16 U.S.C. § 824q : US Code - Section 824Q: Native load service obligation

Search 16 U.S.C. § 824q : US Code - Section 824Q: Native load service obligation

(a) Definitions
In this section:
(1) The term "distribution utility" means an electric utility
that has a service obligation to end-users or to a State utility
or electric cooperative that, directly or indirectly, through one
or more additional State utilities or electric cooperatives,
provides electric service to end-users.
(2) The term "load-serving entity" means a distribution utility
or an electric utility that has a service obligation.
(3) The term "service obligation" means a requirement
applicable to, or the exercise of authority granted to, an
electric utility under Federal, State, or local law or under long-
term contracts to provide electric service to end-users or to a
distribution utility.
(4) The term "State utility" means a State or any political
subdivision of a State, or any agency, authority, or
instrumentality of any one or more of the foregoing, or a
corporation that is wholly owned, directly or indirectly, by any
one or more of the foregoing, competent to carry on the business
of developing, transmitting, utilizing, or distributing power.
(b) Meeting service obligations
(1) Paragraph (2) applies to any load-serving entity that, as of
August 8, 2005 -
(A) owns generation facilities, markets the output of Federal
generation facilities, or holds rights under one or more
wholesale contracts to purchase electric energy, for the purpose
of meeting a service obligation; and
(B) by reason of ownership of transmission facilities, or one
or more contracts or service agreements for firm transmission
service, holds firm transmission rights for delivery of the
output of the generation facilities or the purchased energy to
meet the service obligation.
(2) Any load-serving entity described in paragraph (1) is
entitled to use the firm transmission rights, or, equivalent
tradable or financial transmission rights, in order to deliver the
output or purchased energy, or the output of other generating
facilities or purchased energy to the extent deliverable using the
rights, to the extent required to meet the service obligation of
the load-serving entity.
(3)(A) To the extent that all or a portion of the service
obligation covered by the firm transmission rights or equivalent
tradable or financial transmission rights is transferred to another
load-serving entity, the successor load-serving entity shall be
entitled to use the firm transmission rights or equivalent tradable
or financial transmission rights associated with the transferred
service obligation.
(B) Subsequent transfers to another load-serving entity, or back
to the original load-serving entity, shall be entitled to the same
rights.
(4) The Commission shall exercise the authority of the Commission
under this chapter in a manner that facilitates the planning and
expansion of transmission facilities to meet the reasonable needs
of load-serving entities to satisfy the service obligations of the
load-serving entities, and enables load-serving entities to secure
firm transmission rights (or equivalent tradable or financial
rights) on a long-term basis for long-term power supply
arrangements made, or planned, to meet such needs.
(c) Allocation of transmission rights
Nothing in subsections (b)(1), (b)(2), and (b)(3) of this section
shall affect any existing or future methodology employed by a
Transmission Organization for allocating or auctioning transmission
rights if such Transmission Organization was authorized by the
Commission to allocate or auction financial transmission rights on
its system as of January 1, 2005, and the Commission determines
that any future allocation or auction is just, reasonable and not
unduly discriminatory or preferential, provided, however, that if
such a Transmission Organization never allocated financial
transmission rights on its system that pertained to a period before
January 1, 2005, with respect to any application by such
Transmission Organization that would change its methodology the
Commission shall exercise its authority in a manner consistent with
the (!1) chapter and that takes into account the policies expressed
in subsections (b)(1), (b)(2), and (b)(3) of this section as
applied to firm transmission rights held by a load-serving entity
as of January 1, 2005, to the extent the associated generation
ownership or power purchase arrangements remain in effect.
(d) Certain transmission rights
The Commission may exercise authority under this chapter to make
transmission rights not used to meet an obligation covered by
subsection (b) of this section available to other entities in a
manner determined by the Commission to be just, reasonable, and not
unduly discriminatory or preferential.
(e) Obligation to build
Nothing in this chapter relieves a load-serving entity from any
obligation under State or local law to build transmission or
distribution facilities adequate to meet the service obligations of
the load-serving entity.
(f) Contracts
Nothing in this section shall provide a basis for abrogating any
contract or service agreement for firm transmission service or
rights in effect as of August 8, 2005. If an ISO in the Western
Interconnection had allocated financial transmission rights prior
to August 8, 2005, but had not done so with respect to one or more
load-serving entities' firm transmission rights held under
contracts to which the preceding sentence applies (or held by
reason of ownership or future ownership of transmission
facilities), such load-serving entities may not be required,
without their consent, to convert such firm transmission rights to
tradable or financial rights, except where the load-serving entity
has voluntarily joined the ISO as a participating transmission
owner (or its successor) in accordance with the ISO tariff.
(g) Water pumping facilities
The Commission shall ensure that any entity described in section
824(f) of this title that owns transmission facilities used
predominately to support its own water pumping facilities shall
have, with respect to the facilities, protections for transmission
service comparable to those provided to load-serving entities
pursuant to this section.
(h) ERCOT
This section shall not apply within the area referred to in
section 824k(k)(2)(A) of this title.
(i) Jurisdiction
This section does not authorize the Commission to take any action
not otherwise within the jurisdiction of the Commission.
(j) TVA area
(1) Subject to paragraphs (2) and (3), for purposes of subsection
(b)(1)(B) of this section, a load-serving entity that is located
within the service area of the Tennessee Valley Authority and that
has a firm wholesale power supply contract with the Tennessee
Valley Authority shall be considered to hold firm transmission
rights for the transmission of the power provided.
(2) Nothing in this subsection affects the requirements of
section 824k(j) of this title.
(3) The Commission shall not issue an order on the basis of this
subsection that is contrary to the purposes of section 824k(j) of
this title.
(k) Effect of exercising rights
An entity that to the extent required to meet its service
obligations exercises rights described in subsection (b) of this
section shall not be considered by such action as engaging in undue
discrimination or preference under this chapter.