[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2944 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 2944

To promote competition in electricity markets and to provide consumers 
     with a reliable source of electricity, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 24, 1999

 Mr. Barton of Texas introduced the following bill; which was referred 
  to the Committee on Commerce, and in addition to the Committees on 
Transportation and Infrastructure, Resources, and Ways and Means, 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 promote competition in electricity markets and to provide consumers 
     with a reliable source of electricity, and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Electricity 
Competition and Reliability Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings and purpose.
                   TITLE I--OPEN TRANSMISSION ACCESS

Sec. 101. Clarification of State authority regarding retail electric 
                            competition; clarification of Federal and 
                            State jurisdiction.
Sec. 102. Open access for all transmitting utilities.
Sec. 103. Regional transmission organizations.
Sec. 104. Regional transmission siting agencies.
Sec. 105. Expansion of interstate transmission facilities.
Sec. 106. Conforming amendments.
                     TITLE II--ELECTRIC RELIABILITY

Sec. 201. Electric reliability.
                     TITLE III--CONSUMER PROTECTION

Sec. 301. Electric supplier information disclosure.
Sec. 302. Consumer privacy.
Sec. 303. Electric supply unfair trade practices.
Sec. 304. Universal and affordable service.
Sec. 305. Definitions.
                           TITLE IV--MERGERS

Sec. 401. Electric company mergers and disposition of property.
Sec. 402. Elimination of review by the Nuclear Regulatory Commission.
                     TITLE V--PROMOTING COMPETITION

                     Subtitle A--Retail Reciprocity

Sec. 501. Retail reciprocity.
         Subtitle B--Public Utility Holding Company Act of 1935

Sec. 511. Definitions.
Sec. 512. Repeal of the Public Utility Holding Company Act of 1935.
Sec. 513. Federal access to books and records.
Sec. 514. State access to books and records.
Sec. 515. Exemption authority.
Sec. 516. Affiliate transactions.
Sec. 517. Applicability.
Sec. 518. Effect on other regulations.
Sec. 519. Enforcement.
Sec. 520. Savings provisions.
Sec. 521. Implementation.
Sec. 522. Transfer of resources.
Sec. 523. Effective date.
Sec. 524. Conforming amendment to the Federal Power Act.
       Subtitle C--Public Utility Regulatory Policies Act of 1978

Sec. 531. Prospective repeal.
Sec. 532. Recovery of costs.
Sec. 533. Definitions.
        Subtitle D--Additional Provisions Promoting Competition

Sec. 541. Aggregation.
Sec. 542. Interconnection.
                  TITLE VI--FEDERAL ELECTRIC UTILITIES

                 Subtitle A--Tennessee Valley Authority

Sec. 601. Definitions.
Sec. 602. Wholesale competition in the Tennessee Valley Region.
Sec. 603. Tennessee Valley Authority power sales.
Sec. 604. Tennessee Valley Authority electric generation facilities.
Sec. 605. Renegotiation of all-requirements power contracts.
Sec. 606. Regulation of Tennessee Valley Authority transmission system.
Sec. 607. Regulation of Tennessee Valley Authority distributors.
Sec. 608. Stranded cost recovery.
Sec. 609. Application of antitrust law.
Sec. 610. Savings provision.
              Subtitle B--Bonneville Power Administration

Sec. 621. Definitions.
Sec. 622. Regulation of Bonneville Transmission System.
Sec. 623. Surcharge on transmission rates to recover otherwise 
                            nonrecoverable costs.
Sec. 624. Limit on retail sales by Bonneville Power Administration.
Sec. 625. Acquisition of new major generating resources.
Sec. 626. Application of antitrust law.
Sec. 627. Conforming amendments.
           Subtitle C--Other Power Marketing Administrations

Sec. 631. Definitions.
Sec. 632. Wholesale power sales by Federal power marketing 
                            administrations.
Sec. 633. Regulation of Federal power marketing administration 
                            transmission systems.
Sec. 634. Accounting.
Sec. 635. Application of antitrust law.
                  TITLE VII--ENVIRONMENTAL PROVISIONS

Sec. 701. Renewable energy production incentive.
Sec. 702. Net metering.
        TITLE VIII--PROVISIONS RELATING TO INTERNAL REVENUE CODE

Sec. 801. Business activities of mutual or cooperative electric 
                            companies.
Sec. 802. Tax-exempt bond financing of certain electric facilities.
Sec. 803. Nuclear decommissioning costs.
Sec. 804. Renewable energy tax credit.
                   TITLE IX--MISCELLANEOUS PROVISION

Sec. 901. Study.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--The Congress finds the following:
            (1) Electricity is generated, transmitted, distributed, and 
        sold in interstate commerce and used in virtually every home, 
        commercial enterprise, and manufacturing facility in the United 
        States and substantially affects interstate commerce in other 
        goods and services.
            (2) Americans consume electricity worth more than 
        $250,000,000,000 a year, approximately half of which is for 
        residential purposes. The monthly electric utility bill is one 
        of the largest expenses for most households.
            (3) Traditional monopoly rate-of-return regulation of 
        electricity has stifled competition, resulting in high 
        electricity rates for many consumers and few incentives for 
        technological innovation and good customer service by electric 
        utilities.
            (4) Twenty-four States, representing over 163,000,000 
        people and over 60 percent of the population of the United 
        States, have approved programs to foster retail choice in 
        electric sales. State laws forging the dramatic transition to 
competitive retail electric markets have addressed stranded cost 
recovery, public benefits, and other issues and Congress encourages the 
remaining States to address stranded cost recovery as they open their 
retail electric markets.
            (5) High electricity rates are regressive, placing a 
        disproportionate burden on poor ratepayers. A competitive 
        electric generation industry will provide benefits to all 
        consumers by fostering fairness, innovation, and efficiency, 
        rather than allow cost shifting that lowers rates to some 
        consumers but raises rates to others.
            (6) The cost of electricity has a direct effect on the 
        price, profitability, and competitiveness of goods and services 
        produced in the United States.
            (7) Lower priced electricity and improved reliability can 
        be realized by competition among electric suppliers.
            (8) The development of vigorous competition in the retail 
        market for electric energy will--
                    (A) reduce the costs of electric energy to even the 
                smallest consumers of electricity;
                    (B) create jobs as American businesses are able to 
                lower costs and better compete in world markets and 
                against foreign competition here at home; and
                    (C) result in a more efficient utility industry.
            (9) Federal programs to benefit rural consumers have 
        succeeded, and rural America has been electrified. However, 
        rural America pays some of the highest electric rates in the 
        country. Competition will assure reliable, reasonably priced 
        rural electric service.
            (10) The Nation's interconnected electricity generation, 
        transmission, and local distribution systems critically affect 
        the economy and productivity of the United States, and the 
        health, safety, welfare, and security of all Americans.
            (11) Congress has authority to enact laws, under the 
        Commerce Clause of the United States Constitution, regarding 
        the generation, transmission, distribution, and sale of 
        electric energy in interstate commerce.
            (12) The success of competition in the wholesale electric 
        market under the Energy Policy Act of 1992 and open access 
        under Orders No. 888 and 889 of the Federal Energy Regulatory 
        Commission, as well as innovations in electric generation and 
        transmission technologies, indicate that retail electric 
        competition will substantially benefit all classes of United 
        States electric consumers, including residential, commercial, 
        industrial, and other consumers.
    (b) Purpose.--The purpose of this Act is to benefit American 
electric consumers through lower electric rates, higher quality 
services, and a more robust United States economy by encouraging retail 
and wholesale competition in electric markets and to provide consumers 
with reliable electric service, and for other purposes.

                   TITLE I--OPEN TRANSMISSION ACCESS

SEC. 101. CLARIFICATION OF STATE AUTHORITY REGARDING RETAIL ELECTRIC 
              COMPETITION; CLARIFICATION OF FEDERAL AND STATE 
              JURISDICTION.

    (a) State Authority To Order Retail Electric Competition.--Section 
201(b) of the Federal Power Act is amended by adding the following new 
paragraph after paragraph (2):
    ``(3) This Act shall not affect the authority of a State or 
municipality to require retail electric competition or to require 
unbundled transmission and local distribution service for the delivery 
of electric energy directly to a retail electric consumer.''.
    (b) Clarification of Federal and State Jurisdiction.--(1) Section 
201(a) of the Federal Power Act (16 U.S.C. 824(a)) is amended as 
follows:
            (A) By inserting after ``transmission of electric energy in 
        interstate commerce'' the following: ``, including the 
        unbundled transmission of electric energy sold at retail,''.
            (B) By striking ``such Federal regulation, however, to 
        extend only to those matters which are not subject to 
        regulation by the States.'' and inserting in lieu thereof 
        ``such Federal regulation shall not extend, however, to any 
        bundled retail sale of electric energy, to any local 
        distribution service component of any unbundled retail sale of 
        electric energy, or to any retail sale component of any 
        unbundled retail sale of electric energy, which are each 
        subject to regulation by the States.''.
    (2) Section 201(b)(1) of the Federal Power Act (16 U.S.C. 
824(b)(1)) is amended as follows:
            (A) Inserting after ``the transmission of electric energy 
        in interstate commerce'' the following: ``, including the 
        unbundled transmission of electric energy sold at retail,''.
            (B) In the last sentence, deleting ``the transmission of 
        electric energy in intrastate commerce'', and inserting in lieu 
        thereof ``the transmission of any bundled retail sale of 
        electric energy''.
    (c) Definitions of Types of Sales.--Section 3 of the Federal Power 
Act (16 U.S.C. 796) is amended by adding at the end the following:
            ``(27) The term `bundled retail sale of electric energy' 
        means the sale of electric energy to a retail electric consumer 
        in which the electric energy and transmission services are not 
        sold separately.
            ``(28) The term `local distribution service' means all 
        services necessary to, or customarily provided in, the delivery 
        of electric energy to a retail electric consumer through local 
        distribution facilities, including the construction, 
        maintenance, and operation of local distribution facilities, 
        the metering and billing of retail sales, and any related 
        accounting, management, and other services.
            ``(29) The term `unbundled retail sale of electric energy' 
        means the sale of electric energy to a retail electric consumer 
        in which electric energy and transmission service or local 
        distribution service are sold separately.
            ``(30) The term `unbundled transmission of electric energy 
        sold at retail' means the transmission of electric energy to a 
        retail electric consumer if the electric energy and the service 
of transmitting it are sold separately.''.
    (d) State Public Purpose Charges.--Section 201(b) of the Federal 
Power Act is amended by adding the following new paragraph after 
paragraph (3):
    ``(4) This Act shall not affect the authority of a State or 
municipality to require as a charge for delivery of electric energy to, 
or as a condition for the purchase or receipt of electric energy by, 
any retail electric consumer located in such State the payment of any 
charge deemed necessary by such State or municipality for any purpose, 
including any of the following:
            ``(A) To recover transition costs.
            ``(B) To ensure that adequate electric service is available 
        to all retail electric consumers served by a local distribution 
        company.
            ``(C) To ensure and enhance the reliability of retail 
        electric service.
            ``(D) To fund assistance to low-income retail electric 
        consumers.
            ``(E) To encourage environmental, emerging energy 
        technology, energy efficiency, or energy conservation programs.
            ``(F) To provide for transition costs of electric utility 
        workers.
Nothing in this paragraph shall require a State or municipality to 
impose any such charges.''.
    (e) Determination of Transmission Facilities.--Section 201 of the 
Federal Power Act is amended by adding the following new subsection at 
the end thereof:
    ``(h) Determination of Transmission Facilities.--
            ``(1) Determination.--A State commission, a transmitting 
        utility, or a local distribution company may apply to the 
        Commission for a determination whether a particular facility 
        used for the transportation of electric energy is a 
        transmission facility subject to the jurisdiction of the 
        Commission. The Commission may make such determination pursuant 
        to such a request or on its own motion.
            ``(2) Commission findings.--The Commission shall make a 
        determination under paragraph (1) in accordance with the 
        following factors associated with the facility:
                    ``(A) Function and purpose.
                    ``(B) Size.
                    ``(C) Location.
                    ``(D) Voltage level and other technical 
                characteristics.
                    ``(E) Historical, current and planned usage 
                patterns.
                    ``(F) Interconnection and coordination with other 
                facilities.
                    ``(G) Any other factor the Commission deems 
                relevant.
        In making such determination, the Commission shall give 
        deference to any position taken by the appropriate State 
        commission.''.

SEC. 102. OPEN ACCESS FOR ALL TRANSMITTING UTILITIES.

    (a) Open Access Transmission Authority; Retail Wheeling in Retail 
Competition States.--
            (1) Applicability of open access transmission rules.--
        Section 206 of the Federal Power Act is amended by adding the 
        following new subsection after subsection (d):
    ``(e) Open Access Transmission Services.--Under section 205 and 
this section, the Commission may require, by rule or order, 
transmitting utilities to provide transmission services on a not unduly 
discriminatory or preferential basis, subject to section 212(h), and 
may authorize recovery of stranded costs, as defined by the Commission, 
arising from any requirement to provide transmission services on such a 
basis. This subsection applies to any rule or order promulgated by the 
Commission before, on, or after the date of enactment of this 
subsection.''.
            (2) Authority to order retail wheeling.--Section 212(h) of 
        the Federal Power Act is amended as follows:
                    (A) By inserting ``(1)'' before ``No''.
                    (B) By striking ``(1)'', ``(2)'', ``(A)'', and 
                ``(B)'' and inserting in their places ``(A)'', ``(B)'', 
                ``(i)'', and ``(ii)'' respectively.
                    (C) By striking from redesignated paragraph 
                (1)(B)(ii) ``the date of enactment of this subsection'' 
                and inserting ``October 24, 1992,''.
                    (D) By adding the following new paragraph at the 
                end:
    ``(2) Notwithstanding paragraph (1), the Commission may issue an 
order that requires the transmission of electric energy directly or 
indirectly to retail electric consumers who are served by local 
distribution facilities that are subject to open access.''.
            (3) Conforming amendments.--
                    (A) Section 3(24) of the Federal Power Act is 
                amended to read as follows:
            ``(24) `transmission services' means the transmission of 
        electric energy sold or to be sold.''.
                    (B) Section 211(a) of the Federal Power Act is 
                amended by striking ``for resale''.
                    (C) Section 212(a) of the Federal Power Act is 
                amended by striking ``wholesale'' each time it appears, 
                except the last time.
                    (D) Section 3 of the Federal Power Act is amended 
                by adding the following at the end thereof:
            ``(26) Local distribution company.--The term `local 
        distribution company' means any entity which owns, controls, or 
        operates local distribution facilities.
            ``(27) Local distribution facilities.--The term `local 
        distribution facilities' means any facilities used for the 
        local distribution of electric energy. Such term does not 
        include any facilities determined under section 201(h) to be 
        transmission facilities.
            ``(28) Open access.--The term `open access', with respect 
        to local distribution facilities, means that the local 
        distribution company that owns, controls, or operates the 
        facilities offers not unduly discriminatory or preferential 
        access to the facilities.
            ``(29) Retail electric consumer.--The term `retail electric 
        consumer' means any person who purchases electric energy for 
ultimate consumption.
            ``(30) Retail electric supplier.--The term `retail electric 
        supplier' means any person who sells electric energy to a 
        retail electric consumer for ultimate consumption.
            ``(31) State regulated electric utility.--The term `State 
        regulated electric utility' means any electric utility with 
        respect to which a State commission has ratemaking 
        authority.''.
    (b) Definition of Public Utility.--Section 201(e) of the Federal 
Power Act (16 U.S.C. 824(e)) is amended to read as follows:
    ``(e) Definition of Public Utility.--(1) The term `public utility', 
when used in this Part and Part III, means:
            ``(A) Any person who owns or operates facilities subject to 
        the jurisdiction of the Commission under this part (other than 
        facilities subject to such jurisdiction solely by reason of 
        section 210, 211, or 212).
            ``(B) Any transmitting utility (other than the Federal 
        power marketing administrations and the Tennessee Valley 
        Authority) that is not a public utility within the meaning of 
        paragraph (1), but only with respect to determining, fixing, 
        and otherwise regulating the rates, terms, and conditions for 
        the transmission of electric energy in interstate commerce.
    ``(2)(A) Within 180 days after the enactment of this subsection, 
after notice and opportunity for comment, the Commission shall adopt 
rules providing criteria and procedures to exempt certain transmitting 
utilities from paragraph (1)(B).
    ``(B) The criteria established by the Commission under this 
paragraph may include whether the transmitting utility owns, operates, 
or controls only limited and discrete transmission facilities that do 
not form an integrated grid; whether the transmitting utility is a 
small public utility not part of a centrally dispatched power pool and 
any other circumstances which the Commission finds appropriate. Such 
criteria may provide for revocation of an exemption in the event of 
changed circumstances. The Commission may from time to time, after 
notice and opportunity for comment, modify its exemption criteria.
    ``(C) The procedures established by the Commission shall permit 
exemptions, after notice and opportunity for comment, based on a letter 
application containing a sworn statement, by a representative legally 
authorized to bind the applicant, attesting to the facts demonstrating 
that the applicant meets the exemption standards. A good faith 
application for an exemption shall be deemed granted unless, within 60 
days of its receipt of such application, the Commission makes a 
determination that the applicant does not meet the exemption criteria.
    ``(D) For purposes of this paragraph, the term `small public 
utility' means a public utility that sells no more than 4,000,000 
megawatt-hours of electric energy per year.''.
    (c) Nonjurisdictional Status Resulting From Compliance With Orders 
Under Sections 210 and 211; Limitation.--Section 201(b)(2) of the 
Federal Power Act (16 U.S.C. 824(b)(2)) is amended by striking the 
period at the end of the second sentence and inserting the following: 
``except with respect to determining, fixing, and otherwise regulating 
the rates, terms, and conditions for the transmission of electric 
energy under this part pursuant to subsection (e)(2).''.
    (d) Definition.--Section 3(23) of the Federal Power Act (16 U.S.C. 
796) is amended to read as follows:
            ``(23) Transmitting utility.--The term `transmitting 
        utility' means any entity (including a State or municipal 
        entity) that owns or operates facilities used for the 
        transmission of electric energy in interstate commerce (other 
        than facilities subject to an order of the Commission under 
        section 210 or 211).''.
    (e) Foreign Commerce.--
            (1) Section 201(c) of the Federal Power Act (16 U.S.C. 
        824(c)) is amended by striking ``thereof:'' and inserting 
        ``thereof (including consumption in a foreign country),''.
            (2) Section 202(f) of the Federal Power Act is repealed.

