Legislation/Regulations

In marketing electricity, Western must follow many laws, regulations and policies. Many of these are unique to our agency. Section 9(c) of the Reclamation Project Act of 1939 (43 U.S.C. § 485h(c)) establishes the maximum term of 40 years for Western’s power sales contracts. It also identifies certain types of prospective customers who must be given preference in Federal power sales—such as cities and towns and rural electric cooperatives—over other types of prospective customers, such as investor-owned utilities.

In addition, under Section 9(c), the law outlines the costs recoverable from power rates, in particular operation and maintenance costs, construction costs and interest on the investment. It specifies the repayment responsibility of power users, saying that any sale of electric power must produce enough revenue to cover power users’ share of annual operation and maintenance project costs, plus interest, on their share of the construction investment.

In some cases, project-specific laws govern how Western can sell the output of particular powerplants. For example, Title I of the Hoover Powerplant Act of 1984 (Public Law 98-381) states which organizations should be offered allocations of long-term contingent capacity and associated firm energy generated at Hoover Powerplant.

A variety of Federal laws and court decisions require that Western’s power sales contracts contain provisions about such diverse subjects as equal employment opportunity practices, contract work hours and safety standards. Of particular note is Section 114 of Public Law 102-486, the Energy Policy Act of 1992, requires our long-term firm power customers to develop Integrated Resource Plans. Also in the Energy Policy Act, the Energy Planning and Management Program also requires customers to evaluate the full range of alternatives for providing adequate and reliable electric service to their electric consumers at the lowest system cost. These alternatives include new generating capacity, power purchases, energy conservation and efficiency, co-generation and renewable energy resources.

Various laws, including the Reclamation Project Act of 1939, require Western to give a preference to certain types of non-profit organizations seeking to purchase Federal power. Those entitled to this preference include cities and towns, state and Federal agencies, irrigation districts, public utility districts, Native American tribes and rural electric cooperatives.

While these types of organizations are entitled to preference, historically Western has exercised discretion regarding which entities should receive preference in allocations of Federal power. We have allocated power and/or transmission rights to diverse public loads such as wildlife refuges, universities and mass transit systems. Sometimes, legislation specifies which entities receive preference in power sales from a particular powerplant or irrigation project.

Western also follows financial reporting policies, procedures and methods as do the other PMAs. Is Section 5.0: Power Marketing Administration Financial Reporting, RA 6120.2, Western must follow the requirements for accounting and preparing power system financial statements.

What authority does Western have to regulate local utilities?
None. State public utility commissions regulate investor-owned utilities. Co-op boards and city governments regulate utilities under their control. The Federal Energy Regulatory Commission principally regulates interstate power and transmission sales by investor-owned utilities. FERC also has the authority to confirm, approve or send Western’s proposed rates back to the agency for further study or to disapprove such rates.