[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1031 Introduced in Senate (IS)]

  1st Session
                                S. 1031

           To enhance the reliability of the electric system.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 12, 2005

 Ms. Cantwell (for herself, Mr. Jeffords, and Mrs. Clinton) introduced 
the following bill; which was read twice and referred to the Committee 
                    on Energy and Natural Resources

_______________________________________________________________________

                                 A BILL


 
           To enhance the reliability of the electric system.

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

SECTION 1. SHORT TITLE.

    This title may be cited as the ``Electric Reliability Act of 
2005''.

SEC. 2. ELECTRIC RELIABILITY STANDARDS.

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

``SEC. 215. ELECTRIC RELIABILITY.

    ``(a) Definitions.--In this section:
            ``(1)(A) The term `bulk-power system' means--
                    ``(i) facilities and control systems necessary for 
                operating an interconnected electric energy 
                transmission network (or any portion thereof); and
                    ``(ii) electric energy from generation facilities 
                needed to maintain transmission system reliability.
            ``(B) The term `bulk-power system' does not include 
        facilities used in the local distribution of electric energy.
            ``(2) The terms `Electric Reliability Organization' and 
        `ERO' mean the organization certified by the Commission under 
        subsection (c) the purpose of which is to establish and enforce 
        reliability standards for the bulk-power system, subject to 
        Commission review.
            ``(3) The term `interconnection' means a geographic area in 
        which the operation of bulk-power system components is 
        synchronized such that the failure of 1 or more of such 
        components may adversely affect the ability of the operators of 
        other components within the system to maintain reliable 
        operation of the facilities within their control.
            ``(4) The term `regional entity' means an entity having 
        enforcement authority pursuant to subsection (e)(4).
            ``(5)(A) The term `reliability standard' means a 
        requirement, approved by the Commission under this section, to 
        provide for reliable operation of the bulk-power system.
            ``(B) The term `reliability standard' includes requirements 
        for the operation of existing bulk-power system facilities and 
        the design of planned additions or modifications to those 
        facilities to the extent necessary to provide for reliable 
        operation of the bulk-power system.
            ``(C) The term `reliability standard' does not include any 
        requirement to enlarge a facility described in subparagraph (B) 
        or to construct new transmission capacity or generation 
        capacity.
            ``(6) The term `reliable operation' means operating the 
        elements of the bulk-power system within equipment and electric 
        system thermal, voltage, and stability limits so that 
        instability, uncontrolled separation, or cascading failures of 
        such system will not occur as a result of a sudden disturbance 
        or unanticipated failure of system elements.
            ``(7) The term `transmission organization' means a regional 
        transmission organization, independent system operator, 
        independent transmission provider, or other transmission 
        organization finally approved by the Commission for the 
        operation of transmission facilities.
    ``(b) Jurisdiction and Applicability.--(1)(A) The Commission shall 
have jurisdiction, within the United States, over the ERO certified by 
the Commission under subsection (c), any regional entities, and all 
users, owners and operators of the bulk-power system, including the 
entities described in section 201(f), for purposes of approving 
reliability standards established under this section and enforcing 
compliance with this section.
    ``(B) All users, owners, and operators of the bulk-power system 
shall comply with reliability standards that take effect under this 
section.
    ``(2) Not later than 180 days after the date of enactment of this 
section, the Commission shall issue a final rule to implement this 
section.
    ``(c) Certification.--(1) Following the issuance of a Commission 
rule under subsection (b)(2), any person may submit an application to 
the Commission for certification as the Electric Reliability 
Organization.
    ``(2) The Commission may certify an ERO described in paragraph (1) 
if the Commission determines that the ERO--
            ``(A) has the ability to develop and enforce, subject to 
        subsection (e)(2), reliability standards that provide for an 
        adequate level of reliability of the bulk-power system; and
            ``(B) has established rules that--
                    ``(i) ensure the independence of the ERO from the 
                users and owners and operators of the bulk-power 
                system, while ensuring fair stakeholder representation 
                in the selection of directors of the ERO and balanced 
                decisionmaking in any ERO committee or subordinate 
                organizational structure;
                    ``(ii) allocate equitably reasonable dues, fees, 
                and other charges among end users for all activities 
                under this section;
                    ``(iii) provide fair and impartial procedures for 
                enforcement of reliability standards through the 
                imposition of penalties in accordance with subsection 
                (e) (including limitations on activities, functions, or 
                operations, or other appropriate sanctions);
                    ``(iv) provide for reasonable notice and 
