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require such changes and additions in the service of any public service company as it may deem necessary, including but not limited to repairs or improvements in plant, increase in motive power and change in schedule or manner of operations."
Attached is a letter, dated September 7, 1967, from the General Counsel of NARUC.
b. Such State statutes are of limited legal effect since many State commissions have no authority over the municipally-owned, State-owned or cooperativelyowned electric utilities and no State has jurisdiction over the Federal electric utilities.
c. State authority is practically limited by interdependence of utilities in several states as a result of interconnection.
d. Active Federal-State cooperation will best promote electric reliability and is a major feature of the reliability program we propose.
2. What authority does the Commission have under Section 202 of the present Federal Power Act to improve reliability?
Answer: a. Section 202(a) provides authority to promote voluntary coordination, as the Commission has done through the National Power Survey, studies of power failures, particular interconnection studies, and the work of the Advisory Committee on Reilability of Bulk Power Supply. Although the term "reliability” does not appear in section 202(a), we believe it is a relevant consideration. The Congress there declared a national "purpose of assuring an abundant supply of electric energy throughout the United States with the greatest possible economy and with regard to the proper utilization and conservation of national resources."
The Commission is thereby authorized to establish regional districts "for the voluntary interconnection and coordination of facilities for the generation, transmission and sale of electric energy" [emphasis added], and "to promote and encourage such interconnection and coordination within each such district and between such districts". Under these provisions, utilities may disregard the Commission's urging of increased interconnections and may even decline to permit attendance by Commission representatives at coordination meetings.
b. Section 202(b) provides additional authority to require a "public utility” (but not of a Federal, municipal, state, or cooperative utility or an intrastate utility) interconnection of transmission facilities, sale of energy or exchange of energy. The authority of section 202(b) may come into play only if an application is filed either by a State commission or by any other transmitter or seller of electric energy. (Exercise of the authority is limited as described in answer to Question 3, below.) This section is of special importance to small electrically isolated systems, whether municipally, cooperatively, or privatelyowned. At the present time there are more than 250 such systems. However, few cases have been initiated or decided under this authority (none on application of a State commission). Utilities seem reluctant to resort to these provisions even though negotiations with their neighbors may drag on without tangible results.
c. Section 202 (c) provides that during wartime, power shortages, or other emergencies the Commission may require of a utility "such temporary connections of facilities and such generation, delivery, interchange, or transmission of electric energy as in its judgment will best meet the emergency and serve the public interest."
Emergency orders under section 202 (c) may be directed against an intrastate utility, but it is not clear whether they may be addressed to a public body or instrumentality exempted from regulation by section 201 (f). These provisions can be used to require temporary services in wartime and other emergency circumstances; the Commission has recently done so where an isolated utility suffered repeated power failures. Georgia Power Co., 35 FPC 629, order issued April 22. 1966. It is questionable, however, whether these provisions were intended to authorize the Commission to act generally to improve long-term reliability.
d. Section 202(e) provides for Commission regulation of exports.
e. While we are convinced that section 202 of the Act is inadequate to permit the Commission to play the full part called for to assist the industry in meeting the challenges ahead, we intend to use our existing authority fully to achieve these objectives to the extent that funds are available.
3. Is the authority presently contained in Section 202(b) of the Federal Power Act sufficient to accomplish the essential purposes of Section 411, or would it be sufficient if authority were added to Section 202(b) to permit orders on the Commission's own motion?
Answer: As the question correctly suggests, and as mentioned in the previous answer, one of the inadequacies of section 202(b) is the lack of authority in the
Commission to act on its own motion. Thus our study of the El Paso power failure of December 22, 1965, led the Commission to recommend serious study of an interconnection between El Paso Electric Company and Southwestern Public Service Company to strengthen the bulk power network serving El Paso. The companies have discussed the proposal, but no tangible results are yet forthcoming and the Commission cannot compel action despite the slow pace of purely voluntary coordination. Proposed section 411 would permit the Commission to act on its own motion in such circumstances, but this is not the only insufficiency of section 202 (b).
