I 

108TH CONGRESS 

1ST SESSION H. R. 3004

To improve the reliability of the Nation’s electric transmission system. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 4, 2003

Mr. DINGELL (for himself, Mr. WAXMAN, Mr. MARKEY, Mr. BOUCHER, Mr. 

TOWNS, Mr. PALLONE, Mr. BROWN of Ohio, Mr. GORDON, Mr. 

DEUTSCH, Mr. RUSH, Ms. ESHOO, Mr. STUPAK, Mr. ENGEL, Mr. WYNN, 

Ms. MCCARTHY of Missouri, Mr. STRICKLAND, Ms. DEGETTE, Mrs. 

CAPPS, Mr. DOYLE, Mr. ALLEN, Mr. DAVIS of Florida, Ms. 

SCHAKOWSKY, and Ms. SOLIS) introduced the following bill; which was 

referred to the Committee on Energy and Commerce 

A BILL

To improve the reliability of the Nation’s electric 

transmission 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 Act may be cited as the ‘‘Electric Reliability Im5 provement Act of 2003’’. 
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1 SEC. 2. ELECTRIC RELIABILITY STANDARDS. 

2 Part II of the Federal Power Act (16 U.S.C. 824 et 

3 seq.) is amended by inserting the following new section 

4 at the end thereof: 

5 ‘‘SEC. 215. ELECTRIC RELIABILITY. 

6 ‘‘(a) DEFINITIONS.—For purposes of this section—

7 ‘‘(1) The term ‘bulk-power system’ means—

8 ‘‘(A) facilities and control systems nec9 essary for operating an interconnected electric 

10 energy transmission network (or any portion 

11 thereof); and 

12 ‘‘(B) electric energy from generation facili13 ties needed to maintain transmission system re14 liability. 

15 The term does not include facilities used in the local 

16 distribution of electric energy. 

17 ‘‘(2) The terms ‘Electric Reliability Organiza18 tion’ and ‘ERO’ mean the organization certified by 

19 the Commission under subsection (c) the purpose of 

20 which is to establish and enforce reliability stand21 ards for the bulk-power system, subject to Commis22 sion review. 

23 ‘‘(3) The term ‘reliability standard’ means a re24 quirement, approved by the Commission under this 

25 section, to provide for reliable operation of the bulk26 power system. The term includes requirements for 
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1 the operation of existing bulk-power system facilities 

2 and the design of planned additions or modifications 

3 to such facilities to the extent necessary to provide 

4 for reliable operation of the bulk-power system, but 

5 the term does not include any requirement to en6 large such facilities or to construct new transmission 

7 capacity or generation capacity. 

8 ‘‘(4) The term ‘reliable operation’ means oper9 ating the elements of the bulk-power system within 

10 equipment and electric system thermal, voltage, and 

11 stability limits so that instability, uncontrolled sepa12 ration, or cascading failures of such system will not 

13 occur as a result of a sudden disturbance or unan14 ticipated failure of system elements. 

15 ‘‘(5) The term ‘Interconnection’ means a geo16 graphic area in which the operation of bulk-power 

17 system components is synchronized such that the 

18 failure of one or more of such components may ad19 versely affect the ability of the operators of other 

20 components within the system to maintain reliable 

21 operation of the facilities within their control. 

22 ‘‘(6) The term ‘transmission organization’ 

23 means a regional transmission organization, inde24 pendent system operator, independent transmission 

25 provider, or other transmission organization finally 
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1 approved by the Commission for the operation of 

2 transmission facilities. 

3 ‘‘(7) The term ‘regional entity’ means an entity 

4 having enforcement authority pursuant to subsection 

5 (e)(4). 

6 ‘‘(b) JURISDICTION AND APPLICABILITY.—(1) The 

7 Commission shall have jurisdiction, within the United 

8 States, over the ERO certified by the Commission under 

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

10 and operators of the bulk-power system, including but not 

11 limited to the entities described in section 201(f), for pur12 poses of approving reliability standards established under 

13 this section and enforcing compliance with this section. All 

14 users, owners and operators of the bulk-power system 

15 shall comply with reliability standards that take effect 

16 under this section. 

