NGI's Daily Gas Price Index 
published : April 25, 2001
	FERC Price Probe Eliminated from Barton CA Bill 
	A proposal calling on FERC to conduct a formal investigation into wholesale 
power rates in western markets has been stripped out of the latest discussion 
draft of emergency legislation that was released Tuesday by Chairman Joe 
Barton (R-TX) of the House Energy and Air Quality Subcommittee. 
	Instead of proposing that the Commission undertake a Section 206 probe to 
determine if prices are "just and reasonable," which could lead eventually to 
price controls, Barton's latest draft provides a mix of demand-management 
incentives, environmental waivers, proposals to eliminate or reduce 
transmission constraints, energy conservation measures and emergency 
preparedness initiatives to mitigate ballooning wholesale electricity and 
natural gas prices in ailing markets in California and other western states. 
	The decision to peel out the provision on the FERC price investigation did 
not come as a major surprise, given the Republicans' unyielding opposition to 
any federal intervention in wholesale power prices. However, this move could 
make it all the more difficult to report a bill out of the subcommittee and 
the full House Energy and Commerce Committee in light of Democratic members' 
support for price caps and/or cost-based rates. 
	Barton's emergency legislation --- which seeks to provide supply and price 
relief in the West by this summer --- isn't expected to be formally 
introduced in the House until later this week. "We're shooting for sometime 
before the [subcommittee] hearing" on the bill, which is scheduled for next 
Tuesday, said Barton spokeswoman Samantha Jordan. Barton is expected to hold 
only one hearing on his legislation, to be named "The Electricity Emergency 
Act," and then quickly proceed to mark-up. 
	Significantly, the draft measure also stripped out a section that would have 
amended the Federal Power Act (FPA) to give FERC limited authority over the 
siting of transmission facilities. Barton and subcommittee members were 
considering this move in an earlier discussion draft, believing that such 
authority would help to hasten the construction of much-needed transmission 
capacity. Several members of the Commission also supported a move in this 
direction. 
	In what was seen a big blow for natural gas, a section that would have 
required utilities to interconnect to distributed generation facilities has 
been taken out, too. "I'm not jumping for joy. I'm not upset. To tell you the 
truth, there's not much to comment on gas with distributed generation 
removed," said a gas industry lobbyist. 
	"I think that [distributed generation] will come back in a larger energy 
bill," he noted. But "I'm still unsure how far it [the Barton bill] will get" 
in Congress. 
	Tuesday's discussion draft added a couple of new provisions. Foremost, it 
orders FERC to establish a program for consumers within the 13-state Western 
Systems Coordinating Council (WSCC) to resell at market prices the 
electricity that they don't consume, but otherwise are entitled to use under 
"contract or applicable regulation." This provision is designed to give 
consumers a financial incentive to conserve power during peak demand. The 
consumer could resell the unused electricity to either their utility or to a 
third-party purchaser. In cases of third-party sales, the local utility would 
"credit" the third party for the amount of power purchased. 
	"Either way, the local utility would receive the same amount of revenue that 
it would have received if the consumer had not opted to reduce consumption. 
The consumer would benefit from conserving electricity, and the resulting 
demand reduction would have a "cooling" effect on prices by bringing demand 
back into balance with supply," according to a summary of the discussion 
draft. The program would expire in October 2003. 
	Another new provision directs the energy secretary to establish electric 
power transmission corridors across federal lands, after conducting a study 
of the need for transmission expansion and determining that siting of 
transmission facilities on federal land is necessary and appropriate, the 
summary said. 
	Barton also has added a section addressing the sale of transmission assets to 
the state of California. In the event California acquires the transmission 
lines of a public utility, such as Southern California Edison, the draft 
proposes that the state be made subject to the same jurisdiction at FERC as 
had the public utility. 
	It further calls on the energy secretary to conduct an energy conservation 
educational campaign through the media to promote conservation in certain 
geographic regions where demand for electricity is expected to exceed 
available supplies in the near term. 
	Other provisions in the discussion draft (which were in the earlier draft) 
would: 
	Give state governors the opportunity to ask the Environmental Protection 
Agency (EPA) for temporary waivers of certain NOx emission requirements for 
newly constructed power plants for a period of two years; 
	Create a "limited, emergency provision" for governors to submit plans to the 
EPA to allow natural gas-fired power plants and on-site generators to exceed 
certain NOx limitations during power emergencies (equivalent to the Stage III 
alerts in California) and when blackouts are imminent; 
	Allow the energy secretary --- if requested by a governor --- to authorize 
any federal facility to generate electricity for self-consumption or for 
sales to the state, so long as compensation is assured by the purchasers or 
by the state; 
	Authorize the administrator of the Bonneville Power Administration to require 
hydroelectric facilities that provide power to the BPA to step up their 
electric generation output, if asked to do so by the governors of the Pacific 
Northwest states (Washington, Oregon, Idaho and Montana). The bill also would 
give hydroelectric licensees greater latitude to modify the terms and/or 
conditions in their FERC-approved licenses to respond to power emergencies 
when declared by a state governor: 
	Authorize the administrator of the Western Area Power Administration System 
(WAPA) to expand its transmission system to eliminate the constraint on Path 
15. The bill would set aside up to $220 million for this project. All 
expansion costs would be recovered by WAPA through transmission fees or from 
the sale of ownership interests in transmission facilities; 
	Direct the energy secretary, in coordination with the Federal Emergency 
Management Agency (FEMA), to initiate emergency planning in states that are 
likely to face electricity shortages; 
	Direct FERC to establish a clearinghouse system for those who would want to 
auction electric energy to which they have contractual rights; 
	Allow qualifying facility (QF) generators to sell power to third parties when 
a utility is unable to pay under a purchase power agreement; 
	Prohibit the energy secretary, FERC, any other officer or agency of the 
federal government, and the courts from ordering sellers to provide 
electricity or natural gas "unless there is a guarantee that, as determined 
by the Commission, is sufficient to ensure that the seller will be paid the 
full purchase price when due;" 
	Allow California, Nevada, Oregon and Washington to adjust their Standard Time 
if they find it can help to alleviate an electricity crisis: 
	Direct the energy secretary and FERC to do a joint study of transmission 
congestion, and develop a plan to relieve constraints and report to Congress 
within six months of the legislation's enactment; and 
	Direct a state governor to request an emergency reduction in energy 
consumption within that state. 
	Lastly, Barton is considering including in the bill a provision that would 
require full participation in a western-wide regional transmission 
organization (RTO), if agreed to by at least 10 of 13 governors within the 
WSCC. All federal facilities would be directed to participate in the RTO, as 
would municipally-owned utilities and cooperatives owning or operating 
transmission facilities within the region. The requirement to participate 
would sunset three years after the RTO is established.