HR 8568
Lowering Utility Bills Act
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Bill overview
The Lowering Utility Bills Act aims to reduce the returns on equity that investor-owned electric and gas utilities are allowed to earn. It requires these utilities to base their returns on a range of reasonableness, derived from average expected returns on equity for the U.S. market, as determined by financial academics, financial institutions, and Global Systemically Important Banks. The bill also prohibits utilities from recovering costs associated with lobbying, political contributions, and certain executive expenses, and establishes a process for prioritizing cost-saving investments in transmission projects.
Key provisions
- Establishes a range of reasonableness for utility returns on equity based on market data.
- Requires utilities to use the lowest return on equity within the established range for rate-setting purposes.
- Prohibits utilities from recovering costs related to lobbying, political contributions, and certain executive expenses.
- Mandates that utilities prioritize grid-enhancing technologies when planning capital expenditures.
- Requires utilities to publicly disclose justification for higher returns on equity.
- Addresses transmission provider returns on equity, establishing a similar range of reasonableness.
- Creates a ban on recovering costs associated with membership dues to organizations like the 501(c)(6) and political contributions.
- Establishes a process for adjusting the range of reasonableness based on reduced risks for transmission providers.
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119th CONGRESS — 2d Session
H. R. 8568
IN THE HOUSE OF REPRESENTATIVES
A BILL
To amend the Federal Power Act and the Public Utility Regulatory Policies Act of 1978 to require investor owned electric utilities and gas utilities and transmission providers to, when establishing or calculating a return on equity, establish or calculate the return on equity at the lowest return on equity in an established range of reasonableness, and for other purposes.
This Act may be cited as the Lowering Utility Bills Act
.
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).
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.
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.
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 use of a formula ratemaking process;
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).
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;
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;
penalties or fines, including tax penalties or fines, issued against the transmission provider.
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.
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 Federal Power Act is amended by striking section 219 (16 U.S.C. 824s).
in section 201(b)(2), by striking 219,
each place it appears; and
in section 201(e), by striking 219,
.
Title VI of the Public Utility Regulatory Policies Act of 1978 is amended by adding at the end the following:
Except as provided in paragraph (2), when calculating a return on equity for a covered utility for purposes of any official business, including reports, financial disclosures, and rate applications, such covered utility 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).
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.
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.
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.
A covered utility shall, in accordance with clause (ii), adjust a range of reasonableness established under subparagraph (A) to account for the reduced risks of the covered utility due to, as applicable—
any applicable State action, including—
the approval of any regulatory assets of the covered utility;
the allowance of operating cost riders and nonbypassable fees;
the allowance of recovery for any customer bad debt or under-collections;
the approval of any securitization or bond revenue related to the provision of services by the covered utility; and
approval or allowance of any other measure that reduces the risks of the covered utility relative to an entity operating in a competitive market.
Except as otherwise provided in this paragraph, when using a return on equity for purposes of any official business, a covered utility shall use the lowest return on equity in the applicable range of reasonableness established pursuant to paragraph (1).
Nothing in this section precludes an applicable State regulatory authority from requesting or requiring alternative rate schedules that rely on a return on equity that is not the return on equity required under subparagraph (A).
a justification outlining why the higher return on equity is required to attract needed capital and to maintain the financial integrity of the covered utility;
No covered utility may recover through rates 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;
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;
travel, lodging, or food and beverage expenses for the board of directors or officers of—
such covered utility; or
such covered utility’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 covered utility; or
such covered utility’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 applicable State regulatory authority or the Commission, 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;
penalties or fines, including tax penalties or fines, issued against the covered utility; or
payments to outside attorneys representing the covered utility in any Commission proceeding or experts testifying on behalf of, or otherwise supporting the participation by, utilities in any Commission proceeding.
A violation of this section shall be treated as a violation of a provision of part II of the Federal Power Act and enforced in accordance with section 316A of such Act.
an electric cooperative;
a gas cooperative;
an electric utility that is owned or operated by a State or political subdivision thereof; or
a gas utility that is owned or operated by a State or political subdivision thereof.
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 table of contents in section 1(b) of the Public Utility Regulatory Policies Act of 1978 is amended by inserting after the item relating to section 608 the following: