[Congressional Record Volume 151, Number 18 (Thursday, February 17, 2005)]
[Senate]
[Pages S1635-S1641]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. JEFFORDS (for himself, Ms. Cantwell, and Mr. Kennedy):
  S. 426. A bill to enhance national security by improving the 
reliability of the United States electricity transmission grid, to 
ensure efficient, reliable and affordable energy to American consumers, 
and for other purposes, to the Committee on Energy and Natural 
Resources.
  Mr. JEFFORDS. Mr. President, today I am introducing comprehensive 
legislation to ensure the reliable delivery of electric power in the 
United States.
  Last Congress, in August of 2003, nearly 50 million people in the 
Northeast and Midwest were affected by a massive power outage. This 
event emphasized the vulnerability of the U.S. electricity grid to 
human error, mechanical failure, and weather-related outages. We must 
act to protect the grid from devastating interruptions in the future. 
That is why I am introducing this bill today to ensure greater 
reliability in our electricity delivery system.
  My bill, the Electric Reliability Security Act of 2005, will help 
achieve reliability and security of the electricity grid in an 
efficient, cost-effective, and environmentally sound manner. It does so 
by creating mandatory, nationwide electric reliability standards.
  The bill also mandates regional coordination in the siting of 
transmission facilities, and provides $10 billion dollars in loan 
guarantees to finance ``smart grid'' technologies that improve the way 
the grid transmits power.
  While a $10 billion dollar investment may seem to be a large 
investment, it is significantly less than the transmission cost 
estimates that have circulated following the Northeast blackout. 
Industry experts estimated that it would cost consumers as much as $100 
billion dollars to upgrade transmission systems and site new lines to 
meet future reliability needs.
  However, even this hefty price tag does not factor in the costs of 
additional generation, does not consider the rising cost of natural gas 
due to increasing electricity consumption, and does not include the 
environmental and other social costs of continued expansion of our 
presently centralized power system. Power lines are expensive and are 
rarely welcomed by the nearby public. The loan guarantees in the bill 
will help balance the need for new transmission lines by providing 
federal resources to help improve existing ones.
  In addition to addressing system operation and transmission needs, 
the bill also promotes sound system management. It establishes a 
Federal system benefits fund as a match for state programs. 
Historically, regulated electric utility companies have provided a 
number of energy-related public services beyond simply supplying 
electricity that benefit the system as a whole. Such services have 
included bill payment assistance and energy conservation measures for 
low-income households, energy efficiency programs for residential and 
business customers, and pilot programs to promote renewable energy 
resources. More than 20 states, including my home state of Vermont, 
have public benefits programs. This bill will provide needed federal 
matching money to States for these programs. Our states can use these 
funds. They will be able to move more quickly to deploy these low-cost 
strategies with federal help.
  The Alliance to Save Energy estimates that a federal program to match 
existing state public benefits programs would save 1.24 trillion 
kilowatt-hours of electricity over 20 years, and cut consumer energy 
bills by about $100 billion dollars. Mr. President, my bill, which has 
the potential to save consumers $100 billion dollars is far preferable 
to raising consumer electricity bills by the $100 billion dollars to 
raise money for grid expansion. My Vermont constituents would prefer to 
keep the lights on, and their money in their own pockets. The bill also 
establishes energy efficiency performance standards for utilities. The 
United States has experienced tremendous growth in electricity 
consumption over the past decade. Current estimates are that 
electricity consumption is increasing at roughly 2 percent per year.
  Between 1993 and 1999, U.S. summer peak electricity use alone 
increased by 95,000 megawatts. This is the equivalent of adding a new, 
six-state New England to the nation's electricity demand every fourteen 
months. Energy experts estimate that as much as 50 percent of expected 
new demand over the next 20 years can be met through consumer 
efficiency and load management programs. Over the past two decades, 
utility demand-side efficiency programs have avoided the need for more 
than 100 300-megawatt power plants. However, with the advent of 
electricity deregulation, utility spending on these efficiency programs 
has dropped by almost half. The federal government should seek to 
correct this trend, and this bill takes a strong first step in that 
direction by phasing in a requirement that utilities reduce their peak 
demand for power and their customers' power use between 2006 and 2015.
  Finally, the bill enacts standards that enable increased on-site, or 
distributed, generation to reduce pressure on the grid and lessen the 
impact of a blackout should one occur. We have an obligation, Mr. 
President, to ensure that the electricity grid is secure. We currently 
have a giant system consisting of almost 200,000 miles of 
interconnecting lines that constantly shift huge amounts of electricity 
throughout the country. Such a giant and complex system, traversing 
miles of city and countryside, is inevitably subject to unforseen 
problems. Simply making it bigger will never take away all uncertainty, 
nor can it eliminate the vulnerability of the grid to sabotage or 
terrorist attack. We should do all we can to make certain such 
vulnerabilities are reduced.
  In summary, I am introducing this legislation because I feel that we 
should be cautious in our assumptions that the answer to our nation's 
reliability woes lies primarily in building a bigger, more expansive 
grid. Simply building more transmission lines is not the answer. 
Investments in energy efficiency and on-site generation can 
significantly improve the reliability of the nation's electricity grid 
and in most cases will be cheaper, faster to implement and more 
environmentally friendly than large-scale grid expansion. We also must 
fill the regulatory gaps in the system, which my bill does. Congress 
should establish mandatory reliability standards and close other 
regulatory gaps left by state deregulation of the electricity sector. 
In addition, no national reliability program will be effective or 
complete without strong incentives for demand-side management programs 
for efficiency and for on-site generation.
  We cannot solve today's energy problems with yesterday's solutions. 
My bill is an innovative approach to ensuring electric reliability by 
maximizing energy efficiency, regulatory efficiency, and efficient 
investment. Given the high costs of power outages to our country, we 
cannot afford to do otherwise.
  I invite my colleagues to join me in my efforts to advance energy 
security and reliability in the United States. I ask unanimous consent 
that the text of the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 426

