I
105TH CONGRESS
1ST SESSION
H. R. 718
To privatize certain Federal power generation and transmission assets, and
for other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 12, 1997
Mr. FOLEY (for himself, Mr. FRANKS of New Jersey, Mr. HOEKSTRA, Mr.
KLUG, Mr. MEEHAN, Mr. ROHRABACHER, Mr. SCARBOROUGH, and Mr.
SOLOMON) introduced the following bill; which was referred to the Com-
mittee on Resources, and in addition to the Committee on Commerce, for
a period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the com-
mittee concerned
A BILL
To privatize certain Federal power generation and
transmission assets, 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 ‘‘Federal Power Asset
Privatization Act of 1997’’.
SEC. 2. FINDINGS.
The Congress finds that:
(1) the Federal Power Marketing Administra-
tions, over the years, have served to help bring elec-
tricity to many areas in the Nation;
(2) they have done so with the investment of
the American taxpayer;
(3) the necessity of federally owned power gen-
eration and transmission facilities has passed and
halting this practice is in the best national interest
of the United States;
(4) in fairness to the longtime consumers of
Federal Power Marketing Administrations, any proc-
ess of sale should be open to them;
(5) the taxpayers, through investing in the con-
struction and operation, have established equity in
the facilities; and
(6) this equity entitles the American taxpayer
to expect the highest possible return in the sale
process.
SEC. 3. SALE OF ASSETS.
(a) SALE
OF ASSETS.—The Secretary of Energy
(hereinafter referred to as ‘‘the Secretary’’) is authorized
and directed to take such steps as necessary to sell all
electric power generation facilities and transmission facili-
ties, that are currently owned and operated by Federal
departments and agencies under the supervision of, or co-
ordination with, the Federal Power Marketing Administra-
tions. No foreign person or corporation may purchase any
such facilities; such facilities may be sold only to a United
States citizen or to a corporation or partnership organized
under the laws of a State. After such sales are completed
the Secretary shall terminate the operations of the Federal
Power Marketing Administrations. The heads of other af-
fected Federal departments and agencies shall assist the
Secretary of Energy in implementing the sales authorized
by this section.
(b) PRICE; STRUCTURE OF SALE.—
(1) PRICE.—The Secretary shall obtain the
highest possible price for such facilities. In determin-
ing the highest possible price, the value of future tax
revenues shall be included.
(2) RETENTION
OF
FINANCIAL
ADVISOR.—In
order to conduct the sales authorized by this section
in such manner as will produce the highest possible
price for the facilities to be sold consistent with this
Act, within 30 days of enactment of this section, the
Secretary shall, through a competitive bidding proc-
ess, retain an experienced private sector firm to
serve as financial advisor to the Secretary with re-
spect to such sales.
(3) FINANCIAL ADVISOR’S REPORT.—Within 90
days of being retained by the Secretary, the financial
advisor shall provide to the Secretary a report con-
taining—
(A) a description of those assets described
in subsection (a) which, in the opinion of the fi-
nancial advisor, can be successfully transferred
to private sector ownership or operation;
(B) the value of each such asset, calculated
on the basis of the valuation method or meth-
ods which the financial advisor deems most ap-
propriate to a particular asset;
(C) the appropriate alternative trans-
actional methods for transferring each such
asset to private sector ownership or operation;
(D) the amount of proceeds which the fi-
nancial advisor estimates would be paid to the
United States Government as a result of such
transaction, including the present value of fu-
ture revenue from taxes and any other future
payments to be made to the United States Gov-
ernment; and
(E) an estimate of the average market rate
for wholesale electric power sales within each
region served by a Federal Power Marketing
Administration.
(c) TIME OF SALE.—Sales of facilities under this sec-
tion shall be conducted in accordance with the time of sale
schedule set forth in section 4. At least one year before
the date of any sale specified in such schedule, the Sec-
retary, in consultation with the Secretary of the Army and
the Secretary of the Interior, and based on the rec-
ommendations of the financial advisor, shall select the fa-
cilities or groups of facilities to be sold and establish the
terms and conditions of the sale.
(d) FORMER EMPLOYEES OF PMAS.—It is the sense
of the Congress that the purchaser of any such facilities
should offer to employ, where possible, former employees
of the Federal Power Marketing Administrations in con-
nection with the operation of the facilities following their
purchase.
(e) PROCEEDS.—The Secretary of Energy shall de-
posit sale proceeds in the Treasury of the United States
to the credit of miscellaneous receipts.