SEC. 103. REGIONAL TRANSMISSION ORGANIZATIONS.

    Section 202 of the Federal Power Act is amended by adding the 
following new subsections after subsection (g):
    ``(h) Regional Transmission Organizations.--
            ``(1) In general.--Effective January 1, 2003, each 
        transmitting utility shall establish or join a regional 
        transmission organization. By January 1, 2002, each such 
        utility shall file an application with the Commission to 
        establish or join a regional transmission organization. After 
        notice and an opportunity for a hearing, the Commission shall 
        approve an application by one or more transmitting utilities to 
        establish or join a regional transmission organization if the 
        Commission determines the regional transmission organization 
        meets the standards in paragraph (2). The Commission shall 
        apply the standards in paragraph (2) without regard to the 
specific structure, type, or form of proposed regional transmission 
organization. If a transmitting utility applies to establish or join a 
regional transmission organization that meets the standards in 
paragraph (2), the Commission shall have no authority under this 
subsection to require the transmitting utility to participate in a 
different regional transmission organization. The Commission may 
approve a regional transmission organization that does not meet all the 
standards in paragraph (2) if the Commission determines that the 
regional transmission organization contains features that are 
consistent with or superior to the standards listed in paragraph (2). 
The requirement that a transmitting utility establish or join a 
regional transmission organization shall be stayed pending any 
proceeding under this section or section 313.
            ``(2) Standards for regional transmission organizations.--
        The Commission shall make a determination under paragraph (1) 
        in accordance with the following standards:
                    ``(A) Independence.--The regional transmission 
                organization must be independent of all market 
                participants, and no market participant may exercise 
                control over the operation of the regional transmission 
                organization. For purposes of determining whether a 
                regional transmission organization is independent of 
                all market participants, ownership of passive, 
                nonvoting interests in a regional transmission 
                organization, or ownership of 10 percent or less of the 
                voting interests in the regional transmission 
                organization, shall be deemed not to confer control 
                over the regional transmission organization for 
                purposes of this subparagraph. For purposes of this 
                subparagraph, the term `voting interest' shall not 
                include the right to participate in major organic 
                corporate changes to the regional transmission 
                organization that affect the ownership status of the 
                nonvoting interests.
                    ``(B) Scope and configuration.--The regional 
                transmission organization must operate transmission 
                facilities that comprise an appropriate scope and 
                regional configuration. In determining whether a 
                regional transmission organization contains an 
                appropriate scope and configuration, the Commission 
                shall consider the following factors:
                            ``(i) Performance of essential regional 
                        transmission organization functions.
                            ``(ii) Electricity trading patterns.
                            ``(iii) Exercise of market power not 
                        subject to State regulation.
                            ``(iv) Existing control areas.
                            ``(v) Existing regional transmission 
                        entities.
                            ``(vi) Contiguity of geographic area.
                            ``(vii) Interconnection of regional 
                        transmission organization transmission systems.
                            ``(viii) International boundaries.
                    ``(C) Operational authority.--The regional 
                transmission organization must possess operational 
                authority over all transmission facilities under its 
                control.
                    ``(D) Expansion.--The regional transmission 
                organization must be responsible for planning necessary 
                additions and upgrades to the transmission system under 
                the operational control of the regional transmission 
                organization that will enable it to provide efficient, 
                reliable, not unduly discriminatory or preferential 
                transmission service and coordinating such efforts with 
                the appropriate State authorities.
                    ``(E) Other standards.--The regional transmission 
                organization shall meet any other standards that the 
                Commission determines to be in the public interest.
            ``(3) Federal transmitting utilities.--The Tennessee Valley 
        Authority, the Bonneville Power Administration, the 
        Southwestern Power Administration, and the Western Area Power 
        Administration are each authorized to participate in a regional 
        transmission organization after conducting a public process in 
        the relevant region to receive comments. Notwithstanding any 
        other law, participation may include delegation of operation 
        and control of the transmission system concerned to a regional 
        transmission organization or other method of participation, 
        under terms and conditions the Tennessee Valley Authority or 
        the power marketing administration concerned determines 
        necessary or appropriate, including being bound by operational 
        and other orders of the regional transmission organization and 
        by the results of arbitration of disputes with the organization 
        or with other participants.
            ``(4) State authority not affected.--Nothing in this 
        subsection limits States from addressing transmission facility 
        maintenance, planning, siting, and other utility functions in a 
        manner consistent with this Act or Commission action under this 
        Act.
            ``(5) Existing regional transmission organization.--Nothing 
        in this subsection authorizes the Commission to require any 
        change in a regional transmission organization or comparable 
        organization approved by the Commission before the date of 
        enactment of this subsection.
            ``(6) Incentive transmission pricing policies.--The 
        Commission shall encourage incentive transmission pricing 
        policies for regional transmission organizations approved under 
        paragraph (1) and comparable transmission organizations 
        approved by the Commission before enactment of this subsection. 
        Such pricing policies include policies that--
                    ``(A) provide incentives to transmitting utilities 
                to promote the formation of regional transmission 
                organizations, and extend such incentives to 
                transmitting utilities that already have formed a 
                regional transmission organization;
                    ``(B) limit the charging of multiple rates for 
                transmission service over the transmission facilities 
                operated by the regional transmission organization, 
                except that a reasonable transition period may be used 
                before eliminating such rates;
                    ``(C) minimize the shifting of costs among existing 
                customers of the transmitting utilities within the 
                regional transmission organization;
                    ``(D) encourage the efficient and reliable 
                operation of the transmission system and supply of 
                transmission services through congestion management, 
                performance-based or incentive ratemaking, and other 
                measures; and
                    ``(E) encourage efficient and adequate investment 
                in and expansion of the transmission facilities owned 
                or controlled by the regional transmission 
                organization.
        ``Within 180 days after enactment of this paragraph, the 
        Commission shall establish by rule definitions and standards 
        that it determines are necessary to give effect to this 
        paragraph.
            ``(7) Withdrawal.--The Commission, after notice and 
        opportunity for comment, may withdraw the approval for a 
        regional transmission organization if the Commission determines 
        that the regional transmission organization fails to comply 
        with the provisions of this subsection.''.

SEC. 104. REGIONAL TRANSMISSION SITING AGENCIES.

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

``SEC. 215. REGIONAL TRANSMISSION SITING AGENCIES.

    ``(a) Consent.--The consent of Congress is given for compacts among 
two or more States to establish regional transmission siting agencies 
to--
            ``(1) facilitate coordination among the States within a 
        particular region with regard to the siting of future 
        transmission facilities;
            ``(2) carry out State transmission facility siting 
        responsibilities;
            ``(3) meet the other requirements of this section and rules 
        prescribed by the Commission under this section; and
            ``(4) otherwise be consistent with the public interest.
    ``(b) Authority.--If the Commission determines that a compact meets 
the requirements of subsection (a), the agency established under the 
compact has such authority with respect to matters otherwise within the 
jurisdiction of the Commission as is expressly provided in the compact 
and is necessary or appropriate for carrying out the siting 
responsibilities of the agency. The Commission's determination under 
this section may be subject to any terms and conditions the Commission 
determines are necessary or appropriate to ensure that the compact is 
in the public interest.
    ``(c) Rules.--(1) The Commission shall prescribe by rule--
            ``(A) criteria for determining whether a compact is 
        consistent with subsection (a); and
            ``(B) standards for its administration of a regional 
        transmission siting agency established under the compact.
    ``(2) The rule shall require that--
            ``(A) a regional transmission siting agency operate within 
        a region that includes all or part of each State that is a 
        party to the compact;
            ``(B) a regional transmission siting agency be composed of 
        one or more members from each State that is a party to the 
        compact;
            ``(C) each participating State vest in the regional 
        transmission siting agency the authority to carry out the 
        compact and this section; and
            ``(D) the agency follow reasonable procedures in making its 
        decisions, in governing itself, and in carrying out its 
        authorities under the compact, including judicial review.
    ``(3) The rule may include any other requirement to ensure that the 
regional transmission siting agency's organization, practices, and 
procedures are sufficient to carry out this section and the rules 
promulgated under it.
    ``(d) Termination.--The Commission, after notice and opportunity 
for comment, may terminate the approval of a compact under this section 
at any time if it determines that the regional transmission siting 
agency fails to comply with the provisions of this section or 
Commission rules under subsection (c) or that the compact is contrary 
to the public interest.''.

SEC. 105. EXPANSION OF INTERSTATE TRANSMISSION FACILITIES.

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

``SEC. 216. EXPANSION OF INTERSTATE TRANSMISSION FACILITIES.

    ``(a) Commission Authority.--Upon the application of an electric 
utility or transmitting utility, if the Commission determines, after 
notice and opportunity for hearing, that such action is in the public 
interest, it may issue an order requiring a transmitting utility to 
enlarge, extend, or improve its facilities for the transmission of 
electric energy in interstate commerce. The transmitting utility 
ordered to enlarge, extend, or improve its facilities may apply to the 
Commission for an order terminating or modifying the order if the 
transmitting utility demonstrates, and the Commission determines, that 
the transmitting utility has failed, after making a good faith effort, 
to obtain the necessary approvals or property rights under applicable 
Federal, State, and local laws.
    ``(b) Compliance With Other Laws.--Commission action under this 
section shall be subject to the National Environmental Policy Act of 
1969 (42 U.S.C. 4321 and following) and all other applicable State and 
Federal laws. This section does not affect the authority of States or 
political subdivisions of States to site transmission facilities under 
applicable State and local laws.
    ``(c) Use of Joint Boards.--Before issuing an order under 
subsection (a), the Commission shall refer the matter to a joint board 
for advice and recommendations on the need for, design of, and location 
of the proposed enlargement, extension, or improvement. The Commission 
shall consider the advice and recommendations of such board before 
ordering any such enlargement, extension, or improvement. Any such 
board shall be composed of a member or members, as determined by the 
Commission, from the State or each of the States affected or to be 
affected by such matter, from each Federal agency affected or to be 
affected by such matter, and from the Commission. Any such board shall 
be vested with the same power and be subject to the same duties and 
liabilities as in the case of a member of the Commission when 
designated to hold any hearings. The action of such board shall have 
such force and effect and its proceedings shall be conducted in such 
manner as the Commission shall by regulations provide. The State member 
or members of such board shall be appointed by the Commission from 
persons nominated by the State commission of each State affected, or by 
the Governor of such State if there is no State commission. Each State 
affected shall be entitled to the same number of representatives on the 
board unless the nominating power of such State waives such right. The 
Commission shall have the discretion to reject the nominee from any 
State, but shall thereupon invite a new nomination from that State. The 
Federal member or members from agencies other than the Commission shall 
be appointed by the Commission in consultation with the head of such 
agency or agencies. The Commission member or members of such board 
shall be appointed by the chairman, in consultation with the 
Commission. The Commission may, when in its discretion sufficient 
reason exists therefor, terminate such a board.
    ``(d) Limitation on Authority.--The Commission shall have no 
authority to compel a transmitting utility to extend or improve its 
transmission facilities if such enlargement, extension, or improvement 
would unreasonably impair the ability of the transmitting utility to 
provide adequate service to its customers.''.

SEC. 106. CONFORMING AMENDMENTS.

    (a) Enforcement.--Subsections (a) and (b) of section 316A of the 
Federal Power Act (16 U.S.C. 791a) are each amended by striking 
``section 211, 212, 213, or 214,'' in each place such phrase appears 
and inserting ``part II''.
    (b) Complaints.--Section 306 of the Federal Power Act is amended by 
inserting ``agency or instrumentality of the United States,'' after 
``person,'' in the first sentence and by inserting ``, electric 
utility, transmitting utility'' after ``licensee'' in each place it 
appears.
    (c) Review of Commission Orders.--Section 313 of the Federal Power 
Act is amended by inserting ``agency or instrumentality of the United 
States,'' after ``person,'' in the first sentence in subsection (a).
    (d) Technical Corrections.--(1) Section 211(c) of the Federal Power 
Act is amended by striking ``(2)'' and by redesignating subparagraphs 
(A) and (B) as paragraphs (1) and (2) and by striking ``termination of 
modification'' and inserting ``termination or modification''.
    (2) Section 315 of the Federal Power Act is amended by striking 
``subsection'' and inserting ``section''.

                     TITLE II--ELECTRIC RELIABILITY

SEC. 201. ELECTRIC RELIABILITY.

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

``SEC. 217. ELECTRIC RELIABILITY ORGANIZATION AND OVERSIGHT.

