[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1587 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 1587

    To encourage States to establish competitive retail markets for 
  electricity, to clarify the roles of the Federal Government and the 
    States in retail electricity markets, to remove certain Federal 
            barriers to competition, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 27, 1999

 Mr. Stearns introduced the following bill; which was referred to the 
Committee on Commerce, and in addition to the Committees on Resources, 
and Transportation and Infrastructure, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
    To encourage States to establish competitive retail markets for 
  electricity, to clarify the roles of the Federal Government and the 
    States in retail electricity markets, to remove certain Federal 
            barriers to competition, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Electric Energy Empowerment Act of 
1999''.

SEC. 2. COMPETITIVE RETAIL ELECTRICITY MARKETS.

    (a) Purpose.--It is the purpose of this section to ensure that the 
States have the authority to order electric utilities subject to their 
jurisdiction to provide transmission and local distribution services to 
retail customers within their States, and to encourage States to 
proceed expeditiously to enact such legislation as may be necessary to 
establish competitive retail electricity markets.
    (b) State Authority To Order Retail Wheeling.--(1) Section 201 of 
the Federal Power Act (16 U.S.C. 824) is amended by adding the 
following new subsection at the end thereof:
    ``(h) State Authority To Order Retail Wheeling.--(1) Subject to the 
conditions set forth in paragraph (2), notwithstanding any other 
provision of law, the States have the authority to order electric 
utilities subject to their jurisdiction to provide nondiscriminatory 
open access through functionally unbundled transmission and local 
distribution services, as defined by the Commission by rule, to retail 
customers within their borders.
    ``(2) Conditions.--
            ``(A) Reciprocity condition.--A State shall order an 
        electric utility subject to its jurisdiction to provide 
        nondiscriminatory open access through functionally unbundled 
        transmission and local distribution services to retail 
        customers within its borders only on the condition that such 
        services need only be provided to transmit electricity produced 
        in States which have ordered their electric utilities to 
        provide nondiscriminatory open access through functionally 
        unbundled transmission and local distribution services to 
        retail customers within their borders.
            ``(B) Nonregulated utilities.--If, as of the date of the 
        enactment of this paragraph, a State has not established 
        ratemaking authority with respect to an electric utility in the 
        State, the State may not--
                            ``(i) prohibit the utility from selling 
                        electric energy at retail in interstate 
                        commerce in any other State; or
                            ``(ii) establish any disincentives to the 
                        development in the State of effective 
                        competition in the market for selling electric 
                        energy at retail.
                Any such utility may sell electric energy at retail in 
                interstate commerce in another State only if the 
                utility provides nondiscriminatory open access 
                (including the functional unbundling of services) to 
                the local distribution facilities of the utility and to 
                any transmission facilities of the utility that are not 
                subject to the jurisdiction of the Federal Energy 
                Regulatory Commission under sections 205 and 206 of 
                this Act.''.
    (c) Bypass.--(1) Notwithstanding any provision of this Act or any 
other law, a State or a State regulatory authority (in carrying out its 
authority to regulate facilities used for the local distribution of 
electric energy or for the provision of local distribution service) may 
require, as a condition for the purchase by any person or municipality 
of retail electric energy services, the payment of a charge deemed 
necessary by the State or State regulatory authority for any of the 
following:
            (A) To recover costs incurred by an electric utility that 
        become unrecoverable due to the availability of retail electric 
        service choice.
            (B) To ensure that adequate electric service is available 
        to all customers served by the retail distribution system 
        concerned.
            (C) To ensure and enhance the reliability of retail 
        electric service.
            (D) To fund assistance to low-income customers.
            (E) To encourage environmental, renewable energy, energy 
        efficiency, conservation programs, or any combination of such 
        programs.
            (F) To provide for retraining of electric employees.
            (G) To provide payment of all reasonable costs associated 
        with Federal and State requirements regarding the 
        decommissioning of nuclear generating units.
            (H) Any combination of the purposes described in 
        subparagraphs (A) through (G).
    (2) For purposes of this subsection, the term ``local distribution 
service'' includes the receipt of electric energy by an end user 
whether or not such receipt requires the use of local distribution 
facilities.

