I
105TH CONGRESS
1ST SESSION
H. R. 1230
To give all American electricity consumers the right to choose among competi-
tive providers of electricity in order to secure lower electricity rates,
higher quality services, and a more robust United States economy, and
for other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 8, 1997
Mr. DELAY introduced the following bill; which was referred to the Committee
on Commerce
A BILL
To give all American electricity consumers the right to choose
among competitive providers of electricity in order to
secure lower electricity rates, higher quality services, and
a more robust United States economy, and for other
purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Consumers Electric Power Act of 1997’’.
(b) TABLE OF CONTENTS.—The table of Contents is
as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Consumer choice.
Sec. 4. State authority.
Sec. 5. Reliable and nondiscriminatory operation of transmission and distribu-
tion systems.
Sec. 6. Federal transmission tariff reform.
Sec. 7. Application of Public Utility Holding Company Act and Public Utility
Regulatory Policies Act.
Sec. 8. Transition planning.
Sec. 9. Generating sources free to serve consumers and resellers.
Sec. 10. Applicability.
Sec. 11. Antitrust laws.
Sec. 12. Judicial review.
Sec. 13. Definitions.
Sec. 14. Federal power act.
Sec. 15. Effective date; savings provisions.
Sec. 16. Evaluation of effectiveness.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) Low-cost and reliable electric service is inte-
gral to the vitality of the United States economy, the
competitiveness of domestically made goods, and the
quality of life of all Americans.
(2) Americans consume electricity worth more
than $200,000,000,000 a year, approximately half of
which is for residential purposes, making the month-
ly electric bill one of the largest expenses for most
households.
(3) The cost of electric service has a direct ef-
fect on the price, profitability, and competitiveness
of goods and services produced in the United States.
(4) Lower priced electric service can be realized
by giving all American consumers the right to choose
among suppliers of electric service in a competitive
market, while maintaining, if not improving the reli-
ability of service those consumers have come to ex-
pect.
(5) The development of vibrant competition in
the retail market for electric energy will—
(A) reduce the costs of electric service to
even the smallest consumers of electricity;
(B) reduce the costs to consumers benefit-
ing from today’s lowest regulated rates;
(C) create jobs as American businesses are
able to lower costs and better compete in world
markets and against foreign competition here at
home;
(D) result in a more efficient utility indus-
try; and
(E) reduce environmental impacts.
(6) Monopoly cost-of-service regulation of elec-
tricity has failed. It has stifled competition, resulting
in high electric service rates for many consumers
and few incentives for technological innovation and
good customer service by utilities.
(7) High electric service rates are regressive,
placing a disproportionate burden on poor rate-
payers.
(8) High electric service rates divert consumer
dollars that would otherwise be spent for purchasing
necessary goods and services, savings, or invest-
ments that benefit the economy as a whole.
(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 level. Only
Congress can ensure that a competitive retail market
is established throughout the United States on an
expeditious but orderly basis.
(10) Regional and State variations require that
State regulatory authorities should receive deference
in certain decisions relating to electric service.
(11) Consumers of all utilities, whether served
by regulated or nonregulated electric utilities (such
as municipally owned utilities or rural cooperatives),
should have the same rights to receive the benefits
of competition and consumer choice.
(12) Consumer choice is needed to produce re-
newable energy development that is market driven
fulfills customer desires for clean energy supplies
and encourages competition among different renew-
able technologies. Subjecting renewable energy tech-
nologies to the discipline of the free market will bet-
ter allocate renewable resources and speed the com-
mercialization of renewable technologies than tradi-
tional centralized government resource planning.
SEC. 3. CONSUMER CHOICE.
(a) FREEDOM OF CHOICE.—(1) Each person has the
right to purchase electric service from any electric service
provider, notwithstanding any other law.
(2) A Federal, State, or local authority may not deny
or limit any person’s right to purchase such energy from
an electric service provider at a price and on terms and
conditions freely arrived at.
