Subject: CQ Weekly article on electricity restructuring
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Date: Fri, 21 Apr 2000 07:55:00 -0700 (PDT)

---------------------- Forwarded by Cynthia Sandherr/Corp/Enron on 04/21/2000 
04:03 PM ---------------------------

	
	From:  Allison Navin                           04/21/2000 02:19 PM

To: Cynthia Sandherr/Corp/Enron@ENRON
cc:  

Subject: CQ Weekly article on electricity restructuring

Here's the electronic version of the electricity restructuring article that 
will appear in Monday's CQ Weekly in case you would like to forward (there is 
a hard copy in your box).

CQ WEEKLY - ENERGY 
Apr. 22, 2000 
Page 949 
Pressure Surges to a New High To Legislate Electric> Deregulation
By James C. Benton, CQ Staff 
At the dawn of the year, it seemed Congress would be content to let the 
current session end without moving legislation to encourage further 
deregulation of the nation's $220 billion <electric> market. But developments 
in the past few weeks suggest that groups interested in seeing deregulation, 
as well as the Clinton administration, are building a consensus that will put 
pressure on Congress to move some kind of bill this year.
On April 6, a group called the <Electricity> Restructuring Stakeholders -- 
representing consumers, <electric> generating companies, senior citizens and 
others -- released a set of goals they believe should be included in 
restructuring legislation. The principles include repeal of the Public 
Utility Holding Company Act of 1935 (<PUHCA>) and changes to a 1978 law (PL 
95-617) that required state utility commissions and <utilities> to reform 
their <electric> rates and take other measures to even out daily <electric> 
consumption. (1978 CQ Almanac, p. 639)
The group plans to meet with environmental groups and regulators to identify 
other areas where common ground can be reached, said Joe Nipper, chief 
lobbyist for the American Public Power Association.
A smaller trade group, composed mainly of investor-owned <utilities>, is 
working on its own set of principles.
Energy Secretary Bill Richardson acknowledged the stakeholder progress in an 
April 17 speech to the National Energy Marketers Association, and he urged 
Congress to pass an <electric> restructuring bill.
"Our interstate <electricity> markets are in need of repair," Richardson 
said, adding that <transmission> access and generation capacity are 
decreasing as demand for <electricity> grows. "If Congress fails to act -- 
and act soon -- on restructuring legislation, it will strangle the 
development of competitive <electricity> markets."
The two committee chairmen who will have to spearhead a restructuring plan 
have stated their intent to pass a bill by the end of the 106th Congress. But 
they must navigate past obstacles that include the compressed calendar, 
election-year politics and a general lack of knowledge among their colleagues 
on how to rewrite or repeal <PUHCA>.
On April 27, Senate Energy Chairman Frank H. Murkowski, R-Alaska, will hold 
the last of three hearings on eight <electric> deregulation-related measures.
On the House side, retiring Commerce Committee Chairman Thomas J. Bliley Jr., 
R-Va., has vowed to work toward enacting a bill (HR 2944) to encourage 
further state deregulation of the <electric> utility market. That measure, 
which would effectively allow consumers to buy their power from anyone, not 
just the nearest utility, was approved by the House Commerce Subcommittee on 
Energy and Power on Oct. 27. (CQ Weekly, p. 478; 1999 CQ Weekly, p. 2599)
The bill also would give states the authority to handle their transition to a 
competitive market but contains no deadline, or "date certain," by which 
states would have to restructure.
Moving a Senate Bill
Some are skeptical that the political and practical hurdles can be overcome 
this year. For example, while they have made progress on principles, the key 
negotiators -- representing investor-owned <utilities>; <electric> 
cooperatives; municipal <electric> <utilities>; large <electricity> 
consumers; labor unions, and environmental groups -- still must reach 
consensus on details the legislation should address, as well as the 
legislative language to implement any agreement.
"I think the chances of getting a bill enacted this year are low, not from 
the lack of trying," Nipper said.
The best chance appears to lie in the Senate, where Murkowski's committee is 
considering eight bills. "I am committed to getting something meaningful out 
of my committee," Murkowski said in an April 14 interview. Murkowski 
acknowledged, though, that the congressional schedule and narrow consensus on 
each of the bills pose challenges to his goal -- developing a comprehensive 
deregulation bill, not one that only addresses portions of <electric> 
restructuring.
The path in the House appears more difficult, although one key supporter said 
there is behind-the-scenes movement.
Bliley has promised to hold a markup of HR 2944 before Memorial Day, and he 
has named a task force of six members to help move the bill through committee.
Joe L. Barton, R-Texas, the sponsor of HR 2944, said meetings are taking 
