I

106TH CONGRESS

1ST SESSION H. R. 1587

To encourage States to establish competitive retail markets for electricity,

to clarify the roles of the Federal Government and the States in retail

electricity markets, to remove certain Federal barriers to competition,

and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

APRIL 27, 1999

Mr. STEARNS introduced the following bill; which was referred to the Committee on Commerce, and in addition to the Committees on Resources,

and Transportation and Infrastructure, for a period to be subsequently

determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To encourage States to establish competitive retail markets

for electricity, to clarify the roles of the Federal Government and the States in retail electricity markets, to

remove certain Federal barriers to competition, 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 ‘‘Electric Energy Em5 powerment Act of 1999’’.
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1 SEC. 2. COMPETITIVE RETAIL ELECTRICITY MARKETS.

2 (a) PURPOSE.—It is the purpose of this section to

3 ensure that the States have the authority to order electric

4 utilities subject to their jurisdiction to provide trans5 mission and local distribution services to retail customers

6 within their States, and to encourage States to proceed

7 expeditiously to enact such legislation as may be necessary

8 to establish competitive retail electricity markets.

9 (b) STATE AUTHORITY TO ORDER RETAIL WHEEL10 ING.—(1) Section 201 of the Federal Power Act (16

11 U.S.C. 824) is amended by adding the following new sub12 section at the end thereof:

13 ‘‘(h) STATE AUTHORITY TO ORDER RETAIL WHEEL14 ING.—(1) Subject to the conditions set forth in paragraph

15 (2), notwithstanding any other provision of law, the States

16 have the authority to order electric utilities subject to their

17 jurisdiction to provide nondiscriminatory open access

18 through functionally unbundled transmission and local

19 distribution services, as defined by the Commission by

20 rule, to retail customers within their borders.

21 ‘‘(2) CONDITIONS.—

22 ‘‘(A) RECIPROCITY CONDITION.—A State shall

23 order an electric utility subject to its jurisdiction to

24 provide nondiscriminatory open access through func25 tionally unbundled transmission and local distribu26 tion services to retail customers within its borders
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1 only on the condition that such services need only be

2 provided to transmit electricity produced in States

3 which have ordered their electric utilities to provide

4 nondiscriminatory open access through functionally

5 unbundled transmission and local distribution serv6 ices to retail customers within their borders.

7 ‘‘(B) NONREGULATED UTILITIES.—If, as of the

8 date of the enactment of this paragraph, a State has

9 not established ratemaking authority with respect to

10 an electric utility in the State, the State may not—

11 ‘‘(i) prohibit the utility from selling

12 electric energy at retail in interstate com13 merce in any other State; or

14 ‘‘(ii) establish any disincentives to the

15 development in the State of effective com16 petition in the market for selling electric

17 energy at retail.

18 Any such utility may sell electric energy at re19 tail in interstate commerce in another State

20 only if the utility provides nondiscriminatory

21 open access (including the functional

22 unbundling of services) to the local distribution

23 facilities of the utility and to any transmission

24 facilities of the utility that are not subject to

25 the jurisdiction of the Federal Energy Regu-
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1 latory Commission under sections 205 and 206

2 of this Act.’’.

3 (c) BYPASS.—(1) Notwithstanding any provision of

4 this Act or any other law, a State or a State regulatory

5 authority (in carrying out its authority to regulate facili6 ties used for the local distribution of electric energy or

7 for the provision of local distribution service) may require,

8 as a condition for the purchase by any person or munici9 pality of retail electric energy services, the payment of a

10 charge deemed necessary by the State or State regulatory

11 authority for any of the following:

12 (A) To recover costs incurred by an electric

13 utility that become unrecoverable due to the avail14 ability of retail electric service choice.

15 (B) To ensure that adequate electric service is

16 available to all customers served by the retail dis17 tribution system concerned.

18 (C) To ensure and enhance the reliability of re19 tail electric service.

20 (D) To fund assistance to low-income cus21 tomers.

22 (E) To encourage environmental, renewable en23 ergy, energy efficiency, conservation programs, or

24 any combination of such programs.
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1 (F) To provide for retraining of electric employ2 ees.

