HR 1828 IH

To provide for a more competitive electric power industry, and for other purposes.

To provide for a more competitive electric power industry, and for other purposes.

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

SECTION 1. SHORT TITLE.

This Act may be cited as the `Comprehensive Electricity Competition Act'.

SEC. 2. TABLE OF CONTENTS.

Sec. 1. Short title.

Sec. 2. Table of contents.

TITLE I--RETAIL ELECTRIC SERVICE

Sec. 101. Retail competition.

Sec. 102. Authority to impose reciprocity requirements.

Sec. 103. Aggregation for purchase of retail electric energy.

TITLE II--CONSUMER PROTECTION

Sec. 201. Consumer information.

Sec. 202. Access to electric service for low-income consumers.

Sec. 203. Unfair trade practices.

Sec. 204. Residential electricity consumer database.

Sec. 205. Model retail supplier code.

Sec. 206. Model electric utility worker code.

TITLE III--FACILITATING STATE AND REGIONAL REGULATION

Sec. 301. Clarification of State and Federal authority over retail transmission services.

Sec. 302. Interstate compacts on regional transmission planning.

Sec. 303. Backup authority to impose a charge on an ultimate consumer's receipt of electric energy.

Sec. 304. Authority to establish and require independent regional system operation.

TITLE IV--PUBLIC BENEFITS

Sec. 401. Public benefits fund.

Sec. 402. Federal renewable portfolio standard.

Sec. 403. Net metering.

Sec. 404. Reform of section 210 of PURPA.

Sec. 405. Interconnections for certain facilities.

Sec. 406. Rural and remote communities electrification grants.

Sec. 407. Indian tribe assistance.

Sec. 408. Office of Indian Energy Policy and Programs.

Sec. 409. Southeast Alaska electrical power.

TITLE V--REGULATION OF MERGERS AND CORPORATE STRUCTURE

Sec. 501. Reform of holding company regulation under PUHCA.

Sec. 502. Electric company mergers.

Sec. 503. Remedial measures for market power.

TITLE VI--ELECTRIC RELIABILITY

Sec. 601. Electric reliability organization and oversight.

Sec. 602. Electricity outage investigation.

Sec. 603. Additional transmission capacity.

TITLE VII--ENVIRONMENTAL PROTECTION

Sec. 701. Nitrogen oxides cap and trade program.

TITLE VIII--FEDERAL POWER SYSTEMS

Subtitle A--Tennessee Valley Authority

Sec. 801. Definition.

Sec. 802. Application of Federal Power Act.

Sec. 803. Antitrust coverage.

Sec. 804. TVA power sales.

Sec. 805. Renegotiation of long-term power contracts.

Sec. 806. Stranded cost recovery.

Sec. 807. Conforming amendments.

Subtitle B--Bonneville Power Administration

Sec. 811. Definitions.

Sec. 812. Application of Federal Power Act.

Sec. 813. Surcharge on transmission rates to recover otherwise non-recoverable costs.

Sec. 814. Complaints.

Sec. 815. Review of commission orders.

Sec. 816. Conforming amendments.

Subtitle C--Western Area Power Administration and Southwestern Power Administration

Sec. 821. Definitions.

Sec. 822. Application of Federal Power Act.

Sec. 823. Surcharge on transmission rates to recover otherwise non-recoverable costs.

Sec. 824. Conforming amendments.

TITLE IX--OTHER PROVISIONS

Sec. 901. Treatment of nuclear decommissioning costs in bankruptcy.

Sec. 902. Energy Information Administration study of impacts of competition in electricity markets.

Sec. 903. Antitrust savings clause.

Sec. 904. Elimination of antitrust review by the Nuclear Regulatory Commission.

Sec. 905. Environmental laws savings clause.

Sec. 906. Generating plant efficiency study.

Sec. 907. Conforming amendments.

SEC. 101. RETAIL COMPETITION.

(a) RETAIL COMPETITION- The Public Utility Regulatory Policies Act of 1978 (referred to in this Act as PURPA) is amended by adding after section 608 the following new section:

`SEC. 609. RETAIL COMPETITION.

`(a) DEFINITIONS- For purposes of this section, `retail stranded costs' means the amount of net costs incurred or obligations undertaken before the date of enactment of the Comprehensive Electricity Competition Act by a distribution utility that--

`(1) were incurred or undertaken by that distribution utility in order to comply with a legal obligation on that utility to provide electricity to electric consumers in its service territory, and

`(2) cannot be recovered because of implementation of retail competition under subsection (b).

`(b) RETAIL COMPETITION REQUIREMENT- Except as provided in subsection (c), not later than January 1, 2003, any distribution utility that has the capability to deliver electric energy to an electric consumer over its facilities shall offer open access to those facilities for the sale of electric energy to the consumer and shall do so at rates, terms, and conditions that are not unduly discriminatory or preferential, as determined by the appropriate regulatory authority.

`(c) OPT OUT- (1) A State regulatory authority (with respect to a distribution utility for which it has ratemaking authority) may direct a distribution utility not to implement the retail competition requirement described in subsection (b) if the State regulatory authority finds, after notice and opportunity for hearing, that implementation of the retail competition requirement by the distribution utility will have a negative impact on a class of customers of that utility that cannot be mitigated.

`(2) A nonregulated distribution utility may determine not to implement the retail competition requirement described in subsection (b) if it finds, after notice and opportunity for hearing, that implementation of the retail competition requirement by the distribution utility will have a negative impact on a class of customers of that utility that cannot be mitigated.

`(3) The State regulatory authority (with respect to a distribution utility for which it has ratemaking authority) or nonregulated distribution utility shall publish the determination and its basis and shall file a notice with the Commission of its determination by January 1, 2002.

`(d) NOTICE OF RETAIL COMPETITION- A State regulatory authority (with respect to a distribution utility for which it has ratemaking authority) or nonregulated distribution utility shall file with the Commission a notice that the distribution utility has implemented or will implement retail competition consistent with subsection (b). The notice shall describe the implementation of retail competition. The notice is effective for purposes of section 118, 119, 119A, and 119B of this Act and sections 212(h), 216, and 217 of the Federal Power Act on the date the notice is filed or the date of implementation of retail competition consistent with subsection (b), whichever is later.

`(e) CONSIDERATION OF RECOVERY OF RETAIL STRANDED COSTS- (1) If a State regulatory authority or nonregulated distribution utility conducts a public proceeding before a distribution utility implements retail competition as required under subsection (b), as part of this proceeding, the State regulatory authority or nonregulated distribution utility shall consider the appropriate mechanism to address recovery by a distribution utility for which it has ratemaking authority of retail stranded costs that are legitimate, prudent, and verifiable, if the utility has taken all reasonable steps to mitigate the costs, including assistance for workers who are employed or were most recently employed by an electric utility and who may become or have become unemployed as a result of the implementation of retail competition. A charge imposed for purposes of recovering retail stranded costs or providing assistance for unemployed workers should be imposed in a manner so as to minimize to the fullest extent possible any effect on an electric consumer's choice among competing suppliers or products.

`(2) If a State regulatory authority or nonregulated utility imposes or allows a charge to recover retail stranded costs under paragraph (1), it shall consider reducing the charge on an electric consumer who uses electric energy produced on-site when the charge results from the use of new on-site generation produced by--

`(A) a fuel cell,

`(B) a facility with an efficiency rate of at least 50 percent,

`(C) a facility that uses a single fuel source to produce at the point of use either electric or mechanical power and thermal energy and that has a combined efficiency rate of at least 50 percent, or

`(D) a renewable resource.

`(f) ENFORCEMENT- Any person may bring an action in the appropriate State court against a State regulatory authority, a distribution utility, or a nonregulated distribution utility for failure to comply with this section. Filing an action challenging whether retail competition is being implemented consistent with subsection (b) makes a notice of retail competition ineffective for purposes of section 118, 119, 119A, and 199B of this Act and sections 212(h), 216, and 217 of the Federal Power Act until final resolution of the action. Notwithstanding any other law, a court created under Article III of the Constitution does not have jurisdiction over an action arising under this section.'.

(b) DEFINITIONS- Section 3 of PURPA is amended by adding after paragraph (21) the following new paragraphs:

`(22) The term `notice of retail competition' means a notice filed under section 609(d).

`(23) The term `distribution utility' means a person, State agency, or any other non-federal entity that owns or operates a local distribution facility used for the sale of electric energy to an electric consumer.

`(24) The term `nonregulated distribution utility' means a distribution utility not subject to the ratemaking authority of a State regulatory authority.'

SEC. 102. AUTHORITY TO IMPOSE RECIPROCITY REQUIREMENTS.

PURPA is amended by adding the following new section after section 117:

`SEC. 118. AUTHORITY TO IMPOSE RECIPROCITY REQUIREMENTS.

`(a) STATE REGULATORY AUTHORITY- If a State regulatory authority files a notice of retail

`(b) NONREGULATED DISTRIBUTION UTILITY- If a nonregulated distribution utility files a notice of retail competition, beginning on the effective date of the notice, it may prohibit any other distribution utility located in the United States (and any affiliate of such a utility, as defined under the Public Utility Holding Company Act of 1999) from selling electric energy to electric consumers of the nonregulated distribution utility covered by the notice unless a notice of retail competition has been filed with respect to the other distribution utility.'.

SEC. 103. AGGREGATION FOR PURCHASE OF RETAIL ELECTRIC ENERGY.

PURPA is amended by adding the following new section after section 118 as added by section 102 of this Act:

`SEC. 119. AGGREGATION FOR PURCHASE OF RETAIL ELECTRIC ENERGY.

`Notwithstanding any other provision of Federal or State law, and subject to legitimate and nondiscriminatory State requirements imposed on retail electric suppliers, a group of customers or any entity acting on behalf of such group may acquire retail electric energy on an aggregate basis if the group of customers is served by one or more distribution utilities for which a State regulatory authority or nonregulated distribution utility has filed a notice of retail competition under section 609 of this Act for each distribution utility.'.

SEC. 201. CONSUMER INFORMATION.

PURPA is amended by adding the following new section after section 119 as added by section 103 of this Act:

`SEC. 119A. CONSUMER INFORMATION DISCLOSURE.

`(a) DISCLOSURE RULES- Not later than six months after the date of enactment of this Act, the Secretary, in consultation with the Commission, the Administrator of the Environmental Protection Agency, and the Federal Trade Commission, shall issue rules prescribing the form, content, placement, and timing of the supplier disclosure required under subsections (b) and (c) of this section. The rules shall be prescribed in accordance with section 553 of title 5, United States Code.

`(b) DISCLOSURE TO ELECTRIC CONSUMERS- An electric utility that offers to sell electric energy to an electric consumer shall provide the electric consumer, to the extent practicable and in accordance with rules issued under subsection (a), a statement containing the following information:

`(1) The nature of the service being offered, including information about interruptibility or curtailment of service;

`(2) The price of the electric energy, including a description of any variable charges;

`(3) A description of all other charges associated with the service being offered including, but not limited to, access charges, exit charges, back-up service charges, stranded cost recovery charges, and customer service charges;

`(4) Information concerning the type of energy resource used to generate the electric energy and the environmental attributes of the generation (including air emissions characteristics); and

`(5) Any other information the Secretary determines can be provided feasibly and would be useful to consumers in making purchasing decisions.

