II

106TH CONGRESS

2D SESSION S. 2098

To facilitate the transition to more competitive and efficient electric power

markets, and to ensure electric reliability.

IN THE SENATE OF THE UNITED STATES

FEBRUARY 24, 2000

Mr. MURKOWSKI (for himself and Ms. LANDRIEU) introduced the following

bill; which was read twice and referred to the Committee on Energy and

Natural Resources

A BILL

To facilitate the transition to more competitive and efficient

electric power markets, and to ensure electric reliability.

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 Power Market

5 Competition and Reliability Act’’.

6 SEC. 2. TABLE OF CONTENTS.

Sec. 1. Short title.

Sec. 2. Table of contents.

TITLE I—AMENDMENTS TO THE FEDERAL POWER ACT

Sec. 101. Clarification of state-federal jurisdiction.

Sec. 102. Interstate transmission or support state retail competition.

Sec. 103. State authority to protect the public interest.
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Sec. 104. Regional transmission organizations.

Sec. 105. State reciprocity authority.

Sec. 106. Application to state utility laws to retail sales to federal facilities.

Sec. 107. Stranded cost recovery.

Sec. 108. Savings clauses.

TITLE II—REPEAL OF PURPA MANDATORY PURCHASE

REQUIREMENT

Sec. 201. Prospective repeal of PURPA mandatory purchase requirement.

Sec. 202. Recovery of PURPA costs.

Sec. 203. Definitions.

TITLE III—ELECTRIC RELIABILITY

Sec. 301. Electric reliability organization and oversight.

Sec. 302. Application of antitrust laws.

Sec. 303. Savings clause.

Sec. 304. Regional advisory role.

Sec. 305. Application.

TITLE IV—REPEAL OF THE PUBLIC UTILITY HOLDING COMPANY

ACT OF 1935 AND ENACTMENT OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1999

Sec. 401. Short title.

Sec. 402. Findings and purposes.

Sec. 403. Definitions.

Sec. 404. Repeal of the Public Utility Holding Company Act of 1935.

Sec. 405. Federal access to books and records.

Sec. 406. State access to books and records.

Sec. 407. Exemption authority.

Sec. 408. Affiliate transactions.

Sec. 409. Applicability.

Sec. 410. Effect on other regulations.

Sec. 411. Enforcement.

Sec. 412. Savings provisions.

Sec. 413. Implementation.

Sec. 414. Transfer of resources.

Sec. 415. Authorization of appropriations.

Sec. 416. Conforming amendment to the Federal Power Act.

TITLE V—NUCLEAR DECOMMISSIONING

Sec. 501. Short Title.

Sec. 502. Definitions.

Sec. 503. Nuclear Decommissioning Assurance Determination by the Nuclear

Regulatory Commission.

Sec. 504. Amendments to the Federal Power Act.
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1 TITLE I—AMENDMENTS TO THE

2 FEDERAL POWER ACT

3 SEC. 101. CLARIFICATION OF STATE-FEDERAL JURISDIC4 TION.

5 (a) DECLARATION.—Section 201(a) of the Federal

6 Power Act is amended by—

7 (1) inserting after ‘‘transmission of electric en8 ergy in interstate commerce’’ the following: ‘‘, in9 cluding the unbundled interstate transmission of

10 electric energy sold at retail’’; and

11 (2) adding at the end thereof: ‘‘The bundled re12 tail sale of electric energy, unbundled local distribu13 tion service, unbundled retail sale of electric energy,

14 and facilities in such State related to each of the

15 foregoing, are subject to the jurisdiction of the State

16 in which the energy is consumed.’’.

17 (b) APPLICATION.—Section 201(b) of the Federal

18 Power Act is amended by—

19 (1) inserting after ‘‘transmission of electric en20 ergy in interstate commerce’’ the following: ‘‘, in21 cluding the unbundled interstate transmission of

22 electric energy’’;

23 (2) striking ‘‘sentence.’’ and inserting ‘‘sen24 tence, except with respect to determining, fixing, and

25 otherwise regulating the rates, terms, and conditions
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1 for the transmission of electric energy in interstate

2 commerce under this Part pursuant to subsection

3 (e)(2)’’; and

4 (3) adding at the end thereof:

5 ‘‘(3) The bundled retail sale of electric energy,

6 unbundled local distribution service, unbundled retail

7 sale of electric energy, and facilities in such State

8 related to each of the foregoing, are subject to the

9 jurisdiction of the State in which the energy is con10 sumed. The Commission, after consulting with and

11 giving deference to the views of the appropriate

12 State regulatory authorities, shall determine, by rule

13 or order, which facilities used for the transmission

14 and delivery of electric energy are used for trans15 mission in interstate commerce subject to the juris16 diction of the Commission under this Part, and

17 which are used for local distribution subject to State

18 jurisdiction under this Part.’’.

19 (c) DEFINITION OF INTERSTATE COMMERCE.—Sec20 tion 201(c) of the Federal Power Act is amended by in21 serting after ‘‘outside thereof’’ the following: ‘‘(including

22 consumption in a foreign country)’’.

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

24 201(d) of the Federal Power Act is amended by—
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1 (1) inserting ‘‘(1)’’ after the subsection designa2 tion;

3 (2) adding at the end the following:

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

5 energy’ means the sale of electric energy to an ulti6 mate consumer in which the generation and trans7 mission service are not sold separately.

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

9 service’ means the delivery of electric energy to an

10 ultimate consumer if—

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

12 delivering it are sold separately, and

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

14 distribution.

15 ‘‘(4) The term ‘unbundled transmission of elec16 tric energy sold at retail’ means the transmission of

17 electric energy to an ultimate consumer if—

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

19 delivering it are sold separately, and

20 ‘‘(B) the transmission uses facilities for

21 transmission in interstate commerce.

22 ‘‘(5) The term ‘unbundled retail sale of electric

23 energy’ means the sale of electric energy to an ulti24 mate consumer if—
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1 ‘‘(A) the electric energy and the service of

2 delivering it are sold separately, and

3 ‘‘(B) the electric energy is delivered

4 through transmission or local distribution facili5 ties.’’.

6 (e) DEFINITION OF PUBLIC UTILITY.—Section 201

7 of the Federal Power Act is amended by striking sub8 section (e) and inserting the following:

9 ‘‘(e) The term ‘public utility’ means—

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

11 subject to the jurisdiction of the Commission under

12 this Part (other than facilities subject to such juris13 diction solely by reason of section 210, 211, or 212);

14 and

15 ‘‘(2) any electric utility or other entity that

16 owns or operates transmission facilities that provide

17 transmission services in interstate commerce not

18 otherwise subject to the jurisdiction of the Commis19 sion under this Part (other than a utility to which

20 section 212(k) applies) including, but not limited

21 to—

22 ‘‘(A) the Tennessee Valley Authority,

23 ‘‘(B) a Federal power marketing adminis24 tration,
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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 thereof,

4 ‘‘(D) a person who has ever received a loan

5 for the purpose of providing electric service

6 from the Administrator of the Rural Electrifica7 tion Administration or the Rural Utilities Serv8 ice under the Rural Electrification Act of 1936,

9 or

10 ‘‘(E) any corporation or other entity that

11 is wholly owned directly or indirectly, by any

12 one or more of the foregoing or by the Federal

13 government—

14 but only with respect to the determining, fixing, and

15 otherwise regulating the rates, terms, and conditions

16 for the transmission of electric energy in interstate

17 commerce under this Part.’’.

18 (f) APPLICATION OF PART TO GOVERNMENT UTILI19 TIES.—Section 201(f) of the Federal Power Act is amend20 ed by striking ‘‘No provision’’ and inserting ‘‘Except as

21 provided in subsection (e)(2) and section 3(23) no provi22 sion’’.

23 (g) DEFINITION OF TRANSMITTING UTILITY.—Sec24 tion 3 of the Federal Power Act is amended by striking

25 paragraph (23) and inserting the following:
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1 ‘‘(23) TRANSMITTING UTILITY.—The term

2 ‘transmitting utility’ means any public utility, as de3 fined in section 201(e), that owns or operates elec4 tric power transmission facilities that provide trans5 mission services in interstate commerce and are used

6 for the sale of electric energy, and any utility to

7 which section 212(k) applies.’’.

8 SEC. 102. INTERSTATE TRANSMISSION TO SUPPORT STATE

9 RETAIL COMPETITION.

10 (a) FERC AUTHORITY.—

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

12 amended by striking ‘‘for resale’’.

13 (2) Section 212(a) of the Federal Power Act is

14 amended by striking ‘‘wholesale transmission serv15 ices’’ each place is appears and inserting ‘‘trans16 mission services’’ in lieu thereof.

17 (b) LIMITATION ON FERC AUTHORITY.—Section

18 212 of the Federal Power Act is amended by striking sub19 section (h) and inserting in lieu thereof the following:

20 ‘‘(h) LIMITATION ON COMMISSION AUTHORITY.—No

21 rule or order issued under this Act shall require or be con22 ditioned upon the transmission of electric energy:

23 ‘‘(1) directly to an ultimate consumer in con24 nection with a sale of electric energy to such con25 sumer unless the seller of such energy is permitted
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1 or required under applicable State law to make such

2 sale to such consumer, or

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

4 or other entity if such electric energy would be sold

5 by such utility or entity directly to an ultimate con6 sumer, unless the utility or entity is permitted or re7 quired under applicable State law to sell electric en8 ergy to such ultimate consumer.’’.

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

10 Federal Power Act is amended by striking paragraph (24)

11 and inserting the following:

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

13 ‘transmission services’ means the transmission of

14 electric energy in interstate commerce.’’.

15 SEC. 103. STATE AUTHORITY TO PROTECT THE PUBLIC IN16 TEREST.

17 The Federal Power Act is amended by adding the fol18 lowing:

19 ‘‘SEC. 215. STATE AUTHORITY TO PROTECT CONSUMERS.

20 ‘‘(a) Nothing in this Act precludes a State, in accord21 ance with State law, from imposing a public interest re22 quirement, on matters subject to State jurisdiction, the

23 purposes of which may include but are not limited to—

24 ‘‘(1) distribution system reliability;

25 ‘‘(2) safety;
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1 ‘‘(3) obligation to serve;

2 ‘‘(4) universal service;

3 ‘‘(5) assured service to low-income, rural and

4 remote consumers;

5 ‘‘(6) seller performance standards;

6 ‘‘(7) protection of retail consumers from unfair

7 business practices; and

8 ‘‘(8) any other matter affecting an ultimate

9 consumer in that State as may be in the public in10 terest pursuant to State law.

11 ‘‘(b) Nothing in this Act precludes a State, in accord12 ance with State law, from imposing a public interest

13 charge, on matters subject to State jurisdiction, the pur14 pose of which may include but is not limited to—

15 ‘‘(1) assisting low-income consumers of elec16 tricity;

17 ‘‘(2) ensuring universal electric service, particu18 larly those consumers located in rural and remote

19 areas;

20 ‘‘(3) funding for environmental programs, re21 newable-energy programs, energy efficiency pro22 grams, and energy conservation programs;

23 ‘‘(4) providing recovery of industry transition

24 costs, including, but not limited to, stranded costs
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1 resulting from any action by any unit of Federal,

2 State or local government;

3 ‘‘(5) providing transition costs of electricity

4 workers adversely affected by restructuring;

5 ‘‘(6) funding of research and development on

6 electric technologies; or

7 ‘‘(7) assisting any other program affecting ulti8 mate consumers in that State as may be authorized

9 pursuant to State law.’’.

10 SEC. 104. REGIONAL TRANSMISSION ORGANIZATIONS.

11 The Federal Power Act is amended by adding the fol12 lowing:

13 ‘‘SEC. 216. REGIONAL TRANSMISSION ORGANIZATIONS.

14 ‘‘(a) RTO FORMATION.—One or more transmitting

15 utilities may file with the Commission an application to

16 form, implement or participate in a regional transmission

17 organization. After notice and an opportunity for a hear18 ing, the Commission shall approve an application by one

19 or more transmitting utilities to form, implement, or par20 ticipate in a regional transmission organization when the

21 Commission finds that the regional transmission organiza22 tion complies with the standards listed in subsection (b).

23 The Commission shall apply the standards set forth in

24 subsection (b) without regard to the specific structure type

25 or form of proposed regional transmission organization.
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1 If a transmitting utility forms, or voluntarily agrees to

2 participate in, a regional transmission organization that

3 complies with the standards in subsection (b), the Com4 mission shall have no authority to compel the transmitting

5 utility to participate in a different regional transmission

6 organization directly or as a condition of the receipt of

7 any other approval from the Commission; nor shall the

8 Commission have the authority to add to or change the

9 terms or conditions of such application without affording

10 a transmitting utility the opportunity to withdraw from

11 the regional transmission organization if it finds such

12 terms and conditions to be unacceptable. The Commission

13 may also approve a regional transmission organization

14 that does not satisfy all such standards if the Commission

15 determines that the regional transmission organization

16 contains features that are consistent with or superior to

17 the standards listed in subsection (b).

18 ‘‘(b) RTO STANDARDS.—The standards for a re19 gional transmission organization are:

20 ‘‘(1) Independence: The regional transmission

21 organization must be independent of all market par22 ticipants. No market participant shall exercise con23 trol over the operation of the regional transmission

24 organization. For purposes of determining whether a

25 regional transmission organization is independent of
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1 all market participants, ownership of passive, non2 voting interests in a regional transmission organiza3 tion, or ownership of five (5) percent or less of the

4 voting interests in the regional transmission organi5 zation, shall be deemed not to confer control over

6 the regional transmission organization for purposes

7 of this subsection. For purposes of this subsection,

8 the term ‘voting interest’ shall not include the right

9 to participate in major organic corporate changes to

10 the regional transmission organization that affect

11 the ownership status of the nonvoting interests.

12 ‘‘(2) Scope and Configuration: The regional

13 transmission organization must operate transmission

14 facilities that comprise an appropriate scope and re15 gional configuration. In determining whether a re16 gional transmission organization contains an appro17 priate scope and configuration, the Commission shall

18 employ a rebuttable presumption that the configura19 tion selected by the regional transmission organiza20 tion is in the public interest. This presumption can

21 be rebutted upon a demonstration, based on the pre22 ponderance of the evidence, that the proposed con23 figuration is not in the public interest.

24 ‘‘(3) Operational Authority: The regional trans25 mission organization must possess sufficient oper-
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1 ational authority for all transmission facilities under

2 its control to maintain the security and stability of

3 the synchronous transmission grid.

4 ‘‘(4) Reliability: The regional transmission or5 ganization must have the responsibility for facili6 tating the commercial use of the transmission sys7 tem in a manner consistent with maintaining reli8 ability (adequacy and security) to end-use cus9 tomers. The regional transmission organization shall

10 have the authority to review and approve inter11 connections to the transmission system to ensure

12 that such interconnections do not threaten the reli13 ability of the transmission system under the oper14 ational control of the regional transmission organiza15 tion.

16 ‘‘(5) Transmission Tariff: The regional trans17 mission organization must administer a tariff that

18 will promote efficient use and expansion of trans19 mission facilities, and operate a single Open Access

20 Same Time Information System (as defined by the

21 Commission) for all transmission facilities under its

22 control, provided that nothing in this section shall

23 preclude a transmitting utility from filing with the

24 Commission’s original or amended rates concerning

25 transmission service on such utility’s facilities.
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1 ‘‘(6) Ancillary Services: The regional trans2 mission organization must serve as a supplier of last

3 resort for the following ancillary services: (a) Sched4 uling, System Control and Dispatching Service; and

5 (b) Reactive Supply and Voltage Control from Gen6 eration Services. For purposes of this section,

7 ‘Scheduling, System Control and Dispatching Serv8 ice’ and 1 ‘Reactive Supply and Voltage Control

9 from Generation Services’ shall be defined by the

10 Commission.

11 ‘‘(7) Market Monitoring: The regional trans12 mission organization must monitor transmission-re13 lated markets, including ancillary services and con14 gestion management markets, to identify market de15 sign flaws. The market monitoring feature may pro16 vide for its automatic expiration within a fixed pe17 riod of time, provided that the fixed period of time

18 shall be no shorter than five years and that the

19 Commission may approve an extension of the moni20 toring feature provided that, absent the consent of

21 the regional transmission organization, such exten22 sion shall be for a period no longer than five years;

23 and

24 ‘‘(8) Expansion: The regional transmission or25 ganization must plan and coordinate necessary
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1 transmission additions and upgrades in accordance

2 with the provisions of section 217.

3 ‘‘(c) GOVERNMENT TRANSMITTING UTILITY PAR4 TICIPATION.—The Tennessee Valley Authority, the Bon5 neville Power Administration, the Southwestern Power

6 Administration, or the Western Area Power Administra7 tion are each authorized to participate in a regional trans8 mission organization after conducting a public process in

9 the relevant region to receive comments. Notwithstanding

10 any other law, participation may include delegation of op11 eration and control of the transmission system concerned

12 to a regional transmission organization or other method

13 of participation, under terms and conditions the Ten14 nessee Valley Authority or the power marketing adminis15 tration concerned determines necessary or appropriate, in16 cluding being bound by operational and other orders of

17 the regional transmission organization and by the results

18 of arbitration of disputes with the organization or with

19 other participants.

20 ‘‘SEC. 217. ELECTRIC TRANSMISSION CONSTRUCTION AND

21 EXPANSION.

22 ‘‘(a) TRANSMISSION EXPANSION PLANNING PROC23 ESS.—A regional transmission organization, a member of

24 a regional transmission organization, or any other appli25 cant (provided that the application is consistent with a
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1 planning process approved by a regional transmission or2 ganization or comparable regional transmission planning

3 entity), may develop and submit for review and approval

4 by the Commission a transmission expansion planning

5 process for the construction and expansion of the trans6 mission facilities it operates or proposes to operate. The

7 Commission shall approve the transmission expansion

8 planning process if the planning process—

9 ‘‘(1) permits the input of all market partici10 pants and other persons in the region and other

11 interconnected regions;

12 ‘‘(2) is designed to determine efficient solutions

13 to relieve constraints in the transmission system

14 without preference for either transmission or genera15 tion solutions; and

16 ‘‘(3) provides for aggrieved market participants

17 or other persons to contest the plans through an al18 ternative dispute resolution process or through re19 view by the Commission.

20 ‘‘(b) CONSTRUCTION CERTIFICATES.—The Commis21 sion shall, after notice and opportunity for hearing, ap22 prove a request of a regional transmission organization (or

23 such member or other applicant) for a certificate of public

24 convenience and necessity to construct any proposed

25 transmission facilities developed through a transmission
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1 expansion plan resulting from a transmission expansion

2 planning process approved by the Commission under sub3 section (a), if it finds:

4 ‘‘(1)(A) a State in which the transmission fa5 cilities are to be constructed or modified is without

6 authority to approve the siting of the facilities, or

7 ‘‘(B) any State commission or body in a State

8 in which the transmission facilities are to be con9 structed or modified has authority to approve the

10 siting of the facilities but has withheld approval,

11 modified or conditioned its approval in a manner

12 that materially alters the transmission expansion

13 plan, or delayed the final determination of its ap14 proval for more than one year after the filing of an

15 application seeking approval; and

16 ‘‘(2) the facilities to be authorized by the cer17 tificate are or will be required by the present or fu18 ture public convenience and necessity.

19 The Commission shall have the power to attach to the

20 issuance of such certificate and to the exercise of the

21 rights granted thereunder such reasonable terms and con22 ditions related to the construction of such facility as the

23 public convenience and necessity may require; provided

24 that the Commission shall have no authority to compel the

25 construction or enlargement of transmission facilities di-
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1 rectly or indirectly, including as a condition of the receipt

2 of any other approval from the Commission. The Commis3 sion shall issue its final decision in the certificate pro4 ceeding within 180 days after the filing of the request for

5 a certificate.

6 ‘‘(c) APPLICATIONS FOR CERTIFICATES.—Applica7 tions for certificates under subsection (b) shall be made

8 in writing to the Commission, be verified under oath, and

9 shall be in such form, contain such information, and notice

10 thereof shall be served upon such interested parties and

11 in such manner as the Commission shall, by regulation,

12 require.

13 ‘‘(d) COMMENTS.—In any proceeding before the

14 Commission initiated under subsection (b), the Commis15 sion shall afford each State in which transmission facilities

16 covered by the certificate is or will be located and other

17 interested parties a reasonable opportunity to present

18 their views and recommendations with respect to the need

19 for and impact of any facilities covered by the certificate.

