No Subject

[Matt Freedman <freedman@Citizen.ORG>]

  CONGRESSMAN MARKEY INTRODUCES RESTRUCTURING LEGISLATION
  BILL WOULD PERMIT EXEMPTIONS FROM PURPA IF UTILITIES ALLOW RETAIL
  COMPETITION OR DIVEST FROM ALL GENERATION ASSETS
  
  Representative Ed Markey (D-MA) introduced legislation at the end of  
  January that lays out conditions for exempting utilities from the
  mandatory purchase provisions in section 210 of the Public
  Utility Regulatory Policies Act of 1978 (PURPA).  Section 210
  requires electric utilities to sign power purchase agreements
  with independent generators using renewable fuels or cogeneration
  at the utilities' marginal cost for new capacity.
  
  The "Electric Power Competition Act of 1996" (H.R. 2929) would
  allow state regulatory commissions to issue a "certificate of
  competition" to utilities that either allow retail competition in
  their service territory or divest all generation assets. 
  Furthermore, protections for renewable energy, energy efficiency
  and low-income programs would have to be addressed structurally
  with a nonbypassable charge on the distribution system.  States
  could also adopt a minimum portfolio standard to meet the
  renewables and fuel diversity requirements.
  
  Representative Markey is a member of the House Commerce Committee
  and serves on the Energy and Power Subcommittee that considers
  legislation pertaining to electricity regulation.
  
  Full copies of the bill and Congressman Markey's floor statement are 
  available via email only and can be obtained by sending a request to 
  cmep@citizen.org.  A summary of the legislation follows:
  
  The "Electric Power Competition Act of 1996" begins with a
  finding that:
  
       -- competition will benefit consumers and is preferable to
       regulation of monopolies.     
       
       -- open access to transmission and distribution facilities  
       on a non-discriminatory basis is essential.  
       
       -- programs to promote fuel diversity, renewables,          
       efficiency and environmental protection are necessary
       
       -- utilities must be able to recover "legitimate and        
       verifiable stranded costs"
       
       -- section 210 of PURPA should be maintained until clearly
       defined standards for competition are met
  
       -- elimination of some anti-trust exemptions for utilities
       will prevent market power abuses.
  
  The bill amends PURPA to include the following:
  
       -- An electric utility can be exempted from the mandatory
       purchase provisions of section 210 upon receiving a
       "certification of competition" from a state regulatory
       authority.
  
       -- existing power purchase agreements under section 210
       cannot be altered or renegotiated regardless of whether or
       nor a utility qualifies for a certification of competition.
  
       -- states may not be prevented from "favoring or disfavoring
       particular types of generation" in its implementation of
       section 210.  In particular, states are permitted to use
       segmented competitive bidding to determine the appropriate
       avoided cost for a specific generation technology.  This
       section would essentially overturn the FERC decision on
       California's Biennial Resource Planning Update (BRPU) and
       allow states to use California's methodology for
       implementing PURPA to help individual renewable generating
       technologies.
  
  States can issue a certification of competition to a utility if
  it meets either a "Federal retail competition standard" or a
  "Federal divestiture standard".
       
       -- a utility is able to meet the "Federal retail competition
       standard" if: there is competition in serving retail
       customers within its territory, any entity may build or
       operate new generating capacity, and the utility cannot
       exert market power to gain advantage over other buyers and
       sellers in its service territory.  Certification can be
       withdrawn if these conditions are violated.
       
       -- a utility can meet the "Federal divestiture standard" if
       it has divested itself of all generation assets and is
       prohibited from owning or controlling any generation so long
       as it has monopoly control over transmission and
       distribution.  In addition, the utility must adopt non-
       discriminatory open access tariffs.
       
  A certificate of competition cannot be issued unless the
  following conditions exist:
       
       -- all suppliers of electricity to the utility or customers
       have "both the incentive and opportunity to provide energy
       efficiency and renewable energy resources that are less
       costly on a life-cycle basis than displaced generation." 
       Furthermore, nonbypassable distribution charges must be
       adopted to support low-income services, fuel diversity
       requirements and energy efficiency programs.  The fuel
       diversity requirement may also be met "through minimum
       portfolio standards that ensure maintenance or improvement
       of current levels of reliance on renewable energy
       resources."
       
       -- a determination is made that structural mechanisms are in
       place to protect consumers from "price discrimination or
       undue price increases" and that no customer class can avoid
       its share of stranded cost recovery.
       
       -- there is a determination that recovery of stranded costs
       is "not contingent on continued operation of the generation
       assets for which recovery is approved."
       
  Finally, the bill alters antitrust law so that utilities may not use the
  "State action" doctrine as a "defense against charges of anticompetitive
  behavior in unregulated generation markets." 
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