H.R. 2050 (106th): Electric Consumers’ Power To Choose Act of 1999

106th Congress, 1999–2000. Text as of Jun 08, 1999 (Introduced).

Status & Summary | PDF | Source: GPO

HR 2050 IH

106th CONGRESS

1st Session

H. R. 2050

To provide consumers with a reliable source of electricity and a choice of electric providers, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

June 8, 1999

Mr. LARGENT (for himself and Mr. MARKEY) introduced the following bill; which was referred to the Committee on Commerce, and in addition to the Committees on Ways and Means, Transportation and Infrastructure, and Resources, 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 committee concerned


A BILL

To provide consumers with a reliable source of electricity and a choice of electric providers, 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 AND TABLE OF CONTENTS.

    (a) SHORT TITLE- This Act may be cited as the ‘Electric Consumers’ Power To Choose Act of 1999’.

    (b) TABLE OF CONTENTS-

      Sec. 1. Short title and table of contents.

      Sec. 2. Findings and purpose.

TITLE I--CONSUMER CHOICE AND COMPETITION FOR ELECTRIC UTILITIES

      Sec. 101. Competition for retail electric distribution systems.

‘Subtitle F--Retail Electric Competition

‘Sec. 151. Definitions.

‘Sec. 152. Retail competition for State-regulated local distribution systems.

‘Sec. 153. Retail competition for nonregulated local distribution systems.

‘Sec. 154. Grandfathering provision.

‘Sec. 155. Retail reciprocity.

‘Sec. 156. Aggregation for purchase of retail electric energy.

‘Sec. 157. State jurisdiction.

‘Sec. 158. Relation to NAFTA; imports.

‘Sec. 159. Privacy of consumer proprietary information.

      Sec. 102. Electric reliability.

      Sec. 103. Federal interconnection authorities.

      Sec. 104. Consumer protection, market power, and unfair trade practices.

      Sec. 105. Antitrust savings clause.

      Sec. 106. Mandatory open access for all transmitting utilities.

      Sec. 107. Clarification of State and Federal authority over retail transmission services.

      Sec. 108. Authority to establish regional transmission organizations.

      Sec. 109. Special provisions respecting BPA and ERCOT transmission.

      Sec. 110. Electric company mergers.

      Sec. 111. Regional transmission planning agencies.

      Sec. 112. Universal and affordable service.

      Sec. 113. Conforming and technical amendments to the Federal Power Act.

      Sec. 114. Study of grandfathered systems.

      Sec. 115. Effective date.

TITLE II--PROVISIONS RESPECTING THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935

      Sec. 201. Short title.

      Sec. 202. Reform of holding company regulation under PUHCA.

      Sec. 203. Definitions.

      Sec. 204. Federal access to books and records.

      Sec. 205. State access to books and records.

      Sec. 206. Exemption authority.

      Sec. 207. Affiliate transactions.

      Sec. 208. Applicability.

      Sec. 209. Effect on other regulations.

      Sec. 210. Enforcement.

      Sec. 211. Savings provisions.

      Sec. 212. Implementation.

      Sec. 213. Transfer of resources.

      Sec. 214. Authorization of appropriations.

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

TITLE III--PROVISIONS RESPECTING THE PUBLIC UTILITY REGULATORY POLICIES ACT OF 1978

      Sec. 301. Short title.

      Sec. 302. Findings.

      Sec. 303. Prospective repeal.

      Sec. 304. Recovery of costs.

TITLE IV--FEDERAL POWER MARKETING ADMINISTRATIONS AND TENNESSEE VALLEY AUTHORITY

Subtitle A--Tennessee Valley Authority

      Sec. 401. Definitions.

      Sec. 402. Wholesale competition in the Tennessee Valley region.

      Sec. 403. Tennessee Valley Authority power sales.

      Sec. 404. Prohibition on acquisition of new generating resources.

      Sec. 405. Renegotiation of long-term contracts.

      Sec. 406. Regulation of Tennessee Valley Authority transmission system.

      Sec. 407. Regulation of Tennessee Valley Authority distributors.

      Sec. 408. Stranded cost recovery.

      Sec. 409. Regional transmission planning agencies.

      Sec. 410. Application of antitrust law.

      Sec. 411. Disposition of surplus local distribution facilities.

      Sec. 412. Commission regulations.

      Sec. 413. Savings provision.

Subtitle B--Bonneville Power Administration

      Sec. 421. Definitions.

      Sec. 422. Application of Federal Power Act.

      Sec. 423. Surcharge on transmission rates to recover otherwise nonrecoverable costs.

      Sec. 424. Complaints.

      Sec. 425. Review of commission orders.

      Sec. 426. Antitrust laws application to BPA.

      Sec. 427. Conforming amendments.

Subtitle C--Other Power Marketing Administrations

      Sec. 431. Definitions.

      Sec. 432. Accounting.

      Sec. 433. Regional transmission planning agencies.

      Sec. 434. Application of antitrust law.

TITLE V--RENEWABLE ENERGY

      Sec. 501. Renewable portfolio standard.

      Sec. 502. Net metering.

TITLE VI--PROVISIONS RELATING TO THE INTERNAL REVENUE CODE

      Sec. 601. 5-year extension of credit for producing electricity from renewable resources.

      Sec. 602. Credit for energy efficiency improvements to existing homes.

      Sec. 603. Business credit for construction of new energy efficient home.

      Sec. 604. Tax credit for combined heat and power system property.

      Sec. 605. Tax-exempt bond financing of certain electric facilities.

SEC. 2. FINDINGS AND PURPOSE.

    (a) FINDINGS- The Congress finds the following:

      (1) Electricity is used in virtually every home, commercial enterprise, and manufacturing facility in the United States; is a basic element of the interstate and foreign commerce of the United States; and immediately, directly, and substantially affects interstate and foreign commerce.

      (2) Americans consume electricity worth more than $250,000,000,000 a year, approximately half of which is for residential purposes, making the monthly electric utility bill one of the largest expenses for most households.

      (3) Traditional monopoly rate-of-return regulation of electricity has failed. It has stifled competition, resulting in high electricity rates for many consumers and few incentives for technological innovation and good customer service by electric utilities.

      (4) High electricity rates are regressive, placing a disproportionate burden on poor ratepayers. A competitive electric generation industry should provide benefits to all consumers by fostering innovation and efficiency, rather than by allowing cost shifting that lowers rates to some consumers but raises rates to others.

      (5) The cost of electricity has a direct effect on the price, profitability, and competitiveness of goods and services produced in the United States.

      (6) Lower priced electricity can be realized by giving all American consumers the right to choose among suppliers of electricity in a competitive market, while maintaining, if not improving, the reliability of service those consumers have come to expect.

      (7) The development of vibrant competition in the retail market for electric energy will--

        (A) reduce the costs of electric energy to even the smallest consumers of electricity;

        (B) create jobs as American businesses are able to lower costs and better compete in world markets and against foreign competition here at home; and

        (C) result in a more efficient utility industry.

      (8) The Nation’s interconnected electricity generation, transmission, and local distribution systems critically affect the economy and productivity of the United States, and the health, safety, welfare, and security of all Americans.

      (9) Congress has authority to enact laws, under the Commerce Clause of the United States Constitution, regarding the generation, transmission, distribution, and sale of electric energy in interstate commerce at the wholesale and retail levels.

      (10) Only Congress can ensure that a competitive retail electricity market is established throughout the United States on an expeditious but orderly basis. Regional and State variations, however, require that State regulatory authorities should receive deference in implementing competition and consumer choice in retail electricity markets.

      (11) The success of competition in the wholesale electricity market under the Energy Policy Act of 1992 and open access under Orders No. 888 and 889 of the Federal Energy Regulatory Commission, as well as innovations in electricity generation and transmission technologies, indicate that with appropriate transition measures, retail customer choice and generation competition can substantially benefit all classes of United States electricity consumers, including residential, commercial, industrial, and other consumers.

      (12) In a competitive generation market, it is in the national interest to continue to encourage the development of emerging energy technologies in order to ensure energy diversity and security and to protect the environment.

    (b) PURPOSE- The purpose of this Act is to allow American electricity consumers to choose among competing providers of electricity, in order to secure lower electricity rates, higher quality services, and a more robust United States economy, and for other purposes.

TITLE I--CONSUMER CHOICE AND COMPETITION FOR ELECTRIC UTILITIES

SEC. 101. COMPETITION FOR RETAIL ELECTRIC DISTRIBUTION SYSTEMS.

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

‘Subtitle F--Retail Electric Competition

‘SEC. 151. DEFINITIONS.

    ‘For purposes of this subtitle:

      ‘(1) CONSUMER- The term ‘consumer’ means any person who purchases or offers to purchase any retail electric supply.

      ‘(2) ELECTRIC SUPPLIER- The term ‘electric supplier’ means any person who produces, generates,

manufactures, aggregates, markets, brokers, sells, or otherwise supplies electric energy.

      ‘(3) LOCAL DISTRIBUTION COMPANY- The term ‘local distribution company’ means any person which owns, controls, or operates local distribution facilities.

      ‘(4) LOCAL DISTRIBUTION FACILITIES- The term ‘local distribution facilities’ means any facilities used for the local distribution of electric energy, including any facilities determined pursuant to section 201 of the Federal Power Act to be so used.

      ‘(5) LOCAL DISTRIBUTION SERVICE- The term ‘local distribution service’ includes all services necessary to, or customarily provided in the course of, the delivery of electric energy to a consumer through local distribution facilities, including the construction, maintenance, and operation of local distribution facilities, the metering and billing of retail sales, and related management, accounting, and other services. Such term shall not include the generation or sale of electric energy.

      ‘(6) NONREGULATED LOCAL DISTRIBUTION COMPANY- The term ‘nonregulated local distribution company’ means any local distribution company other than any State-regulated local distribution company.

      ‘(7) PERSON- The term ‘person’ means any entity, including an individual, a foreign governmental entity, the United States Government or any instrumentality or authority thereof (including the Tennessee Valley Authority), or a State, or any instrumentality, authority, or political subdivision thereof, including any municipality.

      ‘(8) PUBLIC UTILITY- The term ‘public utility’ means a public utility as defined in section 201(e)(1) of the Federal Power Act.

      ‘(9) STATE REGULATED LOCAL DISTRIBUTION COMPANY- The term ‘State regulated local distribution company’ means any local distribution company with respect to which a State regulatory authority has ratemaking jurisdiction.

      ‘(10) STATE REGULATORY AUTHORITY- Notwithstanding section 3(17) of this Act, the term ‘State regulatory authority’ means any State agency which has ratemaking authority with respect to the provision of local distribution services by any local distribution company (other than such State agency).

      ‘(11) TRANSMISSION FACILITIES- The term ‘transmission facilities’ means any facilities used for the transmission of electric energy, including any facilities determined pursuant to section 201 of the Federal Power Act to be so used.

‘SEC. 152. RETAIL COMPETITION FOR STATE REGULATED LOCAL DISTRIBUTION SYSTEMS.

    ‘(a) STATE ELECTIONS-

      ‘(1) IN GENERAL- Every State may elect to require, by no later than January 1, 2002, retail electric competition in accordance with paragraph (2) of this subsection for every State regulated local distribution company providing local distribution service in such State. Such election shall be made by January 1, 2001. No such election may be partial or revocable. Such election shall be conclusively evidenced by the submission to the Commission from the State regulatory authority by January 1, 2001, of a notice that the State will require such retail competition.

      ‘(2) RETAIL ELECTRIC COMPETITION- If a State makes an election under paragraph (1), the State regulatory authority for that State shall establish such terms and conditions as necessary and appropriate to ensure that--

        ‘(A) all electric consumers in such State served by State regulated local distribution companies may choose from competing electric suppliers; and

        ‘(B) State regulated local distribution companies shall provide local distribution service under rates, charges, terms, and conditions which--

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

          ‘(ii) identify, offer, and sell local distribution service separately from any sales of electric energy; and

          ‘(iii) comply with State law and are otherwise in the public interest; and

        in the case of a local distribution company which is also an electric supplier, such rates, charges, terms, and conditions shall be comparable to those applicable to the use of local distribution facilities owned, controlled, or operated by the company for the local distribution of electric energy supplied by such company.

    ‘(b) OPT OUT OF RETAIL COMPETITION- If a State regulatory authority does not make the election under subsection (a), subsection (c) shall apply unless the State regulatory authority finds, after notice and opportunity for hearing, that making such election will have a negative impact on the residential class, the commercial class, or the industrial class of customers in that State that cannot be reasonably mitigated. The State regulatory authority shall publish the finding and its basis and shall file a notice with the Commission of its determination by January 1, 2001.

    ‘(c) FAILURE TO ELECT OR OPT OUT- Except for a State covered by section 154 (relating to grandfathering), if a State does not make an election under subsection (a), or file an opt-out notice under subsection (b), by January 1, 2001, each State regulated local distribution company providing local distribution service in such State shall establish retail electric competition for its local distribution facilities in accordance with subsection (a)(2) by January 1, 2002.

    ‘(d) AUTHORITY TO REQUIRE CHARGES- Except as provided in subsection (b), nothing in this subtitle shall affect the authority of a State or a State regulatory authority to require, as a condition for the purchase or receipt by any person located in such State of any retail electric energy or services described in section 201(h) of the Federal Power Act, the payment of any charge deemed

necessary by such State or State regulatory authority for any of the following purposes:

      ‘(1) To recover transition costs.

      ‘(2) To ensure that adequate electric service is available to all customers served by a retail distribution system.

      ‘(3) To ensure and enhance the reliability of retail electric service.

      ‘(4) To fund assistance to low-income customers.

      ‘(5) To encourage, in a competitively neutral fashion, environmental, emerging energy technologies, energy efficiency, or energy conservation programs, or any combination of such programs.

      ‘(6) To provide for transition costs of electric utility workers adversely affected by restructuring.

      ‘(7) To encourage research and development on electric technologies.

      ‘(8) Any combination of the purposes described in paragraphs (1) through (7).

    Nothing in this subsection shall require a State or State regulatory authority to impose any charges under this subsection.

    ‘(e) DISCRIMINATION PROHIBITED- The calculation, assessment, or imposition of any fees and charges described in subsection (d), or imposed pursuant to any other law, shall not unduly discriminate among different classes or categories of electric utilities, local distribution companies, electric energy consumers, or electric suppliers. Nothing in this subtitle shall affect the authority of a State under applicable State law to design rates for local distribution service.

    ‘(f) ENFORCEMENT- Any person may bring an action in the appropriate State court against any State regulatory authority or State regulated local distribution company to require compliance with this section.

‘SEC. 153. RETAIL COMPETITION FOR NONREGULATED LOCAL DISTRIBUTION SYSTEMS.

    ‘(a) NONREGULATED LOCAL DISTRIBUTION COMPANIES-

      ‘(1) ELECTION BY UTILITY- Every nonregulated local distribution company may elect to establish, by no later than January 1, 2002, retail competition in accordance with paragraph (2) for its local distribution facilities providing local distribution service. Such election shall be made by January 1, 2001. No such election may be partial or revocable. For a nonregulated local distribution company in any State, such election shall be conclusively evidenced by the submission from such company to the Commission by January 1, 2001, of a notice that the company will provide such retail competition.

      ‘(2) RETAIL ELECTRIC COMPETITION- If a nonregulated local distribution company in any State makes an election under paragraph (1), it shall establish such terms and conditions as it finds necessary and appropriate to ensure that--

        ‘(A) all electric consumers of local distribution service provided by such company may choose from competing retail electric suppliers; and

        ‘(B) the company shall provide access to its local distribution service under rates, charges, terms, and conditions which--

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

          ‘(ii) identify, offer, and sell local distribution service separately from any sales of electric energy;

          ‘(iii) comply with State law and are otherwise in the public interest; and

        in the case of a local distribution company which is also an electric supplier, such rates, charges, terms, and conditions shall be comparable to those applicable to the use of local distribution facilities owned, controlled, or operated by the company for the local distribution of electric energy supplied by such company.

    ‘(b) OPT OUT OF RETAIL COMPETITION- If a nonregulated local distribution company does not make the election under subsection (a), subsection (c) shall apply unless the company finds, after notice and opportunity for hearing, that implementation of retail competition in accordance with subsection (a) will have a negative impact on the residential class, the commercial class, or the industrial class of customers of that company that cannot be reasonably mitigated. The nonregulated local distribution company shall publish such determination and its basis and shall file a notice with the Commission of its determination by January 1, 2001.

    ‘(c) FAILURE TO ELECT- Except for a nonregulated local distribution company covered by section 154 (relating to grandfathering), each nonregulated local distribution company that does not make an election under subsection (a), or file an opt-out notice under subsection (b), by January 1, 2001, shall provide retail competition for its local distribution facilities providing local distribution service in accordance with subsection (a)(2) by January 1, 2002.

    ‘(d) CHARGES-

      ‘(1) AUTHORITY TO REQUIRE CHARGES- Except as provided in subsection (b), nothing in this subtitle shall affect the authority of a nonregulated local distribution company that provides local distribution service to require, as a condition for the purchase or receipt by any electric consumers receiving local distribution service provided by such company, the payment of any charge deemed necessary by such company for any of the following purposes:

        ‘(A) To recover transition costs.

        ‘(B) To ensure that adequate electric service is available to all consumers served by such company.

        ‘(C) To ensure and enhance the reliability of retail electric service.

        ‘(D) To fund assistance to low-income customers.

        ‘(E) To encourage, in a competitively neutral fashion, environmental, emerging energy technologies, energy efficiency, or energy conservation programs, or any combination of such programs.

        ‘(F) To provide for transition costs of electric utility workers adversely affected by restructuring.

        ‘(G) To encourage research and development on electric technologies.

        ‘(H) Any combination of the purposes described in subparagraphs (A) through (G).

      Nothing in this subsection shall require a nonregulated local distribution company to impose any charges under this section.

      ‘(2) DISCRIMINATION PROHIBITED- The calculation, assessment, or imposition of any fees and charges described in paragraph (1), or imposed pursuant to any other law, shall not unduly discriminate among different classes or categories of electric utilities, local distribution companies, consumers, or electric suppliers. Nothing in this subtitle shall affect the authority of a nonregulated local distribution company under applicable State law to design rates for local distribution service.

    ‘(e) ENFORCEMENT- Any person may bring an action the appropriate State court against any nonregulated local distribution company to require compliance with this section.

‘SEC. 154. GRANDFATHERING PROVISION.

    ‘(a) STATE REGULATED COMPANIES- A State shall be exempt from section 152 if the State has--

      ‘(1) adopted a plan to provide open access to local distribution facilities of all State regulated local distribution companies in the State for retail electric suppliers seeking to make retail sales to all classes of retail customers, and

      ‘(2) submitted a notice to the Commission within 30 days after the date of the enactment of this section stating that such State has adopted such plan..

