§ 839c. — Sale of power.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 16USC839c]
TITLE 16--CONSERVATION
CHAPTER 12H--PACIFIC NORTHWEST ELECTRIC POWER PLANNING AND CONSERVATION
Sec. 839c. Sale of power
(a) Preferences and priorities
All power sales under this chapter shall be subject at all times to
the preference and priority provisions of the Bonneville Project Act of
1937 (16 U.S.C. 832 and following) and, in particular, sections 4 and 5
thereof [16 U.S.C. 832c and 832d]. Such sales shall be at rates
established pursuant to section 839e of this title.
(b) Sales to public bodies, cooperatives, and Federal agency customers
(1) Whenever requested, the Administrator shall offer to sell to
each requesting public body and cooperative entitled to preference and
priority under the Bonneville Project Act of 1937 [16 U.S.C. 832 et
seq.] and to each requesting investor-owned utility electric power to
meet the firm power load of such public body, cooperative or investor-
owned utility in the Region to the extent that such firm power load
exceeds--
(A) the capability of such entity's firm peaking and energy
resources used in the year prior to December 5, 1980, to serve its
firm load in the region, and
(B) such other resources as such entity determines, pursuant to
contracts under this chapter, will be used to serve its firm load in
the region.
In determining the resources which are used to serve a firm load, for
purposes of subparagraphs (A) and (B), any resources used to serve a
firm load under such subparagraphs shall be treated as continuing to be
so used, unless such use is discontinued with the consent of the
Administrator, or unless such use is discontinued because of
obsolescence, retirement, loss of resource, or loss of contract rights.
(2) Contracts with investor-owned utilities shall provide that the
Administrator may reduce his obligations under such contracts in
accordance with section 5(a) of the Bonneville Project Act of 1937 [16
U.S.C. 832d(a)].
(3) In addition to his authorities to sell electric power under
paragraph (1), the Administrator is also authorized to sell electric
power to Federal agencies in the region.
(4) Sales under this subsection shall be made only if the public
body, cooperative, Federal agency or investor-owned utility complies
with the Administrator's standards for service in effect on December 5,
1980, or as subsequently revised.
(5) The Administrator shall include in contracts executed in
accordance with this subsection provisions that enable the Administrator
to restrict his contractual obligations to meet the loads referred to in
this subsection in the future if the Administrator determines, after a
reasonable period of experience under this chapter, that the
Administrator cannot be assured on a planning basis of acquiring
sufficient resources to meet such loads during a specified period of
insufficiency. Any such contract with a public body, cooperative, or
Federal agency shall specify a reasonable minimum period between a
notice of restriction and the earliest date such restriction may be
imposed.
(6) Contracts executed in accordance with this subsection with
public body, cooperative, and Federal agency customers shall--
(A) provide that the restriction referred to in paragraph (5)
shall not be applicable to any such customers until the operating
year in which the total of such customers' firm loads to be served
by the Administrator equals or exceeds the firm capability of the
Federal base system resources;
(B) not permit restrictions which would reduce the total
contractual entitlement of such customers to an amount less than the
firm capability of the Federal base system resources; and
(C) contain a formula for determining annually, on a uniform
basis, each such customer's contractual entitlement to firm power
during such a period of restriction, which formula shall not
consider customer resources other than those the customer has
determined, as of December 5, 1980, to be used to serve its own firm
loads.
The formula referred to in subparagraph (C) shall obligate the
Administrator to provide on an annual basis only firm power needed to
serve the portion of such customer's firm load in excess of the
capability of such customer's own firm resources determined by such
customer under paragraph (1) of this subsection to be used to serve its
firm load.
(7) Required sale.--
(A) Definition of a joint operating entity.--In this section,
the term ``joint operating entity'' means an entity that is lawfully
organized under State law as a public body or cooperative prior to
September 22, 2000, and is formed by and whose members or
participants are two or more public bodies or cooperatives, each of
which was a customer of the Bonneville Power Administration on or
before January 1, 1999.