    ``(a) Definitions.--As used in this section:
            ``(1) Affiliated regional reliability entity.--The term 
        `affiliated regional reliability entity' means an entity 
        delegated authority under the provisions of subsection (h).
            ``(2) Bulk-power system.--The term `bulk-power system' 
        means all facilities and control systems necessary for 
        operating an interconnected transmission grid (or any portion 
        thereof), including high-voltage transmission lines, 
        substations, control centers, communications, data, and 
        operations planning facilities, and the output of generating 
        units necessary to maintain transmission system reliability.
            ``(3) Electric reliability organization.--The term 
        `electric reliability organization' means the organization 
        approved by the Commission under subsection (d)(4).
            ``(4) Entity rule.--The term `entity rule' means a rule 
        adopted by an affiliated regional reliability entity for a 
        specific region and designed to implement or enforce one or 
        more organization standards. An entity rule shall be subject to 
        approval by the electric reliability organization and once 
        approved, shall be treated as an organization standard.
            ``(5) Industry sector.--The term `industry sector' means a 
        group of users of the bulk power system with substantially 
        similar commercial interests, as determined by the board of the 
        electric reliability organization.
            ``(6) Interconnection.--The term `interconnection' means a 
        geographic area in which the operation of bulk-power system 
        components is synchronized such that the failure of one or more 
        of such components may adversely affect the ability of the 
        operators of other components within the interconnection to 
        maintain safe and reliable operation of the facilities within 
        their control.
            ``(7) Organization standard.--The term `organization 
        standard' means a policy or standard duly adopted by the 
        electric reliability organization to provide for the reliable 
        operation of a bulk power system.
            ``(8) Public interest group.--The term `public interest 
        group' means any nonprofit private or public organization that 
        has an interest in the activities of the electric reliability 
        organization, including, but not limited to, ratepayer 
        advocates, environmental groups, and State and local government 
        organizations that regulate market participants and promulgate 
        government policy.
            ``(9) System operator.--The term `system operator' means 
        any entity that operates or is responsible for the operation of 
        a bulk-power system, including a control area operator, an 
        independent system operator, a transmission company, a 
        transmission system operator, or a regional security 
        coordinator.
            ``(10) User of the bulk-power system.--The term `user of 
        the bulk-power system' means any entity that sells, purchases, 
        or transmits electric energy over a bulk-power system, or that 
        owns, operates or maintains facilities or control systems that 
        are part of a bulk-power system, or that is a system operator.
            ``(11) Variance.--The term `variance' means an exception or 
        variance from the requirements of an organization standard 
        (including a proposal for an organization standard where there 
        is no organization standard) that is adopted by an affiliated 
        regional reliability entity and applicable to all or a part of 
        the region for which the affiliated regional reliability entity 
        is responsible. A variance shall be subject to approval by the 
        electric reliability organization and once approved, shall be 
        treated as an organization standard.
    ``(b) Commission Authority.--(1) Within the United States, the 
Commission shall have jurisdiction over the electric reliability 
organization, all affiliated regional reliability entities, all system 
operators, and all users of the bulk-power system, for purposes of 
approving and enforcing compliance with the requirements of this 
section.
    ``(2) The Commission may, by rule, define any other term used in 
this section, provided such definition is consistent with the 
definitions in, and the purpose and intent of, this Act.
    ``(c) Existing Reliability Standards.--Following enactment of this 
section, and prior to the approval of the electric reliability 
organization under subsection (d), any person, including the North 
American Electric Reliability Council and its member regional 
reliability councils, shall file with the Commission any reliability 
standard, guidance or practice, or any amendment thereto, that the 
person would propose to be made mandatory and enforceable. The 
Commission, after allowing interested persons an opportunity to submit 
comments, may approve any such proposed mandatory standard, guidance or 
practice, or any amendment thereto, if it finds that the standard, 
guidance, or practice, or amendment is just, reasonable, not unduly 
discriminatory or preferential, and in the public interest. Filed 
standards, guidances, or practices, including any amendments thereto, 
shall be mandatory and applicable according to their terms following 
approval by the Commission and shall remain in effect until--
            ``(1) withdrawn, disapproved or superseded by an 
        organization standard, issued or approved by the electric 
        reliability organization and made effective by the Commission 
        under subsection (e); or
            ``(2) disapproved or suspended by the Commission if, upon 
        complaint or upon its own motion and after notice and 
        opportunity for comment, the Commission finds the standard, 
        guidance or practice unjust, unreasonable, unduly 
        discriminatory or preferential, or not in the public interest.
Standards, guidances or practices in effect pursuant to the provisions 
of this subsection shall be enforceable by the Commission.
    ``(d) Organization Approval.--(1) Not later than 90 days after the 
date of enactment of this section, the Commission shall issue proposed 
rules specifying procedures and requirements for an entity to apply for 
approval as the electric reliability organization. The Commission shall 
provide notice and opportunity for comment on the proposed rules. The 
Commission shall promulgate a final rule under this subsection within 
180 days after the date of enactment of this section.
    ``(2) Following the issuance of a final Commission rule under 
paragraph (1), an entity may submit an application to the Commission 
for approval as the electric reliability organization. The applicant 
shall specify in its application its governance and procedures, as well 
as its funding mechanism and initial funding requirements.
    ``(3) The Commission shall provide public notice of the application 
and afford interested parties an opportunity to comment.
    ``(4) The Commission shall approve the application if the 
Commission determines that the applicant--
            ``(A) has the ability to develop, implement and enforce 
        standards that provide for an adequate level of reliability of 
        the bulk-power system;
            ``(B) permits voluntary membership to any user of the bulk-
        power system or public interest group;
            ``(C) assures fair representation of its members in the 
        selection of its directors and fair management of its affairs, 
        taking into account the need for efficiency and effectiveness 
        in decisionmaking and operations and the requirements for 
        technical competency in the development of organization 
        standards and the exercise of oversight of bulk-power system 
        reliability;
            ``(D) assures that no two industry sectors have the ability 
        to control, and no one industry sector has the ability to veto, 
        the electric reliability organization's discharge of its 
        responsibilities (including actions by committees recommending 
        standards to the board or other board actions to implement and 
        enforce standards);
            ``(E) provides for governance by a board wholly comprised 
        of independent directors;
            ``(F) provides a funding mechanism and requirements that 
        are just, reasonable and not unduly discriminatory or 
        preferential and are in the public interest, and which satisfy 
        the requirements of subsection (l);
            ``(G) establishes procedures for development of 
        organization standards that provide reasonable notice and 
        opportunity for public comment, taking into account the need 
        for efficiency and effectiveness in decisionmaking and 
        operations and the requirements for technical competency in the 
        development of organization standards, and which standards 
        development process has the following attributes:
                    ``(i) openness,
                    ``(ii) balance of interests, and
                    ``(iii) due process, except that the procedures may 
                include alternative procedures for emergencies;
            ``(H) establishes fair and impartial procedures for 
        implementation and enforcement of organization standards, 
        either directly or through delegation to an affiliated regional 
reliability entity, including the imposition of penalties, limitations 
on activities, functions, or operations, or other appropriate 
sanctions;
            ``(I) establishes procedures for notice and opportunity for 
        public observation of all meetings, except that the procedures 
        for public observation may include alternative procedures for 
        emergencies or for the discussion of information the directors 
        reasonably determine should take place in closed session, such 
        as litigation, personnel actions, or commercially sensitive 
        information;
            ``(J) provides for the consideration of recommendations of 
        States and State commissions, and
            ``(K) addresses other matters that the Commission may deem 
        necessary or appropriate to ensure that the procedures, 
        governance, and funding of the electric reliability 
        organization are just, reasonable, not unduly discriminatory or 
        preferential, and are in the public interest.
    ``(5) The Commission shall approve only one electric reliability 
organization. If the Commission receives two or more timely 
applications that satisfy the requirements of this subsection, the 
Commission shall approve only the application it concludes will best 
implement the provisions of this section.
    ``(e) Establishment of and Modifications to Organization 
Standards.--(1) The electric reliability organization shall file with 
the Commission any new or modified organization standards, including 
any variances or entity rules, and the Commission shall follow the 
procedures under paragraph (2) for review of that filing.
    ``(2) Submissions under paragraph (1) shall include:
            ``(A) a concise statement of the purpose of the proposal, 
        and
            ``(B) a record of any proceedings conducted with respect to 
        such proposal.
The Commission shall provide notice of the filing of such proposal and 
afford interested persons 30 days to submit comments. The Commission, 
after taking into consideration any submitted comments, shall approve 
or disapprove such proposal not later than 60 days after the deadline 
for the submission of comments, except that the Commission may extend 
the 60-day period for an additional 90 days for good cause, and except 
further that if the Commission does not act to approve or disapprove a 
proposal within the foregoing periods the proposal shall go into effect 
subject to its terms, without prejudice to the authority of the 
Commission thereafter to suspend or modify the proposal in accordance 
with the standards and requirements of this section. Proposals approved 
by the Commission shall take effect according to their terms but not 
earlier than 30 days after the effective date of the Commission's 
order, except as provided in paragraph (3) of this subsection.
    ``(3)(A) In the exercise of its review responsibilities under this 
subsection, the Commission shall give due weight to the technical 
expertise of the electric reliability organization with respect to the 
content of a new or modified organization standard, but shall not defer 
to the organization with respect to the effect of the organization 
standard on competition. The Commission shall approve a proposed new or 
modified organization standard if it determines the proposal to be 
just, reasonable, not unduly discriminatory or preferential, and in the 
public interest. The Commission, either upon complaint or upon its own 
motion, shall suspend an existing organization standard, if it 
determines the standard to be unjust, unreasonable, unduly 
discriminatory or preferential or not in the public interest. Upon 
suspension of such a standard, the Commission shall establish an 
interim standard to apply until a new or modified standard is approved.
    ``(B) An existing or proposed organization standard which is 
disapproved or suspended in whole or in part by the Commission shall be 
remanded to the electric reliability organization for further 
consideration.
    ``(C) The Commission, on its own motion or upon complaint, may 
direct the electric reliability organization to develop an organization 
standard, including modification to an existing organization standard, 
addressing a specific matter by a date certain if the Commission 
considers such new or modified organization standard necessary or 
appropriate to further the purposes of this section. The electric 
reliability organization shall file any such new or modified 
organization standard in accordance with this subsection.
    ``(D) An affiliated regional reliability entity may propose a 
variance or entity rule under subsection (h)(3) to the electric 
reliability organization. The affiliated regional reliability entity 
may request that the electric reliability organization expedite 
consideration of the proposal, and shall file a notice of such request 
with the Commission, if expedited consideration is necessary to provide 
for bulk-power system reliability. If the electric reliability 
organization fails to adopt the variance or entity rule, either in 
whole or in part, the affiliated regional reliability entity may 
request that the Commission review such action. If the Commission 
determines, after its review of such a request, that the action of the 
electric reliability organization did not conform to the applicable 
standards and procedures approved by the Commission, or if the 
Commission determines that the variance or entity rule is just, 
reasonable, not unduly discriminatory or preferential, and in the 
public interest, and that the electric reliability organization has 
unreasonably rejected the proposed variance or entity rule, then the 
Commission may remand the proposed variance or entity rule for further 
consideration by the electric reliability organization or may direct 
the electric reliability organization or the affiliated regional 
reliability entity to develop a variance or entity rule consistent with 
that requested by the affiliated regional reliability entity. Any such 
variance or entity rule proposed by an affiliated regional reliability 
entity shall be submitted to the electric reliability organization for 
review and filing with the Commission in accordance with the procedures 
specified in this subsection.
    ``(E) Notwithstanding any other provision of this subsection, a 
proposed organization standard or amendment shall take effect according 
to its terms if the electric reliability organization determines that 
an emergency exists requiring that such proposed organization standard 
or amendment take effect without notice or comment. The electric 
reliability organization shall notify the Commission immediately 
following such determination and shall file such emergency organization 
standard or amendment with the Commission not later than five days 
following such determination and shall include in such filing an 
explanation of the need for such emergency standard. Subsequently, the 
Commission shall provide notice of the organization standard or 
amendment for comment, and shall follow the procedures set out in 
paragraphs (2) and (3) for review of the new or modified organization 
standard. Any such emergency organization standard that has gone into 
effect shall remain in effect unless and until suspended or disapproved 
by the Commission. If the Commission determines at any time that the 
emergency organization standard or amendment is not necessary, the 
Commission may suspend such emergency organization standard or 
amendment.
    ``(4) All users of the bulk-power system shall comply with any 
organization standard that takes effect under this section.
    ``(f) Coordination With Canada and Mexico.--The electric 
reliability organization shall take all appropriate steps to gain 
recognition in Canada and Mexico. The United States shall use its best 
efforts to enter into international agreements with the appropriate 
governments of Canada and Mexico to provide for effective compliance 
with organization standards and to provide for the effectiveness of the 
electric reliability organization in carrying out its mission and 
responsibilities. All actions taken by the electric reliability 
organization, any affiliated regional reliability entity, and the 
Commission shall be consistent with the provisions of such 
international agreements.
    ``(g) Changes in Procedures, Governance, or Funding.--(1) The 
electric reliability organization shall file with the Commission any 
proposed change in its procedures, governance, or funding, or any 
changes in the affiliated regional reliability entity's procedures, 
governance or funding relating to delegated functions, and shall 
include with the filing an explanation of the basis and purpose for the 
change.
    ``(2) A proposed procedural change shall take effect 90 days after 
filing with the Commission if the change constitutes a statement of 
policy, practice, or interpretation with respect to the meaning or 
enforcement of an existing procedure. Any other proposed procedural 
change shall take effect only upon a finding by the Commission, after 
notice and opportunity for comments, that the change is just, 
reasonable, not unduly discriminatory or preferential, is in the public 
interest, and satisfies the requirements of subsection (d)(4).
    ``(3) A proposed change in governance or funding shall not take 
effect unless the Commission finds that the change is just, reasonable, 
not unduly discriminatory or preferential, and is in the public 
interest, and satisfies the requirements of subsection (d)(4).
    ``(4)(A) The Commission, either upon complaint or upon its own 
motion, may suspend a procedure or governance or funding provision if 
it determines the procedure or provision does not meet the requirements 
of subsection (d)(4) or is unjust, unreasonable, unduly discriminatory 
or preferential, or otherwise not in the public interest. Upon such 
suspension the Commission shall establish an interim procedure or 
governance or funding provision until a new or modified procedure or 
governance or funding provision meeting the requirements of this 
subsection takes effect.
    ``(B) The Commission, upon complaint or upon its own motion, may 
require the electric reliability organization to amend the procedures, 
governance or funding if the Commission determines that the amendment 
is necessary to meet the requirements of this section. The electric 
reliability organization shall file the amendment in accordance with 
paragraph (1) of this subsection.
    ``(h) Delegations of Authority.--(1) The electric reliability 
organization shall, upon request by an entity, enter into an agreement 
with such entity for the delegation of authority to implement and 
enforce compliance with organization standards in a specified 
geographic area if the electric reliability organization finds that the 
entity requesting the delegation satisfies the requirements of 
subsection (d)(4) (A), (B), (C), (D), (F), and (K), and if the 
delegation promotes the effective and efficient implementation and 
administration of bulk-power system reliability. The electric 
reliability organization may enter into an agreement to delegate to the 
entity any other authority, except that the electric reliability 
organization shall reserve the right to set and approve organization 
standards for bulk-power system reliability.
    ``(2) The electric reliability organization shall file with the 
Commission any agreement entered into under this subsection and any 
information the Commission requires with respect to the affiliated 
regional reliability entity to which authority is to be delegated. The 
Commission shall approve the agreement, following public notice and 
opportunity for comment, if it finds that the agreement meets the 
requirements of paragraph (1), and is just, reasonable, not unduly 
discriminatory or preferential, and is in the public interest. A 
proposed delegation agreement with an affiliated regional reliability 
entity organized on an interconnection-wide basis shall be rebuttably 
presumed by the Commission to promote the effective and efficient 
implementation and administration of bulk-power system reliability. No 
delegation by the electric reliability organization shall be valid 
unless approved by the Commission.
    ``(3)(A) A delegation agreement entered into under this subsection 
shall specify the procedures for an affiliated regional reliability 
entity to propose entity rules or variances for review by the electric 
reliability organization. With respect to any such proposal that would 
apply on an interconnection-wide basis, the electric reliability 
organization shall presume such proposal valid if made by an 
interconnection-wide affiliated regional reliability entity unless the 
electric reliability organization makes a written finding that the 
proposal--
            ``(i) was not developed in a fair and open process that 
        provided an opportunity for all interested parties to 
        participate;
            ``(ii) has a significant adverse impact on reliability or 
        interstate commerce in other interconnections;
            ``(iii) fails to provide a level of bulk-power system 
        reliability within the interconnection such that it would 
        constitute a serious and substantial threat to public health, 
safety, welfare, or national security; or
            ``(iv) creates a serious and substantial burden on 
        competitive markets within the interconnection that is not 
        necessary for reliability.
    ``(B) With respect to any such proposal that would apply only to 
part of an interconnection, the electric reliability organization shall 
find such proposal valid if the affiliated regional reliability entity 
or entities making the proposal demonstrate that it--
            ``(i) was developed in a fair and open process that 
        provided an opportunity for all interested parties to 
        participate;
            ``(ii) would not have an adverse impact on interstate 
        commerce that is not necessary for reliability;
            ``(iii) provides a level of bulk-power system reliability 
        adequate to protect public health, safety, welfare, and 
        national security, and would not have a significant adverse 
        impact on reliability; and
            ``(iv) in the case of a variance, is based on legitimate 
        differences between regions or between subregions within the 
        affiliated regional reliability entity's geographic area.
The electric reliability organization shall approve or disapprove such 
proposal within 120 days, or the proposal shall be deemed approved. 
Following approval of any such proposal under this paragraph, the 
electric reliability organization shall seek Commission approval 
pursuant to subsection (e)(3). Affiliated regional reliability entities 
may not make requests for approval directly to the Commission except 
pursuant to subsection (e)(3)(D).
    ``(4) If an affiliated regional reliability entity requests, 
consistent with paragraph (1), that the electric reliability 
organization delegate authority to it, but is unable within 180 days to 
reach agreement with the electric reliability organization with respect 
to such requested delegation, such entity may seek relief from the 
Commission. If, following notice and opportunity for comment, the 
Commission determines that a delegation to the entity would meet the 
requirements of subsection (1) above, and that the delegation would be 
just, reasonable, not unduly discriminatory or preferential, and in the 
public interest, and that the electric reliability organization has 
unreasonably withheld such delegation, the Commission may, by order, 
direct the electric reliability organization to make such delegation.
    ``(5)(A) The Commission may, upon its own motion or upon complaint, 
and with notice to the appropriate affiliated regional reliability 
entity or entities, direct the electric reliability organization to 
propose a modification to an agreement entered into under this 
subsection if the Commission determines that--
            ``(i) the affiliated regional reliability entity no longer 
        has the capacity to carry out effectively or efficiently its 
        implementation or enforcement responsibilities under that 
        agreement, has failed to meet its obligations under that 
        agreement, or has violated any provision of this section,
            ``(ii) the rules, practices, or procedures of the 
        affiliated regional reliability entity no longer provide for 
        fair and impartial discharge of its implementation or 
        enforcement responsibilities under the agreement,
            ``(iii) the geographic boundary of a regional transmission 
        organization approved by the Commission is not wholly within 
        the boundary of an affiliated regional reliability entity and 
        such difference is inconsistent with the effective and 
        efficient implementation and administration of bulk-power 
        system reliability, or
            ``(iv) the agreement is inconsistent with another 
        delegation agreement as a result of actions taken under 
        paragraph (4) of this subsection.
    ``(B) Following an order of the Commission issued under 
subparagraph (A), the Commission may suspend the affected agreement if 
the electric reliability organization or the affiliated regional 
reliability entity does not propose an appropriate and timely 
modification. If the agreement is suspended, the electric reliability 
organization shall assume the previously delegated responsibilities. 
The Commission shall allow the electric reliability organization and 
the affiliated regional reliability entity an opportunity to appeal the 
suspension. Any such appeal shall not stay the suspension unless 
directed by the Commission or a reviewing court.
    ``(i) Organization Membership.--Every system operator shall be 
required to be a member of the electric reliability organization and 
shall be required also to be a member of any affiliated regional 
reliability entity operating under an agreement effective pursuant to 
subsection (h) applicable to the region in which the system operator 
operates or is responsible for operation of bulk-power system 
facilities.
    ``(j) Injunctions and Disciplinary Action.--(1) Consistent with the 
range of actions approved by the Commission under subsection (d)(4)(H), 
the electric reliability organization may impose a penalty, limit 
activities, functions, or operations, or take such other disciplinary 
actions the electric reliability organization finds appropriate against 
a user of the bulk-power system if the electric reliability 
organization, after notice and opportunity for interested parties to be 
heard, issues a finding in writing that the user of the bulk-power 
system has violated an organization standard approved by the 
Commission. The electric reliability organization shall immediately 
notify the Commission of any disciplinary action imposed with respect 
to an act or failure to act of a user of the bulk-power system that 
affected or threatened to affect bulk-power system facilities located 
in the United States. The sanctioned party shall have the right to seek 
suspension, modification, or rescission of such disciplinary action by 
the Commission. If the electric reliability organization finds it 
necessary to prevent a serious threat to reliability, the organization 
may seek injunctive relief in the United States district court for the 
district in which the affected facilities are located.
    ``(2) A disciplinary action taken under paragraph (1) may take 
effect no earlier than 30 days after the electric reliability 
organization files with the Commission its written finding and record 
of proceedings before the electric reliability organization and the 
Commission posts the organization's written finding, unless the 
Commission, on its own motion or upon petition by the user of the bulk-
power system which is the subject of the action, suspends the action. 
The action shall remain in effect or remain suspended until the 
Commission, after notice and opportunity for hearing, affirms, sets 
aside, modifies, or reinstates the action, but the Commission shall 
conduct such hearing under procedures established to ensure expedited 
consideration of the action taken.
    ``(3) The Commission, on its own motion or upon complaint of any 
person, may order compliance with an organization standard and may 
impose a penalty, limit activities, functions, or operations, or take 
such other disciplinary action as the Commission finds appropriate, 
against a user of the bulk-power system with respect to actions 
affecting or threatening to affect bulk-power system facilities located 
in the United States if the Commission finds, after notice and 
opportunity for a hearing, that the user of the bulk-power system has 
violated or threatens to violate an organization standard.
    ``(4) The Commission may take such action as is necessary against 
the electric reliability organization or an affiliated regional 
reliability entity to assure compliance with an organization standard, 
or any Commission order affecting the electric reliability organization 
or an affiliated regional reliability entity.
    ``(k) Reliability Reports.--The electric reliability organization 
shall conduct periodic assessments of the reliability and adequacy of 
the interconnected bulk-power system in North America and shall report 
annually to the Secretary of Energy and the Commission its findings and 
recommendations for monitoring or improving system reliability and 
adequacy.
    ``(l) Assessment and Recovery of Certain Costs.--The reasonable 
costs of the electric reliability organization, and the reasonable 
costs of each affiliated regional reliability entity that are related 
to implementation and enforcement of organization standards or other 
requirements contained in a delegation agreement approved under 
subsection (h), shall be assessed by the electric reliability 
organization and each affiliated regional reliability entity, 
respectively, taking into account the relationship of costs to each 
region and based on an allocation that reflects an equitable sharing of 
the costs among all end-users. The Commission shall provide by rule for 
the review of such costs and allocations, pursuant to the standards in 
this subsection and subsection (d)(4)(F).
    ``(m) Application of Antitrust Laws.--
            ``(1) In general.--To the extent undertaken to develop, or 
        implement, or enforce an organization standard, each of the 
        following activities shall not, in any action under the 
        antitrust laws, be deemed illegal per se:
                    ``(A) Activities undertaken by the electric 
                reliability organization under this section or 
                affiliated regional reliability entity operating under 
                an agreement in effect under subsection (h).
                    ``(B) Activities of a member of the electric 
                reliability organization or affiliated regional 
                reliability entity in pursuit of organization 
                objectives under this section undertaken in good faith 
                under the rules of the organization.
        Primary jurisdiction, and immunities and other affirmative 
        defenses, shall be available to the extent otherwise 
        applicable.
            ``(2) Rule of reason.--In any action under the antitrust 
        laws, an activity described in paragraph (1) shall be judged on 
        the basis of its reasonableness, taking into account all 
        relevant factors affecting competition and reliability.
            ``(3) Definition.--For purposes of this subsection, the 
        term `antitrust laws' has the meaning given such term in 
        subsection (a) of the first section of the Clayton Act (15 
        U.S.C. 12(a)), except that such term includes section 5 of the 
        Federal Trade Commission Act (15 U.S.C. 45) to the extent that 
        such section 5 applies to unfair methods of competition.
    ``(n) Savings Clause.--Nothing in this section shall be construed 
to preempt the authority of a State or a political subdivision of a 
State to ensure the reliability of local distribution facilities within 
the State except where the exercise of such authority unreasonably 
impairs the reliability of the bulk power system.''.

