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‘‘(C) purchase, acquire, or take any security of
1
any other public utility, or
2
‘‘(D) purchase, lease, or otherwise acquire exist-
3
ing facilities for the generation of electric energy un-
4
less such facilities will be used exclusively for the sale
5
of electric energy at retail.
6
‘‘(2) No holding company in a holding company sys-
7
tem that includes a transmitting utility or an electric util-
8
ity company shall purchase, acquire, or take any security
9
of, or, by any means whatsoever, directly or indirectly,
10
merge or consolidate with a transmitting utility, an electric
11
utility company, a gas utility company, or a holding com-
12
pany in a holding company system that includes a trans-
13
mitting utility, an electric utility company, or a gas utility
14
company, without first having secured an order of the Com-
15
mission authorizing it to do so.
16
‘‘(3) Upon application for such approval the Commis-
17
sion shall give reasonable notice in writing to the Governor
18
and State commission of each of the States in which the
19
physical property affected, or any part thereof, is situated,
20
and to such other persons as it may deem advisable.
21
‘‘(4) After notice and opportunity for hearing, the
22
Commission shall approve the proposed disposition, consoli-
23
dation, acquisition, or control, if it finds that the proposed
24
transaction—
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‘‘(A) will be consistent with the public interest;
1
‘‘(B) will not adversely affect the interests of con-
2
sumers of electric energy of any public utility that is
3
a party to the transaction or is an associate company
4
of any party to the transaction;
5
‘‘(C) will not impair the ability of the Commis-
6
sion or any State commission having jurisdiction
7
over any public utility that is a party to the trans-
8
action or an associate company of any party to the
9
transaction to protect the interests of consumers or the
10
public; and
11
‘‘(D) will not lead to cross-subsidization of asso-
12
ciate companies or encumber any utility assets for the
13
benefit of an associate company.
14
‘‘(5) The Commission shall, by rule, adopt procedures
15
for the expeditious consideration of applications for the ap-
16
proval of dispositions, consolidations, or acquisitions under
17
this section. Such rules shall identify classes of transactions,
18
or specify criteria for transactions, that normally meet the
19
standards established in paragraph (4), and shall require
20
the Commission to grant or deny an application for ap-
21
proval of a transaction of such type within 90 days after
22
the conclusion of the hearing or opportunity to comment
23
under paragraph (4). If the Commission does not act within
24
90 days, such application shall be deemed granted unless
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the Commission finds that further consideration is required
1
to determine whether the proposed transaction meets the
2
standards of paragraph (4) and issues one or more orders
3
tolling the time for acting on the application for an addi-
4
tional 90 days.
5
‘‘(6) For purposes of this subsection, the terms ‘asso-
6
ciate company’, ‘electric utility company’, ‘gas utility com-
7
pany’, ‘holding company’, and ‘holding company system’
8
have the meaning given those terms in the Public Utility
9
Holding Company Act of 2003.’’.
10
SEC. 203. MARKET-BASED RATES.
11
(a) A
PPROVAL OF
M
ARKET
-B
ASED
R
ATES
.—Section
12
205 of the Federal Power Act (16 U.S.C. 824d) is amended
13
by adding at the end the following:
14
‘‘(h) The Commission may determine whether a mar-
15
ket-based rate for the sale of electric energy subject to the
16
jurisdiction of the Commission is just and reasonable and
17
not unduly discriminatory or preferential. In making such
18
determination, the Commission shall consider such factors
19
as the Commission may deem to be appropriate and in the
20
public interest, including to the extent the Commission con-
21
siders relevant to the wholesale power market—
22
‘‘(1) market power;
23
‘‘(2) the nature of the market and its response
24
mechanisms; and
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‘‘(3) reserve margins.’’.
1
(b) R
EVOCATION OF
M
ARKET
-B
ASED
R
ATES
.—Section
2
206 of the Federal Power Act (16 U.S.C. 824e) is amended
3
by adding at the end the following:
4
‘‘(f) Whenever the Commission, after a hearing had
5
upon its own motion or upon complaint, finds that a rate
6
charged by a public utility authorized to charge a market-
7
based rate under section 205 is unjust, unreasonable, un-
8
duly discriminatory or preferential, the Commission shall
9
determine the just and reasonable rate and fix the same by
10
order.’’.
11
SEC. 204. REFUND EFFECTIVE DATE.
12
Section 206(b) of the Federal Power Act (16 U.S.C.
