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because of overworked and outdated distribution facilities cracking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
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
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