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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 596 Introduced in Senate (IS)]

  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To reform the Nation's outdated laws relating to the electric industry, 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To reform the Nation's outdated laws relating to the electric industry, 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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Electric Transmission and 
Reliability Enhancement Act of 2005''.

                   TITLE I--TRANSMISSION IMPROVEMENT

SEC. 101. OPEN NON-DISCRIMINATORY ACCESS.

    Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is amended 
by inserting after section 211 the following:

          ``open access by unregulated transmitting utilities

    ``Sec. 211A. (a) Subject to section 212(h), the Commission may, by 
rule or order, require an unregulated transmitting utility to provide 
transmission services--
            ``(1) at rates that are comparable to those that the 
        unregulated transmitting utility charges itself, and
            ``(2) on terms and conditions (not relating to rates) that 
        are comparable to those under Commission rules that require 
        public utilities to offer open access transmission services and 
        that are not unduly discriminatory or preferential.
    ``(b) The Commission shall exempt from any rule or order under this 
subsection any unregulated transmitting utility that--
            ``(1) sells no more than 4,000,000 megawatt hours of 
        electricity per year;
            ``(2) does not own or operate any transmission facilities 
        that are necessary for operating an interconnected transmission 
        system (or any portion thereof); or
            ``(3) meets other criteria the Commission determines to be 
        in the public interest.
    ``(c) The rate changing procedures applicable to public utilities 
under subsections (c) and (d) of section 205 are applicable to 
unregulated transmitting utilities for purposes of this section.
    ``(d) In exercising its authority under paragraph (1) of subsection 
(a), the Commission may remand transmission rates to an unregulated 
transmitting utility for review and revision where necessary to meet 
the requirements of subsection (a).
    ``(e) The provision of transmission services under subsection (a) 
does not preclude a request for transmission services under section 
211.
    ``(f) The Commission may not require a State or municipality to 
take action under this section that constitutes a private business use 
for purposes of section 141 of the Internal Revenue Code of 1986 (26 
U.S.C. 141).
    ``(g) For purposes of this subsection, the term `unregulated 
transmitting utility' means an entity that--
            ``(1) owns or operates facilities used for the transmission 
        of electric energy in interstate commerce, and
            ``(2) is either an entity described in section 201(f) or a 
        rural electric cooperative.''.

SEC. 102. FEDERAL AGENCY COORDINATION.

    The Department of Energy shall be the lead agency for conducting 
environmental review (for purposes of the National Environmental Policy 
Act of 1969) of the establishment and modification of electric power 
transmission corridors across federal lands. The Secretary of Energy 
shall coordinate with Federal agencies, including Federal land 
management agencies, to ensure the timely completion of environmental 
reviews pertaining to such corridors and may set deadlines for the 
completion of such reviews. For purposes of this section, the term 
``Federal land management agencies'' means the Bureau of Land 
Management, the United States Forest Service, the United States Fish 
and Wildlife Service, and the Department of Defense. For purposes of 
this section, ``Federal lands'' means all lands owned by the United 
States except lands in the National Park System or the national 
wilderness preservation system, or such other lands as the President 
may designate.

SEC. 103. PRIORITY FOR RIGHTS-OF-WAY ACROSS FEDERAL LANDS.

    Section 501 of the Federal Land Policy and Management Act of 1976 
(43 U.S.C. 1761) is amended by adding the following new subsection at 
the end thereof:
    ``(e) In administering the provisions of this title, the Secretary 
of the Interior and the Secretary of Agriculture shall each shall give 
a priority to applications for rights of way for electric power 
transmission corridors.''.

SEC. 104. ELECTRIC RELIABILITY STANDARDS.

    Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is amended 
by inserting the following new section at the end thereof:

``SEC. 215. ELECTRIC RELIABILITY.

