I
106TH CONGRESS
1ST SESSION
H. R. 2944
To promote competition in electricity markets and to provide consumers
with a reliable source of electricity, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 24, 1999
Mr. BARTON of Texas introduced the following bill; which was referred to the
Committee on Commerce, and in addition to the Committees on Trans-
portation and Infrastructure, Resources, and Ways and Means, for a pe-
riod to be subsequently determined by the Speaker, in each case for con-
sideration of such provisions as fall within the jurisdiction of the com-
mittee concerned
A BILL
To promote competition in electricity markets and to provide
consumers with a reliable source of electricity, 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; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Electricity Competition and Reliability Act’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title; table of contents.
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Sec. 2. Findings and purpose.
TITLE I—OPEN TRANSMISSION ACCESS
Sec. 101. Clarification of State authority regarding retail electric competition;
clarification of Federal and State jurisdiction.
Sec. 102. Open access for all transmitting utilities.
Sec. 103. Regional transmission organizations.
Sec. 104. Regional transmission siting agencies.
Sec. 105. Expansion of interstate transmission facilities.
Sec. 106. Conforming amendments.
TITLE II—ELECTRIC RELIABILITY
Sec. 201. Electric reliability.
TITLE III—CONSUMER PROTECTION
Sec. 301. Electric supplier information disclosure.
Sec. 302. Consumer privacy.
Sec. 303. Electric supply unfair trade practices.
Sec. 304. Universal and affordable service.
Sec. 305. Definitions.
TITLE IV—MERGERS
Sec. 401. Electric company mergers and disposition of property.
Sec. 402. Elimination of review by the Nuclear Regulatory Commission.
TITLE V—PROMOTING COMPETITION
Subtitle A—Retail Reciprocity
Sec. 501. Retail reciprocity.
Subtitle B—Public Utility Holding Company Act of 1935
Sec. 511. Definitions.
Sec. 512. Repeal of the Public Utility Holding Company Act of 1935.
Sec. 513. Federal access to books and records.
Sec. 514. State access to books and records.
Sec. 515. Exemption authority.
Sec. 516. Affiliate transactions.
Sec. 517. Applicability.
Sec. 518. Effect on other regulations.
Sec. 519. Enforcement.
Sec. 520. Savings provisions.
Sec. 521. Implementation.
Sec. 522. Transfer of resources.
Sec. 523. Effective date.
Sec. 524. Conforming amendment to the Federal Power Act.
Subtitle C—Public Utility Regulatory Policies Act of 1978
Sec. 531. Prospective repeal.
Sec. 532. Recovery of costs.
Sec. 533. Definitions.
Subtitle D—Additional Provisions Promoting Competition
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Sec. 541. Aggregation.
Sec. 542. Interconnection.
TITLE VI—FEDERAL ELECTRIC UTILITIES
Subtitle A—Tennessee Valley Authority
Sec. 601. Definitions.
Sec. 602. Wholesale competition in the Tennessee Valley Region.
Sec. 603. Tennessee Valley Authority power sales.
Sec. 604. Tennessee Valley Authority electric generation facilities.
Sec. 605. Renegotiation of all-requirements power contracts.
Sec. 606. Regulation of Tennessee Valley Authority transmission system.
Sec. 607. Regulation of Tennessee Valley Authority distributors.
Sec. 608. Stranded cost recovery.
Sec. 609. Application of antitrust law.
Sec. 610. Savings provision.
Subtitle B—Bonneville Power Administration
Sec. 621. Definitions.
Sec. 622. Regulation of Bonneville Transmission System.
Sec. 623. Surcharge on transmission rates to recover otherwise nonrecoverable
costs.
Sec. 624. Limit on retail sales by Bonneville Power Administration.
Sec. 625. Acquisition of new major generating resources.
Sec. 626. Application of antitrust law.
Sec. 627. Conforming amendments.
Subtitle C—Other Power Marketing Administrations
Sec. 631. Definitions.
Sec. 632. Wholesale power sales by Federal power marketing administrations.
Sec. 633. Regulation of Federal power marketing administration transmission
systems.
Sec. 634. Accounting.
Sec. 635. Application of antitrust law.
TITLE VII—ENVIRONMENTAL PROVISIONS
Sec. 701. Renewable energy production incentive.
Sec. 702. Net metering.
TITLE VIII—PROVISIONS RELATING TO INTERNAL REVENUE
CODE
Sec. 801. Business activities of mutual or cooperative electric companies.
Sec. 802. Tax-exempt bond financing of certain electric facilities.
Sec. 803. Nuclear decommissioning costs.
Sec. 804. Renewable energy tax credit.
TITLE IX—MISCELLANEOUS PROVISION
Sec. 901. Study.
SEC. 2. FINDINGS AND PURPOSE.
(a) FINDINGS.—The Congress finds the following:
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(1) Electricity is generated, transmitted, dis-
tributed, and sold in interstate commerce and used
in virtually every home, commercial enterprise, and
manufacturing facility in the United States and sub-
stantially affects interstate commerce in other goods
and services.
(2) Americans consume electricity worth more
than $250,000,000,000 a year, approximately half of
which is for residential purposes. The monthly elec-
tric utility bill is one of the largest expenses for most
households.
(3) Traditional monopoly rate-of-return regula-
tion of electricity has stifled competition, resulting in
high electricity rates for many consumers and few
incentives for technological innovation and good cus-
tomer service by electric utilities.
(4) Twenty-four States, representing over
163,000,000 people and over 60 percent of the pop-
ulation of the United States, have approved pro-
grams to foster retail choice in electric sales. State
laws forging the dramatic transition to competitive
retail electric markets have addressed stranded cost
recovery, public benefits, and other issues and Con-
gress encourages the remaining States to address
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stranded cost recovery as they open their retail elec-
tric markets.
(5) High electricity rates are regressive, placing
a disproportionate burden on poor ratepayers. A
competitive electric generation industry will provide
benefits to all consumers by fostering fairness, inno-
vation, and efficiency, rather than allow cost shifting
that lowers rates to some consumers but raises rates
to others.
(6) The cost of electricity has a direct effect on
the price, profitability, and competitiveness of goods
and services produced in the United States.
