Federal Power Act Amendments of 1999

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Federal Power Act Amendments of 
1999''.

SEC. 2. CLARIFICATION OF JURISDICTION.

    (a) Declaration of Policy.--Section 201(a) of the Federal Power Act 
(16 U.S.C. 824(a)) is amended by--
            (1) inserting after ``transmission of electric energy in 
        interstate commerce'' the following: ``, including the 
        unbundled transmission of electric energy sold at retail,''; 
        and
            (2) striking ``such Federal regulation, however, to extend 
        only to those matters which are not subject to regulation by 
        the States.'' and inserting the following: ``such Federal 
        regulation shall not extend, however, to the bundled retail 
        sale of electric energy or to unbundled local distribution 
        service, which are subject to regulation by the States.''.
    (b) Application of Part.--Section 201(b) of the Federal Power Act 
(16 U.S.C. 824(b)(1)) is amended by--
            (1) inserting after ``the transmission of electric energy 
        in interstate commerce'' the following: ``, including the 
        unbundled transmission of electric energy sold at retail,''; 
        and
            (2) adding at the end the following:
            ``(3) The Commission, after consulting with the appropriate 
        State regulatory authorities, shall determine, by rule or 
        order, which facilities used for the transmission and delivery 
        of electric energy are used for transmission in interstate 
        commerce subject to the jurisdiction of the Commission under 
        this Part, and which are used for local distribution subject to 
        State jurisdiction.''.
    (c) Definition of Interstate Commerce.--Section 201(c) of the 
Federal Power Act (16 U.S.C. 824(c)) is amended by inserting after 
``outside thereof'' the following: ``(including consumption in a 
foreign country)''.
    (d) Definitions of Types of Sales.--Section 201(d) of the Federal 
Power Act (16 U.S.C. 824(d)) is amended by--
            (1) inserting ``(1) after the subsection designation;
            (2) adding at the end the following:
            ``(2) The term `bundled retail sale of electric energy' 
        means the sale of electric energy to an ultimate consumer in 
        which the generation and transmission service are not sold 
        separately.
            ``(3) The term `unbundled local distribution service' means 
        the delivery of electric energy to an ultimate consumer if--
                    ``(A) the electric energy and the service of 
                delivering it are sold separately, and
                    ``(B) the delivery uses facilities for local 
                distribution as determined by the Commission under 
                subsection (b)(3).
            ``(4) The term `unbundled transmission of electric energy 
        sold at retail' means the transmission of electric energy to an 
        ultimate consumer if--
                    ``(A) the electric energy and the service of 
                transmitting it are sold separately, and
                    ``(B) the transmission uses facilities for 
                transmission in interstate commerce as determined by 
                the Commission under subsection (b)(3).''.
    (e) Definitions of Public Utility.--Section 201 of the Federal 
Power Act (16 U.S.C. 824) is amended by striking subsection (e) and 
inserting the following:
    ``(e) The term `public utility' when used in this Part or in the 
Part next following 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 electric utility or Federal power marketing 
        agency not otherwise subject to the jurisdiction of the 
        Commission under this Part, including--
                    ``(A) the Tennessee Valley Authority,
                    ``(B) a Federal power marketing agency,
                    ``(C) a State or any political subdivision of a 
                State, or any agency, authority, or instrumentality of 
                a State or political subdivision,
                    ``(D) a corporation or association that has ever 
                received a loan for the purpose of providing electric 
                service from the Administrator of the Rural 
                Electrification Administration or the Rural Utilities 
                Service under the Rural Electrification Act of 1936; or
                    ``(E) any corporation or association which is 
                wholly owned, directly or indirectly, by any one or 
                more of the foregoing,
        but only with respect to determining, fixing, and otherwise 
        regulating the rates, terms, and conditions for the 
        transmission of electric energy under this Part (including 
        sections 217, 218, and 219).''.
    (f) 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''.
    (g) Definition of Transmitting Utility.--Section 3 of the Federal 
Power Act (16 U.S.C. 796) is amended by striking paragraph (23) and 
inserting the following:
            ``(23) Transmitting utility.--The term `transmitting 
        utility' means any electric utility, qualifying cogeneration 
        facility, qualifying small power production facility, Federal 
        power marketing agency, or any public utility, as defined in 
        section 201(e)(2), that owns or operates electric power 
        transmission facilities which are used for the sale of electric 
        energy.''.

