Statute (FPA 206)

§ 824e

TITLE 16—CONSERVATION

complaint or upon its own initiative without
complaint, at once, and, if it so orders, without
answer or formal pleading by the public utility,
but upon reasonable notice, to enter upon a
hearing concerning the lawfulness of such rate,
charge, classification, or service; and, pending
such hearing and the decision thereon, the Commission, upon filing with such schedules and delivering to the public utility affected thereby a
statement in writing of its reasons for such suspension, may suspend the operation of such
schedule and defer the use of such rate, charge,
classification, or service, but not for a longer period than five months beyond the time when it
would otherwise go into effect; and after full
hearings, either completed before or after the
rate, charge, classification, or service goes into
effect, the Commission may make such orders
with reference thereto as would be proper in a
proceeding initiated after it had become effective. If the proceeding has not been concluded
and an order made at the expiration of such five
months, the proposed change of rate, charge,
classification, or service shall go into effect at
the end of such period, but in case of a proposed
increased rate or charge, the Commission may
by order require the interested public utility or
public utilities to keep accurate account in detail of all amounts received by reason of such increase, specifying by whom and in whose behalf
such amounts are paid, and upon completion of
the hearing and decision may by further order
require such public utility or public utilities to
refund, with interest, to the persons in whose
behalf such amounts were paid, such portion of
such increased rates or charges as by its decision shall be found not justified. At any hearing
involving a rate or charge sought to be increased, the burden of proof to show that the increased rate or charge is just and reasonable
shall be upon the public utility, and the Commission shall give to the hearing and decision of
such questions preference over other questions
pending before it and decide the same as speedily as possible.
(f) Review of automatic adjustment clauses and
public utility practices; action by Commission; ‘‘automatic adjustment clause’’ defined
(1) Not later than 2 years after November 9,
1978, and not less often than every 4 years thereafter, the Commission shall make a thorough review of automatic adjustment clauses in public
utility rate schedules to examine—
(A) whether or not each such clause effectively provides incentives for efficient use of
resources (including economical purchase and
use of fuel and electric energy), and
(B) whether any such clause reflects any
costs other than costs which are—
(i) subject to periodic fluctuations and
(ii) not susceptible to precise determinations in rate cases prior to the time such
costs are incurred.
Such review may take place in individual rate
proceedings or in generic or other separate proceedings applicable to one or more utilities.
(2) Not less frequently than every 2 years, in
rate proceedings or in generic or other separate
proceedings, the Commission shall review, with
respect to each public utility, practices under

Page 1334

any automatic adjustment clauses of such utility to insure efficient use of resources (including
economical purchase and use of fuel and electric
energy) under such clauses.
(3) The Commission may, on its own motion or
upon complaint, after an opportunity for an evidentiary hearing, order a public utility to—
(A) modify the terms and provisions of any
automatic adjustment clause, or
(B) cease any practice in connection with
the clause,
if such clause or practice does not result in the
economical purchase and use of fuel, electric energy, or other items, the cost of which is included in any rate schedule under an automatic
adjustment clause.
(4) As used in this subsection, the term ‘‘automatic adjustment clause’’ means a provision of
a rate schedule which provides for increases or
decreases (or both), without prior hearing, in
rates reflecting increases or decreases (or both)
in costs incurred by an electric utility. Such
term does not include any rate which takes effect subject to refund and subject to a later determination of the appropriate amount of such
rate.
(June 10, 1920, ch. 285, pt. II, § 205, as added Aug.
26, 1935, ch. 687, title II, § 213, 49 Stat. 851; amended Pub. L. 95–617, title II, §§ 207(a), 208, Nov. 9,
1978, 92 Stat. 3142.)
AMENDMENTS
1978—Subsec. (d). Pub. L. 95–617, § 207(a), substituted
‘‘sixty’’ for ‘‘thirty’’ in two places.
Subsec. (f). Pub. L. 95–617, § 208, added subsec. (f).
STUDY OF ELECTRIC RATE INCREASES UNDER FEDERAL
POWER ACT
Section 207(b) of Pub. L. 95–617 directed chairman of
Federal Energy Regulatory Commission, in consultation with Secretary, to conduct a study of legal requirements and administrative procedures involved in
consideration and resolution of proposed wholesale
electric rate increases under Federal Power Act, section 791a et seq. of this title, for purposes of providing
for expeditious handling of hearings consistent with
due process, preventing imposition of successive rate
increases before they have been determined by Commission to be just and reasonable and otherwise lawful,
and improving procedures designed to prohibit anticompetitive or unreasonable differences in wholesale
and retail rates, or both, and that chairman report to
Congress within nine months from Nov. 9, 1978, on results of study, on administrative actions taken as a result of this study, and on any recommendations for
changes in existing law that will aid purposes of this
section.

