I

107TH CONGRESS

1ST SESSION H. R. 1974

To amend the Federal Power Act to provide the Federal Energy Regulatory

Commission with authority to order certain refunds of electric rates,

to require the Commission to expand its market mitigation plan, and

to provide the Secretary of Energy with authority to revoke the market

mitigation plan under certain circumstances, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MAY 23, 2001

Mr. OSE (for himself and Mr. HORN) introduced the following bill; which was

referred to the Committee on Energy and Commerce

A BILL

To amend the Federal Power Act to provide the Federal

Energy Regulatory Commission with authority to order

certain refunds of electric rates, to require the Commission to expand its market mitigation plan, and to provide

the Secretary of Energy with authority to revoke the

market mitigation plan under certain circumstances, 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 ‘‘Western States Energy

5 Consumer Protection Act of 2001’’.
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1 SEC. 2. FINDINGS.

2 The Congress finds that—

3 (1) undue reliance upon the purchase of power

4 from the spot market has resulted in a dysfunctional

5 energy market reflected in high spot market prices;

6 (2) the State of California should encourage

7 further use of long-term and bilateral contracts and

8 reduce reliance on the spot market; and

9 (3) it is not in the interest of the residents of

10 the State of California for the State to create and

11 operate a statewide power authority.

12 SEC. 3. DEFINITIONS.

13 As used in this Act:

14 (1) COMMISSION.—The term ‘‘Commission’’

15 means the Federal Energy Regulatory Commission.

16 (2) PUBLIC UTILITY.—The term ‘‘public util17 ity’’ has the meaning given the term in section 201

18 of the Federal Power Act (16 U.S.C. 824).

19 (3) WHOLESALE ELECTRIC UTILITY.—The term

20 ‘‘wholesale electric utility’’ means a person or entity

21 (including any Federal, State or local department,

22 agency, or instrumentality) selling electric power at

23 wholesale in the western energy market

24 (4) WESTERN ENERGY MARKET.—The term

25 ‘‘western energy market’’ means the area within the
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1 United States that is encompassed by the Western

2 Systems Coordinating Council (‘‘WSCC’’).

3 (5) SPOT MARKET.—The terms ‘‘spot market’’

4 and ‘‘real time market’’ mean the market for electric

5 energy to be delivered within the next 24-hour pe6 riod, or the spot market as otherwise defined by the

7 Commission.

8 (6) RE-MARKETER.—The term ‘‘re-marketer’’

9 means any person who purchases electric energy at

10 wholesale for resale at wholesale.

11 SEC. 4. MARKET MONITORING AND MITIGATION PLAN.

12 (a) EXPANSION TO WSCC REGION.—The Federal

13 Energy Regulatory Commission shall issue such orders as

14 may be necessary to apply to all public utility sales of elec15 tric energy in interstate commerce in the western energy

16 market the market monitoring and mitigation plan for the

17 California market (as adopted by order issued on April

18 26, 2001 (95 FERC 61,115)), that is based not on inflexi19 ble price caps, but on the use of competitive bids to rep20 licate competitive pricing.

21 (b) SCOPE OF PLAN.—

22 (1) IN GENERAL.—The orders issued as pro23 vided in subsection (a) shall also modify the market

24 monitoring and mitigation plan to remove the limita25 tions in such plan regarding emergencies in Cali-
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1 fornia when reserves are 7.5 percent or less so that

2 such plan will apply to all sales by public utilities in

3 interstate commerce in the spot market at all times,

4 including sales by re-marketers.

5 (2) CERTAIN STATES EXCLUDED.—The market

6 mitigation plan referred to in this section shall not

7 apply to sales of electric energy at wholesale for de8 livery in a State that, after the enactment of this

9 Act—

10 (A) prohibits the State public utility com11 mission from approving the passing through to

12 retail consumers of the costs of electric power;

13 or

14 (B) imposes a price limit on the sale of

15 electric energy at retail that precludes a public

16 utility (or any entity that is authorized to pur17 chase electricity on behalf of a public utility or

18 a State) from making a payment when due to

19 any entity within the western energy market

20 from which the public utility purchases electric

21 energy for resale at retail within the western

22 energy market.

23 (c) DEPARTMENT OF ENERGY AUTHORITY.—The

24 Secretary of Energy shall have the authority to terminate

25 the market mitigation plan referred to in this section at
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1 any time that the Secretary determines that such plan is

2 resulting in decreased supply or increased demand for

3 electric energy in the States covered by the Western States

4 Coordinating Council.

5 (d) APPLICATION TO NONJURISDICTIONAL UTILI6 TIES.—It is the intent of Congress that each wholesale

7 electric utility that is not a public utility subject to the

8 jurisdiction of the Commission shall voluntarily comply

9 with the market monitoring and mitigation plan referred

10 to in subsection (a), as modified by the Commission under

11 this section.

12 (e) SUNSET.—The requirements of this section shall

13 cease to apply as of September 30, 2002.

14 SEC. 5. NATURAL GAS RATES.

15 (a) INAPPLICABILITY OF WAIVER OF MAXIMUM RATE

16 CEILING PROVISION TO TRANSPORTATION OF NATURAL

17 GAS INTO THE STATE OF CALIFORNIA.—Effective with

18 respect to contracts entered into after the date of enact19 ment of this Act, paragraph (i) of section 284.8 of title

20 18, Code of Federal Regulations, shall not apply to the

21 transportation of natural gas into the State of California

22 from outside the State.

