After years of debate and hearings on whether and how torestructure the $200 billion electricity industry, mark-up ofcomprehensive legislation by the House Energy and PowerSubcommittee finally is in sight but the chances are slim that atruly bipartisan measure will be voted out in the weeks ahead.

With mark-up scheduled to begin the week of Oct. 18th,Subcommittee Chairman Joe Barton (R-TX) will need at least 16 votesto get his proposed restructuring measure, H.R. 2944, throughsubcommittee and forwarded to the full Commerce Committee. It’sexpected he can count on 14 Republican members for their support.But two Republicans – Rep. Edward Whitfield of Kentucky and Rep.Charles Norwood of Georgia – are against federal restructuringlegislation. This means Barton badly needs some Democratic supportfor his bill, which at this juncture seems unlikely.

At a hearing Tuesday, key Democrats – Reps. Ralph Hall of Texas,Edward Markey of Massachusetts, John Dingell of Michigan and FrankPallone of New Jersey – went on record either opposing Barton’sproposal, or expressing doubts that comprehensive legislation wouldbe likely this year on the House side.

Even if Barton can get a few Democrats on his side, giving him aone or two vote majority, “that would send a terrible message” tothe Commerce Committee and other House members, a Capitol Hillobserver said. “He needs a strong two-thirds [majority] type votein the subcommittee or his bill will face trouble” at the committeelevel. “He knows he needs a strong bipartisan vote.”

But bipartisan support for Barton’s bill seems lacking. Markeywas the most critical of the measure, saying it should be called”electric futility legislation.” Although a staunch supporter offederal legislation, he said there was something “very wrong” withthe Barton legislation. “It does not de-monopolize the utilityindustry. It deregulates the monopolies in a manner which will freethem to engage in a wide arrange of unfair, predatory andmanipulative practices…” He presented a laundry list of specificproblems with the bill. Pallone agreed it wasn’t a “truecompetition” proposal.

“We have a long way to go on this bill,” remarked Hall, theranking Democrat on the subcommittee. In fact, he suggested theClinton administration and other parties begin thinking about a”bare bones package” that might better “navigate” the House andSenate.

Although it doesn’t back the Barton bill in its current form,Deputy Energy Secretary T. J. Glauthier said the Department ofEnergy (DOE) still advocated comprehensive reform of theelectricity industry, and wanted Congress to “act quickly” on it.He added it hadn’t even considered alternatives in the eventcomprehensive legislation isn’t possible. “That’s a good answer,”Hall commented, but he advised DOE to start “thinking about afall-back position because I think it’s going to come around.”

Dingell, who is considered the dean of House Democrats, warnedBarton not to go to markup without a clear consensus fromsubcommittee members. Absent a consensus, “there will [be] littlemerit in forcing a markup in order to meet an arbitrary deadline,”he said, adding that the time for major restructuring legislation”may not yet have arrived.”

In their testimony before the subcommittee, FERC Chairman JamesHoecker and Commissioners William Massey and Linda Breathitt voicedtheir overall support for the Barton measure – with somemodifications. But Commissioners Curt Hebert J. and Vicky Baileyquestioned the need for any type of federal legislation.

“I am extremely hesitant to support any major piece oflegislation or rulemaking that would lock into place a 1999-vintagevision for the [electric] industry, when that vision might verywell be overtaken by technological or other advances in futureyears,” Bailey remarked. Hebert said he believed the Commissionalready had authority to create a competitive power market.

Both Hoecker and DOE’s Glauthier were concerned by the bill’sfailure to give FERC authority to remedy market-power concerns inretail power markets. Barton said this was omitted from theproposed federal legislation because most of the states that haverestructured their markets already have dealt with the issue intheir respective bills. “…I see no compelling reason to give thefederal government authority that it has never had before,” hesaid.

Glauthier argued that federal authority to address market-powerproblems was needed in cases where a retail power market extendsacross state boundaries and beyond the reach of regulators in aspecific state.

With respect to regional transmission organizations (RTOs),Hoecker and Massey were the only FERC members to support theBarton’s bill mandate requiring utilities to join or establish suchgroups by Jan. 1, 2003. In fact, both advocated moving the deadlinefor utility participation in an RTO up “by at least one year.”Bailey countered that an RTO mandate was “unnecessary andill-advised,” while Hebert said it would rob the utility industryof initiative.

Hoecker, as well as Massey and Breathitt, also urged thesubcommittee not to “codify” standards pertaining to an RTO’sindependence, geographic scope and configuration, operationalauthority and expansion. “Detailed standards that appearappropriate today may be inappropriate in future years” as themarket evolves, Hoecker told the panel.

Hoecker and Glauthier also asked that the Commission be giventhe ability to modify utilities’ RTO applications. As currentlywritten, the Barton bill would limit FERC’s authority to onlyapproving or rejecting them. The Commission “should have theprocedural flexibility to work with the applicants to modify aflawed proposal, instead of simply disapproving a deficient ornon-complying application…”

Barton believes utilities should have a free rein in creatingRTOs, without any interference from the Commission. “We wanted tolimit the FERC’s discretion [in this area]. Why would you assumethat five commissioners…..would have more perfect knowledge thanthe market participants themselves that are creating the RTOs?” heasked Glauthier.

With respect to transmission, Hoecker and DOE’s Glauthierobjected to the bill’s provision that would limit FERC authority toonly unbundled transmission, while state regulators would overseebundled transmission. This “distinction…..would balkanize theregulation of transmission and could have a potentially chaoticimpact on the development of competitive markets,” Glauthier noted.”…[W]e urge you to re-evaluate this provision. Whethertransmission is bundled or unbundled, it is essential to thedevelopment of competitive markets that all competitors havenon-discriminatory access to the facilities.”

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