    ``(a) Definitions.--For purposes of this section--
            ``(1) The term `bulk-power system' means--
                    ``(A) facilities and control systems necessary for 
                operating an interconnected electric energy 
                transmission network (or any portion thereof); and
                    ``(B) electric energy from generation facilities 
                needed to maintain transmission system reliability.
        The term does not include facilities used in the local 
        distribution of electric energy.
            ``(2) The terms `Electric Reliability Organization' and 
        `ERO' mean the organization certified by the Commission under 
        subsection (c) the purpose of which is to establish and enforce 
        reliability standards for the bulk-power system, subject to 
        Commission review.
            ``(3) The term `reliability standard' means a requirement, 
        approved by the Commission under this section, to provide for 
        reliable operation of the bulk-power system. The term includes 
        requirements for the operation of existing bulk-power system 
        facilities and the design of planned additions or modifications 
        to such facilities to the extent necessary to provide for 
        reliable operation of the bulk-power system, but the term does 
        not include any requirement to enlarge such facilities or to 
        construct new transmission capacity or generation capacity.
            ``(4) The term `reliable operation' means operating the 
        elements of the bulk-power system within equipment and electric 
        system thermal, voltage, and stability limits so that 
        instability, uncontrolled separation, or cascading failures of 
        such system will not occur as a result of a sudden disturbance 
        or unanticipated failure of system elements.
            ``(5) The term `Interconnection' means a geographic area in 
        which the operation of bulk-power system components is 
        synchronized such that the failure of one or more of such 
        components may adversely affect the ability of the operators of 
        other components within the system to maintain reliable 
        operation of the facilities within their control.
            ``(6) The term `transmission organization' means a regional 
        transmission organization, independent system operator, 
        independent transmission provider, or other transmission 
        organization finally approved by the Commission for the 
        operation of transmission facilities.
            ``(7) The term `regional entity' means an entity having 
        enforcement authority pursuant to subsection (e)(4).
    ``(b) Jurisdiction and Applicability.--(1) The Commission shall 
have jurisdiction, within the United States, over the ERO certified by 
the Commission under subsection (c), any regional entities, and all 
users, owners and operators of the bulk-power system, including but not 
limited to the entities described in section 201(f), for purposes of 
approving reliability standards established under this section and 
enforcing compliance with this section. All users, owners and operators 
of the bulk-power system shall comply with reliability standards that 
take effect under this section.
    ``(2) The Commission shall issue a final rule to implement the 
requirements of this section not later than 180 days after the date of 
enactment of this section.
    ``(c) Certification.--Following the issuance of a Commission rule 
under subsection (b)(2), any person may submit an application to the 
Commission for certification as the Electric Reliability Organization 
(ERO). The Commission may certify one such ERO if the Commission 
determines that such ERO--
            ``(1) has the ability to develop and enforce, subject to 
        subsection (e)(2), reliability standards that provide for an 
        adequate level of reliability of the bulk-power system;
            ``(2) has established rules that--
                    ``(A) assure its independence of the users and 
                owners and operators of the bulk-power system, while 
                assuring fair stakeholder representation in the 
                selection of its directors and balanced decisionmaking 
                in any ERO committee or subordinate organizational 
                structure;
                    ``(B) allocate equitably reasonable dues, fees, and 
                other charges among end users for all activities under 
                this section;
                    ``(C) provide fair and impartial procedures for 
                enforcement of reliability standards through the 
                imposition of penalties in accordance with subsection 
                (e) (including limitations on activities, functions, or 
                operations, or other appropriate sanctions);
                    ``(D) provide for reasonable notice and opportunity 
                for public comment, due process, openness, and balance 
                of interests in developing reliability standards and 
                otherwise exercising its duties; and
                    ``(E) provide for taking, after certification, 
                appropriate steps to gain recognition in Canada and 
                Mexico.
    ``(d) Reliability Standards.--(1) The Electric Reliability 
