Rep. Peter DeFazio (D-OR) last Thursday urged fellow lawmakers crafting a comprehensive energy bill to place restrictions on what he called FERC’s “virtually unintelligible, 638-page” proposed rulemaking for a standard market design (SMD) in U.S. wholesale electricity markets.

“I’ve been looking for a place to agree with the gentleman for a long time. That’s it,” Rep. Billy Tauzin (R-LA) told DeFazio at the end of a day-long House-Senate energy bill conference committee. Lawmakers from both chambers met to reconcile comprehensive energy bills previously passed by the Senate and the House of Representatives.

At Thursday’s meeting, Tauzin, a co-chairman of the conference committee, noted that “We are very close to having a House Republican position” on electricity. “As I pointed out, the House Democrats, I’m sure, will want to interplay with us on that position before we make an offer to the Senate.”

But DeFazio said that “some events that have unfolded” since the House-Senate energy bill conference committee last met “should be addressed in that section of the bill,” including FERC’s SMD NOPR. The SMD proposed rulemaking was unveiled by the federal agency in late July (see NGI, Aug. 5).

The Oregon lawmaker is worried that SMD “has been written as sort of an academic exercise, and I don’t feel it’s very based in reality and is bound to fail as badly or worse than the California academic experiment.”

DeFazio said it’s his hope that the energy bill conference committee will “put sideboards or restrictions” on SMD. “Because it’s not clear to me [that] we’ve even extended previously to the Federal Energy Regulatory Commission, through the 1992 [Energy Policy] Act or other statutes, the authority to act in this area.”

DeFazio also expressed concern about the impact of SMD in the wake of FERC’s efforts to extend its authority over non-jurisdictional utilities. “I’d be very concerned that not only will this be a disaster for its current regulated, or jurisdictional utilities, but for bringing the entire grid of the United States under this incomprehensible, disastrous, academic proposal.”

The Oregon lawmaker also voiced concerns over FERC and market-based rates. “To move toward an extraordinary authority based across the entire United States with no requirement that they make explicit findings on a case-by-case basis whether market power exists or not on market-based rates, I think would be a real mistake.”

The House Appropriations Committee recently voted in favor of asking the Department of Energy (DOE) to study the impact of SMD prior to the issuance of a final rule. The request came in the form of report language included in a House Energy and Water appropriations bill. The language was inserted into the bill at the request of DeFazio and Rep. George Nethercutt (R-WA).

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