To strengthen the Federal Energy Regulatory Commission's authority to review public utility mergers.

AMENDMENTS SUBMITTED AND PROPOSED

SA 1410. Mr. BINGAMAN proposed an amendment to amendment SA
1386 proposed by Mr. Bond (for himself, Mr. Levin, Mr.
Domenici, and Ms. Stabenow) to the bill S. 14, to enhance the
energy security of the United States, and for other purposes.
SA 1411. Mr. MILLER submitted an amendment intended to be
proposed by him to the bill S. 14, supra; which was ordered
to lie on the table.
SA 1412. Mr. DOMENICI (for himself, Ms. Landrieu, Mr.
Thomas, Ms. Murkowski, Mr. Campbell, Mr. Smith, Mr.
Alexander, Mr. Kyl, Mr. Nelson, of Nebraska, Mr. Hagel, Mr.
Talent, Mr. Bunning, and Mr. Coleman) proposed an amendment
to the bill S. 14, supra.
SA 1413. Mr. BINGAMAN proposed an amendment to the bill S.
14, supra.
SA 1414. Mr. INHOFE submitted an amendment intended to be
proposed by him to the bill S. 14, supra; which was ordered
to lie on the table.
SA 1415. Mr. INOUYE submitted an amendment intended to be
proposed by him to the bill S. 14, supra; which was ordered
to lie on the table.
SA 1416. Mr. FEINGOLD (for himself and Mr. Wyden) submitted
an amendment intended to be proposed to amendment SA 1412
proposed by Mr. Domenici (for himself, Ms. Landrieu, Mr.
Thomas, Ms. Murkowski, Mr. Campbell, Mr. Smith, Mr.
Alexander, Mr. Kyl, Mr. Nelson of Nebraska, Mr. Hagel, Mr.
Talent, Mr. Bunning, and Mr. Coleman) to the bill S. 14,
supra; which was ordered to lie on the table.
SA 1417. Mr. DAYTON (for himself, Ms. Cantwell, and Mrs.
Boxer) submitted an amendment intended to be proposed to
amendment SA 1412 proposed by Mr. Domenici (for himself, Ms.
Landrieu, Mr. Thomas, Ms. Murkowski, Mr. Campbell, Mr. Smith,
Mr. Alexander, Mr. Kyl, Mr. Nelson of Nebraska, Mr. Hagel,
Mr. Talent, Mr. Bunning, and Mr. Coleman) to the bill S. 14,
supra; which was ordered to lie on the table.
SA 1418. Mr. BINGAMAN proposed an amendment to the bill S.
14, supra.
SA 1410. Mr. BINGAMAN proposed an amendment to amendment SA 1386
proposed by Mr. Bond (for himself, Mr. Levin, Mr. Domenici, and Ms.
Stabenow) to the bill S. 14, to enhance the energy security of the
United States, and for other purposes; as follows:

On page 5, strike lines 14 through 18 and insert the
following:
(c) Clarification of Authority To Amend Passenger
Automobile Standard.--Section 32902 of title 49, United
States Code, is amended--
(1) in subsection (b), by inserting before the period at
the end the following: ``, or such other number as the
Secretary prescribes under subsection (c)''; and
(2) in subsection (c)(2), by striking ``The procedures of
section 551'' and all that follows and inserting the
following: ``The amendment shall be considered to be a major
rule that is subject to chapter 8 of title 5, United States
Code (relating to congressional review of agency
rulemaking).''.
______

SA. 1411. Mr. MILLER submitted an amendment intended to be proposed
by him to the bill S. 14, to enhance the energy security of the United
States, and for other purposes; which was ordered to lie on the table;
as follows:

On page 260, between lines 7 and 8, insert the following:

SEC. 712. AVERAGE FUEL ECONOMY STANDARDS FOR PICKUP TRUCKS

(a) In General.--Section 32902(a) of title 49, United
States Code, is amended--
(1) by inserting ``(1)'' after ``Automobiles.--''; and
(2) by adding at the end the following new paragraph:
``(2) The average fuel economy standard for pickup trucks
manufactured by a manufacturer in a model year after model
year 2005 shall be 20.7 miles per gallon. No average fuel
economy standard prescribed under another provision of this
section shall apply to pickup trucks.''.
(b) Definition Of Pickup Truck.--Section 32901(a) of such
title is amended by adding at the end the following new
paragraph:
``(17) `pickup truck' has the meaning given that term in
regulations prescribed by the Secretary for the
administration of this chapter, as such regulations are in
effect on January 1, 2003, except that such term shall also
include any additional vehicle that the Secretary defines as
a pickup truck in regulations prescribed for the
administration of this chapter after such date.''.
______

SA 1412. Mr. DOMENICI (for himself, Ms. Landrieu, Mr. Thomas, Ms.
Murkowksi, Mr. Campbell, Mr. Smith,

[[Page S10155]]

Mr. Alexander, Mr. Kyl, Mr. Nelson of Nebraska, Mr. Hagel, Mr. Talent,
Mr. Bunning, and Mr. Coleman) proposed an amendment to the bill S. 14,
to enhance the energy security of the United States, and for other
purposes; as follows:

Beginning on page 405, strike line 18 and all that follows
through page 467, line 16, and insert the following:

TITLE XI--ELECTRICITY

SEC. 1101. DEFINITIONS.

(a) Electric Utility.--Section 3(22) of the Federal Power
Act (16 U.S.C. 796(22)) is amended to read as follows:
``(22) `electric utility' means any person or Federal or
State agency (including any entity described in section
201(f)) that sells electric energy; such term includes the
Tennessee Valley Authority and each Federal power marketing
agency;''.
(b) Transmitting Utility.--Section 3(23) of the Federal
Power Act (16 U.S.C. 796(23)) is amended to read as follows:
``(23) `transmitting utility' means an entity, including
any entity described in section 201(f), that owns or operates
facilities used for the transmission of electric energy--
``(A) in interstate commerce; or
``(B) for the sale of electric energy at wholesale;''.
(c) Additional Definitions.--Section 3 of the Federal Power
Act (16 U.S.C. 796) is amended by adding at the end the
following:
``(26) `unregulated transmitting utility' means an entity
that--
``(A) owns or operates facilities used for the transmission
of electric energy in interstate commerce, and
``(B) is an entity described in section 201(f);
``(27) `electric cooperative' means a cooperatively owned
electric utility;
``(28) `Regional Transmission Organization' or `RTO' means
an entity of sufficient regional scope approved by the
Commission to exercise operational or functional control of
facilities used for the transmission of electric energy in
interstate commerce and to ensure non-discriminatory access
to such facilities; and
``(29) `Independent System Operator' or `ISO' means an
entity used for the transmission of electric energy and which
has been approved by the Commission to exercise operational
or functional control of facilities used for the transmission
of electric energy in interstate commerce and to ensure
nondiscriminatory access to such facilities.''.
(d) Additional Modifications.--
(1) Section 201(b)(2) of the Federal Power Act (16 U.S.C.
824(b)(2)) is amended by striking ``The'' the first time it
appears and inserting, ``Notwithstanding section 201(f),
the''.
(2) Section 201(f) of the Federal Power Act (16 U.S.C.
824(f)) is amended by adding after ``political subdivision of
a state,'' ``an electric cooperative that has financing under
the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.)
or sells less than 4,000,000 megawatt hours of electricity
per year,''.
(e) For the purposes of this title, the term ``Commission''
means the Federal Energy Regulatory Commission.

Subtitle A--Reliability

SEC. 1111. ELECTRIC RELIABILITY STANDARDS.

(a) Part II of the Federal Power Act (16 U.S.C. 824 et
seq.) is amended by adding at the end the following:

``ELECTRIC RELIABILITY

``Sec. 215. (a) For the purposes of this section:
``(1) The term `bulk-power system' means--
``(A) facilities and control systems necessary for
operating an interconnected electric energy transmission
network (or any portion thereof); and
``(B) electric energy from generation facilities needed to
maintain transmission system reliability.
The term does not include facilities used in the local
distribution of electric energy.
``(2) The terms `Electric Reliability Organization' and
`ERO' mean the organization certified by the Commission under
subsection (c), the purpose of which is to establish and
enforce reliability standards for the bulk-power system,
subject to Commission review.
``(3) The term `reliability standard' means a requirement,
approved by the Commission under this section, to provide for
reliable operation of the bulk-power system. The term
includes requirements for the operation of existing bulk-
power system components and the design of planned additions
or modifications to such components to the extent necessary
to provide for reliable operation of the bulk-power system,
but the term does not include any requirement to enlarge such
components or to construct new transmission capacity or
generation capacity.
``(4) The term `reliable operation' means operating the
components of the bulk-power system within equipment and
electric system thermal, voltage, and stability limits so
that instability, uncontrolled separation, or cascading
failures of such system will not occur as a result of a
sudden disturbance or unanticipated failure of system
components.
``(5) The term `Interconnection' means a geographic area in
which the operation of bulkpower 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 system to maintain reliable
operation of the portion of the system within their control.
``(6) The term `transmission organization' means an RTO or
other transmission organization finally approved by the
Commission for the operation of transmission facilities.
``(7) The term `regional entity' means an entity having
enforcement authority pursuant to subsection (e)(4).
``(b) The Commission shall have jurisdiction, within the
United States, over the ERO certified by the Commission under
subsection (c), any regional entities, and all users, owners
and operators of the bulk-power system, including the
entities described in section 201(f), for purposes of
approving reliability standards established under this
section and enforcing compliance with this section. All
users, owners and operators of the bulk-power system shall
comply with reliability standards that take effect under this
section. The Commission shall issue a final rule to implement
the requirements of this section not later than 180 days
after the date of enactment of this section.
``(c) Following the issuance of a Commission rule under
subsection (b), any person may submit an application to the
Commission for certification as the Electric Reliability
Organization. The Commission may certify one such ERO if the
Commission determines that such ERO--
``(1) has the ability to develop and enforce, subject to
subsection (d)(2), reliability standards that provide for an
adequate level of reliability of the bulk-power system; and
``(2) has established rules that--
``(A) assure its independence of the users and owners and
operators of the bulk-power system, while assuring fair
stakeholder representation in the selection of its directors
and balanced decisionmaking in any ERO committee or
subordinate organizational structure;
``(B) allocate equitably reasonable dues, fees, and other
charges among end users for all activities under this
section;
``(C) provide fair and impartial procedures for enforcement
of reliability standards through the imposition of penalties
in accordance with subsection (e) (including limitations on
activities, functions, or operations, or other appropriate
sanctions);
``(D) provide for reasonable notice and opportunity for
public comment, due process, openness, and balance of
interests in developing reliability standards and otherwise
exercising its duties; and
``(E) provide for taking, after certification, appropriate
steps to gain recognition in Canada and Mexico.
``(d)(1) The ERO shall file each reliability standard or
modification to a reliability standard that it proposes to be
made effective under this section with the Commission.
``(2) The Commission may approve by rule or order a
proposed reliability standard or modification to a
reliability standard if it determines that the standard is
just, reasonable, not unduly discriminatory or preferential,
and in the public interest. The Commission shall give due
weight to the technical expertise of the ERO with respect to
the content of a proposed standard or modification to a
reliability standard and to the technical expertise of a
regional entity organized on an Interconnection-wide basis
with respect to a reliability standard to be applicable
within that Interconnection, but shall not defer with respect
to the effect of a standard on competition. A proposed
standard or modification shall take effect upon approval by
the Commission.
``(3) The ERO shall rebuttably presume that a proposal from
a regional entity organized on an Interconnection-wide basis
for a reliability standard or modification to a reliability
standard to be applicable on an Interconnection-wide basis is
just, reasonable, and not unduly discriminatory or
preferential, and in the public interest.
``(4) The Commission shall remand to the ERO for further
consideration a proposed reliability standard or a
modification to a reliability standard that the Commission
disapproves in whole or in part.
``(5) The Commission, upon its own motion or upon
complaint, may order the ERO to submit to the Commission a
proposed reliability standard or a modification to a
reliability standard that addresses a specific matter if the
Commission considers such a new or modified reliability
standard appropriate to carry out this section.
``(6) The final rule adopted under subsection (b) shall
include fair processes for the identification and timely
resolution of any conflict between a reliability standard and
any function, rule, order, tariff, rate schedule, or
agreement accepted, approved, or ordered by the Commission
applicable to a transmission organization. Such transmission
organization shall continue to comply with such function,
rule, order, tariff, rate schedule or agreement accepted
approved, or ordered by the Commission until--
``(A) the Commission finds a conflict exists between a
reliability standard and any such provision;
``(B) the Commission orders a change to such provision
pursuant to section 206 of this Part; and
``(C) the ordered change becomes effective under this Part.
If the Commission determines that a reliability standard
needs to be changed as a result of such a conflict, it shall
order the ERO to develop and file with the Commission a
modified reliability standard under paragraph (4) or (5) of
this subsection.
``(e)(1) The ERO may impose, subject to paragraph (2), a
penalty on a user or owner or operator of the bulk-power
system for a violation of a reliability standard approved by
the Commission under subsection (d) if

