[Congressional Record (Bound Edition), Volume 146 (2000), Part 9]
[Senate]
[Pages 13414-13416]
[From the U.S. Government Publishing Office, www.gpo.gov]



                     ELECTRIC RELIABILITY 2000 ACT

  Mr. LOTT. Mr. President, I ask unanimous consent that the Senate 
proceed to the consideration of Calendar No. 642, S. 2071.
  The PRESIDING OFFICER. The clerk will report the bill by title.
  The legislative clerk read as follows:

       A bill (S. 2071) to benefit electricity consumers by 
     promoting the reliability of the bulk-power system.

  There being no objection, the Senate proceeded to consider the bill 
which had been reported from the Committee on Energy and Natural 
Resources with an amendment, as follows:
  (The amendment will be printed in a future edition of the Record.)
  Mr. GORTON. Mr. President, today I urge the Senate to unanimously 
adopt S. 2071, my bill also known as ``the Electric Reliability 2000 
Act.'' The bill consists of a striking amendment adopted in the Energy 
Committee and sponsored by Senators Murkowski, Bingaman, and myself. It 
includes the original legislation and compromise language that 
addresses the concerns of the States on this issue.
  We should be pro-active in addressing electricity reliability, and S. 
2071 is the correct approach at this time. The language has been 
endorsed by all of the major groups associated with the electricity 
industry, including investor-owned utilities, public power, rural 
cooperatives, states groups, reliability groups, power producers, and 
consumer organizations. Not only does this bill provide a long-term 
solution to electricity reliability by creating a national reliability 
organization--modeled loosely on the Securities and Exchange 
Commission--it will give the Federal Energy Regulatory Commission 
immediate authority to prevent blackouts this summer.
  Enacting S. 2071 is critical for all electricity consumers in the 
United States. This Nation's interstate electric transmission system is 
an extremely complex network that connects with Canada and Mexico. It 
developed over decades with various voluntary agreements that allow 
areas to work together depending on changing power needs that vary from 
minute to minute. Yet a fundamental change has made this voluntary 
system unworkable. The system of buying and selling wholesale power is 
now many times more complex than it was just a decade ago. With a 
stronger economy, electricity usage and its importance to the economy 
has increased. Due to the uncertain nature of evolving retail and 
wholesale electricity markets, many utilities have cut investment that 
traditionally enhanced the reliability of the nation's grid.
  The fact is that the voluntary agreements just do not work any longer 
because there is no enforcement. With the beginning of competition, we 
need a referee on the bulk-power system. A multitude of studies and 
incidents over the past several years show that the Nation's 
reliability is at its lowest point in decades. Certain entities can 
``game'' the transmission system--with potential of causing brownouts 
and blackouts within a region--and suffer no consequences for such 
actions. With continued extreme heat predicted for this summer, the 
problem will continue. Blackouts hit the San Francisco area and Detroit 
in the past month, and even the Northwest is facing shortages this 
summer.
  As I said in February when I introduced this bill, reliability is 
more than creating legally-enforceable rules on the electricity 
transmission grid. It also includes cost-effective conservation and 
demand-side management. Reliability will be enhanced with open-access 
transmission policies and with more generation distributed throughout 
the grid, whether it is small fuel cells or larger plants with clean 
technology. Sending the right signals to the investment community will 
be aided by passage of a truly comprehensive bill next year that allows 
all regions of the country--including the Northwest--the ability to 
benefit from a truly open and competitive marketplace. All of these 
factors, along with S. 2071, contribute to electricity reliability.
  The Electric Reliability 2000 Act is not a total solution to the 
electricity reliability problem in this nation, but it is a solid 
start. Enacting this legislation will have immediate benefits for 
American consumers and the economy of the United States.
  Mr. MURKOWSKI. Mr. President, I rise in support of S. 2071.
  S. 2071 will promote the reliability of our electric power grid.
  I strongly support the enactment of this legislation, but there 
should be no misunderstanding that it does only part of the job of 
protecting consumers.
  It establishes enforceable rules for the use of the interstate 
transmission grid, but it does not stimulate the construction of new 
generation and transmission.
  New transmission and generation are essential if we are going to 
avoid electricity shortages this summer and in the future.

