I
106TH CONGRESS
1ST SESSION
H. R. 2786
To provide for expansion of electricity transmission networks in order to
support competitive electricity markets and to bring the benefits of less
regulation of such markets to the public, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
AUGUST 5, 1999
Mr. SAWYER introduced the following bill; which was referred to the
Committee on Commerce
A BILL
To provide for expansion of electricity transmission networks
in order to support competitive electricity markets and
to bring the benefits of less regulation of such markets
to the public, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Interstate Trans-
mission Act’’.
SEC. 2. FINDINGS.
Congress finds as follows:
(1) Transmission networks are the backbone of
competitive power markets and increased interstate
commerce in electricity.
(2) To support competitive power markets and
to bring the benefits of less regulation of such mar-
kets to transmission customers, consumers, busi-
nesses, and the public, both today and in the future,
transmission networks must be expanded, enhanced,
and improved.
(3) The expansion, enhancement, and improve-
ment of transmission facilities also are necessary to
maintain and improve reliability of electric service.
(4) The regulation of transmission service must
be reformed.
SEC. 3. CLARIFICATION OF JURISDICTION.
(a) DECLARATION OF POLICY.—Section 201(a) of
the Federal Power Act (16 U.S.C. 824(a)) is amended by
inserting after ‘‘transmission of electric energy in inter-
state commerce’’ the following: ‘‘, including the unbundled
transmission of electric energy sold at retail,’’.
(b) APPLICATION OF PART.—Section 201(b)(1) of
the Federal Power Act (16 U.S.C. 824(b)(1)) is amended
by—
(1) inserting after ‘‘the transmission of electric
energy in interstate commerce’’ the following: ‘‘, in-
cluding the unbundled transmission of electric en-
ergy sold at retail,’’; and
(2) adding at the end of subsection (b) the fol-
lowing new paragraph:
‘‘(3) After consulting with the appropriate
State regulatory authorities, the Commission shall
determine by rule or order which facilities used for
the transmission and delivery of electric energy are
used for transmission in interstate commerce subject
to the jurisdiction of the Commission under this
part, and which are used for local distribution sub-
ject to State jurisdiction.’’.
(c) DEFINITION OF INTERSTATE COMMERCE.—Sec-
tion 201(c) of the Federal Power Act (16 U.S.C. 824(c))
is amended after ‘‘outside thereof’ by inserting ‘‘(including
consumption in a foreign country)’’.
(d) DEFINITIONS
OF TYPES
OF SALES.—Section
201(d) of the Federal Power Act (16 U.S.C. 824(d)) is
amended by—
(1) inserting ‘‘(1)’’ after the subsection designa-
tion; and
(2) adding at the end the following:
‘‘(2) The term ‘bundled retail sale of electric energy’
means the sale of electric energy to an ultimate consumer
in which the generation and transmission service are not
sold separately.
‘‘(3) The term ‘unbundled local distribution service’
means the delivery of electric energy to an ultimate con-
sumer if—
‘‘(A) the electric energy and the service of deliv-
ering it are sold separately; and
‘‘(B) the delivery uses facilities for local dis-
tribution as determined by the Commission under
subsection (b)(3).
‘‘(4) The term ‘unbundled transmission of electric en-
ergy sold at retail’ means the transmission of electric en-
ergy to an ultimate consumer if—
‘‘(A) the electric energy and the service of
transmitting it are sold separately, and
‘‘(B) the transmission uses facilities for trans-
mission in interstate commerce as determined by the
Commission under subsection (b)(3).’’.
(e) DEFINITION
OF
PUBLIC
UTILITY.—Section
201(e) of the Federal Power Act (16 U.S.C. 824(e)) is
amended to read as follows:
‘‘(e) The term ‘public utility’, when used in this part
or in the part next following means—
‘‘(1) any person who owns or operates facilities
subject to the jurisdiction of the Commission under
this part (other than facilities subject to such juris-
diction solely by reason of section 210, 211, or 212);
and
‘‘(2) any transmitting utility that is not a pub-
lic utility under paragraph (1), but only with respect
to determining, fixing, and otherwise regulating the
rates, terms, and conditions for the transmission of
electric energy under this part.’’.