                opportunity for public comment, due process, openness, 
                and balance of interests in developing reliability 
                standards and otherwise exercising the duties of the 
                ERO; and
                    ``(v) provide for taking, after certification, 
                appropriate steps to gain recognition in Canada and 
                Mexico.
    ``(d) Reliability Standards.--(1) The Electric Reliability 
Organization shall file each reliability standard or modification to a 
reliability standard that the Electric Reliability Organization 
proposes to be made effective under this section with the Commission.
    ``(2)(A) The Commission may approve, by rule or order, a proposed 
reliability standard or modification to a reliability standard if the 
Commission determines that the standard is just, reasonable, not unduly 
discriminatory or preferential, and in the public interest.
    ``(B) The Commission--
            ``(i) shall give due weight to the technical expertise of 
        the Electric Reliability Organization with respect to the 
        content of a proposed standard or modification to a reliability 
        standard and to the technical expertise of a regional entity 
        organized on an interconnection-wide basis with respect to a 
        reliability standard to be applicable within that 
        interconnection; but
            ``(ii) shall not defer with respect to the effect of a 
        standard on competition.
    ``(C) A proposed standard or modification shall take effect upon 
approval by the Commission.
    ``(3) The Electric Reliability Organization shall rebuttably 
presume that a proposal from a regional entity organized on an 
interconnection-wide basis for a reliability standard or modification 
to a reliability standard to be applicable on an interconnection-wide 
basis is just, reasonable, and not unduly discriminatory or 
preferential, and in the public interest.
    ``(4) The Commission shall remand to the Electric Reliability 
Organization for further consideration a proposed reliability standard 
or a modification to a reliability standard that the Commission 
disapproves in whole or in part.
    ``(5) The Commission, upon a motion of the Commission or upon 
complaint, may order the Electric Reliability Organization to submit to 
the Commission a proposed reliability standard or a modification to a 
reliability standard that addresses a specific matter if the Commission 
considers such a new or modified reliability standard appropriate to 
carry out this section.
    ``(6)(A) The final rule adopted under subsection (b)(2) shall 
include fair processes for the identification and timely resolution of 
any conflict between a reliability standard and any function, rule, 
order, tariff, rate schedule, or agreement accepted, approved, or 
ordered by the Commission applicable to a transmission organization.
    ``(B) The transmission organization shall continue to comply with 
such function, rule, order, tariff, rate schedule, or agreement as is 
accepted, approved, or ordered by the Commission until--
            ``(i) the Commission finds a conflict exists between a 
        reliability standard and any such provision;
            ``(ii) the Commission orders a change to the provision 
        pursuant to section 206; and
            ``(iii) the ordered change becomes effective under this 
        part.
    ``(C) If the Commission determines that a reliability standard 
needs to be changed as a result of such a conflict, the Commission 
shall order the ERO to develop and file with the Commission a modified 
reliability standard under paragraph (4) or (5).
    ``(e) Enforcement.--(1) Subject to paragraph (2), the ERO may 
impose a penalty on a user or owner or operator of the bulk-power 
system for a violation of a reliability standard approved by the 
Commission under subsection (d) if the ERO, after notice and an 
opportunity for a hearing--
            ``(A) finds that the user or owner or operator has violated 
        a reliability standard approved by the Commission under 
        subsection (d); and
            ``(B) files notice and the record of the proceeding with 
        the Commission.
    ``(2)(A) A penalty imposed under paragraph (1) may take effect not 
earlier than the 31st day after the date on which the ERO files with 
the Commission notice of the penalty and the record of proceedings.
    ``(B) The penalty shall be subject to review by the Commission 
upon--
            ``(i) a motion by the Commission; or
            ``(ii) application by the user, owner, or operator that is 
        the subject of the penalty filed not later than 30 days after 
        the date on which the notice is filed with the Commission.
    ``(C) Application to the Commission for review, or the initiation 
of review by the Commission upon a motion of the Commission, shall not 
operate as a stay of the penalty unless the Commission orders otherwise 
upon a motion of the Commission or upon application by the user, owner, 
or operator that is the subject of the penalty.
    ``(D) In any proceeding to review a penalty imposed under paragraph 
(1), the Commission, after notice and opportunity for hearing (which 
hearing may consist solely of the record before the ERO and opportunity 
for the presentation of supporting reasons to affirm, modify, or set 
aside the penalty), shall by order affirm, set aside, reinstate, or 
modify the penalty, and, if appropriate, remand to the ERO for further 
proceedings.
    ``(E) The Commission shall implement expedited procedures for 
hearings described in subparagraph (D).
    ``(3) Upon a motion of the Commission or upon complaint, the 
Commission may order compliance with a reliability standard and may 
impose a penalty against a user or owner or operator of the bulk-power 
system if the Commission finds, after notice and opportunity for a 
hearing, that the user or owner or operator of the bulk-power system 
has engaged or is about to engage in any act or practice that 
constitutes or will constitute a violation of a reliability standard.