3 (G) To provide payment of all reasonable costs

4 associated with Federal and State requirements re5 garding the decommissioning of nuclear generating

6 units.

7 (H) Any combination of the purposes described

8 in subparagraphs (A) through (G).

9 (2) For purposes of this subsection, the term ‘‘local

10 distribution service’’ includes the receipt of electric energy

11 by an end user whether or not such receipt requires the

12 use of local distribution facilities.

13 SEC. 3. CLARIFICATION OF JURISDICTION.

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

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

16 follows:

17 (1) By inserting after ‘‘transmission of electric

18 energy in interstate commerce’’ the following: ‘‘, in19 cluding the unbundled transmission of electric en20 ergy sold at retail,’’.

21 (2) By striking ‘‘such Federal regulation, how22 ever, to extend only to those matters which are not

23 subject to regulation by the States.’’ and inserting

24 the following: ‘‘such Federal regulation shall not ex25 tend, however, to the bundled retail sale of electric
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1 energy or to unbundled local distribution service

2 which are subject to regulation by the States.’’.

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

4 Federal Power Act (16 U.S.C. 824(b)) is amended as fol5 lows:

6 (1) By inserting after ‘‘the transmission of elec7 tric energy in interstate commerce’’ the following: ‘‘,

8 including the unbundled transmission of electric en9 ergy sold at retail,’’.

10 (2) By adding at the end the following:

11 ‘‘(3) The Commission shall, by rule or order, after

12 giving notice to and consulting with the appropriate State

13 regulatory authorities, determine which facilities used for

14 the transmission and delivery of electric energy are used

15 for transmission in interstate commerce subject to the ju16 risdiction of the Commission, under this part, and which

17 are used for local distribution subject to State jurisdic18 tion.’’.

19 (c) DEFINITION OF INTERSTATE COMMERCE.—Sec20 tion 201(c) of the Federal Power Act (16 U.S.C. 824(c))

21 is amended by inserting after ‘‘outside thereof’’ the fol22 lowing: ‘‘(including consumption in a foreign country).’’.

23 (d) DEFINITION OF TYPES OF SALES.—Section

24 201(d) of the Federal Power Act (16 U.S.C. 824(d)) is

25 amended as follows:
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1 (1) By inserting ‘‘(1)’’ after ‘‘(d)’’.

2 (2) By adding at the end the following:

3 ‘‘(2) For purposes of this section, the term ‘bundled

4 retail sale of electric energy’ means the sale of electric en5 ergy to an ultimate consumer in which the generation and

6 transmission service are not sold separately.

7 ‘‘(3) The term ‘unbundled local distribution service’

8 means the delivery of electric energy to an ultimate con9 sumer if—

10 ‘‘(A) the electric energy and the service of deliv11 ering it are sold separately, and

12 ‘‘(B) the delivery uses facilities for local dis13 tribution as determined by the Commission under

14 subsection (b)(3).

15 ‘‘(4) The term ‘unbundled transmission of electric en16 ergy sold at retail’ means the transmission of electric en17 ergy to an ultimate consumer if—

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

19 transmitting it are sold separately, and

20 ‘‘(B) the transmission uses facilities for trans21 mission in interstate commerce as determined by the

22 Commission under subsection (b)(3).’’.
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1 SEC. 4. ENCOURAGEMENT OF INDEPENDENT TRANS2 MISSION SYSTEM OPERATORS.

3 The creation of Independent Transmission System

4 Operators is encouraged in order to ensure that all sellers

5 and buyers of electricity in the United States have access

6 to nondiscriminatory transmission services. Nothing in

7 this section shall be construed as affecting any authority

8 of the Federal Energy Regulatory Commission under any

9 other provision of law to order the creation of Independent

10 Transmission System Operators.

11 SEC. 5. APPLICATION OF FERC OPEN ACCESS RULES TO

12 NONJURISDICTIONAL ENTITIES.

13 (a) DEFINITION OF PUBLIC UTILITY.—Section

14 201(e) of the Federal Power Act (16 U.S.C. 824) is

15 amended to read as follows:

