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Thursday, March 10, 2005

The Burr electricity bill
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I usually agree with Lynne Kiesling, but I need to take exception to her post yesterday criticizing the electricity transmission bill introduced by Senator Richard Burr of North Carolina (along with Mary Landrieu and Trent Lott) last week.

One reason I like the Burr bill (and liked its predecessors that he introduced as a member of the House) is that it contains perhaps the only truly deregulatory measure - in the sense of actually reducing a regulatory agency's authority - of any of the electricity bills under consideration of late: Repealing section 203 of the Federal Power Act, which requires FERC approval of property transfers, effectively takes FERC out of the merger review process and puts merger reviews where they belong - at the Department of Justice. This would be a very significant change.

The bill promotes incentive-based rate making for transmission, clearly a good thing. Everyone knows that transmission will remain regulated for the foreseeable future, and also that most new transmission investment will need to come from the incumbent utilities rather than merchant transmission. We know how to do a better job of regulating in this area, FERC has not been doing it, and this provision of the bill can also have major benefits.

The bill's reliability section is similar to ones in other bills. I am not a fan of mandatory reliability standards, but they seem to have almost universal support elsewhere. They are obviously going to be part of any electricity legislation that passes.

The bill favors voluntary participation in RTOs, and I agree with Lynne that this section could be stronger.

Lynne criticizes the bill as having "its origins in states that have not been friendly to competition in this industry." I'm not sure about the bill's origins, although I do know that it includes provisions that Senator Burr was pursuing for quite a while as a member of the House. Whatever its origins, I think the bill is a very useful addition to the mix and more pro-competitive than the other measures on the table.

posted by Tom Lenard @ 4:35 PM | Electricity

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