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DOE Builds Base for Administration's Restructuring Bill

Fortnightly Magazine - February 15 1997

comes to federal standards for electricity pricing, the bill seems to adopt two tiers.

Utility prices must be nondiscriminatory; yet, competitors such as marketers appear to have no pricing restrictions.

• On conservation and energy efficiency, the draft reads as if states will be revisiting demand-side management. This marks a step backward, as many public utility commissions and utilities might

observe. The bill also calls on states to provide, through "appropriate measures," funding of research and development.

• The bill endorses multi-state, regional regulation (em a difference from the Schaefer bill.

• It creates the National Electric Systems Benefits Fund to match state contributions to conservation efforts.

A DOE official, who asked not to be named, says the Department will try to come up with answers to remaining questions:

• Should there be a retail choice mandate by a certain date?

• How should stranded costs be recovered, and who should recover them? (The DOE leans toward giving states the responsibility.)

• Should the restructuring bill set new pollution requirements to prevent low-cost, "dirty" plants from being over-used?

• How should the Power Marketing Administrations, or PMAs, be dismantled?

Late last year, the DOE trolled the country for input at public meetings in Sayreville, N.J.; Santa Fe, N.M.; Chicago, Ill.; and Atlanta.

At the Chicago meeting, Hazel R. O'Leary, now former energy secretary, spoke about the difficulty in drafting restructuring legislation.

"We're talking about commerce at so, so many levels," O'Leary said. "And we need to understand the levels of commerce. We need to understand the exchanges within the commercial transactions. And we need to be very clear about how we're shifting both responsibility and ... authority. My God, this is tough, and we need to do it together."

But according to the unnamed DOE official, the meetings and debate within the agency provided some internal consensus, even if stakeholders were split. The most overarching theme is that federal impediments to competition must be eliminated. Impediments would include taxes, the Public Utility Holding Company Act and the Public Utility Regulatory Policies Act, and yes, even PMAs, an explosive issue.

"We'd like to see a bill enacted this Congress," says the official. "I think we identified a fair amount of consensus in our hearings that supports a great deal of what's in our bill."

The latest bill, that is.

What was said at the hearings? A lot. The transcripts run more than 200 pages.

The New Jersey hearing focused on renewables, energy research and the environmental effects of deregulation, with one speaker noting that the state has the nation's second worst air quality. Another speaker said the shutdown of nuclear plants posed the gravest threat to increased air emissions.

In Atlanta, Arthur Adelberg, a Central Maine Power v.p., (who has been outspoken on PURPA reform) said that in his state high rates have driven customers into the diesel-generator market. "And if you think an energy policy that encourages small diesel generation is desirable, I think you've got something coming," he said. Air emissions is a problem, he noted, but only via lower rates will people stay in the utility system.