Proposed section 411 is patterned directly upon section 202 (b) with the following differences:
a. Under section 411 the Commission could act on its own motion, not only upon Complaint.
b. Under section 411 the Commission could require compliance by utilities exempt from Part II of the Act: i.e., municipal, state and Federal utilities, cooperatively-owned utilities, and those investor-owned utilities not engaged in interstate commerce in the statutory sense (but subject to the commerce or national defense powers of Congress under the Constitution).
e. Under section 411, Commission decisions would be governed by the objectives spelled out in section 401(b); under section 202(b) the more general “public interest" standard governs.
d. Section 411 preserves the limitation in section 202(b) that the Commission may act only when it finds that "no undue burden will be placed" by its order upon the utility. Section 411 does not repeat the additional limitation that the Commission order may not "compel the enlargement of generating facilities" Since there appears no legitimate reason for further limiting authority to act in those instances where the order imposes no undue burden. Thus the Northeast power failure illustrates how the absence of standby generating facilities to supply auxiliary station power and to maintain communications and remote control systems multiplied the duration of the outage and, in some instances, gave rise to equipment damage. In appropriate circumstances, therefore, the Commission should have power to compel non-burdensome provision of generating facilities as an incident to an interconnection order. On the other hand, section 411 also omits the further limitation in section 202(b) against requiring a utility to take steps which "would impair its ability to render adequate service to its customers." Normally, the proscription against imposing undue burdens upon the utility would also protect this objective, but it has been pointed out to us that the interests of a utility and its customers might diverge in some circumstances. Accordingly, we would have no objection to adding this explicit protection of service to existing customers to section 411.
4. In view of your support of S. 683, why are the antitrust provisions of S. 1934 limited to providing immunity only from private damage suits?
Answer: As pointed out in our letter of July 18, 1967, to Chairman Magnuson and in Chairman White's statement on August 22 (page 30), the bill was intended to immunize from private injunctions suits as well as damage suits and should be so amended. As spelled out in the discussion of antitrust problems in the statement (page 42) the differences between S. 1934 and S. 683 are intended both to meet objections previously raised to the broader immunity of the latter (in the hearings on S. 3136, 89th Congress) and to place a premium on considering the relevant issues in the regional planning process, rather than on by-passing the regional council.
5. Federal rights on right-of-ways will not arise until quite a long time after the utilities have been required to publicly identify their proposed rights-of-way. Will this increase the cost of this land?
Answer: Chairman White's prepared statement discusses the point (page 55) : "... 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 public land and water use agencies into the planning process."
Although the cost of land for rights-of-way might increase in some instances, that possible effect would not be so great as to disrupt utility economics, and in other instances we anticipate a net decrease in costs through avoidance of lastminute litigation. To the exent that rights-of-way information must be divulged early under present practice we know of no disastrous cost consequences: Such information is made public when the line involved is required to be licensed by the FPC as a primary line from a hydroelectric project and some State utility
laws also require notice. It must be kept in mind that land costs amount to but a fraction of electric utility investment. Besides, we expect countervailing savings as a result of the orderly procedure that S. 1934 would provide. Delay and litigation in the absence of such procedure, especially when they arise at the last minute, must also be counted among the expenses of securing a right-of-way.
6. The final report on the Northeast Blackout points out that the prolonged nature of the essential lead-time seriously aggravates the reliability of existing systems. Will superimposing of Commission staff review, public hearings and Commission review further aggravate this situation?
Answer: Enactment of S. 1934 would speed up, rather than delay the process. The problem would be aggravated, as was asserted during last year's hearings on S. 1472, S. 2139, and S. 2140 (89th Congress), if FPC review first began only after utility planning was completed. Indeed, too often today we see implementation of plans delayed because of last-minute disputes over transmission line routing. The planning agencies and regulatory authorities cannot do either an effective or expeditious job under present industry practices which shroud utility planning in secrecy until a fully-developed program is announced for implementation. Similarly, electric equipment manufacturers complain that the utilities are not disclosing their plans early enough to permit timely installation of manufacturing capacity. The procedures of S. 1934 would open the earlier stages of the planning process and thereby facilitate sounder and speedier decisions by all concerned. If despite all these early procedures an emergency arose threatening reliability in a particular case, section 409 (f) of S. 1934 provides an emergency procedure to waive hearings and further review.
7. Will differing standards of reliability be used for different regions?
Answer: There may be differences, if the circumstances warrant and section 408 expressly provides for that possibility. The various regions that would be set up would be defined, at least in part, on the basis of the type of problems found in different areas of the country. Some areas for example, depend heavily on their plentiful supply or hydroelectric capacity; others are primarily dependent on fuel-burning plants. The reliability standards, insofar as they were initially prepared by the regional councils, would automatically reflect these differences; and the Commission would, wherever appropriate, issue standards on a regional rather than a national basis.