[[Page S10156]]

the ERO, after notice and an opportunity for a hearing--
``(A) finds that the user or owner or operator has violated
a reliability standard approved by the Commission under
subsection (d); and
``(B) files notice and the record of the proceeding with
the Commission.
``(2) A penalty imposed under paragraph (1) may take effect
not earlier than the 31st day after the ERO files with the
Commission notice of the penalty and the record of
proceedings. Such penalty shall be subject to review by the
Commission, on its own motion or upon application by the
user, owner or operator that is the subject of the penalty
filed within 30 days after the date such notice is filed with
the Commission. Application to the Commission for review, or
the initiation of review by the Commission on its own motion,
shall not operate as a stay of such penalty unless the
Commission otherwise orders upon its own motion or upon
application by the user, owner or operator that is the
subject of such penalty. In any proceeding to review a
penalty imposed under paragraph (1), the Commission, after
notice and opportunity for hearing (which hearing may consist
solely of the record before the ERO and opportunity for the
presentation of supporting reasons to affirm, modify, or set
aside the penalty), shall by order affirm, set aside,
reinstate, or modify the penalty, and, if appropriate, remand
to the ERO for further proceedings. The Commission shall
implement expedited procedures for such hearings.
``(3) On its own motion or upon complaint, the Commission
may order compliance with a reliability standard and may
impose a penalty against a user or owner or operator of the
bulk-power system, if the Commission finds, after notice and
opportunity for a hearing, that the user or owner or operator
of the bulk-power system has engaged or is about to engage in
any acts or practices that constitute or will constitute a
violation of a reliability standard.
``(4) The Commission shall establish regulations
authorizing the ERO to enter into an agreement to delegate
authority to a regional entity for the purpose of proposing
reliability standards to the ERO and enforcing reliability
standards under paragraph (1) if--
``(A) the regional entity is governed by an independent
board, a balanced stakeholder board, or a combination
independent and balanced stakeholder board;
``(B) the regional entity otherwise satisfies the
provisions of subsection (c)(1) and (2); and
``(C) the agreement promotes effective and efficient
administration of bulk-power system reliability.
The Commission may modify such delegation. The ERO and the
Commission shall rebuttably presume that a proposal for
delegation to a regional entity organized on an
Interconnection-wide basis promotes effective and efficient
administration of bulk-power system reliability and should be
approved. Such regulation may provide that the Commission may
assign the ERO's authority to enforce reliability standards
under paragraph (1) directly to a regional entity consistent
with the requirements of this paragraph.
``(5) The Commission may take such action as is necessary
or appropriate against the ERO or a regional entity to ensure
compliance with a reliability standard or any Commission
order affecting the ERO or a regional entity.
``(6) Any penalty imposed under this section shall bear a
reasonable relation to the seriousness of the violation and
shall take into consideration the efforts of such user,
owner, or operator to remedy the violation in a timely
manner.
``(f) The ERO shall file with the Commission for approval
any proposed rule or proposed rule change, accompanied by an
explanation of its basis and purpose. The Commission, upon
its own motion or complaint, may propose a change to the
rules of the ERO. A proposed rule or proposed rule change
shall take effect upon a finding by the Commission, after
notice and opportunity for comment, that the change is just,
reasonable, not unduly discriminatory or preferential, is in
the public interest, and satisfies the requirements of
subsection (c).
``(g) The ERO shall conduct periodic assessments of the
reliability and adequacy of the bulk-power system in North
America.
``(h) The President is urged to negotiate international
agreements with the governments of Canada and Mexico to
provide for effective compliance with reliability standards
and the effectiveness of the ERO in the United States and
Canada or Mexico.
``(i)(1) The ERO shall have authority to develop and
enforce compliance with reliability standards for only the
bulk-power system.
``(2) This section does not authorize the ERO or the
Commission to order the construction of additional generation
or transmission capacity or to set and enforce compliance
with standards for adequacy or safety of electric facilities
or services.
``(3) Nothing in this section shall be construed to preempt
any authority of any State to take action to ensure the
safety, adequacy, and reliability of electric service within
that State, as long as such action is not inconsistent with
any reliability standard.
``(4) Within 90 days of the application of the ERO or other
affected party, and after notice and opportunity for comment,
the Commission shall issue a final order determining whether
a State action is inconsistent with a reliability standard,
taking into consideration any recommendation of the ERO.
``(5) The Commission, after consultation with the ERO, may
stay the effectiveness of any State action, pending the
Commission's issuance of a final order.
``(j) The Commission shall establish a regional advisory
body on the petition of at least two-thirds of the States
within a region that have more than one-half of their
electric load served within the region. A regional advisory
body shall be composed of one member from each participating
State in the region, appointed by the Governor of each State,
and may include representatives of agencies, States, and
provinces outside the United States. A regional advisory body
may provide advice to the ERO, a regional entity, or the
Commission regarding the governance of an existing or
proposed regional entity within the same region; whether a
standard proposed to apply within the region is just,
reasonable, not unduly discriminatory or preferential, and in
the public interest; whether fees proposed to be assessed
within the region are just, reasonable, not unduly
discriminatory or preferential, and in the public interest,
and any other responsibilities requested by the Commission.
The Commission may give deference to the advice of any such
regional advisory body if that body is organized on an
Interconnection-wide basis.
``(k) The provisions of this section do not apply to Alaska
or Hawaii.''.
(b) The electric reliability organization certified by the
Commission under section 215(c) of the Federal Power Act and
any regional entity delegated enforcement authority pursuant
to section 215(e) of the Federal Power Act are not
departments, agencies, or instrumentalities of the United
States Government.

Subtitle B--Regional Markets

SEC. 1121. IMPLEMENTATION DATE FOR PROPOSED RULEMAKING ON
STANDARD MARKET DESIGN.

The Commission's proposed rulemaking entitled ``Remedying
Undue Discrimination through Open Access Transmission Service
and Standard Electricity Market Design'' (Docket No. RM01-
12000) is remanded to the Commission for reconsideration. No
final rule pursuant to the proposed rulemaking, including any
rule or order of general applicability within the scope of
the proposed rulemaking, may be issued before July 1, 2005.
Any final rule issued by the Commission pursuant to the
proposed rulemaking, including any rule or order of general
applicability within the scope of the proposed rulemaking,
shall be preceded by a notice of proposed rulemaking issued
after the date of enactment of this Act and an opportunity
for public comment.

SEC. 1122. SENSE OF THE CONGRESS ON REGIONAL TRANSMISSION
ORGANIZATIONS.

It is the sense of Congress that, in order to promote fair,
open access to electric transmission service, benefit retail
consumers, facilitate wholesale competition, improve
efficiencies in transmission grid management, promote grid
reliability, remove opportunities for unduly discriminatory
or preferential transmission practices, and provide for the
efficient development of transmission infrastructure needed
to meet the growing demands of competitive wholesale power
markets, all transmitting utilities in interstate commerce
should voluntarily become members of independently
administered Regional Transmission Organizations (``RTO'')
that have operational or functional control of facilities
used for the transmission of electric energy in interstate
commerce and do not own or have a financial interest in
generation facilities used to supply electric energy for sale
at wholesale.

SEC. 1123. PARTICIPATION IN REGIONAL TRANSMISSION
ORGANIZATIONS.

Nothing in this Act authorizes the Commission to require a
transmitting utility to transfer control or operational
control of its transmitting facilities to an RTO or any other
Commission-approved organization designated to provide non-
discriminatory transmission access.

SEC. 1124. FEDERAL UTILITY PARTICIPATION IN REGIONAL
TRANSMISSION ORGANIZATIONS.

(a) Definitions.--For purposes of this section:
(1) The term ``appropriate Federal regulatory authority''
means--
(A) with respect to a Federal power marketing agency, the
Secretary of Energy, except that the Secretary may designate
the Administrator of a Federal power marketing agency to act
as the appropriate Federal regulatory authority with respect
to the transmission system of that Federal power marketing
agency; and
(B) with respect to the Tennessee Valley Authority, the
Board of Directors of the Tennessee Valley Authority.
(2) The term ``Federal utility'' means a Federal power
marketing agency or the Tennessee Valley Authority.
(3) The term ``transmission system'' means electric
transmission facilities owned, leased, or contracted for by
the United States and operated by a Federal utility.
(b) Transfer.--
(1) The appropriate Federal regulatory authority is
authorized to enter into a contract, agreement, or other
arrangement transferring control and use of all or part of
the Federal utility's transmission system to a Regional
Transmission Organization

[[Page S10157]]

(``RTO''), as defined in the Federal Power Act. Such
contract, agreement or arrangement shall be voluntary and
include--
(A) performance standards for operation and use of the
transmission system that the head of the Federal utility
determines necessary or appropriate, including standards that
assure recovery of all the Federal utility's costs and
expenses related to the transmission facilities that are the
subject of the contract, agreement, or other arrangement;
consistency with existing contracts and third-party financing
arrangements; and consistency with said Federal utility's
statutory authorities, obligations, and limitations;
(B) provisions for monitoring and oversight by the Federal
utility of the RTO fulfillment of the terms and conditions of
the contract, agreement or other arrangement, including a
provision that may provide for the resolution of disputes
through arbitration or other means with the RTO or with other
participants, notwithstanding the obligations and limitations
of any other law regarding arbitration; and
(C) a provision that allows the Federal utility to withdraw
from the RTO and terminate the contract, agreement, or other
arrangement in accordance with its terms.
(2) Neither this section, actions taken pursuant to it, nor
any other transaction of a Federal utility using an RTO shall
serve to confer upon the Commission jurisdiction or authority
over the Federal utility's electric generation assets,
electric capacity or energy that the Federal utility is
authorized by law to market, or the Federal utility's power
sales activities.
(c) Existing Statutory and Other Obligations.--
(1) Any statutory provision requiring or authorizing a
Federal utility to transmit electric power, or to construct,
operate, or maintain its transmission system shall not be
construed to prohibit a transfer of control and use of its
transmission system pursuant to, and subject to all
requirements of subsection (b).
(2) This subsection shall not be construed to--
(A) suspend, or exempt any Federal utility from any
provision of existing Federal law, including but not limited
to any requirement or direction relating to the use of the
Federal utility's transmission system, environmental
protection, fish and wildlife protection, flood control,
navigation, water delivery, or recreation; or
(B) authorize abrogation of any contract or treaty
obligation.

