S 2886 PCS

To provide for retail competition for the sale of electric power, to authorize States to recover transition costs, and for other purposes.

July 18, 2000

Mr. GRAMM (for himself and Mr. SCHUMER) introduced the following bill; which was read the first time

July 19, 2000

Read the second time and placed on the calendar

To provide for retail competition for the sale of electric power, to authorize States to recover transition costs, and for other purposes.

Be it enacted by the Senate and House of Representatives 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 `Consumer Empowerment and Electricity Deregulation Act of 2000'.

(b) TABLE OF CONTENTS- The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I--CONSUMER CHOICE AND COMPETITION FOR ELECTRIC SUPPLIERS

Sec. 101. Competition for retail electric sales.

Sec. 102. Termination of new contract requirement under section 210 of the Public Utility Regulatory Policies Act of 1978.

Sec. 103. Reliability and interstate transmission.

TITLE II--PUBLIC UTILITY HOLDING COMPANIES

Sec. 201. Short title.

Sec. 202. Findings and purposes.

Sec. 203. Definitions.

Sec. 204. Repeal of the Public Utility Holding Company Act of 1935.

Sec. 205. Federal access to books and records.

Sec. 206. State access to books and records.

Sec. 207. Exemption authority.

Sec. 208. Affiliate transactions.

Sec. 209. Applicability.

Sec. 210. Effect on other regulations.

Sec. 211. Enforcement.

Sec. 212. Savings provisions.

Sec. 213. Implementation.

Sec. 214. Transfer of resources.

Sec. 215. Conforming amendment to the Federal Power Act.

Sec. 216. Authorization of appropriations.

Sec. 217. Effective date.

TITLE III--TAX PROVISIONS

Sec. 301. Tax-exempt bond financing of certain electric facilities.

Sec. 302. Modifications to special rules for nuclear decommissioning costs.

Sec. 303. Treatment of certain revenues of electric cooperatives.

TITLE I--CONSUMER CHOICE AND COMPETITION FOR ELECTRIC SUPPLIERS

SEC. 101. COMPETITION FOR RETAIL ELECTRIC SALES.

(a) AMENDMENT OF PURPA- Title I of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 et seq.) is amended by adding at the end the following:

`Subtitle F--Retail Electric Competition

`SEC. 151. FINDINGS.

`Congress finds that--

`(1) the opportunity for all consumers to purchase electric energy in interstate commerce from the supplier of choice is essential to a dynamic, fully integrated, and competitive national market for electric energy;

`(2) the establishment, maintenance, or enforcement of exclusive rights to sell electric energy and other State action that unduly discriminates against any consumer that seeks to purchase electric energy in interstate commerce from the supplier of its choice constitutes an unwarranted and unacceptable discrimination against and burden on interstate commerce;

`(3) in today's technologically driven marketplace, there is no justification for the discrimination against and burden imposed on interstate commerce by the granting of exclusive rights to sell electric energy or other State action that unduly discriminates against consumers that seek to purchase electric energy in interstate commerce from the suppliers of their choice;

`(4) the electric energy transmission and local distribution facilities of all of the utilities of the United States are essential facilities for the conduct of a competitive interstate retail market in electric energy in which all consumers have the opportunity to purchase electric energy in interstate commerce from the suppliers of their choice; and

`(5) in a competitive electricity generation market, it is in the national interest to encourage the development of energy technologies to promote energy efficiency and ensure energy security.

`SEC. 152. DEFINITIONS.

`In this subtitle:

`(1) CONSUMER- The term `consumer' means a person that purchases or offers to purchase electric energy at retail.

`(2) ELECTRIC SUPPLIER- The term `electric supplier' means a person or entity that produces, generates, manufactures, aggregates, markets, brokers, sells, or otherwise supplies electric energy.

`(3) LOCAL DISTRIBUTION COMPANY- The term `local distribution company' means a person that owns, controls, or operates a local distribution facility.

`(4) LOCAL DISTRIBUTION FACILITY-

`(A) IN GENERAL- The term `local distribution facility' means a facility used for the local distribution of electric energy.

