[House Report 114-452]
[From the U.S. Government Publishing Office]


114th Congress    }                                       {     Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                       {    114-452

======================================================================



 
 FAIR RATEPAYER ACCOUNTABILITY, TRANSPARENCY, AND EFFICIENCY STANDARDS 
                                  ACT

                                _______
                                

 March 14, 2016.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Upton, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 2984]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 2984) to amend the Federal Power Act to provide 
that any inaction by the Federal Energy Regulatory Commission 
that allows a rate change to go into effect shall be treated as 
an order by the Commission for purposes of rehearing and court 
review, having considered the same, report favorably thereon 
without amendment and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     2
Committee Consideration..........................................     3
Committee Votes..................................................     3
Committee Oversight Findings.....................................     3
Statement of General Performance Goals and Objectives............     3
New Budget Authority, Entitlement Authority, and Tax Expenditures     3
Earmark, Limited Tax Benefits, and Limited Tariff Benefits.......     4
Committee Cost Estimate..........................................     4
Congressional Budget Office Estimate.............................     4
Federal Mandates Statement.......................................     5
Duplication of Federal Programs..................................     5
Disclosure of Directed Rule Makings..............................     5
Advisory Committee Statement.....................................     5
Applicability to Legislative Branch..............................     5
Section-by-Section Analysis of the Legislation...................     6
Changes in Existing Law Made by the Bill, as Reported............     6

                          Purpose and Summary

    H.R. 2984, a bill to amend the Federal Power Act to provide 
that any inaction by the Federal Energy Regulatory Commission 
(FERC) that allows a rate change to go into effect shall be 
treated as an order by the Commission for purposes of rehearing 
and court review, was introduced by Rep. Joseph P. Kennedy, III 
(D-MA) on July 8, 2015.

                  Background and Need for Legislation

    Section 205 of the Federal Power Act (FPA) sets forth 
specific processes to set rates for electricity, including 
opportunities for the public to protest a rate change filed 
with FERC.\1\ Pursuant to the FPA, new rates take effect if 
FERC approves them or if FERC fails to issue an order approving 
or denying the filed rates by the time statutorily required by 
the FPA. The failure to approve or deny a rate may result from 
agency delay or, in some limited cases, a vote that results in 
a deadlocked Commission, for example a 2-2 vote.\2\ In such 
cases, the rates become effective by operation of law, even 
when these rates were not approved by a majority of 
commissioners.
---------------------------------------------------------------------------
    \1\16 U.S.C. Sec. 824d.
    \2\FERC is generally comprised of 5 commissioners, each of whom is 
appointed by the President and confirmed by the U.S. Senate for a 5-
year term. In some circumstances, FERC may operate with less than 5 
commissioners. Presently, FERC has only 4 sitting commissioners 
resulting from Commissioner Moeller's recent departure.
---------------------------------------------------------------------------
    The FPA provides administrative redress for members of the 
public to protest Commission rate decisions.\3\ However, if 
rates become effective by operation of law--for example, as a 
result of a deadlocked Commission--the administrative processes 
are not available to the public because FERC did not 
technically issue an order for the public to protest. In such 
cases, there is no legal or administrative avenue for 
ratepayers to remedy or protest the rate change. This scenario 
has occurred on at least five occasions in the past fourteen 
years.
---------------------------------------------------------------------------
    \3\See sections 205 (16 U.S.C. 824d) and 313 (16 U.S.C. 825l) of 
the FPA.
---------------------------------------------------------------------------
    To resolve this procedural discrepancy, H.R. 2984 amends 
the requirement under section 205 of the FPA that a public 
utility provide FERC and the public sixty days' notice before 
making changes to its rate, charge, or classification 
structure. If a lack of action by FERC allows such a change to 
take effect, including if FERC allows the 60-day notice period 
to expire without taking action, FERC's lack of action will be 
treated as though FERC had issued an order accepting the change 
for purposes of the right of any party affected by a FERC order 
to apply for a rehearing within 30 days. Therefore, the bill 
would provide opportunities for rehearing of orders affecting 
rates, even in instances where the Commission is deadlocked.

                                Hearings

    The Subcommittee on Energy and Power held a hearing on H.R. 
2984 on February 2, 2016. The Subcommittee received testimony 
from:
           Ann Miles, Director, Office of Energy 
        Projects, Federal Energy Regulatory Commission;
           Max Minzner, General Counsel, Office of the 
        General Counsel, Federal Energy Regulatory Commission;
           Timothy L. Powell, CEP, Director of Land, 
        GIS and Permits, Williams Company;
           Edward Lloyd, Evan M. Frankel Clinical 
        Professor of Environmental Law, Columbia University 
        School of Law, on behalf of the New Jersey Conservation 
        Foundation and Stonybrook Millstone Watershed 
        Association;
           Bill Bottiggi, General Manager, Braintree 
        Light and Electric Department;
           Bill Marsan, Executive Vice President, 
        General Counsel and Corporate Secretary, American 
        Transmission Company;
           Tyson Slocum, Energy Program Director, 
        Public Citizen, Inc.; and,
           Jeffrey A. Leahey, Esq., Deputy Executive 
        Director, National Hydropower Association.

