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eriteria has been vested almost exclusively in utility managements despite the vital public stake in the matter. We believe that now is the time for State and Federal Governments to focus upon their appropriate responsibilities.
Design of particular facilities should remain completely outside the scope of this bill. Even the planning decisions, although influenced by Commission responsibilities under other parts of S. 1934, would not be controlled by the reliability criteria prescribed under section 408 since the criteria would have to be of general applicability and could therefore be satisfied by more than one alternative plan. We have been asked whether section 408 might authorize not only those reasonable regulations which enhanced reliable system planning and operation, but also any other reasonable regulations which accord with the overall objectives of the statute, as summarized in section 401(b)-even regulations unrelated to reliability. We do not believe section 408 goes that far; certainly that is not our intent. Section 408 is restricted to reliability criteria, and is further restricted in that the regulations must not only be reasonable but also in accordance with the statutory objectives. The reason for a further restriction is to make clear that reliability regulation is a balancing process in which public policy must decide whether an increment in reliability is worth the price of dollars, natural resources, or the like.
REGIONAL COUNCIL PLANS
The regional councils are to develop plans for regional and interregional coordination. This aspect of the bill has raised a number of questions: We expect that the regional council and its staff will coordinate plan and studies of the member utilities and have general oversight of the necessary testing and critical review to assure prosecution of reliable system expansion plans. We would not normally expect the regional council to originate and work out detailed plans, although it would likely suggest basic regional requirements and planning possibilities and would arrange for these matters to be explored by one or more member utilities (or adjacent utilities in another region). An illustration may help: Volume III of our Final Report to the President includes a critique by the Commission's Advisory Panel on the Northeast Power Interruption. Among other things the Panel suggests (pages 5-6):
that further consideration be given to additional interconnections, particularly to the south and west from upper New York State. This judgment was arrived at by noting the future proposed 345-kv. and 500-kv. developments in this and adjacent areas. While the Panel is in no position to determine whether such lines are essential, it, nevertheless, believes that any additional reinforcing ties of this type would contribute greatly to the overall reliability of the area, particularly because of the area's somewhat radial relationship to the systems to the south and west.
The Panel's suggestion to the New York utilities and their neighbors hardly amounts to original planning; certainly no member of the Panel purports to have come up with a master plan. Yet the suggestion is a preliminary step in the planning process, intended to encourage the particular utilities to study and possibly take action. We would expect the regional council staffs, and the Commission representatives to raise similar questions. The latter, at least, should be empowered to require a response to suggestions, including genuine confrontation and discussion of issues raised. Eventually, in some instances. the role of a regional council and its staff may evolve beyond the review and recommendation function spelled out above. The extent to which such evolutions take place will depend largely upon the people who become involved in the regional council work and upon the degrees of mutual confidence that member utilities develop. Nothing in the bill forbids such evolution toward a stronger regional pooling mechanism; but by the same token, nothing requires it.
Another significant function of the regional councils under the bill would be to assure the planning needed to prevent power shortages in addition to dealing with problems of system reliability against widespread failures. One function would be to secure the best and most comprehensive load forecasts possible. Load forecasting is particularly important in avoiding "brownouts"--power shortages. like the St. Louis situation I spoke of earlier. These failures, which are as much a matter of concern to the reliability planner as sudden, unforeseen interruptions. are not amenable to rapid correction. By their nature, they require new construction rather than repairs which may take only a few hours. Preventing these shortages requires an accurate prediction of demand, and a detailed knowledge of what assistance can be expected from neighboring systems. It is a type
of planning which I believe can be done much better with the assistance of a regional organization than by the action of individual systems.
Studies of the stability of existing facilities under a wide variety of contingencies are equally vital if we are to attain a high standard of reliability. The advent of sophiscated computers has been of tremendous assistance to the utility industry in conducting these studies. When computer studies are made of existing facilities, their weaknesses can be learned and the proper corrective measures-including additional construction if necessary-decided upon. In this way, a regional council, acting on the results of a region-wide survey of the strengths and weaknesses of its members' facilities, can assist the individual systems to arrive at a better scheme of priorities for new construction as well as suggesting useful modifications to the planned facilities. The studies made by regional councils can also help determine what facilities are likely to be most needed and most dependable in the future. It is possible, using computers, to evaluate facilities which exist only on paper from the point of view of stability under various defined contingencies. The results of such studies, in the hands of the individual systems or local power pools, would reveal weaknesses and guide the planning of future construction.
