Utilities break ranks on transmission, as competition issues gain attention

T H E N E W S I N F 0 C U S

GE Lighting in Hungary, Efficiently

G eneral Electric's lighting arm is stepping up business activ-

ity in Hungary, with aim on ex- panding the compact fluorescent market. Cleveland-based GE Lighting has increased its 56% majority ownership in Tungsram, an established Hungarian light bulb company, to 75%. The added shares will give GE greater clout in and control of the company, which is partly owned by the Hungarian Credit Bank.

"Tungsram has more than met our expectations," said GE Light- ing senior vice president John Opie, explaining the additional investment. In addition to increas- ing its ownership, GE Lighting and its co-owner plan an immedi- ate $47 million investment to im- prove efficiency and develop new products. Since its affiliation with GE, Tungsram has invested heav- fly in high-speed fluorescent and other new lamp capacity.

GE Lighting spokesman John Betchkal says the 12-plant Tungsram system, which employs 14,000 people in Hungary and Austria, will produce many products for the European market. However, he says, Tungsram's Nagykanizsa plant will empha- size producing compact fluorescent bulbs for the world market.

"This plant is the one GE picked to be the world source for the quad tubes that are needed for compact fluorescent bulbs," said Betchkal.

Uncertainty Reigns

Utilities Break Ranks on Transmission, as Competition Issues Gain Attention

T he Edison Electric Institute's sweeping condemnation of

any form of legislatively man- dated transmission access is draw- ing fire from EEI's supposedly unified ranks, said James Rogers, PSI Energy's chairman, president and chief executive officer.

EEI publidy denounced Rep.

Edward Markey's (D-Mass.) bi- partisan transmission access bill, H.R. 2224, and promised to lobby against it. The bill's sponsors say it would clarify - - others say ex- tend - - the Federal Energy Regu- latory Commission's authority under the Federal Power Act to mandate wheeling on a case-by- case basis.

Rogers said he is "putting to- gether a group of utilities that rec- ognize the public policy predicate

that supports the Markey bill, and is prepared to deal with it rather than to accept blindly EEl's 'Hell no, we won't go' approach to Con- gress." The group is said to in- dude Entergy, Northern States Power, Pacific Gas & Electric, Southern California Edison, Wis- consin Electric Power Co. and Do- minion Power.

Rogers and his supporters are considered "~rncoats" by many staunch EEI supporters, accord- ing to one industry source. "They have betrayed certain agreements with EEI that they would stand by what the EEI board decides."

While Rogers does not agree with all parts of the Markey bill, he said he wants to negotiate with Markey's staff to mold the bill into something more palatable for utilities.

"Philosophically, I support the bill, but I disagree with many as- pects [of it]," Rogers said. "If I were drafting a bill, I would clarify FERC's authority to order wheeling in specific cases, such as market pricing, mergers, and in situations where there is proof that a utility is using transmission in an anti-competitive manner." Most importantl)~ he said he would include a provision that "requires FERC to mandate recov- ery of stranded investment if it or- ders wheeling."

If the electric industry remains inflexible on transmission access, it will miss a valuable window of opportunity to clarify FERC's authority and address stranded investment, before FERC does it of its own accord, Rogers said. Sev-

July 1991 5


eral years back, he saw first-hand the results of the gas industry's

Pyrrhic victory, as it refused to debate take-or-pay issues when leg-

islation was considered to open pipelines. The legislation was ulti-

mately dropped altogether, but FERC opened the gas systems anyway - - on terms harsher than

the ones Congress had sought,

Rogers said. Rep. Jim Cooper (D-Tenn.) is

among those who have criticized utilities for their unwillingness to

get involved early in the acid rain legislative process. In the end,

Cooper said, lawmakers were faced with environmentalists lob-

bying for tough standards and an industry unwilling, for the most

part, to negotiate. Tough standards were adopted as a result, he

said.

O ther industry sources see a

parallel between the clean air fight and transmission access.

Political pressures are building for access, but the industry's "just say

no" stance on transmission may ultimately damage utilities, say

some Capitol Hill observers. Rogers' suggestions on transmis-

sion access would probably be welcomed warmly in the House

and Senate, added one congressional observer.

