I
106TH CONGRESS
1ST SESSION
H. R. 2050
To provide consumers with a reliable source of electricity and a choice of
electric providers, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JUNE 8, 1999
Mr. LARGENT (for himself and Mr. MARKEY) introduced the following bill;
which was referred to the Committee on Commerce, and in addition to
the Committees on Ways and Means, Transportation and Infrastructure,
and Resources, for a period to be subsequently determined by the Speak-
er, in each case for consideration of such provisions as fall within the ju-
risdiction of the committee concerned
A BILL
To provide consumers with a reliable source of electricity
and a choice of electric providers, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Electric Consumers’ Power To Choose Act of 1999’’.
(b) TABLE OF CONTENTS.—
Sec. 1. Short title and table of contents.
Sec. 2. Findings and purpose.
TITLE I—CONSUMER CHOICE AND COMPETITION FOR ELECTRIC
UTILITIES
Sec. 101. Competition for retail electric distribution systems.
‘‘Subtitle F—Retail Electric Competition
‘‘Sec. 151. Definitions.
‘‘Sec. 152. Retail competition for State-regulated local distribution sys-
tems.
‘‘Sec. 153. Retail competition for nonregulated local distribution systems.
‘‘Sec. 154. Grandfathering provision.
‘‘Sec. 155. Retail reciprocity.
‘‘Sec. 156. Aggregation for purchase of retail electric energy.
‘‘Sec. 157. State jurisdiction.
‘‘Sec. 158. Relation to NAFTA; imports.
‘‘Sec. 159. Privacy of consumer proprietary information.
Sec. 102. Electric reliability.
Sec. 103. Federal interconnection authorities.
Sec. 104. Consumer protection, market power, and unfair trade practices.
Sec. 105. Antitrust savings clause.
Sec. 106. Mandatory open access for all transmitting utilities.
Sec. 107. Clarification of State and Federal authority over retail transmission
services.
Sec. 108. Authority to establish regional transmission organizations.
Sec. 109. Special provisions respecting BPA and ERCOT transmission.
Sec. 110. Electric company mergers.
Sec. 111. Regional transmission planning agencies.
Sec. 112. Universal and affordable service.
Sec. 113. Conforming and technical amendments to the Federal Power Act.
Sec. 114. Study of grandfathered systems.
Sec. 115. Effective date.
TITLE II—PROVISIONS RESPECTING THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935
Sec. 201. Short title.
Sec. 202. Reform of holding company regulation under PUHCA.
Sec. 203. Definitions.
Sec. 204. Federal access to books and records.
Sec. 205. State access to books and records.
Sec. 206. Exemption authority.
Sec. 207. Affiliate transactions.
Sec. 208. Applicability.
Sec. 209. Effect on other regulations.
Sec. 210. Enforcement.
Sec. 211. Savings provisions.
Sec. 212. Implementation.
Sec. 213. Transfer of resources.
Sec. 214. Authorization of appropriations.
Sec. 215. Conforming amendment to the Federal Power Act.
TITLE III—PROVISIONS RESPECTING THE PUBLIC UTILITY
REGULATORY POLICIES ACT OF 1978
Sec. 301. Short title.
Sec. 302. Findings.
Sec. 303. Prospective repeal.
Sec. 304. Recovery of costs.
TITLE IV—FEDERAL POWER MARKETING ADMINISTRATIONS AND
TENNESSEE VALLEY AUTHORITY
Subtitle A—Tennessee Valley Authority
Sec. 401. Definitions.
Sec. 402. Wholesale competition in the Tennessee Valley region.
Sec. 403. Tennessee Valley Authority power sales.
Sec. 404. Prohibition on acquisition of new generating resources.
Sec. 405. Renegotiation of long-term contracts.
Sec. 406. Regulation of Tennessee Valley Authority transmission system.
Sec. 407. Regulation of Tennessee Valley Authority distributors.
Sec. 408. Stranded cost recovery.
Sec. 409. Regional transmission planning agencies.
Sec. 410. Application of antitrust law.
Sec. 411. Disposition of surplus local distribution facilities.
Sec. 412. Commission regulations.
Sec. 413. Savings provision.
Subtitle B—Bonneville Power Administration
Sec. 421. Definitions.
Sec. 422. Application of Federal Power Act.
Sec. 423. Surcharge on transmission rates to recover otherwise nonrecoverable
costs.
Sec. 424. Complaints.
Sec. 425. Review of commission orders.
Sec. 426. Antitrust laws application to BPA.
Sec. 427. Conforming amendments.
Subtitle C—Other Power Marketing Administrations
Sec. 431. Definitions.
Sec. 432. Accounting.
Sec. 433. Regional transmission planning agencies.
Sec. 434. Application of antitrust law.
TITLE V—RENEWABLE ENERGY
Sec. 501. Renewable portfolio standard.
Sec. 502. Net metering.
TITLE VI—PROVISIONS RELATING TO THE INTERNAL REVENUE
CODE
Sec. 601. 5-year extension of credit for producing electricity from renewable re-
sources.
Sec. 602. Credit for energy efficiency improvements to existing homes.
Sec. 603. Business credit for construction of new energy efficient home.
Sec. 604. Tax credit for combined heat and power system property.
Sec. 605. Tax-exempt bond financing of certain electric facilities.
SEC. 2. FINDINGS AND PURPOSE.
(a) FINDINGS.—The Congress finds the following:
(1) Electricity is used in virtually every home,
commercial enterprise, and manufacturing facility in
the United States; is a basic element of the inter-
state and foreign commerce of the United States;
and immediately, directly, and substantially affects
interstate and foreign commerce.
(2) Americans consume electricity worth more
than $250,000,000,000 a year, approximately half of
which is for residential purposes, making the month-
ly electric utility bill one of the largest expenses for
most households.
(3) Traditional monopoly rate-of-return regula-
tion of electricity has failed. It has stifled competi-
tion, resulting in high electricity rates for many con-
sumers and few incentives for technological innova-
tion and good customer service by electric utilities.
(4) High electricity rates are regressive, placing
a disproportionate burden on poor ratepayers. A
competitive electric generation industry should pro-
vide benefits to all consumers by fostering innova-
tion and efficiency, rather than by allowing cost
shifting that lowers rates to some consumers but
raises rates to others.
(9) Congress has authority to enact laws, under
the Commerce Clause of the United States Constitu-
tion, regarding the generation, transmission, dis-
tribution, and sale of electric energy in interstate
commerce at the wholesale and retail levels.
(10) Only Congress can ensure that a competi-
tive retail electricity market is established through-
out the United States on an expeditious but orderly
basis. Regional and State variations, however, re-
quire that State regulatory authorities should receive
deference in implementing competition and consumer
choice in retail electricity markets.
(11) The success of competition in the whole-
sale electricity market under the Energy Policy Act
of 1992 and open access under Orders No. 888 and
889 of the Federal Energy Regulatory Commission,
as well as innovations in electricity generation and
transmission technologies, indicate that with appro-
priate transition measures, retail customer choice
and generation competition can substantially benefit
all classes of United States electricity consumers, in-
cluding residential, commercial, industrial, and other
consumers.
(12) In a competitive generation market, it is in
the national interest to continue to encourage the
development of emerging energy technologies in
order to ensure energy diversity and security and to
protect the environment.
(b) PURPOSE.—The purpose of this Act is to allow
American electricity consumers to choose among com-
peting providers of electricity, in order to secure lower
electricity rates, higher quality services, and a more robust
United States economy, and for other purposes.
TITLE 
I—CONSUMER 
CHOICE
AND 
COMPETITION 
FOR
ELECTRIC UTILITIES
SEC. 101. COMPETITION FOR RETAIL ELECTRIC DISTRIBU-
TION SYSTEMS.
(a) AMENDMENT OF PURPA.—Title I of the Public
Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601
and following) is amended by adding the following new
subtitle at the end thereof:
‘‘Subtitle F—Retail Electric Competition
‘‘SEC. 151. DEFINITIONS.
‘‘For purposes of this subtitle:
‘‘(1) CONSUMER.—The term ‘consumer’ means
any person who purchases or offers to purchase any
retail electric supply.
‘‘(2) ELECTRIC SUPPLIER.—The term ‘electric
supplier’ means any person who produces, generates,
manufactures, aggregates, markets, brokers, sells, or
otherwise supplies electric energy.
‘‘(3) LOCAL
DISTRIBUTION
COMPANY.—The
term ‘local distribution company’ means any person
which owns, controls, or operates local distribution
facilities.
‘‘(4) LOCAL
DISTRIBUTION
FACILITIES.—The
term ‘local distribution facilities’ means any facilities
used for the local distribution of electric energy, in-
cluding any facilities determined pursuant to section
201 of the Federal Power Act to be so used.
‘‘(5) 
LOCAL
DISTRIBUTION
SERVICE.—The
term ‘local distribution service’ includes all services
necessary to, or customarily provided in the course
of, the delivery of electric energy to a consumer
through local distribution facilities, including the
construction, maintenance, and operation of local
distribution facilities, the metering and billing of re-
tail sales, and related management, accounting, and
other services. Such term shall not include the gen-
eration or sale of electric energy.
‘‘(6) NONREGULATED
LOCAL
DISTRIBUTION
COMPANY.—The term ‘nonregulated local distribu-
tion company’ means any local distribution company
other than any State-regulated local distribution
company.
‘‘(7) PERSON.—The term ‘person’ means any
entity, including an individual, a foreign govern-
mental entity, the United States Government or any
instrumentality or authority thereof (including the
Tennessee Valley Authority), or a State, or any in-
strumentality, authority, or political subdivision
thereof, including any municipality.
‘‘(8) PUBLIC UTILITY.—The term ‘public util-
ity’ means a public utility as defined in section
201(e)(1) of the Federal Power Act.
‘‘(9) STATE REGULATED LOCAL DISTRIBUTION
COMPANY.—The term ‘State regulated local distribu-
tion company’ means any local distribution company
with respect to which a State regulatory authority
has ratemaking jurisdiction.
‘‘(10) STATE REGULATORY AUTHORITY.—Not-
withstanding section 3(17) of this Act, the term
‘State regulatory authority’ means any State agency
which has ratemaking authority with respect to the
provision of local distribution services by any local
distribution company (other than such State agen-
cy).
‘‘(11) TRANSMISSION
FACILITIES.—The term
‘transmission facilities’ means any facilities used for
the transmission of electric energy, including any fa-
cilities determined pursuant to section 201 of the
Federal Power Act to be so used.
‘‘SEC. 152. RETAIL COMPETITION FOR STATE REGULATED
LOCAL DISTRIBUTION SYSTEMS.
‘‘(a) STATE ELECTIONS.—
‘‘(1) IN GENERAL.—Every State may elect to
require, by no later than January 1, 2002, retail
electric competition in accordance with paragraph
(2) of this subsection for every State regulated local
distribution company providing local distribution
service in such State. Such election shall be made by
January 1, 2001. No such election may be partial or
revocable. Such election shall be conclusively evi-
denced by the submission to the Commission from
the State regulatory authority by January 1, 2001,
of a notice that the State will require such retail
competition.
‘‘(2) RETAIL
ELECTRIC
COMPETITION.—If a
State makes an election under paragraph (1), the
State regulatory authority for that State shall estab-
lish such terms and conditions as necessary and ap-
propriate to ensure that—
‘‘(A) all electric consumers in such State
served by State regulated local distribution
companies may choose from competing electric
suppliers; and
‘‘(B) State regulated local distribution
companies shall provide local distribution serv-
ice under rates, charges, terms, and conditions
which—
‘‘(i) are just and reasonable and not
unduly discriminatory or preferential;
‘‘(ii) identify, offer, and sell local dis-
tribution service separately from any sales
of electric energy; and
‘‘(iii) comply with State law and are
otherwise in the public interest; and
in the case of a local distribution company
which is also an electric supplier, such rates,
charges, terms, and conditions shall be com-
parable to those applicable to the use of local
distribution facilities owned, controlled, or oper-
ated by the company for the local distribution
of electric energy supplied by such company.
‘‘(b) OPT OUT OF RETAIL COMPETITION.—If a State
regulatory authority does not make the election under sub-
section (a), subsection (c) shall apply unless the State reg-
ulatory authority finds, after notice and opportunity for
hearing, that making such election will have a negative
impact on the residential class, the commercial class, or
the industrial class of customers in that State that cannot
be reasonably mitigated. The State regulatory authority
shall publish the finding and its basis and shall file a no-
tice with the Commission of its determination by January
1, 2001.
‘‘(c) FAILURE TO ELECT OR OPT OUT.—Except for
a 
State 
covered 
by 
section 
154 
(relating 
to
grandfathering), if a State does not make an election
under subsection (a), or file an opt-out notice under sub-
section (b), by January 1, 2001, each State regulated local
distribution company providing local distribution service
in such State shall establish retail electric competition for
its local distribution facilities in accordance with sub-
section (a)(2) by January 1, 2002.
‘‘(d) AUTHORITY TO REQUIRE CHARGES.—Except as
provided in subsection (b), nothing in this subtitle shall
affect the authority of a State or a State regulatory au-
thority to require, as a condition for the purchase or re-
ceipt by any person located in such State of any retail
electric energy or services described in section 201(h) of
the Federal Power Act, the payment of any charge deemed
necessary by such State or State regulatory authority for
any of the following purposes:
‘‘(1) To recover transition costs.
‘‘(2) To ensure that adequate electric service is
available to all customers served by a retail distribu-
tion system.
‘‘(3) To ensure and enhance the reliability of
retail electric service.
‘‘(4) To fund assistance to low-income cus-
tomers.
‘‘(5) To encourage, in a competitively neutral
fashion, 
environmental, 
emerging 
energy 
tech-
nologies, energy efficiency, or energy conservation
programs, or any combination of such programs.
‘‘(6) To provide for transition costs of electric
utility workers adversely affected by restructuring.
‘‘(7) To encourage research and development on
electric technologies.
‘‘(8) Any combination of the purposes described
in paragraphs (1) through (7).
Nothing in this subsection shall require a State or State
regulatory authority to impose any charges under this sub-
section.
‘‘(e) DISCRIMINATION PROHIBITED.—The calcula-
tion, assessment, or imposition of any fees and charges
described in subsection (d), or imposed pursuant to any
other law, shall not unduly discriminate among different
classes or categories of electric utilities, local distribution
companies, electric energy consumers, or electric suppliers.
Nothing in this subtitle shall affect the authority of a
State under applicable State law to design rates for local
distribution service.
‘‘(f) ENFORCEMENT.—Any person may bring an ac-
tion in the appropriate State court against any State regu-
latory authority or State regulated local distribution com-
pany to require compliance with this section.
‘‘SEC. 153. RETAIL COMPETITION FOR NONREGULATED
LOCAL DISTRIBUTION SYSTEMS.
‘‘(a) NONREGULATED LOCAL DISTRIBUTION COMPA-
NIES.—
‘‘(1) ELECTION BY UTILITY.—Every nonregu-
lated local distribution company may elect to estab-
lish, by no later than January 1, 2002, retail com-
petition in accordance with paragraph (2) for its
local distribution facilities providing local distribu-
tion service. Such election shall be made by January
1, 2001. No such election may be partial or rev-
ocable. For a nonregulated local distribution com-
pany in any State, such election shall be conclusively
evidenced by the submission from such company to
the Commission by January 1, 2001, of a notice
that the company will provide such retail competi-
tion.
‘‘(2) RETAIL
ELECTRIC
COMPETITION.—If a
nonregulated local distribution company in any State
makes an election under paragraph (1), it shall es-
tablish such terms and conditions as it finds nec-
essary and appropriate to ensure that—
‘‘(A) all electric consumers of local dis-
tribution service provided by such company may
choose from competing retail electric suppliers;
and
‘‘(B) the company shall provide access to
its local distribution service under rates,
charges, terms, and conditions which—
‘‘(i) are just and reasonable and not
unduly preferential or discriminatory;
‘‘(ii) identify, offer, and sell local dis-
tribution service separately from any sales
of electric energy;
‘‘(iii) comply with State law and are
otherwise in the public interest; and
in the case of a local distribution company
which is also an electric supplier, such rates,
charges, terms, and conditions shall be com-
parable to those applicable to the use of local
distribution facilities owned, controlled, or oper-
ated by the company for the local distribution
of electric energy supplied by such company.
‘‘(b) OPT OUT OF RETAIL COMPETITION.—If a non-
regulated local distribution company does not make the
election under subsection (a), subsection (c) shall apply
unless the company finds, after notice and opportunity for
hearing, that implementation of retail competition in ac-
cordance with subsection (a) will have a negative impact
on the residential class, the commercial class, or the indus-
trial class of customers of that company that cannot be
reasonably mitigated. The nonregulated local distribution
company shall publish such determination and its basis
and shall file a notice with the Commission of its deter-
mination by January 1, 2001.
‘‘(c) FAILURE TO ELECT.—Except for a nonregu-
lated local distribution company covered by section 154
(relating to grandfathering), each nonregulated local dis-
tribution company that does not make an election under
subsection (a), or file an opt-out notice under subsection
(b), by January 1, 2001, shall provide retail competition
for its local distribution facilities providing local distribu-
tion service in accordance with subsection (a)(2) by Janu-
ary 1, 2002.
‘‘(d) CHARGES.—
‘‘(1) AUTHORITY TO REQUIRE CHARGES.—Ex-
cept as provided in subsection (b), nothing in this
subtitle shall affect the authority of a nonregulated
local distribution company that provides local dis-
tribution service to require, as a condition for the
purchase or receipt by any electric consumers receiv-
ing local distribution service provided by such com-
pany, the payment of any charge deemed necessary
by such company for any of the following purposes:
‘‘(A) To recover transition costs.
‘‘(B) To ensure that adequate electric serv-
ice is available to all consumers served by such
company.
‘‘(C) To ensure and enhance the reliability
of retail electric service.
‘‘(D) To fund assistance to low-income
customers.
‘‘(E) To encourage, in a competitively neu-
tral fashion, environmental, emerging energy
technologies, energy efficiency, or energy con-
servation programs, or any combination of such
programs.
‘‘(F) To provide for transition costs of
electric utility workers adversely affected by re-
structuring.
‘‘(G) To encourage research and develop-
ment on electric technologies.
‘‘(H) Any combination of the purposes de-
scribed in subparagraphs (A) through (G).
Nothing in this subsection shall require a nonregu-
lated local distribution company to impose any
charges under this section.
‘‘(2) DISCRIMINATION PROHIBITED.—The cal-
culation, assessment, or imposition of any fees and
charges described in paragraph (1), or imposed pur-
suant to any other law, shall not unduly discriminate
among different classes or categories of electric utili-
ties, local distribution companies, consumers, or elec-
tric suppliers. Nothing in this subtitle shall affect
the authority of a nonregulated local distribution
company under applicable State law to design rates
for local distribution service.
‘‘(e) ENFORCEMENT.—Any person may bring an ac-
tion the appropriate State court against any nonregulated
local distribution company to require compliance with this
section.
‘‘SEC. 154. GRANDFATHERING PROVISION.
‘‘(a) STATE REGULATED COMPANIES.—A State shall
be exempt from section 152 if the State has—
‘‘(1) adopted a plan to provide open access to
local distribution facilities of all State regulated local
distribution companies in the State for retail electric
suppliers seeking to make retail sales to all classes
of retail customers, and
‘‘(2) submitted a notice to the Commission
within 30 days after the date of the enactment of
this section stating that such State has adopted such
plan..
‘‘(b) NONREGULATED COMPANIES.—Any nonregu-
lated local distribution company shall be exempt from sec-
tion 153 if the company has—
‘‘(1) adopted a plan to provide open access to
its local distribution facilities for retail electric sup-
pliers seeking to make retail sales to all classes of
retail customers, and
‘‘(2) submitted a notice to the Commission
within 30 days after the date of the enactment of
this section stating that such company has adopted
such plan.
‘‘SEC. 155. RETAIL RECIPROCITY.
‘‘(a) STATE AUTHORITY.—
‘‘(1) ELECTRICITY
GENERATED
IN
A
NON-
COMPETITIVE STATE.—Any State may prohibit any
person from selling to retail electric consumers of
State regulated local distribution companies in such
State any electric energy generated in a second
State which has not made a timely election under
section 152(a) or which has filed an opt-out notice
under section 152(b) unless—
‘‘(A) such electric energy is generated by a
nonregulated electric utility in such second
State;
‘‘(B) such other State has submitted a
timely notice under section 154 (relating to
grandfathering); or
‘‘(C) all local distribution facilities in such
second State owned, controlled, or operated by
State regulated local distribution companies
providing local distribution service in such sec-
ond State are subject to retail competition con-
sistent with section 152(a)(2).
‘‘(2) 
ELECTRICITY
GENERATED
BY
NON-
COMPETITIVE NONREGULATED ELECTRIC UTILITY.—
Any State may prohibit any person from selling to
retail electric consumers of State regulated local dis-
tribution companies in such State any electric en-
ergy generated by a nonregulated electric utility
which has not made an election under section 153(a)
or which has filed an opt-out notice under section
153(b) unless—
‘‘(A) such nonregulated electric utility has
submitted a timely notice under section 154 (re-
lating to grandfathering); or
‘‘(B) all local distribution facilities of such
nonregulated electric utility are subject to retail
competition consistent with section 153(a)(2).