`(B) INCLUSION- The term `local distribution facility' includes a facility determined under section 201(b)(1) of the Federal Power Act (16 U.S.C. 824(b)(1)) to be used for the local distribution of electric energy.

`(5) LOCAL DISTRIBUTION SERVICE-

`(A) IN GENERAL- The term `local distribution service' means service that is necessary to, or customarily provided in the course of, the delivery of electric energy to a consumer through a local distribution facility.

`(B) INCLUSIONS- The term `local distribution service' includes service required for--

`(i) the construction, maintenance, and operation of a local distribution facility; and

`(ii) related management, accounting, and other services.

`(C) EXCLUSION- The term `local distribution service' does not include the generation or sale of electric energy.

`(6) NONREGULATED LOCAL DISTRIBUTION COMPANY- The term `nonregulated local distribution company' means a local distribution company that is not a State-regulated local distribution company.

`(7) PERSON- For the purposes of paragraphs (2) and (3), the term `person' includes--

`(A) the Federal Government;

`(B) a State (including a municipality or any other instrumentality, authority, or political subdivision of a State); and

`(C) any other entity (including an electric cooperative and a foreign governmental entity).

`(8) STATE-REGULATED LOCAL DISTRIBUTION COMPANY- The term `State-regulated local distribution company' means a local distribution company with respect to which a State regulatory authority has ratemaking jurisdiction.

`(9) STATE REGULATORY AUTHORITY- The term `State regulatory authority' means a State agency that has ratemaking authority with respect to the provision of local distribution services by any local distribution company.

`(10) STRANDED COST- The term `stranded cost' means a cost allocable to the construction or upgrade of an electric generation facility or to purchased electric power that an electric supplier sustained while subject to cost-of-service regulation but is unable to recover because--

`(i) the electric supplier is unable to assess consumers charges at the rate charged during calendar year 2000;

`(ii) the market value of the generation facility is less than the depreciated value of the facility; or

`(iii) the electric supplier is unable to mitigate costs through the renegotiation of power supply contracts and other means.

`SEC. 153. RETAIL ELECTRIC COMPETITION.

`(a) REQUIREMENTS-

`(1) IN GENERAL- Markets for the purchase of electric energy by consumers in a State shall--

`(A) separate (unbundle) all competitive electric energy supply activities from the transmission and local distribution of electric energy;

`(B) allow each consumer in the State to select from among competing electric suppliers; and

`(C) require each local distribution company to provide local distribution service under rates, charges, terms, and conditions that--

`(i) are just, reasonable, and not unduly discriminatory or preferential; and

`(ii) identify, offer, and sell (directly or for resale) local distribution service separately from any sales of electric energy.

`(2) NONDISCRIMINATION- In the case of a local distribution company that is also an electric supplier, the rates, charges, terms, and conditions described in paragraph (1)(B) shall be the same as those applicable to the use of a local distribution facility by that local distribution company.

`(b) STATE-REGULATED LOCAL DISTRIBUTION COMPANIES-

`(1) IN GENERAL- Not later than January 1, 2002, each State legislature and State regulatory authority shall require each State-regulated local distribution company in the State to meet the requirements of subsection (a).

`(2) FAILURE TO IMPLEMENT- If a State fails to implement paragraph (1) by January 1, 2002, each State-regulated local distribution company in the State shall comply, by that date, with the requirement applicable to nonregulated local distribution companies under subsection (c).

`(c) NONREGULATED LOCAL DISTRIBUTION COMPANIES- Not later than January 1, 2002, each nonregulated local distribution company shall meet the requirements of subsection (a).

`(d) RECOVERY OF STRANDED COSTS-

`(1) APPLICABILITY- This subsection applies only in a State in which the State legislature has not enacted, before July 1, 2000, a stranded cost recovery scheme.

`(2) AUTHORITY TO IMPOSE CHARGE-

`(A) IN GENERAL- Until January 1, 2013, a State regulatory authority may require each local distribution company in the State to include in charges to its customers a stranded cost recovery charge for use as described in paragraph (3).

