means, for any calendar year, the amount (if any) 
by which the potential rate for electric energy pro-
vided by that provider to that sector exceeds the cur-
rent rate for that sector, multiplied by that sector’s 
total consumption (in kilowatt-hours) during that 
calendar year. 
(2) CURRENT RATE.—For any provider of retail 
electric services in a State, for any consumer sector 
in the State, the term ‘‘current rate’’ means, for the 
12 months following the effective date of this Act for 
that sector in that State, the average kilowatt-hour 
rate paid by customers of the provider in that con-
sumer sector in that State, as calculated by the pro-
vider and recalculated annually. 
(3) POTENTIAL RATE.—
(A) GENERAL RULE.—For any provider of 
retail electric services in a State, for any con-
sumer sector in the State, the term ‘‘potential 
rate’’ means, for each calendar year following 
the effective date of this act for that sector in 
that State, the average kilowatt-hour rate paid 
by the provider’s customers in that sector dur-
ing the 12-month period preceding the date on 
which retail electric service choice for customers 
in that sector was established, adjusted for in-
flation. The adjustment for inflation shall be 
made using a methodology to be determined by 
the Secretary of Energy. The Secretary of En-
ergy shall recalculate the potential rate annu-
ally to adjust it for inflation. 
(B) SPECIAL RULES.— For all sectors not 
serviced by the provider during any period, the 
average kilowatt-hour rate for that sector shall 
be estimated or measured by the Secretary of 
Energy. In any case where retail choice in a 
State or sector did not all occur on one effective 
date but was phased-in over time, the Secretary 
of Energy shall establish regulations to fairly 
establish the potential rate. In any cases where, 
for the 12-month period preceding the date on 
which retail electric service choice for customers 
in that sector was established, a provider served 
a sector in the State but did not serve it for the 
full period, the Secretary of Energy shall estab-
lish regulations to fairly establish the potential 
rate. 
SEC. 3. USE OF CONTRIBUTIONS FOR ENVIRONMENTAL 
PRIORITIES. 
(a) 
NATIONAL
ENVIRONMENTAL
PRIORITIES 
BOARD.—The Administrator of the Environmental Pro-
tection Agency (hereinafter in this section referred to as 
the ‘‘Administrator’’) shall establish a National Environ-
mental Priorities Board to carry out the functions and re-
sponsibilities specified in this section. The Board shall be 
composed of 3 persons who are officers or employees of 
the United States, and 4 State commissioners nominated 
by the national organization of the State commissions and 
appointed by the Administrator. The Administrator shall 
appoint one member of the Board to serve as Chairman. 
(b) RULES.—Within 180 days after the enactment of 
this Act, the Administrator shall promulgate a final rule 
containing the rules and procedures of the Board, includ-
ing the rules and procedures for selecting a non-Federal 
fiscal agent under subsection (e). The Administrator shall 
have oversight responsibilities over the Board. 
(c) ENVIRONMENTAL PRIORITIES PROGRAM.—
(1) REGULATIONS.—Within 90 days after the 
promulgation of the Administrator’s rules under 
subsection (b), the Board shall institute a pro-
ceeding to establish regulations governing creation 
and administration of an Environmental Priorities 
Program. Such regulations shall include criteria and 
methods of selecting State projects to receive sup-
port under the Program. Such support may include 
direct loans, loan guarantees, grants, capitalization
grants for State revolving funds, and other assist-
ance. The State projects may include—
(A) lowering borrowing costs for municipal 
and regional governments constructing waste-
water treatment plants; 
(B) increasing the use of filter strips and 
riparian buffers in protecting rivers and 
streams; 
(C) mitigating the deleterious effect of 
electricity production on air quality; 
(D) supporting the preservation of open 
space for resource conservation, wildlife protec-
tion, or recreation; and 
(E) such other projects furthering national 
environmental priorities as may be established 
by the Board. 
(2) AGENT.—The Board shall enter into ar-
rangements with a non-Federal fiscal agent who 
shall be authorized to receive the contributions made 
under section 2(b) and to disburse such contribu-
tions as provided in subsection (d). 
(3) PROGRAMS.—Any State in which retail elec-
tric service choice has been established for any con-
sumer sector may establish one or more public pur-
pose programs and apply for matching funding
under this section for projects to be funded under 
such program. A participating State may use match-
ing funds received under this section only to support 
one or more eligible environmental priorities pro-
grams meeting the selection criteria established 
under paragraph (1). The Board shall regularly 
audit the expenditures of matching funds received by 
a participating State under this section. 
(4) STATE OPTION.—At no time shall a State 
be required, pursuant to this section, to participate 
in the Environmental Priorities Program, nor may a 
State be required by the Board to fund a particular 
project. 
(d) FUND FOR ENVIRONMENTAL PRIORITIES.—
(1) DISTRIBUTION.—The fiscal agent shall dis-
tribute contributions received by the fiscal agent 
under section 2(b) to States (or entities designated 
by the States) under this subsection in accordance 
with the criteria established by the Board under sub-
section (c) to carry out eligible projects under envi-
ronmental priorities programs established by the 
States. For each calendar year after the year 2002, 
the Board shall solicit applications from States for 
matching funds to carry out eligible environmental 
priorities programs. The applications for assistance
during any calendar year must be received by the 
Board before the commencement of such year. In its 
application, the State shall certify that the moneys 
will be used for one or more eligible public purpose 
programs and shall specify the amount of State sup-
port which is projected for the coming calendar year 
for the programs concerned. 
(2) CALCULATION.—Upon receipt of all State 
requests for matching funds submitted pursuant to 
paragraph (1) for any calendar year, the Board shall 
calculate the funds necessary to match the level of 
projected States funds for eligible environmental pri-
orities programs for that calendar year. 
(3) REDUCTION.—Following the calculation of 
the amount of matching funds required under para-
graph (2) for all States requesting funds for any cal-
endar year, the Board shall communicate that 
amount to the fiscal agent. Expenditures by the fis-
cal agent for any calendar year may not exceed the 
total balance. To the extent the matching funds re-
quested by all such States for a calendar year exceed 
the total amount received by the fiscal agent during 
the prior calendar year and available to the fiscal 
agent at the commencement of the calendar year 
concerned, the matching funds distributed to each