For other versions of this document, see http://wikileaks.org/wiki/CRS-RL32041 ------------------------------------------------------------------------------ Order Code RL32041 CRS Report for Congress Received through the CRS Web Electric Utility Policy: Comparison of House-Passed H.R. 6 and S.Amdt. 1412, 108th Congress Updated August 26, 2003 Amy Abel Specialist in Energy Policy Resources, Science, and Industry Division Congressional Research Service ~ The Library of Congress Electric Utility Policy: Comparison of House-Passed H.R. 6 and S.Amdt. 1412, 108th Congress Summary Electric utility provisions are included in comprehensive energy legislation that has passed both the House and Senate. The House passed H.R. 6 on April 11, 2003. On July 31, 2003, the Senate suspended debate on S. 14, the comprehensive energy bill that had been reported by the Energy and Natural Resources Committee. It then passed H.R. 6 with the text of the Senate-passed version of H.R. 4 from the 107th Congress. For a comparison of the House- and Senate-passed versions of H.R. 6, see CRS Report RL32033, Omnibus Energy Legislation (H.R. 6): Side-by-Side Comparison of Non-Tax Provisions. Before debate on S. 14 was suspended, Senator Domenici proposed S.Amdt. 1412 on July 29, 2003, to completely replace the electricity title of S. 14 as introduced in the Senate. The proposed amendment was withdrawn on July 31, 2003. Although S.Amdt. 1412 is not included in the Senate-passed bill that will be considered in conference, there are indications that provisions of the amendment might be brought up. Both the House-passed electricity provisions in H.R. 6 and those in S.Amdt. 1412 would give limited rate authority to the Federal Energy Regulatory Commission (FERC) over municipal and cooperative transmission systems; create an electric reliability organization; repeal the Public Utility Holding Company Act (PUHCA) and give FERC and state public utility commissions access to books and records; prospectively repeal the mandatory purchase requirement of the Public Utility Regulatory Policies Act (PURPA); explicitly prohibit round-trip trading; establish market transparency rules; protect native load consumers (existing customers); and increase criminal penalties under the Federal Power Act. Title VI of the House-passed H.R. 6 would, in part, provide for incentive-based transmission rates, allow transmission owners in certain instances to exercise the right of eminent domain to site new transmission lines, create an electric reliability organization, and clarify the right of transmission owners to serve existing customers (native load). Unlike the House-passed H.R. 6, S.Amdt. 1412 does not contain provisions that would allow transmission owners to exercise the right of eminent domain to site new transmission lines. S.Amdt. 1412 contains provisions that are not included in the House-passed H.R. 6. These include provisions that prohibit FERC from requiring utilities to transfer operational control of transmission facilities to a regional transmission organization (RTO), give authority to power marketing administrations and the Tennessee Valley Authority (TVA) to join RTOs, remand the FERC Standard Market Design (SMD) notice of proposed rulemaking, and strengthen FERC's merger review authority. This report will not be updated. Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Transmission Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Transmission Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Reliability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Public Utility Holding Company Act Amendments . . . . . . . . . . . . . . . . . . . . . . 15 Public Utility Regulatory Policies Act (PURPA) Amendments . . . . . . . . . . . . . 21 Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Market Transparency, Round Trip Trading Prohibition, and Enforcement . . . . . 26 Consumer Protections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Merger Review Reform and Accountability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Study of Economic Dispatch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Electric Utility Policy: Comparison of House-Passed H.R. 6 and S.Amdt. 1412, 108th Congress Introduction Historically, electric utilities have been regarded as natural monopolies requiring regulation at the state and federal levels. The Energy Policy Act of 1992 (EPACT, P.L. 102-486) removed a number of regulatory barriers to electricity generation in an effort to increase supply and introduce competition, and further legislation has been introduced and debated to resolve remaining issues affecting transmission, reliability, and other restructuring concerns. Electric utility provisions are included in comprehensive energy legislation that has passed both the House and Senate. The House passed H.R. 6 on April 11, 2003. On July 31, 2003, the Senate suspended debate on S. 14, the comprehensive energy bill that had been drafted by the Energy and Natural Resources Committee, and instead passed H.R. 6 with the text of the Senate-passed version of H.R. 4 from the 107th Congress. For a comparison of the House- and Senate-passed versions of H.R. 6, see CRS Report RL32033, Omnibus Energy Legislation (H.R. 6): Side-by-Side Comparison of Non-Tax Provisions. Before debate on S. 14 was suspended, Senator Domenici proposed S.Amdt. 1412 on July 29, 2003, to completely replace the electricity title of S. 14 as introduced in the Senate. The proposed amendment was withdrawn on July 31, 2003, and is not included in the Senate-passed energy bill. However, majority staff of the Senate Energy and Natural Resources Committee have indicated that provisions of the amendment might be brought up in conference.1 Title VI of the House-passed H.R. 6 would, in part, provide for incentive-based transmission rates, allow transmission owners in certain instances to exercise the right of eminent domain to site new transmission lines, create an electric reliability organization, give new, but limited, authority to the Federal Energy