8. Will you state the Commission's present opinion as to what areas should be included within the various regions in which you suggest that regional organizations be established for cordinating the planning, construction, operation and maintenance of bulk power supply systems?
Answer: We have not decided what particular areas should be included in each region. The terms of S. 1934 require that we consult extensively with utilities and State commissions before coming to any decision on that question, and naturally we would want to have all the advice we can gather from those quarters before hazarding any opinion. Chairman White's statement (page 28) gives some idea of the general criteria we would use.
9. On page 4 of the Commission's July report on the prevention of power failures you state "Achieving adequate reliability throughout the nation will engage not months, but years of concerted planning and construction. We believe the 12 recommendations which follow go to the heart of the problem." After reference to some supplemental recommendations, the report lists 12 principal conclusions and recommendations. Is it correct to assume that the attainment of those conclusion would, to the best of your present knowledge and advice, result, in due course, in the maximum feasible reliability of bulk power supplies?
Answer: The twelve recommendations mentioned are the most sweeping and significant of the total of 34 which the report sets out. The twelve are at volume I. pages 4-5; the 34 at volume I, pages 88-95. We would prefer to say that these thirty-four recommendations represent what, as far as we can see today, would be the best means of achieving the highest practicable degree of reliability (including the earliest restoration of service if a power failure occurs) and providing for continuity of essential services where a blackout occurs.
10. Can you give examples of regulations that would be appropriate to implement those various provision of S. 1934 under which the promulgation of regulations is authorized?
Answer: The Commission's general, rulemaking authority under existing section 309 would automatically carry over to the new Part IV by virtue of section 402(b). However, in a number of instances we have deemed it important to call attention to the rulemaking power to implement the statute. For example:
a. Section 404(b) specifies that statements of regional council organization and regional plans are to be filed under rules to be prescribed. Such rules might define the sort of document which rises to the status of statement of organization (see, eg., the ECAR Coordination Agreement submitted to the Committee at page 27 of Chairman White's statement) as contrasted with minor adminis trative directives. Rules might also fix the frequency with which regional plans are to be reported, as explained at page 36 of Chairman White's statement.
b. Section 407 provides for lodging of all agreements for coordination of bulk power supply with the Commission, including both agreements that must now be filed under Part II of the Act and other agreements, not now filed, such as those involving only public power utilities or utilities engaged exclusively in intrastate commerce. Rules to be promulgated under this section would include provisions to avoid double burdens in the case of agreements subject both to existing Part II and new section 407.
e. Section 409 (a) provides for regulations as to filing of proposals to construct extra-high-voltage transmission facilities. Such regulations would include specific guidance to the proponent as to the form and contents of his filings. Existing Commission regulations similarly govern the applications for hydroelectric licenses under Part I of the Power Act, applications for gas pipeline certificates under the Natural Gas Act, and rate change proposals under each of these
d. Section 413 authorizes the exemption by rule of matters otherwise subject to Part IV. As the Commission's section-by-section analysis and Chairman White's statement (page 49) point out, such a regulation might exempt an extra-highVoltage spur line, built to serve only a single industrial customer.
11. Is there any provision of S. 1934 which would authorize the Commission to decide what specific organization or agency would build a transmission line in cases where more than one agency is competing to provide such facility? If so, what criteria would the Commission use to decide between them?
Ansirer: If two utilities each propose under section 409 to build the same extra-high-voltage transmission line the Commission would have to decide where the public interest lay between them, guided by the objectives of Part IV. Hopefully, such disagreements would be rare, being resolved earlier by negotiation in the regional planning process. If some disputes cannot be thus resolved, however, it would be the Commission's responsibility under section 409 to make a decision which prevented wasteful duplication, which secured reliable planning and operation, and which economically utilized steel and aluminum, land, capital and human resources. Perhaps particularly relevant is the objective of Part IV to respect the territorial integrity of service areas so far as consistent with the public interest. It is common practice in the industry for each neighboring utility to build and own that segment of a major transmission line which lies in its own service area, and this practice might often provide a practicable method of settling competitive applications.
12. If two or more utilities each desired to build a large generating plant and only one is needed at that time to meet the area load, would S. 1934 authorize the Commission to decide between them? If so, what criteria would be used to make such decisions?