Organization shall file each reliability standard or modification to a 
reliability standard that it proposes to be made effective under this 
section with the Commission.
    ``(2) The Commission may approve by rule or order a proposed 
reliability standard or modification to a reliability standard if it 
determines that the standard is just, reasonable, not unduly 
discriminatory or preferential, and in the public interest. The 
Commission shall give due weight to the technical expertise of the 
Electric Reliability Organization with respect to the content of a 
proposed standard or modification to a reliability standard and to the 
technical expertise of a regional entity organized on an 
Interconnection-wide basis with respect to a reliability standard to be 
applicable within that Interconnection, but shall not defer with 
respect to the effect of a standard on competition. A proposed standard 
or modification shall take effect upon approval by the Commission.
    ``(3) The Electric Reliability Organization shall rebuttably 
presume that a proposal from a regional entity organized on an 
Interconnection-wide basis for a reliability standard or modification 
to a reliability standard to be applicable on an Interconnection-wide 
basis is just, reasonable, and not unduly discriminatory or 
preferential, and in the public interest.
    ``(4) The Commission shall remand to the Electric Reliability 
Organization for further consideration a proposed reliability standard 
or a modification to a reliability standard that the Commission 
disapproves in whole or in part.
    ``(5) The Commission, upon its own motion or upon complaint, may 
order the Electric Reliability Organization to submit to the Commission 
a proposed reliability standard or a modification to a reliability 
standard that addresses a specific matter if the Commission considers 
such a new or modified reliability standard appropriate to carry out 
this section.
    ``(6) The final rule adopted under subsection (b)(2) shall include 
fair processes for the identification and timely resolution of any 
conflict between a reliability standard and any function, rule, order, 
tariff, rate schedule, or agreement accepted, approved, or ordered by 
the Commission applicable to a transmission organization. Such 
transmission organization shall continue to comply with such function, 
rule, order, tariff, rate schedule or agreement accepted approved, or 
ordered by the Commission until--
            ``(A) the Commission finds a conflict exists between a 
        reliability standard and any such provision;
            ``(B) the Commission orders a change to such provision 
        pursuant to section 206 of this part; and
            ``(C) the ordered change becomes effective under this part.
If the Commission determines that a reliability standard needs to be 
changed as a result of such a conflict, it shall order the ERO to 
develop and file with the Commission a modified reliability standard 
under paragraph (4) or (5) of this subsection.
    ``(e) Enforcement.--(1) The ERO may impose, subject to paragraph 
(2), a penalty on a user or owner or operator of the bulk-power system 
for a violation of a reliability standard approved by the Commission 
under subsection (d) if the ERO, after notice and an opportunity for a 
hearing--
            ``(A) finds that the user or owner or operator has violated 
        a reliability standard approved by the Commission under 
        subsection (d); and
            ``(B) files notice and the record of the proceeding with 
        the Commission.
    ``(2) A penalty imposed under paragraph (1) may take effect not 
earlier than the 31st day after the Electric Reliability Organization 
files with the Commission notice of the penalty and the record of 
proceedings. Such penalty shall be subject to review by the Commission, 
on its own motion or upon application by the user, owner or operator 
that is the subject of the penalty filed within 30 days after the date 
such notice is filed with the Commission. Application to the Commission 
for review, or the initiation of review by the Commission on its own 
motion, shall not operate as a stay of such penalty unless the 
Commission otherwise orders upon its own motion or upon application by 
the user, owner or operator that is the subject of such penalty. In any 
proceeding to review a penalty imposed under paragraph (1), the 
Commission, after notice and opportunity for hearing (which hearing may 
consist solely of the record before the Electric Reliability 
Organization and opportunity for the presentation of supporting reasons 
to affirm, modify, or set aside the penalty), shall by order affirm, 
set aside, reinstate, or modify the penalty, and, if appropriate, 
remand to the Electric Reliability Organization for further 
proceedings. The Commission shall implement expedited procedures for 
such hearings.
    ``(3) On its own motion or upon complaint, the Commission may order 
compliance with a reliability standard and may impose a penalty against 
a user or owner or operator of the bulk-power system, if the Commission 
finds, after notice and opportunity for a hearing, that the user or 
owner or operator of the bulk-power system has engaged or is about to 
engage in any acts or practices that constitute or will constitute a 
violation of a reliability standard.
