II

105TH CONGRESS

1ST SESSION S. 1276

To amend the Federal Power Act, to facilitate the transition to more

competitive and efficient electric power markets, and for other purposes.

IN THE SENATE OF THE UNITED STATES

OCTOBER 8, 1997

Mr. BINGAMAN introduced the following bill; which was read twice and

referred to the Committee on Energy and Natural Resources

A BILL

To amend the Federal Power Act, to facilitate the transition

to more competitive and efficient electric power markets,

and for other purposes.

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 ‘‘Federal Power Act

5 Amendments of 1997’’.

6 SEC. 2. CLARIFICATION OF JURISDICTION.

7 (a) DECLARATION OF POLICY.—Section 201(a) of

8 the Federal Power Act (16 U.S.C. 824(a)) is amended

9 by—
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1 (1) inserting after ‘‘transmission of electric en2 ergy in interstate commerce’’ the following: ‘‘, in3 cluding the unbundled transmission of electric en4 ergy sold at retail,’’; and

5 (2) striking ‘‘such Federal regulation, however,

6 to extend only to those matters which are not sub7 ject to regulation by the States.’’ and inserting the

8 following: ‘‘such Federal regulation shall not extend,

9 however, to the bundled retail sale of electric energy

10 or to unbundled local distribution service, which are

11 subject to regulation by the States.’’.

12 (b) APPLICATION OF PART.—Section 201(b) of the

13 Federal Power Act (16 U.S.C. 824(b)(1)) is amended

14 by—

15 (1) inserting after ‘‘the transmission of electric

16 energy in interstate commerce’’ the following: ‘‘, in17 cluding the unbundled transmission of electric en18 ergy sold at retail,’’; and

19 (2) adding at the end the following:

20 ‘‘(3) The Commission, after consulting with the

21 appropriate State regulatory authorities, shall deter22 mine, by rule or order, which facilities used for the

23 transmission and delivery of electric energy are used

24 for transmission in interstate commerce subject to

25 the jurisdiction of the Commission under this Part,
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1 and which are used for local distribution subject to

2 State jurisdiction.’’.

3 (c) DEFINITION OF INTERSTATE COMMERCE.—Sec4 tion 201(c) of the Federal Power Act (16 U.S.C. 824(c))

5 is amended by inserting after ‘‘outside thereof ’’ the follow6 ing: ‘‘(including consumption in a foreign country)’’.

7 (d) DEFINITIONS OF TYPES OF SALES.—Section

8 201(d) of the Federal Power Act (16 U.S.C. 824(d)) is

9 amended by—

10 (1) inserting ‘‘(1) after the subsection designa11 tion;

12 (2) adding at the end the following:

13 ‘‘(2) The term ‘bundled retail sale of electric

14 energy’ means the sale of electric energy to an ulti15 mate consumer in which the generation and trans16 mission service are not sold separately.

17 ‘‘(3) The term ‘unbundled local distribution

18 service’ means the delivery of electric energy to an

19 ultimate consumer if—

20 ‘‘(A) the electric energy and the service of

21 delivering it are sold separately, and

22 ‘‘(B) the delivery uses facilities for local

23 distribution as determined by the Commission

24 under subsection (b)(3).
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1 ‘‘(4) The term ‘unbundled transmission of elec2 tric energy sold at retail’ means the transmission of

3 electric energy to an ultimate consumer if—

4 ‘‘(A) the electric energy and the service of

5 transmitting it are sold separately, and

6 ‘‘(B) the transmission uses facilities for

7 transmission in interstate commerce as deter8 mined by the Commission under subsection

9 (b)(3).’’.

10 (e) DEFINITIONS OF PUBLIC UTILITY.—Section 201

11 of the Federal Power Act (16 U.S.C. 824) is amended by

12 striking subsection (e) and inserting the following:

13 ‘‘(e) The term ‘public utility’ when used in this Part

14 or in the Part next following means—

15 ‘‘(1) any person who owns or operates facilities

16 subject to the jurisdiction of the Commission under

17 this Part (other than facilities subject to such juris18 diction solely by reason of section 210, 211, or 212);

19 or

20 ‘‘(2) any electric utility or Federal power mar21 keting agency not otherwise subject to the jurisdic22 tion of the Commission under this Part, including—

23 ‘‘(A) the Tennessee Valley Authority,

24 ‘‘(B) a Federal power marketing agency,
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1 ‘‘(C) a State or any political subdivision of