(7) Lower priced electricity and improved reli-
ability can be realized by competition among electric
suppliers.
(8) The development of vigorous competition in
the retail market for electric energy will—
(A) reduce the costs of electric energy to
even the smallest consumers of electricity;
(B) create jobs as American businesses are
able to lower costs and better compete in world
markets and against foreign competition here at
home; and
(C) result in a more efficient utility indus-
try.
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(9) Federal programs to benefit rural con-
sumers have succeeded, and rural America has been
electrified. However, rural America pays some of the
highest electric rates in the country. Competition
will assure reliable, reasonably priced rural electric
service.
(10) The Nation’s interconnected electricity
generation, transmission, and local distribution sys-
tems critically affect the economy and productivity
of the United States, and the health, safety, welfare,
and security of all Americans.
(11) Congress has authority to enact laws,
under the Commerce Clause of the United States
Constitution, regarding the generation, transmission,
distribution, and sale of electric energy in interstate
commerce.
(12) The success of competition in the whole-
sale electric market under the Energy Policy Act of
1992 and open access under Orders No. 888 and
889 of the Federal Energy Regulatory Commission,
as well as innovations in electric generation and
transmission technologies, indicate that retail elec-
tric competition will substantially benefit all classes
of United States electric consumers, including resi-
dential, commercial, industrial, and other consumers.
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(b) PURPOSE.—The purpose of this Act is to benefit
American electric consumers through lower electric rates,
higher quality services, and a more robust United States
economy by encouraging retail and wholesale competition
in electric markets and to provide consumers with reliable
electric service, and for other purposes.
TITLE I—OPEN TRANSMISSION
ACCESS
SEC. 101. CLARIFICATION OF STATE AUTHORITY REGARD-
ING RETAIL ELECTRIC COMPETITION; CLARI-
FICATION OF FEDERAL AND STATE JURISDIC-
TION.
(a) STATE AUTHORITY TO ORDER RETAIL ELECTRIC
COMPETITION.—Section 201(b) of the Federal Power Act
is amended by adding the following new paragraph after
paragraph (2):
‘‘(3) This Act shall not affect the authority of a State
or municipality to require retail electric competition or to
require unbundled transmission and local distribution
service for the delivery of electric energy directly to a retail
electric consumer.’’.
(b) CLARIFICATION OF FEDERAL AND STATE JURIS-
DICTION.—(1) Section 201(a) of the Federal Power Act
(16 U.S.C. 824(a)) is amended as follows:
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(A) By inserting after ‘‘transmission of electric
energy in interstate commerce’’ the following: ‘‘, in-
cluding the unbundled transmission of electric en-
ergy sold at retail,’’.
(B) By striking ‘‘such Federal regulation, how-
ever, to extend only to those matters which are not
subject to regulation by the States.’’ and inserting in
lieu thereof ‘‘such Federal regulation shall not ex-
tend, however, to any bundled retail sale of electric
energy, to any local distribution service component
of any unbundled retail sale of electric energy, or to
any retail sale component of any unbundled retail
sale of electric energy, which are each subject to reg-
ulation by the States.’’.
(2) Section 201(b)(1) of the Federal Power Act (16
U.S.C. 824(b)(1)) is amended as follows:
(A) Inserting after ‘‘the transmission of electric
energy in interstate commerce’’ the following: ‘‘, in-
cluding the unbundled transmission of electric en-
ergy sold at retail,’’.
(B) In the last sentence, deleting ‘‘the trans-
mission of electric energy in intrastate commerce’’,
and inserting in lieu thereof ‘‘the transmission of
any bundled retail sale of electric energy’’.
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(c) DEFINITIONS OF TYPES OF SALES.—Section 3 of
the Federal Power Act (16 U.S.C. 796) is amended by
adding at the end the following:
‘‘(27) The term ‘bundled retail sale of electric
energy’ means the sale of electric energy to a retail
electric consumer in which the electric energy and
transmission services are not sold separately.
‘‘(28) The term ‘local distribution service’
means all services necessary to, or customarily pro-
vided in, the delivery of electric energy to a retail
electric consumer through local distribution facilities,
including the construction, maintenance, and oper-
ation of local distribution facilities, the metering and
billing of retail sales, and any related accounting,
management, and other services.
‘‘(29) The term ‘unbundled retail sale of elec-
tric energy’ means the sale of electric energy to a re-
tail electric consumer in which electric energy and
transmission service or local distribution service are
sold separately.
‘‘(30) The term ‘unbundled transmission of
electric energy sold at retail’ means the transmission
of electric energy to a retail electric consumer if the
electric energy and the service of transmitting it are
sold separately.’’.
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(d) STATE PUBLIC PURPOSE CHARGES.—Section
201(b) of the Federal Power Act is amended by adding
the following new paragraph after paragraph (3):
‘‘(4) This Act shall not affect the authority of a State
or municipality to require as a charge for delivery of elec-
tric energy to, or as a condition for the purchase or receipt
of electric energy by, any retail electric consumer located
in such State the payment of any charge deemed necessary
by such State or municipality for any purpose, including
any of the following:
‘‘(A) To recover transition costs.
‘‘(B) To ensure that adequate electric service is
available to all retail electric consumers served by a
local distribution company.
‘‘(C) To ensure and enhance the reliability of
retail electric service.
‘‘(D) To fund assistance to low-income retail
electric consumers.
‘‘(E) To encourage environmental, emerging en-
ergy technology, energy efficiency, or energy con-
servation programs.
‘‘(F) To provide for transition costs of electric
utility workers.
Nothing in this paragraph shall require a State or munici-
pality to impose any such charges.’’.
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(e) DETERMINATION
OF
TRANSMISSION
FACILI-
TIES.—Section 201 of the Federal Power Act is amended
by adding the following new subsection at the end thereof:
‘‘(h) DETERMINATION
OF TRANSMISSION FACILI-
TIES.—
‘‘(1) DETERMINATION.—A State commission, a
transmitting utility, or a local distribution company
may apply to the Commission for a determination
whether a particular facility used for the transpor-
tation of electric energy is a transmission facility
subject to the jurisdiction of the Commission. The
Commission may make such determination pursuant
to such a request or on its own motion.
