RECENT CONFERENCE on independent system operators held by the Federal Energy Regulatory Commission was, in many respects, a tremendous achievement. It is a testimony to this Commission that its...
Red, White, and Ready: The Patriotic Push for Energy Legislation
- (PURPA) to allow for prospective release from mandatory purchase obligations; and
- add real-time pricing and time-of-use metering provisions.
Other wholesale electric reforms in the bill include proposed amendments to the Federal Power Act that would take on reliability, market transparency, transmission access, and transmission pricing. For example, participation in regional transmission organizations would be voluntary, but the law would codify the authority of FERC to offer incentive rates for joining.
The House Subcommittee on Energy and Air Quality on March 19 approved the bill by a vote of 21-9, and the House energy committee approved it April 3 by a 36-17 vote.
Far-Reaching Impact: Flashpoint SMD
Skepticism abounds on Capitol Hill regarding the standard market design (SMD) proposed by the Federal Energy Regulatory Commission (FERC), having filtered up partly from protests by regulators in Northwestern and Southern states. Two ranking senators on the Energy and Natural Resources Committee -Pete Domenici (a Republican) and Jeff Bingaman (a Democrat), both from New Mexico-have voiced some doubt on SMD. New Mexico is considering repeal of retail competition.
And while Rep. Barton hails from Texas, where the isolated ERCOT appears to have become a workable example of both wholesale and retail competition, Chairman Billy Tauzin of Louisiana is from one of the many low-cost Southern states up in arms over the proposed SMD.
At a March 5 hearing before the House Subcommittee on Energy and Air Quality to consider Barton's proposed comprehensive energy bill, which originally did not contain an SMD provision, the FERC commissioners did not fare well.
The members were clear about their SMD doubts. The legislators from low-cost power states in the Northwest and South fear subsidizing electricity in higher-priced states in the Midwest and Northeast. Lawmakers from the low-cost states have threatened legislation to cut off FERC's funding if SMD advances as proposed.
Earlier in the year, Domenici proposed that FERC issue a white paper, due out in April, to allow FERC to attempt to persuade lawmakers of the case for SMD. Domenici noted that too many senators had questions, and compromise may be needed. And while FERC Chairman Pat Wood had been asked by some senators to drop the proposed SMD rule altogether, he declined, knowing that he had the backing of the DOE and Bush administration. However, that could change if the situation becomes too volatile.
"I see that Congress is already involved with SMD, not in legislating so much as sending messages to Wood to not move too quickly and to modify the proposal," Fox-Penner says. "I think those messages have been received at the FERC to some extent. It is a matter of degree, and I am not sure of the degree relative to the feelings of the critics of SMD. But I do feel that Congress [and] statements of people like Sen. Domenici and others are having an impact on the FERC.
"Do I think they are going to pass a specific bill on SMD? I think that depends on … how much the FERC does to modify its proposals to accommodate the critics."
On March 17,