Regulatory Commission (FERC) over municipal and cooperative transmission systems, and clarify the right of transmission owners to serve existing customers (native load). In addition, the House bill would repeal the Public Utility Holding Company Act (PUHCA) and give FERC and state public utility commissions access to books and records, prospectively repeal the mandatory purchase requirement of the Public Utility Regulatory Policies Act of 1978 (PURPA), and require utilities to provide 1 CRS communication with majority senior staff of the Senate Energy and Natural Resources Committee, Aug. 19, 2003. CRS-2 real-time rates and time-of-use metering. The House version of H.R. 6 would establish market transparency rules, explicitly prohibit round-trip trading, and increase criminal penalties under the Federal Power Act. Like the House-passed electricity provisions of H.R. 6, S.Amdt. 1412 would, in a more limited fashion, give FERC rate authority over municipal and cooperative transmission systems, create an electric reliability organization, repeal PUHCA and give FERC and state public utility commissions access to books and records, prospectively repeal the mandatory purchase requirement of PURPA, clarify the right of transmission owners to serve native load, explicitly prohibit round-trip trading, establish market transparency rules, and increase criminal penalties under the Federal Power Act. Unlike the House-passed H.R. 6, S.Amdt. 1412 does not contain provisions that would allow transmission owners to exercise the right of eminent domain to site new transmission lines. S.Amdt. 1412 contains provisions that are not included in the House-passed H.R. 6. These include provisions that prohibit FERC from requiring utilities to transfer operational control of transmission facilities to a regional transmission organization (RTO), give authority to power marketing administrations and the Tennessee Valley Authority to join RTOs, remand FERC's Standard Market Design (SMD) notice of proposed rulemaking, and strengthen FERC's merger review authority. For additional information, see CRS Report RL32728, Electric Utility Regulatory Reform: Issues for the 109th Congress. CRS-3 Definitions Provision Current Law House S.Amdt. 1412 Comments Definitions The Federal Power Act (FPA) No similar provision. Sec. 1101. In part, modifies does not include any federal definition of `electric utility' to power marketing agency in the include federal power marketing definition of `electric utility.' agencies. Changes definition of The Federal Power Act does not `transmitting utility' to include include municipalities and the Tennessee Valley Authority. states, (entities described in Defines unregulated transmitting 201(f)) in the definition of utility, electric cooperative, `transmitting utility' (16 U.S.C. Regional Transmission 796). Organization, and Independent System Operator. Transmission Capacity Provision Current Law House S.Amdt. 1412 Comments Transmission infrastructure FERC must approve Sec. 16011. FERC is required to Sec. 1133. Requires FERC to improvement rulemaking transmission rates charged by establish a rule to create promulgate rules within 180 (continued on next row). utilities. These rates must be incentive-based transmission days of enactment to establish just and reasonable (16 U.S.C. rates. Under the rule, FERC pricing policies for the 824d). must approve a transmission construction of new interstate organization's request that new transmission facilities or for transmission facilities that expansion and upgrades of the increase the transfer capability existing transmission of the system be participant- infrastructure. (continued on funded. next row) CRS-4 Provision Current Law House S.Amdt. 1412 Comments Transmission infrastructure (see row above) (see row above) (continued from row above) improvement rulemaking. The regulation is to promote economic capital investment in transmission, encourage construction and operation of generation and transmission to minimize risk and provide just and reasonable rates to consumers, encourage use of transmission technologies that increase the transfer capacity of existing lines, and ensure that transmission expansion costs are allocated in a fair manner. RTOs or ISOs are required to submit a plan to FERC that determines how costs will be allocated for transmission expansion. This section allows costs to be: 1) directly assigned; 2) participant funded; or 3) rolled into regional or sub- regional rates. RTOs or ISOs could also propose other methods for cost allocation. CRS-5 Provision Current Law House S.Amdt. 1412 Comments Siting of interstate electrical Transmission siting is the Sec. 16012. The Secretary of No similar provision. Under House proposed FPA transmission facilities responsibility of the states. Energy is required to conduct a section 216(d) there is no (continued in next row). study of electric transmission specific comment period Federal Land Policy and congestion every three years. required. New FPA section Management Act (43 U.S.C. Based on the findings, the 216(e) appears to be exercising 1763). Secretary of Energy may federal power of eminent designate a geographic area as domain to cross private land. being congested. Under certain New FPA section 216(g) does conditions, FERC is authorized not clearly state whether to issue construction permits. companies using condemnation Permit holders will be allowed authority to cross private land to petition in District Court to must comply with the National acquire rights-of-way through Environmental Policy Act of the exercise of the right of 1969 (NEPA). New section eminent domain. Any exercise 216(h) does not state whether of eminent domain authority is property owners will be required considered to be takings of to reimburse compensation if private property for which just land is transferred back to the compensation is due. This owner. New FPA section section does not apply to the 216(j)(1) gives the Department Electric Reliability Council of of Energy (DOE) new authority Texas (ERCOT). An applicant to prepare environmental for federal authorization to site documents and appears to give transmission facilities on federal DOE additional decision- lands may request that the making authority for rights-of- Department of Energy be the way and siting on federal lands. lead agency to coordinate This would appear to give DOE environmental review and other input into the decision process federal authorization. for creating rights-of-way. New (continued in next row) FPA section 216(l) would not apply to monuments that are not managed by the National Park Service. CRS-6 Provision Current Law House S.Amdt. 1412 Comments Siting of interstate electrical (See row above.) Sec. 16012 (continued from (See row above.) (See row above.) transmission facilities row above). Once a completed (continued from row above). application is submitted, all related environmental reviews must be completed within 1 year unless existing federal law environmental review document is to be used for all decisions on the proposed project. Review under section 503 of the Federal Land Policy and Management Act may be streamlined by relying on prior analyses. Any denial of federal rights-of-way may be appealed by the applicant or relevant state to the Secretary of Energy. The Secretary of Energy must issue a decision within 90 days of the appeal's filing. States may enter into interstate compacts for the purposes of siting transmission facilities and the Secretary of Energy may provide technical assistance. CRS-7 Provision Current Law House S.Amdt. 1412 Comments Transmission technologies. The Federal Power Act (16 Sec. 16013. FERC is to exercise No similar provision. Investment in the transmission U.S.C. 791a and following) its authority under the Federal system has not kept pace with gives FERC authority to order Power Act to encourage increases in generation. This interconnections with the technologies that will increase section is intended to increase transmission system and the efficiency and transfer the capacity of existing lines transmission capacity additions capability of transmission through the implementation of necessary to support the networks. technology. interconnection (Section 210). Section 212 allows the costs of transmission system enlargement to be included in the rates for wholesale transmission services. CRS-8 Transmission Operation Provision Current Law House S.Amdt. 1412 Comments Open access transmission by The Federal Power Act (Section Sec. 16021. FERC is authorized, Sec. 1132. FERC is authorized, Both provisions are often certain utilities. 201(f)) does not apply to federal by rule or order, to require by rule or order, to require referred to as "FERC-lite." power marketing unregulated transmitting utilities unregulated transmitting utilities administrations, state entities, or (power marketing (power marketing rural electric cooperatives (16 administrations, state entities, administrations, state entities, U.S.C. 824). and rural electric cooperatives) and rural electric cooperatives) to charge rates comparable to to charge rates comparable to what they charge themselves, what they charge themselves and also require that the terms and requires that the terms and and conditions of the sales are conditions of the sales are comparable to those required of comparable to those required of other utilities. Exemptions are other utilities. Exemptions are established for utilities selling established for utilities selling less than 4 million megawatt- less than 4 million mwh of hours (mwh) of electricity per electricity per year, for year, for distribution utilities, distribution utilities, and for and for utilities that own or utilities that own or operate operate transmission facilities transmission facilities that are that are not necessary to not necessary to facilitate a facilitate a nationwide nationwide interconnected interconnected transmission transmission system. FERC is system. FERC may remand not authorized to order states or transmission rates to an municipalities to take action unregulated transmitting utility under this section if it if the rates do not comply with constitutes a private use under this section. section 141 of the Internal Revenue Code of 1986. FERC is not authorized to require unregulated transmitting utilities to join a transmission organization. CRS-9 Provision Current Law House S.Amdt. 1412 Comments Sense of Congress on Regional No current law. Sec. 16022. It is the sense of the Sec. 1122. It is the sense of the Transmission Organizations. Congress that utilities should Congress that utilities should voluntarily become members of voluntarily become members of regional transmission regional transmission organizations (RTO). It is the organizations. sense of the Congress that FERC should provide incentive rates for transmission for those utilities that join regional transmission organizations. FERC is required to report to Congress within 120 days of enactment the status of all regional transmission organization applications. Federal utilities (power marketing administrations or Tennessee Valley Authority) are authorized to participate in regional transmission organizations. Participation in Regional Section 202 (a) of the Federal No similar Provision. Sec. 1123. FERC may not Transmission Organizations. Power Act directs FERC to require a transmitting utility to promote and encourage regional transfer operational control of districts for the voluntary its transmitting facilities to an interconnection and RTO or Independent System coordination of transmission Operator (ISO). facilities by public utilities and non-public utilities for the purpose of assuring an abundant supply of electric energy throughout the United States with the greatest possible economy. CRS-10 Provision Current Law House S.Amdt. 1412 Comments Federal utility participation in Enabling statutes for power No similar Provision. Sec. 1124. Federal entities, such regional transmission marketing administrations may as the power marketing organizations. restrict participation