House Republicans Throw in Towel on CA Emergency Bill

House Republican energy leaders have deep-sixed their proposed legislation to provide emergency relief to California and other western energy markets, insisting that Democrats and Republicans are too far apart on the issue of whether price limits on wholesale power should be included.

Chairman W.J. "Billy" Tauzin (R-LA) of the House Energy and Commerce Committee and Rep. Joe Barton (R-TX), chairman of the House Energy and Air Quality Subcommittee, made the announcement during a press briefing last Wednesday on Capitol Hill, just before mark-up of the emergency bill was due to begin. Tauzin said they decided against moving forward on the proposed bill for "tactical and practical" reasons, the first of which was timing. Given the contentious issue of price caps, there would be little chance of getting a bill through both houses of Congress and a conference committee in time to do any good this summer. The two said that consideration of the bill had already served as a prod to get a number of its initiatives underway, both by the federal and California governments. Also, conservation initiatives have already reduced demand in California by 13%, two nuclear generators have come back on line, boosting power supplies, and prices have moderated, Tauzin said.

Republicans on the committee plan to send a letter to the Federal Energy Regulatory Commission, asking it to address several of the provisions of the now-dead bill that could provide some help for the western market in the short-term. Other items will be rolled into an omnibus energy policy bill to be taken up later in the year, designed to address energy problems across the country.

The letter to FERC will urge it to explore the concept of extending trading of "negawatts" (credits for power not used) across the western grid. In addition, Republicans will join the California delegation in asking the Commission to "aggressively" monitor power markets for evidence of price manipulation and gouging. They also will call on FERC to extend its market-mitigation efforts in California on a 24-hour, seven-day-a-week basis, rather than just limiting it to emergency situations. The Commission's market mitigation plan, issued in late April, called for the establishment of a single-market clearing price for real-time transactions in the Cal-ISO during times of reserve deficiencies (Stage I, II and III emergencies) in the state. During those times, real-time transactions are based on a proxy price, which is derived from daily natural gas and emissions prices (see NGI, April 30).

Tauzin blamed House Minority Leader Dick Gephardt (D-MO) for directing Democrats on the committee to hold the line for power price caps, in direct opposition to the president's stance on the issue. He rejected the notion, suggested in press questions, that the bill was being killed in the House committee at the direction of the White House, which because of the leadership change in the Senate, has lost its ability to stop price cap legislation there. Nor was he aiming to save western legislators from having to go on the record in a House floor vote on price caps. The committee chairman responded that he didn't think dropping the emergency bill would rule out a floor vote on price caps. That issue could be brought to the floor in other legislation or sent over from the Senate, he added.

The likelihood of Senate legislation to reduce western power prices took a giant step forward Wednesday when the new Senate Majority Leader Tom Daschle said he would support the bill authored by California's Democratic Sen. Dianne Feinstein and Sen. Gordon Smith (R-OR) to direct FERC to impose just and reasonable prices in the wholesale electricity market (see separate report, this issue).

Barton and Tauzin indicated getting a comprehensive bill through the Congress this year on electric restructuring would be very difficult, given the "incredible regional and philosophic differences and the vested interests, who like the status quo. They indicated piecemeal legislation might have a better chance, "and we may try some end runs on some things," Barton added.

Barton said the committee had reached agreement in the emergency legislation "on every contentious issue, except the price cap issue." Republicans had the votes in committee to report out the bill without the price caps, but it didn't seem worth it "with so little bipartisan support and so much of it already adopted." The two pointed to the president's pledge to implement an expansion of the bottleneck Path 15 north-south transmission line in California by executive order and his move last week to increase funding to help low income consumers meet their energy bills this summer. Also, FERC already has opened an investigation into power prices.

In a separate press briefing Wednesday, minority committee members blasted the Republicans for failing to follow through on the mark-up and allow a vote on cost-based rates. Rep. John Dingell (D-MI) said he believed the Republicans' decision to ditch the proposed emergency bill for California was a mistake. Rep. Henry Waxman (D-CA) said he was preparing a price gouging and blackout-prevention amendment to "rein in wholesale generators' windfall profits." He said House Democrats might resort to other measures to bring power price remedies to the floor, such as rounding up the votes for a discharge petition to force a vote.

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