‘‘(2) COMMISSION FINDINGS.—The Commission
shall make a determination under paragraph (1) in
accordance with the following factors associated with
the facility:
‘‘(A) Function and purpose.
‘‘(B) Size.
‘‘(C) Location.
‘‘(D) Voltage level and other technical
characteristics.
‘‘(E) Historical, current and planned usage
patterns.
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‘‘(F) Interconnection and coordination with
other facilities.
‘‘(G) Any other factor the Commission
deems relevant.
In making such determination, the Commission shall
give deference to any position taken by the appro-
priate State commission.’’.
SEC. 102. OPEN ACCESS FOR ALL TRANSMITTING UTILI-
TIES.
(a) OPEN ACCESS TRANSMISSION AUTHORITY; RE-
TAIL WHEELING IN RETAIL COMPETITION STATES.—
(1) APPLICABILITY
OF
OPEN
ACCESS
TRANS-
MISSION RULES.—Section 206 of the Federal Power
Act is amended by adding the following new sub-
section after subsection (d):
‘‘(e) OPEN
ACCESS
TRANSMISSION
SERVICES.—
Under section 205 and this section, the Commission may
require, by rule or order, transmitting utilities to provide
transmission services on a not unduly discriminatory or
preferential basis, subject to section 212(h), and may au-
thorize recovery of stranded costs, as defined by the Com-
mission, arising from any requirement to provide trans-
mission services on such a basis. This subsection applies
to any rule or order promulgated by the Commission be-
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fore, on, or after the date of enactment of this sub-
section.’’.
(2) AUTHORITY
TO
ORDER
RETAIL
WHEEL-
ING.—Section 212(h) of the Federal Power Act is
amended as follows:
(A) By inserting ‘‘(1)’’ before ‘‘No’’.
(B) By striking ‘‘(1)’’, ‘‘(2)’’, ‘‘(A)’’, and
‘‘(B)’’ and inserting in their places ‘‘(A)’’,
‘‘(B)’’, ‘‘(i)’’, and ‘‘(ii)’’ respectively.
(C) By striking from redesignated para-
graph (1)(B)(ii) ‘‘the date of enactment of this
subsection’’ and inserting ‘‘October 24, 1992,’’.
(D) By adding the following new para-
graph at the end:
‘‘(2) Notwithstanding paragraph (1), the Commission
may issue an order that requires the transmission of elec-
tric energy directly or indirectly to retail electric con-
sumers who are served by local distribution facilities that
are subject to open access.’’.
(3) CONFORMING AMENDMENTS.—
(A) Section 3(24) of the Federal Power
Act is amended to read as follows:
‘‘(24) ‘transmission services’ means the trans-
mission of electric energy sold or to be sold.’’.
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(B) Section 211(a) of the Federal Power
Act is amended by striking ‘‘for resale’’.
(C) Section 212(a) of the Federal Power
Act is amended by striking ‘‘wholesale’’ each
time it appears, except the last time.
(D) Section 3 of the Federal Power Act is
amended by adding the following at the end
thereof:
‘‘(26) LOCAL
DISTRIBUTION
COMPANY.—The
term ‘local distribution company’ means any entity
which owns, controls, or operates local distribution
facilities.
‘‘(27) LOCAL DISTRIBUTION FACILITIES.—The
term ‘local distribution facilities’ means any facilities
used for the local distribution of electric energy.
Such term does not include any facilities determined
under section 201(h) to be transmission facilities.
‘‘(28) OPEN ACCESS.—The term ‘open access’,
with respect to local distribution facilities, means
that the local distribution company that owns, con-
trols, or operates the facilities offers not unduly dis-
criminatory or preferential access to the facilities.
‘‘(29) 
RETAIL
ELECTRIC
CONSUMER.—The
term ‘retail electric consumer’ means any person
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who purchases electric energy for ultimate consump-
tion.
‘‘(30) RETAIL ELECTRIC SUPPLIER.—The term
‘retail electric supplier’ means any person who sells
electric energy to a retail electric consumer for ulti-
mate consumption.
‘‘(31) STATE REGULATED ELECTRIC UTILITY.—
The term ‘State regulated electric utility’ means any
electric utility with respect to which a State commis-
sion has ratemaking authority.’’.
(b) 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) DEFINITION
OF PUBLIC UTILITY.—(1) The
term ‘public utility’, when used in this Part and Part III,
means:
‘‘(A) 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).
‘‘(B) Any transmitting utility (other than the
Federal power marketing administrations and the
Tennessee Valley Authority) that is not a public util-
ity within the meaning of paragraph (1), but only
with respect to determining, fixing, and otherwise
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regulating the rates, terms, and conditions for the
transmission of electric energy in interstate com-
merce.
‘‘(2)(A) Within 180 days after the enactment of this
subsection, after notice and opportunity for comment, the
Commission shall adopt rules providing criteria and proce-
dures to exempt certain transmitting utilities from para-
graph (1)(B).
‘‘(B) The criteria established by the Commission
under this paragraph may include whether the transmit-
ting utility owns, operates, or controls only limited and
discrete transmission facilities that do not form an inte-
grated grid; whether the transmitting utility is a small
public utility not part of a centrally dispatched power pool
and any other circumstances which the Commission finds
appropriate. Such criteria may provide for revocation of
an exemption in the event of changed circumstances. The
Commission may from time to time, after notice and op-
portunity for comment, modify its exemption criteria.
‘‘(C) The procedures established by the Commission
shall permit exemptions, after notice and opportunity for
comment, based on a letter application containing a sworn
statement, by a representative legally authorized to bind
the applicant, attesting to the facts demonstrating that
the applicant meets the exemption standards. A good faith
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application for an exemption shall be deemed granted un-
less, within 60 days of its receipt of such application, the
Commission makes a determination that the applicant
does not meet the exemption criteria.
‘‘(D) For purposes of this paragraph, the term ‘small
public utility’ means a public utility that sells no more
than 4,000,000 megawatt-hours of electric energy per
year.’’.
