A Gas-Friendly Electric Bill
The draft version of Rep. Joe Barton's (R-TX) much-anticipated
retail electric legislation that was unveiled last week appears to
be most notable for the two things that were missing from it - a
renewable-fuel mandate and a date-certain.
Absent was a gas producer-opposed mandate that would require a
certain percentage of electric power each year to be generated by
renewable fuels. Instead the draft called for the reauthorization
of the Renewable Production Incentive (REPI) program, which would
direct the Department of Energy (DOE) to provide incentive payments
of 1.5 cents/kilowatt-hour to facilities that generate power
"solely by use of solar energy, wind, biomass or geothermal." The
legislation, which would authorize the payments over a 10-year
period, called for Congress to appropriate $50 million for the REPI
program during fiscal years 2000-2004.
Gas producers lobbied vigorously against any kind of legislative
mandate that would give a competitive advantage to renewable fuels
or other fuels in the generation market. The gas industry is
counting on power generation to provide it with much of its demand
growth over the next decade, and it believes a mandate guaranteeing
renewables a specific share of generation would deprive it of a
fair shot at the market. Although Barton's proposed incentive
payments still would give renewables some edge, they're likely to
be more palatable to gas producers than a mandate.
The mandate wasn't included in the draft measure mainly because
of Barton's dislike for them, and it would never have survived the
Energy and Power Subcommittee, of which Barton is chairman, a
Capitol Hill observer said. "That's not going to pass." But
lawmakers "would like to do something along the lines [of
incentives] to say that they helped" green electricity, he noted.
Even more than the absence of a mandate, the observer thinks the
biggest boon for natural gas in the draft is the requirement that
utilities disclose to retail customers information about, among
other things, the electricity's generation source and emissions
Barton's draft also didn't specify a date-certain by which the
states would be required to open their electric markets to retail
competition. Instead, it defers to states on this issue. It does
take a backdoor approach to encourage retail competition by barring
utilities in states closed to competition from selling to customers
in open states. The reciprocity provision also would extend to
utilities in Canada and Mexico. Lastly, the draft proposes some tax
adjustments to further encourage state and municipal utilities and
electric cooperatives to embrace retail competition.
Barton's silence on the date-certain issue wasn't surprising,
the Hill observer said. "I think that's becoming less and less of
an important issue because 24 states have already passed bills"
opening their retail markets to competition. These states represent
about 65-70% of the electricity consumers in the nation, he
The draft has been circulated to lawmakers on the House energy
and power panel for their comment. Actual legislation from Barton
is not expected to emerge until September, said a spokeswoman for
the Texas Republican. Commerce Committee Chairman Thomas J. Bliley
(R-VA) has sent Barton a letter requesting legislation by Sept.
21st, according to a subcommittee aide. Mark-up on a House
restructuring bill is "still up in the air at this time."
The Barton draft would enhance FERC's jurisdiction over the
power transmission grid, extending to it authority over the 34% of
the system that is currently non-jurisdictional (state and
municipal utilities, cooperatives and federal electric utilities).
It further clarifies that the open-access provisions under Order
888 would apply to all transmission systems.
To further reduce barriers to transmission access, the draft
proposal urges transmitting utilities to form and/or join regional
transmission organizations (RTOs) within three years after the
enactment of the bill.
It proposes the establishment of an electric reliability
organization (ERO) to develop "enforceable" reliability standards
for the transmission grid.
Barton also attempts to remove some of the barriers to
transmission facility siting by authorizing interstate compacts to
coordinate with states on the planning and siting of facilities on
a regional basis. This has been a key concern for utilities, many
of which say the siting problems are responsible for transmission
constraints that have resulted in the runup in power prices during
the summer months. Additionally, the draft gives FERC the authority
to order a utility to expand its transmission system, after
convening a joint federal-state board to discuss the need for the
To further enhance competition, the Barton draft proposes
prospective repeal of the mandatory purchase provision of the
Public Utility Regulatory Policies Act of 1978 (PURPA). Contracts
between utilities and qualifying facilities that were in effect as
of Jan. 6, 1999 would remain whole, however. It also proposes
repeal of the Public Utility Holding Company Act of 1935 (PUHCA)
one year after the bill's enactment.
And in an attempt to further reduce market-power abuse, the
draft proposes that review of electric utility mergers be
transferred from FERC to the Department of Justice and the Federal
Trade Commission, which have authority under antitrust laws. FERC,
however, would have oversight over all sales of utility generation
and transmission facilities.