`(c) DISCLOSURE TO WHOLESALE CUSTOMERS- In every sale of electric energy for resale, the seller shall provide to the purchaser the information respecting the type of energy resource used to generate the electric energy and the environmental attributes of the generation required by rules established under subsection (a).

`(d) FEDERAL TRADE COMMISSION ENFORCEMENT- A violation of a rule prescribed under this section shall constitute an unfair or deceptive act or practice in violation of section 5 of the Federal Trade Commission Act (15 U.S.C. 45) and shall be treated as a violation of a rule under section 18 of the Federal Trade Commission Act (15 U.S.C. 57a). All functions and powers of the Federal Trade Commission under the Federal Trade Commission Act are available to enforce compliance with this section notwithstanding jurisdictional limitations in the Federal Trade Commission Act.

`(e) AUTHORITY TO OBTAIN INFORMATION- Authority to obtain information under section 11 of the Energy Supply and Environmental Coordination Act of 1974 (15 U.S.C. 796) is available to the Secretary to administer this section and to the Federal Trade Commission to enforce this section. In order to carry out its duties under this section, the Federal Trade Commission may use any of its powers under sections 3, 6, 9, and 20 of the Federal Trade Commission Act (15 U.S.C. 43, 46, 49, and 57b-2) without regard to the limitations contained in section 20(b) of that Act (15 U.S.C. 57b-2(b)) or any jurisdictional limitations contained in that Act.

`(f) ENFORCEMENT BY STATES- (1) When a State determines that the interests of its residents have been or are being threatened or adversely affected because any person is violating or has violated a rule of the Secretary under this section, the State may bring a civil action on behalf of its residents in an appropriate district court of the United States to--

`(A) enjoin the violation;

`(B) enforce compliance with the rule of the Secretary;

`(C) obtain damages, restitution, or other compensation on behalf of its residents; or

`(D) obtain other relief the court considers appropriate.

`(2) The State shall serve prior written notice of any civil action under this subsection upon the Federal Trade Commission and provide the Federal Trade Commission with a copy of its complaint, except that if it is not feasible for the State to provide this prior notice, the State shall serve the notice immediately upon instituting the action. Upon receiving a notice respecting a civil action, the Federal Trade Commission may--

`(A) intervene in the action, and

`(B) upon so intervening, be heard on all matters arising in the action and file petition for appeal.

`(3) For purposes of bringing any civil action under this subsection, this section does not prevent a State official from exercising the powers conferred by State law to conduct investigations, administer oaths or affirmations, or compel the attendance of witnesses or the production of documentary and other evidence.

`(4) While a civil action instituted by or on behalf of the Federal Trade Commission for violation of any rule prescribed under this subsection is pending, a State may not institute a civil action under this section against a defendant named in the complaint in the pending action for a violation alleged in the complaint.

`(5) A civil action brought under this subsection may be brought in the district in which the defendant is found, is an inhabitant, or transacts business or wherever venue is proper under section 1391 of title 28, United States Code. Process in such an action may be served in any district in which the defendant is an inhabitant or in which the defendant may be found.

`(6) This section does not prohibit a State from proceeding in State court on the basis of an alleged violation of a State or criminal statute.'.

SEC. 202. ACCESS TO ELECTRIC SERVICE FOR LOW-INCOME CONSUMERS.

PURPA is amended by adding the following new section after section 119A as added by section 201 of this Act.

`SEC. 119B. ACCESS TO ELECTRIC SERVICE FOR LOW-INCOME CONSUMERS.

`(a) DEFINITIONS- For purposes of this section `low-income residential consumer' is a household, as defined in section 2603(4) of the Low-Income Energy Assistance Act of 1981 (42 U.S.C. 8622(4)), with an annual income that--

`(1) does not exceed 60 percent of the State median income, as defined in section 2603(9) of the Low-Income Home Energy Assistance Act of 1981 (42 U.S.C. 8622(9)), of the State where the household is located, or

`(2) meets the eligibility criteria for a low-income energy program operated by the State where the household is located.

`(b) APPLICABILITY- Each State regulatory authority and nonregulated distribution utility that files a notice of retail competition under section 609 of this Act shall conduct a proceeding to determine whether to apply the principles of subsection (c).

`(c) PRINCIPLES- The following are principles for providing electric service to low-income residential consumers:

`(1) A State regulatory authority or nonregulated distribution utility shall assure that its low-income residential consumers obtain benefits from retail competition comparable to its other residential consumers.

`(2) As a condition of offering retail service to residential consumers in a State, a retail electric supplier shall agree to--

`(A) offer, promote, and provide, upon request, retail electric service to a low-income residential consumer on rates, terms, and conditions comparable to those offered to other residential consumers located in the same area where the low-income residential consumer is located, and

`(B) share equitably with other retail electric suppliers in the State any costs necessary to provide service to low-income residential consumers under subparagraph (A).'.

SEC. 203. UNFAIR TRADE PRACTICES.

The Federal Trade Commission Act (15 U.S.C. 41 et seq.) is amended by inserting the following new section after section 5:

`SEC. 5A. ELECTRICITY SUPPLY UNFAIR TRADE PRACTICES.

`(a) DEFINITION- For purposes of this section, `retail electric supplier' has the meaning given that term in section 3(25) of the Public Utility Regulatory Policies Act of 1978.

`(b) SLAMMING- (1) The Federal Trade Commission shall establish rules in accordance with section 553 of title 5, United States Code for the submittal and verification of a retail electric customer's selection or change in selection of a retail electric supplier and for the assessment of penalties for violation of these rules. These rules shall ensure that the customer receives electric service from the retail electric supplier of the customer's choice.

`(2) A person shall not submit or change the selection made by a retail electric customer except in accordance with procedures established in paragraph (1).

`(c) CRAMMING- (1) The Federal Trade Commission shall establish rules in accordance with section 553 of title 5, United States Code for obtaining the consent of a retail electric customer for purchase of goods and services other than those expressly authorized by law or by the customer's electricity supply and metering agreement and for the assessment of penalties for violation of these rules.

`(2) A person shall not charge a retail electric customer for a particular service except in accordance with procedures established in paragraph (1).

`(d) FEDERAL TRADE COMMISSION ENFORCEMENT- Violation of this section or of a rule prescribed under this section constitutes an unfair and deceptive act or practice in violation of section 5 of this Act and shall be treated as a violation of a rule under section 18 of this Act. All functions and powers of the Federal Trade Commission under this Act are available to the Federal Trade Commission to enforce compliance with this section notwithstanding any jurisdictional limitations in this Act.

`(e) STATE PROCEEDINGS AND OTHER REMEDIES- (1) This section does not preclude a State or State commission from prescribing and enforcing additional laws, regulations, or procedures regarding the practices which are the subject of this section, so long as such laws, regulations or procedures do not conflict with the provisions of this section or with any rule prescribed by the FTC pursuant to it.

`(2) The remedies provided by this section are in addition to any other remedies available by law.'.

SEC. 204. RESIDENTIAL ELECTRICITY CONSUMER DATABASE.

PURPA is amended by adding the following new section after section 119B as added by section 202 of this Act:

`SEC. 119C. RESIDENTIAL ELECTRICITY CONSUMER DATABASE.

`(a) DATABASE- The Secretary is authorized to compile a database to provide residential electric consumers with information to compare the offers of various retail electric suppliers.

`(b) INFORMATION- A retail electric supplier who provides electric consumers with information under section 119A shall provide the Secretary the same information and any other

`(c) CONTENT- The database under this program shall--

`(1) compare the rates, terms, and conditions of the service offered by the various retail electric suppliers based on the information provided under subsection (b);

`(2) disseminate the comparison to consumers through various communications channels, including the Internet; and

`(3) provide other information the Secretary considers appropriate to carry out the purposes of this section.'.

SEC. 205. MODEL RETAIL SUPPLIER CODE.

PURPA is amended by adding the following new section after section 119C as added by section 204 of this Act:

`SEC. 119D. MODEL CODE FOR RETAIL SUPPLIERS.

`The Secretary shall develop by rule and circulate among the States for their consideration a model code for the regulation of retail electric suppliers for the protection of electric consumers.'.

SEC. 206. MODEL ELECTRIC UTILITY WORKER CODE.

PURPA is amended by adding the following new section after section 119D as added by section 205 of this Act:

`SEC. 119E. MODEL CODE FOR ELECTRIC UTILITY WORKERS.

`(a) The Secretary shall develop by rule and circulate among the States for their consideration a model code containing standards for electric facility workers to ensure electric facility safety and reliability. The Secretary, in developing these standards, shall consult with all interested parties, including representatives of electric facility workers.

`(b) In issuing a model code under this section, the Secretary shall not, for purposes of section 653 of title 29, be deemed to be exercising statutory authority to prescribe or enforce standards or regulations affecting occupational safety and health.'.

SEC. 301. CLARIFICATION OF STATE AND FEDERAL AUTHORITY OVER RETAIL TRANSMISSION SERVICES.

(a) NONPREEMPTION OF STATE AND NONREGULATED UTILITY AUTHORITY TO ORDER RETAIL WHEELING AND TO IMPOSE LOCAL DELIVERY CHARGES- Section 201(b) of the Federal Power Act (referred to in this Act as `the FPA') is amended by adding the following new paragraph after paragraph (2):

`(3) This Act does not preempt or otherwise affect any authority under the law of a State or municipality to--

`(A) require unbundled transmission and local distribution services for the delivery of electric energy directly to an ultimate consumer, but if unbundled transmission is in interstate commerce, the rates, terms, and conditions of the transmission are subject to the exclusive jurisdiction of the Commission under this Part, or

`(B) impose a delivery charge on an ultimate consumer's receipt of electric energy.'.

(b) OPEN ACCESS TRANSMISSION AUTHORITY; RETAIL WHEELING IN RETAIL COMPETITION STATES-

(1) APPLICABILITY OF OPEN ACCESS TRANSMISSION RULES- Section 206 of the FPA is amended by adding the following new subsection after subsection (d):

`(e) OPEN ACCESS TRANSMISSION SERVICES- (1) Under section 205 and this section, the Commission may require, by rule or order, public utilities to provide open access transmission services, subject to section 212(h), and may authorize recovery of stranded costs, as defined by the Commission, arising from any requirement to provide open access transmission services. This section applies to any rule or order issued by the Commission before the date of enactment of the Comprehensive Electricity Competition Act.'.

(2) AUTHORITY TO ORDER RETAIL WHEELING- Section 212(h) of the FPA is amended--

(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 paragraph (1)(B)(ii) `the date of enactment of this subsection' and inserting `October 24, 1992,' in its place; and

(D) by adding at the end a new paragraph as follows:

`(2) Notwithstanding paragraph (1), the Commission may issue an order that requires the transmission of electric energy directly or indirectly to an ultimate consumer if a notice of retail competition under section 609 of the Public Utility Regulatory Policies Act of 1978 has been filed and is in effect with respect to the ultimate consumer's distribution utility or if a distribution utility offers open access to its delivery facilities to the ultimate consumer.'.