‘‘(b) AUTHORITY
OF
NONREGULATED
ELECTRIC
UTILITIES.—
‘‘(1) ELECTRICITY
GENERATED
IN
A
NON-
COMPETITIVE
STATE.—Any nonregulated eletric
utility in a State may prohibit any person from sell-
ing to its retail electric consumers any electric en-
ergy generated in a second State which has not
made a timely election under section 152(a) or
which has filed an opt-out notice under section
152(b) unless—
‘‘(A) such electric energy is generated by a
nonregulated electric utility in such second
State;
‘‘(B) such other State has submitted a
timely notice under section 154 (relating to
grandfathering); or
‘‘(C) all local distribution facilities in such
second State owned, controlled, or operated by
State regulated local distribution companies
providing local distribution service in such sec-
ond State are subject to retail competition con-
sistent with section 152(a)(2).
‘‘(2) 
ELECTRICITY
GENERATED
BY
NON-
COMPETITIVE NONREGULATED ELECTRIC UTILITY.—
Any nonregulated electric utility may prohibit any
person from selling to its retail electric consumers
any electric energy generated by a nonregulated elec-
tric utility which has not made an election under
section 153(a) or which has filed an opt-out notice
under section 153(b) unless—
‘‘(A) such nonregulated electric utility has
submitted a timely notice under section 154 (re-
lating to grandfathering); or
‘‘(B) all local distribution facilities of such
nonregulated electric utility are subject to retail
competition consistent with section 153(a)(2).
‘‘SEC. 156. AGGREGATION FOR PURCHASE OF RETAIL ELEC-
TRIC ENERGY.
‘‘Notwithstanding any other provision of Federal or
State law, and subject to legitimate and nondiscriminatory
State requirements imposed on retail electric suppliers, a
group of customers or any entity acting on behalf of such
group may acquire retail electric energy on an aggregate
basis if the group of customers is served by 1 or more
local distribution companies for which a State regulatory
authority or nonregulated local distribution company has
filed a notice of retail competition under section 152(a)(1)
or 153(a)(1).
‘‘SEC. 157. STATE JURISDICTION.
‘‘(a) PRIMARY STATE JURISDICTION.—Except for re-
view of any action in the Supreme Court of the United
States in accordance with sections 1257 and 1258 of title
28, United States Code, no court of the United States
shall have jurisdiction over any action arising under the
provisions of section 152 or 153 (relating to retail electric
competition).
‘‘(b) STATE COURT PROCEDURES.—Except for Su-
preme Court review, any appeal, review, or other action
in State court shall be pursuant to any applicable State
procedures.
‘‘(c) 
PARITY
OF
FRANCHISE
AND
OTHER
CHARGES.—A State or local government, under State law,
may impose or collect any franchise, license, permit fee,
or equivalent thereof, from any electric supplier as a condi-
tion for operating in the State or locality, only to the ex-
tent such charge is imposed on a just and reasonable and
not unduly discriminatory or preferential basis.
‘‘SEC. 158. RELATION TO NAFTA; IMPORTS.
‘‘(a) NATIONAL
TREATMENT
AS
REQUIRED
BY
NAFTA.—The provisions of section 155 (relating to retail
reciprocity) shall apply on a not unduly discriminatory or
preferential basis, and to the same extent, to any foreign
person or foreign electric utility which is a citizen of a
nation which has ratified the North American Free Trade
Agreement, as such provisions apply to any person or elec-
tric utility which is a citizen of the United States.
‘‘(b) IMPORTS.—The provisions of section 155 (relat-
ing to respecting retail reciprocity) shall apply pursuant
to subsection (a) to any imports of electric energy into
the United States.
‘‘SEC. 159. PRIVACY OF CONSUMER PROPRIETARY INFOR-
MATION.
‘‘(a) PRIVACY REQUIREMENTS.—Except as required
by law or with the prior written affirmative approval of
the consumer, any person that receives or obtains cus-
tomer information by virtue of its provision of retail elec-
tric service or metering and billing service shall only use,
disclose, or permit access to individually identifiable con-
sumer information in its provision of (1) retail electric
service or metering and billing service from which such
information is derived, or (2) services necessary to, or used
in, the provision of such service.
‘‘(b) DISCLOSURE ON REQUEST BY CONSUMERS.—
An electric utility or metering and billing service provider
shall disclose consumer information, upon affirmative
written request by the consumer, to any person designated
by the consumer.
‘‘(c) AGGREGATE CONSUMER INFORMATION.—Any
person that receives or obtains consumer information by
virtue of its provision of retail electric service or metering
and billing services may use, disclose, or permit access to
aggregate consumer information other than for the pur-
poses described in subsection (a). An electric utility or me-
tering or billing service provider may use, disclose, or per-
mit access to aggregate consumer information other than
for purposes described in subsection (a) only if it provides
such aggregate information to other retail electric service
providers on reasonable and nondiscriminatory terms and
conditions upon reasonable request therefor.
‘‘(d) EXCEPTIONS.—Nothing in this section prohibits
an electric utility or metering and billing service provider
from using, disclosing, or permitting access to consumer
information obtained from its consumers, either directly
or indirectly through its agents—
‘‘(1) to initiate, render, bill, and collect for re-
tail electric services or metering and billing services;
‘‘(2) to protect the rights or property of the
electric utility or metering and billing service pro-
vider, or to protect consumers of those services and
other service providers from fraudulent, abusive, un-
lawful use of, or subscription to such services; or
‘‘(3) for purposes of compliance with any other
Federal or State law or regulation authorizing dis-
closure of information to a Federal or State agency.
‘‘(e) DEFINITIONS.—As used in this section:
‘‘(1) CONSUMER
INFORMATION.—The term
‘consumer information’ means—
‘‘(A) information that relates to the quan-
tity, technical configuration, type, destination,
and amount of use of a retail electric service
subscribed to by any consumer, and that is
made available to an electric utility or metering
and billing service provider solely by virtue of
its business relationship; and
‘‘(B) information contained in the bills per-
taining to retail electric service received by a
consumer.
‘‘(2) AGGREGATE CONSUMER INFORMATION.—
The term ‘aggregate consumer information’ means
collective data that relates to a group or category of
services or consumers, from which individual con-
sumer identities and characteristics have been re-
moved.’’.
(b) TABLE OF CONTENTS.—The table of contents for
title I of the Public Utility Regulatory Policies Act of 1978
(16 U.S.C. 2601 and following) is amended by adding the
following at the end thereof:
‘‘Subtitle F—Retail Electric Competition
‘‘Sec. 151. Definitions.
‘‘Sec. 152. Retail competition for State regulated local distribution sys-
tems.
‘‘Sec. 153. Retail competition for nonregulated local distribution systems.
‘‘Sec. 154. Grandfathering provision.
‘‘Sec. 155. Retail reciprocity.
‘‘Sec. 156. Aggregation for purchase of retail electric energy.
‘‘Sec. 157. State jurisdiction.
‘‘Sec. 158. Relation to NAFTA; imports.
‘‘Sec. 159. Privacy of consumer proprietary information.’’.
SEC. 102. ELECTRIC RELIABILITY.
The Federal Power Act (16 U.S.C. 791a et seq.) is
amended by adding the following new Part at the end
thereof:
‘‘PART IV—ELECTRIC RELIABILITY
‘‘SEC. 401. ELECTRIC RELIABILITY ORGANIZATION AND
OVERSIGHT.
‘‘(a) DEFINITIONS.—As used in this section:
‘‘(1) AFFILIATED
REGIONAL
LIABILITY
ENTI-
TY.—The term ‘affiliated regional reliability entity’
means an entity delegated authority under the provi-
sions of subsection (h).
‘‘(2) BULK-POWER SYSTEM.—The term ‘bulk-
power system’ means all facilities and control sys-
tems necessary for operating an interconnected
transmission grid (or any portion thereof), including
high-voltage transmission lines, substations, control
centers, communications, data, and operations plan-
ning facilities, and the output of generating units
necessary to maintain transmission system reli-
ability.
‘‘(3) ELECTRIC RELIABILITY ORGANIZATION, OR
ORGANIZATION.—The term ‘electric reliability orga-
nization’ or ‘organization’ means the organization
approved by the Commission under subsection
(d)(4).
‘‘(4) ENTITY
RULE.—The term ‘entity rule’
means a rule adopted by an affiliated regional reli-
ability entity for a specific region and designed to
implement or enforce one or more organization
standards. An entity rule shall be approved by the
Organization and once approved, shall be treated as
an organization standard.
‘‘(5) INDUSTRY SECTOR.—The term ‘industry
sector’ means a group of users of the bulk power
system with substantially similar commercial inter-
ests, as determined by the Board of the Electric Re-
liability Organization.
‘‘(6) INTERCONNECTION.—The term ‘inter-
connection’ means a geographic area in which the
operation of bulk-power system components is syn-
chronized such that the failure of one or more of
such components may adversely effect the ability of
the operators of other components within the inter-
connection to maintain safe and reliable operation of
the facilities within their control.
‘‘(7) ORGANIZATION STANDARD.—The term ‘or-
ganization standard’ means a policy or standard
duly adopted by the Electric Reliability Organization
to provide for the reliable operation of a bulk power
system.
‘‘(8) PUBLIC
INTEREST
GROUP.—The term
‘public interest group’ means any nonprofit private
or public organization that has an interest in the ac-
tivities of the Electric Reliability Organization, in-
cluding, but not limited to, ratepayer advocates, en-
vironmental groups, and State and local government
organizations that regulate market participants and
promulgate government policy.
‘‘(9) VARIANCE.—The term ‘variance’ means an
exception or variance from the requirements of an
organization standard (including a proposal for an
organization standard where there is no organization
standard) that is adopted by an affiliated regional
reliability entity and applicable to all or a part of the
region for which the affiliated regional reliability en-
tity responsible. A variance shall be approved by the
organization and once approved, shall be treated as
an organization standard.
‘‘(10) SYSTEM OPERATOR.—The term ‘system
operator’ means any entity that operates or is re-
sponsible for the operation of a bulk-power system,
including but not limited to a control area operator,
an independent system operator, a transmission
company, a transmission system operator, or a re-
gional security coordinator.
‘‘(11) USER OF THE BULK-POWER SYSTEM.—
The term ‘user of the bulk-power system’ means any
entity that sells, purchases, or transmits electric
power over a bulk-power system, or that owns, oper-
ates or maintains facilities or control systems that
are part of a bulk-power system, or that is a system
operator.
‘‘(b) COMMISSION
AUTHORITY.—(1) Within the
United States, the Commission shall have jurisdiction over
the Electric Reliability Organization, all affiliated regional
reliability entities, all system operators, and all users of
the bulk-power system, for purposes of approving and en-
forcing compliance with the requirements of this section.
‘‘(2) The Commission may, by rule, define any other
term used in this section, provided such definition is con-
sistent with the definitions in, and the purpose and intent
of, this Act.
‘‘(c) EXISTING
RELIABILITY
STANDARDS.—Fol-
lowing enactment of this section, and prior to the approval
of an organization under subsection (d), any person, in-
cluding the North American Electric Reliability Council
and its member regional reliability councils, may file any
reliability standard, guidance or practice that they would
propose to be made mandatory and enforceable. The Com-
mission, after allowing interested persons an opportunity
to submit comments, may approve any such proposed
mandatory standard, guidance or practice, or any amend-
ment thereto, if it finds that the standard, guidance, or
practice, or amendment is just, reasonable, not unduly dis-
criminatory or preferential, and in the public interest. The
Commission may, without further proceeding or finding,
grant its approval to any standard, guidance or practice
for which no substantive objections are filed in the com-
ment period. Filed standards, guidances, or practices, in-
cluding any amendments thereto, shall be mandatory and
applicable according to their terms following approval by
the Commission and shall remain in effect until (1) with-
drawn, disapproved or superseded by an organization
standard, issued or approved by the Electric Reliability
Organization and made effective by the Commission under
subsection (e); or (2) disapproved or suspended by the
Commission if, upon complaint or upon its own motion
and after notice and an opportunity for comment, the
Commission finds the standard, guidance or practice un-
just, unreasonable, unduly discriminatory, or preferential
or not in the public interest. Standards, guidances or prac-
tices in effect pursuant to the provisions of this subsection
shall be enforceable by the Commission.
‘‘(d) ORGANIZATION APPROVAL.—(1) Not later than
90 days after the date of enactment of this section, the
Commission shall issue proposed rules specifying proce-
dures and requirements for an entity to apply for approval
as the Electric Reliability Organization. The Commission
shall provide notice and opportunity for comment on the
proposed rules. The Commission shall issue a final rule
under this subsection within 180 days after the date of
enactment of this section.
‘‘(2) Following the issuance of a final Commission
rule under paragraph (1), an entity may submit an appli-
cation to the Commission for approval as the Electric Reli-
ability Organization. The applicant shall specify in its ap-
plication its governance and procedures, as well as its
funding mechanism and initial funding requirements.
‘‘(3) The Commission shall provide public notice of
the application and afford interested parties an oppor-
tunity to comment.
‘‘(4) The Commission shall approve the application
if the Commission determines that the applicant—
‘‘(A) has the ability to develop, implement and
enforce standards that provide for an adequate level
of reliability of the bulk-power system;
‘‘(B) permits voluntary membership to any user
of the bulk-power system or public interest group;
‘‘(C) assures fair representation of its members
in the selection of its directors and fair management
of its affairs, taking into account the need for effi-
ciency and effectiveness in decisionmaking and oper-
ations and the requirements for technical com-
petency in the development of organization stand-
ards and the exercise of oversight of bulk-power sys-
tem reliability;
‘‘(D) assures that no two industry sectors have
the ability to control, and no one industry sector has
the ability to veto, the Electric Reliability Organiza-
tion’s discharge of its responsibilities (including ac-
tions by committees recommending standards to the
board or other board actions to implement and en-
force standards);
‘‘(E) provides for governance by a board wholly
comprised of independent directors;
‘‘(F) provides a funding mechanism and re-
quirements that are just, reasonable and not unduly
discriminatory or preferential and are in the public
interest, and which satisfies the requirements of sub-
section (l);
‘‘(G) establishes procedures for development of
organization standards that provide reasonable no-
tice and opportunity for public comment, taking into
account the need for efficiency and effectiveness in
decisionmaking and operations and the requirements
for technical competency in the development of orga-
nization standards, and which standards develop-
ment process has the following attributes:
‘‘(i) openness,
‘‘(ii) balance of interests, and
‘‘(iii) due process, except that the proce-
dures may include alternative procedures for
emergencies;
‘‘(H) establishes fair and impartial procedures
for implementation and enforcement of organization
standards, either directly or through delegation to
an affiliated regional reliability entity, including the
imposition of penalties, limitations on activities,
functions, or operations, or other appropriate sanc-
tions;
‘‘(I) establishes procedures for notice and op-
portunity for public observation of all meetings, ex-
cept that the procedures for public observation may
include alternative procedures for emergencies or for
the discussion of information the directors determine
should take place in closed session, such as litiga-
tion, personnel actions, or commercially sensitive in-
formation;
‘‘(J) provides for the consideration of rec-
ommendations of States and State commissions, and
‘‘(K) addresses other matters that the Commis-
sion may deem necessary or appropriate to ensure
that the procedures, governance, and funding of the
Electric Reliability Organization are just, reason-
able, not unduly discriminatory or preferential, and
are in the public interest.
‘‘(5) The Commission shall approve only one electric
reliability organization. If the Commission receives two or
more timely applications that satisfy the requirements of
this subsection, the Commission shall approve only the ap-
plication it concludes will best implement the provisions
of this section.
‘‘(e) ESTABLISHMENT OF AND MODIFICATIONS TO
ORGANIZATION STANDARDS.—(1) The Electric Reliability
Organization shall file with the Commission any new or
modified organization standards, including any variances
or entity rules, and the Commission shall follow the proce-
dures under paragraph (2) for review of that filing.
‘‘(2) Submissions under paragraph (1) shall include:
‘‘(A) a concise statement of the purpose of the
proposal, and
‘‘(B) a record of any proceedings conducted
with respect to such proposal.
The Commission shall provide notice of the filing of such
proposal and afford interested persons 30 days to submit
comments. The Commission, after taking into consider-
ation any submitted comments, shall approve or dis-
approve such proposal not later than 60 days after the
deadline for the submission of comments, except that the
Commission may extend the 60-day period for an addi-
tional 90 days for good cause, and except further that if
the Commission does not act to approve or disapprove a
proposal within the foregoing periods the proposal shall
go into effect subject to its terms, without prejudice to
the authority of the Commission thereafter to suspend or
modify the proposal in accordance with the standards and
requirements of this section. Proposals approved by the
Commission shall take effect according to their terms but
not earlier than 30 days after the effective date of the
Commission’s order, except as provided in paragraph (3)
of this subsection.
‘‘(3)(A) In the exercise of its review responsibilities
under this subsection, the Commission shall give due
weight to the technical expertise of the Electric Reliability
Organization with respect to the content of a new or modi-
fied organization standard, but shall not defer to the Or-
ganization with respect to the effect of the standard on
competition. The Commission shall approve a proposed
new or modified organization standard if it determines the
proposal to be just, reasonable, not unduly discriminatory
or preferential, and in the public interest. The Commis-
sion, either upon complaint or upon its own motion, shall
suspend an existing organization standard, if it determines
the standard to be unjust, unreasonable, unduly discrimi-
natory or preferential or not in the public interest.
‘‘(B) An existing or proposed organization standard
which is disapproved or suspended in whole or in part by
the Commission shall be remanded to the Electric Reli-
ability Organization for further consideration.
‘‘(C) The Commission, on its own motion or upon
complaint, may direct the Electric Reliability Organization
to develop an organization standard, including modifica-
tion to an existing organization standard, addressing a
specific matter by a date certain if the Commission con-
siders such new or modified organization standard nec-
essary or appropriate to further the purposes of this sec-
tion. The Electric Reliability Organization shall file any
such new or modified organization standard in accordance
with this subsection.
‘‘(D) An affiliated regional reliability entity may pro-
pose a Variance or Entity Rule to the Electric Reliability
Organization. The affiliated regional reliability entity may
request that the Electric Reliability Organization expedite
consideration of the proposal, and may file a notice of such
request with the Commission, if expedited consideration
is necessary to provide for bulk-power system reliability.
If the Electric Reliability Organization fails to adopt the
variance or entity rule, either in whole or in part, the affili-
ated regional reliability entity may request that the Com-
mission review such action. If the Commission determines,
after its review of such a request, that the action of the
Electric Reliability Organization did not conform to the
applicable standards and procedures approved by the
Commission, or if the Commission determines that the
variance or entity rule is just, reasonable, not unduly dis-
criminatory or preferential, and in the public interest, and
that the Electric Reliability Organization has unreason-
ably rejected the proposed variance or entity rule, then
the Commission may remand the proposed variance or en-
tity rule for further consideration by the Electric Reli-
ability Organization or may direct the Electric Reliability
Organization or the affiliated regional reliability entity to
develop a variance or entity rule consistent with that re-
quested by the affiliated regional reliability entity. Any
such variance or entity rule proposed by an affiliated re-
gional reliability entity shall be submitted to the Electric
Reliability Organization for review and filing with the
Commission in accordance with the procedures specified
in this subsection.
‘‘(E) Notwithstanding any other provision of this sub-
section, a proposed organization standard or amendment
shall take effect according to its terms if the Electric Reli-
ability Organization determines that an emergency exists
requiring that such proposed organization standard or
amendment take effect without notice or comment. The
Electric Reliability Organization shall notify the Commis-
sion immediately following such determination and shall
file such emergency organization standard or amendment
with the Commission not later than 5 days following such
determination and shall include in such filing an expla-
nation of the need for such emergency standard. Subse-
quently, the Commission shall provide notice of the organi-
zation standard or amendment for comment, and shall fol-
low the procedures set out in paragraphs (2) and (3) for
review of the new or modified organization standard. Any
such organization standard that has gone into effect shall
remain in effect unless and until suspended or disapproved
by the Commission. If the Commission determines at any
time that the emergency organization standard or amend-
ment is not necessary, the Commission may suspend such
emergency organization standard or amendment.
‘‘(4) All users of the bulk-power system shall comply
with any organization standard that takes effect under
this section.
‘‘(f) COORDINATION WITH CANADA AND MEXICO.—
The Electric Reliability Organization shall take all appro-
priate steps to gain recognition in Canada and Mexico.
The United States shall use its best efforts to enter into
international agreements with the appropriate govern-
ments of Canada and Mexico to provide for effective com-
pliance with organization standards and to provide for the
effectiveness of the Electric Reliability Organization in
carrying out its mission and responsibilities. All actions
taken by the Electric Reliability Organization, any affili-
ated regional reliability entity, and the Commission shall
be consistent with the provisions of such international
agreements.
‘‘(g) CHANGES IN PROCEDURES, GOVERNANCE, OR
FUNDING.—(1) The Electric Reliability Organization shall
file with the Commission any proposed change in its proce-
dures, governance, or funding, or any changes in the affili-
ated regional reliability entity’s procedures, governance or
funding relating to delegated functions, and shall include
with the filing an explanation of the basis and purpose
for the change.
‘‘(2) A proposed procedural change may take effect
90 days after filing with the Commission if the change
constitutes a statement of policy, practice, or interpreta-
tion with respect to the meaning or enforcement of an ex-
isting procedure. Otherwise, a proposed procedural change
shall take effect only upon a finding by the Commission,
after notice and opportunity for comments, that the
change is just, reasonable, not unduly discriminatory or
preferential, is in the public interest, and satisfies the re-
quirements of subsection (d)(4).
‘‘(3) A change in governance or funding shall not
take effect unless the Commission finds that the change
is just, reasonable, not unduly discriminatory or pref-
erential, and is in the public interest, and satisfies the re-
quirements of subsection (d)(4).