    ``(4) The Commission shall establish regulations directing the ERO 
to enter into an agreement to delegate authority to a regional entity 
for the purpose of proposing reliability standards to the ERO and 
enforcing reliability standards under paragraph (1) if--
            ``(A) the regional entity is governed by an independent, 
        balanced stakeholder, or combination independent and balanced 
        stakeholder board;
            ``(B) the regional entity otherwise satisfies the 
        provisions of subsection (c)(1) and (2); and
            ``(C) the agreement promotes effective and efficient 
        administration of bulk-power system reliability.
The Commission may modify such delegation. The ERO and the Commission 
shall rebuttably presume that a proposal for delegation to a regional 
entity organized on an Interconnection-wide basis promotes effective 
and efficient administration of bulk-power system reliability and 
should be approved. Such regulation may provide that the Commission may 
assign the ERO's authority to enforce reliability standards under 
paragraph (1) directly to a regional entity consistent with the 
requirements of this paragraph.
    ``(5) The Commission may take such action as is necessary or 
appropriate against the ERO or a regional entity to ensure compliance 
with a reliability standard or any Commission order affecting the ERO 
or a regional entity.
    ``(6) Any penalty imposed under this section shall bear a 
reasonable relation to the seriousness of the violation and shall take 
into consideration the efforts of such user, owner, or operator to 
remedy the violation in a timely manner.
    ``(f) Changes in Electricity Reliability Organization Rules.--The 
Electric Reliability Organization shall file with the Commission for 
approval any proposed rule or proposed rule change, accompanied by an 
explanation of its basis and purpose. The Commission, upon its own 
motion or complaint, may propose a change to the rules of the Electric 
Reliability Organization. A proposed rule or proposed rule change shall 
take effect upon a finding by the Commission, after notice and 
opportunity for comment, that the change is just, reasonable, not 
unduly discriminatory or preferential, is in the public interest, and 
satisfies the requirements of subsection (c).
    ``(g) Reliability Reports.--The Electric Reliability Organization 
shall conduct periodic assessments of the reliability and adequacy of 
the bulk-power system in North America.
    ``(h) Coordination With Canada and Mexico.--The President is urged 
to negotiate international agreements with the governments of Canada 
and Mexico to provide for effective compliance with reliability 
standards and the effectiveness of the Electric Reliability 
Organization in the United States and Canada or Mexico.
    ``(i) Savings Provisions.--(1) The Electric Reliability 
Organization shall have authority to develop and enforce compliance 
with reliability standards for only the bulk-power system.
    ``(2) This section does not authorize the Electric Reliability 
Organization or the Commission to order the construction of additional 
generation or transmission capacity or to set and enforce compliance 
with standards for adequacy or safety of electric facilities or 
services.
    ``(3) Nothing in this section shall be construed to preempt any 
authority of any State to take action to ensure the safety, adequacy, 
and reliability of electric service within that State, as long as such 
action is not inconsistent with any reliability standard.
    ``(4) Within 90 days of the application of the Electric Reliability 
Organization or other affected party, and after notice and opportunity 
for comment, the Commission shall issue a final order determining 
whether a State action is inconsistent with a reliability standard, 
taking into consideration any recommendation of the Electric 
Reliability Organization.
    ``(5) The Commission, after consultation with the Electric 
Reliability Organization, may stay the effectiveness of any State 
action, pending the Commission's issuance of a final order.
    ``(j) Regional Advisory Bodies.--The Commission shall establish a 
regional advisory body on the petition of at least two-thirds of the 
States within a region that have more than one-half of their electric 
load served within the region. A regional advisory body shall be 
composed of one member from each participating State in the region, 
appointed by the Governor of each State, and may include 
representatives of agencies, States, and provinces outside the United 
States. A regional advisory body may provide advice to the Electric 
Reliability Organization, a regional entity, or the Commission 
regarding the governance of an existing or proposed regional entity 
within the same region, whether a standard proposed to apply within the 
region is just, reasonable, not unduly discriminatory or preferential, 
and in the public interest, whether fees proposed to be assessed within 
the region are just, reasonable, not unduly discriminatory or 
preferential, and in the public interest and any other responsibilities 
requested by the Commission. The Commission may give deference to the 
advice of any such regional advisory body if that body is organized on 
an Interconnection-wide basis.
    ``(k) Application to Alaska and Hawaii.--The provisions of this 
section do not apply to Alaska or Hawaii.''.