17 ‘‘(2) The Commission shall issue a final rule to imple18 ment the requirements of this section not later than 180 

19 days after the date of enactment of this section. 

20 ‘‘(c) CERTIFICATION.—Following the issuance of a 

21 Commission rule under subsection (b)(2), any person may 

22 submit an application to the Commission for certification 

23 as the Electric Reliability Organization (ERO). The Com24 mission may certify one such ERO if the Commission de25 termines that such ERO—
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1 ‘‘(1) has the ability to develop and enforce, sub2 ject to subsection (e)(2), reliability standards that 

3 provide for an adequate level of reliability of the 

4 bulk-power system; and 

5 ‘‘(2) has established rules that—

6 ‘‘(A) assure its independence of the users 

7 and owners and operators of the bulk-power 

8 system, while assuring fair stakeholder rep9 resentation in the selection of its directors and 

10 balanced decisionmaking in any ERO com11 mittee or subordinate organizational structure; 

12 ‘‘(B) allocate equitably reasonable dues, 

13 fees, and other charges among end users for all 

14 activities under this section; 

15 ‘‘(C) provide fair and impartial procedures 

16 for enforcement of reliability standards through 

17 the imposition of penalties in accordance with 

18 subsection (e) (including limitations on activi19 ties, functions, or operations, or other appro20 priate sanctions);

21 ‘‘(D) provide for reasonable notice and op22 portunity for public comment, due process, 

23 openness, and balance of interests in developing 

24 reliability standards and otherwise exercising its 

25 duties; and 
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1 ‘‘(E) provide for taking, after certification, 

2 appropriate steps to gain recognition in Canada 

3 and Mexico. 

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

5 Reliability Organization shall file each reliability standard 

6 or modification to a reliability standard that it proposes 

7 to be made effective under this section with the Commis8 sion. 

9 ‘‘(2) The Commission may approve, by rule or order, 

10 a proposed reliability standard or modification to a reli11 ability standard if it determines that the standard is just, 

12 reasonable, not unduly discriminatory or preferential, and 

13 in the public interest. The Commission shall give due 

14 weight to the technical expertise of the Electric Reliability 

15 Organization with respect to the content of a proposed 

16 standard or modification to a reliability standard and to 

17 the technical expertise of a regional entity organized on 

18 an Interconnection-wide basis with respect to a reliability 

19 standard to be applicable within that Interconnection, but 

20 shall not defer with respect to the effect of a standard 

21 on competition. A proposed standard or modification shall 

22 take effect upon approval by the Commission. 

23 ‘‘(3) The Electric Reliability Organization shall 

24 rebuttably presume that a proposal from a regional entity 

25 organized on an Interconnection-wide basis for a reliability 
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1 standard or modification to a reliability standard to be ap2 plicable on an Interconnection-wide basis is just, reason3 able, and not unduly discriminatory or preferential, and 

4 in the public interest. 

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

6 Reliability Organization for further consideration a pro7 posed reliability standard or a modification to a reliability 

8 standard that the Commission disapproves in whole or in 

9 part. 

10 ‘‘(5) The Commission, upon its own motion or upon 

11 complaint, may order the Electric Reliability Organization 

12 to submit to the Commission a proposed reliability stand13 ard or a modification to a reliability standard that ad14 dresses a specific matter if the Commission considers such 

15 a new or modified reliability standard appropriate to carry 

16 out this section. 

