Electric power groups divided over Senate energy bill

By the OGJ Online Staff

HOUSTON, Feb. 27, 2001—Electric power industry groups squared off Tuesday over provisions of the omnibus energy bill sponsored by Sens. Frank Murkowski (R-Alas.) and John Breaux (D-La.).

The senators filed the bill Monday (OGJ Online, Feb. 23, 2001). Murkowski is the Energy and Natural Resources Committee chairman. Breaux is the ranking Democrat on the panel.

The Edison Electric Institute (EEI) and the North American Electric Reliability Council (NERC) praised the legislation, but a spokesman for the Electric Power Supply Association (EPSA) and the American Public Power Association (APPA) expressed strong reservations.

EEI, which represents the nation’s investor-owned utilities, called the bill an important step in the formation of a comprehensive U.S. energy policy.

“This legislation encourages development of our domestic resources and creates the foundation for a balanced energy platform that will serve all Americans,” said Thomas R. Kuhn, EEI president. “Sen. Murkowski’s bill would help protect consumers from energy price spikes by helping assure reliable supplies of all types of energy at affordable prices.”

Kuhn specified a number of provisions he said would improve energy policy, including:

• The bill would create incentives to harness new technologies and stimulate the creation of new energy infrastructure.

• The bill would repeal the Public Utility Holding Company Act, allowing more electricity suppliers to enter new markets.

• It would repeal the mandatory purchase provisions of the Public Utility Regulatory Policies Act, lowering utility costs and creating savings to be passed on to retail customers.

• The bill would promote greater energy efficiency through a variety of programs.

• The bill includes formation of a new national electric reliability organization to enforce mandatory rules for the transmission grid, improving system reliability.

NERC also endorsed provisions of the bill which would establish an electric reliability organization. The provision would authorize creation of an organization under FERC oversight in the U.S..

“Congress came very close to passing our reliability legislation last year,” Gent noted. “We hope they finish the job in this session of Congress.”

But Tom Stultz, a spokesman for EPSA, an independent power producer group, Washington, DC, said the bill doesn’t address such central-to-deregulation issues as comparable transmission access and standardization of interconnection procedures.

He said the organization has not taken a formal stand on the proposed National Energy Security Act of 2001. But he called it a “valuable starting point” for debate, and if it becomes the energy legislative vehicle of choice, the organization “will be looking to add” to it.

While the bill contains provisions which the APPA endorses, it is “so heavily weighted with benefits for investor-owned utilities and so lacking in comparable incentives for public power that we cannot support it in its present form,” the organization said in a statement.

The APPA said it took issue with a number of provisions, including:

• Tax code incentives for developing renewable energy resources favor investor-owned utilities at the expense of public power.

• Tax incentives for clean coal technology do not include tradeable tax credits for not-for-profit public power and rural cooperatives. The APPA said it makes no sense to “exclude from the bill all the incentives for publicly and cooperatively owned utilities that collectively serve one in every four Americans.”

• Broad new tax subsidies for investor-owned utilities, including new 7-year accelerated depreciation, are likely to be costly to the U.S. Treasury.

• Proposed repeal of the Public Utility Company Act is not balanced by consumer protection and protection from market power abuse.

However, APPA said it is pleased the bill contains provisions to amend the tax code solving public power tax issues and addresses questions with respect to hydroelectric relicensing procedures.