From time to time the council will reduce a composite plan for generation and transmission facilities to writing. The planning process is continuous and utility planning experts repeatedly revise their proposals so that the councils will have to select fixed times for recording and revising regional plans, subject to immediate revision if the magnitude of a particular new project calls for immediate attention by all. The planning process is also geographically intricate since the planning area may, at the same time, be one company for some purposes, a small power pool for others, and a reliability region for yet others. The functioning of regional councils should improve communication among the planners within the region and this, alone, should open up alternatives which might otherwise not be considered at all from a narrower planning horizon.
The regional councils will be expected to come up with plans (perhaps once each year) which attempt to live up to all the objectives of reliability, abundant supply, economy, efficiency, conservation of natural resources, and fair dealing among rival utilities. In case of conflicts, their first obligation should be to reliability.
REGIONAL POWER NEEDS AND THE ENVIRONMENT
The critical need for strong transmission systems seems more and more to be opposed to public desires to promote conservation. Reliability can be jeopardized by delays in the construction of transmission lines due to inadequate mechanisms for evaluation and reconciliation between our demand for power and our need to preserve our natural environment. This issue is becoming more and more important in utility planning. S. 1934 can serve as a means of solving problems that are very likely to invite legislative attention by themselves, and to do so in such a way as to minimize conflicts between our various social goals.
In some cases, utilities have made commendable efforts to accommodate their own requirements to the public demand for preservation of scenic beauty, historic areas, and residential neighborhoods. In Woodside, California, for example, the Pacific Gas & Electric Company and the Atomic Energy Commission faced heated opposition to the construction of a major power line. Underground construction proved to be impracticable. Yet, thoughtful routing and determined effort to make the facility inconspicuous have made the project much more acceptable to the public than seemed possible when it was first proposed.
In some cases, unfortunately, utilities have tried to present the public with a fait accompli; to avoid rather than solve the problem. We expect public concern for the preservation of our environment to continue to grow, and we trust that the power industry and the government will pay increasing attention to the problem. I believe that the regional councils, as well as other provisions of this bill, will be a useful means of reaching the necessary accommodations.
In time, we hope that regional councils will be working closely with State and Federal agencies concerned with land and water use in order to facilitate early competent consideration of environmental issues which now, too often, wait for the last minute, if they are reviewed at all. The list of potential problems is formidable: placement of transmission lines is a major issue today and will no doubt continue to be one; location of generating stations raises questions of air pollution, disposal of solid wastes, and thermal pollution of waterways; and hydroelectric development can raise thorny problems of wildlife preservation
and conservation of scenic areas. As matters now stand, our mechanisms for review of such issues satisfy neither the utility's urgent need to maintain construction timetables nor society's need for conservation. The P-J-M Power Failure illustrates how hearings long after a transmission plan has been developed can delay vital facilities. What we desperately need, for reliability as well as conservation, is a procedure to permit thorough consideration of these issues in the planning process, coupled with effective public review at an early stage, as provided by section 410 of the bill. We recognize that earlier disclosure of utility plans may increase land acquisition costs. But we conclude that it is well worth that price to secure earlier consideration of the basic issues. We believe the utility industry should accept a duty to draw affected parties and the public land and water use agencies into the planning process.
The councils would provide an opportunity for discussion of land use issues arising from the construction of new facilities at a time when construction plans are still flexible. Much acrimony that sometimes surrounds these problems today results neither from the intransigence of conservation interests nor from the callousness of utility managers, but from delay in bringing the issue into the open until a late stage in the development of the project. Plans have been made final, much of the right-of-way may have been purchased, and the project is often an urgent necessity in terms of ability to serve customers. If the potential land use problems can be exposed and at least preliminarily discussed in the regional planning process, they may be more easily solved.
REGIONAL POWER PLANNING AND MANUFACTURERS' LEAD TIME
More information, which the regional councils can provide, will help manufacturers of generating and transmission equipment to plan ahead and thereby cut down the delays in meeting orders. The point is illustrated by comments reported by Electrical World magazine [June 12, 1967, page 151, et seq.] from a panel discussion on manufacturers' lead time at this year's meeting of the Edison Electric Institute Purchasing and Stores Committee. Asked why the insulator industry was not better prepared for the heavy influx of EHV orders despite the publicity given EHV during the past five years, panelists explained:
True, there was much discussion of EHV. Today there is similar talk of DC and URD. In neither case, however, has the electric utility industry made any attempt to present the total needs or to project their effect, so, in the case of EHV, there was no way to estimate total EHV demand.