place among Bliley, Republican House staffers and some interested groups. 
"There is some action; it's just not visible," Barton said late last month. 
"I think what's happening there is that [stakeholders are] jockeying for 
position."
Barton said he anticipated that a "fairly good bill" could be moved by the 
middle of May if stakeholders and members come together.
One complication: Democrats, in the midst of the battle to regain control of 
the House, may not move toward a consensus with Republicans. Staff aides for 
several Democratic members have already complained they have not heard from 
the committee staff in trying to work out differences raised in subcommittee.
But others point to a 1992 energy law (PL 102-486) that cleared Congress in 
the weeks before that year's election. It contained provisions allowing <
utilities> and independent producers to compete in the wholesale power 
market; that law has been credited with the current wave of deregulation in 
some markets. So far, 25 states and the District of Columbia have either 
restructured their markets or enacted laws to begin retail competition in 
coming years. (1992 Almanac, p. 231)
Mark Stultz, a spokesman for the <Electric> <Power> Supply Association, a 
group of competitive power suppliers and power marketers, said the 1992 law 
was enacted after the <electric> industry quickly built up a consensus among 
members and educated them on what the bill would do.
"The industry was able to access that in a very short time," Stultz said. As 
far as getting a restructuring bill through this year, Stultz said it is "not 
an impossible, unrealizable goal to assume that we could get consensus," 
since key stakeholders have reached agreement on several issues. They include 
blocking "market power" -- the ability of a few companies to stunt 
competition by effectively using its assets to manipulate the deregulated 
market to its advantage.
While the House bill contains many issues stakeholders agree with, Stultz 
said it also contains some fatal flaws. He cited as an example its lack of 
federal agency jurisdiction over "bundled" services in a regulated market, in 
which <electric> generation, <transmission> and distribution rates are 
combined in an <electric> bill, and "unbundled" services in a deregulated 
market, in which the generation rates are broken apart from <transmission> 
and distribution rates and other temporary charges brought on by deregulation 
are included.
Best Bets in the Senate
Of the eight bills pending in the Senate, Nipper said the one with the best 
chance of passing is S 2071, sponsored by Slade Gorton, R-Wash., which is 
intended to encourage greater <electric> <reliability>. Nipper said the 
Gorton bill would replace the North American <Electric> <Reliability> 
Council, a group in which utility participation is voluntary, with the <
Electric> <Reliability> Organization, a board that would require 
participation by <utilities>. The Federal Energy Regulatory Commission would 
have jurisdiction over the board, as well as the power to enforce its 
policies on <utilities>.
The reliability issue is likely to intensify in coming months, due to 
problems <electric> <utilities> faced each of the past two summers. While 
some plants were undergoing needed maintenance, some <utilities> were caught 
with their generation capacity down during periods of extremely high demand. 
The resulting shortage triggered a spike in bulk <electric> prices, driving 
the price of a megawatt-hour of <electricity> in a few places from $30 to as 
high as $7,000. <Utilities> enforced rotating blackouts on customers, asked 
consumers to reduce <electric> use and passed on surcharges for the higher 
cost of <electricity>.
Hoping to avoid outages this summer, the Department of Energy has scheduled 
four regional "summits" on <electric> <reliability> on April 24 and 28.
Jim Owen, a spokesman for the Edison <Electric> Institute, said a third 
consecutive summer of service interruptions and significant price increases 
could motivate Congress to move on the deregulation bill. "It might push this 
thing up further on the congressional radar screen," although a law enacted 
immediately would not have a quick impact on generation and <transmission> 
reliability, he said.
Other thorny issues include:
? How to handle taxation issues between publicly owned <utilities>, <electric
> cooperatives and municipal <utilities>, and whether <utilities> should 
voluntarily join, or be forced to join, "regional <transmission> 
organizations" designed to allow more efficient transfer of <electricity> 
across the national grid.
? Whether the federal government should be involved in regulating the 
interstate <transmission> of <electric> <power>. Some stakeholders argue 
federal regulation is necessary to prevent one state or region from 
protecting its customers at the expense of others.
? Environmental groups' desire for stronger anti-pollution restrictions on <
utilities> that produce pollutants while generating <electricity>. And labor 
groups, wary that deregulation could trigger massive layoffs through 
corporate mergers and acquisitions, want to make sure their union members are 
protected.