16 U.S.C. § 2621 : US Code - Section 2621: Consideration and determination respecting certain ratemaking standards

Search 16 U.S.C. § 2621 : US Code - Section 2621: Consideration and determination respecting certain ratemaking standards

(a) Consideration and determination
Each State regulatory authority (with respect to each electric
utility for which it has ratemaking authority) and each
nonregulated electric utility shall consider each standard
established by subsection (d) of this section and make a
determination concerning whether or not it is appropriate to
implement such standard to carry out the purposes of this chapter.
For purposes of such consideration and determination in accordance
with subsections (b) and (c) of this section, and for purposes of
any review of such consideration and determination in any court in
accordance with section 2633 of this title, the purposes of this
chapter supplement otherwise applicable State law. Nothing in this
subsection prohibits any State regulatory authority or nonregulated
electric utility from making any determination that it is not
appropriate to implement any such standard, pursuant to its
authority under otherwise applicable State law.
(b) Procedural requirements for consideration and determination
(1) The consideration referred to in subsection (a) of this
section shall be made after public notice and hearing. The
determination referred to in subsection (a) of this section shall
be -
(A) in writing,
(B) based upon findings included in such determination and upon
the evidence presented at the hearing, and
(C) available to the public.
(2) Except as otherwise provided in paragraph (1), in the second
sentence of section 2622(a) of this title, and in sections 2631 and
2632 of this title, the procedures for the consideration and
determination referred to in subsection (a) of this section shall
be those established by the State regulatory authority or the
nonregulated electric utility.
(c) Implementation
(1) The State regulatory authority (with respect to each electric
utility for which it has ratemaking authority) or nonregulated
electric utility may, to the extent consistent with otherwise
applicable State law -
(A) implement any such standard determined under subsection (a)
of this section to be appropriate to carry out the purposes of
this chapter, or
(B) decline to implement any such standard.
(2) If a State regulatory authority (with respect to each
electric utility for which it has ratemaking authority) or
nonregulated electric utility declines to implement any standard
established by subsection (d) of this section which is determined
under subsection (a) of this section to be appropriate to carry out
the purposes of this chapter, such authority or nonregulated
electric utility shall state in writing the reasons therefor. Such
statement of reasons shall be available to the public.
(3) If a State regulatory authority implements a standard
established by subsection (d)(7) or (8) of this section, such
authority shall -
(A) consider the impact that implementation of such standard
would have on small businesses engaged in the design, sale,
supply, installation or servicing of energy conservation, energy
efficiency or other demand side management measures, and
(B) implement such standard so as to assure that utility
actions would not provide such utilities with unfair competitive
advantages over such small businesses.
(d) Establishment
The following Federal standards are hereby established:
(1) Cost of service
Rates charged by any electric utility for providing electric
service to each class of electric consumers shall be designed, to
the maximum extent practicable, to reflect the costs of providing
electric service to such class, as determined under section
2625(a) of this title.
(2) Declining block rates
The energy component of a rate, or the amount attributable to
the energy component in a rate, charged by any electric utility
for providing electric service during any period to any class of
electric consumers may not decrease as kilowatt-hour consumption
by such class increases during such period except to the extent
that such utility demonstrates that the costs to such utility of
providing electric service to such class, which costs are
attributable to such energy component, decrease as such
consumption increases during such period.
(3) Time-of-day rates
The rates charged by any electric utility for providing
electric service to each class of electric consumers shall be on
a time-of-day basis which reflects the costs of providing
electric service to such class of electric consumers at different
times of the day unless such rates are not cost-effective with
respect to such class, as determined under section 2625(b) of
this title.
(4) Seasonal rates
The rates charged by an electric utility for providing electric
service to each class of electric consumers shall be on a
seasonal basis which reflects the costs of providing service to
such class of consumers at different seasons of the year to the
extent that such costs vary seasonally for such utility.