SEC. 1125. REGIONAL CONSIDERATION OF COMPETITIVE WHOLESALE
MARKETS.

(a) State Regulatory Authorities.--Not later than 90 days
after the date of enactment of this Act, the Commission shall
convene regional discussions with State regulatory
authorities, as defined in section 3(21) of the Federal Power
Act. The regional discussions should address whether
wholesale electric markets in each region are working
effectively to provide reliable service to electric consumers
in the region at the lowest reasonable cost. Priority should
be given to discussions in regions that do not have, as of
the date of enactment of this Act, a Regional Transmission
Organization (``RTO'') or an Independent System Operator
(``ISO''), as defined in the Federal Power Act. The regional
discussions shall consider--
(1) the need for an RTO or other organizations in the
region to provide nondiscriminatory transmission access and
generation interconnection;
(2) a process for regional planning of transmission
facilities with State regulatory authority participation and
for consideration of multi-state projects;
(3) a means for ensuring that costs for all electric
consumers, as defined in section 3(5) of the Public Utility
Regulatory Policies Act of 1978 (16 U.S.C. 2602(5)), and
buyers of wholesale energy or capacity are reasonable and
economically efficient;
(4) a means for ensuring that all electric consumers, as
defined in section 3(5) of the Public Utility Regulatory
Policies Act of 1978 (16 U.S.C. 2602(5)), within the region
maintain their ability to use the existing transmission
system without incurring unreasonable additional costs in
order to expand the transmission system for new customers;
(5) whether the integrated transmission and electric power
supply system can and should be operated in a manner that
schedules and economically prioritizes all available electric
generation resources, so as to minimize the costs of electric
energy to all consumers (``economic dispatch'') and maintain
system reliability;
(6) a means to provide transparent price signals to promote
proper location and utilization of generation and the
efficient expansion of transmission in a manner that does not
result in collection of transmission rents that do not
relieve congestion;
(7) eliminating in a reasonable manner, consistent with
applicable State and Federal law, multiple, cumulative
charges for transmission service across successive locations
within a region (``pancaked rates'');
(8) resolution of seams issues with neighboring regions and
inter-regional coordination;
(9) a means of providing information electronically to
potential users of the transmission system;
(10) implementation of a market monitor for the region with
State regulatory authority and Commission oversight and
establishment of rules and procedures that ensure that State
regulatory authorities are provided access to market
information and that provides for expedited consideration by
the Commission of any complaints concerning exercise of
market power and the operation of wholesale markets;
(11) a process by which to phase-in any proposed RTO or
other organization designated to provide non-discriminatory
transmission access, including the formulation of
transmission pricing methodologies, so as to best meet the
needs of a region, and, if relevant, shall take into account
the special circumstances that may be found in the Western
Interconnection related to the existence of transmission
congestion, the existence of significant hydroelectric
capacity, the participation of unregulated transmitting
utilities, and the distances between generation and load;
(12) the need to submit regional studies, within one year
of enactment of this Act, to the Commission outlining
possible methodologies that will ensure that the amount of
energy produced in any region will be equal to at least 50
percent of the amount of energy consumed in that region by
2013;
(13) the potential value of developing a uniform system-
wide average rate for transmission pricing as a way to
enhance the efficiency and reliability of the transmission
grid; and
(14) a timetable to meet the objectives of this section.
(b) Report.--Not later than 1 year after the date of
enactment of this Act, the Commission shall report to
Congress on the progress made in addressing the issues in
subsection (a) of this section in discussions with the
States.
(c) Savings.--Nothing in this section shall affect any
discussions between the Commission and State or other retail
regulatory authorities that are on-going prior to enactment
of this Act.

Subtitle C--Improving Transmission Access and Protecting Service
Obligations

SEC. 1131. SERVICE OBLIGATION SECURITY AND PARITY.

Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is
amended by adding at the end the following:

``Service Obligation Security and Parity

``SEC. 216. (a)(1) Any load-serving entity that, as of the
date of enactment of this section--
``(A) owns generation facilities, markets the output of
federal generation facilities, or holds rights under one or
more wholesale contracts to purchase electric energy, for the
purpose of meeting a service obligation, and
``(B) by reason of ownership of transmission facilities, or
one or more contracts or service agreements for firm
transmission service, holds firm transmission rights for
delivery of the output of such generation facilities or such
purchased energy to meet such service obligation, is entitled
to use such firm transmission rights, or, at its election,
equivalent tradeable or financial transmission rights, in
order to deliver such output or purchased energy, or the
output of other generating facilities or purchased energy to
the extent deliverable using such rights, to the extent
required to meet its service obligation.
``(2) To the extent that all or a portion of the service
obligation covered by such firm transmission rights or
equivalent tradeable or financial transmission rights is
transferred to another load-serving entity, the successor
load-serving entity shall be entitled to use the firm
transmission rights or equivalent tradeable or financial
transmission rights associated with the transferred
service obligation. Subsequent transfers to another load-
serving entity, or back to the original load-serving
entity, shall be entitled to the same rights.
``(3) The Commission shall exercise its authority under
this Act in a manner that facilitates the planning and
expansion of transmission facilities to meet the reasonable
needs of load-serving entities to satisfy their service
obligations.
``(b) Nothing in this section shall affect any methodology,
approved by the Commission prior to the date of enactment of
this section, for the allocation of transmission rights by an
RTO or ISO that has been authorized by the Commission to
allocate transmission rights.
``(c) Nothing in this Act shall relieve a load-serving
entity from any obligation under State or local law to build
transmission or distribution facilities adequate to meet its
service obligations.
``(d) Nothing in this section shall provide a basis for
abrogating any contract or service agreement for firm
transmission service or rights in effect as of the date of
the enactment of this subsection.
``(e) For purposes of this section:
``(1) The term `distribution utility' means an electric
utility that has a service obligation to end-users or to a
State utility or electric cooperative that, directly or
indirectly, through one or more additional State utilities or
electric cooperatives, provides electric service to end-
users.
``(2) The term 'load-serving entity' means a distribution
utility or an electric utility that has a service obligation.
``(3) The term `service obligation' means a requirement
applicable to, or the exercise of authority granted to, an
electric utility under Federal, State or local law or under
long-term contracts to provide electric service to end-users
or to a distribution utility.
``(4) The term `State utility' means a State or any
political subdivision of a State, or any agency, authority,
or instrumentality of

[[Page S10158]]

any one or more of the foregoing, or a corporation which is
wholly owned, directly or indirectly, by any one or more of
the foregoing, competent to carry on the business of
developing, transmitting, utilizing or distributing power.
``(5) A transmitting utility that is a water district or
water agency to which section 201(f) applies and that has a
right under state law to provide water shall be treated as a
load-serving entity. Such water district or water agency's
right to provide water should be treated as a service
obligation.
``(f) Nothing in the section shall apply to an entity
located in an area referred to in section 212(k)(2)(A).
``(g) This section does not authorize the Commission to
take any action not otherwise within its jurisdiction under
other provisions of this Act.''

SEC. 1132. OPEN NON-DISCRIMINATORY ACCESS.

Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is
amended by inserting after section 211 (16 U.S.C. 824j) the
following:

``open access by unregulated transmitting utilities

``SEC. 211A. (A) SUBJECT TO SECTION 212(H), THE COMMISSION
MAY, BY RULE OR ORDER, REQUIRE AN UNREGULATED
TRANSMITTING UTILITY TO PROVIDE TRANSMISSION
SERVICES

``(1) at rates that are comparable to those that the
unregulated transmitting utility charges itself; and
``(2) on terms and conditions (not relating to rates) that
are comparable to those under which such unregulated
transmitting utility provides transmission services to itself
and that are not unduly discriminatory or preferential.
``(b) The Commission shall exempt from any rule or order
under this section any unregulated transmitting utility that
``(1) sells no more than 4,000,000 megawatt hours of
electricity per year; or
``(2) does not own or operate any transmission facilities
that are necessary for operating an interconnected
transmission system (or any portion thereof); or
``(3) meets other criteria the Commission determines to be
in the public interest.
``(c) The requirements of subsection (a) shall not apply to
facilities used in local distribution.
``(d) if an unregulated transmitting utility exempted
pursuant to subsection (b) no longer meets any of the
criteria for exemption, the exemption shall expire.
``(e) The rate changing procedures applicable to public
utilities under subsections (c) and (d) of section 205 are
applicable to unregulated transmitting utilities for purposes
of this section.
``(f) In exercising its authority under paragraph (1) of
subsection (a), the Commission may remand transmission rates
to an unregulated transmitting utility for review and
revision where necessary to meet the requirements of
subsection (a).
``(g) The provision of transmission services under
subsection (a) does not preclude a request for transmission
services under section 211.
``(h) The Commission may not require a State or
municipality to take action under this section that
constitutes a private business use for purposes of section
141 of the Internal Revenue Code of 1986 (26 U.S.C. 141).
``(i) Nothing in this Act authorizes the Commission to
require an unregulated transmitting utility to transfer
control or operational control of its transmitting facilities
to an RTO or any other Commission approved organization
designated to provide non-discriminatory transmission
access.''.

SEC. 1133. TRANSMISSION INFRASTRUCTURE INVESTMENT.

Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is
amended by adding at the end the following:

``participant funding

``SEC. 217. (A) IN GENERAL.--NOT LATER THAN 180 DAYS AFTER
THE DATE OF ENACTMENT OF THIS SECTION, THE
COMMISSION SHALL PROMULGATE FINAL REGULATIONS
ESTABLISHING TRANSMISSION PRICING POLICIES
APPLICABLE TO ALL PUBLIC UTILITIES ASSOCIATED
WITH THE CONSTRUCTION OF NEW INTERSTATE
TRANSMISSION FACILITIES AND EXPANSION,
MODIFICATION, OR UPGRADING OF EXISTING
INTERSTATE TRANSMISSION FACILITIES
(``TRANSMISSION EXPANSION'').

