Sec. 3. Rulemaking on shared savings framework for transmitting utilities subject to Federal Energy Regulatory Commission jurisdiction
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Not later than one year after the date of the enactment of this Act, the Commission shall issue a final rule under section 219(b)(3) of the Federal Power Act ( 16 U.S.C. 824s(b)(3) ), as amended by section 2 , that establishes a framework under which a covered transmitting utility may recover a portion of verified cost savings attributable to a qualifying action of such transmitting utility as an incentive (in this subsection referred to as the shared savings framework ). The Commission shall develop and include in the rule under subsection
(a)standardized methodologies, applicable across similarly situated transmission segments, as follows: Methodologies, developed in consultation with the Secretary, for covered transmitting utilities to determine the annual baseline performance of transmission facilities or transmission segments absent qualifying actions— by measuring the baseline performance of such a transmission facility or transmission segment— through the actual amount of electrical energy entering and leaving such facility or segment (commonly referred to as direct metering ); or if the method under clause
(i)is not feasible, through an estimation of such amount consistent with modeling methodologies prescribed by the Commission; and by normalizing data to ensure such baseline performance accounts for variability in exogenous factors determined by the Commission, such as variability in— weather; demand over time; upgrades, interconnections, or operational changes made by other utilities, Independent System Operators or Regional Transmission Organizations, or other entities determined relevant by the Commission; or other conditions affecting demand or generation. Methodologies for covered transmitting utilities to estimate and calculate, and for independent evaluators to verify, the cost savings attributable to qualifying actions under the shared savings framework, taking into account— the baseline performance of any transmission facility or transmission segment with respect to which a qualifying action is conducted; and price proxies, determined according to a methodology prescribed by the Commission, for the value of electric energy transmitted (which may include, for a region managed by an Independent System Operator or Regional Transmission Organization, the locational marginal price corresponding to the location on the electric grid where an injection or withdrawal of power is modeled (commonly referred to as a pricing node )). Methodologies for covered transmitting utilities to determine, taking into account the factors described in subparagraph (B), the following: The total percentage of cost savings attributable to a qualifying action that such a utility may recover as an incentive under the shared savings framework, which may not be less than 10 percent or greater than 60 percent of such total attributable cost savings (in this section referred to as the recoverable percentage of such savings). The period of time during which such a utility may recover amounts as an incentive for such an action, which may not be shorter than a 2-year period or longer than a 5-year period (in this section referred to as the rate recovery timeline for such action). The factors described in this subparagraph are the following: The extent of financial or operational risk to be assumed by a covered transmitting utility in conducting a qualifying action. The baseline performance for transmission facilities or transmission segments with respect to which such action is to be conducted. The replicability or demonstration value of such action. The duration of cost savings predicted to result from such action and whether such cost savings will remain consistent over such duration. The extent to which such action is expected to result in additional benefits, such as improvements to the resilience or the reliable operation of the bulk-power system, reductions to transmission congestion, or reductions to greenhouse gas emissions. Such other factors as the Commission may determine relevant to ensure the incentive is performance-based, transparent, and cost-effective. To be considered for an incentive under the shared savings framework for the conduct of a qualifying action, a covered transmitting utility shall submit to the Commission an initial filing, the contents of which shall be verified by an independent evaluator determined appropriate by the Commission, that includes the following: An identification of the baseline performance of any transmission facility or transmission segment with respect to which such action is to be conducted for the one-year period preceding the date on which such conduct is to be commenced, determined by such utility pursuant to an applicable methodology under subsection (b)(1) (including the data underlying such calculation). A description of such action, including an analysis of improvements expected to result from such action. The rate recovery timeline for such action and the recoverable percentage of cost savings attributable to such action, determined pursuant to an applicable methodology under subsection (b)(3). An estimate, developed pursuant to an applicable methodology under subsection (b)(2) , of the cost savings to result from such action for— the one-year period beginning on the date on which the conduct of such action commences; and the duration of the rate recovery timeline for such action. A claim for 50 percent of the recoverable percentage of cost savings estimated under paragraph (4)(A). An agreement by such utility to file with the Commission the annual reports required under subsection
(d), the contents of which shall be verified by an independent evaluator determined appropriate by the Commission. Beginning one year after the date on which a covered transmitting utility submits an initial filing for a qualifying action under subsection
(c), and on an annual basis thereafter until the end of the rate recovery timeline for such action determined under paragraph
(3)of such subsection or until such action no longer results in cost savings, whichever occurs first, such utility shall file with the Commission a report containing, with respect to the qualifying action of such utility, the following: Data on the performance during the preceding year of any transmission facility or transmission segment with respect to which such action was conducted, and a comparison of such performance to the baseline performance of that transmission facility or transmission segment determined pursuant to an applicable methodology under subsection (b)(1) for such year. The actual cost savings attributable to the qualifying action for the preceding year, calculated pursuant to an applicable methodology under subsection (b)(2) . If such utility expects cost savings to result from the qualifying action during the following year, an estimate, developed pursuant to an applicable methodology under subsection (b)(2) , of the cost savings for such following year. A claim for the following: An amount that is the recoverable percentage of the actual cost savings for the preceding year calculated under paragraph
(2)minus any amount previously recovered based on an estimate of cost savings for such year under subsection (e)(1) or subsection (e)(2)(B) , as the case may be. If the report includes an estimate of cost savings for the following year under paragraph (3), an amount that is 50 percent of the recoverable percentage of such estimated cost savings. If such utility finds that the total amount recovered for a year under subsection
(e)exceeds the amount equal to the total recoverable percentage of the actual cost savings for that year under paragraph (2), an identification of the excess amount. Not later than 60 days after receiving an initial filing of a covered transmitting utility under subsection
(c), the Commission shall provide to such utility a rate adjustment under which such utility may recover the amount claimed under subsection (c)(5) . Not later than 60 days after receiving an annual report of a covered transmitting utility under subsection
(d), the Commission shall provide to such utility a rate adjustment under which— subject to paragraph (3), such utility may recover the amount claimed under subsection (d)(4)(A) ; and if the report included a claim under subsection (d)(4)(B) , such utility may recover the amount so claimed. If a utility identifies an excess amount under subsection (d)(5) , or the Commission determines the information reported for that year under subsection
(d)is insufficient for purposes of this subsection, the Commission shall credit the difference to ratepayers through a rate adjustment. It is the sense of Congress that— following the issuance of the rule under subsection (a), the Commission should revise such rule, or issue additional rules under the authority of section 219(b)(3) of the Federal Power Act ( 16 U.S.C. 824s(b)(3) ), as amended by section 2 , to expand the shared savings framework to additional categories of measurable, demonstrable, and verifiable covered transmission actions; any such rule should include a version of the methodologies developed under subsection
(b)adapted for such additional categories; and any such rule should take into account the findings of the most recently conducted study under section 6 .
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Sec. 3
Rulemaking on shared savings framework for transmitting utilities subject to Federal Energy Regulatory Commission jurisdiction
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