(f) PREPARATION.—The Secretary of Energy is au-
thorized to use funds appropriated to the Department of
Energy for the Federal Power Marketing Administrations
and funds otherwise appropriated to other Federal agen-
cies for power generation and related activities in order
to prepare these assets for sale and conveyance. Such
preparation shall provide sufficient title to ensure the ben-
eficial use, enjoyment, and occupancy to the purchasers
of the assets to be sold and shall include identification of
all associated laws and regulations to be amended for the
purpose of these sales. The Secretary of Energy shall un-
dertake a study of the effect of sales of facilities under
this Act on existing contracts for the sale of electric power
generated at such facilities.
(g) REPORTING OF SALES.—Not later than one year
after the sale of the assets of each Federal Power Market-
ing Administration in accordance with this Act, the Sec-
retary of Energy shall—
(1) complete the business of, and close out,
such administration; and
(2) prepare and submit to Congress a report
documenting the sales.
(h) TREATMENT OF SALES FOR PURPOSES OF CER-
TAIN LAWS.—The sales of assets under this Act shall not
be considered a disposal of Federal surplus property under
the following provisions of law:
(1) Section 203 of the Federal Property and
Administrative Services Act of 1949 (40 U.S.C.
484).
(2) Section 13 of the Surplus Property Act of
1944 (50 U.S.C. App. 1622).
SEC. 4. TIME OF SALES.
(a) SCHEDULE.—The Secretary of Energy shall com-
plete the sale of the electric power generation and trans-
mission assets referred to in section 3 in accordance with
the following schedule:
Power Administration
Sale Completion Date
Southeastern
Before September 30, 1999
Southwestern
Before September 30, 2000
Western Area
Before September 30, 2001
Bonneville
Before September 30, 2002
(b) UNEXPENDED BALANCES.—Following the sale of
the assets of each of the Federal Power Marketing Admin-
istrations and their associated power generation facilities,
the Secretary of Energy shall return the unexpended bal-
ances of funds appropriated for that administration to the
Treasury of the United States.
SEC. 5. RATE STABILIZATION FOR AFFECTED CONSUMERS.
So that the affected consumers of each Federal
Power Marketing Administration are not impacted by se-
vere rate increases, each purchaser of electric power gen-
eration facilities providing electric power to customers
within any region shall be required, as part of the agree-
ment to purchase such facilities, to insure that the price
at which electric power is sold to such consumers does not
increase above the baseline price at a rate greater than
10 percent annually. For purposes of this section, the term
‘‘baseline price’’ means the price for the sale of electric
power to a consumer that is in effect on the date of the
sale of the facility. The preceding sentence shall cease to
apply when the price at which electric power is sold to
a consumer is at least equal to the average market rate
for wholesale electric power sales within the region con-
cerned, as determined by the Financial Advisor.
SEC. 6. LICENSING OF PROJECTS TO PRESERVE CURRENT
OPERATING CONDITIONS.
(a) ORIGINAL LICENSE.—Simultaneously with the
sale of hydroelectric generation facility under this Act, the
Federal Energy Regulatory Commission shall issue an
original license under part 1 of the Federal Power Act
(16 U.S.C. 791a–823b) to the purchaser for the construc-
tion, operation, and maintenance of such facility. Such li-
cense shall expire on the date 10 years after the date of
the sale facility and shall contain standard terms and con-
ditions for hydroelectric power licenses issued under part
1 of such Act for facilities installed at Federal water
projects, together with such additional terms and condi-
tions as the Commission deems necessary, in consultation
with the department or agency which operates such water
project, to further the project purposes and insure that
the project will continue operations in the same manner
and subject to the same procedures, contracts, and other
requirements as were applicable prior to the sale. The
Commission shall publish such license terms and condi-
tions for each facility to be sold under this Act as promptly
as practicable after the date of the enactment of this Act
but not later than one year prior to the date established
for the sale of the facility.
(b) LICENSE
REQUIRED.—Notwithstanding any
other provision of law, the Federal Energy Regulatory
Commission shall have jursidiction under part 1 of the
Federal Power Act over any hydroelectric generation facil-
ity sold under this Act.
SEC. 7. ENABLING FEDERAL STUDIES.
Section 505 of the Energy and Water Development
Appropriations Act of 1993 (Public Law 102–377) is
hereby repealed.
SEC. 8. DEFINITION OF POWER GENERATION FACILITY.
For purposes of this Act, the term ‘‘power generation
facility’’ means a facility used for the generation of electric
energy. If any portion of a structure or other facility is
used for flood control, water supply or other purposes in
addition to the generation of electric energy, such term
refers only to that portion of the structure or facility used
exclusively for the generation of electric energy, including
turbines, generators, controls, substations, and primary
lines used for transmitting electric energy therefrom to the
point of juncture with the interconnected primary trans-
mission system. Such term shall not include any portion
of a facility used for navigation, flood control, irrigation,
water supply, or recreation.
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