SUMMARY OF NATIONAL ELECTRICITY
RESTRUCTURING LEGISLATION
IN THE 104TH AND 105TH CONGRESSES

(Last revised June 6, 1997)

104TH CONGRESS (1995-1996)

S. 1526 -- Introduced by Senator Bennett Johnston (D-LA) to ?provide for retail competition among electric energy suppliers, to provide for recovery of stranded costs....and other purposes.?

• Repeals PURPA prospectively without disturbing existing contracts.
• Requires states and nonregulated retail utilities to select one of three courses of action within 18 months: (a) set up a competitive wholesale procurement market, (b) establish retail access for all consumers by 2002, or (c) devise some other program which precludes utility discrimination in favor of its own generation.
• Gives FERC authority to order retail wheeling, while not preempting states in this area.
• Mandates FERC definition and oversight of 100 percent stranded cost recovery.
• Mandates recovery of nuclear decommissioning costs.
• Sets a 2010 end-date for completing retail access.

H.R. 2929 -- Introduced by Congressman Ed Markey (D-MA) as the ?Electric Power Competition Act of 1996.?

• Sets forth federal standards of competition, which include open access transmission tariffs, and either utility divestiture of generation or a FERC finding of state mandated competition.
• Amends the anti-trust laws to make the ?state action? doctrine (by which any action would be exempt from compliance with Federal Antitrust laws because it was taken pursuant to state regulation or law) of antitrust jurisprudence inapplicable to electric utility activities subject to state review of competition.
• Suspends the PURPA provisions prospectively that require utilities to purchase QF generation where a utility service territory has been certified as competitive by the state and FERC.
• Protects the integrity of existing power purchase contracts.
• Permits state encouragement of particular generation technologies, such as facilities employing renewable resources.
• Provides for protection of customers from undue price increases and protection of utility recovery of verifiable stranded costs.

H.R. 3790 -- Electric Consumers? Power to Choose Act of 1996, introduced by Congressman Dan Schaefer (R-CO) to ?give all American electricity consumers the right to choose among competitive providers of electricity....?

• Establishes general concept that electric utility retail customers will have the right to purchase electric energy services from any supplier no later than December 15, 2000.
• If, within 6 months of enactment, states do not establish retail service to begin no later than December 15, 2000, FERC shall exercise the authorities that would otherwise be exercised by the state regulatory authority.
• States are required to consider applying the following to local distribution or sale of retail electric services:
• (1) tariffs or surcharges to ensure adequate electric service is available on a nondiscriminatory basis to all customers,
• (2) terms and conditions designed to ensure and enhance the reliability of service,
• (3) terms and conditions allowing state regulated utilities to recover investment costs incurred prior to July 11, 1996, and
• (4) terms and conditions to promote energy efficiency, conservation and environmental programs.
• Clarifies FERC authority to require transmission operators to provide interstate transmission services under such terms and conditions as FERC finds are necessary and appropriate to ensure that customers have access to transmission services under terms and conditions comparable to those under which a transmission operator uses its own system.
• Renewable Energy Credits: After the establishment of retail access, electric generators are required to submit to FERC credits in an amount equal to the required annual percentage of the total electric energy generated by such generator in the preceding calendar year. The required annual percentage is 2 percent beginning in the first year of retail access through 2004, 3 percent in 2005 through 2010, and 4 percent beginning in 2011. Credits accrue to facilities that generate electricity from organic waste, biomass, dedicated energy crops, landfill gas, geothermal, solar or wind resources.
• Public Utility Holding Company Act of 1935: PUHCA shall cease to apply to any public utility company and any holding company operating within a state once that state has instituted retail access.
• Public Utility Regulatory Policies Act of 1978: PURPA is amended to provide that section 210 does not apply to electric utilities after states institute retail access. The rights of parties under contracts in effect on July 11, 1996, however, are protected.

H.R. 3878, the Power Marketing Administration Privatization and Reform Act of 1996, introduced by Congressman Franks (R-NJ).

• Disposes of, through a competitive bidding procedure, all Federally-owned generation and transmission facilities used to generate and transmit power sold by the Federal Power Marketing Administrations and thereafter terminate Federal Power Marketing Administrations.
• Disposes of, through a competitive bidding procedure, all the hydroelectric generation facilities of the TVA.
• In the interim period before full privatization of the PMAs, would provide for full cost recovery rates for power sold by the PMAs and provide a transition to market-based rates for such power.
• Preference: Public utilities and coops shall be given a preference to future power allocations or reallocations of Federal power through a right of first refusal at market prices.

105TH CONGRESS (1997-1998)

Schaefer Bill: Representative Dan Schaefer (R-CO), chairman of the Subcommittee on Energy and Power of the House Commerce Committee, on February 10, 1997, filed H.R. 655, entitled the "Electric Consumers? Power to Choose Act of 1997." H.R. 655 is a "comprehensive" proposal to re-regulate the electric utility industry, along the lines of the telecommunications deregulation bill recently passed by Congress. H.R. 655 mandates retail wheeling nationwide no later than December 15, 2000.

Moreover, H.R. 655 requires states to elect within six months of H.R. 655's enactment whether the state will develop its own retail wheeling program or defer to FERC to develop that state?s plan. Likewise, each cooperative that is not regulated by its state commission must elect within six months of enactment whether the cooperative will develop its own retail wheeling program or defer to the state commission; where the state commission elects to defer to FERC, the local cooperative?s plan would also be determined by FERC.

