II 

109TH CONGRESS 

1ST SESSION S. 596 

To reform the Nation’s outdated laws relating to the electric industry, improve 

the operation of our transmission system, enhance reliability of our 

electric grid, increase consumer benefits from wholesale electric competition and restore investor confidence in the electric industry. 

IN THE SENATE OF THE UNITED STATES 

MARCH 10, 2005 

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

to the Committee on Energy and Natural Resources 

A BILL 

To reform the Nation’s outdated laws relating to the electric 

industry, improve the operation of our transmission system, enhance reliability of our electric grid, increase consumer benefits from wholesale electric competition and 

restore investor confidence in the electric industry. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Electric Transmission 

5 and Reliability Enhancement Act of 2005’’. 
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1 TITLE I—TRANSMISSION 

2 IMPROVEMENT 

3 SEC. 101. OPEN NON-DISCRIMINATORY ACCESS. 

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

5 seq.) is amended by inserting after section 211 the fol6 lowing: 

7 ‘‘OPEN ACCESS BY UNREGULATED TRANSMITTING

8 UTILITIES

9 ‘‘SEC. 211A. (a) Subject to section 212(h), the Com10 mission may, by rule or order, require an unregulated 

11 transmitting utility to provide transmission services— 

12 ‘‘(1) at rates that are comparable to those that 

13 the unregulated transmitting utility charges itself, 

14 and 

15 ‘‘(2) on terms and conditions (not relating to 

16 rates) that are comparable to those under Commis17 sion rules that require public utilities to offer open 

18 access transmission services and that are not unduly 

19 discriminatory or preferential. 

20 ‘‘(b) The Commission shall exempt from any rule or 

21 order under this subsection any unregulated transmitting 

22 utility that— 

23 ‘‘(1) sells no more than 4,000,000 megawatt 

24 hours of electricity per year; 
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1 ‘‘(2) does not own or operate any transmission 

2 facilities that are necessary for operating an inter3 connected transmission system (or any portion 

4 thereof); or 

5 ‘‘(3) meets other criteria the Commission deter6 mines to be in the public interest. 

7 ‘‘(c) The rate changing procedures applicable to pub8 lic utilities under subsections (c) and (d) of section 205 

9 are applicable to unregulated transmitting utilities for 

10 purposes of this section. 

11 ‘‘(d) In exercising its authority under paragraph (1) 

12 of subsection (a), the Commission may remand trans13 mission rates to an unregulated transmitting utility for 

14 review and revision where necessary to meet the require15 ments of subsection (a). 

16 ‘‘(e) The provision of transmission services under 

17 subsection (a) does not preclude a request for trans18 mission services under section 211. 

19 ‘‘(f) The Commission may not require a State or mu20 nicipality to take action under this section that constitutes 

21 a private business use for purposes of section 141 of the 

22 Internal Revenue Code of 1986 (26 U.S.C. 141). 

23 ‘‘(g) For purposes of this subsection, the term ‘un24 regulated transmitting utility’ means an entity that— 
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1 ‘‘(1) owns or operates facilities used for the 

2 transmission of electric energy in interstate com3 merce, and 

4 ‘‘(2) is either an entity described in section 

5 201(f) or a rural electric cooperative.’’. 

6 SEC. 102. FEDERAL AGENCY COORDINATION. 

7 The Department of Energy shall be the lead agency 

8 for conducting environmental review (for purposes of the 

9 National Environmental Policy Act of 1969) of the estab10 lishment and modification of electric power transmission 

11 corridors across federal lands. The Secretary of Energy 

12 shall coordinate with Federal agencies, including Federal 

13 land management agencies, to ensure the timely comple14 tion of environmental reviews pertaining to such corridors 

15 and may set deadlines for the completion of such reviews. 

16 For purposes of this section, the term ‘‘Federal land man17 agement agencies’’ means the Bureau of Land Manage18 ment, the United States Forest Service, the United States 

19 Fish and Wildlife Service, and the Department of Defense. 

20 For purposes of this section, ‘‘Federal lands’’ means all 

21 lands owned by the United States except lands in the Na22 tional Park System or the national wilderness preservation 

23 system, or such other lands as the President may des24 ignate. 
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1 SEC. 103. PRIORITY FOR RIGHTS-OF-WAY ACROSS FEDERAL 

2 LANDS. 

3 Section 501 of the Federal Land Policy and Manage4 ment Act of 1976 (43 U.S.C. 1761) is amended by adding 

5 the following new subsection at the end thereof: 

6 ‘‘(e) In administering the provisions of this title, the 

7 Secretary of the Interior and the Secretary of Agriculture 

8 shall each shall give a priority to applications for rights 

9 of way for electric power transmission corridors.’’. 

10 SEC. 104. ELECTRIC RELIABILITY STANDARDS. 

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

12 seq.) is amended by inserting the following new section 

13 at the end thereof: 

14 ‘‘SEC. 215. ELECTRIC RELIABILITY. 

