Implementing the energy bill at Western

The Energy Policy Act of 2005 affects all electric utilities and all Federal agencies. It also expands the Federal Energy Regulatory Commission's oversight of Federal utilities, including Western. Western's senior managers have identified the actions Western must take to comply with specific provisions.

Here's a brief breakdown on what some of the provisions in the massive bill mean to Western's activities and business practices.

Title I—Energy Efficiency

Section 102 mandates new energy efficiency standards for all Federal buildings and lets agencies retain the money saved from energy efficiencies to be used for additional energy-saving projects. Section 103 requires all Federal buildings be metered for electrical use by 2012. The provision calls for using advanced metering to the extent possible. Section 104 mandates Federal agencies purchase Energy Star-labeled products and premium efficient motors. It also encourages agencies to take actions to maximize air conditioning and refrigeration equipment efficiency.

Section 105 extends the authority of Federal agencies to enter into energy-savings performance contracts from October 2006 through October 2016. Section 108 amends the Solid Waste Disposal Act to add requirements designed to maximize the use of recovered mineral components, such as coal-combustion fly ash, in cement or concrete used on Federal projects.

Section 109 amends Section 305 of the Energy Conservation and Production Act by requiring new building efficiency standards. It requires agency heads to list new buildings they own, operate or control and state whether the new buildings meet or exceed these revised efficiency standards. Beginning in 2007, Section 110 extends Daylight Savings Time by four weeks. It moves the start date to the second Sunday in March and the end date to the first Sunday in November.

Title II—Renewable Energy

Section 203 requires Federal agencies to purchase increasing amounts of renewable energy to the extent economically feasible and technically practical. Section 242 allows the Secretary of Energy to make incentive payments to qualified hydroelectric production facilities at dams, including Federal dams.

Title V—Indian Energy

Section 502 creates an Office of Indian Energy Policy and Programs within the Department of Energy. Section 503 amends Title XXVI of the Energy Policy Act of 1992. Section 2602 of EPAct is amended to allow Federal agencies to give preference to electricity purchased from tribes at prices not greater than prevailing market rates. Section 2604 of EPAct is amended to provide tribes with additional authority for entering into leases or business agreements related to energy-resource development or construction and operation of energy and transmission facilities on tribal lands. It limits lease and agreement terms to 30 years.

Section 2605 of EPAct requires Federal power marketing administrators to encourage Indian tribal energy development. New amendments under this section include:

• Tribes are allowed to use power allocations from Western to meet firming and reserve needs of Indian-owned energy projects on Indian land.
• Western may purchase non-Federally generated power from tribes to meet its firming and reserve requirements.
• Western may provide technical assistance for tribes wanting to use the high-voltage transmission system to deliver electric power.
• The Secretary of Energy must conduct a study describing the use and quantity of power allocations sold to, or for the benefit of, tribes by the PMAs and the barriers that impede tribal access to Federal power. The report must describe how to remove those barriers and improve the ability of the PMAs to deliver Federal power to tribes.

Section 2606 of EPAct is amended to require the Secretary of Energy to conduct a study of the cost and feasibility of developing a demonstration project that uses wind energy generated by tribes and Federal Missouri River hydropower to supply firming power to Western.

Section 504 requires the Energy and Interior secretaries to consult with Indian tribes to the maximum extent practical.

Title XI—Personnel and Training

Section 1103 tasks the Labor and Energy secretaries with developing model personnel training guidelines that support the reliability and safety of non-nuclear electric systems.

Title XII—Electricity

Section 1121 creates rules for a new reliability organization. It adds Section 215 to the Federal Power Act, giving the Federal Energy Regulatory Commission authority to certify an electric reliability organization to develop and enforce reliability standards. This section makes Western subject to FERC jurisdiction for reliability. It also requires Federal agencies to provide access to electric lines on Federal lands for vegetation management, service restoration and other situations that immediately endanger reliability or safety.

Section 1222 authorizes Western's Administrator to participate with others in developing transmission and related facilities necessary to construct new or upgrade existing Western facilities in a national interest electric transmission corridor and permits Western and Southwestern to obtain up to $100 million in outside financing over the next 10 years for new and existing transmission facilities.

Section 1231 amends the Federal Power Act making Western subject to "FERC Lite" jurisdiction. It gives FERC expanded jurisdiction by:

• Clarifying the standard of review FERC will use in examining Western's rates and allowing FERC to order Western to provide comparable open access transmission service under terms that are not unduly discriminatory or preferential.
• Requiring Western to comply with certain filing and notice provisions defined in section 205 (c) and (d) of the Federal Power Act.
• Prohibiting FERC from requiring Western to transfer control or operational control of its transmission facilities to a [regional] transmission organization.

Section 1232 gives the PMAs and TVA explicit statutory authority to participate in RTOs. Section 1233 grants load-serving entities holding firm transmission rights, including Western, an entitlement to use those rights to deliver generation to meet native service load obligations. For Western, this includes sales to project use and firm power loads.

Subtitle E—Amendments to the Public Utility Regulatory Policies Act makes substantial changes to the qualifying facility provisions of PURPA. Section 1251 creates net metering, fuel source and fossil fuel generation efficiency standards; Section 1252 creates smart metering standards; Section 1253 prospectively repeals mandatory purchase obligations if certain competitive conditions exist; and Section 1254 creates new standards for interconnections to distributed generation facilities. Western will need to review these provisions and determine whether it needs to adopt these new standards.

Section 1281 authorizes FERC to issue rules governing publication of market price information and authorizes FERC to obtain market price and availability information from any market participant, including Western.

Section 1283 provides generic and broad prohibitions to all market participants, including Western, against fraud involving the purchase or sale of electric energy or transmission service and authorizes FERC to publish new rules prohibiting market manipulation.

Section 1284 increases penalties and modifies procedures for revising FERC orders under the Federal Power Act. It explicitly allows Western to file complaints, have complaints filed against it under the FPA and to seek rehearing of a FERC order.

Section 1286 grants FERC refund authority over Western under section 206 of the FPA, allowing FERC to order a refund to achieve a just and reasonable rate if Western makes a voluntary short-term sale of electric energy through an organized market.

Section 1291 expressly includes the power marketing administrations, including Western, in the definition of an "electric utility," clearly including Western within FERC's jurisdiction under sections 210, 211 and 212 of the FPA regarding mandatory interconnection and wheeling orders as well as now-market transparency and consumer protection measures.

Title XIII—Studies

Section 1824 encourages FERC to conclude its investigation into the unjust or unreasonable changes incurred in California during the 2000-2001 electricity crisis. Section 1834 calls for the secretaries of Energy and Interior, in consultation with the Army Secretary, to study the potential of increasing electric power production at federally-owned facilities. Section 1840 requires the Secretary of the Interior, working through the Bureau of Reclamation, to submit a report identifying the status of potential hydropower facilities that have not been completed or authorized for construction.

Note: Originally printed in Western's employee publication, Sept. 9, 2005.