S 516 IS

To benefit consumers by promoting competition in the electric power industry, and for other purposes.

March 3, 1999

Mr. THOMAS introduced the following bill; which was read twice and referred to the Committee on Energy and Natural Resources

To benefit consumers by promoting competition in the electric power industry, and for other purposes.

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

SECTION 1. SHORT TITLE.

This Act may be cited as the `Electric Utility Restructuring Empowerment and Competitiveness Act of 1999'.

SEC. 2. FINDINGS AND PURPOSES.

(a) FINDINGS- Congress finds that--

(1) the Nation's electricity generation, transmission, and local distribution systems critically affect the economy and productivity of the United States and the health, safety, welfare, and security of all Americans;

(2) competition will provide greater choices, lower prices, and innovative services and products to all consumers of electricity;

(3)(A) States have traditionally regulated the rates, terms, and conditions of selling electricity for end-use;

(B) regulation of the rates, terms, and conditions of selling electricity for end-use is properly the exclusive jurisdiction of States;

(C) virtually every State is considering reforms to traditional methods of regulating the provision of retail electric service to promote competition;

(D) many States, through legislation or by administrative decision, have already approved plans to begin retail competition; and

(E) States should--

(i) continue to take the lead in managing the transition to a competitive electricity marketplace; and

(ii) determine the retail electric policies that provide the greatest benefits to consumers in a manner that recognizes the unique characteristics of each State;

(4) all classes of consumers of electric energy should benefit from competition in electricity sales;

(5) consumers should have access to adequate, reliable, and efficient supplies of electricity;

(6) the transition to competition among electricity providers should not impair the ability of the States to determine recovery of the substantial investments made by electric utilities to serve their customers;

(7) reciprocity among competing retail electricity providers will ensure that the States do not obtain undue advantages or disadvantages from the timing of their decisions;

(8) the Federal Government must address the matters within Federal jurisdiction as necessary to promote competition, but such actions must not be made at the expense of State authority; and

(9)(A) Congress should consider restricting governmental utilities with respect to facilities financed with tax-exempt debt;

(B) sales in a service territory in existence before the restriction may continue to be financed using tax-exempt debt; and

(C) a governmental utility should have to finance sales outside its service territory on the same basis as other competitors.

(b) PURPOSE- The purpose of this Act is to promote competition in the electric power industry through empowering the States, deregulation, and streamlining.

SEC. 3. STATE PROMOTION OF RETAIL COMPETITION.

(a) RETAINED STATE JURISDICTION- 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. STATE PROMOTION OF RETAIL COMPETITION.

`(a) DEFINITIONS- In this section:

`(1) NONREGULATED ELECTRIC UTILITY- The term `nonregulated electric utility' has the meaning given the term in section 3 of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2602).

`(2) RETAIL ELECTRIC SUPPLY-

`(A) IN GENERAL- The term `retail electric supply' means the production, generation, manufacture, aggregation, retail marketing, retail brokering, retail selling, or other retail supplying of electricity.

`(B) EXCLUSION- The term `retail electric supply' does not include the transmission of electricity in interstate commerce.

`(3) RETAIL SALE- The term `retail sale' means any sale of electric energy for ultimate consumption.

`(4) STATE REGULATED ELECTRIC UTILITY- The term `State regulated electric utility' has the meaning given the term in section 3 of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2602).

`(b) JURISDICTION- A State may regulate the provision of any retail electric supply (including self-generation) or any local distribution service provided to an ultimate consumer of electricity in the State.

`(c) PERFORMANCE STANDARDS- A State may establish and enforce performance standards for the retail sale, marketing, or delivery of electric energy to ensure system reliability, protect human health and public safety, and protect retail consumers from unfair business practices.

`(d) STATE AUTHORITY OVER RETAIL TRANSACTIONS- Notwithstanding any other provision of this Act, a State or a nonregulated electric utility may require, as a condition of the purchase by any person or municipality located in the State or service area of the nonregulated electric utility, as appropriate, of a retail electric supply or local distribution service, the payment of a charge determined by the State or nonregulated electric utility to further public policy goals, including--

`(1) recover electric industry transition costs;

`(2) ensure that adequate electric service is available to all customers served by a retail electricity distribution system;

`(3) ensure and enhance the reliability of retail electric service;

`(4) fund assistance to low-income consumers of electricity;

`(5) encourage environmental programs, renewable-energy programs, energy-efficiency programs, or conservation programs;

`(6) provide for transition costs of electric utility workers adversely affected by restructuring; and

`(7) encourage research and development on electric technologies.

`(e) WHOLESALE RECIPROCITY- An electric utility may not provide any wholesale electric supply in commerce using open and nondiscriminatory transmission access unless the electric utility, and every affiliate of the electric utility, provides comparable open and nondiscriminatory transmission access over any facility owned, controlled, or operated by the person or affiliate.

`(f) RETAIL RECIPROCITY- A State may provide that a nonregulated electric utility, a State regulated electric utility, or a cooperative utility in the State may deny local distribution access to any other nonregulated electric utility, State regulated electric utility, or cooperative utility (or affiliate of any such utility) that is offering electric energy for sale (referred to in this subsection as the `seller') to a customer of the in-State utility if the seller or an affiliate of the seller is not providing comparable access to any local distribution facility owned, controlled, or operated by the seller or affiliate.'.

(b) STATE AUTHORITY OVER SALES OF ELECTRICITY TO FEDERAL FACILITIES- Section 201 of the Federal Power Act (16 U.S.C. 824) is amended by adding at the end the following:

`(h) STATE AUTHORITY OVER SALES OF ELECTRICITY TO FEDERAL FACILITIES- The purchase of electricity for ultimate consumption by a Federal department, agency, authority, instrumentality, facility, enclave, installation, establishment, or mixed-ownership government corporation shall be subject to the laws (including regulations) of the State in which the consumption of electricity occurs with respect to the choice of supplier and rules, rates, terms and conditions, if any, applicable to such a purchase.'.

(c) UNIVERSAL SERVICE- Section 201(b) of the Federal Power Act (16 U.S.C. 824(b)) is amended by adding at the end the following:

`(3) UNIVERSAL SERVICE- Nothing in this Act deprives a State of the authority to require, in accordance with State law, all electricity providers that sell electricity to retail customers in the State to assist in providing universal service.'.

SEC. 4. DEREGULATION OF WHOLESALE SALES OF ELECTRIC ENERGY.