in RTOs. administrations and the (16 U.S.C. 832 (Bonneville Tennessee Valley Authority, are Power Administration), 16 allowed to enter into a contract U.S.C. 460(Southeastern and to transfer control and use of all Southwestern Power Marketing or part of a federal utility's Administration), and 43 U.S.C. transmission system to an RTO. 485 (Western Area Power Administration)) 16 U.S.C. 831. The Tennessee Valley Authority Act prohibits the Tennessee Valley Authority (TVA) from performing any transmission service that would result in the delivery of power generated by TVA outside of its service territory (the "fence"). CRS-11 Provision Current Law House S.Amdt. 1412 Comments State regulatory authorities. No current law. No similar provision. Sec. 1125. FERC is required to convene regional discussions with state regulatory authorities to determine whether wholesale electric markets in the region are being effective in providing reliable service at the lowest reasonable cost. These discussions, in part, are required to consider whether an RTO is needed, the process to consider planning for multi-state transmission facilities, whether economic dispatch should be implemented, a method to provide proper price signals so new transmission and generation facilities alleviate congestion on the transmission system, and whether a new transmission pricing system is necessary to enhance efficiency and reliability of the transmission grid. FERC is required to report to Congress within one year of enactment its progress with implementing this section. CRS-12 Provision Current Law House S.Amdt. 1412 Comments Native load. Section 201 of the Federal Sec. 16023. A load-serving Sec. 1131. Similar provision. This section is intended to Power Act gives FERC entity is entitled to use its clarify that reserving jurisdiction over "the transmission facilities or transmission for existing transmission of electric energy transmission rights to serve its customers (native load) is not in interstate commerce and the existing customers before it is considered unduly sale of such energy at wholesale obligated to make its discriminatory. in interstate commerce." Section transmission capacity available 205 of the Federal Power Act for other uses. prohibits utilities from granting "undue preference or advantage to any person or subject any person to any undue prejudice or disadvantage" (16 U.S.C. 824). Standard Market Design. No current law. No similar provision. Section 1121. This section would remand the Standard Market Design (SMD) notice of proposed rulemaking back to FERC. FERC would not be able to issue a final rule on standard market design before July 1, 2005. CRS-13 Reliability Provision Current Law House S.Amdt. 1412 Comments Electric reliability standards. No current law. Sec. 16031. Requires FERC to Section 1111. Similar provision. promulgate rules within 180 days of enactment to create a FERC-certified electric reliability organization (ERO). The ERO would develop and enforce reliability standards for the bulk-power system. All ERO standards must be approved by FERC. Under this title, the ERO could impose penalties on a user, owner, or operator of the bulk-power system that violates any FERC-approved reliability standard. In addition, FERC could order compliance with a reliability standard and could impose a penalty if FERC finds that a user, owner, or operator of the bulk-power system has engaged in or is about to engage in a violation of a reliability standard. This provision does not give an ERO or FERC authorization to order construction of additional generation or transmission capacity. (continued on next row) CRS-14 Provision Current Law House S.Amdt. 1412 Comments Electric reliability standards (See row above.) (Continued from row above) (See row above.) (See row above.) (continued from row above). This provision also requires that FERC establish a regional advisory body if at least two- thirds of the states within a region petition FERC. The advisory body would be composed of one member from each participating state in the region, appointed by the Governor of each state, and could provide advice to the ERO or FERC on reliability standards, proposed regional entities, proposed fees, and any other responsibilities requested by FERC. The entire reliability provision would not apply to Alaska or Hawaii. CRS-15 Public Utility Holding Company Act Amendments Provision Current Law House S.Amdt. 1412 Comments Short title. The Public Utility Holding Sec. 16041. This subtitle may be Subtitle E. This subtitle may be Company Act of 1935 (PUHCA, cited as the Public Utility cited as the Public Utility 15 U.S.C. 79 et seq.). Holding Company Act of 2003. Holding Company Act of 2003. Definitions. Various terms are defined at 15 Sec. 16042. The following terms Sec. 1151. The following terms U.S.C. 79b. are defined: affiliates; associate are defined: holding company, company; Commission; holding company system, company; electric utility jurisdictional rates, natural gas company; exempt wholesale company, person, public utility, generator; gas utility company; public-utility company, holding company; holding subsidiary company, voting company system; jurisdictional security. rates; natural gas company; person; public utility; public utility company; State commission; subsidiary company; and voting security. CRS-16 Provision Current Law House S.Amdt. 1412 Comments Repeal of the Public Utility In general, the Public Utility Sec. 16043. The Public Utility Sec. 1152. Similar provision. Holding Company Act of Holding Company Act of 1935 Holding Company Act of 1935 1935. regulates the structure of is repealed. holding companies by prohibiting all holding companies that are more than twice removed from their operating subsidiaries, federally regulates holding companies of investor-owned utilities, and provides for Securities and Exchange Commission (SEC) regulation of mergers and diversification proposals. Registered holding companies of subsidiaries are required to have SEC approval prior to issuing securities; all