I

107TH CONGRESS

1ST SESSION H. R. 1468

To stabilize the dysfunctional wholesale power market in the Western United

States, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

APRIL 4, 2001

Mr. INSLEE (for himself, Mr. BACA, Mr. BECERRA, Mr. BAIRD, Mr. BERMAN,

Mr. BLUMENAUER, Mrs. CAPPS, Mr. CAPUANO, Mr. CONDIT, Mrs. DAVIS

of California, Mr. DEFAZIO, Mr. DICKS, Ms. ESHOO, Mr. FARR of California, Mr. FILNER, Mr. GEPHARDT, MS. HARMAN, Mr. HONDA, Ms.

HOOLEY of Oregon, Mr. LANTOS, Mr. LARSEN of Washington, Ms.

LOFGREN, Ms. LEE, Mr. MATSUI, Mr. MCDERMOTT, Mr. GEORGE MILLER of California, Ms. MILLENDER-MCDONALD, Mrs. NAPOLITANO, Ms.

PELOSI, Ms. SCHAKOWSKY, Mr. SHERMAN, Mr. SMITH of Washington,

Ms. SOLIS, Mr. STARK, Mrs. TAUSCHER, Mr. THOMPSON of California,

Ms. WATERS, Mr. WAXMAN, Ms. WOOLSEY, and Mr. WU) introduced the

following bill; which was referred to the Committee on Energy and Commerce

A BILL

To stabilize the dysfunctional wholesale power market in

the Western United States, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Energy Price and Eco5 nomic Stability Act of 2001’’.
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1 SEC. 2. FINDINGS.

2 The Congress finds that:

3 (1) Reliable and affordable energy is necessary

4 to ensure economic health and public safety.

5 (2) The western states have historically worked

6 well together to ensure that energy is sufficient to

7 meet demand at a reasonable cost.

8 (3) Despite the best efforts of the western

9 states, an emergency energy situation now exists.

10 (4) The Federal government should augment

11 the states’ response to the emergency by protecting

12 consumers from excessive wholesale rates.

13 (5) Several factors have led to the existing

14 emergency, including the following: a flawed deregu15 lation plan in the State of California, the existence

16 of market power among generators in the western

17 region, increased natural gas costs, drought in the

18 Northwest, rapid increases in the populations of

19 western states, poor regional and national fore20 casting of energy needs, decreased operating reserves

21 due to a lack of investment in new generation.

22 (6) Federal and State efforts to protect the en23 vironment have not significantly contributed to these

24 problems.

25 (7) The region’s energy needs can be met while

26 protecting the environment and public health.
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1 (8) On November 1, 2000, and again on De2 cember 15, 2000, the Federal Energy Regulatory

3 Commission found that wholesale electricity rates in

4 the State of California were and have the potential

5 to be unjust and unreasonable under the Federal

6 Power Act.

7 (9) The Federal Energy Regulatory Commis8 sion issued orders on March 9, 2001, March 14,

9 2001, and March 16, 2001 alleging that generators

10 had overcharged California utilities more than $130

11 million.

12 (10) The Federal Energy Regulatory Commis13 sion orders only reflect a fraction of total over14 charges and do not reflect the full period during

15 which overcharges may have occurred.

16 (11) The California Independent System Oper17 ator reports that generators may have overcharged

18 California utilities by more than $6 billion in the pe19 riod between May 2000 and February 2001.

20 (12) The market conditions that have existed in

21 California, Washington, and Oregon for months now

22 exist in neighboring states, where electricity costs

23 are also rising.

24 (13) Unless the Federal Energy Regulatory

25 Commission intervenes in the western wholesale elec-
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1 tricity market, nothing will constrain the wholesale

2 price of electricity and the situation this coming

3 summer may worsen by orders of magnitude.

4 (14) On March 9, 2001, the Governors of Cali5 fornia, Oregon, and Washington wrote to the Chair6 man and Commissioners of the Federal Energy Reg7 ulatory Commission to request that cost-of-service

8 based rates be imposed in the western region.

