Interstate Transmission Act- Amends the Federal Power Act to direct the Federal Energy Regulatory Commission (FERC) to establish transmission pricing policies and standards for promoting the expansion of interstate transmission networks through incentive-based, performance-based, participant-funded, and/or cost-based rate treatments to ensure reliability of the electric system, to support interstate wholesale markets for electric power, and to expand transmission transfer capacity needed for wholesale competition.
Grants FERC jurisdiction over Electric Reliability Organizations certified by FERC to establish and enforce reliability standards for the bulk-power system.
Exempts Hawaii and Alaska from application of this Act.
Repeals the requirement for FERC prior authorization of the disposition of public utility facilities.
Authorizes FERC to promote voluntary development of regional transmission organizations, independent transmission providers, and similar organizations in order to enhance electric energy transmission in interstate commerce.
Creates State and Federal authority to site transmission facilities.
Amends the Public Utility Holding Company Act to exclude from its purview a multistate independent transmission company or any action to otherwise affect such an organization.
Amends the Internal Revenue Code to treat as an involuntary conversion, for which no gain shall be recognized for capital gains tax purposes, any disposition to an independent transmission company of property, stock, or partnership interest in an entity whose principal trade or business provides electric transmission services, if the transaction is meant to implement FERC or State electric restructuring policy.
[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1370 Introduced in House (IH)]
108th CONGRESS
1st Session
H. R. 1370
To provide for expansion of electricity transmission networks in order
to support competitive electricity markets, to ensure reliability of
electric service, to modernize regulation and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 19, 2003
Mr. Wynn (for himself and Mr. Burr) introduced the following bill;
which was referred to the Committee on Energy and Commerce, and in
addition to the Committee on Ways and Means, 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 for expansion of electricity transmission networks in order
to support competitive electricity markets, to ensure reliability of
electric service, to modernize regulation 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 ``Interstate
Transmission Act''.
(b) Table of Contents.--The table of contents is as follows:
Sec. 1. Short title and table of contents.
Sec. 2. Findings.
Sec. 3. Sustainable transmission networks rulemaking.
Sec. 4. Electric reliability standards.
Sec. 5. Disposition of property.
Sec. 6. Promotion of voluntary development of regional transmission
organizations, independent transmission
providers, and similar organizations.
Sec. 7. State and Federal authority to site transmission facilities.
Sec. 8. PUHCA exemption for RTOs.
Sec. 9. Independent transmission companies.
SEC. 2. FINDINGS.
Congress finds as follows:
(1) Transmission networks are the backbone of competitive
power markets and increased interstate commerce in electricity.
(2) Wholesale electric competition, already in effect
across the nation, and retail electric competition, adopted by
nearly half of the States, depend on adequate transmission
networks to benefit electric consumers.
(3) The expansion, enhancement, and improvement of
transmission facilities are necessary to maintain and improve
reliability of electric service.
(4) To support competitive power markets and to maintain
and improve reliability of electric service, the regulation of
transmission service must be reformed.
SEC. 3. SUSTAINABLE TRANSMISSION NETWORKS RULEMAKING.
Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is amended
by adding the following new section at the end thereof:
``SEC. 215. SUSTAINABLE TRANSMISSION NETWORKS RULEMAKING.
``(a) Rulemaking Requirement.--Within 1 year after the enactment of
this section, the Commission shall establish, by rule, transmission
pricing policies and standards for promoting the expansion and
improvement of interstate transmission networks through incentive-
based, performance-based, participant-funded, and/or cost-based rate
treatments to ensure reliability of the electric system, to support
interstate wholesale markets for electric power, and expand
transmission transfer capacity needed to sustain wholesale competition.
