II 

109TH CONGRESS 

1ST SESSION S. 1031 

To enhance the reliability of the electric system. 

IN THE SENATE OF THE UNITED STATES 

MAY 12, 2005 

Ms. CANTWELL (for herself, Mr. JEFFORDS, and Mrs. CLINTON) introduced 

the following bill; which was read twice and referred to the Committee 

on Energy and Natural Resources 

A BILL 

To enhance the reliability of the electric system. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This title may be cited as the ‘‘Electric Reliability 

5 Act of 2005’’. 

6 SEC. 2. ELECTRIC RELIABILITY STANDARDS. 

7 (a) IN GENERAL.—Part II of the Federal Power Act 

8 (16 U.S.C 824 et seq.) is amended by adding at the end 

9 the following: 

10 ‘‘SEC. 215. ELECTRIC RELIABILITY. 

11 ‘‘(a) DEFINITIONS.—In this section: 
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1 ‘‘(1)(A) The term ‘bulk-power system’ means— 

2 ‘‘(i) facilities and control systems necessary 

3 for operating an interconnected electric energy 

4 transmission network (or any portion thereof); 

5 and 

6 ‘‘(ii) electric energy from generation facili7 ties needed to maintain transmission system re8 liability. 

9 ‘‘(B) The term ‘bulk-power system’ does not in10 clude facilities used in the local distribution of elec11 tric energy. 

12 ‘‘(2) The terms ‘Electric Reliability Organiza13 tion’ and ‘ERO’ mean the organization certified by 

14 the Commission under subsection (c) the purpose of 

15 which is to establish and enforce reliability stand16 ards for the bulk-power system, subject to Commis17 sion review. 

18 ‘‘(3) The term ‘interconnection’ means a geo19 graphic area in which the operation of bulk-power 

20 system components is synchronized such that the 

21 failure of 1 or more of such components may ad22 versely affect the ability of the operators of other 

23 components within the system to maintain reliable 

24 operation of the facilities within their control. 
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1 ‘‘(4) The term ‘regional entity’ means an entity 

2 having enforcement authority pursuant to subsection 

3 (e)(4). 

4 ‘‘(5)(A) The term ‘reliability standard’ means a 

5 requirement, approved by the Commission under this 

6 section, to provide for reliable operation of the bulk7 power system. 

8 ‘‘(B) The term ‘reliability standard’ includes re9 quirements for the operation of existing bulk-power 

10 system facilities and the design of planned additions 

11 or modifications to those facilities to the extent nec12 essary to provide for reliable operation of the bulk13 power system. 

14 ‘‘(C) The term ‘reliability standard’ does not in15 clude any requirement to enlarge a facility described 

16 in subparagraph (B) or to construct new trans17 mission capacity or generation capacity. 

18 ‘‘(6) The term ‘reliable operation’ means oper19 ating the elements of the bulk-power system within 

20 equipment and electric system thermal, voltage, and 

21 stability limits so that instability, uncontrolled sepa22 ration, or cascading failures of such system will not 

23 occur as a result of a sudden disturbance or unan24 ticipated failure of system elements. 
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1 ‘‘(7) The term ‘transmission organization’ 

2 means a regional transmission organization, inde3 pendent system operator, independent transmission 

4 provider, or other transmission organization finally 

5 approved by the Commission for the operation of 

6 transmission facilities. 

7 ‘‘(b) JURISDICTION AND APPLICABILITY.—(1)(A) 

8 The Commission shall have jurisdiction, within the United 

9 States, over the ERO certified by the Commission under 

10 subsection (c), any regional entities, and all users, owners 

11 and operators of the bulk-power system, including the en12 tities described in section 201(f), for purposes of approv13 ing reliability standards established under this section and 

14 enforcing compliance with this section. 

15 ‘‘(B) All users, owners, and operators of the bulk16 power system shall comply with reliability standards that 

17 take effect under this section. 

18 ‘‘(2) Not later than 180 days after the date of enact19 ment of this section, the Commission shall issue a final 

20 rule to implement this section. 