                        Committee Consideration

    On February 10 and 11, 2016, the Subcommittee on Energy and 
Power met in open markup session and forwarded H.R. 2984 to the 
full Committee, without amendment, by a voice vote. On February 
24 and 25, 2016, the full Committee on Energy and Commerce met 
in open markup session and ordered H.R. 2984 reported to the 
House, without amendment, by a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. 
There were no record votes taken in connection with ordering 
H.R. 2984 reported. A motion by Mr. Upton to order H.R. 2984 
reported to the House, without amendment, was agreed to by a 
voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held a hearing and made 
findings that are reflected in this report.

         Statement of General Performance Goals and Objectives

    The goal of H.R. 2984 is to amend the Federal Power Act to 
provide that any inaction by the Federal Energy Regulatory 
Commission that allows a rate change to go into effect shall be 
treated as an order by the Commission for purposes of rehearing 
and court review.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
2984, would result in no new or increased budget authority, 
entitlement authority, or tax expenditures or revenues.

       Earmark, Limited Tax Benefits, and Limited Tariff Benefits

    In compliance with clause 9(e), 9(f), and 9(g) of rule XXI 
of the Rules of the House of Representatives, the Committee 
finds that H.R. 2984 contains no earmarks, limited tax 
benefits, or limited tariff benefits.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:
                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 11, 2016.
Hon. Fred Upton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2984, the Fair 
RATES Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Megan 
Carroll.
            Sincerely,
                                         Robert A. Sunshine
                                        (For Keith Hall, Director).
    Enclosure.

H.R. 2984--Fair RATES Act

    Under the Federal Power Act (FPA), the Federal Energy 
Regulatory Commission (FERC) is responsible for ensuring that 
rates, terms, and conditions set by public utilities related to 
interstate transmission and sales of electricity are just and 
reasonable. Section 205 of that act requires public utilities 
to notify FERC of any changes to such rates, terms and 
conditions. Under current law, FERC has 60 days to review the 
proposed changes and issue an order determining whether the 
changes can take effect; parties affected by such orders can 
seek a rehearing of FERC's decision and a subsequent review by 
an appellate court. If, however, FERC fails to issue an order 
within 60 days, any proposed changes take effect automatically. 
In the absence of an official decision by FERC, affected 
parties cannot request a rehearing.
    H.R. 2984 would amend section 205 of the FPA to specify 
that any failure by FERC to issue an order related to a 
proposed change in rates or other terms would be considered an 
order to allow such changes. Thus any affected parties could 
seek a rehearing and appellate review of the changes.
    By expanding the number of cases in which proposed rate 
changes potentially could result in rehearings, H.R. 2984 could 
increase FERC's workload. However, based on information from 
FERC about the extremely limited number of cases that would be 
affected by the proposed change, CBO estimates that any 
increased administrative costs to the agency would be 
insignificant in any given year. Further, because FERC recovers 
100 percent of its costs through user fees, any change in that 
agency's costs (which are controlled through annual 
appropriation acts) would be offset by an equal change in fees 
that the commission charges, resulting in no net change in 
federal spending.
    Because enacting H.R. 2984 would not affect direct spending 
or revenues, pay-as-you-go procedures do not apply. CBO 
estimates that enacting H.R. 2984 would not increase net direct 
spending or on-budget deficits in any of the four consecutive 
10-year periods beginning in 2027.
    H.R. 2984 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Megan Carroll. 
The estimate was approved by H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                    Duplication of Federal Programs

    No provision of H.R. 2984 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that enacting H.R. 2984 
specifically directs to be completed no rule makings within the 
meaning of 5 U.S.C. 551.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section provides the short title of ``Fair Ratepayer 
Accountability, Transparency, and Efficiency Standards Act'' or 
the ``Fair RATES Act.''

Section 2. Amendment to the Federal Power Act

    Section 2 amends the requirements under section 205 of the 
Federal Power Act that a public utility provide FERC and the 
public 60 days' notice before making changes to its rate, 
charge, or classification structure. Specifically, if a lack of 
action by FERC allows a change to take effect, including if 
FERC allows the 60-day notice period to expire, such lack of 
action will be treated as if FERC had issued an order accepting 
the change, thereby allowing any affected party to apply for 
rehearing within 30 days.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

                           FEDERAL POWER ACT



           *       *       *       *       *       *       *
PART II--REGULATION OF ELECTRIC UTILITY COMPANIES ENGAGED IN INTERSTATE 
COMMERCE