(c) NONJURISDICTIONAL STATUS RESULTING FROM
COMPLIANCE WITH ORDERS UNDER SECTIONS 210 AND
211; LIMITATION.—Section 201(b)(2) of the Federal
Power Act (16 U.S.C. 824(b)(2)) is amended by striking
the period at the end of the second sentence and inserting
the following: ‘‘except with respect to determining, fixing,
and otherwise regulating the rates, terms, and conditions
for the transmission of electric energy under this part pur-
suant to subsection (e)(2).’’.
(d) DEFINITION.—Section 3(23) of the Federal
Power Act (16 U.S.C. 796) is amended to read as follows:
‘‘(23) 
TRANSMITTING
UTILITY.—The 
term
‘transmitting utility’ means any entity (including a
State or municipal entity) that owns or operates fa-
cilities used for the transmission of electric energy in
interstate commerce (other than facilities subject to
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an order of the Commission under section 210 or
211).’’.
(e) FOREIGN COMMERCE.—
(1) Section 201(c) of the Federal Power Act
(16 U.S.C. 824(c)) is amended by striking ‘‘there-
of:’’ and inserting ‘‘thereof (including consumption
in a foreign country),’’.
(2) Section 202(f) of the Federal Power Act is
repealed.
SEC. 103. REGIONAL TRANSMISSION ORGANIZATIONS.
Section 202 of the Federal Power Act is amended by
adding the following new subsections after subsection (g):
‘‘(h) REGIONAL TRANSMISSION ORGANIZATIONS.—
‘‘(1) IN GENERAL.—Effective January 1, 2003,
each transmitting utility shall establish or join a re-
gional transmission organization. By January 1,
2002, each such utility shall file an application with
the Commission to establish or join a regional trans-
mission organization. After notice and an oppor-
tunity for a hearing, the Commission shall approve
an application by one or more transmitting utilities
to establish or join a regional transmission organiza-
tion if the Commission determines the regional
transmission organization meets the standards in
paragraph (2). The Commission shall apply the
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standards in paragraph (2) without regard to the
specific structure, type, or form of proposed regional
transmission organization. If a transmitting utility
applies to establish or join a regional transmission
organization that meets the standards in paragraph
(2), the Commission shall have no authority under
this subsection to require the transmitting utility to
participate in a different regional transmission orga-
nization. The Commission may approve a regional
transmission organization that does not meet all the
standards in paragraph (2) if the Commission deter-
mines that the regional transmission organization
contains features that are consistent with or supe-
rior to the standards listed in paragraph (2). The
requirement that a transmitting utility establish or
join a regional transmission organization shall be
stayed pending any proceeding under this section or
section 313.
‘‘(2) STANDARDS FOR REGIONAL TRANSMISSION
ORGANIZATIONS.—The Commission shall make a de-
termination under paragraph (1) in accordance with
the following standards:
‘‘(A) 
INDEPENDENCE.—The 
regional
transmission organization must be independent
of all market participants, and no market par-
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ticipant may exercise control over the operation
of the regional transmission organization. For
purposes of determining whether a regional
transmission organization is independent of all
market participants, ownership of passive, non-
voting interests in a regional transmission orga-
nization, or ownership of 10 percent or less of
the voting interests in the regional transmission
organization, shall be deemed not to confer con-
trol over the regional transmission organization
for purposes of this subparagraph. For pur-
poses of this subparagraph, the term ‘voting in-
terest’ shall not include the right to participate
in major organic corporate changes to the re-
gional transmission organization that affect the
ownership status of the nonvoting interests.
‘‘(B) SCOPE
AND
CONFIGURATION.—The
regional transmission organization must operate
transmission facilities that comprise an appro-
priate scope and regional configuration. In de-
termining whether a regional transmission orga-
nization contains an appropriate scope and con-
figuration, the Commission shall consider the
following factors:
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‘‘(i) Performance of essential regional
transmission organization functions.
‘‘(ii) Electricity trading patterns.
‘‘(iii) Exercise of market power not
subject to State regulation.
‘‘(iv) Existing control areas.
‘‘(v) Existing regional transmission
entities.
‘‘(vi) Contiguity of geographic area.
‘‘(vii) 
Interconnection 
of 
regional
transmission 
organization 
transmission
systems.
‘‘(viii) International boundaries.
‘‘(C) OPERATIONAL AUTHORITY.—The re-
gional transmission organization must possess
operational authority over all transmission fa-
cilities under its control.
‘‘(D) EXPANSION.—The regional trans-
mission organization must be responsible for
planning necessary additions and upgrades to
the transmission system under the operational
control of the regional transmission organiza-
tion that will enable it to provide efficient, reli-
able, not unduly discriminatory or preferential
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transmission service and coordinating such ef-
forts with the appropriate State authorities.
‘‘(E) OTHER
STANDARDS.—The regional
transmission organization shall meet any other
standards that the Commission determines to
be in the public interest.
‘‘(3) FEDERAL TRANSMITTING UTILITIES.—The
Tennessee Valley Authority, the Bonneville Power
Administration, the Southwestern Power Adminis-
tration, and the Western Area Power Administration
are each authorized to participate in a regional
transmission organization after conducting a public
process in the relevant region to receive comments.
Notwithstanding any other law, participation may
include delegation of operation and control of the
transmission system concerned to a regional trans-
mission organization or other method of participa-
tion, under terms and conditions the Tennessee Val-
ley Authority or the power marketing administration
concerned determines necessary or appropriate, in-
cluding being bound by operational and other orders
of the regional transmission organization and by the
results of arbitration of disputes with the organiza-
tion or with other participants.
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‘‘(4) STATE
AUTHORITY
NOT
AFFECTED.—
Nothing in this subsection limits States from ad-
dressing transmission facility maintenance, planning,
siting, and other utility functions in a manner con-
sistent with this Act or Commission action under
this Act.
‘‘(5) EXISTING REGIONAL TRANSMISSION ORGA-
NIZATION.—Nothing in this subsection authorizes
the Commission to require any change in a regional
transmission organization or comparable organiza-
tion approved by the Commission before the date of
enactment of this subsection.
