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![Page 1: Review of EPAct05 and Other Significant Legislative Developments Joe Nipper APPA Senior Vice President, Government Relations APPA Legal Seminar San Antonio,](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649ecb5503460f94bd99f8/html5/thumbnails/1.jpg)
Review of EPAct05 and Other Significant Legislative Developments
Joe NipperAPPA Senior Vice President, Government
Relations
APPA Legal SeminarSan Antonio, TexasNovember 13, 2005
![Page 2: Review of EPAct05 and Other Significant Legislative Developments Joe Nipper APPA Senior Vice President, Government Relations APPA Legal Seminar San Antonio,](https://reader036.fdocuments.in/reader036/viewer/2022062422/56649ecb5503460f94bd99f8/html5/thumbnails/2.jpg)
Overview
• Energy Policy Act of 2005
• The next energy bill
• Broadband
• Anti-competitive rail practices
• Tax-exempt bonds
• Endangered Species Act
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The Energy Policy Act of 2005
APPA’s Goals:
• Maintain and enhance fuel diversity
• Ensure reliability
• Facilitate new infrastructure development
• Promote effective wholesale competition
• Limit federal (FERC) jurisdiction over public power systems
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Fuel Diversity
• Hydro licensing reform (Section 241)• Clean Renewable Energy Bonds for renewables /
$800 million ($500 million cap on government entities) for 2 years; 2006 and 2007 (Section 1303)
• Clean coal technology demonstration/R&D (Title IV)• Reauthorization of Renewable Energy Production
Incentive through 2026 (Section 202)• Incentives for nuclear power (Title VI, Subtitle C)• Energy efficiency (Title I)• No federal renewable portfolio standard
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Reliability
• Act establishes new electric reliability organization (ERO) (likely to be NERC) to develop and enforce mandatory reliability standards (Section 1211)
• FERC to issue Final Rule within 180 days• NOPR issued on September 1; comments due
October 7• FERC must approve or remand proposed standards
and enforcement actions• Emerging issue: balance of power between ERO and
“regional entities” (like WECC)
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Infrastructure Development
• DOE to designate “national interest electric transmission corridors” under Section 1221
• Based on congestion study to be completed in one year; updated every three years
• FERC can issue construction permit for transmission facilities in such corridors if a state does not have authority or delays approval for more than one year
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Infrastructure Development, cont’d
• Allows 3 or more states to form regional transmission siting agencies
• Agencies have authority to permit transmission facilities, including facilities in national interest corridors
• Such agencies can “trump” FERC’s siting authority, unless member states disagree
• Could change the siting equation substantially
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Infrastructure Development, cont’d
• Re-affirms FERC flexibility in allocating costs for new transmission – no mandate for “participant funding” (Section 1242)
• New PURPA requirements for public power systems to “consider” smart metering, net metering, interconnection of distributed generation (Sections 1251-1252)
• Applies to public power systems with annual retail sales in excess of 500 million kwh
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Native Load Provisions
• Affirms load serving entities’, including public power systems’, authority to use existing transmission rights (by ownership or contract) to serve native load (Section 1233)
• Directs FERC to facilitate planning and expansion of transmission to meet needs of LSEs for firm long-term transmission rights to serve native load
• Protects certain transmission contracts in California and the Northwest (Section 1235)
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Long-Term Transmission Rights
• Section 1233(b) deals with Long-Term Transmission Rights (LTTRs) in “Organized Markets” (read RTOs)
• Requires FERC to implement LTTRs in RTOs with organized markets through a rulemaking within 1 year of enactment
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Transmission Rate Incentives
• Section 1241 requires FERC within one year to establish incentive-based rate treatments for transmission, including rates of return that “attract new investment in transmission facilities”
• FERC is to provide incentives for “transmitting utilities” to join a Transmission Organization
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Effective Wholesale Competition
Act Has Some Bitter Pills:• Repeals the Public Utility Company Holding
Act which will lead to greater consolidation by private utilities (FERC has issued NOPR on PUCHA replacement provisions; final rule in 90 days)
• Does not address costs, accountability, governance, or other problems in RTOs (but FERC is in midst of rulemaking on RTO cost accounting)
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Effective Wholesale Competition, cont’d
But there are compensations…• Enhanced FERC authority to review mergers of