21 ‘‘(c) CERTIFICATION.—(1) Following the issuance of 

22 a Commission rule under subsection (b)(2), any person 

23 may submit an application to the Commission for certifi24 cation as the Electric Reliability Organization. 
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1 ‘‘(2) The Commission may certify an ERO described 

2 in paragraph (1) if the Commission determines that the 

3 ERO— 

4 ‘‘(A) has the ability to develop and enforce, sub5 ject to subsection (e)(2), reliability standards that 

6 provide for an adequate level of reliability of the 

7 bulk-power system; and 

8 ‘‘(B) has established rules that— 

9 ‘‘(i) ensure the independence of the ERO 

10 from the users and owners and operators of the 

11 bulk-power system, while ensuring fair stake12 holder representation in the selection of direc13 tors of the ERO and balanced decisionmaking 

14 in any ERO committee or subordinate organiza15 tional structure; 

16 ‘‘(ii) allocate equitably reasonable dues, 

17 fees, and other charges among end users for all 

18 activities under this section; 

19 ‘‘(iii) provide fair and impartial procedures 

20 for enforcement of reliability standards through 

21 the imposition of penalties in accordance with 

22 subsection (e) (including limitations on activi23 ties, functions, or operations, or other appro24 priate sanctions); 
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1 ‘‘(iv) provide for reasonable notice and op2 portunity for public comment, due process, 

3 openness, and balance of interests in developing 

4 reliability standards and otherwise exercising 

5 the duties of the ERO; and 

6 ‘‘(v) provide for taking, after certification, 

7 appropriate steps to gain recognition in Canada 

8 and Mexico. 

9 ‘‘(d) RELIABILITY STANDARDS.—(1) The Electric 

10 Reliability Organization shall file each reliability standard 

11 or modification to a reliability standard that the Electric 

12 Reliability Organization proposes to be made effective 

13 under this section with the Commission. 

14 ‘‘(2)(A) The Commission may approve, by rule or 

15 order, a proposed reliability standard or modification to 

16 a reliability standard if the Commission determines that 

17 the standard is just, reasonable, not unduly discriminatory 

18 or preferential, and in the public interest. 

19 ‘‘(B) The Commission— 

20 ‘‘(i) shall give due weight to the technical exper21 tise of the Electric Reliability Organization with re22 spect to the content of a proposed standard or modi23 fication to a reliability standard and to the technical 

24 expertise of a regional entity organized on an inter25 connection-wide basis with respect to a reliability 
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1 standard to be applicable within that interconnec2 tion; but 

3 ‘‘(ii) shall not defer with respect to the effect of 

4 a standard on competition. 

5 ‘‘(C) A proposed standard or modification shall take 

6 effect upon approval by the Commission. 

7 ‘‘(3) The Electric Reliability Organization shall 

8 rebuttably presume that a proposal from a regional entity 

9 organized on an interconnection-wide basis for a reliability 

10 standard or modification to a reliability standard to be ap11 plicable on an interconnection-wide basis is just, reason12 able, and not unduly discriminatory or preferential, and 

13 in the public interest. 

14 ‘‘(4) The Commission shall remand to the Electric 

15 Reliability Organization for further consideration a pro16 posed reliability standard or a modification to a reliability 

17 standard that the Commission disapproves in whole or in 

18 part. 

19 ‘‘(5) The Commission, upon a motion of the Commis20 sion or upon complaint, may order the Electric Reliability 

21 Organization to submit to the Commission a proposed reli22 ability standard or a modification to a reliability standard 

23 that addresses a specific matter if the Commission con24 siders such a new or modified reliability standard appro25 priate to carry out this section. 
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1 ‘‘(6)(A) The final rule adopted under subsection 

2 (b)(2) shall include fair processes for the identification 

3 and timely resolution of any conflict between a reliability 

4 standard and any function, rule, order, tariff, rate sched5 ule, or agreement accepted, approved, or ordered by the 

6 Commission applicable to a transmission organization. 

7 ‘‘(B) The transmission organization shall continue to 

8 comply with such function, rule, order, tariff, rate sched9 ule, or agreement as is accepted, approved, or ordered by 

10 the Commission until— 

11 ‘‘(i) the Commission finds a conflict exists be12 tween a reliability standard and any such provision; 

13 ‘‘(ii) the Commission orders a change to the 

14 provision pursuant to section 206; and 

15 ‘‘(iii) the ordered change becomes effective 

16 under this part. 

