II 

108TH CONGRESS 

1ST SESSION S. 1754

To enhance national security by improving the reliability of the U.S. electricity 

transmission grid, to ensure efficient, reliable and affordable energy 

to American consumers, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

OCTOBER 17, 2003

Mr. JEFFORDS (for himself, Mr. KENNEDY, and Ms. CANTWELL) introduced 

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

on Energy and Natural Resources 

A BILL

To enhance national security by improving the reliability 

of the U.S. electricity transmission grid, to ensure efficient, reliable and affordable energy to American consumers, and for other purposes.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Electric Reliability Security Act of 2003’’. 

6 (b) TABLE OF CONTENTS.—The table of contents of 

7 this Act is as follows:

Sec. 1. Short title; table of contents. 
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TITLE I—RELIABILITY 

Sec. 101. Electric reliability standards. 

Sec. 102. Model electric utility workers code. 

Sec. 103. Interstate compacts on regional transmission planning. 

Sec. 104. Electricity outage investigation. 

Sec. 105. Study on reliability of United States energy grid. 

TITLE II—EFFICIENCY 

Sec. 201. System benefits fund. 

Sec. 202. Electricity efficiency performance standard. 

Sec. 203. Appliance efficiency. 

Sec. 204. Loan guarantees. 

TITLE III—ON-SITE GENERATION 

Sec. 301. Net metering. 

Sec. 302. Interconnection. 

Sec. 303. On-site generation for emergency facilities.

1 TITLE I—RELIABILITY 

2 SEC. 101. ELECTRIC RELIABILITY STANDARDS. 

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

4 seq.) is amended by adding at the end the following: 

5 ‘‘SEC. 215. ELECTRIC RELIABILITY. 

6 ‘‘(a) DEFINITIONS.—In this section—

7 ‘‘(1) ‘bulk power system’ means the network of 

8 interconnected transmission facilities and generating 

9 facilities; 

10 ‘‘(2) ‘electric reliability organization’ means a 

11 self-regulating organization certified by the Commis12 sion under subsection (c) whose purpose is to pro13 mote the reliability of the bulk power system; and 

14 ‘‘(3) ‘reliability standard’ means a requirement 

15 to provide for reliable operation of the bulk power 
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1 system approved by the Commission under this sec2 tion. 

3 ‘‘(b) JURISDICTION AND APPLICABILITY.—The Com4 mission shall have jurisdiction, within the United States, 

5 over an electric reliability organization, any regional enti6 ties, and all users, owners and operators of the bulk power 

7 system, including but not limited to the entities described 

8 in section 201(f), for purposes of approving reliability 

9 standards and enforcing compliance with this section. All 

10 users, owners and operators of the bulk power system shall 

11 comply with reliability standards that take effect under 

12 this section. 

13 ‘‘(c) CERTIFICATION.—

14 ‘‘(1) The Commission shall issue a final rule to 

15 implement the requirements of this section not later 

16 than 180 days after the date of enactment of this 

17 section. 

18 ‘‘(2) Following the issuance of a Commission 

19 rule under paragraph (1), any person may submit an 

20 application to the Commission for certification as an 

21 electric reliability organization. The Commission 

22 may certify an applicant if the Commission deter23 mines that the applicant—

24 ‘‘(A) has the ability to develop, and enforce 

25 reliability standards that provide for an ade-
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1 quate level of reliability of the bulk power sys2 tem; and 

3 ‘‘(B) has established rules that—

4 ‘‘(i) assure the independence of the 

5 applicant from the users and owners and 

6 operators of the bulk power system while 

7 assuring fair stakeholder representation in 

8 the selection of its directors and balanced 

9 decision making in any committee or sub10 ordinate organizational structure; 

11 ‘‘(ii) allocate equitably dues, fees, and 

12 other charges among users for all activities 

13 under this section; 

14 ‘‘(iii) provide fair and impartial proce15 dures for enforcement of reliability stand16 ards through imposition of penalties (in17 cluding limitations on activities, functions, 

18 or operations, or other appropriate sanc19 tions) and 

20 ‘‘(iv) provide for reasonable notice and 

21 opportunity for public comment, due proc22 ess, openness, and balance of interests in 

23 developing reliability standards and other24 wise exercising its duties. 
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1 ‘‘(3) If the Commission receives 2 or more time2 ly applications that satisfy the requirements of this 

3 subsection, the Commission shall approve only the 

4 application the Commission concludes will best im5 plement the provisions of this section. 

6 ‘‘(d) RELIABILITY STANDARDS.—

7 ‘‘(1) An electric reliability organization shall file 

8 a proposed reliability standard or modification to a 

9 reliability standard with the Commission. 

10 ‘‘(2) The Commission may approve a proposed 

11 reliability standard or modification to a reliability 

12 standard if it determines that the standard is just, 

13 reasonable, not unduly discriminatory or pref14 erential, and in the public interest. The Commission 

15 shall give due weight to the technical expertise of the 

16 electric reliability organization with respect to the 

17 content of a proposed standard or modification to a 

18 reliability standard, but shall not defer with respect 

19 to its effect on competition. 

20 ‘‘(3) The electric reliability organization and the 

21 Commission shall rebuttably presume that a pro22 posal from a regional entity organized on an inter23 connection-wide basis for a reliability standard or 

24 modification to a reliability standard to be applicable 

25 on an interconnection-wide basis is just, reasonable, 
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1 and not unduly discriminatory or preferential, and in 

2 the public interests.

3 ‘‘(4) The Commission shall remand to the elec4 tric reliability organization for further consideration 

5 a proposed reliability standard or a modification to 

6 a reliability standard that the Commission dis7 approves in whole or in part. 

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

9 upon complaint, may order an electric reliability or10 ganization to submit to the Commission a proposed 

11 reliability standard or a modification to a reliability 

12 standard that addresses a specific matter if the 

13 Commission considers such a new or modified reli14 ability standard appropriate to carry out this sec15 tion. 

16 ‘‘(e) ENFORCEMENT.—

17 ‘‘(1) An electric reliability organization may im18 pose a penalty on a user or owner or operator of the 

19 bulk power system if the electric reliability organiza20 tion, after notice and an opportunity for a hearing—

21 ‘‘(A) finds that the user or owner or oper22 ator of the bulk power system has violated a re23 liability standard approved by the Commission 

24 under subsection (d); and 
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1 ‘‘(B) files notice with the Commission, 

2 which shall affirm, set aside, or modify the ac3 tion. 

4 ‘‘(2) On its own motion or upon complaint, the 

5 Commission may order compliance with a reliability 

6 standard and may impose a penalty against a user 

7 or owner or operator of the bulk power system if the 

8 Commission finds, after notice and opportunity for 

9 a hearing, that the user or owner or operator of the 

10 bulk power system has violated or threatens to vio11 late a reliability standard. 