16 ‘‘(e) The term ‘public utility’ when used in this part

17 or in the part next following means—

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

19 subject to the jurisdiction of the Commission under

20 this part (other than facilities subject to such juris21 diction solely by reasons of section 210, 211, or

22 212); or

23 ‘‘(2) any electric utility or Federal power mar24 keting agency not otherwise subject to the jurisdic25 tion of the Commission under this part, including—

26 ‘‘(A) the Tennessee Valley Authority;
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1 ‘‘(B) a Federal power marketing agency;

2 ‘‘(C) a State or any political subdivision of

3 a State or any agency, authority, or instrumen4 tality of a State or political subdivision;

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

6 ever received a loan for the purpose of pro7 viding electric service from the Administrator of

8 the Rural Electrification Administration or the

9 Rural Utilities Service under the Rural Elec10 trification Act of 1936; or

11 ‘‘(E) any corporation or association which

12 is wholly owned, directly or indirectly, by any

13 one or more of the foregoing, but only with re14 spect to determining, fixing, and otherwise reg15 ulating the rates, terms, and conditions for the

16 transmission of electric energy under this

17 part.’’.

18 (b) APPLICATION OF PART TO GOVERNMENT UTILI19 TIES.—Section 201(f) of the Federal Power Act (16

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

21 inserting ‘‘Except as provided in subsection (e)(2) and sec22 tion 3(23), no provision’’.

23 (c) DEFINITION OF TRANSMITTING UTILITY.—Para24 graph (23) of section 3 of the Federal Power Act (16

25 U.S.C. 796) is amended to read as follows:
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1 ‘‘(23) TRANSMITTING UTILITY.—The term ‘transmit2 ting utility’ means any electric utility, qualifying cogenera3 tion facility, qualifying small power production facility,

4 Federal power marketing agency, or any public utility, as

5 defined in section 201(e)(2), that owns or operates electric

6 power transmission facilities which are used for the sale

7 of electric energy.’’.

8 SEC. 6. REMOVAL OF FEDERAL BARRIERS TO COMPETI9 TION.

10 (a) REPEAL OF SECTION 210 OF PURPA.—

11 (1) NEW CONTRACTS.—After the date of the

12 enactment of this Act, no electric utility shall be re13 quired to enter into a new contract or obligation to

14 purchase or to sell electric energy or capacity pursu15 ant to section 210 of the Public Utility Regulatory

16 Policies Act of 1978.

17 (2) EXISTING RIGHTS AND REMEDIES NOT AF18 FECTED.—Nothing in this subsection affects the

19 rights or remedies of any party with respect to the

20 purchase or sale of electric energy or capacity from

21 or to a facility determined to be a qualifying small

22 power production facility or a qualifying cogenera23 tion facility under section 210 of the Public Utility

24 Regulatory Policies Act of 1978 pursuant to any

25 contract or obligation to purchase or to sell electric
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1 energy or capacity in effect on the date of the enact2 ment of this Act, including the right to recover the

3 costs of purchasing such electric energy or capacity.

4 (3) INTERPRETATIONS AND ACTIONS TAKEN.—

5 Nothing in this subsection may be deemed or con6 strued as implying congressional ratification of any

7 interpretation of, or any action taken pursuant to,

8 the Public Utility Regulatory Policies Act of 1978.

9 (b) RECOVERY OF COSTS.—In order to assure recov10 ery by electric utilities purchasing electric energy or capac11 ity from a qualifying facility pursuant to any legally en12 forceable obligation entered into or imposed pursuant to

13 section 210 of the Public Utility Regulatory Policies Act

14 of 1978 prior to the date of the enactment of this Act,

15 of all costs associated with such purchases, the Commis16 sion shall promulgate and enforce such regulations as may

17 be required to assure that no utility shall be required di18 rectly or indirectly to absorb the costs associated with such

19 purchases from a qualifying facility. Such regulations shall

20 be treated as a rule enforceable under the Federal Power

21 Act (16 U.S.C. 791a–825r).

22 (c) DEFINITIONS.—For purposes of this section—

23 (1) The term ‘‘Commission’’ means the Federal

24 Energy Regulatory Commission.
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1 (2) The term ‘‘electric utility’’ means any per2 son, State agency, or Federal agency, which sells

3 electric energy.