(a) DEREGULATION OF WHOLESALE SALES OF ELECTRIC ENERGY- Section 205 of the Federal Power Act (16 U.S.C. 824d) is amended by adding at the end the following:

`(g) DEREGULATION OF WHOLESALE SALES OF ELECTRIC ENERGY-

`(1) IN GENERAL- A contract or agreement for the sale of electric energy for resale made after the date of enactment of this subsection shall be exempt from regulation of rates and charges under parts II and III of this Act.

`(2) STATE AUTHORITY OVER RETAIL SALES UNAFFECTED- Nothing in this subsection affects the authority of a State or State commission to regulate sales to an ultimate customer.'.

(b) OPEN ACCESS TRANSMISSION FROM ALL TRANSMITTING UTILITIES- Part II of the Federal Power Act (16 U.S.C. 824 et seq.) (as amended by section 3(a)) is amended by adding at the end the following:

`SEC. 216. OPEN ACCESS TRANSMISSION FROM ALL TRANSMITTING UTILITIES.

`A transmitting utility and any other entity that owns, operates, or controls transmission of electricity in interstate commerce--

`(1) shall be subject to the jurisdiction of the Commission under this Act regarding any wholesale transmission service; and

`(2) shall comply with all requirements applicable to a public utility regarding the provision of any wholesale transmission service.'.

SEC. 5. TAX BENEFITS TO UTILITIES.

Not later than 1 year after the date of enactment of this Act, the Inspector General of the Treasury shall submit to Congress a report detailing whether and how Internal Revenue Code provisions relating to the following benefits should be addressed in order to foster a competitive retail electricity market:

(1) Benefits received as a result of the Internal Revenue Code by an investor-owned electric utility that is not received by other nonutility private corporations under the Internal Revenue Code.

(2) Benefits received as a result of the Internal Revenue Code by a utility providing electric service to the public that is--

(A) an instrumentality of a State;

(B) a political subdivision of a State;

(C) a corporation that has at any time received a loan from the Rural Utilities Service or the Rural Electrification Administration under the Rural Electrification Act of 1936 (17 U.S.C. 901 et seq.) for the purposes of providing electric service; or

(D) an entity that is owned, directly or indirectly, by an entity described in subparagraph (A), (B), or (C).

SEC. 6. PURPA REFORM.

Section 210 of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 824a-3) is amended by adding at the end the following:

`(m) LIMITATION ON RULES-

`(1) DEFINITION OF FACILITY- In this subsection, the term `facility' means a facility for the generation of electric energy or an addition to or expansion of the generating capacity of a facility for the generation of electric energy.

`(2) LIMITATION- This section shall not apply to a facility that begins commercial operation after the date of enactment of this subsection, except for a facility for which a power purchase contract was entered into under this section before the date of enactment of this subsection.

`(3) CONTRACTS- After the date of enactment of this subsection, an electric utility shall not be required to enter into a new contract or obligation to purchase or sell electric energy under this section.'.

SEC. 7. REPEAL OF PUHCA.

(a) FINDINGS AND PURPOSES-

(1) FINDINGS- Congress finds that--

(A) the Public Utility Holding Company Act of 1935 (15 U.S.C. 79a et seq.) was intended to facilitate the work of Federal and State regulators by placing certain constraints on the activities of holding company systems;

(B) developments since 1935, including changes in other regulation and in the electric and gas industries, have called into question the continued relevance of the model of regulation established by that Act;

(C) there is a continuing need for State regulation in order to ensure the rate protection of utility customers; and

(D) limited Federal regulation is necessary to supplement the work of State commissions for continued rate protection for electric and gas utility customers.

(2) PURPOSES- The purposes of this section are--

(A) to eliminate unnecessary regulation, yet continue to provide for consumer protection by facilitating existing rate regulatory authority through improved Federal and State commission access to books and records of all companies in a holding company system, to the extent that such information is relevant to rates paid by utility customers, while affording companies the flexibility required to compete in the energy markets; and

(B) to address protection of electric and gas utility customers by providing for Federal and State access to books and records of all companies in a holding company system that are relevant to utility rates.

(b) DEFINITIONS- In this section:

(1) AFFILIATE- The term `affiliate' means any company, 5 percent or more of the outstanding voting securities of which are owned, controlled, or held with power to vote, directly or indirectly, by a parent company.

(2) ASSOCIATE COMPANY- The term `associate company' means any company in the same holding company system with another company.

(3) COMMISSION- The term `Commission' means the Federal Energy Regulatory Commission.

(4) COMPANY- The term `company' means a corporation, partnership, association, joint stock company, business trust, or any organized group of persons, whether incorporated or not, or a receiver, trustee, or other liquidating agent of any such entity.

(5) ELECTRIC UTILITY COMPANY- The term `electric utility company' means any company that owns or operates facilities used for the generation, transmission, or distribution of electric energy for sale.

(6) EXEMPT WHOLESALE GENERATOR- The term `exempt wholesale generator' has the meaning given the term in section 32(a) of the Public Utility Holding Company Act of 1935 (15 U.S.C. 79z-5a(a)), as in effect on the day before the effective date of this section.

(7) FOREIGN UTILITY COMPANY- The term `foreign utility company' has the meaning given the term in section 33(a) of the Public Utility Holding Company Act of 1935 (15 U.S.C. 79z-5b(a)), as in effect on the day before the effective date of this section.

(8) GAS UTILITY COMPANY- The term `gas utility company' means any company that owns or operates facilities used for retail distribution (other than the distribution only in enclosed portable containers or distribution to tenants or employees of the company operating such facilities for their own use and not for resale) of natural or manufactured gas for heat, light, or power.

(9) HOLDING COMPANY- The term `holding company' means--

(A) a company that directly or indirectly owns, controls, or holds, with power to vote, 10 percent or more of the outstanding voting securities of a public utility company or of a holding company of any public utility company; and

(B) any person, determined by the Commission, after notice and opportunity for hearing, to exercise directly or indirectly (either alone or under an arrangement or understanding with 1 or more persons) such a controlling influence over the management or policies of any public utility company or holding company as to make it necessary or appropriate for rate protection for utility customers with respect to rates that such person be subject to the obligations, duties, and liabilities imposed by this Act upon holding companies.

(10) HOLDING COMPANY SYSTEM- The term `holding company system' means a holding company and all subsidiary companies of the holding company.

(11) JURISDICTIONAL RATE- The term `jurisdictional rate' means a rate established by the Commission for the transmission of electric energy in interstate commerce, the sale of electric energy at wholesale in interstate commerce, the transportation of natural gas in interstate commerce, and the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use.

(12) NATURAL GAS COMPANY- The term `natural gas company' means a person engaged in the transportation of natural gas in interstate commerce or the sale of natural gas in interstate commerce for resale.