SEC. 3. CLARIFICATION OF JURISDICTION.

    (a) Declaration of Policy.--Section 201(a) of the Federal Power Act 
(16 U.S.C. 824(a)) is amended as follows:
            (1) By inserting after ``transmission of electric energy in 
        interstate commerce'' the following: ``, including the 
        unbundled transmission of electric energy sold at retail,''.
            (2) By striking ``such Federal regulation, however, to 
        extend only to those matters which are not subject to 
        regulation by the States.'' and inserting the following: ``such 
        Federal regulation shall not extend, however, to the bundled 
        retail sale of electric energy or to unbundled local 
        distribution service which are subject to regulation by the 
        States.''.
    (b) Application of Part.--Section 201(b) of the Federal Power Act 
(16 U.S.C. 824(b)) is amended as follows:
            (1) By inserting after ``the transmission of electric 
        energy in interstate commerce'' the following: ``, including 
        the unbundled transmission of electric energy sold at 
        retail,''.
            (2) By adding at the end the following:
    ``(3) The Commission shall, by rule or order, after giving notice 
to and consulting with the appropriate State regulatory authorities, 
determine which facilities used for the transmission and delivery of 
electric energy are used for transmission in interstate commerce 
subject to the jurisdiction of the Commission, under this part, and 
which are used for local distribution subject to State jurisdiction.''.
    (c) Definition of Interstate Commerce.--Section 201(c) of the 
Federal Power Act (16 U.S.C. 824(c)) is amended by inserting after 
``outside thereof'' the following: ``(including consumption in a 
foreign country).''.
    (d) Definition of Types of Sales.--Section 201(d) of the Federal 
Power Act (16 U.S.C. 824(d)) is amended as follows:
            (1) By inserting ``(1)'' after ``(d)''.
            (2) By adding at the end the following:
    ``(2) For purposes of this section, the term `bundled retail sale 
of electric energy' means the sale of electric energy to an ultimate 
consumer in which the generation and transmission service are not sold 
separately.
    ``(3) The term `unbundled local distribution service' means the 
delivery of electric energy to an ultimate consumer if--
            ``(A) the electric energy and the service of delivering it 
        are sold separately, and
            ``(B) the delivery uses facilities for local distribution 
        as determined by the Commission under subsection (b)(3).
    ``(4) The term `unbundled transmission of electric energy sold at 
retail' means the transmission of electric energy to an ultimate 
consumer if--
            ``(A) the electric energy and the service of transmitting 
        it are sold separately, and
            ``(B) the transmission uses facilities for transmission in 
        interstate commerce as determined by the Commission under 
        subsection (b)(3).''.

SEC. 4. ENCOURAGEMENT OF INDEPENDENT TRANSMISSION SYSTEM OPERATORS.

    The creation of Independent Transmission System Operators is 
encouraged in order to ensure that all sellers and buyers of 
electricity in the United States have access to nondiscriminatory 
transmission services. Nothing in this section shall be construed as 
affecting any authority of the Federal Energy Regulatory Commission 
under any other provision of law to order the creation of Independent 
Transmission System Operators.

SEC. 5. APPLICATION OF FERC OPEN ACCESS RULES TO NONJURISDICTIONAL 
              ENTITIES.

