Prudence guidelines shelved—for now

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Old Boyz, New Kidz at NARUC

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Because the draft had been disI

Staying Hitched to Transmission Reform

IN

The 2 l/2 page resolution

tributed before it came up for ac-

adopted unanimously by

tion, there was time for hands-on

NARUC’s Executive and Electric-

committee chair Ashley Brown

ity Committees also:

(Ohio) to have it redrafted to bet-

0 calls on Congress to require a

ter square with the desires of

state-FERC joint board to craft a

most committee members. The re-

detailed transmission proposal

ward step, state regulators almost

draft took greater account of the

and report back to Congress

stumbled on their way to the

views of those committee mem-

within 18 months;

transmission reform ball, but

bers -

landed so nimbly one hardly no-

who are more committed to com-

trastate” transmission and re-

ticed the hitch.

petitive approaches, and to ac-

gional regulation of interstate

knowledge a warm, fuzzy fax let-

wheeling; and

Like a dancer taking a brief awk-

The scene was the National As-

many of them new -

sociation of Regulatory Utility Commissioners’

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Francisco last month. NARUC’s to consider a resolution on transmission legislation and faced the usual problem: a complex issue,

f the NARUC summer meeting

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different levels of understanding,

proved anything, it is that a new

and a wide range of views.

generation of regulators is ready

With some members strongly

to play a more active part in the

supporting more open access, a

group’s energy policy making -

few opposed, and some simply

even if the newcomers’ policies

wanting to maximize state prerogatives, the group had come up

ter the group received mid-meet-

with a draft resolution that

ing from Reps. Ed Markey (D-

seemed to love the issue to death.

Mass.) and Carlos Moorhead (RCal.), principal sponsors of a

fect to Congress; “Tell FERC to

House transmission reform bill,

study the matter with us. When

H.R. 2224.

you.” Given the frequent differ-

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ences the group has with FERC,

sponded promptly with thanks,

this position seemed either the

committed to work with the regu-

height of cynicism or of naivete.

lators, and pointed out the ways

With no time limit on the pro-

in which their bill tried to be sensi-

posed joint study, and no expressed interest in working with

tive to state interests already.

he Congressmen, made aware of the NARUC concerns, re-

‘We’re happy to have Congress’

the Congress in the meantime, the

attention,” said Florida’s smooth-

draft resolution seemed likely to

as-silk Mike Wilson, dryly ‘We

take NARUC out of the legislative action.

just didn’t think they were this at-

August{September 1991

opposes federally-mandated

Prudence Guidelines Shelved -for Now

Electricity Committee was about

we know what to do, we’ll tell

0 calls for state regulation of “in-

retail wheeling.

meeting in San

“Keep your bills,” it said in ef-

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c u s

tentive.”

are not entirely clear. The shift is likely to make NARUC a less active player in some areas, but perhaps more effective in others. One area that looks problematic now is the effort by some of NARUC’s more senior and effective commissioners, led by association president Bill Badger (Md.), to develop improved guidelines for regulators to address prudence decisions affecting major generating plants. The prudence effort stems from meetings of an informal group of five NARUC members appointed by Badger and a like number of investor-owned utility chief executives coordinated through Edi-

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THE son Electric Institute. After pro-

NEWS

IN

sioner, so no longer serves) -

F of-

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C

U

S

and in any case cannot obviate -

ducing an earlier draft paper in

fered a resolution to the Electricity

post hoc reviews. As industrial

January, which proved controver-

Committee urging state commis-

consumer representative John An-

sial (TEJ, April 1991 at 6), the

sions to adopt the discussion

derson pointedly observed, “A

paper was modified somewhat to

paper’s rolling prudence princi-

plant that takes more than five

take account of opponents’ views.

ples if they are consistent with

years to build is going to be un-

Armed with an updated June 6

state law.

economic and may be in for a dis-

discussion paper, “New Ap-

In addition to concerns about

allowance.”

proaches to Prudence Reviews for

the report on its merits, commit-

Utility Construction of Major Gen-

tee members like Ron Russell

sponsible for the Electricity

In the end, what was most re-

erating Facilities,” the NARUC

(Mich.) thought the “urging” was

Committee’s deciding to shelve

members of the ad hoc group

a bit strong. Russell ultimately op-

the proposal was the polite but

sought favorable action by the as-

posed adoption. Others, like Jo

pointed opposition the proposal

sociation.

drew from members of another

The effort to readdress the pru-

NARUC panel -

the Energy Con-

dence issue is particularly impor-

servation Committee.

tant to those who would like utili-

tion chair Ron Eachus (Or.) and

ties to have the same chance to

committee member Richard Cow-

recover costs on their generating

art (Vt.) told the Electricity Com-

plants (on which costs are often

mittee that they opted not to take

disallowed) that third party sell-

a position as a committee yet, but

ers have to recover costs under

said 12 members of the committee

wholesale power contracts (for

polled on the measure had all op-

which payments to sellers are not

posed it, for reasons both proce-

generally disallowed).

dural and substantive.