loans and intercompany financial transactions are regulated by the SEC. A holding company can be exempt from PUHCA if its business operations and those of its subsidiaries occur within one state or within contiguous states (15 U.S.C. 79 et seq.). CRS-17 Provision Current Law House S.Amdt. 1412 Comments Federal access to books and Registered holding companies Sec. 16044. Federal access is Sec. 1153. Similar provision. records. and subsidiary companies are provided to books and records required to preserve accounts, of holding companies and their cost-accounting procedures, affiliates. Affiliate companies correspondence, memoranda, must make available to the papers, and books that FERC Commission the books and deems necessary or appropriate records of affiliate transactions. in the public interest or for Federal officials must maintain protection of investors and the confidentiality of such books consumers (15 U.S.C. 79o). and records. State access to books and Under the Federal Power Act, Sec. 16045. A jurisdictional Sec. 1154. Similar provision. records. state commissions may examine state commission may make a the books, accounts, reasonably detailed written memoranda, contracts, and request to a holding company or records of a jurisdictional any associate company for electric utility company, an access to specific books and exempt wholesale generator that records, which must be kept sells to such electric utility, and confidential. This section does any electric utility company or not apply to a holding company holding company that is an that is such solely by reason of associate company or affiliate of ownership of one or more an exempt wholesale generator qualifying facilities. Response (16 U.S.C. 824). to such requests is mandatory. Compliance with this section is enforceable in U.S. District Court. Exemption authority. No current law. Sec. 16046. FERC is directed to Sec. 1155. FERC is directed to promulgate rules to exempt promulgate rules to exempt qualifying facilities, exempt qualifying facilities, exempt wholesale generators, and wholesale generators, and foreign utility companies from foreign utility companies from the requirements of Section the requirements of Section 16044. 1153. CRS-18 Provision Current Law House S.Amdt. 1412 Comments Affiliate transactions. The Federal Power Act requires Sec. 16047. FERC retains the Sec. 1156. FERC and state that jurisdictional rates are just authority to prevent cross- commissions retain authority to and reasonable and prohibits subsidization and to assure that determine if a public-utility cross-subsidization (16 U.S.C. jurisdictional rates are just and company, public utility, or 791a et seq.). reasonable. FERC and state natural gas company may commissions retain jurisdiction recover in rates the costs of to determine whether associate goods or services acquired from company activities may be an affiliate company. recovered in rates. Applicability. No specific provision. Sec. 16048. Except as Sec. 1157. Similar provision. specifically noted, this subtitle does not apply to the U.S. Government, a state or any political subdivision of a state, or a foreign governmental authority operating outside the United States. Effect on other regulations. No specific provision. Sec. 16049. FERC or a state Sec. 1158. Similar provision. commission is not precluded from exercising its jurisdiction under otherwise applicable laws to protect utility customers. Enforcement. 15 U.S.C. 79r. The Securities Sec. 16050. FERC has authority Sec. 1159. Similar provision. and Exchange Commission has to enforce this provision under authority to investigate and sections 306-317 of the Federal enforce provisions of the Public Power Act. Utility Holding Company Act of 1935. CRS-19 Provision Current Law House S.Amdt. 1412 Comments Savings provisions. Not applicable. Sec. 16051. Persons may Sec. 1160. Similar provision. continue to engage in legal activities in which they have been engaged or are authorized to engage in on the effective date of the Act. The subtitle does not limit the authority of the Federal Energy Regulatory Commission under the Federal Power Act or the Natural Gas Act. Implementation. Not applicable. Sec. 16052. Not later than 12 Sec. 1161. Similar provision. months after enactment, FERC will promulgate regulations necessary to implement this subtitle and submit to Congress recommendations for technical or conforming amendments to federal law that might be necessary to carry out this subtitle. Transfer of resources. The Securities and Exchange Sec.16053. The Securities and Sec. 1162. Similar provision. No time frame for transfer of Commission maintains books Exchange Commission will books and records is provided. and records and regulates transfer all applicable books and security transactions (15 U.S.C. records to FERC. 79 et seq.). Effective date. Not applicable. Sec. 16054. Twelve months Sec. 1163. Similar provision. after enactment, this subtitle will take effect. Authorization of Not applicable. Sec. 16055. Necessary funds to No similar provision. appropriations. carry out this subtitle are authorized to be appropriated. CRS-20 Provision Current Law House S.Amdt. 1412 Comments Conforming amendments to The current jurisdiction of the Sec. 16056. The Federal Power Sec. 1164. Similar provision. the Federal Power Act. Securities and Exchange Act is amended to reflect the Commission under the Public changes to the Public Utility Utility Holding Company Act of Holding Company Act of 1935. 