    (a) Definition of Public Utility.--Section 201(e) of the Federal 
Power Act (16 U.S.C. 824) is amended to read as follows:
    ``(e) The term `public utility' when used in this part or in the 
part next following means--
            ``(1) any person who owns or operates facilities subject to 
        the jurisdiction of the Commission under this part (other than 
        facilities subject to such jurisdiction solely by reasons of 
        section 210, 211, or 212); or
            ``(2) any electric utility or Federal power marketing 
        agency not otherwise subject to the jurisdiction of the 
        Commission under this part, including--
                    ``(A) the Tennessee Valley Authority;
                    ``(B) a Federal power marketing agency;
                    ``(C) a State or any political subdivision of a 
                State or any agency, authority, or instrumentality of a 
                State or political subdivision;
                    ``(D) a corporation or association that has ever 
                received a loan for the purpose of providing electric 
                service from the Administrator of the Rural 
                Electrification Administration or the Rural Utilities 
                Service under the Rural Electrification Act of 1936; or
                    ``(E) any corporation or association which is 
                wholly owned, directly or indirectly, by any one or 
                more of the foregoing, but only with respect to 
                determining, fixing, and otherwise regulating the 
                rates, terms, and conditions for the transmission of 
                electric energy under this part.''.
    (b) Application of Part to Government Utilities.--Section 201(f) of 
the Federal Power Act (16 U.S.C. 824(f)) is amended by striking ``No 
provision'' and inserting ``Except as provided in subsection (e)(2) and 
section 3(23), no provision''.
    (c) Definition of Transmitting Utility.--Paragraph (23) of section 
3 of the Federal Power Act (16 U.S.C. 796) is amended to read as 
follows:
    ``(23) Transmitting utility.--The term `transmitting utility' means 
any electric utility, qualifying cogeneration facility, qualifying 
small power production facility, Federal power marketing agency, or any 
public utility, as defined in section 201(e)(2), that owns or operates 
electric power transmission facilities which are used for the sale of 
electric energy.''.

SEC. 6. REMOVAL OF FEDERAL BARRIERS TO COMPETITION.

    (a) Repeal of Section 210 of PURPA.--
            (1) New contracts.--After the date of the enactment of this 
        Act, no electric utility shall be required to enter into a new 
        contract or obligation to purchase or to sell electric energy 
        or capacity pursuant to section 210 of the Public Utility 
        Regulatory Policies Act of 1978.
            (2) Existing rights and remedies not affected.--Nothing in 
        this subsection affects the rights or remedies of any party 
        with respect to the purchase or sale of electric energy or 
        capacity from or to a facility determined to be a qualifying 
        small power production facility or a qualifying cogeneration 
        facility under section 210 of the Public Utility Regulatory 
        Policies Act of 1978 pursuant to any contract or obligation to 
        purchase or to sell electric energy or capacity in effect on 
        the date of the enactment of this Act, including the right to 
        recover the costs of purchasing such electric energy or 
        capacity.
            (3) Interpretations and actions taken.--Nothing in this 
        subsection may be deemed or construed as implying congressional 
        ratification of any interpretation of, or any action taken 
        pursuant to, the Public Utility Regulatory Policies Act of 
        1978.
    (b) Recovery of Costs.--In order to assure recovery by electric 
utilities purchasing electric energy or capacity from a qualifying 
facility pursuant to any legally enforceable obligation entered into or 
imposed pursuant to section 210 of the Public Utility Regulatory 
Policies Act of 1978 prior to the date of the enactment of this Act, of 
all costs associated with such purchases, the Commission shall 
promulgate and enforce such regulations as may be required to assure 
that no utility shall be required directly or indirectly to absorb the 
costs associated with such purchases from a qualifying facility. Such 
regulations shall be treated as a rule enforceable under the Federal 
Power Act (16 U.S.C. 791a-825r).
    (c) Definitions.--For purposes of this section--
            (1) The term ``Commission'' means the Federal Energy 
        Regulatory Commission.
            (2) The term ``electric utility'' means any person, State 
        agency, or Federal agency, which sells electric energy.
            (3) The term ``qualifying small power production facility'' 
        has the same meaning as provided in section 3(17)(C) of the 
        Federal Power Act.
            (4) The term ``qualifying cogeneration facility'' has the 
        same meaning as provided in section 3(18)(A) of the Federal 
        Power Act.
            (5) The term ``qualifying facility'' means either a small 
        power production facility or a qualifying cogeneration 
        facility.
    (d) Repeal of the Public Utility Holding Company Act of 1935.--The 
Public Utility Holding Company Act of 1935 is hereby repealed, 
effective one year from the date of enactment of this Act.

SEC. 7. ENACTMENT OF THE PUBLIC UTILITY HOLDING COMPANY REGULATION.

