II 

109TH CONGRESS 

1ST SESSION S. 426 

To enhance national security by improving the reliability of the United States 

electricity transmission grid, to ensure efficient, reliable and affordable 

energy to American consumers, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 17, 2005 

Mr. JEFFORDS (for himself, Ms. CANTWELL, and Mr. KENNEDY) 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 United States 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 2005’’. 

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. Electricity outage investigation. 

Sec. 104. 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—ONSITE GENERATION 

Sec. 301. Net metering. 

Sec. 302. Interconnection. 

Sec. 303. Onsite generation for emergency facilities. 

1 TITLE I—RELIABILITY 

2 SEC. 101. ELECTRIC RELIABILITY STANDARDS. 

3 (a) IN GENERAL.—Part II of the Federal Power Act 

4 (16 U.S.C 824 et seq.) is amended by adding at the end 

5 the following: 

6 ‘‘SEC. 215. ELECTRIC RELIABILITY. 

7 ‘‘(a) DEFINITIONS.—In this section: 

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

9 ‘‘(i) facilities and control systems necessary 

10 for operating an interconnected electric energy 

11 transmission network (or any portion thereof); 

12 and 

13 ‘‘(ii) electric energy from generation facili14 ties needed to maintain transmission system re15 liability. 
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1 ‘‘(B) The term ‘bulk-power system’ does not in2 clude facilities used in the local distribution of elec3 tric energy. 

4 ‘‘(2) The terms ‘Electric Reliability Organiza5 tion’ and ‘ERO’ mean the organization certified by 

6 the Commission under subsection (c) the purpose of 

7 which is to establish and enforce reliability stand8 ards for the bulk-power system, subject to Commis9 sion review. 

10 ‘‘(3) The term ‘interconnection’ means a geo11 graphic area in which the operation of bulk-power 

12 system components is synchronized such that the 

13 failure of 1 or more of such components may ad14 versely affect the ability of the operators of other 

15 components within the system to maintain reliable 

16 operation of the facilities within their control. 

17 ‘‘(4) The term ‘regional entity’ means an entity 

18 having enforcement authority pursuant to subsection 

19 (e)(4). 

20 ‘‘(5)(A) The term ‘reliability standard’ means a 

21 requirement, approved by the Commission under this 

22 section, to provide for reliable operation of the bulk23 power system. 

24 ‘‘(B) The term ‘reliability standard’ includes re25 quirements for the operation of existing bulk-power 
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1 system facilities and the design of planned additions 

2 or modifications to those facilities to the extent nec3 essary to provide for reliable operation of the bulk4 power system. 

5 ‘‘(C) The term ‘reliability standard’ does not in6 clude any requirement to enlarge a facility described 

7 in subparagraph (B) or to construct new trans8 mission capacity or generation capacity. 

9 ‘‘(6) The term ‘reliable operation’ means oper10 ating the elements of the bulk-power system within 

11 equipment and electric system thermal, voltage, and 

12 stability limits so that instability, uncontrolled sepa13 ration, or cascading failures of such system will not 

14 occur as a result of a sudden disturbance or unan15 ticipated failure of system elements. 

16 ‘‘(7) The term ‘transmission organization’ 

17 means a regional transmission organization, inde18 pendent system operator, independent transmission 

19 provider, or other transmission organization finally 

20 approved by the Commission for the operation of 

21 transmission facilities. 

22 ‘‘(b) JURISDICTION AND APPLICABILITY.—(1)(A) 

23 The Commission shall have jurisdiction, within the United 

24 States, over the ERO certified by the Commission under 

25 subsection (c), any regional entities, and all users, owners 
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1 and operators of the bulk-power system, including the en2 tities described in section 201(f), for purposes of approv3 ing reliability standards established under this section and 

4 enforcing compliance with this section. 

5 ‘‘(B) All users, owners, and operators of the bulk6 power system shall comply with reliability standards that 

7 take effect under this section. 

8 ‘‘(2) Not later than 180 days after the date of enact9 ment of this section, the Commission shall issue a final 

10 rule to implement this section. 

11 ‘‘(c) CERTIFICATION.—(1) Following the issuance of 

12 a Commission rule under subsection (b)(2), any person 

13 may submit an application to the Commission for certifi14 cation as the Electric Reliability Organization. 

15 ‘‘(2) The Commission may certify an ERO described 

16 in paragraph (1) if the Commission determines that the 

17 ERO— 

18 ‘‘(A) has the ability to develop and enforce, sub19 ject to subsection (e)(2), reliability standards that 

20 provide for an adequate level of reliability of the 

21 bulk-power system; and 

22 ‘‘(B) has established rules that— 

23 ‘‘(i) ensure the independence of the ERO 

24 from the users and owners and operators of the 

25 bulk-power system, while ensuring fair stake-
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1 holder representation in the selection of direc2 tors of the ERO and balanced decisionmaking 

3 in any ERO committee or subordinate organiza4 tional structure; 

5 ‘‘(ii) allocate equitably reasonable dues, 

6 fees, and other charges among end users for all 

7 activities under this section; 

8 ‘‘(iii) provide fair and impartial procedures 

9 for enforcement of reliability standards through 

10 the imposition of penalties in accordance with 

11 subsection (e) (including limitations on activi12 ties, functions, or operations, or other appro13 priate sanctions); 

14 ‘‘(iv) provide for reasonable notice and op15 portunity for public comment, due process, 

16 openness, and balance of interests in developing 

17 reliability standards and otherwise exercising 

18 the duties of the ERO; and 

19 ‘‘(v) provide for taking, after certification, 

20 appropriate steps to gain recognition in Canada 

21 and Mexico. 

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

23 Reliability Organization shall file each reliability standard 

24 or modification to a reliability standard that the Electric 
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1 Reliability Organization proposes to be made effective 

2 under this section with the Commission. 

3 ‘‘(2)(A) The Commission may approve, by rule or 

4 order, a proposed reliability standard or modification to 

5 a reliability standard if the Commission determines that 

6 the standard is just, reasonable, not unduly discriminatory 

7 or preferential, and in the public interest. 

8 ‘‘(B) The Commission— 

9 ‘‘(i) shall give due weight to the technical exper10 tise of the Electric Reliability Organization with re11 spect to the content of a proposed standard or modi12 fication to a reliability standard and to the technical 

13 expertise of a regional entity organized on an inter14 connection-wide basis with respect to a reliability 

15 standard to be applicable within that interconnec16 tion; but 

17 ‘‘(ii) shall not defer with respect to the effect of 

18 a standard on competition. 

19 ‘‘(C) A proposed standard or modification shall take 

20 effect upon approval by the Commission. 

21 ‘‘(3) The Electric Reliability Organization shall 

22 rebuttably presume that a proposal from a regional entity 

23 organized on an interconnection-wide basis for a reliability 

24 standard or modification to a reliability standard to be ap25 plicable on an interconnection-wide basis is just, reason-
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1 able, and not unduly discriminatory or preferential, and 

2 in the public interest. 

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

4 Reliability Organization for further consideration a pro5 posed reliability standard or a modification to a reliability 

6 standard that the Commission disapproves in whole or in 

7 part. 

8 ‘‘(5) The Commission, upon a motion of the Commis9 sion or upon complaint, may order the Electric Reliability 

10 Organization to submit to the Commission a proposed reli11 ability standard or a modification to a reliability standard 

12 that addresses a specific matter if the Commission con13 siders such a new or modified reliability standard appro14 priate to carry out this section. 

15 ‘‘(6)(A) The final rule adopted under subsection 

16 (b)(2) shall include fair processes for the identification 

17 and timely resolution of any conflict between a reliability 

18 standard and any function, rule, order, tariff, rate sched19 ule, or agreement accepted, approved, or ordered by the 

20 Commission applicable to a transmission organization. 

21 ‘‘(B) The transmission organization shall continue to 

22 comply with such function, rule, order, tariff, rate sched23 ule, or agreement as is accepted, approved, or ordered by 

24 the Commission until— 
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1 ‘‘(i) the Commission finds a conflict exists be2 tween a reliability standard and any such provision; 

3 ‘‘(ii) the Commission orders a change to the 

4 provision pursuant to section 206; and 

5 ‘‘(iii) the ordered change becomes effective 

6 under this part. 

7 ‘‘(C) If the Commission determines that a reliability 

8 standard needs to be changed as a result of such a con9 flict, the Commission shall order the ERO to develop and 

10 file with the Commission a modified reliability standard 

11 under paragraph (4) or (5). 

12 ‘‘(e) ENFORCEMENT.—(1) Subject to paragraph (2), 

13 the ERO may impose a penalty on a user or owner or 

14 operator of the bulk-power system for a violation of a reli15 ability standard approved by the Commission under sub16 section (d) if the ERO, after notice and an opportunity 

17 for a hearing— 

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

19 has violated a reliability standard approved by the 

20 Commission under subsection (d); and 

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

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

24 take effect not earlier than the 31st day after the date 
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1 on which the ERO files with the Commission notice of the 

2 penalty and the record of proceedings. 

3 ‘‘(B) The penalty shall be subject to review by the 

4 Commission upon— 

5 ‘‘(i) a motion by the Commission; or 

6 ‘‘(ii) application by the user, owner, or operator 

7 that is the subject of the penalty filed not later than 

8 30 days after the date on which the notice is filed 

9 with the Commission. 

10 ‘‘(C) Application to the Commission for review, or the 

11 initiation of review by the Commission upon a motion of 

12 the Commission, shall not operate as a stay of the penalty 

13 unless the Commission orders otherwise upon a motion of 

14 the Commission or upon application by the user, owner, 

15 or operator that is the subject of the penalty. 

16 ‘‘(D) In any proceeding to review a penalty imposed 

17 under paragraph (1), the Commission, after notice and op18 portunity for hearing (which hearing may consist solely 

19 of the record before the ERO and opportunity for the 

20 presentation of supporting reasons to affirm, modify, or 

21 set aside the penalty), shall by order affirm, set aside, re22 instate, or modify the penalty, and, if appropriate, remand 

23 to the ERO for further proceedings. 

24 ‘‘(E) The Commission shall implement expedited pro25 cedures for hearings described in subparagraph (D). 
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1 ‘‘(3) Upon a motion of the Commission or upon com2 plaint, the Commission may order compliance with a reli3 ability standard and may impose a penalty against a user 

4 or owner or operator of the bulk-power system if the Com5 mission finds, after notice and opportunity for a hearing, 

6 that the user or owner or operator of the bulk-power sys7 tem has engaged or is about to engage in any act or prac8 tice that constitutes or will constitute a violation of a reli9 ability standard. 

10 ‘‘(4)(A) The Commission shall issue regulations au11 thorizing the ERO to enter into an agreement to delegate 

12 authority to a regional entity for the purpose of proposing 

13 reliability standards to the ERO and enforcing reliability 

14 standards under paragraph (1) if— 

15 ‘‘(i) the regional entity is governed by an inde16 pendent board, a balanced stakeholder board, or a 

17 combination of an independent and balanced stake18 holder board; 

19 ‘‘(ii) the regional entity otherwise meets the re20 quirements of paragraphs (1) and (2) of subsection 

21 (c); and 

22 ‘‘(iii) the agreement promotes effective and effi23 cient administration of bulk-power system reliability. 

24 ‘‘(B) The Commission may modify a delegation under 

25 this paragraph. 
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1 ‘‘(C) The ERO and the Commission shall rebuttably 

2 presume that a proposal for delegation to a regional entity 

3 organized on an interconnection-wide basis promotes effec4 tive and efficient administration of bulk-power system reli5 ability and should be approved. 

6 ‘‘(D) The regulations issued under this paragraph 

7 may provide that the Commission may assign the author8 ity of the ERO to enforce reliability standards under para9 graph (1) directly to a regional entity in accordance with 

10 this paragraph. 

11 ‘‘(5) The Commission may take such action as the 

12 Commission determines to be appropriate against the 

13 ERO or a regional entity to ensure compliance with a reli14 ability standard or any Commission order affecting the 

15 ERO or a regional entity. 

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

17 bear a reasonable relation to the seriousness of the viola18 tion and shall take into consideration the efforts of the 

19 user, owner, or operator to remedy the violation in a time20 ly manner. 

21 ‘‘(f) CHANGES IN ELECTRIC RELIABILITY ORGANIZA22 TION RULES.—(1) The Electric Reliability Organization 

23 shall file with the Commission for approval any proposed 

24 rule or proposed rule change, accompanied by an expla-
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1 nation of the basis and purpose of the rule and proposed 

2 rule change. 

3 ‘‘(2) The Commission, upon a motion of the Commis4 sion or upon complaint, may propose a change to the rules 

5 of the ERO. 

6 ‘‘(3) A proposed rule or proposed rule change shall 

7 take effect upon a finding by the Commission, after notice 

8 and opportunity for comment, that the change is just, rea9 sonable, not unduly discriminatory or preferential, is in 

10 the public interest, and meets the requirements of sub11 section (c). 

12 ‘‘(g) RELIABILITY REPORTS.—The ERO shall con13 duct periodic assessments of the reliability and adequacy 

14 of the bulk-power system in North America. 

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

16 The President is urged to negotiate international agree17 ments with the governments of Canada and Mexico to pro18 vide for effective compliance with reliability standards and 

19 the effectiveness of the ERO in the United States and 

20 Canada or Mexico. 

21 ‘‘(i) SAVINGS PROVISIONS.—(1) The ERO may de22 velop and enforce compliance with reliability standards for 

23 only the bulk-power system. 

24 ‘‘(2) Nothing in this section authorizes the ERO or 

25 the Commission to order the construction of additional 
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1 generation or transmission capacity or to set and enforce 

2 compliance with standards for adequacy or safety of elec3 tric facilities or services. 