             TITLE II--ELIMINATION OF COMPETITIVE BARRIERS

Subtitle A--Provisions Regarding the Public Utility Holding Company Act 
                                of 1935

SEC. 201. DEFINITIONS.

    For the purposes of this subtitle:
            (1) The term ``affiliate'' of a company means any company 5 
        percent or more of the outstanding voting securities of which 
        are owned, controlled, or held with power to vote, directly or 
        indirectly, by such company.
            (2) The term ``associate company'' of a company means any 
        company in the same holding company system with such company.
            (3) The term ``Commission'' means the Federal Energy 
        Regulatory Commission.
            (4) The term ``company'' means a corporation, partnership, 
        association, joint stock company, business trust, or any 
        organized group of persons, whether incorporated or not, or a 
        receiver, trustee, or other liquidating agent of any of the 
        foregoing.
            (5) The term ``electric utility company'' means any company 
        that owns or operates facilities used for the generation, 
        transmission, or distribution of electric energy for sale.
            (6) The terms ``exempt wholesale generator'' and ``foreign 
        utility company'' have the same meanings as in sections 32 and 
        33, respectively, of the Public Utility Holding Company Act of 
        1935 (15 U.S.C. 79z-5, 79z-5b), as those sections existed on 
        the day before the effective date of this subtitle.
            (7) The term ``gas utility company'' means any company that 
        owns or operates facilities used for distribution at retail 
        (other than the distribution only in enclosed portable 
        containers or distribution to tenants or employees of the 
        company operating such facilities for their own use and not for 
        resale) of natural or manufactured gas for heat, light, or 
        power.
            (8) the term ``holding company'' means--
                    (A) any company that directly or indirectly owns, 
                controls, or holds, with power to vote, 10 percent or 
                more of the outstanding voting securities of a public 
                utility company or of a holding company of any public 
                utility company; and
                    (B) any person, determined by the Commission, after 
                notice and opportunity for hearing, to exercise 
                directly or indirectly (either alone or pursuant to an 
                arrangement or understanding with one or more persons) 
                such a controlling influence over the management or 
                policies of any public utility company or holding 
                company as to make it necessary or appropriate for the 
                rate protection of utility customers with respect to 
                rates that such person be subject to the obligations, 
                duties, and liabilities imposed by this subtitle upon 
                holding companies.
            (9) The term ``holding company system'' means a holding 
        company, together with its subsidiary companies.
            (10) The term ``jurisdictional rates'' means rates 
        established by the Commission for the transmission of electric 
        energy in interstate commerce, the sale of electric energy at 
        wholesale in interstate commerce, the transportation of natural 
        gas in interstate commerce, and the sale in interstate commerce 
        of natural gas for resale for ultimate public consumption for 
        domestic, commercial, industrial, or any other use.
            (11) The term ``natural gas company'' means a person 
        engaged in the transportation of natural gas in interstate 
        commerce or the sale of such gas in interstate commerce for 
        resale.
            (12) The term ``person'' means an individual or company.
            (13) The term ``public utility'' means any person who owns 
        or operates facilities used for transmission of electric energy 
        in interstate commerce or sales of electric energy at wholesale 
        in interstate commerce.
            (14) The term ``public utility company'' means an electric 
        utility company or a gas utility company.
            (15) The term ``State commission'' means any commission, 
        board, agency, or officer, by whatever name designated, of a 
        State, municipality, or other political subdivision of a State 
        that, under the laws of such State, has jurisdiction to 
        regulate public utility companies.
            (16) The term ``subsidiary company'' of a holding company 
        means--
                    (A) any company, 10 percent or more of the 
                outstanding voting securities of which are directly or 
                indirectly owned, controlled, or held with power to 
                vote, by such holding company; and
                    (B) any person, the management or policies of which 
                the Commission, after notice and opportunity for 
                hearing, determines to be subject to a controlling 
                influence, directly or indirectly, by such holding 
                company (either alone or pursuant to an arrangement or 
                understanding with one or more other persons) so as to 
                make it necessary for the rate protection of utility 
                customers with respect to rates that such person be 
                subject to the obligations, duties, and liabilities 
                imposed by this subtitle upon subsidiary companies of 
                holding companies.
            (17) The term ``voting security'' means any security 
        presently entitling the owner or holder thereof to vote in the 
        direction or management of the affairs of a company.

SEC. 202. REPEAL OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935.

    The Public Utility Holding Company Act of 1935 (15 U.S.C. 79a and 
following) is repealed, effective 12 months after the date of enactment 
of this Act.

SEC. 203. FEDERAL ACCESS TO BOOKS AND RECORDS.

    (a) In General.--Each holding company and each associate company 
thereof shall maintain, and shall make available to the Commission, 
such books, accounts, memoranda, and other records as the Commission 
determines are relevant to costs incurred by a public utility or 
natural gas company that is an associate company of such holding 
company and necessary or appropriate for the protection of utility 
customers with respect to jurisdictional rates.
    (b) Affiliate Companies.--Each affiliate of a holding company or of 
any subsidiary company of a holding company shall maintain, and make 
available to the Commission, such books, accounts, memoranda, and other 
records with respect to any transaction with another affiliate, as the 
Commission determines are relevant to costs incurred by a public 
utility or natural gas company that is an associate company of such 
holding company and necessary or appropriate for the protection of 
utility customers with respect to jurisdictional rates.
    (c) Holding Company Systems.--The Commission may examine the books, 
accounts, memoranda, and other records of any company in a holding 
company system, or any affiliate thereof, as the Commission determines 
are relevant to costs incurred by a public utility or natural gas 
company within such holding company system and necessary or appropriate 
for the protection of utility customers with respect to jurisdictional 
rates.
    (d) Confidentiality.--No member, officer, or employee of the 
Commission shall divulge any fact or information that may come to his 
or her knowledge during the course of examination of books, accounts, 
memoranda, or other records as provided in this section, except as may 
be directed by the Commission or by a court of competent jurisdiction.

