Energy PRICE Act

I 116TH CONGRESS 2D SESSION H. R. 5742 To direct the Federal Energy Regulatory Commission to find that certain rates for electricity are inherently unjust and unreasonable, and for other purposes. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 3, 2020 Mr. CASTEN of Illinois (for himself, Mr. LEVIN of California, Mr. HUFFMAN, and Mr. KENNEDY) introduced the following bill; which was referred to the Committee on Energy and Commerce A BILL To direct the Federal Energy Regulatory Commission to find that certain rates for electricity are inherently un- just and unreasonable, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Energy Prices Require 4 Including Climate Externalities Act’’ or as the ‘‘Energy 5 PRICE Act’’. 6 SEC. 2. PURPOSE. 7 The purpose of this Act is to clarify the intent of Con- 8 gress when passing the Federal Power Act and to provide 9 VerDate Sep 11 2014 22:19 Feb 03, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H5742.IH H5742 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 5742 IH direction to the Federal Energy Regulatory Commission 1 with respect to wholesale electricity rates. 2 SEC. 3. FINDINGS. 3 Congress makes the following findings: 4 (1) When passing the Federal Power Act, Con- 5 gress required the Federal Energy Regulatory Com- 6 mission (‘‘the Commission’’) to ensure that the rates 7 charged by electric utilities for, or in connection 8 with, wholesale electricity rates are ‘‘just and rea- 9 sonable’’, a process which necessarily includes the 10 evaluation of all factors affecting wholesale market 11 rates, including environmental externalities. 12 (2) The Federal Power Act requires the Com- 13 mission to ensure that public utilities do not grant 14 undue preference or advantage to, or discriminate 15 against, any person when making wholesale elec- 16 tricity sales. 17 (3) Section 206(a) of the Federal Power Act 18 authorizes the Commission to change any rates that 19 the Commission determines to be ‘‘unjust, unreason- 20 able, unduly discriminatory or preferential’’. 21 (4) In its final rule titled ‘‘Endangerment and 22 Cause or Contribute Findings for Greenhouse Gases 23 Under Section 202(a) of the Clean Air Act’’ pub- 24 lished on December 15, 2009 (74 Fed. Reg. 66496), 25 VerDate Sep 11 2014 22:19 Feb 03, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H5742.IH H5742 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 5742 IH the Environmental Protection Agency found that the 1 emissions of greenhouse gases ‘‘endanger both the 2 public health and the public welfare of current and 3 future generations’’. 4 (5) The failure of markets to internalize the 5 costs of greenhouse gas pollution into the cost of 6 products, including electricity, led to a misallocation 7 of capital, and therefore to the emission of a greater 8 volume of these pollutants. 9 (6) In 1956, the Supreme Court held in Federal 10 Power Commission v. Sierra Pacific Power Com- 11 pany, 350 U.S. 348 (1956), that the Commission 12 must ensure protection of the public interest when 13 exercising its authority to set just and reasonable 14 rates. 15 (7) The restructuring of the electricity industry 16 in the Federal Power Act was intended to promote 17 competition among electricity providers, resulting in 18 lower electricity rates to consumers, higher quality 19 services, and a more robust national economy. 20 (8) Prior to restructuring, utility commissions 21 were frequently asked to consider other societal ben- 22 efits when setting rates, including access to energy, 23 rate equity between different classes of customers, 24 and environmental concerns. 25 VerDate Sep 11 2014 22:19 Feb 03, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H5742.IH H5742 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 5742 IH (9) According to the Environmental Protection 1 Agency, in 2017, emissions from the power sector 2 contributed the second highest share of greenhouse 3 gas emissions by economic sector. 4 (10) The benefits of competition will not be 5 achieved if some competitors enjoy an advantage re- 6 sulting from externalization of environmental costs, 7 permitting them to charge prices for electricity that 8 do not reflect the full economic and environmental 9 cost of production. 10 (11) Despite the Environmental Protection 11 Agency’s finding of endangerment, emissions of 12 greenhouse gases into the air, which endanger public 13 health and threaten the quality of the air, land, and 14 water of the United States, are externalities that are 15 not frequently or uniformly reflected in the price 16 charged for products such as electricity across the 17 United States. 18 (12) The disparity in regulatory treatment be- 19 tween electric generating units with above-average 20 greenhouse gas emissions and those with little to no 21 greenhouse gas emissions provides a significant com- 22 petitive advantage for high greenhouse gas emitting 23 energy generating units over their competitors. 24 VerDate Sep 11 2014 22:19 Feb 03, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5742.IH H5742 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 5742 IH (13) States and State commissions should be 1 encouraged to incorporate the cost of greenhouse gas 2 emissions into wholesale rates for electricity. 3 SEC. 4. CERTAIN RATES UNJUST, UNREASONABLE, UNDULY 4 DISCRIMINATORY, OR PREFERENTIAL. 5 (a) IN GENERAL.—For the purposes of section 205 6 and section 206 of the Federal Power Act (16 U.S.C. 7 824d, 824e), if the Federal Energy Regulatory Commis- 8 sion determines that a rate for the wholesale sale of elec- 9 tricity does not incorporate the cost of externalized green- 10 house gas emissions to public health, safety, or welfare, 11 then the Federal Energy Regulatory Commission shall 12 find that such rate is unjust, unreasonable, unduly dis- 13 criminatory, or preferential. 14 (b) GREENHOUSE GAS DEFINED.—In this sub- 15 section, the term ‘‘greenhouse gas’’ includes— 16 (1) any gas identified by the Environmental 17 Protection Agency in the final rule titled 18 ‘‘Endangerment and Cause or Contribute Findings 19 for Greenhouse Gases Under Section 202(a) of the 20 Clean Air Act’’ published on December 15, 2009 (74 21 Fed. Reg. 66496), including carbon dioxide, hydro- 22 fluorocarbons, methane, nitrous oxide, perfluorocar- 23 bons, and sulfur hexafluoride; and 24 (2) nitrogen trifluoride. 25 VerDate Sep 11 2014 22:19 Feb 03, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H5742.IH H5742 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 5742 IH (c) RULE OF CONSTRUCTION.—Nothing in this sec- 1 tion may be construed to affect or modify the existing au- 2 thorities of the Federal Energy Regulatory Commission. 3 Æ VerDate Sep 11 2014 22:19 Feb 03, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H5742.IH H5742 pamtmann on DSKBC07HB2PROD with BILLS