15 ‘‘(a) DEFINITIONS.—For purposes of this section— 

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

17 ‘‘(A) facilities and control systems nec18 essary for operating an interconnected electric 

19 energy transmission network (or any portion 

20 thereof); and 

21 ‘‘(B) electric energy from generation facili22 ties needed to maintain transmission system re23 liability. 

24 The term does not include facilities used in the local 

25 distribution of electric energy. 
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1 ‘‘(2) The terms ‘Electric Reliability Organiza2 tion’ and ‘ERO’ mean the organization certified by 

3 the Commission under subsection (c) the purpose of 

4 which is to establish and enforce reliability stand5 ards for the bulk-power system, subject to Commis6 sion review. 

7 ‘‘(3) The term ‘reliability standard’ means a re8 quirement, approved by the Commission under this 

9 section, to provide for reliable operation of the bulk10 power system. The term includes requirements for 

11 the operation of existing bulk-power system facilities 

12 and the design of planned additions or modifications 

13 to such facilities to the extent necessary to provide 

14 for reliable operation of the bulk-power system, but 

15 the term does not include any requirement to en16 large such facilities or to construct new transmission 

17 capacity or generation capacity. 

18 ‘‘(4) The term ‘reliable operation’ means oper19 ating the elements of the bulk-power system within 

20 equipment and electric system thermal, voltage, and 

21 stability limits so that instability, uncontrolled sepa22 ration, or cascading failures of such system will not 

23 occur as a result of a sudden disturbance or unan24 ticipated failure of system elements. 
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1 ‘‘(5) The term ‘Interconnection’ means a geo2 graphic area in which the operation of bulk-power 

3 system components is synchronized such that the 

4 failure of one or more of such components may ad5 versely affect the ability of the operators of other 

6 components within the system to maintain reliable 

7 operation of the facilities within their control. 

8 ‘‘(6) The term ‘transmission organization’ 

9 means a regional transmission organization, inde10 pendent system operator, independent transmission 

11 provider, or other transmission organization finally 

12 approved by the Commission for the operation of 

13 transmission facilities. 

14 ‘‘(7) The term ‘regional entity’ means an entity 

15 having enforcement authority pursuant to subsection 

16 (e)(4). 

17 ‘‘(b) JURISDICTION AND APPLICABILITY.—(1) The 

18 Commission shall have jurisdiction, within the United 

19 States, over the ERO certified by the Commission under 

20 subsection (c), any regional entities, and all users, owners 

21 and operators of the bulk-power system, including but not 

22 limited to the entities described in section 201(f), for pur23 poses of approving reliability standards established under 

24 this section and enforcing compliance with this section. All 

25 users, owners and operators of the bulk-power system 
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1 shall comply with reliability standards that take effect 

2 under this section. 

3 ‘‘(2) The Commission shall issue a final rule to imple4 ment the requirements of this section not later than 180 

5 days after the date of enactment of this section. 

6 ‘‘(c) CERTIFICATION.—Following the issuance of a 

7 Commission rule under subsection (b)(2), any person may 

8 submit an application to the Commission for certification 

9 as the Electric Reliability Organization (ERO). The Com10 mission may certify one such ERO if the Commission de11 termines that such ERO— 

12 ‘‘(1) has the ability to develop and enforce, sub13 ject to subsection (e)(2), reliability standards that 

14 provide for an adequate level of reliability of the 

15 bulk-power system; 

16 ‘‘(2) has established rules that— 

17 ‘‘(A) assure its independence of the users 

18 and owners and operators of the bulk-power 

19 system, while assuring fair stakeholder rep20 resentation in the selection of its directors and 

21 balanced decisionmaking in any ERO com22 mittee or subordinate organizational structure; 

23 ‘‘(B) allocate equitably reasonable dues, 

24 fees, and other charges among end users for all 

25 activities under this section; 
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1 ‘‘(C) provide fair and impartial procedures 

2 for enforcement of reliability standards through 

3 the imposition of penalties in accordance with 

4 subsection (e) (including limitations on activi5 ties, functions, or operations, or other appro6 priate sanctions); 

7 ‘‘(D) provide for reasonable notice and op8 portunity for public comment, due process, 

9 openness, and balance of interests in developing 

10 reliability standards and otherwise exercising its 

11 duties; and 

12 ‘‘(E) provide for taking, after certification, 

13 appropriate steps to gain recognition in Canada 

14 and Mexico. 

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

16 Reliability Organization shall file each reliability standard 

17 or modification to a reliability standard that it proposes 

18 to be made effective under this section with the Commis19 sion. 

20 ‘‘(2) The Commission may approve by rule or order 

21 a proposed reliability standard or modification to a reli22 ability standard if it determines that the standard is just, 

23 reasonable, not unduly discriminatory or preferential, and 

24 in the public interest. The Commission shall give due 

25 weight to the technical expertise of the Electric Reliability 
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1 Organization with respect to the content of a proposed 

2 standard or modification to a reliability standard and to 

3 the technical expertise of a regional entity organized on 

4 an Interconnection-wide basis with respect to a reliability 

5 standard to be applicable within that Interconnection, but 

6 shall not defer with respect to the effect of a standard 

7 on competition. A proposed standard or modification shall 

8 take effect upon approval by the Commission. 