       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 ``Electric 
     Reliability Security Act of 2005''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

                          TITLE I--RELIABILITY

Sec. 101. Electric reliability standards.

[[Page S1636]]

Sec. 102. Model electric utility workers code.
Sec. 103. Electricity outage investigation.
Sec. 104. Study on reliability of United States energy grid.

                          TITLE II--EFFICIENCY

Sec. 201. System benefits fund.
Sec. 202. Electricity efficiency performance standard.
Sec. 203. Appliance efficiency.
Sec. 204. Loan guarantees.

                      TITLE III--ONSITE GENERATION

Sec. 301. Net metering.
Sec. 302. Interconnection.
Sec. 303. Onsite generation for emergency facilities.

                          TITLE I--RELIABILITY

     SEC. 101. 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.

[[Page S1637]]

       ``(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.

     SEC. 102. MODEL ELECTRIC UTILITY WORKERS CODE.

       Subtitle B of title I of the Public Utility Regulatory 
     Policies Act of 1978 (16 U.S.C. 2621 et seq.) is amended by 
     adding at the end the following:

     ``SEC. 118. MODEL CODE FOR ELECTRIC UTILITY WORKERS.

       ``(a) In General.--The Secretary shall develop by rule and 
     circulate among the States for their consideration a model 
     code containing standards for electric facility workers to 
     ensure electric facility safety and reliability.
       ``(b) Consultation.--In developing the standards, the 
     Secretary shall consult with all interested parties, 
     including representatives of electric facility workers.
       ``(c) Not Affecting Occupational Safety and Health.--In 
     issuing a model code under this section, the Secretary shall 
     not, for purposes of section 4 of the Occupational Safety and 
     Health Act of 1970 (29 U.S.C. 653), be deemed to be 
     exercising statutory authority to prescribe or enforce 
     standards or regulations affecting occupational safety and 
     health.''.

     SEC. 103. ELECTRICITY OUTAGE INVESTIGATION.

       Part III of the Federal Power Act (16 U.S.C. 824) is 
     amended--
       (1) by redesignating sections 320 and 321 (16 U.S.C. 825r, 
     791a) as sections 321 and 322, respectively; and
       (2) by inserting after section 319 (16 U.S.C. 825q) the 
     following:

     ``SEC. 320. ELECTRICITY OUTAGE INVESTIGATION BOARD.

       ``(a) Establishment.--There is established an Electricity 
     Outage Investigation Board that shall be an independent 
     establishment within the executive branch.
       ``(b) Membership.--(1) The Board shall consist of 7 members 
     and shall include--
       ``(A) the Secretary of Energy (or a designee);
       ``(B) the Chairperson of the Federal Energy Regulatory 
     Commission (or a designee);
       ``(C) a representative of the National Academy of Sciences 
     appointed by the President;
       ``(D) a representative nominated by the majority leader of 
     the Senate and appointed by the President;
       ``(E) a representative nominated by the minority leader of 
     the Senate and appointed by the President;
       ``(F) a representative nominated by the majority leader of 
     the House of Representatives and appointed by the President; 
     and
       ``(G) a representative nominated by the minority leader of 
     the House of Representatives and appointed by the President.
       ``(2) Each member of the Board shall demonstrate relevant 
     expertise in the field of electricity generation, 
     transmission, and distribution, and such other expertise as 
     will best assist in carrying out the duties of the Board.
       ``(c) Terms.--(1) Except as provided in paragraph (2), each 
     member of the Board shall serve for a term of 3 years.
       ``(2) The Secretary of Energy and the Chairperson of the 
     Federal Energy Regulatory Commission shall be permanent 
     members of the Board.
       ``(d) Duties.--The Board shall--
       ``(1) upon request by Congress or the President, 
     investigate a major bulk-power system failure in the United 
     States to determine the causes of the failure;
       ``(2) report expeditiously to Congress and the President 
     the results of the investigation; and
       ``(3) recommend to Congress and the President actions to 
     minimize the possibility of future bulk-power system failure.
       ``(e) Compensation.--(1) Each member of the Board shall be 
     paid at the rate payable for level III of the Executive 
     Schedule for each day (including travel time) the member is 
     engaged in the work of the Board.
       ``(2) Each member of the Board may receive travel expenses, 
     including per diem in lieu of subsistence, in the same manner 
     as is permitted under sections 5702 and 5703 of title 5, 
     United States Code.''.

     SEC. 104. STUDY ON RELIABILITY OF UNITED STATES ELECTRICITY 
                   GRID.

