HR7729-119

What This Bill Does

The SURGE Act expands Federal Power Act transmission incentives beyond capital investment to operational efficiency, cost reduction, performance measures, and shared savings. FERC must issue a final rule within one year allowing jurisdictional transmitting utilities to retain part of verified savings from qualifying actions.

The initial federal framework is narrower than the bill's many examples: a qualifying action must be a covered transmission action that reduces measurable physical electricity losses. New facilities and complete reconstruction are excluded. FERC must establish standardized baselines normalized for weather, demand, other upgrades, and operating conditions, plus methods for valuing and independently verifying savings.

A utility may retain between 10 and 60 percent of attributable savings for two to five years, based on risk, baseline performance, replicability, duration, reliability, congestion, emissions, and other performance factors. An independently verified initial filing claims half of the utility's recoverable share of estimated first-year savings. Annual reports then calculate actual savings and future estimates.

FERC must provide claimed rate adjustments within 60 days. Annual true-ups let a utility recover its actual share and half of the next estimated share. If prior recovery exceeded the allowed actual share, or reporting is insufficient, FERC credits the difference to ratepayers. The bill encourages later expansion to other measurable actions but does not require it.

Within two years, DOE must publish analogous guidance for utilities outside FERC ratemaking jurisdiction, covering baselines, savings, independent evaluation, rate mechanisms, and different utility structures. States remain responsible for choosing whether to adopt a framework.

DOE must also establish a discretionary grant program for state regulators. Grants support framework development, implementation, and oversight but cannot pay utilities. No more than 70 percent supports development, at least 30 percent supports implementation or oversight, and federal administration is capped at five percent. Recipients report annually; missing reports block additional awards. The bill states no grant appropriation total.

Within three years and every five years thereafter, DOE studies rate-design inefficiencies and alternatives including shared savings, decoupling, return-on-equity adjustments, multiyear plans, earnings sharing, total-expenditure models, and performance scorecards. Definitions cover advanced conductors, grid-enhancing technology, storage, demand reduction, pricing mechanisms, and utility categories, but those broader actions enter the initial FERC incentive only when they satisfy the physical-loss requirement.

Who Benefits and How

Utilities gain a temporary share of independently verified savings and quicker rate recovery. Ratepayers retain the balance of savings and receive credits after over-recovery or inadequate reporting. Grid-technology vendors and evaluators gain demand. State commissions receive guidance, grants, data tools, and technical assistance.

Who Bears the Burden and How

Utilities must meter or model baselines, hire independent evaluators, report annually, and repay excess recovery. Ratepayers fund the incentive share, though only from estimated or actual savings. FERC, DOE, national laboratories, and state regulators bear rulemaking, analytical, grant, and oversight work. Projects that do not measurably reduce physical losses cannot enter the initial federal framework.

Key Provisions

• Expands Federal Power Act efficiency incentives.
• Requires a FERC shared-savings rule within one year.
• Limits initial qualifying actions to reduced transmission losses.
• Requires normalized performance baselines.
• Requires independent savings verification.
• Sets utility recovery between 10 and 60 percent.
• Sets recovery periods between two and five years.
• Provides half of estimated first-year recovery initially.
• Requires annual performance and savings reports.
• Requires FERC rate adjustments within 60 days.
• Credits over-recovery or insufficient support to ratepayers.
• Directs DOE state-framework guidance within two years.
• Requires separate guidance for utility structures.
• Creates grants for state utility regulators.
• Prohibits grant payments to utilities.
• Sets grant allocation and administration percentages.
• Requires studies after three years and every five years.
• Defines broader grid and demand actions for state frameworks.