9 ‘‘(3) The Electric Reliability Organization shall 

10 rebuttably presume that a proposal from a regional entity 

11 organized on an Interconnection-wide basis for a reliability 

12 standard or modification to a reliability standard to be ap13 plicable on an Interconnection-wide basis is just, reason14 able, and not unduly discriminatory or preferential, and 

15 in the public interest. 

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

17 Reliability Organization for further consideration a pro18 posed reliability standard or a modification to a reliability 

19 standard that the Commission disapproves in whole or in 

20 part. 

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

22 complaint, may order the Electric Reliability Organization 

23 to submit to the Commission a proposed reliability stand24 ard or a modification to a reliability standard that ad25 dresses a specific matter if the Commission considers such 
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1 a new or modified reliability standard appropriate to carry 

2 out this section. 

3 ‘‘(6) The final rule adopted under subsection (b)(2) 

4 shall include fair processes for the identification and time5 ly resolution of any conflict between a reliability standard 

6 and any function, rule, order, tariff, rate schedule, or 

7 agreement accepted, approved, or ordered by the Commis8 sion applicable to a transmission organization. Such trans9 mission organization shall continue to comply with such 

10 function, rule, order, tariff, rate schedule or agreement ac11 cepted approved, or ordered by the Commission until— 

12 ‘‘(A) the Commission finds a conflict exists be13 tween a reliability standard and any such provision; 

14 ‘‘(B) the Commission orders a change to such 

15 provision pursuant to section 206 of this part; and 

16 ‘‘(C) the ordered change becomes effective 

17 under this part. 

18 If the Commission determines that a reliability standard 

19 needs to be changed as a result of such a conflict, it shall 

20 order the ERO to develop and file with the Commission 

21 a modified reliability standard under paragraph (4) or (5) 

22 of this subsection. 

23 ‘‘(e) ENFORCEMENT.—(1) The ERO may impose, 

24 subject to paragraph (2), a penalty on a user or owner 

25 or operator of the bulk-power system for a violation of a 
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1 reliability standard approved by the Commission under 

2 subsection (d) if the ERO, after notice and an opportunity 

3 for a hearing— 

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

5 has violated a reliability standard approved by the 

6 Commission under subsection (d); and 

7 ‘‘(B) files notice and the record of the pro8 ceeding with the Commission. 

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

10 take effect not earlier than the 31st day after the Electric 

11 Reliability Organization files with the Commission notice 

12 of the penalty and the record of proceedings. Such penalty 

13 shall be subject to review by the Commission, on its own 

14 motion or upon application by the user, owner or operator 

15 that is the subject of the penalty filed within 30 days after 

16 the date such notice is filed with the Commission. Applica17 tion to the Commission for review, or the initiation of re18 view by the Commission on its own motion, shall not oper19 ate as a stay of such penalty unless the Commission other20 wise orders upon its own motion or upon application by 

21 the user, owner or operator that is the subject of such 

22 penalty. In any proceeding to review a penalty imposed 

23 under paragraph (1), the Commission, after notice and op24 portunity for hearing (which hearing may consist solely 

25 of the record before the Electric Reliability Organization 
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1 and opportunity for the presentation of supporting reasons 

2 to affirm, modify, or set aside the penalty), shall by order 

3 affirm, set aside, reinstate, or modify the penalty, and, 

4 if appropriate, remand to the Electric Reliability Organi5 zation for further proceedings. The Commission shall im6 plement expedited procedures for such hearings. 

7 ‘‘(3) On its own motion or upon complaint, the Com8 mission may order compliance with a reliability standard 

9 and may impose a penalty against a user or owner or oper10 ator of the bulk-power system, if the Commission finds, 

11 after notice and opportunity for a hearing, that the user 

12 or owner or operator of the bulk-power system has en13 gaged or is about to engage in any acts or practices that 

14 constitute or will constitute a violation of a reliability 

15 standard. 

16 ‘‘(4) The Commission shall establish regulations di17 recting the ERO to enter into an agreement to delegate 

18 authority to a regional entity for the purpose of proposing 

19 reliability standards to the ERO and enforcing reliability 

20 standards under paragraph (1) if— 

21 ‘‘(A) the regional entity is governed by an inde22 pendent, balanced stakeholder, or combination inde23 pendent and balanced stakeholder board; 

24 ‘‘(B) the regional entity otherwise satisfies the 

25 provisions of subsection (c)(1) and (2); and 
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1 ‘‘(C) the agreement promotes effective and effi2 cient administration of bulk-power system reliability. 