1935 is referenced by 16 U.S.C. 825q; 16 U.S.C. 824(g)(5); 16 U.S.C. 824m. CRS-21 Public Utility Regulatory Policies Act (PURPA) Amendments Provision Current Law House S.Amdt. 1412 Comments Real-time pricing and States are required to consider Sec. 16061. Not later than one Sec. 1142. Not later than one time-of-use metering whether to implement standards year after enactment, each state year after enactment, each state standards. for the purchase of long-term regulatory authority is required regulatory body is required to wholesale power supplies (16 to consider implementing the determine if it will adopt a U.S.C. 2621(d)). following standards: (1) if standard for time-based requested by an electric metering. The standard could consumer, each electric utility implement time-of-use pricing, must provide customers with a critical peak pricing, and real- real-time rate schedule; and (2) time pricing. Utilities are to be if requested by an electric required to provide customers consumer, each electric utility is with meters necessary to required to provide time-of-use implement time-based metering. metering technology. The Secretary of Energy is required to prepare an annual report to Congress that assesses demand response resources on a regional basis. The report will assess the use of advanced meters and communications systems, existing demand response programs, and the potential use of demand response for regional planning purposes. This section establishes that it is the policy of the United States to encourage time-based pricing and other forms of demand response. CRS-22 Provision Current Law House S.Amdt. 1412 Comments Cogeneration and small power Section 210 of the Public Utility Sec. 16062. Mandatory power Sec. 1145. Mandatory power production purchase and sale Regulatory Policies Act of 1978 purchase requirements under purchase requirements under requirements. (PURPA) requires utilities to §210 of PURPA will not apply §210 of the Public Utility purchase power from qualifying to new contracts after the date of Regulatory Policies Act of 1978 facilities and small power enactment if FERC finds that a (PURPA) will not apply to new producers at a rate of the competitive electric market contracts after the date of utilities' avoided cost (16 U.S.C. exists and a qualifying facility enactment if FERC finds that a 824a-3). (QF) has access to competitive electric market independently administered, provides meaningful auction-based day-ahead and opportunity to sell capacity to real-time wholesale markets and buyers other than the utility to long-term wholesale markets. which the QF is interconnectd, FERC may enforce recovery of and a QF has access to "stranded costs" incurred by independently administered, utilities because of PURPA- auction-based day-ahead and mandated cogeneration and real-time wholesale markets and small power purchases. long-term wholesale markets. Ownership limitations under FERC would be required to PURPA are repealed. FERC is promulgate and enforce required to issue a rule to ensure regulations for the recovery of that the electrical, thermal, and "stranded costs" incurred by chemical outputs of new QFs utilities because of PURPA- are intended for industrial, mandated cogeneration and commercial, or institutional use small power purchases. and not for sale to an electric Ownership limitations under utility. PURPA are repealed. FERC is required to issue a rule to ensure that the electrical, thermal, and chemical outputs of new QFs are intended for industrial, commercial, or institutional use and not for sale to an electric utility. CRS-23 Provision Current Law House S.Amdt. 1412 Comments Smart metering. No current law. Sec. 16063. States must consider Sec. 1142. As described above, whether to implement time- each state regulatory body is based rate schedules and time- required to determine if it will based metering. adopt a standard for time-based metering that could implement time-of-use pricing, critical peak pricing, and real-time pricing. Adoption of additional No current law. No similar provision Sec. 1143. States must consider standards. whether to implement a standard that would require that utilities provide interconnection for distributed generation, combined heat and power, and district heating and cooling systems that have a generation capacity of 250 kilowatts (kW) or less if the owner or operator of the generating facility complies with technical standards adopted by the state regulatory authority. In addition, the generating facility is required to pay the cost established by the state regulatory authority for interconnection. Technical assistance for No current law. No similar provision. Sec. 1144. The Secretary of certain responsibilities. Energy is required to offer technical assistance to assist the regulatory authorities with developing and implementing technical standards required under this section. CRS-24 Renewable Energy Provision Current Law House S.Amdt. 1412 Comments Net metering. No current law. Sec. 16071. Each state public Sec. 1141. Similar provision. utility commission is authorized to decide if net metering will be implemented. All utilities are required to provide net metering for eligible generating facilities that conform to size and fuel requirements. Size limits are 500 kilowattts (kw) for commercial systems and 10 kw for residential systems. Residential generators are limited to solar energy, wind energy or fuel cells. Commercial facilities are limited to solar, wind, biomass, geothermal, fuel cells or combined heat and power. Renewable energy production EPACT Sec. 1212 provides a Sec. 16072. Eligibility is No similar provision. incentive. 1.5 cent/kwh incentive for extended through 2023 and power produced from wind and expanded to include electric biomass by state and local cooperatives and tribal governments and non-profit governments. Qualifying electrical cooperatives. Funded resources are expanded to by appropriations, it was created include landfill gas. to parallel the renewable energy production tax credit for businesses (Title XIX). CRS-25 Provision Current Law House S.Amdt. 1412 Comments Renewable energy on Federal No existing requirement. Sec. 16073. The Secretary of the No similar provision. lands. Interior, assisted by the Secretary of Agriculture, is required to study the potential for solar and wind energy resources on federal lands. Also, the National Academy of Sciences (NAS) is directed to study the potential for solar, wind, and ocean energy on the Outer Continental Shelf. Assessment of renewable No existing requirement. Sec. 