Fair Allocation of Interstate Rates Act
- Sponsor
- Sen. Cramer, Kevin [R-ND]
- Committees
- Energy and Natural Resources Committee (primary)
- Last action
- Dec 1, 2025
Bottom line
The bill aims to prevent consumers in one state from subsidizing the costs of new electric transmission infrastructure driven by another state's energy policies without their state's explicit consent.
What it actually does
This bill amends the Federal Power Act to prohibit the allocation of costs for certain interstate electric transmission facilities to consumers in states whose public officials have not expressly consented to such allocation. This prohibition applies when the transmission facility is planned or constructed, in whole or in part, to implement a state's policy (a "covered policy"). It also establishes presumptions that the benefits of such facilities accrue solely to the "cost causers" (residents of the state implementing the covered policy).
Proponents argue
Supporters argue this bill ensures fairness in electricity rates, preventing consumers from being forced to pay for transmission projects that primarily benefit other states' policy goals, such as renewable energy mandates, without their elected officials' approval. They contend it protects state sovereignty and local ratepayers from bearing disproportionate burdens for regional infrastructure.
Opponents contend
Opponents might argue that this bill could hinder the development of crucial regional transmission infrastructure necessary for grid reliability, resilience, and the efficient integration of diverse energy sources. They may contend that it could lead to a balkanized grid, increase overall costs due to inefficient planning, and make it harder to achieve national energy goals by allowing individual states to veto cost-sharing arrangements for projects with broader regional benefits.
The bill is very short and can be read quickly, allowing ample time for a thorough evaluation of its implications.
Section 2, amending Section 205 of the Federal Power Act (16 U.S.C. 824d)
Prohibition on Allocation of Costs for Covered Transmission Facilities
This provision adds a new subsection (h) to the Federal Power Act. It defines "covered transmission facility" as one built to implement a state's policy. It then prohibits transmission providers from charging consumers in one state for these facilities if the facility is based on another state's policy, unless the consumer's state or its officials expressly consent.
Supporters argue
Supporters argue this provision prevents "cross-subsidization," where consumers in states with different energy priorities are forced to pay for infrastructure primarily benefiting other states' policy choices. They assert it restores local control and ensures that states bear the costs of their own policy decisions.
Critics contend
Critics contend this provision could fragment regional electricity markets, making it harder to build necessary transmission lines that offer broad reliability and economic benefits across multiple states. They might argue it could lead to higher overall costs and less efficient grid development by creating barriers to cost-sharing for projects with regional benefits.
Tradeoffs
The bill balances state sovereignty and local ratepayer protection against the need for efficient, integrated regional transmission planning and cost-sharing for projects that may have diffuse benefits across multiple jurisdictions. It creates tension between individual state policy autonomy and regional grid optimization.
Section 2, amending Section 205 of the Federal Power Act (16 U.S.C. 824d), new subsection (h)(4)
Presumptions Regarding Benefits and Cost Causation
This part of the bill establishes three key presumptions: 1) the benefits of a "covered transmission facility" accrue solely to those who cause its costs; 2) any consumer in a state that implements a "covered policy" (which drives the facility's construction) is considered a "cost causer"; and 3) any consumer outside that state is not a "cost causer."
"Covered policy" means a policy of a State, including any policy of a local political entity of a State. "Covered transmission facility" means any facility... used for the transmission of electric energy... that is planned, constructed, or operated in whole or in part to implement a covered policy.
Section 2, subsection (h)(1)(A) and (B) - Definitions of "Covered policy" and "Covered transmission facility"
Why it matters:It is standard legislative practice to define terms at the outset. The "in whole or in part" language is critical for determining applicability.
Case for: Supporters would argue these definitions are precise, ensuring the bill targets only those transmission facilities directly linked to specific state or local policies, thereby preventing overreach while still addressing the core issue of cost allocation for policy-driven projects.
Case against: Opponents might argue that the "in whole or in part" language is overly broad and could be interpreted to apply to almost any new transmission project, as many projects can be argued to support state policies to some degree. This could create significant ambiguity and lead to widespread disputes over cost allocation.
Estimated impact: These definitions determine the universe of projects affected by the bill, potentially impacting billions of dollars in future transmission investments and their cost recovery mechanisms.