13
824e(b)) is amended by—
14
(1) striking ‘‘the date 60 days after the filing of
15
such complaint nor later than 5 months after the ex-
16
piration of such 60-day period’’ in the second sen-
17
tence and inserting ‘‘the date of the filing of such
18
complaint nor later than 5 months after the filing of
19
such complaint’’;
20
(2) striking ‘‘60 days after’’ in the third sentence
21
and inserting ‘‘of’’; and
22
(3) striking ‘‘expiration of such 60-day period’’
23
in the third sentence and inserting ‘‘publication
24
date’’.
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SEC. 205. OPEN ACCESS TRANSMISSION BY CERTAIN UTILI-
1
TIES.
2
Part II of the Federal Power Act is further amended
3
by inserting after section 211 the following:
4
‘‘
OPEN ACCESS BY UNREGULATED TRANSMITTING
5
UTILITIES
6
‘‘S
EC
. 211A. (a) Subject to section 212(h), the Commis-
7
sion may, by rule or order, require an unregulated trans-
8
mitting utility to provide transmission services—
9
‘‘(1) at rates that are comparable to those that
10
the unregulated transmitting utility charges itself,
11
and
12
‘‘(2) on terms and conditions (not relating to
13
rates) that are comparable to those under Commission
14
rules that require public utilities to offer open access
15
transmission services and that are not unduly dis-
16
criminatory or preferential.
17
‘‘(b) The Commission shall exempt from any rule or
18
order under this subsection any unregulated transmitting
19
utility that—
20
‘‘(1) sells no more than 4,000,000 megawatt
21
hours of electricity per year;
22
‘‘(2) does not own or operate any transmission
23
facilities that are necessary for operating an inter-
24
connected transmission system (or any portion there-
25
of); or
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‘‘(3) meets other criteria the Commission deter-
1
mines to be in the public interest.
2
‘‘(c) The rate changing procedures applicable to public
3
utilities under subsections (c) and (d) of section 205 are
4
applicable to unregulated transmitting utilities for pur-
5
poses of this section.
6
‘‘(d) In exercising its authority under paragraph (1),
7
the Commission may remand transmission rates to an un-
8
regulated transmitting utility for review and revision where
9
necessary to meet the requirements of subsection (a).
10
‘‘(e) The provision of transmission services under sub-
11
section (a) does not preclude a request for transmission
12
services under section 211.
13
‘‘(f) The Commission may not require a State or mu-
14
nicipality to take action under this section that constitutes
15
a private business use for purposes of section 141 of the
16
Internal Revenue Code of 1986 (26 U.S.C. 141).
17
‘‘(g) For purposes of this subsection, the term ‘unregu-
18
lated transmitting utility’ means an entity that—
19
‘‘(1) owns or operates facilities used for the
20
transmission of electric energy in interstate com-
21
merce, and
22
‘‘(2) is either an entity described in section
23
201(f) or a rural electric cooperative.’’.
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SEC. 206. ELECTRIC RELIABILITY STANDARDS.
1
Part II of the Federal Power Act (16 U.S.C. 824 et
2
seq.) is amended by inserting the following after section 215
3
as added by this Act:
4
‘‘SEC. 216. ELECTRIC RELIABILITY.
5
‘‘(a) D
EFINITIONS
.—For purposes of this section—
6
‘‘(1) ‘bulk-power system’ means the network of
7
interconnected transmission facilities and generating
8
facilities;
9
‘‘(2) ‘electric reliability organization’ means a
10
self-regulating organization certified by the Commis-
11
sion under subsection (c) whose purpose is to promote
12
the reliability of the bulk-power system; and
13
‘‘(3) ‘reliability standard’ means a requirement
14
to provide for reliable operation of the bulk-power sys-
15
tem approved by the Commission under this section.
16
‘‘(b) J
URISIDICTION AND
A
PPLICABILITY
.—The Com-
17
mission shall have jurisdiction, within the United States,
18
over an electric reliability organization, any regional enti-
19
ties, and all users, owners and operators of the bulk-power
20
system, including but not limited to the entities described
21
in section 201(f), for purposes of approving reliability
22
standards and enforcing compliance with this section. All
23
users, owners and operators of the bulk-power system shall
24
comply with reliability standards that take effect under this
25
section.
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‘‘(c) C
ERTIFICATION
.—(1) The Commission shall issue
1
a final rule to implement the requirements of this section
2
not later than 180 days after the date of enactment of this
3
section.