SEC. 3. FEDERAL WHEELING AUTHORITY.

    (a) Commission Authority To Order Retail Wheeling.--
            (1) Section 211(a) of the Federal Power Act (16 U.S.C. 
        824j(a)) is amended by striking ``for resale''.
            (2) Section 212(a) of the Federal Power Act (16 U.S.C. 
        824k(a)) is amended by striking ``wholesale transmission 
        services'' each place it appears and inserting ``transmission 
        services''.
            (3) Section 212(g) of the Federal Power Act (16 U.S.C. 
        824k(g)) is repealed.
    (b) Limitation on Commission Authority To Order Retail Wheeling.--
Section 212 of the Federal Power Act (16 U.S.C. 824k) is further 
amended by striking subsection (h) and inserting the following:
    ``(h) Limitation on Commission Authority To Order Retail 
Wheeling.--No rule or order issued under this Act shall require or be 
conditioned upon the transmission of electric energy:
            ``(1) directly to an ultimate consumer in connection with a 
        sale of electric energy to the consumer unless the seller of 
        such energy is permitted or required under applicable State law 
        to make such sale to such consumer, or
            ``(2) to, or for the benefit of, an electric utility if 
        such electric energy would be sold by such utility directly to 
        an ultimate consumer, unless the utility is permitted or 
        required under applicable State law to sell electric energy to 
        such ultimate consumer.''.
    (c) Conforming Amendment.--Section 3 of the Federal Power Act (16 
U.S.C. 796) is amended by striking paragraph (24) and inserting the 
following:
            ``(24) Transmission services.--The term `transmission 
        services' means the transmission of electric energy in 
        interstate commerce.''.

SEC. 4. STATE AUTHORITY TO ORDER RETAIL ACCESS.

    Part II of the Federal Power Act is further amended by adding at 
the end the following:

``SEC. 215. STATE AUTHORITY TO ORDER RETAIL ACCESS.

    ``(a) State Authority.--Neither silence on the part of Congress nor 
any Act of Congress shall be construed to preclude a State or State 
commission, acting under authority of state law, from requiring an 
electric utility subject to its jurisdiction to provide unbundled local 
distribution service to any electric consumer within such State.
    ``(b) Nondiscriminatory Service.--If a State or State commission 
permits or requires an electric utility subject to its jurisdiction to 
provide unbundled local distribution service to any electric consumer 
within such State, the electric utility shall provide such service on a 
not unduly discriminatory basis. Any law, regulation, or order of a 
State or State commission that results in unbundled local distribution 
service that is unjust, unreasonable, unduly discriminatory, or 
preferential is hereby preempted.
    ``(c) Reciprocity.--Notwithstanding subsection (b), a State or 
state commission may bar an electric utility from selling electric 
energy to an ultimate consumer using local distribution facilities in 
such State if such utility or any of its affiliates owns or controls 
local distribution facilities and is not itself providing unbundled 
local distribution service.
    ``(d) State Charges.--Nothing in this Act shall prohibit a State or 
State regulatory authority from assessing a nondiscriminatory charge on 
unbundled local distribution service within the State, the retail sale 
of electric energy within the State, or the generation of electric 
energy for consumption by the generator within the State.''.

SEC. 5. UNIVERSAL AND AFFORDABLE SERVICE.

    Part II of the Federal Power Act is further amended by adding at 
the end the following:

``SEC. 216. UNIVERSAL AND AFFORDABLE SERVICE.

    ``(a) Sense of the Congress.--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.
    ``(b) Consideration and Reports.--Any State or State commission 
that requires an electric utility subject to its jurisdiction to 
provide unbundled local distribution service shall--
            ``(1) consider adopting measures to--
                    ``(A) ensure that every consumer of electric energy 
                within such State shall have access to electric energy 
                at reasonable and affordable rates, and
                    ``(B) prevent the loss of service to rural, 
                residential, or low-income consumers; and
            ``(2) report to the Commission on any measures adopted 
        under paragraph (1).''.

SEC. 6. NATIONAL ELECTRIC RELIABILITY STANDARDS.

    Part II of the Federal Power Act is further amended by adding at 
the end the following:

``SEC. 217. NATIONAL ELECTRIC RELIABILITY STANDARDS.

