A number of top energy executives lined up last week to lendtheir support to House Commerce Committee Chairman Thomas J.Bliley’s (R-VA) draft proposal that would give FERC solejurisdiction over all interstate transmission in the United States— including the transmission associated with bundled retailtransactions, as well as the interstate facilities operated byBonneville Power Administration, the Tennessee Valley Authority,cooperatives, municipals and utilities in Texas.
An industry observer viewed this show of utility support as”potentially changing the debate…..ending the logjam” over howmuch jurisdiction to award the Commission for interstatetransmission in a restructured electricity market.
This backing by major utilities also “delivers a wound, possiblya fatal wound, to EEI’s (Edison Electric Institute) position,”which has been to maintain the “status quo…..let the states dealwith all bundled transmission as part of their retailjurisdiction,” he said. “When you got six or seven major utilitiessigning off on this thing, including the utility in his [Bliley’s]home state, it certainly undercuts EEI’s position and helpsBliley.”
Bliley floated a discussion draft last week addressing only the”finite question” of transmission jurisdiction. In it, he proposedto give FERC jurisdiction over practically “anybody that’s gottransmission,” the observer noted. The only transmission facilitiesexempted from FERC oversight would be those used solely forintrastate commerce, such as ones in non-contiguous states likeAlaska, Hawaii and Puerto Rico.
As part of Bliley’s draft, FERC’s jurisdiction would extend tothe interstate transmission facilities of utilities in the ElectricReliability Council of Texas (ERCOT). The industry observer viewedthis move as a “slap in the face to the only two utilities whowould be affected by it” – TXU Corp. and Reliant Energy.Interestingly, the observer noted TXU and Reliant were among theutilities that funneled money to the two Washington D.C. frontgroups to stop Bliley from successfully carrying out restructuringlegislation. Bliley’s committee is expected to begin markup of theHouse restructuring bill, H.R. 2944, this Wednesday.
Energy Secretary Bill Richardson said Bliley’s release of hisdraft proposal on transmission jurisdiction in advance of markupwas a “positive step,” but he believes a “more comprehensiveapproach is necessary to fix what is wrong with our electricitymarkets and to produce a more reliable and competitive interstategrid.”
Last Wednesday, the Commerce chairman met with the energyexecutives from eight companies, who offered a number of “consensusrecommendations” mirroring Bliley’s own views with respect toelectricity restructuring legislation. Utilities represented at themeeting were Dominion Resources, Dominion Generation, Dynegy Corp.,MidAmerican Energy, PG&E Corp., TECO Energy, UtiliCorp andWisconsin Electric.
The band of executives proposed that the Commerce panel clarifyin its legislation that FERC has sole authority over alltransmission service, both bundled and unbundled, and over alltransmission providers. “This would promote the orderly andnon-discriminatory development of the wholesale market by ensuringthat public, private and cooperative systems are subject to uniformrules and conditions,” they told Bliley in a letter outlining theirrecommendations.
The group also called for the House legislation to assure FERCoversight over regional transmission organizations (RTOs).Specifically, the bill should affirm the work that FERC has alreadyundertaken on these organizations and confirm the Commission’sauthority to mandate participation in an RTO as a remedy for unduediscrimination. “RTOs will help ensure both the reliability of thegrid and the development of workable and effective markets,” theytold Bliley.
The power officials suggested that states – both those that havemoved to implement retail competition and those that have not – aswell as utilities be afforded a period of time to accommodate tothe new regulatory system.
Lastly, they asked that restructuring legislation includereliability provisions that recognize the role states can play inassuring the orderly and efficient operation of the nation’selectrical system. “We also note that the reliability titles ofmost bills before the House and Senate were developed by the NorthAmerican Electric Reliability Council, and that NERC is continuingits study of the issue. This continuing work should providereliability solutions compatible with an open and competitivemarketplace.”
The energy executives who met with Bliley were Tom Capps, CEO ofDominion Resources; Tom Farrell, CEO of Dominion Generation; RickGreen, CEO of UliliCorp; Ken Randolph, general counsel andsecretary for Dynegy Corp.; Greg Abel, president of MidAmericanEnergy; Richard Lehfeldt, senior vice president of external affairsfor TECO Energy; Larry Salustro, vice president of legal,government and regulatory affairs for Wisconsin Electric; and SteveKline, vice president of federal governmental and regulatoryrelations for PG&E Corp. Key House proponents of electricityrestructuring — Rep. Joe Barton (R-TX) and Rep. Steve Largent(R-OK) — also were there.
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