       (a) Study on Reliability.--Not later than 45 days after the 
     date of enactment of this Act, the Secretary of Energy shall 
     enter into a contract with the National Academy of Sciences 
     under which the Academy shall conduct a study on the 
     reliability of the

[[Page S1638]]

     United States electricity grid to examine the effectiveness 
     of the current United States electricity transmission and 
     distribution system at providing efficient, secure, and 
     affordable power to United States consumers.
       (b) Contents.--The study shall include an analysis of--
       (1) the vulnerability of the transmission and distribution 
     system to disruption by natural, mechanical or human causes 
     including sabotage;
       (2) the most efficient and cost-effective solutions for 
     dealing with vulnerabilities or other problems of the 
     electricity transmission and distribution system of the 
     United States, including a comparison of investments in--
       (A) efficiency;
       (B) distributed generation;
       (C) technical advances in software and other devices to 
     improve the efficiency and reliability of the grid;
       (D) new power line construction; and
       (E) any other relevant matters.
       (c) Report.--The contract shall provide that, not later 
     than 180 days after the date of execution of the contract, 
     the National Academy of Sciences shall submit to the 
     President and Congress a report that details the findings and 
     recommendations of the study.

                          TITLE II--EFFICIENCY

     SEC. 201. SYSTEM BENEFITS FUND.

       (a) Definitions.--In this section:
       (1) Administrator.--The term ``Administrator'' means the 
     Administrator of the Environmental Protection Agency.
       (2) Board.--The term ``Board'' means the System Benefits 
     Trust Fund Board established under subsection (b).
       (3) Commission.--The term ``Commission'' means the Federal 
     Energy Regulatory Commission.
       (4) Farm system.--The term ``farm system'' means an 
     electric generating facility that generates electric energy 
     from the anaerobic digestion of agricultural waste produced 
     by farming that is located on the farm where substantially 
     all of the waste used is produced.
       (5) Fund.--The term ``Fund'' means the System Benefits 
     Trust Fund established under subsection (c).
       (6) Renewable Energy.--The term ``renewable energy'' means 
     electricity generated from wind, ocean energy, organic waste 
     (excluding incinerated municipal solid waste), biomass 
     (including anaerobic digestion from farm systems and landfill 
     gas recovery) or a geothermal, solar thermal, or photovoltaic 
     source.
       (7) Secretary.--The term ``Secretary'' means the Secretary 
     of Energy.
       (b) Board.--
       (1) Establishment.--The Secretary shall establish a System 
     Benefits Trust Fund Board to carry out the functions and 
     responsibilities described in this section.
       (2) Membership.--The Board shall be composed of--
       (A) 1 representative of the Federal Energy Regulatory 
     Commission appointed by the Federal Energy Regulatory 
     Commission;
       (B) 2 representatives of the Secretary of Energy appointed 
     by the Secretary;
       (C) 2 persons nominated by the National Association of 
     Regulatory Utility Commissioners and appointed by the 
     Secretary;
       (D) 1 person nominated by the National Association of State 
     Utility Consumer Advocates and appointed by the Secretary;
       (E) 1 person nominated by the National Association of State 
     Energy Officials and appointed by the Secretary;
       (F) 1 person nominated by the National Energy Assistance 
     Directors' Association and appointed by the Secretary; and
       (G) 1 representative of the Environmental Protection Agency 
     appointed by the Administrator.
       (3) Chairperson.--The Secretary shall select a member of 
     the Board to serve as Chairperson of the Board.
       (c) Establishment of Fund.--
       (1) In general.--The Board shall establish an account or 
     accounts at 1 or more financial institutions, which account 
     or accounts shall--
       (A) be known as the ``System Benefits Trust Fund''; and
       (B) consist of amounts deposited in the Fund under 
     subsection (e).
       (2) Status of fund.--The wires charges collected under 
     subsection (e) and deposited in the Fund--
       (A) shall not constitute funds of the United States;
       (B) shall be held in trust by the Board solely for the 
     purposes stated in subsection (d); and
       (C) shall not be available to meet any obligations of the 
     United States.
       (d) Use of Fund.--
       (1) Funding of state programs.--Amounts in the Fund shall 
     be used by the Board to provide matching funds to States and 
     Indian tribes for the support of State or tribal public 
     benefits programs relating to--
       (A) energy conservation and efficiency;
       (B) renewable energy sources;
       (C) assisting low-income households in meeting their home 
     energy needs; or
       (D) research and development in areas described in 
     subparagraphs (A) through (C).
       (2) Distribution.--
       (A) In general.--Except for amounts needed to pay costs of 
     the Board in carrying out its duties under this section, the 
     Board shall distribute all amounts in the Fund to States or 
     Indian tribes to fund public benefits programs under 
     paragraph (1).
       (B) Fund share.--
       (i) In general.--Subject to clause (iii), the Fund share of 
     a public benefits program funded under paragraph (1) shall be 
     50 percent.
       (ii) Proportionate reduction.--To the extent that the 
     amount of matching funds requested by States and Indian 
     tribes exceeds the maximum projected revenues of the Fund, 
     the matching funds distributed to each State and Indian tribe 
     shall be reduced by an amount equal to the proportion that 
     the annual consumption of electricity of the State or Indian 
     tribe bears to the annual consumption of electricity of all 
     States and Indian tribes.
       (iii) Additional state or indian tribe funding.--A State or 
     Indian tribe may apply funds to public benefits programs in 
     addition to the amount of funds applied for the purpose of 
     matching the Fund share.
       (3) Program criteria.--The Board shall recommend 
     eligibility criteria for public benefits programs funded 
     under this section for approval by the Secretary.
       (4) Application.--Not later than August 1 of each year 
     beginning in 2006, a State or Indian tribe seeking matching 
     funds for the following fiscal year shall file with the 
     Board, in such form as the Board may require, an 
     application--
       (A) certifying that the funds will be used for an eligible 
     public benefits program;
       (B) stating the amount of State or Indian tribe funds 
     earmarked for the program; and
       (C) summarizing how amounts from the Fund from the previous 
     calendar year (if any) were spent by the State and what the 
     State accomplished as a result of the expenditures.
       (e) Wires Charge.--
       (1) Determination of needed funding.--Not later than 
     September 1 of each year, the Board shall determine and 
     inform the Commission of the aggregate amount of wires 
     charges that will be necessary to be paid into the Fund to 
     pay matching funds to States and Indian tribes and pay the 
     operating costs of the Board in the following fiscal year.
       (2) Imposition of wires charge.--
       (A) In general.--Not later than December 15 of each year, 
     the Commission shall impose a nonbypassable, competitively 
     neutral wires charge, to be paid directly into the Fund by 
     the operator of the wire, on electricity carried through the 
     wire (measured as the electricity exits at the busbar at a 
     generation facility, or, for electricity generated outside 
     the United States, at the point of delivery to the wire 
     operator's system) in interstate commerce.
       (B) Amount.--The wires charge shall be set at a rate equal 
     to the lesser of--
       (i) 1.0 mills per kilowatt hour; or
       (ii) a rate that is estimated to result in the collection 
     of an amount of wires charges that is, to the maximum extent 
     practicable, equal to the amount of needed funding determined 
     under paragraph (1).
       (3) Deposit in the fund.--The wires charge shall be paid by 
     the operator of the wire directly into the Fund at the end of 
     each month during the calendar year for distribution by the 
     Board under subsection (c).
       (4) Penalties.--The Commission may assess against a wire 
     operator that fails to pay a wires charge as required by this 
     subsection a civil penalty in an amount equal to not more 
     than the amount of the unpaid wires charge.
       (f) Auditing.--
       (1) In general.--The Fund shall be audited annually by a 
     firm of independent certified public accountants in 
     accordance with generally accepted auditing standards.
       (2) Access to records.--Representatives of the Secretary 
     and the Commission shall have access to all books, accounts, 
     reports, files, and other records pertaining to the Fund as 
     necessary to facilitate and verify the audit.
       (3) Reports.--
       (A) In general.--A report on each audit shall be submitted 
     to the Secretary, the Commission, and the Secretary of the 
     Treasury, who shall submit the report to the President and 
     Congress not later than 180 days after the end of the fiscal 
     year.
       (B) Requirements.--An audit report shall--
       (i) set forth the scope of the audit; and
       (ii) include--