17 ‘‘(C) If the Commission determines that a reliability 

18 standard needs to be changed as a result of such a con19 flict, the Commission shall order the ERO to develop and 

20 file with the Commission a modified reliability standard 

21 under paragraph (4) or (5). 

22 ‘‘(e) ENFORCEMENT.—(1) Subject to paragraph (2), 

23 the ERO may impose a penalty on a user or owner or 

24 operator of the bulk-power system for a violation of a reli25 ability standard approved by the Commission under sub-
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1 section (d) if the ERO, after notice and an opportunity 

2 for a hearing— 

3 ‘‘(A) finds that the user or owner or operator 

4 has violated a reliability standard approved by the 

5 Commission under subsection (d); and 

6 ‘‘(B) files notice and the record of the pro7 ceeding with the Commission. 

8 ‘‘(2)(A) A penalty imposed under paragraph (1) may 

9 take effect not earlier than the 31st day after the date 

10 on which the ERO files with the Commission notice of the 

11 penalty and the record of proceedings. 

12 ‘‘(B) The penalty shall be subject to review by the 

13 Commission upon— 

14 ‘‘(i) a motion by the Commission; or 

15 ‘‘(ii) application by the user, owner, or operator 

16 that is the subject of the penalty filed not later than 

17 30 days after the date on which the notice is filed 

18 with the Commission. 

19 ‘‘(C) Application to the Commission for review, or the 

20 initiation of review by the Commission upon a motion of 

21 the Commission, shall not operate as a stay of the penalty 

22 unless the Commission orders otherwise upon a motion of 

23 the Commission or upon application by the user, owner, 

24 or operator that is the subject of the penalty. 
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1 ‘‘(D) In any proceeding to review a penalty imposed 

2 under paragraph (1), the Commission, after notice and op3 portunity for hearing (which hearing may consist solely 

4 of the record before the ERO and opportunity for the 

5 presentation of supporting reasons to affirm, modify, or 

6 set aside the penalty), shall by order affirm, set aside, re7 instate, or modify the penalty, and, if appropriate, remand 

8 to the ERO for further proceedings. 

9 ‘‘(E) The Commission shall implement expedited pro10 cedures for hearings described in subparagraph (D). 

11 ‘‘(3) Upon a motion of the Commission or upon com12 plaint, the Commission may order compliance with a reli13 ability standard and may impose a penalty against a user 

14 or owner or operator of the bulk-power system if the Com15 mission finds, after notice and opportunity for a hearing, 

16 that the user or owner or operator of the bulk-power sys17 tem has engaged or is about to engage in any act or prac18 tice that constitutes or will constitute a violation of a reli19 ability standard. 

20 ‘‘(4)(A) The Commission shall issue regulations au21 thorizing the ERO to enter into an agreement to delegate 

22 authority to a regional entity for the purpose of proposing 

23 reliability standards to the ERO and enforcing reliability 

24 standards under paragraph (1) if— 
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1 ‘‘(i) the regional entity is governed by an inde2 pendent board, a balanced stakeholder board, or a 

3 combination of an independent and balanced stake4 holder board; 

5 ‘‘(ii) the regional entity otherwise meets the re6 quirements of paragraphs (1) and (2) of subsection 

7 (c); and 

8 ‘‘(iii) the agreement promotes effective and effi9 cient administration of bulk-power system reliability. 

10 ‘‘(B) The Commission may modify a delegation under 

11 this paragraph. 

12 ‘‘(C) The ERO and the Commission shall rebuttably 

13 presume that a proposal for delegation to a regional entity 

14 organized on an interconnection-wide basis promotes effec15 tive and efficient administration of bulk-power system reli16 ability and should be approved. 

17 ‘‘(D) The regulations issued under this paragraph 

18 may provide that the Commission may assign the author19 ity of the ERO to enforce reliability standards under para20 graph (1) directly to a regional entity in accordance with 

21 this paragraph. 

22 ‘‘(5) The Commission may take such action as the 

23 Commission determines to be appropriate against the 

24 ERO or a regional entity to ensure compliance with a reli-
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1 ability standard or any Commission order affecting the 

2 ERO or a regional entity. 

3 ‘‘(6) Any penalty imposed under this section shall 

4 bear a reasonable relation to the seriousness of the viola5 tion and shall take into consideration the efforts of the 

6 user, owner, or operator to remedy the violation in a time7 ly manner. 