                     TITLE III--CONSUMER PROTECTION

SEC. 301. ELECTRIC SUPPLIER INFORMATION DISCLOSURE.

    (a) Disclosure Rules.--Not later than January 1, 2001, the Federal 
Trade Commission shall promulgate rules prescribing the form, 
placement, content, and timing of the disclosure required under 
subsections (b) and (c) of this section. Such rules shall be 
promulgated in accordance with section 553 of title 5 of the United 
States Code, after consultation with the Federal Energy Regulatory 
Commission, the Secretary of Energy, and the Administrator of the 
Environmental Protection Agency.
    (b) Disclosure to Retail Electric Consumers.--In order to assist 
retail electric consumers in making informed purchasing decisions, any 
retail electric supplier that sells or makes an offer to sell electric 
energy, or solicits retail electric consumers to purchase electric 
energy, shall provide the retail electric consumers, in accordance with 
rules promulgated under subsection (a), a statement containing the 
following information:
            (1)(A) The nature of the service being offered, including 
        information about interruptibility of service.
            (B) The price of electric energy, including a description 
        of any variable charges.
            (C) A description of all other charges that are associated 
        with the service being offered including, but not limited to, 
        access charges, exit charges, back-up service charges, stranded 
        cost recovery charges, and customer service charges.
            (D) Information concerning the product or price that the 
        Federal Trade Commission determines is technologically and 
        economically feasible to provide and is of assistance to retail 
        electric consumers in making purchasing decisions.
            (2)(A) The share of electric energy that is generated by 
        each type of energy generation resource.
            (B) Information concerning generation emissions 
        characteristics that the Federal Trade Commission determines is 
        technologically and economically feasible to provide and is of 
        assistance to retail electric consumers in making purchasing 
        decisions.
    (c) Disclosure to Wholesale Purchasers.--In every sale of electric 
energy for resale, the seller shall provide to the purchaser such 
information respecting generation source and emissions characteristics 
as may be required by rules under subsection (a).
    (d) Federal Trade Commission Enforcement.--Violation of a rule 
promulgated under this section shall be treated as a violation of a 
rule under section 18 of the Federal Trade Commission Act (15 U.S.C. 
57a). All functions and powers of the Federal Trade Commission under 
such Act are available to the Federal Trade Commission to enforce 
compliance with this section notwithstanding any jurisdictional 
limitations in such Act.
    (e) State Authority.--(1) This section does not preclude a State or 
State commission from prescribing and enforcing additional laws, 
regulations, or procedures regarding the practices which are the 
subject of this section, so long as such laws, regulations, or 
procedures are not inconsistent with the provisions of this section or 
with any rule prescribed by the Federal Trade Commission pursuant to 
it.
    (2) The remedies provided by this section are in addition to any 
other remedies available by law.

SEC. 302. CONSUMER PRIVACY.

    (a) Prohibition.--The Federal Trade Commission shall promulgate 
rules prohibiting any person who obtains consumer information in 
connection with the sale or delivery of electric energy to a retail 
electric consumer from using, disclosing, or permitting access to such 
information unless the consumer to whom such information relates 
provides prior written approval. Such rules shall be promulgated in 
accordance with section 553 of title 5 of the United States Code.
    (b) Permitted Use.--The rules under subsection (a) shall not 
prohibit any person from using, disclosing, or permitting access to 
consumer information referred to in subsection (a) for any of the 
following purposes:
            (1) To initiate, render, bill, or collect for the sale or 
        delivery of electric energy to retail electric consumers or for 
        related services.
            (2) To protect the rights or property of the person 
        obtaining such information.
            (3) To protect retail electric consumers from fraud, abuse, 
        and unlawful subscription in the sale or delivery of electric 
        energy to such consumers.
            (4) For law enforcement purposes.
            (5) For purposes of compliance with any Federal, State, or 
        local law or regulation authorizing disclosure of information 
        to a Federal, State, or local agency.
    (c) Aggregate Consumer Information.--The rules under subsection (a) 
shall permit any person to use, disclose, and permit access to 
aggregate consumer information and shall require local distribution 
companies to make such information available to retail electric 
suppliers upon request and payment of a reasonable fee.
    (d) Federal Trade Commission Enforcement.--Violation of a rule 
promulgated under this section shall be treated as a violation of a 
rule under section 18 of the Federal Trade Commission Act (15 U.S.C. 
57a). All functions and powers of the Federal Trade Commission under 
such Act are available to the Federal Trade Commission to enforce 
compliance with this section notwithstanding any jurisdictional 
limitations in such Act.
    (e) State Authority.--(1) This section does not preclude a State or 
State commission from prescribing and enforcing additional laws, 
regulations, or procedures regarding the practices which are the 
subject of this section, so long as such laws, regulations, or 
procedures are not inconsistent with the provisions of this section or 
with any rule prescribed by the Federal Trade Commission pursuant to 
it.
    (2) The remedies provided by this section are in addition to any 
other remedies available by law.
    (f) Definitions.--As used in this section:
            (1) Aggregate consumer information.--The term ``aggregate 
        consumer information'' means collective data that relates to a 
        group or category of retail electric consumers, from which 
        individual consumer identities and characteristics have been 
        removed.
            (2) Consumer information.--The term ``consumer 
        information'' means information that relates to the quantity, 
        technical configuration, type, destination, or amount of use of 
        electric energy delivered to any retail electric consumer.

SEC. 303. ELECTRIC SUPPLY UNFAIR TRADE PRACTICES.

    (a) Slamming.--(1) The Federal Trade Commission shall promulgate 
rules in accordance with section 553 of title 5 of the United States 
Code for the submittal and verification of a retail electric consumer's 
selection or change in selection of a retail electric supplier and for 
the assessment of penalties for violation of these rules.
    (2) A person shall not submit or change the selection made by a 
retail electric consumer except in accordance with procedures 
established in paragraph (1).
    (b) Cramming.--(1) The Federal Trade Commission shall promulgate 
rules in accordance with section 553 of title 5 of the United States 
Code for obtaining the consent of a retail electric consumer for 
purchase of goods and services other than those expressly authorized by 
law or any agreement for the purchase of electric energy or related 
services entered into by the electric consumer and for the assessment 
of penalties for violation of these rules.
    (2) A person shall not charge a retail electric consumer for a 
particular good or service except in accordance with procedures 
established in paragraph (1).
    (c) Federal Trade Commission Enforcement.--Violation of a rule 
promulgated under this section shall be treated as a violation of a 
rule under section 18 of the Federal Trade Commission Act (15 U.S.C. 
57a). All functions and powers of the Federal Trade Commission under 
such Act are available to the Federal Trade Commission to enforce 
compliance with this section notwithstanding any jurisdictional 
limitations in such Act.
    (d) State Authority.--(1) This section does not preclude a State or 
State commission from prescribing and enforcing additional laws, 
regulations, or procedures regarding the practices which are the 
subject of this section, so long as such laws, regulations, or 
procedures are not inconsistent with the provisions of this section or 
with any rule prescribed by the Federal Trade Commission pursuant to 
it.
    (2) The remedies provided by this section are in addition to any 
other remedies available by law.

SEC. 304. UNIVERSAL AND AFFORDABLE SERVICE.

    It is the sense of the Congress that--
            (1) every retail electric consumer should have access to 
        electric energy at reasonable and affordable rates; and
            (2) the States should ensure that retail electric 
        competition does not result in the loss of service to rural, 
        residential, or low-income consumers.

SEC. 305. DEFINITIONS.

    For purposes of this title, each of the terms ``local distribution 
company'', ``retail electric consumer'', ``retail electric supplier'', 
and ``State commission'' has the meaning given such term in section 3 
of the Federal Power Act.

                           TITLE IV--MERGERS

SEC. 401. ELECTRIC COMPANY MERGERS AND DISPOSITION OF PROPERTY.

