Consideration and determination respecting certain ratemaking standards
Consideration and determination
Procedural requirements for consideration and determination
The consideration referred to in subsection (a) shall be made after public notice and hearing. The determination referred to in subsection (a) shall be—
in writing,
based upon findings included in such determination and upon the evidence presented at the hearing, and
available to the public.
Except as otherwise provided in paragraph (1), in the second sentence of section 2622(a) of this title, and in sections 2631 and 2632 of this title, the procedures for the consideration and determination referred to in subsection (a) shall be those established by the State regulatory authority or the nonregulated electric utility.
Implementation
The State regulatory authority (with respect to each electric utility for which it has ratemaking authority) or nonregulated electric utility may, to the extent consistent with otherwise applicable State law—
implement any such standard determined under subsection (a) to be appropriate to carry out the purposes of this chapter, or
decline to implement any such standard.
If a State regulatory authority (with respect to each electric utility for which it has ratemaking authority) or nonregulated electric utility declines to implement any standard established by subsection (d) which is determined under subsection (a) to be appropriate to carry out the purposes of this chapter, such authority or nonregulated electric utility shall state in writing the reasons therefor. Such statement of reasons shall be available to the public.
If a State regulatory authority implements a standard established by subsection (d)(7) or (8), such authority shall—
consider the impact that implementation of such standard would have on small businesses engaged in the design, sale, supply, installation or servicing of energy conservation, energy efficiency or other demand side management measures, and
implement such standard so as to assure that utility actions would not provide such utilities with unfair competitive advantages over such small businesses.
Establishment
The following Federal standards are hereby established:
Cost of service
Declining block rates
Time-of-day rates
Seasonal rates
Interruptible rates
Load management techniques
Each electric utility shall offer to its electric consumers such load management techniques as the State regulatory authority (or the nonregulated electric utility) has determined will—
be practicable and cost-effective, as determined under section 2625(c) of this title,
be reliable, and
provide useful energy or capacity management advantages to the electric utility.
Integrated resource planning
Investments in conservation and demand management
Energy efficiency investments in power generation and supply
Consideration of the effects of wholesale power purchases on utility cost of capital; effects of leveraged capital structures on the reliability of wholesale power sellers; and assurance of adequate fuel supplies
To the extent that a State regulatory authority requires or allows electric utilities for which it has ratemaking authority to consider the purchase of long-term wholesale power supplies as a means of meeting electric demand, such authority shall perform a general evaluation of:
the potential for increases or decreases in the costs of capital for such utilities, and any resulting increases or decreases in the retail rates paid by electric consumers, that may result from purchases of long-term wholesale power supplies in lieu of the construction of new generation facilities by such utilities;
whether the use by exempt wholesale generators (as defined in section 79z–5a 1
whether to implement procedures for the advance approval or disapproval of the purchase of a particular long-term wholesale power supply; and
whether to require as a condition for the approval of the purchase of power that there be reasonable assurances of fuel supply adequacy.
For purposes of implementing the provisions of this paragraph, any reference contained in this section to
Notwithstanding any other provision of Federal law, nothing in this paragraph shall prevent a State regulatory authority from taking such action, including action with respect to the allowable capital structure of exempt wholesale generators, as such State regulatory authority may determine to be in the public interest as a result of performing evaluations under the standards of subparagraph (A).
Notwithstanding section 2634 of this title and paragraphs (1) and (2) of section 2622(a) of this title, each State regulatory authority shall consider and make a determination concerning the standards of subparagraph (A) in accordance with the requirements of subsections (a) and (b) of this section, without regard to any proceedings commenced prior to
Notwithstanding subsections (b) and (c) of section 2622 of this title, each State regulatory authority shall consider and make a determination concerning whether it is appropriate to implement the standards set out in subparagraph (A) not later than one year after
Net metering
Fuel sources
Fossil fuel generation efficiency
Time-based metering and communications
Not later than 18 months after
The types of time-based rate schedules that may be offered under the schedule referred to in subparagraph (A) include, among others—
time-of-use pricing whereby electricity prices are set for a specific time period on an advance or forward basis, typically not changing more often than twice a year, based on the utility’s cost of generating and/or purchasing such electricity at the wholesale level for the benefit of the consumer. Prices paid for energy consumed during these periods shall be pre-established and known to consumers in advance of such consumption, allowing them to vary their demand and usage in response to such prices and manage their energy costs by shifting usage to a lower cost period or reducing their consumption overall;
critical peak pricing whereby time-of-use prices are in effect except for certain peak days, when prices may reflect the costs of generating and/or purchasing electricity at the wholesale level and when consumers may receive additional discounts for reducing peak period energy consumption;
real-time pricing whereby electricity prices are set for a specific time period on an advanced or forward basis, reflecting the utility’s cost of generating and/or purchasing electricity at the wholesale level, and may change as often as hourly; and
credits for consumers with large loads who enter into pre-established peak load reduction agreements that reduce a utility’s planned capacity obligations.
