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Murkowski: FERC Should Punish Utilities that Steal Power

Murkowski: FERC Should Punish Utilities that Steal Power

Senate Energy Chairman Frank Murkowski last week took another shot at what's fast becoming his favorite target --- FERC. He chided the Commission for failing to take punitive action against electric utilities that "improperly" took power from the grid last summer, which lead to near-blackout situations in the Midwest.

"I think they should [have].....assessed some kind of appropriate fine or whatever other authority that they felt was necessary, but to just say 'shame on you' I don't think is adequate or reasonable," the Alaskan Republican said following a speech to the annual meeting of the United States Energy Association in Washington D.C.

"If they [FERC] haven't got the teeth to enforce it, they should ask Congress for the legislative authority" to do so," he told reporters. "I think they had the capability to enforce it [last summer], but they didn't do it."

Murkowski emphasized the ball's in the Commission's court. "It's not up to us [Congress] to figure out all the cures.....They [FERC] spend all their time on this area and they know" what's needed to ensure grid reliability this summer.

The threat of brownouts and blackouts this summer is "very real," Murkowski said. "I'm told that yesterday [last Tuesday] we were near a blackout situation in one area [where] we had prices peaking at about $6,000."

As for electricity restructuring, he noted Senate Republicans got together last week for a "skull session" on the various bills - four are comprehensive and four are "narrower in scope" focusing mostly on reliability. "Surprisingly enough, [we found] there's quite a bit of agreement on many issues. That's the good news. [But] trying to tie these all in" is going to be a "big job," he said.

Murkowski plans to begin marking up an electricity restructuring measure this Wednesday. "Some people say we should have done it last year, some people suggest that we should wait for a new administration, but I'm committed to go through this process and see what we got." Furthermore, "some [say] why don't you just concentrate on reliability. I wouldn't exclude that, but that's not my objective. My objective is to start in with comprehensive and see where we go."

Murkowski also criticized FERC again for "dragging [its] feet" with respect to approving the proposed Independence Pipeline to the Northeast. He believes the natural gas pipeline, which would bring Canadian gas supplies from the Midwest to the Northeast, would provide "some relief" to Northeast customers who largely depend on fuel oil.

FERC's "got an obligation in their ruling [on Independence] to address the economic feasibility [of the project]. They're not supposed to give anything away, but if an area of the country needs an alternative [fuel] source, I think they should make every effort to try and make sure the economics fit," he said.

The reverberations of the Commission's decision on Independence will be felt this summer, he warned. "Wait until they feel the impact this year when the air conditioners go on in the Northeast, and those power generating plants that depend on oil have to pay two to three times what they paid this year. That's going to affect the consumer."

Murkowski further noted Senate Majority Leader Trent Lott (R-MS) intends to introduce this week the "National Energy Security Act of 2000," which will include a mix of energy proposals aimed at reducing U.S. dependence on oil imports by 50% by 2010.

The proposals will seek to promote the use of natural gas by removing existing disincentives, open up the Arctic Coastal Plain area to energy development, open up the Overthrust region in the Midwest to development, provide royalty relief for exploration in frontier areas, offer tax incentives to marginal well producers, establish a home heating fuel reserve in the Northeast, extend tax credits for electricity produced from biomass and solar sources, offer incentives for clean coal technology, expand and improve the weatherization program for low-income families, oppose any withdrawals from the Strategic Petroleum Reserve unless authorized by the Secretary of the Department of Energy (DOE), as well as a number of other measures.

Furthermore, the energy measure will require the DOE Secretary to closely review the National Petroleum Council's report on natural gas, Murkowski said. "It says you're not going to get there [a 30 Tcf market] from here the way you're going. The infrastructure costs [are going to be] a billion and a half dollars. If you think you're going to get cheap gas, you've got another thing coming."

Susan Parker

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