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Producers Like Largent-Markey Electric Bill, Hate Mandate

Producers Like Largent-Markey Electric Bill, Hate Mandate

Although the much-touted electricity restructuring bill introduced by Reps. Steve Largent (R-OK) and Edward Markey (D-MA) would slash the renewable portfolio mandate proposed by the Clinton administration by more than half, natural gas producers still aren't quite satisfied.

While major producers "would certainly endorse" the overall bipartisan Largent-Markey package, they remain opposed to any kind of mandate that would give one fuel an advantage over another - no matter how low the percentage, said John Sharp, NGSA's vice president of federal and state affairs and counsel.

The legislation calls for the Energy Information Administration (EIA) to assess the non-hydroelectric renewables' share of the power generation market in January 2005. If it's lower than 3%, then the bill would require the agency to set a standard of at least 3% of total generation for renewables - wind, solar, biomass or geothermal. This compares to the Clinton proposal that would boost the renewables' market share, on a phased-in basis, to 7.5% in 2015. Both the Largent-Markey bill and the administration proposal would have the renewable mandate sunset in 2015.

Sharp noted the Largent-Markey renewable provision is a "mandate doing nothing," given that renewables' share of the power generation market currently is about 3%. Still, NGSA opposes it simply because it is a mandate.

"I don't think we need to talk about renewables" in electricity restructuring legislation at all, said Sharp. "There's no need to mandate a ceiling or a floor for any fuel. I don't think Congress should be in the business of dictating what kind of fuel to use," he told NGI. Even if lawmakers were proposing a mandate for natural gas, "we'd probably oppose it - believe it or not."

And he thinks many key energy lawmakers share this view. "Based on what I heard from congressmen at [a recent] hearing, I think a renewable portfolio mandate is going to have a very difficult time staying in the bill. My sense is that the majority of people on the [House] Energy and Power Subcommittee do not endorse a fuel mandate."

But apart from the mandate provision, Sharp - like many others, including Energy Secretary Bill Richardson - had high praise for the Largent-Markey bill. "I think it's a bill that would easily be the markup bill for the Energy and Power Subcommittee. This initiative is reflective of a great deal of consensus."

Martin Edwards of the Interstate Natural Gas Association of America (INGAA) said he wouldn't go as far as to call the legislaiton a markup bill, but "I think it should be taken seriously." He believes there's a lot to like about it. "I think in general it's good to have a bipartisan bill of that nature out there in the public forum. It builds on a lot of what the administration has [proposed]."

Sharp particularly liked the provision that would grandfather states, which enact retail-choice legislation by January 2001, from federal restructuring legislation. He believes the provision is an essential ingredient to restructuring. The Clinton administration measure doesn't include a grandfathering provision.

The Largent-Markey bill would require regulated and non-regulated utilities to offer retail choice to consumers by Jan. 1, 2002 - one year sooner than what's called for in the administration's bill. However, it would allow states and non-regulated utilities to "opt out" if they find, after notice and hearing, that retail competition will have a "negative impact upon a class of customers that cannot reasonably be mitigated."

Other key provisions in the bill would: give FERC authority to oversee the creation of regional transmission organizations; award states authority over stranded-cost recovery; give FERC authority to approve and form a reliability group; exempt holding companies from the Public Utility Holding Company Act, with the exception of those serving two or more states that are closed to retail competition; repeal the Public Utility Regulatory Policies Act; place the Tennessee Valley Authority's transmission under Commission jurisdiction; subject the Bonneville Power Administration to FERC authority; provide for retail reciprocity between states; and offer consumers protection against "slamming" and other illegal acts. Many of the provisions are similar to those proposed by the Clinton administration.

Susan Parker

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