    (a) Purpose.--Limited Federal regulation is necessary to supplement 
the work of State commissions for the continued rate protection of 
electric and gas utility consumers. This section is intended to address 
these concerns by providing for Federal and State access to books and 
records of all companies in a holding company system and for federal 
oversight of affiliate transactions, to the extent that such activities 
affect rates.
    (b) Definitions.--When used in this section:
            (1) ``Person'' means an individual or company.
            (2) ``Company'' means a corporation, joint stock company, 
        partnership, association, business trust, organized group of 
        persons, whether incorporated or not, or a receiver or 
        receivers, trustee or trustees of any of the foregoing.
            (3) ``Electric utility company'' means any company that 
        owns or operates facilities used for the generation, 
        transmission, or distribution of electric energy for sale.
            (4) ``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) of 
        natural or manufactured gas for heat, light or power.
            (5) ``Public utility company'' means an electric utility 
        company or gas utility company but does not mean a qualifying 
        facility as defined in the Public Utility Regulatory Policies 
        Act of 1992, or an exempt wholesale generator or a foreign 
        utility company defined by the Energy Policy Act of 1992.
            (6) ``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 or holding company as to make it necessary or appropriate for 
the protection of consumers with respect to rates that such person be 
subject to the obligations, duties, and liabilities imposed in this 
title upon holding companies.
            (7) ``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 protection of 
        consumers with respect to rates that such person be subject to 
        the obligations, duties, and liabilities imposed in this title 
        upon subsidiary companies of holding companies.
            (8) ``Holding company system'' means a holding company 
        together with its subsidiary companies.
            (9) ``Associate company'' of a company means any company in 
        the same holding company system with such company.
            (10) ``Affiliate'' of a company means any company 5 percent 
        or more of whose outstanding voting securities are owned, 
        controlled, or held with power to vote, directly or indirectly, 
        by such company.
            (11) ``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.
            (12) ``Commission'' means the Federal Energy Regulatory 
        Commission.
            (13) ``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 law of such State has jurisdiction to regulate public 
        utility companies.
    (c) Governments.--No provision in this section 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 of the foregoing, or (5) any 
officer, agent, or employee of any of the foregoing acting as such in 
the course of his official duty.
    (d) Exemptions.--(1) The provisions of this section shall not apply 
to any person previously exempted, by rule or order, from regulation 
under the Public Utility Holding Company Act of 1935 and such person 
shall continue to be exempted from the provisions of this section, 
except that the Commission may institute proceedings to terminate such 
exemption if the termination of such exemption would be necessary for 
regulating the rates of a public utility company and necessary for the 
protection of consumers.
    (2) The Commission, by rules and regulations, or by order upon 
application, may conditionally or unconditionally exempt any person or 
transaction, or any class or classes of persons or transactions, from 
any provision or provisions of this title or of any rule or regulation 
thereunder, if the Commission finds that regulation of such person or 
transaction is not relevant to the rates of a public utility company; 
in considering whether to grant such an exemption, the Commission shall 
consult with the affected State commissions.
    (e) Federal Access to Books and Records.--(1) Every holding company 
and subsidiary company thereof shall maintain, and make available to 
the Commission, such books, records, accounts, and other documents as 
the Commission deems relevant to costs incurred by a public utility 