[[Page 13415]]

  While it is too late to avoid the problems this summer, if we start 
now it is not too late for the future.
  The best way to ensure that consumers have a reliable and reasonably-
priced supply of electricity is through comprehensive legislation--
which addresses other impediments to competition.
  Along with provisions to stimulate construction of new generation and 
transmission, it is essential that we repeal both the Public Utility 
Holding Company Act, PUHCA, and the Public Utility Regulatory Policies 
Act, PURPA.
  Both PUHCA and PURPA have long out-lived their usefulness, and they 
are now hurting both consumers and competition.
  PUHCA prevents electric utilities and others from fully competing in 
the electric power market, and that hurts competition.
  PUHCA is an archaic 65-year-old law that has long outlived its 
usefulness.
  Sixty five years ago PUHCA was needed to protect consumers, but other 
laws and Federal agencies now fully protect consumers.
  Thus, repeal of PUHCA would benefit consumers by enhancing 
competition without any loss of any needed consumer protections.
  Legislation to repeal PUHCA is on the Senate Calendar, S. 313, 
Calendar No. 23, and I would urge that the Senate move to its 
consideration.
  Turning now to PURPA, it also harms consumers, and thus deserves to 
be repealed.
  PURPA makes electric utilities purchase power whether or not they 
need it, and to pay so-called ``full avoided cost'' for that power 
whether or not that price is above true market price. And these costs 
are just passed on to consumers through higher electricity prices.
  It is estimated that as a result of PURPA consumers are today paying 
$8 billion per year extra for their electricity.
  I would have liked to bring to the floor comprehensive legislation, 
such as the bill which I introduced, S. 2098, but I could not reach 
agreement with my Democratic colleagues on the Committee.
  As a result, we were able to report only this more limited measure to 
create rules of the road for our interstate electricity transmission 
grid.
  I will now discuss the background and need for this legislation.
  The Nation's interstate electric transmission grid is an extremely 
complex network that is also interconnected with the transmission grids 
of Canada and Mexico.
  It has developed over decades with various voluntary agreements 
between utilities and others that allow areas to work together to 
respond to changing power needs that vary from day-to-day, hour-to-hour 
and even minute-to-minute.
  Many of these voluntary agreements were developed after a disastrous 
event in 1965 that led to a major blackout in New York City and 
throughout other parts of the Northeast.
  While this voluntary system has worked well for the past 35 years, 
fundamental changes in the electric power industry are making this 
voluntary system less workable for the future.
  With the expansion of competition in the wholesale electric power 
market--starting with the 1992 Energy Policy Act--the system of buying 
and selling wholesale power is now many times more complex than it was 
less than a decade ago.
  With a stronger economy, electricity usage has increased while 
thousands of new electricity marketers and buyers have created new 
stresses on the system.
  Moreover, the emergence of competition in the wholesale power market 
has changed the ability and willingness of market participants to act 
voluntarily, particularly when it is not in their economic interest to 
do so.
  As a result, the existing scheme of voluntary compliance with 
voluntary industry reliability rules is simply no longer adequate.
  There has been a marked increase in the number and seriousness of 
violations of voluntary reliability rules.
  Under a voluntary system, there is no penalty for violating a 
reliability standard.
  The users and operators of the system, who used to cooperate 
voluntarily on reliability matters, are now competitors without the 
same incentives to cooperate with each other or comply with voluntary 
reliability rules.
  For example, last summer during an extremely hot period one Midwest 
utility took without any penalty electric power from the grid that it 
was not entitled to.
  It did so without even informing other utilities on the grid what it 
was doing.
  This action came close to jeopardizing power reliability in several 
States.
  This legislation will prevent that kind of inappropriate activity in 
the future.
  In order to maintain grid reliability, rules must be made mandatory 
and enforceable, and fairly applied to all participants in the 
electricity market.
  To address this need, more than a year ago a group of electricity 
industry officials began meeting to develop legislative language.
  As a result of this effort, the North American Electric Reliability 
Council and a broad coalition of industry organizations have jointly 
proposed the language which is embodied in S. 2071.
  The legislation is supported by virtually all aspects of the electric 
power industry, including: the American Public Power Association, the 
Edison Electric Institute, the Electric Power Supply Association, the 
Electricity Consumers Resource Council, the National Rural Electric 
Cooperative Association, and the Canadian Electricity Association.
  The proposal follows the model of the Securities and Exchange 
Commission in its oversight of the securities industry's self-
regulatory organizations--the stock exchanges and the National 
Association of Securities Dealers.
  Let me now describe the key elements of S. 2071.
  S. 2071 helps protect grid reliability by creating an industry-run, 
FERC overseen, organization that sets enforceable rules for the use of 
the interstate transmission grid.
  It also has provisions to ensure that States have an appropriate role 
in promoting reliability.
  S. 2071 authorizes the establishment of a self-regulating Electric 
Reliability Organization.
  Both the establishment of the Electric Reliability Organization and 
the reliability rules it establishes are subject to approval and 
oversight by the FERC.
  The legislation spells out specific criteria required for the new 
Electric Reliability Organization. In essence, the requirements are 
that the Organization be independent and fair.
  The Electric Reliability Organization would establish, monitor and 
enforce compliance with reliability standards for the interstate bulk 
power system.
  The legislation does not give the Electric Reliability Organization 
or any affiliated regional reliability entity any authority to build or 
to pay for the building of any transmission or other facility necessary 
for a bulk power user to comply with a reliability requirement.
  The reliability standards established by the Electric Reliability 
Organization would be mandatory on all owners, users and operators of 
the interstate bulk power system.
  The cost of complying with a reliability requirement is the 
responsibility of bulk power users, not the Electric Reliability 
Organization or any affiliated regional reliability entity.
  The reliability standards only concern the operational security of 
the bulk power system. They do not deal with generation adequacy, 
reserve margins; distribution system reliability; safety; transmission 
siting; or retail customer choice plans.
  Activities conducted in compliance with the statutory requirements 
receive a rebuttable presumption of compliance with the Federal 
antitrust laws.
  Until the new Electric Reliability Organization is up and running, 
the existing North American Electric Reliability Council and its 
individual regional reliability councils may file

