The U.S. Senate is closing in on a set schedule of hearings forall pending federal electric deregulation proposals, Senate EnergyCommittee Chairman Frank Murkowski (R-AK) said at a committeehearing last week. The schedule will include a hearing date for theDept. of Energy (DOE) Secretary Bill Richardson’s administrationproposal, allowing interested parties to comment on itscontroversial 7.5% renewable energy mandate.

A spokesperson for the committee said Murkowski wants to get theball rolling, but has not come any closer to determining a timelinefor a final decision. “He’s gotten things started, but he has alsosaid all along that if he doesn’t get consensus, he’ll do things ina piecemeal fashion. Who knows how long that would take?”

Murkowski named the renewable mandate as one of his mainconcerns in the administration’s bill. “[The mandate] will costconsumers billions of dollars in higher electric rates and is notphysically achievable,” the Senator said. He also disapproved ofthe inclusion of a federal mandate on the states to deregulate byJan. 1, 2003, as well as other proposals that, in Murkowski’s view,have nothing to do with deregulation. He asked for all witnesseswho testify at the upcoming hearings to address these concerns.

On the positive side, Murkowski said he approved of certainissues in the bill, including: repeals for PUHCA (Public UtilitiesHolding Company Act) and PURPA (Public Utility Regulatory PoliciesAct), the bill’s suggestions on what to do with federal powermarketing administrations and the Tennessee Valley Authority, itsallowance of open access on all wholesale transmission and its planto deal with the high cost of electricity in rural communities.

The DOE released a study last week that concluded theadministration’s bill would lead to total energy costs reductionsof $32 billion by 2010, with an average price 14% below projectedpower prices under the current structure. The study also projectedsavings for residential customers in every state if theadministration’s bill is adopted.

With all the pluses and minuses associated with powerrestructuring issues, Murkowski warned the administration thatcompromise is key. “I must say that if the administration threatensto veto any bill that does not include their pet provisions thatare unacceptable, it will be the administration, not Congress, thatis costing U.S. consumers the benefits of competition.”

The commencement of hearings could not happen soon enough,according to Chrisman Iribe, COO of USGen, PG&ampE’s competitivegeneration unit, and president of the Electric Power SupplyAssociation (EPSA). Iribe testified at Tuesday’s Senate hearingthat electric deregulation has progressed inconsistently, leadingto reliability problems and prohibiting the retail market fromdeveloping. “In short, the lack of a national policy on retailcompetition has contributed significantly to the uncertainty of thewholesale market. This uncertainty, in turn, has prevented anorderly and market-responsive infrastructure investment ingeneration and transmission. The correlation between retailcompetition and wholesale competition is very strong-you can’t haveone without the other.”

John Norris

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