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Barton Electric Bill Short on Bipartisan Backing

Barton Electric Bill Short on Bipartisan Backing

After years of debate and hearings on whether and how to restructure the $200 billion electricity industry, the consensus once again appears to be - not this year.

A markup of a comprehensive bill by the House Energy and Power Subcommittee finally is within sight. But judging from the verbal sparring that went on between the panel's Republicans and Democrats during a hearing last week, the prospect for a truly bipartisan measure seems very slim. Beyond that lies the full Commerce Committee and the House floor and a Congress that will recess later this month. On the Senate side, the Energy Committee chairman unveiled a draft bill last week, but he did not formally introduce it, preferring to hold hearings in the next session. (See separate story)

With markup scheduled to begin the week of Oct. 18th, House Subcommittee Chairman Joe Barton (R-TX) will require at least 16 votes to get his proposed restructuring measure, H.R. 2944, through the 29-member subcommittee It's expected he can count on 14 Republicans but he badly needs some Democratic backing. "He needs a strong two-thirds [majority] type vote in the subcommittee or his bill will face trouble" at the committee level. "He knows he needs a strong bipartisan vote," said a gas industry source.

At a hearing last Tuesday, key Democrats - Reps. Ralph Hall of Texas, Edward Markey of Massachusetts, John Dingell of Michigan and Frank Pallone of New Jersey - expressed varying degrees of negativity. And Commerce Committee Chairman Tom Bliley (R-VA), who isn't an ardent fan of the Barton bill, has indicated he doesn't plan to take up the legislation until next year.

Industry executives aren't pinning their hopes on a bill this year either. "Chairman Barton said that if he can't get something done by the end of this month he thinks it's almost dead until after the presidential election," said Unicom CEO John W. Rowe at the 55th annual meeting of the Interstate Natural Gas Association (INGAA) last week.

"Most people that I know around the electric industry think that Barton has come closer to a workable bill than any of the prior bills, but there are all kinds of very troublesome issues still there," Rowe remarked. "I think the odds are very much against this all being pulled together in this session, but if it does it will be a legislative triumph for one very important member and one particular bill and not a document that hammers out all the issues that we're all groping with."

Markey was the most critical of the measure last week, saying it should be called "electric futility legislation." Although a stong advocate of federal legislation, he said there was something "very wrong" with the Barton measure. "It does not de-monopolize the utility industry. It deregulates the monopolies in a manner which will free them to engage in a wide range of unfair, predatory and manipulative practices....."

"We have a long way to go on this bill," remarked Hall, the ranking Democrat on the subcommittee. And Dingell warned Barton not to go to markup without a clear consensus from subcommittee members. The time for major restructuring legislation "may not yet have arrived."

In their testimony before the subcommittee, FERC Chairman James Hoecker and Commissioners William Massey and Linda Breathitt voiced their support for federal restructuring legislation in general, and a number of provisions in the Barton bill specifically, but they also proposed several changes. Commissioners Curt Hebert Jr. and Vicky Bailey, on the other hand, questioned the need for any type of federal legislation. Bailey worried it "would lock into place a 1999-vintage vision for the [electric] industry, when that vision might very well be overtaken by technological or other advances in future years."

Both Hoecker and DOE's Deputy Energy Secretary T. J. Glauthier were concerned by the bill's failure to give FERC authority to remedy market-power concerns in retail power markets. Barton said this was omitted because the states that have restructured their markets already have dealt with the issue. ".....I see no compelling reason to give the federal government authority that it has never had before," he said.

Glauthier argued that federal authority to address market-power problems was needed in cases where a retail power market extended across state boundaries and beyond the reach of regulators in a specific state. In such cases, DOE proposes that FERC --- at the request of the state --- be allowed to step in to correct market-power abuses.

A number of people on Capitol Hill and in the energy industry point to this issue --- the lack of market-power authority for FERC --- as the major drawback to the Barton bill.

With respect to regional transmission organizations (RTOs), Hoecker and Massey were the only FERC members to support the bill's mandate requiring utilities to join or establish such groups. In fact, both advocated moving the bill's deadline (Jan. 1, 2003) for utility participation in an RTO up "by at least one year." Hoecker, Massey and Breathitt, also urged the subcommittee not to "codify" standards pertaining to an RTO's independence, geographic scope, configuration, operational authority or expansion.

Hoecker further proposed the Commission be given the ability to modify utility proposals for forming RTOs. The Barton draft would limit FERC's authority to an up or down vote. Barton believes utilities should have a free rein in creating tailor-made RTOs. "We wanted to limit the FERC's discretion [in this area]. Why would you assume that five commissioners.....would have more perfect knowledge than the market participants themselves that are creating the RTOs?"

On the issue of transmission, the DOE's Glauthier objected to the bill's provision that would limit FERC authority to only unbundled transmission, while state regulators would oversee bundled transmission. This "distinction.....would balkanize the regulation of transmission and could have a potentially chaotic impact on the development of competitive markets."

Susan Parker

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