The Energy Policy Act of 2005 ( P.L. 109-58 ), signed by President Bush on August 8, 2005,was the first omnibus energy legislation enacted in more than a decade. Major provisions include taxincentives for domestic energy production and energy efficiency, a mandate to double the nation'suse of biofuels, faster procedures for energy production on federal lands, and authorization ofnumerous federal energy research and development programs. This report describes the electricityprovisions. Sec. 1201. Short title. This title may be cited asthe "Electric Reliability Act of 2005." Summary of Provisions. This subtitle is intendedto provide federal jurisdiction over activities that are required to support reliability of the U.S. bulkpower system. Clarifying the Federal Energy Regulatory Commission's (FERC) authority toestablish and regulate an electric reliability organization (ERO) is intended to improve reliability asrestructuring of the U.S. bulk power system proceeds. Electric Reliability Standards (Sec. 1211). Thissection requires FERC to promulgate rules within 180 days of enactment to create a FERC-certifiedERO. The North American Electric Reliability Council (NERC) currently has responsibility forreliability of the bulk power system. NERC has established reliability guidelines but has noenforcement authority. Before enactment of P.L. 109-58 , the Federal Power Act (1) gave FERC jurisdiction overunbundled transmission and authority to regulate wholesale rates; however, no authority wasprovided to regulate reliability. Under this section, the ERO will develop and enforce reliabilitystandards for the bulk power system, including cybersecurity protection. All ERO standards will beapproved by FERC. Under this title, the ERO can impose penalties on a user, owner, or operator ofa bulk power system that violates any FERC-approved reliability standard. In addition, FERC canorder compliance with a reliability standard and can impose a penalty if FERC finds that a user,owner, or operator of a bulk power system has engaged in or is about to engage in a violation of areliability standard. This provision does not give an ERO or FERC authorization to orderconstruction of additional generation or transmission capacity. This provision also requires that FERC establish a regional advisory body if requested by atleast two-thirds of the states within a region that have more than half of their electric load servedwithin that region. The advisory body will be composed of one member from each participating statein the region, appointed by the governor of each state, and is able to provide advice to the ERO orFERC on reliability standards, proposed regional entities, proposed fees, and any otherresponsibilities requested by FERC. The entire reliability provision does not apply to Alaska orHawaii. The state of New York is authorized to develop rules that would result in greater reliabilityfor New York, as long as those rules do not result in lower reliability for neighboring states. If the penalties employed by the ERO are not successful, then FERC has the authority toenforce penalties for entities that do not comply with reliability standards. Establishing this newrelationship between FERC and the ERO could have the potential to improve coordination betweenmarket functions and reliability functions. Siting of Interstate Electric Transmission Facilities (Sec.1221). The Secretary of Energy is required to conduct a study of electrictransmission congestion every three years. Based on the findings, the Secretary of Energy maydesignate a geographic area as being congested. Under certain conditions, FERC is authorized toissue construction permits. Under new Section 216(d) of the Federal Power Act (FPA), affectedstates, federal agencies, Indian tribes, property owners, and other interested parties will have anopportunity to present their views and recommendations with respect to the need for, and impact of,a proposed construction permit. However, there is no requirement for a specific comment period. New FPA Section 216(e) will allow permit holders to petition in U.S. District Court to acquirerights-of-way through the exercise of the right of eminent domain. Any exercise of eminent domainauthority would be considered to be takings of private property for which just compensation is due. New FPA Section 216(g) does not state whether property owners would be required to reimbursecompensation if the rights-of-way were transferred back to the owner. An applicant for federal authorization to site transmission facilities on federal lands couldrequest that the Department of Energy be the lead agency to coordinate environmental review andother federal authorization. Once a completed application is submitted, all related environmentalreviews are required to be completed within one year unless another federal law makes thatimpossible. FPA Section 216(h) gives the Department of Energy (DOE) new authority to prepareenvironmental documents and appears to give DOE additional decision-making authority forrights-of-way and siting on federal lands. This would appear to give DOE input into the decisionprocess for creating rights-of-way. Review under Section 