Senate Energy Committee Chairman Frank Murkowski (R-AK) unveileda draft electricity restructuring proposal last week that couldn’tbe more friendly to natural gas had the industry itself written themeasure.

Foremost, the draft — unlike the Clinton administration’sproposal — doesn’t include a federal mandate requiring the useof renewable fuels in power generation. A renewable mandate also isnoticeably absent from the House restructuring bill, which isbefore the Energy and Power Subcommittee.

The mandate was omitted because the federal government”shouldn’t pick [the] winners and losers” in the energy markets,Murkowski told lawmakers and energy executives last Thursday at the1999 National Summit on Electricity and Natural Gas in Washington,D.C.

The committee chairman outlined for the first time the keyprinciples he believes should be included in a bill. He said heplans to hold hearings on his draft when Congress convenes nextyear. And he will only formally introduce legislation reflectinghis principles if there’s a “reasonable chance of forming [a]consensus” in the committee.

In addition to natural gas, Murkowski was particularly kind tothe states in the draft proposal. It precluded federal preemptionof state restructuring programs, as well as a date-certain forstates to comply with federal restructuring legislation. Further,the draft drew a clear division between the jurisdiction of thefederal government and the states, giving states responsibilityover all retail sales within their borders and FERC solejurisdiction over the interstate market, including wholesale powercompetition.

Moreover, it clarified that states have the authority: 1) toprotect electric consumers in their states; 2) impose a “wires”charge to fund state public purpose programs; 3) to establishreciprocity requirements; and 4) over retail sales of electricityto federal facilities.

Probably the most “controversial” provision would give utilitiesthe right to assert eminent domain when building new transmissionfacilities, Murkowski said. But this can only be done when the newfacilities are “proposed in accordance to a regional planningprocess, and the line cannot be built through the state process.”Hydroelectric facilities and gas pipelines already possess theright to federal eminent domain, Murkowski noted, and he thinks ittime power transmission had it.

Furthermore, the draft would give FERC jurisdiction over allinterstate transmission lines, not just those owned byinvestor-owned utilities. And it supports voluntary participationby utilities in regional transmission organization (RTOs), andwould set standards for the Commission to follow in creating suchgroups.

Murkowski noted the Senate Finance Committee will address at anOct. 19th hearing the issue of whether municipally owned utilitiesshould be allowed to continue to issue tax-exempt bonds to buildnew facilities, when investor-owned utilities can’t. “The questionis [is] that fair competition,” Murkowski asked, and added that hedidn’t think so.

Susan Parker

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