Establishment of reliability markets for the bulk-power system

The Federal Power Act (16 U.S.C. 791a et seq.) is amended by inserting after section 215A the following:

215B.

Reliability markets

(a)

Purpose

The purpose of this section is to ensure the reliability of the bulk-power system.(b)

Reports on generation and load

The Commission shall require, by rule or order, each RTO and ISO to submit to the Commission, not less frequently than once a year, a report that identifies, with respect to the public utilities that are part of the RTO or ISO—(1)the ten-year historical and ten-year projected gross peak load and net peak load for every fifteen minutes of each day of the year;(2)the impact of extreme weather on electric demand and generation resource availability;(3)reserve margins of generation resource capacity based on the generation resource types needed to meet demand for every fifteen minutes of each day;(4)each generation resource (and the net capacity factor of each generation resource), including each generation resource that is a dispatchable on demand continuous resource, a dispatchable on demand short-term resource, an intermittent generation resource, or an inverter based generation resource;(5)the energy source, such as coal, nuclear, natural gas, hydro, wind, or solar, of each generation resource identified under paragraph (4);(6)whether a generation resource identified under paragraph (4) relies on—(A)fuel deliveries, including the method by which such fuel is delivered (such as pipeline, rail, or barge); and(B)on-site fuel supplies (including how long the generation resource can operate on such fuel supplies);(7)whether each generation resource identified under paragraph (4) that is operated using natural gas is supplied by firm transportation on natural gas pipelines;(8)whether the energy source of a generation resources identified under paragraph (4) is dependant on the time of day and weather;(9)projected shortfalls in generation needed to meet system needs for every fifteen minutes of the day each year and during extreme weather; and(10)other factors identified by the Commission as important for the reliability of the bulk-power system.(c)

Reliability markets

(1)

New schedules

Each RTO and ISO shall file under section 205 a new schedule which shall ensure that dispatchable on demand continuous resources are available when intermittent generation resources are not available to meet net peak load for every 15 minutes of each day of the year. A schedule filed under section 205 pursuant to this paragraph that differentiates between the operating characteristics of generation resources for purposes of supporting the reliability of the bulk-power system shall not be considered unjust, unreasonable, or unduly preferential under section 205.(2)

Establishment

(A)

In general

In approving a schedule filed pursuant to paragraph (1), the Commission shall consider one of the following:(i)Establishing at least one reliability market where only dispatchable on demand continuous resources and dispatchable on demand short-term resources may participate, which may be established separately or combined for such dispatchable on demand continuous resources and dispatchable on demand short-term resources.(ii)Establishing a reliability market or modifying existing capacity markets to require intermittent resources to purchase electricity generated by a dispatchable on demand continuous resource when the intermittent resource is not available to generate electricity.(iii)Establishing another mechanism that will support the availability of dispatchable on demand continuous resources and dispatchable on demand short-term resources to support the reliability of the bulk-power systems at all times through the year (measured every 15 minutes of each day).(B)

Charge for delivery failure

The Commission shall establish penalties for each generation resource that fails to generate electricity in accordance with the requirements of a market or mechanism established under subparagraph (A).(C)

Forward procurement auction

No public utility may accept an offer at a forward procurement auction for a price that is less than the marginal costs to operate the public utility.(d)

Commission approval of rates and charges

For the purposes of cost allocation of transmission services (including costs associated with interconnection, network upgrades, and the construction and expansion of new transmission lines), no rate or charge shall be considered just and reasonable under section 205—(1)if such rate or charge—(A)socializes costs of transmission service to electric consuming customers who do not receive direct and quantifiable all-in costs of delivered electric service or to meet reliability standards from the transmission service; or(B)allocates costs of transmission service to the electric customers of one State for transmission service that will primarily serve electric customers of another State or region; and(2)direct benefits may include the energy and transmission cost benefits (but must consider the cost of generation, transmission reliability combined); direct benefits shall not include environmental or health benefits; reduction of greenhouse gas emissions; or environmental leakage between States or regions; however the generating resource that causes the need for transmission service may be permitted or required to pay directly for the costs of transmission such service.(e)

Expansion to other States

The Commission may not require any public utility or generation resource within a State or region to join an RTO or ISO unless the applicable State or State regulatory authority agrees to join the RTO or ISO.(f)

No environmental requirements

The Commission and each RTO and ISO may not impose environmental requirements, adjust rates to account for State environmental policies (including environmental leakage adjustments), or mandate environmental performance standards of any kind.(g)

Prohibition on confiscating energy

(1)

Requirement

Each RTO and ISO shall honor its contractual commitments to wheel power outside its service area and may not divert such power deliveries to serve its own load.(2)

Penalties; damages

If an RTO or ISO diverts power from a utility to serve its own load, the RTO or ISO—(A)shall be subject to penalties determined by the Commission; and(B)may be liable for damages pursuant to a proceeding brought in a Federal district court.(h)

Definitions

In this section:(1)

Bulk-power system; reliability standard

The terms bulk-power system and reliability standard have the meanings given such terms in section 215(a).(2)

Dispatchable on demand continuous resource

The term dispatchable on demand continuous resource means an electricity generating resource—(A)that can generate electricity as needed as directed by the operator and not be dependent on the time of day or the weather;(B)that can maintain the requested generation capacity for a minimum of 72 hours continuously; and(C)the power output of which can be adjusted according to the needs of the power grid.(3)

Dispatchable on demand short-term resource

The term dispatchable on demand short-term resource means an electricity generating resource—(A)that can generate electricity as needed as directed by the operator and not be dependent on the time of day or the weather;(B)that can be operational within three hours or less of being called on to generate electricity;(C)that has the capability to continually operate for a minimum of 72 hours; and(D)the power output of which can be adjusted according to the needs of the power grid.(4)

Environmental leakage

The term environmental leakage means where one State or region imposes certain environmental limits or goals on electric generation and another State or region does not and such differences allow a generating resource without such environmental restrictions or goals to generate and sell power cheaper than a generation resource from another State or region.(5)

Extreme weather

The term extreme weather—(A)means a weather event that is at the extremes of the historical distribution; and(B)includes unexpected, unusual, severe, or unseasonal weather.(6)

Firm

The term firm means the electric generator has priority transportation rights to a fuel supply. Storage batteries that have three days of continuous discharge may be considered firm. (7)

Gross peak load

The term gross peak load means the total energy required to serve demand at its highest level for each 15 minutes of every day of the year.(8)

Intermittent resource

The term intermittent resource means an electric generation resource that depends on the weather or time of day for its fuel source, such as wind or solar.(9)

Net capacity factor

The net capacity factor of an electric generator is the ratio of its actual output over two consecutive calendar years, to its potential output if it were possible for it to operate at full nameplate capacity during the same two consecutive calendar years. To calculate the capacity factor, take the total amount of energy the plant produced during a period of time and divide by the amount of energy the plant would have produced at full capacity.(10)

Net peak load

The term net peak load means the difference of—(A)gross peak load, minus(B)intermittent generation resources used to serve load for each 15 minutes of each day of the year.