I
106TH CONGRESS
1ST SESSION
H. R. 1587
To encourage States to establish competitive retail markets for electricity,
to clarify the roles of the Federal Government and the States in retail
electricity markets, to remove certain Federal barriers to competition,
and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 27, 1999
Mr. STEARNS introduced the following bill; which was referred to the Com-
mittee on Commerce, and in addition to the Committees on Resources,
and Transportation and Infrastructure, for a period to be subsequently
determined by the Speaker, in each case for consideration of such provi-
sions as fall within the jurisdiction of the committee concerned
A BILL
To encourage States to establish competitive retail markets
for electricity, to clarify the roles of the Federal Govern-
ment and the States in retail electricity markets, to
remove certain Federal barriers to competition, 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.
This Act may be cited as the ‘‘Electric Energy Em-
powerment Act of 1999’’.
SEC. 2. COMPETITIVE RETAIL ELECTRICITY MARKETS.
(a) PURPOSE.—It is the purpose of this section to
ensure that the States have the authority to order electric
utilities subject to their jurisdiction to provide trans-
mission and local distribution services to retail customers
within their States, and to encourage States to proceed
expeditiously to enact such legislation as may be necessary
to establish competitive retail electricity markets.
(b) STATE AUTHORITY TO ORDER RETAIL WHEEL-
ING.—(1) Section 201 of the Federal Power Act (16
U.S.C. 824) is amended by adding the following new sub-
section at the end thereof:
‘‘(h) STATE AUTHORITY TO ORDER RETAIL WHEEL-
ING.—(1) Subject to the conditions set forth in paragraph
(2), notwithstanding any other provision of law, the States
have the authority to order electric utilities subject to their
jurisdiction to provide nondiscriminatory open access
through functionally unbundled transmission and local
distribution services, as defined by the Commission by
rule, to retail customers within their borders.
‘‘(2) CONDITIONS.—
‘‘(A) RECIPROCITY CONDITION.—A State shall
order an electric utility subject to its jurisdiction to
provide nondiscriminatory open access through func-
tionally unbundled transmission and local distribu-
tion services to retail customers within its borders
only on the condition that such services need only be
provided to transmit electricity produced in States
which have ordered their electric utilities to provide
nondiscriminatory open access through functionally
unbundled transmission and local distribution serv-
ices to retail customers within their borders.
‘‘(B) NONREGULATED UTILITIES.—If, as of the
date of the enactment of this paragraph, a State has
not established ratemaking authority with respect to
an electric utility in the State, the State may not—
‘‘(i) prohibit the utility from selling
electric energy at retail in interstate com-
merce in any other State; or
‘‘(ii) establish any disincentives to the
development in the State of effective com-
petition in the market for selling electric
energy at retail.
Any such utility may sell electric energy at re-
tail in interstate commerce in another State
only if the utility provides nondiscriminatory
open 
access 
(including 
the 
functional
unbundling of services) to the local distribution
facilities of the utility and to any transmission
facilities of the utility that are not subject to
the jurisdiction of the Federal Energy Regu-
latory Commission under sections 205 and 206
of this Act.’’.
(c) BYPASS.—(1) Notwithstanding any provision of
this Act or any other law, a State or a State regulatory
authority (in carrying out its authority to regulate facili-
ties used for the local distribution of electric energy or
for the provision of local distribution service) may require,
as a condition for the purchase by any person or munici-
pality of retail electric energy services, the payment of a
charge deemed necessary by the State or State regulatory
authority for any of the following:
(A) To recover costs incurred by an electric
utility that become unrecoverable due to the avail-
ability of retail electric service choice.
(B) To ensure that adequate electric service is
available to all customers served by the retail dis-
tribution system concerned.
(C) To ensure and enhance the reliability of re-
tail electric service.
(D) To fund assistance to low-income cus-
tomers.
(E) To encourage environmental, renewable en-
ergy, energy efficiency, conservation programs, or
any combination of such programs.
(F) To provide for retraining of electric employ-
ees.
(G) To provide payment of all reasonable costs
associated with Federal and State requirements re-
garding the decommissioning of nuclear generating
units.