    ‘(b) NONREGULATED COMPANIES- Any nonregulated local distribution company shall be exempt from section 153 if the company has--

      ‘(1) adopted a plan to provide open access to its local distribution facilities for retail electric suppliers seeking to make retail sales to all classes of retail customers, and

      ‘(2) submitted a notice to the Commission within 30 days after the date of the enactment of this section stating that such company has adopted such plan.

‘SEC. 155. RETAIL RECIPROCITY.

    ‘(a) STATE AUTHORITY-

      ‘(1) ELECTRICITY GENERATED IN A NONCOMPETITIVE STATE- Any State may prohibit any person from selling to retail electric consumers of State regulated local distribution companies in such State any electric energy generated in a second State which has not made a timely election under section 152(a) or which has filed an opt-out notice under section 152(b) unless--

        ‘(A) such electric energy is generated by a nonregulated electric utility in such second State;

        ‘(B) such other State has submitted a timely notice under section 154 (relating to grandfathering); or

        ‘(C) all local distribution facilities in such second State owned, controlled, or operated by State regulated local distribution companies providing local distribution service in such second State are subject to retail competition consistent with section 152(a)(2).

      ‘(2) ELECTRICITY GENERATED BY NONCOMPETITIVE NONREGULATED ELECTRIC UTILITY- Any State may prohibit any person from selling to retail electric consumers of State regulated local distribution companies in such State any electric energy generated by a nonregulated electric utility which has not made an election under section 153(a) or which has filed an opt-out notice under section 153(b) unless--

        ‘(A) such nonregulated electric utility has submitted a timely notice under section 154 (relating to grandfathering); or

        ‘(B) all local distribution facilities of such nonregulated electric utility are subject to retail competition consistent with section 153(a)(2).

    ‘(b) AUTHORITY OF NONREGULATED ELECTRIC UTILITIES-

      ‘(1) ELECTRICITY GENERATED IN A NONCOMPETITIVE STATE- Any nonregulated eletric utility in a State may prohibit any person from selling to its retail electric consumers any electric energy generated in a second State which has not made a timely election under section 152(a) or which has filed an opt-out notice under section 152(b) unless--

        ‘(A) such electric energy is generated by a nonregulated electric utility in such second State;

        ‘(B) such other State has submitted a timely notice under section 154 (relating to grandfathering); or

        ‘(C) all local distribution facilities in such second State owned, controlled, or operated by State regulated local distribution companies providing local distribution service in such second State are subject to retail competition consistent with section 152(a)(2).

      ‘(2) ELECTRICITY GENERATED BY NONCOMPETITIVE NONREGULATED ELECTRIC UTILITY- Any nonregulated electric utility may prohibit any person from selling to its retail electric consumers any electric energy generated by a nonregulated electric utility which has not made an election under section 153(a) or which has filed an opt-out notice under section 153(b) unless--

        ‘(A) such nonregulated electric utility has submitted a timely notice under section 154 (relating to grandfathering); or

        ‘(B) all local distribution facilities of such nonregulated electric utility are subject to retail competition consistent with section 153(a)(2).

‘SEC. 156. AGGREGATION FOR PURCHASE OF RETAIL ELECTRIC ENERGY.

    ‘Notwithstanding any other provision of Federal or State law, and subject to legitimate and nondiscriminatory State requirements imposed on retail electric suppliers, a group of customers or any entity acting on behalf of such group may acquire retail electric energy on an aggregate basis if the group of customers is served by 1 or more local distribution companies for which a State regulatory authority or nonregulated local distribution company has filed a notice of retail competition under section 152(a)(1) or 153(a)(1).

‘SEC. 157. STATE JURISDICTION.

    ‘(a) PRIMARY STATE JURISDICTION- Except for review of any action in the Supreme Court of the United States in accordance with sections 1257 and 1258 of title 28, United States Code, no court of the United States shall have jurisdiction over any action arising under the provisions of section 152 or 153 (relating to retail electric competition).

    ‘(b) STATE COURT PROCEDURES- Except for Supreme Court review, any appeal, review, or other action in State court shall be pursuant to any applicable State procedures.

    ‘(c) PARITY OF FRANCHISE AND OTHER CHARGES- A State or local government, under State law, may impose or collect any franchise, license, permit fee, or equivalent thereof, from any electric supplier as a condition for operating in the State or locality, only to the extent such charge is imposed on a just and reasonable and not unduly discriminatory or preferential basis.

‘SEC. 158. RELATION TO NAFTA; IMPORTS.

    ‘(a) NATIONAL TREATMENT AS REQUIRED BY NAFTA- The provisions of section 155 (relating to retail reciprocity) shall apply on a not unduly discriminatory or preferential basis, and to the same extent, to any foreign person or foreign electric utility which is a citizen of a nation which has ratified the North American Free Trade Agreement, as such provisions apply to any person or electric utility which is a citizen of the United States.

    ‘(b) IMPORTS- The provisions of section 155 (relating to respecting retail reciprocity) shall apply pursuant to subsection (a) to any imports of electric energy into the United States.

‘SEC. 159. PRIVACY OF CONSUMER PROPRIETARY INFORMATION.

    ‘(a) PRIVACY REQUIREMENTS- Except as required by law or with the prior written affirmative approval of the consumer, any person that receives or obtains customer information by virtue of its provision of retail electric service or metering and billing service shall only use, disclose, or permit access to individually identifiable consumer information in its provision of (1) retail electric service or metering and billing service from which such information is derived, or (2) services necessary to, or used in, the provision of such service.

    ‘(b) DISCLOSURE ON REQUEST BY CONSUMERS- An electric utility or metering and billing service provider shall disclose consumer information, upon affirmative written request by the consumer, to any person designated by the consumer.

    ‘(c) AGGREGATE CONSUMER INFORMATION- Any person that receives or obtains consumer information by virtue of its provision of retail electric service or metering and billing services may use, disclose, or permit access to aggregate consumer information other than for the purposes described in subsection (a). An electric utility or metering or billing service provider may use, disclose, or permit access to aggregate consumer information other than for purposes described in subsection (a) only if it provides such aggregate information to other retail electric service providers on reasonable and nondiscriminatory terms and conditions upon reasonable request therefor.

    ‘(d) EXCEPTIONS- Nothing in this section prohibits an electric utility or metering and billing service provider from using, disclosing, or permitting access to consumer information obtained from its consumers, either directly or indirectly through its agents--

      ‘(1) to initiate, render, bill, and collect for retail electric services or metering and billing services;

      ‘(2) to protect the rights or property of the electric utility or metering and billing service provider, or to protect consumers of those services and other service providers from fraudulent, abusive, unlawful use of, or subscription to such services; or

      ‘(3) for purposes of compliance with any other Federal or State law or regulation authorizing disclosure of information to a Federal or State agency.

    ‘(e) DEFINITIONS- As used in this section:

      ‘(1) CONSUMER INFORMATION- The term ‘consumer information’ means--

        ‘(A) information that relates to the quantity, technical configuration, type, destination, and amount of use of a retail electric service subscribed to by any consumer, and that is made available to an electric utility or metering and billing service provider solely by virtue of its business relationship; and

        ‘(B) information contained in the bills pertaining to retail electric service received by a consumer.

      ‘(2) AGGREGATE CONSUMER INFORMATION- The term ‘aggregate consumer information’ means collective data that relates to a group or category of services or consumers, from which individual consumer identities and characteristics have been removed.’.

    (b) TABLE OF CONTENTS- The table of contents for title I of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 and following) is amended by adding the following at the end thereof:

‘Subtitle F--Retail Electric Competition

‘Sec. 151. Definitions.

‘Sec. 152. Retail competition for State regulated local distribution systems.

‘Sec. 153. Retail competition for nonregulated local distribution systems.

‘Sec. 154. Grandfathering provision.

‘Sec. 155. Retail reciprocity.

‘Sec. 156. Aggregation for purchase of retail electric energy.

‘Sec. 157. State jurisdiction.

‘Sec. 158. Relation to NAFTA; imports.

‘Sec. 159. Privacy of consumer proprietary information.’.

SEC. 102. ELECTRIC RELIABILITY.

    The Federal Power Act (16 U.S.C. 791a et seq.) is amended by adding the following new Part at the end thereof:

‘PART IV--ELECTRIC RELIABILITY

‘SEC. 401. ELECTRIC RELIABILITY ORGANIZATION AND OVERSIGHT.

    ‘(a) DEFINITIONS- As used in this section:

      ‘(1) AFFILIATED REGIONAL LIABILITY ENTITY- The term ‘affiliated regional reliability entity’ means an entity delegated authority under the provisions of subsection (h).

      ‘(2) BULK-POWER SYSTEM- The term ‘bulk-power system’ means all facilities and control systems necessary for operating an interconnected transmission grid (or any portion thereof), including high-voltage transmission lines, substations, control centers, communications, data, and operations planning facilities, and the output of generating units necessary to maintain transmission system reliability.

      ‘(3) ELECTRIC RELIABILITY ORGANIZATION, OR ORGANIZATION- The term ‘electric reliability organization’ or ‘organization’ means the organization approved by the Commission under subsection (d)(4).

      ‘(4) ENTITY RULE- The term ‘entity rule’ means a rule adopted by an affiliated regional reliability entity for a specific region and designed to implement or enforce one or more organization standards. An entity rule shall be approved by the Organization and once approved, shall be treated as an organization standard.

      ‘(5) INDUSTRY SECTOR- The term ‘industry sector’ means a group of users of the bulk power system with substantially similar commercial interests, as determined by the Board of the Electric Reliability Organization.

      ‘(6) INTERCONNECTION- The term ‘interconnection’ means a geographic area in which the operation of bulk-power system components is synchronized such that the failure of one or more of such components may adversely effect the ability of the operators of other components within the interconnection to maintain safe and reliable operation of the facilities within their control.

      ‘(7) ORGANIZATION STANDARD- The term ‘organization standard’ means a policy or standard duly adopted by the Electric Reliability Organization to provide for the reliable operation of a bulk power system.

      ‘(8) PUBLIC INTEREST GROUP- The term ‘public interest group’ means any nonprofit private or public organization that has an interest in the activities of the Electric Reliability Organization, including, but not limited to, ratepayer advocates, environmental groups, and State and local government organizations that regulate market participants and promulgate government policy.

      ‘(9) VARIANCE- The term ‘variance’ means an exception or variance from the requirements of an organization standard (including a proposal for an organization standard where there is no organization standard) that is adopted by an affiliated regional reliability entity and applicable to all or a part of the region for which the affiliated regional reliability entity responsible. A variance shall be approved by the organization and once approved, shall be treated as an organization standard.

      ‘(10) SYSTEM OPERATOR- The term ‘system operator’ means any entity that operates or is responsible for the operation of a bulk-power system, including but not limited to a control area operator, an independent system operator, a transmission company, a transmission system operator, or a regional security coordinator.

      ‘(11) USER OF THE BULK-POWER SYSTEM- The term ‘user of the bulk-power system’ means any entity that sells, purchases, or transmits electric power over a bulk-power system, or that owns, operates or maintains facilities or control systems that are part of a bulk-power system, or that is a system operator.

    ‘(b) COMMISSION AUTHORITY- (1) Within the United States, the Commission shall have jurisdiction over the Electric Reliability Organization, all affiliated regional reliability entities, all system operators, and all users of the bulk-power system, for purposes of approving and enforcing compliance with the requirements of this section.

    ‘(2) The Commission may, by rule, define any other term used in this section, provided such definition is consistent with the definitions in, and the purpose and intent of, this Act.

    ‘(c) EXISTING RELIABILITY STANDARDS- Following enactment of this section, and prior to the approval of an organization under subsection (d), any person, including the North American Electric Reliability Council and its member regional reliability councils, may file any reliability standard, guidance or practice that they would propose to be made mandatory and enforceable. The Commission, after allowing interested persons an opportunity to submit comments, may approve any such proposed mandatory standard, guidance or practice, or any amendment thereto, if it finds that the standard, guidance, or practice, or amendment is just, reasonable, not unduly discriminatory or preferential, and in the public interest. The Commission may, without further proceeding or finding, grant its approval to any standard, guidance or practice for which no substantive objections are filed in the comment period. Filed standards, guidances, or practices, including any amendments thereto, shall be mandatory and applicable according to their terms following approval by the Commission and shall remain in effect until (1) withdrawn, disapproved or superseded by an organization standard, issued or approved by the Electric Reliability Organization and made effective by the Commission under subsection (e); or (2) disapproved or suspended by the Commission if, upon complaint or upon its own motion and after notice and an opportunity for comment, the Commission finds the standard, guidance or practice unjust, unreasonable, unduly discriminatory, or preferential or not in the public interest. Standards, guidances or practices in effect pursuant to the provisions of this subsection shall be enforceable by the Commission.

    ‘(d) ORGANIZATION APPROVAL- (1) Not later than 90 days after the date of enactment of this section, the Commission shall issue proposed rules specifying procedures and requirements for an entity to apply for approval as the Electric Reliability Organization. The Commission shall provide notice and opportunity for comment on the proposed rules. The Commission shall issue a final rule

under this subsection within 180 days after the date of enactment of this section.

    ‘(2) Following the issuance of a final Commission rule under paragraph (1), an entity may submit an application to the Commission for approval as the Electric Reliability Organization. The applicant shall specify in its application its governance and procedures, as well as its funding mechanism and initial funding requirements.

    ‘(3) The Commission shall provide public notice of the application and afford interested parties an opportunity to comment.

    ‘(4) The Commission shall approve the application if the Commission determines that the applicant--

      ‘(A) has the ability to develop, implement and enforce standards that provide for an adequate level of reliability of the bulk-power system;

      ‘(B) permits voluntary membership to any user of the bulk-power system or public interest group;

      ‘(C) assures fair representation of its members in the selection of its directors and fair management of its affairs, taking into account the need for efficiency and effectiveness in decisionmaking and operations and the requirements for technical competency in the development of organization standards and the exercise of oversight of bulk-power system reliability;

      ‘(D) assures that no two industry sectors have the ability to control, and no one industry sector has the ability to veto, the Electric Reliability Organization’s discharge of its responsibilities (including actions by committees recommending standards to the board or other board actions to implement and enforce standards);

      ‘(E) provides for governance by a board wholly comprised of independent directors;

      ‘(F) provides a funding mechanism and requirements that are just, reasonable and not unduly discriminatory or preferential and are in the public interest, and which satisfies the requirements of subsection (l);

      ‘(G) establishes procedures for development of organization standards that provide reasonable notice and opportunity for public comment, taking into account the need for efficiency and effectiveness in decisionmaking and operations and the requirements for technical competency in the development of organization standards, and which standards development process has the following attributes:

        ‘(i) openness,

        ‘(ii) balance of interests, and

        ‘(iii) due process, except that the procedures may include alternative procedures for emergencies;

      ‘(H) establishes fair and impartial procedures for implementation and enforcement of organization standards, either directly or through delegation to an affiliated regional reliability entity, including the imposition of penalties, limitations on activities, functions, or operations, or other appropriate sanctions;

      ‘(I) establishes procedures for notice and opportunity for public observation of all meetings, except that the procedures for public observation may include alternative procedures for emergencies or for the discussion of information the directors determine should take place in closed session, such as litigation, personnel actions, or commercially sensitive information;

      ‘(J) provides for the consideration of recommendations of States and State commissions, and

      ‘(K) addresses other matters that the Commission may deem necessary or appropriate to ensure that the procedures, governance, and funding of the Electric Reliability Organization are just, reasonable, not unduly discriminatory or preferential, and are in the public interest.

    ‘(5) The Commission shall approve only one electric reliability organization. If the Commission receives two or more timely applications that satisfy the requirements of this subsection, the Commission shall approve only the application it concludes will best implement the provisions of this section.

    ‘(e) ESTABLISHMENT OF AND MODIFICATIONS TO ORGANIZATION STANDARDS- (1) The Electric Reliability Organization shall file with the Commission any new or modified organization standards, including any variances or entity rules, and the Commission shall follow the procedures under paragraph (2) for review of that filing.

    ‘(2) Submissions under paragraph (1) shall include:

      ‘(A) a concise statement of the purpose of the proposal, and

      ‘(B) a record of any proceedings conducted with respect to such proposal.

    The Commission shall provide notice of the filing of such proposal and afford interested persons 30 days to submit comments. The Commission, after taking into consideration any submitted comments, shall approve or disapprove such proposal not later than 60 days after the deadline for the submission of comments, except that the Commission may extend the 60-day period for an additional 90 days for good cause, and except further that if the Commission does not act to approve or disapprove a proposal within the foregoing periods the proposal shall go into effect subject to its terms, without prejudice to the authority of the Commission thereafter to suspend or modify the proposal in accordance with the standards and requirements of this section. Proposals approved by the Commission shall take effect according to their terms but not earlier than 30 days after the effective date of the Commission’s order, except as provided in paragraph (3) of this subsection.

    ‘(3)(A) In the exercise of its review responsibilities under this subsection, the Commission shall give due weight to the technical expertise of the Electric Reliability Organization with respect to the content of a new or modified organization standard, but shall not defer to the Organization with respect to the effect of the standard on competition. The Commission shall approve a proposed new or modified organization standard if it determines the proposal to be just, reasonable, not unduly discriminatory or preferential, and in the public interest. The Commission, either upon complaint or upon its own motion, shall suspend an existing organization standard, if it determines

the standard to be unjust, unreasonable, unduly discriminatory or preferential or not in the public interest.

    ‘(B) An existing or proposed organization standard which is disapproved or suspended in whole or in part by the Commission shall be remanded to the Electric Reliability Organization for further consideration.

    ‘(C) The Commission, on its own motion or upon complaint, may direct the Electric Reliability Organization to develop an organization standard, including modification to an existing organization standard, addressing a specific matter by a date certain if the Commission considers such new or modified organization standard necessary or appropriate to further the purposes of this section. The Electric Reliability Organization shall file any such new or modified organization standard in accordance with this subsection.

    ‘(D) An affiliated regional reliability entity may propose a Variance or Entity Rule to the Electric Reliability Organization. The affiliated regional reliability entity may request that the Electric Reliability Organization expedite consideration of the proposal, and may file a notice of such request with the Commission, if expedited consideration is necessary to provide for bulk-power system reliability. If the Electric Reliability Organization fails to adopt the variance or entity rule, either in whole or in part, the affiliated regional reliability entity may request that the Commission review such action. If the Commission determines, after its review of such a request, that the action of the Electric Reliability Organization did not conform to the applicable standards and procedures approved by the Commission, or if the Commission determines that the variance or entity rule is just, reasonable, not unduly discriminatory or preferential, and in the public interest, and that the Electric Reliability Organization has unreasonably rejected the proposed variance or entity rule, then the Commission may remand the proposed variance or entity rule for further consideration by the Electric Reliability Organization or may direct the Electric Reliability Organization or the affiliated regional reliability entity to develop a variance or entity rule consistent with that requested by the affiliated regional reliability entity. Any such variance or entity rule proposed by an affiliated regional reliability entity shall be submitted to the Electric Reliability Organization for review and filing with the Commission in accordance with the procedures specified in this subsection.

