Sec. 5 RE-REGULATION- EPAct 1992 FERC Orders 888 and 889 (1996) EPAct 2005 In short these three laws move the power industry towards an increase in competition in the generation and retail sales sectors NERC ISOs and RTOs This product was funded by a grant awarded under the President’s Community-Based Job Training Grants as implemented by the U.S. department of labor’s Employment and Training Administration. The information contained in this product was created by a grantee organization and does not necessarily reflect the official position of the U.S. Department of labor. All references to non-governmental companies or organizations, their services, products, or resources are offered for informational purposes and should not be construed as an endorsement by the Department of Labor. This product is copyrighted by the institution that created it and is intended for individual, organizational, non-commercial use only.

Sec. 5 RE-REGULATION- EPAct 92 FERC is the enforcer of legislative change – Has regulatory jurisdiction over electricity sales, wholesale rates, hydro licensing and more EPAct 92 amended the laws to authorize FERC to order utilities to provide for wholesale wheeling Amended PUHCA to loosen regulations on holding companies and allowed company diversification and creation of EWGs

Sec. 5 RE-REGULATION- Orders 888 & 889 – Orders were issued to prevent undue discrimination in the provision of transmission services FERC 888 – guaranteed generators and wholesale purchasers access to transmission-owning utilities – Allowed utility recovery of stranded costs FERC 888a – Balance different approaches of stranded cost recovery – Maintain regulatory deals of past large investments – Avoid shifting stranded costs to consumers

Sec. 5 RE-REGULATION- Orders 888 & 889(cont) FERC 889 – Required utilities operating transmission systems to establish electronic information systems known as OASIS – Open Access Same-time Information Systems – Required standards of conduct that functionally separated the operation of the transmission system from each utilities wholesale merchant function

Sec. 5 RE-REGULATION- EPAct 2005 EPAct 2005 PURPOSE – Increase Reliability – Encourage Investment in Infrastructure – Promote Generation Fuel Diversity – Increase Protections for Consumers – Promote Energy Efficiency and Conservation EPAct ’05 NEED – gaping holes in current laws addressing new issues and trends from the re-regulation of power industry

Sec. 5 RE-REGULATION- EPAct 2005(cont) EPAct 2005 PROVISIONS RELIABILITY – Establish utility self regulating reliability organization with FERC oversight (NERC) – Authority to site transmission corridors in national interest – overrules state commissions DOE coordinates federal permitting for transmission – Require Federal land agencies to expedite vegetative control plan approvals for transmission ROW’s to meet reliability standards (i.e. Tree cutbacks and defoliation in the Right- Of- Ways)

Sec. 5 RE-REGULATION- EPAct 2005(cont) INFRASTRUCTURE INVESTMENT INCENTIVES – Reduces depreciation of transmission lines and gas distribution lines from 20 to 15 years – Reduces cost recovery for pollution control on generation plants from 20 to 7 years – Production tax credit for new nuclear facilities SUPPLY DIVERSITY – Federal funding for Clean Coal Technologies – Varied tax incentives for CCT, Nuclear and Hydro – Incentives to increase generation in oil and gas areas

Sec. 5 RE-REGULATION- EPAct 2005(cont) CONSUMER and MARKET PROTECTIONS – Increases FERC enforcement authority Prevent market manipulation Clarified FERC review of mergers POWER DELIVERY – Time based rates and metering – Methods for demand response – Improve methods of interconnect for customer generators (Co-gens, Distributed Power, QFs) CO-OPS – Exemption from many FERC regulations

Sec. 5 RE-REGULATION- EPAct 2005(cont) EFFICIENCY AND CONSERVATION Tax Incentives – Energy Exploration – Energy Delivery – Energy Conservation – Energy Production

Sec. 5 RE-REGULATION- EPAct 2005(cont) PUHCA REPEAL – Consumer protections regarding business structure and monopolies revert back to FERC and State PUCs – Opens the industry to investment opportunity PURPA REFORM – Revises QF criteria – Sets conditions for eliminating mandatory purchase of QF generated power

Sec. 5 RE-REGULATION- NERC North American Electric Reliability Council NERC – Mission to ensure that bulk electric power system is reliable, adequate and secure Divides the USA into 10 NERC Regions New England region is NPCC Northeast Power Coordinating Council – In 2005 NERC mandated comprehensive reliability standards to which all utilities must comply

Sec. 5 RE-REGULATION- ISOs & RTOs Both power pools and groups of utilities have responded to FERC and NERC rulemakings by forming ISOs and RTOs – Goals are to ensure nondiscriminatory operation of transmission systems and to facilitate development of regional transmission tariffs (charges) – Self funded by member utilities – Formed to comply with FERC 888 rule for comparable service- Utilities owning transmission must charge themselves the same transmission tariffs that they charge any other utility

Sec. 5 RE-REGULATION- ISOs & RTOs (cont) ISOs and RTOs – Facilitate open access to transmission system – Manage dispatch for generation and congestion – Administer the regional spot market for energy and capacity – Principal financial benefit is to reduce the pancaking or cumulative cost additions of different rate structures, thus reducing the overall cost of power transmission