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U.S. Code as of:
01/19/04
Section 79z-5a. Exempt wholesale generators
(a) Definitions
For purposes of this section -
(1) Exempt wholesale generator
The term "exempt wholesale generator" means any person
determined by the Federal Energy Regulatory Commission to be
engaged directly, or indirectly through one or more affiliates as
defined in section 79b(a)(11)(B) of this title, and exclusively
in the business of owning or operating, or both owning and
operating, all or part of one or more eligible facilities and
selling electric energy at wholesale. No person shall be deemed
to be an exempt wholesale generator under this section unless
such person has applied to the Federal Energy Regulatory
Commission for a determination under this paragraph. A person
applying in good faith for such a determination shall be deemed
an exempt wholesale generator under this section, with all of the
exemptions provided by this section, until the Federal Energy
Regulatory Commission makes such determination. The Federal
Energy Regulatory Commission shall make such determination within
60 days of its receipt of such application and shall notify the
Commission whenever a determination is made under this paragraph
that any person is an exempt wholesale generator. Not later than
12 months after October 24, 1992, the Federal Energy Regulatory
Commission shall promulgate rules implementing the provisions of
this paragraph. Applications for determination filed after the
effective date of such rules shall be subject thereto.
(2) Eligible facility
The term "eligible facility" means a facility, wherever
located, which is either -
(A) used for the generation of electric energy exclusively
for sale at wholesale, or
(B) used for the generation of electric energy and leased to
one or more public utility companies; Provided, That any such
lease shall be treated as a sale of electric energy at
wholesale for purposes of sections 824d and 824e of title 16.
Such term shall not include any facility for which consent is
required under subsection (c) of this section if such consent has
not been obtained. Such term includes interconnecting
transmission facilities necessary to effect a sale of electric
energy at wholesale. For purposes of this paragraph, the term
"facility" may include a portion of a facility subject to the
limitations of subsection (d) of this section and shall include a
facility the construction of which has not been commenced or
completed.
(3) Sale of electric energy at wholesale
The term "sale of electric energy at wholesale" shall have the
same meaning as provided in section 824(d) of title 16.
(4) Retail rates and charges
The term "retail rates and charges" means rates and charges for
the sale of electric energy directly to consumers.
(b) Foreign retail sales
Notwithstanding paragraphs (1) and (2) of subsection (a) of this
section, retail sales of electric energy produced by a facility
located in a foreign country shall not prevent such facility from
being an eligible facility, or prevent a person owning or
operating, or both owning and operating, such facility from being
an exempt wholesale generator if none of the electric energy
generated by such facility is sold to consumers in the United
States.
(c) State consent for existing rate-based facilities
If a rate or charge for, or in connection with, the construction
of a facility, or for electric energy produced by a facility (other
than any portion of a rate or charge which represents recovery of
the cost of a wholesale rate or charge) was in effect under the
laws of any State as of October 24, 1992, in order for the facility
to be considered an eligible facility, every State commission
having jurisdiction over any such rate or charge must make a
specific determination that allowing such facility to be an
eligible facility (1) will benefit consumers, (2) is in the public
interest, and (3) does not violate State law; Provided, That in the
case of such a rate or charge which is a rate or charge of an
affiliate of a registered holding company:
(A) such determination with respect to the facility in question
shall be required from every State commission having jurisdiction
over the retail rates and charges of the affiliates of such
registered holding company; and
(B) the approval of the Commission under this chapter shall not
be required for the transfer of the facility to an exempt
wholesale generator.
(d) Hybrids
(1) No exempt wholesale generator may own or operate a portion of
any facility if any other portion of the facility is owned or
operated by an electric utility company that is an affiliate or
associate company of such exempt wholesale generator.
(2) Eligible Facility. - Notwithstanding paragraph (1), an exempt
wholesale generator may own or operate a portion of a facility
identified in paragraph (1) if such portion has become an eligible
facility as a result of the operation of subsection (c) of this
section.
(e) Exemption of EWGS
An exempt wholesale generator shall not be considered an electric
utility company under section 79b(a)(3) of this title and, whether
or not a subsidiary company, an affiliate, or an associate company
of a holding company, an exempt wholesale generator shall be exempt
from all provisions of this chapter.
(f) Ownership of EWGS by exempt holding companies
Notwithstanding any provision of this chapter, a holding company
that is exempt under section 79c of this title shall be permitted,
without condition or limitation under this chapter, to acquire and
maintain an interest in the business of one or more exempt
wholesale generators.
(g) Ownership of EWGS by registered holding companies
Notwithstanding any provision of this chapter and the
Commission's jurisdiction as provided under subsection (h) of this
section, a registered holding company shall be permitted (without
the need to apply for, or receive, approval from the Commission,
and otherwise without condition under this chapter) to acquire and
hold the securities, or an interest in the business, of one or more
exempt wholesale generators.