(3) Conforming amendments-

(A) Section 3(23) of the FPA is amended to read as follows:

`(23) `transmitting utility' means any entity that owns, controls, or operates electric power transmission facilities that are used for the sale of electric energy in the 48 contiguous States and the District of Columbia, notwithstanding section 201(f) of this Act;'.

(B) Section 3(24) of the FPA is amended to read as follows:

`(24) `transmission services' means the transmission of electric energy sold or to be sold;'.

(C) Section 211(a) of the FPA is amended by striking `for resale'.

(D) Section 212(a) of the FPA is amended by striking `wholesale' each time it appears, except the last time.

(c) APPLICABILITY OF COMMISSION JURISDICTION TO TRANSMITTING UTILITIES- Section 206(e) of the FPA as added by subsection (b)(1) of this section is amended by adding the following new paragraphs after paragraph (1):

`(2)(A) The Commission has jurisdiction over the rates, terms, and conditions for transmission services provided by a transmitting utility that is not a public utility or covered by section 201A, subject to section 212(h), and may authorize recovery of stranded costs, as defined by the Commission, by such transmitting utility. The Commission may require, by rule or order, a transmitting utility that is not a public utility or covered by section 201A to provide open access transmission services, subject to section 212(h).

`(B) In exercising its authority under this Act, the Commission--

`(i) shall take into account the different structural and operating characteristics of transmitting utilities, including the multi-tier structure and the not-for-profit operations of electric cooperatives;

`(ii) with respect to any transmitting utility that has outstanding loans made or guaranteed by the Rural Utilities Service, shall take into account the policies of the Department of Agriculture in implementing the Rural Electrification Act of 1936 and shall assure, to the extent practicable, that the utility will be able to meet any loan obligations under that Act; and

`(iii) shall not approve rates, terms, or conditions the Commission determines would have the effect of jeopardizing the tax exempt status of nonprofit electric cooperatives under the Internal Revenue Code of 1986.

`(C) Notwithstanding any other law, section 205, this section, and part III apply to a transmitting utility that is not a public utility or covered by section 201A for purposes of this section.

`(3) Any electric utility that owns, directly or indirectly, generation facilities financed in whole or in part with outstanding loans made or guaranteed by the Rural Utilities Service may apply to the Commission to impose a charge for the recovery of stranded costs as defined by the Commission. If the Commission determines that the proposed charge is just, reasonable, and not unduly discriminatory or preferential, the Commission may issue an order providing for the imposition of the charge on transmission service by the applicant or by another transmitting utility or on any electric utility or transaction subject to the Commission's jurisdiction.'.

(d) NOTICE TO AND INTERVENTION OF SECRETARY OF AGRICULTURE IN FERC PROCEEDINGS- The FPA is amended by adding after section 218, as added by section 601 of this Act, the following new section:

`NOTICE TO AND INTERVENTION OF SECRETARY OF AGRICULTURE IN COMMISSION PROCEEDINGS

`SEC. 219. Any person filing a complaint or petition for rulemaking under part II of the FPA that directly affects an electric utility with loans made or guaranteed under the Rural Electrification Act of 1936 shall provide notice of such complaint or petition to the Secretary of Agriculture. The Secretary of Agriculture may as a matter of right intervene or otherwise participate in any proceeding before the Commission that directly affects an electric utility with loans made or guaranteed under the Rural Electrification Act of 1936. The Secretary of Agriculture shall comply with rules of procedure of general applicability governing the timing of intervention or participation in such proceeding or activity and, upon intervening or participating therein, shall comply with rules of procedure of general applicability governing the conduct thereof.'.

SEC. 302. INTERSTATE COMPACTS ON REGIONAL TRANSMISSION PLANNING.

The FPA is amended by adding after section 214 the following new section:

`INTERSTATE COMPACTS ON REGIONAL TRANSMISSION PLANNING

`SEC. 215. (a) The consent of Congress is given for an agreement to establish a regional transmission planning agency, if the Commission determines that the agreement would--

`(1) facilitate coordination among the States within a particular region with regard to the planning of future transmission, generation, and distribution facilities,

`(2) carry out State electric facility siting responsibilities more effectively,

`(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 interest.

`(b)(1) If the Commission determines that an agreement meets the requirements of subsection (a), the agency established under the agreement has the authority necessary or appropriate to carry out the agreement. This authority includes authority with respect to matters otherwise within the jurisdiction of the Commission, if expressly provided for in the agreement and approved by the Commission.

`(2) The Commission's determination under this section may be subject to any terms or conditions the Commission determines are necessary to ensure that the agreement is in the public interest.

`(c)(1) The Commission shall prescribe--

`(A) criteria for determining whether a regional transmission planning agreement meets subsection (a), and

`(B) standards for the administration of a regional transmission planning agency established under the agreement.

`(2) The criteria shall provide that, in order to meet subsection (a)--

`(A) a regional transmission planning agency must operate within a region that includes all tribal governments and all or part of each State that is a party to the agreement,

`(B) a regional transmission planning agency must be composed of one or more members from each State and tribal government that is a party to the agreement,

`(C) each participating State and tribal government must vest in the regional transmission planning agency the authority necessary to carry out the agreement and this section, and

`(D) the agency must follow workable and fair procedures in making its decisions, in governing itself, and in regulating parties to the agreement with respect to matters covered by the agreement, including a requirement that all decisions of the agency be made by majority vote (or majority of weighted votes) of the members present and voting.

`(3) The criteria may include any other requirement for meeting subsection (a) that the Commission determines is necessary to ensure that the regional transmission planning agency's organization, practices, and procedures are sufficient to carry out this section and the rules issued under it.

`(d) The Commission, after notice and opportunity for comment, may terminate the approval of an agreement under this section at any time if it determines that the regional transmission planning agency fails to comply with this section or Commission prescriptions under subsection (c) or that the agreement is contrary to the public interest.

`(e) Section 313 applies to a rehearing before a regional transmission planning agency

SEC. 303. BACKUP AUTHORITY TO IMPOSE A CHARGE ON AN ULTIMATE CONSUMER'S RECEIPT OF ELECTRIC ENERGY.

The FPA is amended by adding the following new section after section 215 as added by section 302 of this Act:

`BACKUP AUTHORITY FOR CHARGE ON RECEIPT OF ELECTRIC ENERGY

`SEC. 216. (a) If a State regulatory authority that has provided notice of retail competition under section 609 of the Public Utility Regulatory Policies Act of 1978 for a distribution utility determines that the utility should be authorized or required to impose a charge on an ultimate consumer's receipt of electric energy but the State regulatory authority lacks authority to authorize or require imposition of such a charge, the State regulatory authority may apply to the Commission for an order providing for the imposition of the charge. If the Commission determines that the imposition of the charge is just, reasonable, and not unduly discriminatory or preferential; is consistent with the State regulatory authority's policy regarding the imposition of the charge; and is not prohibited by State law, the Commission may issue an order providing for the imposition of the charge.

`(b) If a nonregulated utility that has outstanding loans made or guaranteed by the Rural Utilities Service and that has filed a notice of retail competition under section 609 of the Public Utilities Regulatory Policies Act of 1978 determines that it is appropriate to impose a charge on an ultimate consumer's receipt of electric energy, but lacks the authority to impose such a charge under State law, the utility may apply to the Commission for an order providing for the imposition of a charge. If the Commission determines that the proposed charge is just, reasonable, and not unduly discriminatory or preferential, the Commission may issue an order providing for the imposition of the charge.'.

SEC. 304. AUTHORITY TO ESTABLISH AND REQUIRE INDEPENDENT REGIONAL SYSTEM OPERATION.

Section 202 of the FPA is amended by adding the following new subsections after subsection (g):

`(h) Upon its own motion or upon application or complaint and after notice and an opportunity for a hearing, the Commission may order the establishment of entities for the purpose of independent operation, control, and planning of interconnected transmission facilities; order a transmitting utility to relinquish control over operation of its transmission facilities to an entity for the purpose of independent operation, control, and planning of interconnected transmission facilities; subject generators to the control of such entity consistent with other laws to the extent necessary to permit reliable operation of the transmission facilities; or take any combination of these actions, if the Commission finds that--

`(1) this action is appropriate to promote competitive electricity markets and efficient, economical, and reliable operation of the interstate transmission grid;

`(2) the entity established for the purpose of independent operation, control, and planning of interconnected transmission facilities will operate, control, and plan the transmission facilities in a manner that assures that--

`(A) ownership of transmission facilities provides no advantage in competitive electricity markets;

`(B) the transmission customers of the Tennessee Valley Authority (TVA), the Bonneville Power Administration, the Southwestern Power Administration (SWPA), and the Western Area Power Administration (WAPA) will not pay an unreasonable share of the entity's costs and will not experience unreasonable transmission rate increases resulting from the establishment of the entity; and

`(C) as applicable, the respective statutory and treaty obligations and contractual obligations existing on the date of enactment of this Act of the TVA Board of Directors, the Bonneville Administrator, the SWPA Administrator, the WAPA Administrator, the Bureau of Reclamation, and the Corps of Engineers can be met;

`(3) any transmitting utility ordered to transfer control of its transmission facilities will receive just and reasonable compensation for the use of its facilities, consistent with section 201A where applicable; and

`(4) adequate reliability of the affected transmission facilities will be maintained. Nothing in this section limits States from addressing transmission facility maintenance, planning, siting, and other utility functions in a manner consistent with this Act or Commission action under this Act.

`(i) If not ordered under subsection (h), TVA, the Bonneville Administrator, the SWPA Administrator, or the WAPA Administrator are authorized to participate in a regional transmission system operation after conducting a public process in the relevant service area to receive comments. Notwithstanding any other law, participation may include delegation of operation and control of the Authority or Administration's transmission system to that entity, or other method of participation, under terms and conditions the Authority or Administrator determines necessary or appropriate, including being bound by operational and other orders of the entity and by the results of arbitration of disputes with the entity or with other participants.'.

SEC. 401. PUBLIC BENEFITS FUND.

PURPA is amended by adding after section 609, as added by section 101 of this Act, the following new section:

`SEC. 610. PUBLIC BENEFITS FUND.

`(a) DEFINITIONS- For purposes of this section--

`(1) the term `Board' means the Joint Board established under subsection (b)(1);

`(2) the term `eligible public purpose program' means a program that supports one or more of the following--

`(A) availability of affordable electricity service to low-income customers,

`(B) implementation of energy conservation and energy efficiency measures and energy management practices,

`(C) consumer education,

`(D) the development and demonstration of an electricity generation technology that the Secretary determines is emerging from research and development, provides environmental benefits, and--

`(i) has significant national commercial potential, or

`(ii) provides energy security or generation resource diversity benefits, or

`(E) rural assistance subsequent to a determination made under subsection (d)(4);

`(3) the term `fiscal agent' means the entity designated under subsection (b)(2)(B);

`(4) the term `Fund' means the Public Benefits Fund established under subsection (b)(2)(A); and

`(5) the term `State' means each of the 48 contiguous States and the District of Columbia.

