[PRCo] Re: fuel costs - change to Energy Policy Act of 2005

[John Swindler]

Just in case anyone is interested in summary of applicable section of this 
act.

John



>From: "Ken & Tracie" <ktjosephson at earthlink.net>
>Reply-To: pittsburgh-railways at dementia.org
>To: <pittsburgh-railways at dementia.org>
>Subject: [PRCo] Re: fuel costs
>Date: Mon, 12 Sep 2005 19:38:13 -0700
>
>Frd,
>
>Did you read, that the President's energy package has included a provision
>for repealing the Utility Holding Act of 1935 (i.e., the "Death Sentence.")
>
>I wonder if our power companies are going to start buying up and building
>light rail systems around the nation? ;-)
>
>(hee-hee-hee)
>
>K.



Energy Policy Act of 2005

On August 8, 2005, President Bush signed into law the Energy Policy Act of 
2005 (the "Act")1. The Act is the most comprehensive energy legislation 
enacted in the United States in over a decade and contains provisions that 
affect all sectors of the U.S. energy industry. We have summarized below 
several provisions of the Act that may be of particular interest to our 
clients engaged in the electric power and liquefied natural gas industries.2 
For more information on the matters set forth herein, please contact Dave 
Domansky, Liz Thomas or Eric Freedman at (206) 623-7580.

Executive Summary

Repeal of PUHCA: The Act repeals the Public Utility Holding Company Act of 
1935 ("PUHCA").3 As a result, the broad regulatory powers provided to the 
Securities and Exchange Commission (the "SEC") over the finances and 
operations of "registered holding companies" have been abolished. In 
addition, the Act has eliminated the restrictions imposed by PUHCA upon (a) 
the acquisition of the voting securities of public utilities, (b) the 
geographic operating territory of public utilities and (c) lines of business 
of holding companies and public utilities. In place of those restrictions, 
the Act creates limited oversight of holding companies by the Federal Energy 
Regulatory Commission ("FERC").
Amendments to PURPA: The Act amends certain portions of the Public Utility 
Regulatory Policies Act of 1978 ("PURPA"),4 including PURPA’s "mandatory 
purchase obligation" requiring that electric utilities purchase the energy 
and capacity of "qualifying facilities" at the purchasing utility’s avoided 
cost. The Act provides that no electric utility shall be required to enter 
into a new contract or obligation to purchase electric energy from a PURPA 
qualifying facility if FERC finds that the qualifying facility has 
nondiscriminatory access to independent and competitive markets.
Hydroelectric Provisions: The Act amends certain provisions of the Federal 
Power Act5 (the "FPA") to provide parties to hydroelectric licensing 
proceedings an opportunity to propose alternative license conditions, in 
lieu of conditions proposed by certain resource agencies possessing 
mandatory conditioning authority under the FPA. Such agencies must now 
consider the applicant’s proposed alternative conditions, with a trial-type 
hearing for resolution of disputed factual issues, and must document the 
reasons for any rejection of the alternative. The Act also provides 
financial incentives for new or expanded hydroelectric generating capacity.
Siting of Interstate Transmission Facilities: The Act authorizes the 
Secretary of Energy, based on certain findings, to designate as a "national 
electric transmission corridor" any geographic area experiencing electric 
energy transmission capacity constraints or congestion that adversely 
affects consumers. The Act gives FERC authority to issue one or more permits 
for the construction or modification of electric transmission facilities 
that are located in a national electric transmission corridor if FERC makes 
certain findings described in the Act.
Siting of Liquefied Natural Gas Facilities: The Act amends the Natural Gas 
Act6 to grant FERC the exclusive authority to approve or deny an application 
for the siting, construction, expansion or operation of an onshore liquefied 
natural gas ("LNG") terminal or any LNG terminal located in state waters. 
These provisions are designed to preempt claims that a state has 
jurisdiction to approve or deny development of LNG terminals proposed to be 
located within the boundaries of such state.
Protection of Transmission Contracts in the Pacific Northwest: The Act 
amends the FPA to protect the existing firm transmission rights of certain 
electric utilities or persons located in the Pacific Northwest.
Summary

I. Repeal of PUHCA

The Act repeals PUHCA and replaces PUHCA with the Public Utility Holding 
Company Act of 2005 ("New PUHCA"). The repeal of PUHCA has the following 
primary consequences:

The concept of "registered holding companies" has been abolished. As a 
result, the broad powers of the SEC to regulate the finances and operations 
of registered holding companies - and the complex web of exemptions that 
have enabled certain companies to avoid such regulation - have been 
eliminated.
The restrictions placed upon the acquisition of the voting securities of 
"electric utility companies" and "gas utility companies" (as each term is 
defined in PUHCA) have been eliminated. Under PUHCA, a person could not 
acquire more than 5% of a "public-utility company" (as defined in PUHCA) if 
such person already owned 5% or more of another public-utility company, or 
through such purchase would acquire more than 5% of two or more 
public-utility companies.

In place of such restrictions, the Act amends Section 203(a) of the FPA7 
(which requires FERC review and approval of the sale of FERC-jurisdictional 
assets) to require prior FERC approval if a holding company which includes 
in its holding company system a "transmitting utility" (as defined in the 
Act) or an "electric utility company" (as defined in the Act) seeks to 
purchase or acquire a security with a value over $10,000,000, or seeks 
directly or indirectly to merge with a transmitting utility, an electric 
utility company or a holding company which has in its holding company system 
a transmitting utility or electric utility company with a value greater than 
$10,000,000.

