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H.R.3406
Electric Supply and Transmission Act (Introduced in
House)
Subtitle C--Provisions Regarding Public Utility Regulatory Policies Act
of 1978
SEC. 131. FINDINGS.
The Congress finds that--
(1) implementation of section 210 of the Public Utility Regulatory
Policies Act of 1978 (16 U.S.C. 824a-3) resulted in many consumers paying
excessive rates for electricity;
(2) the Energy Policy Act of 1992 gives nonregulated producers of
electricity additional access to the wholesale electric market through
transmission access and exemption from the Public Utility Holding Company
Act of 1935; and
(3) in light of the competitive wholesale electric marketplace brought
about by the Energy Policy Act of 1992, section 210 of the Public Utility
Regulatory Policies Act of 1978 need no longer exist.
SEC. 132. PROSPECTIVE REPEAL.
(a) NEW CONTRACTS- After the date of enactment of this Act, no electric
utility shall be required to enter into a new contract or obligation to
purchase or to sell electric energy or capacity pursuant to section 210 of the
Public Utility Regulatory Policies Act of 1978.
(b) EXISTING RIGHTS AND REMEDIES NOT AFFECTED- Nothing in this section
affects the rights or remedies of any party with respect to the purchase or
sale of electric energy or capacity from or to a facility determined to be a
qualifying small power production facility or a qualifying cogeneration facility under section
210 of the Public Utility Regulatory Policies Act of 1978 pursuant to any
contract or obligation to purchase or to sell electric energy or capacity in
effect on January 6, 1999, including the right to recover the costs of
purchasing such electric energy or capacity.
(c) INTERPRETATIONS AND ACTIONS TAKEN- Nothing in this Act may be deemed
or construed as implying congressional ratification of any interpretation of,
or any action taken pursuant to, the Public Utility Regulatory Policies Act of
1978.
SEC. 133. RECOVERY OF COSTS.
In order to assure recovery by electric utilities purchasing electric
energy or capacity from a qualifying facility pursuant to any legally
enforceable obligation entered into or imposed pursuant to section 210 of the
Public Utility Regulatory Policies Act of 1978 prior to the date of enactment
of this Act of all costs associated with such purchases, the Commission shall
promulgate and enforce such regulations as may be required to assure that no
utility shall be required directly or indirectly to absorb the costs
associated with such purchases from a qualifying facility. Such regulations
shall be treated as a rule enforceable under the Federal Power Act (16 U.S.C.
791a-825r).
SEC. 134. DEFINITIONS.
For purposes of this subtitle:
(1) The term `Commission' means the Federal Energy Regulatory
Commission.
(2) The term `electric utility' means any person, State agency, or
Federal agency, which sells electric energy.
(3) The term `qualifying small power production facility' has the same
meaning as provided in section 3(17)(C) of the Federal Power Act.
(4) The term `qualifying cogeneration facility' has the same
meaning as provided in section 3(18)(A) of the Federal Power Act.
(5) The term `qualifying facility' means either a small power production
facility or a qualifying cogeneration facility.
Subtitle D--Redundant Review of Certain Matters
SEC. 141. REPEAL OF CERTAIN PROVISIONS OF FEDERAL POWER ACT REGARDING
DISPOSITION OF PROPERTY, CONSOLIDATION, AND PURCHASE OF SECURITIES.
Section 203 of the Federal Power Act (16 U.S.C. 824b) is repealed.
SEC. 142. ELIMINATION OF DUPLICATIVE ANTITRUST REVIEW.
(a) IN GENERAL- Section 105 of the Atomic Energy Act of 1954 (42 U.S.C.
2135) is amended by striking subsection c. and inserting the following:
`(1) IN GENERAL- A condition for a grant of a license imposed by the
Commission under this section in effect on the date of enactment of the
Electric Supply and Transmission Act shall remain in effect until the
condition is modified or removed by the Commission.