§ 824e. Power of Commission to fix rates and
charges; determination of cost of production
or transmission
(a) Unjust or preferential rates, etc.; statement of
reasons for changes; hearing; specification of
issues
Whenever the Commission, after a hearing
held upon its own motion or upon complaint,
shall find that any rate, charge, or classification, demanded, observed, charged, or collected
by any public utility for any transmission or
sale subject to the jurisdiction of the Commission, or that any rule, regulation, practice, or
contract affecting such rate, charge, or classi-

Page 1335

TITLE 16—CONSERVATION

fication is unjust, unreasonable, unduly discriminatory or preferential, the Commission
shall determine the just and reasonable rate,
charge, classification, rule, regulation, practice,
or contract to be thereafter observed and in
force, and shall fix the same by order. Any complaint or motion of the Commission to initiate
a proceeding under this section shall state the
change or changes to be made in the rate,
charge, classification, rule, regulation, practice,
or contract then in force, and the reasons for
any proposed change or changes therein. If, after
review of any motion or complaint and answer,
the Commission shall decide to hold a hearing,
it shall fix by order the time and place of such
hearing and shall specify the issues to be adjudicated.
(b) Refund effective date; preferential proceedings; statement of reasons for delay; burden
of proof; scope of refund order; refund orders in cases of dilatory behavior; interest
Whenever the Commission institutes a proceeding under this section, the Commission
shall establish a refund effective date. In the
case of a proceeding instituted on complaint,
the refund effective date shall not be earlier
than the date of the filing of such complaint nor
later than 5 months after the filing of such complaint. In the case of a proceeding instituted by
the Commission on its own motion, the refund
effective date shall not be earlier than the date
of the publication by the Commission of notice
of its intention to initiate such proceeding nor
later than 5 months after the publication date.
Upon institution of a proceeding under this section, the Commission shall give to the decision
of such proceeding the same preference as provided under section 824d of this title and otherwise act as speedily as possible. If no final decision is rendered by the conclusion of the 180-day
period commencing upon initiation of a proceeding pursuant to this section, the Commission
shall state the reasons why it has failed to do so
and shall state its best estimate as to when it
reasonably expects to make such decision. In
any proceeding under this section, the burden of
proof to show that any rate, charge, classification, rule, regulation, practice, or contract is
unjust, unreasonable, unduly discriminatory, or
preferential shall be upon the Commission or
the complainant. At the conclusion of any proceeding under this section, the Commission may
order refunds of any amounts paid, for the period subsequent to the refund effective date
through a date fifteen months after such refund
effective date, in excess of those which would
have been paid under the just and reasonable
rate, charge, classification, rule, regulation,
practice, or contract which the Commission orders to be thereafter observed and in force: Provided, That if the proceeding is not concluded
within fifteen months after the refund effective
date and if the Commission determines at the
conclusion of the proceeding that the proceeding
was not resolved within the fifteen-month period primarily because of dilatory behavior by
the public utility, the Commission may order refunds of any or all amounts paid for the period
subsequent to the refund effective date and prior
to the conclusion of the proceeding. The refunds

