Marked-Up Electric Bill Comes Under Attack
The electricity restructuring legislation that survived markup
by the House Energy and Power Subcommittee last Wednesday is a
shell of the bill that was sponsored by Chairman Joe Barton (R-TX),
energy industry lobbyists say.
"There ain't much of a bill left. Markup was not a pretty scene,
but it got done.....There were several amendments passed that
pretty much took what remaining [federal] authority the bill had
and kind of sucked it away," said a gas industry lobbyist. "I
thought it was a pretty weak bill to begin with. And they have made
[it] even weaker. Some might argue that it even goes backwards"
from the status quo in the industry now.
The marked-up bill, which squeaked past the subcommittee by a
vote of 17-11, included several amendments that "pretty much
gutted" provisions that would expand FERC's authority in certain
areas, such as utility mergers, and it weakened the federal role in
others, such as requiring states to adhere to retail reciprocity,
establishing uniform standards for interconnection to the
transmission grid, setting up aggregation to market power to
smaller customers, the creation of regional transmission
organizations (RTOs), requiring utilities to provide net metering
for small generators, and over consumer protection.
"All of the powers will be kept to the state level. Nearly all
of the new authority that was proposed for FERC has in my humble
opinion been gutted," the gas lobbyist noted. He said probably the
most damaging amendment that passed was the one offered by Reps.
Albert Wynn (D-MD) and Robert Ehrlich (R-MD), which he estimated
scrapped "about five or six sections" of Barton's bill. It either
purged or watered down "nearly all of the areas where there was
potential federal authority," he said.
"I'm certainly concerned [on this score]. I think that there was
a movement or belief by the subcommittee that more things needed to
be decided by the states. And as a consequence, things like
mergers, things like interconnects and so on were all basically
punted to the states to decide," noted John Sharp, vice president
of governmental affairs and counsel for the Natural Gas Supply
Association. "In the end, they gave too much stuff to the states
and took too much from FERC." He especially was concerned by an
amendment sponsored by Rep. Cliff Stearns (R-FL) that eliminated
the reciprocity section of Barton's bill.
"I don't agree at all with what was done to the reciprocity
provision. Basically, the original Barton provision said that if
you [a generator] are in a closed state, you cannot sell
electricity into or compete in an open state. But the subcommittee
decided [during markup] that these reciprocity provisions on the
federal level were inappropriate and struck them." Sharp also said
there were "a lot of changes to the distributed power section,"
which he hopes will be either eliminated or modified by the full
Commerce Committee. He noted distributed power is a big user of
"I would give the bill a D minus, minus, minus," said Lynne
Church, executive director of the Electric Power Supply
Association, which represents power marketers and competitive
generators. "Its fundamental problem is it does not send the
message that Congress wants a competitive wholesale power market.
The subcommittee missed the opportunity to create an atmosphere for
a seamless grid across the country."
She, too, was concerned the subcommittee has taken away or
curtailed FERC's authority over mergers and grid interconnections,
which she believes "sets the stage for a very balkanized situation"
in the power market. And although Church had "mixed" feelings about
the reciprocity provision, she noted "it was at least the one part
of the bill that was going to provide incentives to states to open
up their retail markets."
Marty Kanner, coordinator of Consumers for Fair Competition
(CFC), doesn't see it as a FERC vs. state issue. For him, "it's a
question of having a referee [in the power market], or having no
one and leaving it to the monopolists. The bill didn't give powers
and take powers from FERC and [then] give them to the states.
Rather, it either took from or failed to give the FERC authority to
look at things that would be exclusively within [its] jurisdiction
because they're interstate commerce issues. [But] it's not leaving
them to the states. It's leaving them to nobody," he said. A good
example would be the creation of regional transmission
organizations, Kanner noted. "States can't do that. The bill
doesn't give FERC the tools to do that. So, it leaves it to
Commerce Chairman Thomas Bliley (R-VA) has pledged to bring
restructuring legislation before the committee early next year.
"My guess would be that Chairman Bliley [first] would want to
re-write this bill. It doesn't represent anything close to what he
believes in," the gas lobbyist said. And, he added, getting a
restructuring bill through the full committee won't be an easy
task. "I don't think that there's very many members who are willing
to tinker with the status quo on this at all. They're just very
Kanner agreed that a re-write of the bill was in order. "I think
that's the only chance for the interests of competition to be
served, and I think it's the only chance for getting a bill
enacted. Candidly, if this is the same proposal that's in play at
the full committee, our organization and a lot of others will do
everything they can to defeat it." Kanner's group represents a wide
range of transmission users, including power marketers, industrial
customers, utilities, small business groups and consumer
Americans for Affordable Electricity (AAE), which represents a
broad coalition of power users and marketers, also was disappointed
with the bill voted out by the subcommittee, saying it would not
result in a competitive or reliable electricity system. It strips
away federal oversight for wholesale electricity transactions that
occur on the interstate grid, the group said, adding that it hopes
to see a "more balanced and fair process" as the bill advances
through the full committee.
Prior to markup, even Bliley conceded he had reservations with
the Barton bill. He said that while he was "pleased" the
subcommittee was "finally taking this initial step" towards
restructuring the power industry, "I would be remiss if I did not
mention that I still have concerns about this particular bill." For
example, "I don't know if this bill strikes the right balance for
consumers. I have questions about the [Public Utility Holding Act]
provisions and the market-power provisions." Following markup,
Bliley didn't comment on the substance of the amended bill. His
office released a statement saying the chairman was "pleased to
have received the subcommittee product," and that he "had a number
of options at his disposal" when the full committee takes up
restructuring next year.
Unlike Bliley, CFC's Kanner didn't hesitate to list the bill's
drawbacks. The amended Barton bill "doesn't do the things that are
needed to have a competitive marketplace. It doesn't separate the
transmission system from the merchant function. It doesn't provide
for meaningful review of utility mergers. It doesn't address overly
concentrated generation markets. And it doesn't look at utilities
leveraging captive ratepayers to finance competitive affiliate