Policies and standards established under this section shall
specifically--
``(1) promote capital investment in the economically
efficient enlargement of transmission networks to reduce
congestion on transmission networks and provide accurate price
signals so that new generation and transmission is built where
it provides the lowest overall cost to consumers;
``(2) encourage improved operation of transmission
facilities and deployment of transmission technologies to
increase capacity and efficiency of existing networks and
reduce line losses, including but not limited to high-capacity
wires (including high-temperature superconducting cables),
power electronics and information technologies (including
flexible alternating current transmission system technologies),
and high-voltage, direct current lines; and
``(3) provide a return on equity that attracts new
investment in transmission facilities and reasonably reflects
the financial, operational and other risks taken by public
utilities in restructuring transmission assets.
``(b) Limitation on the Authority of This Section.--In the case of
any transmission rate approved by the Commission on or after the
effective date of the rule established under this section, the rate
shall comply with--
``(1) the policies and standards adopted pursuant to this
section as necessary or appropriate to implement the
requirements of subsection (a) of this section; and
``(2) the procedural and other requirements of this part,
including the requirement of sections 205 and 206, that all
rates, charges, terms and conditions be just and reasonable and
not unduly discriminatory.''.
SEC. 4. ELECTRIC RELIABILITY STANDARDS.
Part II of the Federal Power Act (16 U.S.C 824 et seq.) is amended
by adding the following new section at the end thereof:
``SEC. 216. ELECTRIC RELIABILITY.
``(a) Definitions.--For purposes of this section--
``(1) The term `bulk-power system' means--
``(A) facilities and control systems necessary for
operating an interconnected electric energy
transmission network (or any portion thereof); and
``(B) electric energy from generation facilities
needed to maintain transmission system reliability.
The term does not include facilities used in the local
distribution of electric energy.
``(2) The terms `Electric Reliability Organization' and
`ERO' mean the organization certified by the Commission under
subsection (c) the purpose of which is to establish and enforce
reliability standards for the bulk-power system, subject to Commission
review.
``(3) The term `reliability standard' means a requirement,
approved by the Commission under this section, to provide for
reliable operation of the bulk-power system. The term includes
requirements for the operation of existing bulk-power system
facilities and the design of planned additions or modifications
to such facilities to the extent necessary to provide for
reliable operation of the bulk-power system, but the term does
not include any requirement to enlarge such facilities or to
construct new transmission capacity or generation capacity.
``(4) The term `reliable operation' means operating the
elements of the bulk-power system within equipment and electric
system thermal, voltage, and stability limits so that
instability, uncontrolled separation, or cascading failures of
such system will not occur as a result of a sudden disturbance
or unanticipated failure of system elements.
``(5) 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 affect the ability of the operators of
other components within the system to maintain reliable
operation of the facilities within their control.
``(6) The term `transmission organization' means a regional
transmission organization, independent system operator,
independent transmission provider, or other transmission
organization finally approved by the Commission for the
operation of transmission facilities.
``(7) The term `regional entity' means an entity having
enforcement authority pursuant to subsection (e)(4).
``(b) Jurisdiction and Applicability.--(1) The Commission shall
have jurisdiction, within the United States, over the ERO certified by
the Commission under subsection (c), any regional entities, and all
users, owners and operators of the bulk-power system, including but not
limited to the entities described in section 201(f), for purposes of
approving reliability standards established under this section and
enforcing compliance with this section. All users, owners and operators
of the bulk-power system shall comply with reliability standards that
take effect under this section.
``(2) The Commission shall issue a final rule to implement the
requirements of this section not later than 180 days after the date of
enactment of this section.
``(c) Certification.--Following the issuance of a Commission rule
under subsection (b)(2), any person may submit an application to the
Commission for certification as the Electric Reliability Organization
(ERO). The Commission may certify one such ERO if the Commission
determines that such ERO--
``(1) has the ability to develop and enforce, subject to
subsection (e)(2), reliability standards that provide for an
adequate level of reliability of the bulk-power system;
``(2) has established rules that--
``(A) assure its independence of the users and
owners and operators of the bulk-power system, while
assuring fair stakeholder representation in the
selection of its directors and balanced decisionmaking
in any ERO committee or subordinate organizational
structure;
``(B) allocate equitably reasonable dues, fees, and
other charges among end users for all activities under
this section;
``(C) provide fair and impartial procedures for
enforcement of reliability standards through the
imposition of penalties in accordance with subsection
(e) (including limitations on activities, functions, or
operations, or other appropriate sanctions);
``(D) provide for reasonable notice and opportunity
for public comment, due process, openness, and balance
of interests in developing reliability standards and
otherwise exercising its duties; and
``(E) provide for taking, after certification,
appropriate steps to gain recognition in Canada and
Mexico.