`(B) RATE- A stranded cost recovery charge--

`(i) shall initially be set at a rate estimated to generate not more than a percentage determined by the State (not to exceed 50 percent) of the amount of stranded costs estimated to be sustained by each supplier in the State; and

`(ii) shall be reviewed annually, and subsequently be reduced, to the extent that collections exceed the most recent estimate, or increased to the extent that the estimate exceeds the collections.

`(3) STRANDED COST RECOVERY PAYMENTS- Of amounts collected under paragraph (2) for any billing period, each electric supplier that sustained stranded costs for the billing period shall be entitled to a stranded cost recovery payment equal to--

`(A) the amount of stranded costs that the electric supplier sustained; multiplied by

`(B) the percentage of stranded cost recovery determined by the State under paragraph (2)(B).

`SEC. 154. PROHIBITION OF DISCRIMINATION.

`The calculation, assessment, or imposition of any fee or charge imposed under this Act or any other law shall not unduly discriminate among different classes or categories of electric utilities, local distribution companies, electric energy consumers, or electric suppliers.

`SEC. 155. ENFORCEMENT.

`(a) ADMINISTRATIVE PROCEEDING- The Commission may order a State regulatory authority, State regulated local distribution company, or nonregulated local distribution company to comply with this subtitle if the Commission determines, after notice and an opportunity for a hearing on the record, that the State regulatory authority, State regulated local distribution company, or nonregulated local distribution company does not comply with section 153(a).

`(b) JUDICIAL ENFORCEMENT OR REVIEW- A consumer, State regulatory authority, State regulated local distribution company, or nonregulated local distribution company may file a petition appealing a determination under subsection (a) in the United States court of appeals.'.

(b) CONFORMING AMENDMENT- The table of contents in section 1(b) of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. prec. 2601) is amended by inserting at the end of the items for title I the following:

`Subtitle F--Retail Electric Competition

`Sec. 151. Findings.

`Sec. 152. Definitions.

`Sec. 153. Retail electric competition.

`Sec. 154. Prohibition of discrimination.

`Sec. 155. Enforcement.'.

SEC. 102. TERMINATION OF NEW CONTRACT REQUIREMENT UNDER SECTION 210 OF THE PUBLIC UTILITY REGULATORY POLICIES ACT OF 1978.

Section 210 of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 824a-3) is amended by adding at the end the following:

`(m) TERMINATION OF NEW CONTRACT REQUIREMENT-

`(1) IN GENERAL- On or after the date of enactment of this subsection, no electric utility shall be required to enter into a new contract or obligation to purchase or to sell electric energy or capacity under this section.

`(2) EXISTING RIGHTS AND REMEDIES NOT AFFECTED-

`(A) IN GENERAL- 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 cogeneration facility under this section under 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 (consistent with section 153) the costs of purchasing such electric energy or capacity.

`(B) EXCEPTION- Any contract entered into before, on, or after the date of enactment of this Act by a qualifying small power production facility or qualifying cogeneration facility that provides for a purchase or sale of electric energy or capacity on or after the date that is 5 years after the date of enactment of this subsection at a rate exceeding 150 percent of wholesale market rates prevailing during calendar year 2000 shall become voidable by either party to the contract on the date that is 5 years after the date of enactment of this subsection.

`(3) EFFECT OF SUBSECTION- Nothing in this subsection implies congressional ratification of any interpretation of this Act or any action taken under this Act by any person before the date of enactment of this subsection.'.

SEC. 103. RELIABILITY AND INTERSTATE TRANSMISSION.

(a) DEFINITIONS- Section 3 of the Federal Power Act (16 U.S.C. 796) is amended by adding at the end the following:

`(26) RETAIL CUSTOMER- The term `retail customer' means a person that purchases electric energy for use by the person other than for resale to another person.

`(27) WHOLESALE CUSTOMER- The term `wholesale customer' means a person that purchases electric energy for resale to another person.

`(28) BUNDLED TRANSMISSION SERVICE- The term `bundled transmission service' means transmission service in which electric energy and transmission service are not sold separately.

`(29) UNBUNDLED TRANSMISSION SERVICE- The term `unbundled transmission service' means transmission service in which electric energy and transmission service are sold separately.'.