       (I) a statement of assets and liabilities, capital, and 
     surplus or deficit;
       (II) a surplus of deficit analysis;
       (III) a statement of income and expenses;
       (IV) any other information that may be considered necessary 
     to keep the President and Congress informed of the operations 
     and financial condition of the Fund; and
       (V) any recommendations with respect to the Fund that the 
     Secretary or the Commission may have.

     SEC. 202. ELECTRICITY EFFICIENCY PERFORMANCE STANDARD.

       Title VI of the Public Utility Regulatory Policies Act of 
     1978 (16 U.S.C. 2621 note) is amended by adding at the end 
     the following:

     ``SEC. 609. FEDERAL ELECTRICITY EFFICIENCY PERFORMANCE 
                   STANDARD.

       ``(a) In General.--Each electric retail supplier shall 
     implement energy efficiency and load reduction programs and 
     measures to achieve verified improvements in energy 
     efficiency and peak load reduction in retail customer 
     facilities and the distribution systems that serve those 
     facilities.
       ``(b) Power Savings.--The programs and measures under 
     subsection (a) shall produce savings in total peak power 
     demand and total electricity use by retail customers by an 
     amount that is equal to or greater than

[[Page S1639]]

     the following percentages relative to the peak demand and 
     electricity used in that year by the retail electric 
     supplier's customers:

------------------------------------------------------------------------
                                                 Reduction    Reduction
                                                 in demand      in use
------------------------------------------------------------------------
In calendar year 2006.........................           1%         .75%
In calendar year 2007.........................           2%         1.5%
In calendar year 2009.........................           4%         3.0%
In calendar year 2011.........................           6%         4.5%
In calendar year 2013.........................           8%         6.0%
In calendar year 2015.........................          10%         7.5%
------------------------------------------------------------------------

