
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 16USC2621]

 
                         TITLE 16--CONSERVATION
 
             CHAPTER 46--PUBLIC UTILITY REGULATORY POLICIES
 
             SUBCHAPTER II--STANDARDS FOR ELECTRIC UTILITIES
 
Sec. 2621. Consideration and determination respecting certain 
        ratemaking standards
        

(a) Consideration and determination

    Each State regulatory authority (with respect to each electric 
utility for which it has ratemaking authority) and each nonregulated 
electric utility shall consider each standard established by subsection 
(d) of this section and make a determination concerning whether or not 
it is appropriate to implement such standard to carry out the purposes 
of this chapter. For purposes of such consideration and determination in 
accordance with subsections (b) and (c) of this section, and for 
purposes of any review of such consideration and determination in any 
court in accordance with section 2633 of this title, the purposes of 
this chapter supplement otherwise applicable State law. Nothing in this 
subsection prohibits any State regulatory authority or nonregulated 
electric utility from making any determination that it is not 
appropriate to implement any such standard, pursuant to its authority 
under otherwise applicable State law.

(b) Procedural requirements for consideration and determination

    (1) The consideration referred to in subsection (a) of this section 
shall be made after public notice and hearing. The determination 
referred to in subsection (a) of this section shall be--
        (A) in writing,
        (B) based upon findings included in such determination and upon 
    the evidence presented at the hearing, and
        (C) available to the public.

    (2) Except as otherwise provided in paragraph (1), in the second 
sentence of section 2622(a) of this title, and in sections 2631 and 2632 
of this title, the procedures for the consideration and determination 
referred to in subsection (a) of this section shall be those established 
by the State regulatory authority or the nonregulated electric utility.

(c) Implementation

    (1) The State regulatory authority (with respect to each electric 
utility for which it has ratemaking authority) or nonregulated electric 
utility may, to the extent consistent with otherwise applicable State 
law--
        (A) implement any such standard determined under subsection (a) 
    of this section to be appropriate to carry out the purposes of this 
    chapter, or
        (B) decline to implement any such standard.

    (2) If a State regulatory authority (with respect to each electric 
utility for which it has ratemaking authority) or nonregulated electric 
utility declines to implement any standard established by subsection (d) 
of this section which is determined under subsection (a) of this section 
to be appropriate to carry out the purposes of this chapter, such 
authority or nonregulated electric utility shall state in writing the 
reasons therefor. Such statement of reasons shall be available to the 
public.
    (3) If a State regulatory authority implements a standard 
established by subsection (d)(7) or (8) of this section, such authority 
shall--
        (A) consider the impact that implementation of such standard 
    would have on small businesses engaged in the design, sale, supply, 
    installation or servicing of energy conservation, energy efficiency 
    or other demand side management measures, and
        (B) implement such standard so as to assure that utility actions 
    would not provide such utilities with unfair competitive advantages 
    over such small businesses.

(d) Establishment

    The following Federal standards are hereby established:

                         (1) Cost of service

        Rates charged by any electric utility for providing electric 
    service to each class of electric consumers shall be designed, to 
    the maximum extent practicable, to reflect the costs of providing 
    electric service to such class, as determined under section 2625(a) 
    of this title.

                      (2) Declining block rates

        The energy component of a rate, or the amount attributable to 
    the energy component in a rate, charged by any electric utility for 
    providing electric service during any period to any class of 
    electric consumers may not decrease as kilowatt-hour consumption by 
    such class increases during such period except to the extent that 
    such utility demonstrates that the costs to such utility of 
    providing electric service to such class, which costs are 
    attributable to such energy component, decrease as such consumption 
    increases during such period.

                        (3) Time-of-day rates

        The rates charged by any electric utility for providing electric 
    service to each class of electric consumers shall be on a time-of-
    day basis which reflects the costs of providing electric service to 
    such class of electric consumers at different times of the day 
    unless such rates are not cost-effective with respect to such class, 
    as determined under section 2625(b) of this title.

                         (4) Seasonal rates

        The rates charged by an electric utility for providing electric 
    service to each class of electric consumers shall be on a seasonal 
    basis which reflects the costs of providing service to such class of 
    consumers at different seasons of the year to the extent that such 
    costs vary seasonally for such utility.