20 ‘‘(e) RIGHT OF EMINENT DOMAIN.—When any hold21 er of a certificate of public convenience and necessity for

22 electric transmission facilities issued by the Commission

23 pursuant to subsection (b) cannot acquire by contract, or

24 is unable to agree with the owner of the property to the

25 compensation to be paid for the necessary rights-of-way
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1 to construct, operate and maintain such transmission fa2 cility, it may acquire the same by the exercise of the right

3 of eminent domain in the district court of the United

4 States for the district in which such property may be lo5 cated, or in the State courts. The practice and procedure

6 in any action or proceeding for that purpose in the district

7 court of the United States shall conform as nearly as may

8 be with the practice and procedure in similar action or

9 proceeding in the courts of the State where the property

10 is situated.

11 ‘‘(f) COST RECOVERY.—All reasonable costs for the

12 construction, operation and maintenance of transmission

13 facilities developed through a transmission expansion

14 planning process approved by the Commission under sub15 section (a) shall be recoverable in the transmission rates

16 charged by the regional transmission organization or other

17 such applicant.

18 ‘‘(g) STATE LAW.—Nothing in this section shall pre19 clude any person from constructing any transmission fa20 cilities pursuant to State law.

21 ‘‘SEC. 218. PRICING POLICIES FOR REGIONAL TRANS22 MISSION ORGANIZATIONS.

23 ‘‘(a) INNOVATIVE TRANSMISSION PRICING POLI24 CIES.—The Commission shall encourage innovative trans25 mission pricing policies for a regional transmission organi-
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1 zation approved under section 216, a comparable trans2 mission organization approved by the Commission before

3 the enactment of this Act, or a transmitting utility whose

4 facilities are controlled but not owned by either such enti5 ty. Such transmission pricing policies shall:

6 ‘‘(1) Incentives for Voluntary Regional Trans7 mission Organizations: Provide incentives to trans8 mitting utilities to promote the voluntary participa9 tion and formation of regional transmission organi10 zations, without having the effect of forcing trans11 mitting utilities to join regional transmission organi12 zations and extend such incentives to transmitting

13 utilities that already have formed a regional trans14 mission organization;

15 ‘‘(2) Limits on Certain Charges: Limit sepa16 rate, additive access charges for transmission service

17 over the transmission facilities operated by the re18 gional transmission organization, provided, however,

19 that a reasonable transition mechanism or period

20 may be used before eliminating such separate, addi21 tive access charges;

22 ‘‘(3) Limits on Cost Shifting: Minimize the

23 shifting of costs among existing customers of the

24 transmitting utilities within the regional trans25 mission organization, including permitting the use of
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1 transmission rates based on a single transmitting

2 utility’s costs for transmission service provided with3 in the regional transmission organization;

4 ‘‘(4) Innovative Management and Rates: En5 courage the efficient and reliable operation of the

6 transmission grid and supply of transmission serv7 ices through congestion management, performance8 based or incentive ratemaking, and other measures;

9 and

10 ‘‘(5) Efficient Transmission Investment: En11 courage efficient and adequate investment in and ex12 pansion of the transmission facilities owned and/or

13 controlled by the regional transmission organization.

14 ‘‘(b) NEGOTIATED RATES.—The Commission may

15 permit the charging of negotiated rates for transmission

16 services under this section without regard to costs when17 ever an individual company or companies are willing to

18 pay such negotiated rates, provided, however, that costs

19 associated with such negotiated rates shall not be recov20 ered from other transmission customers.

21 ‘‘(c) COMMISSION RULES.—Within 180 days of the

22 enactment of this section, the Commission shall establish

23 by rule definitions and standards to govern its approval

24 of performance-based or incentive pricing policies under

25 subsection (a) and negotiated rates under subsection (b).
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1 With respect to performance-based or incentive rates, the

2 definitions and standards shall include, but not be limited

3 to, (1) a method for calculating initial transmission rates

4 (including price caps that would include discounting); (2)

5 an index mechanism for adjusting initial rates; (3) time

6 periods for redetermining initial rates; and (4) costs to

7 be excluded from performance-based rates.’’.

8 SEC. 105. STATE RECIPROCITY AUTHORITY.

9 The Federal Power Act is amended by adding the fol10 lowing:

11 ‘‘SEC. 219. STATE AUTHORITY TO IMPOSE RECIPROCITY RE12 QUIREMENTS.

13 ‘‘A State or State commission may prohibit an elec14 tric utility from selling electric energy to an ultimate con15 sumer in such State if such electric utility or any of its

16 affiliates owns or controls transmission or local distribu17 tion facilities and is not itself providing unbundled local

18 distribution service in a State in which such electric utility

19 owns or operates a facility used for the generation of elec20 tric energy.’’.

21 SEC. 106. APPLICATION OF STATE UTILITY LAWS TO RE22 TAIL SALES TO FEDERAL FACILITIES.

23 The Federal Power Act is amended by adding the fol24 lowing:
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1 ‘‘SEC. 220. APPLICATION OF STATE UTILITY LAWS TO FED2 ERAL FACILITIES.

3 ‘‘Neither this Act nor any other Act preempts the ap4 plication of State utility laws with respect to the retail sale

5 of electric energy to or the provision of local distribution

6 service to a facility of a department, agency or instrumen7 tality of the United States.’’.

8 SEC. 107. STRANDED COST RECOVERY.

9 It is the sense of the Congress that public utilities

10 are entitled to fully recover all prudently incurred whole11 sale and retail costs that become stranded as a result of

12 changes in public policy with respect to competition and

13 industry structure.

14 SEC. 108. SAVINGS CLAUSES.

15 (a) STATE AUTHORITY TO ORDER RETAIL AC16 CESS.—Neither silence on the part of Congress nor any

17 Act of Congress shall be construed to preclude a State

18 or State commission, acting under authority of State law,

19 from requiring an electric utility subject to its jurisdiction

20 to provide unbundled local distribution service to any elec21 tric consumers within such state.

22 (b) EXISTING STATE PROGRAMS.—Nothing in this

23 Act nor any amendment to the Federal Power Act made

24 by this Act preempts, overrides or requires any change in

25 the terms of any State retail access plan enacted, adopted,
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1 approved or promulgated prior to the enactment of this

2 Act.

3 (c) EXISTING CONTRACTS AND AGREEMENTS.—

4 Nothing in this Act nor any amendment to the Federal

5 Power Act made by this Act expressly or impliedly pre6 empts the continuing applicability, according to its terms,

7 of any contract, tariff, rate schedule, certificate, license,

8 settlement, intra-corporate transfer or sale of electricity

9 or other services or products, or any other valid agreement

10 for any wholesale or retail sale or purchase of electricity

11 in effect on the date of enactment of this Act.

12 (d) PRIOR PRUDENCE DETERMINATIONS.—Nothing

13 in this Act nor any amendment to the Federal Power Act

14 made by this Act affects, reopens, modifies, reverses, or

15 invalidates any determination, finding, order, or ruling

16 made by, or any agreement entered into or approved by,

17 the Federal Energy Regulatory Commission or any State

18 regulatory authority, made prior to the date of enactment

19 of such amendments regarding—

20 (1) the prudence of any cost incurred by an

21 electric utility to provide service to any consumer;

22 (2) any cost allowed to be recovered, or to be

23 recovered, or deferred in the rates of an electric util24 ity whether under rule, regulation or order of the

25 Commission or a State regulatory authority; or
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1 (3) the allocation of any cost among two or

2 more associate companies of a public utility holding

3 company system.

4 TITLE II—REPEAL OF PURPA

5 MANDATORY PURCHASE RE6 QUIREMENT

7 SEC. 201. PROSPECTIVE REPEAL OF PURPA MANDATORY

8 PURCHASE REQUIREMENT.

9 (a) NEW CONTRACTS.—No electric utility shall be re10 quired to enter into a new contract or obligation to pur11 chase or to sell electricity or capacity under section 210

12 of the Public Utility Regulatory Policies Act of 1978.

13 (b) EXISTING RIGHTS AND REMEDIES.—Nothing in

14 this Title affects the rights or remedies of any party with

15 respect to the purchase or sale of electricity or capacity

16 from or to a facility determined to be a qualifying small

17 power production facility or a qualifying congeneration fa18 cility under section 210 of the Public Utility Regulatory

19 Policies Act of 1978, under any contract or obligation to

20 purchase or to sell electricity or capacity in effect on the

21 date of enactment of this Act, including the right to re22 cover the costs of purchasing the electricity of capacity.

23 (c) INTERPRETATIONS AND ACTIONS TAKEN.—Noth24 ing in this Title implies Congressional ratification of any
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1 interpretation of, or any action taken under, the Public

2 Utility Regulatory Policies Act of 1978.

3 SEC. 202. RECOVERY OF PURPA COSTS.

4 (a) REGULATION.—To ensure recovery by any elec5 tric utility that purchases electricity or capacity from a

6 qualifying facility pursuant to any legally enforceable obli7 gation entered into or imposed under section 210 of the

8 Public Utility Regulatory Policies Act of 1978 before the

9 date of enactment of this Act of all costs associated with

10 such purchases, the Federal Regulatory Commission shall

11 promulgate and enforce such regulations, pursuant to its

12 authority under the Federal Power Act, as are required

13 to ensure that no electric utility shall be required directly

14 or indirectly to absorb the costs associated with such pur15 chases.

16 (b) TREATMENT.—A regulation under subsection (a)

17 shall be treated as a rule enforceable under the Federal

18 Power Act.

19 SEC. 203. DEFINITIONS.

20 For the purposes of this Title—

21 (1) The term ‘‘electric utility’’ has the same

22 meaning given the term in section 3(4) of the Public

23 Utility Regulatory Policies Act of 1978.
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1 (2) The term ‘‘qualifying cogeneration facility’’

2 has the meaning given the term in section 3 of the

3 Federal Power Act.

4 (3) The term ‘‘qualifying small power produc5 tion facility’’ has the meaning given the term in sec6 tion 3 of the Federal Power Act.

7 (4) The term ‘‘qualifying facility’’ means—

8 (A) a qualifying cogeneration facility; or

9 (B) a qualifying small power production

10 facility.

11 TITLE III—ELECTRIC

12 RELIABILITY

13 SEC. 301. ELECTRIC RELIABILITY ORGANIZATION AND

14 OVERSIGHT.

15 (a) The Federal Power Act is amended by adding the

16 following:

17 ‘‘SEC. 221. ELECTRIC RELIABILITY ORGANIZATION.

18 ‘‘(a) DEFINITIONS.—As used in this section:

19 ‘‘(1) The term ‘Affiliated Regional Reliability

20 Entity’ means an entity delegated authority under

21 the provisions of subsection (h).

22 ‘‘(2) The term ‘Bulk-Power System’ means all

23 facilities and control systems necessary for operating

24 an interconnected transmission grid (or any portion

25 thereof), including high-voltage transmission lines,
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1 substations, control centers, communications, data,

2 and operations planning facilities, and the output of

3 generating units necessary to maintain trans4 missions system reliability.

5 ‘‘(3) The term ‘Electric Reliability Organiza6 tion’ or ‘Organization’ means the organization ap7 proved by the Commission under subsection (d)(4).

8 ‘‘(4) The term ‘Entity Rule’ means a rule

9 adopted by an Affiliated Regional Reliability Entity

10 for a specific region and designed to implement or

11 enforce one or more Organization Standards. An

12 Entity Rule shall be subject to approval by the Or13 ganization and once approved, shall be treated as an

14 Organization Standard.

15 ‘‘(5) The term ‘Industry Sector’ means a group

16 of Users of the Bulk Power System with substan17 tially similar commercial interests, as determined by

18 the board of the Electric Reliability Organization.

19 ‘‘(6) The term ‘Interconnection’ means a geo20 graphic area in which the operation of Bulk-Power

21 System components is synchronized such that the

22 failure of one or more of such components may ad23 versely affect the ability of the operators of other

24 components within the Interconnection to maintain
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1 safe and reliable operation of the facilities within

2 their control.

3 ‘‘(7) The term ‘Organization Standard’ means a

4 policy or standard duly adopted by the Electric Reli5 ability Organization to provide for the reliable oper6 ation of a Bulk-Power System.

7 ‘‘(8) The term ‘Public Interest Group’ means

8 any non-profit private or public organization that

9 has an interest in the activities of the Electric Reli10 ability Organization, including, but not limited to,

11 ratepayer advocates, environmental groups, and

12 State and local government organizations that regu13 late market participants and promulgate government

14 policy.

15 ‘‘(9) The term ‘Variance’ means an exception or

16 variance from the requirements of an Organization

17 Standard (including a proposal for an Organization

18 standard where there is no Organization standard)

19 that is adopted by an Affiliated Regional Reliability

20 Entity and applicable to all or a part of the region

21 for which the Affiliated Regional Reliability Entity is

22 responsible. A Variance shall be subject to approval

23 by the Organization and once approved, shall be

24 treated as an Organization Standard.
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1 ‘‘(10) The term ‘System Operator’ means any en2 tity that operates or is responsible for the operation

3 of a Bulk-Power System, including but not limited

4 to a control area operator, an independent system

5 operator, a transmission company, a transmission

6 system operator, or a regional security coordinator.

7 ‘‘(11) The term ‘User of the Bulk-Power Sys8 tem’ means any entity that sells, purchases, or

9 transmits electric energy over a Bulk-Power System,

10 or that owns, operates or maintains facilities or con11 trol systems that are part of a Bulk-Power System,

12 or that is a System Operator.

13 ‘‘(b) COMMISSION AUTHORITY.—

14 ‘‘(1) Within the United States, the Commission

15 shall have jurisdiction over the Electric Reliability

16 Organization, all Affiliated Regional Reliability Enti17 ties, all System Operators, and all Users of the

18 Bulk-Power System, for purposes of approving and

19 enforcing compliance with the requirements of this

20 section, notwithstanding section 201(f).

21 ‘‘(2) The Commission may, by rule, define any

22 other term used in this section, provided such defini23 tion is consistent with the definitions in, and the

24 purpose and intent of, this Act.
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1 ‘‘(c) EXISTING RELIABILITY STANDARDS.—Fol2 lowing enactment of this section, and prior to the approval

3 of an Organization under subsection (d), any person, in4 cluding the North American Electric Reliability Council

5 and its member Regional Reliability Councils, shall file

6 with the Commission any reliability standard, guidance,

7 practice or amendment thereto that is proposed to be

8 made mandatory and enforceable. The Commission, after

9 allowing interested persons an opportunity to submit com10 ments, may approve any such proposed mandatory stand11 ard, guidance or practice, or any amendment thereto, if

12 it finds that the standard, guidance, or practice, or

13 amendment is just, reasonable, not unduly discriminatory

14 or preferential, and in the public interest. The Commission

15 may, without further proceeding or finding, grant its ap16 proval to any standard, guidance or practice for which no

17 substantive objections are filed in the comment period.

18 Filed standards, guidances, or practices, including any

19 amendments thereto, shall be mandatory and applicable

20 according to their terms following approval by the Com21 mission and shall remain in effect until (i) withdrawn, dis22 approved or superseded by an Organization Standard,

23 issued or approved by the Electric Reliability Organization

24 and made effective by the Commission under section (e);

25 or (ii) disapproved or suspended by the Commission if,
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1 upon complaint or upon its own motion and after notice

2 and an opportunity for comment, the Commission finds

3 the standard, guidance or practice unjust, unreasonable,

4 unduly discriminatory, or preferential or not in the public

5 interest. Standards, guidances or practices in effect pursu6 ant to the provisions of this subsection shall be enforceable

7 by the Commission.

8 ‘‘(d) ORGANIZATION APPROVAL.—

9 ‘‘(1) Not later than 90 days after the date of

10 enactment of this section, the Commission shall

11 issue proposed rules specifying procedures and re12 quirements for an entity to apply for approval as the

13 Electric Reliability Organization. The Commission

14 shall provide notice and opportunity for comment on

15 the proposed rules. The Commission shall issue a

16 final rule under this subsection within 180 days

17 after the date of enactment of this section.

18 ‘‘(2) Following the issuance of a final Commis19 sion rule under paragraph (1), an entity may submit

20 an application to the Commission for approval as the

21 Electric Reliability Organization. The applicant shall

22 specify in its application its governance and proce23 dures, as well as its funding mechanism and initial

24 funding requirements.
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1 ‘‘(3) The Commission shall provide public no2 tice of the application and afford interested parties

3 an opportunity to comment.

4 ‘‘(4) The Commission shall approve the applica5 tion if the Commission determines that the

6 applicant—

7 ‘‘(A) has the ability to develop, implement

8 and enforce standards that provide for an ade9 quate level of reliability of the Bulk-Power Sys10 tem;

11 ‘‘(B) permits voluntary membership to any

12 User of the Bulk-Power System or Public Inter13 est Group;

14 ‘‘(C) assures fair representation of its

15 members in the selection of its directors and

16 fair management of its affairs, taking into ac17 count the need for efficiency and effectiveness

18 in decisionmaking and operations and the re19 quirements for technical competency in the de20 velopment of Organization Standards and the

21 exercise of oversight of Bulk-Power System reli22 ability;

23 ‘‘(D) assures that no two Industry Sectors

24 have the ability to control, and no one Industry

25 Sector has the ability to veto, the Electric Reli-
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1 ability Organization’s discharge of its respon2 sibilities (including actions by committees rec3 ommending standards to the board or other

4 board actions to implement and enforce stand5 ards);

6 ‘‘(E) provides for governance by a board

7 wholly comprised of independent directors;

8 ‘‘(F) provides a funding mechanism and

9 requirements that are just, reasonable and not

10 unduly discriminatory or preferential and are in

11 the public interest, and which satisfy the re12 quirements of subsection (l);

13 ‘‘(G) establishes procedures for develop14 ment of Organization Standards that provide

15 reasonable notice and opportunity for public

16 comment, taking into account the need for effi17 ciency and effectiveness in decisionmaking and

18 operations and the requirements for technical

19 competency in the development of Organization

20 Standards, and which standards development

21 process has the following attributes: (i) open22 ness, (ii) balance of interests, and (iii) due

23 process, except that the procedures may include

24 alternative procedures for emergencies;
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1 ‘‘(H) establishes fair and impartial proce2 dures for implementation and enforcement of

3 Organization Standards, either directly or

4 through delegation to an Affiliated Regional Re5 liability Entity, including the imposition of pen6 alties, limitations on activities, functions, or op7 erations, or other appropriate sanctions;

8 ‘‘(I) establishes procedures for notice and

9 opportunity for public observation of all meet10 ings, except that the procedures for public ob11 servation may include alternative procedures for

12 emergencies or for the discussion of information

13 the directors determine should take place in

14 closed session, such as litigation, personnel ac15 tions, or commercially sensitive information;

16 ‘‘(J) provides for the consideration of rec17 ommendations of States and State commissions,

18 and

19 ‘‘(K) addresses other matters that the

20 Commission may deem necessary or appropriate

21 to ensure that the procedures, governance, and

22 funding of the Electric Reliability Organization

23 are just, reasonable, not unduly discriminatory

24 or preferential, and are in the public interest.
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1 ‘‘(5) The Commission shall approve only one

2 Electric Reliability Organization. If the Commission

3 receives two or more timely applications that satisfy

4 the requirements of this subsection, the Commission

5 shall approve only the application it concludes will

6 best implement the provisions of this section.

7 ‘‘(e) ESTABLISHMENT OF AND MODIFICATIONS TO

8 ORGANIZATION STANDARDS.—

9 ‘‘(1) The Electric Reliability Organization shall

10 file with the Commission any new or modified Orga11 nization Standards, including any Variances or Enti12 ty Rules, and the Commission shall follow the proce13 dures under paragraph (2) for review of that filing.

14 ‘‘(2) Submissions under paragraph (1) shall in15 clude: (i) a concise statement of the purpose of the

16 proposal, and (ii) a record of any proceedings con17 ducted with respect to such proposal. The Commis18 sion shall provide notice of the filing of such pro19 posal and afford interested persons 30 days to sub20 mit comments. The Commission, after taking into

21 consideration any submitted comments, shall ap22 prove or disapprove such proposal not later than 60

23 day after the deadline for the submission of com24 ments, except that the Commission may extend the

25 60 day period for an additional 90 days for good
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1 cause, and except further that if the Commission

2 does not act to approve or disapprove a proposal

3 within the foregoing periods the proposal shall go

4 into effect subject to its terms, without prejudice to

5 the authority of the Commission thereafter to sus6 pend or modify the proposal in accordance with the

7 standards and requirements of this section. Pro8 posals approved by the Commission shall take effect

9 according to their terms but not earlier than 30 days

10 after the effective date of the Commission’s order,

11 except as provided in paragraph (3) of this sub12 section.