`(2) MODIFICATION- If a person that is licensed to construct or operate
a utilization or production facility applies for reconsideration under this
section of a condition imposed in the person's license, the Commission shall
conduct a proceeding, on an expedited basis, to determine whether the
license condition--
`(A) is necessary to ensure compliance with subsection a.; or
`(B) should be modified or removed.'.
(b) SAVINGS PROVISION- (1) Nothing in this section or the amendments made
by this section shall be construed to modify, impair, or supersede the
applicability of any of the antitrust laws.
(2) As used in this subsection, the term `antitrust laws' has the meaning
given it in subsection (a) of the first section of the Clayton Act (15 U.S.C.
12(a)), except that such term includes the Act of June 19, 1936 (49 Stat.
1526; 15 U.S.C. 13 et seq.), commonly known as the Robinson-Patman Act, and
section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to the extent
that such section 5 applies to unfair methods of competition.
TITLE II--TRANSMISSION OPERATION
SEC. 201. OPEN ACCESS FOR ALL TRANSMITTING UTILITIES.
(a) OPEN ACCESS TRANSMISSION AUTHORITY- Section 206 of the Federal Power
Act is amended by adding the following new subsection after subsection (d):
`(e) OPEN ACCESS TRANSMISSION SERVICES-
`(1) PUBLIC UTILITIES- Under section 205 and this section, the
Commission may, by rule or order, require public utilities to provide
transmission services on a not unduly discriminatory or preferential basis,
subject to section 212(h). This paragraph applies to any rule or order
promulgated by the Commission before, on, or after the date of enactment of
this subsection.
`(2) TRANSMITTING UTILITIES- (A) Subject to section 212(h), the
Commission may, by rule or order, require transmitting utilities that are
not public utilities (other than the Federal power marketing
administrations, the Tennessee Valley Authority, and utilities to which
section 212(k) applies) to provide transmission services--
`(i) at rates that are comparable to those each such transmitting
utility charges itself and that are not unduly discriminatory or
preferential, and
`(ii) on terms and conditions (not relating to rates) that are
comparable to those required under paragraph (1) for transmission service
provided by public utilities.
In exercising its authority under this subparagraph, the Commission may
remand transmission rates to a transmitting utility for review and revision
where necessary. The Commission may authorize recovery of wholesale stranded
costs, as defined by the Commission, arising from any requirement to provide
transmission service under this paragraph.
`(B)(i) Within 180 days after the date of enactment of this subsection,
after notice and opportunity for comment, the Commission shall adopt rules
providing criteria and procedures to exempt certain transmitting utilities
from subparagraph (A). The Commission shall exempt from subparagraph (A) any
transmitting utility that is a small electric utility that does not own or
operate any transmission facilities that are part of the bulk-power system,
or that meets other criteria the Commission determines to be in the public
interest.
`(ii) The procedures established by the Commission shall permit
exemptions, after notice and opportunity for comment, based on a letter
application containing a sworn statement, by a representative legally
authorized to bind the applicant, attesting to the facts demonstrating that
the applicant meets the exemption standards. A good faith application for an
exemption shall be deemed granted unless, within 60 days of its receipt of
such application, the Commission makes a determination that the applicant
does not meet the exemption criteria.
`(iii) Upon complaint of any electric utility or transmitting utility
and after notice and opportunity for comment, the Commission may revoke an
exemption if it determines the transmitting utility does not satisfy the
exemption criteria. In determining whether a transmitting utility owns or
operates transmission facilities that are part of the bulk-power system, the
Commission shall consider any position taken by an electric reliability
organization in the region where the transmitting utility is located.
`(iv) For purposes of this subparagraph, the term `small electric
utility' means an electric utility
that sells no more than 4,000,000 megawatt hours of electric energy per year;
and the terms `bulk-power system', and `electric reliability organization' have
the meanings given such terms in section 218(a).