(13) PERSON- The term `person' means an individual or company.

(14) PUBLIC UTILITY- The term `public utility' means any person that owns or operates facilities used for transmission of electric energy in interstate commerce or sales of electric energy at wholesale in interstate commerce.

(15) PUBLIC UTILITY COMPANY- The term `public utility company' means an electric utility company or a gas utility company.

(16) STATE COMMISSION- The term `State commission' means any commission, board, agency, or officer, by whatever name designated, of a State, municipality, or other political subdivision of a State that, under the laws of such State, has jurisdiction to regulate public utility companies.

(17) SUBSIDIARY COMPANY- The term `subsidiary company', in reference to a subsidiary company of a holding company, means--

(A) a company, 10 percent or more of the outstanding voting securities of which are directly or indirectly owned, controlled, or held

with power to vote, by the holding company; and

(B) any person, the management or policies of which the Commission, after notice and opportunity for hearing, determines to be subject to a controlling influence, directly or indirectly, by the holding company (either alone or under an arrangement or understanding with 1 or more other persons) so as to make it necessary for the rate protection of utility customers with respect to rates that the person be subject to the obligations, duties, and liabilities imposed by this section on subsidiary companies of holding companies.

(18) VOTING SECURITY- The term `voting security' means any security entitling the owner or holder of the security to vote in the direction or management of the affairs of a company.

(c) REPEAL OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935- The Public Utility Holding Company Act of 1935 (15 U.S.C. 79a et seq.) is repealed.

(d) FEDERAL ACCESS TO BOOKS AND RECORDS-

(1) IN GENERAL- Each holding company and each associate company of a holding company shall maintain, and shall make available to the Commission, such books, accounts, memoranda, and other records as the Commission considers to be relevant to costs incurred by a public utility or natural gas company that is an associate company of the holding company and necessary or appropriate for the protection of utility customers with respect to jurisdictional rates for the transmission of electric energy in interstate commerce, the sale of electric energy at wholesale in interstate commerce, the transportation of natural gas in interstate commerce, and the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or other use.

(2) AFFILIATE COMPANIES- Each affiliate of a holding company or of any subsidiary company of a holding company shall maintain, and make available to the Commission, such books, accounts, memoranda, and other records with respect to any transaction with another affiliate, as the Commission considers relevant to costs incurred by a public utility or natural gas company that is an associate company of the holding company and necessary or appropriate for the protection of utility customers with respect to jurisdictional rates.

(3) HOLDING COMPANY SYSTEMS- The Commission may examine the books, accounts, memoranda, and other records of any company in a holding company system, or any affiliate of a company in a holding company system, as the Commission considers relevant to costs incurred by a public utility or natural gas company in the holding company system and necessary or appropriate for the protection of utility customers with respect to jurisdictional rates.

(4) CONFIDENTIALITY- No member, officer, or employee of the Commission shall divulge any fact or information that may come to the knowledge of the member, officer, or employee during the course of examination of a book, account, memorandum, or other record under this section, except as may be directed by the Commission or by a court of competent jurisdiction.

(e) STATE ACCESS TO BOOKS AND RECORDS-

(1) IN GENERAL- On the written request of a State commission having jurisdiction to regulate a public utility company in a holding company system, a holding company or an associate or affiliate of a holding company, wherever located, shall produce for inspection any book, account, memorandum, or other record that--

(A) has been identified in reasonable detail in a proceeding before the State commission;

(B) the State commission considers relevant to costs incurred by the company; and

(C) is necessary for the effective discharge of the responsibilities of the State commission with respect to the proceeding.

(2) LIMITATION- Paragraph (1) does not apply to any person that is a holding company solely by reason of ownership of 1 or more qualifying facilities under the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 et seq.).

(3) CONFIDENTIALITY OF INFORMATION- The production of books, accounts, memoranda, and other records under paragraph (1) shall be subject to such terms and conditions as are necessary to safeguard against unwarranted disclosure to the public of any trade secrets or sensitive commercial information.

(4) EFFECT ON STATE LAW- Nothing in this section preempts applicable State law concerning the provision of books, records, or any other information, or in any way limit the rights of any State to

obtain books, records, or any other information under Federal law, contract, or otherwise.

(5) COURT JURISDICTION- Any United States district court located in the State in which the State commission referred to in paragraph (1) is located shall have jurisdiction to enforce compliance with this section.

(f) EXEMPTION AUTHORITY-

(1) RULEMAKING- Not later than 90 days after the effective date of this section, the Commission shall promulgate a final rule to exempt from the requirements of subsection (d) any person that is a holding company, solely with respect to 1 or more--

(A) qualifying cogeneration facilities or qualifying small power production facilities under section 210 of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 824a-3 et seq.);

(B) exempt wholesale generators; or

(C) foreign utility companies.

(2) OTHER AUTHORITY- If, on application or on its own motion, the Commission finds that the books, records, accounts, memoranda, and other records of any person are not relevant to the jurisdictional rates of a public utility company, or if the Commission finds that any class of transactions is not relevant to the jurisdictional rates of a public utility company, the Commission shall exempt the person or transaction from the requirements of subsection (d).

(g) AFFILIATE TRANSACTIONS- Nothing in this section precludes the Commission or a State commission from exercising its jurisdiction under otherwise applicable law to determine whether a public utility company may recover in rates any costs of an activity performed by an associate company, or any costs of goods or services acquired by the public utility company from an associate company.

(h) APPLICABILITY- This section does not apply to--

(1) the United States;

(2) a State or a political subdivision of a State;

(3) a foreign governmental authority not operating in the United States;

(4) an agency, authority, or instrumentality of an entity referred to in paragraph (1), (2), or (3); or

(5) an officer, agent, or employee of an entity referred to in paragraph (1), (2), or (3) acting as such in the course of the official duties of the officer, agent, or employee.

(i) EFFECT ON OTHER REGULATIONS- Nothing in this section precludes the Commission or a State commission from exercising jurisdiction under other law to protect utility customers.

(j) ENFORCEMENT- The Commission shall have the powers set forth in sections 306 through 317 of the Federal Power Act (16 U.S.C. 825d et seq.) to enforce this section.

(k) SAVINGS PROVISIONS-

(1) IN GENERAL- Nothing in this section prohibits a person from engaging in or continuing to engage in an activity or transaction in which the person was legally engaged or authorized to engage (whether by rule, order, or otherwise) on the day before the effective date of this section, if the person continues to comply with the terms of any authorization.