company that is an associate company of such holding company and 
necessary or appropriate for the protection of consumers with respect 
to rates.
    (2) Every affiliate of a holding company or of any subsidiary 
company thereof shall maintain, and make available to the Commission, 
such books, records, accounts, and other documents with respect to any 
transaction with another affiliate, as the Commission deems relevant to 
costs incurred by a public utility company that is an associate company 
of such holding company and necessary or appropriate for the protection 
of consumers with respect to rates.
    (3) The Commission may examine the books and records of any company 
in a holding company system, or any affiliate thereof, as the 
Commission deems relevant to costs incurred by a public utility company 
within such holding company system and necessary or appropriate for the 
protection of consumers with respect to rates.
    (4) No member, officer, or employee of the Commission shall divulge 
any fact or information that may come to his knowledge during the 
course of examination of books, accounts, or other information as 
herein before provided, except insofar as he may be directed by the 
Commission or by a court.
    (f) State Access to Books and Records.--(1) 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 its associate company or 
affiliate thereof, wherever located, shall produce for inspection such 
books and records as have been identified in reasonable detail in a 
proceeding before the State commission, are relevant to costs incurred 
by such public utility company and are necessary for the effective 
discharge of the State commission's responsibilities with respect to 
such proceeding.
    (2) Nothing in this section shall preempt applicable State law 
concerning the provision of records and other information, or in any 
way limit a State's rights to obtain books and records and other 
information under Federal law, contract, or otherwise.
    (g) Affiliate Transactions.--Nothing in this section shall preclude 
the Commission or a State commission from exercising its jurisdiction 
under otherwise applicable law to determine whether a public utility 
company may recover in rates any costs of an activity performed by an 
associate company, or any costs of goods or services acquired by such 
public utility company from an associate company.
    (h) Effect on Other Regulation.--Nothing in this section shall 
preclude a State commission from exercising its jurisdiction under 
otherwise applicable law to protect utility consumers.
    (i) Enforcement.--The Commission shall have the same powers as set 
forth in Sections 306 through 317 of the Federal Power Act (16 U.S.C. 
825d-825p) to enforce the provisions of this section.
    (j) Savings Provision.--Nothing in this section prohibits a person 
from engaging in activities in which it is legally engaged or 
authorized to engage on the effective date of the Public Utility 
Holding Company Act of 1996,  provided that it continues to comply with 
the terms of any authorization, whether by rule or by order.
    (k) Implementation.--The Commission shall promulgate regulations 
necessary or appropriate to implement this section not later than one 
year after the date of the enactment of this Act.
    (l) Resources.--All books and records that relate primarily to the 
function hereby vested in the Commission shall be transferred from the 
Securities and Exchange Commission to the Commission. It is the sense 
of the Congress that, subject to the approval of the Director of the 
Office of Management and Budget and the Chairman of the Securities and 
Exchange Commission all personnel of the Office of Public Utility 
Regulation of the Securities and Exchange Commission as of the date of 
enactment of this title should be transferred to the Commission.
    (m) Effective Date.--This section shall take effect one year after 
the date of enactment of this Act.
    (n) Severability.--If any provision of this section, or the 
application of such provision to any person or circumstance, shall be 
held invalid, the remainder of the section, and the application of such 
provision to persons or circumstances other than those as to which it 
is held invalid, shall not be affected thereby.
    (o) Federal Power Act.--Section 318 of the Federal Power Act (16 
U.S.C. 285g) is hereby repealed.