SEC. 204. STATE ACCESS TO BOOKS AND RECORDS.

    (a) In General.--Upon the written request of a State commission 
having jurisdiction to regulate a public utility company in a holding 
company system, and subject to such terms and conditions as may be 
necessary and appropriate to safeguard against unwarranted disclosure 
to the public of any trade secrets or sensitive commercial information, 
a holding company or any associate company or affiliate thereof, 
wherever located, shall produce for inspection books, accounts, 
memoranda, and other records that--
            (1) have been identified in reasonable detail in a 
        proceeding before the State commission;
            (2) the State commission determines are relevant to costs 
        incurred by such public utility company; and
            (3) are necessary for the effective discharge of the 
        responsibilities of the State commission with respect to such 
        proceeding.
    (b) Effect on State Law.--Nothing in this section shall preempt 
applicable State law concerning the provision of books, accounts, 
memoranda, or other records, or in any way limit the rights of any 
State to obtain books, accounts, memoranda, or other records, under 
Federal law, contract, or otherwise.
    (c) Court Jurisdiction.--Any United States district court located 
in the State in which the State commission referred to in subsection 
(a) is located shall have jurisdiction to enforce compliance with this 
section.

SEC. 205. EXEMPTION AUTHORITY.

    (a) Rulemaking.--Not later than 90 days after the date of enactment 
of this Act, the Commission shall promulgate a final rule to exempt 
from the requirements of section 203 any person that is a holding 
company, solely with respect to one or more--
            (1) qualifying facilities under the Public Utility 
        Regulatory Policies Act of 1978;
            (2) exempt wholesale generators; or
            (3) foreign utility companies.
    (b) Other Authority.--If, upon application or upon its own motion, 
the Commission finds that the books, accounts, memoranda, and other 
records of any person are not relevant to the jurisdictional rates of a 
public utility company or natural gas company, or if the Commission 
finds that any class of transactions is not relevant to the 
jurisdictional rates of a public utility company, the Commission shall 
exempt such person or transaction from the requirements of section 203.

SEC. 206. AFFILIATE TRANSACTIONS.

    Nothing in this subtitle shall preclude the Commission or a State 
commission from exercising its jurisdiction under otherwise applicable 
law to determine whether a public utility company, public utility, or 
natural gas company may recover in rates any costs of an activity 
performed by an associate company, or any costs of goods or services 
acquired by such public utility company, public utility, or natural gas 
company from an associate company.

SEC. 207. APPLICABILITY.

    No provision of this subtitle shall apply to, or be deemed to 
include--
            (1) the United States;
            (2) a State or any political subdivision of a State;
            (3) any foreign governmental authority not operating in the 
        United States;
            (4) any agency, authority, or instrumentality of any entity 
        referred to in paragraph (1), (2), or (3); or
            (5) any officer, agent, or employee of any entity referred 
        to in paragraph (1), (2), or (3) acting as such in the course 
        of such officer, agent, or employee's official duty.

SEC. 208. EFFECT ON OTHER REGULATIONS.

    Nothing in this subtitle precludes the Commission or a State 
commission from exercising its jurisdiction under otherwise applicable 
law to protect utility customers.

SEC. 209. ENFORCEMENT.

    The Commission shall have the same powers as set forth in sections 
306 through 317 of the Federal Power Act (16 U.S.C. 825e-825p) to 
enforce the provisions of this subtitle.

SEC. 210. SAVINGS PROVISIONS.

    (a) In General.--Nothing in this subtitle prohibits a person from 
engaging in or continuing to engage in activities or transactions in 
which it is legally engaged or authorized to engage on the date of 
enactment of this Act, if that person continues to comply with the 
terms of any such authorization, whether by rule or by order.
    (b) Effect on Other Commission Authority.--Nothing in this subtitle 
limits the authority of the Commission under the Federal Power Act (16 
U.S.C. 791a and following) (including section 301 of that Act) or the 
Natural Gas Act (15 U.S.C. 717 and following) (including section 8 of 
that Act).

