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Montage of Wing Point in Bainbridge Island and the Edmonds Ferry.

Jay Inslee: Washington's 1st Congressional District

Issues

National Energy Issues & Events

Text of Inslee Energy Legislation

Energy Price and Economic Stability Act of 2001 (Introduced in the House)

107th CONGRESS

1st Session

H. R. 1468

To stabilize the dysfunctional wholesale power market in the Western United States, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

April 4, 2001

Mr. INSLEE (for himself, Mr. BACA, Mr. BECERRA, Mr. BAIRD, Mr. BERMAN, Mr. BLUMENAUER, Mrs. CAPPS, Mr. CAPUANO, Mr. CONDIT, Mrs. DAVIS of California, Mr. DEFAZIO, Mr. DICKS, Ms. ESHOO, Mr. FARR of California, Mr. FILNER, Mr. GEPHARDT, MS. HARMAN, Mr. HONDA, Ms. HOOLEY of Oregon, Mr. LANTOS, Mr. LARSEN of Washington, Ms. LOFGREN, Ms. LEE, Mr. MATSUI, Mr. MCDERMOTT, Mr. GEORGE MILLER of California, Ms. MILLENDER-MCDONALD, Mrs. NAPOLITANO, Ms. PELOSI, Ms. SCHAKOWSKY, Mr. SHERMAN, Mr. SMITH of Washington, Ms. SOLIS, Mr. STARK, Mrs. TAUSCHER, Mr. THOMPSON of California, Ms. WATERS, Mr. WAXMAN, Ms. WOOLSEY, and Mr. WU) introduced the following bill; which was referred to the Committee on Energy and Commerce.

A BILL

To stabilize the dysfunctional wholesale power market in the Western United States, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Energy Price and Economic Stability Act of 2001'.

SEC. 2. FINDINGS.

The Congress finds that:

  1. Reliable and affordable energy is necessary to ensure economic health and public safety.
  2. The western states have historically worked well together to ensure that energy is sufficient to meet demand at a reasonable cost.
  3. Despite the best efforts of the western states, an emergency energy situation now exists.
  4. The Federal government should augment the states' response to the emergency by protecting consumers from excessive wholesale rates.
  5. Several factors have led to the existing emergency, including the following: a flawed deregulation plan in the State of California, the existence of market power among generators in the western region, increased natural gas costs, drought in the Northwest, rapid increases in the populations of western states, poor regional and national forecasting of energy needs, decreased operating reserves due to a lack of investment in new generation.
  6. Federal and State efforts to protect the environment have not significantly contributed to these problems.
  7. The region's energy needs can be met while protecting the environment and public health.
  8. On November 1, 2000, and again on December 15, 2000, the Federal Energy Regulatory Commission found that wholesale electricity rates in the State of California were and have the potential to be unjust and unreasonable under the Federal Power Act.
  9. The Federal Energy Regulatory Commission issued orders on March 9, 2001, March 14, 2001, and March 16, 2001 alleging that generators had overcharged California utilities more than $130 million.
  10. The Federal Energy Regulatory Commission orders only reflect a fraction of total overcharges and do not reflect the full period during which overcharges may have occurred.
  11. The California Independent System Operator reports that generators may have overcharged California utilities by more than $6 billion in the period between May 2000 and February 2001.
  12. The market conditions that have existed in California, Washington, and Oregon for months now exist in neighboring states, where electricity costs are also rising.
  13. Unless the Federal Energy Regulatory Commission intervenes in the western wholesale electricity market, nothing will constrain the wholesale price of electricity and the situation this coming summer may worsen by orders of magnitude.
  14. On March 9, 2001, the Governors of California, Oregon, and Washington wrote to the Chairman and Commissioners of the Federal Energy Regulatory Commission to request that cost-of-service based rates be imposed in the western region.
  15. The Federal Energy Regulatory Commission has failed to fulfill its obligations under the Federal Power Act to act in the best interest of consumers by mandating just and reasonable wholesale rates in the western energy market.

SEC. 3. WHOLESALE ELECTRICITY RATES IN THE WESTERN UNITED STATES.

  1. DEFINITIONS- For purposes of this Act:
    1. The term `Commission' means the Federal Energy Regulatory Commission.
    2. The term `cost-of-service-based rate' means a rate, charge, or classification for the sale of electric energy that is equal to the sum of the following:
      1. All variable and fixed costs of generating such electric energy.
      2. Either--
        1. a reasonable risk premium, or
        2. a return on invested capital used to generate and transmit such electric energy that reflects customary returns during the period 1994 through 1999.
      3. Other reasonable costs associated with the acquisition,conservation, and transmission of such electric energy.
    3. The term `new generation facility' means any facility generating electric energy that did not generate electric energy at any time prior to January 1, 2001.
  2. EXERCISE OF AUTHORITY TO ESTABLISH COST-BASED RATES- Within 30 days after the enactment of this Act, the Commission shall issue an order establishing cost-of-service-based rates for electric energy sold at wholesale subject to the jurisdiction of the Commission under the Federal Power Act for use in that portion of the United States that is covered by the Western Systems Coordinating Council of the North American Electric Reliability Council.
  3. SUNSET- Subsection (b) shall not apply to sales of electric energy after March 1, 2003.
  4. NEW FACILITIES NOT COVERED- The rates required under subsection (b) shall not apply to any sale of electric energy generated by any new generation facility.
  5. ENFORCEMENT-
    1. STATE CAUSE OF ACTION- If a State determines that a wholesale rate applicable to delivery of electricity within the State is not in compliance with subsection (b) or is not just and reasonable, the State may bring an action in the appropriate United States district court. Upon adequate showing that a rate is not in compliance with subsection (b) or is not just and reasonable, the court shall order refunds or other relief as appropriate.
    2. CIVIL PENALTIES- Any person who violates any requirement of this section shall be subject to civil penalties equal to 3 times the value of the amount involved in such violation. The Commission shall assess such penalties, after notice and opportunity for public hearing, in accordance with the same provisions as are applicable under section 31(d) of the Federal Power Act in the case of civil penalties assessed under such section 31.
  6. REFUNDS- In the case of sales of electric energy for use in that portion of the United States that is covered by the Western Systems Coordinating Council of the North American Electric Reliability Council the Commission shall order the refund of any rates and charges that were not just and reasonable and that applied to sales between June 1, 2000 and the enactment of this Act. Any affected State may bring an action in the appropriate United States district court to enforce this subsection.
  7. SAVINGS PROVISIONS- Nothing in this section shall affect any authority of the Commission existing before the enactment of this section.

SEC. 4. GUARANTEE OF PAYMENT REQUIRED FOR CERTAIN EMERGENCY POWER SALES.

Section 202(c) of the Federal Power Act (16 U.S.C. 825(c)) is amended by adding the following at the end thereof: `Except during the continuance of any war, no order may be issued under this subsection unless the payment of compensation or reimbursement to the person subject to such order is fully guaranteed by the United States Government or by a State government.'.

SEC. 5. SEVERABILITY.

If any provision of this Act is found to be unenforceable or invalid, no other provision of this Act shall be invalidated thereby.