``(d) Reliability Standards.--(1) The Electric Reliability
Organization shall file each reliability standard or modification to a
reliability standard that it proposes to be made effective under this
section with the Commission.
``(2) The Commission may approve by rule or order a proposed
reliability standard or modification to a reliability standard if it
determines that the standard is just, reasonable, not unduly
discriminatory or preferential, and in the public interest. The
Commission shall give due weight to the technical expertise of the
Electric Reliability Organization with respect to the content of a
proposed standard or modification to a reliability standard and to the
technical expertise of a regional entity organized on an
Interconnection-wide basis with respect to a reliability standard to be
applicable within that Interconnection, but shall not defer with
respect to the effect of a standard on competition. A proposed standard
or modification shall take effect upon approval by the Commission.
``(3) The Electric Reliability Organization shall rebuttably
presume that a proposal from a regional entity organized on an
Interconnection-wide basis for a reliability standard or modification
to a reliability standard to be applicable on an Interconnection-wide
basis is just, reasonable, and not unduly discriminatory or
preferential, and in the public interest.
``(4) The Commission shall remand to the Electric Reliability
Organization for further consideration a proposed reliability standard
or a modification to a reliability standard that the Commission
disapproves in whole or in part.
``(5) The Commission, upon its own motion or upon complaint, may
order the Electric Reliability Organization to submit to the Commission
a proposed reliability standard or a modification to a reliability
standard that addresses a specific matter if the Commission considers
such a new or modified reliability standard appropriate to carry out
this section.
``(6) The final rule adopted under subsection (b)(2) shall include
fair processes for the identification and timely resolution of any
conflict between a reliability standard and any function, rule, order,
tariff, rate schedule, or agreement accepted, approved, or ordered by
the Commission applicable to a transmission organization. Such
transmission organization shall continue to comply with such function,
rule, order, tariff, rate schedule or agreement accepted, approved, or
ordered by the Commission until--
``(A) the Commission finds a conflict exists
between a reliability standard and any such provision;
``(B) the Commission orders a change to such
provision pursuant to section 206 of this part; and
``(C) the ordered change becomes effective under
this part.
If the Commission determines that a reliability standard needs to be
changed as a result of such a conflict, it shall order the ERO to
develop and file with the Commission a modified reliability standard
under paragraph (4) or (5) of this subsection.
``(e) Enforcement.--(1) The ERO may impose, subject to paragraph
(2), a penalty on a user or owner or operator of the bulk-power system
for a violation of a reliability standard approved by the Commission
under subsection (d) if the ERO, after notice and an opportunity for a
hearing--
``(A) finds that the user or owner or operator has violated
a reliability standard approved by the Commission under
subsection (d); and
``(B) files notice and the record of the proceeding with
the Commission.
``(2) A penalty imposed under paragraph (1) may take effect not
earlier than the 31st day after the electric reliability organization
files with the Commission notice of the penalty and the record of
proceedings. Such penalty shall be subject to review by the Commission,
on its own motion or upon application by the user, owner or operator
that is the subject of the penalty filed within 30 days after the date
such notice is filed with the Commission. Application to the Commission
for review, or the initiation of review by the Commission on its own
motion, shall not operate as a stay of such penalty unless the
Commission otherwise orders upon its own motion or upon application by
the user, owner or operator that is the subject of such penalty. In any
proceeding to review a penalty imposed under paragraph (1), the
Commission, after notice and opportunity for hearing (which hearing may
consist solely of the record before the electric reliability
organization and opportunity for the presentation of supporting reasons
to affirm, modify, or set aside the penalty), shall by order affirm,
set aside, reinstate, or modify the penalty, and, if appropriate,
remand to the electric reliability organization for further
proceedings. The Commission shall implement expedited procedures for
such hearings.
``(3) On its own motion or upon complaint, the Commission may order
compliance with a reliability standard and may impose a penalty against
a user or owner or operator of the bulk-power system, if the Commission
finds, after notice and opportunity for a hearing, that the user or
owner or operator of the bulk-power system has engaged or is about to
engage in any acts or practices that constitute or will constitute a
violation of a reliability standard.
``(4) The Commission shall establish regulations authorizing the
ERO to enter into an agreement to delegate authority to a regional
entity for the purpose of proposing reliability standards to the ERO
and enforcing reliability standards under paragraph (1) if--
``(A) the regional entity is governed by--
``(i) an independent board;
``(ii) a balanced stakeholder board; or
``(iii) a combination independent and balanced
stakeholder board;
``(B) the regional entity otherwise satisfies the
provisions of subsection (c)(1) and (2); and
``(C) the agreement promotes effective and efficient
administration of bulk-power system reliability.
The Commission may modify such delegation. The ERO and the Commission
shall rebuttably presume that a proposal for delegation to a regional
entity organized on an Interconnection-wide basis promotes effective
and efficient administration of bulk-power system reliability and
should be approved. Such regulation may provide that the Commission may
assign the ERO's authority to enforce reliability standards under
paragraph (1) directly to a regional entity consistent with the
requirements of this paragraph.
``(5) The Commission may take such action as is necessary or
appropriate against the ERO or a regional entity to ensure compliance
with a reliability standard or any Commission order affecting the ERO
or a regional entity.
``(6) Any penalty imposed under this section shall bear a
reasonable relation to the seriousness of the violation and shall take
into consideration the efforts of such user, owner, or operator to
remedy the violation in a timely manner.
``(f) Changes in Electricity Reliability Organization Rules.--The
Electric Reliability Organization shall file with the Commission for
approval any proposed rule or proposed rule change, accompanied by an
explanation of its basis and purpose. The Commission, upon its own
motion or complaint, may propose a change to the rules of the Electric
Reliability Organization. A proposed rule or proposed rule change shall
take effect upon a finding by the Commission, after notice and
opportunity for comment, that the change is just, reasonable, not
unduly discriminatory or preferential, is in the public interest, and
satisfies the requirements of subsection (c).
``(g) Reliability Reports.--The Electric Reliability Organization
shall conduct periodic assessments of the reliability and adequacy of
the bulk-power system in North America.
``(h) Coordination With Canada and Mexico.-- The President is urged
to negotiate international agreements with the governments of Canada
and Mexico to provide for effective compliance with reliability
standards and the effectiveness of the Electric Reliability
Organization in the United States and Canada or Mexico.
``(i) Savings Provisions.--(1) The Electric Reliability
Organization shall have authority to develop and enforce compliance
with reliability standards for only the bulk-power system.
``(2) This section does not authorize the Electric Reliability
Organization or the Commission to order the construction of additional
generation or transmission capacity or to set and enforce compliance
with standards for adequacy or safety of electric facilities or
services.
``(3) Nothing in this section shall be construed to preempt any
authority of any State to take action to ensure the safety, adequacy,
and reliability of electric service within that State, as long as such
action is not inconsistent with any reliability standard, except that
the State of New York may establish rules that result in greater
reliability within that State, as long as such action does not result
in lesser reliability outside the State than that provided by the
reliability standards.
``(4) Within 90 days of the application of the Electric Reliability
Organization or other affected party, and after notice and opportunity
for comment, the Commission shall issue a final order determining
whether a State action is inconsistent with a reliability standard,
taking into consideration any recommendation of the Electric
Reliability Organization.
``(5) The Commission, after consultation with the Electric
Reliability Organization and the State taking action, may stay the
effectiveness of any State action, pending the Commission's issuance of
a final order.
``(j) Regional Advisory Bodies.--The Commission shall establish a
regional advisory body on the petition of at least two-thirds of the
States within a region that have more than one-half of their electric
load served within the region. A regional advisory body shall be
composed or of one member from each participating State in the region,
appointed by the Governor of each State, and may include
representatives of agencies, States, and provinces outside the United
States. A regional advisory body may provide advice to the Electric
Reliability Organization, a regional entity, or the Commission
regarding the governance of an existing or proposed regional entity
within the same region, whether a standard proposed to apply within the
region is just, reasonable, not unduly discriminatory or preferential,
and in the public interest, whether fees proposed to be assessed within
the region are just, reasonable, not unduly discriminatory or
preferential, and in the public interest and any other responsibilities
requested by the Commission. The Commission may give deference to the
advice of any such regional advisory body if that body is organized on
an Interconnection-wide basis.
``(k) Application to Alaska and Hawaii.--The provisions of this
section do not apply to Alaska or Hawaii.''.
SEC. 5. DISPOSITION OF PROPERTY.
Section 203 of the Federal Power Act (16 U.S.C. 824b) is repealed.
SEC. 6. PROMOTION OF VOLUNTARY DEVELOPMENT OF REGIONAL TRANSMISSION
ORGANIZATIONS, INDEPENDENT TRANSMISSION PROVIDERS, AND
SIMILAR ORGANIZATIONS.
Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is amended
by adding at the end thereof the following new section:
``SEC. 217. PROMOTION OF VOLUNTARY DEVELOPMENT OF REGIONAL TRANSMISSION
ORGANIZATIONS, INDEPENDENT TRANSMISSION PROVIDERS, AND
SIMILAR ORGANIZATIONS.
``(a) In General.--The Commission may approve and may encourage the
formation of regional transmission organizations, independent
transmission providers, and similar organizations (referred to in this
section as `transmission organizations') for the purpose of enhancing
the transmission of electric energy in interstate commerce. Among
options for the formation of a transmission organization, the
Commission shall prefer those in which--
``(1) participation in the organization by transmitting
utilities is voluntary;
``(2) the form, structure, and operating entity of the
organization are approved of by participating transmitting
utilities; and
``(3) market incentives exist to promote investment for
expansion of transmission facilities and for the introduction
of new transmission technologies within the territory of the
organization.
``(b) Conditions.--No order issued under this Act shall be
conditioned upon or require a transmitting utility to transfer
operational control of jurisdictional facilities to an independent
system operator or other transmission organization.
``(c) Complaint.--In addition to any other rights or remedies it
may have under this Act, any entity serving electric load that is
denied services by a transmission organization that the transmission
organization makes available to other load serving entities shall be
entitled to file a complaint with the Commission concerning the denial
of such services. If the Commission shall find, after an evidentiary
hearing on the record, that the denial of services complained of was
unjust, unreasonable, unduly discriminatory or preferential, or
contrary to the public interest, the Commission may order the provision
of such services at rates and on terms and conditions that shall be in
accordance with section 215 of this Act.''.
SEC. 7. STATE AND FEDERAL AUTHORITY TO SITE TRANSMISSION FACILITIES.
Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is amended
by adding at the end thereof the following new section:
``SEC. 218. STATE AND FEDERAL AUTHORITY TO SITE TRANSMISSION
FACILITIES.
``(a) In order to ensure the availability of adequate capacity to
provide for reliable, economic transmission of electric energy in
interstate commerce, upon enactment of this section, and after notice
and opportunity for comment, the Commission shall publish a report,
which it shall revise each year thereafter, describing areas where
additional facilities are necessary to increase electric transmission
capacity. The report shall include information from the regional
transmission organization planning processes explaining the feasibility
of providing additional transmission capacity through existing
transmission rights of way, and shall assess efforts to promote
adequate and economically efficient transmission of electricity through
the introduction of new transmission technologies, and to encourage
investment in new and existing transmission facilities. The Commission
shall rely upon information provided by regional transmission
organizations developed in conjunction with States through regional
transmission organization planning processes, information provided
by State public utility commissions, and such other information about
transmission constraints, reliability, and prices of electric energy as
the Commission deems appropriate. In the report, the Commission shall
review the status of facilities for which an application has been
submitted pursuant to subsection (b).