4 ‘‘(3) Nothing in this section preempts any authority 

5 of any State to take action to ensure the safety, adequacy, 

6 and reliability of electric service within that State, as long 

7 as such action is not inconsistent with any reliability 

8 standard. 

9 ‘‘(4) Not later than 90 days after the date of applica10 tion of the Electric Reliability Organization or other af11 fected party, and after notice and opportunity for com12 ment, the Commission shall issue a final order deter13 mining whether a State action is inconsistent with a reli14 ability standard, taking into consideration any rec15 ommendation of the ERO. 

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

17 ERO and the State taking action, may stay the effective18 ness of any State action, pending the issuance by the Com19 mission of a final order. 

20 ‘‘(j) REGIONAL ADVISORY BODIES.—(1) The Com21 mission shall establish a regional advisory body on the petition of at least 2 22 ⁄3 of the States within a region that have 

more than 1 23 ⁄2 of the electric load of the States served with24 in the region. 

25 ‘‘(2) A regional advisory body— 
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1 ‘‘(A) shall be composed of 1 member from each 

2 participating State in the region, appointed by the 

3 Governor of the State; and 

4 ‘‘(B) may include representatives of agencies, 

5 States, and provinces outside the United States. 

6 ‘‘(3) A regional advisory body may provide advice to 

7 the Electric Reliability Organization, a regional entity, or 

8 the Commission regarding— 

9 ‘‘(A) the governance of an existing or proposed 

10 regional entity within the same region; 

11 ‘‘(B) whether a standard proposed to apply 

12 within the region is just, reasonable, not unduly dis13 criminatory or preferential, and in the public inter14 est; 

15 ‘‘(C) whether fees proposed to be assessed with16 in the region are just, reasonable, not unduly dis17 criminatory or preferential, and in the public inter18 est; and 

19 ‘‘(D) any other responsibilities requested by the 

20 Commission. 

21 ‘‘(4) The Commission may give deference to the ad22 vice of a regional advisory body if that body is organized 

23 on an interconnection-wide basis. 

24 ‘‘(k) ALASKA AND HAWAII.—This section does not 

25 apply to Alaska or Hawaii.’’. 
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1 (b) STATUS OF ERO.—The Electric Reliability Orga2 nization certified by the Federal Energy Regulatory Com3 mission under section 215(c) of the Federal Power Act 

4 (as added by subsection (a)) and any regional entity dele5 gated enforcement authority pursuant to section 215(e)(4) 

6 of that Act (as so added) are not departments, agencies, 

7 or instrumentalities of the United States Government. 

8 SEC. 102. MODEL ELECTRIC UTILITY WORKERS CODE. 

9 Subtitle B of title I of the Public Utility Regulatory 

10 Policies Act of 1978 (16 U.S.C. 2621 et seq.) is amended 

11 by adding at the end the following: 

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

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

14 rule and circulate among the States for their consideration 

15 a model code containing standards for electric facility 

16 workers to ensure electric facility safety and reliability. 

17 ‘‘(b) CONSULTATION.—In developing the standards, 

18 the Secretary shall consult with all interested parties, in19 cluding representatives of electric facility workers. 

20 ‘‘(c) NOT AFFECTING OCCUPATIONAL SAFETY AND

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

22 Secretary shall not, for purposes of section 4 of the Occu23 pational Safety and Health Act of 1970 (29 U.S.C. 653), 

24 be deemed to be exercising statutory authority to prescribe 
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1 or enforce standards or regulations affecting occupational 

2 safety and health.’’. 

3 SEC. 103. ELECTRICITY OUTAGE INVESTIGATION. 

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

5 is amended— 

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

7 U.S.C. 825r, 791a) as sections 321 and 322, respec8 tively; and 

9 (2) by inserting after section 319 (16 U.S.C. 

10 825q) the following: 

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

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

13 Electricity Outage Investigation Board that shall be an 

14 independent establishment within the executive branch. 

15 ‘‘(b) MEMBERSHIP.—(1) The Board shall consist of 

16 7 members and shall include— 

17 ‘‘(A) the Secretary of Energy (or a designee); 

18 ‘‘(B) the Chairperson of the Federal Energy 

19 Regulatory Commission (or a designee); 

20 ‘‘(C) a representative of the National Academy 

21 of Sciences appointed by the President; 

22 ‘‘(D) a representative nominated by the major23 ity leader of the Senate and appointed by the Presi24 dent; 
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1 ‘‘(E) a representative nominated by the minor2 ity leader of the Senate and appointed by the Presi3 dent; 

4 ‘‘(F) a representative nominated by the major5 ity leader of the House of Representatives and ap6 pointed by the President; and 

7 ‘‘(G) a representative nominated by the minor8 ity leader of the House of Representatives and ap9 pointed by the President. 

10 ‘‘(2) Each member of the Board shall demonstrate 

11 relevant expertise in the field of electricity generation, 

12 transmission, and distribution, and such other expertise 

13 as will best assist in carrying out the duties of the Board. 

14 ‘‘(c) TERMS.—(1) Except as provided in paragraph 

15 (2), each member of the Board shall serve for a term of 

16 3 years. 

17 ‘‘(2) The Secretary of Energy and the Chairperson 

18 of the Federal Energy Regulatory Commission shall be 

19 permanent members of the Board. 

20 ‘‘(d) DUTIES.—The Board shall— 

21 ‘‘(1) upon request by Congress or the Presi22 dent, investigate a major bulk-power system failure 

23 in the United States to determine the causes of the 

24 failure; 
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1 ‘‘(2) report expeditiously to Congress and the 

2 President the results of the investigation; and 

3 ‘‘(3) recommend to Congress and the President 

4 actions to minimize the possibility of future bulk5 power system failure. 

6 ‘‘(e) COMPENSATION.—(1) Each member of the 

7 Board shall be paid at the rate payable for level III of 

8 the Executive Schedule for each day (including travel 

9 time) the member is engaged in the work of the Board. 

10 ‘‘(2) Each member of the Board may receive travel 

11 expenses, including per diem in lieu of subsistence, in the 

12 same manner as is permitted under sections 5702 and 

13 5703 of title 5, United States Code.’’. 

14 SEC. 104. STUDY ON RELIABILITY OF UNITED STATES ELEC15 TRICITY GRID. 

16 (a) STUDY ON RELIABILITY.—Not later than 45 days 

17 after the date of enactment of this Act, the Secretary of 

18 Energy shall enter into a contract with the National Acad19 emy of Sciences under which the Academy shall conduct 

20 a study on the reliability of the United States electricity 

21 grid to examine the effectiveness of the current United 

22 States electricity transmission and distribution system at 

23 providing efficient, secure, and affordable power to United 

24 States consumers. 
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1 (b) CONTENTS.—The study shall include an analysis 

2 of— 

3 (1) the vulnerability of the transmission and 

4 distribution system to disruption by natural, me5 chanical or human causes including sabotage; 

6 (2) the most efficient and cost-effective solu7 tions for dealing with vulnerabilities or other prob8 lems of the electricity transmission and distribution 

9 system of the United States, including a comparison 

10 of investments in— 

11 (A) efficiency; 

12 (B) distributed generation; 

13 (C) technical advances in software and 

14 other devices to improve the efficiency and reli15 ability of the grid; 

16 (D) new power line construction; and 

17 (E) any other relevant matters. 