3 The Commission may modify such delegation. The ERO 

4 and the Commission shall rebuttably presume that a pro5 posal for delegation to a regional entity organized on an 

6 Interconnection-wide basis promotes effective and efficient 

7 administration of bulk-power system reliability and should 

8 be approved. Such regulation may provide that the Com9 mission may assign the ERO’s authority to enforce reli10 ability standards under paragraph (1) directly to a re11 gional entity consistent with the requirements of this para12 graph. 

13 ‘‘(5) The Commission may take such action as is nec14 essary or appropriate against the ERO or a regional entity 

15 to ensure compliance with a reliability standard or any 

16 Commission order affecting the ERO or a regional entity. 

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

18 bear a reasonable relation to the seriousness of the viola19 tion and shall take into consideration the efforts of such 

20 user, owner, or operator to remedy the violation in a time21 ly manner. 

22 ‘‘(f) CHANGES IN ELECTRICITY RELIABILITY ORGA23 NIZATION RULES.—The Electric Reliability Organization 

24 shall file with the Commission for approval any proposed 

25 rule or proposed rule change, accompanied by an expla-
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1 nation of its basis and purpose. The Commission, upon 

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

3 rules of the Electric Reliability Organization. A proposed 

4 rule or proposed rule change shall take effect upon a find5 ing by the Commission, after notice and opportunity for 

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

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

8 satisfies the requirements of subsection (c). 

9 ‘‘(g) RELIABILITY REPORTS.—The Electric Reli10 ability Organization shall conduct periodic assessments of 

11 the reliability and adequacy of the bulk-power system in 

12 North America. 

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

14 The President is urged to negotiate international agree15 ments with the governments of Canada and Mexico to pro16 vide for effective compliance with reliability standards and 

17 the effectiveness of the Electric Reliability Organization 

18 in the United States and Canada or Mexico. 

19 ‘‘(i) SAVINGS PROVISIONS.—(1) The Electric Reli20 ability Organization shall have authority to develop and 

21 enforce compliance with reliability standards for only the 

22 bulk-power system. 

23 ‘‘(2) This section does not authorize the Electric Reli24 ability Organization or the Commission to order the con25 struction of additional generation or transmission capacity 
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1 or to set and enforce compliance with standards for ade2 quacy or safety of electric facilities or services. 

3 ‘‘(3) Nothing in this section shall be construed to pre4 empt any authority of any State to take action to ensure 

5 the safety, adequacy, and reliability of electric service 

6 within that State, as long as such action is not incon7 sistent with any reliability standard. 

8 ‘‘(4) Within 90 days of the application of the Electric 

9 Reliability Organization or other affected party, and after 

10 notice and opportunity for comment, the Commission shall 

11 issue a final order determining whether a State action is 

12 inconsistent with a reliability standard, taking into consid13 eration any recommendation of the Electric Reliability Or14 ganization. 

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

16 Electric Reliability Organization, may stay the effective17 ness of any State action, pending the Commission’s 

18 issuance of a final order. 

19 ‘‘(j) REGIONAL ADVISORY BODIES.—The Commis20 sion shall establish a regional advisory body on the petition 

21 of at least two-thirds of the States within a region that 

22 have more than one-half of their electric load served within 

23 the region. A regional advisory body shall be composed of 

24 one member from each participating State in the region, 

25 appointed by the Governor of each State, and may include 
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1 representatives of agencies, States, and provinces outside 

2 the United States. A regional advisory body may provide 

3 advice to the Electric Reliability Organization, a regional 

4 entity, or the Commission regarding the governance of an 

5 existing or proposed regional entity within the same re6 gion, whether a standard proposed to apply within the re7 gion is just, reasonable, not unduly discriminatory or pref8 erential, and in the public interest, whether fees proposed 

9 to be assessed within the region are just, reasonable, not 

10 unduly discriminatory or preferential, and in the public 

11 interest and any other responsibilities requested by the 

12 Commission. The Commission may give deference to the 

13 advice of any such regional advisory body if that body is 

14 organized on an Interconnection-wide basis. 

15 ‘‘(k) APPLICATION TO ALASKA AND HAWAII.—The 

16 provisions of this section do not apply to Alaska or Ha17 waii.’’. 

18 TITLE II—ELIMINATION OF 

19 COMPETITIVE BARRIERS 

20 Subtitle A—Provisions Regarding 

21 the Public Utility Holding Com22 pany Act of 1935 

23 SEC. 201. DEFINITIONS. 

24 For the purposes of this subtitle: 
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1 (1) The term ‘‘affiliate’’ of a company means 

2 any company 5 percent or more of the outstanding 

3 voting securities of which are owned, controlled, or 

4 held with power to vote, directly or indirectly, by 

5 such company. 

6 (2) The term ‘‘associate company’’ of a com7 pany means any company in the same holding com8 pany system with such company. 

9 (3) The term ‘‘Commission’’ means the Federal 

10 Energy Regulatory Commission. 

11 (4) The term ‘‘company’’ means a corporation, 

12 partnership, association, joint stock company, busi13 ness trust, or any organized group of persons, 

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

15 or other liquidating agent of any of the foregoing. 