holding companies, purchases of generation facilities used for interstate sales (Sec. 1289)
• New broad FERC authority to ban market manipulation (Sec. 1283)
• Significant new financial penalties for violation of the Federal Power Act (Sec. 1284)
• New market transparency rules (Sec. 1281)
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FERC Jurisdiction Over Public Power
• Reliability requirements are mandatory for all, including public power entities
• Provisions on market transparency and market manipulation apply to all market participants
• “FERC-lite” gives FERC limited authorities over access to transmission owned by the largest public power systems, but generally keeps rate – setting at the local level (Sec. 1231)
• Allows FERC review over certain wholesale sales by some large public power systems for purposes of potential refunds (Sec. 1286)
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Other Provisions of Interest
• Climate change – Title XVI– Requires DOE to develop a national climate change
strategy to promote R&D for greenhouse gas reduction
– Requires the State Department to report on significant GHG emissions in other countries and to facilitate assistance to developing countries to reduce GHGs
– Seeks to identify trade barriers for exporting GHG reduction technologies
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Other Provisions of Interest (Cont’d)
• Energy efficiency provisions
• LIHEAP authorization
• Hybrid vehicles
• Interagency study in competition at the wholesale and retail levels in electricity markets
• DOE study in “economic dispatch”
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Implementation
• Dozens of new rules and programs to be developed and implemented by DOE, FERC, Treasury, CFTC, FTC, etc., per the Act’s requirements
• APPA priorities include:– Reliability – Long term transmission rights – FERC-lite– Hydro licensing– Clean Renewable Energy Bonds– Renewable Energy Production Incentive – PURPA smart/net metering requirements
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Resources
• EPAct05 page on APPA website
• Additional APPA seminars in Washington, DC– December 15 – 16, EPAct05 and FERC
– January 19 – 20, REPI, Conservation, and Clean Renewable Energy Bonds (CREBs)
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The Next Energy Bill
• H.R 3893 by Rep. Joe Barton (R-TX) passed the House last month
• Addresses oil and gas supply and refinery capacity; no electricity provisions included
• Senate EPW and Energy Committees have been holding hearings; EPW failed to report its own more modest, supply and refinery capacity bill
• Senate Energy Committee may try to move a similar bill• Final passage not likely; this is mostly a political exercise
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Anti-Competitive Rail Practices
• The cost and availability of coal is increasingly adversely affected by anti-competitive activities by the railroads; some public power systems are now paying more for rail transportation than for the coal itself
• S. 919 by Senators Rockefeller (D-WV) and Craig (R-ID), et al, and H.R. 2047 by Reps. Baker (R-LA), Oberstar (D-MN), et al address these issues; these bills are similar, but not identical
• This legislation provides structural and policy changes to improve competitive alternatives for shippers and improvements in consumer protection mechanisms administered by the Surface Transportation Board
• H.R. 3318 by Representatives Green (R-WI) and Pomeroy (D-ND) would remove the railroads’ anti trust exemption
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Broadband
• House Energy and Commerce Committee “staff draft” on IP enabled services includes Section 409 – Government Authority to Provide Services
• No state statute, regulation on other legal requirement “may prohibit or have the effect of prohibiting any public provider” from providing services to any person or entity
• Recently revised staff draft retains this language and drops the placeholder for cross-subsidization language
• Strongly supported by APPA• Telecom and Internet Subcommittee held a hearing on
November 9; possible markup before the end of the year
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Broadband (Cont’d)
• S. 1294, the Community Broadband Act of 2005 by Senators McCain (R-AZ) and Lautenberg (D-NJ); also supported by APPA
• Precludes states from adopting laws or regulations prohibiting “public providers” from providing advanced communication capability or services
• S. 1504 by Senator Ensign (R-NV), a major telecom re-write bill, includes section 15 that requires an “open bid” process for cities that want to provide services, but is really structured as a barrier
• Final action on broadband legislation not likely until 2007
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Endangered Species Act
• H.R. 3824, the Threatened and Endangered Species Act (TESRA) by Rep. Pombo (R-CA)
• Passed the House September 29• Supported by APPA; improves designation and
recovery process, provides greater certainty regarding requirements, is consistent with APPA’s policy resolution
• This is a controversial bill, primarily due to property owner compensation provisions
• Senate passage will be difficult
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www.appanet.org