Electric System Reliability Act of 1998

TABLE OF CONTENTS:

Title I: FERC Authority to Certify Self-Regulating

Reliability Organizations

Title II: FERC Authority to Require Independent System

Operators, to Require Divestiture of Generation

Facilities, and to Prohibit Preferential

Transmission Service

Title III: Interconnection

Title IV: Exempt Transmitting Utilities

Electric System Reliability Act of 1998 - Title I: FERC Authority to Certify Self-Regulating Reliability Organizations - Amends the Federal Power Act to grant the Federal Energy Regulatory Commission (FERC) jurisdiction over electric reliability organizations (EROs), all system operators, and all users of the bulk-power system for purposes of approving and enforcing compliance with U.S. standards.

(Sec. 101) Mandates that users of the bulk-power system comply with standards established by the North American Electric Reliability Council and the regional reliability councils that exist on the date of enactment of this Act.

Prescribes guidelines governing registration and establishment of standards. Empowers FERC to approve from among competing applications only the one ERO deemed most likely to provide a reliable bulk-power system. Prohibits an ERO from: (1) establishing or operating a market for the sale, purchase, or exchange of electric energy; (2) filing any standard that establishes commercial terms for the sale, purchase, or exchange of electric energy; or (3) impeding effective competition.

Mandates that: (1) the United States enter into international agreements with the Governments of Canada and Mexico to provide for compliance with standards and with ERO effectiveness in implementing its responsibilities; and (2) every system operator be an ERO member.

Grants an ERO disciplinary and enforcement powers. Directs an ERO to conduct periodic assessments of the reliability and adequacy of the interconnected bulk-power system in North America and to report its findings annually to FERC.

(Sec. 102) Sets forth a rebuttable presumption that ERO reliability standards and compliance therewith are just and reasonable and not unduly discriminatory or preferential.

Cites activities for which this Act creates a rebuttable presumption of compliance with U.S. antitrust laws.

Title II: FERC Authority to Require Independent System Operators, to Require Divestiture of Generation Facilities, and to Prohibit Preferential Transmission Service - Cites conditions under which FERC shall: (1) establish an entity for the purpose of independent system operation and control of interconnected transmission facilities for the broadest feasible geographic region; (2) direct the transmitting utility to relinquish to such independent entity operational control of its transmission facilities; and (3) order divestiture of electric utility generation or transmission facilities.

Declares that any public utility rates, charges, classifications, rules or practices that have the effect of providing more favorable transmission service to certain customers than to others shall be conclusively deemed to constitute unduly discriminatory and preferential service.

(Sec. 202) Authorizes each State to establish a Single Siting Authority empowered to license construction and operation of electric generating or transmission facilities (other than hydroelectric projects and nuclear generating facilities). Grants the Independent System operator certification authority over such facilities.

Grants Federal district courts limited eminent domain jurisdiction over cases involving generation or transmission facilities.

Title III: Interconnection - Redefines transmitting utility to cover Federal power marketing agencies which own or operate, or propose to own or operate, distribution (as well as electric power transmission) facilities, including facilities used for the transformation of electric energy between the transmission and distribution level or to enhance the capability of transmission or distribution facilities to operate efficiently.

Title IV: Exempt Transmitting Utilities - Amends the Public Utility Holding Company Act of 1935 (PUHCA) to exempt from all of its provisions all transmitting utilities engaged directly, or indirectly through one or more affiliates, and exclusively in the business of owning or operating, or both owning and operating, all or part of one or more eligible transmission facilities, wherever located, which are constructed for the transmission or distribution of electric energy on or after enactment of this Act. (Thus limits application of PUHCA to transmitting utilities which own or operate all or part of transmitting facilities already in existence before enactment of this Act.)