12 ‘‘(3) The Commission shall establish regulations 

13 authorizing the electric reliability organization to 

14 enter into an agreement to delegate authority to a 

15 regional entity for the purpose of proposing and en16 forcing reliability standards (including related activi17 ties) if the regional entity satisfies the provisions of 

18 subparagraphs (A) and (B) of subsection (c)(2) and 

19 the agreement promotes effective and efficient ad20 ministration of bulk power system reliability. The 

21 Commission may modify such delegation. The elec22 tric reliability organization and the Commission shall 

23 rebuttably presume that a proposal for delegation to 

24 a regional entity organized on a interconnection-wide 

25 basis promotes effective and efficient administration 
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1 of bulk power system reliability and should be ap2 proved. Such regulation may provide that the Com3 mission may assign the electric reliability organiza4 tion’s authority to enforce reliability standards di5 rectly to a regional entity consistent with the re6 quirements of this paragraph. 

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

8 is necessary or appropriate against the electric reli9 ability organization or a regional entity to ensure 

10 compliance with a reliability standard or any Com11 mission order affecting the electric reliability organi12 zation or a regional entity. 

13 ‘‘(f) CHANGES IN ELECTRICITY RELIABILITY ORGA14 NIZATION RULES.—An electric reliability organization 

15 shall file with the Commission for approval any proposed 

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

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

19 rules of the electric reliability organization. A proposed 

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

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

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

24 satisfies the requirements of subsection (c)(2). 

25 ‘‘(g) COORDINATION WITH CANADA AND MEXICO.—
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1 ‘‘(1) The electric reliability organization shall 

2 take all appropriate steps to gain recognition in 

3 Canada and Mexico. 

4 ‘‘(2) The President shall use his best efforts to 

5 enter into international agreements with the govern6 ments of Canada and Mexico to provide for effective 

7 compliance with reliability standards and the effec8 tiveness of the electric reliability organization in the 

9 United States and Canada or Mexico. 

10 ‘‘(h) RELIABILITY REPORTS.—The electric reliability 

11 organization shall conduct periodic assessments of the reli12 ability and adequacy of the interconnected bulk power sys13 tem in North America. 

14 ‘‘(i) SAVINGS PROVISIONS.—

15 ‘‘(1) The electric reliability organization shall 

16 have authority to develop and enforce compliance 

17 with standards for the reliable operation of only the 

18 bulk power system. 

19 ‘‘(2) This section does not provide the electric 

20 reliability organization or the Commission with au21 thority to order the construction of additional gen22 eration or transmission capacity or to set and en23 force compliance with standards for adequacy or 

24 safety of electric facilities or services. 
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1 ‘‘(3) Nothing in this section shall be construed 

2 to preempt any authority of any State to take action 

3 to ensure the safety, adequacy, and reliability of 

4 electric service within that State, as long as such ac5 tion is not inconsistent with any reliability standard 

6 established under this section. 

7 ‘‘(4) Not later than 90 days after the date of 

8 the application of the electric reliability organization 

9 or other affected party, and after notice and oppor10 tunity for comment, the Commission shall issue a 

11 final order determining whether a State action is in12 consistent with a reliability standard, taking into 

13 consideration any recommendation of the electric re14 liability organization. 

15 ‘‘(5) The Commission, after consultation with 

16 the electric reliability organization, may stay the ef17 fectiveness of any State action, pending the Commis18 sion’s issuance of a final order. 

19 ‘‘(j) APPLICATION OF ANTITRUST LAWS.—

20 ‘‘(1) To the extent undertaken to develop, im21 plement, or enforce a reliability standard, each of 

22 the following activities shall not, in any action under 

23 the antitrust laws, be deemed illegal per se: 

24 ‘‘(A) Activities undertaken by an electric 

25 reliability organization under this section. 
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1 ‘‘(B) Activities of a user or owner or oper2 ator of the bulk power system undertaken in 

3 good faith under the rules of an electric reli4 ability organization. 

5 ‘‘(2) In any action under the antitrust laws, an 

6 activity described in paragraph (1) shall be judged 

7 on the basis of its reasonableness, taking into ac8 count all relevant factors affecting competition and 

9 reliability. 

10 ‘‘(3) For purposes of this subsection, the term 

11 ‘antitrust laws’ has the meaning given the term in 

12 subsection (a) of the first section of the Clayton Act 

13 (15 U.S.C. 12(a)), except that it includes section 5 

14 of the Federal Trade Commission Act (15 U.S.C. 

15 45) to the extent that section 5 applies to unfair 

16 methods of competition. 

17 ‘‘(k) REGIONAL ADVISORY BODIES.—The Commis18 sion shall establish a regional advisory body on the petition 

of at least 2 19 ⁄3 of the States within a region that have more 

than 1 20 ⁄2 of their electric load served within the region. A 

21 regional advisory body shall be composed of one member 

22 from each participating State in the region, appointed by 

23 the Governor of each state, and may include representa24 tives of agencies, States, and provinces outside the United 

25 States. A regional advisory body may provide advice to the 
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1 electric reliability organization, a regional reliability enti2 ty, or the Commission regarding the governance of an ex3 isting or proposed regional reliability entity within the 

4 same region, whether a standard proposed to apply within 

5 the region is just, reasonable, not unduly discriminatory 

6 or preferential, and in the public interest, whether fees 

7 proposed to be assessed within the region are just, reason8 able, not unduly discriminatory or preferential, and in the 

9 public interest and any other responsibilities requested by 

10 the Commission. The Commission may give deference to 

11 the advice of any such regional advisory body if that body 

12 is organized on an interconnection-wide basis. 

13 ‘‘(l) APPLICATION TO ALASKA AND HAWAII.—The 

14 provisions of this section apply only to the contiguous 48 

15 states.’’. 

16 SEC. 102. MODEL ELECTRIC UTILITY WORKERS CODE. 

17 Subtitle B of the Public Utility Regulatory Policies 

18 Act of 1978 (16 U.S.C. 2621 et seq.) is amended by add19 ing at the end the following: 

20 ‘‘SEC. 118. MODEL CODE FOR ELECTRIC UTILITY WORKERS. 

21 ‘‘(a) IN GENERAL.—The Secretary shall develop by 

22 rule and circulate among the States for their consideration 

23 a model code containing standards for electric facility 

24 workers to ensure electric facility safety and reliability. 
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1 ‘‘(b) CONSULTATION.—In developing these stand2 ards, the Secretary shall consult with all interested par3 ties, including representatives of electric facility workers. 

4 ‘‘(c) NOT AFFECTING OCCUPATIONAL SAFETY AND

5 HEALTH.—In issuing a model code under this section, the 

6 Secretary shall not, for purposes of section 4 of the Occu7 pational Safety and Health Act of 1970 (29 U.S.C. 653) 

8 be deemed to be exercising statutory authority to prescribe 

9 or enforce standards or regulations affecting occupational 

10 safety and health.’’. 

11 SEC. 103. INTERSTATE COMPACTS ON REGIONAL TRANS12 MISSION PLANNING. 

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

14 seq.) (as amended by section 101) is amended by adding 

15 at the end the following: 

16 ‘‘SEC. 216. INTERSTATE COMPACTS ON REGIONAL TRANS17 MISSION PLANNING. 