       ``(c) Beginning Date.--For purposes of this section, 
     savings shall be counted only for measures installed after 
     January 1, 2006.
       ``(d) Rulemaking.--(1) Not later than June 30, 2005, the 
     Secretary shall establish, by rule--
       ``(A) procedures and standards for counting and 
     independently verifying energy and demand savings for 
     purposes of enforcing the energy efficiency performance 
     standards imposed by this section; and
       ``(B) procedures and a schedule for reporting findings to 
     the Department of Energy and for making the reports available 
     to the public.
       ``(2) In developing the procedures, standards, and schedule 
     under paragraph (1), the Secretary shall consult with--
       ``(A) the association representing public utility 
     regulators in the United States; and
       ``(B) the association representing the State energy 
     officials in the United States.
       ``(e) Reporting.--(1) Not later than June 30, 2008, and 
     every 2 years thereafter, each retail electric supplier shall 
     file with the State public utilities commission in each State 
     in which the supplier provides service to retail customers a 
     report demonstrating that the retail electric supplier has 
     taken action to comply with the energy efficiency performance 
     standards of this section.
       ``(2) A report filed under paragraph (1) shall include 
     independent verification of the estimated savings pursuant to 
     standards established by the Secretary.
       ``(3)(A) A State public utilities commission may--
       ``(i) accept a report as filed under paragraph (1); or
       ``(ii) review and investigate the accuracy of the report.
       ``(B) Each State public utilities commission shall--
       ``(i) make findings on any deficiencies relating to the 
     requirements under section 2; and
       ``(ii) issue a remedial order for the correction of any 
     deficiencies that are found.
       ``(f) Utilities Outside State Jurisdiction.--(1) An 
     electric retail supplier that is not subject to the 
     jurisdiction of a State public utilities commission shall 
     submit reports in accordance with subsection (e) to the 
     governing body of the electric retail supplier.
       ``(2) A report submitted under paragraph (1) shall include 
     independent verification of the estimated savings pursuant to 
     standards established by the Secretary.
       ``(g) Program Participation.--(1) An electric retail 
     supplier may demonstrate satisfaction of the standard under 
     this section, in whole or part, by savings achieved through 
     participation in statewide, regional, or national programs 
     that can be demonstrated to significantly improve the 
     efficiency of electric distribution and use.
       ``(2) Verified efficiency savings resulting from programs 
     described in paragraph (1) may be assigned to each 
     participating retail supplier based upon the degree of 
     participation of the supplier in the programs.
       ``(3) An electric retail supplier may purchase rights to 
     extra savings achieved by other electric retail suppliers if 
     the selling supplier or another electric retail supplier does 
     not also take credit for those savings.
       ``(h) Remedies for Failure To Comply.--(1) In the event 
     that any retail electric supplier fails to achieve its energy 
     savings or load reduction target for a specific year, any 
     aggrieved party may bring a civil action or file an 
     administrative claim to seek prompt remedial action before a 
     State public utilities commission (or, in the case of an 
     electric retail supplier not subject to State public utility 
     commission jurisdiction, before an appropriate governing 
     body).
       ``(2)(A) The State public utilities commission or other 
     appropriate governing body shall have a maximum of 1 year to 
     craft a remedy for a civil action or claim filed under 
     paragraph (1).
       ``(B) If a State public utilities commission or other 
     governing body certifies that the commission or body has 
     inadequate resources or authority to promptly resolve 
     enforcement actions under this section, or fails to take 
     action within the time period specified in subparagraph (A), 
     the commission or body or an aggrieved party may seek 
     enforcement in Federal district court.
       ``(3)(A) If a commission or court determines that energy 
     savings or load reduction targets for a specific year have 
     not been achieved by a retail electric supplier under this 
     section, the commission or court shall--
       ``(i) determine the amount of the deficit; and
       ``(ii) fashion an equitable remedy to restore the lost 
     savings as soon as practicable.
       ``(B) A remedy under subparagraph (A)(ii) may include--
       ``(i) a refund to retail electric customers of an amount 
     equal to the retail cost of the electricity consumed due to 
     the failure to reach the target; and
       ``(ii) the appointment of a special master to administer a 
     bidding system to procure the energy and demand savings equal 
     to 125 percent of the deficit.''.

     SEC. 203. APPLIANCE EFFICIENCY.

       Section 325(d)(3) of the Energy Policy and Conservation Act 
     (42 U.S.C. 6295(d)(3)) is amended by striking subparagraph 
     (B) and inserting the following:
       ``(B) Not later than January 1, 2009, the Secretary shall 
     publish a final rule to determine whether the standards in 
     effect for central air conditioners and central air 
     conditioning heat pumps should be amended. The rule shall 
     address both system annual energy use and peak electric 
     demand and may include more than 1 efficiency descriptor. The 
     rule shall apply to products manufactured on or after January 
     1, 2012.''.

     SEC. 204. LOAN GUARANTEES.

