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Richardson Again Warns of Blackouts
Department of Energy Secretary Bill Richardson last week likened the power industry to an old jalopy in desperate need of repair.
Speaking at an energy conference in Washington, D.C. sponsored by the National Energy Marketers Association, Richardson expressed concern that Congress has not been too interested in moving power restructuring legislation, and he said if legislation is not completed soon there could be dire consequences. "My main message is that unless there is restructuring soon there are going to be power outages in this country," Richardson said.
"If those markets were cars, they would be in the shop and we wouldn't like what the mechanic would be telling us about them. Interstate power and transmission marketing are inefficient. Essential investments are not being made. Transmission access is limited. Generating capacity reserves are plummeting, leaving no margin for error. Construction of new major transmission has ground to a halt, and existing transmission capacity is not only feeling the strain but also sometimes breaking under it. And with all of this, demand for electricity continues to grow.
"If Congress fails to act and act soon on restructuring legislation, it will strangle the development of the competitive electricity market," said Richardson.
He urged state regulators, power consumers and other power market stakeholders to "keep the pressure on" and promised to do his part in the form of a series of electric "restructuring summits" in every region of the country, "sounding the alarm bell for the need for electricity restructuring."
"Should Congress act this year, it won't be a moment too soon," said Richardson. "Regions across the country have endured a host of reliability problems in recent summers," he noted. "Spot prices for electricity shot up, and elected officials and utility officials were forced to issue urgent appeals for the public to use less power. Factories shut down to send workers home. Some areas suffered rolling black outs. In other areas the lights went out because of overworked and outdated distribution facilities cracking under pressure." Last summer, parts of Chicago, New York and New Orleans suffered through power outages.
The DOE sponsored a study of last summer's power problems and found that industry restructuring "ultimately would improve reliability." But as the situation stands currently, the pace of the transition to greater competition is too slow and the uncertainty about the future is putting reliability at risk. The situation is likely to get worse before it gets better, Richardson said.
Twenty-five states plus the District of Columbia have adopted proposals to allow retail competition for electricity and almost every other state has that matter under active consideration. But the "full benefits of electric restructuring will be realized only within a framework of federal statute," according to Richardson. "What we do at the federal level and when we do it will have a profound impact on whether wholesale competitive markets, as well as state and local retail markets, will succeed.
"Federal action is necessary for state restructuring programs to achieve their maximum potential. Electrons ignore state borders. Electricity markets are becoming increasingly regional and multi-regional. Actions in one state can and do affect consumers in another."
He said federal restructuring legislation should do six things: 1) make interstate transmission more efficient and effective; 2) promote regional transmission organizations; 3) prevent the abuse of market power; 4) establish mandatory bulk power reliability standards; 5) ensure renewable energy and other public benefits are not left behind (renewable energy should make up 7.5% of generation, according to the administration's plan); and 6) lift federal barriers to the development of competitive wholesale and retail electric markets. Rocco Canonica
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