18 ‘‘(a) CONSENT OF CONGRESS.—The consent of Con19 gress is given for an agreement to establish a regional 

20 transmission planning agency if the Commission deter21 mines that the agreement would—

22 ‘‘(1) facilitate coordination among the States 

23 within a particular region with regard to the plan24 ning of future transmission, generation, and dis25 tribution facilities; 
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1 ‘‘(2) carry out State electric facility siting re2 sponsibilities more effectively; 

3 ‘‘(3) meet the other requirements of this section 

4 and rules prescribed by the Commission under this 

5 section; and 

6 ‘‘(4) otherwise be consistent with the public in7 terest. 

8 ‘‘(b) AUTHORITY TO CARRY OUT AGREEMENT.—

9 ‘‘(1) If the Commission determines that an 

10 agreement meets the requirements of subsection (a), 

11 the agency established under the agreement has the 

12 authority necessary or appropriate to carry out the 

13 agreement. This includes authority with respect to 

14 matters otherwise within the jurisdiction of the 

15 Commission, if expressly provided for in the agree16 ment and approved by the Commission. 

17 ‘‘(2) The Commission’s determination under 

18 this section may be subject to any terms or condi19 tions the Commission determines are necessary to 

20 ensure that the agreement is in the public interest. 

21 ‘‘(c) CRITERIA.—

22 ‘‘(1) The Commission shall prescribe—

23 ‘‘(A) criteria for determining whether a re24 gional transmission planning agreement meets 

25 subsection (a); and 
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1 ‘‘(B) standards for the administration of a 

2 regional transmission planning agency estab3 lished under the agreement. 

4 ‘‘(2) The criteria shall provide that, in order to 

5 meet subsection (a)—

6 ‘‘(A) a regional transmission planning 

7 agency must operate within a region that in8 cludes all tribal governments and all States and 

9 that are a party to the agreement; 

10 ‘‘(B) a regional transmission planning 

11 agency must be composed of one or more mem12 bers from each State and tribal government 

13 that is a party to the agreement; 

14 ‘‘(C) each participating State and tribal 

15 government must vest in the regional trans16 mission planning agency the authority nec17 essary to carry out the agreement and this sec18 tion; and 

19 ‘‘(D) the agency must follow workable and 

20 fair procedures in making its respect to matters 

21 covered by this agreement, including a require22 ment that all decisions of the agency be made 

23 by majority vote (or majority weighted votes) of 

24 the members present and voting. 
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1 ‘‘(3) The criteria may include any other re2 quirement for meeting subsection (a) that the Com3 mission determines is necessary to ensure that the 

4 regional transmission planning agency’s organiza5 tion, practices, and procedures are sufficient to carry 

6 out this section and the rules issued under it. 

7 ‘‘(d) TERMINATION OF APPROVAL.—The Commis8 sion, after notice and opportunity for comment, may ter9 minate the approval of an agreement under this section 

10 at any time if it determines that the regional transmission 

11 planning agency fails to comply with this section or Com12 mission prescriptions under subsection (c) or that the 

13 agreement is contrary to the public interest. 

14 ‘‘(e) REVIEW.—Section 313 applies to a rehearing be15 fore a regional transmission planning agency and judicial 

16 review of any action of a regional transmission planning 

17 agency. For this purpose, when section 313 refers to 

18 ‘Commission’ substitute ‘regional transmission planning 

19 agency’ and when section 313(b) refers to ‘licensee or pub20 lic utility’ substitute ‘entity’.’’. 

21 SEC. 104. ELECTRICITY OUTAGE INVESTIGATION. 

22 Part III of the Federal Power Act (16 U.S.C. 824) 

23 is amended—

24 (1) by redesignating sections 320 and 321 (16 

25 U.S.C. 825r, 791a) as 321 and 322 respectively; and 
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1 (2) by inserting after section 319 (16 U.S.C. 

2 825q) the following:

3 ‘‘SEC. 320. ELECTRICITY OUTAGE INVESTIGATION BOARD. 

4 ‘‘(a) ESTABLISHMENT.—There is established an 

5 Electricity Outage Investigation Board that shall be an 

6 independent establishment within the Executive Branch. 

7 ‘‘(b) MEMBERSHIP.—The Board shall consist of 7 

8 members and shall include—

9 ‘‘(1) the Secretary of Energy or his or her des10 ignee; 

11 ‘‘(2) the Chairman of the Federal Regulatory 

12 Commission or his or her designee; 

13 ‘‘(3) a representative of the National Academy 

14 of Sciences appointed by the President; a represent15 ative appointed by the majority leader of the Senate; 

16 a representative appointed by the minority leader of 

17 the Senate; a representative appointed by the major18 ity leader of the House of Representatives; and a 

19 representative appointed by the minority leader of 

20 the House of Representatives. Each such appointee 

21 shall demonstrate relevant expertise in the field of 

22 electricity generation, transmission and distribution, 

23 and such other expertise as will best assist in car24 rying out the duties of the Board. 
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1 ‘‘(c) TERMS.—The Secretary of Energy and the 

2 Chairman of the Federal Regulatory Commission shall be 

3 permanent members. The remaining members shall each 

4 serve for a term of 3 years. 

5 ‘‘(d) DUTIES.—The Board shall—

6 ‘‘(1) upon request by Congress or by the Presi7 dent investigate a major bulk-power system failure 

8 in the United States to determine the causes of the 

9 failure; 

10 ‘‘(2) report expeditiously to the Congress and to 

11 the President the results of the investigation; and 

12 ‘‘(3) recommend to the Congress and the Presi13 dent actions to minimize the possibility of future 

14 bulk-power system failure. 

15 ‘‘(e) COMPENSATION.—Each member of the Board 

16 shall be paid at the rate payable for level III of the Execu17 tive Schedule for each day (including travel time) such 

18 member is engaged in the work of the Board. Each mem19 ber of the Board may receive travel expenses, including 

20 per diem in lieu of subsistence, in the same manner as 

21 is permitted under section 5702 and 5703 of title 5, 

22 United States Code.’’. 
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1 SEC. 105. STUDY ON RELIABILITY OF U.S. ELECTRICITY 

2 GRID. 

3 (a) STUDY ON RELIABILITY.—Within 45 days after 

4 enactment of this Act, the Secretary of Energy shall con5 tract with the National Academy of Sciences to conduct 

6 a study on the reliability of the U.S. electricity grid. The 

7 study shall examine the effectiveness of the current U.S. 

8 electricity transmission and distribution system at pro9 viding efficient, secure and affordable power to U.S. con10 sumers. 

11 (b) CONTENTS.—The study shall include an analysis 

12 of—

13 (1) vulnerability of the transmission and dis14 tribution system to disruption by natural, mechan15 ical or human causes including sabotage; 

16 (2) the most efficient and cost-effective solu17 tions for dealing with vulnerabilities or other prob18 lems of the U.S. electricity transmission and dis19 tribution system, including a comparison of invest20 ments in—

21 (A) efficiency; 

22 (B) distributed generation; 

23 (C) technical advances in software and 

24 other devices to improve the efficiency and reli25 ability of the grid; 

26 (D) new power line construction; and 
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1 (E) any other relevant matters. 

