I 116th CONGRESS 2d Session H. R. 5742 IN THE HOUSE OF REPRESENTATIVES February 3, 2020 Mr. Casten of Illinois (for himself, Mr. Levin of California , Mr. Huffman , and Mr. Kennedy ) introduced the following bill; which was referred to the Committee on Energy and Commerce A BILL To direct the Federal Energy Regulatory Commission to find that certain rates for electricity are inherently unjust and unreasonable, and for other purposes.

1. Short title This Act may be cited as the Energy Prices Require Including Climate Externalities Act or as the Energy PRICE Act . 2. Purpose The purpose of this Act is to clarify the intent of Congress when passing the Federal Power Act and to provide direction to the Federal Energy Regulatory Commission with respect to wholesale electricity rates. 3. Findings Congress makes the following findings: (1) When passing the Federal Power Act, Congress required the Federal Energy Regulatory Commission ( the Commission ) to ensure that the rates charged by electric utilities for, or in connection with, wholesale electricity rates are just and reasonable , a process which necessarily includes the evaluation of all factors affecting wholesale market rates, including environmental externalities. (2) The Federal Power Act requires the Commission to ensure that public utilities do not grant undue preference or advantage to, or discriminate against, any person when making wholesale electricity sales. (3) Section 206(a) of the Federal Power Act authorizes the Commission to change any rates that the Commission determines to be unjust, unreasonable, unduly discriminatory or preferential . (4) In its final rule titled Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act published on December 15, 2009 (74 Fed. Reg. 66496), the Environmental Protection Agency found that the emissions of greenhouse gases endanger both the public health and the public welfare of current and future generations . (5) The failure of markets to internalize the costs of greenhouse gas pollution into the cost of products, including electricity, led to a misallocation of capital, and therefore to the emission of a greater volume of these pollutants. (6) In 1956, the Supreme Court held in Federal Power Commission v. Sierra Pacific Power Company, 350 U.S. 348 (1956), that the Commission must ensure protection of the public interest when exercising its authority to set just and reasonable rates. (7) The restructuring of the electricity industry in the Federal Power Act was intended to promote competition among electricity providers, resulting in lower electricity rates to consumers, higher quality services, and a more robust national economy. (8) Prior to restructuring, utility commissions were frequently asked to consider other societal benefits when setting rates, including access to energy, rate equity between different classes of customers, and environmental concerns. (9) According to the Environmental Protection Agency, in 2017, emissions from the power sector contributed the second highest share of greenhouse gas emissions by economic sector. (10) The benefits of competition will not be achieved if some competitors enjoy an advantage resulting from externalization of environmental costs, permitting them to charge prices for electricity that do not reflect the full economic and environmental cost of production. (11) Despite the Environmental Protection Agency’s finding of endangerment, emissions of greenhouse gases into the air, which endanger public health and threaten the quality of the air, land, and water of the United States, are externalities that are not frequently or uniformly reflected in the price charged for products such as electricity across the United States. (12) The disparity in regulatory treatment between electric generating units with above-average greenhouse gas emissions and those with little to no greenhouse gas emissions provides a significant competitive advantage for high greenhouse gas emitting energy generating units over their competitors. (13) States and State commissions should be encouraged to incorporate the cost of greenhouse gas emissions into wholesale rates for electricity. 4. Certain rates unjust, unreasonable, unduly discriminatory, or preferential (a) In general For the purposes of section 205 and section 206 of the Federal Power Act ( 16 U.S.C. 824d , 824e), if the Federal Energy Regulatory Commission determines that a rate for the wholesale sale of electricity does not incorporate the cost of externalized greenhouse gas emissions to public health, safety, or welfare, then the Federal Energy Regulatory Commission shall find that such rate is unjust, unreasonable, unduly discriminatory, or preferential. (b) Greenhouse gas defined In this subsection, the term greenhouse gas includes— (1) any gas identified by the Environmental Protection Agency in the final rule titled Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act published on December 15, 2009 (74 Fed. Reg. 66496), including carbon dioxide, hy­dro­fluo­ro­car­bons, methane, nitrous oxide, per­fluo­ro­car­bons, and sulfur hexafluoride; and (2) nitrogen trifluoride. (c) Rule of construction Nothing in this section may be construed to affect or modify the existing authorities of the Federal Energy Regulatory Commission.