‘‘(4)(A) The Commission, either upon complaint or
upon its own motion, may suspend a procedure or govern-
ance or funding provision if it determines the procedure
or provision does not meet the requirements of subsection
(d)(4) or is unjust, unreasonable, unduly discriminatory
or preferential, or otherwise not in the public interest.
‘‘(B) The Commission, upon complaint or upon its
own motion, may require the Electric Reliability Organiza-
tion to amend the procedures, governance or funding if
the Commission determines that the amendment is nec-
essary to meet the requirements of this section. The Elec-
tric Reliability Organization shall file the amendment in
accordance with paragraph (1) of this subsection.
‘‘(h) DELEGATIONS OF AUTHORITY.—(1) The Elec-
tric Reliability Organization shall, upon request by an en-
tity, enter into an agreement with such entity for the dele-
gation of authority to implement and enforce compliance
with organization standards in a specified geographic area
if the Organization finds that the entity requesting the
delegation satisfies the requirements of subsection (d)(4)
(A), (B), (C), (D), (F), and (K), and if the delegation pro-
motes the effective and efficient implementation and ad-
ministration of bulk-power system reliability. The Electric
Reliability Organization may enter into an agreement to
delegate to the entity any other authority, except that the
Electric Reliability Organization shall reserve the right to
set and approve standards for bulk-power system reli-
ability.
‘‘(2) The Electric Reliability Organization shall file
with the Commission any agreement entered into under
this subsection and any information the Commission re-
quires with respect to the affiliated regional reliability en-
tity to which authority is to be delegated. The Commission
shall approve the agreement, following public notice and
an opportunity for comment, if it finds that the agreement
meets the requirements of paragraph (1), and is just, rea-
sonable, not unduly discriminatory or preferential, and is
in the public interest. A proposed delegation agreement
with an affiliated regional reliability entity organized on
an interconnection-wide basis shall be rebuttably pre-
sumed by the Commission to promote the effective and
efficient implementation and administration of bulk-power
system reliability. No delegation by the Electric Reliability
Organization shall be valid unless approved by the Com-
mission.
‘‘(3)(A) A delegation agreement entered into under
this subsection shall specify the procedures for an affili-
ated regional reliability entity to propose entity rules or
variances for review by the Electric Reliability Organiza-
tion. With respect to any such proposal that would apply
on an interconnection-wide basis, the Electric Reliability
Organization shall presume such proposal valid if made
by an interconnection-wide affiliated regional reliability
entity unless the Electric Reliability Organization makes
a written finding that the proposal:
‘‘(i) was not developed in a fair and open proc-
ess that provided an opportunity for all interested
parties to participate;
‘‘(ii) has a significant adverse impact on reli-
ability or commerce in other interconnections;
‘‘(iii) fails to provide a level of reliability of the
bulk-power system within the interconnection such
that it would constitute a serious and substantial
threat to public health, safety, welfare, or national
security; or
‘‘(iv) creates a serious and substantial burden
on competitive markets within the interconnection
that is not necessary for reliability.
‘‘(B) With respect to any such proposal that would
apply only to part of an interconnection, the Electric Reli-
ability Organization shall find such proposal valid if the
affiliated regional reliability entity or entities making the
proposal demonstrate that it:
‘‘(i) was developed in a fair and open process
that provided an opportunity for all interested par-
ties to participate;
‘‘(ii) would not have an adverse impact on com-
merce that is not necessary for reliability;
‘‘(iii) provides a level of bulk-power system reli-
ability adequate to protect public health, safety, wel-
fare, and national security, and would not have a
significant adverse impact on reliability; and
‘‘(iv) in the case of a Variance, is based on le-
gitimate differences between regions or between sub-
regions within the affiliated regional reliability enti-
ty’s geographic area.
The Electric Reliability Organization shall approve or dis-
approve such proposal within 120 days, or the proposal
shall be deemed approved. Following approval of any such
proposal under this paragraph, the Electric Reliability Or-
ganization shall seek Commission approval pursuant to
the procedures prescribed under subsection (e)(3). Affili-
ated regional reliability entities may not make requests for
approval directly to the Commission except pursuant to
subsection (e)(3)(D).
‘‘(4) If an affiliated regional reliability entity re-
quests, consistent with paragraph (1) of this subsection,
that the Electric Reliability Organization delegate author-
ity to it, but is unable within 180 days to reach agreement
with the Electric Reliability Organization with respect to
such requested delegation, such entity may seek relief
from the Commission. If, following notice and opportunity
for comment, the Commission determines that a delega-
tion to the entity would meet the requirements of sub-
section (1) above, and that the delegation would be just,
reasonable, not unduly discriminatory or preferential, and
in the public interest, and that the Electric Reliability Or-
ganization has unreasonably withheld such delegation, the
Commission may, by order, direct the Electric Reliability
Organization to make such delegation.
‘‘(5)(A) The Commission may, upon its own motion
or upon complaint, and with notice to the appropriate af-
filiated regional reliability entity or entities, direct the
Electric Reliability Organization to propose a modification
to an agreement entered into under this subsection if the
Commission determines that—
‘‘(i) the affiliated regional reliability entity no
longer has the capacity to carry out effectively or ef-
ficiently its implementation or enforcement respon-
sibilities under that agreement, has failed to meet its
obligations under that agreement, or has violated
any provision of this section,
‘‘(ii) the rules, practices, or procedures of the
affiliated regional reliability entity no longer provide
for fair and impartial discharge of its implementa-
tion or enforcement responsibilities under the agree-
ment,
‘‘(iii) the geographic boundary of a transmission
entity approved by the Commission is not wholly
within the boundary of an affiliated regional reli-
ability entity and such difference is inconsistent with
the effective and efficient implementation and ad-
ministration of bulk-power system reliability, or
‘‘(iv) the agreement is inconsistent with another
delegation agreement as a result of actions taken
under paragraph (4) of this subsection.
‘‘(B) Following an order of the Commission issued
under subparagraph (A), the Commission may suspend
the affected agreement if the Electric Reliability Organiza-
tion or the affiliated regional reliability entity does not
propose an appropriate and timely modification. If the
agreement is suspended, the Electric Reliability Organiza-
tion shall assume the previously delegated responsibilities.
The Commission shall allow the Electric Reliability Orga-
nization and the affiliated regional reliability entity an op-
portunity to appeal the suspension.
‘‘(i) ORGANIZATION MEMBERSHIP.—Every System
Operator shall be required to be a member of the Electric
Reliability Organization and shall be required also to be
a member of any affiliated regional reliability entity oper-
ating under an agreement effective pursuant to subsection
(h) applicable to the region in which the system operator
operates or is responsible for the operation of bulk-power
system facilities.
‘‘(j) INJUNCTIONS AND DISCIPLINARY ACTION.—(1)
Consistent with the range of actions approved by the Com-
mission under subsection (d)(4)(H), the Electric Reli-
ability Organization may impose a penalty, limitation of
activities, functions, or operations, or other disciplinary
action the Electric Reliability Organization finds appro-
priate against a user of the bulk-power system if the Elec-
tric Reliability Organization, after notice and an oppor-
tunity for interested parties to be heard, issues a finding
in writing that the user of the bulk-power system has vio-
lated an organization standard. The Electric Reliability
Organization shall immediately notify the Commission of
any disciplinary action imposed with respect to an act or
failure to act of a user of the bulk-power system that af-
fected or threatened to affect bulk-power system facilities
located in the United States, and the sanctioned party
shall have the right to seek modification or rescission of
such disciplinary action by the Commission. If the Organi-
zation finds it necessary to prevent a serious threat to reli-
ability, the Organization may seek injunctive relief in a
Federal Court in the district in which the affected facili-
ties are located.
‘‘(2) A disciplinary action taken under paragraph (1)
may take effect not earlier than the 30th day after the
Electric Reliability Organization files with the Commission
its written finding and record of proceedings before the
Electric Reliability Organization and the Commission
posts its written finding, unless the Commission, on its
own motion or upon application by the user of the bulk-
power system which is the subject of the action, suspends
the action. The action shall remain in effect or remain
suspended unless and until the Commission, after notice
and opportunity for hearing, affirms, sets aside, modifies,
or reinstates the action, but the Commission shall conduct
such hearing under procedures established to ensure expe-
dited consideration of the action taken.
‘‘(3) The Commission, on its own motion, may order
compliance with an organization standard and may impose
a penalty, limitation of activities, functions, or operations,
or take such other disciplinary action as the Commission
finds appropriate, against a user of the bulk-power system
with respect to actions affecting or threatening to affect
bulk-power system facilities located in the United States
if the Commission finds, after notice and opportunity for
a hearing, that the user of the bulk-power system has vio-
lated or threatens to violate an organization standard.
‘‘(4) The Commission may take such action as is nec-
essary against the Electric Reliability Organization or an
affiliated regional reliability entity to assure compliance
with an organization standard, or any Commission order
affecting the Electric Reliability Organization or an affili-
ated regional reliability entity.
‘‘(k) RELIABILITY REPORTS.—The Electric Reli-
ability Organization shall conduct periodic assessments of
the reliability and adequacy of the interconnected bulk-
power system in North America and shall report annually
to the Secretary of Energy and the Commission its find-
ings and recommendations for monitoring or improving
system reliability and adequacy.
‘‘(l) ASSESSMENT
AND
RECOVERY
OF
CERTAIN
COSTS.—The reasonable costs of the Electric Reliability
Organization, and the reasonable costs of each affiliated
regional reliability entity that are related to implementa-
tion and enforcement of organization standards or other
requirements contained in a delegation agreement ap-
proved under subsection (h), shall be assessed by the Elec-
tric Reliability Organization and each affiliated regional
reliability entity, respectively, taking into account the rela-
tionship of costs to each region and based on an allocation
that reflects an equitable sharing of the costs among all
end-users. The Commission shall provide by rule for the
review of such costs and allocations, pursuant to the
standards in this subsection and subsection (d)(4)(F).
‘‘SEC. 402. APPLICATION OF ANTITRUST LAWS.
‘‘Notwithstanding any other provision of law, each of
the following activities are rebuttably presumed to be in
compliance with the antitrust laws of the United States:
‘‘(1) Activities undertaken by the Electric Reli-
ability Organization under section 401 or affiliated
regional reliability entity operating under an agree-
ment in effect under section 401(h).
‘‘(2) Activities of a member of the Electric Reli-
ability Organization or affiliated regional reliability
entity in pursuit of organization objectives under
section 401 undertaken in good faith under the rules
of the organization.
Primary jurisdiction, and immunities and other affirma-
tive defenses, shall be available to the extent otherwise ap-
plicable.’’.
SEC. 103. FEDERAL INTERCONNECTION AUTHORITIES.
(a) INTERCONNECTIONS
FOR
CERTAIN
FACILI-
TIES.—Section 210 of the Federal Power Act is amended
by adding the following at the end thereof:
‘‘(f) SPECIAL RULE FOR CERTAIN FACILITIES.—
‘‘(1) DEFINITION.—As used in this subsection
the term ‘facility’ means—
‘‘(A) a small-scale electric power genera-
tion facility that is designed to serve customers
at or near the facility, or
‘‘(B) a facility using a single fuel source to
produce at the point of use either electric or
mechanical power and thermal energy.
‘‘(2) INTERCONNECTION.—A local distribution
company (as defined in section 151 of the Public
Utility Regulatory Policies Act of 1978) shall allow
a facility to interconnect with the local distribution
facilities of such company if the facility owner (A)
is an electric customer provided local distribution
service by such company and (B) complies with the
final rule issued under paragraph (3).
‘‘(3) RULES.—Within 1 year from the date of
enactment of this subsection, the Commission shall
issue a final rule to implement paragraph (2) and
issue related safety and power quality standards. To
the extent feasible, the Commission shall develop the
standards through a process involving interested
parties. The Commission shall enforce the rule es-
tablished under this subsection using its authority
under this Act.’’.
(b) AMENDMENTS TO EXISTING INTERCONNECTION
AUTHORITIES.—Section 210 of the Federal Power Act is
amended as follows:
(1) 
In 
section 
210(a)(1) 
(16 
U.S.C.
824i(a)(1))—
(A) by inserting ‘‘transmitting utility,’’
after ‘‘electric utility,’’;
(B) by inserting ‘‘any transmitting utility,’’
after ‘‘small power production facility,’’ in sub-
paragraph (A); and
(C) by inserting ‘‘or distribution’’ after
‘‘transmission’’ in subparagraph (D).
(2) In section 210(b)(2) (16 U.S.C. 824i(b)(2))
by striking ‘‘an evidentiary hearing’’ and inserting
‘‘a hearing’’.
(3) In section 210(d) by deleting the last sen-
tence.
SEC. 104. CONSUMER PROTECTION, MARKET POWER AND
UNFAIR TRADE PRACTICES.
(a) ELECTRIC SUPPLIER INFORMATION DISCLOSURE.
(1) DISCLOSURE RULES.—Not later than Janu-
ary 1, 2000, the Federal Trade Commission, in con-
sultation with the Federal Energy Regulatory Com-
mission, the Secretary of Energy, and the Adminis-
trator of the Environmental Protection Agency shall
issue rules prescribing the form, placement, content,
and timing of the supplier disclosure required under
this subsection.
(2) DISCLOSURE TO ELECTRIC CONSUMERS.—
In order to assist consumers in making informed
purchasing decisions, any electric supplier with a ca-
pacity in excess of 5 megawatts that sells or makes
an offer to sell electric energy to consumers, or solic-
its consumers to purchase electric energy, shall pro-
vide the consumers, in accordance with rules issued
under this subsection, a statement containing the
following information:
(A)(i) The nature of the service being of-
fered, 
including 
information 
about
interruptibility of service.
(ii) The price of electric energy, including
a description of any variable charges.
(iii) A description of all other charges that
are associated with the service being offered in-
cluding, but not limited to, access charges, exit
charges, back-up service charges, stranded cost
recovery charges, and customer service charges.
(iv) Such other information concerning the
product or price as the Federal Trade Commis-
sion determines can be feasibly provided and
would be useful to consumers in making pur-
chasing decisions.
(B)(i) The share of electric energy that is
generated by each of the following types of en-
ergy generation resource: coal, natural gas, oil,
nuclear, hydroelectric, solar, geothermal, wind,
biomass, waste, and other.
(ii) Such information concerning genera-
tion emissions characteristics as the Federal
Trade Commission determines can be provided
feasibly and would be useful to consumers in
making purchasing decisions, including (I)
emissions in each of the following categories per
magawatt-hour of generation from the sup-
plier’s energy portfolio dedicated to the energy
product being offered: sulfur dioxide, nitrogen
oxides, and carbon dioxide and (II) the average
emissions of the pollutants identified in sub-
clause (I) for all generation in any regional
power pool or control area in which such sup-
plier participates.
(3) 
DISCLOSURE
TO
WHOLESALE
CUS-
TOMERS.—In every sale of electric energy for resale,
the seller shall provide to the purchaser such infor-
mation respecting generation source and emissions
characteristics as may be required by rules under
this subsection.
(4) AUTHORITY
TO
OBTAIN
BOOKS
AND
RECORDS.—Authority to obtain information under
section 11 of the Energy Supply and Environmental
Coordination Act of 1974 (15 U.S.C. 796) shall be
available to the Federal Trade Commission to ad-
minister and enforce this section.
(5) PROHIBITED ACTS AND ENFORCEMENT.—
The failure of any person to provide information re-
quired under the rules issued under this subsection
or the providing by any person of false or misleading
information with respect to the disclosures required
by this section or the rules issued under this sub-
section shall be treated as a violation of a rule under
section 18 of the Federal Trade Commission Act (15
U.S.C. 41 and following) regarding unfair or decep-
tive acts or practices in or affecting commerce.
(6) STATE AUTHORITY.—Nothing in this sub-
section shall affect the authority of any State to pre-
scribe disclosure requirements in addition to and not
inconsistent with this section.
(b) MARKET POWER.—
(1) AMENDMENT OF FEDERAL POWER ACT.—
Part II of the Federal Power Act is amended by
adding after section 214 the following new section:
‘‘SEC. 215. MARKET POWER IN ELECTRIC SALES.
‘‘(a) FERC DETERMINATION.—On its own motion or
upon complaint of any affected person, the Commission
may, after notice and opportunity for a hearing on the
record, make a determination that—
‘‘(1) any electric utility is exercising, or has ex-
ercised, market power in the sale of electric energy
by reason of its ownership or control of local dis-
tribution facilities (as defined in section 151 of the
Public Utility Regulatory Policies Act of 1978) or
transmission facilities;
‘‘(2) such exercise of market power results in
prices for electric energy that exceed the prices that
would be charged in a fully competitive market; and
‘‘(3) action under this section is required to re-
duce or eliminate such market power.
‘‘(b) MITIGATION PLAN.—Whenever the Commission
makes a determination under subsection (a) with respect
to any electric utility, the Commission shall issue an order
requiring the utility to submit to the Commission a plan
to reduce or eliminate the market power concerned and
to implement such plan.
‘‘(c) ADDITIONAL REMEDIES.—If the Commission
disapproves a plan submitted under subsection (b) or de-
termines that the utility is failing to properly implement
any such plan, the Commission shall—
‘‘(1) issue an order under subsection (h) of sec-
tion 202 requiring the utility to relinquish control
over any transmission facilities owned or controlled
by such utility to any entity established under such
subsection (h) for the purpose of independent oper-
ation, control, and planning of interconnected trans-
mission facilities;
‘‘(2) require the utility to establish just and
reasonable rates and charges for the retail sale of
electric energy that are based on the cost of service,
plus a reasonable rate of return on investment, not-
withstanding any provision of Federal or State law;
and
‘‘(3) require the utility to establish just and
reasonable rates and charges for the wholesale sale
of electric energy that are based on the cost of serv-
ice, plus a reasonable rate of return on investment.
The Commission may elect not to take action under para-
graph (1), (2), or (3) in any case in which the Commission
finds that such action will not mitigate the market power
issues involved.
‘‘(d) RELIABILITY.—No order or plan under this sub-
section shall unreasonably impair the reliability of any
local distribution system affected by such order or plan.
‘‘(e) STATE AUTHORITY.—Nothing in this section
shall be construed to preempt any State authority to re-
quire any State regulated electric utility to take any ac-
tion, or cease taking any action, in addition to the actions
required by the Commission or by a plan under this sec-
tion to remedy the exercise of market power by such utility
to the extent such State actions are not inconsistent with
any order or plan under this section.
‘‘(f) RETURN
TO
MARKET-BASED
RATES.—The
Commission shall terminate an order issued under sub-
section (c)(2) to any electric utility whenever, on its own
motion or upon petition of any affected person, the Com-
mission determines that such order is no longer necessary
to reduce or eliminate the exercise of market power by
such utility.
‘‘(g) EFFECTIVE DATE.—This section shall take ef-
fect on January 1, 2002.’’.
(2) 
CONFORMING
AMENDMENT.—Section
201(b)(2) of the Federal Power Act (relating to
Commission jurisdiction) is amended by striking
‘‘and 212’’ and inserting ‘‘212, and 215’’.
(c) UNFAIR TRADE PRACTICES.—The Federal Trade
Commission Act (15 U.S.C. 41 et seq.) is amended by in-
serting the following new section after section 5:
‘‘SEC. 5A. ELECTRICITY SUPPLY UNFAIR TRADE PRAC-
TICES.
‘‘(a) DEFINITION.—For purposes of this section the
term, ‘retail electric supplier’ has the meaning given that
term in section 3(25) of the Public Utility Regulatory
Policies Act of 1978.
‘‘(b) SLAMMING.—(1) The Federal Trade Commis-
sion shall establish rules in accordance with section 553
of title 5, United States Code, for the submittal and
verification of a retail electric customer’s selection or
change in selection of a retail electric supplier and for the
assessment of penalties for violation of these rules. These
rules shall ensure that the customer receives electric serv-
ice from the retail electric supplier of the customer’s
choice.
‘‘(2) A person shall not submit or change the selec-
tion made by a retail electric customer except in accord-
ance with procedures established in paragraph (1).
‘‘(c) CRAMMING.—(1) The Federal Trade Commis-
sion shall establish rules in accordance with section 553
of title 5, United States Code, for obtaining the consent
of a retail electric customer for purchase of goods and
services other than those expressly authorized by law or
by the customer’s electricity supply and metering agree-
ment and for the assessment of penalties for violation of
these rules.
‘‘(2) A person shall not charge a retail electric
customer for a particular service except in accord-
ance with procedures established in paragraph (1).
‘‘(d) FEDERAL
TRADE
COMMISSION
ENFORCE-
MENT.—Violation of this section or of a rule prescribed
under this section constitutes an unfair and deceptive act
or practice in violation of section 5 of this Act and shall
be treated as a violation of a rule under section 18 of this
Act. All functions and powers of the Federal Trade Com-
mission under this Act are available to the Federal Trade
Commission to enforce compliance with this section not-
withstanding any jurisdictional limitations in this Act.
‘‘(e) STATE PROCEEDINGS AND OTHER REMEDIES.—
(1) This section does not preclude a State or State com-
mission from prescribing and enforcing additional laws,
regulations, or procedures regarding the practices which
are the subject of this section, so long as such laws, regu-
lations, or procedures do not conflict with the provisions
of this section or with any rule prescribed by the Federal
Trade Commission pursuant to it.
‘‘(2) The remedies provided by this section are in ad-
dition to any other remedies available by law.’’.
SEC. 105. ANTITRUST SAVINGS CLAUSE.
