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 Cali-
fornia, 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 MIL-
LER 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 Com-
merce
A BILL
To stabilize the dysfunctional wholesale power market in
the Western United States, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Energy Price and Eco-
nomic Stability Act of 2001’’.
SEC. 2. FINDINGS.
The Congress finds that:
(1) Reliable and affordable energy is necessary
to ensure economic health and public safety.
(2) The western states have historically worked
well together to ensure that energy is sufficient to
meet demand at a reasonable cost.
(3) Despite the best efforts of the western
states, an emergency energy situation now exists.
(4) The Federal government should augment
the states’ response to the emergency by protecting
consumers from excessive wholesale rates.
(5) Several factors have led to the existing
emergency, including the following: a flawed deregu-
lation plan in the State of California, the existence
of market power among generators in the western
region, increased natural gas costs, drought in the
Northwest, rapid increases in the populations of
western states, poor regional and national fore-
casting of energy needs, decreased operating reserves
due to a lack of investment in new generation.
(6) Federal and State efforts to protect the en-
vironment have not significantly contributed to these
problems.
(7) The region’s energy needs can be met while
protecting the environment and public health.
(8) On November 1, 2000, and again on De-
cember 15, 2000, the Federal Energy Regulatory
Commission found that wholesale electricity rates in
the State of California were and have the potential
to be unjust and unreasonable under the Federal
Power Act.
(9) The Federal Energy Regulatory Commis-
sion issued orders on March 9, 2001, March 14,
2001, and March 16, 2001 alleging that generators
had overcharged California utilities more than $130
million.
(10) The Federal Energy Regulatory Commis-
sion orders only reflect a fraction of total over-
charges and do not reflect the full period during
which overcharges may have occurred.
(11) The California Independent System Oper-
ator reports that generators may have overcharged
California utilities by more than $6 billion in the pe-
riod between May 2000 and February 2001.
(12) The market conditions that have existed in
California, Washington, and Oregon for months now
exist in neighboring states, where electricity costs
are also rising.
(13) Unless the Federal Energy Regulatory
Commission intervenes in the western wholesale elec-
tricity market, nothing will constrain the wholesale
price of electricity and the situation this coming
summer may worsen by orders of magnitude.
(14) On March 9, 2001, the Governors of Cali-
fornia, Oregon, and Washington wrote to the Chair-
man and Commissioners of the Federal Energy Reg-
ulatory Commission to request that cost-of-service
based rates be imposed in the western region.
(15) The Federal Energy Regulatory Commis-
sion has failed to fulfill its obligations under the
Federal Power Act to act in the best interest of con-
sumers by mandating just and reasonable wholesale
rates in the western energy market.
SEC. 3. WHOLESALE ELECTRICITY RATES IN THE WESTERN
UNITED STATES.
(a) DEFINITIONS.—For purposes of this Act:
(1) The term ‘‘Commission’’ means the Federal
Energy Regulatory Commission.
(2) The term ‘‘cost-of-service-based rate’’
means a rate, charge, or classification for the sale of
electric energy that is equal to the sum of the fol-
lowing:
(A) All variable and fixed costs of gener-
ating such electric energy.
(B) Either—
(i) a reasonable risk premium, or
(ii) a return on invested capital used
to generate and transmit such electric en-
ergy that reflects customary returns during
the period 1994 through 1999.
(C) Other reasonable costs associated with
the acquisition, conservation, and transmission
of such electric energy.
(3) The term ‘‘new generation facility’’ means
any facility generating electric energy that did not
generate electric energy at any time prior to Janu-
ary 1, 2001.
(b) EXERCISE OF AUTHORITY TO ESTABLISH COST-
BASED RATES.—Within 30 days after the enactment of
this Act, the Commission shall issue an order establishing
cost-of-service-based rates for electric energy sold at
wholesale subject to the jurisdiction of the Commission
under the Federal Power Act for use in that portion of
the United States that is covered by the Western Systems
Coordinating Council of the North American Electric Reli-
ability Council.
(c) SUNSET.—Subsection (b) shall not apply to sales
of electric energy after March 1, 2003.
North American Electric Reliability Council the Commis-
sion shall order the refund of any rates and charges that
were not just and reasonable and that applied to sales be-
tween June 1, 2000 and the enactment of this Act. Any
affected State may bring an action in the appropriate
United States district court to enforce this subsection.
(g) SAVINGS PROVISIONS.—Nothing in this section
shall affect any authority of the Commission existing be-
fore the enactment of this section.
SEC. 4. GUARANTEE OF PAYMENT REQUIRED FOR CERTAIN
EMERGENCY POWER SALES.
Section 202(c) of the Federal Power Act (16 U.S.C.
825(c)) is amended by adding the following at the end
thereof: ‘‘Except during the continuance of any war, no
order may be issued under this subsection unless the pay-
ment of compensation or reimbursement to the person
subject to such order is fully guaranteed by the United
States Government or by a State government.’’.
SEC. 5. SEVERABILITY.
If any provision of this Act is found to be unenforce-
able or invalid, no other provision of this Act shall be in-
validated thereby.
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