I

104TH CONGRESS

2D SESSION H. R. 4297

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

SEPTEMBER 28, 1996

Mr. DELAY 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; TABLE OF CONTENTS.

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

5 ‘‘Consumers Electric Power Act of 1996’’.

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

7 as follows:
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Sec. 1. Short title; table of contents.

Sec. 2. Findings.

Sec. 3. Consumer choice.

Sec. 4. State authority.

Sec. 5. Reliable and nondiscriminatory operation of transmission and distribution systems.

Sec. 6. Federal transmission tariff reform.

Sec. 7. Application of Public Utility Holding Company Act and Public Utility

Regulatory Policies Act.

Sec. 8. Transition planning.

Sec. 9. Generating sources free to serve consumers and resellers.

Sec. 10. Applicability.

Sec. 11. Antitrust laws.

Sec. 12. Judicial review.

Sec. 13. Definitions.

Sec. 14. Federal power act.

Sec. 15. Effective date; savings provisions.

Sec. 16. Evaluation of effectiveness.

1 SEC. 2. FINDINGS.

2 The Congress finds the following:

3 (1) Low-cost and reliable electric service is inte4 gral 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 $200,000,000,000 a year, approximately half of

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

11 households.

12 (3) The cost of electric service has a direct ef13 fect on the price, profitability, and competitiveness

14 of goods and services produced in the United States.

15 (4) Lower priced electric service can be realized

16 by giving all American consumers the right to choose

17 among suppliers of electric service in a competitive
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1 market, while maintaining, if not improving the reli2 ability of service those consumers have come to ex3 pect.

4 (5) The development of vibrant competition in

5 the retail market for electric energy will—

6 (A) reduce the costs of electric service to

7 even the smallest consumers of electricity;

8 (B) reduce the costs to consumers benefit9 ing from today’s lowest regulated rates;

10 (C) create jobs as American businesses are

11 able to lower costs and better compete in world

12 markets and against foreign competition here at

13 home;

14 (D) result in a more efficient utility indus15 try; and

16 (E) reduce environmental impacts.

17 (6) Monopoly cost-of-service regulation of elec18 tricity has failed. It has stifled competition, resulting

19 in high electric service rates for many consumers

20 and few incentives for technological innovation and

21 good customer service by utilities.

22 (7) High electric service rates are regressive,

23 placing a disproportionate burden on poor rate24 payers.
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1 (8) High electric service rates divert consumer

2 dollars that would otherwise be spent for purchasing

3 necessary goods and services, savings, or invest4 ments that benefit the economy as a whole.

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

6 the Commerce Clause of the United States Constitu7 tion, regarding the generation, transmission, dis8 tribution, and sale of electric energy in interstate

9 commerce at the wholesale and retail level. Only

10 Congress can ensure that a competitive retail market

11 is established throughout the United States on an

12 expeditious but orderly basis.

13 (10) Regional and State variations require that

14 State regulatory authorities should receive deference

15 in certain decisions relating to electric service.

16 (11) Consumers of all utilities, whether served

17 by regulated or nonregulated electric utilities (such

18 as municipally owned utilities or rural cooperatives),

19 should have the same rights to receive the benefits

20 of competition and consumer choice.

21 (12) Consumer choice needed to produce renew22 able energy development that is market driven ful23 fills customer desires for clean energy supplies and

24 encourages competition among different renewable

25 technologies. Subjecting renewable energy tech-
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1 nologies to the discipline of the free market will bet2 ter allocate renewable resources and speed the com3 mercialization of renewable technologies than tradi4 tional centralized government resource planning.

5 SEC. 3. CONSUMER CHOICE.

6 (a) FREEDOM OF CHOICE.—(1) Each person has the

7 right to purchase electric service from any electric service

8 provider, notwithstanding any other law.

9 (2) A Federal, State, or local authority may not deny

10 or limit any person’s right to purchase such energy from

11 an electric service provider at a price and on terms and

12 conditions freely arrived at.

13 (3) A Federal, State, or local authority may not dis14 criminate, or authorize the discrimination, against any

15 person who exercises that person’s right to purchase such

16 energy, subject to subsection (b).