`(b) JOINT BOARD- (1) A Joint Board is established whose membership is composed of two officers or employees of the United States Government appointed by the Secretary, four State commissioners appointed by the national organization of State commissions, and one member of an Indian tribal government appointed by the Secretary. The Secretary shall designate the Chair of the Board.

`(2) The Board shall--

`(A) establish a Public Benefits Fund upon petition of States and tribal governments wishing to participate in the program under this section,

`(B) appoint a fiscal agent, from persons nominated by the States and tribal governments petitioning to establish the Fund, and

`(C) administer the Fund as set forth in this section.

`(c) FISCAL AGENT- The fiscal agent appointed by the Board shall collect and disburse the amounts in the Fund as set forth in this section.

`(d) SECRETARY- The Secretary shall prescribe rules for--

`(1) the determination of charges under subsection (e);

`(2) the collection of amounts for the Fund, including provisions for overcollection or undercollection;

`(3) distribution of amounts from the Fund; and

`(4) the criteria under which the Board determines whether a State or tribal government's program is an eligible public purpose program, including a rural assistance program. A rural assistance program shall be an eligible public purpose program to the extent that the Secretary, in consultation with the Secretary of Agriculture, determines by rule that significant adverse economic effects on rural customers have occurred or will occur as a result of electricity restructuring that meets the retail competition requirements of this Act. After such a determination is made, the Secretary, in consultation with the Secretary of Agriculture, shall specify by rule the mechanism for distribution of funds to rural assistance programs, amounts to be provided, and variances to the overall requirements to the Public Benefits Fund under this section, if any. For the purposes of funding rural assistance programs, the Secretary shall increase the charge for the Public Benefit Fund as necessary, up to a maximum of .17 mills per kilowatt hour. Funding for rural assistance programs under this section shall be provided exclusively from this increase in the charge.

`(e) PUBLIC BENEFITS CHARGE- (1) As a condition of existing or future interconnection with facilities of any transmitting utility, each owner of an electric generating facility whose capacity exceeds one megawatt shall pay the transmitting utility a public benefits charge determined under paragraph (2), even if the generation facility and the transmitting facility are under common ownership or are otherwise affiliated. Each importer of electric energy from Canada or Mexico, as a condition of existing or future interconnection with facilities of any transmitting utility in the United States, shall pay this same charge for imported electric energy. The transmitting utility shall pay the amounts collected to the fiscal agent at the close of each month, and the fiscal agent shall deposit the amounts into the Fund as offsetting collections.

`(2)(A) The Board shall notify the Commission of the sum of the requests of all States and tribal governments under subsection (f) within 30 days after receiving the requests.

`(B) The Commission shall calculate the rate for the public benefits charge for each calendar year at an amount, not in excess of 1 mill per kilowatt-hour, equal to the sum of the requests of all States and tribal governments under subsection (f) for programs described in subsection (a)(2)(A) through (a)(2)(D), but not to exceed $3 billion per year, divided by the estimated kilowatt hours of electric energy to be generated by generators subject to the charge. Amounts collected in excess of $3 billion in a fiscal year shall be retained in the fund and the assessment in the following year shall be reduced by that amount. If there are more than de minimis receipts from the sale of Renewable Energy Credits under section 611, the Secretary shall direct the Commission to reduce the charge to reflect the amount of receipts received from the sale of Credits. The amount of the receipts from the sale of Renewable Energy Credits deposited in the Public Benefits Fund may not exceed $3 billion per year adjusted for inflation. Receipts from the sale of Renewable Energy Credits in excess of $3 billion per year adjusted for inflation shall be deposited in the General Fund of the Treasury.

`(C) If a finding is made under subsection (d)(4) in relation to rural customers, the public benefit charge shall be increased as indicated under subsection (d)(4).

`(f) STATE AND TRIBAL GOVERNMENT PARTICIPATION- (1) Not later than 90 days before the beginning of each calendar year, each State and tribal government seeking to participate in the Fund shall submit to the Board a request for payments from the Fund for the calendar year in an amount not in excess of 50 percent of the State or tribal government's estimated expenditures for eligible public purpose programs for the year, except as provided under rules issued under subsection (d)(4) for rural assistance programs.

`(2) To the extent a State or tribal government generates all or part of its funds for eligible public purpose programs through a wires charge on an ultimate consumer's receipt of electric energy, the State or tribal government shall impose the charge on a non-discriminatory basis on all consumers within the State or tribal government jurisdiction.

`(3) Notwithstanding subsection (a)(5)--

`(A) Alaska may participate in the Fund as a State if it certifies to the Board that all generators within Alaska with a nameplate capacity exceeding one megawatt shall pay

`(B) Hawaii may participate in the Fund as a State if it certifies to the Board that all generators within Hawaii with a nameplate capacity exceeding one megawatt shall pay into the Fund at the rate calculated by the Board during the year in which Hawaii seeks matching funds.

`(g) DISBURSAL FROM THE FUND- (1) The Board shall review State and tribal government submissions and determine whether programs designated by the State or tribal government are eligible public purpose programs, using the criteria prescribed under subsection (d), and whether there is reasonable assurance that spending qualifying as State or tribal government matching funds will occur.

`(2) The fiscal agent shall disburse amounts in the Fund to participating States and tribal governments to carry out eligible public programs in accordance with this subsection and rules prescribed under subsection (d).

`(3) To the extent the aggregate amount of funds requested by the States and tribal governments exceeds the maximum aggregate revenues eligible to be collected under subsection (e) and deposited as payment for Renewable Energy Credits under section 611, the fiscal agent shall reduce each participating State and tribal government's request proportionately.

`(4)(A) The fiscal agent shall disburse amounts for a calendar year from the Fund to a State or tribal government in twelve equal monthly payments beginning two months after the beginning of the calendar year. Amounts disbursed may not exceed the lesser of the State or tribal government's request for the fiscal year, after any reduction required under paragraph (3), or 50 percent of the State or tribal government's documented expenditures for eligible public purpose programs for the calendar year, except as provided under rules issued under subsection (d)(4) for rural assistance programs.

`(B) The fiscal agent shall make distributions to the State or tribal government or to an entity designated by the State or tribal government to receive payments. The State or tribal government may designate a nonregulated utility as an entity to receive payments under this section.

`(C) A State or tribal government may use amounts received only for the eligible public purpose programs the State or tribal government designated in its submission to the Board and the Board determined eligible.

`(h) REPORT- One year before the date of expiration of this section, the Secretary shall report to Congress, after consultation with the Board, whether a public benefits fund should continue to exist.

`(i) SUNSET- This section expires at midnight on December 31 of the fifteenth year after the year the Comprehensive Electricity Competition Act is enacted, except with regard to charges and funding for rural assistance programs.'.

SEC. 402. FEDERAL RENEWABLE PORTFOLIO STANDARD.

(a) STANDARD- PURPA is amended by adding after section 610, as added by section 401 of this Act, the following new section:

`SEC. 611. FEDERAL RENEWABLE PORTFOLIO STANDARD.

`(a) MINIMUM RENEWABLE GENERATION REQUIREMENT- (1) For each calendar year beginning with 2000, a retail electric supplier shall submit to the Secretary Renewable Energy Credits in an amount equal to the required annual percentage, specified in subsection (b), of the total electric energy sold by the retail electric supplier to electric consumers in the calendar year. The retail electric supplier shall make this submission before April 1 of the following calendar year.

`(2) For purposes of this section a `renewable energy' resource means solar energy, wind, geothermal, or biomass.

`(3) This section does not preclude a State from requiring additional renewable energy generation in that State.

`(b) REQUIRED ANNUAL PERCENTAGE- (1) The Secretary shall determine the required annual percentage that is to be applied to all retail electric suppliers for calendar years 2000-2004. This required annual percentage shall be equal to the percent of the total electric energy sold, during the most recent calendar year for which information is available before the calendar year of the enactment of this section, by retail suppliers to electric customers in the United States that is renewable energy.

`(2) The Secretary shall determine the required annual percentage for all retail electric suppliers for calendar years 2005-2009. This percentage shall be above the percentage in paragraph (1) and below the percentage in paragraph (3) and shall be selected to promote a smooth transition to the level in paragraph (3).

`(3) For calendar years 2010-2015, the required annual percentage is 7.5 percent.

`(c) SUBMISSION OF CREDITS- A retail electric supplier may satisfy the requirements of subsection (a) through the submission of--

`(1) Renewable Energy Credits issued under subsection (d) for renewable energy generated by the retail electric supplier in the calendar year for which Credits are being submitted or any previous calendar year,

`(2) Renewable Energy Credits issued under subsection (d) to any renewable energy generator for renewable energy generated in the calendar year for which Credits are being submitted or a previous calendar year and acquired by the retail electric supplier, or

`(3) any combination of Credits under paragraphs (1) and (2).

`(d) ISSUANCE OF CREDIT- (1) The Secretary shall establish, not later than one year after the date of enactment of this section, a program to issue, monitor the sale or exchange of, and track Renewable Energy Credits.

`(2) Under the program, an entity that generates electric energy through the use of a renewable energy resource may apply to the Secretary for the issuance of Renewable Energy Credits. The application shall indicate--

`(A) the type of renewable energy resource used to produce the electricity,

`(B) the State in which the electric energy was produced, and

`(C) any other information the Secretary determines appropriate.

`(3)(A) Except as provided in paragraph (B), the Secretary shall issue to an entity one

`(B) The Secretary shall issue two Renewable Energy Credits for each kilowatt-hour of electric energy generated through the use of a renewable energy resource in any State in 2000 and any succeeding year, if the generating facility is located on Indian land. For purposes of this paragraph, renewable energy generated by biomass cofired with other fuels is eligible for two credits only if the biomass was grown on the land eligible under this paragraph.

`(C) To be eligible for a Renewable Energy Credit, the unit of a electricity generated through the use of a renewable energy resource may be sold or may be used by the generator. If both a renewable energy resource and a non-renewable energy resource are used to generate the electric energy, the Secretary shall issue credits based on the proportion of the renewable energy resource used. The Secretary shall identify Renewable Energy Credits by type of generation and by the State in which the generating facility is located.

`(4) In order to receive a Renewable Energy Credit, the recipient of a Renewable Energy Credit shall pay a fee, calculated by the Secretary, in an amount that is equal to the administrative costs of issuing, recording, monitoring the sale of exchange of, and tracking the Credit or does not exceed five percent of the dollar value of the Credit, whichever is lower. The Secretary shall retain the fee and use it to pay these administrative costs.

`(5) When a generator sells electric energy generated through the use of a renewable energy resource to a retail electric supplier under a contract subject to section 210 of this Act, the retail electric supplier is treated as the generator of the electric energy for the purposes of this section for the duration of the contract.