‘‘(6) INCENTIVE TRANSMISSION PRICING POLI-
CIES.—The Commission shall encourage incentive
transmission pricing policies for regional trans-
mission organizations approved under paragraph (1)
and comparable transmission organizations approved
by the Commission before enactment of this sub-
section. Such pricing policies include policies that—
‘‘(A) provide incentives to transmitting
utilities to promote the formation of regional
transmission organizations, and extend such in-
centives to transmitting utilities that already
have formed a regional transmission organiza-
tion;
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‘‘(B) limit the charging of multiple rates
for transmission service over the transmission
facilities operated by the regional transmission
organization, except that a reasonable transi-
tion period may be used before eliminating such
rates;
‘‘(C) minimize the shifting of costs among
existing customers of the transmitting utilities
within the regional transmission organization;
‘‘(D) encourage the efficient and reliable
operation of the transmission system and sup-
ply of transmission services through congestion
management, performance-based or incentive
ratemaking, and other measures; and
‘‘(E) encourage efficient and adequate in-
vestment in and expansion of the transmission
facilities owned or controlled by the regional
transmission organization.
‘‘Within 180 days after enactment of this para-
graph, the Commission shall establish by rule defini-
tions and standards that it determines are necessary
to give effect to this paragraph.
‘‘(7) WITHDRAWAL.—The Commission, after
notice and opportunity for comment, may withdraw
the approval for a regional transmission organization
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if the Commission determines that the regional
transmission organization fails to comply with the
provisions of this subsection.’’.
SEC. 104. REGIONAL TRANSMISSION SITING AGENCIES.
Part II of the Federal Power Act (16 U.S.C. 824 and
following) is amended by adding at the end the following
section:
‘‘SEC. 215. REGIONAL TRANSMISSION SITING AGENCIES.
‘‘(a) CONSENT.—The consent of Congress is given for
compacts among two or more States to establish regional
transmission siting agencies to—
‘‘(1) facilitate coordination among the States
within a particular region with regard to the siting
of future transmission facilities;
‘‘(2) carry out State transmission facility siting
responsibilities;
‘‘(3) meet the other requirements of this section
and rules prescribed by the Commission under this
section; and
‘‘(4) otherwise be consistent with the public in-
terest.
‘‘(b) AUTHORITY.—If the Commission determines
that a compact meets the requirements of subsection (a),
the agency established under the compact has such au-
thority with respect to matters otherwise within the juris-
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‘‘(D) the agency follow reasonable procedures in
making its decisions, in governing itself, and in car-
rying out its authorities under the compact, includ-
ing judicial review.
‘‘(3) The rule may include any other requirement to
ensure that the regional transmission siting agency’s orga-
nization, practices, and procedures are sufficient to carry
out this section and the rules promulgated under it.
‘‘(d) TERMINATION.—The Commission, after notice
and opportunity for comment, may terminate the approval
of a compact under this section at any time if it deter-
mines that the regional transmission siting agency fails
to comply with the provisions of this section or Commis-
sion rules under subsection (c) or that the compact is con-
trary to the public interest.’’.
SEC. 105. EXPANSION OF INTERSTATE TRANSMISSION FA-
CILITIES.
Part II of the Federal Power Act (16 U.S.C. 824 and
following) is amended by adding at the end the following
section:
‘‘SEC. 216. EXPANSION OF INTERSTATE TRANSMISSION FA-
CILITIES.
‘‘(a) COMMISSION AUTHORITY.—Upon the applica-
tion of an electric utility or transmitting utility, if the
Commission determines, after notice and opportunity for
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hearing, that such action is in the public interest, it may
issue an order requiring a transmitting utility to enlarge,
extend, or improve its facilities for the transmission of
electric energy in interstate commerce. The transmitting
utility ordered to enlarge, extend, or improve its facilities
may apply to the Commission for an order terminating
or modifying the order if the transmitting utility dem-
onstrates, and the Commission determines, that the trans-
mitting utility has failed, after making a good faith effort,
to obtain the necessary approvals or property rights under
applicable Federal, State, and local laws.
‘‘(b) COMPLIANCE WITH OTHER LAWS.—Commis-
sion action under this section shall be subject to the Na-
tional Environmental Policy Act of 1969 (42 U.S.C. 4321
and following) and all other applicable State and Federal
laws. This section does not affect the authority of States
or political subdivisions of States to site transmission fa-
cilities under applicable State and local laws.
‘‘(c) USE OF JOINT BOARDS.—Before issuing an
order under subsection (a), the Commission shall refer the
matter to a joint board for advice and recommendations
on the need for, design of, and location of the proposed
enlargement, extension, or improvement. The Commission
shall consider the advice and recommendations of such
board before ordering any such enlargement, extension, or
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improvement. Any such board shall be composed of a
member or members, as determined by the Commission,
from the State or each of the States affected or to be af-
fected by such matter, from each Federal agency affected
or to be affected by such matter, and from the Commis-
sion. Any such board shall be vested with the same power
and be subject to the same duties and liabilities as in the
case of a member of the Commission when designated to
hold any hearings. The action of such board shall have
such force and effect and its proceedings shall be con-
ducted in such manner as the Commission shall by regula-
tions provide. The State member or members of such
board shall be appointed by the Commission from persons
nominated by the State commission of each State affected,
or by the Governor of such State if there is no State com-
mission. Each State affected shall be entitled to the same
number of representatives on the board unless the nomi-
nating power of such State waives such right. The Com-
mission shall have the discretion to reject the nominee
from any State, but shall thereupon invite a new nomina-
tion from that State. The Federal member or members
from agencies other than the Commission shall be ap-
pointed by the Commission in consultation with the head
of such agency or agencies. The Commission member or
members of such board shall be appointed by the chair-
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man, in consultation with the Commission. The Commis-
sion may, when in its discretion sufficient reason exists
therefor, terminate such a board.
‘‘(d) LIMITATION ON AUTHORITY.—The Commission
shall have no authority to compel a transmitting utility
to extend or improve its transmission facilities if such en-
largement, extension, or improvement would unreasonably
impair the ability of the transmitting utility to provide
adequate service to its customers.’’.
SEC. 106. CONFORMING AMENDMENTS.
