Electricity legislation goes to US House

Under a measure approved by the US Senate, a self-regulating Electric Reliability Organization (ERO) would establish, monitor, and enforce compliance with reliability standards for interstate bulk power systems. But passage of an electricity bill in the House of Representatives continues to be problematic.


Washington, DC�Under a measure approved by the US Senate, a self-regulating Electric Reliability Organization (ERO) would establish, monitor, and enforce compliance with reliability standards for interstate bulk power systems.

But passage of an electricity bill in the House of Representatives continues to be problematic because of a disagreement between Rep. Thomas Bliley, (R-Va.), chairman of the US House Commerce Committee, and Rep. Joe Barton, (R-Tex.), chairman of the House Energy and Power Subcommittee, over the bill's language.

Bliley and Barton have been negotiating on a broader retail electricity reform bill. Next week, theCommerce Committee is expected to consider legislation aimed at dealing with reliability concerns.

Sen. Frank Murkowski (R-Alas.), the Energy Committee chairman, said he favored comprehensive legislation that would have addressed other impediments to competition in the electric industry.

"This bill will create an industry run organization that will set rules of the road for reliable power and will help ensure states have an appropriate role in promoting reliability," he said.

"However, the measure does not stimulate the construction of new generation and transmission that are essential if we are going to avoid electricity shortages this summer and in the future."

Elements
The bill, SB 2071, passed Friday before the July 4 recess, would establish a self-regulating Electric Reliability Organization which will operate under the oversight of the Federal Energy Regulatory Commission.

Their relationship will be similar to the Securities and Exchange Commission's oversight of industry self-regulatory organizations like the stock exchanges.

However, the legislation only addresses the operational security of the bulk power system. Not covered were issues such as generation adequacy, reserve margins, distribution system reliability, safety, transmission siting, or retail customer choice programs.

The ERO would not have authority to build or finance any transmission or other facility necessary for a bulk power user to comply with a reliability requirement.

The ERO standards would be mandatory on all owners, users and operators of the system, and penalties could be assessed for noncompliance. Bulk power users would have to pay the costs of complying with the standards.

Justification
In a speech on the Senate floor, Murkowski said ERO was essential.

"The nation's interstate electric transmission grid is an extremely complex network that is also interconnected with the transmission grid in Canada and Mexico," he said.

"It has developed over decades with various voluntary agreements between utilities and others that allow regions to work together to respond to changing power needs that vary from day to day, even minute to minute.

"Many of these voluntary agreements were developed after a disastrous event in 1965 that led to a major blackout in New York City and throughout other parts of the Northeast."

Murkowski said expansion of competition in the wholesale electric power market, starting with the 1992 Energy Policy Act, has changed the system of buying and selling wholesale power and made it much more complex. He said a strong economy has pushed more electricity usage and created new stresses on the system.

"The existing scheme of voluntary compliance with voluntary industry reliability rules is simply no longer adequate. The users and operators of the system, who used to cooperate voluntarily on reliability matters, are now competitors without the same incentives to cooperate with each other or comply with voluntary reliability rules.

"For example, last summer during an extremely hot period, one Midwest utility took power from the grid to which it was not entitled. It did so without penalty and without informing other utilities on the grid. It is this kind of activity this legislation will prevent."

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