4
‘‘(2) Following the issuance of a Commission rule
5
under paragraph (1), any person may submit an applica-
6
tion to the Commission for certification as an electric reli-
7
ability organization. The Commission may certify an ap-
8
plicant if the Commission determines that the applicant—
9
‘‘(A) has the ability to develop, and enforce reli-
10
ability standards that provide for an adequate level
11
of reliability of the bulk-power system;
12
‘‘(B) has established rules that—
13
‘‘(i) assure its independence of the users and
14
owners and operators of the bulk-power system;
15
while assuring fair stakeholder representation in
16
the selection of its directors and balanced deci-
17
sionmaking in any committee or subordinate or-
18
ganizational structure;
19
‘‘(ii) allocate equitably dues, fees, and other
20
charges among end users for all activities under
21
this section;
22
‘‘(iii) provide fair and impartial procedures
23
for enforcement of reliability standards through
24
imposition of penalties (including limitations on
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HR 6 EAS1S/PP
activities, functions, or operations, or other ap-
1
propriate sanctions); and
2
‘‘(iv) provide for reasonable notice and op-
3
portunity for public comment, due process, open-
4
ness, and balance of interests in developing reli-
5
ability standards and otherwise exercising its
6
duties.
7
‘‘(3) If the Commission receives two or more timely
8
applications that satisfy the requirements of this subsection,
9
the Commission shall approve only the application it con-
10
cludes will best implement the provisions of this section.
11
‘‘(d) R
ELIABILITY
S
TANDARDS
.—(1) An electric reli-
12
ability organization shall file a proposed reliability stand-
13
ard or modification to a reliability standard with the Com-
14
mission.
15
‘‘(2) The Commission may approve a proposed reli-
16
ability standard or modification to a reliability standard
17
if it determines that the standard is just, reasonable, not
18
unduly discriminatory or preferential, and in the public
19
interest. The Commission shall give due weight to the tech-
20
nical expertise of the electric reliability organization with
21
respect to the content of a proposed standard or modifica-
22
tion to a reliability standard, but shall not defer with re-
23
spect to its effect on competition.
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‘‘(3) The electric reliability organization and the Com-
1
mission shall rebuttably presume that a proposal from a
2
regional entity organized on an interconnection-wide basis
3
for a reliability standard or modification to a reliability
4
standard to be applicable on an interconnection-wide basis
5
is just, reasonable, and not unduly discriminatory or pref-
6
erential, and in the public interest.
7
‘‘(4) The Commission shall remand to the electric reli-
8
ability organization for further consideration a proposed re-
9
liability standard or a modification to a reliability stand-
10
ard that the Commission disapproves in whole or in part.
11
‘‘(5) The Commission, upon its own motion or upon
12
complaint, may order an electric reliability organization
13
to submit to the Commission a proposed reliability stand-
14
ard or a modification to a reliability standard that address-
15
es a specific matter if the Commission considers such a new
16
or modified reliability standard appropriate to carry out
17
this section.
18
‘‘(e) E
NFORCEMENT
.—(1) An electric reliability orga-
19
nization may impose a penalty on a user or owner or oper-
20
ator of the bulk-power system if the electric reliability orga-
21
nization, after notice and an opportunity for a hearing—
22
‘‘(A) finds that the user or owner or operator of
23
the bulk-power system has violated a reliability
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standard approved by the Commission under sub-
1
section (d); and
2
‘‘(B) files notice with the Commission, which
3
shall affirm, set aside or modify the action.
4
‘‘(2) On its own motion or upon complaint, the Com-
5
mission may order compliance with a reliability standard
6
and may impose a penalty against a user or owner or oper-
7
ator of the bulk-power system, if the Commission finds, after
8
notice and opportunity for a hearing, that the user or owner
9
or operator of the bulk-power system has violated or threat-
10
ens to violate a reliability standard.
11
‘‘(3) The Commission shall establish regulations au-
12
thorizing the electric reliability organization to enter into
13
an agreement to delegate authority to a regional entity for
14
the purpose of proposing and enforcing reliability stand-
15
ards (including related activities) if the regional entity sat-
16
isfies the provisions of subsection (c)(2) (A) and (B) and
17
the agreement promotes effective and efficient administra-
18
tion of bulk-power system reliability, and may modify such
19
delegation. The electric reliability organization and the
20
Commission shall rebuttably presume that a proposal for
21
delegation to a regional entity organized on an interconnec-
22
tion-wide basis promotes effective and efficient administra-
23
tion of bulk-power system reliability and should be ap-
24
proved. Such regulation may provide that the Commission
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