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posed project in a State because the applicant does
not serve end-use customers in the State; or
‘‘(C) a State commission or other entity that has
authority to approve the siting of the facilities has—
‘‘(i) withheld approval for more than 1 year
after the filing of an application seeking ap-
proval pursuant to applicable law or 1 year
after the designation of the relevant national in-
terest electric transmission corridor, whichever is
later; or
‘‘(ii) conditioned its approval in such a
manner that the proposed construction or modi-
fication will not significantly reduce trans-
mission congestion in interstate commerce or is
not economically feasible;
‘‘(2) the facilities to be authorized by the permit
will be used for the transmission of electric energy in
interstate commerce;
‘‘(3) the proposed construction or modification is
consistent with the public interest;
‘‘(4) the proposed construction or modification
will significantly reduce transmission congestion in
interstate commerce and protects or benefits con-
sumers;
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‘‘(5) the proposed construction or modification is
consistent with sound national energy policy and will
enhance energy independence; and
‘‘(6) the proposed modification will maximize, to
the extent reasonable and economical, the trans-
mission capabilities of existing towers or structures so
as to minimize the environmental and visual impact
of the proposed modification.
‘‘(c) PERMIT APPLICATIONS.—(1) Permit applications
under subsection (b) shall be made in writing to the Com-
mission.
‘‘(2) The Commission shall issue rules specifying—
‘‘(A) the form of the application;
‘‘(B) the information to be contained in the ap-
plication; and
‘‘(C) the manner of service of notice of the permit
application on interested persons.
‘‘(d) COMMENTS.—In any proceeding before the Com-
mission under subsection (b), the Commission shall afford
each State in which a transmission facility covered by the
permit is or will be located, each affected Federal agency
and Indian tribe, private property owners, and other inter-
ested persons, a reasonable opportunity to present their
views and recommendations with respect to the need for and
impact of a facility covered by the permit.
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‘‘(e) RIGHTS-OF-WAY.—(1) In the case of a permit
under subsection (b) for electric transmission facilities to
be located on property other than property owned by the
United States or a State, if the permit holder cannot ac-
quire by contract, or is unable to agree with the owner of
the property to the compensation to be paid for, the nec-
essary right-of-way to construct or modify the transmission
facilities, the permit holder may acquire the right-of-way
by the exercise of the right of eminent domain in the district
court of the United States for the district in which the prop-
erty concerned is located, or in the appropriate court of the
State in which the property is located.
‘‘(2) Any right-of-way acquired under paragraph (1)
shall be used exclusively for the construction or modification
of electric transmission facilities within a reasonable period
of time after the acquisition.
‘‘(3) The practice and procedure in any action or pro-
ceeding under this subsection in the district court of the
United States shall conform as nearly as practicable to the
practice and procedure in a similar action or proceeding
in the courts of the State in which the property is located.
‘‘(f) COMPENSATION.—(1) Any right-of-way acquired
pursuant to subsection (e) shall be considered a taking of
private property for which just compensation is due.
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‘‘(2) Just compensation shall be an amount equal to
the fair market value (including applicable severance dam-
ages) of the property taken on the date of the exercise of
eminent domain authority.
‘‘(g) STATE LAW.—Nothing in this section precludes
any person from constructing or modifying any trans-
mission facility in accordance with State law.
‘‘(h) COORDINATION OF FEDERAL AUTHORIZATIONS
FOR TRANSMISSION FACILITIES.—(1) In this subsection:
‘‘(A) The term ‘Federal authorization’ means
any authorization required under Federal law in
order to site a transmission facility.
‘‘(B) The term ‘Federal authorization’ includes
such permits, special use authorizations, certifi-
cations, opinions, or other approvals as may be re-
quired under Federal law in order to site a trans-
mission facility.
‘‘(2) The Department of Energy shall act as the lead
agency for purposes of coordinating all applicable Federal
authorizations and related environmental reviews of the fa-
cility.
‘‘(3) To the maximum extent practicable under appli-
cable Federal law, the Secretary shall coordinate the Fed-
eral authorization and review process under this subsection
with any Indian tribes, multistate entities, and State agen-
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cies that are responsible for conducting any separate per-
mitting and environmental reviews of the facility, to ensure
timely and efficient review and permit decisions.
‘‘(4)(A) As head of the lead agency, the Secretary, in
consultation with agencies responsible for Federal author-
izations and, as appropriate, with Indian tribes, multistate
entities, and State agencies that are willing to coordinate
their own separate permitting and environmental reviews
with the Federal authorization and environmental reviews,
shall establish prompt and binding intermediate milestones
and ultimate deadlines for the review of, and Federal au-
thorization decisions relating to, the proposed facility.
‘‘(B) The Secretary shall ensure that, once an applica-
tion has been submitted with such data as the Secretary
considers necessary, all permit decisions and related envi-
ronmental reviews under all applicable Federal laws shall
be completed—
‘‘(i) within 1 year; or
‘‘(ii) if a requirement of another provision of
Federal law does not permit compliance with clause
(i), as soon thereafter as is practicable.
‘‘(C) The Secretary shall provide an expeditious pre-
application mechanism for prospective applicants to confer
with the agencies involved to have each such agency deter-
mine and communicate to the prospective applicant not
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later than 60 days after the prospective applicant submits
a request for such information concerning—
‘‘(i) the likelihood of approval for a potential fa-
cility; and
‘‘(ii) key issues of concern to the agencies and
public.
‘‘(5)(A) As lead agency head, the Secretary, in con-
sultation with the affected agencies, shall prepare a single
environmental review document, which shall be used as the
basis for all decisions on the proposed project under Federal
law.
‘‘(B) The Secretary and the heads of other agencies
shall streamline the review and permitting of transmission
within corridors designated under section 503 of the Federal
Land Policy and Management Act (43 U.S.C. 1763) by
fully taking into account prior analyses and decisions relat-
ing to the corridors.
‘‘(C) The document shall include consideration by the
relevant agencies of any applicable criteria or other matters
as required under applicable law.
‘‘(6)(A) If any agency has denied a Federal authoriza-
tion required for a transmission facility, or has failed to
act by the deadline established by the Secretary pursuant
to this section for deciding whether to issue the authoriza-
tion, the applicant or any State in which the facility would
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be located may file an appeal with the President, who shall,
in consultation with the affected agency, review the denial
or failure to take action on the pending application.
‘‘(B) Based on the overall record and in consultation
with the affected agency, the President may—
‘‘(i) issue the necessary authorization with any
appropriate conditions; or
‘‘(ii) deny the application.
‘‘(C) The President shall issue a decision not later than
90 days after the date of the filing of the appeal.
‘‘(D) In making a decision under this paragraph, the
President shall comply with applicable requirements of Fed-
eral law, including any requirements of—
‘‘(i) the National Forest Management Act of
1976 (16 U.S.C. 472a et seq.);
‘‘(ii) the Endangered Species Act of 1973 (16
U.S.C. 1531 et seq.);
‘‘(iii) the Federal Water Pollution Control Act
(33 U.S.C. 1251 et seq.);
‘‘(iv) the National Environmental Policy Act of
1969 (42 U.S.C. 4321 et seq.); and
‘‘(v) the Federal Land Policy and Management
Act of 1976 (43 U.S.C. 1701 et seq.).
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‘‘(7)(A) Not later than 18 months after the date of en-
actment of this section, the Secretary shall issue any regula-
tions necessary to implement this subsection.
‘‘(B)(i) Not later than 1 year after the date of enact-
ment of this section, the Secretary and the heads of all Fed-
eral agencies with authority to issue Federal authorizations
shall enter into a memorandum of understanding to ensure
the timely and coordinated review and permitting of elec-
tricity transmission facilities.
‘‘(ii) Interested Indian tribes, multistate entities, and
State agencies may enter the memorandum of under-
standing.
‘‘(C) The head of each Federal agency with authority
to issue a Federal authorization shall designate a senior
official responsible for, and dedicate sufficient other staff
and resources to ensure, full implementation of the regula-
tions and memorandum required under this paragraph.
‘‘(8)(A) Each Federal land use authorization for an
electricity transmission facility shall be issued—
‘‘(i) for a duration, as determined by the Sec-
retary, commensurate with the anticipated use of the
facility; and
‘‘(ii) with appropriate authority to manage the
right-of-way for reliability and environmental protec-
tion.
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‘‘(B) On the expiration of the authorization (including
an authorization issued before the date of enactment of this
section), the authorization shall be reviewed for renewal tak-
ing fully into account reliance on such electricity infra-
structure, recognizing the importance of the authorization
for public health, safety, and economic welfare and as a
legitimate use of Federal land.
‘‘(9) In exercising the responsibilities under this sec-
tion, the Secretary shall consult regularly with—
‘‘(A) the Federal Energy Regulatory Commis-
sion;
‘‘(B) electric reliability organizations (including
related regional entities) approved by the Commis-
sion; and
‘‘(C) Transmission Organizations approved by
the Commission.