18 (c) REPORT.—The contract shall provide that, not 

19 later than 180 days after the date of execution of the con20 tract, the National Academy of Sciences shall submit to 

21 the President and Congress a report that details the find22 ings and recommendations of the study. 

23 TITLE II—EFFICIENCY 

24 SEC. 201. SYSTEM BENEFITS FUND. 

25 (a) DEFINITIONS.—In this section: 
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1 (1) ADMINISTRATOR.—The term ‘‘Adminis2 trator’’ means the Administrator of the Environ3 mental Protection Agency. 

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

5 System Benefits Trust Fund Board established 

6 under subsection (b). 

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

8 means the Federal Energy Regulatory Commission. 

9 (4) FARM SYSTEM.—The term ‘‘farm system’’ 

10 means an electric generating facility that generates 

11 electric energy from the anaerobic digestion of agri12 cultural waste produced by farming that is located 

13 on the farm where substantially all of the waste used 

14 is produced. 

15 (5) FUND.—The term ‘‘Fund’’ means the Sys16 tem Benefits Trust Fund established under sub17 section (c). 

18 (6) RENEWABLE ENERGY.—The term ‘‘renew19 able energy’’ means electricity generated from wind, 

20 ocean energy, organic waste (excluding incinerated 

21 municipal solid waste), biomass (including anaerobic 

22 digestion from farm systems and landfill gas recov23 ery) or a geothermal, solar thermal, or photovoltaic 

24 source. 
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1 (7) SECRETARY.—The term ‘‘Secretary’’ means 

2 the Secretary of Energy. 

3 (b) BOARD.— 

4 (1) ESTABLISHMENT.—The Secretary shall es5 tablish a System Benefits Trust Fund Board to 

6 carry out the functions and responsibilities described 

7 in this section. 

8 (2) MEMBERSHIP.—The Board shall be com9 posed of— 

10 (A) 1 representative of the Federal Energy 

11 Regulatory Commission appointed by the Fed12 eral Energy Regulatory Commission; 

13 (B) 2 representatives of the Secretary of 

14 Energy appointed by the Secretary; 

15 (C) 2 persons nominated by the National 

16 Association of Regulatory Utility Commis17 sioners and appointed by the Secretary; 

18 (D) 1 person nominated by the National 

19 Association of State Utility Consumer Advo20 cates and appointed by the Secretary; 

21 (E) 1 person nominated by the National 

22 Association of State Energy Officials and ap23 pointed by the Secretary; 
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1 (F) 1 person nominated by the National 

2 Energy Assistance Directors’ Association and 

3 appointed by the Secretary; and 

4 (G) 1 representative of the Environmental 

5 Protection Agency appointed by the Adminis6 trator. 

7 (3) CHAIRPERSON.—The Secretary shall select 

8 a member of the Board to serve as Chairperson of 

9 the Board. 

10 (c) ESTABLISHMENT OF FUND.— 

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

12 account or accounts at 1 or more financial institu13 tions, which account or accounts shall— 

14 (A) be known as the ‘‘System Benefits 

15 Trust Fund’’; and 

16 (B) consist of amounts deposited in the 

17 Fund under subsection (e). 

18 (2) STATUS OF FUND.—The wires charges col19 lected under subsection (e) and deposited in the 

20 Fund— 

21 (A) shall not constitute funds of the 

22 United States; 

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

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

25 and 
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1 (C) shall not be available to meet any obli2 gations of the United States. 

3 (d) USE OF FUND.— 

4 (1) FUNDING OF STATE PROGRAMS.—Amounts 

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

6 matching funds to States and Indian tribes for the 

7 support of State or tribal public benefits programs 

8 relating to— 

9 (A) energy conservation and efficiency; 

10 (B) renewable energy sources; 

11 (C) assisting low-income households in 

12 meeting their home energy needs; or 

13 (D) research and development in areas de14 scribed in subparagraphs (A) through (C). 

15 (2) DISTRIBUTION.— 

16 (A) IN GENERAL.—Except for amounts 

17 needed to pay costs of the Board in carrying 

18 out its duties under this section, the Board 

19 shall distribute all amounts in the Fund to 

20 States or Indian tribes to fund public benefits 

21 programs under paragraph (1). 

22 (B) FUND SHARE.— 

23 (i) IN GENERAL.—Subject to clause 

24 (iii), the Fund share of a public benefits 
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1 program funded under paragraph (1) shall 

2 be 50 percent. 

3 (ii) PROPORTIONATE REDUCTION.— 

4 To the extent that the amount of matching 

5 funds requested by States and Indian 

6 tribes exceeds the maximum projected rev7 enues of the Fund, the matching funds dis8 tributed to each State and Indian tribe 

9 shall be reduced by an amount equal to the 

10 proportion that the annual consumption of 

11 electricity of the State or Indian tribe 

12 bears to the annual consumption of elec13 tricity of all States and Indian tribes. 

14 (iii) ADDITIONAL STATE OR INDIAN

15 TRIBE FUNDING.—A State or Indian tribe 

16 may apply funds to public benefits pro17 grams in addition to the amount of funds 

18 applied for the purpose of matching the 

19 Fund share. 

20 (3) PROGRAM CRITERIA.—The Board shall rec21 ommend eligibility criteria for public benefits pro22 grams funded under this section for approval by the 

23 Secretary. 

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

25 each year beginning in 2006, a State or Indian tribe 
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1 seeking matching funds for the following fiscal year 

2 shall file with the Board, in such form as the Board 

3 may require, an application— 

4 (A) certifying that the funds will be used 

5 for an eligible public benefits program; 

6 (B) stating the amount of State or Indian 

7 tribe funds earmarked for the program; and 

8 (C) summarizing how amounts from the 

9 Fund from the previous calendar year (if any) 

10 were spent by the State and what the State ac11 complished as a result of the expenditures. 

12 (e) WIRES CHARGE.— 

13 (1) DETERMINATION OF NEEDED FUNDING.— 

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

15 shall determine and inform the Commission of the 

16 aggregate amount of wires charges that will be nec17 essary to be paid into the Fund to pay matching 

18 funds to States and Indian tribes and pay the oper19 ating costs of the Board in the following fiscal year. 