4 (3) The term ‘‘qualifying small power produc5 tion facility’’ has the same meaning as provided in

6 section 3(17)(C) of the Federal Power Act.

7 (4) The term ‘‘qualifying cogeneration facility’’

8 has the same meaning as provided in section

9 3(18)(A) of the Federal Power Act.

10 (5) The term ‘‘qualifying facility’’ means either

11 a small power production facility or a qualifying co12 generation facility.

13 (d) REPEAL OF THE PUBLIC UTILITY HOLDING

14 COMPANY ACT OF 1935.—The Public Utility Holding

15 Company Act of 1935 is hereby repealed, effective one

16 year from the date of enactment of this Act.

17 SEC. 7. ENACTMENT OF THE PUBLIC UTILITY HOLDING

18 COMPANY REGULATION.

19 (a) PURPOSE.—Limited Federal regulation is nec20 essary to supplement the work of State commissions for

21 the continued rate protection of electric and gas utility

22 consumers. This section is intended to address these con23 cerns by providing for Federal and State access to books

24 and records of all companies in a holding company system
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1 and for federal oversight of affiliate transactions, to the

2 extent that such activities affect rates.

3 (b) DEFINITIONS.—When used in this section:

4 (1) ‘‘Person’’ means an individual or company.

5 (2) ‘‘Company’’ means a corporation, joint

6 stock company, partnership, association, business

7 trust, organized group of persons, whether incor8 porated or not, or a receiver or receivers, trustee or

9 trustees of any of the foregoing.

10 (3) ‘‘Electric utility company’’ means any com11 pany that owns or operates facilities used for the

12 generation, transmission, or distribution of electric

13 energy for sale.

14 (4) ‘‘Gas utility company’’ means any company

15 that owns or operates facilities used for distribution

16 at retail (other than the distribution only in enclosed

17 portable containers) of natural or manufactured gas

18 for heat, light or power.

19 (5) ‘‘Public utility company’’ means an electric

20 utility company or gas utility company but does not

21 mean a qualifying facility as defined in the Public

22 Utility Regulatory Policies Act of 1992, or an ex23 empt wholesale generator or a foreign utility com24 pany defined by the Energy Policy Act of 1992.
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1 (6) ‘‘Holding company’’ means (A) any com2 pany that directly or indirectly owns, controls, or

3 holds with power to vote, 10 percent or more of the

4 outstanding voting securities of a public utility com5 pany or of a holding company of any public utility

6 company; and (B) any person, determined by the

7 Commission, after notice and opportunity for hear8 ing, to exercise directly or indirectly (either alone or

9 pursuant to an arrangement or understanding with

10 one or more persons) such a controlling influence

11 over the management or policies of any public utility

12 or holding company as to make it necessary or ap13 propriate for the protection of consumers with re14 spect to rates that such person be subject to the ob15 ligations, duties, and liabilities imposed in this title

16 upon holding companies.

17 (7) ‘‘Subsidiary company’’ of a holding com18 pany means (A) any company 10 percent or more of

19 the outstanding voting securities of which are di20 rectly or indirectly owned, controlled, or held with

21 power to vote, by such holding company; and (B)

22 any person the management or policies of which the

23 Commission, after notice and opportunity for hear24 ing, determines to be subject to a controlling influ25 ence, directly or indirectly, by such holding company
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1 (either alone or pursuant to an arrangement or un2 derstanding with one or more other persons) so as

3 to make it necessary for the protection of consumers

4 with respect to rates that such person be subject to

5 the obligations, duties, and liabilities imposed in this

6 title upon subsidiary companies of holding compa7 nies.

8 (8) ‘‘Holding company system’’ means a hold9 ing company together with its subsidiary companies.

10 (9) ‘‘Associate company’’ of a company means

11 any company in the same holding company system

12 with such company.

13 (10) ‘‘Affiliate’’ of a company means any com14 pany 5 percent or more of whose outstanding voting

15 securities are owned, controlled, or held with power

16 to vote, directly or indirectly, by such company.

17 (11) ‘‘Voting security’’ means any security pres18 ently entitling the owner or holder thereof to vote in

19 the direction or management of the affairs of a com20 pany.

