A House Commerce subcommittee hearing yesterday revealed thatlawmakers aren’t much closer to agreement on the tough,controversial issues associated with restructuring of the powerindustry than they were a year ago.

The rifts were apparent as members of the energy and powersubcommittee, which seeks to piece together and vote oncomprehensive restructuring legislation by the end of the year,took up reform of the Public Utility Regulatory Policies Act of1978 (PURPA), stranded-cost recovery, environmental considerationsand the hot-bed issue of a renewable portfolio standard (RPS).

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

Even among the proponents, which includes the Clintonadministration, there’s a “fair amount of disagreement” over thedetails of an RPS, said Rep. John Dingell (D-MI), the rankingDemocrat on the Commerce Committee. The administration has proposedphasing in increases in the percentage of gross annual generationoutput that would be sourced by renewables, rising from the currentlevel of 2.5%-3% to 7.5% between 2010-2015, while others have comeup with completely different figures. “We could have a grandbattle” over this issue alone, Dingell noted, asking whether thepercentage share for renewables should be “2, 7, 10 [or even] 20%.”

And that’s only the beginning. As shown in the administration’sbill, “should the required percentage increase over time? And ifso, what is the appropriate rate for the increase?” he askedlawmakers. “Should [an] RPS be a permanent fixture in law or shouldit sunset? Should an RPS count waste energy or hydroelectricprojects as renewables? Should TVA, the PMAs, municipal utilitiesand rural cooperatives [be bound] by RPS? What would be therelationship between the investor-owned utilities and the munis andthe co-ops and the public if we go this direction?” It’s questionsand issues like these that will be “helpful in sinking” federalrestructuring legislation, he said.

In contrast, Rep. Edward Markey (D-MA) believes the nationshould have a “renewable strategy” as it moves into the 21stcentury to avoid an “environmental catastrophe.” He said such astrategy was critical given that electric generation plantspresently account for one-third of the greenhouse gases in thecountry.

On a more general note, there was considerable debate overwhether a final restructuring bill should have an environmentalcomponent. “…[O]ne thing that I’m quite certain about is that thelegislation should not include any environmental title that imposesadditional controls on electric power plants or attempts topenalize the coal industry anymore,” noted Rep. Edward Whitfield(R-KY). “I take this position because I believe the existing CleanAir 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 inthe Midwest has “negatively” affected the air quality in theNortheast. Since New Jersey’s recent legislation enacting retailcompetition fell far short on ensuring environmental safeguards, hebelieves it’s up to Congress to address the issue in itscomprehensive legislation. Pallone said he plans to come out soonwith an “expanded” version of a bill, which he first introduced inthe 105th Congress, that would propose the implementation ofuniform environmental standards for all electric generators.

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

Most of the House lawmakers agreed stranded-cost recovery is anissue that should be handled with the utmost care, but who shouldbe doing the handling, the states or federal government, remains amajor bone of contention. “I have great faith [in] the states to dothe right thing, and we ought to be…the least intrusive that wecan be in this issue,” said Rep. Ralph Hall (D-TX), who addedstranded costs were the “largest financial” matter that he’s comeup against since joining Congress. “I think…..we can largelyremove ourselves from this obligation if we bury once and for alltime this notion of imposing mandates on the states and thedate-certain by which they’d have to be carried out,” he told thesubcommittee.

Commerce Committee Chairman Thomas J. Bliley (R-VA) noted that21 states, in opening their power markets to competition, haveprovided a “fair opportunity” for utilities to recover theirstranded costs. “They have already done all the heavy lifting onthis issue, and that is proper.”

Rep. Charles Norwood (R-GA) urged lawmakers to proceedcautiously on the issue. “…..[I]f we don’t handle this correctlywe can [send] dozens of towns and several companies in Georgia intobankruptcy…..If we pull the rug out from underneath them, 39 of42 electric memberships in Georgia will most likely…..go out ofbusiness. That is no way to increase competition in themarketplace.” He called for the subcommittee to hold a separatehearing to solely address stranded-cost recovery.

Oklahoma Corporation Commissioner Denise Bode agreed that”over-arching” federal electricity legislation was needed toresolve stranded costs and other issues, saying that it would be”extraordinarily difficult” to move forward with competitionwithout it.

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