``(b) Contents.--Consistent with section 205, the
regulation under subsection (a) shall, to the maximum extent
practicable--
``(1) promote economic capital investment in efficient
transmission systems;
``(2) encourage the construction and use of transmission
facilities and generation facilities  that reduce risk and
provide just and reasonable rates to consumers;
``(3) encourage improved operation of generation and
transmission facilities and deployment of transmission
technologies designed to increase capacity and efficiency of
existing networks; and
``(4) ensure that the costs of any transmission expansion
are assigned or allocated in a fair manner, meaning that
those who benefit from the transmission expansion pay an
appropriate share of the associated costs.
``(c) Plan.
``(1) In general.--An RTO or ISO may submit to the
Commission a plan containing the criteria for determining the
person or persons who will be required to pay for any
transmission expansion. Nothing herein diminishes or alters
the rights of individual members of an RTO or ISO under the
Act.
``(2) Requirements.--The Commission shall approve a plan
submitted under paragraph (1) if the Commission determines
that the plan--
``(A) meets all the requirements of this Act and is
consistent with the regulation promulgated under subsection
(a);
``(B) specifies the method or methods by which costs may be
allocated or assigned. Such methods may include, but are not
limited to:
``(i) directly assigned;
``(ii) participant funded; or
``(iii) rolled into regional or sub-regional rates; and
``(C) ensures that the party or parties who pay for
facilities necessary for the transmission expansion receive
appropriate compensation for those facilities, considering
among other factors the economic benefits associated with the
transmission expansion.
``(3) Deference.--In exercising its jurisdiction under this
section, the Commission shall give substantial deference to
the comments filed with the Commission by State regulatory
authorities, other appropriate State officials, and
stakeholders of the RTO or ISO.
``(4) Effect of section.--Nothing in this section shall
affect an RTO or ISO's allocation methodology for
transmission expansion approved by the Commission prior to
the date of enactment of this section.''.

Subtitle D--Amendments to the Public Utility Regulatory Policies Act of
1978

SEC. 1141. NET METERING.

(a) Adoption of Standard.--Section 111(d) of the Public
Utility Regulatory Policies Act of 1978 (16 U.S.C. 2621(d))
is amended by adding at the end the following:
``(11) Net metering.--
``(A) Each electric utility shall make available upon
request net metering service to any electric consumer that
the electric utility serves.
``(B) For purposes of implementing this paragraph, any
reference contained in this section to the date of enactment
of the Public Utility Regulatory Policies Act of 1978 shall
be deemed to be a reference to the date of enactment of this
paragraph.
``(C) Notwithstanding subsections (b) and (c) of section
112, each State regulatory authority shall consider and make
a determination concerning whether it is appropriate to
implement the standard set out in subparagraph (A) not later
than 1 year after the date of enactment of this paragraph.''.
(b) Special Rules for Net Metering.--Section 115 of the
Public Utility Regulatory Policies Act of 1978 (16 U.S.C.
2625) is further amended by adding at the end the following:
``(i) Net Metering.--In undertaking the consideration and
making the determination under section 111 with respect to
the standard concerning net metering established by section
III (d)(11), the term net metering service shall mean a
service provided in accordance with the following standards:
``(1) An electric utility--
``(A) shall charge the owner or operator of an on-site
generating facility rates and charges that are identical to
those that would be charged other electric consumers of the
electric utility in the same rate class; and
``(B) shall not charge the owner or operator of an on-site
generating facility any additional standby, capacity,
interconnection, or other rate or charge.
``(2) An electric utility that sells electric energy to the
owner or operator of an on-site generating facility shall
measure the quantity of electric energy produced by the on-
site facility and the quantity of electric energy consumed by
the owner or operator of an on-site generating facility
during a billing period in accordance with reasonable
metering practices.
``(3) If the quantity of electric energy sold by the
electric utility to an on-site generating facility exceeds
the quantity of electric energy supplied by the on-site
generating facility to the electric utility during the
billing period, the electric utility may bill the owner or
operator for the net quantity of electric energy sold, in
accordance with reasonable metering practices.
``(4) If the quantity of electric energy supplied by the
on-site generating facility to the electric utility exceeds
the quantity of electric energy sold by the electric utility
to the on-site generating facility during the billing
period--
``(A) the electric utility may bill the owner or operator
of the on-site generating facility for the appropriate
charges for the billing period in accordance with paragraph
(2); and
``(B) the owner or operator of the on-site generating
facility shall be credited for the excess kilowatt-hours
generated during the billing period, with the kilowatt-hour
credit appearing on the bill for the following billing
period.
``(5) An eligible on-site generating facility and net
metering system used by an electric consumer shall meet all
applicable safety, performance, reliability, and
interconnection standards established by the National
Electrical Code, the Institute of Electrical and Electronics
Engineers, and Underwriters Laboratories.
``(6) The Commission, after consultation with State
regulatory authorities and unregulated electric utilities and
after notice and opportunity for comment, may adopt, by rule,
additional control and testing requirements for on-site
generating facilities and net metering systems that the
Commission determines are necessary to protect public safety
and system reliability.
``(7) For purposes of this subsection--
``(A) The term `eligible on-site generating facility' means
a facility on the site of a residential electric consumer
with a maximum generating capacity of 10 kilowatts or less

[[Page S10159]]

that is fueled by solar energy, wind energy, or fuel cells;
or a facility on the site of a commercial electric consumer
with a maximum generating capacity of 500 kilowatts or less
that is fueled solely by a renewable energy resource,
landfill gas, or a high efficiency system.
``(B) The term `renewable energy resource' means solar,
wind, biomass, or geothermal energy.
``(C) The term `high efficiency system' means fuel cells or
combined heat and power.
``(D) The term `net metering service' means service to an
electric consumer under which electric energy generated by
that electric consumer from an eligible on-site generating
facility and delivered to the local distribution facilities
may be used to offset electric energy provided by the
electric utility to the electric consumer during the
applicable billing period.''.

SEC. 1142. SMART METERING.

(a) In General.--Section 111(d) of the Public Utilities
Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)) is
amended by adding at the end the following:
``(12) Time-based metering and communications.--
``(A) Each electric utility shall offer each of its
customer classes, and provide individual customers upon
customer request, a time-based rate schedule under which the
rate charged by the electric utility varies during different
time periods and reflects the variance in the costs of
generating and purchasing electricity at the wholesale level.
The time-based rate schedule shall enable the electric
consumer to manage energy use and cost through advanced
metering and communications technology.
``(B) The types of time-based rate schedules that may be
offered under the schedule referred to in subparagraph (A)
include, among others--
``(i) time-of-use pricing whereby electricity prices are
set for a specific time period on an advance or forward
basis, typically not changing more often than twice a year.
Prices paid for energy consumed during these periods shall be
pre-established and known to consumers in advance of such
consumption, allowing them to vary their demand and usage in
response to such prices and manage their energy costs by
shifting usage to a lower cost period or reducing their
consumption overall;
``(ii) critical peak pricing whereby time-of-use prices are
in effect except for certain peak days, when prices may
reflect the costs of generating and purchasing electricity at
the wholesale level and when consumers may receive additional
discounts for reducing peak period energy consumption; and
``(iii) real-time pricing whereby electricity prices are
set for a specific time period on an advanced or forward
basis and may change as often as hourly.
``(C) Each electric utility subject to subparagraph (A)
shall provide each customer requesting a time-based rate with
a time-based meter capable of enabling the utility and
customer to offer and receive such rate, respectively.
``(D) For purposes of implementing this paragraph, any
reference contained in this section to the date of enactment
of the Public Utility Regulatory Policies Act of 1978 shall
be deemed to be a reference to the date of enactment of this
paragraph.
``(E) In a State that permits third-party marketers to sell
electric energy to retail electric consumers, such consumers
shall be entitled to receive that same time-based metering
and communications device and service as a retail electric
consumer of the electric utility.
``(F) Notwithstanding subsections (b) and (c) of section
112, each State regulatory authority shall, not later than 12
months after the date of enactment of this paragraph conduct
an investigation in accordance with section 115(I) and issue
a decision whether it is appropriate to implement the
standards set out in subparagraphs (A) and (C).''.
(b) State Investigation of Demand Response and Time-Based
Metering.--Section 115 of the Public Utilities Regulatory
Policies Act of 1978 (16 U.S.C. 2625) is amended by adding at
the end the following:
``(j) Time-Based Metering and Communications.--Each State
regulatory authority shall conduct an investigation and issue
a decision whether or not it is appropriate for electric
utilities to provide and install time-based meters and
communications devices for each of their customers which
enable such customers to participate in time-based pricing
rate schedules and other demand response programs.''.
(c) Federal Assistance on Demand Response.--Section 132(a)
of the Public Utility Regulatory Policies Act of 1978 (16
U.S.C. 2642(a)) is amended by striking ``and'' at the end of
paragraph (3), striking the period at the end of paragraph
(4) and inserting ``; and'', and by adding the following at
the end thereof:
``(5) technologies, techniques, and rate-making methods
related to advanced metering and communications and the use
of these technologies, techniques and methods in demand
response programs.''.
(d) Federal Guidance.--Section 132 of the Public Utility
Regulatory Policies Act of 1978 (16 U.S.C. 2643) is amended
by adding the following at the end thereof:
``(d) Demand Response.--The Secretary shall be responsible
for--
``(1) educating consumers on the availability, advantages,
and benefits of advanced metering and communications
technologies, including the funding of demonstration or pilot
projects;
``(2) working with States, utilities, other energy
providers and advanced metering and communications experts to
identify and address barriers to the adoption of demand
response programs; and
``(3) not later than 180 days after the date of enactment
of the Energy Policy Act of 2003, providing the Congress with
a report that identifies and quantifies the national benefits
of demand response and makes a recommendation on achieving
specific levels of such benefits by January 1, 2005.
``(e) Demand Response and Regional Coordination.--
``(1) It is the policy of the United States to encourage
States to coordinate, on a regional basis, State energy
policies to provide reliable and affordable demand response
services to the public.
``(2) The Secretary of Energy shall provide technical
assistance to States and regional organizations formed by two
or more States to assist them in--
``(A) identifying the areas with the greatest demand
response potential;
``(B) identifying and resolving problems in transmission
and distribution networks, including through the use of
demand response; and
``(C) developing plans and programs to use demand response
to respond to peak demand or emergency needs.
``(3) Not later than 1 year after the date of enactment of
the Energy Policy Act of 2003, the Commission shall prepare
and publish an annual report, by appropriate region, that
assesses demand response resources, including those available
from all consumer classes, and which identifies and reviews--
``(A) saturation and penetration rate of advanced meters
and communications technologies, devices and systems;
``(B) existing demand response programs and time-based rate
programs;
``(C) the annual resource contribution of demand resources;
``(D) the potential for demand response as a quantifiable,
reliable resource for regional planning purposes; and
``(E) steps taken to ensure that, in regional transmission
planning and operations, demand resources are provided
equitable treatment as a quantifiable, reliable resource
relative to the resource obligations of any load-serving
entity, transmission provider, or transmitting party.
``(f) Federal Encouragement of Demand Response Devices.--It
is the policy of the United States that time-based pricing
and other forms of demand response, whereby electricity
customers are provided with electricity price signals and the
ability to benefit by responding to them, shall be
encouraged, and the deployment of such technology and devices
that enable electricity customers to participate in such
pricing and demand response systems shall be facilitated.''.