17 ‘‘(6) The final rule adopted under subsection (b)(2) 

18 shall include fair processes for the identification and time19 ly resolution of any conflict between a reliability standard 

20 and any function, rule, order, tariff, rate schedule, or 

21 agreement accepted, approved, or ordered by the Commis22 sion applicable to a transmission organization. Such trans23 mission organization shall continue to comply with such 

24 function, rule, order, tariff, rate schedule or agreement ac25 cepted approved, or ordered by the Commission until—
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1 ‘‘(A) the Commission finds a conflict exists be2 tween a reliability standard and any such provision; 

3 ‘‘(B) the Commission orders a change to such 

4 provision pursuant to section 206 of this part; and 

5 ‘‘(C) the ordered change becomes effective 

6 under this part. 

7 If the Commission determines that a reliability standard 

8 needs to be changed as a result of such a conflict, it shall 

9 order the ERO to develop and file with the Commission 

10 a modified reliability standard under paragraph (4) or (5) 

11 of this subsection. 

12 ‘‘(e) ENFORCEMENT.—(1) The ERO may impose, 

13 subject to paragraph (2), a penalty on a user or owner 

14 or operator of the bulk-power system for a violation of a 

15 reliability standard approved by the Commission under 

16 subsection (d) if the ERO, after notice and an opportunity 

17 for a hearing—

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

19 has violated a reliability standard approved by the 

20 Commission under subsection (d); and 

21 ‘‘(B) files notice and the record of the pro22 ceeding with the Commission. 

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

24 take effect not earlier than the 31st day after the electric 

25 reliability organization files with the Commission notice of 
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1 the penalty and the record of proceedings. Such penalty 

2 shall be subject to review by the Commission, on its own 

3 motion or upon application by the user, owner or operator 

4 that is the subject of the penalty filed within 30 days after 

5 the date such notice is filed with the Commission. Applica6 tion to the Commission for review, or the initiation of re7 view by the Commission on its own motion, shall not oper8 ate as a stay of such penalty unless the Commission other9 wise orders upon its own motion or upon application by 

10 the user, owner or operator that is the subject of such 

11 penalty. In any proceeding to review a penalty imposed 

12 under paragraph (1), the Commission, after notice and op13 portunity for hearing (which hearing may consist solely 

14 of the record before the electric reliability organization and 

15 opportunity for the presentation of supporting reasons to 

16 affirm, modify, or set aside the penalty), shall by order 

17 affirm, set aside, reinstate, or modify the penalty, and, 

18 if appropriate, remand to the electric reliability organiza19 tion for further proceedings. The Commission shall imple20 ment expedited procedures for such hearings.

21 ‘‘(3) On its own motion or upon complaint, the Com22 mission may order compliance with a reliability standard 

23 and may impose a penalty against a user or owner or oper24 ator of the bulk-power system, if the Commission finds, 

25 after notice and opportunity for a hearing, that the user 
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1 or owner or operator of the bulk-power system has en2 gaged or is about to engage in any acts or practices that 

3 constitute or will constitute a violation of a reliability 

4 standard. 

5 ‘‘(4) The Commission shall establish regulations au6 thorizing the ERO to enter into an agreement to delegate 

7 authority to a regional entity for the purpose of proposing 

8 reliability standards to the ERO and enforcing reliability 

9 standards under paragraph (1) if—

10 ‘‘(A) the regional entity is governed by—

11 ‘‘(i) an independent board; 

12 ‘‘(ii) a balanced stakeholder board; or 

13 ‘‘(iii) a combination independent and bal14 anced stakeholder board. 

15 ‘‘(B) the regional entity otherwise satisfies the 

16 provisions of subsection (c)(1) and (2); and 

17 ‘‘(C) the agreement promotes effective and effi18 cient administration of bulk-power system reliability. 

19 The Commission may modify such delegation. The ERO 

20 and the Commission shall rebuttably presume that a pro21 posal for delegation to a regional entity organized on an 

22 Interconnection-wide basis promotes effective and efficient 

23 administration of bulk-power system reliability and should 

24 be approved. Such regulation may provide that the Com25 mission may assign the ERO’s authority to enforce reli-
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1 ability standards under paragraph (1) directly to a re2 gional entity consistent with the requirements of this para3 graph. 