(2) EFFECT ON OTHER COMMISSION AUTHORITY- Nothing in this section limits the authority of the Commission under the Federal Power Act (16 U.S.C. 791a et seq.) or the Natural Gas Act (15 U.S.C. 717 et seq.).

(l) IMPLEMENTATION- Not later than 18 months after the date of enactment of this Act, the Commission shall--

(1) promulgate such regulations as are necessary or appropriate to implement this section (other than subsection (c)); and

(2) submit to Congress detailed recommendations on technical and conforming amendments to Federal law necessary to carry out this section and the amendments made by this section.

(m) TRANSFER OF RESOURCES- All books and records that relate primarily to responsibilities of the Commission under this section shall be transferred from the Securities and Exchange Commission to the Commission.

(n) CONFORMING AMENDMENT TO THE FEDERAL POWER ACT- Section 318 of the Federal Power Act (16 U.S.C. 825q) is repealed.

(o) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated such sums as are necessary to carry out this section.

(p) EFFECTIVE DATE- This section and the amendments made by this section take effect on the date that is 18 months after the date of enactment of this Act.

SEC. 8. ELECTRIC RELIABILITY ORGANIZATION AND OVERSIGHT.

(a) IN GENERAL- Part II of the Federal Power Act (16 U.S.C. 824 et seq.) (as amended by section 4(b)) is amended by adding at the end the following:

`SEC. 217. ELECTRIC RELIABILITY ORGANIZATION AND OVERSIGHT.

`(a) DEFINITIONS- In this section:

`(1) AFFILIATED REGIONAL RELIABILITY ENTITY- The term `affiliated regional reliability entity' means an entity delegated authority under subsection (h).

`(2) BULK-POWER SYSTEM-

`(A) IN GENERAL- The term `bulk-power system' means an interconnected transmission grid in which electric power is transmitted over transmission lines with a capacity of more than 115 kilovolts.

`(B) INCLUSIONS- The term `bulk-power system' includes--

`(i) transmission lines, substations, control centers, communications, data, operations planning facilities, control systems, and all other facilities necessary for the operation of all or any part of the transmission grid; and

`(ii) the output of generating units necessary to maintain the reliability of the transmission grid.

`(3) BULK-POWER SYSTEM USER- The term `bulk-power system user' means an entity that--

`(A) sells, purchases, or transmits electric power over a bulk-power system; or

`(B) owns, operates, or maintains facilities or control systems that are part of a bulk-power system.

`(4) ELECTRIC RELIABILITY ORGANIZATION- The term `electric reliability organization' means the organization designated by the Commission under subsection (d).

`(5) ENTITY RULE- The term `entity rule' means a rule adopted by an affiliated regional reliability entity for a specific region and designed to implement or enforce 1 or more organization standards.

`(6) INDEPENDENT DIRECTOR- The term `independent director' means a person that--

`(A) is not an officer or employee of an entity that would reasonably be perceived as having a direct financial interest in the outcome of a decision by the board of directors of the electric reliability organization; and

`(B) does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director of the electric reliability organization.

`(7) INDUSTRY SECTOR- The term `industry sector' means a group of bulk-power system users with substantially similar commercial interests, as determined by the board of directors of the electric reliability organization.

`(8) INTERCONNECTION- The term `interconnection' means a geographic area in which the operation of bulk-power system components is synchronized so that the failure of 1 or more of the components may adversely affect the ability of the operators of other components within the interconnection to maintain safe and reliable operation of the facilities within their control.

`(9) ORGANIZATION STANDARD-

`(A) IN GENERAL- The term `organization standard' means a policy or standard adopted by the electric reliability organization to provide for the reliable operation of a bulk-power system.

`(B) INCLUSIONS- The term `organization standard' includes--

`(i) an entity rule approved by the electric reliability organization; and

`(ii) a variance approved by the electric reliability organization.

`(10) PUBLIC INTEREST GROUP-

`(A) IN GENERAL- The term `public interest group' means a nonprofit private or public organization that has an interest in the activities of the electric reliability organization.

`(B) INCLUSIONS- The term `public interest group' includes--

`(i) a ratepayer advocacy group;

`(ii) an environmental group; and

`(iii) a State or local government organization that regulates participants in and promulgates government policy with respect to the market for electric power.

`(11) SYSTEM OPERATOR-

`(A) IN GENERAL- The term `system operator' means an entity that operates or is responsible for the operation of a bulk-power system.

`(B) INCLUSIONS- The term `system operator' includes--

`(i) a control area operator;

`(ii) an independent system operator;

`(iii) a transmission company;

`(iv) a transmission system operator; and

`(v) a regional security coordinator.

`(12) VARIANCE- The term `variance' means an exception from the requirements of an organization standard (including a proposal for an organization standard in a case in which there is no organization standard) that is adopted by an affiliated regional reliability entity and is applicable to all or a part of the region for which the affiliated regional reliability entity is responsible.

`(b) JURISDICTION OF THE COMMISSION- Within the United States, the Commission shall have jurisdiction over the electric reliability organization, all affiliated regional reliability entities, all system operators, and all bulk-power system users for purposes of approving organization standards and enforcing compliance with this section.

`(c) EXISTING RELIABILITY STANDARDS-

`(1) SUBMISSION TO THE COMMISSION- Before designation of an electric reliability organization under subsection (d), any person, including the North American Electric Reliability Council and its member Regional Reliability Councils, may submit to the Commission any reliability standard, guidance, or practice that the person proposes to be made mandatory and enforceable.

`(2) REVIEW BY THE COMMISSION-

`(A) IN GENERAL- The Commission, after allowing interested persons an opportunity to submit comments, may approve any such proposed mandatory standard, guidance, or practice if the Commission finds that the standard, guidance, or practice is just, reasonable, not unduly discriminatory or preferential, and in the public interest.

`(B) SUMMARY APPROVAL- The Commission may, without further proceeding or finding, approve any standard, guidance, or practice for which no substantive objections are submitted during the comment period.

`(3) EFFECT OF APPROVAL- A standard, guidance, or practice shall be mandatory and applicable according to its terms following approval by the Commission and shall remain in effect until it is--

`(A) withdrawn, disapproved, or superseded by an organization standard that is issued or approved by the electric reliability organization and made effective by the Commission under section (e); or

`(B) disapproved or suspended by the Commission if, on complaint or upon motion by the Commission and after notice and an opportunity for comment, the Commission finds the standard, guidance, or practice to be unjust, unreasonable, unduly discriminatory or preferential or not in the public interest.

`(4) ENFORCEABILITY- A standard, guidance, or practice in effect under this subsection shall be enforceable by the Commission.

