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Three "Workshops" Down, More "Work" to Do

Fortnightly Magazine - May 1 1997

Or what have you done? You've accomplished nothing."

Moler pointed out the Internal Revenue Service needs to clarify its rules to ensure public and nonpublic utilities do not jeopardize their tax-exempt financing in providing open access.

Before the same Senate panel a week earlier, Missy Mandell of the Large Public Power Council had offered a strident argument for her constituents on the matter of tax laws and private power entities. "We do believe we can compete and exist with private power," she said. She urged Congress, however, to resolve the conflicting elements of the 1992 Energy Policy Act and the 1986 Tax Reform Act. "The tax laws stipulate that a state or local public power system cannot sell more than 10 percent of its transmission capacity to a private entity," she said. "And yet the Energy Policy Act, as interpreted by the Federal Energy Regulatory Commission, states that we must make our transmission lines available to everyone."

Impending competition has made problems created by IRS "private use" restrictions more acute, Mandell said.

Most, if not all, state regulators at the March 20 hearing agreed with Commissioner Richard H. Cowart that they did not need "congressional dynamite" to undo any logjam at the state level when it came to starting the flow of competition.

Cowart, chair of the Vermont Public Service Board, suggested Congress help states by promoting regional solutions, clearing jurisdictional boundaries, and boosting environmental quality and public purpose measures.

P. Gregory Conlon, president of the California Public Utilities Commission, said federal legislation was not necessary in its case (em the California market becomes competitive next year. "We need Congress to ratify an interstate compact that we're working on with 14 states in the West," he said. The compact would include Mexico and Canada. Reciprocity also requires federal attention as a regional issue, he said.

Linda K. Brethitt, chair of the Kentucky Public Service Commission, suggested her state does not need mandated federal restructuring legislation, but for different reasons. "We enjoy some of the lowest rates in the nation in that our average ... [with] all the customer classes combined is about 4.5 cents a kilowatt-hour, with the national average being about 7.2 for all customer classes."

Later, Brethitt said she didn't advocate a "not-in-my-state" position. But "because we are so low cost, we have a different set of circumstances than many of my colleagues here at the table." She said because of Kentucky's large rural population, it will always carry a significant obligation to serve.

Like Conlon, John M. Quain, chair of the Pennsylvania Public Utility Commission, noted his state also has a deregulation plan. He asked that such states be "grandfathered" into federal legislation.

Quain did admit it was appropriate for Congress to mandate retail competition.

"Simply even the threat last year of federal legislation was enough to move some of the most slow-moving IOUs in Pennsylvania to the table to sit down and negotiate," he said. "So I would suggest if just the threat has that kind of impact, a mandate, set sufficiently forward, would have an even greater