‘‘(i) INTERSTATE COMPACTS.—(1) The consent of Con-
gress is given for 3 or more contiguous States to enter into
an interstate compact, subject to approval by Congress, es-
tablishing regional transmission siting agencies to—
‘‘(A) facilitate siting of future electric energy
transmission facilities within those States; and
‘‘(B) carry out the electric energy transmission
siting responsibilities of those States.
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‘‘(2) The Secretary may provide technical assistance
to regional transmission siting agencies established under
this subsection.
‘‘(3) The regional transmission siting agencies shall
have the authority to review, certify, and permit siting of
transmission facilities, including facilities in national in-
terest electric transmission corridors (other than facilities
on property owned by the United States).
‘‘(4) The Commission shall have no authority to issue
a permit for the construction or modification of an electric
transmission facility within a State that is a party to a
compact, unless the members of the compact are in disagree-
ment and the Secretary makes, after notice and an oppor-
tunity for a hearing, the finding described in subsection
(b)(1)(C).
‘‘(j) RELATIONSHIP TO OTHER LAWS.—(1) Except as
specifically provided, nothing in this section affects any re-
quirement of an environmental law of the United States,
including the National Environmental Policy Act of 1969
(42 U.S.C. 4321 et seq.).
‘‘(2) Subsection (h)(6) shall not apply to any unit of
the National Park System, the National Wildlife Refuge
System, the National Wild and Scenic Rivers System, the
National Trails System, the National Wilderness Preserva-
tion System, or a National Monument.’’.
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(b) REPORTS
TO CONGRESS
ON CORRIDORS
AND
RIGHTS OF WAY ON FEDERAL LANDS.—Not later than 90
days after the date of enactment of this Act, the Secretary
of the Interior, the Secretary, the Secretary of Agriculture,
and the Chairman of the Council on Environmental Qual-
ity shall submit to Congress a joint report identifying—
(1)(A) all existing designated transmission and
distribution corridors on Federal land and the status
of work related to proposed transmission and dis-
tribution corridor designations under title V of the
Federal Land Policy and Management Act of 1976
(43 U.S.C. 1761 et seq.);
(B) the schedule for completing the work;
(C) any impediments to completing the work;
and
(D) steps that Congress could take to expedite the
process;
(2)(A) the number of pending applications to lo-
cate transmission facilities on Federal land;
(B) key information relating to each such facil-
ity;
(C) how long each application has been pending;
(D) the schedule for issuing a timely decision as
to each facility; and
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(E) progress in incorporating existing and new
such rights-of-way into relevant land use and resource
management plans or the equivalent of those plans;
and
(3)(A) the number of existing transmission and
distribution rights-of-way on Federal land that will
come up for renewal within the following 5-, 10-, and
15-year periods; and
(B) a description of how the Secretaries plan to
manage the renewals.
SEC. 1222. THIRD-PARTY FINANCE.
(a) EXISTING FACILITIES.—The Secretary, acting
through the Administrator of the Western Area Power Ad-
ministration (referred to in this section as ‘‘WAPA’’) or the
Administrator of the Southwestern Power Administration
(referred to in this section as ‘‘SWPA’’), or both, may carry
out a project to design, develop, construct, operate, main-
tain, or own, or participate with other entities in designing,
developing, constructing, operating, maintaining, or own-
ing, an electric power transmission facility and related fa-
cilities needed to upgrade existing transmission facilities
owned by the SWPA or WAPA if the Secretary, in consulta-
tion with the applicable Administrator, determines that the
proposed project—
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(1)(A) is located in a national interest electric
transmission corridor designated under section 216(a)
of the Federal Power Act and will reduce congestion
of electric transmission in interstate commerce; or
(B) is necessary to accommodate an actual or
projected increase in demand for electric transmission
capacity;
(2) is consistent with—
(A) transmission needs identified, in a
transmission expansion plan or otherwise, by the
appropriate Transmission Organization (as de-
fined in section 3 of the Federal Power Act (16
U.S.C. 796)), if any, or approved regional reli-
ability organization; and
(B) efficient and reliable operation of the
transmission grid; and
(3) would be operated in conformance with pru-
dent utility practice.
(b) NEW FACILITIES.—The Secretary, acting through
the WAPA or SWPA, or both, may carry out a project to
design, develop, construct, operate, maintain, or own, or
participate with other entities in designing, developing,
constructing, operating, maintaining, or owning, a new
electric power transmission facility and related facilities lo-
cated within any State in which the WAPA or SWPA oper-
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ates if the Secretary, in consultation with the applicable
Administrator, determines that the proposed project—
(1)(A) is located in a national interest electric
transmission corridor designated under section 216(a)
of the Federal Power Act and will reduce congestion
of electric transmission in interstate commerce; or
(B) is necessary to accommodate an actual or
projected increase in demand for electric transmission
capacity;
(2) is consistent with—
(A) transmission needs identified, in a
transmission expansion plan or otherwise, by the
appropriate Transmission Organization, if any,
or approved regional reliability organization;
and
(B) efficient and reliable operation of the
transmission grid;
(3) will be operated in conformance with pru-
dent utility practice;
(4) will be operated by, or in conformance with
the rules of, the appropriate—
(A) Transmission Organization, if any; or
(B) if such an organization does not exist,
regional reliability organization; and
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(5) will not duplicate the functions of existing
transmission facilities or proposed facilities that are
the subject of ongoing or approved siting and related
permitting proceedings.
(c) OTHER FUNDS.—
(1) IN
GENERAL.—In carrying out a project
under subsection (a) or (b), the Secretary may accept
and use funds contributed by another entity for the
purpose of carrying out the project.
(2) AVAILABILITY.—The contributed funds shall
be available for expenditure for the purpose of car-
rying out the project—
(A) without fiscal year limitation; and
(B) as if the funds had been appropriated
specifically for the project.
(3) ALLOCATION OF COSTS.—In carrying out a
project under subsection (a) or (b), any costs of the
project not paid for by contributions from another en-
tity shall be—
(A) collected through rates charged to cus-
tomers using the new transmission capability
provided by the project; and
(B) allocated equitably among these project
beneficiaries using the new transmission capa-
bility.
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(d) RELATIONSHIP TO OTHER LAWS.—Nothing in this
section affects any requirement of—
(1) any Federal environmental law, including
the National Environmental Policy Act of 1969 (42
U.S.C. 4321 et seq.);
(2) any Federal or State law relating to the
siting of energy facilities; or
(3) any authorizing law in effect on the date of
enactment of this Act.
(e) SAVINGS CLAUSE.—Nothing in this section con-
strains or restricts an Administrator in the use of other
authority delegated to the Administrator of the WAPA or
SWPA.
(f) SECRETARIAL DETERMINATIONS.—Any determina-
tion made pursuant to subsection (a) or (b) shall be based
on findings by the Secretary using the best available data.
(g) MAXIMUM FUNDING AMOUNT.—The Secretary shall
not accept and use more than $100,000,000 under sub-
section (c)(1) for the period of fiscal years 2006 through
2013.
SEC. 1223. ADVANCED TRANSMISSION TECHNOLOGIES.
(a) DEFINITION OF ADVANCED TRANSMISSION TECH-
NOLOGY.—In this section, the term ‘‘advanced transmission
technology’’ means a technology that increases the capacity,
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efficiency, or reliability of an existing or new transmission
facility, including—
(1) high-temperature lines (including super-
conducting cables);
(2) underground cables;
(3) advanced conductor technology (including
advanced composite conductors, high-temperature low-
sag conductors, and fiber optic temperature sensing
conductors);
(4) high-capacity ceramic electric wire, connec-
tors, and insulators;
(5) optimized transmission line configurations
(including multiple phased transmission lines);
(6) modular equipment;
(7) wireless power transmission;
(8) ultra-high voltage lines;
(9) high-voltage DC technology;
(10) flexible AC transmission systems;
(11) energy storage devices (including pumped
hydro, compressed air, superconducting magnetic en-
ergy storage, flywheels, and batteries);
(12) controllable load;
(13) distributed generation (including PV, fuel
cells, and microturbines);
(14) enhanced power device monitoring;
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(15) direct system state sensors;
(16) fiber optic technologies;
(17) power electronics and related software (in-
cluding real time monitoring and analytical soft-
ware);
(18) mobile transformers and mobile substations;
and
(19) any other technologies the Commission con-
siders appropriate.
(b) AUTHORITY.—In carrying out the Federal Power
Act (16 U.S.C. 791a et seq.) and the Public Utility Regu-
latory Policies Act of 1978 (16 U.S.C. 2601 et seq.), the
Commission shall encourage, as appropriate, the deploy-
ment of advanced transmission technologies.
SEC. 1224. ADVANCED POWER SYSTEM TECHNOLOGY IN-
CENTIVE PROGRAM.
(a) DEFINITIONS.—In this section:
(1) QUALIFYING
ADVANCED
POWER
SYSTEM
TECHNOLOGY
FACILITY.—The term ‘‘qualifying ad-
vanced power system technology facility’’ means a fa-
cility using an advanced fuel cell, turbine, or hybrid
power system or power storage system to generate or
store electric energy.