The delays in securing EHV insulation equipment have been a major factor affecting completion of the Pacific Northwest-Southwest Intertie. Electrical World goes on:
One panelist put it this way: "In the past, utilities have been overly protective of their expansion plans. The manufacturer needs insight into plans on quantity of units, kva, voltages, LTC or non-LTC if he is to properly design production facilities. . . ."
Asked for the most effective step the utility industry could employ, one panelist responded:
"We need estimates of miles of new construction and miles to be re-insulated as far in advance as they can be predicted with reasonable accuracy. It would be helpful if plans could be reported accurately and regularly, in advance of public announcement, to an independent gathering source. . .
STATUS OF REGIONAL COUNCIL PLANS AND COMMISSION REVIEW
Under section 404 (b) the Commission would be directed to consider plans submitted to it by a regional council in the exercise of its responsibilities under the entire Federal Power Act, including the hydroelectric licensing provisions of Part I, the wholesale rate and compulsory interconnection provisions of Part II. and the proposed EHV review provisions of Part IV. The purpose is to give the pre-regulatory planning process status in administrative proceedings thus shifting some of the determinations from an adversary framework to a coordinative framework.
The planning documents submitted by the regional councils would have statutory status even before being reviewed by the Commission; but the Commission would be required to give public notice of the filing of such regional (or interregional) plans and could review such plans. Review would involve opportunity for hearing and the safeguards of judicial review. The standards of review would
be two-fold: First, consistency with the objectives of Part IV, spelled out in section 401 (b); second, one of two tests as to the restraints upon competition which may be reflected in the regional plan:
(i) will the effect of the regional council plan upon competition be insubstantial? or, if not,
(ii) will the effect of the regional council plan on competition be clearly outweighed by other public interest considerations?
If the Commission approves the plan under these tests then it may confer two benefits: antitrust immunity, limited as described below, for actions taken pursuant to the plan; and the possibility of rapid Commission sanction of any EHV proposal consistent with that plan six months after acceptance of the filing under section 409 of the bill. No utility would be directly required, as a matter of law, to comply with the approved plan, and even at the time of review of EHV proposals the proponent would be free to urge the superiority of his proposal even though inconsistent with the plan. As a practical matter, because of public opinion, however, we would expect that each utility in the region would feel itself under a heavy obligation to explain to its customers, stockholders, State commission, and other interested parties any substantial deviation from the approved plan.
If the Commission disapproved the plan, it might modify it or set it aside. Such action would end the regulatory status of the initial plan; end its antitrust immunity; and end the procedural advantage to proponents of EHV facilities consistent with the initial plan. On the other hand, utilities in the region would be free to adhere to the initial plan, subject only to the need to secure review of EHV proposals.
No formal Commission action under section 404, whether in approval, disapproval or modification of a plan may require any utility (or utilities) to build a generator, to scale a generator to the size favored by the Commission, or to share in the ownership of a generator. We have been urged that the bill should deal with the current problem of co-ownership of large steam units, particularly nuclear units. This the bill does not do.
The last subsection of section 404 would permit the Commission, after compliance with procedural due process and subject to court review, to require participation in the creation of a regional council or in effective coordination, if a system unreasonably refused to do so. This means compulsion to plan, not compulsion to build. I do not believe this subsection would have to be used often, if at all. The benefits to be gained by the regional councils embodied in this bill so far outweigh the expenses and occasional necessities for compromise among systems that there should be almost 100 percent cooperation. This subsection does, I believe, provide a useful spur to cooperation in joint planning, by helping ensure that it will not be crippled by the refusal of some systems to participate.
This Committee has studied the antitrust problem in last year's hearings on S. 3136 (89th Congress) and in this year's hearing on S. 683.