    (a) In General.--Section 203(a) of the Federal Power Act (16 U.S.C. 
824b(a)) is amended as follows:
            (1) By striking ``public utility'' each place it appears 
        and inserting ``electric utility or transmitting utility''.
            (2) By striking ``facilities subject to the jurisdiction of 
        the Commission,'' and inserting ``generation or transmission 
        facilities,''.
            (3) By inserting the following after the first sentence: 
        ``Except as the Commission otherwise provides, a holding 
        company in a holding company system that includes an electric 
        utility company shall not, directly or indirectly, purchase, 
        acquire, or take any security of an electric utility company or 
        of a holding company in a holding company system that includes 
        an electric utility company, without first securing an order of 
        the Commission authorizing it to do so.''.
            (4) By amending the last sentence to read as follows: 
        ``After notice and a 60-day opportunity for oral or written 
        presentation of views, the Commission shall approve the 
        proposed action if the Commission finds that such action will 
        be consistent with the public interest. Such finding shall 
        include consideration of the effects on competition in 
        wholesale and retail markets. The Commission shall approve or 
        disapprove such action within 90 days after such 60-day period, 
        except that the Commission may extend such 90-day period for an 
        additional 90 days for good cause.''.
            (5) By adding at the end the following: ``For purposes of 
        this subsection, the terms `electric utility company', `holding 
        company', and `holding company system' have the meanings given 
        those terms by section 512 of the Electricity Competition and 
        Reliability Act. Notwithstanding sections 201(b)(1) and 201(f), 
        generation and transmission facilities shall be subject to the 
        jurisdiction of the Commission for purposes of this section.''.
    (b) Definition of Electric Utility.--Section 3(22) of the Federal 
Power Act (16 U.S.C. 796(22)) is amended by striking ``, but does not 
include any'' and inserting ``and each''.

SEC. 402. ELIMINATION OF REVIEW BY THE NUCLEAR REGULATORY COMMISSION.

    Section 105 of the Atomic Energy Act of 1954 (42 U.S.C. 2135) is 
amended by adding the following after subsection c.:
    ``d. Following the date of enactment of this subsection, subsection 
105 c. shall not apply to any pending or future application filed for a 
license to construct or operate a utilization or production facility 
under sections 103 or 104 b. This subsection shall not affect the 
Commission's authority to enforce conditions included in licenses 
issued under sections 103 or 104 b. before the date of enactment of 
this subsection.''.

                     TITLE V--PROMOTING COMPETITION

                     Subtitle A--Retail Reciprocity

SEC. 501. RETAIL RECIPROCITY.

    (a) In General.--Part II of the Federal Power Act (16 U.S.C. 824 
and following) is amended by adding at the end the following section:

``SEC. 218. RETAIL RECIPROCITY.

    ``(a) In General.--A retail electric supplier shall not sell 
electric energy to any retail electric consumer through local 
distribution facilities owned, controlled, or operated by another 
entity unless all local distribution facilities owned, controlled, or 
operated by the retail electric supplier, or any affiliate thereof, are 
subject to open access. The preceding sentence shall not apply to any 
retail electric supplier specifically exempted, by State law enacted 
prior to the date of enactment of this section, from State reciprocity 
requirements. In the case of local distribution facilities that are 
owned, controlled, or operated by a State regulated electric utility 
and that are not subject to open access, for purposes of this 
subsection such local distribution facilities shall be deemed to be 
subject to open access if the State regulated electric utility 
has filed with the State commission a plan to provide, within two years 
after the date of such filing, open access to such facilities.
    ``(b) Foreign Commerce.--A retail electric supplier located in a 
foreign country which is a party to the North American Free Trade 
Agreement shall not sell electric energy to retail electric consumers 
in the United States through local distribution facilities owned, 
controlled, or operated by a local distribution company in the United 
States unless all local distribution facilities owned, controlled, or 
operated by the retail electric supplier, or any affiliate thereof, and 
located in such country are subject to open access.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect one year after the date of the enactment of this Act.

         Subtitle B--Public Utility Holding Company Act of 1935

SEC. 511. DEFINITIONS.

    For 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, 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) 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 
                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 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. 512. REPEAL OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935.

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

SEC. 513. 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 necessary to identify 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 necessary to identify 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 necessary to identify 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. 514. 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 its 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 necessary to 
        identify 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. 515. EXEMPTION AUTHORITY.

    (a) Rulemaking.--Not later than 90 days after the date of enactment 
of this Act, the Commission shall promulgate a final rule to exempt 
from the requirements of section 514 any person that is a holding 
company, solely with respect to one or more--
            (1) qualifying facilities under the Public Utility 
        Regulatory Policies Act of 1978;
            (2) exempt wholesale generators; or
            (3) foreign utility companies.
    (b) Other Authority.--If, upon application or upon its own motion, 
the Commission finds that the books, 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 514.

SEC. 516. 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 from an associate company.

SEC. 517. 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 his or her official duty.

SEC. 518. 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. 519. 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. 520. 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 and following) (including section 301 of that Act) or the 
Natural Gas Act (15 U.S.C. 717 and following) (including section 8 of 
that Act).

SEC. 521. IMPLEMENTATION.

    Not later than 12 months after the date of enactment of this Act, 
the Commission shall--
            (1) promulgate such regulations as may be necessary or 
        appropriate to implement this subtitle; and
            (2) submit to the 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. 522. TRANSFER OF RESOURCES.

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

SEC. 523. EFFECTIVE DATE.

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

SEC. 524. CONFORMING AMENDMENT TO THE FEDERAL POWER ACT.

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

       Subtitle C--Public Utility Regulatory Policies Act of 1978

SEC. 531. PROSPECTIVE REPEAL.

    (a) New Contracts.--After the date of 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.
    (b) Existing Rights and Remedies Not Affected.--Nothing in this 
section 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.
    (c) Interpretations and Actions Taken.--Nothing in this subtitle 
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.

SEC. 532. 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 enactment of this Act of all costs associated with such 
purchases, the Federal Energy Regulatory 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 after the 
date of the enactment of this Act. Such regulations shall be treated as 
a rule enforceable under the Federal Power Act (16 U.S.C. 791a-825r).

SEC. 533. DEFINITIONS.

    For purposes of this subtitle:
            (1) The term ``electric utility'' means any person, State 
        agency, or Federal agency, which sells electric energy.
            (2) The term ``qualifying small power production facility'' 
        has the same meaning as provided in section 3(17)(C) of the 
        Federal Power Act.
            (3) The term ``qualifying cogeneration facility'' has the 
        same meaning as provided in section 3(18)(A) of the Federal 
        Power Act.
            (4) The term ``qualifying facility'' means either a 
        qualifying small power production facility or a qualifying 
        cogeneration facility.

        Subtitle D--Additional Provisions Promoting Competition

SEC. 541. AGGREGATION.

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

``SEC. 221. PURCHASE OF ELECTRIC ENERGY BY RETAIL ELECTRIC CONSUMERS.

    ``Notwithstanding any other provision of Federal or State law, and 
subject to not unduly discriminatory or preferential State requirements 
imposed on retail electric suppliers, a group of retail electric 
consumers or any entity that aggregates consumers acting on behalf of 
such group, including a political subdivision of a State or a rural 
electric cooperative, may acquire retail electric energy on an 
aggregate basis if the group is served by one or more local 
distribution companies all of whose local distribution facilities are 
subject to open access.''.

SEC. 542. INTERCONNECTION.

    (a) Distributed Generation Facilities.--Section 210 of the Federal 
Power Act is amended by adding the following at the end thereof:
    ``(f) Special Rule for Distributed Generation Facilities.--
            ``(1) Definition.--As used in this subsection the term 
        `distributed generation facility' means an electric power 
        generation facility of not more than 50 megawatts capacity that 
        is designed to serve retail electric consumers at the facility.
            ``(2) Interconnection.--A local distribution company shall 
        allow a distributed generation facility to interconnect with 
        the local distribution facilities of such company if the 
        distributed generation facility owner is a retail electric 
        consumer provided local distribution service by such company 
        and such owner complies with the final rule promulgated under 
        paragraph (3).
            ``(3) Rules.--Within one year from the date of enactment of 
        this subsection, the Commission shall promulgate a final rule 
        to establish safety, reliability, and power quality standards 
        relating to distributed generation facilities. To the extent 
        feasible, the Commission shall develop the standards through a 
        process involving interested parties. For purposes of 
        developing such standards, the Commission shall establish an 
        advisory committee composed of qualified experts to make 
        recommendations to the Commission''.
    (b) Interconnection of Other Facilities.--Section 210 of the 
Federal Power Act is amended as follows:
            (1) In subsection (a)(1) (16 U.S.C. 824i(a)(1))--
                    (A) by inserting ``transmitting utility, local 
                distribution companies'' after ``electric utility,'';
                    (B) by inserting ``any transmitting utility,'' 
                after ``small power production facility,'' in 
                subparagraph (A); and
                    (C) by inserting ``or distribution'' after 
                ``transmission'' in subparagraph (D).
            (2) In subsection (b)(2) (16 U.S.C. 824i(b)(2)) by striking 
        ``an evidentiary hearing'' and inserting ``a hearing''.
            (3) In subsection (c)(2) strike ``or'' at the end of 
        subparagraph (B), strike ``and'' the end of subparagraph (C) 
        and insert ``or'', and add the following at the end thereof:
                    ``(D) promote competition in electricity markets, 
                and''.
            (4) In subsection (d) by deleting the last sentence.

                  TITLE VI--FEDERAL ELECTRIC UTILITIES

                 Subtitle A--Tennessee Valley Authority

 SEC. 601. DEFINITIONS.

    For purposes of this subtitle:
            (1) The term ``Commission'' means the Federal Energy 
        Regulatory Commission.
            (2) The term ``distributor'' means a municipal or 
        cooperative organization that owns, controls, or operates local 
        distribution facilities and which on January 2, 1998, purchased 
        electric power at wholesale from the Tennessee Valley Authority 
        under an all-requirements contract.
            (3) The term ``distributor service area'' means the 
        geographic area within which a distributor is authorized by 
        State law to sell electric power to retail electric consumers 
        on the date of enactment of this Act.
            (4) The term ``electric utility'' has the same meaning as 
        provided by section 3(22) of the Federal Power Act (16 U.S.C. 
        796(22)).
            (5) The term ``excess electric power'' means that portion 
        of the electric power and capacity that is available to the 
        Tennessee Valley Authority and which exceeds the Tennessee 
        Valley Authority's firm power supply obligations under 
        contracts entered into in accordance with sections 10, 11, and 
        12 of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 
        831i, 831j, and 831k).
            (6) The term ``public utility'' has the same meaning as 
        provided by section 201(e)(1) of the Federal Power Act (16 
        U.S.C. 824(e)(1)).
            (7) The term ``retail electric consumer'' has the same 
        meaning as provided by section 3 of the Federal Power Act (16 
        U.S.C. 796).
            (8) The term ``Tennessee Valley Region'' means the 
        geographic area in which the Tennessee Valley Authority or its 
        distributors were the primary source of electric power on the 
        date of enactment of this Act.

SEC. 602. WHOLESALE COMPETITION IN THE TENNESSEE VALLEY REGION.

    (a) Amendments to the Federal Power Act.--
            (1) Section 212(f) of the Federal Power Act (16 U.S.C. 
        824k(f)), relating to interconnection or wheeling orders that 
        result in the sale or delivery of electric power outside the 
        Tennessee Valley Region, is repealed.
            (2) Section 212(j) of the Federal Power Act (16 U.S.C. 
        824k(j)), relating to transmission within the Tennessee Valley 
        Region, is repealed.
    (b) Amendments to the Tennessee Valley Authority Act.--(1) The 
third sentence of the first paragraph of section 15d(a) of the 
Tennessee Valley Authority Act of 1933 (16 U.S.C. 831n-4(a)), limiting 
the sale or delivery of electric power outside the area for which the 
Tennessee Valley Authority or its distributors were the primary source 
of electric power on July 1, 1957, is repealed.
    (2) The second and third paragraphs of section 15d(a) of the 
Tennessee Valley Authority Act of 1933 (16 U.S.C. 831n-4(a)) are 
repealed.

SEC. 603. TENNESSEE VALLEY AUTHORITY POWER SALES.

    (a) Limit on Retail Sales by Tennessee Valley Authority.--
Notwithstanding sections 10, 11, and 12 of the Tennessee Valley 
Authority Act (16 U.S.C. 831i), the Tennessee Valley Authority shall 
not sell electric power at retail, except it may sell power to--
            (1) a retail electric consumer (or predecessor in interest) 
        that had a contract for the purchase of electric power from the 
        Tennessee Valley Authority on the date of enactment of this 
        Act; or
            (2) a retail electric consumer who consumes that power 
        within a distributor service area, if--
                    (A) the distributor's firm power purchases from the 
                Tennessee Valley Authority are 50 percent or less of 
                the distributor's total retail sales; or
                    (B) the distributor agrees that the Tennessee 
                Valley Authority can sell electric power to such retail 
                electric consumer.
    (b) Regional Preference for Wholesale Power Sales.--
            (1) Regional preference.--Notwithstanding sections 10, 11, 
        and 12, or any other provision of the Tennessee Valley 
        Authority Act of 1933 (16 U.S.C. 831 and following), the sale 
        of electric power at wholesale by the Tennessee Valley 
        Authority for use outside the Tennessee Valley Region shall be 
        limited to excess electric power.
            (2) Sales of excess electric power.--The Tennessee Valley 
        Authority shall not offer firm excess power under an agreement 
        with a term of three years or longer to a new wholesale 
        customer at rates, terms, and conditions more favorable than 
        those offered to any distributor for comparable power, taking 
        into account such factors as the amount of power sold, the 
        firmness of such power, and the length of the contract term 
        unless the distributor or distributors that are purchasing 
        power under equivalent firm power contracts agree to the sale 
        to the new customer.
Nothing in this subsection shall prevent the Tennessee Valley Authority 
from making exchange power arrangements with other electric utilities 
when economically feasible.
    (c) Regulation of TVA Wholesale Power Sales.--Notwithstanding 
section 201(f) of the Federal Power Act, sections 202(h), 205, 206, 
208, and 210 through 213 and sections 301 through 304, 306, 307 (except 
the last sentence of paragraph (c)), 308, 309, 313, and 317 of the 
Federal Power Act apply to sales of electric power at wholesale by the 
Tennessee Valley Authority for use outside the Tennessee Valley Region 
to the same extent and in the same manner as such provisions apply to 
wholesale sales of electric power in interstate commerce by a public 
utility otherwise subject to the jurisdiction of the Commission under 
part II of such Act.
    (d) Application of Tennessee Valley Authority Act to Sales Outside 
Tennessee Valley Region.--The third proviso of section 10 of the 
Tennessee Valley Authority Act of 1933 (16 U.S.C. 831i) and the second 
and third provisos of section 12 of the Tennessee Valley Authority Act 
of 1933 (16 U.S.C. 831k) shall not apply to any sale of excess electric 
power by the Tennessee Valley Authority for use outside the Tennessee 
Valley Region.

SEC. 604. TENNESSEE VALLEY AUTHORITY ELECTRIC GENERATION FACILITIES.

    Section 15(d) of the Tennessee Valley Authority Act of 1933 (16 
U.S.C. 831n-4(a)) is amended by striking the period at the end of the 
second sentence and inserting the following: ``, if the Corporation 
determines the construction, acquisition, enlargement, improvement, or 
replacement of any plant or facility used or to be used for the 
generation of electric power that is necessary to supply the demands of 
distributors (as defined in section 601 of the Electricity Competition 
and Reliability Act) and retail electric consumers (as defined in such 
section 601) of the Corporation.''.

SEC. 605. RENEGOTIATION OF ALL-REQUIREMENTS POWER CONTRACTS.

    (a) Renegotiation.--Within one year following the date of enactment 
of this Act, the Tennessee Valley Authority and the distributors shall 
renegotiate their existing all-requirements power contracts with 
respect to--
            (1) the remaining term;
            (2) the length of the termination notice;
            (3) the amount of electric power a distributor may purchase 
        from an electric utility other than the Tennessee Valley 
        Authority, and access to the Tennessee Valley Authority 
        transmission system for that electric power; and
            (4) stranded cost recovery.
    (b) Resolution.--If the parties are unable to reach agreement with 
regard to any of the issues under subsection (a) within the one-year 
period set forth in subsection (a), the distributor shall have the 
right to terminate the contract upon not less than three years notice.

 SEC. 606. REGULATION OF TENNESSEE VALLEY AUTHORITY TRANSMISSION 
              SYSTEM.

