Clinton Electric Bill Is Bad News for Gas
Energy Secretary Bill Richardson last week said long-awaited
Clinton administration legislation 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
it "makes[s] more sense" from a policy standpoint, he said during
an electricity restructuring forum co-sponsored by The Atlantic
Monthly and the Edison Electric Institute in Washington D.C. last
Tuesday. But "it'll be ready" when Congress comes back on April
12th, he assured Rep. John Dingell, ranking Democrat on the
Commerce Committee, and other top energy lawmakers and regulators
who were panelists.
The bill is expected to have some bad news for the natural gas
industry: it will propose mandating the use of renewable fuels in
electricity 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 more. The gas industry
is fervently opposed to the mandate because it contends it would
give renewables - i.e. solar, wind and biomass - an unfair
competitive advantage over gas as a source to generate power.
"We're willing to go to battle" over this issue, said one gas
source, adding that nearly the entire industry was united against
The higher level for renewables also is not expected to sit well
with Senate Energy Committee Chairman Frank Murkowski (R-AK), who
was "critical" of 5.5%, a committee press aide told NGI. He just
can't see how renewable fuels, which currently generate only about
one-tenth of 1% of the electricity nationwide, can reach 7% or more
of generation capacity without including nuclear or hydro power in
the fuel category. "What are you going to do fill an entire state
with windmills?" the aide asked. Also, the senator doesn't like
mandates. "Any time you mandate something, it's a big deal with the
Even with the administration's proposal expected soon, lawmakers
said the outlook for getting comprehensive restructuring
legislation out of Congress this year would be 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, the fate of power marketing administrations, the
grandfathering of states' retail access plans and the controversial
renewable mandate, said Murkowski. He indicated the prospect for
such a bill this year was a "mixed bag."
Sen. Jeff Bingaman (D-NM) agreed that 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 move
ahead," 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 "this spring or early summer," and forward a bill
to the floor by "late summer or early fall." 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." But he conceded that reaching that goal hinged on
the contents of the administration's bill and whether the House and
Senate could reach consensus on key issues.
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
Murkowski said he was concerned a federal restructuring bill
would increase power costs for rural consumers, who are prevalent
in his home state. "If the rates are going to go up for Rural
America, look out. The bill isn't going to go anywhere," he warned.
But Richardson noted there were "a lot of provisions" in the
administration's bill to protect rural customers and others. He
cited the section that would permit states to opt out of federal
restructuring as an example.
Richardson pointed to last summer's price spikes in the Midwest
power market as a good reason "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."
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