§ 2621. — Consideration and determination respecting certain ratemaking standards.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 16USC2621]
TITLE 16--CONSERVATION
CHAPTER 46--PUBLIC UTILITY REGULATORY POLICIES
SUBCHAPTER II--STANDARDS FOR ELECTRIC UTILITIES
Sec. 2621. Consideration and determination respecting certain
ratemaking standards
(a) Consideration and determination
Each State regulatory authority (with respect to each electric
utility for which it has ratemaking authority) and each nonregulated
electric utility shall consider each standard established by subsection
(d) of this section and make a determination concerning whether or not
it is appropriate to implement such standard to carry out the purposes
of this chapter. For purposes of such consideration and determination in
accordance with subsections (b) and (c) of this section, and for
purposes of any review of such consideration and determination in any
court in accordance with section 2633 of this title, the purposes of
this chapter supplement otherwise applicable State law. Nothing in this
subsection prohibits any State regulatory authority or nonregulated
electric utility from making any determination that it is not
appropriate to implement any such standard, pursuant to its authority
under otherwise applicable State law.
(b) Procedural requirements for consideration and determination
(1) The consideration referred to in subsection (a) of this section
shall be made after public notice and hearing. The determination
referred to in subsection (a) of this section shall be--
(A) in writing,
(B) based upon findings included in such determination and upon
the evidence presented at the hearing, and
(C) available to the public.
(2) 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) of this section shall be those established
by the State regulatory authority or the nonregulated electric utility.
(c) Implementation
(1) 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--
(A) implement any such standard determined under subsection (a)
of this section to be appropriate to carry out the purposes of this
chapter, or
(B) decline to implement any such standard.
(2) 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)
of this section which is determined under subsection (a) of this section
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.
(3) If a State regulatory authority implements a standard
established by subsection (d)(7) or (8) of this section, such authority
shall--
(A) 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
(B) implement such standard so as to assure that utility actions
would not provide such utilities with unfair competitive advantages
over such small businesses.
(d) Establishment
The following Federal standards are hereby established:
(1) Cost of service
Rates charged by any electric utility for providing electric
service to each class of electric consumers shall be designed, to
the maximum extent practicable, to reflect the costs of providing
electric service to such class, as determined under section 2625(a)
of this title.
(2) Declining block rates
The energy component of a rate, or the amount attributable to
the energy component in a rate, charged by any electric utility for
providing electric service during any period to any class of
electric consumers may not decrease as kilowatt-hour consumption by
such class increases during such period except to the extent that
such utility demonstrates that the costs to such utility of
providing electric service to such class, which costs are
attributable to such energy component, decrease as such consumption
increases during such period.
(3) Time-of-day rates
The rates charged by any electric utility for providing electric
service to each class of electric consumers shall be on a time-of-
day basis which reflects the costs of providing electric service to
such class of electric consumers at different times of the day
unless such rates are not cost-effective with respect to such class,
as determined under section 2625(b) of this title.
(4) Seasonal rates
The rates charged by an electric utility for providing electric
service to each class of electric consumers shall be on a seasonal
basis which reflects the costs of providing service to such class of
consumers at different seasons of the year to the extent that such
costs vary seasonally for such utility.
(5) Interruptible rates
Each electric utility shall offer each industrial and commercial
electric consumer an interruptible rate which reflects the cost of
providing interruptible service to the class of which such consumer
is a member.
(6) 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--
(A) be practicable and cost-effective, as determined under
section 2625(c) of this title,
(B) be reliable, and
(C) provide useful energy or capacity management advantages
to the electric utility.
(7) Integrated resource planning
Each electric utility shall employ integrated resource planning.
All plans or filings before a State regulatory authority to meet the
requirements of this paragraph must be updated on a regular basis,
must provide the opportunity for public participation and comment,
and contain a requirement that the plan be implemented.
(8) Investments in conservation and demand management
The rates allowed to be charged by a State regulated electric
utility shall be such that the utility's investment in and
expenditures for energy conservation, energy efficiency resources,
and other demand side management measures are at least as
profitable, giving appropriate consideration to income lost from
reduced sales due to investments in and expenditures for
conservation and efficiency, as its investments in and expenditures
for the construction of new generation, transmission, and
distribution equipment. Such energy conservation, energy efficiency
resources and other demand side management measures shall be
appropriately monitored and evaluated.
