To amend the Federal Power Act to provide for the protection of electric utility customers and enhance the stability of wholesale electric markets through the clarification of State regulatory jurisdiction.

April 30, 2003

Mr. SHELBY (for himself, Mr. MILLER, Mr. LOTT, Ms. LANDRIEU, Mr. SESSIONS, Mr. COCHRAN, and Mr. CHAMBLISS) introduced the following bill; which was read twice and referred to the Committee on Energy and Natural Resources

To amend the Federal Power Act to provide for the protection of electric utility customers and enhance the stability of wholesale electric markets through the clarification of State regulatory jurisdiction.

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

SECTION 1. BUNDLED RETAIL SALES OF ELECTRIC ENERGY.

(a) JURISDICTION- Section 201(b)(1) of the Federal Power Act (16 U.S.C. 824(b)(1)) is amended--

(1) by striking `(b)(1) The' and inserting the following:

`(b) APPLICABILITY-

`(1) IN GENERAL- The';

(2) by striking `The Commission' and inserting the following:

`(2) FACILITIES- The Commission'; and

(3) by adding at the end the following:

`(3) BUNDLED RETAIL SALES OF ELECTRIC ENERGY- The Commission shall not have jurisdiction--

`(A) over bundled retail sales of electric energy (including the transmission component of retail sales); or

`(B) to compel the unbundling of rates for bundled retail sales of electric energy.'.

(b) DEFINITION OF BUNDLED RETAIL SALES OF ELECTRIC ENERGY- Section 201 of the Federal Power Act (16 U.S.C. 824) is amended by adding at the end the following:

`(h) DEFINITION OF BUNDLED RETAIL SALES OF ELECTRIC ENERGY- In this part, the term `bundled retail sales of electric energy' means sales of electric energy to retail customers in which generation, transmission, distribution, and other services necessary to supply electric energy to retail customers are sold as a single delivered service by a single seller, acting under the regulatory jurisdiction of a State commission.'.

SEC. 2. SERVICE OBLIGATION PROTECTION.

Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is amended at the end the following:

`SEC. 215. SERVICE OBLIGATIONS OF LOAD-SERVING ENTITIES.

`(a) DEFINITIONS- In this section:

`(1) EXISTING WHOLESALE CONTRACTUAL OBLIGATION-

`(A) IN GENERAL- The term `existing wholesale contractual obligation' means an obligation under a firm long-term wholesale contract that was in effect on March 28, 2003.

`(B) CONTRACT MODIFICATIONS- A contract modification after March 28, 2003 (other than a contract modification that increases the quantity of electric energy sold under the contract), shall not affect the status of a contract described in subparagraph (A) as an existing wholesale contractual obligation.

`(2) LOAD-SERVING ENTITY-

`(A) IN GENERAL- The term `load-serving entity' means a transmitting utility that has an obligation under Federal, State, or local law, or a long-term contract, to provide electric service to--

`(i) electric consumers (as defined in section 3 of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2602)); or

`(ii) an electric utility (as defined in section 3 of that Act) that has an obligation to provide electric service to electric consumers.

`(B) SERVICE OBLIGATION- For purposes of this section, an obligation described in subparagraph (A) shall be considered a service obligation.

`(b) SERVICE OBLIGATIONS-

`(1) APPLICABILITY- This subsection applies to any load-serving entity that--

`(A) owns transmission facilities for the transmission of electric energy in interstate commerce used to purchase or deliver electric energy to meet a service obligation to customers or an existing wholesale contractual obligation; or

`(B) holds a contract or service agreement for firm transmission service used to purchase or deliver electric energy to meet a service obligation to customers or an existing wholesale contractual obligation.

`(2) USE OF TRANSMISSION FACILITIES OR SERVICES- In exercising authority under this Act, the Commission shall ensure that any entity described in paragraph (1) shall be entitled to use transmission facilities or rights to firm transmission service described in paragraph (1) to meet service obligations described in paragraph (1) before transmission capacity is made available for other uses.

`(c) USE BY SUCCESSORS IN INTEREST-

`(1) IN GENERAL- If all or a portion of the service obligation or contractual obligation described in subsection (b) is transferred to another load-serving entity, the successor shall be entitled to use the transmission facilities or firm transmission rights associated with the transferred service obligation consistent with subsection (b).

`(2) SUBSEQUENT TRANSFERS- A subsequent transfer to another load-serving entity, or a retransfer to the original load-serving entity, shall be entitled as provided in paragraph (1).

`(d) RELATIONSHIP TO OTHER PROVISIONS- If a transmitting utility reserves transmission capacity (or reserves the equivalent capacity in the form of tradable transmission rights) to meet service obligations or firm long-term wholesale contractual obligations under subsection (b), the transmitting utility shall not be considered to be engaging in undue discrimination or preference under this Act or any other law.

`(e) APPLICABILITY- This section does not apply to an area served by a utility located in an area described in section 212(k)(2)(B).

`(f) SAVINGS CLAUSE- Nothing in this section alters or affects the allocation of transmission rights approved by the Commission before the date of enactment of this section by an independent system operator or regional transmission organization.'.

SEC. 3. COST ALLOCATION.

Section 205 of the Federal Power Act (16 U.S.C. 824d) is amended by adding at the end the following:

`(g) COST ALLOCATION-

`(1) APPLICABILITY- This subsection applies to any rule or order of general applicability issued by the Commission under this Act that--

`(A) requires the physical connection of any cogeneration facility, any small power production facility, any other electric power generation facility that makes wholesale sales of electric power, or the transmission facilities of any electric utility, with the facilities of any electric utility, Federal power marketing agency, geothermal power producer (including a producer that is not an electric utility), qualifying cogenerator, or qualifying small power producer; or

`(B) setting rates for transmission service.

`(2) COSTS- Any order or rule described in paragraph (1) shall require that the applicant seeking the interconnection of facilities or transmission service to pay--

`(A) the necessary and reasonable costs of any new facility required to provide the interconnection or transmission service that would not have been necessary absent the interconnection or transmission service request;

`(B) an equitable share of the fixed costs of the existing system necessary to complete the interconnection or transmission service transaction; and

`(C) the costs of any other services that are ancillary to the interconnection or transmission service transaction.

`(3) TRANSMISSION SERVICE CREDITS- The requestor of interconnection or transmission service shall not be entitled to transmission service credits as a result of payments made under this subsection.'.

SEC. 4. STANDARD MARKET DESIGN RULE.

Section 206 of the Federal Power Act (16 U.S.C. 824i) (as amended by section 3) is amended by adding at the end the following:

`(g) STANDARD MARKET DESIGN RULE-

`(1) DEFINITION OF STANDARD MARKET DESIGN RULE- In this subsection, the term `standard market design rule' means--

`(A) a rule promulgated pursuant to the notice of proposed rulemaking issued by the Commission on July 31, 2002, in Docket No. RM01-12-0000, including any modification of the rule that is within the scope of the notice; or

`(B) any rule or order of general applicability under this Act that addresses transmission access or market design and in which the Commission--

`(i) asserts jurisdiction over the transmission component of bundled retail sales of electric energy; or

`(ii) requires the transfer of ownership, operation, or control of transmission facilities to a regional transmission organization, independent transmission provider, or similar organization.

`(2) EFFECTIVENESS- Except as provided in paragraph (3), a standard market design rule shall not be effective except to the extent that the standard market design rule is approved by Congress in a law enacted after the date of enactment of this subsection.

`(3) STATE CONSENT- A standard market design rule that is otherwise valid under this Act may take effect in a region consisting entirely of States the State Commission has consented in writing to the application of the standard market design rule in the State.'.

END