Answer: The Commission would not be authorized to decide. No section of the bill provides for FPC review of generating projects along the lines of the proposed review of EHV transmission lines. Such issues could arise in the regional planning process, and so be subject to Commission examination and comment under section 404, including the withholding of antitrust immunity if the Commission concluded that plans for ownership of a generating plant would have a substantial adverse effect on competition which would not be clearly outweighed by other public interest considerations. The Commission's persuasive role might Well influence industry ownership decisions, but the bill would not authorize the Commission to impose its own decision upon the utilities.
13. Will the Commission have any authority, direct or indirect, to enforce the execution of plans to be developed by the proposed regional counsels?
Ansicer: The Commission would not have any general authority to require execution of plans developed by the regional councils. The Commission would have special authority, however, in two respects :
a. Under section 411. the Commission might require execution of an interconnection, sale or exchange which carried out a plan developed by a regional council.
b. Under section 409, the Commission might allow construction of proposed EHV facilities only on condition that the proposal be carried out consistently with a plan developed by a regional council.
As noted in the previous answer, the Commission would also have the powers of persuasion and of withholding the antitrust immunity which might be conferred under the bill.
14. Under the new Part IV of the Federal Power Act, as provided for in this bill, how will the FPC justify jurisdiction over electric utilities operating in intrastate commerce, under present interpretations of Parts II and III of the Act, where such intrastate companies are not considered jurisdictional?
Answer: Existing Part II generally applies only to operations in insterstate commerce, but the Congress has broader power under the Constitution. Proposed Part IV would exercise the broad range of Congressional power over electric systems, reaching to operations which affect interstate commerce and operations which affect the national defense.
15. With respect to nuclear power plants, how will the exercise of FPC authority be coordinated with the AEC's regulatory powers over construction and operation of such plants?
Answer: The AEC has licensing jurisdiction over certain aspects of nuclear power plant construction. S. 1934 does not involve licensing of power plants. We anticipate that the authorities of AEC and of FPC under S. 1934 would be readily compatible.
16. What jurisdiction, if any, will this bill give to the FPC with respect to thermal pollution?
Answer: Thermal pollution would be a factor to be considered in the regional planning process under section 404, but the Commission would not have authority to regulate thermal pollution. The Commission has separately supported legislation to provide for licensing of water diversion facilities for steam-electric plants, thereby authorizing regulation of thermal pollution effects. See F.P.C., Forty-Sixth Annual Report (1967); and S. 2306 and H.R. 10701 (89th Congress). The Commission now has authority over thermal pollution matters to the extent of its jurisdiction over licensed hydroelectric projects.
17. Can you give the Committee a more explicit estimate of additional staff that will be needed to administer the bill?
Answer: The Commission is in the process of building up its staff in order to exercise fully its existing authority under the Federal Power Act. This must be a rather slow process because of the scarcity of highly trained experts in this field. Beyond the level of staff that we consider necessary to fully exercise the authority and responsibility with respect to reliability of service contained in the present Act, we estimate that a fairly substantial increase in staff would be necessary to carry out the provisions of S. 1934. The staff that would be required depends on a number of factors, not the least significant of which is the degree of cooperation that may be forthcoming from the various segments of the industry, how the regions and regional councils are set up, how the councils operate, and the extent to which we are able to utilize advisory boards, as provided in section 406. These matters are not precisely predictable at this time, but we shall work closely with the Congress to plan and pace the development of needed staff resources.
18. Do you believe it will be necessary to set electrical equipment specifications on a national basis to assure components of the required characteristics and reliability?
Answer: We doubt that it will become necessary to standardize electrical equipment components nationally. In any event, S. 1934 does not provide for such standardization.
19. Does the language in Section 401 (b), which states that "all utility systems and their customers shall have access to the benefits of coordination . . ." mean that nongenerating distribution electric utilities will be able to participate in the planning councils envisioned in this bill under Section 404?
Answer: The bill intends to furnish an opportunity for such participation and says so more explicitly in section 404 (a):
"Each regional coordination organization . . . shall be open to membership. direct or indirect, by each electric system in the region ..
We recognize that participation by nongenerating distribution utilities (and. perhaps, others of the smaller systems) may prove feasible only on a grouped basis. This is spelled out in Chairman White's statement at pages 22 and 29.
20. What will be the nature of FPC representation on regional councils as described in section 404(a)?
Answer: The FPC representative would participate in the work of the regional council in much the same way as other members. He would not be empowered to