House subcommittee schedules hearings on electricity reform

Electric industry groups were scrambling Thursday to analyze a draft reform bill introduced by Rep. Joe Barton (R-Texas), chairman of the House Subcommittee on Energy and Air Quality. Hearings on the measure are scheduled Dec. 12-13, just before Congress leaves for the year.

By the OGJ Online Staff

HOUSTON, Dec. 6 -- Electric industry groups were scrambling Thursday to analyze a draft reform bill introduced by Rep. Joe Barton (R-Texas), chairman of the House Subcommittee on Energy and Air Quality.

Barton's office released H.R. 3406, the Electric Supply and Transmission Act of 2001, Thursday. Hearings on the measure are scheduled Dec. 12-13, just before Congress leaves for the year.

Barton held extensive hearings this summer on a bill to help California through its power crisis and has regularly supported industry reform, but the efforts have attracted little bipartisan support. The industry itself remains divided on a number of key issues.

"There are a few changes this time," speculated a source close to an electricity industry trade association in Washington, DC. Edison Electric Institute, which represents investor-owned utilities, said early Thursday the group was still reviewing the bill, which it had just received and would not comment, said Jane Brady, spokeswoman for EEI.

Industry sources noted the draft codifies into law the ability of aluminum companies to buy power cheaply from the Bonneville Power Administration and cut back, or even discontinue aluminum production, to resell the power on the open market.

Bonneville Power Administration, a federal energy entity, owns substantial transmission facilities and generation in the Pacific Northwest and makes available its relatively cheap energy to industrial and utility customers.

During the energy crisis in the West in 2000 and early 2001, aluminum companies found that it was more profitable to resell BPA's cheap power on the market than to use it to make aluminum.

Barton's draft bill would repeal the Public Utility Holding Company Act of 1935, which imposes restrictions on mergers among utilities in order to prevent monopoly abuses and misconduct. It would also repeal the Public Utility Regulatory Policies Act of 1978 (PURPA). Only contracts with qualifying facilities in existence in January 1999 would be enforced, according to the draft.

PURPA required utilities to buy power from so-called qualifying facilities (QFs) in order to avoid building new capacity. PURPA also attempted to guarantee a market for power generated from renewable fuel sources.

The Barton bill would require utilities to participate in a fully operational regional transmission organization 12 months after the bill becomes law. If a utility balks, the bill gives the Federal Energy Regulatory Commission authority to order participation in such an organization within 9 months after the first deadline.

The bill doesn't authorize FERC to require divestiture of transmission assets to an RTO. Transmission owners would be able to seek recovery of lost revenue from the RTO. The bill does not interfere with a state's right to regulate the retail market, but it would give FERC new jurisdiction with respect to siting of interstate transmission facilities.

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