(a) ENFORCEMENT.—Subsections (a) and (b) of sec-
tion 316A of the Federal Power Act (16 U.S.C. 791a) are
each amended by striking ‘‘section 211, 212, 213, or
214,’’ in each place such phrase appears and inserting
‘‘part II’’.
(b) COMPLAINTS.—Section 306 of the Federal Power
Act is amended by inserting ‘‘agency or instrumentality
of the United States,’’ after ‘‘person,’’ in the first sentence
and by inserting ‘‘, electric utility, transmitting utility’’
after ‘‘licensee’’ in each place it appears.
(c) REVIEW OF COMMISSION ORDERS.—Section 313
of the Federal Power Act is amended by inserting ‘‘agency
or instrumentality of the United States,’’ after ‘‘person,’’
in the first sentence in subsection (a).
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(d) TECHNICAL CORRECTIONS.—(1) Section 211(c)
of the Federal Power Act is amended by striking ‘‘(2)’’
and by redesignating subparagraphs (A) and (B) as para-
graphs (1) and (2) and by striking ‘‘termination of modi-
fication’’ and inserting ‘‘termination or modification’’.
(2) Section 315 of the Federal Power Act is amended
by striking ‘‘subsection’’ and inserting ‘‘section’’.
TITLE II—ELECTRIC
RELIABILITY
SEC. 201. ELECTRIC RELIABILITY.
Part II of the Federal Power Act (16 U.S.C. 824 and
following) is amended by adding at the end the following
section:
‘‘SEC. 217. ELECTRIC RELIABILITY ORGANIZATION AND
OVERSIGHT.
‘‘(a) DEFINITIONS.—As used in this section:
‘‘(1) AFFILIATED REGIONAL RELIABILITY ENTI-
TY.—The term ‘affiliated regional reliability entity’
means an entity delegated authority under the provi-
sions of subsection (h).
‘‘(2) BULK-POWER SYSTEM.—The term ‘bulk-
power system’ means all facilities and control sys-
tems necessary for operating an interconnected
transmission grid (or any portion thereof), including
high-voltage transmission lines, substations, control
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centers, communications, data, and operations plan-
ning facilities, and the output of generating units
necessary to maintain transmission system reli-
ability.
‘‘(3) ELECTRIC RELIABILITY ORGANIZATION.—
The term ‘electric reliability organization’ means the
organization approved by the Commission under
subsection (d)(4).
‘‘(4) ENTITY
RULE.—The term ‘entity rule’
means a rule adopted by an affiliated regional reli-
ability entity for a specific region and designed to
implement or enforce one or more organization
standards. An entity rule shall be subject to ap-
proval by the electric reliability organization and
once approved, shall be treated as an organization
standard.
‘‘(5) INDUSTRY SECTOR.—The term ‘industry
sector’ means a group of users of the bulk power
system with substantially similar commercial inter-
ests, as determined by the board of the electric reli-
ability organization.
‘‘(6) INTERCONNECTION.—The term ‘inter-
connection’ means a geographic area in which the
operation of bulk-power system components is syn-
chronized such that the failure of one or more of
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such components may adversely affect the ability of
the operators of other components within the inter-
connection to maintain safe and reliable operation of
the facilities within their control.
‘‘(7) ORGANIZATION STANDARD.—The term ‘or-
ganization standard’ means a policy or standard
duly adopted by the electric reliability organization
to provide for the reliable operation of a bulk power
system.
‘‘(8) PUBLIC
INTEREST
GROUP.—The term
‘public interest group’ means any nonprofit private
or public organization that has an interest in the ac-
tivities of the electric reliability organization, includ-
ing, but not limited to, ratepayer advocates, environ-
mental groups, and State and local government or-
ganizations that regulate market participants and
promulgate government policy.
‘‘(9) SYSTEM
OPERATOR.—The term ‘system
operator’ means any entity that operates or is re-
sponsible for the operation of a bulk-power system,
including a control area operator, an independent
system operator, a transmission company, a trans-
mission system operator, or a regional security coor-
dinator.
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‘‘(10) USER OF THE BULK-POWER SYSTEM.—
The term ‘user of the bulk-power system’ means any
entity that sells, purchases, or transmits electric en-
ergy over a bulk-power system, or that owns, oper-
ates or maintains facilities or control systems that
are part of a bulk-power system, or that is a system
operator.
‘‘(11) VARIANCE.—The term ‘variance’ means
an exception or variance from the requirements of
an organization standard (including a proposal for
an organization standard where there is no organiza-
tion standard) that is adopted by an affiliated re-
gional reliability entity and applicable to all or a
part of the region for which the affiliated regional
reliability entity is responsible. A variance shall be
subject to approval by the electric reliability organi-
zation and once approved, shall be treated as an or-
ganization standard.
‘‘(b) COMMISSION
AUTHORITY.—(1) Within the
United States, the Commission shall have jurisdiction over
the electric reliability organization, all affiliated regional
reliability entities, all system operators, and all users of
the bulk-power system, for purposes of approving and en-
forcing compliance with the requirements of this section.
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‘‘(2) The Commission may, by rule, define any other
term used in this section, provided such definition is con-
sistent with the definitions in, and the purpose and intent
of, this Act.
‘‘(c) EXISTING
RELIABILITY
STANDARDS.—Fol-
lowing enactment of this section, and prior to the approval
of the electric reliability organization under subsection (d),
any person, including the North American Electric Reli-
ability Council and its member regional reliability councils,
shall file with the Commission any reliability standard,
guidance or practice, or any amendment thereto, that the
person would propose to be made mandatory and enforce-
able. The Commission, after allowing interested persons
an opportunity to submit comments, may approve any
such proposed mandatory standard, guidance or practice,
or any amendment thereto, if it finds that the standard,
guidance, or practice, or amendment is just, reasonable,
not unduly discriminatory or preferential, and in the pub-
lic interest. Filed standards, guidances, or practices, in-
cluding any amendments thereto, shall be mandatory and
applicable according to their terms following approval by
the Commission and shall remain in effect until—
‘‘(1) withdrawn, disapproved or superseded by
an organization standard, issued or approved by the
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electric reliability organization and made effective by
the Commission under subsection (e); or
‘‘(2) disapproved or suspended by the Commis-
sion if, upon complaint or upon its own motion and
after notice and opportunity for comment, the Com-
mission finds the standard, guidance or practice un-
just, unreasonable, unduly discriminatory or pref-
erential, or not in the public interest.
