PRESENT LAW-CONGRESSIONAL INTENT The proposed legislation would grant sweeping powers to the FPC and would repeal by implication the present expression of Congressional intent to retain in the states their traditional powers of regulation. Congress very clearly expressed its intent to grant only limited powers to the FPC in Section 201 (a) which reads in part that "such Federal regulation, however, to extend only to those matters which are not subject to regulation by the States." PRESENT AUTHORITY Sections 202, 203, 204, 205, 206 and 207 now provide considerable authority to the FPC. For example, the emergency powers contained in Section 202(c) permit the FPC to act on its own motion to declare an emergency. The Commission did exercise the power recently in the Georgia Power Co. case where Georgia had repeated power failures. It is suggested that it is not necessary for the FPC to wait for repeated power failures to invoke its emergency power. CONCLUSIONS AND RECOMMENDATIONS The inconveniences and public concern over the Northeast Blackout and the P.J.M. power failure are fully understandable. The desire of the congress and the FPC to preclude a recurrence is appreciated, yet it is the California Commission's appraisal that the solutions proposed by the various Electric Reliability Acts are misplaced. Transmission failures typically represent a small fraction of power outages. An analysis of interruptions of the major California electric utilities indicates that such interruptions aggregate from 40 to 80 customer minutes per customer per year. Of this amount only about one customer minute per customer per year can be attributable to high volage transmission line failures. The bulk of electric system interruptions relate to failure of low voltage distribution facilities. The proposed legislation may render the difficulties more serious, by concentrating on transmission and organizing the entire electric power industry around large scale grids and interregional power ties to the neglect of load center generation and proper assumption of individual utility responsibility. It is suggested that, in lieu of adding a new, untried part, which has built-in conflicts with the present Act, the Commission now has authority to insure reliability. The States are just as much interested in avoiding power failures as is the Congress and the FPC, and we are sure that the States would cooperate with the FPC wherever and whenever requested to insure adequacy of service. The California Commission's analysis shows that the present law includes broad powers, some of which could be used more imaginatively as adverted to above, which constitute a basis for implementation of a program similar to that conducted successfully in California. Rather than enacting a new part, it is suggested that a section-by-section analysis of the present law be made to determine specifically wherein it is deficient to meet present-day conditions and problems. The California Commission believes the FPC can accomplish much more than has been accomplished under its emergency powers since it has jurisdiction to declare what constitutes an emergency under its powers of suspension of rates, schedules and service and through cooperation with the states under Sections 202(b) and 207. The California Commission would have no objection to the FPC being specifically permitted to act on its own motion under Section 202(b) and 207 assuming the FPC cannot exercise its emergency powers, cannot effectively act under its power to suspend rates, or cannot establish a cooperative effort with the States in this area. The present law is well established, understood by the industry and the regulators, and has been interpreted by judicial decision. It thus affords a sound basis for insuring reliability. Amendments to particular sections appear to be the more logical approach, rather than enactment of a new, separate section which will raise additional problems of its own. The California Commission recognizes the necessity for proper regulation of electric reliability. It is respectfully urged, however, that many matters of elec tric power supply are matters of local concern and subject to regulation by the States. It is believed that the regulation of electric reliability can be effective under a statutory scheme that provides for federal regulation only where state regulation is nonexistent. The Congress of the United States recognizes the value of state regulation in the Natural Gas Act and throughout the Federal Power Act. These clearly defined boundaries were wisely provided by Congress. The California Public Utilities Commission strongly recommends that the Congress continue the clear distinction in the present law which provides for federal regulation only where state regulation is nonexistent. CALIFORNIA PUBLIC UTILITIES COMMISSION'S AUTHORITY AND PRACTICES IN The California Commission's power to regulate public utilities stems from Article XII, Sections 22 and 23 of the Constitution of the State of California. Section 23 declares, among other things, that "Every private corporation, and every individual owning, operating, managing, or controlling any commercial . . . plant or equipment within this State, for . . . the production, generation, transmission, delivery or furnishing of either directly or indirectly, to or for the public, is hereby declared to be a public utility subject to such control and regulation by the Railroad Commission as may be provided by the Legislature power Various sections of the Public Utilities Code, set forth below, represent the legislative implementation of the Constitutional powers granted in Article XII, Section 22, pertaining to electric utilities. Section 216 defines public utilities as including, among others, electrical corporations and declares them to be subject to the Commission's jurisdiction, control and regulation. