Governors' Association Endorses Curbing Rules for Some Bond-Financed Utilities

Governors Tony Knowles of Alaska and Jim Geringer of Wyoming, Western Governors' Association, Denver, have urged Treasury to revise the rules concerning exempt bond-financed utilities so that electric power utilities can participate in independent systems operation (ISO) facilities. Knowles and Geringer say that under current law, bond-financed electric power facilities would lose the exempt status of existing debt if they participate in the ISOs. "Failure of the federal government to act will significantly cripple efforts to create a competitive market in the West and deny western consumers the benefits of a restructured industry," the governors write.

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November 14, 1997

The Honorable Robert E. Rubin

Dear Secretary Rubin:

[1] Western governors are working with the electric power industry to create a competitive electric power market which will significantly reduce the power bills of our consumers. Critical to the creation of a competitive market is the establishing of independent system operators (ISOs) which would operate all the transmission facilities in the region, including those financed with tax exempt bonds. We urge you to take the necessary steps to safeguard the tax exempt status of existing debt associated with the transmission systems of public power utilities that choose to participate in ISOs.

[2] Prompt action by the Department of the Treasury on this narrow issue will enable progress to continue on the establishment of three ISOs under development in the West without jeopardizing Congressional review of larger industry restructuring issues, such as creating a level playing field between public and private power entities. We concur with Senator Frank Murkowski that you need to act quickly ". . . where private use concerns may frustrate turning existing transmission assets over to independent system operators . . ." Failure of the federal government to act will significantly cripple efforts to create a competitive market in the West and deny western consumers the benefits of a restructured industry.

[3] For your information, attached are recent letter on this issue from Governor Wilson and Senator Murkowski.

                                   Sincerely,

     Tony Knowles                  Jim Geringer

enclosures

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                                   November 11, 1997

The Honorable Robert E. Rubin

Dear Secretary Rubin:

[4] The Committee on Regional Electric Power Cooperation, which includes all the public utility commissions and governors' energy agencies in the 11 states in the western electric power grid, urges you to act to remove a major impediment the creation of a competitive electric power industry in the West. As you know, the establishment of a competitive electricity market is a major energy policy objective of the Clinton Administration.

[5] Specifically, we urge you to take the necessary steps to safeguard the tax exempt status of existing debt associated with the transmission systems of public power utilities that choose to participate in Independent System Operators (ISOs). The development of ISOs with full authority to operate the complete transmission system that exists today, including the facilities owned by both private or public entities, is essential to the creation of a competitive electric power market.

[6] Prompt action by the Department of the Treasury on this narrow issue will enable progress to continue on the development of the three ISOs in the West without jeopardizing Congressional review of the larger industry restructuring issues. We concur with Senator Frank Murkowski that you need to act quickly ". . . where private use concerns may frustrate turning existing transmission assets over to independent system operators. . . ." Failure of the federal government to act could significantly undermine efforts to create a competitive market in the West and deny western consumers the benefits of a restructured electric industry.

Sincerely,

Roger Hamilton, Chairman

cc: The Honorable Frank Murkowaski

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Date: 5/19/97

[7] I, Harold Kuster grant to Congressman Ike Skelton and/or his staff, permission to have access to information held by Department of Treasury. The specific nature of the action I am seeking is a change in the interest on U.S. Saving Bonds (Series EE) to be excluded from Federal Taxes, if redeemed for payment of a catastrophic hospital and medical bills or long term Nuring Home Care payments. (Using Form 8815) This would comply with the same benefits as the Education Saving Bond Program.

[8] These changes would help the middle Income Americans save for their future and they would be more incline to invest in U.S. Saving Bonds.

[9] I hope Treasury Secretary Robert Rubin and the administration, would give this some consideration for the conservative savers.

I Thank you,

Harold F. Kuster