16 (5) The term ‘‘electric utility company’’ means 

17 any company that owns or operates facilities used 

18 for the generation, transmission, or distribution of 

19 electric energy for sale. 

20 (6) The terms ‘‘exempt wholesale generator’’ 

21 and ‘‘foreign utility company’’ have the same mean22 ings as in sections 32 and 33, respectively, of the 

23 Public Utility Holding Company Act of 1935 (15 

24 U.S.C. 79z–5, 79z–5b), as those sections existed on 

25 the day before the effective date of this subtitle. 
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1 (7) The term ‘‘gas utility company’’ means any 

2 company that owns or operates facilities used for 

3 distribution at retail (other than the distribution 

4 only in enclosed portable containers or distribution 

5 to tenants or employees of the company operating 

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

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

8 power. 

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

10 (A) any company that directly or indirectly 

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

12 percent or more of the outstanding voting secu13 rities of a public utility company or of a holding 

14 company of any public utility company; and 

15 (B) any person, determined by the Com16 mission, after notice and opportunity for hear17 ing, to exercise directly or indirectly (either 

18 alone or pursuant to an arrangement or under19 standing with one or more persons) such a con20 trolling influence over the management or poli21 cies of any public utility company or holding 

22 company as to make it necessary or appropriate 

23 for the rate protection of utility customers with 

24 respect to rates that such person be subject to 
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1 the obligations, duties, and liabilities imposed 

2 by this subtitle upon holding companies. 

3 (9) The term ‘‘holding company system’’ means 

4 a holding company, together with its subsidiary com5 panies. 

6 (10) The term ‘‘jurisdictional rates’’ means 

7 rates established by the Commission for the trans8 mission of electric energy in interstate commerce, 

9 the sale of electric energy at wholesale in interstate 

10 commerce, the transportation of natural gas in inter11 state commerce, and the sale in interstate commerce 

12 of natural gas for resale for ultimate public con13 sumption for domestic, commercial, industrial, or 

14 any other use. 

15 (11) The term ‘‘natural gas company’’ means a 

16 person engaged in the transportation of natural gas 

17 in interstate commerce or the sale of such gas in 

18 interstate commerce for resale. 

19 (12) The term ‘‘person’’ means an individual or 

20 company. 

21 (13) The term ‘‘public utility’’ means any per22 son who owns or operates facilities used for trans23 mission of electric energy in interstate commerce or 

24 sales of electric energy at wholesale in interstate 

25 commerce. 
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1 (14) The term ‘‘public utility company’’ means 

2 an electric utility company or a gas utility company. 

3 (15) The term ‘‘State commission’’ means any 

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

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

6 political subdivision of a State that, under the laws 

7 of such State, has jurisdiction to regulate public util8 ity companies. 

9 (16) The term ‘‘subsidiary company’’ of a hold10 ing company means— 

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

12 the outstanding voting securities of which are 

13 directly or indirectly owned, controlled, or held 

14 with power to vote, by such holding company; 

15 and 

16 (B) any person, the management or poli17 cies of which the Commission, after notice and 

18 opportunity for hearing, determines to be sub19 ject to a controlling influence, directly or indi20 rectly, by such holding company (either alone or 

21 pursuant to an arrangement or understanding 

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

23 it necessary for the rate protection of utility 

24 customers with respect to rates that such per25 son be subject to the obligations, duties, and li-
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1 abilities imposed by this subtitle upon sub2 sidiary companies of holding companies. 

3 (17) The term ‘‘voting security’’ means any se4 curity presently entitling the owner or holder thereof 

5 to vote in the direction or management of the affairs 

6 of a company. 

7 SEC. 202. REPEAL OF THE PUBLIC UTILITY HOLDING COM8 PANY ACT OF 1935. 

9 The Public Utility Holding Company Act of 1935 (15 

10 U.S.C. 79a and following) is repealed, effective 12 months 

11 after the date of enactment of this Act. 

12 SEC. 203. FEDERAL ACCESS TO BOOKS AND RECORDS. 

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

14 associate company thereof shall maintain, and shall make 

15 available to the Commission, such books, accounts, memo16 randa, and other records as the Commission determines 

17 are relevant to costs incurred by a public utility or natural 

18 gas company that is an associate company of such holding 

19 company and necessary or appropriate for the protection 

20 of utility customers with respect to jurisdictional rates. 

21 (b) AFFILIATE COMPANIES.—Each affiliate of a hold22 ing company or of any subsidiary company of a holding 

23 company shall maintain, and make available to the Com24 mission, such books, accounts, memoranda, and other 

25 records with respect to any transaction with another affil-
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1 iate, as the Commission determines are relevant to costs 

2 incurred by a public utility or natural gas company that 

3 is an associate company of such holding company and nec4 essary or appropriate for the protection of utility cus5 tomers with respect to jurisdictional rates. 

6 (c) HOLDING COMPANY SYSTEMS.—The Commission 

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

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

9 any affiliate thereof, as the Commission determines are 

10 relevant to costs incurred by a public utility or natural 

11 gas company within such holding company system and 

12 necessary or appropriate for the protection of utility cus13 tomers with respect to jurisdictional rates. 