    ``(a) Reliability Standards.--The Commission shall establish and 
enforce national electric reliability standards to ensure the 
reliability of the electric transmission system.
    ``(b) Designation of National and Regional Councils.--
            ``(1) For purposes of establishing and enforcing national 
        electric reliability standards under subsection (a), the 
        Commission may designate an appropriate number of regional 
        electric reliability councils composed of electric utilities or 
        transmitting utilities, and one national electric reliability 
        council composed of designated regional electric reliability 
        councils, whose mission is to promote the reliability of 
        electric transmission system.
            ``(2) The Commission shall not designate a regional 
        electric reliability council unless the Commission determines 
        that the council--
                    ``(A) permits open access to membership from all 
                entities engaged in the business of selling, 
                generating, transmitting, or delivering electric energy 
                within its region;
                    ``(B) provides fair representation of its members 
                in the selection of its directors and the management of 
                its affairs; and
                    ``(C) adopts and enforces appropriate standards of 
                operation designed to promote the reliability of the 
                electric transmission system.
    ``(c) Incorporation of Council Standards.--The Commission may 
incorporate, in whole or in part, the standards of operation adopted by 
the regional and national electric reliability councils in the national 
electric reliability standards adopted by the Commission under 
subsection (a).
    ``(d) Enforcement.--The Commission may, by rule or order, require 
any public utility or transmitting utility to comply with any standard 
adopted by the Commission under this section.

SEC. 7. SITING NEW INTERSTATE TRANSMISSION FACILITIES.

    Part II of the Federal Power Act is further amended by adding at 
the end the following:

``SEC. 218. SITING NEW INTERSTATE TRANSMISSION FACILITIES.

    ``(a) Commission Authority.--Whenever the Commission, after notice 
and opportunity for hearing, finds such action necessary or desirable 
in the public interest, it may order a transmitting utility to enlarge, 
extend, or improve its facilities for the interstate transmission of 
electric energy.
    ``(b) Procedure.--The Commission may commence a proceeding for the 
issuance of an order under subsection (a) upon the application of an 
electric utility, transmitting utility, or state regulatory authority, 
or upon its own motion.
    ``(c) Compliance With Other Laws.--Commission action under this 
section shall be subject to the National Environmental Policy Act of 
1969 (42 U.S.C. 4321 et seq.) and all other applicable state and 
federal laws.
    ``(d) Use of Joint Boards.--Before issuing an order under 
subsection (a), the Commission shall refer the matter to a joint board 
appointed under section 209(a) for advice and recommendations on the 
need for, design of, and location of the proposed enlargement, 
extension, or improvement. The Commission shall consider the advice and 
recommendations of the Board before ordering such enlargement, 
extension, or improvement.
    ``(e) Limitation on Authority.--The Commission shall have no 
authority to compel a transmitting utility to extend or improve its 
transmission facilities if such enlargement, extension, or improvement 
would unreasonably impair the ability of the transmitting utility to 
render adequate service to its customers.''.

SEC. 8. REGIONAL INDEPENDENT SYSTEM OPERATORS.

    Part II of the Federal Power Act is further amended by adding at 
the end the following:

``SEC. 219. REGIONAL INDEPENDENT SYSTEM OPERATORS.

    ``(a) Regional Transmission Systems.--Whenever the Commission finds 
such action necessary or desirable in the public interest to ensure the 
fair and non-discriminatory access to transmission services within a 
region, the Commission may order the formation of a regional 
transmission system and may order any transmitting utility operating 
within such region to participate in the regional transmission system.
    ``(b) Oversight Board.--The Commission shall appoint a regional 
oversight board to oversee the operation of the regional transmission 
system. Such oversight board shall be composed of a fair representation 
of all of the transmitting utilities participating in the regional 
transmission system, electric utilities and consumers served by the 
system, and State regulatory authorities within the region. The 
regional oversight board shall ensure that the independent system 
operator formulates policies, operates the system, and resolves 
disputes in a fair and non-discriminatory manner.
    ``(c) Independent System Operator.--The regional oversight board 
shall appoint an independent system operator to operate the regional 
transmission system. No independent system operator shall--
            ``(1) own generating facilities or sell electric energy, or
            ``(2) be subject to the control of, or have a financial 
        interest in, any electric utility or transmitting utility 
        within the region served by the independent system operator.
    ``(d) Commission Rules.--The Commission shall establish rules 
necessary to implement this section.''.