8 ‘‘(f) CHANGES IN ELECTRIC RELIABILITY ORGANIZA9 TION RULES.—(1) The Electric Reliability Organization 

10 shall file with the Commission for approval any proposed 

11 rule or proposed rule change, accompanied by an expla12 nation of the basis and purpose of the rule and proposed 

13 rule change. 

14 ‘‘(2) The Commission, upon a motion of the Commis15 sion or upon complaint, may propose a change to the rules 

16 of the ERO. 

17 ‘‘(3) A proposed rule or proposed rule change shall 

18 take effect upon a finding by the Commission, after notice 

19 and opportunity for comment, that the change is just, rea20 sonable, not unduly discriminatory or preferential, is in 

21 the public interest, and meets the requirements of sub22 section (c). 

23 ‘‘(g) RELIABILITY REPORTS.—The ERO shall con24 duct periodic assessments of the reliability and adequacy 

25 of the bulk-power system in North America. 
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1 ‘‘(h) COORDINATION WITH CANADA AND MEXICO.— 

2 The President is urged to negotiate international agree3 ments with the governments of Canada and Mexico to pro4 vide for effective compliance with reliability standards and 

5 the effectiveness of the ERO in the United States and 

6 Canada or Mexico. 

7 ‘‘(i) SAVINGS PROVISIONS.—(1) The ERO may de8 velop and enforce compliance with reliability standards for 

9 only the bulk-power system. 

10 ‘‘(2) Nothing in this section authorizes the ERO or 

11 the Commission to order the construction of additional 

12 generation or transmission capacity or to set and enforce 

13 compliance with standards for adequacy or safety of elec14 tric facilities or services. 

15 ‘‘(3) Nothing in this section preempts any authority 

16 of any State to take action to ensure the safety, adequacy, 

17 and reliability of electric service within that State, as long 

18 as such action is not inconsistent with any reliability 

19 standard. 

20 ‘‘(4) Not later than 90 days after the date of applica21 tion of the Electric Reliability Organization or other af22 fected party, and after notice and opportunity for com23 ment, the Commission shall issue a final order deter24 mining whether a State action is inconsistent with a reli-
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1 ability standard, taking into consideration any rec2 ommendation of the ERO. 

3 ‘‘(5) The Commission, after consultation with the 

4 ERO and the State taking action, may stay the effective5 ness of any State action, pending the issuance by the Com6 mission of a final order. 

7 ‘‘(j) REGIONAL ADVISORY BODIES.—(1) The Com8 mission shall establish a regional advisory body on the petition of at least 2 9 ⁄3 of the States within a region that have 

more than 1 10 ⁄2 of the electric load of the States served with11 in the region. 

12 ‘‘(2) A regional advisory body— 

13 ‘‘(A) shall be composed of 1 member from each 

14 participating State in the region, appointed by the 

15 Governor of the State; and 

16 ‘‘(B) may include representatives of agencies, 

17 States, and provinces outside the United States. 

18 ‘‘(3) A regional advisory body may provide advice to 

19 the Electric Reliability Organization, a regional entity, or 

20 the Commission regarding— 

21 ‘‘(A) the governance of an existing or proposed 

22 regional entity within the same region; 

23 ‘‘(B) whether a standard proposed to apply 

24 within the region is just, reasonable, not unduly dis-
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1 criminatory or preferential, and in the public inter2 est; 

3 ‘‘(C) whether fees proposed to be assessed with4 in the region are just, reasonable, not unduly dis5 criminatory or preferential, and in the public inter6 est; and 

7 ‘‘(D) any other responsibilities requested by the 

8 Commission. 

9 ‘‘(4) The Commission may give deference to the ad10 vice of a regional advisory body if that body is organized 

11 on an interconnection-wide basis. 

12 ‘‘(k) ALASKA AND HAWAII.—This section does not 

13 apply to Alaska or Hawaii.’’. 

14 (b) STATUS OF ERO.—The Electric Reliability Orga15 nization certified by the Federal Energy Regulatory Com16 mission under section 215(c) of the Federal Power Act 

17 (as added by subsection (a)) and any regional entity dele18 gated enforcement authority pursuant to section 215(e)(4) 

19 of that Act (as so added) are not departments, agencies, 

20 or instrumentalities of the United States Government. 

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