(h) Financing and other relationships between EWGS and registered
holding companies
The issuance of securities by a registered holding company for
purposes of financing the acquisition of an exempt wholesale
generator, the guarantee of securities of an exempt wholesale
generator by a registered holding company, the entering into
service, sales or construction contracts, and the creation or
maintenance of any other relationship in addition to that described
in subsection (g) of this section between an exempt wholesale
generator and a registered holding company, its affiliates and
associate companies, shall remain subject to the jurisdiction of
the Commission under this chapter: Provided, That -
(1) section 79k of this title shall not prohibit the ownership
of an interest in the business of one or more exempt wholesale
generators by a registered holding company (regardless of where
facilities owned or operated by such exempt wholesale generators
are located), and such ownership by a registered holding company
shall be deemed consistent with the operation of an integrated
public utility system;
(2) the ownership of an interest in the business of one or more
exempt wholesale generators by a registered holding company
(regardless of where facilities owned or operated by such exempt
wholesale generators are located) shall be considered as
reasonably incidental, or economically necessary or appropriate,
to the operations of an integrated public utility system;
(3) in determining whether to approve (A) the issue or sale of
a security by a registered holding company for purposes of
financing the acquisition of an exempt wholesale generator, or
(B) the guarantee of a security of an exempt wholesale generator
by a registered holding company, the Commission shall not make a
finding that such security is not reasonably adapted to the
earning power of such company or to the security structure of
such company and other companies in the same holding company
system, or that the circumstances are such as to constitute the
making of such guarantee an improper risk for such company,
unless the Commission first finds that the issue or sale of such
security, or the making of the guarantee, would have a
substantial adverse impact on the financial integrity of the
registered holding company system;
(4) in determining whether to approve (A) the issue or sale of
a security by a registered holding company for purposes other
than the acquisition of an exempt wholesale generator, or (B)
other transactions by such registered holding company or by its
subsidiaries other than with respect to exempt wholesale
generators, the Commission shall not consider the effect of the
capitalization or earnings of any subsidiary which is an exempt
wholesale generator upon the registered holding company system,
unless the approval of the issue or sale or other transaction,
together with the effect of such capitalization and earnings,
would have a substantial adverse impact on the financial
integrity of the registered holding company system;
(5) the Commission shall make its decision under paragraph (3)
to approve or disapprove the issue or sale of a security or the
guarantee of a security within 120 days of the filing of a
declaration concerning such issue, sale or guarantee; and
(6) the Commission shall promulgate regulations with respect to
the actions which would be considered, for purposes of this
subsection, to have a substantial adverse impact on the financial
integrity of the registered holding company system; such
regulations shall ensure that the action has no adverse impact on
any utility subsidiary or its customers, or on the ability of
State commissions to protect such subsidiary or customers, and
shall take into account the amount and type of capital invested
in exempt wholesale generators, the ratio of such capital to the
total capital invested in utility operations, the availability of
books and records, and the financial and operating experience of
the registered holding company and the exempt wholesale
generator; the Commission shall promulgate such regulations
within 6 months after October 24, 1992; after such 6-month period
the Commission shall not approve any actions under paragraph (3),
(4) or (5) except in accordance with such issued regulations.
(i) Application of chapter to other eligible facilities
In the case of any person engaged directly and exclusively in the
business of owning or operating (or both owning and operating) all
or part of one or more eligible facilities, an advisory letter
issued by the Commission staff under this chapter after October 24,
1992, or an order issued by the Commission under this chapter after
October 24, 1992, shall not be required for the purpose, or have
the effect, of exempting such person from treatment as an electric
utility company under section 79b(a)(3) of this title or exempting
such person from any provision of this chapter.
(j) Ownership of exempt wholesale generators and qualifying
facilities
The ownership by a person of one or more exempt wholesale
generators shall not result in such person being considered as
being primarily engaged in the generation or sale of electric power
within the meaning of sections 796(17)(C)(ii) and 796(18)(B)(ii) of
title 16.
(k) Protection against abusive affiliate transactions
(1) Prohibition
After October 24, 1992, an electric utility company may not
enter into a contract to purchase electric energy at wholesale
from an exempt wholesale generator if the exempt wholesale
generator is an affiliate or associate company of the electric
utility company.
(2) State authority to exempt from prohibition
Notwithstanding paragraph (1), an electric utility company may
enter into a contract to purchase electric energy at wholesale
from an exempt wholesale generator that is an affiliate or
associate company of the electric utility company -
(A) if every State commission having jurisdiction over the
retail rates of such electric utility company makes each of the
following specific determinations in advance of the electric
utility company entering into such contract:
(i) A determination that such commission has sufficient
regulatory authority, resources and access to books and
records of the electric utility company and any relevant
associate, affiliate or subsidiary company to exercise its
duties under this subparagraph.
(ii) A determination that the transaction -
(I) will benefit consumers,
(II) does not violate any State law (including where
applicable, least cost planning),
(III) would not provide the exempt wholesale generator
any unfair competitive advantage by virtue of its
affiliation or association with the electric utility
company, and
(IV) is in the public interest; or
(B) if such electric utility company is not subject to State
commission retail rate regulation and the purchased electric
energy:
(i) would not be resold to any affiliate or associate
company, or
(ii) the purchased electric energy would be resold to an
affiliate or associate company and every State commission
having jurisdiction over the retail rates of such affiliate
or associate company makes each of the determinations
provided under subparagraph (A), including the determination
concerning a State commission's duties.
(l) Reciprocal arrangements prohibited
Reciprocal arrangements among companies that are not affiliates
or associate companies of each other that are entered into in order
to avoid the provisions of this section are prohibited.
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