`(d) DESIGNATION OF ELECTRIC RELIABILITY ORGANIZATION-

`(1) REGULATIONS-

`(A) PROPOSED REGULATIONS- Not later than 90 days after the date of enactment of this section, the Commission shall propose regulations specifying procedures and requirements for an entity to apply for selection as the electric reliability organization.

`(B) NOTICE AND COMMENT- The Commission shall provide notice and opportunity for comment on the proposed regulations.

`(C) FINAL REGULATION- Not later than 180 days after the date of enactment of this section, the Commission shall promulgate final regulations under this subsection.

`(2) APPLICATION-

`(A) SUBMISSION- Following the promulgation of final regulations under paragraph (1), an entity may submit an application to the Commission for designation as the electric reliability organization.

`(B) CONTENTS- The applicant shall--

`(i) specify in the application the governance and procedures of the applicant and its funding mechanism and initial funding requirements; and

`(ii) submit any organization standards proposed to take effect under subsection (e).

`(3) NOTICE AND COMMENT- The Commission shall--

`(A) provide public notice of the application and the proposed organization standards; and

`(B) afford interested parties an opportunity to comment.

`(4) DESIGNATION OF ELECTRIC RELIABILITY ORGANIZATION- The Commission shall designate the applicant as the electric reliability organization if the Commission determines that the applicant--

`(A) has the ability to develop, implement, and enforce standards that provide for an adequate level of reliability of bulk-power systems;

`(B) permits voluntary membership to any bulk-power system user or public interest group;

`(C) ensures fair representation of its members in the selection of its directors and fair management of its affairs, taking into account the need for efficiency and effectiveness in decisionmaking and operations and the requirements for technical competency in the development of organization standards and the exercise of oversight of bulk-power system reliability;

`(D) ensures that no 2 industry sectors have the ability to control, and no 1 industry sector has the ability to veto, the applicant's discharge of its responsibilities as the electric reliability organization (including actions by committees recommending standards for approval by the board or other board actions to implement and enforce standards);

`(E) provides for governance by a board wholly comprised of independent directors;

`(F) provides a funding mechanism and requirements that--

`(i) are just, reasonable, not unduly discriminatory or preferential and in the public interest; and

`(ii) satisfy the requirements of subsection (l);

`(G) has established procedures for development of organization standards that--

`(i) provide reasonable notice and opportunity for public comment, taking into account the need for efficiency and effectiveness in decisionmaking and operations and the requirements for technical competency in the development of organization standards; and

`(ii) ensure openness, a balancing of interests, and due process, subject to the application of alternative procedures when necessitated by a need to respond to an emergency;

`(H) has established fair and impartial procedures for implementation and enforcement of organization standards, either directly or through delegation to an affiliated regional reliability entity, including the imposition of penalties, limitations on activities, functions, or operations, or other appropriate sanctions;

`(I) has established procedures for notice and opportunity for public observation of all meetings, except that the procedures for public observation may include alternative procedures for emergencies or for the discussion of information that the directors determine should take place in closed session, such as litigation, personnel actions, or commercially sensitive information;

`(J) provides for the consideration of recommendations of States and State commissions; and

`(K) addresses such other matters as the Commission deems necessary or appropriate to ensure that the procedures, governance, and funding of the electric reliability organization are just, reasonable, not unduly discriminatory or preferential, and in the public interest.

`(5) EXCLUSIVE DESIGNATION-

`(A) IN GENERAL- The Commission shall designate only 1 electric reliability organization.

`(B) MULTIPLE APPLICATIONS- If the Commission receives 2 or more timely applications that satisfy the requirements of this subsection, the Commission shall approve only the application that the Commission determines will best implement this section.

`(e) ORGANIZATION STANDARDS-

`(1) SUBMISSION OF PROPOSALS TO COMMISSION-

`(A) IN GENERAL- If the electric reliability organization proposes a new organization standard or modification to an organization standard, the electric reliability organization

shall submit the new organization standard or modification to the Commission for review.

`(B) CONTENTS- A proposal submitted under subparagraph (A) shall include--

`(i) a concise statement of the purpose of the proposal; and

`(ii) a record of any proceedings conducted with respect to the proposal.

`(2) REVIEW BY THE COMMISSION-

`(A) NOTICE AND COMMENT- The Commission shall--

`(i) provide notice of a proposal under paragraph (1); and

`(ii) allow interested persons 30 days to submit comments on the proposal.

`(B) ACTION BY THE COMMISSION- After taking into consideration any submitted comments, the Commission shall approve or disapprove a proposed organization standard or modification not later than the end of the 60-day period beginning on the date of the deadline for the submission of comments, except that the Commission may extend the 60-day period for an additional 90 days for good cause.

`(C) FAILURE TO ACT- If the Commission does not act to approve or disapprove a proposed organization standard or modification within the period specified by subparagraph (B), the proposed organization standard or modification shall take effect subject to its terms, without prejudice to the authority of the Commission thereafter to suspend or modify the organization standard or modification in accordance with this section.

`(D) EFFECTIVE DATE- An organization standard or modification approved by the Commission shall take effect--

`(i) not earlier than 30 days after the date of the Commission's order of approval; or

`(ii) if the organization standard is to take effect under subparagraph (C), on the date that is 30 days after the end of the applicable period under subparagraph (B).

`(E) STANDARDS FOR APPROVAL OR SUSPENSION-

`(i) IN GENERAL- The Commission shall approve a proposed new organization standard or modification if the Commission determines the organization standard or modification to be just, reasonable, not unduly discriminatory or preferential, and in the public interest.

`(ii) SUSPENSION- The Commission, on complaint or upon the motion of the Commission, shall suspend an organization standard or modification if the Commission determines the standard to be unjust, unreasonable, unduly discriminatory or preferential, or not in the public interest.

`(iii) CONSIDERATIONS- In the exercise of its review responsibilities under this subsection, the Commission--

`(I) shall give due weight to the technical expertise of the electric reliability organization with respect to the content of a new organization standard or modification; but

`(II) shall not defer to the electric reliability organization with respect to the effect of the organization standard on competition.

`(F) REMAND-

`(i) IN GENERAL- An existing or proposed organization standard that is disapproved or suspended in whole or in part by the Commission shall be remanded to the electric reliability organization for further consideration.

`(ii) GUIDANCE- The Commission may offer guidance to the electric reliability organization as to how to cure the determined deficiency.

`(3) ORDERS TO DEVELOP OR MODIFY ORGANIZATION STANDARDS- The Commission, on complaint or on motion of the Commission, may order the electric reliability organization to develop and submit to the Commission, by a date specified in the order, an organization standard or modification to an existing organization standard to address a specific matter if the Commission considers a new organization standard or modification appropriate to carry out this section.