21 (12) ‘‘Commission’’ means the Federal Energy

22 Regulatory Commission.

23 (13) ‘‘State Commission’’ means any commis24 sion, board, agency, or officer, by whatever name

25 designated, of a State, municipality, or other polit-
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1 ical subdivision of a State that under the law of such

2 State has jurisdiction to regulate public utility com3 panies.

4 (c) GOVERNMENTS.—No provision in this section

5 shall apply to, or be deemed to include: (1) the United

6 States, (2) a State or any political subdivision of a State,

7 (3) any foreign governmental authority not operating in

8 the United States, (4) any agency, authority, or instru9 mentality of any of the foregoing, or (5) any officer, agent,

10 or employee of any of the foregoing acting as such in the

11 course of his official duty.

12 (d) EXEMPTIONS.—(1) The provisions of this section

13 shall not apply to any person previously exempted, by rule

14 or order, from regulation under the Public Utility Holding

15 Company Act of 1935 and such person shall continue to

16 be exempted from the provisions of this section, except

17 that the Commission may institute proceedings to termi18 nate such exemption if the termination of such exemption

19 would be necessary for regulating the rates of a public

20 utility company and necessary for the protection of con21 sumers.

22 (2) The Commission, by rules and regulations, or by

23 order upon application, may conditionally or uncondition24 ally exempt any person or transaction, or any class or

25 classes of persons or transactions, from any provision or
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1 provisions of this title or of any rule or regulation there2 under, if the Commission finds that regulation of such per3 son or transaction is not relevant to the rates of a public

4 utility company; in considering whether to grant such an

5 exemption, the Commission shall consult with the affected

6 State commissions.

7 (e) FEDERAL ACCESS TO BOOKS AND RECORDS.—

8 (1) Every holding company and subsidiary company there9 of shall maintain, and make available to the Commission,

10 such books, records, accounts, and other documents as the

11 Commission deems relevant to costs incurred by a public

12 utility company that is an associate company of such hold13 ing company and necessary or appropriate for the protec14 tion of consumers with respect to rates.

15 (2) Every affiliate of a holding company or of any

16 subsidiary company thereof shall maintain, and make

17 available to the Commission, such books, records, ac18 counts, and other documents with respect to any trans19 action with another affiliate, as the Commission deems rel20 evant to costs incurred by a public utility company that

21 is an associate company of such holding company and nec22 essary or appropriate for the protection of consumers with

23 respect to rates.

24 (3) The Commission may examine the books and

25 records of any company in a holding company system, or
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1 any affiliate thereof, as the Commission deems relevant

2 to costs incurred by a public utility company within such

3 holding company system and necessary or appropriate for

4 the protection of consumers with respect to rates.

5 (4) No member, officer, or employee of the Commis6 sion shall divulge any fact or information that may come

7 to his knowledge during the course of examination of

8 books, accounts, or other information as herein before pro9 vided, except insofar as he may be directed by the Com10 mission or by a court.

11 (f) STATE ACCESS TO BOOKS AND RECORDS.—(1)

12 Upon the written request of a State commission having

13 jurisdiction to regulate a public utility company in a hold14 ing company system, and subject to such terms and condi15 tions as may be necessary and appropriate to safeguard

16 against unwarranted disclosure to the public of any trade

17 secrets or sensitive commercial information, a holding

18 company or its associate company or affiliate thereof,

19 wherever located, shall produce for inspection such books

20 and records as have been identified in reasonable detail

21 in a proceeding before the State commission, are relevant

22 to costs incurred by such public utility company and are

23 necessary for the effective discharge of the State commis24 sion’s responsibilities with respect to such proceeding.
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1 (2) Nothing in this section shall preempt applicable

2 State law concerning the provision of records and other

3 information, or in any way limit a State’s rights to obtain

4 books and records and other information under Federal

5 law, contract, or otherwise.

6 (g) AFFILIATE TRANSACTIONS.—Nothing in this sec7 tion shall preclude the Commission or a State commission

8 from exercising its jurisdiction under otherwise applicable

9 law to determine whether a public utility company may

10 recover in rates any costs of an activity performed by an

11 associate company, or any costs of goods or services ac12 quired by such public utility company from an associate

13 company.