2 a State, or any agency, authority, or instrumen3 tality of a State or political subdivision,

4 ‘‘(D) a corporation or association that has

5 ever received a loan for the purpose of provid6 ing electric service from the Administrator of

7 the Rural Electrification Administration or the

8 Rural Utilities Service under the Rural Elec9 trification Act of 1936; or

10 ‘‘(E) any corporation or association which

11 is wholly owned, directly or indirectly, by any

12 one or more of the foregoing,

13 but only with respect to determining, fixing, and

14 otherwise regulating the rates, terms, and conditions

15 for the transmission of electric energy under this

16 Part (including sections 217, 218, and 219).’’.

17 (f) APPLICATION OF PART TO GOVERNMENT UTILI18 TIES.—Section 201(f) of the Federal Power Act (16

19 U.S.C. 824(f)) is amended by striking ‘‘No provision’’ and

20 inserting ‘‘Except as provided in subsection (e)(2) and sec21 tion 3(23), no provision’’.

22 (g) DEFINITION OF TRANSMITTING UTILITY.—Sec23 tion 3 of the Federal Power Act (16 U.S.C. 796) is

24 amended by striking paragraph (23) and inserting the fol25 lowing:
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1 ‘‘(23) TRANSMITTING UTILITY.—The term

2 ‘transmitting utility’ means any electric utility,

3 qualifying cogeneration facility, qualifying small

4 power production facility, Federal power marketing

5 agency, or any public utility, as defined in section

6 201(e)(2), that owns or operates electric power

7 transmission facilities which are used for the sale of

8 electric energy.’’.

9 SEC. 3. FEDERAL WHEELING AUTHORITY.

10 (a) COMMISSION AUTHORITY TO ORDER RETAIL

11 WHEELING.—

12 (1) Section 211(a) of the Federal Power Act

13 (16 U.S.C. 824j(a)) is amended by striking ‘‘for re14 sale’’.

15 (2) Section 212(a) of the Federal Power Act

16 (16 U.S.C. 824k(a)) is amended by striking ‘‘whole17 sale transmission services’’ each place it appears and

18 inserting ‘‘transmission services’’.

19 (3) Section 212(g) of the Federal Power Act

20 (16 U.S.C. 824k(g)) is repealed.

21 (b) LIMITATION ON COMMISSION AUTHORITY TO

22 ORDER RETAIL WHEELING.—Section 212 of the Federal

23 Power Act (16 U.S.C. 824k) is further amended by strik24 ing subsection (h) and inserting the following:
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1 ‘‘(h) LIMITATION ON COMMISSION AUTHORITY TO

2 ORDER RETAIL WHEELING.—No rule or order issued

3 under this Act shall require or be conditioned upon the

4 transmission of electric energy:

5 ‘‘(1) directly to an ultimate consumer in con6 nection with a sale of electric energy to the

7 consumer unless the seller of such energy is per8 mitted or required under applicable State law to

9 make such sale to such consumer, or

10 ‘‘(2) to, or for the benefit of, an electric utility

11 if such electric energy would be sold by such utility

12 directly to an ultimate consumer, unless the utility

13 is permitted or required under applicable State law

14 to sell electric energy to such ultimate consumer.’’.

15 (c) CONFORMING AMENDMENT.—Section 3 of the

16 Federal Power Act (16 U.S.C. 796) is amended by strik17 ing paragraph (24) and inserting the following:

18 ‘‘(24) TRANSMISSION SERVICES.—The term

19 ‘transmission services’ means the transmission of

20 electric energy in interstate commerce.’’.

21 SEC. 4. STATE AUTHORITY TO ORDER RETAIL ACCESS.

22 Part II of the Federal Power Act is further amended

23 by adding at the end the following:
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1 ‘‘SEC. 215. STATE AUTHORITY TO ORDER RETAIL ACCESS.

2 ‘‘(a) STATE AUTHORITY.—Neither silence on the part

3 of Congress nor any Act of Congress shall be construed

4 to preclude a State or State commission, acting under au5 thority of state law, from requiring an electric utility sub6 ject to its jurisdiction to provide unbundled local distribu7 tion service to any electric consumer within such State.

8 ‘‘(b) NONDISCRIMINATORY SERVICE.—If a State or

9 State commission permits or requires an electric utility

10 subject to its jurisdiction to provide unbundled local dis11 tribution service to any electric consumer within such

12 State, the electric utility shall provide such service on a

13 not unduly discriminatory basis. Any law, regulation, or

14 order of a State or State commission that results in

15 unbundled local distribution service that is unjust, unrea16 sonable, unduly discriminatory, or preferential is hereby

17 preempted.