(9) Energy efficiency investments in power generation and
supply
The rates charged by any electric utility shall be such that the
utility is encouraged to make investments in, and expenditures for,
all cost-effective improvements in the energy efficiency of power
generation, transmission and distribution. In considering regulatory
changes to achieve the objectives of this paragraph, State
regulatory authorities and nonregulated electric utilities shall
consider the disincentives caused by existing ratemaking policies,
and practices, and consider incentives that would encourage better
maintenance, and investment in more efficient power generation,
transmission and distribution equipment.
(10) 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
(A) 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:
(i) 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;
(ii) whether the use by exempt wholesale generators (as
defined in section 79z-5a of title 15) of capital structures
which employ proportionally greater amounts of debt than the
capital structures of such utilities threatens reliability or
provides an unfair advantage for exempt wholesale generators
over such utilities;
(iii) whether to implement procedures for the advance
approval or disapproval of the purchase of a particular long-
term wholesale power supply; and
(iv) whether to require as a condition for the approval of
the purchase of power that there be reasonable assurances of
fuel supply adequacy.
(B) For purposes of implementing the provisions of this
paragraph, any reference contained in this section to November 9,
1978, shall be deemed to be a reference to October 24, 1992.
(C) 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).
(D) 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 October 24, 1992.
(E) 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 October 24, 1992.
(Pub. L. 95-617, title I, Sec. 111, Nov. 9, 1978, 92 Stat. 3121; Pub. L.
102-486, title I, Sec. 111(a), (b), title VII, Sec. 712, Oct. 24, 1992,
106 Stat. 2795, 2910.)
References in Text
This chapter, referred to in subsecs. (a) and (c), was in the
original ``this title'', meaning title I (Sec. 101 et seq.) of Pub. L.
95-617, Nov. 9, 1978, 92 Stat. 3120, which enacted this chapter and
amended sections 6801 to 6808 of Title 42, The Public Health and
Welfare. For complete classification of title I to the Code, see Tables.
Amendments
1992--Subsec. (c)(3). Pub. L. 102-486, Sec. 111(b), added par. (3).
Subsec. (d)(7) to (9). Pub. L. 102-486, Sec. 111(a), added pars. (7)
to (9).
Subsec. (d)(10). Pub. L. 102-486, Sec. 712, added par. (10).
State Authorities; Construction
Nothing in amendment by section 712 of Pub. L. 102-486 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 Title 15,
Commerce and Trade.
Report to President and Congress on Encouragement of Integrated Resource
Planning and Investments in Conservation and Energy Efficiency by
Electric Utilities
Section 111(e) of Pub. L. 102-486 provided that: ``Not later than 2
years after the date of the enactment of this Act [Oct. 24, 1992], the
Secretary shall transmit a report to the President and to the Congress
containing--
``(1) 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)];
``(2) an evaluation by the Secretary of whether and to what
extent, integrated resource planning is likely to result in--
``(A) higher or lower electricity costs to an electric
utility's ultimate consumers or to classes or groups of such
consumers;
``(B) enhanced or reduced reliability of electric service;
and
``(C) increased or decreased dependence on particular energy
resources; and
``(3) 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.''
[For provisions relating to further requirements as to subject
matter contained in report under section 111(e) of Pub. L. 102-486, set
out above, see section 115(e) of Pub. L. 102-486, set out as a note
under section 3203 of Title 15, Commerce and Trade.]
Study Concerning Electric Rates of State Utility Agencies
Section 601 of Pub. L. 95-617 directed the Secretary to conduct a
study concerning the effects of provisions of Federal law on rates
established by State utility agencies and to submit a report to Congress
on the results of such study not later than 1 year after Nov. 9, 1978.
Section Referred to in Other Sections
This section is referred to in sections 831m-1, 2622, 2624, 2625,
2626, 2627, 2641, 2643 of this title; title 42 sections 6349, 6807a,
7276b.