`(3) CERTAIN WHOLESALE STRANDED COSTS- The Commission shall authorize
recovery of wholesale stranded costs of a public utility or transmitting
utility that occur when retail electric consumers cease to be served by that
public utility or transmitting utility by reason of the establishment of a
local distribution company owned or operated by a State or a political
subdivision of a State serving such consumers. In calculating such wholesale
stranded costs, the Commission shall use a reasonable expectation period
that is based on the weighted average remaining useful life of generation
assets owned or power purchased under contract by the public utility and
included in wholesale or retail rates in effect on July 9, 1996. This
paragraph shall apply to wholesale stranded cost determinations made by the
Commission before, on, or after the date of enactment of this
paragraph.'.
(b) RETAIL WHEELING IN RETAIL COMPETITION STATES- Section 212(h) of the
Federal Power Act is amended as follows:
(1) By inserting `(1)' before `No'.
(2) By striking `(1)', `(2)', `(A)', and `(B)' and inserting in their
places `(A)', `(B)', `(i)', and `(ii)' respectively.
(3) By striking from redesignated paragraph (1)(B)(ii) `the date of
enactment of this subsection' and inserting `October 24, 1992,'.
(4) By adding the following new paragraph at the end:
`(2) Notwithstanding paragraph (1), the Commission may issue an order that
requires the transmission of electric energy for purposes of a sale of such
energy to retail electric consumers served by local distribution facilities
that are subject to open access, consistent with State law.'.
(c) CONFORMING AMENDMENTS- (1) Section 211(a) of the Federal Power Act is
amended by striking `for resale'.
(2) Section 212(a) of the Federal Power Act is amended by striking
`wholesale' each time it appears, except the last time.
(d) FOREIGN COMMERCE- (1) Section 201(c) of the Federal Power Act (16
U.S.C. 824(c)) is amended by striking `thereof:' and inserting `thereof
(including consumption in a foreign country),'.
(2) Section 202(f) of the Federal Power Act is repealed.
SEC. 202. REGIONAL TRANSMISSION ORGANIZATIONS.
Section 202 of the Federal Power Act (16 U.S.C. 824a) is amended by adding
the following new subsection after subsection (g):
`(h) REGIONAL TRANSMISSION ORGANIZATIONS-
`(1) DUTY TO PARTICIPATE- The Commission is authorized and directed to
order each transmitting utility to participate in a fully operational
regional transmission organization not later than 12 months after enactment
of this subsection, subject to the procedures and minimum standards
established under this subsection. Each transmitting utility that is not a
member of a fully operational regional transmission organization
(hereinafter in this subsection referred to as an `RTO') approved by the
Commission (pursuant to the Commission's Order No. 2000) on the date of the
enactment of this subsection shall file with the Commission, within 3 months
after such date of enactment, an application to form or join an RTO. If a
transmitting utility fails to meet this deadline, the Commission, in
consultation with affected State regulatory authorities, is authorized and
directed to order such transmitting utility to form or participate in an RTO
that meets the standards set forth in paragraph (6) not later than 9 months
after the deadline. The Commission shall approve an application submitted
under this subsection if the Commission determines that the RTO, including
any independent transmission company, proposed in the application meets the
minimum standards set forth in paragraph (6). If the Commission finds that
the RTO proposed in an application does not meet such standards, the
Commission, in consultation with affected State regulatory authorities,
shall propose such modifications or conditions to the application as the
Commission deems necessary for the proposal to meet the minimum standards.
The Commission shall have no authority to mandate (whether directly or as a
condition of receiving or retaining any other regulatory approval) the
establishment of, participation in, or modification to an RTO except as
provided in this section.
`(2) EVIDENTIARY HEARING- At the request of an applicant, the Commission
shall hold an evidentiary hearing to determine whether the modifications or
conditions the Commission would impose on the applicant are necessary to
meet the minimum standards set forth in paragraph (6). A hearing held
pursuant to this section shall be subject to the procedural requirements of
the Federal Power Act, including the requirements of section 308 providing
for interventions by interested parties.
`(3) JUDICIAL REVIEW- The applicant shall have a right of review in the
United States Court of Appeals for the District of Columbia of an order
imposing modifications or conditions on an application to form or join an
RTO. If the applicant petitions the court for review, the RTO proceeding
shall be stayed until such time as the reviewing court renders its decision.
