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News Release: August 8, 2005 Print this page

Energy Bill provisions represent most significant changes in energy law in 70 years, Chairman says

Federal Energy Regulatory Commission Chairman Joseph T. Kelliher today congratulated President Bush for realizing one of his top policy objectives by signing into law the Energy Policy Act of 2005. He noted that the energy bill's provisions involve the most significant changes in the Commission's responsibilities in 70 years.

"The energy bill represents the most significant policy changes for FERC since the Federal Power Act of 1935 and the Natural Gas Act of 1938," Chairman Kelliher said. "Clearly, this new law establishes significant new responsibilities for the Commission, and I am determined to address all of the mandates within the timeframes provided by Congress," he said.

Among those new responsibilities is overseeing the reliability of the nation's electricity transmission grid. Congress has directed the Commission to finalize within 180 days new rules establishing an enforceable framework of mandatory power-grid reliability rules. The law also gives the Commission new "backstop authority" responsibility to site power transmission facilities in "national interest electric transmission corridors." The Commission must adopt rules regarding permit applications for transmission facilities and long-term transmission rights, and providing incentive-based rates to promote transmission investment.

The energy bill also repeals the 1935 Public Utility Holding Company Act, or PUHCA, creating new mandates for the Commission to issue rules addressing access to utility holding company books and records. "We are optimistic that PUHCA repeal will bring sorely needed new avenues of capital investment into the U.S. electricity sector, particularly for the transmission grid where investment has been lagging growth for years," Chairman Kelliher said, noting that PUHCA had served to blunt electricity market entry by certain well-capitalized companies and industry sectors.

"While time will tell whether or not PUHCA repeal results in a significant uptick in mergers and acquisitions, I am nonetheless gratified that Congress saw fit to reinforce FERC's merger-review authority, particularly with regard to generation-only transactions. This added merger-review authority will strengthen the Commission's ability to prevent the exercise of market power," the Chairman observed.

Chairman Kelliher also praised Congress for granting FERC additional tools to prevent market manipulation. "Congress acted to prevent market manipulation by establishing an express prohibition of market manipulation and giving the Commission the ability to act swiftly to bar and sanction manipulative practices. We felt these new tools were necessary to enable us to respond to the changes that have occurred in electricity and gas markets since the 1930s. Congress apparently agreed," the Chairman observed.

The energy bill includes provisions addressing price transparency in electric and natural gas markets, and significantly revises FERC's enforcement and civil penalties authorities. "Putting FERC's civil penalty muscle on par with those of other federal agencies should be a significant deterrent to any repeat of the sort of unscrupulous behavior that occurred during the Western energy crisis in 2000 and 2001," the Chairman observed.

The new statute also affirms the Commission's exclusive authority under the Natural Gas Act to authorize new import terminals for liquefied natural gas, or LNG. "Congress is to be congratulated for ending the regulatory uncertainty created by an unprecedented legal challenge to FERC's LNG authority. The new law leaves intact the considerable authority states already enjoy in reviewing LNG import terminal proposals, and gives the states new authority to conduct safety inspections," Chairman Kelliher said.

Chairman Kelliher further commented that FERC is actively working with other federal agencies, such as the Department of Energy, in the implementation of the new law, which includes inter-agency studies and reports mandated by Congress.

A fact sheet summarizing the Commission's energy bill implementation obligations is available at www.ferc.gov.

R-05-51

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Updated: June 28, 2010