2 (c) REPORT.—The contract shall provide that within 

3 six months of entering into the contract, the National 

4 Academy of Sciences shall submit a report to the Presi5 dent and Congress detailing findings and recommenda6 tions of the study. 

7 TITLE II—EFFICIENCY 

8 SEC. 201. SYSTEM BENEFITS FUND. 

9 (a) DEFINITIONS.—In this section: 

10 (1) ADMINISTRATOR.—The term ‘‘Adminis11 trator’’ means the Administrator of the Environ12 mental Protection Agency. 

13 (2) BOARD.—The term ‘‘Board’’ means the 

14 Board established under subsection (b). 

15 (3) COMMISSION.—The term ‘‘Commission’’ 

16 means the Federal Energy Regulatory Commission. 

17 (4) FUND.—The term ‘‘Fund’’ means the Sys18 tem Benefits Trust Fund established under sub19 section (c). 

20 (5) RENEWABLE ENERGY.—The term ‘‘renew21 able energy’’ means electricity generated from wind, 

22 ocean energy, organic waste (excluding incinerated 

23 municipal solid waste), or biomass (including anaer24 obic digestion from farm systems and landfill gas re25 covery) or a geothermal, solar thermal, or photo-
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1 voltaic source. For purposes of this paragraph, a 

2 farm system is an electric generating facility that 

3 generates electric energy from the anaerobic diges4 tion of agricultural waste produced by farming that 

5 is located on the farm where substantially all of the 

6 waste used is produced. 

7 (6) SECRETARY.—The term ‘‘Secretary’’ means 

8 the Secretary of Energy. 

9 (b) BOARD.—

10 (1) ESTABLISHMENT.—The Secretary shall es11 tablish a System Benefits Trust Fund Board to 

12 carry out the functions and responsibilities described 

13 in this section. 

14 (2) MEMBERSHIP.—The Board shall be com15 posed of—

16 (A) 1 representative of the Federal Energy 

17 Regulatory Commission appointed by the Fed18 eral Energy Regulatory Commission; 

19 (B) 2 representatives of the Secretary of 

20 Energy appointed by the Secretary; 

21 (C) 2 persons nominated by the National 

22 Association of Regulatory Utility Commis23 sioners and appointed by the Secretary; 
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1 (D) 1 person nominated by the National 

2 Association of State Utility Consumer Advo3 cates and appointed by the Secretary; 

4 (E) 1 person nominated by the National 

5 Association of State Energy Officials and ap6 pointed by the Secretary; 

7 (F) 1 person nominated by the National 

8 Energy Assistance Directors’ Association and 

9 appointed by the Secretary; and 

10 (G) 1 representative of the Environmental 

11 Protection Agency appointed by the Adminis12 trator of the Environmental Protection Agency.

13 (3) CHAIRPERSON.—The Secretary shall select 

14 a member of the Board to serve as Chairperson of 

15 the Board. 

16 (c) ESTABLISHMENT OF FUND.—

17 (1) IN GENERAL.—The Board shall establish an 

18 account or accounts at one or more financial institu19 tions, which account or accounts shall be known as 

20 the System Benefits Trust Fund consisting of 

21 amounts deposited in the fund under subsection (e). 

22 (2) STATUS OF FUND.—The wires charges col23 lected under subsection (e) and deposited in the 

24 Fund—
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1 (A) shall not constitute funds of the 

2 United States; 

3 (B) shall be held in trust by the Board 

4 solely for the purposes stated in subsection (d); 

5 and 

6 (C) shall not be available to meet any obli7 gations of the United States. 

8 (d) USE OF FUND.—

9 (1) FUNDING OF STATE PROGRAMS.—Amounts 

10 in the Fund shall be used by the Board to provide 

11 matching funds to States and Indian tribes for the 

12 support of State or tribal public benefits programs 

13 relating to—

14 (A) energy conservation and efficiency; 

15 (B) renewable energy sources; 

16 (C) assisting low-income households in 

17 meeting their home energy needs; or 

18 (D) research and development in areas de19 scribed in subparagraphs (A) through (C). 

20 (2) DISTRIBUTION.—

21 (A) IN GENERAL.—Except for amounts 

22 needed to pay costs of the Board in carrying 

23 out its duties under this section, the Board 

24 shall distribute all amounts in the Fund to 
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1 States or Indian tribes to fund public benefits 

2 programs under paragraph (1). 

3 (B) FUND SHARE.—

4 (i) IN GENERAL.—Subject to clause 

5 (iii), the Fund share of a public benefits 

6 program funded under paragraph (1) shall 

7 be 50 percent. 

8 (ii) PROPORTIONATE REDUCTION.—

9 To the extent that the amount of matching 

10 funds requested by States and Indian 

11 tribes exceeds the maximum projected rev12 enues of the Fund, the matching funds dis13 tributed to the States and Indian tribes 

14 shall be reduced by an amount that is pro15 portionate to each State’s annual consump16 tion of electricity compared to the Nation’s 

17 aggregate annual consumption of elec18 tricity. 

19 (iii) ADDITIONAL STATE OR INDIAN

20 TRIBE FUNDING.—A State or Indian tribe 

21 may apply funds to public benefits pro22 grams in addition to the amount of funds 

23 applied for the purpose of matching the 

24 Fund share. 
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1 (3) PROGRAM CRITERIA.—The Board shall rec2 ommend eligibility criteria for public benefits pro3 grams funded under this section for approval by the 

4 Secretary. 

5 (4) APPLICATION.—Not later than August 1 of 

6 each year beginning in 2004, a State or Indian tribe 

7 seeking matching funds for the following fiscal year 

8 shall file with the Board, in such forms as the Board 

9 may require, an application—

10 (A) certifying that the funds will be used 

11 for an eligible public benefits program; 

12 (B) stating the amount of State or Indian 

13 tribe funds earmarked for the program; and 

14 (C) summarizing how System Benefit 

15 Trust Fund funds from the previous calendar 

16 year (if any) were spent by the State and what 

17 the State accomplished as a result of these ex18 penditures. 

19 (e) WIRES CHARGE.—

20 (1) DETERMINATION OF NEEDED FUNDING.—

21 Not later than September 1 of each year, the Board 

22 shall determine and inform the Commission of the 

23 aggregate amount of wires charges that will be nec24 essary to be paid into the Fund to pay matching 
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1 funds to States and Indian tribes and pay the oper2 ating costs of the Board in the following fiscal year. 

3 (2) IMPOSITION OF WIRES CHARGE.—

4 (A) IN GENERAL.—Not later than Decem5 ber 15 of each year, the Commission shall im6 pose a nonbypassable, competitively neutral 

7 wires charge, to be paid directly into the Fund 

8 by the operator of the wire, on electricity car9 ried through the wire (measured as the elec10 tricity exits at the busbar at a generation facil11 ity, or, for electricity generated outside the 

12 United States, at the point of delivery to the 

13 wire operator’s system) in interstate commerce. 