The provision of antitrust immunity, both for the organization of the councils themselves and for the plans they develop, is designed to avoid delay in the progress of coordination, without sacrificing public control over anticompetitive behavior. For this reason, it is limited in two ways. Before any immunity can be granted, the Commission must find the effect of the organization statement or regional plan upon competition will be "insubstantial or *** clearly outweighed by other public interest considerations." If that finding is made, the immunity granted will apply to actions for treble or regular damages or injunctive relief. except that the authority of the Antitrust Division of the Justice Department will remain unaffected. We believe that this will adequately protect the regional councils and their plans from suits brought primarily for the purpose of stalling a plan, adopted after proper consideration by the council and approved by the Commission, but for some reason unsatisfactory to a single party. On the other hand, the chance of really harmful anticompetitive behavior-a chance we believe is very slight-will continue to be guarded against by the power of the Attorney General to bring suit at the instance of the Antitrust Division. Since the regional council itself would be open to every utility in the region, it is most probable that any possibly restrictive provisions in a regional plan would be fully exposed and corrected before the plan was adopted. For this reason, the immunity would extend only to actions taken pursuant to the regional plans; that is, to arrangements which the regional council had in fact sanctioned. A broader immunity
might have the unfortunate effect of making it equally possible to achieve security from antitrust suits without going through the regional council's procedures, a course we believe is fundamentally inconsistent with the purposes of the Reliability Act. Of course, there will be scope for agreements between individual companies or groups not encompassed within the regional plan, but to the extent they are consistent therewith it seems likely that they will not raise important antitrust questions. Otherwise we would expect the affected utilities to desire and secure regional council attention to the problem.
EXTRA-HIGH-VOLTAGE TRANSMISSION REVIEW
Transmission lines are the key to improved reliability and a sound transmission network is the best insurance against blackouts and power shortages. For that reason, transmission projects receive special attention in the proposed Reliability Act.
There is perhaps much in section 409 of this bill which will be familiar to members of the Committee from their previous consideration of EHV certification bills during the hearings in the 89th Congress on Senator Metcalf's bill, S. 1472 (reintroduced by Senator Metcalf this year as S. 1834) and the Commission's two proposals, S. 2139 and S. 2140 (the latter has been reintroduced by Senator Metcalf this year as S. 1835). I hope that the changes we have made in the procedures and requirements that were before the Committee at last year's hearings chaired by Senator Neuberger will be recognizable as improvements, responsive to the suggestions raised at that time. The functions of EHV regulation in the present bill, however, are much the same as in past proposals. It is designed to assure the adequacy of proposed transmission facilities, both for the proponent's own purposes and for the needs of any other system that logically should participate in the costs and benefits of the project and wishes to do so. It is increasingly necessary, because of the need to conserve land and the higher cost of high-capacity transmission facilities, that the widest possible use be made of each new facility. To this end, EHV regulation under section 409 would seek to ensure that every system that could usefully participate in the construction and use of an EHV project, and wished to do so, would have the opportunity. This encouragement of common use of transmission projects would also serve to prevent duplicative construction and consequent waste of materials, labor, and land. Conservation of land, scenic and historic areas, and recreational resources can also be promoted by EHV review, and the participation of these interests in the reviewing process can help us achieve a satisfactory reconciliation of power needs with the public interest in wise use of land. There are other issues which may need to be considered in a proceeding under section 409. For instance, it may benefit a particular region to build an EHV direct-current transmission project. On the other hand, if DC ground return currents would have a serious corrosive effect on buried pipelines, that fact should fully be taken into consideration and the problem solved in planning the transmission project. Thus FPC review under section 409 would permit exposure and solution of nonpower impacts as well as an evaluation of the project from a power engineering standpoint.
One of our primary objectives in drafting section 409 was the avoidance of delay. The problems of administrative delay were much discussed in the hearings on EHV regulation in the 89th Congress. We have tried in this version of EHV review to reduce the amount of time required to the minimum consistent with the objects of this section.
Two years before it intended to begin construction, a utility would file with the Commission a proposal giving sufficient information about the EHV project (including its route) to allow the Commission to determine whether it was consistent with the objectives of Part IV and with a plan developed by a regional council. In many cases, I believe, the proposal would be submitted as a direct result of the regional planning process; that is, it might be agreed within the regional council, and incorporated in the regional plan, that the proponent was to build this particular segment of line. The filing would also state whether the proponent intended to use the right-of-way provisions of section 409 (e).
There would be an immediate 6-month moratorium on construction after acceptance of the filing. This in itself would be no additional delay, since the filing would antedate the beginning of construction by two years. Within that six months, the Commission would evaluate the proposal and before the six months expired, it could issue an order suspending construction on the grounds that the project was inconsistent with an approved regional plan or appears not to be