    (a) Federal Power Act Jurisdiction.--Notwithstanding sections 
201(b)(1) and 201(f) of the Federal Power Act, sections 202(h), 205, 
206, 208, and 210 through 213 and sections 301 through 304, 306, 307 
(except the last sentence of paragraph (c)), 308, 309, 313, and 317 of 
the Federal Power Act apply to the transmission and local distribution 
of electric power by the Tennessee Valley Authority to the same extent 
and in the same manner as such provisions apply to the transmission of 
electric power in interstate commerce by a public utility otherwise 
subject to the jurisdiction of the Commission under part II of such 
Act.
    (b) Rate Phase-In.--If the Commission determines that the initial 
application of this subtitle in the development of any Tennessee Valley 
Authority rates for transmission services would result in an excessive 
increase in any rate, as determined by the Commission, the Commission 
may phase in the effect of the application of this subtitle to such 
rate over a reasonable period of time.

SEC. 607. REGULATION OF TENNESSEE VALLEY AUTHORITY DISTRIBUTORS.

    (a) Repeal of Tennessee Valley Authority Regulation of 
Distributors.--Upon the election of a distributor, the third proviso of 
section 10 of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 
831i) and the second and third provisos of section 12 of the Tennessee 
Valley Authority Act of 1933 (16 U.S.C. 831k) shall not apply to future 
wholesale sales of electric power by the Tennessee Valley Authority in 
the Tennessee Valley Region, and the Tennessee Valley Authority shall 
not be authorized to regulate, by means of rules, contract provisions, 
resale rate schedules, contract termination rights, or any other 
method, any rates, terms, or conditions imposed on the resale of such 
electric power by such distributor, or any rates, terms, or conditions 
for the use of local distribution facilities. In any contract between 
the Tennessee Valley Authority and a distributor for the purchase of at 
least 70 percent of the distributor's requirements for the sale of 
electric power, the Tennessee Valley Authority shall include such terms 
and conditions as may be reasonably necessary to assure that the 
financial benefits of a distributor's electric system operations are 
allocated to the distributor's ratepayers.
    (b) Removal of PURPA Ratemaking Authority.--Section 3(17) of the 
Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2602(17)) is 
amended by striking ``, and in the case of an electric utility with 
respect to which the Tennessee Valley Authority has ratemaking 
authority, such term means the Tennessee Valley Authority''.
    (c) Authority of Governing Bodies of Distributors.--Any regulatory 
authority exercised by the Tennessee Valley Authority over any 
distributor shall be exercised by the governing body of such 
distributor, in accordance with the laws of the State in which it is 
organized.

SEC. 608. STRANDED COST RECOVERY.

    (a) In General.--Within six months after the date of enactment of 
this Act, or sooner as part of any distributors renegotiation of its 
contract under section 605, the Tennessee Valley Authority shall make a 
good faith effort to reach agreement with distributors for recovery of 
its stranded costs. The Tennessee Valley Authority and the distributors 
shall submit jointly, or if they disagree, submit separately, a 
stranded cost recovery plan to the Commission for review. The 
Commission shall approve, reject, or modify the plan and issue an order 
within one year of the date of enactment of this Act, to provide for 
recovery of stranded costs (as determined by the Commission) by the 
Tennessee Valley Authority from any departing power or transmission 
customer. These regulations shall provide that customers that did not 
cause stranded costs to be incurred by the Tennessee Valley Authority 
are not obligated to pay such costs on behalf of other customers. The 
Tennessee Valley Authority is authorized to recover such of its 
stranded costs as are approved by the Commission. The Commission may 
not impose a stranded cost recovery charge after September 30, 2007, 
unless the person against whom such charges are assessed agrees 
otherwise.
    (b) Debt.--Amounts recovered by the Tennessee Valley Authority as 
stranded cost recovery charges shall be used to pay down Tennessee 
Valley Authority's debt to the extent determined by the Tennessee 
Valley Authority Board to be consistent with the proper financial 
management of the Tennessee Valley Authority power system, provided 
that Tennessee Valley Authority may not use amounts recovered to pay 
for additions to the Tennessee Valley Authority's generating capacity.
    (c) Unbundling.--Any stranded cost recovery charges assessed by the 
Tennessee Valley Authority on retail or wholesale customers or assessed 
on retail customers of distributors shall be unbundled from the 
otherwise applicable retail or wholesale rate applicable to that 
customer and stated on the customer's bill as a separate charge.
    (d) Report.--Beginning in fiscal year 2003, as part of the annual 
management report submitted by the Tennessee Valley Authority to 
Congress, the Tennessee Valley Authority shall also specifically 
report:
            (A) the status of the Tennessee Valley Authority's long-
        range financial plans and the progress toward its goal of 
        competitively priced power, and a general discussion of 
        Tennessee Valley Authority's prospects on meeting the 
        objectives of the Ten Year Business Outlook issued on July 22, 
        1997;
            (B) any changes in assumptions since the previous report 
        that may have a material effect on Tennessee Valley Authority's 
        long-range financial plans;
            (C) the source of funds used for any capacity additions;
            (D) the use or other disposition of amounts recovered by 
        Tennessee Valley Authority under this Act;
            (E) the amount by which Tennessee Valley Authority's 
        publicly-held debt was reduced; and
            (F) the projected amount by which Tennessee Valley 
        Authority's publicly-held debt will be reduced.

 SEC. 609. APPLICATION OF ANTITRUST LAW.

    (a) In General.--The Tennessee Valley Authority shall be subject to 
the antitrust laws of the United States with respect to the operation 
of its electric power and transmission systems. For purposes of this 
section, the term ``antitrust laws'' has the meaning given such term in 
subsection (a) of the first section of the Clayton Act (15 U.S.C. 
12(a)), except that such term includes section 5 of the Federal Trade 
Commission Act (15 U.S.C. 45) to the extent that such section 5 applies 
to unfair methods of competition.
    (b) Damages.--No damages, interest on damages, costs, or attorney's 
fees may be recovered under section 4, 4A, or 4C of the Clayton Act (15 
U.S.C. 15, 15a, or 15c) from the Tennessee Valley Authority.

 SEC. 610. SAVINGS PROVISION.

    (a) In General.--This subtitle shall be interpreted and implemented 
in a manner that does not adversely affect bonds issued by the 
Tennessee Valley Authority.
    (b) Tennessee Valley Authority Bonds Not Obligations of the United 
States.--Nothing in this subtitle shall affect section 15d(b) of the 
Tennessee Valley Authority Act of 1933 (16 U.S.C. 831n-4(b)), providing 
that bonds issued by the Tennessee Valley Authority shall not be 
obligations of, nor shall payment of the principal thereof or interest 
thereon be guaranteed by, the United States.

              Subtitle B--Bonneville Power Administration

SEC. 621. DEFINITIONS.

    As used in this subtitle:
            (1) The term `Bonneville Administrator' means the 
        Administrator of the Bonneville Power Administration.
            (2) The term `Bonneville Transmission System' means 
        transmission facilities owned or leased by the United States 
and operated by the Bonneville Power Administration or by another 
entity under section 202(h) of the Federal Power Act.
            (3) The terms ``Commission'', ``electric utility'', 
        ``retail electric consumer'', and ``transmitting utility'' have 
        the same meanings as provided by section 3 of the Federal Power 
        Act (16 U.S.C. 796).
            (4) The term ``major resource'' has the meaning given such 
        term in section 3(12) of the Pacific Northwest Electric Power 
        Planning and Conservation Act.
            (5) The term `Pacific Northwest' has the meaning given that 
        term in section 3(14) of the Pacific Northwest Electric Power 
        Planning and Conservation Act (16 U.S.C. 839a(14)).

SEC. 622. REGULATION OF BONNEVILLE TRANSMISSION SYSTEM.

    (a) In General.--After September 30, 2001, notwithstanding section 
201(f) of the Federal Power Act, sections 202(h), 205, 206, 208, and 
210 through 213 and sections 301 through 304, 306, 307 (except the last 
sentence of paragraph (c)), 308, 309, 313, and 317 of the Federal Power 
Act apply to the Bonneville Transmission System and transmission of 
electric energy and provision of necessary associated services over the 
Bonneville Transmission System.
    (b) Additional Rules.--Any determination by the Commission of 
rates, terms, and conditions for the transmission of electric energy 
under subsection (a) shall be subject to the following rules:
            (1) Phasing in changes in transmission rates or charges 
        that would cause unreasonable cost shifts among users of the 
        Bonneville Transmission System if implemented at once.
            (2) Mitigating unreasonable adverse effects on transmission 
        customers in the Pacific Northwest that would otherwise result 
        from changes in the treatment of costs to acquire transmission 
        to serve customers historically served by General Transfer 
        Agreements entered into between the Bonneville Administrator 
        and other transmitting utilities prior to the enactment of this 
        Act. This paragraph shall not apply if the Bonneville 
        Transmission System is operated by a regional transmission 
        organization approved by the Commission.
            (3) No direct assignment of costs of transmission 
        facilities that were included in the Bonneville Administrator's 
        transmission rates in effect on October 1, 1998, or costs for 
        replacement of such facilities.
            (4) Assuring the Bonneville Power Administration's 
        transmission rates and charges are established sufficient to--
                    (A) recover Federal investment in the Bonneville 
                Transmission System over a reasonable period of years 
                after first meeting all the Bonneville Power 
                Administration's other transmission costs and expenses; 
                and
                    (B) produce the revenues necessary to assure timely 
                payment of all transmission related costs and expenses;
        provided that this paragraph shall not be construed to require 
        any particular methodology for setting transmission rates.
            (5) Rules established by the Commission to--
                    (A) assure transmission access is provided over the 
                Bonneville Transmission System for hydroelectric power 
                that must be generated and transmitted at a particular 
                time in order to reduce levels of dissolved nitrogen 
                gas harmful to fish, with such access to be provided in 
                a manner that displaces other generation using the 
                Bonneville Transmission System but does not impair 
                service to loads, require operations that may damage 
                generation facilities, or alter commercial 
                relationships between the electric utility whose 
                generation was displaced and its customer; and
                    (B) provide methods for compensation between or 
                among the electric utility that generated the 
                hydroelectric power and the party or parties affected 
                by the displacement of transmission customers in those 
                circumstances.
            (6) Section 623 of this Act (relating to surcharge on 
        transmission rates to recover otherwise nonrecoverable costs).
    (c) Applicability.--Subsection (a) shall not apply to--
            (1) the Bonneville Power Administration's activities other 
        than transmission of electric energy and provision of necessary 
        associated services over the Bonneville Transmission System; or
            (2) a contract in effect on the date of enactment of this 
        Act, except for rates which are adjustable by the Bonneville 
        Administrator under the contract; a treaty of the United 
        States; or a contract concerning the delivery of electric 
        energy and capacity entered into by entities designated 
        pursuant to such a treaty.
    (d) Priority of Payments.--Nothing in this section shall alter or 
be construed to alter the priority of payments established in section 
13(b) of the Federal Columbia River Transmission System Act (16 U.S.C. 
838k(b)) or the requirements of section 11 of that Act (16 U.S.C. 
838i).
    (e) Costs and Revenues.--Costs and revenues shall be allocated to 
the Bonneville Transmission System in accordance with rules to be 
promulgated by the Commission.
    (f) Hearings.--In any proceeding, or part of a proceeding, that the 
Commission sets for hearing before an administrative law judge, with 
respect to the rates, terms, or conditions for transmission of electric 
energy by the Bonneville Power Administration, all evidentiary hearings 
shall be conducted in the Pacific Northwest.

SEC. 623. SURCHARGE ON TRANSMISSION RATES TO RECOVER OTHERWISE 
              NONRECOVERABLE COSTS.

    (a) Surcharge Authority.--By October 1, 2001, notwithstanding 
section 201(f) of the Federal Power Act, the Bonneville Administrator 
shall propose and the Commission shall, by accepting or modifying the 
Bonneville Administrator's proposal, authorize the Administrator to 
place a surcharge on rates or charges for transmission services over 
the Bonneville Transmission System when necessary to recover power 
costs that cannot be recovered through power revenues to meet the cost 
recovery requirements of section 7(a)(1) of the Pacific Northwest 
Electric Power Planning and Conservation Act (16 U.S.C. 839e(a)(1)).
    (b) Requirements.--The transmission surcharge referred to in 
subsection (a) shall--
            (1) recover not more than $600,000,000 in total and no more 
        than $100,000,000 in any fiscal year;
            (2) be available only between October 1, 2001, and October 
        1, 2016;
            (3) be implemented by the Bonneville Administrator only 
        when the Administrator projects that available financial 
        reserves in the Bonneville Power Administration Fund 
        attributable to the power function will fall below 
        $150,000,000;
            (4) not be implemented until the Bonneville Administrator 
        has undertaken reasonable and prudent measures to mitigate the 
        need to implement the surcharge; and
            (5) to the fullest extent possible, be designed and 
        established to recover the costs from transmission in a manner 
        that does not apply to use of the Bonneville Transmission 
        System for sales of electric energy outside the Pacific 
        Northwest.
    (c) Implementation.--The Bonneville Administrator shall have sole 
discretion to implement the surcharge on rates or charges for 
transmission services authorized by the Commission under subsection 
(a). Before implementing the surcharge, the Bonneville Administrator 
shall--
            (1) make available information concerning the need for and 
        amount of the surcharge, and its proposed effective date;
            (2) conduct a public process of not less than 30 days in 
        the Pacific Northwest to receive comments on implementation of 
        the surcharge; and
            (3) afford the Pacific Northwest Electric Power and 
        Conservation Planning Council 30 days to make recommendations 
        to the Bonneville Administrator concerning cost management 
        options that could mitigate the need to implement the 
        surcharge.
If, after taking into consideration those comments and recommendations 
and ensuring that reasonable and prudent alternatives to implementation 
of the surcharge have been undertaken, the Bonneville Administrator 
decides to implement a surcharge, the Administrator may implement the 
surcharge by filing the proposed surcharge with the Commission. The 
surcharge shall take effect on the Bonneville Administrator's proposed 
effective date, but no earlier than 60 days following the 
Administrator's filing of the proposed surcharge to the Commission for 
approval.
    (d) Commission Review.--Within 120 days after the effective date of 
the surcharge, the Commission shall accept, reject, or modify the 
surcharge and communicate its decision to the Bonneville Administrator. 
If the Commission rejects or modifies the surcharge, the Commission may 
order the Bonneville Power Administration to refund, with interest, the 
portion of the surcharge the Commission found not justified or the 
Commission may authorize the Bonneville Power Administration to recover 
amounts from customers who underpaid or did not pay the surcharge. If 
the Commission orders modification of the surcharge, such modified 
charge shall be effective on the date and for the time period specified 
by the Commission.
    (e) Repayment.--Any amounts recovered through the transmission 
surcharge shall be treated as loans to the Bonneville Power 
Administration's power function by the transmission function. The 
Bonneville Power Administration shall repay the loans as soon as 
possible from power revenues once the Bonneville Power Administration 
is able to meet other power cost recovery and Treasury repayment 
obligations on an annual basis using power revenues. To the extent 
practicable, the Administrator shall refund all or a portion of the 
surcharge collected from transmission customers, as directed and 
determined appropriate by the Commission. The borrowed revenues shall 
bear interest at a rate determined appropriate by the Commission.
    (f) Cost Recovery.--For the recovery of costs relating to any 
generation or conservation resources financed by debt issued by a non-
Federal party before October 1, 1998 (and any refundings and 
refinancing thereof), and secured by an obligation of the Bonneville 
Power Administration to make payments or net bill power and 
transmission service that cannot be recovered through power rates and 
charges and paid in accordance with the application of revenues and 
priority of payments specified by section 13(b) of the Federal Columbia 
River Transmission System Act of 1974 (16 U.S.C. 838k(b)), the 
provisions of this section apply, except for the recovery limitations 
under subsection (b)(1) and the time limits under subsection (b)(2), 
but only to the extent such recovery would have been allowed under laws 
applicable to the Bonneville Power Administration as of October 1, 
1998.

SEC. 624. LIMIT ON RETAIL SALES BY BONNEVILLE POWER ADMINISTRATION.

    Notwithstanding section 5(a) of the Bonneville Project Act (16 
U.S.C. 832d(a)), the Bonneville Power Administration shall not sell 
electric energy or capacity to any retail electric consumer that did 
not have a contract for the purchase of electric energy from the 
Bonneville Power Administration for use at specific facilities on 
October 1, 1998.