14 (B) AMOUNT.—The wires charge shall be 

15 set at a rate equal to the lesser of—

16 (i) 1.0 mills per kilowatt hour; or 

17 (ii) a rate that is estimated to result 

18 in the collection of an amount of wires 

19 charges that is as nearly as possible equal 

20 to the amount of needed funding deter21 mined under paragraph (1). 

22 (3) DEPOSIT IN THE FUND.—The wires charge 

23 shall be paid by the operator of the wire directly into 

24 the Fund at the end of each month during the cal-
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1 endar year for distribution by the Board under sub2 section (c). 

3 (4) PENALTIES.—The Commission may assess 

4 against a wire operator that fails to pay a wires 

5 charge as required by this subsection a civil penalty 

6 in an amount equal to not more than the amount of 

7 the unpaid wires charge. 

8 (f) AUDITING.—

9 (1) IN GENERAL.—The Fund shall be audited 

10 annually by a firm of independent certified public 

11 accountants in accordance with generally accepted 

12 auditing standards. 

13 (2) ACCESS TO RECORDS.—Representatives of 

14 the Secretary and the Commission shall have access 

15 to all books, accounts, reports, files, and other 

16 records pertaining to the Fund as necessary to fa17 cilitate and verify the audit. 

18 (3) REPORTS.—

19 (A) IN GENERAL.—A report on each audit 

20 shall be submitted to the Secretary, the Com21 mission, and the Secretary of the Treasury, who 

22 shall submit the report to the President and 

23 Congress not later than 180 days after the 

24 close of the fiscal year. 
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1 (B) REQUIREMENTS.—An audit report 

2 shall—

3 (i) set forth the scope of the audit; 

4 and 

5 (ii) include—

6 (I) a statement of assets and li7 abilities, capital, and surplus or def8 icit; 

9 (II) a surplus of deficit analysis; 

10 (III) a statement of income and 

11 expenses; 

12 (IV) any other information that 

13 may be considered necessary to keep 

14 the President and Congress informed 

15 of the operations and financial condi16 tion of the Fund; and 

17 (V) any recommendations with 

18 respect to the Fund that the Sec19 retary or the Commission may have. 

20 SEC. 202. ELECTRICITY EFFICIENCY PERFORMANCE 

21 STANDARD. 

22 Title VI of the Public Utility Regulatory Policies Act 

23 of 1978 (16 U.S.C. 2621 note) is amended by adding at 

24 the end the following: 
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1 ‘‘SEC. 609. FEDERAL ELECTRICITY EFFICIENCY PERFORM2 ANCE STANDARD. 

3 ‘‘(a) IN GENERAL.—Each electric retail supplier shall 

4 implement energy efficiency and load reduction programs 

5 and measures to achieve verified improvements in energy 

6 efficiency and peak load reduction in retail customer facili7 ties and the distribution systems that serve them. 

8 ‘‘(b) POWER SAVINGS.—Such programs shall produce 

9 savings in total peak power demand and total electricity 

10 use by retail customers by an amount that is equal to or 

11 greater than the following percentages relative to the peak 

12 demand and electricity used in that year by the retail elec13 tric supplier’s customers:

Reduction 

in demand 

Reduction 

in use 

In calendar year 2004 ............................................ 1% .75%

In calendar year 2005 ............................................ 2% 1.5%

In calendar year 2007 ............................................ 4% 3.0%

In calendar year 2009 ............................................ 6% 4.5%

In calendar year 2011 ............................................ 8% 6.0%

In calendar year 2013 ............................................ 10% 7.5%

14 ‘‘(c) BEGINNING DATE.—For purposes of this sec15 tion, savings shall be counted only for measures installed 

16 after January 1, 2003. 

17 ‘‘(d) RULEMAKING.—The Secretary of Energy is di18 rected to establish, by rule, procedures and standards for 

19 counting and independently verifying energy and demand 

20 savings for purposes of enforcing the energy efficiency per-
30

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1 formance standards imposed by this section. Such rule 

2 shall also include procedures and a schedule for reporting 

3 findings to the Department of Energy and for making 

4 such reports available to the public. The Secretary shall 

5 consult with the association representing the nation’s pub6 lic utility regulators, and with the association representing 

7 the nation’s state energy officials in developing these pro8 cedures and standards. This rulemaking shall be com9 pleted no later than June 30, 2004. 

10 ‘‘(e) REPORTING.—By June 30, 2006, and every two 

11 years thereafter, each retail electric supplier shall file with 

12 the state public utilities commission in each state in which 

13 its supplies service to retail customers, a report dem14 onstrating that it has taken action to comply with the en15 ergy efficiency performance standards of this section. 

16 These reports shall include independent verification of the 

17 estimated savings pursuant to standards established by 

18 the Secretary. A state public utilities commission may ac19 cept such report as filed, or may review and investigate 

20 the accuracy of the report. Each state public utilities com21 mission shall make findings on any deficiencies relative to 

22 the requirements in section 2, and shall create a remedial 

23 order for the correction of any deficiencies that are found. 

24 ‘‘(f) UTILITIES OUTSIDE STATE JURISDICTION.—

25 Electric retail suppliers not subject to the jurisdiction of 
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1 state public utilities commissions shall report to their gov2 erning bodies. Such reports shall include independent 

3 verification of the estimated savings pursuant to standards 

4 established by the Secretary. 

5 ‘‘(g) PROGRAM PARTICIPATION.—Electric retail sup6 pliers may demonstrate satisfaction of this standard, in 

7 whole or part, by savings achieved through participation 

8 in statewide, regional, or national programs that can be 

9 demonstrated to significantly improve the efficiency of 

10 electric distribution and use. Verified efficiency savings re11 sulting from such programs may be assigned to each par12 ticipating retail supplier based upon their degree of par13 ticipation in such programs. Electric retail suppliers may 

14 also purchase rights to extra savings achieved by other 

15 electric retail suppliers, provided that the selling supplier 

16 or another electric retail supplier does not also take credit 

17 for those savings. 

18 ‘‘(h) REMEDIES FOR FAILURE TO COMPLY.—In the 

19 event that any retail electric supplier fails to achieve its 

20 energy savings and/or load reduction target for a specific 

21 year, any aggrieved party may enter suit and seek prompt 

22 remedial action before a state public utilities commission 

23 or an appropriate governing body in the case of electric 

24 retail suppliers not subject to state public utility commis25 sion jurisdiction. The state public utilities commission or 
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1 other appropriate governing body shall have a maximum 

2 of one year to craft a remedy. However, if a state public 

3 utilities commission or other governing body certifies that 

4 it has inadequate resources or authority to promptly re5 solve enforcement actions under this section, or fails to 

6 take action within the time period specified above, enforce7 ment may be sought in Federal district court. If a commis8 sion or court determines that energy savings and/or load 

9 reduction targets for a specific year have not been 

10 achieved, the commission or court shall determine the 

11 amount of the deficit and shall fashion an equitable rem12 edy to restore the lost savings as soon as practicable. Such 

13 remedies may include a refund to retail electric customers 

14 of an amount equal to the retail cost of the electricity con15 sumed due to the failure to reach the target, and the ap16 pointment of a special master to administer a bidding sys17 tem to procure the energy and demand savings equal to 

18 125 percent of the deficit. 

