POWER POLITICS
August 18, 2003

Last week's sweeping power outages heated up the debate over the country's energy policies. Experts discuss how to improve the reliability of the nation's electric power grid. Background report.

 

Aug. 15, 2003: Experts discuss the structure and vulnerability of the U.S. electrical grid system Aug. 15, 2003: Update: Millions struggle with largest-ever North American power outage Aug. 14, 2003: Experts React to the Initial Outage Aug. 14, 2003: Update: Electricity blackout his major U.S., Canadian Cities Jan. 2, 2003: Controversial new power plants south of the U.S. border April 5, 2001: Exploring an alternative source of energy: wind power March 29, 2001: President Bush and the environment March 28, 2001: Signs of global warming March 19, 2001: The energy crisis and agriculture in California March 14, 2001: Bush reverses a pledge to restrict CO2 emissions Feb. 26, 2001: Rising natural gas prices Feb. 23, 2001: Consumers and natural gas prices Feb. 9, 2001: Natural gas prices and California Jan. 25, 2001: California Governor Gray Davis discusses his state's power woes Jan. 23, 2001: Blackouts roll across California Jan. 4, 2001: A vote to raise electricity rates Nov. 30, 2000: Consumers and politicians debate the fallout of electricity deregulation Browse the NewsHour's coverage of the Environment   News for Students: Top Story: The global warming threat 07.02.01     Department of Energy Federal Energy Regulatory Commission Harvard Electricity Policy Group North American Electric Reliability Council Niagara Mohawk	GWEN IFILL: The debate about what should be done to improve the reliability of the nation's power system. We welcome Congressman John Dingell, the top Democrat on the House Energy and Commerce Committee. His district in Michigan was without power until late Friday. Republican Congressman Joe Barton of Texas, chairs that committee's energy subcommittee. Thomas Kuhn is the president of the Edison Electric Institute, the trade association that represents the nation's shareholder-owned electric companies. And Wenonah Hauter is the director of the Energy and Environment Program at Public Citizen, a not-for-profit consumer advocate organization. Start with the lawmakers, you Mr. Dingell first. What needs to be fixed and whose job is to it fix it?
	Addressing the problem
	REP. JOHN DINGELL: Well, I think we have to address the immediate problem, reliability of the delivery and the generation of electric power. That's a fairly simple thing to do. It could be complicated as much as we want by trying to pass a much larger energy bill and adding whole new areas of complication, disagreement and quite honestly confusion. So my answer is get down to the problem of addressing the problem of reliability: Both generation, supply, and very frankly the grid, as well as the mechanical and electronic measures that have to be done to make it work and work in the public interest. GWEN IFILL: And in your opinion that's a federal responsibility that should be undertaken? REP. JOHN DINGELL: It is a shared responsibility, the federal government has a major responsibility and we're going to have to address that part of it. GWEN IFILL: Congressman Barton, what's your answer to that question? Whose job is it to fix this big problem? REP. JOE BARTON: I don't agree with what Congressman Dingell just said as far as he goes. But we need to do more than that. In addition to mandatory reliability standards, we need to have incentive pricing to build new transmission lines, we need to rebuild PUHCA, that's the Public Utility Holding Company Act, so you can bring more capital, more private sector capital in to build new transmission lines and new power plants. We need to accelerate a depreciation for transmission. We need to at least encourage the creation of these regional transmission organizations, or RTO's so you can put together the grids that can move power around and make sure the system is totally balanced. And there's, with Senator Domenici chairing the Energy Conference that we're going to have with the Senate in September, there's absolutely no reason we couldn't have a comprehensive bill on President Bush's desk if not by the end of September certainly by Halloween or Thanksgiving. So I don't disagree with Congressman Dingell on that one piece, but I think we can make it part of a larger package that will address the issue in a comprehensive and systemic way. GWEN IFILL: If I read Congressman Dingell right, and a lot of other Democrats on the hill, they're saying comprehensive is exactly what you don't need right now in order to get something done. REP. JOE BARTON: Well, we have wrestled with the energy issue for the last seven or eight years, when Congressman Dingell was chairman of the Energy and Commerce Committee, he helped put together a package back in the early 1990s that deregulated wholesale electricity, the power going around the country. So I don't think you can take one piece of the pie and focus on it. We're an integrated economy; it deserves an integrated systematic approach so that we have the very best energy market and energy policy in the free world. GWEN IFILL: Mr. Dingell, I'll give you an opportunity to respond. REP. JOHN DINGELL: We've been trying for years to come up with a comprehensive energy bill. We still haven't had it. And that's gone on for about the last eight years. Simple fact of the matter is, we have a serious problem and that is to address this problem of reliability. As my old daddy said, rather kill the closest snake first. The doctors also say first do no harm. Our problem is to get this job done, to get it done quickly, to get it done well. We can add lots of confusion, lots of dispute, lots of difficulty and lots of argument and get no bill, and not to get a bill in the time that we need to do it.