18 ‘‘(c) RECIPROCITY.—Notwithstanding subsection (b),

19 a State or state commission may bar an electric utility

20 from selling electric energy to an ultimate consumer using

21 local distribution facilities in such State if such utility or

22 any of its affiliates owns or controls local distribution fa23 cilities and is not itself providing unbundled local distribu24 tion service.

25 ‘‘(d) STATE CHARGES.—Nothing in this Act shall

26 prohibit a State or State regulatory authority from assess-
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1 ing a nondiscriminatory charge on unbundled local dis2 tribution service within the State, the retail sale of electric

3 energy within the State, or the generation of electric en4 ergy for consumption by the generator within the State.’’.

5 SEC. 5. UNIVERSAL AND AFFORDABLE SERVICE.

6 Part II of the Federal Power Act is further amended

7 by adding at the end the following:

8 ‘‘SEC. 216. UNIVERSAL AND AFFORDABLE SERVICE.

9 ‘‘(a) SENSE OF THE CONGRESS.—It is the sense of

10 the Congress that—

11 ‘‘(1) every consumer of electric energy should

12 have access to electric energy at reasonable and af13 fordable rates, and

14 ‘‘(2) the Commission and the States should en15 sure that competition in the electric energy business

16 does not result in the loss of service to rural, resi17 dential, or low-income consumers.

18 ‘‘(b) CONSIDERATION AND REPORTS.—Any State or

19 State commission that requires an electric utility subject

20 to its jurisdiction to provide unbundled local distribution

21 service shall—

22 ‘‘(1) consider adopting measures to—

23 ‘‘(A) ensure that every consumer of electric

24 energy within such State shall have access to
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1 electric energy at reasonable and affordable

2 rates, and

3 ‘‘(B) prevent the loss of service to rural,

4 residential, or low-income consumers; and

5 ‘‘(2) report to the Commission on any measures

6 adopted under paragraph (1).’’.

7 SEC. 6. NATIONAL ELECTRIC RELIABILITY STANDARDS.

8 Part II of the Federal Power Act is further amended

9 by adding at the end the following:

10 ‘‘SEC. 217. NATIONAL ELECTRIC RELIABILITY STANDARDS.

11 ‘‘(a) RELIABILITY STANDARDS.—The Commission

12 shall establish and enforce national electric reliability

13 standards to ensure the reliability of the electric trans14 mission system.

15 ‘‘(b) DESIGNATION OF NATIONAL AND REGIONAL

16 COUNCILS.—

17 ‘‘(1) For purposes of establishing and enforcing

18 national electric reliability standards under sub19 section (a), the Commission may designate an ap20 propriate number of regional electric reliability coun21 cils composed of electric utilities or transmitting util22 ities, and one national electric reliability council

23 composed of designated regional electric reliability

24 councils, whose mission is to promote the reliability

25 of electric transmission system.
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1 ‘‘(2) The Commission shall not designate a re2 gional electric reliability council unless the Commis3 sion determines that the council—

4 ‘‘(A) permits open access to membership

5 from all entities engaged in the business of sell6 ing, generating, transmitting, or delivering elec7 tric energy within its region;

8 ‘‘(B) provides fair representation of its

9 members in the selection of its directors and

10 the management of its affairs; and

11 ‘‘(C) adopts and enforces appropriate

12 standards of operation designed to promote the

13 reliability electric transmission system.

14 ‘‘(c) INCORPORATION OF COUNCIL STANDARDS.—

15 The Commission may incorporate, in whole or in part, the

16 standards of operation adopted by the regional and na17 tional electric reliability councils in the national electric

18 reliability standards adopted by the Commission under

19 subsection (a).

20 ‘‘(d) ENFORCEMENT.—The Commission may, by rule

21 or order, require any public utility or transmitting utility

22 to comply with any standard adopted by the Commission

23 under this section.
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1 SEC. 7. SITING NEW INTERSTATE TRANSMISSION FACILI2 TIES.

3 Part II of the Federal Power Act is further amended

4 by adding at the end the following:

5 ‘‘SEC. 218. SITING NEW INTERSTATE TRANSMISSION FACILI6 TIES.