9 (15) The Federal Energy Regulatory Commis10 sion has failed to fulfill its obligations under the

11 Federal Power Act to act in the best interest of con12 sumers by mandating just and reasonable wholesale

13 rates in the western energy market.

14 SEC. 3. WHOLESALE ELECTRICITY RATES IN THE WESTERN

15 UNITED STATES.

16 (a) DEFINITIONS.—For purposes of this Act:

17 (1) The term ‘‘Commission’’ means the Federal

18 Energy Regulatory Commission.

19 (2) The term ‘‘cost-of-service-based rate’’

20 means a rate, charge, or classification for the sale of

21 electric energy that is equal to the sum of the fol22 lowing:

23 (A) All variable and fixed costs of gener24 ating such electric energy.

25 (B) Either—
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1 (i) a reasonable risk premium, or

2 (ii) a return on invested capital used

3 to generate and transmit such electric en4 ergy that reflects customary returns during

5 the period 1994 through 1999.

6 (C) Other reasonable costs associated with

7 the acquisition, conservation, and transmission

8 of such electric energy.

9 (3) The term ‘‘new generation facility’’ means

10 any facility generating electric energy that did not

11 generate electric energy at any time prior to Janu12 ary 1, 2001.

13 (b) EXERCISE OF AUTHORITY TO ESTABLISH COST14 BASED RATES.—Within 30 days after the enactment of

15 this Act, the Commission shall issue an order establishing

16 cost-of-service-based rates for electric energy sold at

17 wholesale subject to the jurisdiction of the Commission

18 under the Federal Power Act for use in that portion of

19 the United States that is covered by the Western Systems

20 Coordinating Council of the North American Electric Reli21 ability Council.

22 (c) SUNSET.—Subsection (b) shall not apply to sales

23 of electric energy after March 1, 2003.
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1 (d) NEW FACILITIES NOT COVERED.—The rates re2 quired under subsection (b) shall not apply to any sale

3 of electric energy generated by any new generation facility.

4 (e) ENFORCEMENT.—

5 (1) STATE CAUSE OF ACTION.—If a State de6 termines that a wholesale rate applicable to delivery

7 of electricity within the State is not in compliance

8 with subsection (b) or is not just and reasonable, the

9 State may bring an action in the appropriate United

10 States district court. Upon adequate showing that a

11 rate is not in compliance with subsection (b) or is

12 not just and reasonable, the court shall order re13 funds or other relief as appropriate.

14 (2) CIVIL PENALTIES.—Any person who vio15 lates any requirement of this section shall be subject

16 to civil penalties equal to 3 times the value of the

17 amount involved in such violation. The Commission

18 shall assess such penalties, after notice and oppor19 tunity for public hearing, in accordance with the

20 same provisions as are applicable under section

21 31(d) of the Federal Power Act in the case of civil

22 penalties assessed under such section 31.

23 (f) REFUNDS.—In the case of sales of electric energy

24 for use in that portion of the United States that is covered

25 by the Western Systems Coordinating Council of the
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1 North American Electric Reliability Council the Commis2 sion shall order the refund of any rates and charges that

3 were not just and reasonable and that applied to sales be4 tween June 1, 2000 and the enactment of this Act. Any

5 affected State may bring an action in the appropriate

6 United States district court to enforce this subsection.

7 (g) SAVINGS PROVISIONS.—Nothing in this section

8 shall affect any authority of the Commission existing be9 fore the enactment of this section.

10 SEC. 4. GUARANTEE OF PAYMENT REQUIRED FOR CERTAIN

11 EMERGENCY POWER SALES.

12 Section 202(c) of the Federal Power Act (16 U.S.C.

13 825(c)) is amended by adding the following at the end

14 thereof: ‘‘Except during the continuance of any war, no

15 order may be issued under this subsection unless the pay16 ment of compensation or reimbursement to the person

17 subject to such order is fully guaranteed by the United

18 States Government or by a State government.’’.

19 SEC. 5. SEVERABILITY.

20 If any provision of this Act is found to be unenforce21 able or invalid, no other provision of this Act shall be in22 validated thereby.

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