14 (d) CONFIDENTIALITY.—No member, officer, or em15 ployee of the Commission shall divulge any fact or infor16 mation that may come to his or her knowledge during the 

17 course of examination of books, accounts, memoranda, or 

18 other records as provided in this section, except as may 

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

20 jurisdiction. 

21 SEC. 204. STATE ACCESS TO BOOKS AND RECORDS. 

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

23 State commission having jurisdiction to regulate a public 

24 utility company in a holding company system, and subject 

25 to such terms and conditions as may be necessary and ap-
24 

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1 propriate to safeguard against unwarranted disclosure to 

2 the public of any trade secrets or sensitive commercial in3 formation, a holding company or any associate company 

4 or affiliate thereof, wherever located, shall produce for in5 spection books, accounts, memoranda, and other records 

6 that— 

7 (1) have been identified in reasonable detail in 

8 a proceeding before the State commission; 

9 (2) the State commission determines are rel10 evant to costs incurred by such public utility com11 pany; and 

12 (3) are necessary for the effective discharge of 

13 the responsibilities of the State commission with re14 spect to such proceeding. 

15 (b) EFFECT ON STATE LAW.—Nothing in this section 

16 shall preempt applicable State law concerning the provi17 sion of books, accounts, memoranda, or other records, or 

18 in any way limit the rights of any State to obtain books, 

19 accounts, memoranda, or other records, under Federal 

20 law, contract, or otherwise. 

21 (c) COURT JURISDICTION.—Any United States dis22 trict court located in the State in which the State commis23 sion referred to in subsection (a) is located shall have ju24 risdiction to enforce compliance with this section. 
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1 SEC. 205. EXEMPTION AUTHORITY. 

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

3 date of enactment of this Act, the Commission shall pro4 mulgate a final rule to exempt from the requirements of 

5 section 203 any person that is a holding company, solely 

6 with respect to one or more— 

7 (1) qualifying facilities under the Public Utility 

8 Regulatory Policies Act of 1978; 

9 (2) exempt wholesale generators; or 

10 (3) foreign utility companies. 

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

12 upon its own motion, the Commission finds that the books, 

13 accounts, memoranda, and other records of any person are 

14 not relevant to the jurisdictional rates of a public utility 

15 company or natural gas company, or if the Commission 

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

17 jurisdictional rates of a public utility company, the Com18 mission shall exempt such person or transaction from the 

19 requirements of section 203. 

20 SEC. 206. AFFILIATE TRANSACTIONS. 

21 Nothing in this subtitle shall preclude the Commis22 sion or a State commission from exercising its jurisdiction 

23 under otherwise applicable law to determine whether a 

24 public utility company, public utility, or natural gas com25 pany may recover in rates any costs of an activity per26 formed by an associate company, or any costs of goods 
26 

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1 or services acquired by such public utility company, public 

2 utility, or natural gas company from an associate com3 pany. 

4 SEC. 207. APPLICABILITY. 

5 No provision of this subtitle shall apply to, or be 

6 deemed to include— 

7 (1) the United States; 

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

9 State; 

10 (3) any foreign governmental authority not op11 erating in the United States; 

12 (4) any agency, authority, or instrumentality of 

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

14 or 

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

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

17 such in the course of such officer, agent, or employ18 ee’s official duty. 

19 SEC. 208. EFFECT ON OTHER REGULATIONS. 

20 Nothing in this subtitle precludes the Commission or 

21 a State commission from exercising its jurisdiction under 

22 otherwise applicable law to protect utility customers. 

23 SEC. 209. ENFORCEMENT. 

24 The Commission shall have the same powers as set 

25 forth in sections 306 through 317 of the Federal Power 
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1 Act (16 U.S.C. 825e–825p) to enforce the provisions of 

2 this subtitle. 

3 SEC. 210. SAVINGS PROVISIONS. 

4 (a) IN GENERAL.—Nothing in this subtitle prohibits 

5 a person from engaging in or continuing to engage in ac6 tivities or transactions in which it is legally engaged or 

7 authorized to engage on the date of enactment of this Act, 

8 if that person continues to comply with the terms of any 

9 such authorization, whether by rule or by order. 

10 (b) EFFECT ON OTHER COMMISSION AUTHORITY.— 

11 Nothing in this subtitle limits the authority of the Com12 mission under the Federal Power Act (16 U.S.C. 791a and 

13 following) (including section 301 of that Act) or the Nat14 ural Gas Act (15 U.S.C. 717 and following) (including sec15 tion 8 of that Act). 

16 SEC. 211. IMPLEMENTATION. 

17 Not later than 12 months after the date of enactment 

18 of this Act, the Commission shall— 

19 (1) promulgate such regulations as may be nec20 essary or appropriate to implement this subtitle; and 

21 (2) submit to Congress detailed recommenda22 tions on technical and conforming amendments to 

23 Federal law necessary to carry out this subtitle and 

24 the amendments made by this subtitle. 
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1 SEC. 212. TRANSFER OF RESOURCES. 