17 (b) BAN ON EXIT FEES, SUBSIDIES, OR OTHER PEN18 ALTIES ON EXERCISING RIGHT OF CHOICE.—A Federal,

19 State, or local authority may not grant any preference or

20 protection from competition to any electric service pro21 vider. For purposes of this subsection, the terms ‘‘pref22 erence’’ and ‘‘protection from competition’’ include—

23 (1) any direct or indirect subsidy; and
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1 (2) any exit fee or other levy imposed in con2 nection with any purchaser who terminates a pur3 chasing relationship with any seller, other than—

4 (A) a charge levied pursuant to provisions

5 of a service contract that were specifically and

6 freely negotiated and agreed upon by both par7 ties (or generally applicable contract law) to

8 such contract; or

9 (B) a nondiscriminatory access charge for

10 funding service continuations under section 4(b)

11 (relating to lifeline source).

12 (c) EFFECTIVE DATE.—The provisions of this section

13 shall take effect on January 1, 1998.

14 (d) ALTERNATIVE CHOICES.—Nothing in this Act

15 shall be construed to prohibit or otherwise restrict any

16 electric energy purchaser from having that electric energy

17 delivered through arrangements of the purchaser’s choice.

18 Any such alternative shall be consistent with regional or

19 national reliability standards.

20 SEC. 4. STATE AUTHORITY.

21 (a) LOCAL DISTRIBUTION SERVICE.—Nothing in this

22 Act shall affect the authority and responsibility of any

23 State or local government concerning the obligation to

24 connect consumers to the local distribution system and to
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1 ensure the adequate maintenance, safety, and reliability

2 of such local distribution system.

3 (b) LIFELINE SERVICE.—The authority under sub4 section (a) includes the authority to provide for the con5 tinuation of service to residential customers unable to af6 ford electric energy service, including the authority to es7 tablish nondiscriminatory local distribution access charges

8 on any power delivered sufficient to cover the cost of such

9 continuation.

10 (c) CERTIFICATION OF ELECTRIC SERVICE PROVID11 ERS.—No State may establish discriminatory require12 ments or other obligations for certification of electric serv13 ice providers within that State. Nothing in this subsection

14 shall affect the ability of a State to impose requirements

15 necessary to preserve universal service, protect the public

16 safety and welfare, ensure the continued reliability of the

17 distribution system, and safeguard the rights of consum18 ers.

19 (d) IF CONSUMERS MAKE NO SELECTION OF AN

20 ELECTRIC SERVICE PROVIDER.—In the case of a retail

21 customer who fails to select an electric service provider,

22 the State may establish rules under which the customer

23 shall be initially assigned on a nondiscriminatory basis to

24 one of a variety of electric service providers that have filed
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1 service terms with an appropriate State authority and met

2 any requirements described in subsection (c).

3 (e) ASSURANCE OF APPROPRIATE RATES FOR TRAN4 SITION TO COMPETITION.—In order to ensure uninter5 rupted local distribution service, if nondiscriminatory

6 unbundled rates are not in effect by the effective date of

7 this section, interim rates prescribed in the transition plan

8 under section 7 shall apply for any local distribution serv9 ice until such time as State rates take effect.

10 (f) ADDITIONAL STATE AUTHORITY.—State and

11 local governments shall retain authority over any specific

12 matter not otherwise addressed in this Act, including—

13 (1) the continuation of universal service;

14 (2) conservation programs and initiatives;

15 (3) consumer choice with regard to renewable

16 energy;

17 (4) research and development programs and ini18 tiatives; and

19 (5) any other matter deemed appropriate by a

20 State or local government.

21 SEC. 5. RELIABLE AND NONDISCRIMINATORY OPERATION

22 OF TRANSMISSION AND DISTRIBUTION SYS23 TEMS.

24 (a) OPERATION OF TRANSMISSION AND DISTRIBU25 TION SYSTEMS.—The Nation’s transmission and distribu-
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1 tion systems shall be operated to achieve the following ob2 jectives:

3 (1) Organizational separation within remaining

4 vertically integrated firms, between individuals, as5 sets, and systems dedicated to the operation of

6 transmission and distribution systems and those in7 volved in the provision of electric service.

8 (2) Nondiscriminatory access to the trans9 mission and distribution systems whether for whole10 sale or retail sale of electric service.

11 (3) The prevention of preferential treatment (or

12 protection from competition) by system operators to13 ward affiliated service providers.

14 (4) Access to information on a nondiscrim15 inatory basis concerning—

16 (A) availability of transmission and dis17 tribution service;

18 (B) operating conditions on transmission

19 and distribution systems; and

20 (C) rates, terms, and conditions of any ar21 rangement between, or information provided

22 from, the transmission and distribution system

23 operators and their affiliated electric service

24 provider, if any.
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1 (5) Ensuring that the transmission and dis2 tribution system operator—

3 (A) receives adequate and timely informa4 tion from electric service providers regarding

5 physical flows and physical transactions on the

6 transmission and distribution system;

7 (B) has access to assets and resources it

8 needs to maintain system balance in the event

9 of unanticipated events or the failure of an elec10 tric service provider to perform; and

11 (C) has authority to implement Commis12 sion approved sanctions and penalties for the

13 failure of electric service providers to conform

14 to the tariffs governing access to the trans15 mission and distribution system.