14 (h) EFFECT ON OTHER REGULATION.—Nothing in

15 this section shall preclude a State commission from exer16 cising its jurisdiction under otherwise applicable law to

17 protect utility consumers.

18 (i) ENFORCEMENT.—The Commission shall have the

19 same powers as set forth in Sections 306 through 317 of

20 the Federal Power Act (16 U.S.C. 825d–825p) to enforce

21 the provisions of this section.

22 (j) SAVINGS PROVISION.—Nothing in this section

23 prohibits a person from engaging in activities in which it

24 is legally engaged or authorized to engage on the effective

25 date of the Public Utility Holding Company Act of 1996,
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1 provided that it continues to comply with the terms of any

2 authorization, whether by rule or by order.

3 (k) IMPLEMENTATION.—The Commission shall pro4 mulgate regulations necessary or appropriate to imple5 ment this section not later than one year after the date

6 of the enactment of this Act.

7 (l) RESOURCES.—All books and records that relate

8 primarily to the function hereby vested in the Commission

9 shall be transferred from the Securities and Exchange

10 Commission to the Commission. It is the sense of the Con11 gress that, subject to the approval of the Director of the

12 Office of Management and Budget and the Chairman of

13 the Securities and Exchange Commission all personnel of

14 the Office of Public Utility Regulation of the Securities

15 and Exchange Commission as of the date of enactment

16 of this title should be transferred to the Commission.

17 (m) EFFECTIVE DATE.—This section shall take ef18 fect one year after the date of enactment of this Act.

19 (n) SEVERABILITY.—If any provision of this section,

20 or the application of such provision to any person or cir21 cumstance, shall be held invalid, the remainder of the sec22 tion, and the application of such provision to persons or

23 circumstances other than those as to which it is held in24 valid, shall not be affected thereby.
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1 (o) FEDERAL POWER ACT.—Section 318 of the Fed2 eral Power Act (16 U.S.C. 285g) is hereby repealed.

3 SEC. 8. RELIABILITY COUNCIL.

4 Part III of the Federal Power Act is amended by in5 serting the following after section 319:

6 ‘‘SEC. 319A. ELECTRIC RELIABILITY COUNCIL.

7 ‘‘(a) CONSENT OF CONGRESS; FORMATION AND OP8 ERATION OF COUNCIL; PURPOSES.—The consent of Con9 gress is hereby given for the formation and operation of

10 the Electric Reliability Council. The Council shall be a

11 body composed of all electricity industry participants, as

12 specified in this section, and shall carry out its functions

13 and responsibilities in accordance with this section. The

14 Council shall continue in force as specified in this section

15 and shall not be construed to be an agency or instrumen16 tality of the United States for the purpose of any Federal

17 law. The Council shall provide the best technical electricity

18 industry advice and recommendations to the Commission,

19 regarding the reliability of—

20 ‘‘(1) wholesale sales of electricity in interstate

21 commerce, and

22 ‘‘(2) the transmission of electricity in interstate

23 commerce,
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1 in order to ensure that the competitive restructuring of

2 the Nation’s electricity industry does not lessen the high

3 reliability of traditional electric service.

4 ‘‘(b) CERTAIN FEDERAL LAWS NOT APPLICABLE.—

5 No Federal law relating to the making of contracts, con6 flicts of interest, financial disclosure, open meetings of the

7 Council, advisory committees, disclosure of information,

8 and related matters shall apply to the Council. No con9 tract, obligation, or other action of the Council shall be

10 construed as an obligation of the United States or an obli11 gation secured by the full faith and credit of the United

12 States. For the purpose of judicial review of any action

13 of the Council or challenging any provision of this Act re14 lating to functions and responsibilities of the Council, not15 withstanding any other provision of law, the courts of the

16 United States shall have exclusive jurisdiction of any such

17 review.

18 ‘‘(c) RESPONSIBILITY.—The Council shall be respon19 sible for proposing to the Commission advice and regula20 tions setting forth not unduly discriminatory criteria re21 specting the reliability of wholesale sales of electricity in

22 interstate commerce and the transmission of electricity in

23 interstate commerce.
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1 ‘‘(d) MEMBERSHIP.—All electricity suppliers, trans2 mitting utilities, and local distribution companies shall be

3 members of the Council.