13 ‘‘(3)(A) In the exercise of its review responsibil14 ities under this subsection, the Commission shall

15 give due weight to the technical expertise of the

16 Electric Reliability Organization with respect to the

17 content of a new or modified Organization Standard,

18 but shall not defer to the Organization with respect

19 to the effect of the standard on competition. The

20 Commission shall approve a proposed new or modi21 fied Organization Standard if it determines the pro22 posal to be just, reasonable, not unduly discrimina23 tory or preferential, and in the public interest. The

24 Commission, either upon complaint or upon its own

25 motion, may suspend an existing Organization
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1 Standard, if it determines the standard to be unjust,

2 unreasonable, unduly discriminatory or preferential

3 or not in the public interest.

4 ‘‘(B) An existing or proposed Organization

5 Standard which is disapproved or suspended in

6 whole or in part by the Commission shall be re7 manded to the Electric Reliability Organization for

8 further consideration.

9 ‘‘(C) The Commission, on its own motion or

10 upon complaint, may direct the Electric Reliability

11 Organization to develop an Organization Standard,

12 including modification to an existing Organization

13 Standard, addressing a specific matter by a date

14 certain if the Commission considers such new or

15 modified Organization Standard necessary or appro16 priate to further the purposes of this section. The

17 Electric Reliability Organization shall file any such

18 new or modified Organization Standard in accord19 ance with this subsection.

20 ‘‘(D) An Affiliated Regional Reliability Entity

21 may propose a Variance or Entity Rule to the Elec22 tric Reliability Organization. The Affiliated Regional

23 Reliability Entity may request that the Electric Reli24 ability Organization expedite consideration of the

25 proposal, and shall file a notice of such request with
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1 the Commission, if expedited consideration is nec2 essary to provide for Bulk-power System reliability.

3 If the Electric Reliability Organization fails to adopt

4 the Variance or Entity Rule, either in whole or in

5 part, the Affiliated Regional Reliability Entity may

6 request that the Commission review such action. If

7 the Commission determines, after its review of such

8 a request, that the action of the Electric Reliability

9 Organization did not conform to the applicable

10 standards and procedures approved by the Commis11 sion, or if the Commission determines that the Vari12 ance of Entity Rule is just, reasonable, not unduly

13 discriminatory or preferential, and in the public in14 terest, and that the Electric Reliability Organization

15 has unreasonably rejected the proposed Variance or

16 Entity Rule, then the Commission may remand the

17 proposed Variance or Entity Rule for further consid18 eration by the Electric Reliability Organization or

19 may direct the Electric Reliability Organization or

20 the Affiliated Regional Reliability Entity to develop

21 a Variance or Entity Rule consistent with that re22 quested by the Affiliated Regional Reliability Entity.

23 Any such Variance or Entity Rule proposed by an

24 Affiliated Regional Reliability Entity shall be sub25 mitted to the Electric Reliability Organization for
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1 review and filing with the Commission in accordance

2 with the procedures specified in this subsection.

3 ‘‘(E) Notwithstanding any other provision of

4 this subsection, a proposed Organization Standard

5 or amendment shall take effect according to its

6 terms if the Electric Reliability Organization deter7 mines that an emergency exists requiring that such

8 proposed Organization Standard or amendment take

9 effect without notice or comment. The Electric Reli10 ability Organization shall notify the Commission im11 mediately following such determination and shall file

12 such emergency Organization Standard or amend13 ment with the Commission not later than five days

14 following such determination and shall include in

15 such filing an explanation of the need for such emer16 gency standard. Subsequently, the Commission shall

17 provide notice of the Organization Standard or

18 amendment for comment, and shall follow the proce19 dures set out in paragraphs (2) and (3) for review

20 of the new or modified Organization Standard. Any

21 such emergency Organization Standard that has

22 gone into effect shall remain in effect unless and

23 until suspended or disapproved by the Commission.

24 If the Commission determines at any time that the

25 emergency Organization Standard or amendment is
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1 not necessary, the Commission may suspend such

2 emergency Organization Standard or amendment.

3 ‘‘(4) All Users of the Bulk-Power System shall

4 comply with any Organization Standard that takes

5 effect under this section.

6 ‘‘(f) COORDINATION WITH CANADA AND MEXICO.—

7 The Electric Reliability Organization shall take all appro8 priate steps to gain recognition in Canada and Mexico.

9 The United States shall use its best efforts to enter into

10 international agreements with the appropriate govern11 ments of Canada and Mexico to provide for effective com12 pliance with Organization Standards and to provide for

13 the effectiveness of the Electric Reliability Organization

14 in carrying out its mission and responsibilities. All actions

15 taken by the Electric Reliability Organization, any Affili16 ated Regional Reliability Entity, and the Commission shall

17 be consistent with the provisions of such international

18 agreements.

19 ‘‘(g) CHANGES IN PROCEDURES, GOVERNANCE, OR

20 FUNDING.—

21 ‘‘(1) The Electric Reliability Organization shall

22 file with the Commission any proposed change in its

23 procedures, governance, or funding, or any changes

24 in the Affiliated Regional Reliability Entity’s proce25 dures, governance or funding relating to delegated
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1 functions, and shall include with the filing an expla2 nation of the basis and purpose for the change.

3 ‘‘(2) A proposed procedural change shall take

4 effect 90 days after filing with the Commission if

5 the change constitutes a statement of policy, prac6 tice, or interpretation with respect to the meaning or

7 enforcement of an existing procedure. Any other pro8 posed procedural change shall take effect only upon

9 a finding by the Commission, after notice and oppor10 tunity for comments, that the change is just, reason11 able, not unduly discriminatory or preferential, is in

12 the public interest, and satisfies the requirements of

13 subsection (d)(4).

14 ‘‘(3) A proposed change in governance or fund15 ing shall not take effect unless the Commission finds

16 that the change is just, reasonable, not unduly dis17 criminatory or preferential, and is in the public in18 terest, and satisfies the requirements of subsection

19 (d)(4).

20 ‘‘(4) The Commission, either upon complaint or

21 upon its own motion, may suspend a procedure or

22 governance or funding provision if it determines the

23 procedure or provision does not meet the require24 ments of subsection (d)(4) or is unjust, unreason-
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1 able, unduly discriminatory or preferential, or other2 wise not in the public interest.

3 ‘‘(5) The Commission, upon complaint or upon

4 its own motion, may require the Electric Reliability

5 Organization to amend the procedures, governance

6 or funding if the Commission determines that the

7 amendment is necessary to meet the requirements of

8 this section. The Electric Reliability Organization

9 shall file the amendment in accordance with para10 graph (1) of this subsection.

11 ‘‘(h) DELEGATIONS OF AUTHORITY.—

12 ‘‘(1) The Electric Reliability Organization shall,

13 upon request by an entity, enter into an agreement

14 with such entity for the delegation of authority to

15 implement and enforce compliance with Organization

16 Standards in a specified geographic area if the Or17 ganization finds that the entity requesting the dele18 gation satisfies the requirements of subsection (d)(4)

19 (A), (B), (C), (D), (F), (J), and (K), and if the dele20 gation promotes the effective and efficient implemen21 tation and administration of Bulk-Power System re22 liability. The Electric Reliability Organization may

23 enter into an agreement to delegate to the entity any

24 other authority, except that the Electric Reliability
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1 Organization shall reserve the right to set and ap2 prove standards for Bulk-Power System reliability.

3 ‘‘(2) The Electric Reliability Organization shall

4 file with the Commission any agreement entered into

5 under this subsection and any information the Com6 mission requires with respect to the Affiliated Re7 gional Reliability Entity to which authority is to be

8 delegated. The Commission shall approve the agree9 ment, following public notice and an opportunity for

10 comment, if it finds that the agreement meets the

11 requirements of subsection (1) above, and is just,

12 reasonable, not unduly discriminatory or pref13 erential, and is in the public interest. A proposed

14 delegation agreement with an Affiliated Regional Re15 liability Entity organized on an Interconnection-wide

16 basis shall be rebuttably presumed by the Commis17 sion to promote the effective and efficient implemen18 tation and administration of Bulk-Power System re19 liability. No delegation by the Electric Reliability Or20 ganization shall be valid unless approved by the

21 Commission.

22 ‘‘(3) A delegation agreement entered into under

23 this subsection shall specify the procedures for an

24 Affiliated Regional Reliability Entity to propose En25 tity Rules or Variances for review by the Electric
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1 Reliability Organization. With respect to any such

2 proposal that would apply on an Interconnection3 wide basis, the Electric Reliability Organization shall

4 presume such proposal valid if made by an Inter5 connection-wide Affiliated Regional Reliability Entity

6 unless the Electric Reliability Organization makes a

7 written finding that the proposal: (i) was not devel8 oped in a fair and open process that provided an op9 portunity for all interested parties to participate; (ii)

10 has a significant adverse impact on reliability or

11 commerce in other Interconnections; (iii) fails to

12 provide a level of reliability of the Bulk-Power Sys13 tem within the Interconnection such that it would

14 constitute a serious and substantial threat to public

15 health, safety, welfare, or national security; or (iv)

16 creates a serious and substantial burden on competi17 tive markets within the Interconnection that it not

18 necessary for reliability. With respect to any such

19 proposal that would apply only to part of an Inter20 connection, the Electric Reliability Organization

21 shall find such proposal valid if the Affiliated Re22 gional Reliability Entity or Entities making the pro23 posal demonstrate that it: (i) was developed in a fair

24 and open process that provided an opportunity for

25 all interested parties to participate; (ii) would not
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1 have an adverse impact on commerce that it not nec2 essary for reliability; (iii) provides a level of Bulk3 Power System reliability adequate to protect public

4 health, safety, welfare, and national security and

5 would not have a significant adverse impact on reli6 ability; and (iv) in the case of a Variance, is based

7 on legitimate differences between regions or between

8 subregions within the Affiliated Regional Reliability

9 Entity’s geographic area. The Electric Reliability

10 Organization shall approve or disapprove such pro11 posal within 120 days, or the proposal shall be

12 deemed approved. Following approval of any such

13 proposal under this paragraph, the Electric Reli14 ability Organization shall seek Commission approval

15 pursuant to the procedures prescribed under sub16 section (e)(3). Affiliated Regional Reliability Entities

17 may not make requests for approval directly to the

18 Commission except pursuant to subsection (e)(3)(D).

19 ‘‘(4) If an Affiliated Regional Reliability Entity

20 requests, consistent with paragraph (1) of this sub21 section, that the Electric Reliability Organization

22 delegate authority to it, but is unable within 180

23 days to reach agreement with the Electric Reliability

24 Organization with respect to such requested delega25 tion, such entity may seek relief from the Commis-
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1 sion. If, following notice and opportunity for com2 ment, the Commission determines that a delegation

3 to the entity would meet the requirements of sub4 section (1) above, and that the delegation would be

5 just, reasonable, not unduly discriminatory or pref6 erential, and in the public interest, and that the

7 Electric Reliability Organization has unreasonably

8 withheld such delegation, the Commission may, by

9 order, direct the Electric Reliability Organization to

10 make such delegation.