`(6) The Secretary shall disqualify an otherwise eligible renewable energy generator from receiving a Renewable Energy Credit if the generator has elected to participate in net metering under section 612.

`(7) If a generator using a renewable energy resource receives matching funds under section 610, the Secretary shall reduce the number of Renewable Energy Credits the generator receives under paragraphs (3) so that the aggregate value of those Credits plus the matching funds received under section 610 equals the aggregate value of the Credits the generator would have received absent this paragraph. For purposes of this paragraph, the Secretary shall value a Credit at a price that is representative of the price of a Credit in private transactions. In no event shall the Secretary use a price to establish values for purposes of this paragraph that exceeds the cost cap established under subsection (f).

`(e) SALE OR EXCHANGE- A Renewable Energy Credit may be sold or exchanged by the entity to whom issued or by any other entity who acquires the Credit. A Renewable Energy Credit for any year that is not used to satisfy the minimum renewable generation requirement of subsection (a) for that year may be carried forward for use in another year.

`(f) RENEWABLE ENERGY CREDIT COST CAP- Beginning January 1, 2000, the Secretary shall offer Renewable Energy Credits for sale. The Secretary shall charge 1.5 cents for each Renewable Energy Credit sold during calendar year 2000, and on January 1 of each following year, the Secretary shall adjust for inflation, based on the Consumer Price Index, the price charged per Credit for that calendar year. The Secretary shall deposit in the Public Benefits Fund established under section 610 the amount received from a sale under this subsection.

`(g) ENFORCEMENT- The Secretary may bring an action in the appropriate United States district court to impose a civil penalty on a retail electric supplier that does not comply with subsection (a). A retail electric supplier who does not submit the required number of Renewable Energy Credits under subsection (a) is subject to a civil penalty of not more than three times the value of the Renewable Energy Credits not submitted. For purposes of this subsection, the value of a Renewable Energy Credit is the price of a Credit determined under subsection (f) for the year the Credits were not submitted.

`(h) INFORMATION COLLECTION- The Secretary may collect the information necessary to verify and audit--

`(1) the annual electric energy generation and renewable energy generation of any entity applying for Renewable Energy Credits under this section,

`(2) the validity of Renewable Energy Credits submitted by a retail electric supplier to the Secretary, and

`(3) the quantity of electricity sales of all retail electric suppliers.

`(i) SUNSET- This section expires December 31, 2015.'.

(b) DEFINITIONS- Section 3 of PURPA is amended by adding after paragraph (24) as added by section 101 of this Act the following new paragraph:

`(25) The term `retail electric supplier' means a person, State agency, or Federal agency that sells electric energy to an electric consumer.

`(26) The term `Indian land' means (A) any land within the limits of any Indian reservation, pueblo or rancheria, (B) any land not within the limits of any Indian reservation, pueblo or rancheria title to which was on the date of passage of the Comprehensive Electricity Competition Act either held in trust by the United States for the benefit of any Indian tribe or individual or held by any Indian tribe or individual subject to restriction by the United States against alienation, (C) any dependent Indian community, and (D) any land conveyed to any Alaska Native corporation under the Alaska Native Claims Settlement Act.

`(27) The term `Indian tribe' means any Indian tribe, band, group, or nation, including Alaska Indians, Aleuts, or Eskimos, or any Alaskan Native Village of the United States, which is considered an eligible recipient under the Indian Self Determination and Education Assistance Act (Public Law 93-638) or was considered an eligible recipient under chapter 67 of title 31, United States Code, prior to the repeal of such chapter.'.

SEC. 403. NET METERING.

PURPA is amended by adding the following new section after section 611 as added by section 402 of this Act:

`SEC. 612. NET METERING FOR RENEWABLE ENERGY.

`(a) DEFINITIONS- For purposes of this section--

`(1) The term `eligible on-site generating facility' means a facility on the site of an electric consumer with a peak generating capacity of 20 kilowatts or less that is fueled

`(2) The term `renewable energy resource' means solar energy, wind, geothermal, or biomass.

`(3) The term `net metering service' means service to an electric consumer under which electricity generated by that consumer from an eligible on-site generating facility and delivered to the distribution system through the same meter through which purchased electricity is received may be used to offset electricity provided by the retail electric supplier to the electric consumer during the applicable billing period so that an electric consumer is billed only for the net electricity consumed during the billing period, but in no event shall the net be less than zero during the applicable billing period.

`(b) REQUIREMENT TO PROVIDE NET METERING SERVICE- Each retail electric supplier shall make available upon request net metering service to any retail electric consumer whom the supplier currently serves or solicits for service.

`(c) STATE AUTHORITY- This section does not preclude a State from imposing additional requirements consistent with the requirements in this section, including the imposition of a cap limiting the amount of net metering available in the State. Nothing in this Act or any other Federal law preempts or otherwise affects authority under State law to require a retail electric supplier to make available net metering service to a retail electric consumer whom the supplier serves or offers to serve.'.

SEC. 404. REFORM OF SECTION 210 OF PURPA.

Section 210 of PURPA is amended by adding the following new subsection after subsection (l):

`(m) REPEAL OF MANDATORY PURCHASE REQUIREMENT- After the date of enactment of the Comprehensive Electricity Competition Act, an electric utility shall not be required to enter into a new contract or obligation to purchase electric energy under this section.'.

SEC. 405. INTERCONNECTIONS FOR CERTAIN FACILITIES.

PURPA is amended by adding the following new section after section 612 as added by section 403 of this Act:

`SEC. 613. INTERCONNECTIONS FOR CERTAIN FACILITIES.

`(a) DEFINITION- As used in this section `facility' means--

`(1) a small-scale electric power generation facility that is designed to serve customers at or near the facility, or

`(2) a facility using a single fuel source to produce at the point of use either electric or mechanical power and thermal energy.

`(b) INTERCONNECTION- A distribution utility shall allow a facility to interconnect with the distribution utility if the facility owner is located in the distribution utility's service territory and complies with the final rule issued under subsection (c).

`(c) Within one year from the date of enactment of this section, the Secretary shall issue a final rule to implement subsection (b) and issue related safety and power quality standards. To the extent feasible, the Secretary shall develop the standards through a process involving interested parties.

`(d) The Commission shall enforce the rule established under subsection (c) using its authority under this Act.'.

SEC. 406. RURAL AND REMOTE COMMUNITIES ELECTRIFICATION GRANTS.

Section 313 of the Rural Electrification Act of 1936 (7 U.S.C. 940c) is amended by adding after subsection (b) the following new subsections:

`(c) RURAL AND REMOTE COMMUNITIES ELECTRIFICATION GRANTS- The Secretary, in consultation with the Secretary of Energy and the Secretary of the Interior, may provide grants to eligible borrowers under this Act for the purpose of increasing energy efficiency, lowering, or stabilizing electric rates to end users, or providing or modernizing electric facilities for:

`(1) a unit of local government of a State or territory, or

`(2) an Indian tribe

that has an average cost per kilowatt hour of electricity that is at least 150 percent of the average retail price per kilowatt hour for all consumers in the United States, as determined by the Secretary using data provided by the Department of Energy. The Secretary shall issue the grants based on a determination of cost-effectiveness and most effective use of the funds to achieve the stated purposes of this section.

`(d) DEFINITION- For purposes of this section, the term `Indian tribe' means any Indian tribe, band, group, or nation, including Alaska Indians, Aleuts, or Eskimos, or any Alaskan Native Village of the United States, which is considered an eligible recipient under the Indian Self Determination and Education Assistance Act (Public Law 93-638) or was considered an eligible recipient under chapter 67 of title 31, United States Code, prior to the repeal of such chapter.

`(e) AUTHORIZATION- There is authorized to be appropriated for purposes of subsection (c) $20,000,000 for each of the seven fiscal years following enactment of this section.'.

SEC. 407. INDIAN TRIBE ASSISTANCE.

Title XXVI of the Energy Policy Act of 1992 (25 U.S.C. 3501-3506) is amended by adding after section 2606 the following new section:

`SEC. 2607. TRIBAL ELECTRICITY ASSISTANCE.

`(a) The Secretary of Energy, in consultation with the Secretary of the Interior and the Secretary of Agriculture, shall establish a program to assist an Indian tribe to meet its electricity needs. Under the program, the Secretary shall provide, subject to appropriations, to an Indian tribe--

`(1) technical assistance and grants to analyze tribal electricity needs, the availability of natural resources for tribal generation of electricity, the opportunities for the improvement of transmission of electricity to the tribe, and the effect on the tribe of retail competition in the sale or transmission of electricity, and

`(2) in an area that is not served or served inadequately by an electric utility, as defined in section 3(4) of the Public Utility Regulatory Policies Act of 1978, or distribution utility, as defined in section 3(23) of the Public Utility Regulatory Policies Act of 1978, grants to plan and construct or improve facilities to generate, transmit, and distribute electricity to serve tribal needs.

In exercising authority under this section, the Secretary shall take into account the ability of entities with loans made or guaranteed under the Rural Electrification Act of 1936 to repay those

`(b) DEFINITION- For purposes of this section, the term `Indian tribe' means any Indian tribe, band, group, or nation, including Alaska Indians, Aleuts, or Eskimos, or any Alaskan Native Village of the United States, which is considered an eligible recipient under the Indian Self Determination and Education Assistance Act (Public Law 93-638) or was considered an eligible recipient under chapter 67 of title 31, United States Code, prior to the repeal of such chapter.

`(c) There are authorized to be appropriated to the Department of Energy for each of the seven fiscal years following enactment of this section, $5,000,000 to carry out subsection (a)(1), and $15,000,000 to carry out subsection (a)(2).'.

SEC. 408. OFFICE OF INDIAN ENERGY POLICY AND PROGRAMS.

Title II of the Department of Energy Organization Act is amended by adding the following new section after section 212:

`SEC. 213. OFFICE OF INDIAN ENERGY POLICY AND PROGRAMS.

`(a) The Secretary may establish within the Department an Office of Indian Energy Policy and Programs. The Office shall be headed by a Director appointed by the Secretary.

`(b) Subject to the supervision of the Secretary, the Office is authorized to establish a program to provide, direct, foster, coordinate and implement energy, energy management, and energy conservation programs to--

`(1) promote tribal energy efficiency;

`(2) modernize tribal electric infrastructure;

`(3) preserve tribal sovereignty and self determination related to energy matters;

`(4) lower or stabilize energy costs; and

`(5) electrify tribal members' homes.

`(c) There are authorized to be appropriated such sums as may be necessary to implement this section.'.

SEC. 409. SOUTHEAST ALASKA ELECTRICAL POWER.

There are authorized to be appropriated to the Department of Energy up to a total sum of $20,000,000 for the purpose of providing financial assistance to the State of Alaska as necessary to ensure the availability of adequate electrical power to the greater Ketchikan area in southeast Alaska, including the construction of an intertie.

SEC. 501. REFORM OF HOLDING COMPANY REGULATION UNDER PUHCA.

Effective 18 months after the enactment of this Act, the Public Utility Holding Company Act of 1935 is repealed and the following is enacted in its place:

`SECTION 1. SHORT TITLE.