2 All books and records that relate primarily to the 

3 functions transferred to the Commission under this sub4 title shall be transferred from the Securities and Exchange 

5 Commission to the Commission. 

6 SEC. 213. EFFECTIVE DATE. 

7 This subtitle shall take effect 12 months after the 

8 date of enactment of this Act. 

9 SEC. 214. CONFORMING AMENDMENT TO THE FEDERAL 

10 POWER ACT. 

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

12 825q) is repealed. 

13 Subtitle B—Provisions Regarding 

14 the Public Utility Regulatory 

15 Policies Act of 1978 

16 SEC. 215. PROSPECTIVE REPEAL OF SECTION 210. 

17 (a) NEW CONTRACTS.—After the date of enactment 

18 of this Act, no electric utility shall be required to enter 

19 into a new contract or obligation to purchase or to sell 

20 electric energy or capacity pursuant to section 210 of the 

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

22 824a–3). 

23 (b) EXISTING RIGHTS AND REMEDIES NOT AF24 FECTED.—Nothing in this Act affects the rights or rem25 edies of any party with respect to the purchase or sale 

26 of electric energy or capacity from or to a facility deter-
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1 mined to be a qualifying small power production facility 

2 or a qualifying cogeneration facility under section 210 of 

3 the Public Utility Regulatory Policies Act of 1978 pursu4 ant to any contract or obligation to purchase or to sell 

5 electric energy or capacity in effect on the date of enact6 ment of this Act, including the right to recover the costs 

7 of purchasing such electric energy or capacity. 

8 SEC. 216. RECOVERY OF COSTS. 

9 In order to assure recovery by electric utilities pur10 chasing electric energy or capacity from a qualifying facil11 ity pursuant to any legally enforceable obligation entered 

12 into or imposed pursuant to section 210 of the Public Util13 ity Regulatory Policies Act of 1978 prior to the date of 

14 enactment of this Act, of all costs associated with such 

15 purchases, the Commission shall promulgate and enforce 

16 such regulations as may be required to assure that no such 

17 electric utility shall be required directly or indirectly to 

18 absorb the costs associated with such purchases from a 

19 qualifying facility. Such regulations shall be treated as a 

20 rule enforceable under the Federal Power Act (16 U.S.C. 

21 791a–825r). 

22 SEC. 217. DEFINITIONS. 

23 For purposes of this subtitle, the terms ‘‘Commis24 sion’’, ‘‘electric utility’’, ‘‘qualifying cogeneration facility’’, 

25 and ‘‘qualifying small power production facility’’, shall 
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1 have the same meanings as provided in the Public Utility 

2 Regulatory Policies Act of 1978, and the term ‘‘qualifying 

3 facility’’ shall mean either a qualifying small production 

4 facility or a qualifying cogeneration facility as defined in 

5 such Act. 

6 TITLE III—MARKET TRANS7 PARENCY, ANTI-MANIPULA8 TION AND ENFORCEMENT 

9 Subtitle A—Market Transparency, 

10 Anti-Manipulation and Enforce11 ment 

12 SEC. 301. MARKET TRANSPARENCY RULES. 

13 Part II of the Federal Power Act is amended by add14 ing after section 215 as added by this Act the following: 

15 ‘‘SEC. 216. MARKET TRANSPARENCY RULES. 

16 ‘‘(a) COMMISSION RULES.—Not later than 180 days 

17 after the date of enactment of this section, the Commis18 sion shall issue rules establishing an electronic information 

19 system to provide the Commission and the public with ac20 cess to such information as is necessary or appropriate 

21 to facilitate price transparency and participation in mar22 kets subject to the Commission’s jurisdiction. Such sys23 tems shall provide statistical information about the avail24 ability and market price of wholesale electric energy and 

25 transmission services to the Commission, State commis-
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1 sions, buyers and sellers of wholesale electric energy, users 

2 of transmission services, and the public on a timely basis. 

3 ‘‘(b) INFORMATION REQUIRED.—The Commission 

4 shall require— 

5 ‘‘(1) each regional transmission organization or, 

6 where no regional transmission organization is oper7 ating, each transmitting utility to provide informa8 tion about the available capacity of transmission fa9 cilities operated by the organization or transmitting 

10 utility; and 

11 ‘‘(2) each regional transmission organization or 

12 broker or exchange to provide aggregate information 

13 about the amount and price of physical sales of elec14 tric energy at wholesale in interstate commerce it 

15 transacts. 

16 ‘‘(c) DEFINITION.—For purposes of this section, the 

17 term ‘broker or exchange’ means an entity that matches 

18 offers to sell and offers to buy physical sales of wholesale 

19 electric energy in interstate commerce. 

