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Comments on H.R. 2944

Section 3
The grandfathering of state legislative action as it relates to consumer protection, interconnection, aggregation and net metering enacted prior to or within 3 years of the date of enactment of H.R. 2944 is unacceptable to NCSL. This provision is equal to a temporary grandfathering by the federal government of these provisions that are within state jurisdiction (see point 2 of our 3 primary principles).

Title I--Open Transmission Access

Section 101
NCSL supports provisions that affirm state authority over (1) implementation of retail competition and (2) imposition of charges on retail services for public purpose programs with nonexclusive list of purposes. In addition, NCSL supports legislation affirming state authority to impose non-bypassable charges used to promote energy efficiency, renewable energy and low-income assistance.

NCSL is opposed to the provision that provides exclusive jurisdiction over unbundled retail transmission to FERC. NCSL supports legislation that affirms state authority over the regulation of retail power delivery regardless of facilities used (transmission or distribution). NCSL strongly opposes expansion of FERC jurisdiction to include unbundled retail transmission services.

While NCSL supports the provision that eliminates FERC jurisdiction over the transmission component of a bundled retail sale, I recognize that in the absence of FERC regulation, state legislation must ensure comparability for all transmission users to produce a healthy, competitive marketplace.

Section 103
NCSL supports legislation that calls for voluntary formation of RTOs and ISOs, but would oppose any legislation requiring entities within states to join them.

Section 104
NCSL supports the provision allowing Congress to authorize formation of interstate compacts for regional transmission siting. However, such compacts should be formed on a voluntary basis and FERC should not have oversight over the compacts' formation or their rules.

Section 105
NCSL opposes the provision that authorizes FERC to issue an order requiring a transmission utility to enlarge, extend, or improve its facilities for the transmission of electricity in interstate commerce. The utilities affected are permitted to apply to FERC if they were unsuccessful after making a good faith effort to obtain the necessary approval or property rights under applicable federal, state or local laws. NCSL is opposed to potential preemption of state authority over intrastate retail electric transmission.

NCSL opposes the provision that authorizes FERC to permit transmitting utilities to recover all transmission costs, and to consider incremental cost and benefit of new transmission facilities when setting rates (Sawyer amendment). Instead, states should continue to regulate retail services on behalf of retail ratepayers.

NCSL supports the provision that mandates that transmission rates be just and reasonable and not unduly discriminatory or preferential and that they promote economically efficient transmission, expansion of networks, introduction of new transmission technologies and the provision of transmission services by Regional Transmission Organizations (RTOs) (Sawyer amendment). However, states should continue to participate in transmission pricing, improvement and policy.

Section 107
NCSL supports the spirit of the Wynn amendment provision that would grandfather state electric restructuring plans until three years after enactment of H.R. 2944. However, NCSL opposes any temporary grandfathering of issues under state authority and would suggest that there be no time limit on the grandfathering provision.

Title II--Reliability

Section 201
NCSL supports federal policy that promotes the reliable, safe supply and delivery of electricity. NCSL requires that states have a role in the development of federal reliability policy and the implementation of such policy in all aspects of electric service. Also, NCSL is concerned that state authority over intrastate, retail transmission may be unnecessarily preempted in an effort to ensure electric reliability. NCSL will not tolerate the preemption of state authority on this issue unless the exercise of such authority, 1) could have adverse effect on the reliability of the bulk power system or, 2) could have a substantial effect on commerce to ensure reliability of the electric systems in the state.

Title III--Consumer Protection

Section 301
NCSL supports the provision that authorizes the FTC to issue rules for disclosure to retail customers and requires the FTC to consult with FERC, DOE and EPA. However, NCSL strongly supports FTC consultation with states in this matter.

Sections 302 & 303
NCSL supports minimum standards, based on state experience, that would re-affirm state jurisdiction over terms and conditions of retail service. However, the FTC should not issue rules that preempt states' authority in these areas.

Section 304
NCSL supports the provision expressing the need for universal service.

Title IV--Mergers

Section 401
NCSL supports federal merger policy that allows the federal government and states to analyze the effects of proposed electric facility mergers before they are approved. States should retain authority over retail impacts of mergers.

Title V--Promoting Competition

Section 501
NCSL opposed the "hard reciprocity" provision that was eliminated by the Stearns Amendment. States must be provided with the option of not restructuring their electric industry. Any decision regarding hard reciprocity should be left to the states.

Section 502
NCSL has no position on whether PUHCA should be repealed or modified. However, should it be repealed or modified, state authority should not be transferred to FERC or any other federal agency.

Section 521
NCSL has no position on whether PURPA should be repealed or modified. However, NCSL is opposed to the provision that would authorize FERC to issue regulations preempting state authority over recovery of PURPA contract expenses. Also, NCSL urges that changes in or to PURPA guarantee that it is within the individual state public utility commission's purview to determine the specific methodology employed for calculating "avoided cost". Considering the state-specific conditions of power generation capability, the determination of competitive prices for purchased power from PURPA-qualified facilities (QFs) must remain a state right and responsibility. The purchase price for QF power must be based on the utility's service needs as determined in ratemaking proceedings before the state or local regulatory authority. In addition, existing state law and state regulatory authority should not be negatively impacted by PURPA repeal or modification.

Section 531
NCSL supports policy that facilitates regional or statewide aggregation, but state and local authority over aggregation must not be preempted.

Title VII--Environmental Provisions

Section 701
NCSL supports the renewable energy production incentive of 1.5 cents/kWh to small hydroelectric, solar, wind, bio-mass and geothermal technologies (Shadegg amendment). NCSL believes that non-traditional energy production should be encouraged, but we contend that this incentive is insufficient to ensure that renewable energy is a viable energy source vital to the nation's growing need for energy diversification.