Nothing in this title or any amendment made by this
title shall be construed to modify, impair, or supersede the
operation of the antitrust laws. For purposes of this sec-
tion, the term ‘‘antitrust laws’’ has the meaning given it
in subsection (a) of the first section of the Clayton Act
(15 U.S.C. 12(a)), except that such term includes the Act
of June 19, 1936 (15 U.S.C. 13 and following), commonly
known as the Robinson-Patman Act, and section 5 of the
Federal Trade Commission Act (15 U.S.C. 45) to the ex-
tent that such section 5 applies to unfair methods of com-
petition.
SEC. 106. MANDATORY OPEN ACCESS FOR ALL TRANSMIT-
TING UTILITIES.
(a) DEFINITION
OF
PUBLIC
UTILITY.—Section
201(e) of the Federal Power Act (16 U.S.C. 824(e)) is
amended to read as follows:
‘‘(e) DEFINITION OF PUBLIC UTILITY.—The term
‘public utility’, when used in this Part and Parts III and
IV, means—
‘‘(1) any person who owns or operates facilities
subject to the jurisdiction of the Commission under
this Part (other than facilities subject to such juris-
diction solely by reason of section 210, 211, or 212);
or
‘‘(2) any transmitting utility (other than the
Federal power marketing administrations and the
Tennessee Valley Authority) which owns or operates
transmission facilities not otherwise subject to the
jurisdiction of the Commission under this Part, but
only with respect to determining, fixing, and other-
wise regulating the rates, terms, and conditions for
the transmission of electric energy under this Part.’’.
(b) APPLICATION OF PART TO GOVERNMENT UTILI-
TIES.—Section 201(f) of the Federal Power Act (16
U.S.C. 824(f)) is amended by striking ‘‘No provision’’ and
inserting ‘‘Except as provided in subsection (e)(2) and sec-
tion 3(23), no provision’’.
(c) NONJURISDICTIONAL STATUS RESULTING FROM
COMPLIANCE WITH ORDERS UNDER SECTIONS 210 AND
211; LIMITATION.—Section 201(b)(2) of the Federal
Power Act (16 U.S.C. 824(b)(2)) is amended by striking
the period at the end of the second sentence and inserting
the following: ‘‘except with respect to determining, fixing,
and otherwise regulating the rates, terms, and conditions
for the transmission of electric energy under this Part
pursuant to subsection (e)(2).’’.
(d) DEFINITION.—Section 3(23) of the Federal
Power Act (16 U.S.C. 796) is amended to read as follows:
‘‘(23) 
TRANSMITTING
UTILITY.—The 
term
‘transmitting utility’ means any entity that owns or
operates facilities used for the transmission of elec-
tric energy.’’.
SEC. 107. CLARIFICATION OF STATE AND FEDERAL AU-
THORITY OVER RETAIL TRANSMISSION SERV-
ICES.
(a) NONPREEMPTION
OF STATE AUTHORITY
TO
ORDER RETAIL WHEELING AND TO IMPOSE LOCAL DE-
LIVERY CHARGES.—Section 201(b) of the Federal Power
Act is amended by adding the following new paragraph
after paragraph (2):
‘‘(3) This Act shall not preempt or otherwise affect
any authority under the law of a State or municipality
to—
‘‘(A) require unbundled transmission and local
distribution service (as defined in section 151 of the
Public Utility Regulatory Policies Act of 1978) for
the delivery of electric energy directly to an ultimate
consumer, or
‘‘(B) impose a delivery charge on an ultimate
consumer’s receipt of electric energy.
If such unbundled transmission is in interstate commerce,
the rate, terms, and conditions of the transmission shall
be subject to the exclusive jurisdiction of the Commission
under this part.’’.
(b) OPEN ACCESS TRANSMISSION AUTHORITY; RE-
TAIL WHEELING IN RETAIL COMPETITION STATES.—
(1) APPLICABILITY
OF
OPEN
ACCESS
TRANS-
MISSION RULES.—Section 206 of the Federal Power
Act is amended by adding the following new sub-
section after subsection (d):
‘‘(e) OPEN ACCESS TRANSMISSION SERVICES.—(1)
Under section 205 and this section, the Commission may
require, by rule or order, public utilities and transmitting
utilities to provide open access transmission services, sub-
ject to section 212(h), and may authorize recovery of
stranded costs, as defined by the Commission, arising
from any requirement to provide open access transmission
services. This section applies to any rule or order issued
by the Commission before, on, or after the date of enact-
ment of this Act.’’.
(2) AUTHORITY
TO
ORDER
RETAIL
WHEEL-
ING.—Section 212(h) of the Federal Power Act is
amended as follows:
(A) By inserting ‘‘(1)’’ before ‘‘No’’.
(B) By striking ‘‘(1)’’, ‘‘(2)’’, ‘‘(A)’’, and
‘‘(B)’’ and inserting in their places ‘‘(A)’’,
‘‘(B)’’, ‘‘(i)’’, and ‘‘(ii)’’ respectively.
(C) By striking from redesignated para-
graph (1)(B)(ii) ‘‘the date of enactment of this
subsection’’ and inserting ‘‘October 24, 1992,’’.
(D) By adding the following new para-
graphs at the end:
‘‘(2) Notwithstanding paragraph (1), the Commission
may issue an order that requires the transmission of elec-
tric energy directly or indirectly to an ultimate consumer
if a notice of retail competition under section 152(a)(1)
or section 153(a)(1) of the Public Utility Regulatory Poli-
cies Act of 1978 has been filed and is in effect with respect
to the ultimate consumer or if a distribution utility offers
open access to its delivery facilities to the ultimate con-
sumer.
‘‘(3) Notwithstanding any provision of this Part to
the contrary, and whether or not a notice of retail competi-
tion under section 152(a)(1) or section 153(a)(1) of the
Public Utility Regulatory Policies Act of 1978 has been
filed, upon application by a designated representative of
(A) a military base facility of the Department of Defense
or a supplier or proposed supplier of electric energy there-
to, or (B) an Indian tribe, or a supplier or proposed sup-
plier thereto, the Commission shall issue an order requir-
ing the transmission of electric energy directly or indi-
rectly to such facility or Indian tribe. Any order under
this paragraph shall establish rates, terms and conditions
that are consistent with the requirements for open access
transmission services provided pursuant to this Act. Noth-
ing in this paragraph shall affect the authority of a State
under section 152(d) and 153(d) of the Public Utility Reg-
ulatory Policies Act of 1978.’’.
(3) CONFORMING AMENDMENTS.—
(A) Section 3(24) of the Federal Power
Act is amended to read as follows:
‘‘(24) ‘transmission services’ means the trans-
mission of electric energy sold or to be sold.’’.
(B) Section 211(a) of the Federal Power
Act is amended by striking ‘‘for resale’’.
(C) Section 212(a) of the Federal Power
Act is amended by striking ‘‘wholesale’’ each
time it appears, except the last time.
(D) Section 3 of the Federal Power Act is
amended by adding the following new para-
graph at the end thereof:
‘‘(26) INDIAN TRIBE.—The term ‘Indian tribe’
means any Indian tribe, band group, and nation, in-
cluding Alaska Indians, Aleuts, and Eskimos, and
any Alaskan Native Village, of the United States,
which is considered an eligible recipient under the
Indian Self Determination and Education Assistance
Act (Public Law 93–638) or was considered an eligi-
ble recipient under chapter 67 of title 31, United
States Code, prior to the repeal of such chapter.’’.
(c) DETERMINATION OF LOCAL DISTRIBUTION AND
TRANSMISSION FACILITIES.—Section 201 of the Federal
Power Act is amended by adding the following new sub-
section at the end thereof:
‘‘(h) DETERMINATION OF LOCAL DISTRIBUTION AND
TRANSMISSION FACILITIES.—
‘‘(1) APPLICATION BY STATE REGULATORY AU-
THORITY.—A State regulatory authority, a transmit-
ting utility, or a local distribution company may
apply to the Commission for a determination wheth-
er a particular facility used for the transportation of
electric energy located in such State is a local dis-
tribution facility subject to the jurisdiction of that
State regulatory authority or is a transmission facil-
ity subject to the jurisdiction of the Commission.
The Commission may make such determination pur-
suant to such a request or on its own motion.
‘‘(2) COMMISSION FINDINGS.—If an application
is submitted pursuant to this subsection by a State
regulatory authority, the Commission shall make a
determination giving the maximum practicable def-
erence to the position taken by the State regulatory
authority, in accordance with the following factors
associated with the facility:
‘‘(A) function and purpose;
‘‘(B) size;
‘‘(C) location;
‘‘(D) voltage level and other technical char-
acteristics;
‘‘(E) historic, current and planned usage
patterns;
‘‘(F) interconnection and coordination with
other facilities; and
‘‘(G) any other factor the Commission
deems relevant.’’.
SEC. 108. AUTHORITY TO ESTABLISH REGIONAL TRANS-
MISSION ORGANIZATION.
Section 202 of the Federal Power Act is amended by
adding the following new subsections after subsection (g):
‘‘(h) REGIONAL TRANSMISSION ORGANIZATION.—(1)
Upon its own motion or upon application or complaint and
after notice and an opportunity for a hearing, the Com-
mission may order the establishment of entities for the
purpose of independent ownership or independent oper-
ation, control, and planning of interconnected trans-
mission facilities; order a transmitting utility to relinquish
ownership or control over operation of its transmission fa-
cilities to an entity for the purpose of independent owner-
ship or independent operation, control, and planning of
interconnected transmission facilities; subject generators
to the control of such entity consistent with other laws
to the extent necessary to permit reliable operation of the
transmission facilities; or take any combination of these
actions, if the Commission finds that—
‘‘(A) this action is appropriate to promote com-
petitive electricity markets and efficient, economical,
and reliable operation of the interstate transmission
grid;
‘‘(B) the entity established for the purpose of
independent ownership or independent operation,
control, and planning of interconnected transmission
facilities will manage the transmission facilities in a
manner that assures that—
‘‘(i) ownership of transmission facilities
provides no advantage in competitive electricity
markets;
‘‘(ii) the transmission customers of the
Tennessee Valley Authority, the Bonneville
Power Administration, the Administrator of the
Southwestern Power Administration, and the
Administrator of the Western Area Power Ad-
ministration will not pay an unreasonable share
of the entity’s costs and will not experience un-
reasonable transmission rate increases resulting
from the establishment of the entity; and
‘‘(iii) as applicable, the respective statutory
and treaty obligations and contractual obliga-
tions existing on the date of enactment of this
Act of the Board of Directors of the Tennessee
Valley Authority, the Administrator of the Bon-
neville Power Administration, the Administrator
of the Southwestern Power Administration, the
Administrator of the Western Area Power Ad-
ministration, the Bureau of Reclamation, and
the Corps of Engineers can be met;
‘‘(C) any transmitting utility ordered to trans-
fer ownership or control of its transmission facilities
will receive just and reasonable compensation for the
use of its facilities; and
‘‘(D) adequate reliability of the affected trans-
mission facilities will be maintained.
Nothing in this subsection limits States from addressing
transmission facility maintenance, planning, siting, and
other utility functions in a manner consistent with this
Act or Commission action under this Act.
‘‘(2) If not ordered under paragraph (1), the Ten-
nessee Valley Authority, the Administrator of the Bonne-
ville Power Administration, the Administrator of the
Southwestern Power Administration, or the Administrator
of the Western Area Power Administration is authorized
to participate in a regional transmission organization after
conducting a public process in the relevant service area
to receive comments. Notwithstanding any other law, par-
ticipation may include delegation of operation and control
of the Authority or Administration’s transmission system
to that entity, or other method of participation, under
terms and conditions the Authority or Administrator de-
termines necessary or appropriate, including being bound
by operational and other orders of the entity and by the
results of arbitration of disputes with the entity or with
other participants.
‘‘(3) If the Commission determines, after notice and
opportunity for hearing, that the rates, charges, or classi-
fications demanded, observed, charged, or collected by any
entity established for the purpose of independent owner-
ship or independent operation, control, and planning of
interconnected transmission facilities for any transmission
or sale, or that any rule, regulation, practice, or contract
affecting such rate, charge, or classification is unjust, un-
reasonable, unduly discriminatory or preferential, or fur-
thers or maintains the existence of market power, the
Commission shall, pursuant to the standards and proce-
dures in section 206 of this Act, determine the rate,
charge, classification, rule, regulation, practice or contract
that eliminates such market power and is just and reason-
able, and shall fix the same by order.
‘‘(4) Upon request by an entity established for the
purpose of independent ownership or independent oper-
ation, control, and planning of interconnected trans-
mission facilities or any other person, the Commission
shall issue a declaratory order determining whether such
entity covers a sufficiently broad geographic region so as
to ensure the development of efficient regional electricity
markets that encourage regional efficiencies in both gen-
eration dispatch and reliability of service.’’.
SEC. 109. SPECIAL PROVISIONS RESPECTING BPA AND
ERCOT TRANSMISSION.
(a) REPEAL OF SPECIAL BPA WHEELING PROVI-
SIONS.—Section 212(i) of the Federal Power Act (16
U.S.C. 824k(i)), relating to laws applicable to the Federal
Columbia River Transmission System, is repealed.
(b) REPEAL OF SPECIAL ERCOT WHEELING PROVI-
SIONS.—Section 212(k) of the Federal Power Act (16
U.S.C. 824k(k)), relating to ERCOT utilities, is repealed.
SEC. 110. ELECTRIC COMPANY MERGERS.
Section 203(a) of the Federal Power Act is amended
as follows:
(1) By striking ‘‘public utility’’ each place it ap-
pears and inserting ‘‘electric utility company’’.
(2) By inserting after the first sentence the fol-
lowing: ‘‘Except as the Commission may otherwise
provide by rule, no holding company in a holding
company system that includes an electric utility com-
pany shall, directly or indirectly, purchase, acquire,
or take any security of any electric utility company
or of a holding company in a holding company sys-
tem that includes an electric utility company, with-
out first having secured an order of the Commission
authorizing it to do so.’’.
(3) By striking ‘‘hearing’’ in the last sentence
and inserting ‘‘oral or written presentation of
views’’.
(4) By adding at the end the following: ‘‘For
purposes of this subsection, the terms ‘electric utility
company’, ‘holding company’, and ‘holding company
system’ have the meaning given them in section 2 of
the Public Utility Holding Company Act of 1935.
Notwithstanding section 201(b)(1), generation facili-
ties shall be subject to the jurisdiction of the Com-
mission for purposes of this section, except as the
Commission may otherwise provide by rule.’’.
SEC. 111. REGIONAL TRANSMISSION PLANNING AGENCIES.
Part II of the Federal Power Act is amended by add-
ing after section 215, as added by this Act, the following
new section:
‘‘SEC. 216. REGIONAL TRANSMISSION PLANNING AGENCIES.
‘‘(a) CONSENT.—The consent of Congress is given for
agreements among two or more States to establish re-
gional transmission planning agencies to—
‘‘(1) facilitate coordination among the States
within a particular region with regard to the plan-
ning of future transmission and distribution facili-
ties;
‘‘(2) carry out State siting responsibilities more
effectively;
‘‘(3) facilitate regulation of transmission system
operation within the region;
‘‘(4) meet the other requirements of this section
and rules prescribed by the Commission under this
section; and
‘‘(5) otherwise be consistent with the public in-
terest.
‘‘(b) AUTHORITY.—(1) If the Commission determines
that an agreement meets the requirements of subsection
(a), the agency established under the agreement has such
authority with respect to matters otherwise within the ju-
risdiction of the Commission as is expressly provided in
the agreement and is necessary or appropriate for carrying
out the planning, siting, and regulatory responsibilities of
the agency.
‘‘(2) The Commission’s approval under this section
may be subject to any terms and conditions the Commis-
sion determines are necessary to ensure that the agree-
ment is in the public interest.
‘‘(c) RULES.—(1) The Commission shall prescribe by
rule—
ing a requirement that all decisions of the agency be
made by majority vote (or majority of weighted
votes) of the members present and voting.
‘‘(3) The rule may include any other requirement to
ensure that the regional transmission planning agency’s
organization, practices, and procedures are sufficient to
carry out this section and the rules issued under it.
‘‘(d) TERMINATION.—The Commission, after notice
and opportunity for comment, may terminate the approval
of an agreement under this section at any time if it deter-
mines that the regional transmission planning agency fails
to comply with the provisions of this section or Commis-
sion rules under subsection (c) or that the agreement is
contrary to the public interest.
‘‘(e) APPLICATION OF SECTION 313.—Section 313
shall apply to rehearing before a regional transmission
planning agency and judicial review of any action of a re-
gional transmission planning agency in the same manner
as that section applies to rehearing and judicial review of
orders of the Commission.’’.
SEC. 112. UNIVERSAL AND AFFORDABLE SERVICE.
Section 201 of the Federal Power Act (16 U.S.C.
824) is amended by adding at the end thereof the fol-
lowing new subsection:
‘‘(i) UNIVERSAL AND AFFORDABLE SERVICE.—It is
the sense of the Congress that—
‘‘(1) every consumer of electric energy should
have access to electric energy at reasonable and af-
fordable rates; and
‘‘(2) the Commission and the States should en-
sure that competition in the electric energy business
does not result in the loss of service to rural, resi-
dential, or low-income consumers.’’.
SEC. 113. CONFORMING AND TECHNICAL AMENDMENTS TO
THE FEDERAL POWER ACT.
Subsections (a) and (b) of section 316A of the Fed-
eral Power Act (16 U.S.C. 791a et seq.) are each amended
by striking ‘‘section 211, 212, 213, or 214,’’ in each place
such phrase appears and inserting ‘‘section 211, 212, 213,
214, 215, or 216’’.
SEC. 114. STUDY OF GRANDFATHERED SYSTEMS.
The Federal Energy Regulatory Commission shall
undertake a study of the extent to which retail electric
customers of local distribution companies subject to sec-
tion 154 of the Public Utility Regulatory Policies Act of
1978 (relating to grandfathering) benefit from the adop-
tion of retail electric competition and submit a report to
Congress not later than January 1, 2005, containing the
results of such study.
SEC. 115. EFFECTIVE DATE.
The amendments made by this subtitle shall be effec-
tive on the date of enactment of this Act.
TITLE II—PROVISIONS RESPECT-
ING 
THE 
PUBLIC 
UTILITY
HOLDING COMPANY ACT OF
1935
SEC. 201. SHORT TITLE.
This title may be cited as the ‘‘Public Utility Holding
Company Act of 1999’’.
SEC. 202. REFORM OF HOLDING COMPANY REGULATION
UNDER PUHCA.
Eighteen months after the enactment of this Act, the
provisions of this title shall apply in lieu of the provisions
of the Public Utility Holding Company Act of 1935, except
that the Public Utility Holding Company Act of 1935 shall
remain in effect with respect to any holding-company sys-
tem which includes one or more subsidiary companies that
are public-utility companies, if such public-utility company
or companies provide retail electric or gas service in two
or more States in which the State regulatory authority has
not provided notice of retail competition pursuant to sec-
tion 152 of the Public Utility Regulatory Policies Act of
1978 or which has not otherwise required distribution util-
ities to provide open access service over the distribution
facilities of each distribution utility subject to its jurisdic-
tion.
SEC. 203. DEFINITIONS.
For purposes of this title:
(1) AFFILIATE.—The term ‘‘affiliate’’ of a com-
pany means any company 5 percent or more of the
outstanding voting securities of which are owned,
controlled, or held with power to vote, directly or in-
directly, by such company.
(2) ASSOCIATE COMPANY.—The term ‘‘associate
company’’ of a company means any company in the
same holding company system with such company.
(3) COMMISSION.—The term ‘‘Commission’’
means the Federal Energy Regulatory Commission.
(4) COMPANY.—The term ‘‘company’’ means a
corporation, partnership, association, joint stock
company, business trust, or any organized group of
persons, whether incorporated or not, or a receiver,
trustee, or other liquidating agent of any of the fore-
going.
(5) ELECTRIC
UTILITY
COMPANY.—The term
‘‘electric utility company’’ means any company that
owns or operates facilities used for the generation,
transmission, or distribution of electric energy for
sale.
(6) EXEMPT
WHOLESALE
GENERATOR
AND
FOREIGN
UTILITY
COMPANY.—The terms ‘‘exempt
wholesale generator’’ and ‘‘foreign utility company’’
have the same meanings as in section 32 and 33, re-
spectively, of the Public Utility Holding Company
Act of 1935.
(7) GAS
UTILITY
COMPANY.—The term ‘‘gas
utility company’’ means any company that owns or
operates facilities used for distribution at retail
(other than the distribution only in enclosed portable
containers, or distribution to tenants or employees of
the company operating such facilities for their own
use and not for resale) of natural or manufactured
gas for heat, light, or power.
(8) HOLDING
COMPANY.—The term ‘‘holding
company’’ means—
(A) any company that directly or indirectly
owns, controls, or holds, with power to vote, 10
percent or more of the outstanding voting secu-
rities of a public utility company or of a holding
company of any public utility company; and
(B) any person, determined by the Com-
mission, after notice and opportunity for hear-
ing, to exercise directly or indirectly (either
alone or pursuant to an arrangement or under-
standing with one or more persons) such a con-
trolling influence over the management or poli-
cies of any public utility company or holding
company as to make it necessary or appropriate
for the rate protection of utility customers with
respect to rates that such person be subject to
the obligations, duties, and liabilities imposed
by this Act upon holding companies.
(9) HOLDING
COMPANY
SYSTEM.—The term
‘‘holding company system’’ means a holding com-
pany, together with its subsidiary companies.
(10) JURISDICTIONAL RATES.—The term ‘‘ju-
risdictional rates’’ means rates established by the
Commission for the transmission of electric energy,
the sale of electric energy at wholesale in interstate
commerce, the transportation of natural gas, and the
sale in interstate commerce of natural gas for resale
for ultimate public consumption for domestic, com-
mercial, industrial, or any other use.