`(4) VARIANCES AND ENTITY RULES-

`(A) PROPOSAL- An affiliated regional reliability entity may propose a variance or entity rule to the electric reliability organization.

`(B) EXPEDITED CONSIDERATION- If expedited consideration is necessary to provide for bulk-power system reliability, the affiliated regional reliability entity may--

`(i) request that the electric reliability organization expedite consideration of the proposal; and

`(ii) file a notice of the request with the Commission.

`(C) FAILURE TO ACT-

`(i) IN GENERAL- If the electric reliability organization fails to adopt the variance or entity rule, in whole or in part, the affiliated regional reliability entity may request that the Commission review the proposal.

`(ii) ACTION BY THE COMMISSION- If the Commission determines, after a review of the request, that the action of the electric reliability organization did not conform to the applicable standards and procedures approved by the Commission, or if the Commission determines that the variance or entity rule is just, reasonable, not unduly discriminatory or preferential, and that the electric reliability organization has unreasonably rejected or failed to act on the proposal, the Commission may--

`(I) remand the proposal for further consideration by the electric reliability organization; or

`(II) order the electric reliability organization or the affiliated regional reliability entity to develop a variance or entity rule consistent with that requested by the affiliated regional reliability entity.

`(D) PROCEDURE- A variance or entity rule proposed by an affiliated regional reliability entity shall be submitted to the electric reliability organization for review and submission to the Commission in accordance with the procedures specified in paragraph (2).

`(5) IMMEDIATE EFFECTIVENESS-

`(A) IN GENERAL- Notwithstanding any other provision of this subsection, a proposed organization standard or modification shall take effect according to its terms if the electric reliability organization determines that an emergency exists requiring that the proposed organization standard or modification take effect without advance notice or comment.

`(B) NOTIFICATION- The electric reliability organization shall--

`(i) notify the Commission immediately after making a determination under subparagraph (A);

`(ii) submit the emergency organization standard or modification to the Commission not later than 5 days after making the determination; and

`(iii) include in the submission an explanation of the need for the emergency organization standard.

`(C) NOTICE AND COMMENT- The Commission shall--

`(i) provide notice of the new organization standard or modification for comment; and

`(ii) follow the procedures specified in paragraphs (2) and (3) for review of the new organization standard or modification.

`(D) DURATION OF EFFECTIVENESS- An emergency organization standard or modification shall remain in effect unless and until suspended or disapproved by the Commission.

`(E) SUSPENSION OR DISAPPROVAL- If the Commission determines at any time that the emergency organization standard or modification is not necessary, the Commission may suspend or disapprove the emergency organization standard or modification.

`(6) COMPLIANCE- Each bulk power system user shall comply with an organization standard that takes effect under this section.

`(f) COORDINATION WITH CANADA AND MEXICO-

`(1) RECOGNITION- The electric reliability organization shall take all appropriate steps to gain recognition by the governments of and the industry in Canada and Mexico.

`(2) INTERNATIONAL AGREEMENTS-

`(A) IN GENERAL- The United States shall use its best efforts to enter into agreements with the appropriate governments of Canada and Mexico to provide for--

`(i) effective compliance with organization standards; and

`(ii) the effectiveness of the electric reliability organization in carrying out its mission and responsibilities.

`(B) ACTION CONSISTENT WITH INTERNATIONAL AGREEMENTS- All actions taken by the electric reliability organization, any affiliated regional reliability entity, or the Commission shall be consistent with any international agreements described in subparagraph (A).

`(g) CHANGES IN PROCEDURES, GOVERNANCE, OR FUNDING-

`(1) SUBMISSION TO THE COMMISSION- The electric reliability organization shall submit to the Commission--

`(A) any proposed change in a procedure, governance, or funding provision; or

`(B) any change in an affiliated regional reliability entity's procedure, governance, or funding provision relating to delegated functions.

`(2) CONTENTS- A submission under paragraph (1) shall include an explanation of the basis and purpose for the change.

`(3) EFFECTIVE DATE-

`(A) CHANGES IN PROCEDURES-

`(i) STATEMENTS WITH RESPECT TO EXISTING PROCEDURES- A proposed change in a procedure may take effect 90 days after submission to the Commission if the change constitutes a statement of policy, practice, or interpretation with respect to the meaning or enforcement of a procedure that the Commission has determined to meet the requirements of subparagraph (G), (H), or (I) of subsection (d)(4).

`(ii) OTHER CHANGES IN PROCEDURES- A proposed change in procedure other than a change described in clause (i) shall take effect if the Commission, after notice and opportunity for comment, determines that the change--

`(I) is just, reasonable, not unduly discriminatory or preferential, and in the public interest; and

`(II) satisfies the requirements of subsection (d)(4).

`(B) CHANGES IN GOVERNANCE OR FUNDING- A change in governance or funding shall take effect if the Commission, after notice and opportunity for comment, determines that the change--

`(i) is just, reasonable, not unduly discriminatory or preferential, and in the public interest; and

`(ii) satisfies the requirements of subsection (d)(4).

`(4) SUSPENSION- The Commission, on complaint or on the motion of the Commission, may suspend application of a procedure, governance, or funding provision if the Commission determines that the provision--

`(A) is unjust, unreasonable, unduly discriminatory or preferential, or not in the public interest; or

`(B) does not meet the requirements of subsection (d)(4).

`(5) ORDER TO AMEND-

`(A) IN GENERAL- The Commission, on complaint or on the motion of the Commission, may require the electric reliability organization to amend a procedure, governance, or funding provision if the Commission determines that the amendment is necessary to meet the requirements of this section.

`(B) FILING- The electric reliability organization shall submit the amendment in accordance with paragraph (1).

`(h) DELEGATIONS OF AUTHORITY-

`(1) IN GENERAL-

`(A) IMPLEMENTATION AND ENFORCEMENT OF COMPLIANCE- At the request of an affiliated regional reliability entity, the electric reliability organization shall enter into an agreement with the affiliated regional reliability entity for the delegation of authority to implement and enforce compliance with organization standards in a specified geographic area if the electric reliability organization finds that--

`(i) the affiliated regional reliability entity satisfies the requirements of subparagraphs (A), (B), (C), (D), (F), and (K) of subsection (d)(4); and

`(ii) the delegation would promote the effective and efficient implementation and administration of bulk-power system reliability.

