Red, White, and Ready: The Patriotic Push for Energy Legislation
Enron market manipulation strategies were designed to exploit poor market rules and the disparity in rules in the West.
The goals of standard market design are to make competitive markets work better, prevent market power abuse and market manipulation, remove transmission bottlenecks, and assure adequate electricity supplies. These are the right goals. The question is whether standard market design-as proposed-will achieve these goals.
The Notice of Proposed Rulemaking is just that, a proposed rule. FERC has received hundreds of comments on the proposal totaling many thousands of pages. They are going through the record. The agency has indicated a willingness to make changes to the proposed rule, and in particular has demonstrated it understands the need to ensure market rules reflect regional characteristics. The only thing we know for sure right now is that any final rule will be very different from the proposed rule. That much is clear from FERC actions and statements in recent weeks. Furthermore, Congress directed DOE to complete a cost benefit study of the standard market design proposed rule by April 30, 2003. We hope that any congressional action would come after our independent analysis is complete.
"The events of California and the West demonstrated what can happen with a poorly designed, semi-regulated market. The provisions proposed in the new energy bill would give FERC much needed new authority to oversee competitive wholesale power markets."
The 107th Congress failed to send a comprehensive energy bill to President Bush. Do you expect a comprehensive bill with an electricity title to make it to his desk this Congress?
Clearly, our chances look a lot brighter these days as a result of the committee's diligent efforts during the 107th Congress. The new comprehensive energy bill will include an electricity title that addresses electricity supply and transmission, modernizes our infrastructure and wholesale power markets, and ensures reliable delivery of electricity when and where we need it.
Is repeal of the Public Utility Holding Company Act a priority in this Congress?
The proposed House energy policy takes an important step to improve the flow of capital into a sector that badly needs investment by calling for the repeal of the Public Utility Holding Company Act. I have supported repealing PUHCA for more than a decade. It is more imperative than ever that we repeal it now.
Will Congress likely get involved with FERC's proposed standard market design, and if so, how?
SMD is a sweeping regulatory initiative aimed at establishing uniform rules of the road for wholesale electricity markets, which is a positive thing. However, it affects different regions in different ways. In the Southeast, for example, there are legitimate questions about the benefits of SMD in the timeframe FERC is talking about. FERC is in a position to facilitate the transition to more competitive markets in these regions in the most cost-effective way, and many people are watching closely to see how FERC addresses these regional concerns. Will Congress get involved? It depends on how the rulemaking plays out. Are we proposing doing something in our House energy bill on SMD