(3) A Federal, State, or local authority may not dis-
criminate, or authorize the discrimination, against any
person who exercises that person’s right to purchase such
energy, subject to subsection (b).
(b) BAN ON EXIT FEES, SUBSIDIES, OR OTHER PEN-
ALTIES ON EXERCISING RIGHT OF CHOICE.—A Federal,
State, or local authority may not grant any preference or
protection from competition to any electric service pro-
vider. For purposes of this subsection, the terms ‘‘pref-
erence’’ and ‘‘protection from competition’’ include—
(1) any direct or indirect subsidy; and
(2) any exit fee or other levy imposed in con-
nection with any purchaser who terminates a pur-
chasing relationship with any seller, other than—
(A) a charge levied pursuant to provisions
of a service contract that were specifically and
freely negotiated and agreed upon by both par-
ties (or generally applicable contract law) to
such contract; or
(B) a nondiscriminatory access charge for
funding service continuations under section 4(b)
(relating to lifeline source).
(c) EFFECTIVE DATE.—The provisions of this section
shall take effect on January 1, 1999.
(d) ALTERNATIVE CHOICES.—Nothing in this Act
shall be construed to prohibit or otherwise restrict any
electric energy purchaser from having that electric energy
delivered through arrangements of the purchaser’s choice.
Any such alternative shall be consistent with regional or
national reliability standards.
SEC. 4. STATE AUTHORITY.
(a) LOCAL DISTRIBUTION SERVICE.—Nothing in this
Act shall affect the authority and responsibility of any
State or local government concerning the obligation to
connect consumers to the local distribution system and to
ensure the adequate maintenance, safety, and reliability
of such local distribution system.
(b) LIFELINE SERVICE.—The authority under sub-
section (a) includes the authority to provide for the con-
tinuation of service to residential customers unable to af-
ford electric energy service, including the authority to es-
tablish nondiscriminatory local distribution access charges
on any power delivered sufficient to cover the cost of such
continuation.
(c) CERTIFICATION OF ELECTRIC SERVICE PROVID-
ERS.—No State may establish discriminatory require-
ments or other obligations for certification of electric serv-
ice providers within that State. Nothing in this subsection
shall affect the ability of a State to impose requirements
necessary to preserve universal service, protect the public
safety and welfare, ensure the continued reliability of the
distribution system, and safeguard the rights of consum-
ers.
(d) IF CONSUMERS MAKE NO SELECTION OF AN
ELECTRIC SERVICE PROVIDER.—In the case of a retail
customer who fails to select an electric service provider,
the State shall establish rules under which the customer
shall be initially assigned on a nondiscriminatory basis to
one of a variety of electric service providers that have filed
service terms with an appropriate State authority and met
any requirements described in subsection (c).
(e) ASSURANCE OF APPROPRIATE RATES FOR TRAN-
SITION TO COMPETITION.—In order to ensure uninter-
rupted local distribution service, if nondiscriminatory
unbundled rates are not in effect by the effective date of
this section, interim rates prescribed in the transition plan
under section 7 shall apply for any local distribution serv-
ice until such time as State rates take effect.
(f) ADDITIONAL
STATE
AUTHORITY.—State and
local governments shall retain authority over any specific
matter not otherwise addressed in this Act, including—
(1) the continuation of universal service;
(2) conservation programs and initiatives;
(3) consumer choice with regard to renewable
energy;
(4) research and development programs and ini-
tiatives; and
(5) any other matter deemed appropriate by a
State or local government.
SEC. 5. RELIABLE AND NONDISCRIMINATORY OPERATION
OF TRANSMISSION AND DISTRIBUTION SYS-
TEMS.