(11) NATURAL GAS COMPANY.—The term ‘‘nat-
ural gas company’’ means a person engaged in the
transportation of natural gas in interstate commerce
or the sale of such gas in interstate commerce for
resale.
(12) PERSON.—The term ‘‘person’’ means an
individual or company.
(13) PUBLIC UTILITY.—The term ‘‘public util-
ity’’ means any person who owns or operates facili-
ties used for transmission of electric energy or sales
of electric energy at wholesale in interstate com-
merce.
(14) PUBLIC
UTILITY
COMPANY.—The term
‘‘public utility company’’ means an electric utility
company or a gas utility company.
(15) STATE
COMMISSION.—The term ‘‘State
commission’’ means any commission, board, agency,
or officer, by whatever name designated, of a State,
municipality, or other political subdivision of a State
that, under the laws of such State, has jurisdiction
to regulate public utility companies.
(16) SUBSIDIARY COMPANY.—The term ‘‘sub-
sidiary company’’ of a holding company means—
‘‘(A) any company, 10 percent or more of
the outstanding voting securities of which are
directly or indirectly owned, controlled, or held
with power to vote, by such holding company;
and
(B) any person, the management or poli-
cies of which the Commission, after notice and
opportunity for hearing, determines to be sub-
ject to a controlling influence, directly or indi-
rectly, by such holding company (either alone or
pursuant to an arrangement or understanding
with one or more other persons) so as to make
it necessary for the rate protection of utility
customers with respect to rates that such per-
son be subject to the obligations, duties, and li-
ability imposed by this Act upon subsidiary
companies of holding companies.
(17) VOTING SECURITY.—The term ‘‘voting se-
curity’’ means any security presently entitling the
owner or holder thereof to vote in the direction or
management of the affairs of a company.
SEC. 204. FEDERAL ACCESS TO BOOKS AND RECORDS.
(a) IN GENERAL.—Each holding company and each
associate company thereof shall maintain, and shall make
available to the Commission, such books, accounts, memo-
randa, and other records as are relevant to costs incurred
by a public utility or natural gas company that is an asso-
ciate company of such holding company and that provides
goods or services to, obtains goods or services from, or
engages in any transactions with such public utility com-
pany or natural gas company, and necessary or appro-
priate for the protection of utility customers with respect
to jurisdictional rates for the transmission of electric en-
ergy in interstate commerce, the sale of electric energy at
wholesale in interstate commerce, the transportation of
natural gas in interstate commerce, and the sale in inter-
state commerce of natural gas for resale for ultimate pub-
lic consumption for domestic, commercial, industrial, or
any other use.
(b) AFFILIATE COMPANIES.—Each affiliate of a hold-
ing company or of any subsidiary company of a holding
company shall maintain, and make available to the Com-
mission, such books, accounts, memoranda, and other
records with respect to any transaction with a public util-
ity or natural gas company that is an associate company
of such holding company as are relevant to costs incurred
by such public utility or natural gas company and nec-
essary or appropriate for the protection of utility cus-
tomers with respect to jurisdictional rates.
(c) HOLDING COMPANY SYSTEMS.—The Commission
may examine the books, accounts, memoranda, and other
records of any company in a holding company system, or
any affiliate thereof that provides goods or services to, ob-
tains goods or services from, or engages in any transaction
with a public utility or natural gas company that is an
associate company in such holding company system, as are
relevant to costs incurred by a public utility or natural
gas company within such holding company system and
necessary or appropriate for the protection of utility cus-
tomers with respect to jurisdictional rates.
(d) CONFIDENTIALITY.—No member, officer, or em-
ployee of the Commission shall divulge any fact or infor-
mation that may come to his or her knowledge during the
course of examination of books, accounts, memoranda, or
other records as provided in this section, except as may
be directed by the Commission, by a committee of Con-
gress, or by a court of competent jurisdiction.
SEC. 205. STATE ACCESS TO BOOKS AND RECORDS.
(a) IN GENERAL.—Upon the written request of a
State commission having jurisdiction to regulate a public
utility company in a holding company system, the holding
company or any associate company or affiliate thereof,
other than such public utility company, wherever located,
that provides goods or services to, obtains goods or serv-
ices from, or engages in any transactions with such public
utility company, shall produce for inspection such books,
accounts, memoranda, and other records that—
(1) have been identified in reasonable detail in
a proceeding before the State commission;
(2) the State commission deems are relevant to
costs incurred by such public utility company; and
(3) are necessary for the effective discharge of
the responsibilities of the State commission with re-
spect to such proceeding.
(b) LIMITATION.—Subsection (a) does not apply to
any person that is a holding company solely by reason of
ownership of one or more qualifying facilities under sec-
tion 210 of the Public Utility Regulatory Policies Act of
1978.
(c) CONFIDENTIALITY OF INFORMATION.—The pro-
duction of books, accounts, memoranda, and other records
under subsection (a) shall be subject to such terms and
conditions as may be necessary and appropriate to safe-
guard against unwarranted disclosure to the public of any
trade secrets or sensitive commercial information.
(d) EFFECT ON STATE LAW.—Nothing in this sec-
tion shall preempt applicable State law concerning the pro-
vision of books, records, or any other information, or in
any way limit the rights of any State to obtain books,
records, or any other information under any other Federal
law, contract, or otherwise.
(e) COURT JURISDICTION.—Any United States dis-
trict court located in the State in which the State commis-
sion referred to in subsection (a) is located shall have ju-
risdiction to enforce compliance with this section.
SEC. 206. EXEMPTION AUTHORITY.
(a) RULEMAKING.—Not later than 90 days after the
date of enactment of this Act, the Commission shall pro-
mulgate a final rule to exempt from the requirements of
section 204 any person that is a holding company, solely
with respect to one or more of the following:
(1) Qualifying facilities under the Public Utility
Regulatory Policies Act of 1978.
(2) Exempt wholesale generators.
(3) Foreign utility companies.
(4) Exempt telecommunications companies.
(b) OTHER AUTHORITY.—If, upon application or
upon its own motion, the Commission finds that the books,
records, accounts, memoranda, and other records of any
person are not relevant to the jurisdictional rates of a pub-
lic utility or natural gas company, or if the Commission
finds that any class of transactions is not relevant to the
jurisdictional rates of a public utility or natural gas com-
pany, the Commission shall exempt such person or trans-
action from the requirements of section 204.
SEC. 207. AFFILIATE TRANSACTIONS.
Nothing in this title shall preclude the Commission
or a State commission from exercising its jurisdiction
under otherwise applicable law to determine whether a
public utility company, public utility, or natural gas com-
pany may recover in rates any costs of an activity per-
formed by an associate company, or any costs of goods
or services acquired by such public utility company from
an associate company.
SEC. 208. APPLICABILITY.
No provision of this title shall apply to, or be deemed
to include—
(1) the United States;
(2) a State or any political subdivision of a
State;
(3) any foreign governmental authority not op-
erating in the United States;
(4) any agency, authority, or instrumentality of
any entity referred to in paragraph (1), (2), or (3);
or
(5) any officer, agent, or employee of any entity
referred to in paragraph (1), (2), or (3) acting as
such in the course of official duty.
SEC. 209. EFFECT ON OTHER REGULATIONS.
Nothing in this title precludes the Commission or a
State commission from exercising its jurisdiction under
otherwise applicable law to protect utility customers from
paying too much for goods and services provided by asso-
ciate companies and from other cross subsidization of as-
sociate companies by regulated public utility companies.
SEC. 210. ENFORCEMENT.
The Commission shall have the same powers as set
forth in sections 306 through 317 of the Federal Power
Act (16 U.S.C. 825d-825p) to enforce the provisions of
this title.
SEC. 211. SAVINGS PROVISIONS.
(a) IN GENERAL.—Nothing in this title prohibits a
person from engaging in or continuing to engage in activi-
ties or transactions in which it is legally engaged or au-
thorized to engage on the effective date of this title.
(b) EFFECT ON OTHER COMMISSION AUTHORITY.—
Nothing in this title limits the authority of the Commis-
sion under the Federal Power Act (16 U.S.C. 791a et seq.)
(including section 301 of that Act) or the Natural Gas
Act (15 U.S.C. 717 et seq.) (including section 8 of that
Act).
SEC. 212. IMPLEMENTATION.
Not later than 18 months after the date of enactment
of this title, the Commission shall—
(1) promulgate such regulations as may be nec-
essary or appropriate to implement this title (other
than section 205); and
(2) submit to the Congress detailed rec-
ommendations on technical and conforming amend-
ments to Federal law necessary to carry out this
title and the amendments made by this title.
SEC. 213. TRANSFER OF RESOURCES.
All books and records that relate primarily to the
functions transferred to the Commission under this title
shall be transferred from the Securities and Exchange
Commission to the Commission.
SEC. 214. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated such funds
as may be necessary to carry out this title.
SEC. 215. CONFORMING AMENDMENT TO THE FEDERAL
POWER ACT.
Section 318 of the Federal Power Act (16 U.S.C.
825q) is repealed.
TITLE 
III—PROVISIONS 
RE-
SPECTING THE PUBLIC UTIL-
ITY REGULATORY POLICIES
ACT OF 1978
SEC. 301. SHORT TITLE.
This title may be cited as the ‘‘Ratepayer Protection
Act of 1999’’.
SEC. 302. FINDINGS.
The Congress finds that—
(1) implementation of the mandatory power
purchase provisions of section 210 of the Public
Utility Regulatory Policies Act of 1978 (16 U.S.C.
824a–3) has resulted in many consumers paying ex-
cessive rates for electric energy;
(2) the Energy Policy Act of 1992 gives non-
regulated producers of electricity additional access to
the wholesale electric market through transmission
access and exemption from the Public Utility Hold-
ing Company Act of 1935; and
(3) in light of the competitive wholesale electric
marketplace brought about by the Energy Policy Act
of 1992 and Part IV of the Federal Power Act, the
purchase mandate in section 210 of the Public Util-
ity Regulatory Policies Act of 1978 is no longer
needed.
SEC. 303. PROSPECTIVE REPEAL.
Section 210 of the Public Utility Regulatory Policies
Act of 1978 is amended by adding the following new sub-
section at the end thereof:
‘‘(m) PROSPECTIVE REPEAL.—
‘‘(1) NEW CONTRACTS.—After the enactment of
this subsection, no electric utility shall be required
to enter into a new contract or obligation to pur-
chase or to sell electric energy or capacity pursuant
to this section.
‘‘(2) EXISTING RIGHTS AND REMEDIES NOT AF-
FECTED.—Nothing in this subsection affects the
rights or remedies of any party with respect to the
purchase or sale of electric energy or capacity from
or to a facility determined to be a qualifying small
power production facility or a qualifying cogenera-
tion facility under this section 210 pursuant to any
contract or obligation to purchase or to sell electric
energy or capacity in effect on the date of enactment
of this subsection, including the right to recover the
costs of purchasing such electric energy or capac-
ity.’’.
SEC. 304. RECOVERY OF COSTS.
Section 210 of the Public Utility Regulatory Policies
Act of 1978 is amended by adding the following new sub-
section at the end thereof:
‘‘(n) RECOVERY OF COSTS.—The Commission shall
promulgate and enforce such regulations as may be re-
quired to assure that no electric utility shall be required
directly or indirectly to absorb the costs associated with
purchases of electric energy or capacity from a qualifying
facility pursuant to any legally enforceable obligation en-
tered into or imposed pursuant to this section prior to the
date of enactment of this subsection, to the extent that
the electric utility cannot otherwise reasonably mitigate
such costs. Such regulations shall be treated as a rule en-
forceable under the Federal Power Act (16 U.S.C. (16
U.S.C. 791a–825r).’’.
TITLE 
IV—FEDERAL 
POWER
MARKETING 
ADMINISTRA-
TIONS AND TENNESSEE VAL-
LEY AUTHORITY
Subtitle A—Tennessee Valley
Authority
SEC. 401. DEFINITIONS.
For purposes of this subtitle:
(1) The term ‘‘Commission’’ means the Federal
Energy Regulatory Commission.
(2) The term ‘‘distributor’’ means a State,
county, municipality, or cooperative organization
which owns, controls, or operates local distribution
facilities and which on April 1, 1999, purchased
electric energy at wholesale from the Tennessee Val-
ley Authority under an all-requirements power con-
tract.
(3) The term ‘‘distributor service area’’ means
that geographic area which is either assigned to or
statutorily defined under State law as the area with-
in which a distributor has the right or privilege to
provide electric energy at retail to the ultimate con-
sumer and ratepayer.
(4) The term ‘‘electric supplier’’ means any per-
son who provides any electric supply.
(5) The term ‘‘excess electric energy’’ means
electric energy that has become surplus to the firm
contractual obligations of the Tennessee Valley Au-
thority under section 10 of the Tennessee Valley Au-
thority Act of 1933 (16 U.S.C. 831i) due to any re-
duction in the quantity of electric energy that the
Tennessee Valley Authority was contractually re-
quired to supply on the date of enactment of this
Act where such reduction results from the election
by customers of the Tennessee Valley Authority not
to purchase from Tennessee Valley Authority electric
energy that the Tennessee Valley Authority was con-
tractually required to supply on the date of enact-
ment of this Act.
(6) The term ‘‘generating resource’’ means elec-
tric energy, including the actual or planned electric
energy capability of generating facilities.
(7) The term ‘‘major generating resource’’
means any generating resource that—
(A) has a planned capability greater than
50 average megawatts, and
(B) if acquired by the Tennessee Valley
Authority, is acquired for a period of more than
five years.
(8) The term ‘‘person’’ means a person as de-
fined in section 3(4) of the Federal Power Act.
(9) The term ‘‘public utility’’ means a public
utility as defined in section 201(e)(1) of the Federal
Power Act.
(10) The term ‘‘Tennessee Valley Region’’
means the geographic area in which the Tennessee
Valley Authority or its distributors were the primary
source of power supply on the date of enactment of
this Act.
SEC. 402. WHOLESALE COMPETITION IN THE TENNESSEE
VALLEY REGION.
(a) AMENDMENTS TO THE FEDERAL POWER ACT.—
(1) Section 212(f) of the Federal Power Act (16 U.S.C.
824k(f)), relating to interconnection or wheeling orders
that result in the sale or delivery of electric energy outside
the Tennessee Valley Region, is repealed.
(2) Section 212(j) of the Federal Power Act (16
U.S.C. 824k(j)), relating to equitability within territory
restricted electric systems, is repealed.
(b) AMENDMENTS TO THE TENNESSEE VALLEY AU-
THORITY ACT.—(1) The third sentence of the first para-
graph of section 15d(a) of the Tennessee Valley Authority
Act of 1933 (16 U.S.C. 831n–4(a)), limiting the sale or
delivery of electric energy outside the area for which the
Tennessee Valley Authority or its distributors were the
primary source of power supply on July 1, 1957, is re-
pealed.
(2) The second and third paragraphs of section
15d(a) of the Tennessee Valley Authority Act of 1933 (16
U.S.C. 831n–4(a)), which clarify the limitations imposed
by the third sentence of the first paragraph of the sub-
section, are repealed.
SEC. 403. TENNESSEE VALLEY AUTHORITY POWER SALES.
(a) BAR ON TENNESSEE VALLEY AUTHORITY RE-
TAIL SALES.—Notwithstanding section 10 of the Ten-
nessee Valley Authority Act of 1933 (16 U.S.C. 831i), the
Tennessee Valley Authority shall not sell or deliver electric
energy to any end use or retail customers that did not
have a contract for the purchase of electric energy with
the Tennessee Valley Authority for services to specific fa-
cilities on the date of enactment of this Act.
(b) REGIONAL
PREFERENCE
FOR
WHOLESALE
POWER SALES.—
(1) REGIONAL PREFERENCE.—Notwithstanding
section 10, 11, and 12, or any other provision of the
Tennessee Valley Authority Act of 1933 (16 U.S.C.
831 and following), the sale and delivery of electric
energy at wholesale by the Tennessee Valley Author-
ity for use outside the Tennessee Valley Region shall
be limited to excess electric energy.
(2) FIRM POWER SALES OF EXCESS ELECTRIC
ENERGY.—Any sale or delivery of excess electric en-
ergy by Tennessee Valley Authority pursuant to
paragraph (1) may be made only if each of the fol-
lowing requirements are met:
(A) NOTICE.—At least 30 days prior to
the execution of any contract for the sale or de-
livery of such electric energy the Tennessee Val-
ley Authority shall give the distributors written
notice that negotiations for such contract are
pending, and thereafter, at any distributor’s re-
quest, make available for its inspection current
drafts of the proposed contract.
(B) TERM.—The contract term for the sale
of such energy may not exceed 7 years.
(C) OFFER
TO
EXISTING
CUSTOMERS.—
The excess electric energy to be sold pursuant
to paragraph (1) shall first be offered for a rea-
sonable period of time and under the same es-
sential rates, terms, and conditions to distribu-
tors.
(3) ECONOMY
EXCHANGES.—Nothing in this
subsection shall prevent the Tennessee Valley Au-
100
thority from making exchange power arrangements
with other electric suppliers when economically fea-
sible.
(c) APPLICATION OF FEDERAL POWER ACT TO EX-
CESS POWER SALES OF ELECTRIC ENERGY AT WHOLE-
SALE BY THE TENNESSEE VALLEY AUTHORITY.—Sales of
electric energy at wholesale by the Tennessee Valley Au-
thority for use outside the Tennessee Valley Region shall
be subject to the provisions of Parts II and III of the Fed-
eral Power Act (16 U.S.C. 791a) (except sections 204,
207, 209, 214, and 305), and the Commission shall have
jurisdiction under such Parts II and III over the rates,
terms, and conditions of such sales. Such provisions of the
Federal Power Act and the rules, regulations and policies
of the Commission thereunder, shall apply to such sales
by the Tennessee Valley Authority to the same extent and
in the same manner as such provisions apply to wholesale
sales of electric energy in interstate commerce by a public
utility otherwise subject to the jurisdiction of the Commis-
sion under Part II of such Act.
(d) APPLICATION OF TENNESSEE VALLEY AUTHOR-
ITY ACT TO SALES OUTSIDE TENNESSEE VALLEY RE-
GION.—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
101
Valley Authority Act of 1933 (16 U.S.C. 831k) shall not
apply to any sale of excess electric energy by the Ten-
nessee Valley Authority for use outside the Tennessee Val-
ley Region.
SEC. 404. PROHIBITION ON ACQUISITION OF NEW GENER-
ATING RESOURCES.
Notwithstanding any other provision of law, the Ten-
nessee Valley Authority shall not acquire any new major
generating resource after the date of enactment of this
Act unless contractual or other financial arrangements
have been made to ensure that the customer or customers
on whose behalf the resource is acquired commit to pay
the full costs of the resource, and the Tennessee Valley
Authority shall not acquire any new generating resource
that it reasonably expects will necessitate the use of its
authority to recover otherwise nonrecoverable costs pro-
vided in section 408.
SEC. 405. RENEGOTIATION OF LONG-TERM CONTRACTS.
The Tennessee Valley Authority and its distributors
shall, within one year following the date of enactment of
this Act, renegotiate their existing long-term contracts
with respect to the remaining term, the length of the ter-
mination notice, the amount of electric energy that dis-
tributors may purchase from electric suppliers other than
the Tennessee Valley Authority, including access to the
102
Tennessee Valley Authority transmission system, and pro-
visions for stranded cost recovery. Such renegotiated con-
tracts shall not grant any undue preference or advantage
to any person or subject any person to any undue preju-
dice or disadvantage. If the parties are unable to reach
agreement with regard to any of the issues under this sec-
tion within the 1-year period set forth above, they shall
submit the issue in dispute to the Federal Energy Regu-
latory Commission for final resolution.
SEC. 406. REGULATION OF TENNESSEE VALLEY AUTHORITY
TRANSMISSION SYSTEM.
(a) FEDERAL
POWER
ACT
JURISDICTION.—The
transmission and local distribution of electric energy by
the Tennessee Valley Authority shall be subject to the pro-
visions of parts II and III of the Federal Power Act (ex-
cept sections 204, 207, 209, 214, and 305), the Commis-
sion shall have jurisdiction under such Parts II and III
over the rates, terms, and conditions of such transmission
and local distribution. Such provisions of the Federal
Power Act and the rules, regulations and policies of the
Commission thereunder, shall apply to such transmission
and local distribution by the Tennessee Valley Authority
to the same extent and in the same manner as such provi-
sions apply to the transmission of electric energy by a pub-
103
lic utility otherwise subject to the jurisdiction of the Com-
mission under Part II of such Act.
(b) TRANSMISSION PLANT INVESTMENT.—Except as
otherwise provided by the Commission, the Tennessee Val-
ley Authority shall not make any transmission plant in-
vestment that is significant (as defined by regulations
issued by the Commission) without the Commission’s prior
approval as to the need for such investment, taking into
account possible alternate investments, project partici-
pants or transmission providers, the reasonableness of the
cost estimate and the prudence of the investment.
(c) RATE PHASE-IN.—If the Commission determines
that the initial application of this subtitle in the develop-
ment of any Tennessee Valley Authority rates for trans-
mission services would result in an excessive increase in
any rate, as determined by the Commission, the Commis-
sion may phase in the effect of the application of this sub-
title to such rate over a reasonable period of time to the
same extent it would ordinarily do so for public utility
rates.
SEC. 407. REGULATION OF TENNESSEE VALLEY AUTHORITY
DISTRIBUTORS.