           *       *       *       *       *       *       *


          rate and charges; schedules; suspension of new rates

  Sec. 205. (a) All rates and charges made, demanded, or 
received by any public utility for or in connection with the 
transmission or sale of electric energy subject to the 
jurisdiction of the Commission, and all rules and regulations 
affecting or pertaining to such rates or charges shall be just 
and reasonable, and any such rate or charge that is not just 
and reasonable is hereby declared to be unlawful.
  (b) No public utility shall, with respect to any transmission 
or sale subject to the jurisdiction of the Commission, (1) make 
or grant any undue preference or advantage to any person or 
subject any person to any undue prejudice or disadvantage, or 
(2) maintain any unreasonable difference in rates, charges, 
service, facilities, or in any other respect, either as between 
localities or as between classes of service.
  (c) Under such rules and regulations as the Commission may 
prescribe, every public utility shall file with the Commission, 
within such time and in such form as the Commission may 
designate, and shall keep open in convenient form and place for 
public inspection schedules showing all rates and charges for 
any transmission or sale subject to the jurisdiction of the 
Commission, and the classification, practices, and regulations 
affecting such rates and charges, together with all contracts 
which in any manner affect or relate to such rates, charges, 
classifications, and services.
  (d) Unless the Commission otherwise orders, no change shall 
be made by any public utility in any such rates, charges, 
classification, or service, or in any rule, regulation, or 
contract relating thereto, except after sixty days' notice to 
the Commission and to the public. Such notice shall be given by 
filing with the Commission and keeping open for public 
inspection new schedules stating plainly the change or changes 
to be made in the schedule or schedules then in force and the 
time when the change or changes will go into effect. The 
Commission, for good cause shown, may allow changes to take 
effect without requiring the sixty days' notice herein provided 
for by an order specifying the changes so to be made and the 
time when they shall take effect and the manner in which they 
shall be filed and published. Any absence of action by the 
Commission that allows a change to take effect under this 
section, including the Commission allowing the sixty days' 
notice herein provided to expire without Commission action, 
shall be treated as an order issued by the Commission accepting 
such change for purposes of section 313.
  (e) Whenever any such new schedule is filed the Commission 
shall have authority, either upon complaint or upon its own 
initiative without complaint at once, and, if it so orders, 
without answer or formal pleading by the public utility, but 
upon reasonable notice to enter upon a hearing concerning the 
lawfulness of such rate, charge, classification, or service; 
and, pending such hearing and the decision thereon the 
Commission, upon filing with such schedules and delivering to 
the public utility affected thereby a statement in writing of 
its reasons for such suspension, may suspend the operation of 
such schedule and defer the use of such rate, charge, 
classification, or service, but not for a longer period than 
five months beyond the time when it would otherwise go into 
effect; and after full hearings, either completed before or 
after the rate, charge, classification, or service goes into 
effect, the Commission may make such orders with reference 
thereto as would be proper in a proceeding initiated after it 
had become effective. If the proceeding has not been concluded 
and an order made at the expiration of such five months, the 
proposed change of rate, charge, classification, or service 
shall go into effect at the end of such period, but in case of 
a proposed increased rate or charge, the Commission may by 
order require the interested public utility or public utilities 
to keep accurate account in detail of all amounts received by 
reason of such increase, specifying by whom and in whose behalf 
such amounts are paid, and upon completion of the hearing and 
decision may by further order require such public utility or 
public utilities to refund, with interest, to the persons in 
whose behalf such amounts were paid, such portion of such 
increased rates or charges as by its decision shall be found 
not justified. At any hearing involving a rate or charge sought 
to be increased, the burden of proof to show that the increased 
rate or charge is just and reasonable shall be upon the public 
utility, and the Commission shall give to the hearing and 
decision of such questions preference over other questions 
pending before it and decide the same as speedily as possible.
  (f)(1) Not later than 2 years after the date of the enactment 
of this subsection and not less often than every 4 years 
thereafter, the Commission shall make a thorough review of 
automatic adjustment clauses in public utility rate schedules 
to examine--
          (A) whether or not each such clause effectively 
        provides incentives for efficient use of resources 
        (including economical purchase and use of fuel and 
        electric energy), and
          (B) whether any such clause reflects any costs other 
        than costs which are--
                  (i) subject to periodic fluctuations, and
                  (ii) not susceptible to precise 
                determinations in rate cases prior to the time 
                such costs are incurred.
Such review may take place in individual rate proceedings or in 
generic or other separate proceedings applicable to one or more 
utilities.
  (2) Not less frequently than every 2 years, in rate 
proceedings or in generic or other separate proceedings, the 
Commission shall review, with respect to each public utility, 
practices under any automatic adjustment clauses of such 
utility to insure efficient use of resources (including 
economical purchase and use of fuel and electric energy) under 
such clauses.
  (3) The Commission may, on its own motion or upon complaint, 
after an opportunity for an evidentiary hearing, order a public 
utility to--
          (A) modify the terms and provisions of any automatic 
        adjustment clause, or
          (B) cease any practice in connection with the clause,
if such clause or practice does not result in the economical 
purchase and use of fuel, electric energy, or other items, the 
cost of which is included in any rate schedule under an 
automatic adjustment clause.
  (4) As used in this subsection, the term ``automatic 
adjustment clause'' means a provision of a rate schedule which 
provides for increases or decreases (or both), without prior 
hearing, in rates reflecting increases or decreases (or both) 
in costs incurred by an electric utility. Such term does not 
include any rate which takes effect subject to refund and 
subject to a later determination of the appropriate amount of 
such rate.

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