(b) DECLARATION OF POLICY; APPLICATION OF PART II OF THE FEDERAL POWER ACT- Section 201 of the Federal Power Act (16 U.S.C. 824) is amended by striking subsections (a) and (b)(1) and inserting the following:

`(a) DECLARATION OF POLICY- Congress declares that--

`(1) the business of transmitting and selling electric energy for ultimate distribution to the public is affected with a public interest; and

`(2) Federal regulation of matters relating to the transmission of electric energy in interstate commerce (including transmission service to wholesale customers, unbundled transmission service to retail customers, and bundled transmission service to retail customers) and to the sale of such energy at wholesale in interstate commerce, is necessary to establish

just and reasonable rates and to prevent interference with interstate commerce and threats to the reliability of the interstate bulk power grid.

`(b) APPLICABILITY OF PART-

`(1) IN GENERAL- This part applies to--

`(A) bundled transmission service in interstate commerce;

`(B) unbundled transmission service in interstate commerce; and

`(C) the sale of electric energy at wholesale in interstate commerce.

`(2) JURISDICTION OF THE COMMISSION- The Commission shall have jurisdiction over all facilities used--

`(A) to provide bundled or unbundled transmission of electric energy in interstate commerce;

`(B) to make sales of electric energy in which the purchaser intends to resell the electric energy to another person; or

`(C) to establish and enforce reliability standards implemented by a regional transmission organization for the reliable operation of the bulk power system.

`(3) LIMIT ON JURISDICTION- Except as specifically provided in this part and part III, the Commission shall not have jurisdiction over--

`(A) facilities used for the generation of electric energy;

`(B) facilities used in local distribution or used only for the transmission of electric energy in intrastate commerce; or

`(C) facilities for the transmission of electric energy consumed wholly by the transmitter.'.

TITLE II--PUBLIC UTILITY HOLDING COMPANIES

SEC. 201. SHORT TITLE.

This title may be cited as the `Public Utility Holding Company Act of 2000'.

SEC. 202. FINDINGS AND PURPOSES.

(a) FINDINGS- Congress finds that--

(1) the Public Utility Holding Company Act of 1935 (15 U.S.C. 79a et seq.) was intended to facilitate the work of Federal and State regulators by placing certain constraints on the activities of holding company systems;

(2) developments since 1935, including changes in other regulation and in the electric and gas industries, have called into question the continued relevance of the model of regulation established by that Act;

(3) there is a continuing need for State regulation in order to ensure the rate protection of utility customers; and

(4) limited Federal regulation is necessary to supplement the work of State commissions for the continued rate protection of electric and gas utility customers.

(b) PURPOSES- The purposes of this title are--

(1) to eliminate unnecessary regulation, yet continue to provide for consumer protection by facilitating existing rate regulatory authority through improved Federal and State commission access to books and records of all companies in a holding company system, to the extent that such information is relevant to rates paid by utility customers, while affording companies the flexibility required to compete in the energy markets; and

(2) to address protection of electric and gas utility customers by providing for Federal and State access to books and records of all companies in a holding company system that are relevant to utility rates.

SEC. 203. DEFINITIONS.

In this title:

(1) AFFILIATE- The term `affiliate' of a company 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 indirectly, by another company.

(2) ASSOCIATE COMPANY- The term `associate company', in relation to another company, means a company in the same holding company system as the other 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 foregoing.

(5) ELECTRIC UTILITY COMPANY- The term `electric utility company' means a company that owns or operates facilities used for the generation, transmission, or distribution of electric energy for sale.

(6) EXEMPT WHOLESALE GENERATOR- The term `exempt wholesale generator' has the meaning given the term in section 32(a) of the Public Utility Holding Company Act of 1935 (15 U.S.C. 79z-5a(a)), as in effect on the day before the effective date of this title.

(7) FOREIGN UTILITY COMPANY- The term `foreign utility company' has the meaning given the term in section 33(b) of the Public Utility Holding Company Act of 1935 (15 U.S.C. 79z-5b(b)), as in effect on the day before the effective date of this title.