Rogers said he tried to commu- nicate the virtues of negotiation

and the philosophical probity of the Markey bill in conversations with EEI President Thomas Kuhn, but to no avail.

Similar pleas from John Rowe, president and chief executive of the New England Electric System,

have met with the same response. "I'm an apostate on the issue, and [EEI] knows that," Rowe said in an interview. "I basically would

favor the changes in Markey's bill, based on efforts underway by

New England regulators. It

makes sense. "I think EEI has accurately rep-

resented the position of its larger members and the majority of its members," Rowe added. "I sim- ply disagree."

The Markey bill "needs a lot of modification before it

will be acceptable to our company. The bill goes

way beyond what is I I necessary . . . .

--William T. McCormick, Jr. Consumers Power Co.

Rowe said most New England utilities are indifferent to Markey's bill because they already have a fairly open-access transmission system. Transmis- sion transactions in the area are

coordinated by the New England Power Pool and various utilities. Utilities are allowed to protect their systems, including native

load. "Exactly what protections they

are allowed - - and what consti- tutes native load - - have yet to be determined," as part of a regional

transmission agreement being de- veloped by New England utilities,

state regulatory bodies and independent power producers, Rowe said.

R owe said the New England

transmission protocol, once complete, could be used as a model for open-access wheeling nationwide.

Other utility executives are join- ing Rogers and Rowe in meeting

the wheeling issue head-on. Wil- liam McCormick, chairman and

chief executive at Consumers Power, criticized the Markey bill,

but said his utility may be willing to work with congressional staff

to draft a more agreeable wheeling bill. "We're more amenable

[than EEI] to working with [congressional] staff to change the breadth and scope of FERC's authority as written in the pro-

posal," McCormick said in an interview.

The Markey bill "needs a lot of modification before it will be ac-

ceptable to our company. The bill goes way beyond what is neces-

sary in order to assure a level playing field in connection with

reform of the Public Utility Hold- ing Company Act," said McC-

ormick, who also heads the Util- ity Working Group, which

supports changing PUHCA. "In the context of any particular

FERC rate proceeding, we believe they have the authority to require transmission. We would promote some clarification of FERC's power to order wheeling," he continued. McCormick says Markey's bill overreaches in al-

6 The Electricity Journal


lowing FERC to order wheeling as a way to encourage least cost

planning, address environmental concerns, or for any other reason FERC finds in the public interest.

"The bill's focus must be nar-

rowed," McCormick said. A narrower focus still may not

win over the majority of investor- owned utilities on wheeling.

"Folks are scared of transmission access," said Thomas Gibson,

spokesman for the Electric Reli- ability Coalition, which opposes

changing PUHCA. The momen- tum of wheeling legislation in the

House is unnerving pro-PUHCA reform utilities because the

PUHCA title in energy legislation "is a natural point of attachment

for transmission access," Gibson said. Transmission access legisla-

tion has transformed PUHCA changes into "a tar baby from

which they wish they could get loose," he said.

The idea of widening FERC's power to mandate wheeling has

garnered support from many con-

sumer advocate groups, and

some segments of the electricity industry. The American Public Power Association admonished

FERC to "just exercise it" - - refer-

ring to FERC's power to mandate wheeling. "The Commission should abandon - - in [the Depart- ment of Energy's] own words - -

its conservative view of its own authority," the public power

group said. "However, since FERC seems to believe it cannot

act, [we] propose that it either test its present authority - - or seek authority through legislation."

Registered holding companies, however, don't see a need for mas-

sive new efforts by FERC on transmission, said holding company at-

torney Charles Patrizia of Paul, Hastings, Janofsky & Walker.

"FERC already has some authority to order transmission through

conditioning" of mergers, and there is "already a lot of voluntary

transmission going on. We should let the existing system

work."

Transmission access legislation has transformed PUHCA changes into "a tar baby" from which utilities wish they could get loose.

--Thomas Gibson, Electric Reliability Coalition

The Southern Company under- scores Patrizia's sentiment. Allen

Franklin, Southern Company Ser- vices Inc. president, recently told

FERC that giving that agency increased powers to mandate access

would strip utilities of decision- making on how best to meet their obligation to serve, and may inad- vertently threaten transmission system reliability. Franklin recom- mended that FERC stick to its cur- rent case-by-case decision-making, without expanded powers under the Markey bill.

