After years of debate and hearings on whether and how torestructure the $200 billion electricity industry, the consensusonce again appears to be – not this year.

A markup of a comprehensive bill by the House Energy and PowerSubcommittee finally is within sight. But judging from the verbalsparring that went on between the panel’s Republicans and Democratsduring a hearing last week, the prospect for a truly bipartisanmeasure seems very slim. Beyond that lies the full CommerceCommittee and the House floor and a Congress that will recess laterthis month. On the Senate side, the Energy Committee chairmanunveiled a draft bill last week, but he did not formally introduceit, preferring to hold hearings in the next session. (See separatestory)

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

At a hearing last Tuesday, key Democrats – Reps. Ralph Hall ofTexas, Edward Markey of Massachusetts, John Dingell of Michigan andFrank Pallone of New Jersey – expressed varying degrees ofnegativity. And Commerce Committee Chairman Tom Bliley (R-VA), whoisn’t an ardent fan of the Barton bill, has indicated he doesn’tplan to take up the legislation until next year.

Industry executives aren’t pinning their hopes on a bill thisyear either. “Chairman Barton said that if he can’t get somethingdone by the end of this month he thinks it’s almost dead untilafter the presidential election,” said Unicom CEO John W. Rowe atthe 55th annual meeting of the Interstate Natural Gas Association(INGAA) last week.

“Most people that I know around the electric industry think thatBarton has come closer to a workable bill than any of the priorbills, but there are all kinds of very troublesome issues stillthere,” Rowe remarked. “I think the odds are very much against thisall being pulled together in this session, but if it does it willbe a legislative triumph for one very important member and oneparticular bill and not a document that hammers out all the issuesthat we’re all groping with.”

Markey was the most critical of the measure last week, saying itshould be called “electric futility legislation.” Although a stongadvocate of federal legislation, he said there was something “verywrong” with the Barton measure. “It does not de-monopolize theutility industry. It deregulates the monopolies in a manner whichwill free them to engage in a wide range of unfair, predatory andmanipulative practices…..”

“We have a long way to go on this bill,” remarked Hall, theranking Democrat on the subcommittee. And Dingell warned Barton notto go to markup without a clear consensus from subcommitteemembers. The time for major restructuring legislation “may not yethave arrived.”

In their testimony before the subcommittee, FERC Chairman JamesHoecker and Commissioners William Massey and Linda Breathitt voicedtheir support for federal restructuring legislation in general, anda number of provisions in the Barton bill specifically, but theyalso proposed several changes. Commissioners Curt Hebert Jr. andVicky Bailey, on the other hand, questioned the need for any typeof federal legislation. Bailey worried it “would lock into place a1999-vintage vision for the [electric] industry, when that visionmight very well be overtaken by technological or other advances infuture years.”

Both Hoecker and DOE’s Deputy Energy Secretary T. J. Glauthierwere concerned by the bill’s failure to give FERC authority toremedy market-power concerns in retail power markets. Barton saidthis was omitted because the states that have restructured theirmarkets already have dealt with the issue. “…..I see nocompelling reason to give the federal government authority that ithas never had before,” he said.

Glauthier argued that federal authority to address market-powerproblems was needed in cases where a retail power market extendedacross state boundaries and beyond the reach of regulators in aspecific state. In such cases, DOE proposes that FERC — at therequest of the state — be allowed to step in to correctmarket-power abuses.

A number of people on Capitol Hill and in the energy industrypoint 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’smandate requiring utilities to join or establish such groups. Infact, both advocated moving the bill’s deadline (Jan. 1, 2003) forutility 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 tomodify utility proposals for forming RTOs. The Barton draft wouldlimit FERC’s authority to an up or down vote. Barton believesutilities should have a free rein in creating tailor-made RTOs. “Wewanted to limit the FERC’s discretion [in this area]. Why would youassume that five commissioners…..would have more perfectknowledge than the market participants themselves that are creatingthe RTOs?”

On the issue of transmission, the DOE’s Glauthier objected tothe bill’s provision that would limit FERC authority to onlyunbundled transmission, while state regulators would overseebundled transmission. This “distinction…..would balkanize theregulation of transmission and could have a potentially chaoticimpact on the development of competitive markets.”

Susan Parker

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