Standards, guidances or practices in effect pursuant to the
provisions of this subsection shall be enforceable by the
Commission.
‘‘(d) ORGANIZATION APPROVAL.—(1) Not later than
90 days after the date of enactment of this section, the
Commission shall issue proposed rules specifying proce-
dures and requirements for an entity to apply for approval
as the electric reliability organization. The Commission
shall provide notice and opportunity for comment on the
proposed rules. The Commission shall promulgate a final
rule under this subsection within 180 days after the date
of enactment of this section.
‘‘(2) Following the issuance of a final Commission
rule under paragraph (1), an entity may submit an appli-
cation to the Commission for approval as the electric reli-
ability organization. The applicant shall specify in its ap-
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plication its governance and procedures, as well as its
funding mechanism and initial funding requirements.
‘‘(3) The Commission shall provide public notice of
the application and afford interested parties an oppor-
tunity to comment.
‘‘(4) The Commission shall approve the application
if the Commission determines that the applicant—
‘‘(A) has the ability to develop, implement and
enforce standards that provide for an adequate level
of reliability of the bulk-power system;
‘‘(B) permits voluntary membership to any user
of the bulk-power system or public interest group;
‘‘(C) assures fair representation of its members
in the selection of its directors and fair management
of its affairs, taking into account the need for effi-
ciency and effectiveness in decisionmaking and oper-
ations and the requirements for technical com-
petency in the development of organization stand-
ards and the exercise of oversight of bulk-power sys-
tem reliability;
‘‘(D) assures that no two industry sectors have
the ability to control, and no one industry sector has
the ability to veto, the electric reliability organiza-
tion’s discharge of its responsibilities (including ac-
tions by committees recommending standards to the
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board or other board actions to implement and en-
force standards);
‘‘(E) provides for governance by a board wholly
comprised of independent directors;
‘‘(F) provides a funding mechanism and re-
quirements that are just, reasonable and not unduly
discriminatory or preferential and are in the public
interest, and which satisfy the requirements of sub-
section (l);
‘‘(G) establishes procedures for development of
organization standards that provide reasonable no-
tice and opportunity for public comment, taking into
account the need for efficiency and effectiveness in
decisionmaking and operations and the requirements
for technical competency in the development of orga-
nization standards, and which standards develop-
ment process has the following attributes:
‘‘(i) openness,
‘‘(ii) balance of interests, and
‘‘(iii) due process, except that the proce-
dures may include alternative procedures for
emergencies;
‘‘(H) establishes fair and impartial procedures
for implementation and enforcement of organization
standards, either directly or through delegation to
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an affiliated regional reliability entity, including the
imposition of penalties, limitations on activities,
functions, or operations, or other appropriate sanc-
tions;
‘‘(I) establishes procedures for notice and op-
portunity for public observation of all meetings, ex-
cept that the procedures for public observation may
include alternative procedures for emergencies or for
the discussion of information the directors reason-
ably determine should take place in closed session,
such as litigation, personnel actions, or commercially
sensitive information;
‘‘(J) provides for the consideration of rec-
ommendations of States and State commissions, and
‘‘(K) addresses other matters that the Commis-
sion may deem necessary or appropriate to ensure
that the procedures, governance, and funding of the
electric reliability organization are just, reasonable,
not unduly discriminatory or preferential, and are in
the public interest.
‘‘(5) The Commission shall approve only one electric
reliability organization. If the Commission receives two or
more timely applications that satisfy the requirements of
this subsection, the Commission shall approve only the ap-
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plication it concludes will best implement the provisions
of this section.
‘‘(e) ESTABLISHMENT OF AND MODIFICATIONS TO
ORGANIZATION STANDARDS.—(1) The electric reliability
organization shall file with the Commission any new or
modified organization standards, including any variances
or entity rules, and the Commission shall follow the proce-
dures under paragraph (2) for review of that filing.
‘‘(2) Submissions under paragraph (1) shall include:
‘‘(A) a concise statement of the purpose of the
proposal, and
‘‘(B) a record of any proceedings conducted
with respect to such proposal.
The Commission shall provide notice of the filing of such
proposal and afford interested persons 30 days to submit
comments. The Commission, after taking into consider-
ation any submitted comments, shall approve or dis-
approve such proposal not later than 60 days after the
deadline for the submission of comments, except that the
Commission may extend the 60-day period for an addi-
tional 90 days for good cause, and except further that if
the Commission does not act to approve or disapprove a
proposal within the foregoing periods the proposal shall
go into effect subject to its terms, without prejudice to
the authority of the Commission thereafter to suspend or
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modify the proposal in accordance with the standards and
requirements of this section. Proposals approved by the
Commission shall take effect according to their terms but
not earlier than 30 days after the effective date of the
Commission’s order, except as provided in paragraph (3)
of this subsection.
‘‘(3)(A) In the exercise of its review responsibilities
under this subsection, the Commission shall give due
weight to the technical expertise of the electric reliability
organization with respect to the content of a new or modi-
fied organization standard, but shall not defer to the orga-
nization with respect to the effect of the organization
standard on competition. The Commission shall approve
a proposed new or modified organization standard if it de-
termines the proposal to be just, reasonable, not unduly
discriminatory or preferential, and in the public interest.
The Commission, either upon complaint or upon its own
motion, shall suspend an existing organization standard,
if it determines the standard to be unjust, unreasonable,
unduly discriminatory or preferential or not in the public
interest. Upon suspension of such a standard, the Com-
mission shall establish an interim standard to apply until
a new or modified standard is approved.
‘‘(B) An existing or proposed organization standard
which is disapproved or suspended in whole or in part by
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the Commission shall be remanded to the electric reli-
ability organization for further consideration.
‘‘(C) The Commission, on its own motion or upon
complaint, may direct the electric reliability organization
to develop an organization standard, including modifica-
tion to an existing organization standard, addressing a
specific matter by a date certain if the Commission con-
siders such new or modified organization standard nec-
essary or appropriate to further the purposes of this sec-
tion. The electric reliability organization shall file any such
new or modified organization standard in accordance with
this subsection.