SEC. 1143. ADOPTION OF ADDITIONAL STANDARDS.

(a) Adoption of Standards.--Section 113(b) of the Public
Utility Regulatory Policies Act of 1978 (16 U.S.C. 2623(b))
is amended by adding at the end the following:
``(6) Each electric utility shall provide distributed
generation, combined heat and power, and district heating and
cooling systems competitive access to the local distribution
grid and competitive pricing of service, and shall use
simplified standard contracts for the interconnection of
generating facilities that have a power production capacity
of 250 kilowatts or less.
``(7) No electric utility may refuse to interconnect a
generating facility with the distribution facilities of the
electric utility if the owner or operator of the generating
facility complies with technical standards adopted by the
State regulatory authority and agrees to pay the costs
established by such State regulatory authority.
``(8) Each electric utility shall develop a plan to
minimize dependence on one fuel source and to ensure that the
electric energy it sells to consumers is generated using a
diverse range of fuels and technologies, including renewable
technologies.
``(9) Each electric utility shall develop and implement a
10-year plan to increase the efficiency of its fossil fuel
generation.''.
(b) Time for Adopting Standards.--Section 113 of the Public
Utility Regulatory Policies Act of 1978 (16 U.S.C. 2623) is
further amended by adding at the end the following:
``(d) Special Rule.--For purposes of implementing
paragraphs (6), (7), (8), and (9) of subsection (b), any
reference contained in this section to the date of enactment
of the Public Utility Regulatory Policies Act of 1978 shall
be deemed to be a reference to the date of enactment of this
subsection.''.

SEC. 1144. TECHNICAL ASSISTANCE.

Section 132(c) of the Public Utility Regulatory Policies
Act of 1978 (16 U.S.C. 2642(c)) is amended to read as
follows:
``(c) Technical Assistance for Certain Responsibilities.--
The Secretary may provide such technical assistance as
determined appropriate to assist State regulatory authorities
and electric utilities in carrying out their responsibilities
under section 111(d)(11) and paragraphs (6), (7), (8), and
(9) of section 113(b).''.

SEC. 1145. COGENERATION AND SMALL POWER PRODUCTION PURCHASE
AND SALE REQUIREMENTS.

(a) Termination of Mandatory Purchase and Sale
Requirements.--Section 210 of the Public Utility Regulatory
Policies Act of 1978 (16 U.S.C. 824a-3) is amended by adding
at the end the following:
``(m) Termination of Mandatory Purchase and Sale
Requirements.--

[[Page S10160]]

``(1) Obligation to Purchase.--After the date of enactment
of this subsection, no electric utility shall be required to
enter into a new contract or obligation to purchase electric
energy from a qualifying cogeneration facility or a
qualifying small power production facility under this section
if the Commission finds that the qualifying cogeneration
facility or qualifying small power production facility has
nondiscriminatory access to--
``(A)(i) independently administered, auction-based day
ahead and real time wholesale markets for the sale of
electric energy; and
(ii) wholesale markets for longterm sales of capacity and
electric energy; or
``(B)(i) transmission and interconnection services that are
provided by a Commission-approved regional transmission
entity and administered pursuant to an open access
transmission tariff that affords nondiscriminatory treatment
to all customers; and
``(ii) competitive wholesale markets that provide a
meaningful opportunity to sell capacity, including long-term
and short-term sales, and electric energy, including long-
term, short-term and real-time sales, to buyers other than
the utility to which the qualifying facility is
interconnected. In determining whether a meaningful
opportunity to sell exists, the Commission shall consider,
among other factors, evidence of transactions within the
relevant market; or
``(C) wholesale markets for the sale of capacity and
electric energy that are, at a minimum, of comparable
competitive quality as markets described in subparagraphs (A)
and (B).
``(2) Revised purchase and sale obligation for new
facilities.--
``(A) After the date of enactment of this subsection, no
electric utility shall be required pursuant to this section
to enter into a new contract or obligation to purchase from
or sell electric energy to a facility that is not an existing
qualifying cogeneration facility unless the facility meets
the criteria for qualifying cogeneration facilities
established by the Commission pursuant to the rulemaking
required by subsection (n).
``(B) For the purposes of this paragraph, the term
`existing qualifying cogeneration facility' means a facility
that--
``(i) was a qualifying cogeneration facility on the date of
enactment of subsection (m); or
``(ii) had filed with the Commission a notice of self-
certification, self-recertification or an application for
Commission certification under 18 C.F.R. 292.207 prior to the
date on which the Commission issues the final rule required
by subsection (n).
``(3) Commission review.--Any electric utility may file an
application with the Commission for relief from the mandatory
purchase obligation pursuant to this subsection on a service
territory-wide basis. Such application shall set forth the
factual basis upon which relief is requested and describe why
the conditions set forth in subparagraphs (A), (B) or (C) of
paragraph (1) of this subsection have been met. After notice,
including sufficient notice to potentially affected
qualifying cogeneration facilities and qualifying small power
production facilities, and an opportunity for comment, the
Commission shall make a final determination within 90 days of
such application regarding whether the conditions set forth
in subparagraphs (A), (B) or (C) of paragraph (1) have been
met.
``(4) Reinstatement of obligation to purchase.--At any time
after the Commission makes a finding under paragraph (3)
relieving an electric utility of its obligation to purchase
electric energy, a qualifying cogeneration facility, a
qualifying small power production facility, a State agency,
or any other affected person may apply to the Commission for
an order reinstating the electric utility's obligation to
purchase electric energy under this section. Such application
shall set forth the factual basis upon which the application
is based and describe why the conditions set forth in
subparagraphs (A), (B) or (C) of paragraph (1) of this
subsection are no longer met. After notice, including
sufficient notice to potentially affected utilities, and
opportunity for comment, the Commission shall issue an order
within 90 days of such application reinstating the electric
utility's obligation to purchase electric energy under this
section if the Commission finds that the conditions set forth
in subparagraphs (A), (B) or (C) of paragraph (1) which
relieved the obligation to purchase, are no longer met.
``(5) Obligation to sell.--After the date of enactment of
this subsection, no electric utility shall be required to
enter into a new contract or obligation to sell electric
energy to a qualifying cogeneration facility or a qualifying
small power production facility under this section if the
Commission finds that--
``(A) competing retail electric suppliers are willing and
able to sell and deliver electric energy to the qualifying
cogeneration facility or qualifying small power production
facility; and
``(B) the electric utility is not required by State law to
sell electric energy in its service territory.
``(6) No effect on existing rights and remedies.--Nothing
in this subsection affects the rights or remedies of any
party under any contract or obligation, in effect or pending
approval before the appropriate State regulatory authority or
non-regulated electric utility on the date of enactment of
this subsection, to purchase electric energy or capacity from
or to sell electric energy or capacity to a qualifying
cogeneration facility or qualifying small power production
facility under this Act (including the right to recover costs
of purchasing electric energy or capacity).
``(7) Recovery of Costs.--
``(A) The Commission shall promulgate and enforce such
regulations as are necessary to ensure that an electric
utility that purchases electric energy or capacity from a
qualifying cogeneration facility or qualifying small power
production facility in accordance with any legally
enforceable obligation entered into or imposed under this
section recovers all prudently incurred costs associated with
the purchase.
``(B) A regulation under subparagraph (A) shall be
enforceable in accordance with the provisions of law
applicable to enforcement of regulations under the Federal
Power Act (16 U.S.C. 791 a et seq.).
``(n) Rulemaking for New Qualifying Facilities.--
``(1)(A) Not later than 180 days after the date of
enactment of this section, the Commission shall issue a rule
revising the criteria in 18 C.F.R. 292.205 for new qualifying
cogeneration facilities seeking to sell electric energy
pursuant to section 210 of this Act to ensure
``(i) that the thermal energy output of a new qualifying
cogeneration facility is used in a productive and beneficial
manner;
``(ii) the electrical, thermal, and chemical output of the
cogeneration facility is used fundamentally for industrial,
commercial, or institutional purposes and is not intended
fundamentally for sale to an electric utility, taking into
account technological, efficiency, economic, and variable
thermal energy requirements, as well as state laws applicable
to sales of electric energy from a qualifying facility to its
host facility; and
``(iii) continuing progress in the development of efficient
electric energy generating technology.
``(B) The rule promulgated pursuant to section (n)(1)(A)
shall be applicable only to facilities that seek to sell
electric energy pursuant to section 210 of this Act. For all
other purposes, except as specifically provided in section
(m)(2)(A), qualifying facility status shall be determined in
accordance with the rules and regulations of this Act.
``(2) Rules for Existing Facilities.--Notwithstanding rule
revisions under paragraph (1), the Commission's criteria for
qualifying cogeneration facilities in effect prior to the
date on which the Commission issues the final rule required
by paragraph (1) shall continue to apply to any cogeneration
facility that--
``(A) was a qualifying cogeneration facility on the date of
enactment of subsection (m), or
``(B) had filed with the Commission a notice of self-
certification, self-recertification or an application for
Commission certification under 18 C.F.R. 292.207 prior to the
date on which the Commission issues the final rule required
by paragraph (1).''.
(b) Elimination of Ownership Limitations.--
(1) Section 3(17)(C) of the Federal Power Act (16 U.S.C.
796(17)(C)) is amended to read as follows:
``(C) `qualifying small power production facility' means a
small power production facility that the Commission
determines, by rule, meets such requirements (including
requirements respecting fuel use, fuel efficiency, and
reliability) as the Commission may, by rule, prescribe.''.
(2) Section 3(18)(B) of the Federal Power Act (16 U.S.C.
796(18)(B)) is amended to read as follows:
``(B) `qualifying cogeneration facility' means a
cogeneration facility that the Commission determines, by
rule, meets such requirements (including requirements
respecting minimum size, fuel use, and fuel efficiency) as
the Commission may, by rule, prescribe.''.

Subtitle E--Provisions Regarding the Public Utility Holding Company Act
of 1935

This subtitle may be cited as the ``Public Utility Holding
Company Act of 2003.''

SEC. 1151. DEFINITIONS.

For the purposes of this subtitle:
(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 (15 U.S.C. 79z-5, 79z-5b), as those sections
existed on the day before the effective date of this
subtitle.
(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)

[[Page S10161]]

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 subtitle
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 in interstate commerce, 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.
(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 in interstate commerce or sales of electric energy at
wholesale in interstate commerce.
(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 subtitle upon subsidiary
companies of holding companies.
(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. 1152. REPEAL OF THE PUBLIC UTILITY HOLDING COMPANY ACT
OF 1935.

The Public Utility Holding Company Act of 1935 (15 U.S.C.
79a et seq.) is repealed, effective 12 months after the date
of enactment of this Act.

SEC. 1153. 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, memoranda, and other
records as the Commission determines are 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.
(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
determines are 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 determines are 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. 1154. 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, and 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, a holding
company or any associate company or affiliate thereof,
wherever located, shall produce for inspection 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 determines 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) Effect on State Law.--Nothing in this section shall
preempt applicable State law concerning the provision of
books, accounts, memoranda, or other records, or in any way
limit the rights of any State to obtain books, accounts,
memoranda, or other records, under Federal law, contract, or
otherwise.
(c) 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. 1155. EXEMPTION AUTHORITY.

