Emergency power bill would set up electricity auction

By the OGJ Online Staff

HOUSTON, Apr. 25 -- US Rep. Joe Barton (R-Tex), chairman of the Energy & Air Quality Subcommittee of the House Energy and Commerce Committee, has tentatively scheduled hearings on an emergency electricity bill Tuesday with a possible vote May 3.

The most recent draft of the bill generally follows a previous draft circulated earlier. But under the latest version, the proposed legislation directs the Federal Energy Regulatory Commission (FERC) to establish a clearinghouse where wholesale buyers willing to forego contractual purchases of electric energy could auction off the power.

FERC would recommend to Congress by Jan. 1, 2003, whether this section should be extended beyond the proposed Oct. 1, 2003, termination date.

The bill also directs FERC to establish a program to allow consumers in the Western Systems Coordinating Council (WSCC) to resell, at market prices, a portion of the electricity they would otherwise be entitled to consume under contract or applicable regulation.

This provision would give consumers a financial incentive to conserve electricity when demand peaks, according to a bill analysis. A consumer could resell electricity to either the consumer�s own local utility or to a third party. The local utility would receive the same amount of money, regardless of who buys the power..

The program would expire in October 2003. The WSCC region includes all or parts of Washington, Oregon, California, Idaho, Nevada, Montana, Wyoming, Utah, Arizona, Colorado, New Mexico, South Dakota, and Nebraska.

The bill includes several provisions directed at improving transmission capacity in the West. It directs the secretary of energy and FERC to study transmission congestion and develop a plan to relieve constraints and report to Congress within 6 months after enactment.

It would also authorize the Western Area Power Administration to spend $220 million to expand WAPA�s transmission system to reduce the constraints on "Path 15" in California. Costs would be recovered from transmission fees, sale of transmission assets, or both.

The bill would authorize electric power transmission corridors across federal lands, after conducting a study of the need for transmission expansion and determining if transmission facilities on federal land is necessary or appropriate

Under the legislation, if California acquires transmission facilities from a "public utility," the state would be subject to the same jurisdiction, with respect to the facilities, as the utility. California Gov. Gray Davis has negotiated a deal, subject to a number of approvals, under which the state would purchase Edison International's transmission system.

Proposed but still under discussion is a provision that would require full participation in a western-wide regional transmission organization (RTO) upon agreement by at least 10 of 13 governors in the WSCC. Federal transmission facilities would be authorized and directed to participate in the subsequent RTO, as would municipally-owned entities and cooperatives owning or operating transmission facilities in the region. The requirement for participation would end 3 years after the RTO is established.

The bill also prohibits the secretary of energy, FERC, federal officers, agencies, and the courts from issuing an order requiring emergency sales of electricity or natural gas unless payment is guaranteed. It would also also Qualifying Facilities (QFs) under the Public Utility Regulatory Policies Act (PURPA) to sell power to third parties when a utility is unable to meet the payment terms of a power purchase agreement. A QF would be required to resume sales under certain conditions.

Other provisions of the bill direct the federal government to take various step during blackouts, including conservation and education programs. Some assistance would be available only if governors ask for it.