Energy Bill Includes Most
Significant Changes to Energy Law in 70 Years, Kelliher Says
Federal Energy Regulatory
Commission (FERC) Chairman Joseph Kelliher has stated that the federal
energy bill's provisions involve the most significant changes since the Federal
Power Act of 1935 and the Natural Gas Act of 1938. Among those new
responsibilities is overseeing the reliability of the nation’s electricity
transmission grid. Congress has directed FERC to finalize within 180 days new
rules establishing an enforceable framework of mandatory power-grid reliability
rules. The law also gives the FERC new "backstop authority" responsibility to
site power-transmission facilities in "national interest electric transmission
corridors." The commission must adopt rules regarding permit applications for
transmission facilities and long-term transmission rights, and providing
incentive-based rates to promote transmission investment. The energy bill also
repeals the 1935 Public Utility Holding Company Act (PUHCA), creating new
mandates for the FERC to issue rules addressing access to utility holding
company books and records.
"We are optimistic that PUHCA repeal will bring sorely needed new avenues of
capital investment into the U.S. electricity sector, particularly for the
transmission grid where investment has been lagging growth for years," Kelliher
said, noting that PUHCA had served to blunt electricity market entry by certain
well-capitalized companies and industry sectors. "While time will tell whether
or not PUHCA repeal results in a significant uptick in mergers and acquisitions,
I am nonetheless gratified that Congress saw fit to reinforce FERC's
merger-review authority, particularly with regard to generation-only
transactions. This added merger-review authority will strengthen the
Commission's ability to prevent the exercise of market power," he observed.
Kelliher also applauded Congress for granting FERC additional tools to prevent
market manipulation. "Congress acted to prevent market manipulation by
establishing an express prohibition of market manipulation and giving the
Commission the ability to act swiftly to bar and sanction manipulative
practices," he said. "We felt these new tools were necessary to enable us to
respond to the changes that have occurred in electricity and gas markets since
the 1930s. Congress apparently agreed."
The energy bill includes provisions addressing price transparency in electric
and natural gas-markets, and significantly revises FERC’s enforcement and civil
penalties authorities. "Putting FERC’s civil-penalty muscle on par with those of
other federal agencies should be a significant deterrent to any repeat of the
sort of unscrupulous behavior that occurred during the Western energy crisis in
2000 and 2001," Kelleher observed.
Kelliher noted that FERC is actively working with other federal agencies, such
as the U.S. Department of Energy, in the implementation of the new law, which
includes inter-agency studies and reports mandated by Congress. A fact sheet
summarizing the FERC's obligations under the new law is available at
www.ferc.gov.
(Source: FERC news release, 8/8/05)