``(b) A regional transmission organization or a regional
transmission entity which has submitted an application to a State or
local agency for approval of transmission facilities to provide
additional transmission capacity in an area identified in the report
required by subsection (a) shall notify the Commission by providing a
copy of the application, including a description of the facilities and
the proposed route. The regional transmission organization shall submit
to the Commission with a copy of the application a statement assessing
the feasibility of upgrading existing transmission facilities to
provide additional capacity in an area identified in the report
required by subsection (a).
``(c) If a regional transmission organization or a regional
transmission entity has not received approval of its application to the
State to construct transmission facilities in an area identified in the
report required by subsection (a) within one year of the notice to the
Commission pursuant to subsection (b), or within two years of such
notice has not received all permits and approvals required to construct
the facilities, the Commission may, after considering the feasibility
of upgrading existing facilities to increase electric transmission
capacity, upon its own motion or upon request, and after notice and
opportunity for hearing, issue a certificate of public convenience and
necessity to construct a proposed transmission facility if it finds the
facilities to be authorized by the certificate are or will be required
by public convenience and necessity.
``(d) The Commission shall have the power to attach to the issuance
of such certificate and to the exercise of the rights granted
thereunder such reasonable terms and conditions related to the
construction of such facility as the public convenience and necessity
may require.
``(e) The Commission shall require that construction on the
proposed transmission facility commence within 18 months after the
Commision grants an issuance of certificate. If construction does not
commence within the allowed time, the certificate reverts back to the
Commission. The owner of the proposed transmission facility may apply
for up to two six-month extensions.
``(f) The Commission shall issue its final decision in the
certificate proceeding within 18 months after the filing of a request
for a certificate or the initiation of proceedings on its own motion.
``(g) When any holder of a certificate of public convenience and
necessity for electric transmission facilities issued by the Commission
pursuant to subsection (c) cannot acquire by contract, or is unable to
agree with the owner of the property to the compensation to be paid for
the necessary rights-of-way to construct, operate and maintain such
transmission facility, it may acquire the same by the exercise of the
right of eminent domain in the district court of the United States for
the district in which such property may be located, or in the State
courts.''.
SEC. 8. PUBLIC UTILITY HOLDING COMPANY ACT EXEMPTION FOR RTOS.
The Public Utility Holding Company Act (15 U.S.C. 79 et seq.) is
amended--
(1) by redesignating section 36 as section 37; and
(2) by inserting after section 35 the following:
``SEC. 36. SAVINGS CLAUSE.
``(a) In General.--This Act shall not apply to a multistate
independent transmission company or to any action to form, modify,
finance, sell, purchase, operate, or otherwise affect such an
organization.
``(b) Definitions.--For purposes of subsection (a):
``(1) The term `multistate independent transmission' means
any person which owns or operates facilities in more than one
State used for the transmission of electric energy in
interstate commerce and which--
``(A) is not engaged in the generation or sale of
electric energy; or
``(B) the Federal Energy Regulatory Commission
determines is not a market participant (within the
meaning of the Commission's rules applicable to
regional transmission organizations).
``(2) The term `transmission of electric energy in
interstate commerce' shall have the meaning given such term in
section 201 of the Federal Power Act.''.
SEC. 9. INDEPENDENT TRANSMISSION COMPANIES.
(a) In General.--Section 1033 of the Internal Revenue Code of 1986
(relating to involuntary conversions) is amended by redesignating
subsection (k) as subsection (l) and by inserting after subsection (j)
the following new subsection:
``(k) Sales or Dispositions To Implement Federal Energy Regulatory
Commission or State Electric Restructuring Policy.--
``(1) In general.--For purposes of this subtitle, if a
taxpayer elects the application of this subsection to a
qualifying electric transmission transaction--
``(A) such transaction shall be treated as an
involuntary conversion to which this section applies,
and
``(B) exempt utility property shall be treated as
property which is similar or related in service or use
to the property disposed of in such transaction.
