- The Washington Times - Monday, July 28, 2003

One might be tempted to think that if all the hot air expended in the U.S. Senate this week on energy legislation could be harnessed, it could fuel several power plants. But there will be useful debate on protecting states’ rights in the energy field while, at the same time, attempting to halt an increasingly socialistic Federal Energy Regulatory Commission (FERC) from rewriting U.S. power grid rules that could ultimately cripple the domestic energy market.

To date the five-member FERC board, led by Chairman Pat Wood, has been working in near-obscurity on plans that affect the pocketbooks and quality of life of every American. But since last spring, more and more national lawmakers have been startled as the board slowly unfolded a restructuring scheme pushing vast federal power over state and local utilities.

Through a so-called standard market design (SMD), FERC claims it will be easier to connect buyers and sellers of electricity as well as to bring down prices and create more reliable service. Hmmmm. Isn’t that what some geniuses said they were trying to do in California a few years ago through similar energy “restructuring”? Americans, let alone Californians, know how that flopped as the electrical brown outs and marketmanipulation emerged.

Concern for America’s future overall energy needs is why consumer watchdogs in Congress are trying to rein FERC in. For example, new language proposed for the House-passed energy bill by members of the Senate Energy Committee would block FERC from requiring utilities to join a regional power grid and from proceeding with its unfair market rules.

A bipartisan group of Southern and Western senators — some of whom have engaged in stormy confrontations with Mr. Wood in recent months — are naturally proud their states have some of the cheapest electrical rates in the nation. They rightly see FERC’s scheme not only as an imposition on their states’ rights, but as a vast regional transfer of wealth to the Northeast and some Midwestern states. States where consumers pay low electricity bills shouldn’t have to subsidize new power lines in higher-priced states for what FERC calls a “seamless transmission grid,” nor do states with inexpensive hydropower want to subsidize other states that aren’t so blessed. (A secondary point: Why would President George W. Bush want to allow FERC to punish consumers in low-cost regions that have been his electoral base of support?)

Senate Energy Committee Chairman Pete Domenici, New Mexico Republican, is blunt. For starters, he seeks new language in the pending legislation that “strengthens market protection and cracks down on market manipulation” while limiting “federal meddling in healthy electricity markets.” Other new language pushed by the FERC’s Senate watchdogs should also ensure that utilities can reserve adequate transmission capacity to serve their customers — something the geniuses in Califonia never did.

FERC is pushing an outdated, California-type policy — and did so in virtual secrecy. Far from rewarding FERC for its actions, the Senate needs to understand the full impact of the standard market design, and that it would create more problems than it would solve. That’s why more Senate debate is warranted and new compromise language needed for a more gradual, tailored national transmission plan.

Phil Kent is an author and president of Phil Kent Consulting.

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