16074. DOE is required to No similar provision. energy resources. report annually on resource potential, including solar, wind, biomass, ocean, geothermal, and hydro. CRS-26 Market Transparency, Round Trip Trading Prohibition, and Enforcement Provision Current Law House S.Amdt. 1412 Comments Market transparency rules. In part, Commodity Exchange Sec. 16081. Within 180 days Sec. 1171. Within 180 days Act (7 U.S.C. 1 et seq.) after enactment, FERC is after enactment, FERC is required to issue rules to required to issue rules to establish an electronic system establish an electronic system that provides information about that provides information about the availability and price of the availability and price of wholesale electric energy and wholesale electric energy and transmission services. transmission services. Commercial or financial Commercial or financial information that FERC information that FERC determines to be privileged, determines to be privileged, confidential, or otherwise confidential, or otherwise sensitive is exempt from sensitive is exempt from disclosure. disclosure. FERC is to ensure that markets are protected from possible collusion or other anti- competitive actions that could occur with public disclosure of transaction-specific information. The section does not affect the jurisdiction of the Commodity Futures Trading Commission with respect to accounts, agreements, contracts, or transactions in commodities under the Commodity Exchange Act. CRS-27 Provision Current Law House S.Amdt. 1412 Comments Market transparency. Commodity Exchange Act (7 No similar provision. Sec. 1173. Paragraph (a) makes It appears that the broad anti- U.S.C. 1 et seq.). it a violation of the Commodity fraud authority granted to the Exchange Act to knowingly Commodity Futures Trading provide false information to a Commission (CFTC) in section government entity or other data 4b (in current law or under the compiler in an attempt to proposed amendment) may manipulate reports relating to already encompass the type of natural gas or electricity manipulative behavior specified markets. The section also in paragraph (a). changes the wording of Section 4b of the Commodity Exchange Act. Clarifies CFTC authority to bring administrative or civil actions against violators of the Commodity Exchange Act. For FY2004 such funds as necessary to carry out this section are authorized. CRS-28 Provision Current Law House S.Amdt. 1412 Comments Prohibition on round trip 18 U.S.C. 1341 (mail fraud): Sec. 16082. It is unlawful for Sec. 1172. It is a violation of This section explicitly applies trading. This in part applies to use of the any individual, corporation, or this Act to knowingly and existing fraud statutes to round- mail for the purpose of any government entity willfully report false trip electricity trading. executing, or attempting to (municipality, state, power information relating to the price execute, a scheme or artifice to marketing administration) to of electricity sold at wholesale defraud or for obtaining money engage in round-trip electricity or the availability of or property by false or trading. Round-trip trading is transmission capacity. It is fraudulent pretenses, defined to include contracts unlawful for any individual, representations, or promises. where purchase and sale corporation, or any government transactions have no specific entity (municipality, state, 18 U.S.C. 1343 (wire fraud): financial gain or loss and are power marketing administration) Covers use of wire, radio, or entered into with the intent to to engage in round-trip television communication in distort reported revenues, electricity trading. Round-trip interstate or foreign commerce trading volumes, or prices. trading includes contracts to transmit or to cause to be where purchase and sale transmitted any writings, signs, transactions have no specific signals, pictures, or sounds, for financial gain or loss and are the purpose of executing a entered into with the intent to scheme or artifice to defraud or distort reported revenues, for obtaining money or property trading volumes, or prices. by means of false or fraudulent pretenses, representations, or promises. Conforming changes. 16 U.S.C. 824. Sec. 16083. Changes reflect No similar provision. amendments to the Federal Power Act. CRS-29 Provision Current Law House S.Amdt. 1412 Comments Enforcement. Criminal penalties may not Sec. 16084. The Federal Power Sec. 1174. Similar provision In the House version, Section exceed $5,000 and/or 2 years Act is amended to allow electric (see comment.) 16084(b) clarifies that all imprisonment. A civil penalty utilities to file a complaint with entities that have filed not exceeding $10,000 per day FERC and to allow complaints complaints may request a of violation may be assessed for to be filed against transmitting rehearing if FERC denies a violations of Sections 211, 212, utilities. Criminal and civil petition. S.Amdt 1412 includes 213, or 214 of the Federal penalties under the Federal a provision to increase penalties Power Act (16 U.S.C. 825e and Power Act are increased. under the Natural Gas Act (15 16 U.S.C. 825o). U.S.C. 717t). This is not included in S.Amdt. 1412. Consumer Protections Provision Current Law House S.Amdt. 1412 Comments Refund effective date. Refunds for rates that FERC Sec. 16091. Section 206(b) of Sec. 1175. Similar provision. finds to be unjust, unreasonable, the Federal Power Act is unduly discriminatory, or amended to allow the effective preferential begin a minimum of date for refunds to begin at the 60 days after a complaint is filed time of the filing of a complaint (16 U.S.C. 824e(b)). with FERC but not later than 5 months after filing of a complaint. CRS-30 Provision Current Law House S.Amdt. 1412 Comments Jurisdiction over interstate Section 201(f) of the Federal Sec. 16092. Any entity that is No similar provision. As engrossed in the House, this sales. Power Act exempts government not a public utility (including an section is intended to exempt entities from FERC rate entity referred