    ‘(E) Notwithstanding any other provision of this subsection, a proposed organization standard or amendment shall take effect according to its terms if the Electric Reliability Organization determines that an emergency exists requiring that such proposed organization standard or amendment take effect without notice or comment. The Electric Reliability Organization shall notify the Commission immediately following such determination and shall file such emergency organization standard or amendment with the Commission not later than 5 days following such determination and shall include in such filing an explanation of the need for such emergency standard. Subsequently, the Commission shall provide notice of the organization standard or amendment for comment, and shall follow the procedures set out in paragraphs (2) and (3) for review of the new or modified organization standard. Any such organization standard that has gone into effect shall remain in effect unless and until suspended or disapproved by the Commission. If the Commission determines at any time that the emergency organization standard or amendment is not necessary, the Commission may suspend such emergency organization standard or amendment.

    ‘(4) All users of the bulk-power system shall comply with any organization standard that takes effect under this section.

    ‘(f) COORDINATION WITH CANADA AND MEXICO- The Electric Reliability Organization shall take all appropriate steps to gain recognition in Canada and Mexico. The United States shall use its best efforts to enter into international agreements with the appropriate governments of Canada and Mexico to provide for effective compliance with organization standards and to provide for the effectiveness of the Electric Reliability Organization in carrying out its mission and responsibilities. All actions taken by the Electric Reliability Organization, any affiliated regional reliability entity, and the Commission shall be consistent with the provisions of such international agreements.

    ‘(g) CHANGES IN PROCEDURES, GOVERNANCE, OR FUNDING- (1) The Electric Reliability Organization shall file with the Commission any proposed change in its procedures, governance, or funding, or any changes in the affiliated regional reliability entity’s procedures, governance or funding relating to delegated functions, and shall include with the filing an explanation of the basis and purpose for the change.

    ‘(2) A proposed procedural change may take effect 90 days after filing with the Commission if the change constitutes a statement of policy, practice, or interpretation with respect to the meaning or enforcement of an existing procedure. Otherwise, a proposed procedural change shall take effect only upon a finding by the Commission, after notice and opportunity for comments, that the change is just, reasonable, not unduly discriminatory or preferential, is in the public interest, and satisfies the requirements of subsection (d)(4).

    ‘(3) A change in governance or funding shall not take effect unless the Commission finds that the change is just, reasonable, not unduly discriminatory or preferential, and is in the public interest, and satisfies the requirements of subsection (d)(4).

    ‘(4)(A) The Commission, either upon complaint or upon its own motion, may suspend a procedure or governance or funding provision if it determines the procedure or provision does not meet the requirements of subsection (d)(4) or is unjust, unreasonable, unduly discriminatory or preferential, or otherwise not in the public interest.

    ‘(B) The Commission, upon complaint or upon its own motion, may require the Electric Reliability Organization to amend the procedures, governance or funding if the Commission determines that the amendment is necessary to meet the requirements of this section. The Electric Reliability Organization shall file the amendment in accordance with paragraph (1) of this subsection.

    ‘(h) DELEGATIONS OF AUTHORITY- (1) The Electric Reliability Organization shall, upon request by an entity, enter into an agreement with such entity for the delegation of authority to implement and enforce compliance with organization standards in a specified geographic area

if the Organization finds that the entity requesting the delegation satisfies the requirements of subsection (d)(4) (A), (B), (C), (D), (F), and (K), and if the delegation promotes the effective and efficient implementation and administration of bulk-power system reliability. The Electric Reliability Organization may enter into an agreement to delegate to the entity any other authority, except that the Electric Reliability Organization shall reserve the right to set and approve standards for bulk-power system reliability.

    ‘(2) The Electric Reliability Organization shall file with the Commission any agreement entered into under this subsection and any information the Commission requires with respect to the affiliated regional reliability entity to which authority is to be delegated. The Commission shall approve the agreement, following public notice and an opportunity for comment, if it finds that the agreement meets the requirements of paragraph (1), and is just, reasonable, not unduly discriminatory or preferential, and is in the public interest. A proposed delegation agreement with an affiliated regional reliability entity organized on an interconnection-wide basis shall be rebuttably presumed by the Commission to promote the effective and efficient implementation and administration of bulk-power system reliability. No delegation by the Electric Reliability Organization shall be valid unless approved by the Commission.

    ‘(3)(A) A delegation agreement entered into under this subsection shall specify the procedures for an affiliated regional reliability entity to propose entity rules or variances for review by the Electric Reliability Organization. With respect to any such proposal that would apply on an interconnection-wide basis, the Electric Reliability Organization shall presume such proposal valid if made by an interconnection-wide affiliated regional reliability entity unless the Electric Reliability Organization makes a written finding that the proposal:

      ‘(i) was not developed in a fair and open process that provided an opportunity for all interested parties to participate;

      ‘(ii) has a significant adverse impact on reliability or commerce in other interconnections;

      ‘(iii) fails to provide a level of reliability of the bulk-power system within the interconnection such that it would constitute a serious and substantial threat to public health, safety, welfare, or national security; or

      ‘(iv) creates a serious and substantial burden on competitive markets within the interconnection that is not necessary for reliability.

    ‘(B) With respect to any such proposal that would apply only to part of an interconnection, the Electric Reliability Organization shall find such proposal valid if the affiliated regional reliability entity or entities making the proposal demonstrate that it:

      ‘(i) was developed in a fair and open process that provided an opportunity for all interested parties to participate;

      ‘(ii) would not have an adverse impact on commerce that is not necessary for reliability;

      ‘(iii) provides a level of bulk-power system reliability adequate to protect public health, safety, welfare, and national security, and would not have a significant adverse impact on reliability; and

      ‘(iv) in the case of a Variance, is based on legitimate differences between regions or between subregions within the affiliated regional reliability entity’s geographic area.

    The Electric Reliability Organization shall approve or disapprove such proposal within 120 days, or the proposal shall be deemed approved. Following approval of any such proposal under this paragraph, the Electric Reliability Organization shall seek Commission approval pursuant to the procedures prescribed under subsection (e)(3). Affiliated regional reliability entities may not make requests for approval directly to the Commission except pursuant to subsection (e)(3)(D).

    ‘(4) If an affiliated regional reliability entity requests, consistent with paragraph (1) of this subsection, that the Electric Reliability Organization delegate authority to it, but is unable within 180 days to reach agreement with the Electric Reliability Organization with respect to such requested delegation, such entity may seek relief from the Commission. If, following notice and opportunity for comment, the Commission determines that a delegation to the entity would meet the requirements of subsection (1) above, and that the delegation would be just, reasonable, not unduly discriminatory or preferential, and in the public interest, and that the Electric Reliability Organization has unreasonably withheld such delegation, the Commission may, by order, direct the Electric Reliability Organization to make such delegation.

    ‘(5)(A) The Commission may, upon its own motion or upon complaint, and with notice to the appropriate affiliated regional reliability entity or entities, direct the Electric Reliability Organization to propose a modification to an agreement entered into under this subsection if the Commission determines that--

      ‘(i) the affiliated regional reliability entity no longer has the capacity to carry out effectively or efficiently its implementation or enforcement responsibilities under that agreement, has failed to meet its obligations under that agreement, or has violated any provision of this section,

      ‘(ii) the rules, practices, or procedures of the affiliated regional reliability entity no longer provide for fair and impartial discharge of its implementation or enforcement responsibilities under the agreement,

      ‘(iii) the geographic boundary of a transmission entity approved by the Commission is not wholly within the boundary of an affiliated regional reliability entity and such difference is inconsistent with the effective and efficient implementation and administration of bulk-power system reliability, or

      ‘(iv) the agreement is inconsistent with another delegation agreement as a result of actions taken under paragraph (4) of this subsection.

    ‘(B) Following an order of the Commission issued under subparagraph (A), the Commission may suspend the affected agreement if the Electric Reliability Organization or the affiliated regional reliability entity does not propose an appropriate and timely modification. If the agreement is suspended, the Electric Reliability Organization shall assume the previously delegated responsibilities.

The Commission shall allow the Electric Reliability Organization and the affiliated regional reliability entity an opportunity to appeal the suspension.

    ‘(i) ORGANIZATION MEMBERSHIP- Every System Operator shall be required to be a member of the Electric Reliability Organization and shall be required also to be a member of any affiliated regional reliability entity operating under an agreement effective pursuant to subsection (h) applicable to the region in which the system operator operates or is responsible for the operation of bulk-power system facilities.

    ‘(j) INJUNCTIONS AND DISCIPLINARY ACTION- (1) Consistent with the range of actions approved by the Commission under subsection (d)(4)(H), the Electric Reliability Organization may impose a penalty, limitation of activities, functions, or operations, or other disciplinary action the Electric Reliability Organization finds appropriate against a user of the bulk-power system if the Electric Reliability Organization, after notice and an opportunity for interested parties to be heard, issues a finding in writing that the user of the bulk-power system has violated an organization standard. The Electric Reliability Organization shall immediately notify the Commission of any disciplinary action imposed with respect to an act or failure to act of a user of the bulk-power system that affected or threatened to affect bulk-power system facilities located in the United States, and the sanctioned party shall have the right to seek modification or rescission of such disciplinary action by the Commission. If the Organization finds it necessary to prevent a serious threat to reliability, the Organization may seek injunctive relief in a Federal Court in the district in which the affected facilities are located.

    ‘(2) A disciplinary action taken under paragraph (1) may take effect not earlier than the 30th day after the Electric Reliability Organization files with the Commission its written finding and record of proceedings before the Electric Reliability Organization and the Commission posts its written finding, unless the Commission, on its own motion or upon application by the user of the bulk-power system which is the subject of the action, suspends the action. The action shall remain in effect or remain suspended unless and until the Commission, after notice and opportunity for hearing, affirms, sets aside, modifies, or reinstates the action, but the Commission shall conduct such hearing under procedures established to ensure expedited consideration of the action taken.

    ‘(3) The Commission, on its own motion, may order compliance with an organization standard and may impose a penalty, limitation of activities, functions, or operations, or take such other disciplinary action as the Commission finds appropriate, against a user of the bulk-power system with respect to actions affecting or threatening to affect bulk-power system facilities located in the United States if the Commission finds, after notice and opportunity for a hearing, that the user of the bulk-power system has violated or threatens to violate an organization standard.

    ‘(4) The Commission may take such action as is necessary against the Electric Reliability Organization or an affiliated regional reliability entity to assure compliance with an organization standard, or any Commission order affecting the Electric Reliability Organization or an affiliated regional reliability entity.

    ‘(k) RELIABILITY REPORTS- The Electric Reliability Organization shall conduct periodic assessments of the reliability and adequacy of the interconnected bulk-power system in North America and shall report annually to the Secretary of Energy and the Commission its findings and recommendations for monitoring or improving system reliability and adequacy.

    ‘(l) ASSESSMENT AND RECOVERY OF CERTAIN COSTS- The reasonable costs of the Electric Reliability Organization, and the reasonable costs of each affiliated regional reliability entity that are related to implementation and enforcement of organization standards or other requirements contained in a delegation agreement approved under subsection (h), shall be assessed by the Electric Reliability Organization and each affiliated regional reliability entity, respectively, taking into account the relationship of costs to each region and based on an allocation that reflects an equitable sharing of the costs among all end-users. The Commission shall provide by rule for the review of such costs and allocations, pursuant to the standards in this subsection and subsection (d)(4)(F).

‘SEC. 402. APPLICATION OF ANTITRUST LAWS.

    ‘Notwithstanding any other provision of law, each of the following activities are rebuttably presumed to be in compliance with the antitrust laws of the United States:

      ‘(1) Activities undertaken by the Electric Reliability Organization under section 401 or affiliated regional reliability entity operating under an agreement in effect under section 401(h).

      ‘(2) Activities of a member of the Electric Reliability Organization or affiliated regional reliability entity in pursuit of organization objectives under section 401 undertaken in good faith under the rules of the organization.

    Primary jurisdiction, and immunities and other affirmative defenses, shall be available to the extent otherwise applicable.’.

SEC. 103. FEDERAL INTERCONNECTION AUTHORITIES.

    (a) INTERCONNECTIONS FOR CERTAIN FACILITIES- Section 210 of the Federal Power Act is amended by adding the following at the end thereof:

    ‘(f) SPECIAL RULE FOR CERTAIN FACILITIES-

      ‘(1) DEFINITION- As used in this subsection the term ‘facility’ means--

        ‘(A) a small-scale electric power generation facility that is designed to serve customers at or near the facility, or

        ‘(B) a facility using a single fuel source to produce at the point of use either electric or mechanical power and thermal energy.

      ‘(2) INTERCONNECTION- A local distribution company (as defined in section 151 of the Public Utility Regulatory Policies Act of 1978) shall allow a facility to interconnect with the local distribution facilities of such company if the facility owner (A) is an electric customer provided local distribution service by such company and (B) complies with the final rule issued under paragraph (3).

      ‘(3) RULES- Within 1 year from the date of enactment of this subsection, the Commission shall issue a final rule to implement paragraph (2) and issue related safety and power quality standards. To the extent feasible, the Commission shall develop the

standards through a process involving interested parties. The Commission shall enforce the rule established under this subsection using its authority under this Act.’.

    (b) AMENDMENTS TO EXISTING INTERCONNECTION AUTHORITIES- Section 210 of the Federal Power Act is amended as follows:

      (1) In section 210(a)(1) (16 U.S.C. 824i(a)(1))--

        (A) by inserting ‘transmitting utility,’ after ‘electric utility,’;

        (B) by inserting ‘any transmitting utility,’ after ‘small power production facility,’ in subparagraph (A); and

        (C) by inserting ‘or distribution’ after ‘transmission’ in subparagraph (D).

      (2) In section 210(b)(2) (16 U.S.C. 824i(b)(2)) by striking ‘an evidentiary hearing’ and inserting ‘a hearing’.

      (3) In section 210(d) by deleting the last sentence.

SEC. 104. CONSUMER PROTECTION, MARKET POWER AND UNFAIR TRADE PRACTICES.

    (a) Electric Supplier Information Disclosure.

      (1) DISCLOSURE RULES- Not later than January 1, 2000, the Federal Trade Commission, in consultation with the Federal Energy Regulatory Commission, the Secretary of Energy, and the Administrator of the Environmental Protection Agency shall issue rules prescribing the form, placement, content, and timing of the supplier disclosure required under this subsection.

      (2) DISCLOSURE TO ELECTRIC CONSUMERS- In order to assist consumers in making informed purchasing decisions, any electric supplier with a capacity in excess of 5 megawatts that sells or makes an offer to sell electric energy to consumers, or solicits consumers to purchase electric energy, shall provide the consumers, in accordance with rules issued under this subsection, a statement containing the following information:

        (A)(i) The nature of the service being offered, including information about interruptibility of service.

        (ii) The price of electric energy, including a description of any variable charges.

        (iii) A description of all other charges that are associated with the service being offered including, but not limited to, access charges, exit charges, back-up service charges, stranded cost recovery charges, and customer service charges.

        (iv) Such other information concerning the product or price as the Federal Trade Commission determines can be feasibly provided and would be useful to consumers in making purchasing decisions.

        (B)(i) The share of electric energy that is generated by each of the following types of energy generation resource: coal, natural gas, oil, nuclear, hydroelectric, solar, geothermal, wind, biomass, waste, and other.

        (ii) Such information concerning generation emissions characteristics as the Federal Trade Commission determines can be provided feasibly and would be useful to consumers in making purchasing decisions, including (I) emissions in each of the following categories per magawatt-hour of generation from the supplier’s energy portfolio dedicated to the energy product being offered: sulfur dioxide, nitrogen oxides, and carbon dioxide and (II) the average emissions of the pollutants identified in subclause (I) for all generation in any regional power pool or control area in which such supplier participates.

      (3) DISCLOSURE TO WHOLESALE CUSTOMERS- In every sale of electric energy for resale, the seller shall provide to the purchaser such information respecting generation source and emissions characteristics as may be required by rules under this subsection.

      (4) AUTHORITY TO OBTAIN BOOKS AND RECORDS- Authority to obtain information under section 11 of the Energy Supply and Environmental Coordination Act of 1974 (15 U.S.C. 796) shall be available to the Federal Trade Commission to administer and enforce this section.

      (5) PROHIBITED ACTS AND ENFORCEMENT- The failure of any person to provide information required under the rules issued under this subsection or the providing by any person of false or misleading information with respect to the disclosures required by this section or the rules issued under this subsection shall be treated as a violation of a rule under section 18 of the Federal Trade Commission Act (15 U.S.C. 41 and following) regarding unfair or deceptive acts or practices in or affecting commerce.

      (6) STATE AUTHORITY- Nothing in this subsection shall affect the authority of any State to prescribe disclosure requirements in addition to and not inconsistent with this section.

    (b) MARKET POWER-

      (1) AMENDMENT OF FEDERAL POWER ACT- Part II of the Federal Power Act is amended by adding after section 214 the following new section:

‘SEC. 215. MARKET POWER IN ELECTRIC SALES.

    ‘(a) FERC DETERMINATION- On its own motion or upon complaint of any affected person, the Commission may, after notice and opportunity for a hearing on the record, make a determination that--

      ‘(1) any electric utility is exercising, or has exercised, market power in the sale of electric energy by reason of its ownership or control of local distribution facilities (as defined in section 151 of the Public Utility Regulatory Policies Act of 1978) or transmission facilities;

      ‘(2) such exercise of market power results in prices for electric energy that exceed the prices that would be charged in a fully competitive market; and

      ‘(3) action under this section is required to reduce or eliminate such market power.

    ‘(b) MITIGATION PLAN- Whenever the Commission makes a determination under subsection (a) with respect to any electric utility, the Commission shall issue an order requiring the utility to submit to the Commission a plan to reduce or eliminate the market power concerned and to implement such plan.

    ‘(c) ADDITIONAL REMEDIES- If the Commission disapproves a plan submitted under subsection (b) or determines that the utility is failing to properly implement any such plan, the Commission shall--

      ‘(1) issue an order under subsection (h) of section 202 requiring the utility to relinquish control over any transmission facilities owned or controlled by such utility to any entity established under such subsection (h) for the purpose of independent operation, control, and planning of interconnected transmission facilities;

      ‘(2) require the utility to establish just and reasonable rates and charges for the retail sale of electric energy that are based on the cost of service, plus a reasonable rate of return on investment, notwithstanding any provision of Federal or State law; and

      ‘(3) require the utility to establish just and reasonable rates and charges for the wholesale sale of electric energy that are based on the cost of service, plus a reasonable rate of return on investment.