"I am not impressed by the notion that FERC needs more au-

thority [to mandate wheeling] in- stead of providing incentive for

voluntary agreements" by allow- ing utilities to make a profit from

transmission, Patrizia added. He also opined that FERC does not

have the time to deal with transmission on top of complex natural

gas and merger issues. "They have enough on their plate," he

said. The APPA counters that, to the

contrar)~ FERC must become more active in wheeling. FERC's

abrogation of wheeling authority has resulted in widespread

abuses by transmission owners, APPA said.

"Few utilities any longer deny that some type of transmission ac-

cess is necessary to promote or protect competition in the electric

industry," added the Environmen- tal Action Foundation. "The

same theme echoes regularly from Wall Street, which will not fi-

nance new wholesale generation projects without assurance that

the products can get to market."

y et utilities resist efforts to

strengthen wheeling authority at the federal or state level,

hoping to herd the transmission debate "down a jurisdictional

'black hole' "between Congress and FERC, EA said.

Advocates of opening the nation's transmission lines are likely to fail in a bid to exploit the Federal Power Act to order non-

discriminatory wheeling, pre- dicted attorney Harvey Reiter.

July 1991 7

T H E N E W S I N F O C U S

Reiter observed that section 207 of the Federal Power Act allows

state commissions to lodge a com- plaint with FERC if the quality of

transmission service is inadequate or insufficient. If FERC finds the

state PUC's complaints valid, it must order "proper, adequate or sufficient service to be furnished,"

in the words of the statute.

T he Vermont Department of Public Service and Public

Service Board have asked for greater access under section 207 as part of the Northeast Utilities- Public Service of New Hampshire

merger pending before the FERC, said Reiter, who represents the

Vermont regulators. "What you're confronting here

is precisely the controversy that [Rep. Edward] Markey (D-Mass.)

is trying to resolve," said one advocate for transmission access.

"Some people think [the Federal Power Act] authorizes FERC to

order wheeling when denial of

wheeling is anti-competitive, but

the appeals courts are split on this. People can be harmed by

monopolistic refusals to wheel, and have no recourse under the

FPA. "This is exactly what happens

when there is no precise legislation" on wheeling," the attorney

continued. "Reiter has to take his clients through a series of hoops and Catch 22 situations and mil- lions of dollars worth of complaints," only to settle for limited access through merger conditions.

While it's still too early to fore- tell an outcome, the next few pro- cedural steps seem clear. First,

there may well be transmission amendments offered when the

omnibus bill marked up by the Senate Energy and Natural Re-

sources Committee (S. 1220) comes to the Senate floor, though

the likely outcome of any such move seems unclear.

On the House side, the Energy and Power Subcommittee will no

doubt consider a transmission provision in the omnibus House

energy bill the subcommittee staff

will write this summer for sub-

committee and then full commit-

tee markup in the fall. The chances for a Markey-like transmission amendment seem much

better here then in the Senate, though far from a shoo-in.

One looming problem for pro- PUHCA, anti-transmission reform utilities in the House is the inevitable linkage of the two is-

sues there. In the lower body, it could well come down to: "No transmission reform, no PUHCA reform."

Perhaps the key change in all that is going on is that the once-

monolithic utility view that transmission is too complex and risky

an area for policy change is losing potenc~ even within the industry itself. The consensus that has de-

veloped around the notion that transmission can be dealt with - - however complex its technical problems - - now includes the state and federal regulatory com-

munity, the independent power industry, public power, industrial

and other energy consumer groups, and a handful of utilities.

This "sea change" could signal a readiness to do something about both transmission and PUHCA sooner than most insiders were

guessing at the outset of the

102nd Congress. - - Kimberly Dozier

Acid Test for Nuclear

Japan's Push for 40 New Plants Faces Anti-Nuke Reaction

N IMBY, the "Not in my back yard" syndrome that has

proven a formidable barrier to sit-

ing of power plants and other public works in the United States, is at work in Japan and may become a major obstacle for Japan's electric utility industry.

The forcing event in framing Japan's energy future may well be the Japanese Ministry of Interna- tional Trade and Industry's (MITI) projection of the need for

8 The Electricity Journal

Documents

Utilities break ranks on transmission, as competition issues gain attention