The full Senate passed by unanimous consent a stand-aloneelectric reliability bill late last week, while House CommerceCommittee Chairman Thomas Bliley (R-VA) moved ahead full throttlewith plans to mark up a comprehensive power bill and bring it tothe House floor before the end of July.

Accompanying news of the Senate’s action, Sen. Slade Gorton(R-WA), sponsor of the reliability proposal, called on FERC toinvestigate the spikes in spot power prices in the PacificNorthwest and report back in 30 days. He also asked Senate EnergyCommittee Chairman Frank Murkowski (R-AK) to conduct hearings intothe “devastating situation” in the California and the PacificNorthwest wholesale electric markets.

The opinion is split over whether Gorton’s bill, which wouldcreate enforceable reliability rules for the bulk power system forthe first time, will provide any real relief this summer. The billgives FERC new authority to immediately adopt mandatory reliabilitystandards, and begin the process of creating one nationalreliability organization.”

Even Murkowski, who voted in favor of Gorton’s measure,questioned how much good it would do the market. The bill, S. 2071,”does not stimulate the construction of new generation andtransmission that are essential if we are going to avoidelectricity shortages this summer and in the future.” Murkowski hasand continues to be a major proponent of comprehensiverestructuring legislation.

In a recent speech in Montreal, FERC Chairman James Hoecker alsoknocked Gorton’s reliability bill. “No piece of stand-alonereliability legislative, however meritorious, entirely gets uswhere we need to go. We need open, competitive, transparent marketstoo and I, for one, do not think that will happen without RTOs.”(see related story)

In a letter to Hoecker on Friday, Gorton wrote the”unprecedented and devastating series of price spikes” in thewholesale electric markets in California and the Pacific Northwestreveal that there’s something “seriously wrong.” Record-settingtemperatures and planned and unplanned maintenance outages atgeneration facilities were partly to blame, he said, but they alonedon’t explain the extreme level of the price spikes.

“Many of my constituents have speculated that thecommand-and-control approach of the California Power Exchange (PX)has created a situation that encourages suppliers (and in somecases large users) to ‘game’ the power market. I have heard thatcertain generating plants were held back from the market — evenduring the San Francisco-area rolling blackouts — in order tosell it at astronomical levels on the short-term spot market. Thissituation stymies the function of the marketplace and encouragescertain entities to gain tremendous financial windfalls fromcreating potentially artificial shortages. Consumers throughout theWest will eventually see rate increases from this situation,workers are jobless due to these actions, and the reliability ofthe entire West Coast bulk-power grid is thereby endangered.”

Also, Gorton wrote, “some of my constituents…contend that thelack of investment in new generation, partly due to a lack ofregulatory certainty, has contributed to these prices spikes” inthe region.

Before Gorton’s reliability bill could be voted on Friday, itfirst had to clear two holds — one placed by Sen. Phil Gramm(R-TX) and another by Sen. Dianne Feinstein (D-CA). Gramm put ahold on the bill “in hopes that he could buy a few hours to see ifthere was an opportunity to broaden the legislation. He wanted totake the steam out of the [reliability] effort,” said Gramm pressaide Larry Neal. He noted Gramm, who has a “strong preference” forcomprehensive legislation, lifted the hold when he realized therewas no hope “in the immediate future” of passing a broadelectricity measure in the Senate. He said, however, Gramm’s “got[his] fingers crossed” for a comprehensive bill in the House.

Feinstein removed her short-lived hold on the reliability billafter her concerns about the bill’s impact on the California marketwere addressed, he office said.

Susan Parker

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