‘‘(D) An affiliated regional reliability entity may pro-
pose a variance or entity rule under subsection (h)(3) to
the electric reliability organization. The affiliated regional
reliability entity may request that the electric reliability
organization expedite consideration of the proposal, and
shall file a notice of such request with the Commission,
if expedited consideration is necessary to provide for bulk-
power system reliability. If the electric reliability organiza-
tion fails to adopt the variance or entity rule, either in
whole or in part, the affiliated regional reliability entity
may request that the Commission review such action. If
the Commission determines, after its review of such a re-
quest, that the action of the electric reliability organiza-
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tion did not conform to the applicable standards and pro-
cedures approved by the Commission, or if the Commis-
sion determines that the variance or entity rule is just,
reasonable, not unduly discriminatory or preferential, and
in the public interest, and that the electric reliability orga-
nization has unreasonably rejected the proposed variance
or entity rule, then the Commission may remand the pro-
posed variance or entity rule for further consideration by
the electric reliability organization or may direct the elec-
tric reliability organization or the affiliated regional reli-
ability entity to develop a variance or entity rule consistent
with that requested by the affiliated regional reliability en-
tity. Any such variance or entity rule proposed by an affili-
ated regional reliability entity shall be submitted to the
electric reliability organization for review and filing with
the Commission in accordance with the procedures speci-
fied in this subsection.
‘‘(E) Notwithstanding any other provision of this sub-
section, a proposed organization standard or amendment
shall take effect according to its terms if the electric reli-
ability organization determines that an emergency exists
requiring that such proposed organization standard or
amendment take effect without notice or comment. The
electric reliability organization shall notify the Commission
immediately following such determination and shall file
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such emergency organization standard or amendment with
the Commission not later than five days following such
determination and shall include in such filing an expla-
nation of the need for such emergency standard. Subse-
quently, the Commission shall provide notice of the organi-
zation standard or amendment for comment, and shall fol-
low the procedures set out in paragraphs (2) and (3) for
review of the new or modified organization standard. Any
such emergency organization standard that has gone into
effect shall remain in effect unless and until suspended
or disapproved by the Commission. If the Commission de-
termines at any time that the emergency organization
standard or amendment is not necessary, the Commission
may suspend such emergency organization standard or
amendment.
‘‘(4) All users of the bulk-power system shall comply
with any organization standard that takes effect under
this section.
‘‘(f) COORDINATION WITH CANADA AND MEXICO.—
The electric reliability organization shall take all appro-
priate steps to gain recognition in Canada and Mexico.
The United States shall use its best efforts to enter into
international agreements with the appropriate govern-
ments of Canada and Mexico to provide for effective com-
pliance with organization standards and to provide for the
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effectiveness of the electric reliability organization in car-
rying out its mission and responsibilities. All actions taken
by the electric reliability organization, any affiliated re-
gional reliability entity, and the Commission shall be con-
sistent with the provisions of such international agree-
ments.
‘‘(g) CHANGES IN PROCEDURES, GOVERNANCE, OR
FUNDING.—(1) The electric reliability organization shall
file with the Commission any proposed change in its proce-
dures, governance, or funding, or any changes in the affili-
ated regional reliability entity’s procedures, governance or
funding relating to delegated functions, and shall include
with the filing an explanation of the basis and purpose
for the change.
‘‘(2) A proposed procedural change shall take effect
90 days after filing with the Commission if the change
constitutes a statement of policy, practice, or interpreta-
tion with respect to the meaning or enforcement of an ex-
isting procedure. Any other proposed procedural change
shall take effect only upon a finding by the Commission,
after notice and opportunity for comments, that the
change is just, reasonable, not unduly discriminatory or
preferential, is in the public interest, and satisfies the re-
quirements of subsection (d)(4).
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‘‘(3) A proposed change in governance or funding
shall not take effect unless the Commission finds that the
change is just, reasonable, not unduly discriminatory or
preferential, and is in the public interest, and satisfies the
requirements of subsection (d)(4).
‘‘(4)(A) The Commission, either upon complaint or
upon its own motion, may suspend a procedure or govern-
ance or funding provision if it determines the procedure
or provision does not meet the requirements of subsection
(d)(4) or is unjust, unreasonable, unduly discriminatory
or preferential, or otherwise not in the public interest.
Upon such suspension the Commission shall establish an
interim procedure or governance or funding provision until
a new or modified procedure or governance or funding pro-
vision meeting the requirements of this subsection takes
effect.
‘‘(B) The Commission, upon complaint or upon its
own motion, may require the electric reliability organiza-
tion to amend the procedures, governance or funding if
the Commission determines that the amendment is nec-
essary to meet the requirements of this section. The elec-
tric reliability organization shall file the amendment in ac-
cordance with paragraph (1) of this subsection.
‘‘(h) DELEGATIONS OF AUTHORITY.—(1) The elec-
tric reliability organization shall, upon request by an enti-
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ty, enter into an agreement with such entity for the dele-
gation of authority to implement and enforce compliance
with organization standards in a specified geographic area
if the electric reliability organization finds that the entity
requesting the delegation satisfies the requirements of
subsection (d)(4) (A), (B), (C), (D), (F), and (K), and
if the delegation promotes the effective and efficient imple-
mentation and administration of bulk-power system reli-
ability. The electric reliability organization may enter into
an agreement to delegate to the entity any other authority,
except that the electric reliability organization shall re-
serve the right to set and approve organization standards
for bulk-power system reliability.
‘‘(2) The electric reliability organization shall file
with the Commission any agreement entered into under
this subsection and any information the Commission re-
quires with respect to the affiliated regional reliability en-
tity to which authority is to be delegated. The Commission
shall approve the agreement, following public notice and
opportunity for comment, if it finds that the agreement
meets the requirements of paragraph (1), and is just, rea-
sonable, not unduly discriminatory or preferential, and is
in the public interest. A proposed delegation agreement
with an affiliated regional reliability entity organized on
an interconnection-wide basis shall be rebuttably pre-
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