    The Commission may elect not to take action under paragraph (1), (2), or (3) in any case in which the Commission finds that such action will not mitigate the market power issues involved.

    ‘(d) RELIABILITY- No order or plan under this subsection shall unreasonably impair the reliability of any local distribution system affected by such order or plan.

    ‘(e) STATE AUTHORITY- Nothing in this section shall be construed to preempt any State authority to require any State regulated electric utility to take any action, or cease taking any action, in addition to the actions required by the Commission or by a plan under this section to remedy the exercise of market power by such utility to the extent such State actions are not inconsistent with any order or plan under this section.

    ‘(f) RETURN TO MARKET-BASED RATES- The Commission shall terminate an order issued under subsection (c)(2) to any electric utility whenever, on its own motion or upon petition of any affected person, the Commission determines that such order is no longer necessary to reduce or eliminate the exercise of market power by such utility.

    ‘(g) EFFECTIVE DATE- This section shall take effect on January 1, 2002.’.

      (2) CONFORMING AMENDMENT- Section 201(b)(2) of the Federal Power Act (relating to Commission jurisdiction) is amended by striking ‘and 212’ and inserting ‘212, and 215’.

    (c) UNFAIR TRADE PRACTICES- The Federal Trade Commission Act (15 U.S.C. 41 et seq.) is amended by inserting the following new section after section 5:

‘SEC. 5A. ELECTRICITY SUPPLY UNFAIR TRADE PRACTICES.

    ‘(a) DEFINITION- For purposes of this section the term, ‘retail electric supplier’ has the meaning given that term in section 3(25) of the Public Utility Regulatory Policies Act of 1978.

    ‘(b) SLAMMING- (1) The Federal Trade Commission shall establish rules in accordance with section 553 of title 5, United States Code, for the submittal and verification of a retail electric customer’s selection or change in selection of a retail electric supplier and for the assessment of penalties for violation of these rules. These rules shall ensure that the customer receives electric service from the retail electric supplier of the customer’s choice.

    ‘(2) A person shall not submit or change the selection made by a retail electric customer except in accordance with procedures established in paragraph (1).

    ‘(c) CRAMMING- (1) The Federal Trade Commission shall establish rules in accordance with section 553 of title 5, United States Code, for obtaining the consent of a retail electric customer for purchase of goods and services other than those expressly authorized by law or by the customer’s electricity supply and metering agreement and for the assessment of penalties for violation of these rules.

      ‘(2) A person shall not charge a retail electric customer for a particular service except in accordance with procedures established in paragraph (1).

    ‘(d) FEDERAL TRADE COMMISSION ENFORCEMENT- Violation of this section or of a rule prescribed under this section constitutes an unfair and deceptive act or practice in violation of section 5 of this Act and shall be treated as a violation of a rule under section 18 of this Act. All functions and powers of the Federal Trade Commission under this Act are available to the Federal Trade Commission to enforce compliance with this section notwithstanding any jurisdictional limitations in this Act.

    ‘(e) STATE PROCEEDINGS AND OTHER REMEDIES- (1) This section does not preclude a State or State commission from prescribing and enforcing additional laws, regulations, or procedures regarding the practices which are the subject of this section, so long as such laws, regulations, or procedures do not conflict with the provisions of this section or with any rule prescribed by the Federal Trade Commission pursuant to it.

    ‘(2) The remedies provided by this section are in addition to any other remedies available by law.’.

SEC. 105. ANTITRUST SAVINGS CLAUSE.

    Nothing in this title or any amendment made by this title shall be construed to modify, impair, or supersede the operation of the antitrust laws. For purposes of this section, the term ‘antitrust laws’ has the meaning given it in subsection (a) of the first section of the Clayton Act (15 U.S.C. 12(a)), except that such term includes the Act of June 19, 1936 (15 U.S.C. 13 and following), commonly known as the Robinson-Patman Act, and section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to the extent that such section 5 applies to unfair methods of competition.

SEC. 106. MANDATORY OPEN ACCESS FOR ALL TRANSMITTING UTILITIES.

    (a) DEFINITION OF PUBLIC UTILITY- Section 201(e) of the Federal Power Act (16 U.S.C. 824(e)) is amended to read as follows:

    ‘(e) DEFINITION OF PUBLIC UTILITY- The term ‘public utility’, when used in this Part and Parts III and IV, means--

      ‘(1) any person who owns or operates facilities subject to the jurisdiction of the Commission under this Part (other than facilities subject to such jurisdiction solely by reason of section 210, 211, or 212); or

      ‘(2) any transmitting utility (other than the Federal power marketing administrations and the Tennessee Valley Authority) which owns or operates transmission facilities not otherwise subject to the jurisdiction of the Commission under this Part, but only with respect to determining, fixing, and otherwise regulating the rates, terms, and conditions for the transmission of electric energy under this Part.’.

    (b) APPLICATION OF PART TO GOVERNMENT UTILITIES- Section 201(f) of the Federal Power Act (16 U.S.C. 824(f)) is amended by striking ‘No provision’ and inserting ‘Except as provided in subsection (e)(2) and section 3(23), no provision’.

    (c) NONJURISDICTIONAL STATUS RESULTING FROM COMPLIANCE WITH ORDERS UNDER SECTIONS 210 AND 211; LIMITATION- Section 201(b)(2) of the Federal Power Act (16 U.S.C. 824(b)(2)) is amended by striking the period at the end of the second sentence and inserting the following: ‘except with respect to determining, fixing, and otherwise regulating the rates, terms, and conditions for the transmission of electric energy under this Part pursuant to subsection (e)(2).’.

    (d) DEFINITION- Section 3(23) of the Federal Power Act (16 U.S.C. 796) is amended to read as follows:

      ‘(23) TRANSMITTING UTILITY- The term ‘transmitting utility’ means any entity that owns or operates facilities used for the transmission of electric energy.’.

SEC. 107. CLARIFICATION OF STATE AND FEDERAL AUTHORITY OVER RETAIL TRANSMISSION SERVICES.

    (a) NONPREEMPTION OF STATE AUTHORITY TO ORDER RETAIL WHEELING AND TO IMPOSE LOCAL DELIVERY CHARGES- Section 201(b) of the Federal Power Act is amended by adding the following new paragraph after paragraph (2):

    ‘(3) This Act shall not preempt or otherwise affect any authority under the law of a State or municipality to--

      ‘(A) require unbundled transmission and local distribution service (as defined in section 151 of the Public Utility Regulatory Policies Act of 1978) for the delivery of electric energy directly to an ultimate consumer, or

      ‘(B) impose a delivery charge on an ultimate consumer’s receipt of electric energy.

    If such unbundled transmission is in interstate commerce, the rate, terms, and conditions of the transmission shall be subject to the exclusive jurisdiction of the Commission under this part.’.

    (b) OPEN ACCESS TRANSMISSION AUTHORITY; RETAIL WHEELING IN RETAIL COMPETITION STATES-

      (1) APPLICABILITY OF OPEN ACCESS TRANSMISSION RULES- Section 206 of the Federal Power Act is amended by adding the following new subsection after subsection (d):

    ‘(e) OPEN ACCESS TRANSMISSION SERVICES- (1) Under section 205 and this section, the Commission may require, by rule or order, public utilities and transmitting utilities to provide open access transmission services, subject to section 212(h), and may authorize recovery of stranded costs, as defined by the Commission, arising from any requirement to provide open access transmission services. This section applies to any rule or order issued by the Commission before, on, or after the date of enactment of this Act.’.

      (2) AUTHORITY TO ORDER RETAIL WHEELING- Section 212(h) of the Federal Power Act is amended as follows:

        (A) By inserting ‘(1)’ before ‘No’.

        (B) By striking ‘(1)’, ‘(2)’, ‘(A)’, and ‘(B)’ and inserting in their places ‘(A)’, ‘(B)’, ‘(i)’, and ‘(ii)’ respectively.

        (C) By striking from redesignated paragraph (1)(B)(ii) ‘the date of enactment of this subsection’ and inserting ‘October 24, 1992,’.

        (D) By adding the following new paragraphs at the end:

    ‘(2) Notwithstanding paragraph (1), the Commission may issue an order that requires the transmission of electric energy directly or indirectly to an ultimate consumer if a notice of retail competition under section 152(a)(1) or section 153(a)(1) of the Public Utility Regulatory Policies Act of 1978 has been filed and is in effect with respect to the ultimate consumer or if a distribution utility offers open access to its delivery facilities to the ultimate consumer.

    ‘(3) Notwithstanding any provision of this Part to the contrary, and whether or not a notice of retail competition under section 152(a)(1) or section 153(a)(1) of the Public Utility Regulatory Policies Act of 1978 has been filed, upon application by a designated representative of (A) a military base facility of the Department of Defense or a supplier or proposed supplier of electric energy thereto, or (B) an Indian tribe, or a supplier or proposed supplier thereto, the Commission shall issue an order requiring the transmission of electric energy directly or indirectly to such facility or Indian tribe. Any order under this paragraph shall establish rates, terms and conditions that are consistent with the requirements for open access transmission services provided pursuant to this Act. Nothing in this paragraph shall affect the authority of a State under section 152(d) and 153(d) of the Public Utility Regulatory Policies Act of 1978.’.

      (3) CONFORMING AMENDMENTS-

        (A) Section 3(24) of the Federal Power Act is amended to read as follows:

      ‘(24) ‘transmission services’ means the transmission of electric energy sold or to be sold.’.

        (B) Section 211(a) of the Federal Power Act is amended by striking ‘for resale’.

        (C) Section 212(a) of the Federal Power Act is amended by striking ‘wholesale’ each time it appears, except the last time.

        (D) Section 3 of the Federal Power Act is amended by adding the following new paragraph at the end thereof:

      ‘(26) INDIAN TRIBE- The term ‘Indian tribe’ means any Indian tribe, band group, and nation, including Alaska Indians, Aleuts, and Eskimos, and any Alaskan Native Village, of the United States, which is considered an eligible recipient under the Indian Self Determination and Education Assistance Act (Public Law 93-638) or was considered an eligible recipient under chapter 67 of title 31, United States Code, prior to the repeal of such chapter.’.

    (c) DETERMINATION OF LOCAL DISTRIBUTION AND TRANSMISSION FACILITIES- Section 201 of the Federal Power Act is amended by adding the following new subsection at the end thereof:

    ‘(h) DETERMINATION OF LOCAL DISTRIBUTION AND TRANSMISSION FACILITIES-

      ‘(1) APPLICATION BY STATE REGULATORY AUTHORITY- A State regulatory authority, a transmitting utility, or a local distribution company may apply to the Commission for a determination whether a particular facility used for the transportation of electric energy located in such State is a local distribution facility subject to the jurisdiction of that State regulatory authority or is a transmission facility subject to the jurisdiction of the Commission. The Commission may make such determination pursuant to such a request or on its own motion.

      ‘(2) COMMISSION FINDINGS- If an application is submitted pursuant to this subsection by a State regulatory authority, the Commission shall make a determination giving the maximum practicable deference to the position taken by the State regulatory authority, in accordance with the following factors associated with the facility:

        ‘(A) function and purpose;

        ‘(B) size;

        ‘(C) location;

        ‘(D) voltage level and other technical characteristics;

        ‘(E) historic, current and planned usage patterns;

        ‘(F) interconnection and coordination with other facilities; and

        ‘(G) any other factor the Commission deems relevant.’.

SEC. 108. AUTHORITY TO ESTABLISH REGIONAL TRANSMISSION ORGANIZATION.

    Section 202 of the Federal Power Act is amended by adding the following new subsections after subsection (g):

    ‘(h) REGIONAL TRANSMISSION ORGANIZATION- (1) Upon its own motion or upon application or complaint and after notice and an opportunity for a hearing, the Commission may order the establishment of entities for the purpose of independent ownership or independent operation, control, and planning of interconnected transmission facilities; order a transmitting utility to relinquish ownership or control over operation of its transmission facilities to an entity for the purpose of independent ownership or independent operation, control, and planning of interconnected transmission facilities; subject generators to the control of such entity consistent with other laws to the extent necessary to permit reliable operation of the transmission facilities; or take any combination of these actions, if the Commission finds that--

      ‘(A) this action is appropriate to promote competitive electricity markets and efficient, economical, and reliable operation of the interstate transmission grid;

      ‘(B) the entity established for the purpose of independent ownership or independent operation, control, and planning of interconnected transmission facilities will manage the transmission facilities in a manner that assures that--

        ‘(i) ownership of transmission facilities provides no advantage in competitive electricity markets;

        ‘(ii) the transmission customers of the Tennessee Valley Authority, the Bonneville Power Administration, the Administrator of the Southwestern Power Administration, and the Administrator of the Western Area Power Administration will not pay an unreasonable share of the entity’s costs and will not experience unreasonable transmission rate increases resulting from the establishment of the entity; and

        ‘(iii) as applicable, the respective statutory and treaty obligations and contractual obligations existing on the date of enactment of this Act of the Board of Directors of the Tennessee Valley Authority, the Administrator of the Bonneville Power Administration, the Administrator of the Southwestern Power Administration, the Administrator of the Western Area Power Administration, the Bureau of Reclamation, and the Corps of Engineers can be met;

      ‘(C) any transmitting utility ordered to transfer ownership or control of its transmission facilities will receive just and reasonable compensation for the use of its facilities; and

      ‘(D) adequate reliability of the affected transmission facilities will be maintained.

    Nothing in this subsection limits States from addressing transmission facility maintenance, planning, siting, and other utility functions in a manner consistent with this Act or Commission action under this Act.

    ‘(2) If not ordered under paragraph (1), the Tennessee Valley Authority, the Administrator of the Bonneville Power Administration, the Administrator of the Southwestern Power Administration, or the Administrator of the Western Area Power Administration is authorized to participate in a regional transmission organization after conducting a public process in the relevant service area to receive comments. Notwithstanding any other law, participation may include delegation of operation and control of the Authority or Administration’s transmission system to that entity, or other method of participation, under terms and conditions the Authority or Administrator determines necessary or appropriate, including being bound by operational and other orders of the entity and by the

results of arbitration of disputes with the entity or with other participants.

    ‘(3) If the Commission determines, after notice and opportunity for hearing, that the rates, charges, or classifications demanded, observed, charged, or collected by any entity established for the purpose of independent ownership or independent operation, control, and planning of interconnected transmission facilities for any transmission or sale, or that any rule, regulation, practice, or contract affecting such rate, charge, or classification is unjust, unreasonable, unduly discriminatory or preferential, or furthers or maintains the existence of market power, the Commission shall, pursuant to the standards and procedures in section 206 of this Act, determine the rate, charge, classification, rule, regulation, practice or contract that eliminates such market power and is just and reasonable, and shall fix the same by order.

    ‘(4) Upon request by an entity established for the purpose of independent ownership or independent operation, control, and planning of interconnected transmission facilities or any other person, the Commission shall issue a declaratory order determining whether such entity covers a sufficiently broad geographic region so as to ensure the development of efficient regional electricity markets that encourage regional efficiencies in both generation dispatch and reliability of service.’.

SEC. 109. SPECIAL PROVISIONS RESPECTING BPA AND ERCOT TRANSMISSION.

    (a) REPEAL OF SPECIAL BPA WHEELING PROVISIONS- Section 212(i) of the Federal Power Act (16 U.S.C. 824k(i)), relating to laws applicable to the Federal Columbia River Transmission System, is repealed.

    (b) REPEAL OF SPECIAL ERCOT WHEELING PROVISIONS- Section 212(k) of the Federal Power Act (16 U.S.C. 824k(k)), relating to ERCOT utilities, is repealed.

SEC. 110. ELECTRIC COMPANY MERGERS.

    Section 203(a) of the Federal Power Act is amended as follows:

      (1) By striking ‘public utility’ each place it appears and inserting ‘electric utility company’.

      (2) By inserting after the first sentence the following: ‘Except as the Commission may otherwise provide by rule, no holding company in a holding company system that includes an electric utility company shall, directly or indirectly, purchase, acquire, or take any security of any electric utility company or of a holding company in a holding company system that includes an electric utility company, without first having secured an order of the Commission authorizing it to do so.’.

      (3) By striking ‘hearing’ in the last sentence and inserting ‘oral or written presentation of views’.

      (4) By adding at the end the following: ‘For purposes of this subsection, the terms ‘electric utility company’, ‘holding company’, and ‘holding company system’ have the meaning given them in section 2 of the Public Utility Holding Company Act of 1935. Notwithstanding section 201(b)(1), generation facilities shall be subject to the jurisdiction of the Commission for purposes of this section, except as the Commission may otherwise provide by rule.’.

SEC. 111. REGIONAL TRANSMISSION PLANNING AGENCIES.

    Part II of the Federal Power Act is amended by adding after section 215, as added by this Act, the following new section:

‘SEC. 216. REGIONAL TRANSMISSION PLANNING AGENCIES.

    ‘(a) CONSENT- The consent of Congress is given for agreements among two or more States to establish regional transmission planning agencies to--

      ‘(1) facilitate coordination among the States within a particular region with regard to the planning of future transmission and distribution facilities;

      ‘(2) carry out State siting responsibilities more effectively;

      ‘(3) facilitate regulation of transmission system operation within the region;

      ‘(4) meet the other requirements of this section and rules prescribed by the Commission under this section; and

      ‘(5) otherwise be consistent with the public interest.

    ‘(b) AUTHORITY- (1) If the Commission determines that an agreement meets the requirements of subsection (a), the agency established under the agreement has such authority with respect to matters otherwise within the jurisdiction of the Commission as is expressly provided in the agreement and is necessary or appropriate for carrying out the planning, siting, and regulatory responsibilities of the agency.

    ‘(2) The Commission’s approval under this section may be subject to any terms and conditions the Commission determines are necessary to ensure that the agreement is in the public interest.

    ‘(c) RULES- (1) The Commission shall prescribe by rule--

      ‘(A) criteria for use in making the determination regarding a regional transmission planning agreement under subsection (a) (including criteria specifying the extent to which a tribal government is treated as a State for purposes of this section); and

      ‘(B) standards for its administration of a regional transmission planning agency established under the agreement.

    ‘(2) The rule shall require that--

      ‘(A) a regional transmission planning agency operate within a region that includes all or part of each State that is a party to the agreement;

      ‘(B) a regional transmission planning agency be composed of 1 or more members from each State that is a party to the agreement;

      ‘(C) each participating State vest in the regional transmission planning agency the authority that otherwise would be exercised by the State and that is necessary to provide for a comprehensive program for planning and siting of transmission facilities and to carry out the agreement and this section; and

      ‘(D) the agency follow reasonable procedures in making its decisions, in governing itself, and in regulating the entities subject to its jurisdiction, including a requirement that all decisions of the agency be made by majority vote (or majority of weighted votes) of the members present and voting.

