July 12, 1999 The Honorable Joe Barton Dear Joe: Thank you for soliciting my views on the subject of legislation to restructure the electric industry. This is a complex subject of tremendous importance to consumers and to our economy, and it is essential that members of the Committee fully appreciate the significant issues at stake in this debate. I want to assure you that I have an open mind with respect to this issue, and I commend you for the hearings you have held so far this year. However, I remain doubtful that this Congress has a sufficient understanding of the issues to warrant rewriting the Federal Power Act, and other major federal statutes, at this time. It is also not clear to me that there is a consensus on whether or how to do so. Over a relatively short period of time, the electric industry has undergone rapid change, which was initiated in large part by Congress, the states, the Federal Energy Regulatory Commission (FERC), and the courts. This Committee encouraged wholesale competition by developing the Energy Policy Act of 1992 (EPACT), a measure which has met with a fair degree of success but is nonetheless a relatively recent development. In the meantime, nearly every state has considered whether or not retail competition would serve the best interests of its consumers. The early results from states which have gone this route are mixed, and the jury may be out for some time. Since Congress enacted EPACT, the Commission has issued several major transmission rules, announced new merger guidelines, and recently proposed a major new rulemaking on regional transmission groups (RTO’s). Recently, the courts have dramatically curtailed private federal rights of action in state court, and at least two major cases interpreting FERC’s authority under the Federal Power Act are pending in federal courts. The rapid pace of change further complicates the legislative equation by presenting members of the Committee with something of a moving target. Nonetheless, I recognize your interest in determining whether it is possible to craft a bill that would benefit consumers and spark consensus among Committee members. I believe Chairman Bliley’s decision to forego any federal mandate instructing states to adopt retail competition by a date certain was wise, and I will continue to maintain an open mind with respect to any legislative proposal you may develop. However, I believe that at a minimum, any legislation moving through the Committee should meet the following criteria: First and foremost, any bill should offer clear benefits to consumers – particularly smaller industrial, commercial, and residential consumers, who lack the economic clout which larger entities wield even in newly competitive markets. This means working closely with representative groups, such as consumer groups and state utility regulators, rather than forcing legislation through the Committee over their protests. Second, electric restructuring legislation should neither harm the environment nor become a vehicle for making new federal environmental policy. If Congress decides to encourage retail competition, it must not advantage or disadvantage any particular fuel source. Third, any bill should maintain and enhance the reliability of the interstate transmission system, and address the concerns of state regulators with whom the responsibility for siting new lines and regulating distribution systems will remain. Fourth, any changes to federal transmission law should be carefully considered, so as not to disadvantage states which choose not to adopt retail competition, or utilities operating in such states. Transmission policy should not become a backdoor substitute for a federal mandate. Fifth, any increase in FERC’s regulatory authority should be carefully scrutinized, lest a bill undertaken in the name of competition become a re-regulatory bill by which Congress chooses winners and losers in the marketplace. Sixth, any pro-competitive legislation must abolish regional preference to power produced by the Tennessee Valley Authority (TVA), Bonneville, and the other federal power agencies. If Congress decides to encourage competition in the electric industry, it must be consistent and require that this federally subsidized power be made available to all consumers, throughout the country, on a nondiscriminatory and equal basis. Mr. Chairman, each of these issues is complex on its own terms, and melding them into a coherent whole poses a substantial challenge. I trust that this response is informative, and I look forward to the coming legislative debate. Sincerely, JOHN D. DINGELL cc: The Honorable Ralph M. Hall | |
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