(8) GAS UTILITY COMPANY- The term `gas utility company' means a 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.

(9) HOLDING COMPANY- The term `holding company' means--

(A) a company that directly or indirectly owns, controls, or holds, with power to vote, 10 percent or more of the outstanding voting securities of a public utility company or of a holding company of any public utility company; and

(B) a person, determined by the Commission, after notice and opportunity for hearing, to exercise directly or indirectly (either alone or under an arrangement or understanding with one or more persons) such a controlling influence over the management or policies 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 the person be subject to the obligations, duties, and liabilities imposed by this title on holding companies.

(10) HOLDING COMPANY SYSTEM- The term `holding company system' means a holding company, together with its subsidiary companies.

(11) JURISDICTIONAL RATE- The term `jurisdictional rate' means a rate established by the Commission for--

(A) the transmission of electric energy in interstate commerce, the sale of electric energy at wholesale in interstate commerce;

(B) the transportation of natural gas in interstate commerce; or

(C) the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use.

(12) NATURAL GAS COMPANY- The term `natural gas company' means a person engaged in the transportation of natural gas in interstate commerce or the sale of natural gas in interstate commerce for resale.

(13) PERSON- The term `person' means an individual or company.

(14) PUBLIC UTILITY- The term `public utility' means a person that owns or operates a facility used for transmission of electric energy in interstate commerce or sales of electric energy at wholesale in interstate commerce.

(15) PUBLIC UTILITY COMPANY- The term `public utility company' means an electric utility company or a gas utility company.

(16) STATE COMMISSION- The term `State commission' means a 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 the State, has jurisdiction to regulate public utility companies.

(17) SUBSIDIARY COMPANY- The term `subsidiary company', in relation to a holding company, means--

(A) a 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 the holding company; and

(B) a person, the management or policies of which the Commission, after notice and opportunity for hearing, determines to be subject to a controlling influence, directly or indirectly, by the holding company (either alone or under an arrangement or understanding with 1 or more other persons) so as to make it necessary for the rate protection of utility customers with respect to rates that the person be subject to the obligations, duties, and liabilities imposed by this title on subsidiary companies of holding companies.

(18) VOTING SECURITY- The term `voting security' means a security presently entitling the owner or holder of the security to vote in the direction or management of the affairs of a company.

SEC. 204. REPEAL OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935.

The Public Utility Holding Company Act of 1935 (15 U.S.C. 79a et seq.) is repealed.

SEC. 205. FEDERAL ACCESS TO BOOKS AND RECORDS.

(a) IN GENERAL- Each holding company and each associate company of a holding company shall maintain, and shall make available to the Commission, such books, accounts, memoranda, and other records as the Commission deems to be relevant to costs incurred by a public utility or natural gas company that is an associate company of the holding company and necessary or appropriate for the protection of utility customers with respect to jurisdictional rates for the transmission of electric energy 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 interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use.

(b) AFFILIATE COMPANIES- Each affiliate of a holding company or of any subsidiary company of a holding company shall maintain, and make available to the Commission, such books, accounts, memoranda, and other records with respect to any transaction with another affiliate, as the Commission deems to be relevant to costs incurred by a public utility or natural gas company that is an associate company of the holding company and necessary or appropriate for the protection of utility customers 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 of a holding company, as the Commission deems to be relevant to costs incurred by a public utility or natural gas company within the holding company system and necessary or appropriate for the protection of utility customers with respect to jurisdictional rates.

(d) CONFIDENTIALITY- No member, officer, or employee of the Commission shall divulge any fact or information 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 or by a court of competent jurisdiction.

SEC. 206. STATE ACCESS TO BOOKS AND RECORDS.

(a) IN GENERAL- On 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 of the holding company, other than the public utility company, wherever

located, shall produce for inspection 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 the public utility company; and

(3) are necessary for the effective discharge of the responsibilities of the State commission with respect to the 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 the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 et seq.).

(c) CONFIDENTIALITY OF INFORMATION- The production 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 safeguard against unwarranted disclosure to the public of any trade secrets or sensitive commercial information.