503 of the Federal Land Policy andManagement Act (2) couldbe streamlined by relying on prior analyses. If a federal agency has denied an authorization requiredby a transmission or distribution facility, the denial could be appealed by the applicant or relevantstate to the President. The President is required to issue a decision within 90 days of the appeal'sfiling. With congressional approval, states may enter into interstate compacts for the purposes ofsiting transmission facilities and the Secretary of Energy could provide technical assistance. Thissection does not apply to the Electric Reliability Council of Texas (ERCOT). Third-Party Finance (Sec. 1222). The WesternArea Power Administration (WAPA) and the Southwestern Power Administration (SWPA) are ableeither to continue to design, develop, construct, operate, maintain, or own transmission facilitieswithin their regions or to participate with other entities for the same purposes if the Secretary ofEnergy designates the area as a National Interest Electric Transmission Corridor and if the facilitywill reduce congestion or is needed to accommodate projected increases in demand for transmissioncapacity. The project is required to be consistent with the needs identified by the appropriateRegional Transmission Organization or Independent System Operator. Under certain circumstances,the Secretary of Energy, acting through WAPA and/or SWPA, may design, develop, construct,operate, maintain, or own an electric power transmission facility in the WAPA and SWPA region. No more than $100 million from third-party financing may be used during fiscal years 2006 through2015. Before enactment, the enabling statutes for power marketing administrations could haverestricted third-party financing, construction, operation, and maintenance of transmissionfacilities. (3) Advanced Transmission Technologies (Sec.1223). FERC is directed to encourage deployment of advanced transmissiontechnologies. Advanced Power System Technology Incentive Program (Sec.1224). A program is established to provide incentive payments to owners oroperators of advanced power generation systems. Subject to the availability of funds, 1.8 cents perkilowatt-hour will be paid to the owner or operator of a qualifying advanced power systemtechnology facility. For facilities that the Secretary of Homeland Security and the Secretary ofEnergy determine are "qualifying security and assured power facilities," an additional 0.7 cents perkilowatt-hour will be paid to the owner or operator of such a facility. Under the incentive program,the first 10,000,000 kilowatt-hours produced in any facility in a fiscal year are eligible for theincentives. Eligible systems include advanced fuel cells, turbines, or hybrid power systems. ForFY2006 through FY2012, an annual appropriation of $10 million is authorized. Open Nondiscriminatory Access (Sec. 1231). FERC is authorized to require, by rule or order, unregulated transmitting utilities (power marketingadministrations, state entities, and rural electric cooperatives) to charge rates comparable to whatthey charge themselves and require that the terms and conditions of the sales be comparable to thoserequired of other utilities. Before enactment of P.L. 109-58 , under the Federal Power Act (Section201(f)), federal power marketing administrations, state entities, and rural electric cooperatives werenot subject to FERC's rate-making. Under this provision, exemptions are established for utilitiesselling less than 4 million megawatt-hours of electricity per year, for distribution utilities, and forutilities that own or operate transmission facilities that are not necessary to facilitate a nationwideinterconnected transmission system. This exemption can be revoked to maintain transmission systemreliability. FERC is not authorized to order states or municipalities to take action under this sectionif such action would constitute a private use under Section 141 of the Internal Revenue Code of1986. FERC may remand transmission rates to an unregulated transmitting utility if the rates do notcomply with this section. FERC is not authorized to order an unregulated transmitting utility to joina Regional Transmission Organization or other FERC-approved independent transmissionorganization. (This section is often referred to as "FERC-lite.") Federal Utility Participation in Regional TransmissionOrganizations (Sec. 1232). Federal utilities (power marketing administrations orthe Tennessee Valley Authority) are authorized to participate in regional transmission organizations.A law allowing federal utilities to study formation and operation of a regional transmissionorganization is repealed (16 U.S.C. 824n). Native Load Service Obligation (Sec. 1233). Thissection amends the Federal Power Act to clarify that a load-serving entity is entitled to use itstransmission facilities or firm transmission rights to serve its existing customers before it is obligatedto make its transmission capacity available for other uses. FERC is not able to change any approvedallocation of transmission rights by an Regional Transmission Organization (RTO) or IndependentSystem Operator (ISO) approved prior to January 1, 2005.