       (a) Definitions.--In this section:
       (1) Eligible activity.--The term ``eligible activity'' 
     means--
       (A) advanced technologies for high-efficiency electricity 
     transmission control and operation, including high-efficiency 
     power electronics technologies (including software-controlled 
     computer chips and sensors to diagnose trouble spots and re-
     route power into appropriate areas), high-efficiency 
     electricity storage systems, and high-efficiency transmission 
     wire or transmission cable system;
       (B) distributed generation systems fueled solely by--
       (i) solar, wind, biomass, geothermal, or ocean energy;
       (ii) landfill gas;
       (iii) natural gas systems utilizing best available control 
     technology;
       (iv) fuel cells; or
       (v) any combination of the above;
       (C) combined heat and power systems; and
       (D) energy efficiency systems producing demonstrable 
     electricity savings.
       (2) Qualifying entity.--The term ``qualifying entity'' 
     means an individual, corporation, partnership, joint venture, 
     trust or other entity identified by the Secretary under 
     subsection (d)(1) as eligible for a guaranteed loan under 
     this section.
       (3) Secretary.--The term ``Secretary'' means the Secretary 
     of Energy.
       (b) Authority.--The Secretary may guarantee not more than 
     50 percent of the principal of any loan made to a qualifying 
     entity for eligible activities under this section.
       (c) Conditions.--
       (1) In general.--The Secretary shall not guarantee a loan 
     under this section unless--
       (A) the guarantee is a qualifying entity;
       (B) the guarantee has filed an application with the 
     Secretary;
       (C) the project, activity, program, or system for which the 
     loan is made is an eligible activity; and
       (D) the project, activity, program, or system for which the 
     loan is made will significantly enhance the reliability, 
     security, efficiency, and cost-effectiveness of electricity 
     generation, transmission or distribution.
       (2) Priority.--The Secretary shall give priority to 
     guaranteed loans under this section for eligible activities 
     that accomplish the objectives of this section in the most 
     environmentally beneficial manner.
       (3) Eligible financial institutions.--A loan guaranteed 
     under this section shall be made by a financial institution 
     subject to the examination of the Secretary.
       (d) Rules.--Not later than 1 year after the date of 
     enactment of this section, the Secretary shall publish a 
     final rule establishing guidelines for loan requirements 
     under this section, including establishment of--
       (1) criteria for determining which entities shall be 
     considered qualifying entities eligible for loan guarantees 
     under this section;
       (2) criteria for determining which projects, activities, 
     programs, or systems shall be considered eligible activities 
     eligible for loan guarantees in accordance with the purposes 
     of this section;
       (3) loan requirements including term, maximum size, 
     collateral requirements; and
       (4) any other relevant features.
       (e) Limitation on Size.--The Secretary may make commitments 
     to guarantee loans under this section only to the extent that 
     the total principal, any part of which is guaranteed, will 
     not exceed $10,000,000,000.
       (f) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary such sums as are 
     necessary to cover the cost of loan guarantees (as defined by 
     section 502(5) of the Federal Credit Reform Act of 1990 (2. 
     U.S.C. 661a(5))) under this section.

                      TITLE III--ONSITE GENERATION

     SEC. 301. NET METERING.

       (a) Adoption of Standard.--Section 111(d) of the Public 
     Utility Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)) 
     is amended by adding at the end the following:
       ``(11) Net metering.--
       ``(A) In general.--Each electric utility shall make 
     available upon request net metering service to any electric 
     consumer that the electric utility serves.
       ``(B) References.--For purposes of implementing this 
     paragraph, any reference contained in this section to the 
     date of enactment of this Act shall be deemed to be a 
     reference to the date of enactment of this paragraph.''.
       (b) Special Rules for Net Metering.--Section 115 of the 
     Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 
     2625) is amended by adding at the end the following:
       ``(i) Net Metering.--(1) In this subsection:
       ``(A) The term `eligible onsite generating facility' 
     means--

[[Page S1640]]

       ``(i) a facility on the site of a residential electric 
     consumer with a maximum generating capacity of 25 kilowatts 
     or less; or
       ``(ii) a facility on the site of a commercial electric 
     consumer with a maximum generating capacity of 1,000 
     kilowatts or less,

     that is fueled solely by a renewable energy resource.
       ``(B) The term `net metering service' means service to an 
     electric consumer under which electric energy generated by 
     that electric consumer from an eligible onsite generating 
     facility and delivered to the local distribution facilities 
     may be used to offset electric energy provided by the 
     electric utility to the electric consumer during the 
     applicable billing period.
       ``(C) The term `renewable energy resource' means--
       ``(i) solar, wind, biomass, geothermal, or wave energy;
       ``(ii) landfill gas;
       ``(iii) fuel cells; and
       ``(iv) a combined heat and power system.
       ``(2) In undertaking the consideration and making the 
     determination concerning net metering established by section 
     111(d)(11), the following shall apply:
       ``(A) An electric utility--
       ``(i) shall charge the owner or operator of an onsite 
     generating facility rates and charges that are identical to 
     those that would be charged other electric consumers of the 
     electric utility in the same rate class; and
       ``(ii) shall not charge the owner or operator of an onsite 
     generating facility any additional standby, capacity, 
     interconnection, or other rate or charge.
       ``(B) An electric utility that sells electric energy to the 
     owner or operator of an onsite generating facility shall 
     measure the quantity of electric energy produced by the 
     onsite facility and the quantity of electricity consumed by 
     the owner or operator of an onsite generating facility during 
     a billing period in accordance with normal metering 
     practices.
       ``(C) If the quantity of electric energy sold by the 
     electric utility to an on-site generating facility exceeds 
     the quantity of electric energy supplied by the onsite 
     generating facility to the electric utility during the 
     billing period, the electric utility may bill the owner or 
     operator for the net quantity of electric energy sold, in 
     accordance with normal metering practices.
       ``(D) If the quantity of electric energy supplied by the 
     onsite generating facility to the electric utility exceeds 
     the quantity of electric energy sold by the electric utility 
     to the onsite generating facility during the billing period--
       ``(i) the electric utility may bill the owner or operator 
     of the onsite generating facility for the appropriate charges 
     for the billing period in accordance with subparagraph (B); 
     and
       ``(ii) the owner or operator of the onsite generating 
     facility shall be credited for the excess kilowatt-hours 
     generated during the billing period, with the kilowatt-hour 
     credit appearing on the bill for the following billing 
     period.
       ``(E) An eligible onsite generating facility and net 
     metering system used by an electric consumer shall meet all 
     applicable safety, performance, reliability, and 
     interconnection standards established by the National 
     Electrical Code, the Institute of Electrical and Electronics 
     Engineers, and Underwriters Laboratories.
       ``(F) The Commission, after consultation with State 
     regulatory authorities and nonregulated electric utilities 
     and after notice and opportunity for comment, may adopt, by 
     rule, additional control and testing requirements for onsite 
     generating facilities and net metering systems that the 
     Commission determines are necessary to protect public safety 
     and system reliability.
       ``(G) An electric utility must provide net metering 
     services to electric consumers until the cumulative 
     generating capacity of net metering systems equals 1.0 
     percent of the utility's peak demand during the most recent 
     calendar year.
       ``(H) Nothing in this subsection precludes a State from 
     imposing additional requirements regarding the amount of net 
     metering available within a State consistent with the 
     requirements of this section.''.

