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                                                      Calendar No. 291
114th Congress     }                                    {       Report
                                 SENATE
 1st Session       }                                    {      114-176

======================================================================



 
                      ELECTRIFY AFRICA ACT OF 2015

                                _______
                                

                December 8, 2015.--Ordered to be printed

          Mr. Corker, from the Committee on Foreign Relations,
                        submitted the following

                                 REPORT

                         [To accompany S. 2152]

    The Committee on Foreign Relations, having had under 
consideration the bill (S. 2152) to establish a comprehensive 
United States Government policy to encourage the efforts of 
countries in sub-Saharan Africa to develop an appropriate mix 
of power solutions, including renewable energy, for more 
broadly distributed electricity access in order to support 
poverty reduction, promote development outcomes, and drive 
economic growth, and for other purposes, having considered the 
same, reports favorably thereon with amendments, and recommends 
that the bill, as amended, do pass.

                                CONTENTS

                                                                   Page

  I. Purpose..........................................................1
 II. Committee Action.................................................1
III. Background.......................................................2
 IV. Discussion.......................................................3
  V. Cost Estimate....................................................6
 VI. Evaluation of Regulatory Impact..................................7
VII. Changes in Existing Law..........................................7

                               I. Purpose

    The purpose of S. 2152 is to establish a comprehensive 
United States government policy to develop and coordinate 
strategies and reforms that improve access to, and the 
affordability, reliability, and sustainability of, power for 
residents of sub-Saharan Africa. S. 2152 further requires a 
progress report evaluating the effectiveness of policies and 
investments made by the U.S. in expanding electricity access in 
sub-Saharan Africa.

                          II. Committee Action

    S. 2152 was introduced on October 7, 2015, by Senator 
Corker and co-sponsored by Senators Cardin, Rubio, Coons. On 
October 8, 2015, the committee considered S. 2152 and reported 
it favorably, by voice vote, with amendments.
    The committee took the following action with regard to 
amendments:

    Two amendments offered by Senator Markey passed by voice 
vote. Among other things, the Markey amendments added language 
requiring implementation of energy projects in a non-
discriminatory way and local consultation with respect to 
energy project development and implementation.

                            III. Background

    Chairman Corker and Ranking Member Cardin introduced S. 
2152 to address the lack of electricity faced by nearly 70 
percent of sub-Saharan Africa's population. The legislation 
addresses solutions to the lack of overall access to 
electricity, including a lack of access to affordable 
electricity options, and an inability to ensure sustainable and 
reliable power. It establishes goals of providing access to 
50,000,000 sub-Saharan Africans by 2020 and adding 20,000 
megawatts of electricity by 2020. With increased access to 
electricity, sub-Saharan Africans can open new doors to private 
sector investment and economic growth that aim to replace 
unsustainable and unhealthy fuel sources such as kerosene, 
wood, and charcoal. The bill supports financing for African 
energy generation development, regulatory reforms in African 
energy sectors to ensure long-term financial sustainability and 
operational reliability of grids, and policy advocacy that will 
significantly increase the continent's access to electricity in 
a socially responsible and financially sustainable way, and 
open new doors generally to increased economic growth and 
improved public health.
    On June 30, 2013, President Obama announced his ``Power 
Africa Initiative'' to improve energy access and production in 
Africa with the goal of doubling the number of Africans with 
access to electricity. Power Africa focuses on leveraging 
private investment to increase financing for power projects in 
sub-Saharan Africa.
    S. 2152 provides a framework for a coordinated strategy for 
the United States to work with sub-Saharan African nations to 
improve access to electricity. The bill encourages the Overseas 
Private Investment Corporation (OPIC), the United States Agency 
for International Development (USAID), the U.S. Department of 
Treasury, the World Bank, the African Development Bank, and the 
U.S. Trade and Development Agency as well as U.S. 
representatives to such international institutions as the World 
Bank and the African Development Bank to prioritize, as 
appropriate, loans, assistance, and technical support that 
promote private investment in projects that increase 
electricity access and reliability. The bill also encourages 
these agencies to partner with sub-Saharan African governments 
to develop policies that reduce burdensome regulations that 
hinder private investment in the electricity sector. To achieve 
broader energy access for those currently living beyond the 
reaches of the existing electricity infrastructure, S. 2152 
places an increased emphasis on the promotion and development 
of off-grid and distributed technologies to be used at a local 
level.
    The bill also requires a report to the committee in three 
years outlining the strategies, investments, and policy changes 
being made under the legislation. This report would detail the 
electricity access programs supported by the U.S. government 
and private investment, and would be accompanied by empirical 
data outlining the return on investment in terms of electricity 
access and reliability.
    S. 2152 recognizes that improving electricity access in 
Africa will require a broad mix of fuel sources, many of which 
exist in Africa in abundance. S. 2152 therefore takes a fuel 
neutral, all-of-the-above approach. As called for in the policy 
section of the bill, Electrify Africa anticipates energy access 
being addressed in sub-Saharan Africa using renewable and non-
renewable fuels.
    The bill also places strong emphasis on the development of 
economically sound utilities. To ensure appropriate cost-
recovery by electricity transmission and distribution 
operators, an appropriate policy and legal framework must be in 
place. For this reason, the bill focuses not only on 
facilitating private sector development of electricity 
generation, the bill also requires implementing industry best 
practices with respect to transmission and distribution such as 
commercial cost recovery practices, regulatory reforms to 
improve efficiencies, strengthening independent regulators, and 
implementing smart grid technologies. The goal is to ensure 
that national electric grids, developed with U.S. assistance, 
will remain financially sustainable over the long term.
    The legislation also aims to improve access to electricity 
for communities who, because of existing constraints and 
obstacles, are not or will not be linked to national and 
regional grids in the near term.
     The bill also helps ensure that supported energy projects 
are developed and deployed to improve access for all local 
communities and in consultation with affected local 
communities. The bill calls for off-grid and mini-grid 
technologies to be employed as an alternative strategy to 
provide communities with electricity in an economical way in 
the short term.

