July 1, 2001
L.A. Loves a Loophole
There's no getting around it...
A SUNDAY AFTERNOON, NOT THREE WEEKS 'TIL CHRISTMAS, and I was holed up at Washington's Mayflower Hotel, attending a workshop (no Santa, no elves) on electric transmission pricing.
I wasn't alone, however. At least 200 others had filled the hotel's East Room near to capacity to hear about such topics as nodes, zones, access charges and load duration curves. The 5th National Electricity Forum, sponsored by the U.S. Department of Energy and the National Association of Regulatory Utility Commissioners, was under way. Harvard Professor William Hogan stood at the podium, explaining how his congestion pricing method had won approval from the Federal Energy Regulatory Commission just two weeks earlier for the new PJM independent system operator.
A few steps away, through the door and in the lobby, music blared from office Christmas parties in full swing. Revelers slid past, drinks in hand, oblivious to the PUC staffers at the registration desk, lining up for their badges and conference materials. Not everyone it seemed, had heard of or cared about deregulation.
FERC Chairman James Hoecker, speaking two days later, caught the mood of the partygoers. Consumers, Hoecker said, had raised no clamor yet for electric utility competition. Until they did, customer choice would prove a "tough sell."
That prospect could change. Karen Hunsicker, a staffer on the Senate Energy and Natural Resources Committee, predicts that Congress will gain momentum on electric restructuring soon after direct access begins in California.
"Wait 'til Jan. 1, when constituents start writing letters."
"That will give Congress something to solve," adds Sue Sheridan, offering a similar view from the minority professional staff of the House Commerce Committee. "It will move us out of the ideological stage that we're stuck in."
Nevertheless, other than direct reform of the Public Utility Holding Company Act, Sheridan hesitates to forecast passage of any comprehensive electric restructuring bill this year, given the short time available to Congress on the 1998 legislative calendar. "There are 120 legislative days in the Senate," she said, "including Mondays and Fridays."
On the morning of Dec. 8, Deputy Energy Secretary Elizabeth Moler had opened the DOE/NARUC conference with her top ten reasons why new federal legislation is needed on electricity restructuring. Reason number one? Reduce consumer costs by $20 billion a year, says Moler. If true, that promise should give Congress the sort of pocketbook issue it needs to justify a vote on a consumer choice bill. Nevertheless, Moler offered neither prediction nor promise on when the Clinton Administration might come out from intra-agency review with its own reform bill, or what that bill might contain.
In fact, a close look at Moler's top-ten list shows a host of problems that don't require solving unless Congress should pass legislation mandating customer choice. For instance, Moler cites sections in the Federal Power Act, PUHCA and PURPA as outdated, but only in a competitive market.
When questioned on whether the administration would mandate nationwide competition, she appeared to retreat. "It might be the best we can do," she conceded, "to recognize that the states decide for themselves."
On the other