	Systematic problems
	GWEN IFILL: Mr. Kuhn, lets pick up where Mr. Dingell's daddy left off. What is the closest snake in this case? THOMAS KUHN: Well, I think reliability is certainly an incredibly important thing that we need to focus on. But I think that there are integrated parts of this bill that will help us so that we don't have a different kind of crisis -- fuel diversity issues and other things. GWEN IFILL: What do you mean? THOMAS KUHN: Things that help us use other fuels like coal and nuclear and natural gas and renewables and hydro, and things of that nature that are all part of the energy bill act. The repeal that Congressman Barton mentioned, on the reliability side is extremely important for us to address the siting issues. That is probably one of the most complex and problematic thing we have in the transmission area is the siting of energy facilities. GWEN IFILL: Where to actually build the energy facilities that someone would allow -- THOMAS KUHN: Where to build and how to get them built, right. GWEN IFILL: That's a knot in my back yard phenomena, which has done right? THOMAS KUHN: You're absolutely right, we can have a hundred people, everybody agree to a major transmission project and one or two people disagree, it can end up getting bogged down for years and years. So we need to have some kind of federal authority that when everything like that happens to get bogged down that they can come in and help move a project forward. GWEN IFILL: Miss Hauter what do you hear so far that sounds right and what do you hear that sounds off? WENONAH HAUTER: Well, first of all, we're concerned that it is the energy industry that is creating energy policy in this country and is driving this energy bill, which has literally millions and millions of dollars of subsidies for the electric industry, oil and gas, and the nuclear industry. The last thing we need to do is deregulate more. And the current energy legislation that's being debated in Congress repeals a very important consumer protection called the Public Utility Holding Company Act, which is one of the last protections that consumers have against bad investments - REP. JOHN DINGELL: And investors. WENONAH HAUTER: Yes. And the energy companies who will benefit from repealing this want to do so that other types of industries can invest in electric utilities. So, for instance, if it's repealed, we may see Chevron or Exxon Mobil owning electric companies. It will also result in consolidation. GWEN IFILL: But there is not a general agreement, Congressman Dingell, is there, on exactly what the approach should be and it's not necessarily a partisan question, it's also a regional question, isn't it? REP. JOHN DINGELL: Oh, that's absolutely true. It's philosophical, it's part I son, regional and very broad. But to say just one thing is very important. We can give you a reliability bill that will work, do good, solve the problems in 30 days. We can work on these other problems like sighting and PUHCA and the other matters over a longer period of time. We could have a crisis again by the end of the week. The situation is that difficult. So I say let's get to the business at hand first.
	Competition vs. reliability
	GWEN IFILL: Well, let's back up for a moment and explain for the energy lay people out there exactly what you mean when you say reliability bill. REP. JOHN DINGELL: Well, reliability bill has to address three things. One, the supply of power. Two, the reliability of the grid which delivers electricity. And three, to address the mechanical and electronic steps and actions, and human actions that have to be taken to make the system work. This can all be done by the simple mechanism of giving the North American Electric Reliability Council Authority which would exercise under the supervision of the FERC to see to it that power was able to be delivered reliably to the American citizens and to begin to address some of the concerns we have resulting from the three shutdowns which we had, the one last week, the one in '65 and the one in '77. GWEN IFILL: Mr. Barton, why not just focus on the reliability issues for now since that seems to be at least, we don't know the cost of the black you last week, but it seems to be the first thing that everybody agrees on needs to be addressed? REP. JOE BARTON: We have standards in both the house bill and senate bill. So I'm not arguing with John Dingell that that's not part of the solution. But that in and of itself is no solution because it doesn't address transmission sighting, building new transmission lines or any of those other issues. The House passed a comprehensive energy bill with a comprehensive reform bill for electricity, that includes sighting, that includes reliability, that includes repeal of PUHCA, that includes the RTO's, passed on a by partisan basis. So I think it will pass, I think the conference report that's comprehensive will pass the Senate on a bipartisan base and is the president will sign it. So if you want to solve the problem, let's do a lot more than John Dingell suggests. I'm not opposed to what he suggests doing, but that by itself won't do anything to solve the problem that happened last week in the Northeast. GWEN IFILL: Mr. Kuhn, let me pick up on one of the points he just made and try to translate some of it for our viewers, incentivizing, which