Holding companies and their public utility subsidiaries will no longer be 
limited to owning and operating a "single integrated utility system."
FERC, rather than the SEC, will have jurisdiction and authority to enforce 
New PUHCA.
New PUHCA is a radically scaled-back version of PUHCA. The principal 
provisions of New PUHCA provide that:

Each "holding company" and its "subsidiaries" are required to maintain and 
make available to FERC such books, accounts and other records as FERC 
determines are relevant to the costs incurred by a "public utility" or 
"natural gas company" that is within the "holding company system" of such 
holding company and necessary or appropriate for the protection of utility 
customers with respect to jurisdictional rates. State utility commissions 
will have access to such records to the extent that any such commission has 
jurisdiction to regulate a public-utility company within such holding 
company system. (The terms "holding company," "holding company system," 
"public-utility company," "public utility," "natural gas company" and 
"subsidiaries" have the meanings assigned to such terms in the Act.)
With a couple of limited exceptions, all holding companies are subject to 
New PUHCA’s financial records requirements. Although such requirements are 
much less onerous than the financial requirements that have been imposed by 
PUHCA on registered holding companies, many more companies will be subject 
to the financial records requirements of New PUHCA than have been subject to 
the financial requirements of PUHCA, as a result of the more limited 
exceptions provided by New PUHCA.
In general, a "holding company" is any company that directly or indirectly 
owns, controls or holds with power to vote 10% or more of the outstanding 
voting securities of a public-utility company or of a holding company of any 
public-utility company.8
The Act directs FERC to issue rules to exempt from New PUHCA’s financial 
record requirements any person that is a holding company solely with respect 
to one or more qualifying facilities, exempt wholesale generators or foreign 
utility companies.
FERC also has authority to exempt a person or transaction from New PUHCA’s 
financial records requirements if such records are not relevant to the 
jurisdictional rates of the applicable public utility or natural gas 
company.
New PUHCA will take effect six months following the date of enactment of the 
Act.
II. Amendment of PURPA

The PURPA amendments affect "electric utilities" and "qualifying facilities" 
(as each term is defined in PURPA) in the following manner:

The Act terminates the "mandatory purchase obligation" imposed by PURPA. 
Under the mandatory purchase obligation, an electric utility is required to 
purchase at the purchasing utility’s avoided cost the energy and capacity 
made available to such utility by a qualifying facility.
Although the Act does not adversely affect existing qualifying facilities, 
the Act provides that no electric utility shall be required to enter into a 
new contract or obligation to purchase electric energy from a qualifying 
facility if FERC finds that the qualifying facility has nondiscriminatory 
access to:
"(A)(i) independently administered, auction-based day ahead and real time 
wholesale markets for the sale of electric energy; and (ii) wholesale 
markets for long-term sales of capacity and electric energy; or
(B)(i) transmission and interconnection services that are provided by a 
Commission-approved regional transmission entity and administered pursuant 
to an open access transmission tariff that affords nondiscriminatory 
treatment to all customers; and (ii) competitive wholesale markets that 
provide a meaningful opportunity to sell capacity, including long-term and 
short-term sales, and electric energy, including long-term, short-term and 
real-time sales, to buyers other than the utility to which the qualifying 
facility is interconnected. In determining whether a meaningful opportunity 
to sell exists, the Commission shall consider, among other factors, evidence 
of transactions within the relevant market; or
(C) wholesale markets for the sale of capacity and electric energy that are, 
at a minimum, of comparable competitive quality as markets described in 
subparagraphs (A) and (B)."
Any electric utility may file an application with FERC for relief from 
PURPA’s mandatory purchase obligation on a service territory-wide basis.
The Act deletes the ownership limitations applicable to qualifying 
facilities, meaning that electric utility companies and holding companies 
may now own up to 100% of the equity interests in one or more qualifying 
facilities.
The Act also amends the "mandatory sale obligation" which currently requires 
that electric utilities sell power to qualifying facilities on a 
nondiscriminatory basis. Under the Act, no electric utility shall be 
required to enter into a new contract or obligation to sell electric energy 
to a qualifying facility if FERC finds that (i) competing retail electric 
suppliers are willing and able to sell and deliver electric energy to the 
qualifying facility and (ii) the electric utility is not required by state 
law to sell electric energy in its service territory.





>----- Original Message -----
>From: "Fred Schneider" <fwschneider at comcast.net>
>To: <pittsburgh-railways at dementia.org>
>Sent: Monday, September 12, 2005 7:25 PM
>Subject: [PRCo] fuel costs
>
>
> > There was a post by Mr. Holland last week and a subsequent one by Mr.
> > Lybarger on the subject of fuel costs versus inflation.
> >
> > For whose who did not hear it on Morning Edition on PBS radio this
> > morning, the Lundberg survey reports that last week's gasoline price
> > survey set a new inflation adjusted high, whipping the 1981 high by
> > one penny.   I found a Sheetz station in Lancaster County last night
> > where all three grades of gasoline were again under $3.00 a gallon.
> > Now if only VW's 180 turbo engine liked low grade gasoline.    PBS
> > also reported that the IRS approved 48.5 cent mileage reimbursement
> > for the rest of the year.   I did not look at the IRS website to
> > confirm same.
> >
> >
> >
>
>
>