(2) QUALIFYING SECURITY AND ASSURED POWER
FACILITY.—The term ‘‘qualifying security and as-
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sured power facility’’ means a qualifying advanced
power system technology facility determined by the
Secretary, in consultation with the Secretary of
Homeland Security, to be in critical need of secure,
reliable, rapidly available, high-quality power for
critical governmental, industrial, or commercial ap-
plications.
(b) PROGRAM.—The Secretary may establish an ad-
vanced power system technology incentive program to—
(1) support the deployment of certain advanced
power system technologies; and
(2) improve and protect certain critical govern-
mental, industrial, and commercial processes.
(c) INCENTIVE PAYMENTS.—
(1) IN
GENERAL.—Funds provided under this
section shall be used by the Secretary to make incen-
tive payments to eligible owners or operators of ad-
vanced power system technologies to increase power
generation through enhanced operational, economic,
and environmental performance.
(2) APPLICATION.—Payments under this section
may only be made on receipt by the Secretary of an
incentive payment application establishing an appli-
cant as—
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(A) a qualifying advanced power system
technology facility; or
(B) a qualifying security and assured
power facility.
(3) PAYMENT RATES.—Subject to availability of
funds—
(A) a payment of 1.8 cents per kilowatt-
hour shall be paid to the owner or operator of a
qualifying advanced power system technology fa-
cility under this section for electricity generated
at the facility; and
(B) an additional 0.7 cents per kilowatt-
hour shall be paid to the owner or operator of a
qualifying security and assured power facility
for electricity generated at the facility.
(4) PAYMENT
QUANTITY.—Any facility quali-
fying under this section shall be eligible for an incen-
tive payment for up to, but not more than, the first
10,000,000 kilowatt-hours produced in any fiscal
year.
(d) AUTHORIZATION OF APPROPRIATIONS.—There is
authorized to be appropriated to the Secretary to carry out
this section $10,000,000 for each of fiscal years 2006
through 2012.
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Subtitle C—Transmission
Operation Improvements
SEC. 1231. OPEN NONDISCRIMINATORY ACCESS.
Part II of the Federal Power Act (16 U.S.C. 824 et
seq.) is amended by inserting after section 211 (16 U.S.C.
824j) the following:
‘‘SEC. 211A. OPEN ACCESS BY UNREGULATED TRANSMIT-
TING UTILITIES.
‘‘(a) DEFINITION OF UNREGULATED TRANSMITTING
UTILITY.—In this section, the term ‘unregulated transmit-
ting utility’ means an entity that—
‘‘(1) owns or operates facilities used for the
transmission of electric energy in interstate com-
merce; and
‘‘(2) is an entity described in section 201(f).
‘‘(b) TRANSMISSION OPERATION IMPROVEMENTS.—
Subject to section 212(h), the Commission may, by rule or
order, require an unregulated transmitting utility to pro-
vide 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 which the
unregulated transmitting utility provides trans-
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mission services to itself and that are not unduly dis-
criminatory or preferential.
‘‘(c) EXEMPTION.—The Commission shall exempt from
any rule or order under this section any unregulated trans-
mitting utility that—
‘‘(1) sells not 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 inter-
connected transmission system (or any portion of the
system); or
‘‘(3) meets other criteria the Commission deter-
mines to be in the public interest.
‘‘(d) LOCAL DISTRIBUTION FACILITIES.—The require-
ments of subsection (b) shall not apply to facilities used
in local distribution.
‘‘(e) EXEMPTION TERMINATION.—If the Commission,
after an evidentiary hearing held on a complaint and after
giving consideration to reliability standards established
under section 215, finds on the basis of a preponderance
of the evidence that any exemption granted pursuant to sub-
section (c) unreasonably impairs the continued reliability
of an interconnected transmission system, the Commission
shall revoke the exemption granted to the transmitting util-
ity.
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‘‘(f) APPLICATION TO UNREGULATED TRANSMITTING
UTILITIES.—The rate changing procedures applicable to
public utilities under subsections (c) and (d) of section 205
are applicable to unregulated transmitting utilities for pur-
poses of this section.
‘‘(g) REMAND.—In exercising authority under sub-
section (b)(1), the Commission may remand transmission
rates to an unregulated transmitting utility for review and
revision if necessary to meet the requirements of subsection
(b).
‘‘(h) OTHER REQUESTS.—The provision of trans-
mission services under subsection (b) does not preclude a
request for transmission services under section 211.
‘‘(i) LIMITATION.—The Commission may not require
a State or municipality to take action under this section
that would violate a private activity bond rule for purposes
of section 141 of the Internal Revenue Code of 1986.
‘‘(j) TRANSFER OF CONTROL OF TRANSMITTING FA-
CILITIES.—Nothing in this section authorizes the Commis-
sion to require an unregulated transmitting utility to
transfer control or operational control of its transmitting
facilities to a Transmission Organization that is designated
to provide nondiscriminatory transmission access.’’.
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SEC. 1232. REGIONAL TRANSMISSION ORGANIZATIONS.
Part II of the Federal Power Act (16 U.S.C. 824 et
seq.) (as amended by section 1221(a)) is amended by adding
at the end the following:
‘‘SEC. 217. PROMOTION OF VOLUNTARY TRANSMISSION OR-
GANIZATIONS.
‘‘(a) IN GENERAL.—The Commission may encourage
and may approve the voluntary formation of RTOs, ISOs,
or other similar organizations approved by the Commission
for the purposes of—
‘‘(1) promoting fair, open access to electric trans-
mission service;
‘‘(2) facilitating wholesale competition;
‘‘(3) improving efficiencies in transmission grid
management;
‘‘(4) promoting grid reliability;
‘‘(5) removing opportunities for unduly discrimi-
natory or preferential transmission practices; and
‘‘(6) providing for the efficient development of
transmission infrastructure needed to meet the grow-
ing demands of competitive wholesale power markets.
‘‘(b) OPERATIONAL CONTROL.—No order issued under
this Act shall be conditioned on or require a transmitting
utility to transfer operational control of jurisdictional fa-
cilities to a Transmission Organization approved by the
Commission.
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‘‘(c) ANNUAL AUDITS.—(1) Each Transmission Orga-
nization shall report to the Commission on a scheduled
basis, as determined by the Commission, the means by
which the Transmission Organization will ensure that the
Transmission Organization will operate and perform the
functions of the Transmission Organization in a cost effec-
tive manner that is also consistent with the obligations of
the Transmission Organization under the Commission-ap-
proved tariffs and agreements of the Transmission Organi-
zation.
‘‘(2) The Commission shall annually audit the compli-
ance of the Transmission Organization with the filed plan
and any additional Commission requirements concerning
the performance, operations, and cost efficiencies of the
Transmission Organization.
‘‘(3) The Commission shall establish appropriate ac-
counting procedures for recording costs to facilitate com-
parisons among Transmission Organizations and, to the ex-
tent practicable, among other transmitting utilities per-
forming similar functions.’’.
SEC. 1233. FEDERAL UTILITY PARTICIPATION IN TRANS-
MISSION ORGANIZATIONS.
(a) DEFINITIONS.—In this section—
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(1) APPROPRIATE
FEDERAL
REGULATORY
AU-
THORITY.—The term ‘‘appropriate Federal regulatory
authority’’ means—
(A) in the case of a Federal power mar-
keting agency, the Secretary, except that the Sec-
retary may designate the Administrator of a
Federal power marketing agency to act as the
appropriate Federal regulatory authority with
respect to the transmission system of the Federal
power marketing agency; and
(B) in the case of the Tennessee Valley Au-
thority, the Board of Directors of the Tennessee
Valley Authority.
(2) FEDERAL POWER MARKETING AGENCY.—The
term ‘‘Federal power marketing agency’’ has the
meaning given the term in section 3 of the Federal
Power Act (16 U.S.C. 796).
(3) FEDERAL UTILITY.—The term ‘‘Federal util-
ity’’ means—
(A) a Federal power marketing agency; or
(B) the Tennessee Valley Authority.
(4) TRANSMISSION
ORGANIZATION.—The term
‘‘Transmission Organization’’ has the meaning given
the term in section 3 of the Federal Power Act (16
U.S.C. 796).
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(5) TRANSMISSION SYSTEM.—The term ‘‘trans-
mission system’’ means an electric transmission facil-
ity owned, leased, or contracted for by the United
States and operated by a Federal utility.
(b) TRANSFER.—The appropriate Federal regulatory
authority may enter into a contract, agreement, or other
arrangement transferring control and use of all or part of
the transmission system of a Federal utility to a Trans-
mission Organization.