11 ‘‘(5) The Commission may, upon its own mo12 tion or upon complaint, and with notice to the ap13 propriate Affiliated Regional Reliability Entity or

14 Entities, direct the Electric Reliability Organization

15 to propose a modification to an agreement entered

16 into under this subsection if the Commission deter17 mines that:

18 ‘‘(A) the Affiliated Regional Reliability En19 tity no longer has the capacity to carry out ef20 fectively or efficiently its implementation or en21 forcement responsibilities under that agree22 ment, has failed to meet its obligations under

23 that agreement, or has violated any provision of

24 this section,
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1 ‘‘(B) the rules, practices, or procedures of

2 the Affiliated Regional Reliability Entity no

3 longer provide for fair and impartial discharge

4 of its implementation or enforcement respon5 sibilities under the agreement,

6 ‘‘(C) the geographic boundary of a trans7 mission entity approved by the Commission is

8 not wholly within the boundary of an Affiliated

9 Regional Reliability Entity and such difference

10 is inconsistent with the effective and efficient

11 implementation and administration of Bulk12 Power System reliability, or

13 ‘‘(D) the agreement is inconsistent with

14 another delegation agreement as a result of ac15 tions taken under paragraph (4) of this sub16 section.

17 ‘‘(6) Following an order of the Commission

18 issued under paragraph (5) of this subsection, the

19 Commission may suspend the affected agreement if

20 the Electric Reliability Organization or the Affiliated

21 Regional Reliability Entity does not propose an ap22 propriate and timely modification. If the agreement

23 is suspended, the Electric Reliability Organization

24 shall assume the previously delegated responsibil25 ities. The Commission shall allow the Electric Reli-
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1 ability Organization and the Affiliated Regional Reli2 ability Entity an opportunity to appeal the suspen3 sion.

4 ‘‘(i) ORGANIZATION MEMBERSHIP.—Every System

5 Operator shall be required to be a member of the Electric

6 Reliability Organization and shall be required also to be

7 a member of any Affiliated Regional Reliability Entity op8 erating under an agreement effective pursuant to sub9 section (h) applicable to the region in which the System

10 Operator operates or is responsible for the operation of

11 Bulk-Power System facilities.

12 ‘‘(j) INJUNCTIONS AND DISCIPLINARY ACTION.—

13 ‘‘(1) Consistent with the range of actions ap14 proved by the Commission under subsection

15 (d)(4)(H), the Electric Reliability Organization may

16 impose a penalty, limitation of activities, functions,

17 or operations, or other disciplinary action the Elec18 tric Reliability Organization finds appropriate

19 against a User of the Bulk-Power System if the

20 Electric Reliability Organization, after notice and an

21 opportunity for interested parties to be heard, issues

22 a finding in writing that the User of the Bulk-Power

23 System has violated an Organization Standard. The

24 Electric Reliability Organization shall immediately

25 notify the Commission of any disciplinary action im-
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1 posed with respect to an act or failure to act of a

2 User of the Bulk-Power System that affected or

3 threatened to affect Bulk-Power System facilities lo4 cated in the United States. The sanctioned party

5 shall have the right to seek modification or rescis6 sion of such disciplinary action by the Commission.

7 If the Organization finds it necessary to prevent a

8 serious threat to reliability, the Organization may

9 seek injunctive relief in the United States district

10 court for the district in which the affected facilities

11 are located.

12 ‘‘(2) A disciplinary action taken under subpara13 graph (1) may take effect not earlier than the 30th

14 day after the Electric Reliability Organization files

15 with the Commission its written finding and record

16 of proceedings before the Electric Reliability Organi17 zation and the Commission posts the Organization’s

18 written finding, unless the Commission, on its own

19 motion or upon petition by the User of the Bulk20 Power System which is the subject of the action,

21 suspends the action. The action shall remain in ef22 fect or remain suspended until the Commission,

23 after notice and opportunity for hearing, affirms,

24 sets aside, modifies, or reinstates the action, but the

25 Commission shall conduct such hearing under proce-
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1 dures established to ensure expedited consideration

2 of the action taken.

3 ‘‘(3) The Commission, on its own motion, or

4 upon complaint of any person, may order compliance

5 with an Organization Standard and may impose a

6 penalty, limitation of activities, functions, or oper7 ations, or take such other disciplinary actions as the

8 Commission finds appropriate, against a User of the

9 Bulk-Power System with respect to actions affecting

10 or threatening to affect Bulk-Power System facilities

11 located in the United States if the Commission

12 finds, after notice and opportunity for a hearing,

13 that the User of the Bulk-Power System has violated

14 or threatens to violate an Organization Standard.

15 ‘‘(4) The Commission may take such action as

16 is necessary against the Electric Reliability Organi17 zation or an Affiliated Regional Reliability Entity to

18 assure compliance with an Organization Standard,

19 or any Commission order affecting the Electric Reli20 ability Organization or an Affiliated Regional Reli21 ability Entity.

22 ‘‘(k) RELIABILITY REPORTS.—The Electric Reli23 ability Organization shall conduct periodic assessments of

24 the reliability and adequacy of the interconnected Bulk25 Power System in North America and shall report annually
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1 to the Secretary of Energy and the Commission its find2 ings and recommendations for monitoring or improving

3 system reliability and adequacy.

4 ‘‘(l) ASSESSMENT AND RECOVERY OF CERTAIN

5 COSTS.—The reasonable costs of the Electric Reliability

6 Organization, and the reasonable costs of each Affiliated

7 Regional Reliability Entity are related to implementation

8 and enforcement of Organization Standards or other re9 quirements contained in a delegation agreement approved

10 under subsection (h), shall be assessed by the Electric Re11 liability Organization and each Affiliated Regional Reli12 ability Entity, respectively, taking into account the rela13 tionship of costs to each region and based on an allocation

14 that reflects an equitable sharing of the costs among all

15 end-users. The Commission shall provide by rule for the

16 review of such costs and allocations, pursuant to the

17 standards in this subsection and subsection (d)(4)(F).’’.

18 (b) ENFORCEMENT.—Sections 316 and 316A of the

19 Federal Power Act are amended by striking ‘‘or 214’’ each

20 place it appears and inserting ‘‘214, or 221’’.

21 SEC. 302. APPLICATION OF ANTITRUST LAWS.

22 Notwithstanding any other provision of law, the fol23 lowing activities are rebuttably presumed to be in compli24 ance with the antitrust laws of the United States.
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1 (1) Activities undertaken by the Electric Reli2 ability Organization under section 221 of the Fed3 eral Power Act or Affiliated Regional Reliability En4 tity operating under an agreement in effect under

5 section 221(h) of the Federal Power Act.

6 (2) Activities of a member of the Electric Reli7 ability Organization or Affiliated Regional Reliability

8 Entity in pursuit of organization objectives under

9 section 221 of the Federal Power Act undertaken in

10 good faith under the rules of the organization. Pri11 mary jurisdiction, and immunities and other affirm12 ative defenses, shall be available to the extent other13 wise applicable.

14 SEC. 303. SAVINGS CLAUSE.

15 Nothing in this title shall be construed to preempt

16 the authority of a State to take action to ensure the reli17 ability, adequacy or safety of electric facilities within the

18 State, except where the exercise of such authority has a

19 material adverse impact on the reliable operation of the

20 bulk power system.

21 SEC. 304. REGIONAL ADVISORY ROLE.

22 (a) ESTABLISHMENT.—The Secretary of Energy

23 shall establish a regional advisory body on the petition of

24 the Governors of at least two-thirds of the States within
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1 a region that have more than one-half of their electrical

2 loads served within the region.

3 (b) MEMBERSHIP.—A regional advisory body—

4 (1) shall be composed of one member from each

5 State in the region, appointed by the Governor of

6 each State in the region; and

7 (2) may include representatives of agencies,

8 States, and provinces outside the United States,

9 upon execution of an appropriate international

10 agreement described in Section 221(f) of the Federal

11 Power Act.

12 (c) FUNCTIONS.—A regional advisory body may pro13 vide advice to an affiliated regional reliability entity, the

14 electric reliability organization, or the Commission

15 regarding—

16 (1) the governance of an affiliated regional reli17 ability entity existing or proposed within a region;

18 (2) whether a standard proposed to apply with19 in the region is just, reasonable, not unduly discrimi20 natory or preferential and in the public interest; and

21 (3) whether fees proposed to be assessed within

22 the region are—

23 (A) just, reasonable, not unduly discrimi24 natory or preferential, and in the public inter25 est; and
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1 (B) consistent with the requirements of

2 Section 221(l) of the Federal Power Act.

3 (d) DEFERENCE.—In a case in which a regional advi4 sory body encompasses an entire Interconnection, the

5 Commission may give deference to the recommendations

6 of the regional advisory body that are provided for in sub7 section (c).

8 SEC. 305. APPLICATION.

9 The provisions of this Title do not apply to Alaska

10 or Hawaii.

