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Congress Still Fiddling with Electric Restructuring

Congress Still Fiddling with Electric Restructuring

While Congress played political football with draft electric restructuring legislation, natural gas pipelines urged legislators to take a page from the history of natural gas deregulation and give FERC enough authority to effectively oversee the national electric grid.

"One set of rules is certainly more effective and less burdensome on private enterprise than 50 different sets of rules," Jerald Halvorsen, president of the Interstate Natural Gas Association of America (INGAA) said in a letter sent last Wednesday to Joe Barton, R-TX, chairman of the House Subcommittee on Energy and Power. "Our pipeline regulation was not restructured because of passage of new legislation on Capitol Hill. Rather, the Federal Energy Regulatory Commission, with Orders 436 and 636, used its authority to restructure our industry into the 'open access' model that exists today.....Having one clear set of rules at the national level was a crucial component to implementing these changes --- changes which have resulted in lower natural gas prices, new services and better reliability for all classes of natural gas customers."

INGAA suggested the committee should allow FERC to provide for "transcos" or private transmission companies as well as Regional Transmission Organizations (RTOs). The pipeline group said it supports the electric supplier information disclosure section of the draft because "we believe consumers will be more likely to purchase electricity from clean resources, such as natural gas, if they are better informed about the generation and emission profiles of electricity suppliers."

The pipelines also strongly supported draft language dealing with interconnection standards for distributed generation, saying they believe on-site generation is "an important trend for the future." And while it is an advocate of repeal of the Public Utility Holding Company Act, INGAA said it was concerned new authority the draft would give to FERC and the states to review books would cause "burdensome disclosures and regulatory fishing expeditions."

Meanwhile, Barton, the subcommittee chairman, reacted to pressure to produce a bill from to Chairman Thomas Bliley, R-VA, chairman of the parent Commerce Committee, saying he wasn't sure he could get a majority of the subcommittee to vote it out. "Does the esteemed Committee Chairman expect me to deliver a corpse? We want to deliver a healthy baby to the full Committee, not a barely-breathing, desiccated husk of a bill."

In his letter to Bliley last Wednesday, Barton said he would do his best to put out a bipartisan bill by the middle of October in time for action before the end of the session Oct. 29. By Friday Barton had issued the latest draft, which appeared to come down on the "barely breathing" side. The draft also appeared to incorporate some of INGAA's wish list.

FERC authority to mandate membership in RTOs was gutted and "FERC is barred from imposing any specific RTO structure." The Commission also may only order an expansion of interstate transmission facilities upon application by an electric utility or transmitting utility and states would have a role in siting. FERC also is directed to give deference to state commissions in determination of transmission facilities. It however, would have the authority to consider the effects of mergers on competition in wholesale and retail markets. Currently, FERC may not evaluate local competition in its examination of prospective mergers.

The new draft also would narrow FERC and state authority in the examination of books and records of holding company subsidiaries and affiliates to review only for the purpose of identifying costs.

The definition of distributed generation facilities eligible for interconnection would be limited to facilities with a capacity of 50 MW that serve retail electric consumers at the facility. FERC may order interconnection of other generation facilities to promote competition.

"We will be holding a legislative hearing on H.R. 2944 in the next two weeks, and plan to move to a mark-up shortly thereafter," Barton said. "I am proud to say that we are right on target - within two weeks of the original timetable Chairman Bliley and I discussed in January." Ellen Beswick

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