(d) EFFECT ON STATE LAW- Nothing in this section shall preempt applicable State law concerning the provision 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 district court located in the State in which the State commission referred to in subsection (a) is located shall have jurisdiction to enforce compliance with this section.

SEC. 207. EXEMPTION AUTHORITY.

(a) RULEMAKING- Not later than 90 days after the effective date of this title, the Commission shall promulgate a final rule to exempt from the requirements of section 205 any person that is a holding company, solely with respect to one or more--

(1) qualifying facilities under the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 et seq.);

(2) exempt wholesale generators; or

(3) foreign utility companies.

(b) OTHER AUTHORITY- If, on application or on 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 public 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 company, the Commission shall exempt the person or transaction from the requirements of section 205.

SEC. 208. AFFILIATE TRANSACTIONS.

Nothing in this title precludes 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 company may recover in rates any costs of an activity performed by an associate company, or any costs of goods or services acquired by the public utility company from an associate company.

SEC. 209. APPLICABILITY.

Nothing in this title applies to or includes--

(1) the United States;

(2) a State or any political subdivision of a State;

(3) any foreign governmental authority not operating 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. 210. 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.

SEC. 211. ENFORCEMENT.

The Commission shall have the same powers as are set forth in sections 306 through 317 of the Federal Power Act (16 U.S.C. 825d-825p) to enforce this title.

SEC. 212. SAVINGS PROVISIONS.

(a) IN GENERAL- Nothing in this title prohibits a person from engaging in or continuing to engage in activities or transactions in which it is legally engaged or authorized to engage on the effective date of this title.

(b) EFFECT ON OTHER COMMISSION AUTHORITY- Nothing in this title limits the authority of the Commission 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. 213. IMPLEMENTATION.

Not later than 18 months after the date of enactment of this Act, the Commission shall--

(1) promulgate such regulations as may be necessary or appropriate to implement this title (other than section 206); and

(2) submit to Congress detailed recommendations on technical and conforming amendments to Federal law necessary to carry out this title and the amendments made by this title.

SEC. 214. 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. 215. CONFORMING AMENDMENT TO THE FEDERAL POWER ACT.

Section 318 of the Federal Power Act (16 U.S.C. 825q) is repealed.

SEC. 216. AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated such sums as are necessary to carry out this title.

SEC. 217. EFFECTIVE DATE.

This title takes effect on the date that is 18 months after the date of enactment of this Act.

TITLE III--TAX PROVISIONS

SEC. 301. TAX-EXEMPT BOND FINANCING OF CERTAIN ELECTRIC FACILITIES.

(a) PERMITTED OPEN ACCESS TRANSACTIONS NOT A PRIVATE BUSINESS USE- Section 141(b)(6) of the Internal Revenue Code of 1986 (defining private business use) is amended by adding at the end the following:

`(C) PERMITTED OPEN ACCESS TRANSACTIONS NOT A PRIVATE BUSINESS USE-

`(i) IN GENERAL- For purposes of this subsection, the term `private business use' shall not include a permitted open access 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 subsection (f)(4)(A)) owned by a governmental unit:

`(I) Providing open access transmission services and ancillary services that meet the reciprocity requirements of Federal Energy Regulatory Commission Order No. 888, or that are ordered by the Federal Energy Regulatory Commission, or that are provided in accordance with a transmission tariff of an independent system operator approved by such Commission, or are consistent with state administered laws, rules or orders providing for open transmission access.

`(II) Participation in an independent system operator agreement (which may include transferring control of transmission facilities to an independent system operator), in a regional 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 facilities.

`(iii) GOVERNMENT-OWNED FACILITY- For purposes of this subparagraph, an electric output facility (as defined in subsection (f)(4)(A)) shall be treated as owned by a governmental unit only if the facility is owned by such governmental unit for the purposes of serving 1 or more customers to which such governmental unit had a service obligation on July 1, 2000.'.

(b) ELECTION TO TERMINATE TAX EXEMPT FINANCING- 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 Facilities-

`(1) IN GENERAL- An issuer may make an irrevocable election under this paragraph to terminate certain tax-exempt financing for electric output facilities. 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 electric 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 enactment of this subsection, the interest on which 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 governmental unit.