                       (5) Interruptible rates

        Each electric utility shall offer each industrial and commercial 
    electric consumer an interruptible rate which reflects the cost of 
    providing interruptible service to the class of which such consumer 
    is a member.

                   (6) Load management techniques

        Each electric utility shall offer to its electric consumers such 
    load management techniques as the State regulatory authority (or the 
    nonregulated electric utility) has determined will--
            (A) be practicable and cost-effective, as determined under 
        section 2625(c) of this title,
            (B) be reliable, and
            (C) provide useful energy or capacity management advantages 
        to the electric utility.

                  (7) Integrated resource planning

        Each electric utility shall employ integrated resource planning. 
    All plans or filings before a State regulatory authority to meet the 
    requirements of this paragraph must be updated on a regular basis, 
    must provide the opportunity for public participation and comment, 
    and contain a requirement that the plan be implemented.

        (8) Investments in conservation and demand management

        The rates allowed to be charged by a State regulated electric 
    utility shall be such that the utility's investment in and 
    expenditures for energy conservation, energy efficiency resources, 
    and other demand side management measures are at least as 
    profitable, giving appropriate consideration to income lost from 
    reduced sales due to investments in and expenditures for 
    conservation and efficiency, as its investments in and expenditures 
    for the construction of new generation, transmission, and 
    distribution equipment. Such energy conservation, energy efficiency 
    resources and other demand side management measures shall be 
    appropriately monitored and evaluated.

     (9) Energy efficiency investments in power generation and 
                                   supply

        The rates charged by any electric utility shall be such that the 
    utility is encouraged to make investments in, and expenditures for, 
    all cost-effective improvements in the energy efficiency of power 
    generation, transmission and distribution. In considering regulatory 
    changes to achieve the objectives of this paragraph, State 
    regulatory authorities and nonregulated electric utilities shall 
    consider the disincentives caused by existing ratemaking policies, 
    and practices, and consider incentives that would encourage better 
    maintenance, and investment in more efficient power generation, 
    transmission and distribution equipment.

        (10) Consideration of the effects of wholesale power 
              purchases on utility cost of capital; effects of 
             leveraged capital structures on the reliability of 
             wholesale power sellers; and assurance of adequate 
                                fuel supplies

        (A) To the extent that a State regulatory authority requires or 
    allows electric utilities for which it has ratemaking authority to 
    consider the purchase of long-term wholesale power supplies as a 
    means of meeting electric demand, such authority shall perform a 
    general evaluation of:
            (i) the potential for increases or decreases in the costs of 
        capital for such utilities, and any resulting increases or 
        decreases in the retail rates paid by electric consumers, that 
        may result from purchases of long-term wholesale power supplies 
        in lieu of the construction of new generation facilities by such 
        utilities;
            (ii) whether the use by exempt wholesale generators (as 
        defined in section 79z-5a of title 15) of capital structures 
        which employ proportionally greater amounts of debt than the 
        capital structures of such utilities threatens reliability or 
        provides an unfair advantage for exempt wholesale generators 
        over such utilities;
            (iii) whether to implement procedures for the advance 
        approval or disapproval of the purchase of a particular long-
        term wholesale power supply; and
            (iv) whether to require as a condition for the approval of 
        the purchase of power that there be reasonable assurances of 
        fuel supply adequacy.

        (B) For purposes of implementing the provisions of this 
    paragraph, any reference contained in this section to November 9, 
    1978, shall be deemed to be a reference to October 24, 1992.
        (C) Notwithstanding any other provision of Federal law, nothing 
    in this paragraph shall prevent a State regulatory authority from 
    taking such action, including action with respect to the allowable 
    capital structure of exempt wholesale generators, as such State 
    regulatory authority may determine to be in the public interest as a 
    result of performing evaluations under the standards of subparagraph 
    (A).
        (D) Notwithstanding section 2634 of this title and paragraphs 
    (1) and (2) of section 2622(a) of this title, each State regulatory 
    authority shall consider and make a determination concerning the 
    standards of subparagraph (A) in accordance with the requirements of 
    subsections (a) and (b) of this section, without regard to any 
    proceedings commenced prior to October 24, 1992.
        (E) Notwithstanding subsections (b) and (c) of section 2622 of 
    this title, each State regulatory authority shall consider and make 
    a determination concerning whether it is appropriate to implement 
    the standards set out in subparagraph (A) not later than one year 
    after October 24, 1992.