(a) OPERATION OF TRANSMISSION AND DISTRIBU-
TION SYSTEMS.—The Nation’s transmission and distribu-
tion systems shall be operated to achieve the following ob-
jectives:
(1) Organizational separation within remaining
vertically integrated firms, between individuals, as-
sets, and systems dedicated to the operation of
transmission and distribution systems and those in-
volved in the provision of electric service. No entity
or organization responsible for operation of a trans-
mission or distribution system shall operate the mar-
ket for the purchase or sale of power nor be involved
in the purchase or sale of power except as needed in
paragraph (5)(B), or for such entity’s or organiza-
tion’s own use.
(2) Nondiscriminatory access to the trans-
mission and distribution systems whether for whole-
sale or retail sale of electric service.
(3) The prevention of preferential treatment (or
protection from competition) by system operators to-
ward affiliated service providers.
(4) Access to information on a nondiscrim-
inatory basis concerning—
(A) availability of transmission and dis-
tribution service;
(B) operating conditions on transmission
and distribution systems; and
(C) rates, terms, and conditions of any ar-
rangement between, or information provided
from, the transmission and distribution system
operators and their affiliated electric service
provider, if any.
(5) Ensuring that the transmission and dis-
tribution system operator—
(A) receives adequate and timely informa-
tion from electric service providers regarding
physical flows and physical transactions on the
transmission and distribution system;
(B) has access to assets and resources it
needs to maintain system balance in the event
of unanticipated events or the failure of an elec-
tric service provider to perform; and
(C) has authority to implement Commis-
sion approved sanctions and penalties for the
failure of electric service providers to conform
to the tariffs governing access to the trans-
mission and distribution system.
(b) COMMISSION AUTHORITY.—In order to ensure
consumers’ ability to access competing electric service pro-
viders, the Commission shall have the authority, by rule,
order, or decision, to provide for nondiscriminatory prices,
terms and conditions to transmission and distribution
services. With respect to distribution services, the Com-
mission shall defer to State authorities with respect to the
matter reserved to the States in section 4. The Commis-
sion shall also have the authority, by rule, order, or deci-
sion, to take the actions necessary to fulfill the obligations
imposed on it by this Act.
SEC. 6. FEDERAL TRANSMISSION TARIFF REFORM.
(a) INITIAL TARIFF REFORM.—By September 30,
1999, the Commission shall promulgate and make effec-
tive, rules which provide for nondiscriminatory access to
transmission and distribution service as provided in this
Act and which eliminate the barriers to competitive elec-
tric service presented by existing contracts and arrange-
ments—
(1) between and among transmitting utilities
governing the pricing, terms, and conditions of ac-
cess to transmission and distribution facilities; and
(2) between transmitting utilities and any other
entities (directly connected to such transmitting util-
ity’s transmission system) providing for the sale of
power by such transmitting utilities to any other en-
tities.
(b) CONTINUING REFORM.—The Commission shall
by rule, order, or decision ensure that the existing electric
utilities are not permitted to exercise market power in the
sale of electric service. The Commission shall initiate pro-
ceedings following enactment, to be concluded on or before
September 30, 1999, in order to determine the extent to
which existing utilities have market power in the sale of
electric services; and to consider and determine the means
for mitigating such market power. In making and enforc-
ing such determinations, the Commission shall have the
authority to—
(1) restrict the ability of the electric utility, or
its affiliates, to sell such services at market-deter-
mined rates, provided that such restrictions shall be
limited to those areas and services for which the
electric utility has a franchise; and
(2) order the divestiture of assets and functions
which are the source of market power, to the extent
reasonably necessary to mitigate such market power,
provided that such divestiture may include a variety
of alternatives including outright sale, lease, or out-
put contracts.
SEC. 7. APPLICATION OF PUBLIC UTILITY HOLDING COM-
PANY 
ACT 
AND 
PUBLIC 
UTILITY 
REGU-
LATORY POLICIES ACT .
(a) PUHCA.—The Public Utility Holding Company
Act of 1935 shall cease to apply to an electric utility sub-
ject to this Act or to any holding company (as defined