APPA supports mandatory reliability in energy bill

POWER - 02/11/2004

American Public Power Assn. members voted last Monday to support mandatory reliability standards as currently drafted in the stalled comprehensive energy bill and legislation to enact President Bush's Clear Skies proposal, but shot down a resolution in favor of granting municipal utilities the same rate incentives the energy bill grants investor-owned utilities to encourage enhancements to the transmission system.

At its annual legislative rally in Washington, APPA members also passed resolutions in favor of encouraging development of clean-energy resources and expansion of the liquefied natural gas industry in the U.S.

In supporting mandatory reliability rules, APPA President and CEO Alan Richardson said he still hopes Congress will pass the comprehensive energy bill, but added that if the legislation falters again he would not support efforts by the Federal Energy Regulatory Commission to mandate rules on its own.

The resolution states that if a bill does not pass, APPA “supports voluntary adherence by all electric utility stakeholders to reliability standards promulgated by NERC,” and Richardson said it was unclear whether FERC had any authority to act without Congress' approval. “FERC's ability to move forward in that area...is limited,” he said in a press briefing.

Separately, APPA members rejected a resolution that would support legislative language granting transmission incentives for grid enhancements only if they were given to all users, including municipal utilities. Although the APPA member advocating the resolution--Los Angeles Dept. of Water and Power--said it opposed the concept of incentives, they wanted to ensure that if they were made available to investor-owned utilities in the energy bill, they were available to municipals as well.

As currently drafted, the energy bill (HR 6) would require FERC to offer higher rates of return on new transmission and increase the accelerated depreciation benefit associated with a utility's federal tax liability. The bill would also give FERC limited authority over a municipal utility's transmission system.

But the measure was blocked because certain members felt it would conflict with their standing policy against transmission incentives. “We have been arguing strongly in opposition to [granting] incentives to IOUs and believe it would be in conflict for us to vote in favor of any incentives,” an official from the Florida Municipal Power Agency said.