`(2) EXCEPTIONS-

`(A) IN GENERAL- An election under paragraph (1) does not apply to--

`(i) any bond issued to finance a qualifying T&D facility, or

`(ii) any bond issued to finance equipment necessary to meet Federal or state environmental requirements applicable to electric output facilities in service on the date of enactment of this subsection.

`(B) INCREASE IN CAPACITY- For purposes of subparagraph (A)(ii), equipment may not increase by more than a de minimus degree the capacity of the facility beyond 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.

`(4) DEFINITIONS- For purposes of this subsection--

`(A) ELECTRIC OUTPUT FACILITY- The term `electric output facility' means an output facility that is an electric generation, transmission, or distribution facility.

`(B) QUALIFYING T&D FACILITY- The term `qualifying T&D facility' means--

`(i) transmission facilities over which services described in subsection (b)(6)(C)(ii)(I) are provided, or

`(ii) distribution facilities over which services described in subsection (b)(6)(C)(ii)(III) are provided.'.

(c) APPLICATION WITH OTHER LAWS- Nothing in this section, or the amendments made by this section, shall be interpreted as affecting the requirement of a municipal facility to provide open access under section 153 of the Public Utilities Regulatory Policies Act of 1978 (as added by section 101(a)).

(d) EFFECTIVE DATE AND TRANSITION RULES-

(1) EFFECTIVE DATE- The amendments made by this section take effect on the date of enactment of this Act, except that a governmental unit may elect to apply section 141(b)(6)(C) of the Internal Revenue Code of 1986, as added by subsection (a), with respect to permitted open access transactions on or after July 9, 1996.

(2) TRANSITION RULE FOR PRIVATE BUSINESS USE- Any activity that was not a private business use prior to the effective date of the amendment made by subsection (a) shall not be deemed to be a private business use by reason of the enactment of such amendment.

SEC. 302. MODIFICATIONS TO SPECIAL RULES FOR NUCLEAR DECOMMISSIONING COSTS.

(a) REPEAL OF LIMITATION ON DEPOSITS INTO FUND BASED ON COST OF SERVICE- Subsection (b) of section 468A of the Internal Revenue Code of 1986 (relating to special rules for nuclear decommissioning costs) is amended to read as follows:

`(b) LIMITATION ON AMOUNTS PAID INTO FUND- The amount which a taxpayer may pay into the Fund for any taxable year shall not exceed the ruling amount applicable to such taxable year.'.

(b) CLARIFICATION OF TREATMENT OF FUND TRANSFERS- Section 468A(e) of the Internal Revenue Code of 1986 (relating to Nuclear Decommissioning Reserve Fund) is amended by adding at the end the following:

`(8) TREATMENT OF FUND TRANSFERS- If, in connection with the transfer of the taxpayer's interest in a nuclear powerplant, the taxpayer transfers the Fund with respect to such powerplant to the transferee of such interest and the transferee elects to continue the application of this section to such Fund--

`(A) the transfer of such Fund shall not cause such Fund to be disqualified from the application of this section, and

`(B) no amount shall be treated as distributed from such Fund, or be includible in gross income, by reason of such transfer.'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2000.

SEC. 303. TREATMENT OF CERTAIN REVENUES OF ELECTRIC COOPERATIVES.

(a) IN GENERAL- Section 501(c)(12)(C) of the Internal Revenue Code of 1986 (relating to list of exempt organizations) is amended--

(1) in clause (i), by striking `or' at the end;

(2) in clause (ii), by striking the period at the end and inserting `, or';

(3) by adding at the end the following:

`(iii) from revenues received from nonmembers solely as a result of conforming transmission and distribution operations to meet provisions of an applicable Federal or State plan designed to provide customer choice in electric power supply.'.

(b) EFFECTIVE DATE- The amendments made by this section shall apply to amounts received after December 31, 2000.

Calendar No. 690

To provide for retail competition for the sale of electric power, to authorize States to recover transition costs, and for other purposes.

July 19, 2000

END