11 TITLE IV—REPEAL OF THE PUB12 LIC UTILITY HOLDING COM13 PANY ACT OF 1935 AND EN14 ACTMENT OF THE PUBLIC

15 UTILITY HOLDING COMPANY

16 ACT OF 1999

17 SEC. 401. SHORT TITLE.

18 This Title may be cited as the ‘‘Public Utility Hold19 ing Company Act of 1999’’.

20 SEC. 402. FINDINGS AND PURPOSES.

21 (a) FINDINGS.—The Congress finds that—

22 (1) the Public Utility Holding Company Act of

23 1935 was intended to facilitate the work of Federal

24 and State regulators by placing certain constraints

25 on the activities of holding company systems;
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1 (2) developments since 1935, including changes

2 in other regulation and in the electric and gas indus3 tries, have called into question the continued rel4 evance of the model of regulation established by that

5 Act;

6 (3) there is a continuing need for State regula7 tion in order to ensure the rate protection of utility

8 customers; and

9 (4) limited Federal regulation is necessary to

10 supplement the work of State commissions for the

11 continued rate protection of electric and gas utility

12 customers.

13 (b) PURPOSES.—The purposes of this Title are—

14 (1) to eliminate unnecessary regulation, yet

15 continue to provide for consumer protection by facili16 tating existing rate regulatory authority through im17 proved Federal and State commission access to

18 books and records of all companies in a holding com19 pany system, to the extent that such information is

20 relevant to rates paid by utility customers, while af21 fording companies the flexibility required to compete

22 in the energy markets; and

23 (2) to address protection of electric and gas

24 utility customers by providing for Federal and State

25 access to books and records of all companies in a
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1 holding company system that are relevant to utility

2 rates.

3 SEC. 403. DEFINITIONS.

4 For the purposes of this Title—

5 (1) the term ‘‘affiliate’’ of a company means

6 any company 5 percent of more of the outstanding

7 voting securities of which are owned, controlled, or

8 held with power to vote, directly or undirectly, by

9 such company;

10 (2) the term ‘‘associated company’’ of a com11 pany means any company in the same holding com12 pany system with such company;

13 (3) the term ‘‘Commission’’ means the Federal

14 Energy Regulatory Commission;

15 (4) the term ‘‘company’’ means a corporation,

16 partnership, association, joint stock company, busi17 ness trust, or any organized group of persons,

18 whether incorporated or not, or a receiver, trustee,

19 or other liquidating agent of any of the foregoing;

20 (5) the term ‘‘electric utility company’’ means

21 any company that owns or operates facilities used

22 for the generation, transmission, or distribution of

23 electric energy for sale;

24 (6) the terms ‘‘exempt wholesale generator’’’

25 and ‘‘foreign utility company’’ have the same mean-
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1 ings as in sections 32 and 33, respectively, of the

2 Public Utility Holding Company Act of 1935, as

3 those sections existed on the day before the effective

4 date of this Act;

5 (7) the term ‘‘gas utility company’’ means any

6 company that owns or operates facilities used for

7 distribution at retail (other than the distribution

8 only in enclosed portable containers or distribution

9 to tenants or employees of the company operating

10 such facilities for their own use and not for resale)

11 of natural or manufactured gas for heat, light, or

12 power;

13 (8) the term ‘‘holding company’’ means—

14 (A) any company that directly or indirectly

15 owns, controls, or holds with power to vote, 10

16 percent or more of the outstanding voting secu17 rities of a public utility company or of a holding

18 company of any public utility company; and

19 (B) any person, determined by the Com20 mission, after notice and opportunity for hear21 ing, to exercise directly or indirectly (either

22 alone or pursuant to an arrangement or under23 standing with one or more persons) such a con24 trolling influence over the management or poli25 cies of any public utility company or holding
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1 company as to make it necessary or appropriate

2 for the rate protection of utility customers with

3 respect to rates that such person be subject to

4 the obligations, duties, and liabilities imposed

5 by this Title upon holding companies;

6 (9) the term ‘‘holding company system’’ means

7 a holding company, together with its subsidiary com8 panies;

9 (10) the term ‘‘jurisdictional rates’’ means

10 rates established by the Commission for the trans11 mission of electric energy in interstate commerce,

12 the sale of electric energy at wholesale in interstate

13 commerce, the transportation of natural gas in inter14 state commerce, and the sale in interstate commerce

15 of natural gas for resale for ultimate public con16 sumption for domestic, commercial, industrial, or

17 any other use;

18 (11) the term ‘‘natural gas company’’ means a

19 person engaged in the transportation of natural gas

20 in interstate commerce or the sale of such gas in

21 interstate commerce for resale;

22 (12) the term ‘‘person’’ means an individual or

23 company;

24 (13) the term ‘‘public utility’’ means any person

25 who owns or operates facilities used for transmission
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1 of electric energy in interstate commerce or sales of

2 electric energy at wholesale in interstate commerce;

3 (14) the term ‘‘public utility company’’ means

4 an electric utility company or a gas utility company;

5 (15) the term ‘‘State commission’’ means any

6 commission, board, agency, or officer, by whatever

7 name designated, of a State, municipality, or other

8 political subdivision of a State that, under the laws

9 of such State, has jurisdiction to regulate public util10 ity companies;

11 (16) the term ‘‘subsidiary company’’ of a hold12 ing company means—

13 (A) any company, 10 percent or more of

14 the outstanding voting securities of which are

15 directly or indirectly owned, controlled, or held

16 with power to vote, by such holding company;

17 and

18 (B) any person, the management or poli19 cies of which the Commission, after notice and

20 opportunity for hearing, determines to be sub21 ject to a controlling influence, directly or indi22 rectly, by such holding company (either alone or

23 pursuant to an arrangement or understanding

24 with one or more other persons) so as to make

25 it necessary for the rate protection of utility
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1 customers with respect to rates that such per2 son be subject to the obligations, duties, and li3 abilities imposed by this Title upon subsidiary

4 companies of holding companies; and

5 (17) the term ‘‘voting security’’ means any se6 curity presently entitling the owner or holder thereof

7 to vote in the direction or management of the affairs

8 of a company.

9 SEC. 404. REPEAL OF THE PUBLIC UTILITY HOLDING COM10 PANY ACT OF 1935.

11 The Public Utility Holding Company Act of 1935 (15

12 U.S.C. 79a et seq.) is repealed, effective one year after

13 the date of enactment of this Title.

14 SEC. 405. FEDERAL ACCESS TO BOOKS AND RECORDS.

15 (a) IN GENERAL.—Each holding company and each

16 associate company thereof shall maintain, and shall make

17 available to the Commission, such books, accounts, memo18 randa, and other records as the Commission deems to be

19 relevant to costs incurred by a public utility or natural

20 gas company that is an associate company of such holding

21 company and necessary or appropriate for the protection

22 of utility customers with respect to jurisdictional rates for

23 the transmission of electric energy in interstate commerce,

24 the sale of electric energy at wholesale in interstate com25 merce, the transportation of natural gas in interstate com-
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1 merce, and the sale in interstate commerce of natural gas

2 for resale for ultimate public consumption for domestic,

3 commercial, industrial, or any other use.

4 (b) AFFILIATE COMPANIES.—Each affiliate of a hold5 ing company or of any subsidiary company of a holding

6 company shall maintain, and make available to the Com7 mission, such books, accounts, memoranda, and other

8 records with respect to any transaction with another affil9 iate, as the Commission deems to be relevant to costs in10 curred by a public utility or natural gas company that is

11 an associate company of such holding company and nec12 essary or appropriate for the protection of utility cus13 tomers with respect to jurisdictional rates.

14 (c) HOLDING COMPANY SYSTEMS.—The Commission

15 may examine the books, accounts, memoranda, and other

16 records of any company in a holding company system, or

17 any affiliate thereof, as the Commission deems to be rel18 evant to costs incurred by a public utility or natural gas

19 company within such holding company system and nec20 essary or appropriate for the protection of utility cus21 tomers with respect to jurisdictional rates.

22 (d) CONFIDENTIALITY.—No member, officer, or em23 ployee of the Commission shall divulge any fact or infor24 mation that may come to his or her knowledge during the

25 course of examination of books, accounts, memoranda, or
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1 other records as provided in this section, except as may

2 be directed by the Commission or by a court of competent

3 jurisdiction.

4 SEC. 406. STATE ACCESS TO BOOKS AND RECORDS.

5 (a) IN GENERAL.—Upon the written request of a

6 State commission having jurisdiction to regulate a public

7 utility company in a holding company system, the holding

8 company or any associate company or affiliate thereof,

9 other than such public utility company, wherever located,

10 shall produce for inspection books, accounts, memoranda,

11 and other records that—

12 (1) have been identified in reasonable detail in

13 a proceeding before the State commission;

14 (2) the State commission deems are relevant to

15 costs incurred by such public utility company; and

16 (3) are necessary for the effective discharge of

17 the responsibilities of the State commission with re18 spect to such proceedings.

19 (b) LIMITATION.—Subsection (a) does not apply to

20 any person that is a holding company solely by reason of

21 ownership of one or more qualifying facilities under the

22 Public Utility Regulatory Policies Act.

23 (c) CONFIDENTIALITY OF INFORMATION.—The pro24 duction of books, accounts, memoranda, and other records

25 under subsection (a) shall be subject to such terms and
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1 conditions as may be necessary and appropriate to safe2 guard against unwarranted disclosure to the public of any

3 trade secrets or sensitive commercial information.

4 (d) EFFECT ON STATE LAW.—Nothing in this sec5 tion shall preempt applicable State law concerning the pro6 vision of books, records, or any other information, or in

7 any way limit the rights of any State to obtain books,

8 records, or any other information under any other Federal

9 law, contract, or otherwise.

10 (e) COURT JURISDICTION.—Any United States dis11 trict court located in the State in which the State commis12 sion referred to in subsection (a) is located shall have ju13 risdiction to enforce compliance with this section.

14 SEC. 407. EXEMPTION AUTHORITY.

15 (a) RULEMAKING.—Not later than 90 days after the

16 effective date of this Title, the Commission shall promul17 gate a final rule to exempt from the requirements of sec18 tion 405 any person that is a holding company, solely with

19 respect to one or more—

20 (1) qualifying facilities under the Public Utility

21 Regulatory Policies Act of 1978;

22 (2) exempt wholesale generators; or

23 (3) foreign utility companies.

24 (b) OTHER AUTHORITY.—If, upon application or

25 upon its own motion, the Commission finds that the books,
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1 records, accounts, memoranda, and other records of any

2 person are not relevant to the jurisdictional rates of a pub3 lic utility or natural gas company, or if the Commission

4 finds that any class of transactions is not relevant to the

5 jurisdictional rates of a public utility or natural gas com6 pany, the Commission’s shall exempt such person or trans7 action from the requirements of section 405.