§ 824e

shall be made, with interest, to those persons
who have paid those rates or charges which are
the subject of the proceeding.
(c) Refund considerations; shifting costs; reduction in revenues; ‘‘electric utility companies’’
and ‘‘registered holding company’’ defined
Notwithstanding subsection (b) of this section,
in a proceeding commenced under this section
involving two or more electric utility companies
of a registered holding company, refunds which
might otherwise be payable under subsection (b)
of this section shall not be ordered to the extent
that such refunds would result from any portion
of a Commission order that (1) requires a decrease in system production or transmission
costs to be paid by one or more of such electric
companies; and (2) is based upon a determination that the amount of such decrease should be
paid through an increase in the costs to be paid
by other electric utility companies of such registered holding company: Provided, That refunds,
in whole or in part, may be ordered by the Commission if it determines that the registered
holding company would not experience any reduction in revenues which results from an inability of an electric utility company of the
holding company to recover such increase in
costs for the period between the refund effective
date and the effective date of the Commission’s
order. For purposes of this subsection, the terms
‘‘electric utility companies’’ and ‘‘registered
holding company’’ shall have the same meanings
as provided in the Public Utility Holding Company Act of 1935, as amended.1
(d) Investigation of costs
The Commission upon its own motion, or upon
the request of any State commission whenever
it can do so without prejudice to the efficient
and proper conduct of its affairs, may investigate and determine the cost of the production
or transmission of electric energy by means of
facilities under the jurisdiction of the Commission in cases where the Commission has no authority to establish a rate governing the sale of
such energy.
(e) Short-term sales
(1) In this subsection:
(A) The term ‘‘short-term sale’’ means an
agreement for the sale of electric energy at
wholesale in interstate commerce that is for a
period of 31 days or less (excluding monthly
contracts subject to automatic renewal).
(B) The term ‘‘applicable Commission rule’’
means a Commission rule applicable to sales
at wholesale by public utilities that the Commission determines after notice and comment
should also be applicable to entities subject to
this subsection.
(2) If an entity described in section 824(f) of
this title voluntarily makes a short-term sale of
electric energy through an organized market in
which the rates for the sale are established by
Commission-approved tariff (rather than by contract) and the sale violates the terms of the tariff or applicable Commission rules in effect at
the time of the sale, the entity shall be subject
1 See

References in Text note below.

§ 824f

TITLE 16—CONSERVATION

to the refund authority of the Commission under
this section with respect to the violation.
(3) This section shall not apply to—
(A) any entity that sells in total (including
affiliates of the entity) less than 8,000,000
megawatt hours of electricity per year; or
(B) an electric cooperative.
(4)(A) The Commission shall have refund authority under paragraph (2) with respect to a
voluntary short term sale of electric energy by
the Bonneville Power Administration only if the
sale is at an unjust and unreasonable rate.
(B) The Commission may order a refund under
subparagraph (A) only for short-term sales made
by the Bonneville Power Administration at
rates that are higher than the highest just and
reasonable rate charged by any other entity for
a short-term sale of electric energy in the same
geographic market for the same, or most nearly
comparable, period as the sale by the Bonneville
Power Administration.
(C) In the case of any Federal power marketing agency or the Tennessee Valley Authority,
the Commission shall not assert or exercise any
regulatory authority or power under paragraph
(2) other than the ordering of refunds to achieve
a just and reasonable rate.
(June 10, 1920, ch. 285, pt. II, § 206, as added Aug.
26, 1935, ch. 687, title II, § 213, 49 Stat. 852; amended Pub. L. 100–473, § 2, Oct. 6, 1988, 102 Stat. 2299;
Pub. L. 109–58, title XII, §§ 1285, 1286, 1295(b), Aug.
8, 2005, 119 Stat. 980, 981, 985.)
REFERENCES IN TEXT
The Public Utility Holding Company Act of 1935, referred to in subsec. (c), is title I of act Aug. 26, 1935, ch.
687, 49 Stat. 803, as amended, which was classified generally to chapter 2C (§ 79 et seq.) of Title 15, Commerce
and Trade, prior to repeal by Pub. L. 109–58, title XII,
§ 1263, Aug. 8, 2005, 119 Stat. 974. For complete classification of this Act to the Code, see Tables.
AMENDMENTS
2005—Subsec. (a). Pub. L. 109–58, § 1295(b)(1), substituted ‘‘hearing held’’ for ‘‘hearing had’’ in first sentence.
Subsec. (b). Pub. L. 109–58, § 1295(b)(2), struck out ‘‘the
public utility to make’’ before ‘‘refunds of any amounts
paid’’ in seventh sentence.
Pub. L. 109–58, § 1285, in second sentence, substituted
‘‘the date of the filing of such complaint nor later than
5 months after the filing of such complaint’’ for ‘‘the
date 60 days after the filing of such complaint nor later
than 5 months after the expiration of such 60-day period’’, in third sentence, substituted ‘‘the date of the
publication’’ for ‘‘the date 60 days after the publication’’ and ‘‘5 months after the publication date’’ for ‘‘5
months after the expiration of such 60-day period’’, and
in fifth sentence, substituted ‘‘If no final decision is
rendered by the conclusion of the 180-day period commencing upon initiation of a proceeding pursuant to
this section, the Commission shall state the reasons
why it has failed to do so and shall state its best estimate as to when it reasonably expects to make such decision’’ for ‘‘If no final decision is rendered by the refund effective date or by the conclusion of the 180-day
period commencing upon initiation of a proceeding pursuant to this section, whichever is earlier, the Commission shall state the reasons why it has failed to do so
and shall state its best estimate as to when it reasonably expects to make such decision’’.
Subsec. (e). Pub. L. 109–58, § 1286, added subsec. (e).
1988—Subsec. (a). Pub. L. 100–473, § 2(1), inserted provisions for a statement of reasons for listed changes,
hearings, and specification of issues.

