This amendment provides that if a powerplant has been abandoned or canceled, then FERC may not mandate the passing on of any rate which includes the cost of that abandoned or canceled plant, unless it would be permitted by State law. Some States already have laws dealing with the rate-setting provisions of utility companies with abandoned plants. But State law does not apply to wholesale sales of power, because FERC has exclusive jurisdiction. The ratepayers are increasingly finding themselves having to pay for an abandoned plant that they never authorized, never asked to be built, and were never consulted about. Moreover, the system provides incentives for utilities to build large powerplants.
Utilities set their rates according to their level of investments.
As a result of these incentives and legal loopholes, lawyers and consultants are telling utilities how to circumvent State regulations and come under FERC jurisdiction. We should use this opportunity to correct the problem of utilities that charge consumers for adandoned or canceled generating units. It has gone on long enough. First, this amendment would apply retroactively to plants that have already been partly constructed and then abandoned. Such treatment would be fundamentally unfair for such plants, because it would be a form of extreme financial punishment for decisions made years ago, as many as 10 or 12 years ago, when conditions were much different from what they are today.