(c) CONTENTS.—The contract, agreement, or arrange-
ment shall include—
(1) performance standards for operation and use
of the transmission system that the head of the Fed-
eral utility determines are necessary or appropriate,
including standards that ensure—
(A) recovery of all of the costs and expenses
of the Federal utility related to the transmission
facilities that are the subject of the contract,
agreement, or other arrangement;
(B) consistency with existing contracts and
third-party financing arrangements; and
(C) consistency with the statutory authori-
ties, obligations, and limitations of the Federal
utility;
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(2) provisions for monitoring and oversight by
the Federal utility of the Transmission Organiza-
tion’s terms and conditions of the contract, agree-
ment, or other arrangement, including a provision for
the resolution of disputes through arbitration or other
means with the Transmission Organization or with
other participants, notwithstanding the obligations
and limitations of any other law regarding arbitra-
tion; and
(3) a provision that allows the Federal utility to
withdraw from the Transmission Organization and
terminate the contract, agreement, or other arrange-
ment in accordance with its terms.
(d) COMMISSION.—Neither this section, actions taken
pursuant to this section, nor any other transaction of a
Federal utility participating in a Transmission Organiza-
tion shall confer on the Commission jurisdiction or author-
ity over—
(1) the electric generation assets, electric capac-
ity, or energy of the Federal utility that the Federal
utility is authorized by law to market; or
(2) the power sales activities of the Federal util-
ity.
(e) EXISTING
STATUTORY
AND
OTHER
OBLIGA-
TIONS.—
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(1) SYSTEM
OPERATION
REQUIREMENTS.—No
statutory provision requiring or authorizing a Fed-
eral utility to transmit electric power or to construct,
operate, or maintain the transmission system of the
Federal utility prohibits a transfer of control and use
of the transmission system pursuant to, and subject
to, the requirements of this section.
(2) OTHER OBLIGATIONS.—This subsection does
not—
(A) suspend, or exempt any Federal utility
from, any provision of Federal law in effect on
the date of enactment of this Act, including any
requirement or direction relating to the use of
the transmission system of the Federal utility,
environmental protection, fish and wildlife pro-
tection, flood control, navigation, water delivery,
or recreation; or
(B) authorize abrogation of any contract or
treaty obligation.
(3) CONFORMING AMENDMENT.—Section 311 of
the Energy and Water Development Appropriations
Act, 2001 (16 U.S.C. 824n) is repealed.
SEC. 1234. STANDARD MARKET DESIGN.
The proposed rulemaking of the Commission entitled
‘‘Remedying Undue Discrimination through Open Access
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Transmission Service and Standard Electricity Market De-
sign’’ (Docket No. RM01–12–000) (commonly known as
‘‘SMD NOPR’’) is terminated and shall not be reissued.
SEC. 1235. NATIVE LOAD SERVICE OBLIGATION.
Part II of the Federal Power Act (16 U.S.C. 824 et
seq.) (as amended by section 1232) is amended by adding
at the end the following:
‘‘SEC. 218. NATIVE LOAD SERVICE OBLIGATION.
‘‘(a) DEFINITIONS.—In this section:
‘‘(1) The term ‘distribution utility’ means an
electric utility that has a service obligation to end-
users or to a State utility or electric cooperative that,
directly or indirectly, through 1 or more additional
State utilities or electric cooperatives, provides elec-
tric service to end-users.
‘‘(2) The term ‘load-serving entity’ means a dis-
tribution utility or an electric utility that has a serv-
ice obligation.
‘‘(3) The term ‘service obligation’ means a re-
quirement applicable to, or the exercise of authority
granted to, an electric utility under Federal, State, or
local law or under long-term contracts to provide elec-
tric service to end-users or to a distribution utility.
‘‘(4) The term ‘State utility’ means a State or
any political subdivision of a State, or any agency,
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authority, or instrumentality of any 1 or more States
or political subdivisions, or a corporation that is
wholly owned, directly or indirectly, by any 1 or
more of the States or political subdivisions, competent
to carry on the business of developing, transmitting,
using, or distributing power.
‘‘(b) MEETING SERVICE OBLIGATIONS.—(1) Para-
graph (2) applies to any load-serving entity that, as of the
date of enactment of this section—
‘‘(A) owns generation facilities, markets the out-
put of Federal generation facilities, or holds rights
under 1 or more wholesale contracts to purchase elec-
tric energy, for the purpose of meeting a service obli-
gation; and
‘‘(B) by reason of ownership of transmission fa-
cilities, or 1 or more contracts or service agreements
for firm transmission service, holds firm transmission
rights for delivery of the output of the generation fa-
cilities or the purchased energy to meet the service ob-
ligation.
‘‘(2) Any load-serving entity described in paragraph
(1) is entitled to use the firm transmission rights, or, equiv-
alent tradable or financial transmission rights, in order to
deliver the output or purchased energy, or the output of
other generating facilities or purchased energy to the extent
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deliverable using the rights, to the extent required to meet
the service obligation of the load-serving entity.
‘‘(3)(A) To the extent that all or a portion of the service
obligation covered by the firm transmission rights or equiv-
alent tradable or financial transmission rights is trans-
ferred to another load-serving entity, the successor load-
serving entity shall be entitled to use the firm transmission
rights or equivalent tradable or financial transmission
rights associated with the transferred service obligation.
‘‘(B) Subsequent transfers to another load-serving enti-
ty, or back to the original load-serving entity, shall be enti-
tled to the same rights.
‘‘(4) The Commission shall exercise the authority of the
Commission under this Act in a manner that facilitates the
planning and expansion of transmission facilities to meet
the reasonable needs of load-serving entities to satisfy the
service obligations of the load-serving entities, and enables
load-serving entities to secure firm transmission rights (or
equivalent tradable or financial rights) on a long term basis
for long term power supply arrangements made, or
planned, to meet such needs.
‘‘(c) ALLOCATION OF TRANSMISSION RIGHTS.—Noth-
ing in subsections (b)(1), (b)(2) and (b)(3) of this section
shall affect any existing or future methodology employed by
a Transmission Organization for allocating or auctioning
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transmission rights if such Transmission Organization was
authorized by the Commission to allocate or auction finan-
cial transmission rights on its system as of January 1,
2005, and the Commission determines that any future allo-
cation or auction is just, reasonable and not unduly dis-
criminatory or preferential, provided, however, that if such
a Transmission Organization never allocated financial
transmission rights on its system that pertained to a period
before January 1, 2005, with respect to any application by
such Transmission Organization that would change its
methodology the Commission shall exercise its authority in
a manner consistent with the Act and that takes into ac-
count the policies expressed in subsections (b)(1), (b)(2) and
(b)(3) as applied to firm transmission rights held by a load-
serving entity as of January 1, 2005, to the extent the asso-
ciated generation ownership or power purchase arrange-
ments remain in effect.
‘‘(d) CERTAIN TRANSMISSION RIGHTS.—The Commis-
sion may exercise authority under this Act to make trans-
mission rights not used to meet an obligation covered by
subsection (b) available to other entities in a manner deter-
mined by the Commission to be just, reasonable, and not
unduly discriminatory or preferential.
‘‘(e) OBLIGATION TO BUILD.—Nothing in this Act re-
lieves a load-serving entity from any obligation under State
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or local law to build transmission or distribution facilities
adequate to meet the service obligations of the load-serving
entity.
‘‘(f) CONTRACTS.—Nothing in this section shall pro-
vide a basis for abrogating any contract or service agree-
ment for firm transmission service or rights in effect as of
the date of the enactment of this subsection. If an ISO in
the Western Interconnection had allocated financial trans-
mission rights prior to the date of enactment of this section
but had not done so with respect to one or more load-serving
entities’ firm transmission rights held under contracts to
which the preceding sentence applies (or held by reason of
ownership or future ownership of transmission facilities),
such load-serving entities may not be required, without
their consent, to convert such firm transmission rights to
tradable or financial rights, except where the load-serving
entity has voluntarily joined the ISO as a participating
transmission owner (or its successor) in accordance with
the ISO tariff.
‘‘(g) WATER PUMPING FACILITIES.—The Commission
shall ensure that any entity described in section 201(f) that
owns transmission facilities used predominately to support
its own water pumping facilities shall have, with respect
to the facilities, protections for transmission service com-
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parable to those provided to load-serving entities pursuant
to this section.
‘‘(h) ERCOT.—This section shall not apply within the
area referred to in section 212(k)(2)(A).
‘‘(i) JURISDICTION.—This section does not authorize
the Commission to take any action not otherwise within
the jurisdiction of the Commission.
‘‘(j) TVA AREA.—(1) Subject to paragraphs (2) and
(3), for purposes of subsection (b)(1)(B), a load-serving en-
tity that is located within the service area of the Tennessee
Valley Authority and that has a firm wholesale power sup-
ply contract with the Tennessee Valley Authority shall be
considered to hold firm transmission rights for the trans-
mission of the power provided.
‘‘(2) Nothing in this subsection affects the requirements
of section 212(j).
‘‘(3) The Commission shall not issue an order on the
basis of this subsection that is contrary to the purposes of
section 212(j).’’.
(h) FERC RULEMAKING
ON LONG-TERM TRANS-
MISSION RIGHTS IN ORGANIZED MARKETS.—Within one
year after the date of enactment of this section and after
notice and an opportunity for comment, the Commission
shall by rule or order implement subsection (b)(4) in Trans-
mission Organizations with organized electricity markets.