SEC. 9. ENFORCEMENT.

    ``(a) General Penalties.--Section 316(c) of the Federal Power Act 
(16 U.S.C. 825o(c)) is amended by--
            (1) striking ``subsection'' and inserting ``section''; and
            (2) striking ``or 214'' and inserting: ``214, 217, 218, or 
        219''.
    ``(b) Civil Penalties.--Section 316A of the Federal Power Act (16 
U.S.C. 825o-1) is amended by striking ``or 214'' each place it appears 
and inserting: ``214, 217, 218, or 219''.

SEC. 10. AMENDMENT TO THE PUBLIC UTILITY REGULATORY POLICIES ACT.

    Section 210 of the Public Utility Regulatory Policies Act of 1978 
(16 U.S.C. 824a-3) is amended by adding at the end the following:
    ``(m) Protection of Existing Wholesale Power Purchase Contracts.--
No State or State regulatory authority may bar a State regulated 
electric utility from recovering the cost of electric energy the 
utility is required to purchase from a qualifying cogeneration facility 
or qualifying small power production facility under this section.''.

Summary: Requires FERC, after consulting with appropriate State regulatory authorities, to determine by rule or order which electric energy transmission and delivery facilities are used for transmission in interstate commerce, subject to FERC jurisdiction, and which are used for local distribution subject to State jurisdiction. Redefines the transmission of electric energy in interstate commerce to include electric energy that will be consumed in a foreign country. Includes among public utilities subject to FERC jurisdiction over electric energy transmission any electric utility or Federal power marketing agency (including the Tennessee Valley Authority (TVA)), municipal utilities, and rural electric cooperatives not otherwise subject to FERC. Redefines a transmitting utility to include any public utility, qualifying cogeneration facility, qualifying small power production facility, or Federal power marketing agency that owns or operates electric power transmission facilities used for electric energy sales. Authorizes any person generating electric energy for sale to apply to FERC for an order requiring a transmitting utility to provide transmission services to the applicant. Repeals the prohibition against mandatory retail wheeling and sham wholesale transactions. Limits FERC authority to order retail wheeling to sales permitted or required by State law. Declares that neither the silence of the Congress nor any Act of the Congress shall be construed to preclude a State or State commission, acting under State law, from requiring an electric utility subject to its jurisdiction to provide unbundled local distribution service to any electric consumer within such State. Requires any electric utility permitted or required by a State to provide unbundled local distribution service to any electric consumer within such State, to do so on a not unduly discriminatory basis. Preempts any State law, regulation, or order that results in unbundled local distribution service that is unjust, unreasonable, unduly discriminatory, or preferential. Authorizes a State or State commission to bar an electric utility from selling electric energy to an ultimate consumer using local distribution facilities if such utility or any of its affiliates owns or controls local distribution facilities and is not itself providing unbundled local distribution service. Declares that nothing in this Act shall prohibit a State or State regulatory authority from assessing a nondiscriminatory charge on unbundled local distribution service, the retail sale of electric energy, or the generation of electric energy for consumption by the generator within the State. Expresses the sense of the Congress that: (1) every electric energy consumer should have access to electric energy at reasonable and affordable rates. And (2) FERC 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. Requires any State or State commission that requires an electric utility subject to its jurisdiction to provide unbundled local distribution service to: (1) consider adopting measures to implement such policy. And (2) report to FERC on any measures so adopted. Instructs FERC to establish and enforce national electric reliability standards to ensure the reliability of the electric transmission system. Authorizes FERC to: (1) designate national and regional councils to promote such reliability. (2) incorporate into its own standards the operational standards adopted by such councils. And (3) enforce compliance with such standards on the part of any public or transmitting utility. Prescribes procedural guidelines under which FERC may order a transmitting utility to broaden or improve its facilities for the interstate transmission of electric energy. Authorizes FERC to order the formation of a regional transmission system, and to order any transmitting utility operating within such region to participate in it. Requires FERC to appoint a regional oversight board to oversee such system operation, and such board to appoint an independent system operator to operate the system. Establishes civil penalties for violations of this Act. Amends the Public Utility Regulatory Policies Act of 1978 to prohibit any State or State authority from barring a State regulated electric utility from recovering the cost of electric energy the utility is required to purchase from a qualifying cogeneration facility or qualifying small power production facility.