    ``(4)(A) The Commission shall issue regulations authorizing the ERO 
to enter into an agreement to delegate authority to a regional entity 
for the purpose of proposing reliability standards to the ERO and 
enforcing reliability standards under paragraph (1) if--
            ``(i) the regional entity is governed by an independent 
        board, a balanced stakeholder board, or a combination of an 
        independent and balanced stakeholder board;
            ``(ii) the regional entity otherwise meets the requirements 
        of paragraphs (1) and (2) of subsection (c); and
            ``(iii) the agreement promotes effective and efficient 
        administration of bulk-power system reliability.
    ``(B) The Commission may modify a delegation under this paragraph.
    ``(C) The ERO and the Commission shall rebuttably presume that a 
proposal for delegation to a regional entity organized on an 
interconnection-wide basis promotes effective and efficient 
administration of bulk-power system reliability and should be approved.
    ``(D) The regulations issued under this paragraph may provide that 
the Commission may assign the authority of the ERO to enforce 
reliability standards under paragraph (1) directly to a regional entity 
in accordance with this paragraph.
    ``(5) The Commission may take such action as the Commission 
determines to be appropriate against the ERO or a regional entity to 
ensure compliance with a reliability standard or any Commission order 
affecting the ERO or a regional entity.
    ``(6) Any penalty imposed under this section shall bear a 
reasonable relation to the seriousness of the violation and shall take 
into consideration the efforts of the user, owner, or operator to 
remedy the violation in a timely manner.
    ``(f) Changes in Electric Reliability Organization Rules.--(1) The 
Electric Reliability Organization shall file with the Commission for 
approval any proposed rule or proposed rule change, accompanied by an 
explanation of the basis and purpose of the rule and proposed rule 
change.
    ``(2) The Commission, upon a motion of the Commission or upon 
complaint, may propose a change to the rules of the ERO.
    ``(3) A proposed rule or proposed rule change shall take effect 
upon a finding by the Commission, after notice and opportunity for 
comment, that the change is just, reasonable, not unduly discriminatory 
or preferential, is in the public interest, and meets the requirements 
of subsection (c).
    ``(g) Reliability Reports.--The ERO shall conduct periodic 
assessments of the reliability and adequacy of the bulk-power system in 
North America.
    ``(h) Coordination With Canada and Mexico.--The President is urged 
to negotiate international agreements with the governments of Canada 
and Mexico to provide for effective compliance with reliability 
standards and the effectiveness of the ERO in the United States and 
Canada or Mexico.
    ``(i) Savings Provisions.--(1) The ERO may develop and enforce 
compliance with reliability standards for only the bulk-power system.
    ``(2) Nothing in this section authorizes the ERO or the Commission 
to order the construction of additional generation or transmission 
capacity or to set and enforce compliance with standards for adequacy 
or safety of electric facilities or services.
    ``(3) Nothing in this section preempts any authority of any State 
to take action to ensure the safety, adequacy, and reliability of 
electric service within that State, as long as such action is not 
inconsistent with any reliability standard.
    ``(4) Not later than 90 days after the date of application of the 
Electric Reliability Organization or other affected party, and after 
notice and opportunity for comment, the Commission shall issue a final 
order determining whether a State action is inconsistent with a 
reliability standard, taking into consideration any recommendation of 
the ERO.
    ``(5) The Commission, after consultation with the ERO and the State 
taking action, may stay the effectiveness of any State action, pending 
the issuance by the Commission of a final order.
    ``(j) Regional Advisory Bodies.--(1) The Commission shall establish 
a regional advisory body on the petition of at least \2/3\ of the 
States within a region that have more than \1/2\ of the electric load 
of the States served within the region.
    ``(2) A regional advisory body--
            ``(A) shall be composed of 1 member from each participating 
        State in the region, appointed by the Governor of the State; 
        and
            ``(B) may include representatives of agencies, States, and 
        provinces outside the United States.
    ``(3) A regional advisory body may provide advice to the Electric 
Reliability Organization, a regional entity, or the Commission 
regarding--
            ``(A) the governance of an existing or proposed regional 
        entity within the same region;
            ``(B) whether a standard proposed to apply within the 
        region is just, reasonable, not unduly discriminatory or 
        preferential, and in the public interest;
            ``(C) whether fees proposed to be assessed within the 
        region are just, reasonable, not unduly discriminatory or 
        preferential, and in the public interest; and
            ``(D) any other responsibilities requested by the 
        Commission.
    ``(4) The Commission may give deference to the advice of a regional 
advisory body if that body is organized on an interconnection-wide 
basis.
    ``(k) Alaska and Hawaii.--This section does not apply to Alaska or 
Hawaii.''.
    (b) Status of ERO.--The Electric Reliability Organization certified 
by the Federal Energy Regulatory Commission under section 215(c) of the 
Federal Power Act (as added by subsection (a)) and any regional entity 
delegated enforcement authority pursuant to section 215(e)(4) of that 
Act (as so added) are not departments, agencies, or instrumentalities 
of the United States Government.
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