SEC. 211. IMPLEMENTATION.

    Not later than 12 months after the date of enactment of this Act, 
the Commission shall--
            (1) promulgate such regulations as may be necessary or 
        appropriate to implement this subtitle; and
            (2) submit to Congress detailed recommendations on 
        technical and conforming amendments to Federal law necessary to 
        carry out this subtitle and the amendments made by this 
        subtitle.

SEC. 212. TRANSFER OF RESOURCES.

    All books and records that relate primarily to the functions 
transferred to the Commission under this subtitle shall be transferred 
from the Securities and Exchange Commission to the Commission.

SEC. 213. EFFECTIVE DATE.

    This subtitle shall take effect 12 months after the date of 
enactment of this Act.

SEC. 214. CONFORMING AMENDMENT TO THE FEDERAL POWER ACT.

    Section 318 of the Federal Power Act (16 U.S.C. 825q) is repealed.

Subtitle B--Provisions Regarding the Public Utility Regulatory Policies 
                              Act of 1978

SEC. 215. PROSPECTIVE REPEAL OF SECTION 210.

    (a) New Contracts.--After the date of enactment of this Act, no 
electric utility shall be required to enter into a new contract or 
obligation to purchase or to sell electric energy or capacity pursuant 
to section 210 of the Public Utility Regulatory Policies Act of 1978 
(16 U.S.C. 824a-3).
    (b) Existing Rights and Remedies Not Affected.--Nothing in this Act 
affects the rights or remedies of any party with respect to the 
purchase or sale of electric energy or capacity from or to a facility 
determined to be a qualifying small power production facility or a 
qualifying cogeneration facility under section 210 of the Public 
Utility Regulatory Policies Act of 1978 pursuant to any contract or 
obligation to purchase or to sell electric energy or capacity in effect 
on the date of enactment of this Act, including the right to recover 
the costs of purchasing such electric energy or capacity.

SEC. 216. RECOVERY OF COSTS.

    In order to assure recovery by electric utilities purchasing 
electric energy or capacity from a qualifying facility pursuant to any 
legally enforceable obligation entered into or imposed pursuant to 
section 210 of the Public Utility Regulatory Policies Act of 1978 prior 
to the date of enactment of this Act, of all costs associated with such 
purchases, the Commission shall promulgate and enforce such regulations 
as may be required to assure that no such electric utility shall be 
required directly or indirectly to absorb the costs associated with 
such purchases from a qualifying facility. Such regulations shall be 
treated as a rule enforceable under the Federal Power Act (16 U.S.C. 
791a-825r).

SEC. 217. DEFINITIONS.

    For purposes of this subtitle, the terms ``Commission'', ``electric 
utility'', ``qualifying cogeneration facility'', and ``qualifying small 
power production facility'', shall have the same meanings as provided 
in the Public Utility Regulatory Policies Act of 1978, and the term 
``qualifying facility'' shall mean either a qualifying small production 
facility or a qualifying cogeneration facility as defined in such Act.

   TITLE III--MARKET TRANSPARENCY, ANTI-MANIPULATION AND ENFORCEMENT

   Subtitle A--Market Transparency, Anti-Manipulation and Enforcement

SEC. 301. MARKET TRANSPARENCY RULES.

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

``SEC. 216. MARKET TRANSPARENCY RULES.

    ``(a) Commission Rules.--Not later than 180 days after the date of 
enactment of this section, the Commission shall issue rules 
establishing an electronic information system to provide the Commission 
and the public with access to such information as is necessary or 
appropriate to facilitate price transparency and participation in 
markets subject to the Commission's jurisdiction. Such systems shall 
provide statistical information about the availability and market price 
of wholesale electric energy and transmission services to the 
Commission, State commissions, buyers and sellers of wholesale electric 
energy, users of transmission services, and the public on a timely 
basis.
    ``(b) Information Required.--The Commission shall require--
            ``(1) each regional transmission organization or, where no 
        regional transmission organization is operating, each 
        transmitting utility to provide information about the available 
        capacity of transmission facilities operated by the 
        organization or transmitting utility; and
            ``(2) each regional transmission organization or broker or 
        exchange to provide aggregate information about the amount and 
        price of physical sales of electric energy at wholesale in 
        interstate commerce it transacts.
    ``(c) Definition.--For purposes of this section, the term `broker 
or exchange' means an entity that matches offers to sell and offers to 
buy physical sales of wholesale electric energy in interstate commerce.
    ``(d) Protection of Sensitive Information.--The Commission shall 
exempt from disclosure information it determines would, if disclosed, 
be detrimental to the operation of an effective market.''.