(a) Rulemaking.--Not later than 90 days after the date of
enactment of this title, the Commission shall promulgate a
final rule to exempt from the requirements of section 1153
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 (16 U.S.C. 2601 et seq.);
(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, accounts,
memoranda, and other records of any person are not relevant
to the jurisdictional rates of a public-utility company 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 company, the Commission shall
exempt such person or transaction from the requirements of
section 1153.

SEC. 1156. AFFILIATE TRANSACTIONS.

Nothing in this subtitle 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, public utility, or natural
gas company from an associate company.

SEC. 1157. APPLICABILITY.

No provision of this subtitle 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 such officer, agent, or employee's official duty.

SEC. 1158. EFFECT ON OTHER REGULATIONS.

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

SEC. 1159. 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.
825e-825p) to enforce the provisions of this subtitle.

SEC. 1160. SAVINGS PROVISIONS.

(a) In General.--Nothing in this subtitle 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 date of enactment of this Act, if that
person continues to comply with the terms of any such
authorization, whether by rule or by order.
(b) Effect on Other Commission Authority.--Nothing in this
subtitle 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. 1161. IMPLEMENTATION.

Not later than 12 months after the date of enactment of
this title, the Commission shall--
(1) promulgate such regulations as may be necessary or
appropriate to implement this subtitle; and
(2) submit to Congress detailed recommendations on
technical and conforming amendments to Federal law necessary
to carry out this subtitle and the amendments made by this
subtitle.

SEC. 1162. TRANSFER OF RESOURCES.

All books and records that relate primarily to the
functions transferred to the Commission under this subtitle
shall be transferred

[[Page S10162]]

from the Securities and Exchange Commission to the
Commission.

SEC. 1163. EFFECTIVE DATE.

This subtitle shall take effect 12 months after the date of
enactment of this title.

SEC. 1164. CONFORMING AMENDMENT TO THE FEDERAL POWER ACT.

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

Subtitle F--Market Transparency, Anti-Manipulation and Enforcement

SEC. 1171. MARKET TRANSPARENCY RULES.

Part 11 of the Federal Power Act (16 U.S.C. 824 et seq.) is
amended by adding at the end the following:

``MARKET TRANSPARENCY RULES

``Sec. 218. (a) Not later than 180 days after the date of
enactment of this section, the Commission shall issue rules
establishing an electronic information system to provide the
Commission and the public with access to such information as
is necessary or appropriate to facilitate price transparency
and participation in markets subject to the Commission's
jurisdiction. Such systems shall provide information about
the availability and market price of wholesale electric
energy and transmission services to the Commission, State
commissions, buyers and sellers of wholesale electric energy,
users of transmission services, and the public. The
Commission shall have authority to obtain such information
from any electric and transmitting utility, including any
entity described in section 201(f).
``(b) The Commission shall exempt from disclosure
information it determines would, if disclosed, be detrimental
to the operation of an effective market or jeopardize system
security. This section shall not apply to an entity described
in section 212(k)(2)(B) with respect to transactions for the
purchase or sale of wholesale electric energy and
transmission services within the area described in section
212(k)(2)(A). In determining the information to be made
available under this section and time to make such
information available, the Commission shall seek to ensure
that consumers and competitive markets are protected from the
adverse effects of potential collusion or other anti-
competitive behaviors that can be facilitated by untimely
public disclosure of transaction-specific information.
``(c) This section shall not affect the exclusive
jurisdiction of the Commodity Futures Trading Commission with
respect to accounts, agreements, contracts, or transactions
in commodities under the Commodity Exchange Act (7 U.S.C. 1
et seq.). Any request for information to a designated
contract market, registered derivatives transaction execution
facility, board of trade, exchange, or market involving
accounts, agreements, contracts, or transactions in
commodities (including natural gas, electricity and other
energy commodities) within the exclusive jurisdiction of the
Commodity Futures Trading Commission shall be directed to the
Commodity Futures Trading Commission.''.

SEC. 1172. MARKET MANIPULATION.

Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is
amended by adding at the end the following:

``PROHIBITION ON FILING FALSE INFORMATION

``Sec. 219. It shall be a violation of this Act for any
person or any other entity (including entities described in
section 201(f) knowingly and willfully to report any
information relating to the price of electricity sold at
wholesale or availability of transmission capacity, which
information the person or any other entity knew to be false
at the time of the reporting, to any governmental entity with
the intent to manipulate the data being compiled by such
governmental entity.

``PROHIBITION ON ROUND TRIP TRADING

``Sec. 220. (a) It shall be a violation of this Act for any
person or any other entity (including entities described in
section 201(f) knowingly and willfully to enter into any
contract or other arrangement to execute a `round trip trade'
for the purchase or sale of electric energy at wholesale.
``(b) For the purposes of this section, the term `round
trip trade' means a transaction, or combination of
transactions, in which a person or any other entity--
``(1) enters into a contract or other arrangement to
purchase from, or sell to, any other person or other entity
electric energy at wholesale;
``(2) simultaneously with entering into the contract or
arrangement described in paragraph (1), arranges a
financially offsetting trade with such other person or entity
for the same such electric energy, at the same location,
price, quantity and terms so that, collectively, the purchase
and sale transactions in themselves result in no financial
gain or loss; and
``(3) enters into the contract or arrangement with the
intent to deceptively affect reported revenues, trading
volumes, or prices.''.

SEC. 1173. MARKET TRANSPARENCY.

(a) In General.--It shall be a violation of the Commodity
Exchange Act (7 U.S.C. 1 et seq.) for a person or entity to
knowingly report or manipulate any information relating to
the price, quantity, sale or purchase, and counter party of
any agreement, contract or transaction related to natural gas
or electricity in interstate commerce, which the person or
entity knew to be false at the time of reporting to any
governmental entity or any person or entity engaged in the
business of collecting and disseminating information.
(b) Clarification of Existing CFTC Authority.--Section 9 of
the Commodity Exchange Act (7 U.S.C. 13) is amended by
designating subsection (f) as subsection (e), and adding:
``(f) Commission Administrative and Civil Authority.--The
Commission may bring administrative or civil action as
provided in this Act against any person for a violation of
any provision of this section including, but not limited to,
false reporting under subsection (a)(2). This applies to any
action pending on or commenced after the date of enactment of
the Energy Policy Act of 2003.''.
(c) Fraud Authority.--Section 4b of the Commodity Exchange
Act (7 U.S.C. 6b) is amended by striking subsection (a) and
inserting the following:
``(a) Prohibition.--It shall be unlawful for any person,
directly or indirectly in or in connection with any account,
or any offer to enter into, the entry into, or the
confirmation of the execution of, any agreement contract, or
transaction subject to regulation or this Act--
``(1) to cheat or defraud or attempt to cheat or defraud
any person;
``(2) to willfully make or cause to be made to any person
any false report or statement, or to willfully enter or cause
to be entered for any person any false record;
``(3) to willfully deceive or attempt to deceive any person
by any means whatsoever; or
``(4) except as permitted in written rules of a designated
contract market or registered derivative transaction
execution facility which the agreement, contract, or
transaction is traded and executed--
``(A) to bucket an order;
``(B) to fill an order by offsetting against 1 or more
orders of another person; or
``(C) willfully and knowingly, for or on behalf of any
other person and without the prior consent of such person, to
become--
``(i) the buyer with respect to any selling order of the
person; or
``(ii) the seller with respect to any buying order of the
person.''.
(d) Technical Corrections.--Section 8(e) of the Commodity
Exchange Act (7 U.S.C. 12(e)) is amended by adding at the end
the following:
``Any request by any Federal, State or foreign government
department, agency, or political subdivision, or foreign
futures authority, for information to a designated contract
market, registered derivatives transaction execution
facility, board of trade, exchange, or market involving
accounts, agreements, contracts, or transactions in
commodities (including natural gas and electricity) within
the exclusive jurisdiction of the Commission shall be
directed to the Commission.''.
(e) Authorization.--There are authorized to be appropriated
to the Commission for fiscal year 2004 such sums as may be
necessary to carry out the additional responsibilities and
obligations of the Commission under this section.

SEC. 1174. ENFORCEMENT.

(a) Complaints.--Section 306 of the Federal Power Act (16
U.S.C. 825e) is amended by--
(1) inserting ``electric utility,'' after ``Any person,'';
and
(2) inserting ``, transmitting utility,'' after
``licensee'' each place it appears.
(b) Investigations.--Section 307(a) of the Federal Power
Act (16 U.S.C. 825f(a)) is amended by inserting ``or
transmitting utility'' after ``any person'' in the first
sentence.
(c) Review of Commission Orders.--Section 313(a) of the
Federal Power Act (16 U.S.C. 8251) is amended by inserting
``electric utility,'' after ``Any person,'' in the first
sentence.
(d) Criminal Penalties.--Section 316 of the Federal Power
Act (16 U.S.C. 825o) is amended--
(1) in subsection (a), by striking ``$5,000'' and inserting
``$1,000,000'', and by striking ``two years'' and inserting
``five years'';
(2) in subsection (b), by striking ``$500'' and inserting
``$25,000''; and
(3) by striking subsection (c).
(e) Civil Penalties.--Section 316A of the Federal Power Act
(16 U.S.C. 825o-1) is amended--
(1) in subsections (a) and (b), by striking ``section 211,
212, 213, or 214'' each place it appears and inserting ``Part
II''; and
(2) in subsection (b), by striking ``$10,000'' and
inserting ``$1,000,000''.
(f) General Penalties.--Section 21 of the Natural Gas Act
(15 U.S.C. 717t) is amended--
(1) in subsection (a), by striking ``$5,000'' and inserting
``$1,000,000'', and by striking ``two years'' and inserting
``five years''; and
(2) in subsection (b), by striking ``$500'' and inserting
``$50,000''.

SEC. 1175. REFUND EFFECTIVE DATE.

Section 206(b) of the Federal Power Act (16 U.S.C. 824e(b))
is amended by--
(1) striking ``the date 60-days after the filing of such
complaint nor later than 5 months after the expiration of
such 60-day period'' in the second sentence and inserting
``the date of the filing of such complaint nor later than 5
months after the filing of such complaint'';
(2) striking ``60 days after'' in the third sentence and
inserting ``of'';
(3) striking ``expiration of such 60-day period'' in the
third sentence and inserting ``publication date''; and
(4) striking the fifth sentence and inserting the
following: ``If no final decision is rendered by the
conclusion of the 180-day period commencing upon initiation
of a proceeding

[[Page S10163]]

pursuant to this section, the Commission shall state the
reasons why it has failed to do so and shall state its best
estimate as to when it reasonably expects to make such
decision.''.

Subtitle G--Consumer Protections

SEC. 1181. ELECTRIC UTILITY MERGERS.