(a) REPEAL
OF TENNESSEE VALLEY AUTHORITY
REGULATION OF DISTRIBUTORS.—Upon the election of a
municipality or cooperative organization to which the Ten-
104
nessee Valley Authority sells electric energy, the third pro-
viso of section 10 of the Tennessee Valley Authority Act
of 1933 (16 U.S.C. 831i) and the second and third pro-
visos of section 12 of the Tennessee Valley Authority Act
of 1933 (16 U.S.C. 831k) shall not apply to future whole-
sale sales by the Tennessee Valley Authority in the Ten-
nessee Valley Region, and the Tennessee Valley Authority
shall not be authorized to regulate, by means of rules, con-
tract provisions, resale rate schedules, contract termi-
nation rights, or any other method, any rates, terms, or
conditions imposed on the resale of such electric energy
by such municipality or cooperative organization.
(b) REMOVAL OF PURPA RATEMAKING AUTHOR-
ITY.—Section 3(17) of the Public Utility Regulatory Poli-
cies Act of 1978 (16 U.S.C. 2602(17)) is amended by
striking ‘‘, and in the case of an electric utility with re-
spect to which the Tennessee Valley Authority has rate-
making authority, such term means the Tennessee Valley
Authority’’.
(c) AUTHORITY OF GOVERNING BODIES OF MUNICI-
PALITIES AND COOPERATIVE ORGANIZATIONS.—Upon the
election by any municipality or cooperative organization
pursuant to subsection (a) of this section, any regulatory
authority currently exercised by the Tennessee Valley Au-
thority over any municipality or cooperative organization
105
shall henceforth be exercised by the governing body of
such municipality or cooperative organization, in accord-
ance with the laws of the State in which it is organized.
SEC. 408. STRANDED COST RECOVERY.
Within one year of the date of enactment of this Act,
the Commission shall promulgate regulations with respect
to recovery of stranded costs (as determined by the Com-
mission) imposed on the Tennessee Valley Authority by
any departing power customer and providing for recovery
of the costs of any stranded transmission facilities (as de-
termined by the Commission) imposed upon the Tennessee
Valley Authority by any departing transmission customer.
These regulations shall provide that customers that did
not impose stranded costs upon the Tennessee Valley Au-
thority are not obligated to pay such costs on behalf of
other customers. The Commission’s methodology for de-
termining recovery of the Tennessee Valley Authority’s
stranded costs shall be consistent with the methodology
used by the Commission in determining stranded cost re-
covery for public utilities. The Tennessee Valley Authority
is authorized to recover such of its stranded costs as are
approved by the Commission. The Commission may not
impose a stranded cost recovery charge after September
30, 2007, unless the person against whom such charges
are assessed agrees otherwise. Any stranded cost recovery
106
charge assessed by the Tennessee Valley Authority on ex-
isting retail or wholesale customers shall be unbundled
from the otherwise applicable retail or wholesale rate ap-
plicable to that customer and stated on the customer’s bill
as a separate charge.
SEC. 409. REGIONAL TRANSMISSION PLANNING AGENCIES.
The Tennessee Valley Authority is authorized to par-
ticipate, under such terms and conditions as it deems ap-
propriate, after conducting a public process to receive
comment on the Tennessee Valley Authority’s participa-
tion, in a Commission approved and regulated regional
transmission planning agency that operates in the Ten-
nessee Valley Region. The Tennessee Valley Authority
shall not join any regional transmission planning agency
which would require it, or the combined users of the Ten-
nessee Valley Authority’s transmission system, to pay a
disproportionate share of the regional transmission plan-
ning agency’s costs. The Tennessee Valley Authority shall
not participate in any regional transmission planning
agency that would result in undue cost shifts among cus-
tomers, as determined by the Commission. This section
shall not be construed to require the Tennessee Valley
Authority’s participation in any regional transmission
planning agency.
107
SEC. 410. APPLICATION OF ANTITRUST LAW.
(a) IN GENERAL.—The Tennessee Valley Authority
shall be subject to the antitrust laws of the United States.
For purposes of this section, the term ‘‘antitrust laws’’
has the meaning given it in subsection (a) of the first sec-
tion of the Clayton Act (15 U.S.C. 12(a)), except that
such term includes the Act of June 19, 1936 (15 U.S.C.
13 and following), commonly known as the Robinson-Pat-
man Act, and section 5 of the Federal Trade Commission
Act (15 U.S.C. 45) to the extent that such section 5 ap-
plies to unfair methods of competition.
(b) JUDICIAL REVIEW.—Any person injured by viola-
tion of the antitrust laws by the Tennessee Valley Author-
ity may bring a civil action against the Tennessee Valley
Authority in Federal district court for injunctive relief or
civil damages. No action under the antitrust laws may be
maintained against the Tennessee Valley Authority, its of-
ficers, attorneys, employees, agents or representatives
arising out of any activity that is obligated or directed to
be performed under any Federal statute.
SEC. 411. DISPOSITION OF SURPLUS LOCAL DISTRIBUTION
FACILITIES.
The Tennessee Valley Authority shall offer for sale,
under such terms and conditions as established by the
Commission through regulation or order, all the following
108
local distribution facilities owned by the Tennessee Valley
Authority:
(1) Facilities used solely for delivery to a single
customer.
(2) Facilities used solely for delivery to a group
of customers all of whom are willing to purchase
such facilities jointly.
Such customers may in any event elect that the Tennessee
Valley Authority shall retain such existing local distribu-
tion facilities, in which event the cost of such facilities
shall not be included in the Tennessee Valley Authority’s
transmission rates. In the case of any Tennessee Valley
Authority facility used in local distribution used solely to
serve any customer entitled to purchase electric energy di-
rectly from the Tennessee Valley Authority, such customer
shall have priority in the purchase of such facility. The
Tennessee Valley Authority shall not construct after the
date of enactment of this Act facilities designed to operate
at electric voltages below 35 kilovolts.
SEC. 412. COMMISSION REGULATIONS.
In addition to the regulations which the Commission
is required to adopt pursuant to this subtitle, the Commis-
sion may adopt other regulations and issue such orders
as it deems appropriate to implement the provisions of this
subtitle.
109
SEC. 413. SAVINGS PROVISION.
(a) IN GENERAL.—This subtitle shall be interpreted
and implemented in a manner that does not adversely af-
fect the obligation of the Tennessee Valley Authority to
repay bonds issued by the Authority.
(b) TENNESSEE VALLEY AUTHORITY BONDS NOT
OBLIGATIONS OF THE UNITED STATES.—Nothing in this
subtitle 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.
Subtitle B—Bonneville Power
Administration
SEC. 421. DEFINITIONS.
Section 3 of the Federal Power Act is amended by
adding the following new paragraphs after paragraph
(27):
‘‘(27) 
BONNEVILLE
ADMINISTRATOR.—The
term ‘Bonneville Administrator’ means the Adminis-
trator of the Bonneville Power Administration;
‘‘(28) PACIFIC NORTHWEST.—The term ‘Pacific
Northwest’ has the meaning given that term in sec-
tion 3(14) of the Pacific Northwest Electric Power
110
Planning 
and 
Conservation 
Act 
(16 
U.S.C.
839a(14));
‘‘(29) BONNEVILLE TRANSMISSION SYSTEM.—
The term ‘Bonneville Transmission System’ means
transmission facilities owned or leased by the United
States, acting through the Bonneville Administrator,
and operated by the Bonneville Administrator or an-
other entity under section 202(h) or (i) of this Act;’’.
SEC. 422. APPLICATION OF FEDERAL POWER ACT.
After September 30, 2001, sections 202(h) and (i),
203 (with respect to dispositions of transmission facili-
ties), 205, 206, 208, and 210 through 213 of the Federal
Power Act and sections 301 through 304, 306, 307 (ex-
cept the last sentence of paragraph (c)), 308, 309, 313,
and 317 of the Federal Power Act apply to transmission
facilities and transmission of electric energy and the provi-
sion of necessary associated services over the Bonneville
Transmission System, provided that—
(1) any determination made under those sec-
tions as to whether an action or matter is just, rea-
sonable, not unduly discriminatory or preferential
shall be subject to—
(A) 
phasing 
in 
Commission-ordered
changes in transmission rates or charges that
would cause unreasonable cost shifts among
111
users of the Bonneville Transmission System if
implemented at once;
(B) mitigating unreasonable adverse im-
pacts on remote transmission customers in the
Pacific Northwest that would otherwise result
from Commission-ordered changes in the his-
toric treatment of costs to acquire transmission
to serve customers historically served by Gen-
eral Transfer Agreements entered into between
the Bonneville Administrator and other trans-
mission providers;
(C) complying with requirements of other
laws applicable to the Bonneville Administrator;
(D) assuring the Bonneville Administra-
tor’s transmission rates and charges are estab-
lished sufficient to—
(i) recover existing and future Federal
investment in the Bonneville Transmission
System over a reasonable number of years
after first meeting all the Bonneville Ad-
ministrator’s other transmission costs and
expenses; and
(ii) produce the revenues necessary to
assure timely payment of all transmission
112
related costs and expenses, including reve-
nues to establish reserves;
(E) rules established by the Commission
to—
(i) assure transmission access is pro-
vided over the Bonneville Transmission
System for hydroelectric power that must
be generated and transmitted at a par-
ticular time in order to reduce spill and
levels of dissolved nitrogen gas harmful to
fish; and
(ii) govern compensation to adversely
affected transmission users when capacity
is made available for transmission of hy-
droelectric power in those circumstances;
and
(F) subsection 205(g) of the Federal
Power Act; and
(2) these sections shall not apply to—
(A) the Bonneville Administrator’s activi-
ties other than transmission of electric energy
and provision of necessary associated services
over the facilities of the Bonneville Trans-
mission System; or
113
(B) a contract in effect on the date of en-
actment of this section, except for rates which
are adjustable by the Administrator under the
contract; a Treaty of the United States; or a
contract concerning the physical delivery of en-
ergy and capacity entered into by entities des-
ignated pursuant to such a Treaty.
SEC. 423. SURCHARGE ON TRANSMISSION RATES TO RE-
COVER 
OTHERWISE 
NONRECOVERABLE
COSTS.
Section 205 of the Federal Power Act is amended by
adding the following after subsection (f):
‘‘(g)(1) Subject to the requirements of paragraph (2),
the Bonneville Administrator shall propose and the Com-
mission shall establish a mechanism pursuant to this sec-
tion that enables the Administrator to place a surcharge
on rates or charges for transmission services over the Bon-
neville Transmission System when necessary in order to
recover power costs unable to be recovered through power
revenues in time to meet the cost recovery requirements
of section 7(a) of the Pacific Northwest Electric Power
Planning and Conservation Act (16 U.S.C. 839e(a)(1)).
‘‘(2) The transmission surcharge mechanism set forth
in paragraph (1) shall—
114
‘‘(A) recover not more than $600,000,000 in
total and no more than $100,000,000 in any fiscal
year;
‘‘(B) be available only between October 1, 2001,
and October 1, 2016;
‘‘(C) be implemented by the Bonneville Admin-
istrator of only when the Bonneville Administrator
projects that available financial reserves attributable
to 
the 
power 
function 
will 
be 
less 
than
$150,000,000; and
‘‘(D) to the fullest extent possible, be designed
and established to recover the costs from trans-
mission users in a manner that—
‘‘(i) minimizes any effect on transmission
users’ choices among competing suppliers or
products;
‘‘(ii) does not apply to use of the Bonne-
ville Transmission System for power sales out-
side the Pacific Northwest; and
‘‘(iii) minimizes bypass of the Bonneville
Transmission System by transmission users
seeking to avoid the surcharge.
‘‘(3) The Bonneville Administrator shall have sole
discretion to determine whether to implement the cost re-
covery mechanism established by the Commission under
115
paragraph (1). Before imposing the surcharge, the Bonne-
ville Administrator shall conduct a public process in the
Pacific Northwest to receive comment on implementation
of the surcharge. As a part of that public process, the
Bonneville Administrator shall make available information
concerning the need for and amount of the surcharge. If
the Bonneville Administrator decides to implement a sur-
charge, it shall take effect on the Bonneville Administra-
tor’s proposed effective date, but no earlier than 60 days
following the Administrator’s filing of the proposed sur-
charge to the Commission for approval.
‘‘(4)(A) Within 120 days after the effective date of
the surcharge, the Commission shall approve, reject, or
modify the surcharge and communicate its decision to the
Bonneville Administrator. In conducting its review, the
Commission shall not consider the appropriateness of the
cost recovery mechanism established by the Commission
under paragraph (1).
‘‘(B) If the Commission rejects or modifies the sur-
charge, the Commission may order the Bonneville Admin-
istrator to refund, with interest, the portion of the sur-
charge the Commission found not justified or the Commis-
sion may authorize the Administrator to recover amounts
from customers who underpaid or did not pay the sur-
charge. If the Commission orders modification of the Bon-
116
neville Administrator’s surcharge, such modified charge
shall be effective on the date and for the time period speci-
fied by the Commission.
‘‘(5) Any payment of power costs through application
of transmission revenues collected by surcharge or other-
wise shall be treated as a loan to the Bonneville Adminis-
trator’s power function. The Bonneville Administrator
shall repay the loan as soon as possible from power func-
tion revenues once the Bonneville Administrator is able
to meet other power cost recovery and Treasury repay-
ment obligations on an annual basis using power revenues
and, to the extent practicable, refund such revenues to all
transmission customers charged the surcharge. The bor-
rowed revenues shall bear interest at a rate determined
appropriate by the Commission.
‘‘(6) For the recovery of costs relating to any genera-
tion or conservation resources financed by debt issued by
a non-Federal party before October 1, 1998, and secured
by an obligation of the Bonneville Administrator to make
payments or net bill power and transmission service that
cannot be recovered through power rates and charges and
paid in accordance with the application of revenues and
the priority of payments specified by section 13(b) of the
Federal Columbia River Transmission System Act of 1974
(16 U.S.C. 838k(b)), the provisions of this section apply,
117
except for the recovery limitations under paragraph (2)(A)
and the time limits under paragraph (2)(B), but only to
the extent such recovery would have been allowed under
laws applicable to the Bonneville Administrator as of Oc-
tober 1, 1998. In reviewing this surcharge request, the
Commission shall apply the standard of review applicable
as of October 1, 1998.’’.
SEC. 424. COMPLAINTS.
Section 306 of the Federal Power Act is amended by
inserting ‘‘agency or instrumentality of the United
States,’’ after ‘‘person,’’ in the first sentence.
SEC. 425. REVIEW OF COMMISSION ORDERS.
Section 313 of the Federal Power Act is amended by
inserting ‘‘agency or instrumentality of the United
States,’’ after ‘‘person,’’ in the first sentence in subsection
(a).
SEC. 426. ANTITRUST LAWS APPLICATION TO BPA.
(a) IN GENERAL.—Subject to subsection (b), effec-
tive January 1, 2003, the Bonneville Power Authority is
subject to the antitrust laws of the United States with re-
spect to the operation of its electric power system. For
purposes of this section, the term ‘antitrust laws’ has the
meaning given it in subsection (a) of the first section of
the Clayton Act (15 U.S.C. 12(a)), except that it includes
the Act of June 19, 1936 (15 U.S.C. 13 et. seq.), com-
118
monly known as the Robinson-Patman Act, and 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.
(b) EXCEPTION.—No damages, interest on damages,
costs, or attorney’s fees may be recovered under section
4, 4A, or 4C of the Clayton Act (15 U.S.C. 15, 15a, or
15c) from the Bonneville Power Authority.
SEC. 427. CONFORMING AMENDMENTS.
(a) Section 201(f) of the Federal Power Act is
amended by striking ‘‘No’’ and inserting ‘‘(1) Except as
provided in section 202(h)–(i), no’’.
(b) Section 212(i) of the Federal Power Act (16
U.S.C. 824(i)) is repealed.
(c) Section 6 of the Federal Columbia River Trans-
mission System Act (16 U.S.C. 838(d)) is repealed.
(d) Section 9 of the Federal Columbia River Trans-
mission System Act (16 U.S.C. 838g) is amended to read
as follows:
‘‘SEC. 9. RATES AND CHARGES.
‘‘Schedules of rates and charges for the sale, includ-
ing dispositions to a Federal agency, of all electric power
made available to the Administrator pursuant to section
8 of this Act or otherwise acquired shall be established—
119
‘‘(1) with a view to encouraging the widest pos-
sible diversified use of electric power at the lowest
possible rates to consumers consistent with sound
business principles;
‘‘(2) having regard to the recovery (upon the
basis of the application of such rate schedules to the
capacity of the electric facilities of the projects) of
the cost of producing such electric power, including
the amortization of the capital investment allocated
to power over a reasonable period of years and pay-
ments provided for in section 11(b)(9) of this Act;
and
‘‘(3) at levels to produce such additional power
revenues as may be required, in the aggregate with
all other power revenues of the Administrator, to
pay when due the principal of, premiums, discounts,
and expenses in connection with the issuance of and
interest on all bonds issued and outstanding pursu-
ant to this Act for other than the construction, ac-
quisition, and replacement of the Federal trans-
mission system, and amounts required to establish
and maintain reserve and other funds and accounts
established in connection therewith.
Electric power rates under this section shall be established
by the Administrator in accordance with section 7 of the
120
Pacific Northwest Electric Power Planning and Conserva-
tion Act.’’.
(e) Section 10 of the Federal Columbia River Trans-
mission Act (16 U.S.C 838h) is repealed.
(f) Section 6 of the Pacific Northwest Regional Pref-
erence Act (16 U.S.C. 837e) is amended by striking ‘‘Fed-
eral energy or’’ in the first sentence and by striking the
second sentence.
(g) Section 7(a)(1) of the Pacific Northwest Electric
Power Planning and Conservation Act (16 U.S.C.
839e(a)(1)) is amended to read as follows:
‘‘(1) The Administrator shall establish, and periodi-
cally review and revise, rates for the sale and disposition
of electric power and shall periodically review and, if nec-
essary, propose revisions to rates for the transmission of
electric power. Rates for the sale and disposition of electric
power shall be established and, as appropriate, revised to
recover, in accordance with sound business principles, the
costs associated with the acquisition and conservation of
electric power, including the amortization of the Federal
investment allocable to electric power rates in the Federal
Columbia River Power system (including irrigation elec-
tric-power-related costs required to be repaid out of elec-
tric power revenues) over a reasonable period of years and
the other costs and expenses incurred by the Adminis-
121
trator pursuant to this Act and other provisions of law.
Rates for the sale and disposition of electric power shall
be established in accordance with section 9 of the Federal
Columbia River Transmission System Act (16 U.S.C.
838g), section 5 of the Flood Control Act of 1944 (16
U.S.C. 825s), and this Act.’’.
(h) Section 7(a)(2) of the Pacific Northwest Electric
Power Planning and Conservation Act (16 U.S.C.
839e(a)(2)) is amended by—
(1) striking ‘‘Rates’’ and inserting ‘‘Power
rates’’;
(2) inserting ‘‘and’’ after the comma in sub-
paragraph (A);
(3) striking ‘‘, and’’ and inserting a period at
the end of subparagraph B; and
(4) striking subparagraph (C).
(i) Section 7(i) of the Pacific Northwest Electric
Power Planning and Conservation Act (16 U.S.C. 839(i))
is amended by inserting ‘‘power’’ immediately after ‘‘es-
tablishing’’ in the first sentence.
(j) Section 9(d) of the Pacific Northwest Electric
Power Planning and Conservation Act (16 U.S.C.
839f(d)) is amended by striking ‘‘transmission access,’’
and inserting ‘‘power’’ immediately before ‘‘services’’ in
the second sentence.
122
(k) Section 9(i)(3) of the Pacific Northwest Electric
Power Planning and Conservation Act (16 U.S.C.
839f(i)(3)) is amended in the first sentence—
(1) by inserting ‘‘power’’ before ‘‘services’’ each
place such term appears; and
(2) by striking ‘‘transmission, storage, and’’
and inserting ‘‘storage and’’.
(l) Section 2(e) of the Act of August 20, 1937 (chap-
ter 720; 50 Stat. 731) (commonly known as the Bonneville
Project Act of 1937) is amended by striking the colon and
and all that follows and inserting a period.
Subtitle C—Other Power
Marketing Administrations
SEC. 431. DEFINITIONS.
For purposes of this subtitle:
(1) The term ‘‘Administrator’’ means the ad-
ministrator of a Federal power marketing adminis-
tration.
(2) The term ‘‘Commission’’ means the Federal
Energy Regulatory Commission.
(3) The term ‘‘Federal power marketing admin-
istrations’’ means the Western Area Power Adminis-
tration, Southwestern Power Administration, and
Southeastern Power Administration.
123
(4) The term ‘‘power generating agencies’’
means the Bureau of Reclamation, the Army Corps
of Engineers, and the International Boundary and
Water Commission.
(5) The term ‘‘public utility’’ means a public
utility as defined in section 201(e)(1) the Federal
Power Act.
(6) The term ‘‘Secretary’’ means the Secretary
of Energy.
SEC. 432. ACCOUNTING.
Not later than 6 months after the date of enactment
of this Act, the Secretary of Energy shall promulgate rules
containing each of the following:
(1) ACCOUNTING
PRINCIPLES
AND
REQUIRE-
MENTS.—Procedures to ensure that the Federal
power marketing administrations utilize the same
accounting principles and requirements as are appli-
cable to public utilities pursuant to Parts II and III
of the Federal Power Act (16 U.S.C. 792 and fol-
lowing) with respect to accounting for revenue, ex-
penses, investments, and depreciation.
(2) COMPLIANCE.—Procedures for the filing of
complaints with the Secretary of Energy by inter-
ested persons seeking to ensure compliance with the
procedures of this section.