SEC. 8. RELIABILITY COUNCIL.

    Part III of the Federal Power Act is amended by inserting the 
following after section 319:

``SEC. 319A. ELECTRIC RELIABILITY COUNCIL.

    ``(a) Consent of Congress; Formation and Operation of Council; 
Purposes.--The consent of Congress is hereby given for the formation 
and operation of the Electric Reliability Council. The Council shall be 
a body composed of all electricity industry participants, as specified 
in this section, and shall carry out its functions and responsibilities 
in accordance with this section. The Council shall continue in force as 
specified in this section and shall not be construed to be an agency or 
instrumentality of the United States for the purpose of any Federal 
law. The Council shall provide the best technical electricity industry 
advice and recommendations to the Commission, regarding the reliability 
of--
            ``(1) wholesale sales of electricity in interstate 
        commerce, and
            ``(2) the transmission of electricity in interstate 
        commerce,
in order to ensure that the competitive restructuring of the Nation's 
electricity industry does not lessen the high reliability of 
traditional electric service.
    ``(b) Certain Federal Laws Not Applicable.--No Federal law relating 
to the making of contracts, conflicts of interest, financial 
disclosure, open meetings of the Council, advisory committees, 
disclosure of information, and related matters shall apply to the 
Council. No contract, obligation, or other action of the Council shall 
be construed as an obligation of the United States or an obligation 
secured by the full faith and credit of the United States. For the 
purpose of judicial review of any action of the Council or challenging 
any provision of this Act relating to functions and responsibilities of 
the Council, notwithstanding any other provision of law, the courts of 
the United States shall have exclusive jurisdiction of any such review.
    ``(c) Responsibility.--The Council shall be responsible for 
proposing to the Commission advice and regulations setting forth not 
unduly discriminatory criteria respecting the reliability of wholesale 
sales of electricity in interstate commerce and the transmission of 
electricity in interstate commerce.
    ``(d) Membership.--All electricity suppliers, transmitting 
utilities, and local distribution companies shall be members of the 
Council.
    ``(e) Funding.--The Commission shall determine in advance the 
reasonable expenses of the Council for each fiscal year, and shall 
provide funds to pay all such expenses by assessing and collecting 
Council charges from each Council member, on a fair and equitable basis 
in proportion to each member's annual revenues from electricity-related 
business activities, and remitting such charges to the Council.
    ``(f) Governance.--The Council shall develop a governance board 
which shall represent the interests of electric utilities, transmitting 
utilities, local distribution companies, independent electricity 
generators, electricity consumers, and electricity marketers and 
brokers. Such board shall also have advisory members, one each 
appointed by each existing electric reliability council. The members, 
officers, and employees of the Council shall be deemed not to be 
officers or employees of the United States for any purpose. Pursuant to 
bylaws adopted by it, the board shall select from among themselves a 
chairman, and may provide for term limits for board members, staggered 
terms, eligibility criteria, reasonable administrative 
procedures, compensation, the assignment and delegation of duties, and 
similar matters.
    ``(g) Action and Authority of the Board.--The board of the Council 
shall act by a majority vote, a quorum of the board being present. Two-
thirds of the board shall constitute a quorum. The board shall have the 
authority to hire necessary staff, establish offices, procure necessary 
equipment, and carry out similar administrative duties.
    ``(h) Recommendation to the Commission.--Any reliability criteria 
duly adopted by the Council shall thereafter be proposed by the Council 
to the Commission, as a petition for a rulemaking under this Act. The 
Commission, pursuant to this Act, shall consider such petition, provide 
notice of such petition as a proposed rule, and provide an opportunity 
for comment thereon, as in any other Commission rulemaking proceeding; 
and may thereafter, in accordance with this Act, adopt such petition 
without change as a final rule under this Act; or may amend it in any 
respect and as amended, adopt it as such a final rule, or may refuse to 
adopt it. If adopted in any respect, such final rule shall be treated 
for all purposes, including enforcement, as a rule under this Act.
    ``(i) Reporting by the Council.--The Council shall submit an annual 
report to the President, Congress, the Commission, and its members 
which--
            ``(1) summarizes the condition of the Nation's electric 
        generation, transmission, and distribution systems;
            ``(2) specifies the need, if any, for improvements and 
        upgrades in the Nation's electric transmission system;
            ``(3) specifies steps, if any, that are needed to improve 
        the coordination of the operations of the Nation's electric 
        generation, transmission, and distribution systems;
            ``(4) identifies regions in which additional generating 
        capacity may be required within 5 and 10 yeas; and
            ``(5) beginning 2 years after the establishment of the 
        Council, rates each Council member according to its performance 
        under the established reliability criteria.
    ``(j) Reporting by Council Members.--All Council members shall 
report to the Council any material electric generation, transmission, 
or distribution system emergency, failure, or outage in the time and 
manner prescribed by the Council. For purposes of this section, the 
Council shall in advance generally identify and define the 
circumstances constituting such a material system emergency, failure, 
or outage.
    ``(k) State Authority Respecting Reliability.--Nothing in this 
section shall limit the authority under otherwise applicable law of any 
State regulatory authority or of any nonregulated electric utility or 
local distribution company, to ensure, with respect to any sale or 
service subject to State jurisdiction under section 201(h), the 
reliability, safety, and effective interconnection and coordination of 
any State regulated or nonregulated electric utility or local 
distribution company facilities.''.
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