APRIL 22, 1999

Today’s hearing touches on one of the most important issues in the electric restructuring debate. Historically, the United States has enjoyed the most reliable electric transmission system in the world. This is a tremendous advantage to residential and business consumers alike, and one which we simply must maintain.

The electric industry faces change on every front, all of which bear on reliability.

About twenty states are at some stage of switching over to retail competition. This raises questions about how generation reserves will be maintained, and how adequate transmission capacity will be preserved, under ever more competitive circumstances.

It is evident already that reliability in certain areas of the country may be jeopardized by constraints in the transmission system, at a time when building new lines is more difficult than ever.

On the environmental front, the timing of new regulatory requirements will result in plants being temporarily shut down, which threatens to occur at the worst possible time in terms of the need to maintain the system’s reliability.

Last summer the Midwest experienced difficulties which should be unsettling for anyone concerned with electric reliability and consumers’ wellbeing. Although we did not have blackouts, these were narrowly averted and only because certain customers were curtailed. Utilities in the region did this by the book, but that did not lessen the inconvenience and cost to those whose service was interrupted.

And while only a small volume of power sold at the spectacular prices in range of $7,000 per kilowatt hour, these price spikes serve notice that we can ill afford to take the stability of our electric system for granted in this era of rapid change. State regulators and utilities in the Midwest are braced for another difficult summer, and it behooves all of us to closely examine the forces at work in this rapidly changing marketplace.