     SEC. 302. INTERCONNECTION.

       (a) Definitions.--Section 3 of the Federal Power Act (16 
     U.S.C. 796) is amended--
       (1) by striking paragraph 23 and inserting the following:
       ``(23) Transmitting utility.--The term `transmitting 
     utility' means any entity (notwithstanding section 201(f)) 
     that owns, controls, or operates an electric power 
     transmission facility that is used for the sale of electric 
     energy.''; and
       (2) by adding at the end the following:
       ``(26) Appropriate regulatory authority.--The term 
     `appropriate regulatory authority' means--
       ``(A) the Commission;
       ``(B) a State commission;
       ``(C) a municipality; or
       ``(D) a cooperative that is self-regulating under State law 
     and is not a public utility.
       ``(27) Generating facility.--The term `generating facility' 
     means a facility that generates electric energy.
       ``(28) Local distribution utility.--The term `local 
     distribution facility' means an entity that owns, controls, 
     or operates an electric power distribution facility that is 
     used for the sale of electric energy.
       ``(29) Non-federal regulatory authority.--The term `non-
     Federal regulatory authority' means an appropriate regulatory 
     authority other than the Commission.''.
       (b) Interconnection to Distribution Facilities.--Section 
     210 of the Federal Power Act (16 U.S.C. 824i) is amended--
       (1) by redesignating subsection (e) as subsection (g); and
       (2) by inserting after subsection (d) the following:
       ``(e) Interconnection to Distribution Facilities.--(1)(A) A 
     local distribution utility shall interconnect a generating 
     facility with the distribution facilities of the local 
     distribution utility if the owner of the generating 
     facility--
       ``(i) complies with the final rule promulgated under 
     paragraph (2); and
       ``(ii) pays the costs of the interconnection.
       ``(B) The costs of the interconnection--
       ``(i) shall be just and reasonable, and not unduly 
     discriminatory or preferential, as determined by the 
     appropriate regulatory authority; and
       ``(ii) shall be comparable to the costs charged by the 
     local distribution utility for interconnection by any 
     similarly situated generating facility to the distribution 
     facilities of the local distribution utility.
       ``(C) The right of a generating facility to interconnect 
     under subparagraph (A) does not relieve the generating 
     facility or the local distribution utility of other Federal, 
     State, or local requirements.
       ``(2) Not later than 180 days after the date of enactment 
     of this subparagraph, the Commission shall promulgate final 
     rules establishing reasonable and appropriate technical 
     standards for the interconnection of a generating facility 
     with the distribution facilities of a local distribution 
     utility.
       ``(3)(A) In accordance with subparagraph (B) a local 
     distribution utility shall offer to sell backup power to a 
     generating facility that has interconnected with the local 
     distribution utility to the extent that the local 
     distribution utility--
       ``(i) is not subject to an order of a non-Federal 
     regulatory authority to provide open access to the 
     distribution facilities of the local distribution utility;
       ``(ii) has not offered to provide open access to the 
     distribution facilities of the local distribution utility; or
       ``(iii) does not allow a generating facility to purchase 
     backup power from another entity using the distribution 
     facilities of the local distribution utility.
       ``(B) A sale of backup power under subparagraph (A) shall 
     be at such a rate, and under such terms and conditions as are 
     just and reasonable and not unduly discriminatory or 
     preferential, taking into account the actual incremental 
     cost, whenever incurred by the local distribution utility, to 
     supply such backup power service during the period in which 
     the backup power service is provided, as determined by the 
     appropriate regulatory authority.
       ``(C) A local distribution utility shall not be required to 
     offer backup power for resale to any entity other than the 
     entity for which the backup power is purchased.
       ``(D) To the extent backup power is used to serve a new or 
     expanded load on the distribution system, the generating 
     facility shall pay any reasonable cost associated with any 
     transmission, distribution, or generating upgrade required to 
     provide such service.''.
       (c) Interconnection to Transmission Facilities.--Section 
     210 of the Federal Power Act (16 U.S.C. 824i) (as amended by 
     subsection (b)) is amended by inserting after subsection (e) 
     the following:
       ``(f) Interconnection to Transmission Facilities.--(1)(A) 
     Notwithstanding subsections (a) and (c), a transmitting 
     utility shall interconnect a generating facility with the 
     transmission facilities of the transmitting utility if the 
     owner of the generating facility--
       ``(i) complies with the final rules promulgated under 
     paragraph (2); and
       ``(ii) pays the costs of interconnection.
       ``(B) Subject to subparagraph (C), the costs of 
     interconnection--
       ``(i) shall be just and reasonable and not unduly 
     discriminatory or preferential; and
       ``(ii) shall be comparable to the costs charged by the 
     transmitting utility for interconnection by any similarly 
     situated generating facility to the transmitting facilities 
     of the transmitting utility.
       ``(C) A non-Federal regulatory authority that is authorized 
     under Federal law to determine the rates for transmission 
     service shall be authorized to determine the costs of any 
     interconnection under this subparagraph.
       ``(D) The right of a generating facility to interconnect 
     under subparagraph (A) does not relieve the generating 
     facility or the transmitting utility of other Federal, State, 
     or local requirements.
       ``(2) Not later than 180 days after the date of enactment 
     of this subparagraph, the Commission shall promulgate rules 
     establishing reasonable and appropriate technical standards 
     for the interconnection of a generating facility with the 
     transmission facilities of a transmitting utility.
       ``(3)(A) In accordance with subparagraph (B), a 
     transmitting utility shall offer to sell backup power to a 
     generating facility that has interconnected with the 
     transmitting utility unless--
       ``(i) Federal or State law allows a generating facility to 
     purchase backup power from an entity other than the 
     transmitting utility; or
       ``(ii) a transmitting utility allows a generating facility 
     to purchase backup power from an entity other than the 
     transmitting utility