(f) APPLICATION OF PART TO GOVERNMENT UTILI-
TIES.—Section 201(f) of the Federal Power Act (16
U.S.C. 824(f)) is amended by striking ‘‘No provision’’ and
inserting in lieu thereof ‘‘Except as provided in subsection
(e)(2) and section 3(23), no provision’’.
SEC. 4. DISPOSITION OF PROPERTY.
Section 203 of the Federal Power Act (16 U.S.C.
824b) is repealed.
SEC. 5. ECONOMICALLY EFFICIENT TRANSMISSION SERV-
ICE AND EXPANSION OF TRANSMISSION NET-
WORKS.
Part II of the Federal Power Act is amended by add-
ing at the end thereof the following new section:
‘‘SEC. 
215. 
STANDARDS 
FOR 
ESTABLISHING 
RATES,
CHARGES, TERMS, AND CONDITIONS FOR
TRANSMISSION SERVICE.
‘‘(a) RECOVERY
OF COSTS.—In reviewing rates,
charges, terms, and conditions for transmission services
under this Act, the Commission shall permit a transmit-
ting utility to recover all of the costs incurred by the utility
in connection with the transmission services and necessary
associated services, including, but not limited to, the costs
of any enlargement of transmission facilities.
‘‘(b) CONSIDERATION OF COST AND BENEFIT.—In
reviewing the rates, charges, terms, and conditions of
transmission services that are provided by a regional
transmission organization and that make use of facilities
constructed after the date of enactment of this section,
the Commission shall take into account the incremental
cost and the benefit to interconnected transmission sys-
tems of such facilities.
‘‘(c) CERTAIN
REQUIREMENTS.—Rates, charges,
terms and conditions established pursuant to subsections
(a) and (b) shall—
‘‘(1) promote the economically efficient trans-
mission of electricity, the expansion of transmission
networks, the introduction of new transmission tech-
nologies, and the provision of transmission services
by regional transmission organizations;
‘‘(2) prevent the shifting of costs to the rates
for services outside the jurisdiction of the Commis-
sion; and
‘‘(3) be just and reasonable and not unduly dis-
criminatory or preferential.
‘‘(d) VOLUNTARY INNOVATIVE PRICING POLICIES.—
Notwithstanding subsection (a) of this section, the Com-
mission shall encourage innovative pricing policies volun-
tarily filed by transmitting utilities. Innovative pricing
policies include policies that—
‘‘(1) provide incentives to transmitting utilities
to promote the voluntary participation in and forma-
tion of regional transmission organizations, without
having the effect of forcing transmitting utilities to
join regional transmission organizations and extend
such incentives to transmitting utilities that already
have formed a regional transmission organization;
‘‘(2) limit the charging of multiple rates for
transmission service over the transmission facilities
operated by the regional transmission organization,
provided, however, that a reasonable transition
mechanism or period may be used before eliminating
such rates;
‘‘(3) minimize the shifting of costs among exist-
ing customers of the transmitting utilities within the
regional transmission organization;
‘‘(4) encourage the efficient and reliable oper-
ation of the transmission grid and supply of trans-
mission services through congestion management,
performance-based or incentive ratemaking, and
other measures; and
‘‘(5) encourage efficient and adequate invest-
ment in and expansion of the transmission facilities
owned or controlled by the regional transmission or-
ganization.
‘‘(e) NEGOTIATED RATES.—Notwithstanding sub-
section (a) of this section, the Commission may permit the
charging of negotiated rates for transmission services
without regard to costs whenever an individual company
or companies are willing to pay such negotiated rates, pro-
vided, however, that such costs shall not be recovered from
other transmission customers.
