§ 79z-5a. — Exempt wholesale generators.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC79z-5a]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2C--PUBLIC UTILITY HOLDING COMPANIES
Sec. 79z-5a. Exempt wholesale generators
(a) Definitions
For purposes of this section--
(1) Exempt wholesale generator
The term ``exempt wholesale generator'' means any person
determined by the Federal Energy Regulatory Commission to be engaged
directly, or indirectly through one or more affiliates as defined in
section 79b(a)(11)(B) of this title, and exclusively in the business
of owning or operating, or both owning and operating, all or part of
one or more eligible facilities and selling electric energy at
wholesale. No person shall be deemed to be an exempt wholesale
generator under this section unless such person has applied to the
Federal Energy Regulatory Commission for a determination under this
paragraph. A person applying in good faith for such a determination
shall be deemed an exempt wholesale generator under this section,
with all of the exemptions provided by this section, until the
Federal Energy Regulatory Commission makes such determination. The
Federal Energy Regulatory Commission shall make such determination
within 60 days of its receipt of such application and shall notify
the Commission whenever a determination is made under this paragraph
that any person is an exempt wholesale generator. Not later than 12
months after October 24, 1992, the Federal Energy Regulatory
Commission shall promulgate rules implementing the provisions of
this paragraph. Applications for determination filed after the
effective date of such rules shall be subject thereto.
(2) Eligible facility
The term ``eligible facility'' means a facility, wherever
located, which is either--
(A) used for the generation of electric energy exclusively
for sale at wholesale, or
(B) used for the generation of electric energy and leased to
one or more public utility companies; Provided, That any such
lease shall be treated as a sale of electric energy at wholesale
for purposes of sections 824d and 824e of title 16.
Such term shall not include any facility for which consent is
required under subsection (c) of this section if such consent has
not been obtained. Such term includes interconnecting transmission
facilities necessary to effect a sale of electric energy at
wholesale. For purposes of this paragraph, the term ``facility'' may
include a portion of a facility subject to the limitations of
subsection (d) of this section and shall include a facility the
construction of which has not been commenced or completed.
(3) Sale of electric energy at wholesale
The term ``sale of electric energy at wholesale'' shall have the
same meaning as provided in section 824(d) of title 16.
(4) Retail rates and charges
The term ``retail rates and charges'' means rates and charges
for the sale of electric energy directly to consumers.
(b) Foreign retail sales
Notwithstanding paragraphs (1) and (2) of subsection (a) of this
section, retail sales of electric energy produced by a facility located
in a foreign country shall not prevent such facility from being an
eligible facility, or prevent a person owning or operating, or both
owning and operating, such facility from being an exempt wholesale
generator if none of the electric energy generated by such facility is
sold to consumers in the United States.
(c) State consent for existing rate-based facilities
If a rate or charge for, or in connection with, the construction of
a facility, or for electric energy produced by a facility (other than
any portion of a rate or charge which represents recovery of the cost of
a wholesale rate or charge) was in effect under the laws of any State as
of October 24, 1992, in order for the facility to be considered an
eligible facility, every State commission having jurisdiction over any
such rate or charge must make a specific determination that allowing
such facility to be an eligible facility (1) will benefit consumers, (2)
is in the public interest, and (3) does not violate State law; Provided,
That in the case of such a rate or charge which is a rate or charge of
an affiliate of a registered holding company:
(A) such determination with respect to the facility in question
shall be required from every State commission having jurisdiction
over the retail rates and charges of the affiliates of such
registered holding company; and
(B) the approval of the Commission under this chapter shall not
be required for the transfer of the facility to an exempt wholesale
generator.
(d) Hybrids
(1) No exempt wholesale generator may own or operate a portion of
any facility if any other portion of the facility is owned or operated
by an electric utility company that is an affiliate or associate company
of such exempt wholesale generator.