124
(3) ADMINISTRATIVE RECONCILIATION.—Proce-
dures to insure that the Bureau of Reclamation, the
United States Army Crops of Engineers, and the
Administrators of the Federal power marketing ad-
ministrations maintain a consistent set of books and
records for purposes of repayment obligations.
SEC. 433. REGIONAL TRANSMISSION PLANNING AGENCIES.
Each Federal power marketing administration is au-
thorized to participate, under such terms and conditions
as it deems appropriate, after conducting a public process
to receive comment on each Federal power marketing ad-
ministration’s participation, in a Commission approved
and regulated regional transmission planning agency, ex-
cept that—
(1) a Federal power marketing administration
shall not join any regional transmission planning
agency which would require it, or the combined
users of its transmission system, to pay a dispropor-
tionate share of the regional transmission planning
agency’s costs, and
(2) a Federal power marketing administration
shall not participate in any regional transmission
planning agency that would result in undue cost
shifts among its customers, as determined by the
Commission.
125
This section shall not be construed to require the partici-
pation of the Federal power marketing administrations in
regional transmission planning agencies.
SEC. 434. APPLICATION OF ANTITRUST LAW.
(a) IN GENERAL.—The Federal power marketing ad-
ministrations shall be subject to the antitrust laws of the
United States. For purposes of this section, the term
‘‘antitrust laws’’ has the meaning given it in subsection
(a) of the first section of the Clayton Act (15 U.S.C.
12(a)), except that such term includes the Act of June
19, 1936 (15 U.S.C. 13 and following), commonly known
as the Robinson-Patman Act, and section 5 of the Federal
Trade Commission Act (15 U.S.C. 45) to the extent that
such section 5 applies to unfair methods of competition.
(b) JUDICIAL REVIEW.—Any person injured by viola-
tion of the antitrust laws by any of the Federal power
marketing administrations may bring a civil action against
the agency in Federal district court for injunctive relief,
but neither the Federal power marketing administrations
nor their officers, attorneys, employees, agents or rep-
resentatives shall be held liable for civil damages or attor-
ney’s fees. No action under the antitrust laws may be
maintained against any of the Federal power marketing
administrations, their officers, attorneys, employees,
agents or representatives arising out of any activity that
126
is obligated or directed to be performed under any Federal
statute.
TITLE V—RENEWABLE ENERGY
SEC. 501. RENEWABLE PORTFOLIO STANDARD.
(a) STANDARD.—Title II of the Public Utility Regu-
latory Polices Act of 1978 is amended by adding after sec-
tion 214 the following new section:
‘‘SEC. 215. FEDERAL RENEWABLE PORTFOLIO STANDARD.
‘‘(a) EFFECTIVE DATE.—The Administrator of the
Energy Information Administration in the Department of
Energy shall publish a notice on or before January 1,
2005, specifying the percentage of total electric energy
generation in the United States that the Administrator es-
timates to be supplied by renewable energy during the cal-
endar year 2004. If such percentage is less than 3 percent,
this section shall take effect on January 1, 2005.
‘‘(b) MINIMUM RENEWABLE GENERATION REQUIRE-
MENT.—(1) For each calendar year beginning after the
effective date of this section, a retail electric supplier shall
submit to the Secretary of Energy (referred to in this sec-
tion as the ‘Secretary’) Renewable Energy Credits in an
amount equal to 3 percent of the total electric energy sold
by the retail electric supplier to electric consumers in the
calendar year. The retail electric supplier shall make this
submission before April 1 of the following calendar year.
127
‘‘(2) For purposes of this section, a ‘renewable en-
ergy’ resource means solar energy, wind, geothermal, or
biomass.
‘‘(3) This section does not preclude a State from re-
quiring additional renewable energy generation in that
State.
‘‘(c) SUBMISSION OF CREDITS.—A retail electric sup-
plier may satisfy the requirements of subsection (a)
through the submission of—
‘‘(1) Renewable Energy Credits issued under
subsection (d) for renewable energy generated by the
retail electric supplier in the calendar year for which
Credits are being submitted or any previous calendar
year;
‘‘(2) Renewable Energy Credits issued under
subsection (d) to any renewable energy generator for
renewable energy generated in the calendar year for
which Credits are being submitted or a previous cal-
endar year and acquired by the retail electric sup-
plier; or
‘‘(3) any combination of Credits under para-
graphs (1) and (2).
‘‘(d) ISSUANCE
OF CREDITS.—(1) The Secretary
shall establish a program to issue, monitor the sale or ex-
change of, and track Renewable Energy Credits.
128
‘‘(2) Under the program, an entity that generates
electric energy through the use of a renewable energy re-
source may apply to the Secretary for the issuance of Re-
newable Energy Credits. The application shall indicate—
‘‘(A) the type of renewable energy resource used
to produce the electricity;
‘‘(B) the State in which the electric energy was
produced; and
‘‘(C) any other information the Secretary deter-
mines appropriate.
‘‘(3)(A) Except as provided in subparagraph (B), the
Secretary shall issue to an entity 1 Renewable Energy
Credit for each kilowatt-hour of electric energy the entity
generates through the use of a renewable energy resource
in any State in 2005 and any succeeding year.
‘‘(B) The Secretary shall issue 2 Renewable Energy
Credits for each kilowatt-hour of electric energy generated
through the use of a renewable energy resource in any
State in 2005 and any succeeding year, if the generating
facility is located on Indian land. For purposes of this
paragraph, renewable energy generated by biomass cofired
with other fuels is eligible for 2 credits only if the biomass
was grown on the land eligible under this subparagraph.
‘‘(C) To be eligible for a Renewable Energy Credit,
the unit of electricity generated through the use of a re-
129
newable energy resource may be sold or may be used by
the generator. If both a renewable energy resource and
a nonrenewable energy resource are used to generate the
electric energy, the Secretary shall issue credits based on
the proportion of the renewable energy resource used. The
Secretary shall identify Renewable Energy Credits by type
of generation and by the State in which the generating
facility is located.
‘‘(4) In order to receive a Renewable Energy Credit,
the recipient of a Renewable Energy Credit shall pay a
fee, calculated by the Secretary, in an amount that is
equal to the administrative costs of issuing, recording,
monitoring the sale or exchange of, and tracking the Cred-
it, or does not exceed 5 percent of the dollar value of the
Credit, whichever is lower. The Secretary shall retain the
fee and use it to pay these administrative costs.
‘‘(5) When a generator sells electric energy generated
through the use of a renewable energy resource to a retail
electric supplier under a contract subject to section 210
of this Act, the retail electric supplier is treated as the
generator of the electric energy for the purposes of this
section for the duration of the contract.
‘‘(6) The Secretary shall disqualify an otherwise eligi-
ble renewable energy generator from receiving a Renew-
130
able Energy Credit if the generator has elected to partici-
pate in net metering under section 216.
‘‘(e) SALE
OR EXCHANGE.—A Renewable Energy
Credit may be sold or exchanged by the entity to which
it was issued or by any other entity that acquires the Cred-
it. A Renewable Energy Credit for any year that is not
used to satisfy the minimum renewable generation require-
ment of subsection (a) for that year may be carried for-
ward for use in another year.
‘‘(f) RENEWABLE ENERGY CREDIT COST CAP.—Be-
ginning on the effective date of this section, the Secretary
shall offer Renewable Energy Credits for sale. The Sec-
retary shall charge 1.5 cents for each Renewable Energy
Credit sold during calendar year 2005, and on January
1 of each following year, the Secretary shall adjust for
inflation, based on the Consumer Price Index, the price
charged per Credit for that calendar year. The Secretary
shall deposit in a separate account the amount received
from a sale under this subsection. Amounts in the separate
account shall be available, without further appropriation,
to the Secretary to be used for purposes of providing as-
sistance for research and development of cleaner burning
fuels and renewable energy.
‘‘(g) ENFORCEMENT.—The Secretary may bring an
action in the appropriate United States district court to
131
impose a civil penalty on a retail electric supplier that does
not comply with subsection (b). A retail electric supplier
that does not submit the required number of Renewable
Energy Credits under subsection (b) is subject to a civil
penalty of not more than 3 times the value of the Renew-
able Energy Credits not submitted. For purposes of this
subsection, the value of a Renewable Energy Credit is the
price of a Credit determined under subsection (f) for the
year the Credits were not submitted.
‘‘(h) INFORMATION COLLECTION.—The Secretary
may collect the information necessary to verify and
audit—
‘‘(1) the annual electric energy generation and
renewable energy generation of any entity applying
for Renewable Energy Credits under this section;
‘‘(2) the validity of Renewable Energy Credits
submitted by a retail electric supplier to the Sec-
retary; and
‘‘(3) the quantity of electricity sales of all retail
electric suppliers.
‘‘(i) SUNSET.—This section expires December 31,
2015.’’.
(b) DEFINITIONS.—Section 3 of the Public Utility
Regulatory Polices Act of 1978 is amended by adding
after paragraph (24) the following new paragraph:
132
‘‘(25) The term ‘retail electric supplier’ means
a person, State agency, or Federal agency that sells
electric energy to an electric consumer.
‘‘(26) The term ‘Indian land’ means—
‘‘(A) any land within the limits of any In-
dian reservation, pueblo, or rancheria;
‘‘(B) any land not within the limits of any
Indian reservation, pueblo, or rancheria title to
which was on the date of passage of the Elec-
tric Consumers’ Power to Choose Act of 1999
either held in trust by the United States for the
benefit of any Indian tribe or individual or held
by any Indian tribe or individual subject to re-
striction by the United States against alien-
ation;
‘‘(C) any dependent Indian community;
and
‘‘(D) any land conveyed to any Alaska Na-
tive corporation under the Alaska Native
Claims Settlement Act.
‘‘(27) The term ‘Indian tribe’ means any Indian
tribe, band, group, or nation, including Alaska Indi-
ans, Aleuts, or Eskimos, or any Alaskan Native Vil-
lage of the United States, which is considered an eli-
gible recipient under the Indian Self-Determination
133
and Education Assistance Act (Public Law 93–638)
or was considered an eligible recipient under chapter
67 of title 31, United States Code, prior to the re-
peal of such chapter.’’.
(c) TABLE OF CONTENTS.—The table of contents for
title II of the Public Utility Regulatory Policies Act of
1978 (16 U.S.C. 2601 and following) is amended by add-
ing the following at the end thereof:
‘‘Sec. 215. Federal renewable portfolio standard.’’.
SEC. 502. NET METERING.
(a) AMENDMENT OF PURPA.—The Public Utility
Regulatory Polices Act of 1978 is amended by adding the
following new section after section 215, as added by sec-
tion 501 of this Act:
‘‘SEC. 216. NET METERING FOR RENEWABLE ENERGY.
‘‘(a) DEFINITIONS.—For purposes of this section—
‘‘(1) the term ‘eligible on-site generating facil-
ity’ means a facility on the site of an electric con-
sumer with a peak generating capacity of 20 kilo-
watts or less that is fueled solely by a renewable en-
ergy resource.
‘‘(2) The term ‘renewable energy resource’
means solar energy, wind, geothermal, or biomass.
‘‘(3) The term ‘net metering service’ means
service to an electric consumer under which elec-
tricity generated by that consumer from an eligible
134
on-site generating facility and delivered to the dis-
tribution system through the same meter through
which purchased electricity is received may be used
to offset electricity provided by the retail electric
supplier to the electric consumer during the applica-
ble billing period so that an electric consumer is
billed only for the net electricity consumed during
the billing period, but in no event shall the net be
less than zero during the applicable billing period.
‘‘(b) REQUIREMENT TO PROVIDE NET METERING
SERVICE.—Each retail electric supplier shall make avail-
able upon request net metering service to any retail elec-
tric consumer that the supplier currently serves or solicits
for service.
‘‘(c) STATE AUTHORITY.—This section does not pre-
clude a State from imposing additional requirements con-
sistent with the requirements in this section, including the
imposition of a cap limiting the amount of net metering
available in the State. Nothing in this Act or any other
Federal law preempts or otherwise affects authority under
State law to require a retail electric supplier to make avail-
able net metering service to a retail electric consumer
which the supplier serves or offers to serve.’’.
(c) TABLE OF CONTENTS.—The table of contents for
title II of the Public Utility Regulatory Policies Act of
135
1978 (16 U.S.C. 2601 and following) is amended by add-
ing the following at the end thereof:
‘‘Sec. 216. Net metering for renewable energy.’’.
TITLE VI—PROVISIONS RELAT-
ING TO THE INTERNAL REV-
ENUE CODE
SEC. 601. 5-YEAR EXTENSION OF CREDIT FOR PRODUCING
ELECTRICITY 
FROM 
RENEWABLE 
RE-
SOURCES.
Subsection (c) of section 45 of the Internal Revenue
Code of 1986 (relating to credit for electricity produced
from certain renewable resources) is amended to read as
follows:
‘‘(c) 
DEFINITIONS.—For 
purposes 
of 
this
subsection—
‘‘(1) QUALIFIED
ENERGY
RESOURCES.—The
term ‘qualified energy resources’ means—
‘‘(A) wind,
‘‘(B) solar power,
‘‘(C) geothermal power, and
‘‘(D) biomass.
‘‘(2) BIOMASS.—The term ‘biomass’ means
closed-loop biomass and forest and agricultural bio-
mass.
‘‘(3) 
CLOSED-LOOP
BIOMASS.—The 
term
‘closed-loop biomass’ means any organic material
136
from a plant which is planted exclusively for pur-
poses of being used at a qualified facility to produce
electricity.
‘‘(4) FOREST AND AGRICULTURAL BIOMASS.—
The term ‘forest and agricultural biomass’ means
any solid, nonhazardous, cellulosic waste material,
that is segregated from other waste materials, and
that is derived from the following forest-related re-
sources: mill residues, pre-commercial thinnings, and
slash and brush, but not including old growth tim-
ber, waste pallets, crates, dunnage, unsegregated
municipal solid waste (garbage), landscape or right-
of-way tree trimmings, and biomass derived from ag-
riculture sources, including orchard tree crops, vine-
yard grain, legumes, sugar, and other crop-by-prod-
ucts or residues.
‘‘(5) QUALIFIED FACILITY.—The term ‘quali-
fied facility’ means any facility owned by the tax-
payer which is originally placed in service—
‘‘(A) in the case of a facility using wind to
produce electricity, after December 31, 1993,
and before July 1, 2015,
‘‘(B) in the case of a facility using solar
power or geothermal power to produce elec-
137
tricity, after the date of the enactment of this
subparagraph and before July 1, 2015, and
‘‘(C) in the case of a facility using biomass
to produce electricity, after December 31, 1992,
and before July 1, 2015.’’.
SEC. 602. CREDIT FOR ENERGY EFFICIENCY IMPROVE-
MENTS TO EXISTING HOMES.
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to nonrefundable personal credits) is
amended by inserting after section 25A the following new
section:
‘‘SEC. 25B. ENERGY EFFICIENCY IMPROVEMENTS TO EXIST-
ING HOMES.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax
imposed by this chapter for the taxable year an amount
equal to 20 percent of the amount paid or incurred by
the taxpayer for qualified energy efficiency improvements
installed during such taxable year.
‘‘(b) LIMITATIONS.—
‘‘(1) MAXIMUM CREDIT.—The credit allowed by
this section with respect to a dwelling shall not ex-
ceed $2,000.
138
‘‘(2) PRIOR CREDIT AMOUNTS FOR TAXPAYER
ON SAME DWELLING TAKEN INTO ACCOUNT.—If a
credit was allowed to the taxpayer under subsection
(a) with respect to a dwelling in 1 or more prior tax-
able years, the amount of the credit otherwise allow-
able for the taxable year with respect to that dwell-
ing shall not exceed the amount of $2,000 reduced
by the sum of the credits allowed under subsection
(a) to the taxpayer with respect to the dwelling for
all prior taxable years.
‘‘(c) CARRYFORWARD OF UNUSED CREDIT.—If the
credit allowable under subsection (a) exceeds the limita-
tion imposed by section 26(a) for such taxable year re-
duced by the sum of the credits allowable under subpart
A of part IV of subchapter A (other than this section),
such excess shall be carried to the succeeding taxable year
and added to the credit allowable under subsection (a) for
such taxable year.
*
‘‘(d) QUALIFIED ENERGY EFFICIENCY IMPROVE-
MENTS.—For purposes of this section, the term ‘qualified
energy efficiency improvements’ means any energy effi-
cient building envelope component, and any energy effi-
cient heating, cooling, or water heating appliance, the in-
stallation of which, by itself or in combination with other
such components or appliances, is certified to improve the
139
annual energy performance of the existing home by at
least 30 percent, if—
‘‘(1) such component or appliance is installed in
or on a dwelling—
‘‘(A) located in the United States, and
‘‘(B) owned and used by the taxpayer as
the taxpayer’s principal residence (within the
meaning of section 121),
‘‘(2) the original use of such component or ap-
pliance commences with the taxpayer, and
‘‘(3) such component or appliance reasonably
can be expected to remain in use for at least 5
years.
Such certification shall be made by the contractor who in-
stalled such improvements, a local building regulatory au-
thority, or a qualified energy consultant (such as a utility
or an accredited home energy rating system provider).
‘‘(e) SPECIAL RULES.—
‘‘(1) TENANT-STOCKHOLDER IN COOPERATIVE
HOUSING
CORPORATION.—In the case of an indi-
vidual who is a tenant-stockholder (as defined in sec-
tion 216) in a cooperative housing corporation (as
defined in such section), such individual shall be
treated as having paid his tenant-stockholder’s pro-
portionate share (as defined in section 216(b)(3)) of
140
the cost of qualified energy efficiency improvements
made by such corporation.
‘‘(2) CONDOMINIUMS.—
‘‘(A) IN GENERAL.—In the case of an indi-
vidual who is a member of a condominium man-
agement association with respect to a condo-
minium which he owns, such individual shall be
treated as having paid his proportionate share
of the cost of qualified energy efficiency im-
provements made by such association.
‘‘(B) CONDOMINIUM
MANAGEMENT
ASSO-
CIATION.—For purposes of this paragraph, the
term ‘condominium management association’
means an organization which meets the require-
ments of paragraph (1) of section 528(c) (other
than subparagraph (E) thereof) with respect to
a condominium project substantially all of the
units of which are used as residences.
‘‘(f) BASIS ADJUSTMENT.—For purposes of this sub-
title, if a credit is allowed under this section for any ex-
penditure with respect to any property, the increase in the
basis of such property which would (but for this sub-
section) result from such expenditure shall be reduced by
the amount of the credit so allowed.
141
‘‘(g) TERMINATION.—Subsection (a) shall apply to
qualified energy efficiency improvements installed during
the period beginning on January 1, 1999, and ending on
December 31, 2003.’’.
(b) CONFORMING AMENDMENTS.—
(1) Subsection (c) of section 23 of such Code
is amended by inserting ‘‘, section 25B, and section
1400C’’ after ’’other than this section’’.
(2) Subparagraph (C) of section 25(e)(1) of
such Code is amended by striking ‘‘section 23’’ and
inserting ‘‘sections 23, 25B, and 1400C’’.
(3) Subsection (d) of section 1400C of such
Code is amended by inserting ‘‘and section 25B’’
after ‘‘other than this section’’.
(4) Subsection (a) of section 1016 of such Code
is amended by striking ‘‘and’’ at the end of para-
graph (26), by striking the period at the end of
paragraph (27) and inserting ‘‘; and’’, and by add-
ing at the end the following new paragraph:
‘‘(28) to the extent provided in section 25B(f),
in the case of amounts with respect to which a credit
has been allowed under section 25B.’’.
(5) The table of sections for subpart A of part
IV of subchapter A of chapter 1 of such Code is
142
amended by inserting after the item relating to sec-
tion 25A the following new item:
‘‘Sec. 25B. Energy efficiency improvements to existing homes.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after De-
cember 31, 1998.
SEC. 603. BUSINESS CREDIT FOR CONSTRUCTION OF NEW
ENERGY EFFICIENT HOME.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to business related credits) is amended by
inserting after section 45C the following new section:
‘‘SEC. 45D. NEW ENERGY EFFICIENT HOME CREDIT.
‘‘(a) IN GENERAL.—For purposes of section 38, in
the case of an eligible contractor, the credit determined
under this section for the taxable year is an amount equal
to the aggregate adjusted bases of all energy efficient
property installed in a qualified new energy efficient home
during construction of such home.
‘‘(b) LIMITATIONS.—
‘‘(1) MAXIMUM CREDIT.—
‘‘(A) IN GENERAL.—The credit allowed by
this section with respect to a dwelling shall not
exceed $2,000.
‘‘(B) PRIOR
CREDIT
AMOUNTS
ON
SAME
DWELLING TAKEN INTO ACCOUNT.—If a credit
143
was allowed under subsection (a) with respect
to a dwelling in 1 or more prior taxable years,
the amount of the credit otherwise allowable for
the taxable year with respect to that dwelling
shall not exceed the amount of $2,000 reduced
by the sum of the credits allowed under sub-
section (a) with respect to the dwelling for all
prior taxable years.
‘‘(2) COORDINATION
WITH
REHABILITATION
AND
ENERGY
CREDITS.—For purposes of this
section—
‘‘(A) the basis of any property referred to
in subsection (a) shall be reduced by that por-
tion of the basis of any property which is attrib-
utable to qualified rehabilitation expenditures
(as defined in section 47(c)(2)) or to the energy
percentage of energy property (as determined
under section 48(a)), and
‘‘(B) expenditures taken into account
under either section 47 or 48(a) shall not be
taken into account under this section.
