A group of major energy purchasers formed as a result of last month’s historic blackout urged Sen. Pete Domenici (R-NM) last week to reconsider a deal backed by Sen. Richard Shelby (R-AL) that would delay implementation of FERC’s pending standard market design (SMD) proposal for U.S. wholesale power markets for several years.
Members of the Business Alliance for Reliable Energy made their collective plea in a letter sent to Domenici, who is a key player on Capitol Hill in the ongoing efforts by House and Senate conferees to craft a compromise, national energy bill.
The letter encouraged Domenici to support the development of a regional-based system that can better manage the nation’s overlapping grids. “Some energy companies lobbied for a deal to protect their markets from broader regional systems that would expose them to national standards and new competition,” the group said.
International Paper, Shell Oil, Smurfit Stone Container Corp. and Walgreens are among the nation’s largest users of electricity, and are the first members of the alliance, which was formed after the Aug. 14 blackout. They stated in the letter that the blackout “demonstrates the need for a new approach to managing the nation’s electricity grids.”
The alliance members said that blackouts span state lines and political jurisdictions in a matter of seconds, requiring new cooperative efforts between federal and state regulatory bodies to improve regional planning and oversight. Major energy purchasers prefer regional approaches to manage the flow of electricity across the multiple infrastructures and political jurisdictions that make up the nation’s system, they said.
The letter also said that efforts in Congress to delay regional approaches “prolong the regulatory uncertainty that constrains private sector investment in the nation’s energy infrastructure, prevents greater coordination among states as they plan and manage their energy needs, and leaves businesses with multi-state operations vulnerable to varied standards of reliability.”
Members of the alliance are encouraging Congress to not allow loopholes for energy companies that they said prefer to avoid participation in regional approaches. “By allowing utilities to ‘opt-out’ of a regional planning and oversight system, the ability of our companies and other purchasers to participate in larger wholesale markets will be diminished.”
Doubts over the Shelby deal appear to be growing in Congress. Charles Schwab analyst Christine Tezak recently noted that grumbling has increased on Capitol Hill over the way in which Shelby “was able to extract a strongly worded, multi-year delay of FERC’s standard market design program in exchange for his vote on a unanimous consent measure to move last year’s energy bill off the floor of the Senate and into conference this year.”
Last Monday, a bipartisan group of more than a dozen U.S. senators argued that Congress should not delay the SMD proposal. “The vision of today’s Congress should be to complete the transition to competitive markets by allowing the wholesale power market platform of the Federal Energy Regulatory Commission to move forward,” the 20 senators wrote in their letter to Domenici and Sen. Jeff Bingaman (D-NM).
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