(B) Sale.--Pursuant to paragraph (1), the Administrator shall
sell, at wholesale to a joint operating entity, electric power
solely for the purpose of meeting the regional firm power consumer
loads of regional public bodies and cooperatives that are members of
or participants in the joint operating entity.
(C) No resale.--A public body or cooperative to which a joint
operating entity sells electric power under subparagraph (B) shall
not resell that power except to retail customers of the public body
or cooperative or to another regional member or participant of the
same joint operating entity, or except as otherwise permitted by
law.
(c) Purchase and exchange sales
(1) Whenever a Pacific Northwest electric utility offers to sell
electric power to the Administrator at the average system cost of that
utility's resources in each year, the Administrator shall acquire by
purchase such power and shall offer, in exchange, to sell an equivalent
amount of electric power to such utility for resale to that utility's
residential users within the region.
(2) The purchase and exchange sale referred to in paragraph (1) of
this subsection with any electric utility shall be limited to an amount
not in excess of 50 per centum of such utility's Regional residential
load in the year beginning July 1, 1980, such 50 per centum limit
increasing in equal annual increments to 100 per centum of such load in
the year beginning July 1, 1985, and each year thereafter.
(3) The cost benefits, as specified in contracts with the
Administrator, of any purchase and exchange sale referred to in
paragraph (1) of this subsection which are attributable to any electric
utility's residential load within a State shall be passed through
directly to such utility's residential loads within such State, except
that a State which lies partially within and partially without the
region may require that such cost benefits be distributed among all of
the utility's residential loads in that State.
(4) An electric utility may terminate, upon reasonable terms and
conditions agreed to by the Administrator and such utility prior to such
termination, its purchase and sale under this subsection if the
supplemental rate charge provided for in section 839e(b)(3) of this
title is applied and the cost of electric power sold to such utility
under this subsection exceeds, after application of such rate charge,
the average system cost of power sold by such utility to the
Administrator under this subsection.
(5) Subject to the provisions of sections 839b and 839d of this
title, in lieu of purchasing any amount of electric power offered by a
utility under paragraph (1) of this subsection, the Administrator may
acquire an equivalent amount of electric power from other sources to
replace power sold to such utility as part of an exchange sale if the
cost of such acquisition is less than the cost of purchasing the
electric power offered by such utility.
(6) Exchange sales to a utility pursuant to this subsection shall
not be restricted below the amounts of electric power acquired by the
Administrator from, or on behalf of, such utility pursuant to this
subsection.
(7) The ``average system cost'' for electric power sold to the
Administrator under this subsection shall be determined by the
Administrator on the basis of a methodology developed for this purpose
in consultation with the Council, the Administrator's customers, and
appropriate State regulatory bodies in the region. Such methodology
shall be subject to review and approval by the Federal Energy Regulatory
Commission. Such average system cost shall not include--
(A) the cost of additional resources in an amount sufficient to
serve any new large single load of the utility;
(B) the cost of additional resources in an amount sufficient to
meet any additional load outside the region occurring after December
5, 1980; and
(C) any costs of any generating facility which is terminated
prior to initial commercial operation.
(d) Sales to existing direct service industrial customers
(1)(A) The Administrator is authorized to sell in accordance with
this subsection electric power to existing direct service industrial
customers. Such sales shall provide a portion of the Administrator's
reserves for firm power loads within the region.
(B) After December 5, 1980, the Administrator shall offer in
accordance with subsection (g) of this section to each existing direct
service industrial customer an initial long term contract that provides
such customer an amount of power equivalent to that to which such
customer is entitled under its contract dated January or April 1975
providing for the sale of ``industrial firm power.''
(2) The Administrator shall not sell electric power, including
reserves, directly to new direct service industrial customers.