Each electric utility subject to subparagraph (A) shall provide each customer requesting a time-based rate with a time-based meter capable of enabling the utility and customer to offer and receive such rate, respectively.
For purposes of implementing this paragraph, any reference contained in this section to
In a State that permits third-party marketers to sell electric energy to retail electric consumers, such consumers shall be entitled to receive the same time-based metering and communications device and service as a retail electric consumer of the electric utility.
Notwithstanding subsections (b) and (c) of section 2622 of this title, each State regulatory authority shall, not later than 18 months after
Interconnection
Integrated resource planning
Each electric utility shall—
integrate energy efficiency resources into utility, State, and regional plans; and
adopt policies establishing cost-effective energy efficiency as a priority resource.
Rate design modifications to promote energy efficiency investments
In general
The rates allowed to be charged by any electric utility shall—
align utility incentives with the delivery of cost-effective energy efficiency; and
promote energy efficiency investments.
Policy options
In complying with subparagraph (A), each State regulatory authority and each nonregulated utility shall consider—
removing the throughput incentive and other regulatory and management disincentives to energy efficiency;
providing utility incentives for the successful management of energy efficiency programs;
including the impact on adoption of energy efficiency as 1 of the goals of retail rate design, recognizing that energy efficiency must be balanced with other objectives;
adopting rate designs that encourage energy efficiency for each customer class;
allowing timely recovery of energy efficiency-related costs; and
offering home energy audits, offering demand response programs, publicizing the financial and environmental benefits associated with making home energy efficiency improvements, and educating homeowners about all existing Federal and State incentives, including the availability of low-cost loans, that make energy efficiency improvements more affordable.
Consideration of smart grid investments
In general
Each State shall consider requiring that, prior to undertaking investments in nonadvanced grid technologies, an electric utility of the State demonstrate to the State that the electric utility considered an investment in a qualified smart grid system based on appropriate factors, including—
total costs;
cost-effectiveness;
improved reliability;
security;
system performance; and
societal benefit.
Rate recovery
Obsolete equipment
Smart grid information
Standard
Information
Information provided under this section, to the extent practicable, shall include:
Prices
Purchasers and other interested persons shall be provided with information on—
time-based electricity prices in the wholesale electricity market; and
time-based electricity retail prices or rates that are available to the purchasers.
Usage
Intervals and projections
Sources
Access
Source
(Pub. L. 95–617, title I, § 111,Notes
References in Text
Amendments
Effective Date of 2007 Amendment
State Authorities; Construction
Report to President and Congress on Encouragement of Integrated Resource Planning and Investments in Conservation and Energy Efficiency by Electric Utilities
“Not later than 2 years after the date of the enactment of this Act [
a survey of all State laws, regulations, practices, and policies under which State regulatory authorities implement the provisions of paragraphs (7), (8), and (9) of section 111(d) of the Public Utility Regulatory Policies Act of 1978 [16 U.S.C. 2621(d)(7)–(9)];
an evaluation by the Secretary of whether and to what extent, integrated resource planning is likely to result in—
higher or lower electricity costs to an electric utility’s ultimate consumers or to classes or groups of such consumers;
enhanced or reduced reliability of electric service; and
increased or decreased dependence on particular energy resources; and
a survey of practices and policies under which electric cooperatives prepare integrated resource plans, submit such plans to the Rural Electrification Administration and the extent to which such integrated resource planning is reflected in rates charged to customers.
The report shall include an analysis prepared in conjunction with the Federal Trade Commission, of the competitive impact of implementation of energy conservation, energy efficiency, and other demand side management programs by utilities on small businesses engaged in the design, sale, supply, installation, or servicing of similar energy conservation, energy efficiency, or other demand side management measures and whether any unfair, deceptive, or predatory acts exist, or are likely to exist, from implementation of such programs.”