The Ohio Public Utilities Commission (PUC) has proposed regulations to allow electric utilities to use fuel-cost clauses to recover gains or losses from trading Clean Air Act emission allowances....
James Hoecker: Building Consensus, Preventing Paralysis
PUBLIC UTILITIES FORTNIGHTLY SPOKE WITH FEDERAL Energy Regulatory Commission Chairman James Hoecker shortly after the Clinton Administration released its long-awaited Comprehensive Electricity Competition Plan.
Although Hoecker sees new legislation as only "the remotest of possibilities" for this session of Congress, he expects that the "real debate" will begin next year, with environmental issues perhaps proving to be the most difficult to solve.
Are mergers bad for competition? "Not necessarily," he says. The chairman wonders whether the question will turn out to be moot since, as he predicts, "Utilities will get bigger."
Hoecker took over the chairman's job last summer. His term runs until June 30, 2000. Is life at the top what he expected?
"I view my role as a consensus builder¼ If the split on the commission is intractable, however, I have to make a decision."
On Federal Legislation
What do you think about the Clinton Administration's restructuring proposal?
I think it's potentially the most significant contribution to the legislative debate. The administration apparently spent many months trying to reconcile competing interests and trying to achieve substantial balance in its package. It reflects consideration of what I think are the most important issues in electric restructuring (em the future of retail competition, recovery of stranded costs, and the interface with environmental issues.
The biggest obstacle to passage certainly is time. There are very few legislative days left in which to have a full discussion of this proposal and to try and reconcile it with the other bills¼ then to come up with a House and Senate version that can be reconciled. So comprehensive legislation, notwithstanding its desirability, is the remotest of possibilities for this Congress. The real debate will begin next year. I do think that these issues are enormously complex and it will take Congress some time to digest them¼ The environmental piece is probably the most controversial and the most complicated to implement. I suspect that will take quite a bit of congressional debate.
On Electric System Reliability
The plan gives the FERC the "authority to approve and oversee a private, self-regulating organization that develops and enforces mandatory reliability standards." What do you think that means?
The language seems to indicate that NERC [the North American Electric Reliability Council] or some successor to it will develop the technical standards that govern curtailment and scheduling and all the elements of reliability, systems security and adequacy of supply. [And] that those standards will then be enforced under some general authority given this agency, and that perhaps we will have the ability to impose penalties for violations of those standards. It's not clear to me that we are being given the job of judging the technical adequacy of the standards. Instead, it is more likely that we would be given the job of ensuring that this standard-setting organization represented all the key interests in the electric power business, and as such could be relied upon to develop standards that were not discriminatory, anti-competitive, or a disservice to any particular interest.
It is very similar to what the NERC "blue ribbon" panel has