(a) Section 203(a) of the Federal Power Act (16 U.S.C.
824(b)) is amended to read as follows:
``(a)(1) No public utility shall, without first having
secured an order of the Commission authorizing it to do so--
``(A) sell, lease, or otherwise dispose of the whole of its
facilities subject to the jurisdiction of the Commission, or
any part thereof of a value in excess of $10,000,000,
``(B) merge or consolidate, directly or indirectly, such
facilities or any part thereof with those of any other
persons, by any means whatsoever, or
``(C) purchase, acquire, or take any security of any other
public utility of a value in excess of $10,000,000.
``(2) No holding company in a holding company system that
includes an electric utility company shall purchase, acquire,
or take any security of, or, by any means whatsoever,
directly or indirectly, merge or consolidate with an electric
utility company, a gas utility company, or a holding company
in a holding company system that includes a public-utility
company of value in excess of $10,000,000 without first
having secured an order of the Commission authorizing it to
do so.
``(3) Upon application for such approval the Commission
shall give reasonable notice in writing to the Governor and
State commission of each of the States in which the physical
property affected, or any part thereof, is situated, and to
such other persons as it may deem advisable.
``(4) After notice and opportunity for hearing, the
Commission shall approve the proposed disposition,
consolidation, acquisition, or change in control, if it finds
that the proposed transaction will be consistent with the
public interest. In evaluating whether a transaction will be
consistent with the public interest, the Commission shall
consider whether the proposed transaction--
``(A) will adequately protect consumer interests,
``(B) will be consistent with competitive wholesale
markets,
``(C) will not impair the ability of the Commission or the
ability of a State commission having jurisdiction following
the completion of the transaction over any public utility
that is a party to the transaction or an associate company of
any party to the transaction to protect the interests of
consumers or the public,
``(D) will not impair the financial integrity of any public
utility that is a party to the transaction or an associate
company of any party to the transaction, and
``(E) satisfies such other criteria as the Commission
considers consistent with the public interest.
``(5) The Commission shall, by rule, adopt procedures for
the expeditious consideration of applications for the
approval of dispositions, consolidations, or acquisitions
under this section. Such rules shall identify classes of
transactions, or specify criteria for transactions, that
normally meet the standards established in paragraph (4). The
Commission shall provide expedited review for such
transactions. The Commission shall grant or deny any other
application for approval of a transaction within 90 days
after the conclusion of the hearing or opportunity to comment
under paragraph (4). If the Commission does not act within 90
days, such application shall be deemed granted unless the
Commission finds, based on good cause, that further
consideration is required to determine whether the proposed
transaction meets the standards of paragraph (4) and issues
one or more orders tolling the time for acting on the
application.
``(6) For purposes of this subsection, the terms
``associate company'', ``electric utility company'', ``gas
utility company'', ``holding company'', ``holding company
system'', and ``public-utility company'' have the meaning
given those terns in the Public Utility Holding Company Act
of 2003.''.
(b) Effective Date.--The amendments made by this section
shall take effect 12 months after the date of enactment of
this section.

SEC. 1182. MARKET-BASED POLICY.

Within six months of the enactment of this section, the
Commission shall issue a policy statement establishing the
conditions under which public utilities may charge market-
based rates for the sale of electric energy subject to the
jurisdiction of the Commission. Such policy statement should
consider consumer protections and market power, as well as
any other factors the Commission may deem necessary, to
ensure that such rates are just and reasonable.

SEC. 1183. INTER-AGENCY REVIEW OF COMPETITION IN THE
WHOLESALE AND RETAIL MARKETS FOR ELECTRIC
ENERGY.

(a) Task Force.--There is established an inter-agency task
force, to be known as the ``Electric Energy Market
Competition Task Force'' (referred to in this section as the
``task force''), which shall consist of--
(1) one member each from--
(A) the Department of Justice, to be appointed by the
Attorney General of the United States;
(B) the Federal Energy Regulatory Commission, to be
appointed by the chairman of that Commission;
(C) the Federal Trade Commission, to be appointed by the
chairman of that Commission;
(D) the Department of Energy, to be appointed by the
Secretary of Energy; and
(E) the Rural Utilities Service, to be appointed by the
Secretary of Agriculture.
(b) Study and Report.--
(1) Study.--The task force shall perform a study and
analysis of competition within the wholesale and retail
market for electric energy in the United States.
(2) Report.--
(A) Final report.--Not later than 1 year after the
effective date of this subtitle, the task force shall submit
a final report of its findings under paragraph (1) to the
Congress.
(B) Public comment.--At least 60 days before submission of
a final report to the Congress under subparagraph (A), the
task force shall publish a draft report in the Federal
Register to provide for public comment.
(c) Consultation.--In performing the study required by this
section, the task force shall consult with and solicit
comments from its advisory members, the States,
representatives of the electric power industry, and the
public.

SEC. 1184. CONSUMER PRIVACY.

The Federal Trade Commission shall issue rules protecting
the privacy of electric consumers from the disclosure of
consumer information in connection with the sale or delivery
of electric energy to a retail electric consumer. If the
Federal Trade Commission determines that a State's
regulations provide equivalent or greater protection than the
provisions of this section, such State regulations shall
apply in that State in lieu of the regulations issued by the
Commission under this section.

SEC. 1185. UNFAIR TRADE PRACTICES.

(a) Slamming.--The Federal Trade Commission shall issue
rules prohibiting the change of selection of an electric
utility except with the informed consent of the electric
consumer or if determined by the appropriate State regulatory
authority to be necessary to prevent loss of service.
(b) Cramming.--The Federal Trade Commission shall issue
rules prohibiting the sale of goods and services to an
electric consumer unless expressly authorized by law or the
electric consumer.
(c) State Authority.--If the Federal Trade Commission
determines that a State's regulations provide equivalent or
greater protection than the provisions of this section, such
State regulations shall apply in that State in lieu of the
regulations issued by the Commission under this section.

SEC. 1186. DEFINITIONS.

For purposes of this subtitle--
(1) the term ``State regulatory authority'' has the meaning
given that term in section 3(21) of the Federal Power Act (16
U.S.C. 796(21)).
(2) the tern ``electric consumer'' and ``electric utility''
have the meanings given those terms in section 3 of the
Public Utility Regulatory Policies Act of 1978 (16 U.S.C.
2602).

Subtitle H--Technical Amendments

SEC. 1191. TECHNICAL AMENDMENTS.

(a) Section 211 (c) of the Federal Power Act (16 U.S.C.
824j(c)) is amended by--
(1) striking ``(2)';
(2) striking ``(A)'' and inserting ``(1)' ''
(3) striking ``(B)'' and inserting ``(2)''; and
(4) striking ``termination of modification'' and inserting
``termination or modification''.
(b) Section 211(d)(1) of the Federal Power Act (16 U.S.C.
824j(d)) is amended by striking ``electric utility'' the
second time it appears and inserting ``transmitting
utility''.
(c) Section 315 (c) of the Federal Power Act (16 U.S.C.
825n(c)) is amended by striking ``subsection'' and inserting
``section''.
______

SA 1413. Mr. BINGAMAN proposed an amendment to the bill S. 14, to
enhance the energy security of the United States, and for other
purposes; as follows:

On page 41, after line 17 strike all that follows through
p. 43, line 10, and insert the following:

SEC. ELECTRIC UTILITY MERGERS.

Section 203(a) of the Federal Power Act (16 U.S.C. 824b) is
amended to read as follows:
``(a)(1) No public utility shall, without first having
secured an order of the Commission authorizing it to do so--
``(A) sell, lease, or otherwise dispose of the whole of its
facilities subject to the jurisdiction of the Commission, or
any part thereof of a value in excess of $10,000,000,
``(B) merge or consolidate, directly or indirectly, such
facilities or any part thereof with the facilities of any
other person, by any means whatsoever,
``(C) purchase, acquire, or take any security of any other
public utility, or
``(D) purchase, lease, or otherwise acquire existing
facilities for the generation of electric energy unless such
facilities will be used exclusively for the sale of electric
energy at retail.
``(2) No holding company in holding company system that
includes a transmitting utility or an electric utility
company shall purchase, acquire, or take any security of, or,
by any means whatsoever, directly or indirectly, merge or
consolidate with a transmitting utility, an electric utility
company, a gas utility company, or a holding company in
holding company system that includes a transmitting utility,
an electric utility company, or a gas utility company,
without first having secured an order of the Commission
authorizing it to do so.

[[Page S10164]]

``(3) Upon application for such approval the Commission
shall give reasonable notice in writing to the Governor and
State commission of each of the States in which the physical
property affected, or any part thereof, is situated, and to
such other persons as it may deem advisable.
``(4) After notice and opportunity for hearing, the
Commission shall approve the proposed disposition,
consolidation, acquisition, or control, if it finds that the
proposed transaction--
``(A) will be consistent with the public interest;
``(B) will not adversely affect the interests of consumers
of electric energy of any public utility that is a party to
the transaction or is an associate company of any party to
the transaction;
``(C) will not impair the ability of the Commission or any
State commission having jurisdiction over any public utility
that is a party to the transaction or an associate company of
any party to the transaction to protect their interest of
consumers or the public; and
``(D) will not lead to cross-subsidization of associate
companies or encumber any utility assets for the benefit of
an associate company.
``(5) The Commission shall, by rule, adopt procedures for
the expeditious consideration of applications for the
approval of dispositions, consolidations, or acquisitions
under this section. Such rules shall identify classes of
transactions, or specify criteria for transactions, that
normally meet the standards established in paragraph (4), and
shall require the Commission to grant or deny an application
for approval of a transaction of such type within 90 days
after the conclusion of the hearing or opportunity to comment
under paragraph (4). If the Commission does not act within 90
days, such application shall be deemed granted unless the
Commission Finds that the proposed transaction does not meet
the standards of paragraph (4) and issues one or more orders
tolling the time for acting on the application for an
additional 90 days.
``(6) For purposes of this subsection, the terms `associate
company', `electric utility company', `gas utility company',
`holding company', and `holding company system' have the
meaning given those terms in section 1151 of the Energy
Policy Act of 1003.''.
______

SA 1414. Mr. INHOFE submitted an amendment intended to be proposed by
him to the bill S. 14, to enhance the energy security of the United
States, and for other purposes; which was ordered to lie on the table;
as follows:

Beginning on page 197, strike line 3 and all that follows
through page 202, line 9, and insert the following:

SEC. 607. INCREASED USE OF RECOVERED MINERAL COMPONENT IN
FEDERALLY FUNDED PROJECTS INVOLVING PROCUREMENT
OF CEMENT OR CONCRETE.

(a) Amendment.--Subtitle F of the Solid Waste Disposal Act
(42 U.S.C. 6961 et seq.) is amended by adding at the end the
following:

``SEC. 6005. INCREASED USE OF RECOVERED MINERAL COMPONENT IN
FEDERALLY FUNDED PROJECTS INVOLVING PROCUREMENT
OF CEMENT OR CONCRETE.