The princi-

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ith such opposition within

pal means for doing so recommended in the discussion paper is “rolling prudence” -

Conserva-

the ranks, it was clear that

whatever action the Electricity

i.e., pru-

dence reviews at designated mile-

Campbell (Tex.) worried that

Committee might take, the resolu-

stones throughout a plant con-

power companies would use the

tion would be controversial if it

struction process.

paper to persuade state legisla-

came before NARUC’s Executive

roponents say such an ap-

tures to enact a rolling prudence

Committee.

proach would obviate the

requirement if state regulators did

at this opposition from another

need for lengthy, expensive, after-

not adopt it voluntarily. Indus-

NARUC committee, newer mem-

the-fact reviews that create an un-

trial consumers and state con-

bers of the Electricity Committee

acceptable degree of uncertainty

sumer advocates were also on

-

for utilities building plants, leav-

hand to speak against the pro-

been inclined to go along with

ing many unwilling to build.

posal.

committee veterans such as Bad-

P

The issue got white hot when

Opponents argued that pur-

Perhaps emboldened

who might otherwise have

ger and Wilson -

also broke

ranks and decided to vote no.

Badger and the three other

chased power deserves different

NARUC members of the ad hoc

treatment from utility generation

group -

because its cost is fixed by con-

still present supported the pro-

Ashley Brown (Ohio),

When the vote was taken, those

Mike Wilson @la.), and Bill

tract. They observed that rolling

posal 9-5, a decent plurality

Steinmeier (MO.) (California’s

prudence reviews may also be as

(though both sides claim the vote

Stan Hulett is no longer a commis-

expensive and time consuming -

would have gone more their way

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The Electricity Journal

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NEWS

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FO

c u s

if some members had not had to

on Energy and Power, gave some

senior vice president of the En-

leave early). For what it’s worth,

ground in response to questions

tergy holding company system,

the average tenure of Electricity

from the panel, but reiterated the

which has joined eight other utili-

Committee members who ulti-

industrys position that H.R. 2224,

ties in sending a letter to subcom-

mately voted no is less than three

introduced by Reps. Edward

mittee chair Phil Sharp favoring

years; tenure of the four commit-

Markey (D-Mass.), Carlos Moor-

both increased competition in

tee members proposing the mea-

head (R-Cal.) and others, which

wholesale power markets and

sure averages nine years.

would give FERC authority to

clarification of the Federal Energy

order transmission access, leaves

Regulatory Commission’s author-

the door too wide open.

ity to ensure fair access to trans-

Given the strong feelings in the Electricity Committee and pleas from the Conservation Commit-

mission facilities.

Franklin predicted the bill as

tee for more consultation prior to

written would result in the de-

adopting a position, Badger and

mise of reliable electric service, re-

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ignees of the letter, aside from Entergy’s Edwin

Wilson asked that the measure be

Lupberger, include John Rowe,

withdrawn for further work and

president and CEO of the New

reconsideration.

England Electric System; James

They made clear

they would seek approval at

Rogers, chairman, president and

NARUC’s annual meeting in No-

CEO of PSI Energy Inc.; Roger

vember and that this time there

Hale, chairman, president and

should be no claims of in suffi-

CEO of Louisville Gas & Electric;

cient time or consultation.

James Smith, chairman and CEO

-Robert

.

of Orange and Rockland Utilities

0. Marritz

Inc.; Richard Abdoo, chairman

EEI Divides

on Access

and CEO of Wisconsin Electric Power Co.; and Ken Harrison,

Transmission Refom Gaining in House; While Members Recess, Staff Drafts

W

ith its ranks splintering more

than a little, an Edison Electric Institute witness has told Congress the association would not oppose legislation on transmission access as long as “reliability and native load customers are protected.” H. Allen Franklin, president and CEO of Southern Company Services and the EEI spokesman at the late June transmission hearings of the House Subcommittee

August/September 1991

chairman and CEO of Portland General Electric Co. Boston Edison’s President and CEO Bersult in higher costs to retail

nard Reznicek also sent a letter en-

customers, and create a chaotic

dorsing the bill directly to Markey.

common carrier transmission net-

Minority Counsel for the sub-

work. He offered no suggestions

committee, Jessica Laverty, says

as to how EEI would modify the

“EEI has lost its relevance [on this

legislation. However, EEI later

issue].” Said another Capitol Hill

contacted Markey’s staff to deny

insider,” A trade association can

that it intended to kill the bill -

a

complete turnaround from EEI

only play if it’s united.” Prospects in the House for link-

President Thomas Kuhn’s May 7

ing transmission access legislation

letter to the membership in which

to proposals to amend the Public

he vowed to “strongly oppose

Utility Holding Company Act of

this . . . onerous legislation.” But Franklin was decidedly in

1935 appear ever stronger, as nine members of the House Energy

the minority at the hearing, even

and Commerce Committee -

on his side of the industry fence.

substantial beginning toward a

Seated next to him was Jack King,

majority -

a

have now sponsored

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