(2) Eligible Facility.--Notwithstanding paragraph (1), an exempt
wholesale generator may own or operate a portion of a facility
identified in paragraph (1) if such portion has become an eligible
facility as a result of the operation of subsection (c) of this section.
(e) Exemption of EWGS
An exempt wholesale generator shall not be considered an electric
utility company under section 79b(a)(3) of this title and, whether or
not a subsidiary company, an affiliate, or an associate company of a
holding company, an exempt wholesale generator shall be exempt from all
provisions of this chapter.
(f) Ownership of EWGS by exempt holding companies
Notwithstanding any provision of this chapter, a holding company
that is exempt under section 79c of this title shall be permitted,
without condition or limitation under this chapter, to acquire and
maintain an interest in the business of one or more exempt wholesale
generators.
(g) Ownership of EWGS by registered holding companies
Notwithstanding any provision of this chapter and the Commission's
jurisdiction as provided under subsection (h) of this section, a
registered holding company shall be permitted (without the need to apply
for, or receive, approval from the Commission, and otherwise without
condition under this chapter) to acquire and hold the securities, or an
interest in the business, of one or more exempt wholesale generators.
(h) Financing and other relationships between EWGS and registered
holding companies
The issuance of securities by a registered holding company for
purposes of financing the acquisition of an exempt wholesale generator,
the guarantee of securities of an exempt wholesale generator by a
registered holding company, the entering into service, sales or
construction contracts, and the creation or maintenance of any other
relationship in addition to that described in subsection (g) of this
section between an exempt wholesale generator and a registered holding
company, its affiliates and associate companies, shall remain subject to
the jurisdiction of the Commission under this chapter: Provided, That--
(1) section 79k of this title shall not prohibit the ownership
of an interest in the business of one or more exempt wholesale
generators by a registered holding company (regardless of where
facilities owned or operated by such exempt wholesale generators are
located), and such ownership by a registered holding company shall
be deemed consistent with the operation of an integrated public
utility system;
(2) the ownership of an interest in the business of one or more
exempt wholesale generators by a registered holding company
(regardless of where facilities owned or operated by such exempt
wholesale generators are located) shall be considered as reasonably
incidental, or economically necessary or appropriate, to the
operations of an integrated public utility system;
(3) in determining whether to approve (A) the issue or sale of a
security by a registered holding company for purposes of financing
the acquisition of an exempt wholesale generator, or (B) the
guarantee of a security of an exempt wholesale generator by a
registered holding company, the Commission shall not make a finding
that such security is not reasonably adapted to the earning power of
such company or to the security structure of such company and other
companies in the same holding company system, or that the
circumstances are such as to constitute the making of such guarantee
an improper risk for such company, unless the Commission first finds
that the issue or sale of such security, or the making of the
guarantee, would have a substantial adverse impact on the financial
integrity of the registered holding company system;
(4) in determining whether to approve (A) the issue or sale of a
security by a registered holding company for purposes other than the
acquisition of an exempt wholesale generator, or (B) other
transactions by such registered holding company or by its
subsidiaries other than with respect to exempt wholesale generators,
the Commission shall not consider the effect of the capitalization
or earnings of any subsidiary which is an exempt wholesale generator
upon the registered holding company system, unless the approval of
the issue or sale or other transaction, together with the effect of
such capitalization and earnings, would have a substantial adverse
impact on the financial integrity of the registered holding company
system;
(5) the Commission shall make its decision under paragraph (3)
to approve or disapprove the issue or sale of a security or the
guarantee of a security within 120 days of the filing of a
declaration concerning such issue, sale or guarantee; and
(6) the Commission shall promulgate regulations with respect to
the actions which would be considered, for purposes of this
subsection, to have a substantial adverse impact on the financial
integrity of the registered holding company system; such regulations
shall ensure that the action has no adverse impact on any utility
subsidiary or its customers, or on the ability of State commissions
to protect such subsidiary or customers, and shall take into account
the amount and type of capital invested in exempt wholesale
generators, the ratio of such capital to the total capital invested
in utility operations, the availability of books and records, and
the financial and operating experience of the registered holding
company and the exempt wholesale generator; the Commission shall
promulgate such regulations within 6 months after October 24, 1992;
after such 6-month period the Commission shall not approve any
actions under paragraph (3), (4) or (5) except in accordance with
such issued regulations.