(H) Any combination of the purposes described
in subparagraphs (A) through (G).
(2) For purposes of this subsection, the term ‘‘local
distribution service’’ includes the receipt of electric energy
by an end user whether or not such receipt requires the
use of local distribution facilities.
SEC. 3. CLARIFICATION OF JURISDICTION.
(a) DECLARATION OF POLICY.—Section 201(a) of
the Federal Power Act (16 U.S.C. 824(a)) is amended as
follows:
(1) By inserting after ‘‘transmission of electric
energy in interstate commerce’’ the following: ‘‘, in-
cluding the unbundled transmission of electric en-
ergy sold at retail,’’.
(2) By striking ‘‘such Federal regulation, how-
ever, to extend only to those matters which are not
subject to regulation by the States.’’ and inserting
the following: ‘‘such Federal regulation shall not ex-
tend, however, to the bundled retail sale of electric
energy or to unbundled local distribution service
which are subject to regulation by the States.’’.
(b) APPLICATION OF PART.—Section 201(b) of the
Federal Power Act (16 U.S.C. 824(b)) is amended as fol-
lows:
(1) By inserting after ‘‘the transmission of elec-
tric energy in interstate commerce’’ the following: ‘‘,
including the unbundled transmission of electric en-
ergy sold at retail,’’.
(2) By adding at the end the following:
‘‘(3) The Commission shall, by rule or order, after
giving notice to and consulting with the appropriate State
regulatory authorities, determine which facilities used for
the transmission and delivery of electric energy are used
for transmission in interstate commerce subject to the ju-
risdiction of the Commission, under this part, and which
are used for local distribution subject to State jurisdic-
tion.’’.
(c) DEFINITION OF INTERSTATE COMMERCE.—Sec-
tion 201(c) of the Federal Power Act (16 U.S.C. 824(c))
is amended by inserting after ‘‘outside thereof’’ the fol-
lowing: ‘‘(including consumption in a foreign country).’’.
(d) DEFINITION
OF TYPES
OF SALES.—Section
201(d) of the Federal Power Act (16 U.S.C. 824(d)) is
amended as follows:
(1) By inserting ‘‘(1)’’ after ‘‘(d)’’.
(2) By adding at the end the following:
‘‘(2) For purposes of this section, the term ‘bundled
retail sale of electric energy’ means the sale of electric en-
ergy to an ultimate consumer in which the generation and
transmission service are not sold separately.
‘‘(3) The term ‘unbundled local distribution service’
means the delivery of electric energy to an ultimate con-
sumer if—
‘‘(A) the electric energy and the service of deliv-
ering it are sold separately, and
‘‘(B) the delivery uses facilities for local dis-
tribution as determined by the Commission under
subsection (b)(3).
‘‘(4) The term ‘unbundled transmission of electric en-
ergy sold at retail’ means the transmission of electric en-
ergy to an ultimate consumer if—
‘‘(A) the electric energy and the service of
transmitting it are sold separately, and
‘‘(B) the transmission uses facilities for trans-
mission in interstate commerce as determined by the
Commission under subsection (b)(3).’’.
(either alone or pursuant to an arrangement or un-
derstanding with one or more other persons) so as
to make it necessary for the protection of consumers
with respect to rates that such person be subject to
the obligations, duties, and liabilities imposed in this
title upon subsidiary companies of holding compa-
nies.
(8) ‘‘Holding company system’’ means a hold-
ing company together with its subsidiary companies.
(9) ‘‘Associate company’’ of a company means
any company in the same holding company system
with such company.
(10) ‘‘Affiliate’’ of a company means any com-
pany 5 percent or more of whose outstanding voting
securities are owned, controlled, or held with power
to vote, directly or indirectly, by such company.
(11) ‘‘Voting security’’ means any security pres-
ently entitling the owner or holder thereof to vote in
the direction or management of the affairs of a com-
pany.
(12) ‘‘Commission’’ means the Federal Energy
Regulatory Commission.
(13) ‘‘State Commission’’ means any commis-
sion, board, agency, or officer, by whatever name
designated, of a State, municipality, or other polit-