20 (2) IMPOSITION OF WIRES CHARGE.— 

21 (A) IN GENERAL.—Not later than Decem22 ber 15 of each year, the Commission shall im23 pose a nonbypassable, competitively neutral 

24 wires charge, to be paid directly into the Fund 

25 by the operator of the wire, on electricity car-
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1 ried through the wire (measured as the elec2 tricity exits at the busbar at a generation facil3 ity, or, for electricity generated outside the 

4 United States, at the point of delivery to the 

5 wire operator’s system) in interstate commerce. 

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

7 set at a rate equal to the lesser of— 

8 (i) 1.0 mills per kilowatt hour; or 

9 (ii) a rate that is estimated to result 

10 in the collection of an amount of wires 

11 charges that is, to the maximum extent 

12 practicable, equal to the amount of needed 

13 funding determined under paragraph (1). 

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

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

16 the Fund at the end of each month during the cal17 endar year for distribution by the Board under sub18 section (c). 

19 (4) PENALTIES.—The Commission may assess 

20 against a wire operator that fails to pay a wires 

21 charge as required by this subsection a civil penalty 

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

23 the unpaid wires charge. 

24 (f) AUDITING.— 
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1 (1) IN GENERAL.—The Fund shall be audited 

2 annually by a firm of independent certified public 

3 accountants in accordance with generally accepted 

4 auditing standards. 

5 (2) ACCESS TO RECORDS.—Representatives of 

6 the Secretary and the Commission shall have access 

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

8 records pertaining to the Fund as necessary to fa9 cilitate and verify the audit. 

10 (3) REPORTS.— 

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

12 shall be submitted to the Secretary, the Com13 mission, and the Secretary of the Treasury, who 

14 shall submit the report to the President and 

15 Congress not later than 180 days after the end 

16 of the fiscal year. 

17 (B) REQUIREMENTS.—An audit report 

18 shall— 

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

20 and 

21 (ii) include— 

22 (I) a statement of assets and li23 abilities, capital, and surplus or def24 icit; 

25 (II) a surplus of deficit analysis; 
29 

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1 (III) a statement of income and 

2 expenses; 

3 (IV) any other information that 

4 may be considered necessary to keep 

5 the President and Congress informed 

6 of the operations and financial condi7 tion of the Fund; and 

8 (V) any recommendations with 

9 respect to the Fund that the Sec10 retary or the Commission may have. 

11 SEC. 202. ELECTRICITY EFFICIENCY PERFORMANCE 

12 STANDARD. 

13 Title VI of the Public Utility Regulatory Policies Act 

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

15 the end the following: 

16 ‘‘SEC. 609. FEDERAL ELECTRICITY EFFICIENCY PERFORM17 ANCE STANDARD. 

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

19 implement energy efficiency and load reduction programs 

20 and measures to achieve verified improvements in energy 

21 efficiency and peak load reduction in retail customer facili22 ties and the distribution systems that serve those facilities. 

23 ‘‘(b) POWER SAVINGS.—The programs and measures 

24 under subsection (a) shall produce savings in total peak 

25 power demand and total electricity use by retail customers 
30 

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1 by an amount that is equal to or greater than the following 

2 percentages relative to the peak demand and electricity 

3 used in that year by the retail electric supplier’s cus4 tomers: 

Reduction 

in demand 

Reduction 

in use 

In calendar year 2006 ............................................ 1% .75%

In calendar year 2007 ............................................ 2% 1.5%

In calendar year 2009 ............................................ 4% 3.0%

In calendar year 2011 ............................................ 6% 4.5%

In calendar year 2013 ............................................ 8% 6.0%

In calendar year 2015 ............................................ 10% 7.5%

5 ‘‘(c) BEGINNING DATE.—For purposes of this sec6 tion, savings shall be counted only for measures installed 

7 after January 1, 2006. 

8 ‘‘(d) RULEMAKING.—(1) Not later than June 30, 

9 2005, the Secretary shall establish, by rule— 

10 ‘‘(A) procedures and standards for counting 

11 and independently verifying energy and demand sav12 ings for purposes of enforcing the energy efficiency 

13 performance standards imposed by this section; and 

14 ‘‘(B) procedures and a schedule for reporting 

15 findings to the Department of Energy and for mak16 ing the reports available to the public. 

17 ‘‘(2) In developing the procedures, standards, and 

18 schedule under paragraph (1), the Secretary shall consult 

19 with— 

20 ‘‘(A) the association representing public utility 

21 regulators in the United States; and 
31 

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1 ‘‘(B) the association representing the State en2 ergy officials in the United States. 

3 ‘‘(e) REPORTING.—(1) Not later than June 30, 2008, 

4 and every 2 years thereafter, each retail electric supplier 

5 shall file with the State public utilities commission in each 

6 State in which the supplier provides service to retail cus7 tomers a report demonstrating that the retail electric sup8 plier has taken action to comply with the energy efficiency 

9 performance standards of this section. 

10 ‘‘(2) A report filed under paragraph (1) shall include 

11 independent verification of the estimated savings pursuant 

12 to standards established by the Secretary. 

13 ‘‘(3)(A) A State public utilities commission may— 

14 ‘‘(i) accept a report as filed under paragraph 

15 (1); or 

16 ‘‘(ii) review and investigate the accuracy of the 

17 report. 

18 ‘‘(B) Each State public utilities commission shall— 

19 ‘‘(i) make findings on any deficiencies relating 

20 to the requirements under section 2; and 

21 ‘‘(ii) issue a remedial order for the correction of 

22 any deficiencies that are found. 

23 ‘‘(f) UTILITIES OUTSIDE STATE JURISDICTION.—(1) 

24 An electric retail supplier that is not subject to the juris25 diction of a State public utilities commission shall submit 
32 

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1 reports in accordance with subsection (e) to the governing 

2 body of the electric retail supplier. 

3 ‘‘(2) A report submitted under paragraph (1) shall 

4 include independent verification of the estimated savings 

5 pursuant to standards established by the Secretary. 

6 ‘‘(g) PROGRAM PARTICIPATION.—(1) An electric re7 tail supplier may demonstrate satisfaction of the standard 

8 under this section, in whole or part, by savings achieved 

9 through participation in statewide, regional, or national 

10 programs that can be demonstrated to significantly im11 prove the efficiency of electric distribution and use. 

12 ‘‘(2) Verified efficiency savings resulting from pro13 grams described in paragraph (1) may be assigned to each 

14 participating retail supplier based upon the degree of par15 ticipation of the supplier in the programs. 

16 ‘‘(3) An electric retail supplier may purchase rights 

17 to extra savings achieved by other electric retail suppliers 

18 if the selling supplier or another electric retail supplier 

19 does not also take credit for those savings. 

20 ‘‘(h) REMEDIES FOR FAILURE TO COMPLY.—(1) In 

21 the event that any retail electric supplier fails to achieve 

22 its energy savings or load reduction target for a specific 

23 year, any aggrieved party may bring a civil action or file 

24 an administrative claim to seek prompt remedial action 

25 before a State public utilities commission (or, in the case 
33 

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1 of an electric retail supplier not subject to State public 

2 utility commission jurisdiction, before an appropriate gov3 erning body). 