    ‘(3) The rule may include any other requirement to ensure that the regional transmission planning agency’s organization, practices, and procedures are sufficient to carry out this section and the rules issued under it.

    ‘(d) TERMINATION- The Commission, after notice and opportunity for comment, may terminate the approval of an agreement under this section at any time if it determines that the regional transmission planning agency fails to comply with the provisions of this section or Commission rules under subsection (c) or that the agreement is contrary to the public interest.

    ‘(e) APPLICATION OF SECTION 313- Section 313 shall apply to rehearing before a regional transmission planning agency and judicial review of any action of a regional transmission planning agency in the same manner as that section applies to rehearing and judicial review of orders of the Commission.’.

SEC. 112. UNIVERSAL AND AFFORDABLE SERVICE.

    Section 201 of the Federal Power Act (16 U.S.C. 824) is amended by adding at the end thereof the following new subsection:

    ‘(i) UNIVERSAL AND AFFORDABLE SERVICE- It is the sense of the Congress that--

      ‘(1) every consumer of electric energy should have access to electric energy at reasonable and affordable rates; and

      ‘(2) the Commission and the States should ensure that competition in the electric energy business does not result in the loss of service to rural, residential, or low-income consumers.’.

SEC. 113. CONFORMING AND TECHNICAL AMENDMENTS TO THE FEDERAL POWER ACT.

    Subsections (a) and (b) of section 316A of the Federal Power Act (16 U.S.C. 791a et seq.) are each amended by striking ‘section 211, 212, 213, or 214,’ in each place such phrase appears and inserting ‘section 211, 212, 213, 214, 215, or 216’.

SEC. 114. STUDY OF GRANDFATHERED SYSTEMS.

    The Federal Energy Regulatory Commission shall undertake a study of the extent to which retail electric customers of local distribution companies subject to section 154 of the Public Utility Regulatory Policies Act of 1978 (relating to grandfathering) benefit from the adoption of retail electric competition and submit a report to Congress not later than January 1, 2005, containing the results of such study.

SEC. 115. EFFECTIVE DATE.

    The amendments made by this subtitle shall be effective on the date of enactment of this Act.

TITLE II--PROVISIONS RESPECTING THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935

SEC. 201. SHORT TITLE.

    This title may be cited as the ‘Public Utility Holding Company Act of 1999’.

SEC. 202. REFORM OF HOLDING COMPANY REGULATION UNDER PUHCA.

    Eighteen months after the enactment of this Act, the provisions of this title shall apply in lieu of the provisions of the Public Utility Holding Company Act of 1935, except that the Public Utility Holding Company Act of 1935 shall remain in effect with respect to any holding-company system which includes one or more subsidiary companies that are public-utility companies, if such public-utility company or companies provide retail electric or gas service in two or more States in which the State regulatory authority has not provided notice of retail competition pursuant to section 152 of the Public Utility Regulatory Policies Act of 1978 or which has not otherwise required distribution utilities to provide open access service over the distribution facilities of each distribution utility subject to its jurisdiction.

SEC. 203. DEFINITIONS.

    For purposes of 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 such company.

      (2) ASSOCIATE COMPANY- The term ‘associate company’ of a company means any company in the same holding company system with such 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 any company that owns or operates facilities used for the generation, transmission, or distribution of electric energy for sale.

      (6) EXEMPT WHOLESALE GENERATOR AND FOREIGN UTILITY COMPANY- The terms ‘exempt wholesale generator’ and ‘foreign utility company’ have the same meanings as in section 32 and 33, respectively, of the Public Utility Holding Company Act of 1935.

      (7) GAS UTILITY COMPANY- The term ‘gas utility company’ means any 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.

      (8) HOLDING COMPANY- The term ‘holding company’ means--

        (A) any 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) any person, determined by the Commission, after notice and opportunity for hearing, to exercise directly or indirectly (either alone or pursuant to 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 such person be subject to the obligations, duties, and liabilities imposed by this Act upon holding companies.

      (9) HOLDING COMPANY SYSTEM- The term ‘holding company system’ means a holding company, together with its subsidiary companies.

      (10) JURISDICTIONAL RATES- The term ‘jurisdictional rates’ means rates established by the Commission for the transmission of electric energy, the sale of electric energy at wholesale in interstate commerce, the transportation of natural gas, and the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use.

      (11) 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 such gas in interstate commerce for resale.

      (12) PERSON- The term ‘person’ means an individual or company.

      (13) PUBLIC UTILITY- The term ‘public utility’ means any person who owns or operates facilities used for transmission of electric energy or sales of electric energy at wholesale in interstate commerce.

      (14) PUBLIC UTILITY COMPANY- The term ‘public utility company’ means an electric utility company or a gas utility company.

      (15) STATE COMMISSION- The term ‘State commission’ means any 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 such State, has jurisdiction to regulate public utility companies.

      (16) SUBSIDIARY COMPANY- The term ‘subsidiary company’ of a holding company means--

        ‘(A) any 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 such holding company; and

        (B) any 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 such holding company (either alone or pursuant to an arrangement or understanding with one or more other persons) so as to make it necessary for the rate protection of utility customers with respect to rates that such person be subject to the obligations, duties, and liability imposed by this Act upon subsidiary companies of holding companies.

      (17) VOTING SECURITY- The term ‘voting security’ means any security presently entitling the owner or holder thereof to vote in the direction or management of the affairs of a company.

SEC. 204. FEDERAL ACCESS TO BOOKS AND RECORDS.

    (a) IN GENERAL- Each holding company and each associate company thereof shall maintain, and shall make available to the Commission, such books, accounts, memoranda, and other records as are relevant to costs incurred by a public utility or natural gas company that is an associate company of such holding company and that provides goods or services to, obtains goods or services from, or engages in any transactions with such public utility company or natural gas 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 a public utility or natural gas company that is an associate company of such holding company as are relevant to costs incurred by such public utility or natural gas 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 thereof that provides goods or services to, obtains goods or services from, or engages in any transaction with a public utility or natural gas company that is an associate company in such holding company system, as are relevant to costs incurred by a public utility or natural

gas company within such 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, by a committee of Congress, or by a court of competent jurisdiction.

SEC. 205. STATE ACCESS TO BOOKS AND RECORDS.

    (a) IN GENERAL- Upon 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 thereof, other than such public utility company, wherever located, that provides goods or services to, obtains goods or services from, or engages in any transactions with such public utility company, shall produce for inspection such 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 such public utility company; and

      (3) are necessary for the effective discharge of the responsibilities of the State commission with respect to such 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 section 210 of the Public Utility Regulatory Policies Act of 1978.

    (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. 206. EXEMPTION AUTHORITY.

    (a) RULEMAKING- Not later than 90 days after the date of enactment of this Act, the Commission shall promulgate a final rule to exempt from the requirements of section 204 any person that is a holding company, solely with respect to one or more of the following:

      (1) Qualifying facilities under the Public Utility Regulatory Policies Act of 1978.

      (2) Exempt wholesale generators.

      (3) Foreign utility companies.

      (4) Exempt telecommunications companies.

    (b) OTHER AUTHORITY- If, upon application or upon 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 such person or transaction from the requirements of section 204.

SEC. 207. AFFILIATE TRANSACTIONS.

    Nothing in this title shall preclude 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 such public utility company from an associate company.

SEC. 208. APPLICABILITY.

    No provision of this title shall apply to, or be deemed to include--

      (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. 209. 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 from paying too much for goods and services provided by associate companies and from other cross subsidization of associate companies by regulated public utility companies.

SEC. 210. ENFORCEMENT.

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

SEC. 211. 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. 212. IMPLEMENTATION.

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

      (1) promulgate such regulations as may be necessary or appropriate to implement this title (other than section 205); and

      (2) submit to the 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. 213. 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. 214. AUTHORIZATION OF APPROPRIATIONS.

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

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

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

TITLE III--PROVISIONS RESPECTING THE PUBLIC UTILITY REGULATORY POLICIES ACT OF 1978

SEC. 301. SHORT TITLE.

    This title may be cited as the ‘Ratepayer Protection Act of 1999’.

SEC. 302. FINDINGS.

    The Congress finds that--

      (1) implementation of the mandatory power purchase provisions of section 210 of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 824a-3) has resulted in many consumers paying excessive rates for electric energy;

      (2) the Energy Policy Act of 1992 gives nonregulated producers of electricity additional access to the wholesale electric market through transmission access and exemption from the Public Utility Holding Company Act of 1935; and

      (3) in light of the competitive wholesale electric marketplace brought about by the Energy Policy Act of 1992 and Part IV of the Federal Power Act, the purchase mandate in section 210 of the Public Utility Regulatory Policies Act of 1978 is no longer needed.

SEC. 303. PROSPECTIVE REPEAL.

    Section 210 of the Public Utility Regulatory Policies Act of 1978 is amended by adding the following new subsection at the end thereof:

    ‘(m) PROSPECTIVE REPEAL-

      ‘(1) NEW CONTRACTS- After the 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 pursuant to this section.

      ‘(2) EXISTING RIGHTS AND REMEDIES NOT AFFECTED- 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 210 pursuant to 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 the costs of purchasing such electric energy or capacity.’.

SEC. 304. RECOVERY OF COSTS.

    Section 210 of the Public Utility Regulatory Policies Act of 1978 is amended by adding the following new subsection at the end thereof:

    ‘(n) RECOVERY OF COSTS- The Commission shall promulgate and enforce such regulations as may be required to assure that no electric utility shall be required directly or indirectly to absorb the costs associated with purchases of electric energy or capacity from a qualifying facility pursuant to any legally enforceable obligation entered into or imposed pursuant to this section prior to the date of enactment of this subsection, to the extent that the electric utility cannot otherwise reasonably mitigate such costs. Such regulations shall be treated as a rule enforceable under the Federal Power Act (16 U.S.C. (16 U.S.C. 791a-825r).’.

TITLE IV--FEDERAL POWER MARKETING ADMINISTRATIONS AND TENNESSEE VALLEY AUTHORITY

Subtitle A--Tennessee Valley Authority

SEC. 401. DEFINITIONS.

    For purposes of this subtitle:

      (1) The term ‘Commission’ means the Federal Energy Regulatory Commission.

      (2) The term ‘distributor’ means a State, county, municipality, or cooperative organization which owns, controls, or operates local distribution facilities and which on April 1, 1999, purchased electric energy at wholesale from the Tennessee Valley Authority under an all-requirements power contract.

      (3) The term ‘distributor service area’ means that geographic area which is either assigned to or statutorily defined under State law as the area within which a distributor has the right or privilege to provide electric energy at retail to the ultimate consumer and ratepayer.

      (4) The term ‘electric supplier’ means any person who provides any electric supply.

      (5) The term ‘excess electric energy’ means electric energy that has become surplus to the firm contractual obligations of the Tennessee Valley Authority under section 10 of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831i) due to any reduction in the quantity of electric energy that the Tennessee Valley Authority was contractually required to supply on the date of enactment of this Act where such reduction results from the election by customers of the Tennessee Valley Authority not to purchase from Tennessee Valley Authority electric energy that the Tennessee Valley Authority was contractually required to supply on the date of enactment of this Act.

      (6) The term ‘generating resource’ means electric energy, including the actual or planned electric energy capability of generating facilities.

      (7) The term ‘major generating resource’ means any generating resource that--

        (A) has a planned capability greater than 50 average megawatts, and

        (B) if acquired by the Tennessee Valley Authority, is acquired for a period of more than five years.

      (8) The term ‘person’ means a person as defined in section 3(4) of the Federal Power Act.

      (9) The term ‘public utility’ means a public utility as defined in section 201(e)(1) of the Federal Power Act.

      (10) The term ‘Tennessee Valley Region’ means the geographic area in which the Tennessee Valley Authority or its distributors were the primary source of power supply on the date of enactment of this Act.

SEC. 402. WHOLESALE COMPETITION IN THE TENNESSEE VALLEY REGION.

    (a) AMENDMENTS TO THE FEDERAL POWER ACT- (1) Section 212(f) of the Federal Power Act (16 U.S.C. 824k(f)), relating to interconnection or wheeling orders that result in the sale or delivery of electric energy outside the Tennessee Valley Region, is repealed.

    (2) Section 212(j) of the Federal Power Act (16 U.S.C. 824k(j)), relating to equitability within territory restricted electric systems, is repealed.

    (b) AMENDMENTS TO THE TENNESSEE VALLEY AUTHORITY ACT- (1) The third sentence of the first paragraph of section 15d(a) of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831n-4(a)), limiting the sale or delivery of electric energy outside the area for which the Tennessee Valley Authority or its distributors were the primary source of power supply on July 1, 1957, is repealed.

    (2) The second and third paragraphs of section 15d(a) of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831n-4(a)), which clarify the limitations imposed by the third sentence of the first paragraph of the subsection, are repealed.

SEC. 403. TENNESSEE VALLEY AUTHORITY POWER SALES.

    (a) BAR ON TENNESSEE VALLEY AUTHORITY RETAIL SALES- Notwithstanding section 10 of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831i), the Tennessee Valley Authority shall not sell or deliver electric energy to any end use or retail customers that did not have a contract for the purchase of electric energy with the Tennessee Valley Authority for services to specific facilities on the date of enactment of this Act.

    (b) REGIONAL PREFERENCE FOR WHOLESALE POWER SALES-

      (1) REGIONAL PREFERENCE- Notwithstanding section 10, 11, and 12, or any other provision of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831 and following), the sale and delivery of electric energy at wholesale by the Tennessee Valley Authority for use outside the Tennessee Valley Region shall be limited to excess electric energy.

      (2) FIRM POWER SALES OF EXCESS ELECTRIC ENERGY- Any sale or delivery of excess electric energy by Tennessee Valley Authority pursuant to paragraph (1) may be made only if each of the following requirements are met:

        (A) NOTICE- At least 30 days prior to the execution of any contract for the sale or delivery of such electric energy the Tennessee Valley Authority shall give the distributors written notice that negotiations for such contract are pending, and thereafter, at any distributor’s request, make available for its inspection current drafts of the proposed contract.

        (B) TERM- The contract term for the sale of such energy may not exceed 7 years.

        (C) OFFER TO EXISTING CUSTOMERS- The excess electric energy to be sold pursuant to paragraph (1) shall first be offered for a reasonable period of time and under the same essential rates, terms, and conditions to distributors.

      (3) ECONOMY EXCHANGES- Nothing in this subsection shall prevent the Tennessee Valley Authority from making exchange power arrangements with other electric suppliers when economically feasible.

    (c) APPLICATION OF FEDERAL POWER ACT TO EXCESS POWER SALES OF ELECTRIC ENERGY AT WHOLESALE BY THE TENNESSEE VALLEY AUTHORITY- Sales of electric energy at wholesale by the Tennessee Valley Authority for use outside the Tennessee Valley Region shall be subject to the provisions of Parts II and III of the Federal Power Act (16 U.S.C. 791a) (except sections 204, 207, 209, 214, and 305), and the Commission shall have jurisdiction under such Parts II and III over the rates, terms, and conditions of such sales. Such provisions of the Federal Power Act and the rules, regulations and policies of the Commission thereunder, shall apply to such sales by the Tennessee Valley Authority to the same extent and in the same manner as such provisions apply to wholesale sales of electric energy in interstate commerce by a public utility otherwise subject to the jurisdiction of the Commission under Part II of such Act.

    (d) APPLICATION OF TENNESSEE VALLEY AUTHORITY ACT TO SALES OUTSIDE TENNESSEE VALLEY REGION- The third proviso of section 10 of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831i) and the second and third provisos of section 12 of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831k) shall not apply to any sale of excess electric energy by the Tennessee Valley Authority for use outside the Tennessee Valley Region.

SEC. 404. PROHIBITION ON ACQUISITION OF NEW GENERATING RESOURCES.

    Notwithstanding any other provision of law, the Tennessee Valley Authority shall not acquire any new major generating resource after the date of enactment of this Act unless contractual or other financial arrangements have been made to ensure that the customer or customers on whose behalf the resource is acquired commit to pay the full costs of the resource, and the Tennessee Valley Authority shall not acquire any new generating resource that it reasonably expects will necessitate the use of its authority to recover otherwise nonrecoverable costs provided in section 408.

SEC. 405. RENEGOTIATION OF LONG-TERM CONTRACTS.

    The Tennessee Valley Authority and its distributors shall, within one year following the date of enactment of this Act, renegotiate their existing long-term contracts with respect to the remaining term, the length of the termination notice, the amount of electric energy that distributors may purchase from electric suppliers other than the Tennessee Valley Authority, including access to the

Tennessee Valley Authority transmission system, and provisions for stranded cost recovery. Such renegotiated contracts shall not grant any undue preference or advantage to any person or subject any person to any undue prejudice or disadvantage. If the parties are unable to reach agreement with regard to any of the issues under this section within the 1-year period set forth above, they shall submit the issue in dispute to the Federal Energy Regulatory Commission for final resolution.

SEC. 406. REGULATION OF TENNESSEE VALLEY AUTHORITY TRANSMISSION SYSTEM.

    (a) FEDERAL POWER ACT JURISDICTION- The transmission and local distribution of electric energy by the Tennessee Valley Authority shall be subject to the provisions of parts II and III of the Federal Power Act (except sections 204, 207, 209, 214, and 305), the Commission shall have jurisdiction under such Parts II and III over the rates, terms, and conditions of such transmission and local distribution. Such provisions of the Federal Power Act and the rules, regulations and policies of the Commission thereunder, shall apply to such transmission and local distribution by the Tennessee Valley Authority to the same extent and in the same manner as such provisions apply to the transmission of electric energy by a public utility otherwise subject to the jurisdiction of the Commission under Part II of such Act.

    (b) TRANSMISSION PLANT INVESTMENT- Except as otherwise provided by the Commission, the Tennessee Valley Authority shall not make any transmission plant investment that is significant (as defined by regulations issued by the Commission) without the Commission’s prior approval as to the need for such investment, taking into account possible alternate investments, project participants or transmission providers, the reasonableness of the cost estimate and the prudence of the investment.

    (c) RATE PHASE-IN- If the Commission determines that the initial application of this subtitle in the development of any Tennessee Valley Authority rates for transmission services would result in an excessive increase in any rate, as determined by the Commission, the Commission may phase in the effect of the application of this subtitle to such rate over a reasonable period of time to the same extent it would ordinarily do so for public utility rates.

SEC. 407. REGULATION OF TENNESSEE VALLEY AUTHORITY DISTRIBUTORS.

    (a) REPEAL OF TENNESSEE VALLEY AUTHORITY REGULATION OF DISTRIBUTORS- Upon the election of a municipality or cooperative organization to which the Tennessee Valley Authority sells electric energy, the third proviso of section 10 of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831i) and the second and third provisos of section 12 of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831k) shall not apply to future wholesale sales by the Tennessee Valley Authority in the Tennessee Valley Region, and the Tennessee Valley Authority shall not be authorized to regulate, by means of rules, contract provisions, resale rate schedules, contract termination rights, or any other method, any rates, terms, or conditions imposed on the resale of such electric energy by such municipality or cooperative organization.