19 SEC. 203. APPLIANCE EFFICIENCY. 

20 Section 325(d)(3) of the Energy Policy and Con21 servation Act (42 U.S.C. 6295(d)(3)) is amended by strik22 ing subparagraph (B) and inserting instead: 

23 ‘‘(B) The Secretary shall publish a final rule no later 

24 than January 1, 2007, to determine whether the stand25 ards in effect for central air conditioners and central air 
33

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1 conditioning heat pumps should be amended. Such rule 

2 shall address both system annual energy use and peak 

3 electric demand and may include more than one efficiency 

4 descriptor. Such rule shall apply to products manufac5 tured on or after January 1, 2010.’’. 

6 SEC. 204. LOAN GUARANTEES.

7 (a) AUTHORITY.—The Secretary may guarantee not 

8 more than 50 percent of the principal of any loan made 

9 to a qualifying entity for eligible activities under this sec10 tion. 

11 (b) CONDITIONS.—

12 (1) The Secretary shall not guarantee a loan 

13 under this section unless—

14 (A) the guarantee is a qualifying entity; 

15 (B) the guarantee has filed an application 

16 with the Secretary; 

17 (C) the project, activity, program or sys18 tem for which the loan is made is an eligible ac19 tivity; and 

20 (D) the project, activity, program or sys21 tem for which the loan is made will significantly 

22 enhance the reliability, security, efficiency and 

23 cost-effectiveness of electricity generation, 

24 transmission or distribution. 
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1 (2) The Secretary shall give priority to guaran2 teed loans under this section for eligible activities 

3 which accomplish the objectives of this section in the 

4 most environmentally beneficial manner. 

5 (3) A loan guaranteed under this section shall 

6 be made by a financial institution subject to the ex7 amination of the Secretary. 

8 (c) RULES.—Not later than 1 year after enactment 

9 of this section, the Secretary shall publish a final rule es10 tablishing guidelines for loan requirements under this sec11 tion. The rules shall establish—

12 (1) criteria for determining which entities shall 

13 be considered qualifying entities eligible for loan 

14 guarantees under this section; 

15 (2) criteria for determining which projects, ac16 tivities, programs or systems shall be considered eli17 gible activities eligible for loan guarantees in accord18 ance with the purposes of this section; 

19 (3) loan requirements including term, maximum 

20 size, collateral requirements; and 

21 (4) any other relevant features. 

22 (d) LIMITATION ON SIZE.—The Secretary may make 

23 commitments to guarantee loans only to the extent that 

24 the total principal, any part of which is guaranteed, will 

25 not exceed $10,000,000,000. 
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1 (e) AUTHORIZATION OF APPROPRIATIONS.—There 

2 are authorized to be appropriated to the Secretary such 

3 sums as may be necessary to cover the cost of loan guaran4 tees as defined by section 502(5) of the Federal Credit 

5 Reform Act of 1990 (2. U.S.C. 661a(5)). 

6 (f) DEFINITIONS.—In this section: 

7 (1) The term ‘‘eligible activity’’ means—

8 (A) advanced technologies for high-effi9 ciency electricity transmission control and oper10 ation, including high-efficiency power elec11 tronics technologies (including software-con12 trolled computer chips and sensors to diagnose 

13 trouble spots and re-route power into appro14 priate areas), high-efficiency electricity storage 

15 systems, and high-efficiency transmission wire 

16 or transmission cable system; 

17 (B) distributed generation systems fueled 

18 solely by—

19 (i) solar, wind, biomass, geothermal, 

20 or ocean energy; 

21 (ii) landfill gas; 

22 (iii) natural gas systems utilizing best 

23 available control technology; 

24 (iv) fuel cells; or 

25 (v) any combination of the above; 
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1 (C) combined heat and power systems; and 

2 (D) energy efficiency systems producing 

3 demonstrable electricity savings. 

4 (2) The term ‘‘qualifying entity’’ means an indi5 vidual, corporation, partnership, joint venture, trust 

6 or other entity identified by the Secretary of Energy 

7 under subsection (c)(1) as eligible for a guaranteed 

8 loan under this section. 

9 (3) The term ‘‘Secretary’’ means the Secretary 

10 of Energy. 

11 TITLE III—ON-SITE GENERATION 

12 SEC. 301. NET METERING. 

13 (a) ADOPTION OF STANDARD.—Section 111(d) of the 

14 Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 

15 2621(d)) is amended by adding at the end the following: 

16 ‘‘(13) NET METERING.—

17 ‘‘(A) Each electric utility shall make available 

18 upon request net metering service to any electric 

19 consumer that the electric utility serves. 

20 ‘‘(B) For purposes of implementing this para21 graph, any reference contained in this section to the 

22 date of enactment of this Act shall be deemed to be 

23 a reference to the date of enactment of this para24 graph.’’. 
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1 (b) SPECIAL RULES FOR NET METERING.—Section 

2 115 of the Public Utility Regulatory Policies Act of 1978 

3 (16 U.S.C. 2625) is amended by adding at the end the 

4 following: 

5 ‘‘(i) NET METERING.—In undertaking the consider6 ation and making the determination concerning net meter7 ing established by section 111(d)(13), the following shall 

8 apply: 

9 ‘‘(1) RATES AND CHARGES.—An electric util10 ity—

11 ‘‘(A) shall charge the owner or operator of 

12 an on-site generating facility rates and charges 

13 that are identical to those that would be 

14 charged other electric consumers of the electric 

15 utility in the same rate class; and 

16 ‘‘(B) shall not charge the owner or oper17 ator of an on-site generating facility any addi18 tional standby, capacity, interconnection, or 

19 other rate or charge. 

20 ‘‘(2) MEASUREMENT.—An electric utility that 

21 sells electric energy to the owner or operator of an 

22 on-site generating facility shall measure the quantity 

23 of electric energy produced by the on-site facility 

24 and the quantity of electricity consumed by the 

25 owner or operator of an on-site generating facility 
38

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1 during a billing period in accordance with normal 

2 metering practices. 

3 ‘‘(3) ELECTRIC ENERGY SUPPLIED EXCEEDING

4 ELECTRIC ENERGY GENERATED.—If the quantity of 

5 electric energy sold by the electric utility to an on6 site generating facility exceeds the quantity of elec7 tric energy supplied by the on-site generating facility 

8 to the electric utility during the billing period, the 

9 electric utility may bill the owner or operator for the 

10 net quantity of electric energy sold, in accordance 

11 with normal metering practices. 