[[Page S1641]]

     using the transmission facilities of the transmitting utility 
     and the transmission facilities of any other transmitting 
     utility.
       ``(B) A sale of backup power under subparagraph (A) shall 
     be at such a rate and under such terms and conditions as are 
     just and reasonable and not unduly discriminatory or 
     preferential, taking into account the actual incremental 
     cost, whenever incurred by the local distribution utility, to 
     supply such backup power service during the period in which 
     the backup power service is provided, as determined by the 
     appropriate regulatory authority.
       ``(C) A transmitting utility shall not be required to offer 
     backup power for resale to any entity other than the entity 
     for which the backup power is purchased.
       ``(D) To the extent backup power is used to serve a new or 
     expanded load on the transmission system, the generating 
     facility shall pay any reasonable costs associated with any 
     transmission, distribution, or generation upgrade required to 
     provide the service.''.
       (d) Conforming Amendments.--Section 210 of the Federal 
     Power Act (16 U.S.C. 824i) is amended--
       (1) in subsection (a)(1)--
       (A) by inserting ``transmitting utility, local distribution 
     utility,'' after ``electric utility,''; and
       (B) in subparagraph (A), by inserting ``any transmitting 
     utility,'' after ``small power production facility,'';
       (2) in subsection (b)(2), by striking ``an evidentiary 
     hearing'' and inserting ``a hearing'';
       (3) in subsection (c)(2)--
       (A) in subparagraph (B), by striking ``or'' at the end;
       (B) in subparagraph (C), by striking ``and'' at the end and 
     inserting ``or''; and
       (C) by adding at the end the following:
       ``(D) promote competition in electricity markets, and''; 
     and
       (4) in subsection (d), by striking the last sentence.

     SEC. 303. ONSITE GENERATION FOR EMERGENCY FACILITIES.

       (a) Definitions.--In this section:
       (1) Eligible facility.--The term ``eligible facility'' 
     means a building owned or operated by a State or local 
     government that is used for--
       (A) critical governmental dispatch and communication;
       (B) police, fire, or emergency services;
       (C) traffic control systems; or
       (D) public water or sewer systems.
       (2) Renewable uninterruptible power supply system.--The 
     term ``renewable uninterruptible power supply system'' means 
     a system designed to maintain electrical power to critical 
     loads in a public facility in the event of a loss or 
     disruption in conventional grid electricity, where such 
     system derives its energy production or storage capacity 
     solely from--
       (A) solar, wind, biomass, geothermal, or ocean energy;
       (B) natural gas;
       (C) landfill gas;
       (D) a fuel cell device; or
       (E) a combination of energy described in subparagraphs (A) 
     through (D).
       (3) Secretary.--The term ``Secretary'' means the Secretary 
     of Energy.
       (b) Demonstration and Technology Transfer Program.--The 
     Secretary shall establish a demonstration program for the 
     implementation of innovative technologies for renewable 
     uninterruptible power supply systems located in eligible 
     buildings and for the dissemination of information on those 
     systems to interested parties.
       (c) Limit on Federal Funding.--The Secretary shall provide 
     not more than 40 percent of the costs of projects funded 
     under this section.
       (d) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section $30,000,000 for 
     each of fiscal years 2006 through 2009.
                                 ______