20 ‘‘(d) PROTECTION OF SENSITIVE INFORMATION.— 

21 The Commission shall exempt from disclosure information 

22 it determines would, if disclosed, be detrimental to the op23 eration of an effective market.’’. 
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1 SEC. 302. MARKET MANIPULATION. 

2 (a) Part II of the Federal Power Act is amended by 

3 adding after section 216 as added by this Act the fol4 lowing: 

5 ‘‘SEC. 217. PROHIBITION ON FILING FALSE INFORMATION. 

6 ‘‘It shall be a violation of this Act for any person will7 fully and knowingly to report any information relating to 

8 the price of electricity sold at wholesale, which information 

9 the person knew to be false at the time of the reporting, 

10 to any governmental or non-governmental entity and with 

11 the intent to manipulate the data being compiled by such 

12 entity. 

13 ‘‘SEC. 218. PROHIBITION ON ROUND TRIP TRADING. 

14 ‘‘(a) PROHIBITION.—It shall be a violation of this Act 

15 for any person willfully and knowingly to enter into any 

16 contract or other arrangement to execute a ‘round-trip 

17 trade’ for the purchase or sale of electric energy at whole18 sale. 

19 ‘‘(b) DEFINITION OF ROUND-TRIP TRADE.—For the 

20 purposes of this section, the term ‘round trip trade’ means 

21 a transaction, or combination of transactions, in which a 

22 person or other entity— 

23 ‘‘(1) enters into a contract or other arrange24 ment to purchase from, or sell to, any other person 

25 or other entity electric energy at wholesale; 
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1 ‘‘(2) simultaneously with entering into the con2 tract or arrangement described in paragraph (1), ar3 ranges a financially offsetting trade with such other 

4 person or entity for the same such electric energy, 

5 at the same location, price, quantity and terms so 

6 that, collectively, the purchase and sale transactions 

7 in themselves result in no financial gain or loss; and 

8 ‘‘(3) enters into the contract or arrangement 

9 with the intent to deceptively affect reported reve10 nues, trading volumes, or prices.’’. 

11 SEC. 303. ENFORCEMENT. 

12 (a) COMPLAINTS.—Section 306 of the Federal Power 

13 Act (16 U.S.C. 825e) is amended by— 

14 (1) inserting ‘‘electric utility,’’ after ‘‘Any per15 son,’’; and 

16 (2) inserting ‘‘transmitting utility,’’ after ‘‘li17 censee’’ each place it appears. 

18 (b) INVESTIGATIONS.—Section 307(a) of the Federal 

19 Power Act (16 U.S.C. 825f(a)) is amended by inserting 

20 ‘‘or transmitting utility’’ after ‘‘any person’’ in the first 

21 sentence. 

22 (c) REVIEW OF COMMISSION ORDERS.—Section 

23 313(a) of the Federal Power Act (16 U.S.C. 8251) is 

24 amended by inserting ‘‘electric utility,’’ after ‘‘Any per25 son,’’ in the first sentence. 
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1 (d) CRIMINAL PENALTIES.—Section 316 of the Fed2 eral Power Act (16 U.S.C. 825o) is amended— 

3 (1) in subsection (a), by striking ‘‘$5,000’’ and 

4 inserting ‘‘$1,000,000’’, and by striking ‘‘two years’’ 

5 and inserting ‘‘five years’’; 

6 (2) in subsection (b), by striking ‘‘$500’’ and 

7 inserting ‘‘$25,000’’; and 

8 (3) by striking subsection (c). 

9 (e) CIVIL PENALTIES.—Section 316A of the Federal 

10 Power Act (16 U.S.C. 825o–1) is amended— 

11 (1) in subsections (a) and (b), by striking ‘‘sec12 tion 211, 212, 213, or 214’’ each place it appears 

13 and inserting ‘‘Part II’’; and 

14 (2) in subsection (b), by striking ‘‘$10,000’’ 

15 and inserting ‘‘$1,000,000’’. 

16 Subtitle B—Refund Effective Date 

17 SEC. 304. REFUND EFFECTIVE DATE. 

18 Section 206(b) of the Federal Power Act (16 U.S.C. 

19 824e(b)) is amended by— 

20 (1) striking ‘‘the date 60 days after the filing 

21 of such complaint nor later than 5 months after the 

22 expiration of such 60-day period’’ in the second sen23 tence and inserting ‘‘the date of the filing of such 

24 complaint nor later than 5 months after the filing of 

25 such complaint’’; 
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1 (2) striking ‘‘60 days after’’ in the third sen2 tence and inserting ‘‘of’’; 

3 (3) striking ‘‘expiration of such 60-day period’’ 

4 in the third sentence and inserting ‘‘publication 

5 date’’; and 

6 (4) striking the fifth sentence and inserting in 

7 lieu thereof: ‘‘If no final decision is rendered by the 

8 conclusion of the 180-day period commencing upon 

9 initiation of a proceeding pursuant to this section, 

10 the Commission shall state the reasons why it has 

11 failed to do so and shall state its best estimate as 

12 to when it reasonably expects to make such deci13 sion.’’. 

Æ