A U.S. House subcommittee last week voted down a proposal that would have allowed states to opt out of FERC’s pending standard market design (SMD) for U.S. wholesale power markets.

The vote on the amendment proposed by Rep. Lois Capps (D-CA) came after a day-long markup of energy legislation forwarded by Rep. Joe Barton (R-TX). The measure was marked up by the House Energy and Air Quality Subcommittee, which Barton chairs. The subcommittee falls under the jurisdiction of the House Energy and Commerce Committee.

“FERC has proposed far-reaching changes in order to establish a standard market design for the utility industry,” Capps said in comments before a vote was taken on her amendment. “It would put the regulation of electricity transmission at the state level directly under the control of FERC. It would likely eviscerate the ability of state officials to protect their consumers from blackouts and rising prices.”

Barton’s legislative proposal does not address SMD, which has become a hot button issue on Capitol Hill in recent months.

“My amendment is simple,” Capps said. “It allows any state to opt out FERC’s standard market design. If FERC is right, that its proposal is well reasoned and provides needed regional flexibility, then the plan will go forward unimpeded. However, if a state determines that the proposal will create more harm than good, then that state would have the ability to exit the program.”

Barton asked Capps to withdraw the amendment, noting that he had already agreed with another lawmaker, Rep. Charlie Norwood (R-GA), earlier in the day “to try to address this issue between now and full committee.”

Barton questioned whether Capps’ proposal was constitutional “because you actually give the state the right to preempt the federal government in interstate commerce, which clearly is unconstitutional. Second, the amendment as currently drafted, does not require any standard of proof. The state simply has to notify the Commission that it has determined…that it would harm the consumers within the state.”

The Capps amendment would “make it virtually impossible to create any kind of an interstate transmission system that has open access,” he said.

“We understand there’s some concerns about standard market design. We expressed those concerns in a hearing to the FERC commissioners several weeks ago. There’s a white paper that the FERC [will] release in the very near future. We’re going to be working with the Commission in the next week or so on some issues to try to take to full committee. So there are any number of reasons to suspend this amendment.”

Capps stood her ground and insisted on a vote on the amendment, which was defeated by a vote of 12 to 16.

Norwood offered an amendment that, among other things, would clarify that the retail sale of electricity “and any component service thereof, including transmission, is subject to the jurisdiction of the states.” Norwood argued that under its SMD proposal, FERC “seeks to assert and exercise jurisdiction that is currently exercised by the states as it’s always been.”

“If we were to accept the gentleman’s amendment, as is, it would have the effect….of creating a situation which would make it almost impossible to every truly get a national transmission system that would be open in terms of wholesale transmission,” Barton said.

“I’ve given my word to both Mr. Norwood and to Chairman [Billy] Tauzin that we’re going to work on this issue,” Barton said. “We’ve scheduled a series of meetings next week between subcommittee and full committee to see if we can’t strike a balance that solves as many of the problems as can be solved in a legislative process.”

In light of those meetings, Norwood subsequently agreed to withdraw his amendment.

A House Energy and Commerce Committee spokesperson said that members of the subcommittee voted out the overall legislation by a vote of 21-9 late Wednesday evening.

A markup by the full committee is expected to take place either this week or during the first week of April, the spokesperson told NGI.

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