4 ‘‘(e) FUNDING.—The Commission shall determine in

5 advance the reasonable expenses of the Council for each

6 fiscal year, and shall provide funds to pay all such ex7 penses by assessing and collecting Council charges from

8 each Council member, on a fair and equitable basis in pro9 portion to each member’s annual revenues from electricity10 related business activities, and remitting such charges to

11 the Council.

12 ‘‘(f) GOVERNANCE.—The Council shall develop a gov13 ernance board which shall represent the interests of elec14 tric utilities, transmitting utilities, local distribution com15 panies, independent electricity generators, electricity con16 sumers, and electricity marketers and brokers. Such board

17 shall also have advisory members, one each appointed by

18 each existing electric reliability council. The members, offi19 cers, and employees of the Council shall be deemed not

20 to be officers or employees of the United States for any

21 purpose. Pursuant to bylaws adopted by it, the board shall

22 select from among themselves a chairman, and may pro23 vide for term limits for board members, staggered terms,

24 eligibility criteria, reasonable administrative procedures,
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1 compensation, the assignment and delegation of duties,

2 and similar matters.

3 ‘‘(g) ACTION AND AUTHORITY OF THE BOARD.—The

4 board of the Council shall act by a majority vote, a

5 quorum of the board being present. Two-thirds of the

6 board shall constitute a quorum. The board shall have the

7 authority to hire necessary staff, establish offices, procure

8 necessary equipment, and carry out similar administrative

9 duties.

10 ‘‘(h) RECOMMENDATION TO THE COMMISSION.—Any

11 reliability criteria duly adopted by the Council shall there12 after be proposed by the Council to the Commission, as

13 a petition for a rulemaking under this Act. The Commis14 sion, pursuant to this Act, shall consider such petition,

15 provide notice of such petition as a proposed rule, and pro16 vide an opportunity for comment thereon, as in any other

17 Commission rulemaking proceeding; and may thereafter,

18 in accordance with this Act, adopt such petition without

19 change as a final rule under this Act; or may amend it

20 in any respect and as amended, adopt it as such a final

21 rule, or may refuse to adopt it. If adopted in any respect,

22 such final rule shall be treated for all purposes, including

23 enforcement, as a rule under this Act.
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1 ‘‘(i) REPORTING BY THE COUNCIL.—The Council

2 shall submit an annual report to the President, Congress,

3 the Commission, and its members which—

4 ‘‘(1) summarizes the condition of the Nation’s

5 electric generation, transmission, and distribution

6 systems;

7 ‘‘(2) specifies the need, if any, for improve8 ments and upgrades in the Nation’s electric trans9 mission system;

10 ‘‘(3) specifies steps, if any, that are needed to

11 improve the coordination of the operations of the

12 Nation’s electric generation, transmission, and dis13 tribution systems;

14 ‘‘(4) identifies regions in which additional gen15 erating capacity may be required within 5 and 10

16 yeas; and

17 ‘‘(5) beginning 2 years after the establishment

18 of the Council, rates each Council member according

19 to its performance under the established reliability

20 criteria.

21 ‘‘(j) REPORTING BY COUNCIL MEMBERS.—All Coun22 cil members shall report to the Council any material elec23 tric generation, transmission, or distribution system emer24 gency, failure, or outage in the time and manner pre25 scribed by the Council. For purposes of this section, the
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1 Council shall in advance generally identify and define the

2 circumstances constituting such a material system emer3 gency, failure, or outage.

4 ‘‘(k) STATE AUTHORITY RESPECTING RELI5 ABILITY.—Nothing in this section shall limit the authority

6 under otherwise applicable law of any State regulatory au7 thority or of any nonregulated electric utility or local dis8 tribution company, to ensure, with respect to any sale or

9 service subject to State jurisdiction under section 201(h),

10 the reliability, safety, and effective interconnection and co11 ordination of any State regulated or nonregulated electric

12 utility or local distribution company facilities.’’.

Æ