`This Act may be cited as the `Public Utility Holding Company Act of 1999'.

`SEC. 2. DEFINITIONS.

`For purposes of this Act--

`(1) the term `affiliate' of a company means any company 5 percent or more of the outstanding voting securities of which are owned, controlled, or held with power to vote, directly or indirectly, by such company;

`(2) the term `associate company' of a company means any company in the same holding company system with such company;

`(3) the term `Commission' means the Federal Energy Regulatory Commission;

`(4) the term `company' means a corporation, partnership, association, joint stock company, business trust, or any organized group of persons, whether incorporated or not, or a receiver, trustee, or other liquidating agent of any of the foregoing;

`(5) the term `electric utility company' means any company that owns or operates facilities used for the generation, transmission, or distribution of electric energy for sale;

`(6) the terms `exempt wholesale generator' and `foreign utility company' have the same meanings as in sections 32 and 33, respectively, of the Public Utility Holding Company Act of 1935, as those sections existed on the day before the effective date of this Act;

`(7) the term `gas utility company' means any company that owns or operates facilities used for distribution at retail (other than the distribution only in enclosed portable containers, or distribution to tenants or employees of the company operating such facilities for their own use and not for resale) of natural or manufactured gas for heat, light, or power;

`(8) the term `holding company' means--

`(A) any company that directly or indirectly owns, controls, or holds, with power to vote, 10 percent or more of the outstanding voting securities of a public utility company or of a holding company of any public utility company; and

`(B) any person, determined by the Commission, after notice and opportunity for hearing, to exercise directly or indirectly (either alone or pursuant to an arrangement or understanding with one or more persons) such a controlling influence over the management or policies of any public utility company or holding company as to make it necessary or appropriate for the rate protection of utility customers with respect to rates that such person be subject to the obligations, duties, and liabilities imposed by this Act upon holding companies;

`(9) the term `holding company system' means a holding company, together with its subsidiary companies;

`(10) the term `jurisdictional rates' means rates established by the Commission for the transmission of electric energy, the sale of electric energy at wholesale in interstate commerce, the transportation of natural gas, and the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use;

`(11) the term `natural gas company' means a person engaged in the transportation of natural gas in interstate commerce or the sale of such gas in interstate commerce for resale;

`(12) the term `person' means an individual or company;

`(13) the term `public utility' means any person who owns or operates facilities used for transmission of electric energy or sales of electric energy at wholesale in

`(14) the term `public utility company' means an electric utility company or a gas utility company;

`(15) the term `State commission' means any commission, board, agency, or officer, by whatever name designated, of a State, municipality, or other political subdivision of a State that, under the laws of such State, has jurisdiction to regulate public utility companies;

`(16) the term `subsidiary company' of a holding company means--

`(A) any company, 10 percent or more of the outstanding voting securities of which are directly or indirectly owned, controlled, or held with power to vote, by such holding company; and

`(B) any person, the management or policies of which the Commission, after notice and opportunity for hearing, determines to be subject to a controlling influence, directly or indirectly, by such holding company (either alone or pursuant to an arrangement or understanding with one or more other persons) so as to make it necessary for the rate protection of utility customers with respect to rates that such person be subject to the obligations, duties, and liabilities imposed by this Act upon subsidiary companies of holding companies; and

`(17) the term `voting security' means any security presently entitling the owner or holder thereof to vote in the direction or management of the affairs of a company.

`SEC. 3. FEDERAL ACCESS TO BOOKS AND RECORDS.

`(a) IN GENERAL- Each holding company and each associate company thereof shall maintain, and shall make available to the Commission, such books, accounts, records, memoranda, and other records as the Commission deems to be relevant to costs incurred by a public utility or natural gas company that is an associate company of such holding company and necessary or appropriate for the protection of utility customers with respect to jurisdictional rates for the transmission of electric energy, the sale of electric energy at wholesale in interstate commerce, the transportation of natural gas in interstate commerce, and the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use.

`(b) AFFILIATE COMPANIES- Each affiliate of a holding company or of any subsidiary company of a holding company shall maintain, and make available to the Commission, such books, accounts, memoranda, and other records with respect to any transaction with another affiliate, as the Commission deems relevant to costs incurred by a public utility or natural gas company that is an associate company of such holding company and necessary or appropriate for the protection of utility customers with respect to jurisdictional rates.

`(c) HOLDING COMPANY SYSTEMS- The Commission may examine the books, accounts, memoranda, and other records of any company in a holding company system, or any affiliate thereof, as the Commission deems relevant to costs incurred by a public utility or natural gas company within such holding company system and necessary or appropriate for the protection of utility customers with respect to jurisdictional rates.

`(d) CONFIDENTIALITY- No member, officer, or employee of the Commission shall divulge any fact or information that may come to his or her knowledge during the course of examination of books, accounts, memoranda, or other records as provided in this section, except as may be directed by the Commission or by a court of competent jurisdiction.

`SEC. 4. STATE ACCESS TO BOOKS AND RECORDS.

`(a) IN GENERAL- Upon the written request of a State commission having jurisdiction to regulate a public utility company in a holding company system, the holding company or any associate company or affiliate thereof, other than such public utility company, wherever located, shall produce for inspection such books, accounts, memoranda, and other records that--

`(1) have been identified in reasonable detail in a proceeding before the State commission;

`(2) the State commission deems are relevant to costs incurred by such public utility company; and

`(3) are necessary for the effective discharge of the responsibilities of the State commission with respect to such proceeding.

`(b) LIMITATION- Subsection (a) does not apply to any person that is a holding company solely by reason of ownership of one or more qualifying facilities under the Public Utility Regulatory Policies Act of 1978.

`(c) CONFIDENTIALITY OF INFORMATION- The production of books, accounts, memoranda, and other records under subsection (a) shall be subject to such terms and conditions as may be necessary and appropriate to safeguard against unwarranted disclosure to the public of any trade secrets or sensitive commercial information.

`(d) EFFECT ON STATE LAW- Nothing in this section shall preempt applicable State law concerning the provision of books, records, or any other information, or in any way limit the rights of any State to obtain books, records, or any other information under any other Federal law, contract, or otherwise.

`(e) COURT JURISDICTION- Any United States district court located in the State in which the State commission referred to in subsection (a) is located shall have jurisdiction to enforce compliance with this section.

`SEC. 5. EXEMPTION AUTHORITY.

`(a) RULEMAKING- Not later than 90 days after the effective date of this Act, the Commission shall promulgate a final rule to exempt from the requirements of section 3 any person that is a holding company, solely with respect to one or more--

`(1) qualifying facilities under the Public Utility Regulatory Policies Act of 1978;

`(2) exempt wholesale generators; or

`(3) foreign utility companies.

`(b) OTHER AUTHORITY- If, upon application or upon its own motion, the Commission finds that the books, records, accounts, memoranda, and other records of any person are not relevant to the jurisdictional rates of a public utility or natural gas company, or if the Commission finds that any class of transactions is not relevant to the jurisdictional rates of a public utility or natural gas company, the Commission shall exempt such person or transaction from the requirements of section 3.

`SEC. 6. AFFILIATE TRANSACTIONS.

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

`SEC. 7. APPLICABILITY.

`No provision of this Act shall apply to, or be deemed to include--

`(1) the United States;

`(2) a State or any political subdivision of a State;

`(3) any foreign governmental authority not operating in the United States;

`(4) any agency, authority, or instrumentality of any entity referred to in paragraph (1), (2), or (3); or

`(5) any officer, agent, or employee of any entity referred to in paragraph (1), (2), or (3) acting as such in the course of official duty.

`SEC. 8. EFFECT ON OTHER REGULATIONS.

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

`SEC. 9. ENFORCEMENT.

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

`SEC. 10. SAVINGS PROVISIONS.

`(a) IN GENERAL- Nothing in this Act prohibits a person from engaging in or continuing to engage in activities or transactions in which it is legally engaged or authorized to engage on the effective date of this Act.

`(b) EFFECT ON OTHER COMMISSION AUTHORITY- Nothing in this Act limits the authority of the Commission under the Federal Power Act (16 U.S.C. 791a et seq.) (including section 301 of that Act) or the Natural Gas Act (15 U.S.C. 717 et seq.) (including section 8 of that Act).

`SEC. 11. IMPLEMENTATION.

`Not later than 18 months after the date of enactment of the Comprehensive Electricity Competition Act, the Commission shall--

`(1) promulgate such regulations as may be necessary or appropriate to implement this Act (other than section 4); and

`(2) submit to the Congress detailed recommendations on technical and conforming amendments to Federal law necessary to carry out this Act and the amendments made by this Act.

`SEC. 12. TRANSFER OF RESOURCES.

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

`SEC. 13. AUTHORIZATION OF APPROPRIATIONS.

`There are authorized to be appropriated such funds as may be necessary to carry out this Act.

`SEC. 14. CONFORMING AMENDMENT TO THE FEDERAL POWER ACT.

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

SEC. 502. ELECTRIC COMPANY MERGERS.

Section 203(c) of the FPA is amended by--

(1) striking `public utility' each time it appears and inserting in its place `person or electric utility company';

(2) inserting after the first sentence the following: `Except as the Commission otherwise provides, a holding company in a holding company system that includes an electric utility company shall not, directly or indirectly, purchase, acquire, or take any security of an electric utility company or of a holding company in a holding company system that includes an electric utility company, with first securing an order of the Commission authorizing it to do so.';

(3) striking `hearing' in the last sentence and inserting `oral or written presentation of views';

(4) adding after `public interest' the following: `including consideration of the effects on competition in wholesale and retail electricity markets,'; and

(5) adding at the end the following: `For purposes of this subsection, the terms `electric utility company', `holding company', and `holding company system' have the meaning given them in the Public Utility Holding Company Act of 1999.

Notwithstanding section 201(b)(1), generation facilities are subject to the jurisdiction of the Commission for purposes of this section, except as the Commission otherwise may provide, provided that an entity that has existing loans made or guaranteed under the Rural Electrification Act of 1936 (5 U.S.C. 901 et seq.) is not jurisdictional for purposes of this section.'.

SEC. 503. REMEDIAL MEASURES FOR MARKET POWER.

The FPA is amended by adding the following new section after section 216 as added by section 303 of this Act:

`REMEDIAL MEASURES FOR MARKET POWER

`SEC. 217. (a) DEFINITIONS- As used in this section--

`(1) `market power' means the ability of a public utility or electric utility profitably to maintain prices above competitive levels for a significant period of time, and

`(2) `notice of retail competition' has the meaning provided under section 3(22) of the Public Utility Regulatory Policies Act of 1978.

`(b) COMMISSION JURISDICTIONAL SALES- (1) If the Commission determines that there are markets in which a public utility that owns or controls generation facilities has market power in sales of electric energy for resale in interstate commerce, the Commission shall order that utility to submit a plan for taking necessary actions to remedy its market power, which may include, but is not limited to, conditions respecting operation or dispatch of generation, independent operation of transmission facilities, or divestiture of ownership of one or more generation facilities.