‘‘(c) QUALIFIED NEW ENERGY EFFICIENT HOME.—
‘‘(1) IN GENERAL.—Property is a qualified new
energy efficient home if—
144
‘‘(A) the original use of such property com-
mences with the taxpayer and is, at the time of
such use, the principal residence of the tax-
payer, and
‘‘(B) such property—
‘‘(i) reduces calculated environmental
emissions for heating and cooling by 50
percent compared to a reference house that
complies with minimum standard practice,
as determined according to the require-
ments specified under paragraph (2)(B),
and
‘‘(ii) is certified before such use com-
mences as meeting the requirements of
clause (i).
‘‘(2) CERTIFICATION.—
‘‘(A) IN GENERAL.—The Secretary of En-
ergy shall establish requirements for the certifi-
cation under paragraph (1)(B)(ii) after exam-
ining the requirements for energy consultants
and home energy ratings providers specified by
the Mortgage Industry National Accreditation
Procedures for Home Energy Rating Systems.
Any certification under such paragraph shall be
145
conveyed to the taxpayer seeking the credit
under this section.
‘‘(B) 
METHODS
FOR
DEMONSTRATING
COMPLIANCE.—(i) Compliance with the require-
ments of paragraph (1)(B)(i) shall be dem-
onstrated by either the component method de-
scribed in clause (ii) or the performance method
described in clause (iii).
‘‘(ii) The component method is a method
in which all of the components of a home com-
ply with the additional requirements established
by the Secretary of Energy, resulting in
achievement of results equivalent to the results
of using the performance method.
‘‘(iii) The performance method is a method
in which compliance with the requirements of
paragraph (1)(B)(i) is demonstrated by the use
of computer software that meets specifications
promulgated in regulations by the Secretary of
Energy in consultation with the Secretary of
Treasury. Such regulations shall contain proce-
dures and methods for calculating emissions
and emissions reductions and for reporting the
results, and shall be based on the 1998 Cali-
fornia residential ACM manual, except that the
146
calculational procedures shall allow a home to
qualify for the tax credit under this section re-
gardless of whether the home uses a gas or oil
furnace or boiler, or an electric heat pump. The
regulations shall require that the software allow
for the printing of IRS forms needed for the
tax credit under this section, and explanations
for the taxpayer of the energy efficiency fea-
tures that were used to comply with the re-
quirements for the tax credit under this section.
The Secretary of Energy shall approve software
submissions that comply with the calculational
requirements of the regulations.
‘‘(C) PERSONS MAKING CERTIFICATION.—
The certification under paragraph (1)(B)(ii)
shall be made to the Secretary of Energy by an
individual qualified to determine compliance
with such paragraph. Individuals qualified to
determine such compliance shall be only those
individuals who are recognized by an organiza-
tion certified by the Secretary of Energy for
such purposes.
‘‘(d) DEFINITIONS.—For purposes of this section—
147
‘‘(1) ELIGIBLE CONTRACTOR.—The term ‘eligi-
ble contractor’ means the person who constructed
the new energy efficient home.
‘‘(2) ENERGY
EFFICIENT
PROPERTY.—The
term ‘energy efficient property’ means any energy
efficient building envelope component, and any en-
ergy efficient heating, cooling, or water heating ap-
pliance.
‘‘(3) PRINCIPAL RESIDENCE.—The term ‘prin-
cipal residence’ has the same meaning as when used
in section 121, except that the period for which a
building is treated as the principal residence of the
taxpayer shall also include the 60-day period ending
on the 1st day on which it would (but for this para-
graph) first be treated as his principal residence.
‘‘(e) BASIS ADJUSTMENT.—For purposes of this sub-
title, if a credit is allowed under this section for any ex-
penditure with respect to any property, the increase in the
basis of such property which would (but for this sub-
section) result from such expenditure shall be reduced by
the amount of the credit so allowed.
‘‘(f) TERMINATION.—Subsection (a) shall apply to
dwellings purchased during the period beginning on Janu-
ary 1, 1999, and ending on December 31, 2003.’’.
149
as paragraph (4) and by inserting after paragraph
(2) the following new paragraph:
‘‘(3) SPECIAL RULES FOR NEW ENERGY EFFI-
CIENT HOME CREDIT.—
‘‘(A) IN GENERAL.—In the case of the new
energy efficient home credit—
‘‘(i) this section and section 39 shall
be applied separately with respect to the
credit, and
‘‘(ii) in applying paragraph (1) to the
credit—
‘‘(I) subparagraph (A) thereof
shall not apply, and
‘‘(II) the limitation under para-
graph (1) (as modified by subclause
(I)) shall be reduced by the credit al-
lowed under subsection (a) for the
taxable year (other than the new en-
ergy efficient home credit).
‘‘(B) NEW
ENERGY
EFFICIENT
HOME
CREDIT.—For purposes of this subsection, the
term ‘new energy efficient home credit’ means
the credit allowable under subsection (a) by rea-
son of section 45D.’’.
150
(2) CONFORMING AMENDMENT.—Subclause (II)
of section 38(c)(2)(A)(ii) of such Code is amended
by inserting ‘‘or the new energy efficient home cred-
it’’ after ‘‘employment credit’’.
(e) LIMITATION ON CARRYBACK.—Subsection (d) of
section 39 of such Code is amended by adding at the end
the following new paragraph:
‘‘(9) NO CARRYBACK OF NEW ENERGY EFFI-
CIENT HOME CREDIT BEFORE EFFECTIVE DATE.—
No portion of the unused business credit for any
taxable year which is attributable to the credit deter-
mined under section 45D may be carried back to
any taxable year ending before the date of the enact-
ment of section 45D.’’.
(f) DEDUCTION FOR CERTAIN UNUSED BUSINESS
CREDITS.—Subsection (c) of section 196 of such Code is
amended by striking ‘‘and’’ at the end of paragraph (7),
by striking the period at the end of paragraph (8) and
inserting ‘‘, and’’, and by adding after paragraph (8) the
following new paragraph:
‘‘(9) the new energy efficient home credit deter-
mined under section 45D.’’.
(g) CLERICAL AMENDMENT.—The table of sections
for subpart D of part IV of subchapter A of chapter 1
of such Code is amended by inserting after the item relat-
151
ing to section 45C the following new item:
‘‘Sec. 45D. New energy efficient home credit.’’.
(h) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after De-
cember 31, 1998.
SEC. 604. TAX CREDIT FOR COMBINED HEAT AND POWER
SYSTEM PROPERTY.
(a) IN GENERAL.—Subpart E of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by inserting after section 48 the fol-
lowing new section:
‘‘SEC. 48A. ENERGY CREDIT.
‘‘(a) IN GENERAL.—For purposes of section 46, the
energy credit for any taxable year is the amount equal to
the energy percentage of the basis of each energy property
placed in service during such taxable year.
‘‘(b) ENERGY PERCENTAGE.—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the energy percentage is 10
percent.
‘‘(2) COMBINED
HEAT
AND
POWER
PROP-
ERTY.—The energy percentage is 8 percent in the
case of combined heat and power property.
‘‘(3) PERIOD FOR WHICH CREDIT IS ALLOWED
FOR COMBINED HEAT AND POWER PROPERTY.—In
the case of combined heat and power property, the
152
credit under subsection (a) shall be allowed only for
the period beginning on January 1, 2000, and end-
ing on December 31, 2002.
‘‘(4) TRANSITION RULES.—Rules similar to the
rules of section 48(m) (as in effect on the day before
the date of the enactment of the Revenue Reconcili-
ation Act of 1990) shall apply for purposes of this
subsection.
‘‘(c) ENERGY PROPERTY DEFINED.—
‘‘(1) IN GENERAL.—For purposes of this sub-
part, the term ‘energy property’ means any
property—
‘‘(A) which is—
‘‘(i) solar energy property,
‘‘(ii) geothermal energy property, or
‘‘(iii) combined heat and power system
property,
‘‘(B)(i) the construction, reconstruction, or
erection of which is completed by the taxpayer,
or
‘‘(ii) which is acquired by the taxpayer if
the original use of such property commences
with the taxpayer, or
153
‘‘(iii) with respect to which depreciation (or
amortization in lieu of depreciation) is allow-
able, and
‘‘(C) which meets—
‘‘(i) the performance and quality
standards (if any), and the certification re-
quirements (if any), which have been pre-
scribed by the Secretary by regulations
(after consultation with the Secretary of
Energy or the EPA Administrator, as ap-
propriate), and
‘‘(ii) are in effect at the time the
property is placed in service.
‘‘(2) EXCEPTION.—Such term shall not include
any property which is public utility property (as de-
fined in section 46(f)(5) as in effect on the day be-
fore the date of the enactment of the Revenue Rec-
onciliation Act of 1990). The preceding sentence
shall not apply to combined heat and power system
property.
‘‘(d) DEFINITIONS RELATING TO TYPES OF ENERGY
PROPERTY.—For purposes of this section—
‘‘(1) SOLAR
ENERGY
PROPERTY.—The term
‘solar energy property’ means equipment which uses
solar energy—
154
‘‘(A) to generate electricity,
‘‘(B) to heat or cool (or provide hot water
for use in) a structure, or
‘‘(C) to provide solar process heat.
‘‘(2) GEOTHERMAL
ENERGY
PROPERTY.—The
term ‘geothermal energy property’ means equipment
used to produce, distribute, or use energy derived
from a geothermal deposit (within the meaning of
section 613(e)(2)), but only, in the case of electricity
generated by geothermal power, up to (but not in-
cluding) the electrical transmission stage.
‘‘(3) COMBINED
HEAT
AND
POWER
SYSTEM
PROPERTY.—
‘‘(A) IN GENERAL.—The term ‘combined
heat and power system property’ means prop-
erty comprising a system—
‘‘(i) which uses the same energy
source for the simultaneous or sequential
generation of electrical power, mechanical
shaft power, or both, in combination with
the generation of steam or other forms of
useful thermal energy (including heating
and cooling applications),
‘‘(ii) which has an electrical capacity
of more than 50 kilowatts or a mechanical
155
energy capacity of more than 67 horse-
power or an equivalent combination of elec-
trical and mechanical energy capacities,
‘‘(iii) which produces—
‘‘(I) at least 20 percent of its
total useful energy in the form of
thermal energy, and
‘‘(II) at least 20 percent of its
total useful energy in the form of elec-
trical or mechanical power (or a com-
bination thereof), and
‘‘(iv) the energy efficiency percentage
of which exceeds 60 percent.
‘‘(B) SPECIAL RULES.—
‘‘(i) ACCOUNTING RULE.—If the com-
bined heat and power system property is
public utility property (as defined in sec-
tion 46(f)(5) as in effect on the day before
the date of the enactment of the Revenue
Reconciliation Act of 1990), the taxpayer
may claim the credit under subsection
(a)(1) only if, with respect to such prop-
erty, the taxpayer uses a normalization
method of accounting.
156
‘‘(ii) DEPRECIATION.—No credit shall
be allowed for any combined heat and
power system property unless the taxpayer
elects to treat such property for purposes
of section 168 as having a class life of not
less than 22 years.
‘‘(e) 
SPECIAL
RULES.—For 
purposes 
of 
this
section—
‘‘(1) SPECIAL RULE FOR PROPERTY FINANCED
BY SUBSIDIZED ENERGY FINANCING OR INDUSTRIAL
DEVELOPMENT BONDS.—
‘‘(A) REDUCTION OF BASIS.—For purposes
of applying the energy percentage to any prop-
erty, if such property is financed in whole or in
part by —
‘‘(i) subsidized energy financing, or
‘‘(ii) the proceeds of a private activity
bond (within the meaning of section 141)
the interest on which is exempt from tax
under section 103, the amount taken into
account as the basis of such property shall
not exceed the amount which (but for this
subparagraph) would be so taken into ac-
count multiplied by the fraction deter-
mined under subparagraph (B).
157
‘‘(B) DETERMINATION OF FRACTION.—For
purposes of subparagraph (A), the fraction de-
termined under this subparagraph is 1 reduced
by a fraction—
‘‘(i) the numerator of which is that
portion of the basis of the property which
is allocable to such financing or proceeds,
and
‘‘(ii) the denominator of which is the
basis of the property.
‘‘(C) SUBSIDIZED
ENERGY
FINANCING.—
For purposes of subparagraph (A), the term
‘subsidized energy financing’ means financing
provided under a Federal, State, or local pro-
gram a principal purpose of which is to provide
subsidized financing for projects designed to
conserve or produce energy.
‘‘(2) CERTAIN PROGRESS EXPENDITURE RULES
MADE APPLICABLE.—Rules similar to the rules of
subsections (c)(4) and (d) of section 46 (as in effect
on the day before the date of the enactment of the
Revenue Reconciliation Act of 1990) shall apply for
purposes of this section.’’.
(b) CONFORMING AMENDMENTS.—
158
(1) Section 48 of such Code is amended to read
as follows:
‘‘SEC. 48. REFORESTATION CREDIT.
‘‘(a) IN GENERAL.—For purposes of section 46, the
reforestation credit for any taxable year is 10 percent of
the portion of the amortizable basis of any qualified timber
property which was acquired during such taxable year and
which is taken into account under section 194 (after the
application of section 194(b)(1)).
‘‘(b) DEFINITIONS.—For purposes of this subpart,
the terms ‘amortizable basis’ and ‘qualified timber prop-
erty’ have the respective meanings given to such terms by
section 194.’’.
(2) Subsection (d) of section 39 of such Code
is amended by adding at the end of the following
new paragraph:
‘‘(9) NO CARRYBACK OF ENERGY CREDIT BE-
FORE EFFECTIVE DATE.—No portion of the unused
business credit for any taxable year which is attrib-
utable to the energy credit determined under section
48A, except for the credit determined with respect to
solar energy property and geothermal energy prop-
erty, may be carried back to a taxable year ending
before the date of the enactment of section 48A.’’.
159
(3) Paragraph (3) of section 50(c) of such Code
is amended by adding at the end the following flush
sentence: ‘‘In the case of the energy credit, the pre-
ceding sentence shall apply only to so much of such
credit as relates to solar energy property and geo-
thermal property (as such terms are defined in sec-
tion 48A(d)).’’.
(4) Subclause (III) of section 29(b)(3)(A)(i) of
such 
Code 
is 
amended 
by 
striking 
‘‘section
48(a)(4)(C)’’ and inserting ‘‘section 48A(e)(1)(C)’’.
(5) Subparagraph (E) of section 50(a)(2) of
such Code is amended by striking ‘‘section 48(a)(5)’’
and inserting ‘‘section 48A(e)(2)’’.
(6) Subparagraph (B) of section 168(e)(3) of
such Code is amended—
(A) in clause (vi)(I) by striking ‘‘subpara-
graph (A) of section 48(a)(3)’’ and inserting
‘‘paragraphs (1) and (2) of section 48A(d)’’,
and
(B) in the last sentence by striking ‘‘sec-
tion 
48(a)(3)’’ 
and 
inserting 
‘‘section
48A(c)(2)’’.
(7) Subparagraph (E) of section 168(e)(3) of
such Code, as amended by section 803(a), is further
amended by striking ‘‘and’’ at the end of clause (iii),
160
by striking the period at the end of clause (iv) and
inserting ‘‘, and’’, and by inserting after clause (iv)
the following new clause:
‘‘(v) any combined heat and power
system property (as defined in section
48A(d)(3)) for which a credit is allowed
under section 48A and which, but for this
clause, would have a recovery period of less
than 15 years.’’.
(8) The table contained in subparagraph (b) of
section 168(g)(3) of such Code, as amended by sec-
tion 803(b)(2), is further amended by adding at the
end the following: ‘‘(E)(v)....... 22’’.
(c) CLERICAL AMENDMENT.—The table of sections
for subpart E of part IV of subchapter A of chapter 1
of such Code is amended by striking the item relating to
section 48 and inserting the following new items:
‘‘Sec. 48. Reforestation credit.
‘‘Sec. 48A. Energy credit.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to periods after December 31,
1999, under rules similar to the rules of section 48(m)
of the Internal Revenue Code of 1986 (as in effect on the
day before the date of the enactment of the Revenue Rec-
onciliation Act of 1990).
161
SEC. 605. TAX-EXEMPT BOND FINANCING OF CERTAIN
ELECTRIC FACILITIES.
(a) PERMITTED OPEN ACCESS TRANSACTIONS NOT
A PRIVATE BUSINESS USE.—Section 141(b)(6) of the In-
ternal Revenue Code of 1986 (defining private business
use) is amended by adding at the end the following:
‘‘(C) PERMITTED
OPEN
ACCESS
TRANS-
ACTIONS NOT A PRIVATE BUSINESS USE.—
‘‘(i) IN
GENERAL.—For purposes of
this subsection, the term ‘private business
use’ shall not include a permitted open ac-
cess transaction.
‘‘(ii) 
PERMITTED
OPEN
ACCESS
TRANSACTION DEFINED.—For purposes of
clause (i), the term ‘permitted open access
transaction’ means any of the following
transactions or activities with respect to an
electric output facility (as defined in sub-
section (f)(4)(A)) owned by a governmental
unit:
‘‘(I) Providing open access trans-
mission services and ancillary services
that meet the reciprocity requirements
of Federal Energy Regulatory Com-
mission Order No. 888, or that are
ordered by the Federal Energy Regu-
162
latory Commission, or that are pro-
vided in accordance with a trans-
mission tariff of an independent sys-
tem operator approved by such Com-
mission, or that are consistent with
State-administered laws, rules, or or-
ders providing for open transmission
access.
‘‘(II) Participation in an inde-
pendent system operator agreement
(which may include transferring con-
trol of transmission facilities to an
independent system operator), in a re-
gional transmission group, or in a
power exchange agreement approved
by such Commission.
‘‘(III) Delivery on an open access
basis of electric energy sold by other
entities to end-users served by such
governmental unit’s distribution facili-
ties.
‘‘(IV) If open access service is
provided under subclause (I) or (III),
the sale of electric output of electric
output facilities on terms other than
163
those available to the general public if
such sale is to an on-system purchaser
or is an existing off-system sale.
‘‘(V) Such other transactions or
activities as may be provided in regu-
lations prescribed by the Secretary.
‘‘(iii) 
DEFINITIONS; 
SPECIAL
RULES.—For 
purposes 
of 
this
subparagraph—
‘‘(I) ON-SYSTEM
PURCHASER.—
The 
term 
‘on-system 
purchaser’
means a person who purchases electric
energy from a governmental unit and
whose electric facilities or equipment
are 
directly 
connected 
with
transmission or distribution facilities
that are owned by such governmental
unit.
‘‘(II) 
OFF-SYSTEM
PUR-
CHASER.—The term ‘off-system pur-
chaser’ means a purchaser of electric
energy from a governmental unit
other than an on-system purchaser.
‘‘(III) 
EXISTING
OFF-SYSTEM
SALE.—The term ‘existing off-system
164
sale’ means a sale of electric energy to
a person that was an off-system pur-
chaser of electric energy in the base
year, but not in excess of the kilowatt
hours purchased by such person in
such year.
‘‘(IV) BASE
YEAR.—The term
‘base year’ means 1998 (or, at the
election of such unit, 1996 or 1997).
‘‘(V) JOINT ACTION AGENCIES.—
A member of a joint action agency
that is entitled to make a sale de-
scribed in clause (ii)(IV) in a year
may transfer that entitlement to the
joint action agency in accordance with
rules of the Secretary.
‘‘(VI) GOVERNMENT-OWNED FA-
CILITY.—An electric output facility
(as defined in subsection (f)(4)(A))
shall be treated as owned by a govern-
mental unit if it is owned or leased by
such governmental unit or if such gov-
ernmental unit has capacity rights
therein acquired before July 9, 1996,
for the purposes of serving one or
165
more customers to which such govern-
mental unit had a service obligation
on such date under State law or a re-
quirements contract.’’.
(b) ELECTION TO TERMINATE TAX-EXEMPT FI-
NANCING.—Section 141 of the Internal Revenue Code of
1986 (relating to private activity bond; qualified bond) is
amended by adding at the end the following:
‘‘(f) ELECTION TO TERMINATE TAX-EXEMPT BOND
FINANCING
FOR CERTAIN ELECTRIC OUTPUT FACILI-
TIES.—
‘‘(1) IN GENERAL.—An issuer may make an ir-
revocable election under this paragraph to terminate
certain tax-exempt financing for electric output fa-
cilities. If the issuer makes such election, then—
‘‘(A) except as provided in paragraph (2),
no bond the interest on which is exempt from
tax under section 103 may be issued on or after
the date of such election with respect to an elec-
tric output facility; and
‘‘(B) notwithstanding paragraph (1) or (2)
of subsection (a) or paragraph (5) of subsection
(b), with respect to an electric output facility no
bond that was issued before the date of enact-
ment of this subsection, the interest on which
166
was exempt from tax on such date, shall be
treated as a private activity bond, for so long
as such facility continues to be owned by a gov-
ernmental unit.
‘‘(2) EXCEPTIONS.—An election under para-
graph (1) does not apply to—
‘‘(A) any qualified bond (as defined in sub-
section (e)),
‘‘(B) any eligible refunding bond,
‘‘(C) any bond issued to finance a quali-
fying T&D facility, or
‘‘(D) any bond issued to finance equipment
necessary to meet Federal or State environ-
mental requirements applicable to, or repair of,
electric output facilities in service on the date
of enactment of this subsection. Repairs or
equipment may not increase by more than a de
minimis degree the capacity of the facility be-
yond its original design.
‘‘(3) FORM AND EFFECT OF ELECTIONS.—An
election under paragraph (1) shall be made in such
a manner as the Secretary prescribes and shall be
binding on any successor in interest to the electing
issuer.