`(B) OTHER AUTHORITY- The electric reliability organization may enter into an agreement to delegate to the affiliated regional authority entity any other authority, except that the electric reliability organization shall reserve the right to set and approve standards for bulk-power system reliability.

`(2) APPROVAL BY THE COMMISSION-

`(A) SUBMISSION TO THE COMMISSION- The electric reliability organization shall submit to the Commission--

`(i) any agreement entered into under this subsection; and

`(ii) any information the Commission requires with respect to the affiliated regional reliability entity to which authority is delegated.

`(B) STANDARDS FOR APPROVAL- The Commission shall approve the agreement, following public notice and an opportunity for comment, if the Commission finds that the agreement--

`(i) meets the requirements of paragraph (1); and

`(ii) is just, reasonable, not unduly discriminatory or preferential, and in the public interest.

`(C) REBUTTABLE PRESUMPTION- A proposed delegation agreement with an affiliated regional reliability entity organized on an interconnection-wide basis shall be rebuttably presumed by the Commission to promote the effective and efficient implementation and administration of the reliability of the bulk-power system.

`(D) INVALIDITY ABSENT APPROVAL- No delegation by the electric reliability organization shall be valid unless approved by the Commission.

`(3) PROCEDURES FOR ENTITY RULES AND VARIANCES-

`(A) IN GENERAL- A delegation agreement under this subsection shall specify the procedures by which the affiliated regional reliability entity may propose entity rules or variances for review by the electric reliability organization.

`(B) INTERCONNECTION-WIDE ENTITY RULES AND VARIANCES- In the case of a proposal for an entity rule or variance that would apply on an interconnection-wide basis, the electric reliability organization shall presume that the proposal is valid if the proposal is made by an interconnection-wide affiliated regional reliability entity unless the electric reliability organization makes a written finding that the entity rule or variance--

`(i) was not developed in a fair and open process that provided an opportunity for all interested parties to participate;

`(ii) would have a significant adverse impact on reliability or commerce in other interconnections;

`(iii) fails to provide a level of reliability of the bulk-power system within the interconnection such that the entity rule or variance would constitute a serious and substantial threat to public health, safety, welfare, or national security; or

`(iv) would create a serious and substantial burden on competitive markets within the interconnection that is not necessary for reliability.

`(C) NONINTERCONNECTION-WIDE ENTITY RULES AND VARIANCES- In the case of a proposal for an entity rule or variance that would apply only to part of an interconnection, the electric reliability organization shall find the proposal valid if the affiliated regional reliability entity making the proposal demonstrates that the proposal--

`(i) was developed in a fair and open process that provided and opportunity for all interested parties to participate;

`(ii) would not have an adverse impact on commerce that is not necessary for reliability;

`(iii) provides a level of bulk-power system reliability that is adequate to protect public health, safety, welfare, and national security and would not have a significant adverse impact on reliability; and

`(iv) in the case of a variance, is based on a technical difference between regions or between subregions within the affiliated regional reliability entity's geographic area that necessitates application of different entity rules in different regions or subregions.

`(D) ACTION BY THE ELECTRIC RELIABILITY ORGANIZATION-

`(i) IN GENERAL- The electric reliability organization shall approve or disapprove a proposal under subparagraph (A) within 120 days after the proposal is submitted.

`(ii) FAILURE TO ACT- If the electric reliability organization fails to act within the time specified in clause (i), the proposal shall be deemed to have been approved.

`(iii) SUBMISSION TO THE COMMISSION- After approving a proposal under subparagraph (A), the electric reliability organization shall submit the proposal to the Commission for approval under subsection (e)(1).

`(E) NO DIRECT SUBMISSIONS- An affiliated regional reliability entity may not submit a proposal for approval directly to the Commission except as provided in subsection (e)(4)(C).

`(4) FAILURE TO REACH DELEGATION AGREEMENT-

`(A) IN GENERAL- If an affiliated regional reliability entity requests, consistent with paragraph (1), that the electric reliability organization delegate authority to it, but is unable within 180 days to reach agreement with the electric reliability organization with respect to the requested delegation, the entity may seek relief from the Commission.

`(B) REVIEW BY THE COMMISSION- The Commission may order the electric reliability organization to make a delegation requested under subparagraph (A) if, after notice and opportunity for comment, the Commission determines that--

`(i) a delegation to the affiliated regional reliability entity would--

`(I) meet the requirements of paragraph (1); and

`(II) be just, reasonable, not unduly discriminatory or preferential, and in the public interest; and

`(ii) the electric reliability organization unreasonably withheld the delegation.

`(5) ORDERS TO MODIFY DELEGATION AGREEMENTS-

`(A) IN GENERAL- On compliant, or on motion of the Commission, after notice to the appropriate affiliated regional reliability entity,

the Commission may order the electric reliability organization to propose a modification to a delegation agreement under this subsection if the Commission determines that--

`(i) the affiliated regional reliability entity--

`(I) no longer has the capacity to carry out effectively or efficiently the implementation or enforcement responsibilities under the delegation agreement;

`(II) has failed to meet its obligations under the delegation agreement; or

`(III) has violated this section;

`(ii) the rules, practices, or procedures of the affiliated regional reliability entity no longer provide for fair and impartial discharge of the implementation or enforcement responsibilities under the delegation agreement;

`(iii) the geographic boundary of a transmission entity approved by the Commission is not wholly within the boundary of an affiliated regional reliability entity, and the discrepancy in the boundaries is inconsistent with the effective and efficient implementation and administration of bulk-power system reliability; or

`(iv) the agreement is inconsistent with another delegation agreement as a result of actions taken under paragraph (4).

`(B) SUSPENSION-

`(i) IN GENERAL- Following an order to modify a delegation agreement under subparagraph (A), the Commission may suspend the delegation agreement if the electric reliability organization or the affiliated regional reliability entity does not propose an appropriate and timely modification.

`(ii) RESUMPTION OF RESPONSIBILITIES- If a delegation agreement is suspended, the electric reliability organization shall resume the responsibilities delegated under the delegation agreement.

`(iii) APPEAL- The Commission shall allow the electric reliability organization and the affiliated regional reliability entity an opportunity to appeal a suspension under clause (i).

`(i) ORGANIZATION MEMBERSHIP- Each system operator shall be a member of--

`(1) the electric reliability organization; and

`(2) any affiliated regional reliability entity operating under an agreement effective under subsection (h) applicable to the region in which the system operator operates or is responsible for the operation of bulk-power system facilities.

