Barton circulates draft emergency power bill

Wholesale electricity generators, including cooperatives and municipal systems, throughout the US West could be subject to a federal price investigation under draft legislation being circulated by Rep. Joe Barton (R-Tex.), chairman of the US House Subcommittee on Energy and Air Quality. No final decision has been made, according to a Barton memo, but if it is incorporated into a final bill, it would require regulators to open proceedings within 10 days of its passage.

By the OGJ Online Staff

HOUSTON, Apr. 9--Wholesale electricity generators, including cooperatives and municipal systems, throughout the US West could be subject to a federal price investigation under draft legislation being circulated by Rep. Joe Barton (R-Tex.), chairman of the US House Subcommittee on Energy and Air Quality.

Barton asked members to comment on the proposed electricity emergency legislation by Thursday. He said he would like to take action within the first 2 weeks after Congress returns from its current recess.

No final decision has been made on the provision to order a formal investigation in prices under Section 206 of the Federal Power Act, according to a Barton memo, but if it is incorporated into a final bill, it would require the Federal Energy Regulatory Commission to open proceedings within 10 days of its passage.

The proposal was not included in a series of ideas submitted to Barton by his staff, after the conclusion of hearings on the California power crisis 3 weeks ago (OGJ Online, Mar. 23, 2001).

The draft incorporates a number of other emergency measures, including boosting hydropower in the West at the expense of salmon restoration projects, reducing transmission bottlenecks, temporarily easing emissions standards, and increasing the supply of distributed generation.

Some but not all the provisions were included in the list of ideas Barton circulated and some are clearly in response to the situation in California. A number address the problems generators have had getting paid for power already delivered to Pacific Gas & Electric Co. and Southern California Edison Co.

The draft bill requires a recipient guarantee compensation, if the secretary of energy orders wholesale generators to sell electric energy. Former Energy Sec. Bill Richardson ordered generators throughout the West to continue selling power to the California Independent System Operator, after it became clear Southern California Edison Co. and Pacific Gas & Electric Co. would not pay for it.

Another provision allows qualifying facilities (QFs) under the Public Utility Regulatory Policies Act (PURPA) to sell power to third parties when a utility is unable to pay under a purchase power agreement.

This would avoid future situations such as those that recently occurred in California in which certain QFs were financially unable to continue producing power, according to the proposed legislation. The section directs FERC to revise existing rules to allow QFs to sell to third parties, while maintaining existing interconnection agreements with the utility.

At least three provisions take aim at relieving the shortage of hydropower in the Northwest, by allowing full use of water to generate electricity rather than saving fish. Upon request by the governors of the Washington, Oregon, Idaho, and Montana, the administrator of the Bonneville Power Administration may authorize maximum electric generation at hydroelectric facilities providing electric power to BPA. The section waives the application of other federal laws, regulations, or court orders that would otherwise apply.

The draft legislation would specifically delay implementation of northern California�s Trinity River restoration plan, which would release additional water into the Trinity River to restore historic salmon and steelhead runs. But it also would apply to any river restoration project that would reduce available water and electricity during a power emergency.

Hydroelectric operators would be given additional latitude to modify terms and/or conditions in their FERC approved licenses to respond to power emergencies when declared by a state governor. The bill instructs FERC to issues rules to provide temporary relief from operational constraints and greater flexibility to increase hydropower production without compromising environmental resources.

With respect to transmission, one provision still under consideration could extend eminent domain authority to the federal government as a way to insure transmission lines are built. Giving the federal government eminent domain authority over transmission lines has been incorporated in other bills in the past but was dropped in a recent omnibus energy bill.

Presently, states are responsible for siting electric transmission facilities, but this raises potential reliability concerns, according to the draft legislation. The proposed provision doesn't preempt states� rights to site transmission but authorizes FERC to enforce requests to expand or upgrade transmission to avoid delay in construction of necessary transmission lines.

The draft legislation also directs the secretary of energy and FERC to do a joint study of transmission congestion, develop a plan to relieve constraints, and report to Congress within 6 months after enactment.

The draft legislation also includes the following provisions.

� It would direct the secretary of energy, in coordination with the Federal Emergency Management Agency (FEMA), to initiate emergency planning in states likely to face electricity shortages. FEMA undertook a number of contingency measures in preparation for Y2K, many of which were directed at the potential for electric power disruptions.

� California, Nevada, Oregon, and Washington would be allowed to adjust their standard time upon a finding that doing so will help alleviate the energy crisis. The section would expire Dec. 31, 2003.

� FERC would be asked to establish a clearinghouse system to speed up agreements between wholesale sellers and wholesale purchasers willing to forego the purchase of electric energy. This would provide a venue for power buyers interested in auctioning electric energy to which they have contractual rights.

� Local power companies would be required to interconnect distributed generation facilities, if the facility owner complies with FERC rules and pays the connection costs.

Certain provisions of the draft bill would be applicable at the request of governors, including:

� A new fund within the Low Income Home Energy Assistance Program (LIHEAP) would assist eligible low income, elderly, or disabled consumers to pay high electricity bills during electricity emergencies. This section requires a governor declare an electricity emergency and request the release of these emergency funds from the secretary of the Department of Health and Human Services.

� The National Energy Conservation Policy Act (NECPA) would be amended to allow a governor to request an emergency reduction in energy consumption of at least 10% at covered federal facilities. In states where a governor has declared an electricity emergency, this new section would require nonexempt federal facilities to reduce energy consumption per gross sq ft by at least 10%. The reduction in consumption would only be required for the duration of the emergency.

� The Western Area Power Administration (WAPA) would be authorized to expand WAPA�s transmission system to remove the Path 15 constraint, if California's governor declares an emergency. The authorization amount is to be decided. Costs would be recovered from transmission fees, sale of transmission assets, or both.

� Governors could request the Environmental Protection Agency issue a temporary waiver of nitrogen oxide (NO2 emission requirements applicable to newly constructed power plants for a maximum of 2 years.

� In states which may experience an electricity emergency, a governor may submit a state implementation plan (SIP) amendment to the EPA administrator. This amendment would give the governor maximum flexibility under the SIP to allow continued electricity generation from natural gas-fired facilities, while obtaining NOx emission offsets from other sources. The temporary waiver cannot last longer than 6 months.

� Full participation in a western regional transmission organization (RTO) would be required upon agreement by at least 10 of 13 governors within the Western Systems Coordinating Council (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 within the region.

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