NGI The Weekly Gas Market Report / NGI All News Access

Marked-Up Electric Bill Comes Under Attack

Marked-Up Electric Bill Comes Under Attack

The electricity restructuring legislation that survived markup by the House Energy and Power Subcommittee last Wednesday is a shell of the bill that was sponsored by Chairman Joe Barton (R-TX), energy industry lobbyists say.

"There ain't much of a bill left. Markup was not a pretty scene, but it got done.....There were several amendments passed that pretty much took what remaining [federal] authority the bill had and kind of sucked it away," said a gas industry lobbyist. "I thought it was a pretty weak bill to begin with. And they have made [it] even weaker. Some might argue that it even goes backwards" from the status quo in the industry now.

The marked-up bill, which squeaked past the subcommittee by a vote of 17-11, included several amendments that "pretty much gutted" provisions that would expand FERC's authority in certain areas, such as utility mergers, and it weakened the federal role in others, such as requiring states to adhere to retail reciprocity, establishing uniform standards for interconnection to the transmission grid, setting up aggregation to market power to smaller customers, the creation of regional transmission organizations (RTOs), requiring utilities to provide net metering for small generators, and over consumer protection.

"All of the powers will be kept to the state level. Nearly all of the new authority that was proposed for FERC has in my humble opinion been gutted," the gas lobbyist noted. He said probably the most damaging amendment that passed was the one offered by Reps. Albert Wynn (D-MD) and Robert Ehrlich (R-MD), which he estimated scrapped "about five or six sections" of Barton's bill. It either purged or watered down "nearly all of the areas where there was potential federal authority," he said.

"I'm certainly concerned [on this score]. I think that there was a movement or belief by the subcommittee that more things needed to be decided by the states. And as a consequence, things like mergers, things like interconnects and so on were all basically punted to the states to decide," noted John Sharp, vice president of governmental affairs and counsel for the Natural Gas Supply Association. "In the end, they gave too much stuff to the states and took too much from FERC." He especially was concerned by an amendment sponsored by Rep. Cliff Stearns (R-FL) that eliminated the reciprocity section of Barton's bill.

"I don't agree at all with what was done to the reciprocity provision. Basically, the original Barton provision said that if you [a generator] are in a closed state, you cannot sell electricity into or compete in an open state. But the subcommittee decided [during markup] that these reciprocity provisions on the federal level were inappropriate and struck them." Sharp also said there were "a lot of changes to the distributed power section," which he hopes will be either eliminated or modified by the full Commerce Committee. He noted distributed power is a big user of natural gas.

"I would give the bill a D minus, minus, minus," said Lynne Church, executive director of the Electric Power Supply Association, which represents power marketers and competitive generators. "Its fundamental problem is it does not send the message that Congress wants a competitive wholesale power market. The subcommittee missed the opportunity to create an atmosphere for a seamless grid across the country."

She, too, was concerned the subcommittee has taken away or curtailed FERC's authority over mergers and grid interconnections, which she believes "sets the stage for a very balkanized situation" in the power market. And although Church had "mixed" feelings about the reciprocity provision, she noted "it was at least the one part of the bill that was going to provide incentives to states to open up their retail markets."

Marty Kanner, coordinator of Consumers for Fair Competition (CFC), doesn't see it as a FERC vs. state issue. For him, "it's a question of having a referee [in the power market], or having no one and leaving it to the monopolists. The bill didn't give powers and take powers from FERC and [then] give them to the states. Rather, it either took from or failed to give the FERC authority to look at things that would be exclusively within [its] jurisdiction because they're interstate commerce issues. [But] it's not leaving them to the states. It's leaving them to nobody," he said. A good example would be the creation of regional transmission organizations, Kanner noted. "States can't do that. The bill doesn't give FERC the tools to do that. So, it leaves it to nobody."

Commerce Chairman Thomas Bliley (R-VA) has pledged to bring restructuring legislation before the committee early next year. "My guess would be that Chairman Bliley [first] would want to re-write this bill. It doesn't represent anything close to what he believes in," the gas lobbyist said. And, he added, getting a restructuring bill through the full committee won't be an easy task. "I don't think that there's very many members who are willing to tinker with the status quo on this at all. They're just very risk averse."

Kanner agreed that a re-write of the bill was in order. "I think that's the only chance for the interests of competition to be served, and I think it's the only chance for getting a bill enacted. Candidly, if this is the same proposal that's in play at the full committee, our organization and a lot of others will do everything they can to defeat it." Kanner's group represents a wide range of transmission users, including power marketers, industrial customers, utilities, small business groups and consumer representatives.

Americans for Affordable Electricity (AAE), which represents a broad coalition of power users and marketers, also was disappointed with the bill voted out by the subcommittee, saying it would not result in a competitive or reliable electricity system. It strips away federal oversight for wholesale electricity transactions that occur on the interstate grid, the group said, adding that it hopes to see a "more balanced and fair process" as the bill advances through the full committee.

Prior to markup, even Bliley conceded he had reservations with the Barton bill. He said that while he was "pleased" the subcommittee was "finally taking this initial step" towards restructuring the power industry, "I would be remiss if I did not mention that I still have concerns about this particular bill." For example, "I don't know if this bill strikes the right balance for consumers. I have questions about the [Public Utility Holding Act] provisions and the market-power provisions." Following markup, Bliley didn't comment on the substance of the amended bill. His office released a statement saying the chairman was "pleased to have received the subcommittee product," and that he "had a number of options at his disposal" when the full committee takes up restructuring next year.

Unlike Bliley, CFC's Kanner didn't hesitate to list the bill's drawbacks. The amended Barton bill "doesn't do the things that are needed to have a competitive marketplace. It doesn't separate the transmission system from the merchant function. It doesn't provide for meaningful review of utility mergers. It doesn't address overly concentrated generation markets. And it doesn't look at utilities leveraging captive ratepayers to finance competitive affiliate ventures."

Susan Parker

©Copyright 1999 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus