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Clinton Power Bill to Have Bad News for Gas

Clinton Power Bill to Have Bad News for Gas

Energy Secretary Bill Richardson yesterday said the long-awaited Clinton administration bill to restructure the retail power industry would be on congressional lawmakers' desks after they return from Easter recess in mid-April.

The administration is in the midst of fine-tuning the measure so that it "make[s] more sense" from a policy standpoint, he said during an electricity restructuring forum sponsored by The Atlantic Monthly in Washington D.C. When Congress comes back on April 12th, "it'll be ready," he assured Rep. John Dingell, ranking Democrat on the Commerce Committee, and other top energy lawmakers and regulators.

The bill will have some bad news for the natural gas industry in that it proposes to mandate the use of renewable fuels in electric generation at an annual level that will be a "little higher" than the 5.5% previously sought by the administration, Richardson noted. Some expect it to be 7% or higher. The gas industry is fervently opposed to the mandate because it contends it would give renewables a leg up over natural gas in the generation market. "We're willing to go to battle" over this issue, said one source, adding that nearly the entire industry was united against the mandate.

Lawmakers said the outlook for restructuring legislation out of Congress this year appears iffy at best. "I don't think we can [get a comprehensive bill through] unless we're prepared to address the tough issues," including stranded-cost recovery, power marketing administrations, the grandfathering of states' retail access plans and the renewable mandate, said Senate Energy Committee Chairman Frank Murkowski (R-AK). He indicated the prospect for such a bill this year was a "mixed bag."

Sen. Jeff Bingaman (D-NM) said a comprehensive restructuring measure was out of the question this year, but he thinks legislation addressing a "very short list" of issues might be doable. "...[I]f we can get to a point very early in this Congress to agree that we're only going to be able to pass a very short list of provisions at the federal level, I think we can do that," he told energy executives and lobbyists.

Rep. Joe Barton (R-TX), chairman of the energy and power subcommittee, was a bit more optimistic and had a clear-cut timetable for passage of restructuring legislation. He hopes to do markup by either "some time this spring or early summer," and forward a bill to the floor by "late summer or early fall." He conceded, however, there was "no absolute necessity" to move a bill now, but he added "if we can get consensus, there is no reason not to move a bill." Barton said his goal was to be at a "Rose Garden [signing] ceremony" for electricity restructuring legislation "before the first presidential primary in the year 2000."

Industry analysts generally agree the chances for a power restructuring bill grow increasingly dim as the beginning of the presidential primary draws near next year.

Richardson said that not only was there a need for federal legislation, but that the states were clamoring for it. The "states want us to do this...What we would be doing would be helping the states achieve some very good results for their customers." The administration estimates its bill would save retail power consumers $20 billion annually. Dingell countered that he hadn't heard any state regulators asking "the feds" to step into their retail markets.

Murkowski said he was concerned a federal restructuring bill would increase power costs for rural consumers, particularly in his home state. But Richardson noted there were "a lot of provisions" in the administration's bill, including one that would allow states to opt out of the federal proposal that would protect rural customers and others.

Richardson cited the price spikes seen in the Midwest power market last summer as a good example of "why we need a federal bill" to complement states' efforts. "We're not going to have utilities build new [generation] capacity unless they know what the new rules are going to be," he said.

FERC Chairman James Hoecker said he was "guardedly optimistic" that there wouldn't be a recurrence of power price spikes in the Midwest. "I don't think you're going to find that this summer. I think there is more generation on line in the Midwest" than last year.

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