H.R. 655 requires that each electric generator?s power production portfolio include at least 2 percent renewables by 2000, escalating to 4 percent by 2010. The requirement may be met either through direct ownership of renewable resources or through a Renewable Energy Credits trading system established under the bill. H.R. 655 would also repeal PUHCA and the mandatory purchase obligations of PURPA Section 210 for those utilities whose territories are deemed competitive by their state regulators.

This bill is similar to H.R. 3790 which Rep. Schaefer introduced in the 104th Congress. Rep. Schaefer held hearings throughout the U.S. in April and May and has scheduled more for June.

Bumpers Bill (S.237): On January 30, 1997, Senator Dale Bumpers introduced a bill, S.237, which provides for retail competition among electric energy suppliers for the benefit and protection of consumers, and for other purposes. The bill would require that by December 15, 2003, all consumers shall have the right to purchase retail electric energy from any person offering to provide such energy. Stranded costs would be guaranteed, but the authority would remain with the states. Each electric utility company shall be obligated to provide retail electric energy for and on behalf of any consumer served by the utility company?s local distribution facilities. The bill calls for FERC to create transmission regions managed by Independent System Operators. Use of renewable energy (9 percent) will be required of each supplier; however, hydro power is defined as renewable energy. The bill would repeal the Public Utility Holding Company Act.

In March, Senator Bumpers announced that he is considering changes to key provisions of his bill. The date of 2003 for federal mandated retail wheeling could be moved up. The renewables requirement will be reduced to a level utilities could more easily meet. He is also considering possible changes in the stranded cost regulations.

DeLay Bill: (H.R. 1230) In April, Representative Tom DeLay, House Majority Whip, introduced his "Consumers Electric Power Act of 1997" to guarantee all retail customers the right to choose their electrical supplier by January 1, 1999. The bill would retain state and local government authority for universal service, conservation and renewables, research and development; directs utilities to separate transmission and distribution from generation, ban all exit fees, subsidies, or other stranded cost penalties, and would assert federal authority over the electric systems. It would also repeal PURPA and PUHCA as long as customers have free and open access to competitive service. The bill is very similar to the proposal that Rep DeLay introduced in the 104th Congress(H.R. 4297).

DeFazio Bill: (HR 1359) - On April 17^th Oregon Congressman Peter DeFazio, along with seven co-sponsors, introduced legislation to create a national energy systems benefits fund. HR 1359 would establish a national fund to provide matching grants to state and local programs that promote energy conservation, renewable resources and low-income assistance. The fund would be supported by transmission access fees, limited to 2 mills/kWh and to one-half the aggregate cost of carrying out eligible public purpose programs. DeFazio?s bill sets up a National Electric System Public Benefits Board that would determine the amount the fund would collect each year and establish the criteria that state and local programs would have to meet to receive the matching funds.

Jeffords Bill: (S 687) - On May 1^st Senator Jim Jeffords introduced the "Electric System Public Benefits Protection Act of 1997." This legislation is very similar to DeFazio?s HR 1359, but it differs in some ways. Jeffords bill, in addition to calling for the transmission access fee to fund public purposes, also calls for establishing a renewable energy portfolio standard, under which all generating suppliers would have to demonstrate that a certain percentage of their annual sales are from renewable resources. The standard starts at 2.5% in 2000 and increases to 20% by 2020. The suppliers with no renewables would be able to purchase renewable credits from those who have them and hydroelectric facilities would be exempt from the standards. The Schaefer and Bumpers? bill also set portfolio standards for renewables. Schaefer?s bill sets 2 % as the current minimum and raises it to 4 percent by 2010. Bumpers? version starts at 5 percent in 2003, raises it to 9 percent on 2008 and 12 percent by 2013.

Besides focusing on renewables, Jeffords legislation establishes national emission standards for generating facilities of 15 MW or larger. emission standards

Thomas Bill: (S 722) - On May 8^th Senator Craig Thomas from Wyoming introduced the latest restructuring bill, the "Electric Utility Restructuring Empowerment Competitiveness Act of 1997." This bill takes a substantially different approach from those introduced by others in both the House and Senate. Senate Bill 722 gives the state most of the authority for deciding how and when to implement open retail access. Under S 722 states would have authority over all retail distribution or sale of electricity as well as the authority to require service delivery to customers. Thomas? proposal also calls for a study by the Treasury to assess whether the present tax code fosters competition and repeal of PUHCA 18 months after the bill is enacted.

The U.S. Department of Energy: The DOE is preparing utility deregulation legislation for the Administration which plans to introduce the measure early in the 105th Congress. Circulating drafts indicate that the proposal will include provisions related to air pollution, renewable energy, nuclear decommissioning funds, and other matters. The goal of the legislation would be to increase competition in the industry by opening both the wholesale and retail markets. The Administration bill is expected to say that states should retain the right to decide if they want to allow retail competition, as well as deciding on what constitutes stranded costs.

After completion of the initial draft, DOE submitted it to the National Economic Council. The NEC will coordinate the review by the other departments and agencies. From comments given by NEC Chairman Gene Sperling on March 20, NEC was just beginning its review of the draft. The review process is expected to take several months. In April, it was announced that Betsy Moler, Chair of FERC would be moving over to the Department of Energy to be the Deputy Secretary. It is expected that, because of her background, her input into the bill would be desirable. This could increase the review time of the bill by several months.