is to say providing an incentive for the regional transmission organizations, the RTO's, what does that mean, and do you think that's a good idea? THOMAS KUHN: Well, I don't think, the issue of regional transmission organizations or market are competition issues, and there are regional differences on that as to where people should move and how fast they should move and I believe that we ought to be able to do what's best for each and every individual region. But the thing that Joe Barton was talking about with respect to reliability, you know, does involve the set of issues that there is universal agreement upon, and that is mandatory standards that were mentioned earlier, the siting issues are so extremely important for us to get through, and some of the financial issues. The transmission facilities are taxed much less favorably than any other major critical infrastructure investment. So the tax provisions of this bill are so extremely important, and that is why we believe all these provisions that relate to reliability have to be moved in a comprehensive bill. GWEN IFILL: Is expanding deregulation part of the key to this, or should that be rolled back? THOMAS KUHN: Well, I think, again, the competition issues are ones that are separate and apart from the reliability issues. And that is where the debate is getting confused, as to whether or not we should move back to re-regulation or we should move onto competition. And the reliability standards that I mentioned --. GWEN IFILL: You think that should be set aside for now, that argument for now? THOMAS KUHN: I think the competition issues -- again I'm not saying they should be set aside. They can be resolved and reconciled with respect to regional differences and we can move forward on the competition issues as well. But certainly they shouldn't be confused on the reliability issues.
	What to look for in the near future
	GWEN IFILL: Miss Hauter, this is all a very expensive proposal, this idea of trying to fix the problem no matter how you look at it. If am an average rate payer trying to make sense of what is a good idea of how to fix it, what should I be looking for, what should I be listening for in this debate? WENONAH HAUTER: Well, first of all, average consumers should take a hard look at the energy bill, which is more than 800 pages long, and they can find an assessment of it on our Web site at citizen.org. Citizens should be very skeptical of the idea that deregulation is competition. In fact, the area where the blackout occurred is where transmission had been most deregulated. We have a real problem in this country where the electric utilities, the energy interests, the nuclear power interests, are writing and influencing legislation in Congress. They've given over 79 million dollars in the last 12 years, and that's why we're not having a real debate over energy policy and how it can benefit consumers. This is all about a drive by the energy industry for more profits, and we shouldn't leave electricity to the vagaries of the market. GWEN IFILL: We began with congressional action. Mr. Dingell, we've mentioned this has happened twice before, not of this magnitude, this kind of a blackout of a major scale. Congress comes back to town in September and takes this up, what's to say that in six month sit won't have just been set aside again? REP. JOHN DINGELL: Oh, it could happen at any time until we have addressed the reliability question. The other questions that have to be addressed I think should addressed. But let's get on it and do as my old daddy said, kill the closest snake first, finish the question of reliability and then we can address all the other things. There's questions like ethanol, there's questions of the repeal of PUHCA, there's questions of siting, which were immensely complex and very much a source of distress for large areas of our society, including the governors who are very much opposed to siting provisions. GWEN IFILL: Mr. Barton, the light back on, the plasma screens are all working again. What is the guarantee that congress will take action on this in the next six months say? REP. JOE BARTON: I want to correct one statement that the gentle lady from Public Citizen said. Transmission has not been deregulated, it's still regulated and would continue to be regulated under the pending bills in both the House and Senate. Wholesale generation has been deregulated under legislation that Congressman Dingell was one of the authors of back in 1991 and 1992. In terms of the solution to preventing the problem from occurring again, you have to take an integrated approach, you can't look at it individually. We need comprehensive both on a regional basis and as Mr. Kuhn pointed out among fuel sources. So there are no easy solutions, but the good news is we almost got an energy bill in the last Congress, we're in conference now, and a conference that's going to be chaired by Senator Domenici who is an expert in these areas, I think that we can get a good energy bill that protects the American consumer, guarantees reliability and creates an energy package for the future economic growth of this country. And that can be done in, certainly within the next two months. GWEN IFILL: Okay. We'll be watching, Congressman Joe Barton, John Dingell, Wenonah Hauter, and Tom Kuhn, thank you all for joining us.