Department of Energy Secretary Bill Richardson last week likenedthe power industry to an old jalopy in desperate need of repair.

Speaking at an energy conference in Washington, D.C. sponsoredby the National Energy Marketers Association, Richardson expressedconcern that Congress has not been too interested in moving powerrestructuring legislation, and he said if legislation is notcompleted soon there could be dire consequences. “My main messageis that unless there is restructuring soon there are going to bepower outages in this country,” Richardson said.

“If those markets were cars, they would be in the shop and wewouldn’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 islimited. Generating capacity reserves are plummeting, leaving nomargin for error. Construction of new major transmission has groundto a halt, and existing transmission capacity is not only feelingthe strain but also sometimes breaking under it. And with all ofthis, demand for electricity continues to grow.

“If Congress fails to act and act soon on restructuringlegislation, it will strangle the development of the competitiveelectricity market,” said Richardson.

He urged state regulators, power consumers and other powermarket stakeholders to “keep the pressure on” and promised to dohis part in the form of a series of electric “restructuringsummits” in every region of the country, “sounding the alarm bellfor 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 ofreliability problems in recent summers,” he noted. “Spot prices forelectricity shot up, and elected officials and utility officialswere forced to issue urgent appeals for the public to use lesspower. Factories shut down to send workers home. Some areassuffered rolling black outs. In other areas the lights went outbecause of overworked and outdated distribution facilities crackingunder pressure.” Last summer, parts of Chicago, New York and NewOrleans suffered through power outages.

The DOE sponsored a study of last summer’s power problems andfound that industry restructuring “ultimately would improvereliability.” But as the situation stands currently, the pace ofthe transition to greater competition is too slow and theuncertainty about the future is putting reliability at risk. Thesituation is likely to get worse before it gets better, Richardsonsaid.

Twenty-five states plus the District of Columbia have adoptedproposals to allow retail competition for electricity and almostevery other state has that matter under active consideration. Butthe “full benefits of electric restructuring will be realized onlywithin a framework of federal statute,” according to Richardson.”What we do at the federal level and when we do it will have aprofound impact on whether wholesale competitive markets, as wellas state and local retail markets, will succeed.

“Federal action is necessary for state restructuring programs toachieve their maximum potential. Electrons ignore state borders.Electricity markets are becoming increasingly regional andmulti-regional. Actions in one state can and do affect consumers inanother.”

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 abuseof market power; 4) establish mandatory bulk power reliabilitystandards; 5) ensure renewable energy and other public benefits arenot left behind (renewable energy should make up 7.5% ofgeneration, according to the administration’s plan); and 6) liftfederal barriers to the development of competitive wholesale andretail electric markets. Rocco Canonica

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