In establishing its docket, the Court shall expedite the review of petitions
brought under this paragraph. If the reviewing court finds, after
considering the evidentiary record as a whole, that the Commission's
decision is supported by a preponderance of the evidence, the court shall
uphold the Commission's decision. If the reviewing court finds, after
considering the evidentiary record as a whole, that the Commission's
decision is not supported by a preponderance of the evidence, the
Commission
shall order the applicant to participate in the RTO proposed by the applicant
pursuant to paragraph (1), without modification.
`(4) UNIFORM MARKET RULES- The term `market rules' means rules
establishing commercial procedures relating to the provision of transmission
services. The Commission is authorized and directed, subject to the
limitations on its authority under this subsection, to ensure uniform market
rules (including establishment and enforcement of appropriate seams
agreements) such as are necessary and appropriate to achieve the policy
objectives of the Commission's Order No. 2000. Nothing in this subsection
shall interfere with the Commission's authority to ensure uniform market
rules through its review of rates, terms and conditions under sections 205
and 206 of this Act. Such rules shall not have the effect of requiring a
transmitting utility to participate in a different RTO or modifying the
scope, configuration, or governance structure of an RTO deemed to meet the
standards of paragraph (6). To implement the requirements of this paragraph,
the Commission shall issue a proposed rule within 3 months after the
enactment of this section.
`(5) DIVESTITURE- Nothing in this Act or any other Act shall give the
Commission authority to order the divestiture of transmission facilities by
any transmitting utility to a regional transmission organization.
`(6) STANDARDS FOR RTOS- The standards for regional transmission
organizations are as follows:
`(A) INDEPENDENCE- The RTO must be independent of any market
participant, pursuant to rules established by the Commission. The RTO must
include, as part of its demonstration of independence, a demonstration
that it meets the following:
`(i) The RTO, its employees, and any nonstakeholder directors must
not have financial interests in any market participant.
`(ii) The RTO must have a decision making process that is
independent of control by any market participant or class of
participants.
`(iii) The RTO must have exclusive and independent authority under
section 205 of this Act to propose rates, terms and conditions of
transmission service provided over the facilities it operates. In the
case of an RTO that does not own transmission, the transmission owners
retain authority under section 206 to seek recovery from the RTO of the
revenue requirements associated with the transmission facilities that
they own.
`(B) SCOPE AND CONFIGURATION- The RTO must serve an appropriate
region. The region must be of sufficient scope and configuration to permit
the RTO to maintain reliability, effectively perform its required
functions, and support efficient and nondiscriminatory power markets,
except that the RTO shall be deemed to satisfy the requirements of this
subparagraph if it is structured so that all loads within the boundaries
of the RTO shall take service under the RTO's tariff and it complies with
either the cost and benefit test set forth in clause (i) or the generation
sufficiency test set forth in clause (ii), respectively, of this
paragraph.
`(i) COST AND BENEFIT TEST- The proposed RTO complies with the cost
and benefit test if the expected benefits of the proposed scope and
configuration of the RTO exceed the expected costs of implementing the
RTO. The application shall include a cost and benefit analysis
addressing the following factors:
`(I) efficient operation of wholesale markets;
`(II) effects on retail electricity rates in each of the affected
States;
`(III) effects on attraction of investment capital to fund new
transmission capacity needed for the RTO's efficient
operation;
`(IV) costs previously incurred by RTO applicants in developing
RTOs conditionally approved by the Commission prior to enactment of
this Act; and
`(V) other costs and benefits related to RTO formation and
participation.
The applicant's cost and benefit analysis shall be presumed to be
sufficient to meet the requirements of this clause unless the Commission
affirmatively finds by a preponderance of the evidence that the proposed
scope and configuration does not meet such requirements.
(ii) GENERATION SUFFICIENCY TEST- The proposed RTO complies with the
generation sufficiency test if the RTO satisfies each of the following
requirements:
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