12 ‘‘(4) ELECTRIC ENERGY GENERATED EXCEED13 ING ELECTRIC ENERGY SUPPLIED.—If the quantity 

14 of electric energy supplied by the on-site generating 

15 facility to the electric utility exceeds the quantity of 

16 electric energy sold by the electric utility to the on17 site generating facility during the billing period—

18 ‘‘(A) the electric utility may bill the owner 

19 or operator of the on-site generating facility for 

20 the appropriate charges for the billing period in 

21 accordance with paragraph (2); and 

22 ‘‘(B) the owner or operator of the on-site 

23 generating facility shall be credited for the ex24 cess kilowatt-hours generated during the billing 
39

S 1754 IS 

1 period, with the kilowatt-hour credit appearing 

2 on the bill for the following billing period. 

3 ‘‘(5) SAFETY AND PERFORMANCE STAND4 ARDS.—An eligible on-site generating facility and 

5 net metering system used by an electric consumer 

6 shall meet all applicable safety, performance, reli7 ability and interconnection standards established by 

8 the National Electrical Code, the Institute of Elec9 trical and Electronics Engineers, and Underwriters 

10 Laboratories. 

11 ‘‘(6) ADDITIONAL CONTROL AND TESTING RE12 QUIREMENTS.—The Commission, after consultation 

13 with State regulatory authorities and nonregulated 

14 electric utilities and after notice and opportunity for 

15 comment, may adopt, by rule, additional control and 

16 testing requirements for on-site generating facilities 

17 and net metering systems that the Commission de18 termines are necessary to protect public safety and 

19 system reliability. 

20 ‘‘(7) DEFINITIONS.—For purposes of this sub21 section: 

22 ‘‘(A) The term ‘eligible on-site generating 

23 facility’ means—

24 ‘‘(i) a facility on the site of a residen25 tial electric consumer with a maximum 
40

S 1754 IS 

1 generating capacity of 25 kilowatts or less; 

2 or 

3 ‘‘(ii) a facility on the site of a com4 mercial electric consumer with a maximum 

5 generating capacity of 1,000 kilowatts or 

6 less—

7 that is fueled solely by a renewable energy re8 source.

9 ‘‘(B) The term ‘renewable energy resource’ 

10 means solar, wind, biomass, geothermal or wave 

11 energy; landfill gas; fuel cells; or a combined 

12 heat and power system. 

13 ‘‘(C) The term ‘net metering service’ 

14 means service to an electric consumer under 

15 which electric energy generated by that electric 

16 consumer from an eligible on-site generating fa17 cility and delivered to the local distribution fa18 cilities may be used to offset electric energy 

19 provided by the electric utility to the electric 

20 consumer during the applicable billing period. 

21 ‘‘(8) STATE AUTHORITY.—An electric utility 

22 must provide net metering services to electric con23 sumers until the cumulative generating capacity of 

24 net metering systems equals 1.0 percent of the util25 ity’s peak demand during the most recent calendar 
41

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1 year. This subsection does not preclude a state from 

2 imposing additional requirements regarding the 

3 amount of net metering available within a state con4 sistent with the requirements in this section.’’. 

5 SEC. 302. INTERCONNECTION. 

6 (a) DEFINITIONS.—Section 3 of the Federal Power 

7 Act (16 U.S.C. 796) is amended—

8 (1) by striking paragraph 23 and inserting the 

9 following: 

10 ‘‘(23) TRANSMITTING UTILITY.—The term 

11 ‘transmitting utility’ means any entity (notwith12 standing section 201(f)) that owns, controls or oper13 ates an electric power transmission facility that is 

14 used for the sale of electric energy.’’; and 

15 (2) by adding at the end the following: 

16 ‘‘(26) APPROPRIATE REGULATORY AUTHOR17 ITY.—The term ‘appropriate regulatory authority’ 

18 means—

19 ‘‘(A) the Commission; 

20 ‘‘(B) a State commission; 

21 ‘‘(C) a municipality; or 

22 ‘‘(D) a cooperative that is self-regulating 

23 under State law and is not a public utility. 
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1 ‘‘(27) GENERATING FACILITY.—The term ‘gen2 erating facility’ means a facility that generates elec3 tric energy. 

4 ‘‘(28) LOCAL DISTRIBUTION UTILITY.—The 

5 term ‘local distribution facility’ means an entity that 

6 owns, controls or operates an electric power distribu7 tion facility that is used for the sale of electric en8 ergy. 

9 ‘‘(29) NON-FEDERAL REGULATORY AUTHOR10 ITY.—The term ‘non-Federal regulatory authority’ 

11 means an appropriate regulatory authority other 

12 than the Commission.’’. 

13 (b) INTERCONNECTION TO DISTRIBUTION FACILI14 TIES.—Section 210 of the Federal Power Act (16 U.S.C. 

15 824i) is amended—

16 (1) by redesignating subsection (e) as sub17 section (g); and 

18 (2) by inserting after subsection (d) the fol19 lowing: 

20 ‘‘(e) INTERCONNECTION TO DISTRIBUTION FACILI21 TIES.—

22 ‘‘(1) INTERCONNECTION.—

23 ‘‘(A) A local distribution utility shall inter24 connect a generating facility with the distribu-
43

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1 tion facilities of the local distribution utility if 

2 the owner of the generating facility—

3 ‘‘(i) complies with the final rule pro4 mulgated under paragraph (2); and 

5 ‘‘(ii) pays the costs of the interconnec6 tion. 

7 ‘‘(B) The costs of the interconnection—

8 ‘‘(i) shall be just and reasonable, and 

9 not unduly discriminatory or preferential, 

10 as determined by the appropriate regu11 latory authority; and 

12 ‘‘(ii) shall be comparable to the costs 

13 charged by the local distribution utility for 

14 interconnection by any similarly situated 

15 generating facility to the distribution facili16 ties of the local distribution utility. 

17 ‘‘(C) The right of a generating facility to 

18 interconnect under subparagraph (A) does not 

19 relieve the generating facility or the local dis20 tribution utility of other Federal, State, or local 

21 requirements. 

22 ‘‘(2) RULE.—Not later than six months after 

23 the date of enactment of this subparagraph, the 

24 Commission shall promulgate final rules establishing 

25 reasonable and appropriate technical standards for 
44

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1 the interconnection of a generating facility with the 

2 distribution facilities of a local distribution utility. 

3 ‘‘(3) RIGHT TO BACKUP POWER.—

4 ‘‘(A) In accordance with subparagraph (B) 

5 a local distribution utility shall offer to sell 

6 backup power to a generating facility that has 

7 interconnected with the local distribution utility 

8 to the extent that the local distribution utility—

9 ‘‘(i) is not subject to an order of a 

10 non-Federal regulatory authority to pro11 vide open access to the distribution facili12 ties of the local distribution utility; 

13 ‘‘(ii) has not offered to provide open 

14 access to the distribution facilities of the 

15 local distribution utility; or 

16 ‘‘(iii) does not allow a generating fa17 cility to purchase backup power from an18 other entity using the distribution facilities 

19 of the local distribution utility. 