‘‘(f) EFFECTIVE
COMPETITION.—Notwithstanding
subsection (a) of this section, in reviewing rates, charges,
terms, and conditions for transmission rates under this
Act, the Commission may permit the recovery of market-
based rates for transmission services where it finds that
relevant geographic and product markets for transmission
services or for delivered wholesale power are subject to ef-
fective competition.
‘‘(g) RULEMAKING.—Within 180 days after enact-
ment of this section, the Commission shall establish by
rule definitions and standards that it shall determine are
necessary to give effect to subsections (d) and (e) of this
section. Within 2 years of enactment of this section, the
Commission shall establish by rule definitions and stand-
ards that it shall determine are required to give effect to
subsection (f) of this section.’’.
SEC. 6. ELECTRIC RELIABILITY STANDARDS.
Part II of the Federal Power Act is amended by add-
ing at the end thereof the following new section:
‘‘SEC. 216. ELECTRIC RELIABILITY STANDARDS.
‘‘(a) POLICIES
AND STANDARDS.—A transmitting
utility may require its transmission customers and any
other transmitting utility with which it is either directly
or indirectly interconnected to observe, as a condition of
receiving transmission service, policies, or standards duly
adopted by an electric reliability organization approved by
the Commission. A transmitting utility may require its
transmission customers and any other transmitting utility
to which it is either directly or indirectly interconnected
to observe, as a condition of receiving transmission service,
policies, or standards duly adopted by a regional affiliate
of such electric reliability organization.
‘‘(b) COMMISSION AUTHORITY.—Whenever the Com-
mission, after a hearing had upon its own motion or upon
complaint, shall find that any policy or standard adopted
by an electric reliability organization approved by the
Commission, or by any affiliate of such electric reliability
organization, or the application of such policy or standard
by a transmitting utility, is unjust, unreasonable, unduly
discriminatory or preferential, the Commission may dis-
approve, and prohibit the application of, such policy or
standard, and shall remand the matter to the electric reli-
ability organization for further consideration.’’.
SEC. 7. PROMOTION OF VOLUNTARY DEVELOPMENT OF RE-
GIONAL TRANSMISSION ORGANIZATIONS.
Part II of the Federal Power Act is amended by in-
serting at the end thereof the following new section:
‘‘SEC. 217. PROMOTION OF VOLUNTARY DEVELOPMENT OF
REGIONAL TRANSMISSION ORGANIZATIONS.
‘‘(a) IN GENERAL.—The Commission may approve
and may encourage the formation of regional transmission
organizations for the purpose of enhancing the trans-
mission of electric energy in interstate commerce. Among
options for the formation of regional transmission organi-
zations, the Commission shall prefer those in which—
‘‘(1) participation in the regional transmission
organization by transmitting utilities is voluntary;
‘‘(2) the form, structure, and operating entity
of the regional transmission organization are ap-
proved of by participating transmitting utilities; and
‘‘(3) market incentives exist to promote invest-
ment for expansion of transmission facilities and for
the introduction of new transmission technologies
within the territory of the regional transmission or-
ganization.
‘‘(b) CONDITIONS.—No order issued under this Act
shall be conditioned upon or require a transmitting utility
to transfer operational control of jurisdictional facilities
to an independent system operator or other regional trans-
mission organization.
‘‘(c) COMPLAINT.—In addition to any other rights or
remedies it may have under this Act, any entity serving
electric load that is denied services by a regional trans-
mission organization that the regional transmission orga-
nization makes available to other load serving entities shall
be entitled to file a complaint with the Commission con-
cerning the denial of such services. If the Commission
shall find, after an evidentiary hearing on the record, that
the denial of services complained of was unjust, unreason-
able, unduly discriminatory or preferential, or contrary to
the public interest, the Commission may order the provi-
sion of such services at rates and on terms and conditions
that shall be in accordance with section 215 of this Act.’’.
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