``(2) Extension of replacement period.--In the case of any
involuntary conversion described in paragraph (1), subsection
(a)(2)(B) shall be applied by substituting `4 years' for `2
years' in clause (i) thereof.
``(3) Qualifying electric transmission transaction.--For
purposes of this subsection, the term `qualifying electric
transmission transaction' means any sale or other disposition
before January 1, 2009, of--
``(A) property used in the trade or business of
providing electric transmission services, or
``(B) any stock or partnership interest in a
corporation or partnership, as the case may be, whose
principal trade or business consists of providing electric transmission
services,
but only if such sale or disposition is to an independent
transmission company.
``(4) Independent transmission company.--For purposes of
this subsection, the term `independent transmission company'
means--
``(A) a regional transmission organization approved
by the Federal Energy Regulatory Commission,
``(B) a person--
``(i) who the Federal Energy Regulatory
Commission determines in its authorization of
the transaction under section 203 of the
Federal Power Act (16 U.S.C. 823b) is not a
market participant within the meaning of such
Commission's rules applicable to regional
transmission organizations, and
``(ii) whose transmission facilities to
which the election under this subsection
applies are under the operational control of a
Federal Energy Regulatory Commission-approved
regional transmission organization before the
close of the period specified in such
authorization, but not later than the close of
the period applicable under subsection
(a)(2)(B) as extended under paragraph (2), or
``(C) in the case of facilities subject to the
exclusive jurisdiction of the Public Utility Commission
of Texas, a person which is approved by that Commission
as consistent with Texas State law regarding an
independent transmission organization.
``(5) Exempt utility property.--For purposes of this
subsection--
``(A) In general.--The term `exempt utility
property' means property used in the trade or business
of--
``(i) generating, transmitting,
distributing, or selling electricity, or
``(ii) producing, transmitting,
distributing, or selling natural gas.
``(B) Nonrecognition of gain by reason of
acquisition of stock.--Acquisition of control of a
corporation shall be taken into account under this
section with respect to a qualifying electric
transmission transaction only if the principal trade or
business of such corporation is a trade or business
referred to in subparagraph (A).
``(6) Special rule for consolidated groups.--In the case of
a corporation which is a member of an affiliated group filing a
consolidated return, such corporation shall be treated as
satisfying the purchase requirement of subsection (a)(2) with
respect to any qualifying electric transmission transaction
engaged in by such corporation to the extent such requirement
is satisfied by another member of such group.
``(7) Election.--An election under paragraph (1), once
made, shall be irrevocable.''
(b) Exception From Gain Recognition Under Section 1245.--Subsection
(b) of section 1245 of such Code is amended by adding at the end the
following new paragraph:
``(9) Dispositions to implement federal energy regulatory
commission or state electric restructuring policy.--At the
election of the taxpayer, the amount of gain which would (but
for this paragraph) be recognized under this section on any
qualified electric transmission transaction (as defined in
section 1033(k)) for which an election under section 1033 is
made shall be reduced by the aggregate reduction in the basis
of section 1245 property held by the taxpayer or, if
insufficient, by a member of an affiliated group which includes
the taxpayer at any time during the taxable year in which such
transaction occurred. The manner and amount of such reduction
shall be determined under regulations prescribed by the
Secretary.''
(c) Effective Date.--The amendments made by subsections (a) and (b)
of this section shall apply to transactions occurring after the date of
the enactment of this Act.
(d) Distributions of Stock To Implement Federal Energy Regulatory
Commission or State Electric Restructuring Policy.--
(1) In general.--Subparagraph (A) of section 355(e)(3) of
such Code (relating to special rules relating to acquisitions)
is amended by inserting after clause (iv) the following new
clause:
``(v) The acquisition of stock in any
controlled corporation in a qualifying electric
transmission transaction (as defined in section
1033(k)).''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to distributions after the date of the enactment of
this Act.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, 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.
Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, 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.
Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, 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.
Referred to the Subcommittee on Energy and Air Quality.
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