20 ‘‘(B) A sale of backup power under sub21 paragraph (A) shall be at such a rate, and 

22 under such terms and conditions as are just 

23 and reasonable and not unduly discriminatory 

24 or preferential, taking into account the actual 

25 incremental cost, whenever incurred by the local 
45

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1 distribution utility, to supply such backup 

2 power service during the period in which the 

3 backup power service is provided, as determined 

4 by the appropriate regulatory authority. 

5 ‘‘(C) A local distribution utility shall not 

6 be required to offer backup power for resale to 

7 any entity other than the entity for which the 

8 backup power is purchased. 

9 ‘‘(D) To the extent backup power is used 

10 to serve a new or expanded load on the dis11 tribution system, the generating facility shall 

12 pay any reasonable cost associated with any 

13 transmission, distribution, or generating up14 grade required to provide such service.’’. 

15 (c) INTERCONNECTION TO TRANSMISSION FACILI16 TIES.—Section 210 of the Federal Power Act (16 U.S.C. 

17 824i) (as amended by subsection (b)) is amended by in18 serting after subsection (e) the following:

19 ‘‘(f) INTERCONNECTION TO TRANSMISSION FACILI20 TIES.—

21 ‘‘(1) INTERCONNECTION.—

22 ‘‘(A) Notwithstanding subsections (a) and 

23 (c), a transmitting utility shall interconnect a 

24 generating facility with the transmission facili-
46

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1 ties of the transmitting utility if the owner of 

2 the generating facility—

3 ‘‘(i) complies with the final rules pro4 mulgated under paragraph (2); and 

5 ‘‘(ii) pays the costs of interconnection. 

6 ‘‘(B) Subject to subparagraph (C), the 

7 costs of interconnection—

8 ‘‘(i) shall be just and reasonable and 

9 not unduly discriminatory or preferential; 

10 and 

11 ‘‘(ii) shall be comparable to the costs 

12 charged by the transmitting utility for 

13 interconnection by any similarly situated 

14 generating facility to the transmitting fa15 cilities of the transmitting utility. 

16 ‘‘(C) A non-Federal regulatory authority 

17 that is authorized under Federal law to deter18 mine the rates for transmission service shall be 

19 authorized to determine the costs of any inter20 connection under this subparagraph. 

21 ‘‘(D) The right of a generating facility to 

22 interconnect under subparagraph (A) does not 

23 relieve the generating facility or the transmit24 ting utility of other Federal, State or local re25 quirements. 
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1 ‘‘(2) RULE.—Not later than six months after 

2 the date of enactment of this subparagraph, the 

3 Commission shall promulgate rules establishing rea4 sonable and appropriate technical standards for the 

5 interconnection of a generating facility with the 

6 transmission facilities of a transmitting utility. 

7 ‘‘(3) RIGHT TO BACKUP POWER.—

8 ‘‘(A) In accordance with subparagraph 

9 (B), a transmitting utility shall offer to sell 

10 backup power to a generating facility that has 

11 interconnected with the transmitting utility un12 less—

13 ‘‘(i) Federal or State law allows a 

14 generating facility to purchase backup 

15 power from an entity other than the trans16 mitting utility; or 

17 ‘‘(ii) a transmitting utility allows a 

18 generating facility to purchase backup 

19 power from an entity other than the trans20 mitting utility using the transmission fa21 cilities of the transmitting utility and the 

22 transmission facilities of any other trans23 mitting utility. 

24 ‘‘(B) A sale of backup power under sub25 paragraph (A) shall be at such a rate and 
48

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1 under such terms and conditions as are just 

2 and reasonable and not unduly discriminatory 

3 or preferential, taking into account the actual 

4 incremental cost, whenever incurred by the local 

5 distribution utility, to supply such backup 

6 power service during the period in which the 

7 backup power service is provided, as determined 

8 by the appropriate regulatory authority. 

9 ‘‘(C) A transmitting utility shall not be re10 quired to offer backup power for resale to any 

11 entity other than the entity for which the 

12 backup power is purchased. 

13 ‘‘(D) To the extent backup power is used 

14 to serve a new or expanded load on the trans15 mission system, the generating facility shall pay 

16 any reasonable costs associated with any trans17 mission, distribution or generation upgrade re18 quired to provide such service.’’. 

19 (d) CONFORMING AMENDMENTS.—Section 210 of the 

20 Federal Power Act (16 U.S.C. 824i) is amended—

21 (1) in subsection (a)(1)—

22 (A) by inserting ‘‘transmitting utility, local 

23 distribution utility,’’ after ‘‘electric utility,’’; 

24 and 
49

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1 (B) in subparagraph (A) by inserting ‘‘any 

2 transmitting utility,’’ after ‘‘small power pro3 duction facility,’’; 

4 (2) in subsection (b)(2) by striking ‘‘an evi5 dentiary hearing’’ and inserting ‘‘a hearing’’; 

6 (3) in subsection (c)(2)—

7 (A) in subparagraph (B) by striking ‘‘or’’ 

8 at the end; 

9 (B) in subparagraph (C) by striking ‘‘and’’ 

10 at the end and inserting ‘‘or’’; and 

11 (C) by adding at the end the following: 

12 ‘‘(D) promote competition in electricity 

13 markets, and’’; and 

14 (4) in subsection (d) by striking the last sen15 tence. 

16 SEC. 303. ON-SITE GENERATION FOR EMERGENCY FACILI17 TIES. 

18 (a) DEMONSTRATION AND TECHNOLOGY TRANSFER

19 PROGRAM.—The Secretary shall establish a demonstration 

20 program for the implementation of innovative technologies 

21 for renewable uninterruptible power supply systems lo22 cated in eligible buildings and for the dissemination of in23 formation on such systems to interested parties. 
50

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1 (b) LIMIT ON FEDERAL FUNDING.—The Secretary 

2 shall provide no more than 40 percent of the costs of 

3 projects funded under this section. 

4 (c) AUTHORIZATION OF APPROPRIATIONS.—There is 

5 hereby authorized to be appropriated $30,000,000 for 

6 each of the fiscal years 2004 through 2007 to carry out 

7 this section. 

8 (d) DEFINITIONS.—For purposes of this section: 

9 (1) The term ‘‘eligible facility’’ means a build10 ing owned or operated by a State or local govern11 ment that is used for critical governmental dispatch 

12 and communication; police, fire or emergency serv13 ices; traffic control systems; or public water or sewer 

14 systems. 

15 (2) The term ‘‘Secretary’’ means the Secretary 

16 of Energy; 

17 (3) The term ‘‘renewable uninterruptible power 

18 supply system’’ means a system designed to main19 tain electrical power to critical loads in a public fa20 cility in the event of a loss or disruption in conven21 tional grid electricity, where such system derives its 

22 energy production or storage capacity solely from 

23 solar, wind, biomass, geothermal or ocean energy, 
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1 natural gas; landfill gas; a fuel cell device; or from 

2 a combination of the above.

Æ