                             IV. Discussion

    A summary of the key provisions of S. 2152, as amended, 
follows:

Section 2

    Section 2 states that the purpose of S. 2152 is to 
encourage the efforts of countries in sub-Saharan Africa to 
improve access to affordable and reliable electricity to unlock 
the potential for inclusive economic growth and other important 
development outcomes.

Section 3

    Section 3 declares that it is the policy of the United 
States, in coordination with international financial 
institutions, sub-Saharan African governments and the private 
sector, to:

  (1) promote first-time access to power and power services in 
            sub-Saharan Africa for at least 50,000,000 people 
            by 2020, in both urban and rural areas;

  (2) encourage the installation of at least 20,000 additional 
            megawatts of electrical power in sub-Saharan Africa 
            by 2020 through a broad mix of energy options that 
            will reduce poverty, promote sustainable 
            development, and drive economic growth;

  (3) promote reliable, affordable, and sustainable power in 
            urban areas in order to promote economic growth and 
            job creation;

  (4) promote efficient institutional platforms and financing 
            for the provision of electrical service to rural 
            and underserved populations;

  (5) encourage the necessary in-country reforms that will make 
            possible the expansion of power access;

  (6) promote reforms of power production, delivery, and 
            pricing, as well as regulatory reforms and 
            transparency, in order to support long-term, 
            market-based power generation and distribution;

  (7) promote policies to displace kerosene lighting with 
            safer, cleaner technologies; and

  (8) promote an all-of-the-above energy development strategy 
            for sub-Saharan Africa.

Section 4

    Section 4 requires the President to establish and submit to 
Congress, within 180 days, a comprehensive multiyear strategy, 
consistent with the policy goals of section 3, to encourage the 
efforts of countries in sub-Saharan Africa in implementing 
national power strategies and developing an appropriate mix of 
power solutions. The strategy must address ways to attract 
private investment in the power sector, both on and off the 
grid, assess the financial viability of power utilities, and be 
sufficiently flexible to allow for technological innovation in 
the power sector.
    The strategy must focus on the following components: 
increasing power production; strengthening electrical 
transmission and distribution infrastructure; providing for 
regulatory reform and transparent and accountable governance 
and oversight; improving the reliability of power; maintaining 
the affordability of power; maximizing the financial 
sustainability of the power sector; and improving access to 
power.
    The strategy reporting must include plans and descriptions 
of: efforts to increase access to power in urban and rural 
areas; efforts to address commercial, industrial, and 
residential needs; efforts to reduce waste and corruption and 
improve existing power generation through the use of a broad 
power mix, distributed generation models, energy efficiency, 
and other technological innovations; an analysis of existing 
mechanisms to ensure commercial cost recovery; an analysis of 
mechanisms to commercialize electric service through 
distribution service providers, including cooperatives, to 
consumers; ways to promote improvements in revenue cycle 
management, power pricing, and fees assessed for service 
contracts and connections; efforts to reduce technical and 
commercial losses; and recommendations on the creation of new 
service provider models that mobilize community participation 
in the provision of power services.
    The strategy report must make recommendations on how to 
reform electricity policies to ensure the long-term economic 
viability of power projects and to increase access to power, 
including the following priorities: allowing third parties to 
connect power generation to the grid; policies to ensure there 
is a viable and independent utility regulator; strategies to 
ensure utilities become or remain creditworthy; regulations 
that permit the participation of independent power producers 
and private-public partnerships; policies that encourage 
private sector and cooperative investment in power generation; 
policies that ensure compensation for power provided to the 
electrical grid by on-site producers; policies to unbundle 
power services; regulations to eliminate conflicts of interest 
in the utility sector; efforts to develop standardized power 
purchase agreements and other contracts to streamline project 
development; and efforts to negotiate and monitor compliance 
with power purchase agreements and other contracts entered into 
with the private sector.
    The strategy requires reporting on engagement with African 
countries including: plans to ensure meaningful local 
consultation, as appropriate, in the planning, long-term 
maintenance, and management of investments designed to increase 
access to power in sub-Saharan Africa; mechanisms to be 
established for selection of partner countries for focused 
engagement on the power sector; ensuring that project 
development is pursued in a manner that does not discriminate 
against or disadvantage particular regions or populations 
within a country; monitoring and evaluating increased access, 
reliability and affordability of power in sub-Saharan Africa 
and the financial sustainability of power generation, 
transmission, and distribution; establishing metrics to 
demonstrate progress and terminating unsuccessful programs.
    The strategy will include specific provisions related to 
bringing power to African communities, given particular 
constraints in Africa. These recommendations will include: 
plans to promote trade in electrical equipment with countries 
in sub-Saharan Africa; plans to lower or eliminate import 
tariffs/ taxes for energy and other power production and 
distribution technologies including equipment used to provide 
energy access, including solar lanterns, solar home systems, 
and micro and mini grids; plans to protect the intellectual 
property of companies designing and manufacturing products that 
can be used to provide energy access in sub-Saharan Africa; 
plans to encourage the growth of distributed renewable energy 
markets in sub-Saharan Africa, including off-grid lighting and 
power; plans to address market barriers to the deployment of 
distributed renewable energy technologies, including an 
analysis of the efficacy of efforts by U.S. agencies to 
facilitate the financing of the importation, distribution, 
sale, leasing, or marketing of distributed renewable energy 
technologies; and a description of plans to ensure that small 
and medium enterprises based in sub-Saharan Africa can fairly 
compete for energy development and energy access opportunities 
associated with this Act.
    Section 4 further states the President may establish, as 
appropriate, an Interagency Working Group to coordinate 
executive branch agencies involved in the implementation of the 
strategy. The Interagency Working Group would also facilitate 
partnerships between executive agencies, the private sector, 
and other development agencies to ensure effective 
implementation. With respect to provisions in Section 4 calling 
for the Administration to partner with the private sector 
entities, the Senate strongly encourages the Working Group 
established under this section and Administration officials 
charged with implementation of this Act generally, to consider 
partnering with the National Rural Electric Cooperative 
Association which has significant experience in working to 
establish financially sustainable electricity grids in Africa.

