITLE III—PUBLIC UTILITY REG17 ULATORY POLICIES ACT OF

18 1978

19 SEC. 301. APPLICATION OF PURPA PROVISIONS.

20 Section 210 of the Public Utility Regulatory Policies

21 Act of 1978 is amended by adding the following new sub22 section at the end thereof:

23 ‘‘(m) UTILITIES SUBJECT TO RETAIL COMPETI24 TION.—
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1 ‘‘(1) IN GENERAL.—The preceding provisions of

2 this section requiring electric utilities to offer to pur3 chase electric energy from qualifying cogeneration

4 facilities and qualifying small power production fa5 cilities at the incremental cost to the utility of alter6 native electric energy shall not apply to an electric

7 utility if the State—

8 ‘‘(A) determines that the retail customers

9 of such utility are able to purchase retail elec10 tric energy services (as defined in the Electric

11 Consumers’ Power to Choose Act of 1996) from

12 any person offering those services to the pur13 chaser on a competitively neutral and non14 discriminatory basis; and

15 ‘‘(B) notifies the Commission of such de16 termination.

17 ‘‘(2) RIGHTS AND REMEDIES NOT AFFECTED.—

18 Nothing in the Electric Consumers’ Power to Choose

19 Act of 1996 affects the rights or remedies of any

20 party with respect to the purchase or sale of electric

21 energy or capacity from or to a facility determined

22 to be a qualifying small power production facility or

23 a qualifying cogeneration facility pursuant to this
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1 Act pursuant to any contract in effect on July 11,

2 1996.’’.

Æ