[[Page 13416]]

with FERC those existing reliability standards they propose to be 
mandatory in the interim.
  The Electric Reliability Organization may delegate authority to 
implement and enforce regional standards to an Affiliated Regional 
Reliability Entity, which can enforce reliability standards and take 
disciplinary action against system operators and users.
  As I said before, the real way to prevent brownouts and blackouts is 
through comprehensive legislation that stimulates the construction of 
new generation and transmission.
  This legislation will help, but much, much more needs to be done.
  I urge my colleagues to support this legislation and to pass it 
without amendment.
  Mr. SMITH of New Hampshire. Mr. President, I commend the chairman of 
the Committee on Energy and Natural Resources on this important piece 
of legislation. I believe that this legislation, and the electric 
reliability organizations created by this legislation, will 
significantly improve the reliability of our transmission system. I 
understand that a question has been raised, however, about the 
potential scope of authority of these electric reliability 
organizations and specifically their authority to waive environmental 
requirements. I would like to seek clarification of this issue. It is 
my understanding that nothing in this legislation in any way waives or 
modifies any environmental requirements, or exempts any facilities 
covered by the bill from any otherwise applicable federal or State 
environmental law or regulations, including the requirements of the 
Clean Air Act, the Clean Water Act, the Resource Conservation and 
Recovery Act, the Endangered Species Act, or any other environmental 
law.
  Mr. BAUCUS. Mr. President, I share the concerns that have been raised 
about the potential scope of authority of the electric reliability 
organizations and would also seek clarification on this point. It is my 
understanding that in addition to not diminishing or affecting any 
environmental obligations, this legislation does not authorize the 
electric reliability organizations to direct or authorize any covered 
facility to violate or disregard the requirements of any Federal or 
State environmental law or regulation.
  Mr. MURKOWSKI. Mr. President, the chairman and ranking member of the 
Committee on Environment and Public Works are both correct that the 
legislation will not affect or modify any requirements of our important 
environmental laws or authorize the electric reliability organizations 
to waive or modify those requirements.
  Mr. BINGAMAN. Mr. President, I concur with the clarification by the 
chairman.
  Mr. SMITH of New Hampshire. I thank the chairman for this important 
clarification.
  Mr. BAUCUS. I also thank the chairman for his clarification.
  Mr. LOTT. Mr. President, I ask unanimous consent that the committee 
amendment in the nature of a substitute be agreed to.
  The committee amendment in the nature of a substitute was agreed to.
  Mr. LOTT. Mr. President, I ask unanimous consent that the bill be 
read a third time and passed, as amended, the motion to reconsider be 
laid upon the table, and any statements relating to the bill be printed 
in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The bill (S. 2071), as amended, was read the third time and passed.

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