(5) Interruptible rates
Each electric utility shall offer each industrial and
commercial electric consumer an interruptible rate which reflects
the cost of providing interruptible service to the class of which
such consumer is a member.
(6) Load management techniques
Each electric utility shall offer to its electric consumers
such load management techniques as the State regulatory authority
(or the nonregulated electric utility) has determined will -
(A) be practicable and cost-effective, as determined under
section 2625(c) of this title,
(B) be reliable, and
(C) provide useful energy or capacity management advantages
to the electric utility.
(7) Integrated resource planning
Each electric utility shall employ integrated resource
planning. All plans or filings before a State regulatory
authority to meet the requirements of this paragraph must be
updated on a regular basis, must provide the opportunity for
public participation and comment, and contain a requirement that
the plan be implemented.
(8) Investments in conservation and demand management
The rates allowed to be charged by a State regulated electric
utility shall be such that the utility's investment in and
expenditures for energy conservation, energy efficiency
resources, and other demand side management measures are at least
as profitable, giving appropriate consideration to income lost
from reduced sales due to investments in and expenditures for
conservation and efficiency, as its investments in and
expenditures for the construction of new generation,
transmission, and distribution equipment. Such energy
conservation, energy efficiency resources and other demand side
management measures shall be appropriately monitored and
evaluated.
(9) Energy efficiency investments in power generation and supply
The rates charged by any electric utility shall be such that
the utility is encouraged to make investments in, and
expenditures for, all cost-effective improvements in the energy
efficiency of power generation, transmission and distribution. In
considering regulatory changes to achieve the objectives of this
paragraph, State regulatory authorities and nonregulated electric
utilities shall consider the disincentives caused by existing
ratemaking policies, and practices, and consider incentives that
would encourage better maintenance, and investment in more
efficient power generation, transmission and distribution
equipment.
(10) Consideration of the effects of wholesale power purchases on
utility cost of capital; effects of leveraged capital
structures on the reliability of wholesale power sellers; and
assurance of adequate fuel supplies
(A) To the extent that a State regulatory authority requires or
allows electric utilities for which it has ratemaking authority
to consider the purchase of long-term wholesale power supplies as
a means of meeting electric demand, such authority shall perform
a general evaluation of:
(i) the potential for increases or decreases in the costs of
capital for such utilities, and any resulting increases or
decreases in the retail rates paid by electric consumers, that
may result from purchases of long-term wholesale power supplies
in lieu of the construction of new generation facilities by
such utilities;
(ii) whether the use by exempt wholesale generators (as
defined in section 79z-5a (!1) of title 15) of capital
structures which employ proportionally greater amounts of debt
than the capital structures of such utilities threatens
reliability or provides an unfair advantage for exempt
wholesale generators over such utilities;
(iii) whether to implement procedures for the advance
approval or disapproval of the purchase of a particular long-
term wholesale power supply; and
(iv) whether to require as a condition for the approval of
the purchase of power that there be reasonable assurances of
fuel supply adequacy.
(B) For purposes of implementing the provisions of this
paragraph, any reference contained in this section to November 9,
1978, shall be deemed to be a reference to October 24, 1992.
(C) Notwithstanding any other provision of Federal law, nothing
in this paragraph shall prevent a State regulatory authority from
taking such action, including action with respect to the
allowable capital structure of exempt wholesale generators, as
such State regulatory authority may determine to be in the public
interest as a result of performing evaluations under the
standards of subparagraph (A).
(D) Notwithstanding section 2634 of this title and paragraphs
(1) and (2) of section 2622(a) of this title, each State
regulatory authority shall consider and make a determination
concerning the standards of subparagraph (A) in accordance with
the requirements of subsections (a) and (b) of this section,
without regard to any proceedings commenced prior to October 24,
1992.
(E) Notwithstanding subsections (b) and (c) of section 2622 of
this title, each State regulatory authority shall consider and
make a determination concerning whether it is appropriate to
implement the standards set out in subparagraph (A) not later
than one year after October 24, 1992.