    (b) REMOVAL OF PURPA RATEMAKING AUTHORITY- Section 3(17) of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2602(17)) is amended by striking ‘, and in the case of an electric utility with respect to which the Tennessee Valley Authority has ratemaking authority, such term means the Tennessee Valley Authority’.

    (c) AUTHORITY OF GOVERNING BODIES OF MUNICIPALITIES AND COOPERATIVE ORGANIZATIONS- Upon the election by any municipality or cooperative organization pursuant to subsection (a) of this section, any regulatory authority currently exercised by the Tennessee Valley Authority over any municipality or cooperative organization shall henceforth be exercised by the governing body of such municipality or cooperative organization, in accordance with the laws of the State in which it is organized.

SEC. 408. STRANDED COST RECOVERY.

    Within one year of the date of enactment of this Act, the Commission shall promulgate regulations with respect to recovery of stranded costs (as determined by the Commission) imposed on the Tennessee Valley Authority by any departing power customer and providing for recovery of the costs of any stranded transmission facilities (as determined by the Commission) imposed upon the Tennessee Valley Authority by any departing transmission customer. These regulations shall provide that customers that did not impose stranded costs upon the Tennessee Valley Authority are not obligated to pay such costs on behalf of other customers. The Commission’s methodology for determining recovery of the Tennessee Valley Authority’s stranded costs shall be consistent with the methodology used by the Commission in determining stranded cost recovery for public utilities. The Tennessee Valley Authority is authorized to recover such of its stranded costs as are approved by the Commission. The Commission may not impose a stranded cost recovery charge after September 30, 2007, unless the person against whom such charges are assessed agrees otherwise. Any stranded cost recovery charge assessed by the Tennessee Valley Authority on existing retail or wholesale customers shall be unbundled from the otherwise applicable retail or wholesale rate applicable to that customer and stated on the customer’s bill as a separate charge.

SEC. 409. REGIONAL TRANSMISSION PLANNING AGENCIES.

    The Tennessee Valley Authority is authorized to participate, under such terms and conditions as it deems appropriate, after conducting a public process to receive comment on the Tennessee Valley Authority’s participation, in a Commission approved and regulated regional transmission planning agency that operates in the Tennessee Valley Region. The Tennessee Valley Authority shall not join any regional transmission planning agency which would require it, or the combined users of the Tennessee Valley Authority’s transmission system, to pay a disproportionate share of the regional transmission planning agency’s costs. The Tennessee Valley Authority shall not participate in any regional transmission planning agency that would result in undue cost shifts among customers, as determined by the Commission. This section shall not be construed to require the Tennessee Valley Authority’s participation in any regional transmission planning agency.

SEC. 410. APPLICATION OF ANTITRUST LAW.

    (a) IN GENERAL- The Tennessee Valley Authority shall be subject to the antitrust laws of the United States. For purposes of this section, the term ‘antitrust laws’ has the meaning given it in subsection (a) of the first section of the Clayton Act (15 U.S.C. 12(a)), except that such term includes the Act of June 19, 1936 (15 U.S.C. 13 and following), commonly known as the Robinson-Patman Act, and section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to the extent that such section 5 applies to unfair methods of competition.

    (b) JUDICIAL REVIEW- Any person injured by violation of the antitrust laws by the Tennessee Valley Authority may bring a civil action against the Tennessee Valley Authority in Federal district court for injunctive relief or civil damages. No action under the antitrust laws may be maintained against the Tennessee Valley Authority, its officers, attorneys, employees, agents or representatives arising out of any activity that is obligated or directed to be performed under any Federal statute.

SEC. 411. DISPOSITION OF SURPLUS LOCAL DISTRIBUTION FACILITIES.

    The Tennessee Valley Authority shall offer for sale, under such terms and conditions as established by the Commission through regulation or order, all the following local distribution facilities owned by the Tennessee Valley Authority:

      (1) Facilities used solely for delivery to a single customer.

      (2) Facilities used solely for delivery to a group of customers all of whom are willing to purchase such facilities jointly.

    Such customers may in any event elect that the Tennessee Valley Authority shall retain such existing local distribution facilities, in which event the cost of such facilities shall not be included in the Tennessee Valley Authority’s transmission rates. In the case of any Tennessee Valley Authority facility used in local distribution used solely to serve any customer entitled to purchase electric energy directly from the Tennessee Valley Authority, such customer shall have priority in the purchase of such facility. The Tennessee Valley Authority shall not construct after the date of enactment of this Act facilities designed to operate at electric voltages below 35 kilovolts.

SEC. 412. COMMISSION REGULATIONS.

    In addition to the regulations which the Commission is required to adopt pursuant to this subtitle, the Commission may adopt other regulations and issue such orders as it deems appropriate to implement the provisions of this subtitle.

SEC. 413. SAVINGS PROVISION.

    (a) IN GENERAL- This subtitle shall be interpreted and implemented in a manner that does not adversely affect the obligation of the Tennessee Valley Authority to repay bonds issued by the Authority.

    (b) TENNESSEE VALLEY AUTHORITY BONDS NOT OBLIGATIONS OF THE UNITED STATES- Nothing in this subtitle shall affect section 15d(b) of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831n-4(b)), providing that bonds issued by the Tennessee Valley Authority shall not be obligations of, nor shall payment of the principal thereof or interest thereon be guaranteed by, the United States.

Subtitle B--Bonneville Power Administration

SEC. 421. DEFINITIONS.

    Section 3 of the Federal Power Act is amended by adding the following new paragraphs after paragraph (27):

      ‘(27) BONNEVILLE ADMINISTRATOR- The term ‘Bonneville Administrator’ means the Administrator of the Bonneville Power Administration;

      ‘(28) PACIFIC NORTHWEST- The term ‘Pacific Northwest’ has the meaning given that term in section 3(14) of the Pacific Northwest Electric Power Planning and Conservation Act (16 U.S.C. 839a(14));

      ‘(29) BONNEVILLE TRANSMISSION SYSTEM- The term ‘Bonneville Transmission System’ means transmission facilities owned or leased by the United States, acting through the Bonneville Administrator, and operated by the Bonneville Administrator or another entity under section 202(h) or (i) of this Act;’.

SEC. 422. APPLICATION OF FEDERAL POWER ACT.

    After September 30, 2001, sections 202(h) and (i), 203 (with respect to dispositions of transmission facilities), 205, 206, 208, and 210 through 213 of the Federal Power Act and sections 301 through 304, 306, 307 (except the last sentence of paragraph (c)), 308, 309, 313, and 317 of the Federal Power Act apply to transmission facilities and transmission of electric energy and the provision of necessary associated services over the Bonneville Transmission System, provided that--

      (1) any determination made under those sections as to whether an action or matter is just, reasonable, not unduly discriminatory or preferential shall be subject to--

        (A) phasing in Commission-ordered changes in transmission rates or charges that would cause unreasonable cost shifts among users of the Bonneville Transmission System if implemented at once;

        (B) mitigating unreasonable adverse impacts on remote transmission customers in the Pacific Northwest that would otherwise result from Commission-ordered changes in the historic treatment of costs to acquire transmission to serve customers historically served by General Transfer Agreements entered into between the Bonneville Administrator and other transmission providers;

        (C) complying with requirements of other laws applicable to the Bonneville Administrator;

        (D) assuring the Bonneville Administrator’s transmission rates and charges are established sufficient to--

          (i) recover existing and future Federal investment in the Bonneville Transmission System over a reasonable number of years after first meeting all the Bonneville Administrator’s other transmission costs and expenses; and

          (ii) produce the revenues necessary to assure timely payment of all transmission

related costs and expenses, including revenues to establish reserves;

        (E) rules established by the Commission to--

          (i) assure transmission access is provided over the Bonneville Transmission System for hydroelectric power that must be generated and transmitted at a particular time in order to reduce spill and levels of dissolved nitrogen gas harmful to fish; and

          (ii) govern compensation to adversely affected transmission users when capacity is made available for transmission of hydroelectric power in those circumstances; and

        (F) subsection 205(g) of the Federal Power Act; and

      (2) these sections shall not apply to--

        (A) the Bonneville Administrator’s activities other than transmission of electric energy and provision of necessary associated services over the facilities of the Bonneville Transmission System; or

        (B) a contract in effect on the date of enactment of this section, except for rates which are adjustable by the Administrator under the contract; a Treaty of the United States; or a contract concerning the physical delivery of energy and capacity entered into by entities designated pursuant to such a Treaty.

SEC. 423. SURCHARGE ON TRANSMISSION RATES TO RECOVER OTHERWISE NONRECOVERABLE COSTS.

    Section 205 of the Federal Power Act is amended by adding the following after subsection (f):

    ‘(g)(1) Subject to the requirements of paragraph (2), the Bonneville Administrator shall propose and the Commission shall establish a mechanism pursuant to this section that enables the Administrator to place a surcharge on rates or charges for transmission services over the Bonneville Transmission System when necessary in order to recover power costs unable to be recovered through power revenues in time to meet the cost recovery requirements of section 7(a) of the Pacific Northwest Electric Power Planning and Conservation Act (16 U.S.C. 839e(a)(1)).

    ‘(2) The transmission surcharge mechanism set forth in paragraph (1) shall--

      ‘(A) recover not more than $600,000,000 in total and no more than $100,000,000 in any fiscal year;

      ‘(B) be available only between October 1, 2001, and October 1, 2016;

      ‘(C) be implemented by the Bonneville Administrator of only when the Bonneville Administrator projects that available financial reserves attributable to the power function will be less than $150,000,000; and

      ‘(D) to the fullest extent possible, be designed and established to recover the costs from transmission users in a manner that--

        ‘(i) minimizes any effect on transmission users’ choices among competing suppliers or products;

        ‘(ii) does not apply to use of the Bonneville Transmission System for power sales outside the Pacific Northwest; and

        ‘(iii) minimizes bypass of the Bonneville Transmission System by transmission users seeking to avoid the surcharge.

    ‘(3) The Bonneville Administrator shall have sole discretion to determine whether to implement the cost recovery mechanism established by the Commission under paragraph (1). Before imposing the surcharge, the Bonneville Administrator shall conduct a public process in the Pacific Northwest to receive comment on implementation of the surcharge. As a part of that public process, the Bonneville Administrator shall make available information concerning the need for and amount of the surcharge. If the Bonneville Administrator decides to implement a surcharge, it shall take effect on the Bonneville Administrator’s proposed effective date, but no earlier than 60 days following the Administrator’s filing of the proposed surcharge to the Commission for approval.

    ‘(4)(A) Within 120 days after the effective date of the surcharge, the Commission shall approve, reject, or modify the surcharge and communicate its decision to the Bonneville Administrator. In conducting its review, the Commission shall not consider the appropriateness of the cost recovery mechanism established by the Commission under paragraph (1).

    ‘(B) If the Commission rejects or modifies the surcharge, the Commission may order the Bonneville Administrator to refund, with interest, the portion of the surcharge the Commission found not justified or the Commission may authorize the Administrator to recover amounts from customers who underpaid or did not pay the surcharge. If the Commission orders modification of the Bonneville Administrator’s surcharge, such modified charge shall be effective on the date and for the time period specified by the Commission.

    ‘(5) Any payment of power costs through application of transmission revenues collected by surcharge or otherwise shall be treated as a loan to the Bonneville Administrator’s power function. The Bonneville Administrator shall repay the loan as soon as possible from power function revenues once the Bonneville Administrator is able to meet other power cost recovery and Treasury repayment obligations on an annual basis using power revenues and, to the extent practicable, refund such revenues to all transmission customers charged the surcharge. The borrowed revenues shall bear interest at a rate determined appropriate by the Commission.

    ‘(6) For the recovery of costs relating to any generation or conservation resources financed by debt issued by a non-Federal party before October 1, 1998, and secured by an obligation of the Bonneville Administrator to make payments or net bill power and transmission service that cannot be recovered through power rates and charges and paid in accordance with the application of revenues and the priority of payments specified by section 13(b) of the Federal Columbia River Transmission System Act of 1974 (16 U.S.C. 838k(b)), the provisions of this section apply,

except for the recovery limitations under paragraph (2)(A) and the time limits under paragraph (2)(B), but only to the extent such recovery would have been allowed under laws applicable to the Bonneville Administrator as of October 1, 1998. In reviewing this surcharge request, the Commission shall apply the standard of review applicable as of October 1, 1998.’.

SEC. 424. COMPLAINTS.

    Section 306 of the Federal Power Act is amended by inserting ‘agency or instrumentality of the United States,’ after ‘person,’ in the first sentence.

SEC. 425. REVIEW OF COMMISSION ORDERS.

    Section 313 of the Federal Power Act is amended by inserting ‘agency or instrumentality of the United States,’ after ‘person,’ in the first sentence in subsection (a).

SEC. 426. ANTITRUST LAWS APPLICATION TO BPA.

    (a) IN GENERAL- Subject to subsection (b), effective January 1, 2003, the Bonneville Power Authority is subject to the antitrust laws of the United States with respect to the operation of its electric power system. For purposes of this section, the term ‘antitrust laws’ has the meaning given it in subsection (a) of the first section of the Clayton Act (15 U.S.C. 12(a)), except that it includes the Act of June 19, 1936 (15 U.S.C. 13 et. seq.), commonly known as the Robinson-Patman Act, and section 5 of the Federal Trade Commission Act (15 U.S.C. 45), to the extent that section 5 applies to unfair methods of competition.

    (b) EXCEPTION- No damages, interest on damages, costs, or attorney’s fees may be recovered under section 4, 4A, or 4C of the Clayton Act (15 U.S.C. 15, 15a, or 15c) from the Bonneville Power Authority.

SEC. 427. CONFORMING AMENDMENTS.

    (a) Section 201(f) of the Federal Power Act is amended by striking ‘No’ and inserting ‘(1) Except as provided in section 202(h)-(i), no’.

    (b) Section 212(i) of the Federal Power Act (16 U.S.C. 824(i)) is repealed.

    (c) Section 6 of the Federal Columbia River Transmission System Act (16 U.S.C. 838(d)) is repealed.

    (d) Section 9 of the Federal Columbia River Transmission System Act (16 U.S.C. 838g) is amended to read as follows:

‘SEC. 9. RATES AND CHARGES.

    ‘Schedules of rates and charges for the sale, including dispositions to a Federal agency, of all electric power made available to the Administrator pursuant to section 8 of this Act or otherwise acquired shall be established--

      ‘(1) with a view to encouraging the widest possible diversified use of electric power at the lowest possible rates to consumers consistent with sound business principles;

      ‘(2) having regard to the recovery (upon the basis of the application of such rate schedules to the capacity of the electric facilities of the projects) of the cost of producing such electric power, including the amortization of the capital investment allocated to power over a reasonable period of years and payments provided for in section 11(b)(9) of this Act; and

      ‘(3) at levels to produce such additional power revenues as may be required, in the aggregate with all other power revenues of the Administrator, to pay when due the principal of, premiums, discounts, and expenses in connection with the issuance of and interest on all bonds issued and outstanding pursuant to this Act for other than the construction, acquisition, and replacement of the Federal transmission system, and amounts required to establish and maintain reserve and other funds and accounts established in connection therewith.

    Electric power rates under this section shall be established by the Administrator in accordance with section 7 of the Pacific Northwest Electric Power Planning and Conservation Act.’.

    (e) Section 10 of the Federal Columbia River Transmission Act (16 U.S.C 838h) is repealed.

    (f) Section 6 of the Pacific Northwest Regional Preference Act (16 U.S.C. 837e) is amended by striking ‘Federal energy or’ in the first sentence and by striking the second sentence.

    (g) Section 7(a)(1) of the Pacific Northwest Electric Power Planning and Conservation Act (16 U.S.C. 839e(a)(1)) is amended to read as follows:

    ‘(1) The Administrator shall establish, and periodically review and revise, rates for the sale and disposition of electric power and shall periodically review and, if necessary, propose revisions to rates for the transmission of electric power. Rates for the sale and disposition of electric power shall be established and, as appropriate, revised to recover, in accordance with sound business principles, the costs associated with the acquisition and conservation of electric power, including the amortization of the Federal investment allocable to electric power rates in the Federal Columbia River Power system (including irrigation electric-power-related costs required to be repaid out of electric power revenues) over a reasonable period of years and the other costs and expenses incurred by the Administrator pursuant to this Act and other provisions of law. Rates for the sale and disposition of electric power shall be established in accordance with section 9 of the Federal Columbia River Transmission System Act (16 U.S.C. 838g), section 5 of the Flood Control Act of 1944 (16 U.S.C. 825s), and this Act.’.

    (h) Section 7(a)(2) of the Pacific Northwest Electric Power Planning and Conservation Act (16 U.S.C. 839e(a)(2)) is amended by--

      (1) striking ‘Rates’ and inserting ‘Power rates’;

      (2) inserting ‘and’ after the comma in subparagraph (A);

      (3) striking ‘, and’ and inserting a period at the end of subparagraph B; and

      (4) striking subparagraph (C).

    (i) Section 7(i) of the Pacific Northwest Electric Power Planning and Conservation Act (16 U.S.C. 839(i)) is amended by inserting ‘power’ immediately after ‘establishing’ in the first sentence.

    (j) Section 9(d) of the Pacific Northwest Electric Power Planning and Conservation Act (16 U.S.C. 839f(d)) is amended by striking ‘transmission access,’ and inserting ‘power’ immediately before ‘services’ in the second sentence.

    (k) Section 9(i)(3) of the Pacific Northwest Electric Power Planning and Conservation Act (16 U.S.C. 839f(i)(3)) is amended in the first sentence--

      (1) by inserting ‘power’ before ‘services’ each place such term appears; and

      (2) by striking ‘transmission, storage, and’ and inserting ‘storage and’.

    (l) Section 2(e) of the Act of August 20, 1937 (chapter 720; 50 Stat. 731) (commonly known as the Bonneville Project Act of 1937) is amended by striking the colon and and all that follows and inserting a period.

Subtitle C--Other Power Marketing Administrations

SEC. 431. DEFINITIONS.

    For purposes of this subtitle:

      (1) The term ‘Administrator’ means the administrator of a Federal power marketing administration.

      (2) The term ‘Commission’ means the Federal Energy Regulatory Commission.

      (3) The term ‘Federal power marketing administrations’ means the Western Area Power Administration, Southwestern Power Administration, and Southeastern Power Administration.

      (4) The term ‘power generating agencies’ means the Bureau of Reclamation, the Army Corps of Engineers, and the International Boundary and Water Commission.

      (5) The term ‘public utility’ means a public utility as defined in section 201(e)(1) the Federal Power Act.

      (6) The term ‘Secretary’ means the Secretary of Energy.