8 SEC. 408. AFFILIATE TRANSACTIONS.

9 Nothing in this Title shall preclude the Commission

10 or a State commission from exercising its jurisdiction

11 under otherwise applicable law to determine whether a

12 public utility company, public utility, or natural gas com13 pany may recover in rates any costs of an activity per14 formed by an associate company, or any costs of goods

15 or services acquired by such public utility company from

16 an associate company.

17 SEC. 409. APPLICABILITY.

18 No provision of this Title shall apply to, or be deemed

19 to include—

20 (1) the United States;

21 (2) a State or any political subdivision of a

22 State;

23 (3) any foreign governmental authority not op24 erating in the United States;
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1 (4) any agency, authority, or instrumentality of

2 any entity referred to in paragraph (1), (2), or (3);

3 or

4 (5) any officer, agent, or employee of any entity

5 referred to in paragraph (1), (2), or (3) acting as

6 such in the course of his or her official duty.

7 SEC. 410. EFFECT ON OTHER REGULATIONS.

8 Nothing in this Title precludes the Commission or a

9 State commission from exercising its jurisdiction under

10 otherwise applicable law to protect utility customers.

11 SEC. 411. ENFORCEMENT.

12 The Commission shall have the same powers as set

13 forth in sections 306 through 317 of the Federal Power

14 Act (16 U.S.C. 825d–825p) to enforce the provisions of

15 this Title.

16 SEC. 412. SAVINGS PROVISIONS.

17 (a) IN GENERAL.—Nothing in this Title prohibits a

18 person from engaging in or continuing to engage in activi19 ties or transactions in which it is legally engaged or au20 thorized to engage on the effective date of this Title.

21 (b) EFFECT ON OTHER COMMISSION AUTHORITY.—

22 Nothing in this Title limits the authority of the Commis23 sion under the Federal Power Act (16 U.S.C. 791a et seq.)

24 (including section 301 of that Act) or the Natural Gas
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1 Act (15 U.S.C. 717 et seq.) (including section 8 of that

2 Act).

3 SEC. 413. IMPLEMENTATION.

4 Not later than 6 months after the date of enactment

5 of this Title, the Commission shall—

6 (1) promulgate such regulations as may be nec7 essary or appropriate to implement this Title (other

8 than section 6); and

9 (2) submit to Congress detailed recommenda10 tions on technical and conforming amendments to

11 Federal law necessary to carry out this Title and the

12 amendments made by this Title.

13 SEC. 414. TRANSFER OF RESOURCES.

14 All books and records that relate primarily to the

15 functions transferred to the Commission under this Title

16 shall be transferred from the Securities and Exchange

17 Commission to the Commission.

18 SEC. 415. AUTHORIZATION OF APPROPRIATIONS.

19 There are authorized to be appropriated such funds

20 as may be necessary to carry out this Title.

21 SEC. 416. CONFORMING AMENDMENT TO THE FEDERAL

22 POWER ACT.

23 Section 318 of the Federal Power Act (16 U.S.C.

24 825q) is repealed.
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1 TITLE V—NUCLEAR

2 DECOMMISSIONING

3 SEC. 501. SHORT TITLE.

4 This Title may be cited as the ‘‘Nuclear Decommis5 sioning Assurance Act’’.

6 SEC. 502. DEFINITIONS.

7 In this Act:

8 (1) DECOMMISSION.—The term ‘‘decommis9 sion’’ has the meaning given the term in section

10 50.2 of title 10, Code of Federal Regulations (or any

11 successor regulation).

12 (2) DECOMMISSIONING OBLIGATION.—The term

13 ‘‘decommissioning obligation’’ means the obligation

14 to pay costs associated with the measures necessary

15 to ensure the continued protection of the public from

16 the dangers of any residual radioactivity or other

17 hazards present at a facility when a nuclear unit is

18 decommissioned, as defined in 10 CFR § 50.2, in19 cluding, but not limited to, all costs of entombing,

20 decontaminating, dismantling, removing and dis21 posing of a nuclear power plant, including all decom22 missioning and associated preparation, security, and

23 radiation monitoring expenses and post-shutdown

24 spent nuclear fuel storage.
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1 (3) NUCLEAR DECOMMISSIONING TRUST

2 FUND.—The term ‘‘nuclear decommissioning trust

3 fund’’ has the meaning given the term ‘‘external

4 sinking fund’’ in section 50.75(e)(1)(ii) of title 10,

5 Code of Federal Regulations (or any successor regu6 lation).

7 (4) STATE COMMISSION.—The term ‘‘State

8 commission’’ has the meaning given the term in sec9 tion 3 of the Federal Power Act.

10 SEC. 503. NRC DECOMMISSIONING DETERMINATION.

11 (a) PETITION.—

12 (1) IN GENERAL.—A licensee under part 50 of

13 title 10, Code of Federal Regulations may petition

14 the Nuclear Regulatory Commission for a deter15 mination of whether—

16 (A) adequate amounts have been deposited

17 or are being deposited in the nuclear decommis18 sioning trust fund of the licensee; and

19 (B) the future funding for any nuclear

20 power plant owned in whole or in part by the

21 licensee is assured.

22 (2) CONTENTS.—A petition under paragraph

23 (1) shall disclose—

24 (A) the licensee’s current minimum

25 amount established by the Nuclear Regulatory
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1 Commission under section 50.75 of title 10,

2 Code of Federal Regulations for each facility

3 for which the licensee holds a license;

4 (B) the currently effective rates to recover

5 costs for decommissioning obligations as estab6 lished by the Commission or State commissions,

7 as appropriate;

8 (C) the amount that has been accumulated

9 in the nuclear decommissioning trust fund;

10 (D) the planned rate and timing of collec11 tion of the costs of the decommissioning obliga12 tions through the projected useful life of the fa13 cility; and

14 (E) any other information pertinent to

15 evaluating the assurance of funding of the nu16 clear decommissioning trust fund.

17 (b) DETERMINATION.—Not later than 180 days of

18 receipt of a petition under paragraph (1), the Nuclear

19 Regulatory Commission shall issue a determination re20 garding whether the nuclear decommissioning trust fund

21 and the currently approved level of rates to recover the

22 costs of the decommissioning obligation are adequate to

23 ensure full and safe decommissioning of the facility. If the

24 Commission determines that there is not currently ade-
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1 quate recovery, it shall specify the amounts needed to

2 make the recovery adequate.

3 (c) CONSIDERATIONS.—In making a determination

4 under subsection (b), the Nuclear Regulatory Commission

5 shall consider—

6 (1) the current level of funds in the nuclear de7 commissioning trust fund;

8 (2) the adequacy of the currently approved

9 rates to recover the costs of the decommissioning ob10 ligation;

11 (3) the assurance of continuing recovery of such

12 costs through rates;

13 (4) the timing of the recovery of such costs rel14 ative to the projected useful life of the plant; and

15 (5) any other information that the Nuclear

16 Regulatory Commission considers pertinent to deter17 mination of the necessary assurance of adequate

18 funding.

19 (d) ADEQUACY OF MINIMUM AMOUNTS.—Nothing in

20 this Act precludes the Nuclear Regulatory Commission

21 from revising or reconsidering the adequacy of the min22 imum amounts established under section 50.75(c) of title

23 10, Code of Federal Regulations.
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1 (e) NOTICE.—The Nuclear Regulatory Commission

2 shall issue notice of its finding to the licensee, the Federal

3 Regulatory Commission, and any other party of record.

4 SEC. 504. AMENDMENTS TO THE FEDERAL POWER ACT.

5 (a) DECLARATION.—Section 201 of the Federal

6 Power Act is amended by adding at the end the following:

7 ‘‘(h) DECLARATION REGARDING DECOMMIS8 SIONING.—The decommissioning of nuclear power plants

9 licensed by the Nuclear Regulatory Commission is affected

10 with a public interest, and the Federal regulation of mat11 ters relating to decommissioning of nuclear power plants,

12 to the extent provided in this part, is necessary in the pub13 lic interest.’’.

14 (b) NUCLEAR DECOMMISSIONING ASSURANCE.—The

15 Federal Power Act is amended by adding the following:

16 ‘‘SEC. 222. NUCLEAR DECOMMISSIONING ASSURANCE.

17 ‘‘(a) RECOVERY OF ADEQUATE DECOMMISSIONING

18 REVENUES IN TRANSMISSION OR WHOLESALE RATES.—

19 Any entity, including a public power entity, responsible for

20 decommissioning a nuclear power plant in whole or in

21 part, and which has obtained a finding from the Nuclear

22 Regulatory Commission pursuant to section 503(b) of the

23 Nuclear Decommissioning Assurance Act, may apply to

24 the Commission for an order under this subsection, pursu25 ant to sections 205 and 206 of this Part, approving rates
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1 and charges in connection with the transmission or whole2 sale sale of electric energy subject to the Commission’s

3 jurisdiction, to collect all or part of the revenues necessary

4 to meet the revenue requirement determined by the NRC

5 to be necessary to assure adequate funding of the entity’s

6 nuclear decommissioning obligations. In issuing an order

7 under this subsection, the Commission shall find to be just

8 and reasonable, prudently incurred, the recoverable in

9 transaction or wholesale rates the decommissioning costs

10 and revenue requirements determined to be necessary by

11 the NRC pursuant to 10 C.F.R. § 50.75 and Section 503

12 of the Nuclear Decommissioning Assurance Act.

13 ‘‘(b) RECOVERY OF ADEQUATE DECOMMISSIONING

14 REVENUES.—In issuing an order under subsection (a), ap15 proving rates and charges in connection with the trans16 mission or wholesale sale of electricity, the Commission

17 shall find to be just and reasonable, prudently incurred,

18 and recoverable through a nonbypassable charge or rate

19 the remainder of the decommissioning costs and revenue

20 requirements (determined to be necessary by the NRC

21 pursuant to 10 C.F.R. § 50.75 and section 503 of the Nu22 clear Decommissioning Assurance Act) and not recovered

23 under subsection(a). The Commission is authorized to en24 force and shall enforce any rule or order issued pursuant
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1 to this subsection in order to ensure collection of adequate

2 decommissioning revenues.’’.

Æ