`(j) ENFORCEMENT-

`(1) DISCIPLINARY ACTIONS-

`(A) IN GENERAL- Consistent with procedures that the Commission has determined to meet the requirements of subsection (d)(4)(H) and with any international agreement under subsection (f), the electric reliability organization may impose a penalty, limitation on activities, functions, or operations, or other disciplinary action that the electric reliability organization finds appropriate against a bulk-power system user if the electric reliability organization, after notice and an opportunity for interested parties to be heard, issues a written finding that the bulk-power system user has violated an organization standard.

`(B) NOTIFICATION- The electric reliability organization shall immediately notify the Commission of any disciplinary action imposed with respect to an act or failure to act of a bulk-power system user that affected or threatened to affect bulk-power system facilities located in the United States.

`(C) RIGHT TO PETITION- A bulk-power system user that is the subject of disciplinary action under paragraph (1) shall have the right to petition the Commission for a modification or rescission of the disciplinary action.

`(D) INJUNCTIONS- If the electric reliability organization finds it necessary to prevent a serious threat to reliability, the electric reliability organization may seek injunctive relief in the United States district court for the district in which the affected facilities are located.

`(E) EFFECTIVE DATE-

`(i) IN GENERAL- Unless the Commission, on motion of the Commission or on application by the bulk-power system user that is the subject of the disciplinary

action, suspends the effectiveness of a disciplinary action, the disciplinary action may take effect not earlier than the 30th day after the date on which--

`(I) the electric reliability organization has submitted to the Commission a written finding under subparagraph (A) and record of proceedings before the electric reliability organization; and

`(II) the Commission has issued a written finding.

`(ii) DURATION- A disciplinary action shall remain in effect or remain suspended until the Commission, after notice and opportunity for hearing, affirms, sets aside, modifies, or reinstates the disciplinary action.

`(iii) EXPEDITED CONSIDERATION- The Commission shall conduct the hearing under procedures established to ensure expedited consideration of the action taken.

`(2) COMPLIANCE ORDERS- The Commission, on motion of the Commission, may order compliance with an organization standard and may impose a penalty, limitation on activities, functions, or operations, or take such other disciplinary action as the Commission finds appropriate, against a bulk-power system user with respect to actions affecting or threatening to affect bulk-power system facilities located in the United States if the Commission finds, after notice and opportunity for a hearing, that the bulk-power system user has violated or threatens to violate an organization standard.

`(3) OTHER ACTIONS- The Commission may take such action as is necessary against the electric reliability organization or an affiliated regional reliability entity to ensure compliance with an organization standard, or any Commission order affecting electric reliability organization or affiliated regional reliability entity.

`(k) RELIABILITY REPORTS- The electric reliability organization shall--

`(1) conduct periodic assessments of the reliability and adequacy of the interconnected bulk-power system in North America; and

`(2) report annually to the Secretary of Energy and the Commission its findings and recommendations for monitoring or improving system reliability and adequacy.

`(l) ASSESSMENT AND RECOVERY OF CERTAIN COSTS-

`(1) IN GENERAL- The reasonable costs of the electric reliability organization, and the reasonable costs of each affiliated regional reliability entity that are related to implementation or enforcement of organization standards or other requirements contained in a delegation agreement approved under subsection (h), shall be assessed by the electric reliability organization and each affiliated regional reliability entity, respectively, taking into account the relationship of costs to each region and based on an allocation that reflects an equitable sharing of the costs among all end-users of electric power in each region.

`(2) RULES- The Commission shall provide by rule for the review of costs and allocations under paragraph (1) in accordance with the standards in this subsection and subsection (d)(4)(F).

`(m) APPLICATION OF ANTITRUST LAWS-

`(1) IN GENERAL- Notwithstanding any other provision of law, the following activities are rebuttably presumed to be in compliance with the antitrust laws of the United States:

`(A) Activities undertaken by the electric reliability organization under this section or affiliated regional reliability entity operating under a delegation agreement under subsection (h).

`(B) Activities of a member of the electric reliability organization or affiliated regional reliability entity in pursuit of the objectives under this section undertaken in good faith under the rules of the organization.

`(2) APPLICABILITY OF LAW- The law relating to the doctrine of primary jurisdiction and to immunities and other affirmative defenses shall be available in any action brought alleging a violation of the antitrust laws to the extent otherwise applicable.

`(n) STATE AUTHORITY- Nothing in this section limits the authority of a State to impose requirements necessary to ensure the continued reliability and public safety of electric facilities in the State.

`(o) REGIONAL ADVISORY ROLE-

`(1) ESTABLISHMENT- The Secretary of Energy shall establish a regional advisory body on the petition of the Governors of 2/3 of the States within a region that have more than 1/2 of their electrical loads served within the region.

`(2) MEMBERSHIP- A regional advisory body--

`(A) shall be composed of 1 member from each State in the region, appointed by the Governor of each State; and

`(B) may include representatives of agencies, States, and provinces outside the United States, on execution of an appropriate international agreement described in subsection (f).

`(3) FUNCTIONS- A regional advisory body may provide advice to the Commission, the electric reliability organization, or an affiliated regional reliability entity regarding--

`(A) the governance of an affiliated regional reliability entity existing or proposed within a region;

`(B) whether a standard proposed to apply within the region is just, reasonable, not unduly discriminatory or preferential, and in the public interest; and

`(C) whether fees proposed to be assessed within the region are--

`(i) just, reasonable, not unduly discriminatory or preferential, and in the public interest; and

`(ii) consistent with the requirements of subsection (l).

`(4) DEFERENCE-

`(A) ENTIRE INTERCONNECTION-

`(i) IN GENERAL- In a case in which a regional advisory body encompasses an entire interconnection, the Commission shall give deference to the findings of the regional advisory body unless the Commission determines that the findings by the regional advisory body are not just, not reasonable, unduly discriminatory or preferential, or not in the public interest.

`(ii) NO PRECEDENTIAL VALUE- Commission deference to the findings of a regional advisory body under clause (i) shall not constitute precedent outside the interconnection unless the Commission so indicates.

`(B) IN GENERAL- The Commission may give deference to any findings made by a regional advisory body.

`(p) REGULATIONS- The Commission may, by regulation, define any term used in this section, so long as the definition is consistent with the definitions in, and the purposes and intent of, this Act.'.

(b) ENFORCEMENT-

(1) GENERAL PENALTIES- Section 316(c) of the Federal Power Act (16 U.S.C. 825o(c)) is amended--

(A) by striking `subsection' and inserting `section'; and

(B) by striking `or 214' and inserting `214 or 217'.

(2) CERTAIN PROVISIONS- Section 316A of the Federal Power Act (16 U.S.C. 825o-1) is amended by striking `or 214' each place it appears and inserting `214, or 217'.

END