`(2) in consultation with the Attorney General and the Federal Trade Commission, the Commission shall review the plan to determine if its implementation would adequately mitigate

`(c) STATE JURISDICTIONAL SALES- (1) If a State commission that has filed a notice of retail competition has reason to believe that an electric utility doing business in the State has market power, the State commission may apply for an order under this section.

`(2) If, after receipt of such an application and after notice and opportunity for a hearing, the Commission determines that the electric utility has market power in the sales of electric energy sold at retail in the State, this market power would adversely affect competition in the State, and the State commission lacks authority to effectively remedy such market power, the Commission may order the electric utility to submit a plan for taking necessary actions to remedy the electric utility's market power. These actions may include conditions respecting operation or dispatch of generation, competitive procurement of all generation capacity or energy, independent operation of transmission facilities, or divestiture of ownership of one or more generation facilities of the electric utility.

`(3) After consultation with the Attorney General and the Federal Trade Commission, the Commission may approve the plan with or without modification. The plan shall take effect upon approval by the Commission.

`(4) Notwithstanding any State law, regulation, or order to the contrary and notwithstanding any other provision of this Act or any other law, the Commission has jurisdiction to order divestiture or other transfer of control of generation assets pursuant to the plan.'.

SEC. 601. ELECTRIC RELIABILITY ORGANIZATION AND OVERSIGHT.

(a) ELECTRIC RELIABILITY ORGANIZATION AND OVERSIGHT- The Federal Power Act is amended by adding the following new section after section 217:

`ELECTRIC RELIABILITY ORGANIZATION AND OVERSIGHT

`SEC. 218. (a) PURPOSE- The purpose of this section is to provide for the establishment and enforcement of mandatory reliability standards in order to ensure the reliable operation of the bulk-power system.

`(b) DEFINITIONS- As used in this section:

`(1) The term `Affiliated Regional Reliability Entity' means an entity delegated authority under the provisions of subsection (i).

`(2) The term `Bulk-Power System' means all facilities and control systems necessary for operating an interconnected transmission grid (or any portion thereof), including high-voltage transmission lines, substations, control centers, communications, data, and operations planning facilities, and the output of generating units necessary to maintain transmission system reliability.

`(3) The term `Electric Reliability Organization' or `Organization' means the organization approved by the Commission under subsection (e)(4).

`(4) The term `Entity Rule' means a rule adopted by an Affiliated Regional Reliability Entity for a specific region and designed to implement or enforce one or more Organization Standards. An Entity Rule shall be subject to approval by the Organization, and once approved, shall be treated as an Organization Standard.

`(5) The term `Industry Sector' means a group of Users of the Bulk Power System with substantially similar commercial interests, as determined by the board of the Electric Reliability Organization.

`(6) The term `Interconnection' means a geographic area in which the operation of Bulk-Power System components is synchronized such that the failure of one or more of such components may adversely affect the ability of the operators of other components within the Interconnection to maintain safe and reliable operation of the facilities within their control.

`(7) The term `Organization 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) The term `Public Interest Group' means any non-profit private or public organization that has an interest in the activities of the Electric Reliability Organization, including, but not limited to, ratepayer advocates, environmental groups, and State and local government organizations that regulate market participants and promulgate government policy.

`(9) 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 Organization Standard) that is adopted by an Affiliated Regional 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 Organization, and once approved, shall be treated as an Organization Standard.

`(10) The term `System Operator' means any entity that operates or is responsible for the operation of a Bulk-Power System, including but not limited to a control area operator, an independent system operator, a transmission company, a transmission system operator, or a regional security coordinator.

`(11) The term `User of the Bulk-Power System' means any entity that sells, purchases, or transmits electric power over a Bulk-Power System, or that owns, operates or maintains facilities or control systems that are part of a Bulk-Power System, or that is a System Operator.

`(c) COMMISSION AUTHORITY- Notwithstanding any other provision of the Federal Power Act, within the United States the Commission has 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 enforcing compliance with the requirements of this section.

`(d) EXISTING RELIABILITY STANDARDS- Following enactment of this section, and prior to the approval of an Organization under subsection (e), any person, including the North American Electric Reliability Council and its member Regional Reliability Councils, may file with the

`(1) withdrawn, disapproval or superseded by an Organization Standard, issued or approved by the Electric Reliability Organization and made effective by the Commission under section (f); or

`(2) disapproved or suspended by the Commission if, upon complaint or upon its own motion and after notice and an opportunity for comment, the Commission finds the standard, guidance, or practice unjust, unreasonable, unduly discriminatory or preferential, or not in the public interest.

Standards, guidance, or practices in effect pursuant to the provisions of this subsection shall be enforceable by the Commission under Part III of this Act.

`(e) ORGANIZATION APPROVAL- (1) Not later than 90 days after the date of enactment of this section, the Commission shall issue proposed rules specifying procedures 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 issue 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 application to the Commission for approval as the Electric Reliability Organization. The applicant shall specify in its application 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 opportunity 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 efficiency and effectiveness in decisionmaking and operation and requirements for technical competency in the development of Organization Standards and the exercise of oversight of Bulk-Power System 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 Organization's discharge of its responsibilities (including actions by committees recommending standards to the board or other board actions to implement and enforce standards);

`(E) provides for governance by a board of no more than eleven members, one of whom shall be appointed by the Secretary of Energy;

`(F) provides a funding mechanism and requirements that are just, reasonable, and not unduly discriminatory or preferential and are in the public interest, and which satisfies the requirements of subsection (n);

`(G) establishes procedures for development of Organization Standards that provide reasonable notice 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 Organization Standards, and which standards development process has the following attributes: (i) openness, (ii) balance of interests, and (iii) due process, except that the procedures 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 an Affiliated Regional Reliability Entity, including the imposition of penalties, limitations on activities, functions, or operations, or other appropriate sanctions;

`(I) establishes procedures for notice and opportunity for public observation of all meetings, except that the procedures for public observation may include alternative procedures for emergencies or for the discussion of information the directors determine should take place in closed session, such as litigation, personnel actions, or commercially sensitive information;

`(J) provides for the consideration of recommendations of States and State commissions; and

`(K) addresses other matters that the Commission may deem necessary or appropriate to ensure that the procedures, governances, 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 application it concludes will best implement the provisions of this section.

`(f) ESTABLISHMENT OF AND MODIFICATIONS OF 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 procedures under paragraph (2) for review of that filing. Submissions shall include:

`(A) a concise statement of the purpose of the proposal, and

`(B) a record of any proceedings conducted with respect to the proposal.

`(2) The Commission shall provide notice of the filing of the proposal and afford interested persons a reasonable time, but not more than 30 days, to submit comments. The Commission, after taking into consideration any submitted comments, shall approve or disapprove the proposal not later than 60 days after the deadline for the submission of comments except that--

`(A) the Commission may extend the 60-day period for an additional 90 days for good cause, and

`(B) if the Commission does not act to approve or disapprove a proposal within the periods set forth in this paragraph, the proposal shall go into effect, without prejudice to the authority of the Commission thereafter to suspend or modify the proposal in accordance with the standards and requirements of this section.

Proposals approved by the Commission 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).

`(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 modified Organization Standard, but shall not defer to the Organization with respect to the effect of the standard on competition. The Commission shall approve a proposed new or modified Organization Standard if it determines the proposal to be just, reasonable, not unduly discriminatory or preferential, and in the public interest.

`(B) 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.

`(C) An existing or proposed Organization Standard which is disapproved or suspended in whole or in part by the Commission shall be remanded to the Electric Reliability Organization for further consideration.

`(D) The Commission, on its own motion or upon complaint, may direct the Electric Reliability Organization to develop an Organization Standard, including modification to an existing Organization Standard, addressing a specific matter by a date certain if the Commission considers a new or modified Organization Standard necessary or appropriate to further the purposes of this section. The Electric Reliability Organization shall file any new or modified Organization Standard in accordance with this subsection.

`(E) An Affiliated Regional Reliability Entity may propose a Variance or Entity Rule to the Electric Reliability Organization under subsection (i)(3). The Affiliated Regional Reliability Entity may request that the Electric Reliability Organization expedite consideration of the proposal, and may file a notice of this request with the Commission, if expedited consideration is necessary to provide for Bulk-Power System reliability. If the Electric Reliability Organization 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 request, that the action of the Electric Reliability Organization did not conform to the applicable standards and procedures approved by the Commission, or if the Commission 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 Organization has unreasonably rejected the proposed Variance or Entity Rule, the Commission may remand the proposed Variance or Entity Rule for further consideration by the Electric Reliability Organization or may direct the Electric Reliability Organization or the Affiliated Regional Reliability Entity to develop a Variance or Entity Rule consistent with that requested by the Affiliated Regional Reliability Entity. Such a Variance or Entity Rule proposed by an Affiliated Regional Reliability Entity shall be submitted to the Electric Reliability Organization for review and filing with the Commission in accordance with the procedures specified in this subsection.

`(F) Notwithstanding any other provision of this subsection, a proposed Organization Standard or amendment shall take effect according to its terms if the Electric Reliability Organization determines that an emergency exists requiring that the proposed Organization Standard or amendment take effect without notice or comment. The Electric Reliability Organization shall notify the Commission immediately following this determination and shall file the emergency Organization Standard or amendment with the Commission not later than five days following the determination and shall include in the filing an explanation of the need for the emergency standard. Subsequently, the Commission shall provide notice of the emergency Organization Standard or amendment for comment, and shall follow the procedures set out in paragraphs (2) and (3) for review of a new or modified Organization Standard. An emergency Organization Standard that has gone into effect shall remain in effect unless and until suspended or disapproved by the Commission. If the Commission determines at any time that the emergency Organization Standard or amendment is not necessary, the Commission may suspend the 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.

`(g) COORDINATION WITH CANADA AND MEXICO- The Electric Reliability Organization shall take all appropriate steps to gain recognition in Canada and Mexico. Subject to the President's authority with respect to foreign policy, the United States shall use its best efforts to enter into international agreements with the appropriate governments of Canada and Mexico to provide for effective compliance with Organization Standards and to provide for the effectiveness of the Electric Reliability Organization in carrying out its mission and responsibilities. All actions taken by the Electric Reliability Organization, any Affiliated Regional Reliability Entity, and the Commission shall be consistent with the provisions of such international agreements.

`(h) CHANGES IN PROCEDURES, GOVERNANCE, OR FUNDING- (1) The Electric Reliability Organization shall file with the Commission any proposed change in its procedures, governance, or funding, or any changes in the Affiliated 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 may take effect 90 days after filing with Commission if the change constitutes a statement of policy, practice, or interpretation with respect to the meaning or enforcement of an existing procedure. Any other proposed procedural change takes 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 requirements of subsection (e)(4).

`(3) A change in governance or funding does not take effect unless the Commission finds that the change is just, reasonable, not unduly discriminatory or preferential, and is in the public

`(4)(A) The Commission, either upon complaint or upon its own motion, may suspend a procedure or governance or funding provision if it determines the procedure or provision does not meet the requirements of subsection (e)(4) or is unjust, unreasonable, unduly discriminatory or preferential, or otherwise not in the public interest.