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(i) EFFECT OF EXERCISING RIGHTS.—An entity that
to the extent required to meet its service obligations exercises
rights described in subsection (b) shall not be considered by
such action as engaging in undue discrimination or pref-
erence under this Act.
SEC. 1236. PROTECTION OF TRANSMISSION CONTRACTS IN
THE PACIFIC NORTHWEST.
Part II of the Federal Power Act (16 U.S.C. 824 et
seq.) (as amended by section 1235) is amended by adding
at the end the following:
‘‘SEC. 219. PROTECTION OF TRANSMISSION CONTRACTS IN
THE PACIFIC NORTHWEST.
‘‘(a) DEFINITION OF ELECTRIC UTILITY OR PERSON.—
In this section, the term ‘electric utility or person’ means
an electric utility or person that—
‘‘(1) as of the date of enactment of the Energy
Policy Act of 2005 holds firm transmission rights
pursuant to contract or by reason of ownership of
transmission facilities; and
‘‘(2) is located—
‘‘(A) in the Pacific Northwest, as that re-
gion is defined in section 3 of the Pacific North-
west Electric Power Planning and Conservation
Act (16 U.S.C. 839a); or
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‘‘(B) in that portion of a State included in
the geographic area proposed for a regional
transmission organization in Commission Docket
Number RT01–35 on the date on which that
docket was opened.
‘‘(b) PROTECTION OF TRANSMISSION CONTRACTS.—
Nothing in this Act confers on the Commission the author-
ity to require an electric utility or person to convert to
tradable or financial rights—
‘‘(1) firm transmission rights described in sub-
section (a)(1); or
‘‘(2) firm transmission rights obtained by exer-
cising contract or tariff rights associated with the
firm transmission rights described in subsection
(a)(1).’’.
Subtitle D—Transmission Rate
Reform
SEC. 1241. TRANSMISSION INFRASTRUCTURE INVESTMENT.
Part II of the Federal Power Act (16 U.S.C. 824 et
seq.) (as amended by section 1236) is amended by adding
at the end the following:
‘‘SEC. 220. TRANSMISSION INFRASTRUCTURE INVESTMENT.
‘‘(a) RULEMAKING REQUIREMENT.—Not later than 1
year after the date of enactment of this section, the Commis-
sion shall establish, by rule, incentive-based (including per-
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formance-based) rate treatments for the transmission of
electric energy in interstate commerce by public utilities for
the purpose of benefiting consumers by ensuring reliability
and reducing the cost of delivered power by reducing trans-
mission congestion.
‘‘(b) CONTENTS.—The rule shall—
‘‘(1) promote reliable and economically efficient
transmission and generation of electricity by pro-
moting capital investment in the enlargement, im-
provement, maintenance, and operation of all facili-
ties for the transmission of electric energy in inter-
state commerce, regardless of the ownership of the fa-
cilities;
‘‘(2) provide a return on equity that attracts
new investment in transmission facilities (including
related transmission technologies);
‘‘(3) encourage deployment of transmission tech-
nologies and other measures to increase the capacity
and efficiency of existing transmission facilities and
improve the operation of the facilities; and
‘‘(4) allow recovery of—
‘‘(A) all prudently incurred costs necessary
to comply with mandatory reliability standards
issued pursuant to section 215; and
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‘‘(B) all prudently incurred costs related to
transmission infrastructure development pursu-
ant to section 216.
‘‘(c) JUST AND REASONABLE RATES.—All rates ap-
proved under the rules adopted pursuant to this section, in-
cluding any revisions to the rules, are subject to the require-
ments of sections 205 and 206 that all rates, charges, terms,
and conditions be just and reasonable and not unduly dis-
criminatory or preferential.’’.
SEC. 1242. FUNDING NEW INTERCONNECTION AND TRANS-
MISSION UPGRADES.
The Commission may approve a participant funding
plan that allocates costs related to transmission upgrades
or new generator interconnection, without regard to whether
an applicant is a member of a Commission-approved
Transmission Organization, if the plan results in rates
that—
(1) are just and reasonable;
(2) are not unduly discriminatory or pref-
erential; and
(3) are otherwise consistent with sections 205
and 206 of the Federal Power Act (16 U.S.C. 824d,
824e).
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Subtitle E—Amendments to PURPA
SEC. 1251. NET METERING AND ADDITIONAL STANDARDS.
(a) ADOPTION OF STANDARDS.—Section 111(d) of the
Public Utility Regulatory Policies Act of 1978 (16 U.S.C.
2621(d)) is amended by adding at the end the following:
‘‘(11) NET
METERING.—Each electric utility
shall make available upon request net metering serv-
ice to any electric consumer that the electric utility
serves. For purposes of this paragraph, the term ‘net
metering service’ means service to an electric con-
sumer under which electric energy generated by that
electric consumer from an eligible on-site generating
facility and delivered to the local distribution facili-
ties may be used to offset electric energy provided by
the electric utility to the electric consumer during the
applicable billing period.
‘‘(12) FUEL
SOURCES.—Each electric utility
shall develop a plan to minimize dependence on 1 fuel
source and to ensure that the electric energy it sells
to consumers is generated using a diverse range of
fuels and technologies, including renewable tech-
nologies.
‘‘(13) FOSSIL FUEL GENERATION EFFICIENCY.—
Each electric utility shall develop and implement a
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10-year plan to increase the efficiency of its fossil fuel
generation.’’.
(b) COMPLIANCE.—
(1) TIME LIMITATIONS.—Section 112(b) of the
Public Utility Regulatory Policies Act of 1978 (16
U.S.C. 2622(b)) is amended by adding at the end the
following:
‘‘(3)(A) Not later than 2 years after the enactment of
this paragraph, each State regulatory authority (with re-
spect to each electric utility for which it has ratemaking
authority) and each nonregulated electric utility shall com-
mence the consideration referred to in section 111, or set
a hearing date for such consideration, with respect to each
standard established by paragraphs (11) through (13) of
section 111(d).
‘‘(B) Not later than 3 years after the date of the enact-
ment of this paragraph, each State regulatory authority
(with respect to each electric utility for which it has rate-
making authority), and each nonregulated electric utility,
shall complete the consideration, and shall make the deter-
mination, referred to in section 111 with respect to each
standard established by paragraphs (11) through (13) of
section 111(d).’’.
(2) FAILURE TO COMPLY.—Section 112(c) of the
Public Utility Regulatory Policies Act of 1978 (16
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U.S.C. 2622(c)) is amended by adding at the end the
following:
‘‘In the case of each standard established by paragraphs
(11) through (13) of section 111(d), the reference contained
in this subsection to the date of enactment of this Act shall
be deemed to be a reference to the date of enactment of such
paragraphs (11) through (13).’’.
(3) PRIOR STATE ACTIONS.—
(A) IN GENERAL.—Section 112 of the Public
Utility Regulatory Policies Act of 1978 (16
U.S.C. 2622) is amended by adding at the end
the following:
‘‘(d) PRIOR STATE ACTIONS.—Subsections (b) and (c)
of this section shall not apply to the standards established
by paragraphs (11) through (13) of section 111(d) in the
case of any electric utility in a State if, before the enact-
ment of this subsection—
‘‘(1) the State has implemented for such utility
the standard concerned (or a comparable standard);
‘‘(2) the State regulatory authority for such
State or relevant nonregulated electric utility has con-
ducted a proceeding to consider implementation of the
standard concerned (or a comparable standard) for
such utility; or
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‘‘(3) the State legislature has voted on the imple-
mentation of such standard (or a comparable stand-
ard) for such utility.’’.
(B) CROSS
REFERENCE.—Section 124 of
such Act (16 U.S.C. 2634) is amended by adding
the following at the end thereof: ‘‘In the case of
each standard established by paragraphs (11)
through (13) of section 111(d), the reference con-
tained in this subsection to the date of enactment
of this Act shall be deemed to be a reference to
the date of enactment of such paragraphs (11)
through (13).’’.
SEC. 1252. SMART METERING.
(a) IN GENERAL.—Section 111(d) of the Public Utili-
ties Regulatory Policies Act of 1978 (16 U.S.C. 2621(d))
is amended by adding at the end the following:
‘‘(14) TIME-BASED METERING AND COMMUNICA-
TIONS.—
‘‘(A) Not later than 18 months after the
date of enactment of this paragraph, each electric
utility shall offer each of its customer classes,
and provide individual customers upon customer
request, a time-based rate schedule under which
the rate charged by the electric utility varies
during different time periods and reflects the
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variance, if any, in the utility’s costs of gener-
ating and purchasing electricity at the wholesale
level. The time-based rate schedule shall enable
the electric consumer to manage energy use and
cost through advanced metering and communica-
tions technology.