16 (b) COMMISSION AUTHORITY.—In order to ensure

17 consumers’ ability to access competing electric service pro18 viders, the Commission shall have the authority, by rule,

19 order, or decision, to provide for nondiscriminatory prices,

20 terms and conditions to transmission and distribution

21 services. With respect to distribution services, the Com22 mission shall defer to State authorities with respect to the

23 matter reserved to the States in section 4. The Commis24 sion shall also have the authority, by rule, order, or deci-
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1 sion, to take the actions necessary to fulfill the obligations

2 imposed on it by this Act.

3 SEC. 6. FEDERAL TRANSMISSION TARIFF REFORM.

4 (a) INITIAL TARIFF REFORM.—By January 1, 1999,

5 the Commission shall promulgate and make effective, rules

6 which provide for nondiscriminatory access to trans7 mission and distribution service as provided in this Act

8 and which eliminate the barriers to competitive electric

9 service presented by existing contracts and arrange10 ments—

11 (1) between and among transmitting utilities

12 governing the pricing, terms, and conditions of ac13 cess to transmission and distribution facilities; and

14 (2) between transmitting utilities and any other

15 entities (directly connected to such transmitting util16 ity’s transmission system) providing for the sale of

17 power by such transmitting utilities to any other en18 tities.

19 (b) CONTINUING REFORM.—The Commission shall

20 by rule, order, or decision ensure that the existing electric

21 utilities are not permitted to exercise market power in the

22 sale of electric service. The Commission shall initiate pro23 ceedings following enactment, to be concluded on or before

24 January 1, 1999, in order to determine the extent to

25 which existing utilities have market power in the sale of
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1 electric services; and to consider and determine the means

2 for mitigating such market power. In making and enforc3 ing such determinations, the Commission shall have the

4 authority to—

5 (1) restrict the ability of the electric utility, or

6 its affiliates, to sell such services at market-deter7 mined rates, provided that such restrictions shall be

8 limited to those areas and services where the electric

9 utility has market power; and

10 (2) order the divestiture of assets and functions

11 which are the source of market power, to the extent

12 reasonably necessary to mitigate such market power,

13 provided that such divestiture may include a variety

14 of alternatives including outright sale, lease, or out15 put contracts.

16 SEC. 7. APPLICATION OF PUBLIC UTILITY HOLDING COM17 PANY ACT AND PUBLIC UTILITY REGU18 LATORY POLICIES ACT .

19 (a) PUHCA.—The Public Utility Holding Company

20 Act of 1935 shall cease to apply to an electric utility sub21 ject to this Act or to any holding company (as defined

22 in such Act) of such utility if each State in which such

23 utility is providing electric energy services—

24 (1) determines that the retail customers served

25 by such utility and its affiliates have the ability to
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1 purchase electric energy services in accordance with

2 the provisions of section 3 of this Act; and

3 (2) notifies the Commission and the Securities

4 and Exchange Commission of such determination.

5 (b) PURPA.—The provisions of section 210 of the

6 Public Utility Regulatory Policies Act of 1978 requiring

7 electric utilities to offer to purchase electric energy from

8 qualifying cogeneration facilities and qualifying small

9 power production facilities at the incremental cost to the

10 utility of alternative electric energy shall cease to apply

11 to an electric utility if each State in which such utility

12 is providing electric services—

13 (1) determines that the retail customers served

14 by such utility have the ability to purchase electric

15 energy services in accordance with the provisions of

16 section 3 of this Act; and

17 (2) notifies the Commission of such determina18 tion.

19 Nothing in this subsection shall be construed to affect any

20 obligation under a binding contract to purchase electric

21 energy entered into before the date of enactment of this

22 Act.

23 SEC. 8. TRANSITION PLANNING.

24 (a) COMMISSION RECOMMENDATIONS.—Within 3

25 months of enactment, the Commission shall make a report
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1 to Congress providing its plan for effectuating its obliga2 tions under this Act, including any potential obstacles it

3 identifies that could inhibit full and reasonably expeditious

4 implementation.

5 (b) COMMISSION GUIDELINES.—The Commission

6 may publish preliminary, nonbinding guidelines to facili7 tate timely compliance with this Act by electric utilities.