23 (b) DISCLOSURE OF COMMODITY PORTION AND

24 TRANSPORTATION PORTION OF SALE PRICE IN BUNDLED

25 NATURAL GAS TRANSACTIONS.—
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1 (1) DEFINITION OF BUNDLED TRANSACTION.—

2 In this subsection, the term ‘‘bundled transaction’’

3 means a transaction for the sale of natural gas in

4 which the sale price includes both the cost of the

5 natural gas and the cost of transporting the natural

6 gas.

7 (2) DISCLOSURE.—Exercising authority under

8 section 4 of the Natural Gas Act (15 U.S.C. 717c),

9 not later than 60 days after the date of enactment

10 of this Act, the Commission shall publish notice of

11 a proposed rulemaking, and not later than 180 days

12 after such date of enactment issue a rule, that re13 quires any person that sells natural gas in a bundled

14 transaction under which the natural gas is to be

15 transported into the State of California from outside

16 the State to file with the Commission, not later than

17 a date specified by the Commission, a statement

18 that discloses—

19 (A) the portion of the sale price that is at20 tributable to the price paid by the seller for the

21 natural gas; and

22 (B) the portion of the sale price that is at23 tributable to the price paid for transportation of

24 the natural gas.
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1 SEC. 6. NO ORDERS TO SELL GAS OR ELECTRICITY WITH2 OUT A REASONABLE ASSURANCE OF PAY3 MENT.

4 Notwithstanding section 302 of the Natural Gas Pol5 icy Act of 1978 (15 U.S.C. 3362), section 202(c) of the

6 Federal Power Act (16 U.S.C. 824a(c)), or section 101

7 of the Defense Production Act of 1950 (50 U.S.C. App.

8 2071), neither the Secretary of Energy nor the Commis9 sion may issue an order that requires a seller of electric

10 energy or natural gas to sell, on or after the date of enact11 ment of this Act, electric energy or natural gas to a buyer

12 in any State in the western region unless there is a reason13 able assurance that the Commission determines is suffi14 cient to ensure that the seller will be paid—

15 (1) the full purchase price when due, as agreed

16 to by the buyer and seller; or

17 (2) if the buyer and seller are unable to agree

18 on—

19 (A) a fair and equitable price for natural

20 gas, as determined by the President under sec21 tion 302 of the Natural Gas Policy Act of 1978

22 (15 U.S.C. 3362); or

23 (B) a just and reasonable price for electric

24 energy, as determined by the Secretary of En25 ergy or the Commission, as appropriate, under
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1 section 202(c) of the Federal Power Act (16

2 U.S.C. 824a(c)).

3 SEC. 7. REQUIREMENT TO MEET IN-STATE DEMAND.

4 Notwithstanding any other provision of law, a State

5 public utility commission in the western energy market

6 may prohibit any utility subject to the jurisdiction of the

7 State public utility commission from making any sale of

8 electric energy to a purchaser outside the service area of

9 the utility at any time at which the State public utility

10 commission has reason to believe that delivery of the elec11 tric energy would impair the ability of the utility to meet,

12 at or after the time of the delivery, the demand for electric

13 energy in the service area of the utility.

14 SEC. 8. WHOLESALE RATE REFUND AUTHORITY.

15 Section 206(b) of the Federal Power Act (16 U.S.C.

16 824e(b)) is amended as follows:

17 (1) In the second sentence, strike ‘‘shall not be

18 earlier than the date 60 days after the filing of such

19 complaint nor later than 5 months after the expira20 tion of such 60-day period’’ and insert ‘‘shall be the

21 date of the filing of such complaint’’.

22 (2) In the third sentence, strike ‘‘shall not be

23 earlier than the date 60 days after the publication

24 by the Commission of notice of its intention to ini25 tiate such proceeding nor later than 5 months after
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1 the expiration of such 60-day period’’ and insert

2 ‘‘shall be the date of publication by the Commission

3 of notice of its intention to initiate such proceeding’’.

4 (3) Beginning in the seventh sentence, strike

5 ‘‘through a date fifteen months after such refund ef6 fective date’’ and all that follows down through

7 ‘‘prior to the conclusion of the proceeding’’ and in8 sert ‘‘through the conclusion of the proceeding’’.

9 (4) In the last sentence, after ‘‘interest’’ insert

10 ‘‘and any penalties the Commission deems appro11 priate’’.

12 SEC. 9. FERC REPORT ON SCHEDULED OUTAGES.

13 Within 180 days after the enactment of this Act, the

14 Commission shall undertake a study of the means avail15 able to improve Commission oversight to investigate and

16 coordinate scheduled outages by electric powerplants. The

17 Commission shall submit a report to Congress containing

18 the findings of such study.

19 SEC. 10. EFFECT OF ACT.

20 Nothing in this Act—

21 (1) affects any energy production that, as of

22 the date of enactment of this Act, is not online and

23 for which an application for a permit to produce

24 electricity has not been filed;
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1 (2) affects any contract for the purchase of

2 electric energy except a contract for a spot market

3 purchase;

4 (3) prohibits a State or other entity from ap5 pearing in a Federal court in any instance in which

6 it is alleged that the Commission is not enforcing

7 the Federal Power Act (16 U.S.C. 791a et seq.); or

8 (4) diminishes or has any other effect on the

9 authority of a State regulatory authority (as defined

10 in section 3 of the Federal Power Act (16 U.S.C.

11 796)) to regulate rates and charges for the sale of

12 electric energy to consumers, including the authority

13 to determine the manner in which wholesale rates

14 shall be passed through to consumers (including the

15 setting of tiered pricing, real-time pricing, and base16 line rates).

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