For Immediate Release:
February 25, 2000


WASHINGTON -- Alaska Sen. Frank Murkowski late Thursday introduced major legislation to promote competition and to ensure reliability in the electric power industry.

³Competition isnıt the goal of this legislation. Instead, competition is the means to achieve the goal of assuring consumers a reliable and reasonably-priced supply of electricity,² said Murkowski.

While the bill generally is aimed at the more competitive electric industry in the Lower 48 states, Murkowski said the bill may need to contain a provision that could be of great benefit to rural areas, especially Alaska, one that would create a universal service fund -- similar to that which was included by Congress in the telecommunications legislation. Such a provision would help areas which do not have access to reliable and affordable electricity.

Some 24 states have already adopted some form of retail competition in electricity sales and all states are considering such a change. ³Our legislative task is to trim federal regulation down to the absolute minimum, but at the same time not halt state progress on retail competition or interfere with the Federal Energy Regulatory Commissionıs progress on bulk power market competition,² said Murkowski in remarks for redelivery on the Senate floor in introducing the bill.

The legislation in part:

  • Creates a clear division of authority and responsibility between the states and federal government with FERC clearly responsible for interstate matters.

  • Helps ensure electric reliability with the North American Electric Reliability Council proposal, plus the reliability provisions requested by Western governors, state public utility commissions and state energy officials. The bill creates a new organization that will be able to assure that our interstate transmission system remains safe and reliable.

  • Ensures non-discriminatory open access on all interstate transmission lines, not just those owned by investor-owned utilities.

  • Reconfirms that the Federal Power Act does not preclude states from imposing a public interest requirement on matter subject to state jurisdiction, such as: distribution system reliability, safety; obligation to serve; universal service; assured service to low-income, rural and remote consumers; retail seller performance standards; and protection against unfair business practices.

  • Reconfirms that states are not precluded from imposing a public interest charge on consumers in their state to fund public purpose programs, including: ensuring universal electric service, funding programs that deal with the environment, renewable energy, energy efficiency and energy conservation providing recovery of transition costs; providing transition costs for electricity workers hurt by restructuring; and funding research and development on electric technologies.

  • It contains repeal of the Public Utility Regulatory Policies Actıs (PURPA), mandatory purchase requirement, repeal of the Public Utilities Holding Companies Act (PUHCA), and assured funding for nuclear power plant decommissioning.

  • It includes eminent domain authority to construct new interstate transmission lines. This is expected to help address the transmission bottleneck and market power issues that are of concern to many.

  • And it retains the regional transmission organizations (RTO) provisions that address troublesome issues with FERCıs ³Order 2000.²

    Murkowski said a host of issues will need to be considered during the legislative process reviewing the bill. He said there is an important issue of streamlining the speeding up the FERC merger review process. ³Utilities rightfully are distressed that FERCıs process takes far too long and is much too cumbersome,² he said.

    ³Another controversial issue that we must deal with in the context of comprehensive legislation is the tax-exempt municipal bond issue, creating a level competitive playing field between investor-owned utilities and municipally owned utilities,² he said. Under the tax code, municipally-owned utilities can issue tax exempt bonds to build new generation, transmission and distribution facilities, but investor-owned utilities can not issue tax-exempt bonds for these purposes -- a disadvantage.

    ³But on the flip side -- under the tax code -- municipal tax-exempt bonds are to a Œprivate useı limitation. This means that if municipal utilities go too far in competing against private utilities, then their bonds are subject to retroactive taxation. This limits the ability of municipal utilities to compete in the market. The bottom line? We have a tax code that is not consistent with todayıs competitive environment, putting both municipal utilities and private utilities ar risk,² said Murkowski.

    Finally, Murkowski, said resolving the role of the Federal Power Marketing Administrations, such as the Bonneville Power Administration, is important. ³We also need to address the role of one of the largest utilities in the United States -- the Tennessee Valley Authority.²