(11) Net metering
Each electric utility shall make available upon request net
metering service to any electric consumer that the electric
utility serves. For purposes of this paragraph, the term "net
metering service" means service to an electric consumer under
which electric energy generated by that electric consumer from an
eligible on-site generating facility and delivered to the local
distribution facilities may be used to offset electric energy
provided by the electric utility to the electric consumer during
the applicable billing period.
(12) Fuel sources
Each electric utility shall develop a plan to minimize
dependence on 1 fuel source and to ensure that the electric
energy it sells to consumers is generated using a diverse range
of fuels and technologies, including renewable technologies.
(13) Fossil fuel generation efficiency
Each electric utility shall develop and implement a 10-year
plan to increase the efficiency of its fossil fuel generation.
(14) Time-based metering and communications
(A) Not later than 18 months after August 8, 2005, each
electric utility shall offer each of its customer classes, and
provide individual customers upon customer request, a time-based
rate schedule under which the rate charged by the electric
utility varies during different time periods and reflects the
variance, if any, in the utility's costs of generating and
purchasing electricity at the wholesale level. The time-based
rate schedule shall enable the electric consumer to manage energy
use and cost through advanced metering and communications
technology.
(B) The types of time-based rate schedules that may be offered
under the schedule referred to in subparagraph (A) include, among
others -
(i) time-of-use pricing whereby electricity prices are set
for a specific time period on an advance or forward basis,
typically not changing more often than twice a year, based on
the utility's cost of generating and/or purchasing such
electricity at the wholesale level for the benefit of the
consumer. Prices paid for energy consumed during these periods
shall be pre-established and known to consumers in advance of
such consumption, allowing them to vary their demand and usage
in response to such prices and manage their energy costs by
shifting usage to a lower cost period or reducing their
consumption overall;
(ii) critical peak pricing whereby time-of-use prices are in
effect except for certain peak days, when prices may reflect
the costs of generating and/or purchasing electricity at the
wholesale level and when consumers may receive additional
discounts for reducing peak period energy consumption;
(iii) real-time pricing whereby electricity prices are set
for a specific time period on an advanced or forward basis,
reflecting the utility's cost of generating and/or purchasing
electricity at the wholesale level, and may change as often as
hourly; and
(iv) credits for consumers with large loads who enter into
pre-established peak load reduction agreements that reduce a
utility's planned capacity obligations.
(C) Each electric utility subject to subparagraph (A) shall
provide each customer requesting a time-based rate with a time-
based meter capable of enabling the utility and customer to
offer and receive such rate, respectively.
(D) For purposes of implementing this paragraph, any reference
contained in this section to November 9, 1978, shall be deemed to
be a reference to August 8, 2005.
(E) In a State that permits third-party marketers to sell
electric energy to retail electric consumers, such consumers
shall be entitled to receive the same time-based metering and
communications device and service as a retail electric consumer
of the electric utility.
(F) Notwithstanding subsections (b) and (c) of section 2622 of
this title, each State regulatory authority shall, not later than
18 months after August 8, 2005, conduct an investigation in
accordance with section 2625(i) of this title and issue a
decision whether it is appropriate to implement the standards set
out in subparagraphs (A) and (C).
(15) Interconnection
Each electric utility shall make available, upon request,
interconnection service to any electric consumer that the
electric utility serves. For purposes of this paragraph, the term
"interconnection service" means service to an electric consumer
under which an on-site generating facility on the consumer's
premises shall be connected to the local distribution facilities.
Interconnection services shall be offered based upon the
standards developed by the Institute of Electrical and
Electronics Engineers: IEEE Standard 1547 for Interconnecting
Distributed Resources with Electric Power Systems, as they may be
amended from time to time. In addition, agreements and procedures
shall be established whereby the services are offered shall
promote current best practices of interconnection for distributed
generation, including but not limited to practices stipulated in
model codes adopted by associations of state regulatory agencies.
All such agreements and procedures shall be just and reasonable,
and not unduly discriminatory or preferential.