4 ‘‘(2)(A) The State public utilities commission or 

5 other appropriate governing body shall have a maximum 

6 of 1 year to craft a remedy for a civil action or claim filed 

7 under paragraph (1). 

8 ‘‘(B) If a State public utilities commission or other 

9 governing body certifies that the commission or body has 

10 inadequate resources or authority to promptly resolve en11 forcement actions under this section, or fails to take action 

12 within the time period specified in subparagraph (A), the 

13 commission or body or an aggrieved party may seek en14 forcement in Federal district court. 

15 ‘‘(3)(A) If a commission or court determines that en16 ergy savings or load reduction targets for a specific year 

17 have not been achieved by a retail electric supplier under 

18 this section, the commission or court shall— 

19 ‘‘(i) determine the amount of the deficit; and 

20 ‘‘(ii) fashion an equitable remedy to restore the 

21 lost savings as soon as practicable. 

22 ‘‘(B) A remedy under subparagraph (A)(ii) may in23 clude— 
34 

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1 ‘‘(i) a refund to retail electric customers of an 

2 amount equal to the retail cost of the electricity con3 sumed due to the failure to reach the target; and 

4 ‘‘(ii) the appointment of a special master to ad5 minister a bidding system to procure the energy and 

6 demand savings equal to 125 percent of the deficit.’’. 

7 SEC. 203. APPLIANCE EFFICIENCY. 

8 Section 325(d)(3) of the Energy Policy and Con9 servation Act (42 U.S.C. 6295(d)(3)) is amended by strik10 ing subparagraph (B) and inserting the following: 

11 ‘‘(B) Not later than January 1, 2009, the Secretary 

12 shall publish a final rule to determine whether the stand13 ards in effect for central air conditioners and central air 

14 conditioning heat pumps should be amended. The rule 

15 shall address both system annual energy use and peak 

16 electric demand and may include more than 1 efficiency 

17 descriptor. The rule shall apply to products manufactured 

18 on or after January 1, 2012.’’. 

19 SEC. 204. LOAN GUARANTEES. 

20 (a) DEFINITIONS.—In this section: 

21 (1) ELIGIBLE ACTIVITY.—The term ‘‘eligible 

22 activity’’ means— 

23 (A) advanced technologies for high-effi24 ciency electricity transmission control and oper25 ation, including high-efficiency power elec-
35 

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1 tronics technologies (including software-con2 trolled computer chips and sensors to diagnose 

3 trouble spots and re-route power into appro4 priate areas), high-efficiency electricity storage 

5 systems, and high-efficiency transmission wire 

6 or transmission cable system; 

7 (B) distributed generation systems fueled 

8 solely by— 

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

10 or ocean energy; 

11 (ii) landfill gas; 

12 (iii) natural gas systems utilizing best 

13 available control technology; 

14 (iv) fuel cells; or 

15 (v) any combination of the above; 

16 (C) combined heat and power systems; and 

17 (D) energy efficiency systems producing 

18 demonstrable electricity savings. 

19 (2) QUALIFYING ENTITY.—The term ‘‘quali20 fying entity’’ means an individual, corporation, part21 nership, joint venture, trust or other entity identified 

22 by the Secretary under subsection (d)(1) as eligible 

23 for a guaranteed loan under this section. 

24 (3) SECRETARY.—The term ‘‘Secretary’’ means 

25 the Secretary of Energy. 
36 

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1 (b) AUTHORITY.—The Secretary may guarantee not 

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

3 to a qualifying entity for eligible activities under this sec4 tion. 

5 (c) CONDITIONS.— 

6 (1) IN GENERAL.—The Secretary shall not 

7 guarantee a loan under this section unless— 

8 (A) the guarantee is a qualifying entity; 

9 (B) the guarantee has filed an application 

10 with the Secretary; 

11 (C) the project, activity, program, or sys12 tem for which the loan is made is an eligible ac13 tivity; and 

14 (D) the project, activity, program, or sys15 tem for which the loan is made will significantly 

16 enhance the reliability, security, efficiency, and 

17 cost-effectiveness of electricity generation, 

18 transmission or distribution. 

19 (2) PRIORITY.—The Secretary shall give pri20 ority to guaranteed loans under this section for eligi21 ble activities that accomplish the objectives of this 

22 section in the most environmentally beneficial man23 ner. 

24 (3) ELIGIBLE FINANCIAL INSTITUTIONS.—A 

25 loan guaranteed under this section shall be made by 
37 

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1 a financial institution subject to the examination of 

2 the Secretary. 

3 (d) RULES.—Not later than 1 year after the date of 

4 enactment of this section, the Secretary shall publish a 

5 final rule establishing guidelines for loan requirements 

6 under this section, including establishment of— 

7 (1) criteria for determining which entities shall 

8 be considered qualifying entities eligible for loan 

9 guarantees under this section; 

10 (2) criteria for determining which projects, ac11 tivities, programs, or systems shall be considered eli12 gible activities eligible for loan guarantees in accord13 ance with the purposes of this section; 

14 (3) loan requirements including term, maximum 

15 size, collateral requirements; and 

16 (4) any other relevant features. 

17 (e) LIMITATION ON SIZE.—The Secretary may make 

18 commitments to guarantee loans under this section only 

19 to the extent that the total principal, any part of which 

20 is guaranteed, will not exceed $10,000,000,000. 

21 (f) AUTHORIZATION OF APPROPRIATIONS.—There 

22 are authorized to be appropriated to the Secretary such 

23 sums as are necessary to cover the cost of loan guarantees 

24 (as defined by section 502(5) of the Federal Credit Re25 form Act of 1990 (2. U.S.C. 661a(5))) under this section. 
38 

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1 TITLE III—ONSITE GENERATION 

2 SEC. 301. NET METERING. 

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

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

5 2621(d)) is amended by adding at the end the following: 

6 ‘‘(11) NET METERING.— 

7 ‘‘(A) IN GENERAL.—Each electric utility shall 

8 make available upon request net metering service to 

9 any electric consumer that the electric utility serves. 

10 ‘‘(B) REFERENCES.—For purposes of imple11 menting this paragraph, any reference contained in 

12 this section to the date of enactment of this Act 

13 shall be deemed to be a reference to the date of en14 actment of this paragraph.’’. 

15 (b) SPECIAL RULES FOR NET METERING.—Section 

16 115 of the Public Utility Regulatory Policies Act of 1978 

17 (16 U.S.C. 2625) is amended by adding at the end the 

18 following: 

19 ‘‘(i) NET METERING.—(1) In this subsection: 

20 ‘‘(A) The term ‘eligible onsite generating facil21 ity’ means— 

22 ‘‘(i) a facility on the site of a residential 

23 electric consumer with a maximum generating 

24 capacity of 25 kilowatts or less; or 
39 

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1 ‘‘(ii) a facility on the site of a commercial 

2 electric consumer with a maximum generating 

3 capacity of 1,000 kilowatts or less, 

4 that is fueled solely by a renewable energy resource. 