`(B) The Commission, upon complaint or upon its own motion, may require the Electric Reliability Organization to amend the procedures, governance or funding if the Commission determines that the amendment is necessary to meet the requirements of this section. The Electric Reliability Organization shall file the amendment in accordance with paragraph (1) of this subsection.

`(i) DELEGATIONS OF AUTHORITY- (1) The Electric Reliability Organization shall, upon request by an entity, enter into an agreement with the entity for the delegation of authority to implement and enforce compliance with Organization Standards approved by the Commission in a specified geographic area if the Organization finds that the entity requesting the delegation satisfies the requirements of subsections (e)(4) (A), (B), (C), (D), (F), and (K), and if the delegation promotes the effective and efficient implementation and administration of Bulk-Power System reliability The Electric Reliability Organization may enter into an agreement to delegate to the entity any other authority, except that the Electric Reliability Organization shall reserve the right to set and approve standards for the 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 requires with respect to the Affiliated Regional Reliability Entity to which authority is to be delegated. The Commission shall approve the agreement, following public notice and an opportunity for comment, if it finds that the agreement meets the requirements of paragraph (1), and is just, reasonable, 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 presumed by the Commission to promote the effective and efficient implementation and administration of Bulk-Power System reliability. No delegation by the Electric Reliability Organization shall be valid unless approved by the Commission.

`(3)(A) A delegation agreement entered into under this subsection shall specify the procedures for an Affiliated Regional Reliability Entity to propose Entity Rules or Variances for review by the Electric Reliability Organization.

`(B) With respect to any such proposal that would apply on an Interconnection-wide basis, the Electric Reliability Organization shall presume the proposal valid if made by an Interconnection-wide Affiliated Regional Reliability Entity unless the Electric Reliability Organization makes a written finding that the proposal--

`(i) was not developed in a fair and open process that provided an opportunity for all interested parties to participate;

`(ii) has a significant adverse impact on reliability or commerce in other Interconnections;

`(iii) fails to provide a level of reliability of the Bulk-Power System within the Interconnection such that it would constitute a serious and substantial threat to public health, safety, welfare, or national security; or

`(iv) creates a serious and substantial burden on competitive markets within the Interconnection that is not necessary for reliability.

`(C) With respect to a proposal that would apply only to part of an Interconnection, the Electric Reliability Organization shall find the proposal valid if the Affiliated Regional Reliability Entity or Entities making the proposal demonstrate that it--

`(i) was developed in a fair and open process that provided an opportunity for all interested parties to participate;

`(ii) would not have an adverse impact on commerce that is not necessary for reliability;

`(iii) provides a level of Bulk-Power System reliability adequate to protect public health, safety, welfare, and national security, and would not have a significant adverse impact on reliability; and

`(iv) in the case of a Variance, is based on legitimate differences between regions or between subregions within the Affiliated Regional Reliability Entity's geographic area.

`(D) The Electric Reliability Organization shall approve or disapprove the proposal within 120 days, or the proposal is deemed approved. Following approval of a proposal under this paragraph, the Electric Reliability Organization shall seek Commission approval pursuant to subsection (f). Affiliated Regional Reliability Entities may not make requests for approval directly to the Commission except pursuant to subsection (f)(3)(E).

`(4) If an Affiliated Regional Reliability Entity requests, consistent with paragraph (1) of this subsection, that the Electric Reliability Organization delegate authority to it, but is unable within 180 days to reach agreement with the Electric Reliability Organization with respect to the requested delegation, the entity may seek relief from the Commission. If, following notice and opportunity for comment, the Commission determines that the delegation to the entity would meet the requirements of paragraph (1); that the delegation would be just, reasonable, not unduly discriminatory or preferential, and in the public interest; and that the Electric Reliability Organization has unreasonably withheld the delegation, the Commission may, by order, direct the Electric Reliability Organization to make the delegation.

`(5)(A) The Commission may, upon its own motion or upon complaint, and with notice to the appropriate Affiliated Regional Reliability Entity or Entities, direct the Electric Reliability Organization to propose a modification to an agreement entered into under this subsection if the Commission determines that--

`(i) the Affiliated Regional Reliability Entity no longer has the capacity to carry out effectively or efficiently its implementation or enforcement responsibilities under that agreement, has failed to meet its obligations under that agreement, or has violated any provision of this section,

`(ii) the rules, practices, or procedures of the Affiliated Regional Reliability Entity no longer provide for fair and impartial discharge of its implementation or enforcement responsibilities under the agreement,

`(iii) the geographic boundary of a transmission entity approved by the Commission is not wholly within the boundary of an Affiliated Regional Reliability

`(iv) the agreement is inconsistent with another delegation agreement as a result of actions taken under paragraph (4) of this subsection.

`(B) Following an order of the Commission issued under paragraph (5)(A) of this subsection, the Commission may suspend the affected agreement if the Electric Reliability Organization or the Affiliated Regional Reliability Entity does not propose an appropriate and timely modification. If the agreement is suspended, the Electric Reliability Organization shall assume the previously delegated responsibilities. The Commission shall allow the Electric Reliability Organization and the Affiliated Regional Reliability Entity an opportunity to appeal the suspension.

`(j) ORGANIZATION MEMBERSHIP- Every System Operator shall be a member of the Electric Reliability Organization and shall be a member of any Affiliated Regional Reliability Entity operating under an agreement effective pursuant to subsection (i) applicable to the region in which the System Operator operates or is responsible for the operation of a Bulk-Power System facility.

`(k) FEDERAL POWER SYSTEMS AND NUCLEAR REGULATORY COMMISSION- Any actions taken under this section by the Commission, the Electric Reliability Organization, and any Affiliated Regional Reliability Entity shall be consistent with any statutory or treaty obligations of a Federal Power Marketing Administration, the Tennessee Valley Authority, the Bureau of Reclamation and the Corps of Engineers and any Nuclear Regulatory Commission requirements.

`(l) INJUNCTIONS AND DISCIPLINARY ACTION- (1) Consistent with the range of actions approved by the Commission under subsection (e)(4)(H), the Electric Reliability Organization may impose a penalty; may limit activities, functions, or operations; or may take other disciplinary action the Electric Reliability Organization finds appropriate against a User of the Bulk-Power System if the Electric Reliability Organization, after notice and an opportunity for interested parties to be heard, issues a finding in writing that the User of the Bulk-Power System has violated an Organization Standard approved by the Commission. The Electric Reliability Organization shall immediately notify the Commission of any disciplinary action imposed with respect to an act or failure of a User of the Bulk-Power System that affected or threatened to affect Bulk-Power System facilities located in the United States, and the sanctioned party shall have the right to seek modification or rescission by the Commission of such disciplinary action. If the Organization finds it necessary to prevent a serious threat to reliability, the Organization may seek injunctive relief in a Federal Court in the district in which the affected facilities are located.

`(2) A disciplinary action taken under paragraph (1) may take effect not earlier than the 30th day after the Electric Reliability Organization files with the Commission its written finding and record of proceedings before the Electric Reliability Organization and the Commission posts the Organization's written finding, unless the Commission, on its own motion or upon application by the User of the Bulk-Power System which is the subject of the action, suspends the action. The action shall remain in effect or remain suspended unless and until the Commission, after notice and opportunity for hearing, affirms, sets aside, modifies, or reinstates the action, but the Commission shall conduct such a hearing under procedures established to ensure expedited consideration of the action taken.

`(3) The Commission, on its own motion, may order compliance with an Organization Standard and may impose a penalty; may limit activities, functions, or operations; or may take such other disciplinary action as the Commission finds appropriate, against a User of the Bulk-Power System with respect to actions affecting or threatening to affect Bulk-Power System facilities located in the United States if the Commission finds, after notice and opportunity for a hearing, that the User of the Bulk-Power System has violated or threatens to violate an Organization Standard.

`(4) The Commission may take such action as is necessary against the Electric Reliability Organization or an Affiliated Regional Reliability Entity to assure compliance with an Organization Standard, or any Commission order affecting the Electric Reliability Organization or an Affiliated Regional Reliability Entity.

`(m) RELIABILITY REPORTS- The Electric Reliability Organization shall conduct periodic assessments of the reliability and adequacy of the interconnected Bulk-Power System in North America and shall report annually to the Secretary of Energy and the Commission its findings and recommendations for monitoring or improving system reliability and adequacy.

`(n) ASSESSMENT AND RECOVERY OF CERTAIN COSTS- The reasonable costs of the Electric Reliability Organization, and the reasonable costs of each Affiliated Regional Reliability Entity that are related to implementation and enforcement of Organization Standards or other requirements contained in a delegation agreement, approved under subsection (i), shall be assessed by the Electric Reliability Organization and each Affiliated Regional Reliability Entity, respectively, taking into account the relationship of costs to each region and based on an allocation that reflects an equitable sharing of the costs among all end-users. The Commission shall provide by rule for the review of such costs and allocations, pursuant to the standards in this subsection and subsection (e)(4)(F).

`(o) RULE OF REASON STANDARD- In any action under the antitrust laws, the conduct of the Electric Reliability Organization, of an Affiliated Regional Reliability Entity operating under an agreement in effect under subsection (i), or a member of the Electric Reliability Organization or an Affiliated Regional Reliability Entity, to the extent such conduct is undertaken to develop or implement an Organization Standard which is approved by the Commission under subsection (f), shall not be deemed illegal per se. Such conduct shall be judged on the basis of its reasonableness, taking into account all relevant factors affecting competition. For purposes of this section, `antitrust laws' has the meaning given it in subsection (a) of the first section of the Clayton Act, except that such term includes section 5 of the Federal Trade Commission Act to the extent that such section 5 applies to unfair methods of competition.'.

(b) CONFORMING AMENDMENTS- (1) Section 316 of the FPA is amended by striking `or 214' each place it appears and inserting `214, or 218'.

(2) Section 316A of the FPA is amended by striking `section 211, 212, 213, or 214' each time it appears and inserting `Part II of this Act'.

SEC. 602. ELECTRICITY OUTAGE INVESTIGATION.

Title II of the Department of Energy Organization Act is amended by adding the

`SEC. 214. ELECTRICITY OUTAGE INVESTIGATION BOARD.

`(a) ESTABLISHMENT; MEMBERSHIP; TERMS- The Secretary shall establish an Electricity Outage Investigation Board. The Board shall consist of five members, appointed by the Secretary. Each member shall serve a term of three years.

`(b) DUTIES- The Board shall--

`(1) investigate a major bulk-power system failure in the United States to determine its causes,

`(2) report to the Secretary the results of the investigation, and

`(3) recommend to the Secretary actions to minimize the possibility of a future bulk-power system failure.

`(c) FEDERAL ADVISORY COMMITTEE ACT- The Board shall not be subject to the Federal Advisory Committee Act (5 U.S.C. Appx.).'.

SEC. 603. ADDITIONAL TRANSMISSION CAPACITY.