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House Lawmakers Far Apart on Restructuring

House Lawmakers Far Apart on Restructuring

A House Commerce subcommittee hearing yesterday revealed that lawmakers aren't much closer to agreement on the tough, controversial issues associated with restructuring of the power industry than they were a year ago.

The rifts were apparent as members of the energy and power subcommittee, which seeks to piece together and vote on comprehensive restructuring legislation by the end of the year, took up reform of the Public Utility Regulatory Policies Act of 1978 (PURPA), stranded-cost recovery, environmental considerations and the hot-bed issue of a renewable portfolio standard (RPS).

The natural gas industry firmly opposes a renewable standard because it would mandate that renewable sources-wind, biomass and solar-be used more widely to generate electricity each year, which could rob gas of a potentially greater share of the power market. Whether such a standard should be included in restructuring legislation is an issue that has split policymakers and the energy industry almost down the middle.

Even among the proponents, which includes the Clinton administration, there's a "fair amount of disagreement" over the details of an RPS, said Rep. John Dingell (D-MI), the ranking Democrat on the Commerce Committee. The administration has proposed phasing in increases in the percentage of gross annual generation output that would be sourced by renewables, rising from the current level of 2.5%-3% to 7.5% between 2010-2015, while others have come up with completely different figures. "We could have a grand battle" over this issue alone, Dingell noted, asking whether the percentage share for renewables should be "2, 7, 10 [or even] 20%."

And that's only the beginning. As shown in the administration's bill, "should the required percentage increase over time? And if so, what is the appropriate rate for the increase?" he asked lawmakers. "Should [an] RPS be a permanent fixture in law or should it sunset? Should an RPS count waste energy or hydroelectric projects as renewables? Should TVA, the PMAs, municipal utilities and rural cooperatives [be bound] by RPS? What would be the relationship between the investor-owned utilities and the munis and the co-ops and the public if we go this direction?" It's questions and issues like these that will be "helpful in sinking" federal restructuring legislation, he said.

In contrast, Rep. Edward Markey (D-MA) believes the nation should have a "renewable strategy" as it moves into the 21st century to avoid an "environmental catastrophe." He said such a strategy was critical given that electric generation plants presently account for one-third of the greenhouse gases in the country.

On a more general note, there was considerable debate over whether a final restructuring bill should have an environmental component. "...[O]ne thing that I'm quite certain about is that the legislation should not include any environmental title that imposes additional controls on electric power plants or attempts to penalize the coal industry anymore," noted Rep. Edward Whitfield (R-KY). "I take this position because I believe the existing Clean Air Act (CAA) is working quite well."

This drew an immediate reaction from Rep. Frank Pallone (D-NJ), who contends the CAA's exemption of "older, dirty" coal plants in the Midwest has "negatively" affected the air quality in the Northeast. Since New Jersey's recent legislation enacting retail competition fell far short on ensuring environmental safeguards, he believes it's up to Congress to address the issue in its comprehensive legislation. Pallone said he plans to come out soon with an "expanded" version of a bill, which he first introduced in the 105th Congress, that would propose the implementation of uniform environmental standards for all electric generators.

Rep. John M. Shimkus (R-IL) believes the sheer introduction of competition to the power industry will produce environmental benefits through greater efficiencies, and thus would minimize the need for a separate environmental title.

Most of the House lawmakers agreed stranded-cost recovery is an issue that should be handled with the utmost care, but who should be doing the handling, the states or federal government, remains a major bone of contention. "I have great faith [in] the states to do the right thing, and we ought to be...the least intrusive that we can be in this issue," said Rep. Ralph Hall (D-TX), who added stranded costs were the "largest financial" matter that he's come up against since joining Congress. "I think.....we can largely remove ourselves from this obligation if we bury once and for all time this notion of imposing mandates on the states and the date-certain by which they'd have to be carried out," he told the subcommittee.

Commerce Committee Chairman Thomas J. Bliley (R-VA) noted that 21 states, in opening their power markets to competition, have provided a "fair opportunity" for utilities to recover their stranded costs. "They have already done all the heavy lifting on this issue, and that is proper."

Rep. Charles Norwood (R-GA) urged lawmakers to proceed cautiously on the issue. ".....[I]f we don't handle this correctly we can [send] dozens of towns and several companies in Georgia into bankruptcy.....If we pull the rug out from underneath them, 39 of 42 electric memberships in Georgia will most likely.....go out of business. That is no way to increase competition in the marketplace." He called for the subcommittee to hold a separate hearing to solely address stranded-cost recovery.

Oklahoma Corporation Commissioner Denise Bode agreed that "over-arching" federal electricity legislation was needed to resolve stranded costs and other issues, saying that it would be "extraordinarily difficult" to move forward with competition without it.

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