7 ‘‘(a) COMMISSION AUTHORITY.—Whenever the Com8 mission, after notice and opportunity for hearing, finds

9 such action necessary or desirable in the public interest,

10 it may order a transmitting utility to enlarge, extend, or

11 improve its facilities for the interstate transmission of

12 electric energy.

13 ‘‘(b) PROCEDURE.—The Commission may commence

14 a proceeding for the issuance of an order under subsection

15 (a) upon the application of an electric utility, transmitting

16 utility, or state regulatory authority, or upon its own mo17 tion.

18 ‘‘(c) COMPLIANCE WITH OTHER LAWS.—Commis19 sion action under this section shall be subject to the Na20 tional Environmental Policy Act of 1969 (42 U.S.C. 4321

21 et seq.) and all other applicable state and federal laws.

22 ‘‘(d) USE OF JOINT BOARDS.—Before issuing an

23 order under subsection (a), the Commission shall refer the

24 matter to a joint board appointed under section 209(a)

25 for advice and recommendations on the need for, design

26 of, and location of the proposed enlargement, extension,
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1 or improvement. The Commission shall consider the advice

2 and recommendations of the Board before ordering such

3 enlargement, extension, or improvement.

4 ‘‘(e) LIMITATION ON AUTHORITY.—The Commission

5 shall have no authority to compel a transmitting utility

6 to extend or improve its transmission facilities if such en7 largement, extension, or improvement would unreasonably

8 impair the ability of the transmitting utility to render ade9 quate service to its customers.’’.

10 SEC. 8. REGIONAL INDEPENDENT SYSTEM OPERATORS.

11 Part II of the Federal Power Act is further amended

12 by adding at the end the following:

13 ‘‘SEC. 219. REGIONAL INDEPENDENT SYSTEM OPERATORS.

14 ‘‘(a) REGIONAL TRANSMISSION SYSTEMS.—When15 ever the Commission finds such action necessary or desir16 able in the public interest to ensure the fair and non-dis17 criminatory access to transmission services within a re18 gion, the Commission may order the formation of a re19 gional transmission system and may order any transmit20 ting utility operating within such region to participate in

21 the regional transmission system.

22 ‘‘(b) OVERSIGHT BOARD.—The Commission shall ap23 point a regional oversight board to oversee the operation

24 of the regional transmission system. Such oversight board

25 shall be composed of a fair representation of all of the
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1 transmitting utilities participating in the regional trans2 mission system, electric utilities and consumers served by

3 the system, and State regulatory authorities within the re4 gion. The regional oversight board shall ensure that the

5 independent system operator formulates policies, operates

6 the system, and resolves disputes in a fair and non-dis7 criminatory manner.

8 ‘‘(c) INDEPENDENT SYSTEM OPERATOR.—The re9 gional oversight board shall appoint an independent sys10 tem operator to operate the regional transmission system.

11 No independent system operator shall—

12 ‘‘(1) own generating facilities or sell electric en13 ergy, or

14 ‘‘(2) be subject to the control of, or have a fi15 nancial interest in, any electric utility or transmit16 ting utility within the region served by the independ17 ent system operator.

18 ‘‘(d) COMMISSION RULES.—The Commission shall es19 tablish rules necessary to implement this section.’’.

20 SEC. 9. ENFORCEMENT.

21 ‘‘(a) GENERAL PENALTIES.—Section 316(c) of the

22 Federal Power Act (16 U.S.C. 825o(c)) is amended by—

23 (1) striking ‘‘subsection’’ and inserting ‘‘sec24 tion’’; and
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1 (2) striking ‘‘or 214’’ and inserting: ‘‘214, 217,

2 218, or 219’’.

3 ‘‘(b) CIVIL PENALTIES.—Section 316A of the Fed4 eral Power Act (16 U.S.C. 825o–1) is amended by striking

5 ‘‘or 214’’ each place it appears and inserting: ‘‘214, 217,

6 218, or 219’’.

7 SEC. 10. AMENDMENT TO THE PUBLIC UTILITY REGU8 LATORY POLICIES ACT.

9 Section 210 of the Public Utility Regulatory Policies

10 Act of 1978 (16 U.S.C. 824a–3) is amended by adding

11 at the end the following:

12 ‘‘(m) PROTECTION OF EXISTING WHOLESALE

13 POWER PURCHASE CONTRACTS.—No State or State regu14 latory authority may bar a State regulated electric utility

15 from recovering the cost of electric energy the utility is

16 required to purchase from a qualifying cogeneration facil17 ity or qualifying small power production facility under this

18 section.’’.

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