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Restrictive regulations adding to nation’s power woes, public power associations tell Congress

WASHINGTON, June 13, 2001 — Public power system officials today urged swift passage of H.R. 1459, the Electric Power Industry Tax Modernization Act, during testimony before the House Ways and Means Subcommittee on Select Revenue Measures.

John Tiencken, who represented both the American Public Power Association (APPA) and the Large Public Power Council (LPPC), is chief executive officer of Santee Cooper, South Carolina’s state-owned electric and water utility.

He told Committee members that the proposed legislation would remove federal tax impediments that hamper both publicly owned and investor-owned electric utilities in their efforts to expand and improve needed transmission lines and to deliver surplus power where it is needed.

This legislation would modify current tax rules to allow publicly owned utilities to sell excess electricity outside their immediate service areas, to let other utilities use their transmission lines and to join Regional Transmission Organizations (RTOs).

“One of the nation’s important goals right now is to ensure that the entire transmission grid (including public power transmission facilities) is fully and efficiently utilized,” said Tiencken. “We should encourage — not deter — expansion of the grid in these circumstances. H.R. 1459 fixes this problem by providing the same relief to new issuers as is provided to other transmission owners and by making relief permanent for both new and existing issuers.”

“In almost every area of the country we face electric transmission constraints — bottlenecks in our electric grid that keep us from delivering power where we need it,” said Tiencken. “In some regions, we are unable to deliver available electric power needed to keep the lights on. This is the case in California, where transmission constraints into the state, and between the northern and southern parts of the state, can trigger rolling blackouts.”

The current rules have served to frustrate long-term commitments to open- access transmission and RTOs by public power systems and restrict use of long- term sales contracts.

“The experience in California over the last 18 months has taught all of us that long-term contracts are key to disciplining market power and market volatility and ensuring that customers receive reliable and economic service. H.R. 1459 will liberalize these rules for public power systems that offer voluntary open-access transmission and/or open-retail access,” Tiencken told the committee. “The provisions of H.R. 1459 will assist us in meeting the national need to use our existing transmission grid more effectively, to expand it where necessary, to accommodate new generation, and to make surplus power more readily available under long-term contracts.”

H.R. 1459 was introduced by Congressman J.D. Hayworth of Arizona and is co-sponsored by 16 other members of the Ways and Means Committee.

The Large Public Power Council’s membership includes 21 of the nation’s largest community-owned and operated electric systems.

The American Public Power Association is the service organization for the nation’s more than 2,000 community-owned, locally controlled not-for-profit electric utilities.

The complete comments are available on APPA’s web site (http://www.APPAnet.org ) or the Large Public Power Council web site (http://www.lppc.org ).

SOURCE: American Public Power Association and the Large Public Power Council