U.S. House Panel Debates Energy Bill

WASHINGTON -- - The Republican-led House Energy and Commerce Committee on Wednesday defeated Democratic attempts to strip electricity grid provisions from an energy bill and instead focus on preventing a repeat of the market manipulation that occurred in California.

The House panel is writing a broad energy bill that includes incentives for oil drilling, nuclear plants and hydrogen-powered automobiles. After the bill is drafted and approved by the panel, it will go to the full House for debate. On Wednesday, the committee spent the day debating Republican-written proposals to open the U.S. electricity grid to greater competition. The fate of such provisions are entwined with a proposal by the Federal Energy Regulatory Commission (FERC) to create new super-regional power grids to boost reliability and supply. Many lawmakers from the South and West from both parties see the FERC plan as an imposition on their turf, and have sought to block it. At the same time, FERC last week issued a report that found widespread market manipulation during the California power crisis of 2000-01, which spurred blackouts and billions of dollars in economic damage. Democrats on the House panel on Wednesday sought to replace the grid-building initiatives in the bill with a plan that would give FERC more authority to punish energy companies that attempt to manipulate markets. The House-written draft steered clear of discussing the most controversial parts of the FERC's planned standard market rules, but included a "sense of Congress" resolution that generally supports the agency's grid-building plan. Democratic Rep. John Dingell of Michigan insisted that Congress should not address wholesale electricity competition until the FERC puts the California issue to rest. 'LOOK BEFORE IT LEAPS' "Congress would be well-advised to look before it leaps," Dingell said. "This is not the time to rock the boat on an already troubled industry." The panel rejected an amendment offered by Dingell that would have eliminated all the Republican-written language on transmission and system reliability, and expanded a ban on energy trading strategies. Republican authors of the bill proposed to outlaw so-called round-trip trades, where two parties buy or sell an identical amount of natural gas or electricity at an identical price to inflate trading volumes or distort prices. Dingell wanted to amend the Federal Power Act, which guides the FERC in how it can act to counter price manipulation, and require the agency to strip a company's power-trading rights if manipulation is found. Texas Rep. Joe Barton, the Republican author of the bill, said wide-sweeping electricity legislation is needed. FERC is already considering "all kinds of pending action," Barton said. "Let's not over-react." Republicans also rejected a proposal by Rep. Rick Boucher, a Virginia Democrat, to block federal authority to condemn federal and state lands to build transmission lines. Negotiations on the bill were ongoing and debate was expected to continue into the night. Yet to be debated are provisions in the bill that seek to protect utilities' transmission rights from having to ship needed power out of their regions. Georgia Republican Rep. Charlie Norwood inserted a provision on the bill that protects utilities' ability to reserve transmission capacity for "native load" customers before making it available to other regions. The measure was adopted after Barton proposed a compromise that would exempt grids in New York, New England, the Midwest and California from the native load requirement. The panel defeated a counterproposal by Rep. Edward Markey of Massachusetts to require utilities to make more transmission available for out-of-region shipments. Markey said Norwood's plan was "monopolistic protection" that allows utilities to bar competitors from their home turf. "In Georgia, we want to make sure our people get taken care of," Norwood countered, saying that FERC's rules would raise power costs in his state by shipping low-cost electricity to other regions.

On Wednesday, the committee spent the day debating Republican-written proposals to open the U.S. electricity grid to greater competition.

The fate of such provisions are entwined with a proposal by the Federal Energy Regulatory Commission (FERC) to create new super-regional power grids to boost reliability and supply. Many lawmakers from the South and West from both parties see the FERC plan as an imposition on their turf, and have sought to block it.

At the same time, FERC last week issued a report that found widespread market manipulation during the California power crisis of 2000-01, which spurred blackouts and billions of dollars in economic damage.

Democrats on the House panel on Wednesday sought to replace the grid-building initiatives in the bill with a plan that would give FERC more authority to punish energy companies that attempt to manipulate markets.

The House-written draft steered clear of discussing the most controversial parts of the FERC's planned standard market rules, but included a "sense of Congress" resolution that generally supports the agency's grid-building plan.

Democratic Rep. John Dingell of Michigan insisted that Congress should not address wholesale electricity competition until the FERC puts the California issue to rest.

'LOOK BEFORE IT LEAPS' "Congress would be well-advised to look before it leaps," Dingell said. "This is not the time to rock the boat on an already troubled industry."

The panel rejected an amendment offered by Dingell that would have eliminated all the Republican-written language on transmission and system reliability, and expanded a ban on energy trading strategies.

Republican authors of the bill proposed to outlaw so-called round-trip trades, where two parties buy or sell an identical amount of natural gas or electricity at an identical price to inflate trading volumes or distort prices.

Dingell wanted to amend the Federal Power Act, which guides the FERC in how it can act to counter price manipulation, and require the agency to strip a company's power-trading rights if manipulation is found.

Texas Rep. Joe Barton, the Republican author of the bill, said wide-sweeping electricity legislation is needed.

FERC is already considering "all kinds of pending action," Barton said. "Let's not over-react."

Republicans also rejected a proposal by Rep. Rick Boucher, a Virginia Democrat, to block federal authority to condemn federal and state lands to build transmission lines.

Negotiations on the bill were ongoing and debate was expected to continue into the night.

Yet to be debated are provisions in the bill that seek to protect utilities' transmission rights from having to ship needed power out of their regions.

Georgia Republican Rep. Charlie Norwood inserted a provision on the bill that protects utilities' ability to reserve transmission capacity for "native load" customers before making it available to other regions.

The measure was adopted after Barton proposed a compromise that would exempt grids in New York, New England, the Midwest and California from the native load requirement.

The panel defeated a counterproposal by Rep. Edward Markey of Massachusetts to require utilities to make more transmission available for out-of-region shipments.

Markey said Norwood's plan was "monopolistic protection" that allows utilities to bar competitors from their home turf.

"In Georgia, we want to make sure our people get taken care of," Norwood countered, saying that FERC's rules would raise power costs in his state by shipping low-cost electricity to other regions.