to under §201(f) any coop or an entity described regulation (16 U.S.C. 824). of the Federal Power Act) and in §201(f) of the Federal Power that enters into spot market Act that does not sell more that transactions will be subject to 4 million megawatt-hours of FERC refund authority. This electricity in one year. section does not apply to However, as drafted, this section cooperatives or government could be interpreted as entities (power marketing exempting all §201(f) entities administrations, state-owned from FERC refund authority. utilities, municipalities) that sell no more than 4 million megawatt-hours of electricity per year. Upon finding that action is necessary to protect the public interest, FERC may modify or abrogate any contract entered into after enactment of this section unless the contract expressly provides for a different standard of review. CRS-31 Provision Current Law House S.Amdt. 1412 Comments Consumer privacy. No current law. Sec. 16093. The Federal Trade Sec. 1184. Similar provision The House version includes a Commission (FTC) is required (see comments.) provision that the FTC to issue rules to protect the promulgate rules in accordance privacy of electric consumers with 5 U.S.C. 553. This is not for the disclosure of consumer included in S. Amdt. 1412. information obtained in connection with the sale or delivery of electric energy to consumers. If the Federal Trade Commission finds that a state's regulations provide equivalent or greater protection than the rules issued under this section, then state regulations will apply rather than federal rules. Unfair trade practices. No current law. Sec. 16094. The Federal Trade Sec. 1185. Similar provision. S.Amdt. 1412 would allow a Commission is required to issue state to approve a change of rules to prohibit slamming and electric provider only to prevent cramming. If the Federal Trade the loss of service. The House Commission determines that a version does not place this limit. state's regulations provide equal The House version includes a or greater protection than the provision that the FTC federal rule, then a state's promulgate rules in accordance regulations on slamming and with cramming will apply. 5 U.S.C. 553. Slamming occurs when an electric utility switches a customer's electric provider without the consumer's knowledge. Cramming occurs when an electric utility adds additional services and charges to a customer's account without the permission of the customer. CRS-32 Provision Current Law House S.Amdt. 1412 Comments Technical amendments. Federal Power Act. 16 U.S.C. No similar provision. Sec. 1191. Redesignates Section 721(4) of the Energy 824j. subsections of Section 211 of Policy Act of 1992 (P.L. 102- the Federal Power Act. 486) struck paragraphs (1), (3), Provides for technical and (4) without redesignating corrections. paragraph (2). This section also replaces the word "of" that appears in this section with the word "or," to conform with the original intent of the Energy Policy Act of 1992. Market-based policy. FERC approves wholesale rates No similar provision. Sec. 1182. FERC is required to for the sale of electric energy. issue a policy statement that These rates must be just and establishes when utilities may reasonable. charge market-based rates for electric energy. The policy must consider consumer protections and market power. CRS-33 Provision Current Law House S.Amdt. 1412 Comments Inter-agency review of No current law. No similar provision. Sec. 1183. Creates the "Electric competition in the wholesale Energy Market Competition and retail markets for electric Task Force" consisting of one energy. member from the Department of Justice, one member from FERC, one member from the Federal Trade Commission, one member from the Department of Energy, and one member from the Rural Utilities Service. Within one year of enactment, the task force will complete a study and analysis of competition within the wholesale and retail markets for electric energy in the United States and issue a report to Congress. CRS-34 Merger Review Reform and Accountability Provision Current Law House S.Amdt. 1412 Comments Merger review reform and Under Section 203(a) of the Sec. 16101. Within 180 days of Sec. 1181. FERC is required to accountability. Federal Power Act, FERC enactment, the Secretary of approve any merger, sale, lease, review of asset transfers applies Energy shall transmit to or disposition of entire electric to transactions valued at Congress a study on whether facilities with a value in excess $50,000 or more (16 U.S.C. FERC's merger review authority of $10,000,000. FERC is 824b). is duplicative with other required to notify the Governor agencies' authority and and state regulatory body if the recommendations that would action would affect physical eliminate any unnecessary property in the state. FERC is duplication. FERC is required required to approve the to issue an annual report to proposed disposition, Congress describing all consolidation, acquisition or conditions placed on mergers change of control if the under Section 203(b) of the transaction is in the public Federal Power Act. FERC is interest. These changes are also required to include in its effective 12 months after report whether such a condition enactment. could have been imposed under any other provision of the Federal Power Act. CRS-35 Study of Economic Dispatch Provision Current Law House S.Amdt. 1412 Comments Study on the benefits of No current law. Sec. 16111. The Secretary of No similar provision. economic dispatch. Energy, in consultation with the states, will issue an annual report to Congress and the states on the current status of economic dispatch. Economic dispatch is defined as "the operation of generation facilities to produce energy at the lowest cost to reliably serve consumers, recognizing any operational limits of generation transmission facilities." ------------------------------------------------------------------------------ For other versions of this document, see http://wikileaks.org/wiki/CRS-RL32041