4 ‘‘(5) The Commission may take such action as is nec5 essary or appropriate against the ERO or a regional entity 

6 to ensure compliance with a reliability standard or any 

7 Commission order affecting the ERO or a regional entity. 

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

9 bear a reasonable relation to the seriousness of the viola10 tion and shall take into consideration the efforts of such 

11 user, owner, or operator to remedy the violation in a time12 ly manner. 

13 ‘‘(f) CHANGES IN ELECTRICITY RELIABILITY ORGA14 NIZATION RULES.—The Electric Reliability Organization 

15 shall file with the Commission for approval any proposed 

16 rule or proposed rule change, accompanied by an expla17 nation of its basis and purpose. The Commission, upon 

18 its own motion or complaint, may propose a change to the 

19 rules of the Electric Reliability Organization. A proposed 

20 rule or proposed rule change shall take effect upon a find21 ing by the Commission, after notice and opportunity for 

22 comment, that the change is just, reasonable, not unduly 

23 discriminatory or preferential, is in the public interest, and 

24 satisfies the requirements of subsection (c). 
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1 ‘‘(g) RELIABILITY REPORTS.—The Electric Reli2 ability Organization shall conduct periodic assessments of 

3 the reliability and adequacy of the bulk-power system in 

4 North America. 

5 ‘‘(h) COORDINATION WITH CANADA AND MEXICO.—

6 The President is urged to negotiate international agree7 ments with the governments of Canada and Mexico to pro8 vide for effective compliance with reliability standards and 

9 the effectiveness of the Electric Reliability Organization 

10 in the United States and Canada or Mexico. 

11 ‘‘(i) SAVINGS PROVISIONS.—(1) The Electric Reli12 ability Organization shall have authority to develop and 

13 enforce compliance with reliability standards for only the 

14 bulk-power system. 

15 ‘‘(2) This section does not authorize the Electric Reli16 ability Organization or the Commission to order the con17 struction of additional generation or transmission capacity 

18 or to set and enforce compliance with standards for ade19 quacy or safety of electric facilities or services. 

20 ‘‘(3) Nothing in this section shall be construed to pre21 empt any authority of any State to take action to ensure 

22 the safety, adequacy, and reliability of electric service 

23 within that State, as long as such action is not incon24 sistent with any reliability standard. 
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1 ‘‘(4) Within 90 days of the application of the Electric 

2 Reliability Organization or other affected party, and after 

3 notice and opportunity for comment, the Commission shall 

4 issue a final order determining whether a State action is 

5 inconsistent with a reliability standard, taking into consid6 eration any recommendation of the Electric Reliability Or7 ganization. 

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

9 Electric Reliability Organization and the State taking ac10 tion, may stay the effectiveness of any State action, pend11 ing the Commission’s issuance of a final order. 

12 ‘‘(j) REGIONAL ADVISORY BODIES.—The Commis13 sion shall establish a regional advisory body on the petition 

14 of at least two-thirds of the States within a region that 

15 have more than one-half of their electric load served within 

16 the region. A regional advisory body shall be composed or 

17 of one member from each participating State in the region, 

18 appointed by the Governor of each State, and may include 

19 representatives of agencies, States, and provinces outside 

20 the United States. A regional advisory body may provide 

21 advice to the Electric Reliability Organization, a regional 

22 entity, or the Commission regarding the governance of an 

23 existing or proposed regional entity within the same re24 gion, whether a standard proposed to apply within the re25 gion is just, reasonable, not unduly discriminatory or pref-
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1 erential, and in the public interest, whether fees proposed 

2 to be assessed within the region are just, reasonable, not 

3 unduly discriminatory or preferential, and in the public 

4 interest and any other responsibilities requested by the 

5 Commission. The Commission may give deference to the 

6 advice of any such regional advisory body if that body is 

7 organized on an Interconnection-wide basis. 

8 ‘‘(k) APPLICATION TO ALASKA AND HAWAII.—The 

9 provisions of this section do not apply to Alaska or Ha10 waii.’’.

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