HR6336-119

What This Bill Does

The Fair Allocation of Interstate Rates Act amends Federal Power Act section 205. It prohibits a transmission provider serving consumers in two or more states from allocating costs of a covered transmission facility to consumers outside the state whose covered policy caused the facility to be built, implemented, planned, or operated. A covered policy can be a state policy or a policy of local political entities within that state, and a covered transmission facility is equipment, lines, systems, or facilities used for interstate electric transmission that are tied in whole or part to that policy. The bill creates a consent exception: out-of-state consumers can be charged only if their state or a designated public official expressly consents. It also creates presumptions that benefits accrue solely to cost causers, that only consumers in the policy state are cost causers, and that consumers outside that state are not cost causers. FERC must issue implementing rules within six months.

Who Benefits and How

Electricity consumers in states without the policy benefit because their transmission bills cannot be used to pay for another state or local policy-driven project without express state consent. State regulators in non-policy states gain leverage because they can block cost allocation unless they consent. Fossil-fuel-heavy or policy-resistant states may benefit if fewer clean-energy transmission costs are shifted to their ratepayers. Commercial and industrial power users in non-consenting states benefit from lower exposure to regional transmission charges driven by another state policy.

Who Bears the Burden and How

Transmission providers and regional transmission organizations must change cost-allocation filings and tariff practices to identify which state policy caused a covered facility. FERC must write rules within six months and resolve disputes over covered policies, covered facilities, consent, and cost-causation presumptions. Renewable energy developers and transmission builders can bear delays or reduced cost recovery when projects depend on spreading costs across a multi-state region. Consumers in states with aggressive clean-energy policies may pay more because project costs are kept within the policy state unless another state consents.

Key Provisions

• Prohibits interstate transmission providers from allocating covered facility costs to consumers outside the policy-causing state.
• Authorizes an exception when the charged consumer state or designated public official expressly consents.
• Establishes presumptions that covered facility benefits and cost causation belong to consumers in the policy state.
• Requires FERC to issue implementing rules and regulations within six months.
• Defines covered policy to include state and local policies and covered transmission facility to include interstate electric transmission equipment, lines, facilities, and systems.