‘‘(B) The types of time-based rate schedules
that may be offered under the schedule referred
to in subparagraph (A) include, among others—
‘‘(i) time-of-use pricing whereby elec-
tricity prices are set for a specific time pe-
riod on an advance or forward basis, typi-
cally not changing more often than twice a
year, based on the utility’s cost of gener-
ating and/or purchasing such electricity at
the wholesale level for the benefit of the con-
sumer. Prices paid for energy consumed
during these periods shall be pre-established
and known to consumers in advance of such
consumption, allowing them to vary their
demand and usage in response to such
prices and manage their energy costs by
shifting usage to a lower cost period or re-
ducing their consumption overall;
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‘‘(ii) critical peak pricing whereby
time-of-use prices are in effect except for
certain peak days, when prices may reflect
the costs of generating and/or purchasing
electricity at the wholesale level and when
consumers may receive additional discounts
for reducing peak period energy consump-
tion;
‘‘(iii) real-time pricing whereby elec-
tricity prices are set for a specific time pe-
riod on an advanced or forward basis, re-
flecting the utility’s cost of generating and/
or purchasing electricity at the wholesale
level, and may change as often as hourly;
and
‘‘(iv) credits for consumers with large
loads who enter into pre-established peak
load reduction agreements that reduce the
planned capacity obligations of a utility.
‘‘(C) Each electric utility subject to sub-
paragraph (A) shall provide each customer re-
questing a time-based rate with a time-based
meter capable of enabling the utility and cus-
tomer to offer and receive such rate, respectively.
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‘‘(D) For purposes of implementing this
paragraph, any reference contained in this sec-
tion to the date of enactment of the Public Util-
ity Regulatory Policies Act of 1978 shall be
deemed to be a reference to the date of enactment
of this paragraph.
‘‘(E) In a State that permits third-party
marketers to sell electric energy to retail electric
consumers, such consumers shall be entitled to re-
ceive the same time-based metering and commu-
nications device and service as a retail electric
consumer of the electric utility.
‘‘(F) Notwithstanding subsections (b) and
(c) of section 112, each State regulatory author-
ity shall, not later than 18 months after the date
of enactment of this paragraph conduct an inves-
tigation in accordance with section 115(i) and
issue a decision whether it is appropriate to im-
plement the standards set out in subparagraphs
(A) and (C).’’.
(b) STATE INVESTIGATION OF DEMAND RESPONSE AND
TIME-BASED METERING.—Section 115 of the Public Utili-
ties Regulatory Policies Act of 1978 (16 U.S.C. 2625) is
amended as follows:
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(1) By inserting in subsection (b) after the
phrase ‘‘the standard for time-of-day rates established
by section 111(d)(3)’’ the following: ‘‘and the stand-
ard for time-based metering and communications es-
tablished by section 111(d)(14)’’.
(2) By inserting in subsection (b) after the
phrase ‘‘are likely to exceed the metering’’ the fol-
lowing: ‘‘and communications’’.
(3) By adding at the end the following:
‘‘(i) TIME-BASED METERING AND COMMUNICATIONS.—
In making a determination with respect to the standard
established by section 111(d)(14), the investigation require-
ment of section 111(d)(14)(F) shall be as follows: Each
State regulatory authority shall conduct an investigation
and issue a decision whether or not it is appropriate for
electric utilities to provide and install time-based meters
and communications devices for each of their customers
which enable such customers to participate in time-based
pricing rate schedules and other demand response pro-
grams.’’.
(c) FEDERAL ASSISTANCE ON DEMAND RESPONSE.—
Section 132(a) of the Public Utility Regulatory Policies Act
of 1978 (16 U.S.C. 2642(a)) is amended by striking ‘‘and’’
at the end of paragraph (3), striking the period at the end
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of paragraph (4) and inserting ‘‘; and’’, and by adding the
following at the end thereof:
‘‘(5) technologies, techniques, and rate-making
methods related to advanced metering and commu-
nications and the use of these technologies, techniques
and methods in demand response programs.’’.
(d) FEDERAL GUIDANCE.—Section 132 of the Public
Utility Regulatory Policies Act of 1978 (16 U.S.C. 2642)
is amended by adding the following at the end thereof:
‘‘(d) DEMAND RESPONSE.—The Secretary shall be re-
sponsible for—
‘‘(1) educating consumers on the availability, ad-
vantages, and benefits of advanced metering and com-
munications technologies, including the funding of
demonstration or pilot projects;
‘‘(2) working with States, utilities, other energy
providers and advanced metering and communica-
tions experts to identify and address barriers to the
adoption of demand response programs; and
‘‘(3) not later than 180 days after the date of en-
actment of the Energy Policy Act of 2005, providing
Congress with a report that identifies and quantifies
the national benefits of demand response and makes
a recommendation on achieving specific levels of such
benefits by January 1, 2007.’’.
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(e) DEMAND RESPONSE AND REGIONAL COORDINA-
TION.—
(1) IN GENERAL.—It is the policy of the United
States to encourage States to coordinate, on a re-
gional basis, State energy policies to provide reliable
and affordable demand response services to the public.
(2) TECHNICAL
ASSISTANCE.—The Secretary
shall provide technical assistance to States and re-
gional organizations formed by 2 or more States to
assist them in—
(A) identifying the areas with the greatest
demand response potential;
(B) identifying and resolving problems in
transmission and distribution networks, includ-
ing through the use of demand response;
(C) developing plans and programs to use
demand response to respond to peak demand or
emergency needs; and
(D) identifying specific measures consumers
can take to participate in these demand response
programs.
(3) REPORT.—Not later than 1 year after the
date of enactment of this Act, the Commission shall
prepare and publish an annual report, by appro-
priate region, that assesses demand response re-
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sources, including those available from all consumer
classes, and which identifies and reviews—
(A) saturation and penetration rate of ad-
vanced meters and communications technologies,
devices and systems;
(B) existing demand response programs and
time-based rate programs;
(C) the annual resource contribution of de-
mand resources;
(D) the potential for demand response as a
quantifiable, reliable resource for regional plan-
ning purposes;
(E) steps taken to ensure that, in regional
transmission planning and operations, demand
resources are provided equitable treatment as a
quantifiable, reliable resource relative to the re-
source obligations of any load-serving entity,
transmission provider, or transmitting party;
and
(F) regulatory barriers to improved cus-
tomer participation in demand response, peak
reduction, and critical period pricing programs.
(f) FEDERAL ENCOURAGEMENT
OF DEMAND RE-
SPONSE DEVICES.—It is the policy of the United States that
time-based pricing and other forms of demand response,
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whereby electricity customers are provided with electricity
price signals and the ability to benefit by responding to
them, shall be encouraged, and the deployment of such tech-
nology and devices that enable electricity customers to par-
ticipate in such pricing and demand response systems shall
be facilitated, and unnecessary barriers to demand response
participation in energy, capacity, and ancillary service
markets shall be eliminated. It is further the policy of the
United States that the benefits of such demand response that
accrue to those not deploying such technology and devices,
but who are part of the same regional electricity entity,
shall be recognized.
(g) TIME LIMITATIONS.—Section 112(b) of the Public
Utility Regulatory Policies Act of 1978 (16 U.S.C. 2622(b))
is amended by adding at the end the following:
‘‘(4)(A) Not later than 1 year after the enact-
ment of this paragraph, each State regulatory author-
ity (with respect to each electric utility for which it
has ratemaking authority) and each nonregulated
electric utility shall commence the consideration re-
ferred to in section 111, or set a hearing date for such
consideration, with respect to the standard established
by paragraph (14) of section 111(d).
‘‘(B) Not later than 2 years after the date of the
enactment of this paragraph, each State regulatory
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authority (with respect to each electric utility for
which it has ratemaking authority), and each non-
regulated electric utility, shall complete the consider-
ation, and shall make the determination, referred to
in section 111 with respect to the standard established
by paragraph (14) of section 111(d).’’.
(h) FAILURE TO COMPLY.—Section 112(c) of the Pub-
lic Utility Regulatory Policies Act of 1978 (16 U.S.C.
2622(c)) is amended by adding at the end the following:
‘‘In the case of the standard established by paragraph (14)
of section 111(d), the reference contained in this subsection
to the date of enactment of this Act shall be deemed to be
a reference to the date of enactment of such paragraph
(14).’’.
(i) PRIOR STATE ACTIONS REGARDING SMART ME-
TERING STANDARDS.—
(1) IN
GENERAL.—Section 112 of the Public
Utility Regulatory Policies Act of 1978 (16 U.S.C.
2622) is amended by adding at the end the following:
‘‘(e) PRIOR STATE ACTIONS.—Subsections (b) and (c)
of this section shall not apply to the standard established
by paragraph (14) of section 111(d) in the case of any elec-
tric utility in a State if, before the enactment of this
subsection—
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‘‘(1) the State has implemented for such utility
the standard concerned (or a comparable standard);
‘‘(2) the State regulatory authority for such
State or relevant nonregulated electric utility has con-
ducted a proceeding to consider implementation of the
standard concerned (or a comparable standard) for
such utility within the previous 3 years; or
‘‘(3) the State legislature has voted on the imple-
mentation of such standard (or a comparable stand-
ard) for such utility within the previous 3 years.’’.