5 ‘‘(B) The term ‘net metering service’ means 

6 service to an electric consumer under which electric 

7 energy generated by that electric consumer from an 

8 eligible onsite generating facility and delivered to the 

9 local distribution facilities may be used to offset 

10 electric energy provided by the electric utility to the 

11 electric consumer during the applicable billing pe12 riod. 

13 ‘‘(C) The term ‘renewable energy resource’ 

14 means— 

15 ‘‘(i) solar, wind, biomass, geothermal, or 

16 wave energy; 

17 ‘‘(ii) landfill gas; 

18 ‘‘(iii) fuel cells; and 

19 ‘‘(iv) a combined heat and power system. 

20 ‘‘(2) In undertaking the consideration and making 

21 the determination concerning net metering established by 

22 section 111(d)(11), the following shall apply: 

23 ‘‘(A) An electric utility— 

24 ‘‘(i) shall charge the owner or operator of 

25 an onsite generating facility rates and charges 
40 

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1 that are identical to those that would be 

2 charged other electric consumers of the electric 

3 utility in the same rate class; and 

4 ‘‘(ii) shall not charge the owner or operator 

5 of an onsite generating facility any additional 

6 standby, capacity, interconnection, or other rate 

7 or charge. 

8 ‘‘(B) An electric utility that sells electric energy 

9 to the owner or operator of an onsite generating fa10 cility shall measure the quantity of electric energy 

11 produced by the onsite facility and the quantity of 

12 electricity consumed by the owner or operator of an 

13 onsite generating facility during a billing period in 

14 accordance with normal metering practices. 

15 ‘‘(C) If the quantity of electric energy sold by 

16 the electric utility to an on-site generating facility 

17 exceeds the quantity of electric energy supplied by 

18 the onsite generating facility to the electric utility 

19 during the billing period, the electric utility may bill 

20 the owner or operator for the net quantity of electric 

21 energy sold, in accordance with normal metering 

22 practices. 

23 ‘‘(D) If the quantity of electric energy supplied 

24 by the onsite generating facility to the electric utility 

25 exceeds the quantity of electric energy sold by the 
41 

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1 electric utility to the onsite generating facility during 

2 the billing period— 

3 ‘‘(i) the electric utility may bill the owner 

4 or operator of the onsite generating facility for 

5 the appropriate charges for the billing period in 

6 accordance with subparagraph (B); and 

7 ‘‘(ii) the owner or operator of the onsite 

8 generating facility shall be credited for the ex9 cess kilowatt-hours generated during the billing 

10 period, with the kilowatt-hour credit appearing 

11 on the bill for the following billing period. 

12 ‘‘(E) An eligible onsite generating facility and 

13 net metering system used by an electric consumer 

14 shall meet all applicable safety, performance, reli15 ability, and interconnection standards established by 

16 the National Electrical Code, the Institute of Elec17 trical and Electronics Engineers, and Underwriters 

18 Laboratories. 

19 ‘‘(F) The Commission, after consultation with 

20 State regulatory authorities and nonregulated elec21 tric utilities and after notice and opportunity for 

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

23 testing requirements for onsite generating facilities 

24 and net metering systems that the Commission de-
42 

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1 termines are necessary to protect public safety and 

2 system reliability. 

3 ‘‘(G) An electric utility must provide net meter4 ing services to electric consumers until the cumu5 lative generating capacity of net metering systems 

6 equals 1.0 percent of the utility’s peak demand dur7 ing the most recent calendar year. 

8 ‘‘(H) Nothing in this subsection precludes a 

9 State from imposing additional requirements regard10 ing the amount of net metering available within a 

11 State consistent with the requirements of this sec12 tion.’’. 

13 SEC. 302. INTERCONNECTION. 

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

15 Act (16 U.S.C. 796) is amended— 

16 (1) by striking paragraph 23 and inserting the 

17 following: 

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

19 ‘transmitting utility’ means any entity (notwith20 standing section 201(f)) that owns, controls, or oper21 ates an electric power transmission facility that is 

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

23 (2) by adding at the end the following: 
43 

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1 ‘‘(26) APPROPRIATE REGULATORY AUTHOR2 ITY.—The term ‘appropriate regulatory authority’ 

3 means— 

4 ‘‘(A) the Commission; 

5 ‘‘(B) a State commission; 

6 ‘‘(C) a municipality; or 

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

8 under State law and is not a public utility. 

9 ‘‘(27) GENERATING FACILITY.—The term ‘gen10 erating facility’ means a facility that generates elec11 tric energy. 

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

13 term ‘local distribution facility’ means an entity that 

14 owns, controls, or operates an electric power dis15 tribution facility that is used for the sale of electric 

16 energy. 

17 ‘‘(29) NON-FEDERAL REGULATORY AUTHOR18 ITY.—The term ‘non-Federal regulatory authority’ 

19 means an appropriate regulatory authority other 

20 than the Commission.’’. 

21 (b) INTERCONNECTION TO DISTRIBUTION FACILI22 TIES.—Section 210 of the Federal Power Act (16 U.S.C. 

23 824i) is amended— 

24 (1) by redesignating subsection (e) as sub25 section (g); and 
44 

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1 (2) by inserting after subsection (d) the fol2 lowing: 

3 ‘‘(e) INTERCONNECTION TO DISTRIBUTION FACILI4 TIES.—(1)(A) A local distribution utility shall inter5 connect a generating facility with the distribution facilities 

6 of the local distribution utility if the owner of the gener7 ating facility— 

8 ‘‘(i) complies with the final rule promulgated 

9 under paragraph (2); and 

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

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

12 ‘‘(i) shall be just and reasonable, and not un13 duly discriminatory or preferential, as determined by 

14 the appropriate regulatory authority; and 

15 ‘‘(ii) shall be comparable to the costs charged 

16 by the local distribution utility for interconnection by 

17 any similarly situated generating facility to the dis18 tribution facilities of the local distribution utility. 

19 ‘‘(C) The right of a generating facility to interconnect 

20 under subparagraph (A) does not relieve the generating 

21 facility or the local distribution utility of other Federal, 

22 State, or local requirements. 

23 ‘‘(2) Not later than 180 days after the date of enact24 ment of this subparagraph, the Commission shall promul25 gate final rules establishing reasonable and appropriate 
45 

•S 426 IS 

1 technical standards for the interconnection of a generating 

2 facility with the distribution facilities of a local distribu3 tion utility. 

4 ‘‘(3)(A) In accordance with subparagraph (B) a local 

5 distribution utility shall offer to sell backup power to a 

6 generating facility that has interconnected with the local 

7 distribution utility to the extent that the local distribution 

8 utility— 

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

10 regulatory authority to provide open access to the 

11 distribution facilities of the local distribution utility; 

12 ‘‘(ii) has not offered to provide open access to 

13 the distribution facilities of the local distribution 

14 utility; or 

15 ‘‘(iii) does not allow a generating facility to pur16 chase backup power from another entity using the 

17 distribution facilities of the local distribution utility. 

