The Senate Energy Committee held an oversight hearing today on siting 
impediments to energy infrastructure.  The four witnesses were Jerry 
Halvorsen of INGAA, William Nugent of Maine for NARUC, David Cook, general 
counsel of NERC, and Stan Szwed, vp-transmission of FirstEnergy Corp.  The 
hearing was well attended by committee Republicans, but only Sen. Bingaman 
and Sen. Landrieu on the Democratic side, and then only briefly.

Highlights

NARUC's Nugent urged the Committee to move swiftly to confirm Wood and 
Brownell to FERC, noting their confirmation hearing is tomorrow.

Consensus that energy infrastructure is not able to keep up with projected 
energy demand, both gas and electric.

Surprising willingness (even among western Republican senators who are 
normally pro-states rights, pro-private property rights) that Congress should 
at least seriously consider, if not implement, some form of federal authority 
over power transmission siting.  Specifics were not nailed down, with some 
senators expressing more support for treating electric like FERC already has 
power over natural gas, while others were inclined more toward a FERC back 
stop or last resort authority when state decisionmaking breaks down.  The 
drift was certainly toward some enhanced federal role.

NERC released is Summer Assessment today that is more pessimistic than 
California ISO on the extent of expected rolling blackouts and shortages this 
summer.  NERC seees a capacity shortage in the Pacific Northwest this 
winter.  While NY/NE is adequate this summer, Cook says it bears watching 
because of bouts of high heat in the region and a high level of unplanned 
outages that often occur in the region in the summer.

Chairman Murkowski engaged in a series of questions with INGAA's Halvorsen 
designed to lay the blame for the natural gas capacity problem to California 
and corresponding high price levels on the actions of LDCs in California not 
supporting expansion of interstate pipelines.  Halvorsen's testimony includes 
a chart of specific cases where LDCs intervened.  In his verbal testimony, 
Halvorsen singled out Sempra as a source of opposition, including Sempra 
filings against expansions by Transwestern and Kern River.

Chairman Murkowski got Halvorsen to say that the actions of the California 
LDCs and the intrastate nature of all gas pipelines in California effectively 
denied California consumers the benefit of open access for natural gas.  
Murkowski implied he would entertain a change in the Natural Gas Act as it 
relates to the status of interstate pipelines going in to California.

Sen. Domenici joined the increasing chorus of members of Congress raising 
questions about why natural gas prices are low at the wellhead for his 
producers in New Mexico, but so high into California.  He asked the panel who 
is making the money in the differential, but none of the witnesses wanted to 
tackle the question.  This is just one more indication of the growing 
interest in the natural gas aspects of the California situation.