(2) CROSS REFERENCE.—Section 124 of such Act
(16 U.S.C. 2634) is amended by adding the following
at the end thereof: ‘‘In the case of the standard estab-
lished by paragraph (14) of section 111(d), the ref-
erence contained in this subsection to the date of en-
actment of this Act shall be deemed to be a reference
to the date of enactment of such paragraph (14).’’.
SEC. 1253. COGENERATION AND SMALL POWER PRODUC-
TION PURCHASE AND SALE REQUIREMENTS.
(a) TERMINATION
OF MANDATORY PURCHASE
AND
SALE REQUIREMENTS.—Section 210 of the Public Utility
Regulatory Policies Act of 1978 (16 U.S.C. 824a–3) is
amended by adding at the end the following:
‘‘(m) TERMINATION OF MANDATORY PURCHASE AND
SALE REQUIREMENTS.—
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‘‘(1) OBLIGATION TO PURCHASE.—After the date
of enactment of this subsection, no electric utility
shall be required to enter into a new contract or obli-
gation to purchase electric energy from a qualifying
cogeneration facility or a qualifying small power pro-
duction facility under this section if the Commission
finds that the qualifying cogeneration facility or
qualifying small power production facility has non-
discriminatory access to—
‘‘(A)(i) independently administered, auc-
tion-based day ahead and real time wholesale
markets for the sale of electric energy; and (ii)
wholesale markets for long-term sales of capacity
and electric energy; or
‘‘(B)(i) transmission and interconnection
services that are provided by a Commission-ap-
proved regional transmission entity and admin-
istered pursuant to an open access transmission
tariff that affords nondiscriminatory treatment
to all customers; and (ii) competitive wholesale
markets that provide a meaningful opportunity
to sell capacity, including long-term and short-
term sales, and electric energy, including long-
term, short-term and real-time sales, to buyers
other than the utility to which the qualifying fa-
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cility is interconnected. In determining whether
a meaningful opportunity to sell exists, the Com-
mission shall consider, among other factors, evi-
dence of transactions within the relevant market;
or
‘‘(C) wholesale markets for the sale of capac-
ity and electric energy that are, at a minimum,
of comparable competitive quality as markets de-
scribed in subparagraphs (A) and (B).
‘‘(2) REVISED PURCHASE AND SALE OBLIGATION
FOR NEW FACILITIES.—(A) After the date of enact-
ment of this subsection, no electric utility shall be re-
quired pursuant to this section to enter into a new
contract or obligation to purchase from or sell electric
energy to a facility that is not an existing qualifying
cogeneration facility unless the facility meets the cri-
teria for qualifying cogeneration facilities established
by the Commission pursuant to the rulemaking re-
quired by subsection (n).
‘‘(B) For the purposes of this paragraph, the
term ‘existing qualifying cogeneration facility’ means
a facility that—
‘‘(i) was a qualifying cogeneration facility
on the date of enactment of subsection (m); or
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‘‘(ii) had filed with the Commission a no-
tice of self-certification, self recertification or an
application for Commission certification under
18 C.F.R. 292.207 prior to the date on which the
Commission issues the final rule required by sub-
section (n).
‘‘(3) COMMISSION REVIEW.—Any electric utility
may file an application with the Commission for re-
lief from the mandatory purchase obligation pursuant
to this subsection on a service territory-wide basis.
Such application shall set forth the factual basis upon
which relief is requested and describe why the condi-
tions set forth in subparagraphs (A), (B) or (C) of
paragraph (1) of this subsection have been met. After
notice, including sufficient notice to potentially af-
fected qualifying cogeneration facilities and quali-
fying small power production facilities, and an op-
portunity for comment, the Commission shall make a
final determination within 90 days of such applica-
tion regarding whether the conditions set forth in sub-
paragraphs (A), (B) or (C) of paragraph (1) have
been met.
‘‘(4) REINSTATEMENT OF OBLIGATION TO PUR-
CHASE.—At any time after the Commission makes a
finding under paragraph (3) relieving an electric
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utility of its obligation to purchase electric energy, a
qualifying cogeneration facility, a qualifying small
power production facility, a State agency, or any
other affected person may apply to the Commission
for an order reinstating the electric utility’s obliga-
tion to purchase electric energy under this section.
Such application shall set forth the factual basis upon
which the application is based and describe why the
conditions set forth in subparagraphs (A), (B) or (C)
of paragraph (1) of this subsection are no longer met.
After notice, including sufficient notice to potentially
affected utilities, and opportunity for comment, the
Commission shall issue an order within 90 days of
such application reinstating the electric utility’s obli-
gation to purchase electric energy under this section
if the Commission finds that the conditions set forth
in subparagraphs (A), (B) or (C) of paragraph (1)
which relieved the obligation to purchase, are no
longer met.
‘‘(5) OBLIGATION TO SELL.—After the date of en-
actment of this subsection, no electric utility shall be
required to enter into a new contract or obligation to
sell electric energy to a qualifying cogeneration facil-
ity or a qualifying small power production facility
under this section if the Commission finds that—
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‘‘(A) competing retail electric suppliers are
willing and able to sell and deliver electric en-
ergy to the qualifying cogeneration facility or
qualifying small power production facility; and
‘‘(B) the electric utility is not required by
State law to sell electric energy in its service ter-
ritory.
‘‘(6) NO EFFECT ON EXISTING RIGHTS AND REM-
EDIES.—Nothing in this subsection affects the rights
or remedies of any party under any contract or obli-
gation, in effect or pending approval before the ap-
propriate State regulatory authority or non-regulated
electric utility on the date of enactment of this sub-
section, to purchase electric energy or capacity from
or to sell electric energy or capacity to a qualifying
cogeneration facility or qualifying small power pro-
duction facility under this Act (including the right to
recover costs of purchasing electric energy or capac-
ity).
‘‘(7) RECOVERY OF COSTS.—(A) The Commission
shall issue and enforce such regulations as are nec-
essary to ensure that an electric utility that purchases
electric energy or capacity from a qualifying cogen-
eration facility or qualifying small power production
facility in accordance with any legally enforceable ob-
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ligation entered into or imposed under this section re-
covers all prudently incurred costs associated with the
purchase.
‘‘(B) A regulation under subparagraph (A) shall
be enforceable in accordance with the provisions of
law applicable to enforcement of regulations under the
Federal Power Act (16 U.S.C. 791a et seq.).
‘‘(n) RULEMAKING
FOR NEW QUALIFYING FACILI-
TIES.—(1)(A) Not later than 180 days after the date of en-
actment of this section, the Commission shall issue a rule
revising the criteria in 18 C.F.R. 292.205 for new quali-
fying cogeneration facilities seeking to sell electric energy
pursuant to section 210 of this Act to ensure—
‘‘(i) that the thermal energy output of a new
qualifying cogeneration facility is used in a produc-
tive and beneficial manner;
‘‘(ii) the electrical, thermal, and chemical output
of the cogeneration facility is used fundamentally for
industrial, commercial, or institutional purposes and
is not intended fundamentally for sale to an electric
utility, taking into account technological, efficiency,
economic, and variable thermal energy requirements,
as well as State laws applicable to sales of electric en-
ergy from a qualifying facility to its host facility;
and
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‘‘(iii) continuing progress in the development of
efficient electric energy generating technology.
‘‘(B) The rule issued pursuant to section (n)(1)(A)
shall be applicable only to facilities that seek to sell electric
energy pursuant to section 210 of this Act. For all other
purposes, except as specifically provided in section
(m)(2)(A), qualifying facility status shall be determined in
accordance with the rules and regulations of this Act.
‘‘(2) Notwithstanding rule revisions under paragraph
(1), the Commission’s criteria for qualifying cogeneration
facilities in effect prior to the date on which the Commis-
sion issues the final rule required by paragraph (1) shall
continue to apply to any cogeneration facility that—
‘‘(A) was a qualifying cogeneration facility on
the date of enactment of subsection (m), or
‘‘(B) had filed with the Commission a notice of
self-certification, self-recertification or an application
for Commission certification under 18 C.F.R. 292.207
prior to the date on which the Commission issues the
final rule required by paragraph (1).’’.
(b) ELIMINATION OF OWNERSHIP LIMITATIONS.—
(1) QUALIFYING SMALL POWER PRODUCTION FA-
CILITY.—Section 3(17)(C) of the Federal Power Act
(16 U.S.C. 796(17)(C)) is amended to read as follows:
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‘‘(C) ‘qualifying small power production fa-
cility’ means a small power production facility
that the Commission determines, by rule, meets
such requirements (including requirements re-
specting fuel use, fuel efficiency, and reliability)
as the Commission may, by rule, prescribe;’’.
(2) QUALIFYING COGENERATION FACILITY.—Sec-
tion 3(18)(B) of the Federal Power Act (16 U.S.C.
796(18)(B)) is amended to read as follows:
‘‘(B) 
‘qualifying 
cogeneration 
facility’
means a cogeneration facility that the Commis-
sion determines, by rule, meets such requirements
(including requirements respecting minimum
size, fuel use, and fuel efficiency) as the Commis-
sion may, by rule, prescribe;’’.
