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EEI SUPPORTS BARTON BILL'S REMOVAL OF MANY FEDERAL BARRIERS; URGES IMPORTANT CHANGES

WASHINGTON (October 6, 1999) - Federal electricity legislation should remove federal barriers to competition, facilitate state restructuring action, address critical transmission and reliability issues and apply the same rules to all competitors, the Edison Electric Institute told House lawmakers today. Rep. Joe Barton's restructuring measure makes significant progress toward achieving some of those goals, but falls short on others, the association said.

EEI Executive Vice President David Owens commended the Texas Republican "for not making H.R. 2944 a vehicle for micromanaging competition with punitive market restrictions," noting the draft legislation does not grant FERC authority to order utility divestiture and does not impose competitive handicaps on the ability of utilities and their affiliates to offer new products and services. "Federal legislation should protect competition, not the competitor," Owens said in his testimony before the House Commerce Committee's Energy and Power Subcommitteensert.

EEI also praised Barton for dealing with issues that only the federal government can address, including PUHCA repeal and PURPA reform, and commended the lawmaker for resolving various issues of federal and state jurisdiction and tackling a number of transmission and reliability issues, including the creation of a self-regulating reliability organization and extending FERC transmission jurisdiction over all transmitting utilities.

At the same time, Owens said, EEI and its members have concerns about portions of the bill, including terms that would allow federal electric utilities, government-owned utilities and cooperatives to use their current and future subsidies to compete with privately owned generation and transmission facilities in a competitive market.

"Electricity restructuring cannot achieve its anticipated results unless the rules governing competition treat all competitors alike," he insisted, urging Congress to address the inequitable tax treatment and subsidies that favor public and cooperative power lest this restructuring bill simply result in growing government, not competition.

The association told lawmakers it takes issue with the bill's expansion of FERC authority. One problem is the creation of a deadline for the formation of regional transmission organizations, Owens said, contending that such a deadline ignores the complex and time-consuming nature of resolving critical issues among diverse interests in order to create an RTO. The bill also would give FERC "carte blanche to arbitrarily overturn decisions made by an RTO," he pointed out, a move that " would put prospective RTO participants in the uncomfortable position of trying to establish an RTO "under a cloud of uncertainty that FERC will second guess their decisions."

Owens said EEI also objects to the bill's expansion of FERC's merger authority, noting that some of the legislative language attempts to expedite FERC's merger review process while other provisions have the contradictory effect of expanding FERC's jurisdiction. Utility mergers are subject to extensive review by FERC, the Dept. of Justice, the Federal Trade Commission and state regulators - expanding FERC authority is simply redundant, he argued.

"We understand that some entities argue for even more burdensome utility merger review. They want electric utilities to be subject to higher merger standards than any other industry," Owens said. "We would point out that there are thousands of suppliers who currently participate in electricity markets, with many new entrants getting into the market. Claims that the electricity market will somehow lack competitors are both ludicrous and blatantly inaccurate," he insisted.

Another sticking point for EEI is that several of the bill's provisions wade into retail issues that properly belong under state purview. Problem areas include interconnection standards, net metering, aggregation and consumer protection, he said. A requirement that FERC examine the impact of utility mergers on retail markets also errs in the same direction, as does a portion of the bill that would impose mandatory reciprocity provisions on the states, Owens said.

EEI applauds Barton for his efforts to move the complex restructuring debate forward, Owens concluded. "We recognize that this is a very contentious, divisive issue of tremendous importance to all consumers and our economy," he said, pledging EEI's cooperation in continuing efforts to negotiate a federal restructuring bill that helps to shape the nation's move toward electricity competition.

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EEI is the association of shareholder-owned electric companies and international affiliates whose domestic members produce and distribute more than three-quarters of the nation's electricity.

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