Page 1336

Subsecs. (b) to (d). Pub. L. 100–473, § 2(2), added subsecs. (b) and (c) and redesignated former subsec. (b) as
(d).
EFFECTIVE DATE OF 1988 AMENDMENT
Pub. L. 100–473, § 4, Oct. 6, 1988, 102 Stat. 2300, provided
that: ‘‘The amendments made by this Act [amending
this section] are not applicable to complaints filed or
motions initiated before the date of enactment of this
Act [Oct. 6, 1988] pursuant to section 206 of the Federal
Power Act [this section]: Provided, however, That such
complaints may be withdrawn and refiled without prejudice.’’
LIMITATION ON AUTHORITY PROVIDED
Pub. L. 100–473, § 3, Oct. 6, 1988, 102 Stat. 2300, provided
that: ‘‘Nothing in subsection (c) of section 206 of the
Federal Power Act, as amended (16 U.S.C. 824e(c)) shall
be interpreted to confer upon the Federal Energy Regulatory Commission any authority not granted to it
elsewhere in such Act [16 U.S.C. 791a et seq.] to issue an
order that (1) requires a decrease in system production
or transmission costs to be paid by one or more electric
utility companies of a registered holding company; and
(2) is based upon a determination that the amount of
such decrease should be paid through an increase in the
costs to be paid by other electric utility companies of
such registered holding company. For purposes of this
section, the terms ‘electric utility companies’ and ‘registered holding company’ shall have the same meanings
as provided in the Public Utility Holding Company Act
of 1935, as amended [15 U.S.C. 79 et seq.].’’
STUDY
Pub. L. 100–473, § 5, Oct. 6, 1988, 102 Stat. 2301, directed
that, no earlier than three years and no later than four
years after Oct. 6, 1988, Federal Energy Regulatory
Commission perform a study of effect of amendments
to this section, analyzing (1) impact, if any, of such
amendments on cost of capital paid by public utilities,
(2) any change in average time taken to resolve proceedings under this section, and (3) such other matters
as Commission may deem appropriate in public interest, with study to be sent to Committee on Energy and
Natural Resources of Senate and Committee on Energy
and Commerce of House of Representatives.

§ 824f. Ordering furnishing of adequate service
Whenever the Commission, upon complaint of
a State commission, after notice to each State
commission and public utility affected and after
opportunity for hearing, shall find that any
interstate service of any public utility is inadequate or insufficient, the Commission shall determine the proper, adequate, or sufficient service to be furnished, and shall fix the same by its
order, rule, or regulation: Provided, That the
Commission shall have no authority to compel
the enlargement of generating facilities for such
purposes, nor to compel the public utility to sell
or exchange energy when to do so would impair
its ability to render adequate service to its customers.
(June 10, 1920, ch. 285, pt. II, § 207, as added Aug.
26, 1935, ch. 687, title II, § 213, 49 Stat. 853.)
§ 824g. Ascertainment of cost of property and depreciation
(a) Investigation of property costs
The Commission may investigate and ascertain the actual legitimate cost of the property
of every public utility, the depreciation therein,
and, when found necessary for rate-making purposes, other facts which bear on the determina-