``(a) Definitions.--In this section:
``(1) Agency head.--The term `agency head' means--
``(A) the Secretary of Transportation; and
``(B) the head of each other Federal agency that, on a
regular basis, procures, or provides Federal funds to pay or
assist in paying the cost of procuring, material for cement
or concrete projects.
``(2) Cement or concrete project.--The term `cement or
concrete project' means a project for the construction or
maintenance of a highway or other transportation facility or
a Federal, State, or local government building or other
public facility that--
``(A) involves the procurement of cement or concrete; and
``(B) is carried out, in whole or in part, using Federal
funds.
``(3) Recovered mineral component.--The term `recovered
mineral component' means--
``(A) ground-granulated blast furnace slag;
``(B) coal combustion fly ash; and
``(C) any other waste material or byproduct recovered or
diverted from solid waste that the Administrator, in
consultation with an agency head, determines should be
treated as recovered mineral component under this section for
use in cement or concrete projects paid for, in whole or in
part, by the agency head.
``(b) Implementation of Requirements.--
``(1) In general.--Not later than 1 year after the date of
enactment of this section, the Administrator and each agency
head shall take such actions as are necessary to implement
fully all procurement requirements and incentives in effect
as of the date of enactment of this section (including
guidelines under section 6002) that provide for the use of
cement and concrete incorporating recovered mineral component
in cement or concrete projects.
``(2) Priority.--In carrying out paragraph (1), an agency
head shall give priority to achieving greater use of
recovered mineral component in cement or concrete projects
for which recovered mineral components historically have not
been used or have been used only minimally.
``(3) Conformance.--The Administrator and each agency head
shall carry out this subsection in accordance with section
6002.
``(c) Full Implementation Study.--
``(1) In general.--The Administrator, in cooperation with
the Secretary of Transportation and the Secretary of Energy,
shall conduct a study to determine the extent to which
current procurement requirements, when fully implemented in
accordance with subsection (b), may realize energy savings
and environmental benefits attainable with substitution of
recovered mineral component in cement used in cement or
concrete projects.
``(2) Matters to be addressed.--The study shall--
``(A) quantify the extent to which recovered mineral
components are being substituted for Portland cement,
particularly as a result of current procurement requirements,
and the energy savings and environmental benefits associated
with that substitution;
``(B) identify all barriers in procurement requirements to
greater realization of energy savings and environmental
benefits, including barriers resulting from exceptions from
current law; and
``(C)(i) identify potential mechanisms to achieve greater
substitution of recovered mineral component in types of
cement or concrete projects for which recovered mineral
components historically have not been used or have been used
only minimally;
``(ii) evaluate the feasibility of establishing guidelines
or standards for optimized substitution rates of recovered
mineral component in those cement or concrete projects; and
``(iii) identify any potential environmental or economic
effects that may result from greater substitution of
recovered mineral component in those cement or concrete
projects.
``(3) Report.--Not later than 30 months after the date of
enactment of this section, the Administrator shall submit to
the Committee on Appropriations and Committee on Environment
and Public Works of the Senate and the Committee on
Appropriations, Committee on Energy and Commerce, and
Committee on Transportation and Infrastructure of the House
of Representatives a report on the study.
``(d) Additional Procurement Requirements.--Unless the
study conducted under subsection (c) identifies any effects
or other difficulties described in subsection (c)(2)(C)(iii)
that warrant further review or delay, the Administrator and
each agency head shall, not later than 1 year after the date
of submission of the report under subsection (c)(3), take
additional actions authorized under this Act to establish
procurement requirements and incentives that provide for the
use of cement and concrete with increased substitution of
recovered mineral component in the construction and
maintenance of cement or concrete projects, so as to--
``(1) realize more fully the energy savings and
environmental benefits associated with increased
substitution; and
``(2) eliminate barriers identified under subsection (c).

``SEC. 6006. USE OF GRANULAR MINE TAILINGS.

``(a) Mine Tailings.--
``(1) In general.--Not later than 180 days after the date
of enactment of this section, the Administrator, in
consultation with the Secretary of Transportation and heads
of other Federal agencies, shall establish criteria
(including an evaluation of whether to establish a numerical
standard for concentration of lead and other hazardous
substances) for the safe and environmentally protective use
of granular mine tailings from the Tar Creek, Oklahoma Mining
District, known as `chat', for--
``(A) cement or concrete projects; and
``(B) transportation construction projects (including
transportation construction projects involving the use of
asphalt) that are carried out, in whole or in part, using
Federal funds.
``(2) Requirements.--In establishing criteria under
paragraph (1), the Administrator shall consider--
``(A) the current and previous uses of granular mine
tailings as an aggregate for asphalt; and
``(B) any environmental and public health risks and
benefits derived from the removal, transportation, and use in
transportation projects of granular mine tailings.
``(3) Public participation.--In establishing the criteria
under paragraph (1), the Administrator shall solicit and
consider comments from the public.
``(4) Applicability of criteria.--On the establishment of
the criteria under paragraph (1), any use of the granular
mine tailings described in paragraph (1) in a transportation
project that is carried out, in whole or in part, using
Federal funds, shall meet the criteria established under
paragraph (1).
``(b) Effect of Sections.--Nothing in this section or
section 6005 affects any requirement of any law (including a
regulation) in effect on the date of enactment of this
section.''.
(b) Conforming Amendment.--The table of contents of the
Solid Waste Disposal Act (42 U.S.C. prec. 6901) is amended by
adding at the end of the items relating to subtitle F the
following:

``Sec. 6005. Increased use of recovered mineral component in federally
funded projects involving procurement of cement or
concrete.
``Sec. 6006. Use of granular mine tailings.''.

[[Page S10165]]

SEC. 608. UTILITY ENERGY SERVICE CONTRACTS.

______

SA 1415. Mr. INOUYE submitted an amendment intended to be proposed by
him to the bill S. 14, to enhance the energy security of the United
States, and for other purposes; which was ordered to lie on the table;
as follows:

In Division B, on page 263, after line 18, add the
following:

SEC. ____. TREATMENT OF FACILITIES USING BAGASSE TO PRODUCE
ENERGY AS SOLID WASTE DISPOSAL FACILITIES
ELIGIBLE FOR TAX-EXEMPT FINANCING.

(a) In General.--Section 142 (relating to exempt facility
bond) is amended by adding at the end the following:
``(l) Solid Waste Disposal Facilities.--For purposes of
subsection (a)(6), the term `solid waste disposal facilities'
includes property located in Hawaii and used for the disposal
of bagasse.''.
(b) Effective Date.--The amendment made by this section
shall apply to bonds issued after the date of the enactment
of this Act.
______

SA 1416. Mr. FEINGOLD (for himself and Mr. Wyden) submitted an
amendment intended to be proposed to amendment SA 1412 proposed by Mr.
Domenici (for himself, Ms. Landrieu, Mr. Thomas, Ms. Murkowski, Mr.
Campbell, Mr. Smith, Mr. Alexander, Mr. Kyl, Mr. Nelson of Nebraska,
Mr. Hagel, Mr. Talent, Mr. Bunning, and Mr. Coleman) to the bill S. 14,
to enhance the energy security of the United States, and for other
purposes; which was ordered to lie on the table; as follows:

Beginning on page 35, strike line 10 and all that follows
through page 35, line 10, and insert the following:

SEC. 1156. AFFILIATE, ASSOCIATE COMPANY, AND SUBSIDIARY
COMPANY TRANSACTIONS.

Section 204 of the Federal Power Act (16 U.S.C. 824c) is
amended by adding at the end the following:
``(i) Transactions With Affiliates and Associated
Companies.--
``(1) Definitions.--In this subsection, the terms
`affiliate', `associate company', `public utility', and
`subsidiary company' have the meanings given the terms in
section 1151 of the Energy Policy Act of 2003.
``(2) Regulations.--
``(A) In general.--The Commission shall promulgate
regulations that shall apply in the case of a transaction
between a public utility and an affiliate, associate company,
or subsidiary company of the public utility.
``(B) Contents.--At a minimum, the regulations under
subparagraph (A) shall require, with respect to a transaction
between a public utility and an affiliate, associate company,
or subsidiary company of the public utility, that--
``(i) the affiliate, associate company, or subsidiary
company shall be an independent, separate, and distinct
entity from the public utility;
``(ii) the affiliate, associate company, or subsidiary
company shall maintain separate books, accounts, memoranda,
and other records and shall prepare separate financial
statements;
``(iii)(I) the public utility shall conduct the transaction
in a manner that is consistent with transactions among
nonaffiliated and nonassociated companies; and
``(II) shall not use its status as a monopoly franchise to
confer on the affiliate, associate company, or subsidiary
company any unfair competitive advantage;
``(iv) the public utility shall not declare or pay any
dividend on any security of the public utility in
contravention of such rules as the Commission considers
appropriate to protect the financial integrity of the public
utility;
``(v) the public utility shall have at least 1 independent
director on its board of directors;
``(vi) the affiliate, associate company, or subsidiary
company shall not acquire any loan, loan guarantee, or other
indebtedness, and shall not structure its governance, in a
manner that would permit creditors to have recourse against
the assets of the public utility; and
``(vii) the public utility shall not--

``(I) commingle any assets or liabilities of the public
utility with any assets or liabilities of the affiliate,
associate company, or subsidiary company; or
``(II) pledge or encumber any assets of the public utility
on behalf of the affiliate, associate company, or subsidiary
company;

``(viii)(I) the public utility shall not cross-subsidize or
shift costs from the affiliate, associate company, or
subsidiary company to the public utility; and
``(II) the public utility shall disclose and fully value,
at the market value or other value specified by the
Commission, any assets or services by the public utility
that, directly or indirectly, are transferred to, or
otherwise provided for the benefit of, the affiliate,
associate company, or subsidiary company, in a manner that is
consistent with transfers among nonaffiliated and
nonassociated companies; and
``(ix) electricity and natural gas consumers and investors
shall be protected against the financial risks of public
utility diversification and transactions with and among
affiliates and associate companies.
``(3) No preemption.--This subsection does not preclude or
deny the right of any State or political subdivision of a
State to adopt and enforce standards for the corporate and
financial separation of public utilities that are more
stringent that those provided under the regulations under
paragraph (2).
``(4) Prohibition.--It shall be unlawful for a public
utility to enter into or take any step in the performance of
any transaction with any affiliate, associate company, or
subsidiary company in violation of the regulations under
paragraph (2).''.
______

SA 1417. Mr. DAYTON (for himself, Ms. Cantwell, and Mrs. Boxer)
submitted an amendment intended to be proposed to amendment SA 1412
proposed by Mr. Domenici (for himself, Ms. Landrieu, Mr. Thomas, Ms.
Murkowski, Mr. Campbell, Mr. Smith, Mr. Alexander, Mr. Kyl, Mr. Nelson
of Nebraska, Mr. Hagel, Mr. Talent, Mr. Bunning, and Mr. Coleman) to
the bill S. 14, to enhance the energy security of the United States,
and for other purposes; which was ordered to lie on the table; as
follows:

On page 30 of the amendment, strike line 24 and all that
follows through page 36, line 24.
______

SA 1418. Mr. BINGAMAN proposed an amendment to the bill S. 14, to
enhance the energy security of the United States, and for other
purposes; as follows:

On page 9, line 23 through 24, strike ``including any rule
or order of general applicability within the scope of the
proposed rulemaking,'' and insert: ``nor any final rule or
order of general applicability establishing a standard market
design,''.

____________________