(3) The Administrator shall not sell amounts of electric power,
including reserves, to existing direct service industrial customers in
excess of the amount permitted under paragraph (1) unless the
Administrator determines, after a plan has been adopted pursuant to
section 839b of this title, that such proposed sale is consistent with
the plan and that--
(A) additional power system reserves are required for the
region's firm loads,
(B) the proposed sale would provide a cost-effective method of
supplying such reserves,
(C) such loads or loads of similar character cannot provide
equivalent operating or planning benefits to the region if served by
an electric utility under contractual arrangements providing
reserves, and
(D) the Administrator has or can acquire sufficient electric
power to serve such loads, and
unless the Council has determined such sale is consistent with the plan.
After such determination by the Administrator and by the Council, the
Administrator is authorized to offer to existing direct service
industrial customers power in such amounts in excess of the amount
permitted under paragraph (1) of this subsection as the Administrator
determines to be necessary to provide additional power system reserves
to meet the region's firm loads.
(4)(A) As used in this section, the term ``existing direct service
industrial customer'' means any direct service industrial customer of
the Administrator which has a contract for the purchase of electric
power from the Administrator on December 5, 1980.
(B) The term ``new direct service industrial customer'' means any
industrial entity other than an existing direct service industrial
customer.
(C)(i) Where a new contract is offered in accordance with subsection
(g) of this section to any existing direct service industrial customer
which has not received electric power prior to December 5, 1980, from
the Administrator pursuant to a contract with the Administrator existing
on December 5, 1980, electric power delivered under such new contract
shall be conditioned on the Administrator reasonably acquiring, in
accordance with this chapter and within such estimated period of time
(as specified in the contract) as he deems reasonable, sufficient
resources to meet, on a planning basis, the load requirement of such
customer. Such contract shall also provide that the obligation of the
Administrator to acquire such resources to meet such load requirement
shall, except as provided in clause (ii) of this subparagraph, apply
only to such customer and shall not be sold or exchanged by such
customer to any other person.
(ii) Rights under a contract described in clause (i) of this
subparagraph may be transferred by an existing direct service industrial
customer referred to in clause (i) to a successor in interest in
connection with a reorganization or other transfer of all major assets
of such customer. Following such a transfer, such successor in interest
(or any other subsequent successor in interest) may also transfer rights
under such a contract only in connection with a reorganization or other
transfer of all assets of such successor in interest.
(iii) The limitations of clause (i) of this subparagraph shall not
apply to any customer referred to in clause (i) whenever the
Administrator determines that such customer is receiving electric power
pursuant to a contract referred to in such clause (ii).
(e) Contractual entitlements to firm power
(1) The contractual entitlement to firm power of any customer from
whom, or on whose behalf, the Administrator has acquired electric power
pursuant to section 839d of this title may not be restricted below the
amount of electric power so acquired from, or on behalf of, such
customer. If in any year such customer's requirements are less than such
entitlement, any excess of such entitlement shall be first made
available to increase the entitlement of other customers of the same
class before being available for the entitlement of other customers. For
purposes of this paragraph, the following entities shall each constitute
a class:
(A) public bodies and cooperatives;
(B) Federal agencies;
(C) direct service industrial; and
(D) investor owned utilities.
(2) Any contractual entitlement to firm power which is based on
electric power acquired from, or on behalf of, a customer pursuant to
section 839d of this title shall be in addition to any other contractual
entitlement to firm power not subject to restriction that such customer
may have under this section. For the purposes of this subsection,
references to amounts of power acquired by the Administrator pursuant to
section 839d of this title shall be deemed to mean the amounts specified
in the resource acquisition contracts exclusive of any amounts
recognized in such contracts as replacement for Federal base system
resources.
(3) The Administrator shall, consistent with the provisions of this
chapter, insure that any restrictions upon any particular customer class
made pursuant to this subsection and subsection (b) of this section are
distributed equitably throughout the region.
