Economist Says FERC Regulations Could Trump Texan's Efforts
WASHINGTON, D.C. - The electricity portion of the House energy bill sponsored by Rep. Joe Barton (R-TX) includes some useful deregulatory provisions, according to free-market economist Thomas M. Lenard. Unfortunately, as currently written, the legislation fails to confront a Bush Administration regulatory proposal that could render its sponsors’ electricity deregulation efforts largely irrelevant.
In a new study, “The Barton Energy Bill: A Good First Step – With a Major Caveat,” Lenard examines the measure’s electricity title using a 12-point ‘deregulatory checklist’. Lenard, a senior fellow and vice president for research at The Progress & Freedom Foundation, likes much of what he sees, but stresses the need to deal with what may be best described as an intra-party and intra-state policy collision in the making.
“The Barton bill has a number of good features and, overall, is deregulatory,” Lenard writes. “The major defect is that it is silent on the ‘elephant in the parlor’ – the highly controversial Standard Market Design proposal currently pending at the FERC.” According to Lenard, that measure “dwarfs the Barton bill in importance” and “will make much of the bill irrelevant.” The lowdown: “…the procompetitive benefits of the Barton bill will not be realized unless Congress adds language that restricts FERC’s ability to finalize its SMD proposal.”
According to Lenard, who has written extensively on energy regulation, the positive, deregulatory features of the Barton bill include repeals of PUHCA and FERC’s duplicative merger review authority, a variety of measures that would lead to “procompetitive ratemaking reforms”, provisions making participation in regional transmission organizations voluntary, and language establishing FERC authority over public power authorities (so they can be integrated into broader regional markets). In the tenth of his twelve points, Lenard argues the Barton bill could, by failing to limit FERC’s imposition of SMD regulations, allow the agency to increase its size and power and “become the centralized planning czar for the electricity sector.”
The Progress & Freedom Foundation is a market-oriented think tank that studies the impact of the digital revolution and its implications for public policy. The Foundation is a 501(c)(3) nonprofit organization founded in 1993.