SEC. 625. ACQUISITION OF NEW MAJOR GENERATING RESOURCES.

    Section 6 of the Pacific Northwest Electric Power Planning and 
Conservation Act (16 U.S.C. 839d) is amended by adding the following 
new subsection at the end thereof:
    ``(n) Acquisition of New Major Generating Resources.--
Notwithstanding any other provision of law, the Administrator shall not 
acquire any new major resource after the date of enactment of this 
subsection unless the Commission determines that satisfactory 
contractual and other financial arrangements have been made to ensure 
that the customer or customers on whose behalf the resource is acquired 
commit to pay the full cost of the resource and the Administrator shall 
not acquire any new major resource that the Administrator reasonably 
expects may require implementation of the surcharge authorized by 
section 623 of the Electricity Competition and Reliability Act.''.

 SEC. 626. APPLICATION OF ANTITRUST LAW.

    (a) In General.--The Bonneville Power Administration shall be 
subject to the antitrust laws of the United States with respect to its 
sale of electric energy and capacity and the operation of its 
transmission system. For purposes of this section, the term ``antitrust 
laws'' has the meaning given such term in subsection (a) of the first 
section of the Clayton Act (15 U.S.C. 12(a)), except that such term 
includes section 5 of the Federal Trade Commission Act (15 U.S.C. 45) 
to the extent that such section 5 applies to unfair methods of 
competition.
    (b) Damages.--No damages, interest on damages, costs, or attorney's 
fees may be recovered under section 4, 4A, or 4C of the Clayton Act (15 
U.S.C. 15, 15a, or 15c) from the Bonneville Power Administration.

SEC. 627. CONFORMING AMENDMENTS.

    (a) Federal Power Act.--Section 212(i) of the Federal Power Act (16 
U.S.C. 824(i)) is repealed.
    (b) Federal Columbia River Transmission System Act.--(1) Section 
3(c) of the Federal Columbia River Transmission System Act (16 U.S.C. 
838a(o)) is amended by inserting ``, and transmission facilities with 
an estimated capital cost exceeding $30,000,000 in 1998 dollars, 
adjusted using the United States Gross Domestic Product Implicit Price 
Deflator Index'', after ``own facilities''.
    (2) Section 6 of the Federal Columbia River Transmission System Act 
(16 U.S.C. 838d) is repealed.
    (3) Section 9 of the Federal Columbia River Transmission System Act 
(16 U.S.C. 838g) is amended to read as follows:

``SEC. 9. RATES AND CHARGES.

    ``Schedules of rates and charges for the sale, including 
dispositions to Federal agencies, of all electric power made available 
to the Administrator pursuant to section 8 of this Act or otherwise 
acquired shall be established--
            ``(1) with a view to encouraging the widest possible 
        diversified use of electric power at the lowest possible rates 
        to consumers consistent with sound business principles;
            ``(2) having regard to the recovery (upon the basis of the 
        application of such rate schedules to the capacity of the 
        electric facilities of the projects) of the cost of producing 
        such electric power, including the amortization of the capital 
        investment allocated to power over a reasonable period of years 
        and payments provided for in section 11(b)(9) of this Act; and
            ``(3) at levels to produce such additional power revenues 
        as may be required, in the aggregate with all other power 
        revenues of the Administrator, to pay when due the principal 
        of, premiums, discounts, and expenses in connection with the 
        issuance of and interest on all bonds issued and outstanding 
        pursuant to this Act for other than the construction, 
        acquisition, and replacement of the Federal transmission 
        system, and amounts required to establish and maintain reserve 
        and other funds and accounts established in connection 
        therewith.
Electric power rates under this section shall be established by the 
Administrator in accordance with section 7 of the Pacific Northwest 
Electric Power Planning and Conservation Act.''.
    (4) Section 10 of the Federal Columbia River Transmission System 
Act (16 U.S.C. 838h) is repealed.
    (c) Regional Preference Act.--Section 6 of Public Law 88-552 (16 
U.S.C. 837e), commonly known as the ``Regional Preference Act'', is 
amended by striking ``Federal energy or'' in the first sentence and by 
striking the second sentence.
    (d) Northwest Power Act.--(1) Section 7(a)(1) of the Pacific 
Northwest Electric Power Planning and Conservation Act (16 U.S.C. 
839e(a)(1)) is amended to read as follows:
    ``(a)(1) The Administrator shall establish, and periodically review 
and revise, rates for the sale and disposition of electric power and 
shall periodically review and, if necessary, propose revisions to rates 
for the transmission of electric power. Rates for the sale and 
disposition of electric power shall be established and, as appropriate, 
revised to recover, in accordance with sound business principles, the 
costs associated with the acquisition and conservation of electric 
power, including the amortization of the Federal investment allocable 
to electric power rates in the Federal Columbia River Power System 
(including irrigation electric power-related costs required to be 
repaid out of electric power revenues) over a reasonable period of 
years and the other costs and expenses incurred by the Administrator 
pursuant to this Act and other provisions of law. Rates for the sale 
and disposition of electric power shall be established in accordance 
with section 9 of the Federal Columbia River Transmission System Act 
(16 U.S.C. 838g), section 5 of the Flood Control Act of 1944 (16 U.S.C. 
825s), and this Act.''.
    (2) Section 7(a)(2) of the Pacific Northwest Electric Power 
Planning and Conservation Act (16 U.S.C. 839e(a)(2)) is amended--
            (A) by striking ``Rates'' and inserting ``Power rates'';
            (B) by inserting ``and'' after the comma in subparagraph 
        (A);
            (C) by striking ``, and'' and inserting a period at the end 
        of subparagraph (B); and
            (D) by striking subparagraph (C).
    (3) Section 7(i) of the Pacific Northwest Electric Power Planning 
and Conservation Act (16 U.S.C. 839e(i)) is amended by inserting 
``power'' after ``establishing'' in the first sentence.
    (4) Section 9(d) of the Pacific Northwest Electric Power Planning 
and Conservation Act (16 U.S.C. 839f(d)) is amended by striking 
``transmission access,'' and inserting ``power'' before ``services'' in 
the second sentence.
    (5) Section 9(i)(3) of the Pacific Northwest Electric Power 
Planning and Conservation Act (16 U.S.C. 839f(i)(3)) is amended by 
inserting ``power'' before ``services'' each place it appears, and by 
striking ``transmission,'' in the first sentence.
    (e) Bonneville Project Act.--Section 2(e) of the Bonneville Project 
Act (16 U.S.C. 832a(e)) is amended by striking the colon and all that 
follows and inserting a period.

           Subtitle C--Other Power Marketing Administrations

SEC. 631. DEFINITIONS.

    For purposes of this subtitle:
            (1) The term ``Administrator'' means the administrator of a 
        Federal power marketing administration.
            (2) The term ``Commission'' means the Federal Energy 
        Regulatory Commission.
            (3) The term ``Federal power marketing administrations'' 
        means the Western Area Power Administration, Southwestern Power 
        Administration, and Southeastern Power Administration.
            (4) The term ``power generating agencies'' means the Bureau 
        of Reclamation, the Army Corps of Engineers, and the 
        International Boundary and Water Commission.
            (5) The term ``public utility'' means a public utility as 
        defined in section 201(e)(1) the Federal Power Act.

SEC. 632. WHOLESALE POWER SALES BY FEDERAL POWER MARKETING 
              ADMINISTRATIONS.

    (a) Rates, Terms, and Conditions.--(1) All rates and charges made, 
demanded, or received for the sale of electric energy and capacity by 
each Federal power marketing administration to its electric energy 
customers shall be the lowest possible rates and charges that will 
recover from such customers over a reasonable period of years, in 
accordance with sound business principles, all costs incurred by the 
United States for the production of electric energy sold by such 
Federal power marketing administration, including repayment of the 
capital investment allocated to power and costs assigned by Acts of 
Congress to power for repayment.
    (2) The Commission may modify proposed rates submitted by any 
Federal power marketing administration and establish terms and 
conditions consistent with this subsection. In its determination of 
rates, terms, and conditions for the sale of electric energy and 
capacity by the Federal power marketing administrations the Commission 
shall not review policy judgments and interpretations of laws and 
regulations made by the power generating agencies.
    (b) Existing Rates.--All rates, terms, and conditions for the sale 
of electric energy and capacity by the Federal power marketing 
administrations placed into effect on a final basis prior to the date 
of enactment of this Act shall remain in full force and effect unless 
the Commission determines, after a hearing held upon its own motion or 
upon complaint, that the rates, terms, and conditions are inconsistent 
with subsection (a)(1) and establishes new rates, terms, and 
conditions.
    (c) Periodic Review.--The Administrators shall periodically review 
the rates and charges made, demanded, or received by each Federal power 
marketing administration for the sale of electric energy and capacity. 
In the event the rates and charges made, demanded, or received by any 
Federal power marketing administration are inconsistent with subsection 
(a)(1), the Administrator of that administration shall propose revised 
rates. Such rates shall be established in accordance with this section, 
section 5 of the Flood Control Act of 1944 (16 U.S.C. 825s), section 
9(c) of the Reclamation Project Act of 1939 (43 U.S.C. 485h(c)), and 
the Acts specifically applicable to individual projects of the power 
systems of the power generating agencies.

SEC. 633. REGULATION OF FEDERAL POWER MARKETING ADMINISTRATION 
              TRANSMISSION SYSTEMS.

    Notwithstanding section 201(f) of the Federal Power Act, sections 
202(h), 205, 206, 208, and 210 through 213 and sections 301 through 
304, 306, 307 (except the last sentence of paragraph (c)), 308, 309, 
313, and 317 of the Federal Power Act apply to the transmission of 
electric energy by the Federal power marketing administrations to the 
same extent and in the same manner as such provisions apply to the 
transmission of electric energy by a public utility otherwise subject 
to the jurisdiction of the Commission under part II of such Act.

SEC. 634. ACCOUNTING.

    Not later than six months after the date of enactment of this Act, 
the Commission shall promulgate rules containing each of the following:
            (1) Accounting principles and requirements.--Procedures to 
        ensure that the Federal power marketing administrations utilize 
        the same accounting principles and requirements as are 
        applicable to public utilities pursuant to parts II and III of 
        the Federal Power Act (16 U.S.C. 792 and following) with 
        respect to accounting for revenue, expenses, investments, and 
        depreciation.
            (2) Compliance.--Procedures for the filing of complaints 
        with the Commission by interested persons seeking to ensure 
        compliance with the procedures of this section.
            (3) Administrative reconciliation.--Procedures to ensure 
        that the power generating agencies and the Administrators 
        maintain a consistent set of books and records for purposes of 
        repayment obligations.

SEC. 635. APPLICATION OF ANTITRUST LAW.

    (a) In General.--Each Federal power marketing administration shall 
be subject to the antitrust laws of the United States with respect to 
its sale of electric energy and capacity and the operation of its 
transmission system. For purposes of this section, the term ``antitrust 
laws'' has the meaning given such term in subsection (a) of the first 
section of the Clayton Act (15 U.S.C. 12(a)), except that such term 
includes section 5 of the Federal Trade Commission Act (15 U.S.C. 45) 
to the extent that such section 5 applies to unfair methods of 
competition.
    (b) Damages.--No damages, interest on damages, costs, or attorney's 
fees may be recovered under section 4, 4A, or 4C of the Clayton Act (15 
U.S.C. 15, 15a, or 15c) from a Federal power marketing administration.

                  TITLE VII--ENVIRONMENTAL PROVISIONS

SEC. 701. RENEWABLE ENERGY PRODUCTION INCENTIVE.

    Section 1212 of the Energy Policy Act of 1992 is amended to read as 
follows:

``SEC. 1212. RENEWABLE ENERGY PRODUCTION INCENTIVE.

    ``(a) Incentive Payments.--For electric energy generated and sold 
by a qualified renewable energy facility during the incentive period, 
the Secretary of Energy (referred to in this section as the 
`Secretary') shall make, subject to the availability of appropriations, 
incentive payments to the owner or operator of such facility. The 
amount of such payment made to any such owner or operator shall be as 
determined under subsection (e) of this section. Payments under this 
section may only be made upon receipt by the Secretary of an incentive 
payment application which establishes that the applicant is eligible to 
receive such payment and which satisfies such other requirements as the 
Secretary deems necessary. Such application shall be in such form, and 
shall be submitted at such time, as the Secretary shall establish.
    ``(b) Qualified Renewable Energy Facility.--For purposes of this 
section, a `qualified renewable energy facility' is a facility which is 
owned by a State or any political subdivision of a State (or an agency, 
authority, or instrumentality of a State or a political subdivision), 
by any corporation or association which is wholly owned, directly or 
indirectly, by one or more of the foregoing, or by a nonprofit 
electrical cooperative and which generates electric energy for sale 
using solar energy, wind, biomass, or geothermal.
    ``(c) Eligibility Window.--Payments may be made under this section 
only for electric energy generated from a qualified renewable energy 
facility first used during the period of 10 fiscal years beginning with 
the first full fiscal year occurring after the date of enactment of 
this Act.
    ``(d) Incentive Period.--A qualified renewable energy facility may 
receive payments under this section for a period of 10 fiscal years 
(referred to in this section as the `incentive period'). Such period 
shall begin with the fiscal year in which electric energy generated 
from the facility is first eligible for such payments.
    ``(e) Amount of Payment.--
            ``(1) In general.--Payments made by the Secretary under 
        this section to the owner or operator of a qualified renewable 
        energy facility shall be based on the number of kilowatt hours 
        of electric energy generated by the facility through the use of 
        solar, wind, biomass, or geothermal energy during the incentive 
        period. For any facility, the amount of such payment shall be 
        1.5 cents per kilowatt hour, adjusted as provided in paragraph 
        (2).
            ``(2) Adjustments.--The amount of the payment made to any 
        person under this subsection as provided in paragraph (1) shall 
        be adjusted for inflation for each fiscal year beginning after 
        calendar year 1999 in the same manner as provided in the 
        provisions of section 29(d)(2)(B) of the Internal Revenue Code 
        of 1986, except that in applying such provisions the calendar 
        year 1999 shall be substituted for calendar year 1979.
    ``(f) Sunset.--No payment may be made under this section to any 
qualified renewable energy facility after the expiration of the period 
of 20 fiscal years beginning with the first full fiscal year occurring 
after the date of enactment of this Act, and no payment made be made 
under this section to any such facility after a payment has been made 
with respect to such facility for a period of 10 fiscal years.
    ``(g) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary to carry out the purposes of this section 
such sums as may be necessary for each of the fiscal years 2000 through 
2004.''.

SEC. 702. NET METERING.

    (a) Definitions.--For purposes of this section:
            (1) The term ``eligible on-site generating facility'' means 
        a facility on the site of a retail electric consumer with a 
        peak generating capacity of 20 kilowatts or less that is fueled 
        solely by solar energy, wind, geothermal, or biomass.
            (2) The term ``net metering service'' means service to a 
        retail electric consumer under which electric energy generated 
        by that consumer from an eligible on-site generating facility 
        and delivered to local distribution facilities through the same 
        meter through which purchased electric energy is received may 
        be used to offset electric energy provided by the retail 
        electric supplier to the retail electric consumer during the 
        applicable billing period so that a retail electric consumer is 
        billed only for the net electric energy consumed during the 
        billing period, but in no event shall the net be less than zero 
        during the applicable billing period.
            (3) The terms ``retail electric consumer'' and ``retail 
        electric supplier'' have the meaning given such term in section 
        3 of the Federal Power Act.
    (b) Requirement To Provide Net Metering Service.--Each retail 
electric supplier shall make available upon request net metering 
service to any retail electric consumer that the supplier currently 
serves or solicits for service.
    (c) State Authority.--This section does not preclude a State from 
imposing additional requirements consistent with the requirements in 
this section, including the imposition of a cap limiting the amount of 
net metering available in the State. Nothing in this Act or any other 
Federal law preempts or otherwise affects authority under State law to 
require a retail electric supplier to make available net metering 
service to a retail electric consumer which the supplier serves or 
offers to serve.