SEC. 432. ACCOUNTING.

    Not later than 6 months after the date of enactment of this Act, the Secretary of Energy shall promulgate rules containing each of the following:

      (1) ACCOUNTING PRINCIPLES AND REQUIREMENTS- Procedures to ensure that the Federal power marketing administrations utilize the same accounting principles and requirements as are applicable to public utilities pursuant to Parts II and III of the Federal Power Act (16 U.S.C. 792 and following) with respect to accounting for revenue, expenses, investments, and depreciation.

      (2) COMPLIANCE- Procedures for the filing of complaints with the Secretary of Energy by interested persons seeking to ensure compliance with the procedures of this section.

      (3) ADMINISTRATIVE RECONCILIATION- Procedures to insure that the Bureau of Reclamation, the United States Army Crops of Engineers, and the Administrators of the Federal power marketing administrations maintain a consistent set of books and records for purposes of repayment obligations.

SEC. 433. REGIONAL TRANSMISSION PLANNING AGENCIES.

    Each Federal power marketing administration is authorized to participate, under such terms and conditions as it deems appropriate, after conducting a public process to receive comment on each Federal power marketing administration’s participation, in a Commission approved and regulated regional transmission planning agency, except that--

      (1) a Federal power marketing administration shall not join any regional transmission planning agency which would require it, or the combined users of its transmission system, to pay a disproportionate share of the regional transmission planning agency’s costs, and

      (2) a Federal power marketing administration shall not participate in any regional transmission planning agency that would result in undue cost shifts among its customers, as determined by the Commission.

    This section shall not be construed to require the participation of the Federal power marketing administrations in regional transmission planning agencies.

SEC. 434. APPLICATION OF ANTITRUST LAW.

    (a) IN GENERAL- The Federal power marketing administrations shall be subject to the antitrust laws of the United States. For purposes of this section, the term ‘antitrust laws’ has the meaning given it in subsection (a) of the first section of the Clayton Act (15 U.S.C. 12(a)), except that such term includes the Act of June 19, 1936 (15 U.S.C. 13 and following), commonly known as the Robinson-Patman Act, and section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to the extent that such section 5 applies to unfair methods of competition.

    (b) JUDICIAL REVIEW- Any person injured by violation of the antitrust laws by any of the Federal power marketing administrations may bring a civil action against the agency in Federal district court for injunctive relief, but neither the Federal power marketing administrations nor their officers, attorneys, employees, agents or representatives shall be held liable for civil damages or attorney’s fees. No action under the antitrust laws may be maintained against any of the Federal power marketing administrations, their officers, attorneys, employees, agents or representatives arising out of any activity that is obligated or directed to be performed under any Federal statute.

TITLE V--RENEWABLE ENERGY

SEC. 501. RENEWABLE PORTFOLIO STANDARD.

    (a) STANDARD- Title II of the Public Utility Regulatory Polices Act of 1978 is amended by adding after section 214 the following new section:

‘SEC. 215. FEDERAL RENEWABLE PORTFOLIO STANDARD.

    ‘(a) EFFECTIVE DATE- The Administrator of the Energy Information Administration in the Department of Energy shall publish a notice on or before January 1, 2005, specifying the percentage of total electric energy generation in the United States that the Administrator estimates to be supplied by renewable energy during the calendar year 2004. If such percentage is less than 3 percent, this section shall take effect on January 1, 2005.

    ‘(b) MINIMUM RENEWABLE GENERATION REQUIREMENT- (1) For each calendar year beginning after the effective date of this section, a retail electric supplier shall submit to the Secretary of Energy (referred to in this section as the ‘Secretary’) Renewable Energy Credits in an amount equal to 3 percent of the total electric energy sold by the retail electric supplier to electric consumers in the calendar year. The retail electric supplier shall make this submission before April 1 of the following calendar year.

    ‘(2) For purposes of this section, a ‘renewable energy’ resource means solar energy, wind, geothermal, or biomass.

    ‘(3) This section does not preclude a State from requiring additional renewable energy generation in that State.

    ‘(c) SUBMISSION OF CREDITS- A retail electric supplier may satisfy the requirements of subsection (a) through the submission of--

      ‘(1) Renewable Energy Credits issued under subsection (d) for renewable energy generated by the retail electric supplier in the calendar year for which Credits are being submitted or any previous calendar year;

      ‘(2) Renewable Energy Credits issued under subsection (d) to any renewable energy generator for renewable energy generated in the calendar year for which Credits are being submitted or a previous calendar year and acquired by the retail electric supplier; or

      ‘(3) any combination of Credits under paragraphs (1) and (2).

    ‘(d) ISSUANCE OF CREDITS- (1) The Secretary shall establish a program to issue, monitor the sale or exchange of, and track Renewable Energy Credits.

    ‘(2) Under the program, an entity that generates electric energy through the use of a renewable energy resource may apply to the Secretary for the issuance of Renewable Energy Credits. The application shall indicate--

      ‘(A) the type of renewable energy resource used to produce the electricity;

      ‘(B) the State in which the electric energy was produced; and

      ‘(C) any other information the Secretary determines appropriate.

    ‘(3)(A) Except as provided in subparagraph (B), the Secretary shall issue to an entity 1 Renewable Energy Credit for each kilowatt-hour of electric energy the entity generates through the use of a renewable energy resource in any State in 2005 and any succeeding year.

    ‘(B) The Secretary shall issue 2 Renewable Energy Credits for each kilowatt-hour of electric energy generated through the use of a renewable energy resource in any State in 2005 and any succeeding year, if the generating facility is located on Indian land. For purposes of this paragraph, renewable energy generated by biomass cofired with other fuels is eligible for 2 credits only if the biomass was grown on the land eligible under this subparagraph.

    ‘(C) To be eligible for a Renewable Energy Credit, the unit of electricity generated through the use of a renewable energy resource may be sold or may be used by the generator. If both a renewable energy resource and a nonrenewable energy resource are used to generate the electric energy, the Secretary shall issue credits based on the proportion of the renewable energy resource used. The Secretary shall identify Renewable Energy Credits by type of generation and by the State in which the generating facility is located.

    ‘(4) In order to receive a Renewable Energy Credit, the recipient of a Renewable Energy Credit shall pay a fee, calculated by the Secretary, in an amount that is equal to the administrative costs of issuing, recording, monitoring the sale or exchange of, and tracking the Credit, or does not exceed 5 percent of the dollar value of the Credit, whichever is lower. The Secretary shall retain the fee and use it to pay these administrative costs.

    ‘(5) When a generator sells electric energy generated through the use of a renewable energy resource to a retail electric supplier under a contract subject to section 210 of this Act, the retail electric supplier is treated as the generator of the electric energy for the purposes of this section for the duration of the contract.

    ‘(6) The Secretary shall disqualify an otherwise eligible renewable energy generator from receiving a Renewable Energy Credit if the generator has elected to participate in net metering under section 216.

    ‘(e) SALE OR EXCHANGE- A Renewable Energy Credit may be sold or exchanged by the entity to which it was issued or by any other entity that acquires the Credit. A Renewable Energy Credit for any year that is not used to satisfy the minimum renewable generation requirement of subsection (a) for that year may be carried forward for use in another year.

    ‘(f) RENEWABLE ENERGY CREDIT COST CAP- Beginning on the effective date of this section, the Secretary shall offer Renewable Energy Credits for sale. The Secretary shall charge 1.5 cents for each Renewable Energy Credit sold during calendar year 2005, and on January 1 of each following year, the Secretary shall adjust for inflation, based on the Consumer Price Index, the price charged per Credit for that calendar year. The Secretary shall deposit in a separate account the amount received from a sale under this subsection. Amounts in the separate account shall be available, without further appropriation, to the Secretary to be used for purposes of providing assistance for research and development of cleaner burning fuels and renewable energy.

    ‘(g) ENFORCEMENT- The Secretary may bring an action in the appropriate United States district court to impose a civil penalty on a retail electric supplier that does not comply with subsection (b). A retail electric supplier that does not submit the required number of Renewable Energy Credits under subsection (b) is subject to a civil penalty of not more than 3 times the value of the Renewable Energy Credits not submitted. For purposes of this subsection, the value of a Renewable Energy Credit is the price of a Credit determined under subsection (f) for the year the Credits were not submitted.

    ‘(h) INFORMATION COLLECTION- The Secretary may collect the information necessary to verify and audit--

      ‘(1) the annual electric energy generation and renewable energy generation of any entity applying for Renewable Energy Credits under this section;

      ‘(2) the validity of Renewable Energy Credits submitted by a retail electric supplier to the Secretary; and

      ‘(3) the quantity of electricity sales of all retail electric suppliers.

    ‘(i) SUNSET- This section expires December 31, 2015.’.

    (b) DEFINITIONS- Section 3 of the Public Utility Regulatory Polices Act of 1978 is amended by adding after paragraph (24) the following new paragraph:

      ‘(25) The term ‘retail electric supplier’ means a person, State agency, or Federal agency that sells electric energy to an electric consumer.

      ‘(26) The term ‘Indian land’ means--

        ‘(A) any land within the limits of any Indian reservation, pueblo, or rancheria;

        ‘(B) any land not within the limits of any Indian reservation, pueblo, or rancheria title to which was on the date of passage of the Electric Consumers’ Power to Choose Act of 1999 either held in trust by the United States for the benefit of any Indian tribe or individual or held by any Indian tribe or individual subject to restriction by the United States against alienation;

        ‘(C) any dependent Indian community; and

        ‘(D) any land conveyed to any Alaska Native corporation under the Alaska Native Claims Settlement Act.

      ‘(27) The term ‘Indian tribe’ means any Indian tribe, band, group, or nation, including Alaska Indians, Aleuts, or Eskimos, or any Alaskan Native Village of the United States, which is considered an eligible recipient under the Indian Self-Determination and Education Assistance Act (Public Law 93-638) or was considered an eligible recipient under chapter 67 of title 31, United States Code, prior to the repeal of such chapter.’.

    (c) TABLE OF CONTENTS- The table of contents for title II of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 and following) is amended by adding the following at the end thereof:

‘Sec. 215. Federal renewable portfolio standard.’.

SEC. 502. NET METERING.

    (a) AMENDMENT OF PURPA- The Public Utility Regulatory Polices Act of 1978 is amended by adding the following new section after section 215, as added by section 501 of this Act:

‘SEC. 216. NET METERING FOR RENEWABLE ENERGY.

    ‘(a) DEFINITIONS- For purposes of this section--

      ‘(1) the term ‘eligible on-site generating facility’ means a facility on the site of an electric consumer with a peak generating capacity of 20 kilowatts or less that is fueled solely by a renewable energy resource.

      ‘(2) The term ‘renewable energy resource’ means solar energy, wind, geothermal, or biomass.

      ‘(3) The term ‘net metering service’ means service to an electric consumer under which electricity generated by that consumer from an eligible on-site generating facility and delivered to the distribution system through the same meter through which purchased electricity is received may be used to offset electricity provided by the retail electric supplier to the electric consumer during the applicable billing period so that an electric consumer is billed only for the net electricity consumed during the billing period, but in no event shall the net be less than zero during the applicable billing period.

    ‘(b) REQUIREMENT TO PROVIDE NET METERING SERVICE- Each retail electric supplier shall make available upon request net metering service to any retail electric consumer that the supplier currently serves or solicits for service.

    ‘(c) STATE AUTHORITY- This section does not preclude a State from imposing additional requirements consistent with the requirements in this section, including the imposition of a cap limiting the amount of net metering available in the State. Nothing in this Act or any other Federal law preempts or otherwise affects authority under State law to require a retail electric supplier to make available net metering service to a retail electric consumer which the supplier serves or offers to serve.’.

    (c) TABLE OF CONTENTS- The table of contents for title II of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 and following) is amended by adding the following at the end thereof:

‘Sec. 216. Net metering for renewable energy.’.

TITLE VI--PROVISIONS RELATING TO THE INTERNAL REVENUE CODE

SEC. 601. 5-YEAR EXTENSION OF CREDIT FOR PRODUCING ELECTRICITY FROM RENEWABLE RESOURCES.

    Subsection (c) of section 45 of the Internal Revenue Code of 1986 (relating to credit for electricity produced from certain renewable resources) is amended to read as follows:

    ‘(c) DEFINITIONS- For purposes of this subsection--

      ‘(1) QUALIFIED ENERGY RESOURCES- The term ‘qualified energy resources’ means--

        ‘(A) wind,

        ‘(B) solar power,

        ‘(C) geothermal power, and

        ‘(D) biomass.

      ‘(2) BIOMASS- The term ‘biomass’ means closed-loop biomass and forest and agricultural biomass.

      ‘(3) CLOSED-LOOP BIOMASS- The term ‘closed-loop biomass’ means any organic material from a plant which is planted exclusively for purposes of being used at a qualified facility to produce electricity.

      ‘(4) FOREST AND AGRICULTURAL BIOMASS- The term ‘forest and agricultural biomass’ means any solid, nonhazardous, cellulosic waste material, that is segregated from other waste materials, and that is derived from the following forest-related resources: mill residues, pre-commercial thinnings, and slash and brush, but not including old growth timber, waste pallets, crates, dunnage, unsegregated municipal solid waste (garbage), landscape or right-of-way tree trimmings, and biomass derived from agriculture sources, including orchard tree crops, vineyard grain, legumes, sugar, and other crop-by-products or residues.

      ‘(5) QUALIFIED FACILITY- The term ‘qualified facility’ means any facility owned by the taxpayer which is originally placed in service--

        ‘(A) in the case of a facility using wind to produce electricity, after December 31, 1993, and before July 1, 2015,

        ‘(B) in the case of a facility using solar power or geothermal power to produce electricity, after the date of the enactment of this subparagraph and before July 1, 2015, and

        ‘(C) in the case of a facility using biomass to produce electricity, after December 31, 1992, and before July 1, 2015.’.

SEC. 602. CREDIT FOR ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.

    (a) IN GENERAL- Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to nonrefundable personal credits) is amended by inserting after section 25A the following new section:

‘SEC. 25B. ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.

    ‘(a) ALLOWANCE OF CREDIT- In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 20 percent of the amount paid or incurred by the taxpayer for qualified energy efficiency improvements installed during such taxable year.

    ‘(b) LIMITATIONS-

      ‘(1) MAXIMUM CREDIT- The credit allowed by this section with respect to a dwelling shall not exceed $2,000.

      ‘(2) PRIOR CREDIT AMOUNTS FOR TAXPAYER ON SAME DWELLING TAKEN INTO ACCOUNT- If a credit was allowed to the taxpayer under subsection (a) with respect to a dwelling in 1 or more prior taxable years, the amount of the credit otherwise allowable for the taxable year with respect to that dwelling shall not exceed the amount of $2,000 reduced by the sum of the credits allowed under subsection (a) to the taxpayer with respect to the dwelling for all prior taxable years.

    ‘(c) CARRYFORWARD OF UNUSED CREDIT- If the credit allowable under subsection (a) exceeds the limitation imposed by section 26(a) for such taxable year reduced by the sum of the credits allowable under subpart A of part IV of subchapter A (other than this section), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such taxable year.

    * ‘(d) QUALIFIED ENERGY EFFICIENCY IMPROVEMENTS- For purposes of this section, the term ‘qualified energy efficiency improvements’ means any energy efficient building envelope component, and any energy efficient heating, cooling, or water heating appliance, the installation of which, by itself or in combination with other such components or appliances, is certified to improve the annual energy performance of the existing home by at least 30 percent, if--

      ‘(1) such component or appliance is installed in or on a dwelling--

        ‘(A) located in the United States, and

        ‘(B) owned and used by the taxpayer as the taxpayer’s principal residence (within the meaning of section 121),

      ‘(2) the original use of such component or appliance commences with the taxpayer, and

      ‘(3) such component or appliance reasonably can be expected to remain in use for at least 5 years.

    Such certification shall be made by the contractor who installed such improvements, a local building regulatory authority, or a qualified energy consultant (such as a utility or an accredited home energy rating system provider).

    ‘(e) SPECIAL RULES-

      ‘(1) TENANT-STOCKHOLDER IN COOPERATIVE HOUSING CORPORATION- In the case of an individual who is a tenant-stockholder (as defined in section 216) in a cooperative housing corporation (as defined in such section), such individual shall be treated as having paid his tenant-stockholder’s proportionate share (as defined in section 216(b)(3)) of the cost of qualified energy efficiency improvements made by such corporation.

      ‘(2) CONDOMINIUMS-

        ‘(A) IN GENERAL- In the case of an individual who is a member of a condominium management association with respect to a condominium which he owns, such individual shall be treated as having paid his proportionate share of the cost of qualified energy efficiency improvements made by such association.

        ‘(B) CONDOMINIUM MANAGEMENT ASSOCIATION- For purposes of this paragraph, the term ‘condominium management association’ means an organization which meets the requirements of paragraph (1) of section 528(c) (other than subparagraph (E) thereof) with respect to a condominium project substantially all of the units of which are used as residences.

    ‘(f) BASIS ADJUSTMENT- For purposes of this subtitle, if a credit is allowed under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.

    ‘(g) TERMINATION- Subsection (a) shall apply to qualified energy efficiency improvements installed during the period beginning on January 1, 1999, and ending on December 31, 2003.’.

    (b) CONFORMING AMENDMENTS-

      (1) Subsection (c) of section 23 of such Code is amended by inserting ‘, section 25B, and section 1400C’ after ’other than this section’.

      (2) Subparagraph (C) of section 25(e)(1) of such Code is amended by striking ‘section 23’ and inserting ‘sections 23, 25B, and 1400C’.

      (3) Subsection (d) of section 1400C of such Code is amended by inserting ‘and section 25B’ after ‘other than this section’.

      (4) Subsection (a) of section 1016 of such Code is amended by striking ‘and’ at the end of paragraph (26), by striking the period at the end of paragraph (27) and inserting ‘; and’, and by adding at the end the following new paragraph:

      ‘(28) to the extent provided in section 25B(f), in the case of amounts with respect to which a credit has been allowed under section 25B.’.

      (5) The table of sections for subpart A of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 25A the following new item:

‘Sec. 25B. Energy efficiency improvements to existing homes.’.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years ending after December 31, 1998.

SEC. 603. BUSINESS CREDIT FOR CONSTRUCTION OF NEW ENERGY EFFICIENT HOME.

    (a) IN GENERAL- Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business related credits) is amended by inserting after section 45C the following new section:

‘SEC. 45D. NEW ENERGY EFFICIENT HOME CREDIT.

    ‘(a) IN GENERAL- For purposes of section 38, in the case of an eligible contractor, the credit determined under this section for the taxable year is an amount equal to the aggregate adjusted bases of all energy efficient property installed in a qualified new energy efficient home during construction of such home.

    ‘(b) LIMITATIONS-

      ‘(1) MAXIMUM CREDIT-

        ‘(A) IN GENERAL- The credit allowed by this section with respect to a dwelling shall not exceed $2,000.