SEC. 302. MARKET MANIPULATION.

    (a) Part II of the Federal Power Act is amended by adding after 
section 216 as added by this Act the following:

``SEC. 217. PROHIBITION ON FILING FALSE INFORMATION.

    ``It shall be a violation of this Act for any person willfully and 
knowingly to report any information relating to the price of 
electricity sold at wholesale, which information the person knew to be 
false at the time of the reporting, to any governmental or non-
governmental entity and with the intent to manipulate the data being 
compiled by such entity.

``SEC. 218. PROHIBITION ON ROUND TRIP TRADING.

    ``(a) Prohibition.--It shall be a violation of this Act for any 
person willfully and knowingly to enter into any contract or other 
arrangement to execute a `round-trip trade' for the purchase or sale of 
electric energy at wholesale.
    ``(b) Definition of Round-Trip Trade.--For the purposes of this 
section, the term `round trip trade' means a transaction, or 
combination of transactions, in which a person or other entity--
            ``(1) enters into a contract or other arrangement to 
        purchase from, or sell to, any other person or other entity 
        electric energy at wholesale;
            ``(2) simultaneously with entering into the contract or 
        arrangement described in paragraph (1), arranges a financially 
        offsetting trade with such other person or entity for the same 
        such electric energy, at the same location, price, quantity and 
        terms so that, collectively, the purchase and sale transactions 
        in themselves result in no financial gain or loss; and
            ``(3) enters into the contract or arrangement with the 
        intent to deceptively affect reported revenues, trading 
        volumes, or prices.''.

SEC. 303. ENFORCEMENT.

    (a) Complaints.--Section 306 of the Federal Power Act (16 U.S.C. 
825e) is amended by--
            (1) inserting ``electric utility,'' after ``Any person,''; 
        and
            (2) inserting ``transmitting utility,'' after ``licensee'' 
        each place it appears.
    (b) Investigations.--Section 307(a) of the Federal Power Act (16 
U.S.C. 825f(a)) is amended by inserting ``or transmitting utility'' 
after ``any person'' in the first sentence.
    (c) Review of Commission Orders.--Section 313(a) of the Federal 
Power Act (16 U.S.C. 8251) is amended by inserting ``electric 
utility,'' after ``Any person,'' in the first sentence.
    (d) Criminal Penalties.--Section 316 of the Federal Power Act (16 
U.S.C. 825o) is amended--
            (1) in subsection (a), by striking ``$5,000'' and inserting 
        ``$1,000,000'', and by striking ``two years'' and inserting 
        ``five years'';
            (2) in subsection (b), by striking ``$500'' and inserting 
        ``$25,000''; and
            (3) by striking subsection (c).
    (e) Civil Penalties.--Section 316A of the Federal Power Act (16 
U.S.C. 825o-1) is amended--
            (1) in subsections (a) and (b), by striking ``section 211, 
        212, 213, or 214'' each place it appears and inserting ``Part 
        II''; and
            (2) in subsection (b), by striking ``$10,000'' and 
        inserting ``$1,000,000''.

                   Subtitle B--Refund Effective Date

SEC. 304. REFUND EFFECTIVE DATE.

    Section 206(b) of the Federal Power Act (16 U.S.C. 824e(b)) is 
amended by--
            (1) striking ``the date 60 days after the filing of such 
        complaint nor later than 5 months after the expiration of such 
        60-day period'' in the second sentence and inserting ``the date 
        of the filing of such complaint nor later than 5 months after 
        the filing of such complaint'';
            (2) striking ``60 days after'' in the third sentence and 
        inserting ``of'';
            (3) striking ``expiration of such 60-day period'' in the 
        third sentence and inserting ``publication date''; and
            (4) striking the fifth sentence and inserting in lieu 
        thereof: ``If no final decision is rendered by the conclusion 
        of the 180-day period commencing upon initiation of a 
        proceeding pursuant to this section, the Commission shall state 
        the reasons why it has failed to do so and shall state its best 
        estimate as to when it reasonably expects to make such 
        decision.''.
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