WASHINGTON--More Power Outages Possible

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More Power Outages Possible

Story Filed: Monday, March 13, 2000 6:59 PM EST

WASHINGTON (AP) -- Rapid change in the electricity industry is causing reliability problems that could increase the likelihood of power outages this summer, Energy Secretary Bill Richardson said Monday.

He urged Congress to enact legislation that would require mandatory reliability standards for wholesale power producers to provide additional protection against power disruptions as the industry becomes more competitive.

Congress must pass legislation to restructure the electric utility industry as it becomes competitive or risk ``more long, hot summers of outages in America's cities,'' Richardson told a meeting of mayors and other local officials.

Lawmakers for several years have been considering legislation that would establish a national program of electricity industry deregulation, ending the historic monopolies utilities have had in their local service areas.

Many states already have moved toward some degree of competition, allowing consumers to choose their supplier of electricity, although the actual power still would come over the same local distribution system. National electricity deregulation bills have been stymied by disagreements among various segments of the $200 billion electric power industry, and opposition from some states where electricity already is cheap.

But an Energy Department report says the transition to competition has strained transmission and distribution lines, and caused some utilities to focus on competing for markets, cutting costs and maximizing prices, instead of assuring that power is kept flowing.

The final report was released Monday, although much of its key findings were made public in an interim document in January. Richardson said the review's findings ``conclude that without action (on the federal level) things could get worse before they get better.''

Last week, Richardson told a conference of state regulators that the system of voluntary reliability rules, established by the industry itself, is inadequate in the current competitive market system.

``We need mandatory reliability standards for (wholesale) power providers,'' Richardson reiterated Monday in his address to the National League of Cities. That would require action by Congress as part of an electricity industry restructuring bill.

Richardson also has raised concerns about large power providers manipulating prices.

Despite the movement toward competition, electricity supply in some parts of the country remains ``highly concentrated in the hands of only a few companies,'' Richardson said.

``This raises a warning flag that these companies will be able to dominate the market and raise prices,'' he recently told a conference of state utility regulators. He accused ``a handful of utilities and other organizations'' of using a ``state's rights'' argument to block federal rules needed to ensure reliability and market power abuses.

The DOE report released Monday said that while many states have made significant progress in developing competitive electricity markets, their efforts to develop market-based mechanisms to ensure against power disruptions have lagged behind.

The report was prepared by a task force, made up of power industry experts from the government and private industry. They were asked to examine power disruptions and electricity price spikes that occurred during high electricity demand last summer and how to prevent a repeat of the same problems this summer.

The incidents examined included outages last summer in Chicago, New York City, Long Island, New Jersey, parts of the mid-Atlantic states, Mississippi, Arkansas, Texas and Louisiana as well as some non-outage electricity grid disturbances in New England and the mid-Atlantic states.

Copyright ) 2000 Associated Press Information Services, all rights reserved.


-- (Dee360Degree@aol.com), March 13, 2000

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