Energy Politics Overshadow House Blackout Inquiry

by J.R. Pegg

The Bush administration and many Congressional Republicans are keen to use the August 14 blackout as fuel to push through a massive energy bill that includes large subsidies for energy production as well as the transmission reliability rules.

Democrats say the energy bill is a controversial proposition with no guarantee of passage and argue that the reliability provisions should be pulled out and considered as a separate piece of legislation.

It makes sense to "kill the closest snake first," said Michigan Representative John Dingell, a Democrat.

Dingell said he will introduce a separate reliability bill this week that focuses on three concerns -- the reliability of the transmission system, the reliability of the generating supply and the capability of controls on the system.

In announcing his intent to push for the standalone bill, the Michigan Democrat reminded his colleagues on the House Energy and Commerce Committee that the Congress has a long record of inaction on energy policy.

"The making of energy policy tends to defy the best of intentions and timetables," Dingell said.

But House Republicans say the problems that resulted in the massive blackout are only part of a faltering national energy policy that needs more supply from existing sources, such as oil, natural gas and nuclear. They acknowledge the difficulty in passing energy legislation but contend now is an unprecedented opportunity to forge consensus.

"If we can not move a national energy plan now, then we ought to give up," said Illinois Representative John Shimkus, a Republican.

The Bush administration is urging Congress to pass the reliability provisions -- along with incentives for transmission infrastructure investment -- within the full energy bill, although officials say they are not sure what caused the August 14 blackout.

U.S. Energy Secretary Spencer Abraham told the committee that a joint U.S.-Canadian task force is investigating why the power outage occurred but it has not yet reached any conclusions.

"Determining the exact causes of this blackout is far too complex a task for anyone to know all the answers at this stage," Abraham said.

As many as 50 million people in eight U.S. states and the Canadian province of Ontario lost power during the blackout.

Abraham said the task force will work with governors of affected states and Ontario as well as all major entities involved with the operation of the electrical transmission infrastructure.

"We hope to have conclusions and recommendations in a matter of weeks -- not months," Abraham testified. "But we will not compromise quality for speed. We want answers quickly, but we want to make sure they are the right answers."

Theories that have circulated in the aftermath of the blackout are "only speculation at this point," Abraham said.

"Our goal is to follow the facts where they lead," Abraham said.

Some believe the facts already show the cause of the power outage. The leading theory is that a failure at an First Energy utility in Ohio began the cascade that rolled through power lines running from Ohio through Michigan, into Canada and down through New York state.

And there is little doubt that a key factor in the cascade was a lack of communication.

Michigan Governor Jennifer Granholm told the committee that her state's main utility was not made aware of events in Ohio until less than two minutes before the cascade, even though problems in Ohio emerged some 90 minutes earlier.

The partial deregulation and lack of clear oversight authority over electricity transmission in much of the Midwest and Northeast has created a situation in which "no one knows who is ultimately responsible for ensuring reliability," Granholm said.

"It would surprise many Americans to learn that there is no governmental oversight over the reliability of this country's electrical transmission system," added Peter Lark, chairman of the Michigan Public Service Commission.

There are reliability rules on the books of the North American Electric Reliability Council (NERC), a not for profit corporation comprised of all segments of the electric industry, but these are voluntary.

That situation, says Lark, "is a prescription for disaster."

Proposals in Congress to remedy this would make the rules mandatory and would expand the oversight of the Federal Energy Regulatory Commission (FERC) to ensure they are enforced.

"The power industry needs an air traffic controller," said FERC Chairman Pat Wood.

But that would only solve part of concerns that have emerged as the nation asks its aging transmission infrastructure to do a job it was not designed to carry out.

Much of the nation's transmission system was build to move electricity from massive utilities to local customers, but the grid now handles massive power transmissions that zip across the nation.

This is a lucrative business for utilities, but some argue it is putting undue pressure on the transmission infrastructure. And deregulation at the state level - prompted by a 1992 federal energy bill -- means utilities are no longer required to reinvest ratepayer money into the transmission system.

According to NERC, utilities spent some $300 million less on upgrades and maintenance to the nation's transmission system in 2000 than they did in 1990 and now have less people to carry out such projects.

Relatively few new transmission lines have been built in the past 15 years, testified Brantley Eldridge, executive manager of the East Central Area Reliability Council, even though demand for electricity continues to increase.

Experts believe the nation's grid could do with some $50 billion to $100 billion in upgrades and maintenance but there is little sign the utilities are keen to foot the bill.

There is good reason for that, says Missouri Representative Roy Blunt, a Republican.

Blunt says bureaucratic and environmental delays for grid upgrades and transmission lines make investors reluctant to fund such projects, even though utilities are guaranteed profits of some 10 to 12 percent by federal and state regulations.

"We can not expect to see the investment and commitment we need to have in power generation and power transmission unless we create some sense of certainty about what the system is going to look like," Blunt said, calling for passage of the full energy bill.

"Having an [energy] policy is more important at this point than what the policy says," Blunt said.

Abraham acknowledged that "the condition of the grid, its age and the demand being put on it creates a lot of concern," and said the administration favors incentives for investment.

Details about the administration's specific recommendations will be forthcoming as early as next week, Abraham said.

"The nation faces a broad set of energy challenges," he told the committee. "It is not just a problem with electricity transmission."

Some Democrats are wary of providing financial incentives for utilities and others to modernize the nation's power grid as they believe the costs will ultimately fall on ratepayers. Massachusetts Democrat Ed Markey says the administration should not be promoting the massive energy bill as the cure for the nation's power grid while it "remains in the dark about the causes of the blackout."

Markey, who supports the standalone reliability legislation, says the administration is using the blackout to push for the immediate adoption of an energy bill that would make "sweeping deregulatory changes in electricity law and launch a wide ranging assault on our environment in the name of increasing oil and gas production."

Even supporters of the energy bill questioned the ability of lawmakers to prevent another power outage.

"I do not know why any of us think we can write legislation to solve a problem when we do not know what caused it," said Georgia Representative Charles Norwood, a Republican.

The House Energy and Commerce Committee will conduct a second day of hearings into the blackout on Thursday.