        ‘(B) PRIOR CREDIT AMOUNTS ON SAME DWELLING TAKEN INTO ACCOUNT- If a credit was allowed under subsection (a) with respect to a dwelling in 1 or more prior taxable years, the amount of the credit otherwise allowable for the taxable year with respect to that dwelling shall not exceed the amount of $2,000 reduced by the sum of the credits allowed under subsection (a) with respect to the dwelling for all prior taxable years.

      ‘(2) COORDINATION WITH REHABILITATION AND ENERGY CREDITS- For purposes of this section--

        ‘(A) the basis of any property referred to in subsection (a) shall be reduced by that portion of the basis of any property which is attributable to qualified rehabilitation expenditures (as defined in section 47(c)(2)) or to the energy percentage of energy property (as determined under section 48(a)), and

        ‘(B) expenditures taken into account under either section 47 or 48(a) shall not be taken into account under this section.

    ‘(c) QUALIFIED NEW ENERGY EFFICIENT HOME-

      ‘(1) IN GENERAL- Property is a qualified new energy efficient home if--

        ‘(A) the original use of such property commences with the taxpayer and is, at the time of such use, the principal residence of the taxpayer, and

        ‘(B) such property--

          ‘(i) reduces calculated environmental emissions for heating and cooling by 50 percent compared to a reference house that complies with minimum standard practice, as determined according to the requirements specified under paragraph (2)(B), and

          ‘(ii) is certified before such use commences as meeting the requirements of clause (i).

      ‘(2) CERTIFICATION-

        ‘(A) IN GENERAL- The Secretary of Energy shall establish requirements for the certification under paragraph (1)(B)(ii) after examining the requirements for energy consultants and home energy ratings providers specified by the Mortgage Industry National Accreditation Procedures for Home Energy Rating Systems. Any certification under such paragraph shall be conveyed to the taxpayer seeking the credit under this section.

        ‘(B) METHODS FOR DEMONSTRATING COMPLIANCE- (i) Compliance with the requirements of paragraph (1)(B)(i) shall be demonstrated by either the component method described in clause (ii) or the performance method described in clause (iii).

        ‘(ii) The component method is a method in which all of the components of a home comply with the additional requirements established by the Secretary of Energy, resulting in achievement of results equivalent to the results of using the performance method.

        ‘(iii) The performance method is a method in which compliance with the requirements of paragraph (1)(B)(i) is demonstrated by the use of computer software that meets specifications promulgated in regulations by the Secretary of Energy in consultation with the Secretary of Treasury. Such regulations shall contain procedures and methods for calculating emissions and emissions reductions and for reporting the results, and shall be based on the 1998 California residential ACM manual, except that the

calculational procedures shall allow a home to qualify for the tax credit under this section regardless of whether the home uses a gas or oil furnace or boiler, or an electric heat pump. The regulations shall require that the software allow for the printing of IRS forms needed for the tax credit under this section, and explanations for the taxpayer of the energy efficiency features that were used to comply with the requirements for the tax credit under this section. The Secretary of Energy shall approve software submissions that comply with the calculational requirements of the regulations.

        ‘(C) PERSONS MAKING CERTIFICATION- The certification under paragraph (1)(B)(ii) shall be made to the Secretary of Energy by an individual qualified to determine compliance with such paragraph. Individuals qualified to determine such compliance shall be only those individuals who are recognized by an organization certified by the Secretary of Energy for such purposes.

    ‘(d) DEFINITIONS- For purposes of this section--

      ‘(1) ELIGIBLE CONTRACTOR- The term ‘eligible contractor’ means the person who constructed the new energy efficient home.

      ‘(2) ENERGY EFFICIENT PROPERTY- The term ‘energy efficient property’ means any energy efficient building envelope component, and any energy efficient heating, cooling, or water heating appliance.

      ‘(3) PRINCIPAL RESIDENCE- The term ‘principal residence’ has the same meaning as when used in section 121, except that the period for which a building is treated as the principal residence of the taxpayer shall also include the 60-day period ending on the 1st day on which it would (but for this paragraph) first be treated as his principal residence.

    ‘(e) BASIS ADJUSTMENT- For purposes of this subtitle, if a credit is allowed under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.

    ‘(f) TERMINATION- Subsection (a) shall apply to dwellings purchased during the period beginning on January 1, 1999, and ending on December 31, 2003.’.

    (b) CREDIT MADE PART OF GENERAL BUSINESS CREDIT- Subsection (b) of section 38 of such Code (relating to current year business credit) is amended by striking ‘plus’ at the end of paragraph (11), by striking the period at the end of paragraph (12) and inserting ‘, plus’, and by adding at the end thereof the following new paragraph:

      ‘(13) the new energy efficient home credit determined under section 45D.’.

    (c) DENIAL OF DOUBLE BENEFIT- Section 280C of such Code (relating to certain expenses for which credits are allowable) is amended by adding at the end thereof the following new subsection:

    ‘(d) NEW ENERGY EFFICIENT HOME EXPENSES- No deduction shall be allowed for that portion of expenses for a new energy efficient home otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit determined for such taxable year under section 45D.’.

    (d) CREDIT ALLOWED AGAINST REGULAR AND MINIMUM TAX-

      (1) IN GENERAL- Subsection (c) of section 38 of such Code (relating to limitation based on amount of tax) is amended by redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following new paragraph:

      ‘(3) SPECIAL RULES FOR NEW ENERGY EFFICIENT HOME CREDIT-

        ‘(A) IN GENERAL- In the case of the new energy efficient home credit--

          ‘(i) this section and section 39 shall be applied separately with respect to the credit, and

          ‘(ii) in applying paragraph (1) to the credit--

            ‘(I) subparagraph (A) thereof shall not apply, and

            ‘(II) the limitation under paragraph (1) (as modified by subclause (I)) shall be reduced by the credit allowed under subsection (a) for the taxable year (other than the new energy efficient home credit).

        ‘(B) NEW ENERGY EFFICIENT HOME CREDIT- For purposes of this subsection, the term ‘new energy efficient home credit’ means the credit allowable under subsection (a) by reason of section 45D.’.

      (2) CONFORMING AMENDMENT- Subclause (II) of section 38(c)(2)(A)(ii) of such Code is amended by inserting ‘or the new energy efficient home credit’ after ‘employment credit’.

    (e) LIMITATION ON CARRYBACK- Subsection (d) of section 39 of such Code is amended by adding at the end the following new paragraph:

      ‘(9) NO CARRYBACK OF NEW ENERGY EFFICIENT HOME CREDIT BEFORE EFFECTIVE DATE- No portion of the unused business credit for any taxable year which is attributable to the credit determined under section 45D may be carried back to any taxable year ending before the date of the enactment of section 45D.’.

    (f) DEDUCTION FOR CERTAIN UNUSED BUSINESS CREDITS- Subsection (c) of section 196 of such Code is amended by striking ‘and’ at the end of paragraph (7), by striking the period at the end of paragraph (8) and inserting ‘, and’, and by adding after paragraph (8) the following new paragraph:

      ‘(9) the new energy efficient home credit determined under section 45D.’.

    (g) CLERICAL AMENDMENT- The table of sections for subpart D of part IV of subchapter A of chapter 1

of such Code is amended by inserting after the item relating to section 45C the following new item:

‘Sec. 45D. New energy efficient home credit.’.

    (h) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years ending after December 31, 1998.

SEC. 604. TAX CREDIT FOR COMBINED HEAT AND POWER SYSTEM PROPERTY.

    (a) IN GENERAL- Subpart E of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 48 the following new section:

‘SEC. 48A. ENERGY CREDIT.

    ‘(a) IN GENERAL- For purposes of section 46, the energy credit for any taxable year is the amount equal to the energy percentage of the basis of each energy property placed in service during such taxable year.

    ‘(b) ENERGY PERCENTAGE-

      ‘(1) IN GENERAL- Except as otherwise provided in this subsection, the energy percentage is 10 percent.

      ‘(2) COMBINED HEAT AND POWER PROPERTY- The energy percentage is 8 percent in the case of combined heat and power property.

      ‘(3) PERIOD FOR WHICH CREDIT IS ALLOWED FOR COMBINED HEAT AND POWER PROPERTY- In the case of combined heat and power property, the credit under subsection (a) shall be allowed only for the period beginning on January 1, 2000, and ending on December 31, 2002.

      ‘(4) TRANSITION RULES- Rules similar to the rules of section 48(m) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this subsection.

    ‘(c) ENERGY PROPERTY DEFINED-

      ‘(1) IN GENERAL- For purposes of this subpart, the term ‘energy property’ means any property--

        ‘(A) which is--

          ‘(i) solar energy property,

          ‘(ii) geothermal energy property, or

          ‘(iii) combined heat and power system property,

        ‘(B)(i) the construction, reconstruction, or erection of which is completed by the taxpayer, or

        ‘(ii) which is acquired by the taxpayer if the original use of such property commences with the taxpayer, or

        ‘(iii) with respect to which depreciation (or amortization in lieu of depreciation) is allowable, and

        ‘(C) which meets--

          ‘(i) the performance and quality standards (if any), and the certification requirements (if any), which have been prescribed by the Secretary by regulations (after consultation with the Secretary of Energy or the EPA Administrator, as appropriate), and

          ‘(ii) are in effect at the time the property is placed in service.

      ‘(2) EXCEPTION- Such term shall not include any property which is public utility property (as defined in section 46(f)(5) as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990). The preceding sentence shall not apply to combined heat and power system property.

    ‘(d) DEFINITIONS RELATING TO TYPES OF ENERGY PROPERTY- For purposes of this section--

      ‘(1) SOLAR ENERGY PROPERTY- The term ‘solar energy property’ means equipment which uses solar energy--

        ‘(A) to generate electricity,

        ‘(B) to heat or cool (or provide hot water for use in) a structure, or

        ‘(C) to provide solar process heat.

      ‘(2) GEOTHERMAL ENERGY PROPERTY- The term ‘geothermal energy property’ means equipment used to produce, distribute, or use energy derived from a geothermal deposit (within the meaning of section 613(e)(2)), but only, in the case of electricity generated by geothermal power, up to (but not including) the electrical transmission stage.

      ‘(3) COMBINED HEAT AND POWER SYSTEM PROPERTY-

        ‘(A) IN GENERAL- The term ‘combined heat and power system property’ means property comprising a system--

          ‘(i) which uses the same energy source for the simultaneous or sequential generation of electrical power, mechanical shaft power, or both, in combination with the generation of steam or other forms of useful thermal energy (including heating and cooling applications),

          ‘(ii) which has an electrical capacity of more than 50 kilowatts or a mechanical energy capacity of more than 67 horsepower or an equivalent combination of electrical and mechanical energy capacities,

          ‘(iii) which produces--

            ‘(I) at least 20 percent of its total useful energy in the form of thermal energy, and

            ‘(II) at least 20 percent of its total useful energy in the form of electrical or mechanical power (or a combination thereof), and

          ‘(iv) the energy efficiency percentage of which exceeds 60 percent.

        ‘(B) SPECIAL RULES-

          ‘(i) ACCOUNTING RULE- If the combined heat and power system property is public utility property (as defined in section 46(f)(5) as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990), the taxpayer may claim the credit under subsection (a)(1) only if, with respect to such property, the taxpayer uses a normalization method of accounting.

          ‘(ii) DEPRECIATION- No credit shall be allowed for any combined heat and power system property unless the taxpayer elects to treat such property for purposes of section 168 as having a class life of not less than 22 years.

    ‘(e) SPECIAL RULES- For purposes of this section--

      ‘(1) SPECIAL RULE FOR PROPERTY FINANCED BY SUBSIDIZED ENERGY FINANCING OR INDUSTRIAL DEVELOPMENT BONDS-

        ‘(A) REDUCTION OF BASIS- For purposes of applying the energy percentage to any property, if such property is financed in whole or in part by --

          ‘(i) subsidized energy financing, or

          ‘(ii) the proceeds of a private activity bond (within the meaning of section 141) the interest on which is exempt from tax under section 103, the amount taken into account as the basis of such property shall not exceed the amount which (but for this subparagraph) would be so taken into account multiplied by the fraction determined under subparagraph (B).

        ‘(B) DETERMINATION OF FRACTION- For purposes of subparagraph (A), the fraction determined under this subparagraph is 1 reduced by a fraction--

          ‘(i) the numerator of which is that portion of the basis of the property which is allocable to such financing or proceeds, and

          ‘(ii) the denominator of which is the basis of the property.

        ‘(C) SUBSIDIZED ENERGY FINANCING- For purposes of subparagraph (A), the term ‘subsidized energy financing’ means financing provided under a Federal, State, or local program a principal purpose of which is to provide subsidized financing for projects designed to conserve or produce energy.

      ‘(2) CERTAIN PROGRESS EXPENDITURE RULES MADE APPLICABLE- Rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this section.’.

    (b) CONFORMING AMENDMENTS-

      (1) Section 48 of such Code is amended to read as follows:

‘SEC. 48. REFORESTATION CREDIT.

    ‘(a) IN GENERAL- For purposes of section 46, the reforestation credit for any taxable year is 10 percent of the portion of the amortizable basis of any qualified timber property which was acquired during such taxable year and which is taken into account under section 194 (after the application of section 194(b)(1)).

    ‘(b) DEFINITIONS- For purposes of this subpart, the terms ‘amortizable basis’ and ‘qualified timber property’ have the respective meanings given to such terms by section 194.’.

      (2) Subsection (d) of section 39 of such Code is amended by adding at the end of the following new paragraph:

      ‘(9) NO CARRYBACK OF ENERGY CREDIT BEFORE EFFECTIVE DATE- No portion of the unused business credit for any taxable year which is attributable to the energy credit determined under section 48A, except for the credit determined with respect to solar energy property and geothermal energy property, may be carried back to a taxable year ending before the date of the enactment of section 48A.’.

      (3) Paragraph (3) of section 50(c) of such Code is amended by adding at the end the following flush sentence: ‘In the case of the energy credit, the preceding sentence shall apply only to so much of such credit as relates to solar energy property and geothermal property (as such terms are defined in section 48A(d)).’.

      (4) Subclause (III) of section 29(b)(3)(A)(i) of such Code is amended by striking ‘section 48(a)(4)(C)’ and inserting ‘section 48A(e)(1)(C)’.

      (5) Subparagraph (E) of section 50(a)(2) of such Code is amended by striking ‘section 48(a)(5)’ and inserting ‘section 48A(e)(2)’.

      (6) Subparagraph (B) of section 168(e)(3) of such Code is amended--

        (A) in clause (vi)(I) by striking ‘subparagraph (A) of section 48(a)(3)’ and inserting ‘paragraphs (1) and (2) of section 48A(d)’, and

        (B) in the last sentence by striking ‘section 48(a)(3)’ and inserting ‘section 48A(c)(2)’.

      (7) Subparagraph (E) of section 168(e)(3) of such Code, as amended by section 803(a), is further amended by striking ‘and’ at the end of clause (iii), by striking the period at the end of clause (iv) and inserting ‘, and’, and by inserting after clause (iv) the following new clause:

          ‘(v) any combined heat and power system property (as defined in section 48A(d)(3)) for which a credit is allowed under section 48A and which, but for this clause, would have a recovery period of less than 15 years.’.

      (8) The table contained in subparagraph (b) of section 168(g)(3) of such Code, as amended by section 803(b)(2), is further amended by adding at the end the following: ‘(E)(v)....... 22’.

    (c) CLERICAL AMENDMENT- The table of sections for subpart E of part IV of subchapter A of chapter 1 of such Code is amended by striking the item relating to section 48 and inserting the following new items:

‘Sec. 48. Reforestation credit.

‘Sec. 48A. Energy credit.’.

    (d) EFFECTIVE DATE- The amendments made by this section shall apply to periods after December 31, 1999, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).

SEC. 605. 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 that 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.

            ‘(IV) If open access service is provided under subclause (I) or (III), the sale of electric output of electric output facilities on terms other than those available to the general public if such sale is to an on-system purchaser or is an existing off-system sale.

            ‘(V) Such other transactions or activities as may be provided in regulations prescribed by the Secretary.

          ‘(iii) DEFINITIONS; SPECIAL RULES- For purposes of this subparagraph--

            ‘(I) ON-SYSTEM PURCHASER- The term ‘on-system purchaser’ means a person who purchases electric energy from a governmental unit and whose electric facilities or equipment are directly connected with transmission or distribution facilities that are owned by such governmental unit.

            ‘(II) OFF-SYSTEM PURCHASER- The term ‘off-system purchaser’ means a purchaser of electric energy from a governmental unit other than an on-system purchaser.

            ‘(III) EXISTING OFF-SYSTEM SALE- The term ‘existing off-system sale’ means a sale of electric energy to a person that was an off-system purchaser of electric energy in the base year, but not in excess of the kilowatt hours purchased by such person in such year.

            ‘(IV) BASE YEAR- The term ‘base year’ means 1998 (or, at the election of such unit, 1996 or 1997).

            ‘(V) JOINT ACTION AGENCIES- A member of a joint action agency that is entitled to make a sale described in clause (ii)(IV) in a year may transfer that entitlement to the joint action agency in accordance with rules of the Secretary.

            ‘(VI) GOVERNMENT-OWNED FACILITY- An electric output facility (as defined in subsection (f)(4)(A)) shall be treated as owned by a governmental unit if it is owned or leased by such governmental unit or if such governmental unit has capacity rights therein acquired before July 9, 1996, for the purposes of serving one or more customers to which such governmental unit had a service obligation on such date under State law or a requirements contract.’.

    (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- An election under paragraph (1) does not apply to--

        ‘(A) any qualified bond (as defined in subsection (e)),

        ‘(B) any eligible refunding bond,

        ‘(C) any bond issued to finance a qualifying T&D facility, or

        ‘(D) any bond issued to finance equipment necessary to meet Federal or State environmental requirements applicable to, or repair of, electric output facilities in service on the date of enactment of this subsection. Repairs or equipment may not increase by more than a de minimis 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) ELIGIBLE REFUNDING BOND- The term ‘eligible refunding bond’ means State or local bonds issued after an election described in paragraph (1) that directly or indirectly refund State or local bonds issued before such election, if the weighted averaged maturity of the refunding bonds do not exceed the remaining weighted average maturity of the bonds issued before the election.

        ‘(C) 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) EFFECTIVE DATE, APPLICABILITY, 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) APPLICABILITY- References in this Act to sections of the Internal Revenue Code of 1986 shall be deemed to include references to comparable sections of the Internal Revenue Code of 1954.

      (3) Transition rules-

        (A) 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.

        (B) ELECTION- An issuer making the election under section 141(f) of the Internal Revenue Code of 1986, as added by subsection (b), shall not be liable under any contract in effect on the date of enactment of this Act for any claim arising from having made the election.