8 Such guidelines shall be calculated to give notice of the

9 direction and substance of the Commission’s implementa10 tion of this Act to facilitate orderly transition and timely

11 compliance, but need not be entirely incorporated in the

12 Commission’s final rules.

13 (c) UTILITY COMPLIANCE.—Nothing in this Act shall

14 prevent utilities from submitting filings in advance of final

15 Commission rules, nor prevent the Commission from mak16 ing determinations on such filings subject to the final

17 rules.

18 SEC. 9. GENERATING SOURCES FREE TO SERVE CONSUM19 ERS AND RESELLERS.

20 No Federal, State, or local government authority

21 may—

22 (1) regulate the pricing, terms, or conditions of

23 service offerings by electric service providers; or

24 (2) except as provided in this Act, regulate who

25 may engage in selling electric energy.
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1 SEC. 10. APPLICABILITY.

2 This Act shall apply with respect to electric energy

3 sold for use or resale within the 50 States and the District

4 of Columbia.

5 SEC. 11. ANTITRUST LAWS.

6 Nothing in this Act shall be construed to modify, im7 pair, or supersede the applicability of the Sherman Anti8 trust Act (15 U.S.C. 1 and following) and amendments

9 thereto, the Clayton Act (15 U.S.C. 12 and following), and

10 amendments thereto, regulations promulgated under such

11 laws, and United States court decisions interpreting such

12 laws.

13 SEC. 12. JUDICIAL REVIEW.

14 Judicial review of this Act, or any rule or order under

15 this Act, within the meaning of section 551(4) of title 5,

16 United States Code, may be obtained in the United States

17 Court of Appeals for any appropriate circuit pursuant to

18 the provisions of chapter 7 of title 5, United States Code,

19 except that the second sentence of section 705 thereof

20 shall not apply.

21 SEC. 13. DEFINITIONS.

22 For purposes of this Act—

23 (1) COMMISSION.—The term ‘‘Commission’’

24 means the Federal Energy Regulatory Commission.

25 (2) ELECTRIC SERVICE.—The term ‘‘electric

26 service’’ shall mean the provision or sale of electric
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1 energy and related goods and services including but

2 not limited to billing, metering, equipment for mon3 itoring, controlling, or managing the consumption or

4 quality of electric energy, generation of electric en5 ergy, ancillary services, and other competitively pro6 vided goods and services, but shall not include trans7 mission and distribution service.

8 (3) TRANSMITTING UTILITY.—The term ‘‘trans9 mitting utility’’ has the meaning given such term in

10 the Federal Power Act, including any Federal power

11 marketing agency, and any other person, engaged in

12 the business of electric energy transmission.

13 (4) UTILITY OR ELECTRIC UTILITY.—The

14 terms ‘‘utility’’ and ‘‘electric utility’’ shall mean any

15 entity which, as of the date of enactment, owns as16 sets for the transmission or distribution of electric

17 energy.

18 (5) TRANSMISSION AND DISTRIBUTION SYSTEM

19 OPERATOR.—The term ‘‘transmission and distribu20 tion system operator’’ shall mean the entity or part

21 thereof with responsibility for monitoring, contract22 ing, and operating the transmission and distribution

23 system.
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1 SEC. 14. FEDERAL POWER ACT.

2 This Act shall supersede any provisions of part II of

3 the Federal Power Act that are inconsistent with the pro4 visions of this Act.

5 SEC. 15. EFFECTIVE DATE; SAVINGS PROVISIONS.

6 (a) EFFECTIVE DATE.—The provisions of this Act

7 shall take effect 30 days after the date of enactment of

8 this Act, except to the extent expressly provided otherwise

9 in this Act.

10 (b) EXISTING CONTRACTS.—Nothing in this Act shall

11 alter, diminish, or otherwise affect any rights or obliga12 tions under any contract existing as of the date of the

13 enactment of this Act.

14 SEC. 16. EVALUATION OF EFFECTIVENESS.

15 Not later than 30 months after the date of the enact16 ment of this Act, the Commission shall conduct, by rule,

17 an evaluation of this Act and submit a report on such eval18 uation to the Congress. Such evaluation shall include each

19 of the following:

20 (1) The extent to which electric energy rates

21 have been reduced, and the combined cost of electric

22 energy delivered to consumers, including the trans23 mission costs.

24 (2) The level of service reliability provided to

25 purchasers of electric energy.
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1 (3) The extent of competition in the electric en2 ergy market.

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