Sec. 2. Requirements for and relating to transmission providers
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The Federal Power Act is amended by inserting after section 206 ( 16 U.S.C. 824e ) the following: When establishing an authorized return on equity for a transmission provider for purposes of any change to be made by such transmission provider in any rate or charge, the Commission shall, subject to subparagraph (C), establish a range of reasonableness for the return on equity that is comprised of three data points, each of which represent a return on equity represented by a current average expected 10-year total or large-cap United States equity market return or equivalent measure determined in accordance with subparagraph (B).
The Commission shall determine one data point to be included in a range of reasonableness established under subparagraph
(A)by— identifying the midpoint expected 10-year total or large-cap United States equity market return or equivalent measure as estimated by financial academics for each of the previous 5 years; and using the average of such midpoints. The Commission shall determine one data point to be included in a range of reasonableness established under subparagraph
(A)by— identifying the midpoint expected 10-year total or large-cap United States equity market return or equivalent measure as estimated by financial institutions for each of the previous 5 years; and using the average of such midpoints. The Commission shall determine one data point to be included in a range of reasonableness established under subparagraph
(A)by— identifying the midpoint expected 10-year total or large-cap United States equity market return or equivalent measure as estimated by Global Systemically Important Banks for each of the previous 5 years; and using the average of such midpoints. The Commission shall adjust a range of reasonableness established under subparagraph
(A)to account for the reduced risks of the applicable transmission provider due to, as applicable— not participating in a regional planning process; and any applicable Federal action, including— the approval of any regulatory assets of the transmission provider; the use of a formula ratemaking process; the provision to the transmission provider of any Federal loans or guarantees for assets in the rate base; or approval or allowance of any other measure that reduces the risks of the transmission provider that it will not recover prudently incurred capital investments. Except as provided in subparagraph (B), when establishing an authorized return on equity for a transmission provider for purposes of any change to be made by such transmission provider in any rate or charge, the Commission shall establish the authorized return on equity at the lowest return on equity in the applicable range of reasonableness established pursuant to paragraph (1). When establishing an authorized return on equity for a transmission provider for purposes of any change to be made by such transmission provider in any rate or charge, the Commission may establish an authorized return on equity that is in the applicable range of reasonableness established pursuant to paragraph
(1)but is not the lowest return on equity in such range only if such transmission provider provides the Commission clear and convincing evidence that a higher return on equity is required to attract needed capital and to maintain the financial integrity of the transmission provider. No transmission provider may recover through customer rates or charges any direct or indirect cost associated with— membership dues or sponsorship fees paid, or contributions made, to an organization described in section 501(c)(6) of the Internal Revenue Code of 1986; lobbying or legislative action, including— any expense for the purpose of directly or indirectly influencing the possible— adoption of Federal, State, or local regulations, legislation, or ordinances; or repeal or modification of existing Federal, State, or local regulations, legislation, or ordinances; any expense for the purpose of directly or indirectly influencing elections or appointments of public officials or referenda; any expense for the purpose of directly or indirectly influencing the approval, modification, or revocation of utility franchises; any expense for the purpose of directly or indirectly influencing the public opinion with respect to Federal, State, or local— regulations, legislation, or ordinances; elections; referenda; or utility rate setting; and any expense for the purpose of directly or indirectly influencing the decisions of Federal, State, or local government officials; advertising, marketing, or communications that seek to influence public opinion or any other related costs, unless such marketing, advertising, communications, or related costs are specifically approved or ordered by the Commission, the Secretary of Energy, or the Administrator of the Environmental Protection Agency; travel, lodging, or food and beverage expenses for the board of directors or officers of— such transmission provider; or such transmission provider’s holding company or any associated company or affiliate; entertainment or gifts; any owned, leased, or chartered aircraft for the board of directors or officers of— such transmission provider; or such transmission provider’s holding company or any associated company or affiliate; investor relations; attendance in, participation in, preparation for, or appeal of any rate proceeding conducted before the Commission pursuant to section 205 or section 206, including costs for attorneys’ fees, fees to engage expert witnesses or consultants, the portion of employee salaries associated with such attendance, participation, preparation, or appeal of a rate proceeding and related costs identified by the Commission; contributions made to an organization described in paragraph
(3)or
(4)of section 501(c) of the Internal Revenue Code of 1986; contributions to political candidates, political parties, campaign committees, issue committees, or independent expenditure committees, or other political expenses; products or services not regulated by the Commission, including marketing, administration, or customer service; or penalties or fines, including tax penalties or fines, issued against the transmission provider. The Commission shall consider a capital expenditure by a transmission provider for a transmission project prudent only if— the transmission provider provides to the Commission substantial evidence that the transmission provider prioritized grid enhancing technologies and other lower cost alternatives in its planning process for the transmission project; and the transmission project was subject to a regional planning process that is determined by the Commission to be in compliance with applicable orders of the Commission. Not later than 120 days after the date of enactment of this section, the Commission shall issue regulations to carry out this section. In this section: The terms affiliate , associate company , and holding company have the meaning given such terms in section 366.1 of title 18, Code of Federal Regulations (or any successor regulations). The term financial academic means an accredited, full-time finance teaching program with over 50 years of teaching experience that regularly publishes United States equity market expected return data and that provides a curriculum in business administration or finance. The term financial institution means an entity that manages not less than $2,000,000,000,000 in combined assets and regularly publishes United States equity market expected return data. The term Global Systemically Important Bank means an entity classified as a Global Systemically Important Bank by the Financial Stability Board that regularly publishes United States equity market expected return data. The term transmission provider means any public utility that owns, operates, or controls facilities used for the transmission of electric energy in interstate commerce. . The Federal Power Act is amended by striking section 219 ( 16 U.S.C. 824s ). The Federal Power Act is amended— in section 201(b)(2), by striking 219, each place it appears; and in section 201(e), by striking 219, .
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