(f) Surplus power
The Administrator is authorized to sell, or otherwise dispose of,
electric power, including power acquired pursuant to this and other
Acts, that is surplus to his obligations incurred pursuant to
subsections (b), (c), and (d) of this section in accordance with this
and other Acts applicable to the Administrator, including the Bonneville
Projects Act of 1937 (16 U.S.C. 832 and following), the Federal Columbia
River Transmission System Act (16 U.S.C. 838 and following), and the Act
of August 31, 1964 (16 U.S.C. 837-837h).
(g) Long-term contracts
(1) As soon as practicable within nine months after December 5,
1980, the Administrator shall commence necessary negotiations for, and
offer, initial long-term contracts (within the limitations of the third
sentence of section 5(a) of the Bonneville Project Act [16 U.S.C.
832d(a)]) simultaneously to--
(A) existing public body and cooperative customers and investor-
owned utility customers under subsection (b) of this section;
(B) Federal agency customers under subsection (b) of this
section;
(C) electric utility customers under subsection (c) of this
section; and
(D) direct service industrial customers under subsection (d)(1)
of this section.
(2) Each customer offered a contract pursuant to this subsection
shall have one year from the date of such offer to accept such contract.
Such contract shall be effective as provided in this subsection.
(3) An initial contract with a public body, cooperative or investor-
owned electric utility customer or a Federal agency customer pursuant to
subsection (b) of this section shall be effective on the date executed
by such customer, unless another effective date is otherwise agreed to
by the Administrator and the customer.
(4) An initial contract with an electric utility customer pursuant
to subsection (c) of this section shall be effective on the date
executed by such customer, but no earlier than the first day of the
tenth month after December 5, 1980.
(5) An initial contract with a direct service industrial customer
pursuant to subsection (d)(1) of this section, shall be effective on the
date agreed upon by the Administrator and such customer, but no later
than the first day of the tenth month after December 5, 1980. When such
contract is executed, it may for rate purposes be given retroactive
effect to such first day.
(6) Initial contracts offered public body, cooperative and Federal
agency customers in accordance with this subsection shall provide that
during a period of insufficiency declared in accordance with subsection
(b) of this section each customer's contractual entitlement shall, to
the extent of its requirements on the Administrator, be no less than the
amount of firm power received from the Administrator in the year
immediately preceding the period of insufficiency.
(7) The Administrator shall be deemed to have sufficient resources
for the purpose of entering into the initial contracts specified in
paragraph (1)(A) through (D).
(Pub. L. 96-501, Sec. 5, Dec. 5, 1980, 94 Stat. 2712; Pub. L. 106-273,
Sec. 1, Sept. 22, 2000, 114 Stat. 802.)
References in Text
The Bonneville Project Act of 1937, referred to in subsecs. (a),
(b)(1), and (f), is act Aug. 20, 1937, ch. 720, 50 Stat. 731, as
amended, which is classified generally to chapter 12B (Sec. 832 et seq.)
of this title. For complete classification of this Act to the Code, see
Short Title note set out under section 832 of this title and Tables.
The Federal Columbia River Transmission System Act, referred to in
subsec. (f), is Pub. L. 93-454, Oct. 18, 1974, 88 Stat. 1376, as
amended, which is classified generally to chapter 12G (Sec. 838 et seq.)
of this title. For complete classification of this Act to the Code, see
Short Title note set out under section 838 of this title and Tables.
Act of August 31, 1964, referred to in subsec. (f), is Pub. L. 88-
552, Aug. 31, 1964, 78 Stat. 756, as amended, which is classified
generally to chapter 12F (Sec. 837 et seq.) of this title. For complete
classification of this Act to the Code, see Tables.
Amendments
2000--Subsec. (b)(7). Pub. L. 106-273 added par. (7).
Section Referred to in Other Sections
This section is referred to in sections 832m, 839d, 839e, 839f, 839g
of this title.
