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News Digest

Fortnightly Magazine - October 15 1998

and business tariffs for Pacific Bell as a permanent offset for the carrier's receipt of universal service funds. The PUC said the new rates would not sink below levels now existing in the competitive market. A.97-03-004, D.98-07-033, July 2, 1998 (Cal.P.U.C.).

Electric Reliability

FERC ENABLING LEGISLATION. U.S. congressmen Edward J. Markey (D-Mass.) and Tom Delay (R-Texas) on Aug. 7 introduced a bill to improve reliability of the nation's electric system.

The Electric System Reliability Act of 1998 (H.R. 4432) does not seek to restructure the electric industry, but does aim to ensure that as restructuring takes place reliability does not degrade. Specifically, the bill would expand the authority of the Federal Energy Regulatory Commission to allow it to: (1) create a self-regulating reliability organization; (2) establish independent system operators to control the nation's electric transmission wires; (3) require utilities to divest themselves of generation or transmission assets; and (4) order interconnection of transmission systems.

The bill also would allow "exempt transmitting utilities" - utilities that could own transmission systems outside their service territories without becoming subject to the Public Utility Holding Company Act. It would encourage states to establish single siting boards, but would allow ISOs to assume responsibility for transmission siting if states fail to set up siting boards.

NERC REFORM LEGISLATION. The North American Electric Reliability Council has released a draft of proposed legislation, termed the Electric Reliability Act of 1998, describing procedures by which the FERC would certify and regulate a new North American Electric Reliability Organization as the nation's one and only self-regulating reliability organization. The proposed legislation, based upon an outline announced in April in a report issued by NERC's Government Interface Issues Task Group, was to be taken up by NERC board of trustees meeting in mid-September, but no final action was expected.

The draft legislation parallels some of the provisions of the Delay/Markey bill (see above), but differs in other material respects.

Under the bill, NAERO would develop and enforce reliability standards, maintain security for short-term reliability and "assess and encourage" the long-term adequacy of electric power supply. NAERO would execute agreements with so-called "affiliated regional reliability organizations," but the draft does little to explain how the ARROs would function, or how the FERC would resolve disputes between the national and regional organizations. Costs incurred by NAERO and the ARROs would be assessed and "equitably allocated" to control area operators, to be recovered in rates paid by users of the bulk power system.

By late August, many groups had filed comments on the draft legislation, including the Electric Consumers Resource Council, the National Association of Regulatory Utility Commissioners, regulatory staff at the New York, California and Oregon utility commissions, and some utility companies, such as Arizona Public Service Co., Pacific Gas & Electric Co., Southern California Edison Co., and Public Service Electric & Gas Co. For full text of the draft legislation and comments, see www.naero.org/legislation.html.

Public Power

HYDROELECTRIC SALE. The first sale of a federal power administration was completed when the Alaska Power Administration and the Alaska Industrial Development and Export Authority transferred