(Pub. L. 95-617, title I, Sec. 111, Nov. 9, 1978, 92 Stat. 3121; Pub. L. 
102-486, title I, Sec. 111(a), (b), title VII, Sec. 712, Oct. 24, 1992, 
106 Stat. 2795, 2910.)

                       References in Text

    This chapter, referred to in subsecs. (a) and (c), was in the 
original ``this title'', meaning title I (Sec. 101 et seq.) of Pub. L. 
95-617, Nov. 9, 1978, 92 Stat. 3120, which enacted this chapter and 
amended sections 6801 to 6808 of Title 42, The Public Health and 
Welfare. For complete classification of title I to the Code, see Tables.


                               Amendments

    1992--Subsec. (c)(3). Pub. L. 102-486, Sec. 111(b), added par. (3).
    Subsec. (d)(7) to (9). Pub. L. 102-486, Sec. 111(a), added pars. (7) 
to (9).
    Subsec. (d)(10). Pub. L. 102-486, Sec. 712, added par. (10).


                     State Authorities; Construction

    Nothing in amendment by section 712 of Pub. L. 102-486 to be 
construed as affecting or intending to affect, or in any way to 
interfere with, authority of any State or local government relating to 
environmental protection or siting of facilities, see section 731 of 
Pub. L. 102-486, set out as a note under section 79 of Title 15, 
Commerce and Trade.


Report to President and Congress on Encouragement of Integrated Resource 
   Planning and Investments in Conservation and Energy Efficiency by 
                           Electric Utilities

    Section 111(e) of Pub. L. 102-486 provided that: ``Not later than 2 
years after the date of the enactment of this Act [Oct. 24, 1992], the 
Secretary shall transmit a report to the President and to the Congress 
containing--
        ``(1) a survey of all State laws, regulations, practices, and 
    policies under which State regulatory authorities implement the 
    provisions of paragraphs (7), (8), and (9) of section 111(d) of the 
    Public Utility Regulatory Policies Act of 1978 [16 U.S.C. 
    2621(d)(7)-(9)];
        ``(2) an evaluation by the Secretary of whether and to what 
    extent, integrated resource planning is likely to result in--
            ``(A) higher or lower electricity costs to an electric 
        utility's ultimate consumers or to classes or groups of such 
        consumers;
            ``(B) enhanced or reduced reliability of electric service; 
        and
            ``(C) increased or decreased dependence on particular energy 
        resources; and
        ``(3) a survey of practices and policies under which electric 
    cooperatives prepare integrated resource plans, submit such plans to 
    the Rural Electrification Administration and the extent to which 
    such integrated resource planning is reflected in rates charged to 
    customers.
The report shall include an analysis prepared in conjunction with the 
Federal Trade Commission, of the competitive impact of implementation of 
energy conservation, energy efficiency, and other demand side management 
programs by utilities on small businesses engaged in the design, sale, 
supply, installation, or servicing of similar energy conservation, 
energy efficiency, or other demand side management measures and whether 
any unfair, deceptive, or predatory acts exist, or are likely to exist, 
from implementation of such programs.''
    [For provisions relating to further requirements as to subject 
matter contained in report under section 111(e) of Pub. L. 102-486, set 
out above, see section 115(e) of Pub. L. 102-486, set out as a note 
under section 3203 of Title 15, Commerce and Trade.]


        Study Concerning Electric Rates of State Utility Agencies

    Section 601 of Pub. L. 95-617 directed the Secretary to conduct a 
study concerning the effects of provisions of Federal law on rates 
established by State utility agencies and to submit a report to Congress 
on the results of such study not later than 1 year after Nov. 9, 1978.

                  Section Referred to in Other Sections

    This section is referred to in sections 831m-1, 2622, 2624, 2625, 
2626, 2627, 2641, 2643 of this title; title 42 sections 6349, 6807a, 
7276b.
