LDC Minimus, LDC Insipidus,
LDC Robustus? Which Would You Rather Be?
Post-Order 636 evolution depends on aggressive regulatory and legislative reform.
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Divest yourself of generating plants or allow retail sales by competitors, and PURPA's mandatory purchase clause in section 210 will no longer hold.
That's the basic deal to be offered to investor-owned electric utilities under the Electric Power Competition Act of 1996 (H.R. 2929), a new bill to amend the Public Utility Regulatory Policies Act (PURPA) introduced by Rep. Edward J. Markey
(D-MA) on February 1.
In the technical sense, the bill would suspend PURPA section 210 for any electric utility receiving a "certification of competition" from its state public utility commission. But from another angle, one might argue that the utility must leap new hurdles to assure regulators not only that it will open itself to competition, but that it will maintain certain public-purpose ideas previously associated with a regulated regime.
To gain eligibility for the certificate, the utility would satisfy one of two tests (em a) retail competition or b) divestiture of generation from transmission (em plus certain other conditions relating to energy efficiency, renewable energy, low-income services, fuel diversity, price discrimination, and recovery of stranded costs.
An electric utility would obtain state certification under the retail competition standard by a showing that it would:
s Permit competition in retail sales to all consumers in its territory
s Allow competitors the opportunity to build, own, and operate new state-approved generating capacity
s Not gain advantages over competitors through its status as a regulated electricity buyer and seller in its territory.
Under the bill's divestiture standard, an alternative to the retail competition standard, certification would be forthcoming if the utility:
s Divests itself from existing generating plants and is barred from owning/controlling generating plants for as long as it owns or controls distribution or transmission facilities
s Adopts open-access transmission tariffs approved as just, reasonable, and not preferential.
s s s
Reaction to the bill from both sides of the PURPA debate was predictable.
"It's somewhat of a disappointment to us," said Arthur W. Adelberg, chairman of the PURPA Reform Group and vice president of Central Maine Power Co. Adelberg said that although the bill's heavy-handed regulation disregards PURPA's harmful effects on utilities, he was encouraged that H.R. 2929 recognizes PURPA "has to go eventually."
"An excellent bill," offered Tobyn J. Anderson, deputy director of the National Independent Energy Producers (NIEP).
For NIEP, the bill's introduction was expected.
"It very closely tracks the draft proposal that NIEP has been floating since last spring," Anderson said. But he admitted it wasn't a perfect piece of legislation. "It's not what's going to be the final legislation, if in fact Congress reports, or passes, legislation. It's an initial marker out there." He said the PURPA debate will form the final bill. While the House is anxious to hold hearings, the Senate sees the issue as less urgent.
Bill Cowan, NIEP policy director, pointed out that H.R. 2929's retail access and divestiture standards go beyond the functional unbundling proposal set out in the Federal Energy Regulatory Commission (FERC) Mega-NOPR. Adelberg notes that utilities already are separating parts of their businesses so that markets can be