Section 5

    Section 5 directs the Administrator of the United States 
Agency for International Development, the Director of the Trade 
and Development Agency, the Overseas Private Investment 
Corporation, and the leadership of the Millennium Challenge 
Corporation to, as appropriate, prioritize and expedite 
institutional efforts and assistance to promote the development 
of power projects and markets consistent with the goals and 
policies of the Act and with the strategy.

Section 6

    Section 6 directs the United States representatives at the 
appropriate international bodies, including but not limited to 
the Executive Directors at the World Bank Group and the African 
Development Bank to use the influence of the U.S., consistent 
with the broad development goals of the United States, to 
encourage those institutions to significantly increase efforts 
in sub-Saharan electrification projects, consistent with host-
country absorptive capacity and provide technical assistance to 
regulatory authorities. The committee believes these efforts 
should include modifying regulatory and legal regimes to reduce 
certain losses, implementing cost-based tariffs, providing for 
commercial cost recovery, reducing corruption, improving 
transparency, and implementing reforms that facilitate 
efficient and responsible power generation, transmission and 
distribution, as well as off-grid energy markets. These efforts 
should use clear, accountable, and metric based targets to 
measure effectiveness.

Section 7

    Section 7 requires a 3-year evaluation of progress made 
towards achieving the strategy described in section 4. The 
report reviews policies advocated by the United States that 
promote increased energy access and electricity sector reform. 
The report also identifies the number and type of projects 
receiving United States government support, the total costs of 
the project, the amount of U.S. supported investment, and 
empirical results of the project in terms of increased 
electricity to businesses, communities, and individuals.

                            V. Cost Estimate

    In accordance with XXVI, paragraph 11(a) of the Standing 
Rules of the Senate, the committee notes that the cost estimate 
provided by the Congressional Budget Office (CBO) estimates 
that enacting S. 2152 would not increase net direct spending or 
on-budget deficits in any of the four consecutive year 10-year 
periods beginning in 2016. The CBO further estimates that 
implementing new requirements, such as the development of the 
comprehensive strategy and subsequent reports to the Congress, 
would cost less than $500,000 each year and total roughly $1 
million over the 2016-2020 period with such spending subject to 
the availability of appropriated funds. Finally, CBO has 
concluded that enacting S. 2152 would not affect direct 
spending or revenues and that, therefore, pay-as-you-go 
procedures do not apply.

                  VI. Evaluation of Regulatory Impact

    Pursuant to the requirement of paragraph 11(b) of rule XXVI 
of the Standing Rules of the Senate, the committee has 
considered the regulatory and paperwork impact of S. 2508, as 
amended, and concluded that such impact would be minimal. The 
Congressional Budget Office estimate for S. 2152 has concluded 
that S. 2152 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.

                      VII. Changes in Existing Law

    In compliance with Rule XXVI, paragraph 12 of the Standing 
Rules of the Senate, it is the conclusion of the committee that 
S. 2152 will require no changes in existing law.

                                  [all]