Tennessee Valley Authority Chair Supports Electric Utility Deregulation Bill

"We welcome competition and choice," the chairman said of provisions in the Electric Supply and Transmission Act that affect TVA.

The bill, which largely addresses national transmission line issues, contains a special section that deals with TVA, a federal utility created in 1933.

The measure could also lead to TVA ultimately ceding control of its 17,000 miles of transmission lines.

TVA's 158 power distributors and large industrial users agreed to the section back in 1999.

Rep. Joe Barton, R-Texas, chairman of the panel that held Wednesday's hearing, included the TVA section in his comprehensive bill at the urging of Reps. Ed Bryant, R-Tenn., and Bart Gordon, D-Tenn.

Energy Department Deputy Secretary Francis Blake said in an interview that the Bush administration backs TVA's treatment in the Barton bill.

"We're supportive of the consensus proposal," he said of the TVA section.

The Barton bill would eliminate the so-called TVA "fence" and permit TVA to sell excess wholesale power outside its service area and competitors to sell wholesale power inside TVA territory.

The legislation also would put oversight of TVA transmission lines under the Federal Energy Regulatory Commission (FERC) for the first time.

FERC wants to require all utilities to join Regional Transmission Organizations (RTOs) in an effort to provide a smooth flow of power nationwide.

Should the bill pass and FERC act, TVA could lose control of its 17,000 miles of transmission lines.

FERC would not oversee TVA's power rates.

"It reflects the best interests of people in the Tennessee Valley, TVA, our power distributors, our bondholders," Chairman McCullough said. "And it's consistent with a competitive, open, marketplace."

Turning ultimate control of TVA's transmission over to FERC is a "compromise," Chairman McCullough said.

"When you have a consensus title, people come to the table and there's give and take."

Several FERC officials also testified at the hearing. Several lawmakers criticized the agency and questioned the need for the deregulation bill in light of the collapse of Enron Corp., the nation's largest electricity wholesaler.

Proponents and opponents of deregulation argued over whether Enron's collapse would slowdown the drive to open up more wholesale competition in the electric industry, which Enron helped to promote.

It was unclear whether Rep. Barton can muster sufficient support to pass his bill in the House. Senators aren't expected to take up their version of electricity deregulation until next year.