Fair, Affordable and Inclusive Rates Act; FAIR Act
Summary
The FAIR Act aims to amend the Public Utility Regulatory Policies Act of 1978 (PURPA) by prohibiting state regulatory authorities from approving electric utility rates if the utility engages in certain diversity, equity, or inclusion (DEI) practices or considers environmental, social, or governance (ESG) factors. The bill targets practices that discriminate based on race, color, ethnicity, religion, biological sex, or national origin. It also restricts the consideration of ESG factors in rate establishment and operational decisions, with limited exceptions for compliance with federal or state laws.
Expected Effects
If enacted, the FAIR Act could lead to changes in how electric utilities operate and set rates. State regulatory authorities would be restricted from approving rates for utilities that implement specific DEI practices or consider ESG factors. This could potentially impact the types of programs and initiatives that utilities undertake, as well as their decision-making processes related to rate setting.
Potential Benefits
- Potentially lower electricity rates if DEI/ESG initiatives increase costs.
- May prevent preferential treatment based on race, color, ethnicity, religion, biological sex, or national origin.
- Could lead to more standardized and economically driven decision-making by utilities.
- May ensure compliance with federal laws without discretionary ESG considerations.
- Could limit the influence of political or ideological objectives on utility operations.
Potential Disadvantages
- May hinder efforts to address climate change and promote environmental sustainability.
- Could limit the ability of utilities to address social inequities through supplier diversity programs.
- Might restrict the implementation of corporate governance policies that promote social responsibility.
- Could face legal challenges based on constitutional grounds or conflicts with existing state laws.
- May reduce the ability of utilities to adapt to changing societal values and expectations.
Most Disadvantaged Areas:
Constitutional Alignment
The bill's constitutional alignment is complex. While Congress has the power to regulate interstate commerce (Article I, Section 8), the Tenth Amendment reserves powers not delegated to the federal government to the states. The FAIR Act's attempt to restrict state regulatory authority over electric utilities could be viewed as an overreach of federal power. However, the Commerce Clause grants broad authority, and the extent of its application here would likely be subject to judicial review. The bill also touches on issues of equal protection, potentially implicating the Fourteenth Amendment if DEI practices are deemed discriminatory.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).