Ferc Urges Requirement of Power Rtos

Pat Wood, the chairman of the Federal Energy Regulatory Commission, and his fellow commissioners testified before a House subcommittee that the potential benefits of the nation's long-running move toward deregulation could be lost if a lack of certainty about its progress cools the enthusiasm of private investors.

"Infrastructure investment suffers from the uncertainty of this long transition," Wood lamented to members of the Energy and Air Quality Subcommittee. "Reliability is being tested and customers are being deprived of the financial savings and other benefits of a competitive marketplace. It is time to finish the job."

The move toward a deregulated electricity market has run into some turbulence caused by last year's rolling blackouts in California and the more recent collapse of high-flying Enron. A bill proposed by House Energy Committee Chairman Joe Barton of Texas reflects a growing sentiment to be even more circumspect in the deregulation process.

Wood and other commissioners countered that putting on the brakes, and possibly diluting FERC's power in the process, could derail the vital expansion of the grid's transmission capacity.

FERC's vision calls for the nation's high-voltage transmission lines to fall under the control of regional transmission organizations (RTOs) that would manage the flow of power according to a standardized set of regulations. A number of states have been leery of being stung by deregulation -- as California was -- and are reluctant to give Washington the authority over state matters such as where new power lines would be built.

"So far, the commission has relied on the voluntary efforts of utilities to form RTOs, and has held mediation and outreach to assist market participants in reaching consensus on RTO governance, scope, and configuration," Commissioner Nora Mead Brownell said. "Nevertheless, to date, not a single RTO is up and running."

The commissioners said they were concerned about provisions in Barton's bill that they see as adding reviews and litigation to the RTO process that could bury the RTOs in red tape.

"I recommend that section ... be replaced with a simple affirmation of the commission's authority to issue such RTO orders as are in the public interest," Brownell said.

Barton's bill would also allow FERC to step in and settle so-called siting issues, such as environmental impact studies, if the states involved don't make a decision within a year. Wood suggested Wednesday that the RTOs themselves could make such rulings rather than referring them to FERC staff members in Washington.

"Since these siting issues are largely regional, the RTO could be the backstop instead of FERC," Wood said. "This keeps the relevant determinations of need, environmental issues and landowner concerns closer to the affected citizens."

(Reported by Hil Anderson, UPI Chief Energy Correspondent)