SEC. 1254. INTERCONNECTION.
(a) ADOPTION OF STANDARDS.—Section 111(d) of the
Public Utility Regulatory Policies Act of 1978 (16 U.S.C.
2621(d)) (as amended by section 1252(a)) is amended by
adding at the end the following:
‘‘(15) INTERCONNECTION.—(A) In this para-
graph, the term ‘interconnection service’ means serv-
ice to an electric consumer by which an on-site gener-
ating facility on the premises of the electric consumer
is connected to the local distribution facilities.
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‘‘(B)(i) Each electric utility shall make avail-
able, on request, interconnection service to any electric
consumer that the electric utility serves.
‘‘(ii) Interconnection services shall be made
available under clause (i) based on the standards de-
veloped by the Institute of Electrical and Electronics
Engineers, entitled ‘‘IEEE Standard 1547 for Inter-
connecting Distributed Resources with Electric Power
Systems’’ (or successor standards).
‘‘(C)(i) Electric utilities shall establish agree-
ments and procedures providing that the interconnec-
tion services made available under subparagraph (B)
promote current best practices of interconnection for
distributed generation, including practices stipulated
in model codes adopted by associations of State regu-
latory agencies.
‘‘(ii) Any agreements and procedures established
under clause (i) shall be just and reasonable and not
unduly discriminatory or preferential.’’.
(b) COMPLIANCE.—
(1) TIME LIMITATIONS.—Section 112(b) of the
Public Utility Regulatory Policies Act of 1978 (16
U.S.C. 2622(b)) (as amended by section 1252(g)) is
amended by adding at the end the following:
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‘‘(5)(A) Not later than 1 year after the date of
enactment of this paragraph, each State regulatory
authority (with respect to each electric utility for
which the State regulatory authority has ratemaking
authority) and each nonregulated utility shall, with
respect to the standard established by section
111(d)(15)—
‘‘(i) commence the consideration under sec-
tion 111(a); or
‘‘(ii) set a hearing date for the consider-
ation.
‘‘(B) Not later than 2 years after the date of en-
actment of this paragraph, each State regulatory au-
thority (with respect to each electric utility for which
the State regulatory authority has ratemaking au-
thority) and each nonregulated electric utility shall,
with respect to the standard established by section
111(d)(15), complete the consideration and make the
determination under section 111(a).’’.
(2) FAILURE TO COMPLY.—Section 112(c) of the
Public Utility Regulatory Policies Act of 1978 (16
U.S.C. 2622(c)) (as amended by section 1252(h)) is
amended by adding at the end the following: ‘‘In the
case of the standard established by paragraph (15),
the reference contained in this subsection to the date
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of enactment of this Act shall be considered to be a
reference to the date of enactment of paragraph
(15).’’.
(3) PRIOR STATE ACTIONS.—
(A) IN
GENERAL.—Section 112(e) of the
Public Utility Regulatory Policies Act of 1978
(as added by section 1252(i)(1)) is amended by
striking ‘‘paragraph 14’’ and inserting ‘‘para-
graph (14) or (15)’’.
(B) 
CONFORMING
AMENDMENT.—Section
124 of the Public Utility Regulatory Policies Act
of 1978 (16 U.S.C. 2634) (as amended by section
1252(i)(2)) is amended by adding at the end the
following: ‘‘In the case of each standard estab-
lished by section 111(d)(15), the reference con-
tained in this section to the date of enactment of
the Act shall be considered to be a reference to
the date of enactment of paragraph (15).’’.
Subtitle F—Market Transparency,
Enforcement, 
and 
Consumer
Protection
SEC. 1261. MARKET TRANSPARENCY RULES.
Part II of the Federal Power Act (16 U.S.C. 824 et
seq.) (as amended by section 1241) is amended by adding
at the end the following:
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‘‘SEC. 221. MARKET TRANSPARENCY RULES.
‘‘(a) IN GENERAL.—The Commission may issue such
rules as the Commission considers to be appropriate to es-
tablish an electronic information system to provide the
Commission and the public with access to such information
as is necessary or appropriate to facilitate price trans-
parency and participation in markets for the sale in inter-
state commerce of electric energy at wholesale.
‘‘(b) INFORMATION TO BE MADE AVAILABLE.—(1) The
system under subsection (a) shall provide, on a timely basis,
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.
‘‘(2) In determining the information to be made avail-
able under the system and the time at which to make such
information available, the Commission shall seek to ensure
that consumers and competitive markets are protected from
the adverse effects of potential collusion or other anti-
competitive behaviors that can be facilitated by untimely
public disclosure of transaction-specific information.
‘‘(c) AUTHORITY
TO
OBTAIN
INFORMATION.—The
Commission shall have authority to obtain information de-
scribed in subsections (a) and (b) from any electric utility
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or transmitting utility (including any entity described in
section 201(f)).
‘‘(d) EXEMPTIONS.—The rules of the Commission, if
adopted, shall exempt from disclosure information that the
Commission determines would, if disclosed—
‘‘(1) be detrimental to the operation of an effec-
tive market; or
‘‘(2) jeopardize system security.
‘‘(e) COMMODITY FUTURES TRADING COMMISSION.—
(1) This section shall not affect the exclusive jurisdiction
of the Commodity Futures Trading Commission with re-
spect to accounts, agreements, contracts, or transactions in
commodities under the Commodity Exchange Act (7 U.S.C.
1 et seq.).
‘‘(2) Any request by the Commission for information
to a designated contract market, registered derivatives
transaction execution facility, board of trade, exchange, or
market involving an account, agreement, contract, or trans-
action in a commodity (including natural gas, electricity
and other energy commodities) within the exclusive juris-
diction of the Commodity Futures Trading Commission
shall be directed to the Commodity Futures Trading Com-
mission, which shall cooperate in responding to any infor-
mation request by the Commission.
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‘‘(f) SAVINGS PROVISION.—In exercising authority
under this section, the Commission shall not—
‘‘(1) compete with, or displace from the market
place, any price publisher (including any electronic
price publisher); or
‘‘(2) regulate price publishers (including any
electronic price publisher) or impose any require-
ments on the publication of information by price pub-
lishers (including any electronic price publisher).
‘‘(g) ERCOT.—This section shall not apply to a trans-
action for the purchase or sale of wholesale electric energy
or transmission services within the area described in section
212(k)(2)(A).’’.
SEC. 1262. FALSE STATEMENTS.
Part II of the Federal Power Act (16 U.S.C. 824 et
seq.) (as amended by section 1261) is amended by adding
at the end the following:
‘‘SEC. 222. PROHIBITION ON FILING FALSE INFORMATION.
‘‘No entity (including an entity described in section
201(f)) shall willfully and knowingly report any informa-
tion relating to the price of electricity sold at wholesale or
the availability of transmission capacity, which informa-
tion the person or any other entity knew to be false at the
time of the reporting, to a Federal agency with intent to
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fraudulently affect the data being compiled by the Federal
agency.’’.
SEC. 1263. MARKET MANIPULATION.
Part II of the Federal Power Act (16 U.S.C. 824 et
seq.) (as amended by section 1262) is amended by adding
at the end the following:
‘‘SEC. 223. PROHIBITION OF ENERGY MARKET MANIPULA-
TION.
‘‘It shall be unlawful for any entity (including an enti-
ty described in section 201(f)), directly or indirectly, to use
or employ, in connection with the purchase or sale of elec-
tric energy or the purchase or sale of transmission services
subject to the jurisdiction of the Commission, any manipu-
lative or deceptive device or contrivance (as those terms are
used in section 10(b) of the Securities Exchange Act of 1934
(15 U.S.C. 78j(b))), in contravention of such rules and regu-
lations as the Commission may prescribe as necessary or
appropriate in the public interest or for the protection of
electric ratepayers.’’.
SEC. 1264. ENFORCEMENT.
(a) COMPLAINTS.—Section 306 of the Federal Power
Act (16 U.S.C. 825e) is amended—
(1) by inserting ‘‘electric utility,’’ after ‘‘Any
person,’’; and
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(2) by 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—
(1) by inserting ‘‘, electric utility, transmitting
utility, or other entity’’ after ‘‘person’’ each place it
appears; and
(2) in the first sentence, by inserting before the
period at the end the following: ‘‘, or in obtaining in-
formation about the sale of electric energy at whole-
sale in interstate commerce and the transmission of
electric energy in interstate commerce’’.
(c) REVIEW OF COMMISSION ORDERS.—Section 313(a)
of the Federal Power Act (16 U.S.C. 825l) is amended by
inserting ‘‘electric utility,’’ after ‘‘person,’’ in the first 2
places it appears and by striking ‘‘any person unless such
person’’ and inserting ‘‘any entity unless such entity’’.
(d) CRIMINAL PENALTIES.—Section 316 of the Federal
Power Act (16 U.S.C. 825o) is amended—
(1) in subsection (a)—
(A) by striking ‘‘$5,000’’ and inserting
‘‘$1,000,000’’; and
(B) by striking ‘‘two years’’ and inserting
‘‘5 years’’;