        TITLE VIII--PROVISIONS RELATING TO INTERNAL REVENUE CODE

SEC. 801. BUSINESS ACTIVITIES OF MUTUAL OR COOPERATIVE ELECTRIC 
              COMPANIES.

    Section 501(c)(12) of the Internal Revenue Code of 1986 is 
amended--
            (1) in subparagraph (C)--
                    (A) in clause (i), by striking ``or'' at the end;
                    (B) in clause (ii), by striking the period and 
                inserting a comma; and
                    (C) by adding at the end the following clauses:
                    ``(iii) from the prepayment of a loan under section 
                306B of the Rural Electrification Act of 1936 
                (including amendments made after January 1, 1987), or
                    ``(iv) from revenues received from nonmembers for 
                qualified open access activities.''; and
            (2) by adding at the end the following subparagraph:
            ``(E) For purposes of this paragraph, the term `qualified 
        open access activities', with respect to a mutual or 
        cooperative electric company, means any of the following 
        activities:
                    ``(i) Providing open access transmission services 
                and ancillary services that meet the requirements of 
                Federal Energy Regulatory Commission open access rules 
                or orders or that are provided in accordance with a 
                transmission tariff of a regional transmission 
                organization, or other transmission organization, 
                approved by the Commission.
                    ``(ii) Delivery on an open access basis of electric 
                energy sold by other retail electric suppliers to 
                retail electric consumers served by local distribution 
                facilities owned, controlled, or operated by the 
                company.
                    ``(iii) The sale of electric energy from electric 
                output facilities (as defined in section 141(f)(4)) in 
                service on the date of enactment of this subparagraph 
                to nonmembers, if the company provides open access to 
                the transmission and local distribution facilities it 
                owns, controls, or operates.
                    ``(iv) Sales of generation, distribution, or 
                transmission facilities.''.

SEC. 802. TAX-EXEMPT BOND FINANCING OF CERTAIN ELECTRIC FACILITIES.

    (a) Permitted Open Access Transactions Not a Private Business 
Use.--Section 141(b)(6) of the Internal Revenue Code of 1986 (defining 
private business use) is amended by adding at the end the following:
                    ``(C) Permitted open access transactions not a 
                private business use.--
                            ``(i) In general.--For purposes of this 
                        subsection, the term `private business use' 
                        shall not include a permitted open access 
                        transaction.
                            ``(ii) Permitted open access transaction 
                        defined.--For purposes of clause (i), the term 
                        `permitted open access transaction' means any 
                        of the following transactions or activities 
                        with respect to an electric output facility (as 
                        defined in subsection (f)(4)(A)) owned by a 
                        governmental unit:
                                    ``(I) Providing open access 
                                transmission services and ancillary 
                                services that meet the requirements of 
                                Federal Energy Regulatory Commission 
                                open access rules or orders, or that 
                                are provided in accordance with a 
                                transmission tariff of a regional 
                                transmission organization, or other 
                                transmission organization, approved by 
                                the Commission, or that are consistent 
                                with State-administered laws, rules, or 
                                orders providing for open transmission 
                                access.
                                    ``(II) Providing open access 
                                transmission services and ancillary 
                                services pursuant to an agreement 
                                approved by the Commission with other 
                                participants in a regional transmission 
                                organization, or another transmission 
                                organization, approved by the 
                                Commission (which agreement may include 
                                transferring control of transmission 
                                facilities).
                                    ``(III) Delivery on an open access 
                                basis of electric energy sold by other 
                                entities to end-users served by such 
                                governmental unit's distribution 
                                facilities.
                                    ``(IV) If open access service is 
                                provided under subclause (I) or (III), 
                                the sale of electric output of electric 
                                output facilities on terms other than 
                                those available to the general public 
                                if such sale is to an on-system 
                                purchaser or is an existing off-system 
                                sale.
                                    ``(V) Such other transactions or 
                                activities as may be provided in 
                                regulations prescribed by the 
                                Secretary.
                            ``(iii) Definitions; special rules.--For 
                        purposes of this subparagraph--
                                    ``(I) On-system purchaser.--The 
                                term `on-system purchaser' means a 
                                person who purchases electric energy 
                                from a governmental unit and whose 
                                electric facilities or equipment are 
                                directly connected with transmission or 
                                distribution facilities that are owned 
                                by such governmental unit.
                                    ``(II) Off-system purchaser.--The 
                                term `off-system purchaser' means a 
                                purchaser of electric energy from a 
                                governmental unit other than an on-
                                system purchaser.
                                    ``(III) Existing off-system sale.--
                                The term `existing off-system sale' 
means a sale of electric energy to a person (other than a person owned 
or controlled by the governmental unit) that was an off-system 
purchaser of electric energy in the base year, but not in excess of the 
kilowatt hours purchased by such person in such year.
                                    ``(IV) Base year.--The term `base 
                                year' means 1998 (or, at the election 
                                of such unit, 1996 or 1997).
                                    ``(V) Joint action agencies.--A 
                                member of a joint action agency that is 
                                entitled to make a sale described in 
                                clause (ii)(IV) in a year may transfer 
                                that entitlement to the joint action 
                                agency in accordance with rules of the 
                                Secretary.
                                    ``(VI) Government-owned facility.--
                                An electric output facility (as defined 
                                in subsection (f)(4)(A)) shall be 
                                treated as owned by a governmental unit 
                                if it is owned or leased by such 
                                governmental unit or if such 
                                governmental unit has capacity rights 
                                therein acquired before July 9, 1996, 
                                for the purposes of serving one or more 
                                customers to which such governmental 
                                unit had a service obligation on such 
                                date under State law or a requirements 
                                contract.''.
    (b) Election To Terminate Tax-Exempt Financing.--Section 141 of the 
Internal Revenue Code of 1986 (relating to private activity bond; 
qualified bond) is amended by adding at the end the following:
    ``(f) Election To Terminate Tax-Exempt Bond Financing for Certain 
Electric Output Facilities.--
            ``(1) In general.--An issuer may make an irrevocable 
        election under this paragraph to terminate certain tax-exempt 
        financing for electric output facilities. If the issuer makes 
        such election, then--
                    ``(A) except as provided in paragraph (2), no bond 
                the interest on which is exempt from tax under section 
                103 may be issued on or after the date of such election 
                with respect to an electric output facility; and
                    ``(B) notwithstanding paragraph (1) or (2) of 
                subsection (a) or paragraph (5) of subsection (b), with 
                respect to an electric output facility no bond that was 
                issued before the date of enactment of this subsection, 
                the interest on which was exempt from tax on such date, 
                shall be treated as a private activity bond, for so 
                long as such facility continues to be owned by a 
                governmental unit.
            ``(2) Exceptions.--An election under paragraph (1) does not 
        apply to--
                    ``(A) any qualified bond (as defined in subsection 
                (e)),
                    ``(B) any eligible refunding bond,
                    ``(C) any bond issued to finance a qualifying T&D 
                facility, or
                    ``(D) any bond issued to finance repair of electric 
                output facilities in service on the date of enactment 
                of this subsection. Repairs may not increase by more 
                than a de minimis degree the capacity of the facility 
                beyond its original design.
            ``(3) Form and effect of elections.--An election under 
        paragraph (1) shall be made in such a manner as the Secretary 
        prescribes and shall be binding on any successor in interest to 
        the electing issuer.
            ``(4) Definitions.--For purposes of this subsection--
                    ``(A) Electric output facility.--The term `electric 
                output facility' means an output facility that is an 
                electric generation, transmission, or distribution 
                facility.
                    ``(B) Eligible refunding bond.--The term `eligible 
                refunding bond' means State or local bonds issued after 
                an election described in paragraph (1) that directly or 
                indirectly refund State or local bonds issued before 
                such election, if the weighted averaged maturity of the 
                refunding bonds do not exceed the remaining weighted 
                average maturity of the bonds issued before the 
                election.
                    ``(C) Qualifying t&d facility.--The term 
                `qualifying T&D facility' means--
                            ``(i) transmission facilities over which 
                        services described in subsection 
                        (b)(6)(C)(ii)(I) are provided, or
                            ``(ii) distribution facilities over which 
                        services described in subsection 
                        (b)(6)(C)(ii)(III) are provided.''.
    (c) Effective Date, Applicability, and Transition Rules.--
            (1) Effective date.--The amendments made by this section 
        take effect on the date of enactment of this Act, except that a 
        governmental unit may elect to apply section 141(b)(6)(C) of 
        the Internal Revenue Code of 1986, as added by subsection (a), 
        with respect to permitted open access transactions on or after 
        July 9, 1996.
            (2) Applicability.--References in this Act to sections of 
        the Internal Revenue Code of 1986 shall be deemed to include 
        references to comparable sections of the Internal Revenue Code 
        of 1954.
            (3) Transition rules.--
                    (A) Private business use.--Any activity that was 
                not a private business use prior to the effective date 
                of the amendment made by subsection (a) shall not be 
                deemed to be a private business use by reason of the 
                enactment of such amendment.
                    (B) Election.--An issuer making the election under 
                section 141(f) of the Internal Revenue Code of 1986, as 
                added by subsection (b), shall not be liable under any 
                contract in effect on the date of enactment of this Act 
                for any claim arising from having made the election.

SEC. 803. NUCLEAR DECOMMISSIONING COSTS.

    (a) Increase in Amount Permitted To Be Paid Into Nuclear 
Decommissioning Reserve Fund.--Subsection (b) of section 468A of the 
Internal Revenue Code of 1986 is amended to read as follows:
    ``(b) Limitation on Amounts Paid Into Fund.--
            ``(1) In general.--The amount which a taxpayer may pay into 
        the Fund for any taxable year during the funding period shall 
        not exceed the level funding amount determined pursuant to 
        subsection (d), except--
                    ``(A) where the taxpayer is permitted by Federal or 
                State law or regulation (including authorization by a 
                public service commission) to charge customers a 
                greater amount for nuclear decommissioning costs, in 
                which case the taxpayer may pay into the Fund such 
                greater amount; or
                    ``(B) in connection with the transfer of a nuclear 
                powerplant, where the transferor or transferee (or 
                both) is required pursuant to the terms of the transfer 
                to contribute a greater amount for nuclear 
                decommissioning costs, in which case the transferor or 
                transferee (or both) may pay into the Fund such greater 
                amount.
            ``(2) Contributions after funding period.--Notwithstanding 
        any other provision of this section, a taxpayer may make 
        deductible payments to the Fund in any taxable year between the 
        end of the funding period and the termination of the license 
        issued by the Nuclear Regulatory Commission for the nuclear 
        powerplant to which the Fund relates provided such payments do 
        not cause the assets of the Fund to exceed the nuclear 
        decommissioning costs allocable to the taxpayer's current or 
        former interest in the nuclear powerplant to which the Fund 
        relates. The foregoing limitation shall be applied by taking 
        into account a reasonable rate of inflation for the nuclear 
        decommissioning costs and a reasonable after-tax rate of return 
        on the assets of the Fund until such assets are anticipated to 
        be expended.''.
    (b) Deduction for Nuclear Decommissioning Costs When Paid.--
Paragraph (2) of section 468A(c) of such Code is amended to read as 
follows:
            ``(2) Deduction of nuclear decommissioning costs.--In 
        addition to any deduction under subsection (a), nuclear 
        decommissioning costs paid or incurred by the taxpayer during 
        any taxable year shall constitute ordinary and necessary 
        expenses in carrying on a trade or business under section 
        162.''.
    (c) Level Funding Amounts.--Subsection (d) of section 468A of such 
Code is amended to read as follows:
    ``(d) Level Funding Amounts.--
            ``(1) Annual amounts.--For purposes of this section, the 
        level funding amount for any taxable year shall equal the 
        annual amount required to be contributed to the Fund in each 
        year remaining in the funding period in order for the Fund to 
        accumulate the nuclear decommissioning costs allocable to the 
        taxpayer's current or former interest in the nuclear powerplant 
        to which the Fund relates. The annual amount described in the 
        foregoing sentence shall be calculated by taking into account a 
        reasonable rate of inflation for the nuclear decommissioning 
        costs and a reasonable after-tax rate of return on the assets 
        of the Fund until such assets are anticipated to be expended.
            ``(2) Funding period.--The funding period for a Fund shall 
        end on the last day of the last taxable year of the expected 
        operating life of the nuclear powerplant.
            ``(3) Nuclear decommissioning costs.--For purposes of this 
        section, the term `nuclear decommissioning costs' shall mean 
        all costs to be incurred in connection with entombing, 
        decontaminating, dismantling, removing, and disposing of a 
        nuclear powerplant, and shall include all associated 
        preparation, security, fuel storage, and radiation monitoring 
        costs. The taxpayer may identify such costs by reference either 
        to a site-specific engineering study or to the financial 
        assurance amount calculated pursuant to section 50.75 of title 
        10 of the Code of Federal Regulations. The term shall include 
        all such costs which, outside of the decommissioning context, 
        might otherwise be capital expenditures.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to amounts paid after June 8, 1999, in taxable years ending after 
such date.

SEC. 804. RENEWABLE ENERGY TAX CREDIT.

    (a) In General.--Paragraph (3) of section 45(c) of the Internal 
Revenue Code of 1986 (defining qualified facility) is amended to read 
as follows:
            ``(3) Qualified facility.--The term `qualified facility' 
        means any facility owned by the taxpayer which is originally 
        placed in service--
                    ``(A) in the case of a facility using wind to 
                produce electricity, after December 31, 1993, and 
                before July 1, 2004, and
                    ``(B) in the case of a facility using closed-loop 
                biomass to produce electricity, after December 31, 
                1992, and before July 1, 1999.''.
    (b) Credit Not To Apply to Electricity Sold to Utilities Under 
Certain Contracts.--Subsection (b) of section 45 of such Code is 
amended by adding at the end the following new paragraph:
            ``(4) Credit not to apply to electricity sold to utilities 
        under certain contracts.--
                    ``(A) In general.--The credit determined under 
                subsection (a) shall not apply to electricity--
                            ``(i) produced at a qualified facility 
                        placed in service by the taxpayer after June 
                        30, 1999, and
                            ``(ii) sold to a utility pursuant to a 
                        contract originally entered into before January 
                        1, 1987 (whether or not amended or restated 
                        after that date).
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                if--
                            ``(i) the prices for energy and capacity 
                        from such facility are established pursuant to 
                        an amendment to the contract referred to in 
                        subparagraph (A)(ii);
                            ``(ii) such amendment provides that the 
                        prices set forth in the contract which exceed 
                        avoided cost prices determined at the time of 
                        delivery shall apply only to annual quantities 
                        of electricity (prorated for partial years) 
                        which do not exceed the greater of--
                                    ``(I) the average annual quantity 
                                of electricity sold to the utility 
                                under the contract during calendar 
                                years 1994, 1995, 1996, 1997, and 1998, 
                                or
                                    ``(II) the estimate of the annual 
                                electricity production set forth in the 
                                contract, or, if there is no such 
                                estimate, the greatest annual quantity 
                                of electricity sold to the utility 
                                under the contract in any of the 
                                calendar years 1996, 1997, or 1998; and
                            ``(iii) such amendment provides that energy 
                        and capacity in excess of the limitation in 
                        clause (ii) may be--
                                    ``(I) sold to the utility only at 
                                prices that do not exceed avoided cost 
                                prices determined at the time of 
                                delivery, or
                                    ``(II) sold to a third party 
                                subject to a mutually agreed upon 
                                advance notice to the utility.
                For purposes of this subparagraph, avoided cost prices 
                shall be determined as provided for in 18 CFR 
                292.304(d)(1) or any successor regulation.''.

                   TITLE IX--MISCELLANEOUS PROVISION

SEC. 901. STUDY.

    The Secretary of Energy shall report to the Congress within two 
years after the enactment of this Act on the extent to which actions 
taken by the States have removed regulatory and statutory barriers to 
interstate commerce in electric energy. The report shall describe any 
remaining barriers to interstate commerce and shall make 
recommendations to the Congress for additional action that may be 
necessary to lower or eliminate barriers to interstate commerce in 
electric energy consistent with the development of a fully competitive 
marketplace.
                                 <all>