(i) Application of chapter to other eligible facilities
In the case of any person engaged directly and exclusively in the
business of owning or operating (or both owning and operating) all or
part of one or more eligible facilities, an advisory letter issued by
the Commission staff under this chapter after October 24, 1992, or an
order issued by the Commission under this chapter after October 24,
1992, shall not be required for the purpose, or have the effect, of
exempting such person from treatment as an electric utility company
under section 79b(a)(3) of this title or exempting such person from any
provision of this chapter.
(j) Ownership of exempt wholesale generators and qualifying facilities
The ownership by a person of one or more exempt wholesale generators
shall not result in such person being considered as being primarily
engaged in the generation or sale of electric power within the meaning
of sections 796(17)(C)(ii) and 796(18)(B)(ii) of title 16.
(k) Protection against abusive affiliate transactions
(1) Prohibition
After October 24, 1992, an electric utility company may not
enter into a contract to purchase electric energy at wholesale from
an exempt wholesale generator if the exempt wholesale generator is
an affiliate or associate company of the electric utility company.
(2) State authority to exempt from prohibition
Notwithstanding paragraph (1), an electric utility company may
enter into a contract to purchase electric energy at wholesale from
an exempt wholesale generator that is an affiliate or associate
company of the electric utility company--
(A) if every State commission having jurisdiction over the
retail rates of such electric utility company makes each of the
following specific determinations in advance of the electric
utility company entering into such contract:
(i) A determination that such commission has sufficient
regulatory authority, resources and access to books and
records of the electric utility company and any relevant
associate, affiliate or subsidiary company to exercise its
duties under this subparagraph.
(ii) A determination that the transaction--
(I) will benefit consumers,
(II) does not violate any State law (including where
applicable, least cost planning),
(III) would not provide the exempt wholesale
generator any unfair competitive advantage by virtue of
its affiliation or association with the electric utility
company, and
(IV) is in the public interest; or
(B) if such electric utility company is not subject to State
commission retail rate regulation and the purchased electric
energy:
(i) would not be resold to any affiliate or associate
company, or
(ii) the purchased electric energy would be resold to an
affiliate or associate company and every State commission
having jurisdiction over the retail rates of such affiliate
or associate company makes each of the determinations
provided under subparagraph (A), including the determination
concerning a State commission's duties.
(l) Reciprocal arrangements prohibited
Reciprocal arrangements among companies that are not affiliates or
associate companies of each other that are entered into in order to
avoid the provisions of this section are prohibited.
(Aug. 26, 1935, ch. 687, title I, Sec. 32, as added Pub. L. 102-486,
title VII, Sec. 711, Oct. 24, 1992, 106 Stat. 2905.)
References in Text
This chapter, referred to in subsecs. (c)(B) and (e) to (i), was in
the original ``this Act'' and was translated as reading ``this title'',
meaning title I of act Aug. 26, 1935, ch. 687, known as the Public
Utility Holding Company Act of 1935, to reflect the probable intent of
Congress.
Prior Provisions
A prior section 32 of act Aug. 26, 1935, ch. 687, was renumbered
section 35 and is classified to section 79z-6 of this title.
State Authorities; Construction
Nothing in this section to be construed as affecting or intending to
affect, or in any way to interfere with, authority of any State or local
government relating to environmental protection or siting of facilities,
see section 731 of Pub. L. 102-486, set out as a note under section 79
of this title.
Section Referred to in Other Sections
This section is referred to in title 16 sections 796, 2621.