18 ‘‘(B) A sale of backup power under subparagraph (A) 

19 shall be at such a rate, and under such terms and condi20 tions as are just and reasonable and not unduly discrimi21 natory or preferential, taking into account the actual in22 cremental cost, whenever incurred by the local distribution 

23 utility, to supply such backup power service during the pe24 riod in which the backup power service is provided, as de25 termined by the appropriate regulatory authority. 
46 

•S 426 IS 

1 ‘‘(C) A local distribution utility shall not be required 

2 to offer backup power for resale to any entity other than 

3 the entity for which the backup power is purchased. 

4 ‘‘(D) To the extent backup power is used to serve 

5 a new or expanded load on the distribution system, the 

6 generating facility shall pay any reasonable cost associated 

7 with any transmission, distribution, or generating upgrade 

8 required to provide such service.’’. 

9 (c) INTERCONNECTION TO TRANSMISSION FACILI10 TIES.—Section 210 of the Federal Power Act (16 U.S.C. 

11 824i) (as amended by subsection (b)) is amended by in12 serting after subsection (e) the following: 

13 ‘‘(f) INTERCONNECTION TO TRANSMISSION FACILI14 TIES.—(1)(A) Notwithstanding subsections (a) and (c), a 

15 transmitting utility shall interconnect a generating facility 

16 with the transmission facilities of the transmitting utility 

17 if the owner of the generating facility— 

18 ‘‘(i) complies with the final rules promulgated 

19 under paragraph (2); and 

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

21 ‘‘(B) Subject to subparagraph (C), the costs of inter22 connection— 

23 ‘‘(i) shall be just and reasonable and not unduly 

24 discriminatory or preferential; and 
47 

•S 426 IS 

1 ‘‘(ii) shall be comparable to the costs charged 

2 by the transmitting utility for interconnection by any 

3 similarly situated generating facility to the transmit4 ting facilities of the transmitting utility. 

5 ‘‘(C) A non-Federal regulatory authority that is au6 thorized under Federal law to determine the rates for 

7 transmission service shall be authorized to determine the 

8 costs of any interconnection under this subparagraph. 

9 ‘‘(D) The right of a generating facility to inter10 connect under subparagraph (A) does not relieve the gen11 erating facility or the transmitting utility of other Federal, 

12 State, or local requirements. 

13 ‘‘(2) Not later than 180 days after the date of enact14 ment of this subparagraph, the Commission shall promul15 gate rules establishing reasonable and appropriate tech16 nical standards for the interconnection of a generating fa17 cility with the transmission facilities of a transmitting util18 ity. 

19 ‘‘(3)(A) In accordance with subparagraph (B), a 

20 transmitting utility shall offer to sell backup power to a 

21 generating facility that has interconnected with the trans22 mitting utility unless— 

23 ‘‘(i) Federal or State law allows a generating 

24 facility to purchase backup power from an entity 

25 other than the transmitting utility; or 
48 

•S 426 IS 

1 ‘‘(ii) a transmitting utility allows a generating 

2 facility to purchase backup power from an entity 

3 other than the transmitting utility using the trans4 mission facilities of the transmitting utility and the 

5 transmission facilities of any other transmitting util6 ity. 

7 ‘‘(B) A sale of backup power under subparagraph (A) 

8 shall be at such a rate and under such terms and condi9 tions as are just and reasonable and not unduly discrimi10 natory or preferential, taking into account the actual in11 cremental cost, whenever incurred by the local distribution 

12 utility, to supply such backup power service during the pe13 riod in which the backup power service is provided, as de14 termined by the appropriate regulatory authority. 

15 ‘‘(C) A transmitting utility shall not be required to 

16 offer backup power for resale to any entity other than the 

17 entity for which the backup power is purchased. 

18 ‘‘(D) To the extent backup power is used to serve 

19 a new or expanded load on the transmission system, the 

20 generating facility shall pay any reasonable costs associ21 ated with any transmission, distribution, or generation up22 grade required to provide the service.’’. 

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

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

25 (1) in subsection (a)(1)— 
49 

•S 426 IS 

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

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

3 and 

4 (B) in subparagraph (A), by inserting 

5 ‘‘any transmitting utility,’’ after ‘‘small power 

6 production facility,’’; 

7 (2) in subsection (b)(2), by striking ‘‘an evi8 dentiary hearing’’ and inserting ‘‘a hearing’’; 

9 (3) in subsection (c)(2)— 

10 (A) in subparagraph (B), by striking ‘‘or’’ 

11 at the end; 

12 (B) in subparagraph (C), by striking 

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

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

15 ‘‘(D) promote competition in electricity 

16 markets, and’’; and 

17 (4) in subsection (d), by striking the last sen18 tence. 

19 SEC. 303. ONSITE GENERATION FOR EMERGENCY FACILI20 TIES. 

21 (a) DEFINITIONS.—In this section: 

22 (1) ELIGIBLE FACILITY.—The term ‘‘eligible fa23 cility’’ means a building owned or operated by a 

24 State or local government that is used for— 
50 

•S 426 IS 

1 (A) critical governmental dispatch and 

2 communication; 

3 (B) police, fire, or emergency services; 

4 (C) traffic control systems; or 

5 (D) public water or sewer systems. 

6 (2) RENEWABLE UNINTERRUPTIBLE POWER

7 SUPPLY SYSTEM.—The term ‘‘renewable 

8 uninterruptible power supply system’’ means a sys9 tem designed to maintain electrical power to critical 

10 loads in a public facility in the event of a loss or dis11 ruption in conventional grid electricity, where such 

12 system derives its energy production or storage ca13 pacity solely from— 

14 (A) solar, wind, biomass, geothermal, or 

15 ocean energy; 

16 (B) natural gas; 

17 (C) landfill gas; 

18 (D) a fuel cell device; or 

19 (E) a combination of energy described in 

20 subparagraphs (A) through (D). 

21 (3) SECRETARY.—The term ‘‘Secretary’’ means 

22 the Secretary of Energy. 

23 (b) DEMONSTRATION AND TECHNOLOGY TRANSFER

24 PROGRAM.—The Secretary shall establish a demonstration 

25 program for the implementation of innovative technologies 
51 

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1 for renewable uninterruptible power supply systems lo2 cated in eligible buildings and for the dissemination of in3 formation on those systems to interested parties. 

4 (c) LIMIT ON FEDERAL FUNDING.—The Secretary 

5 shall provide not more than 40 percent of the costs of 

6 projects funded under this section. 

7 (d) AUTHORIZATION OF APPROPRIATIONS.—There is 

8 authorized to be appropriated to carry out this section 

9 $30,000,000 for each of fiscal years 2006 through 2009. 

Æ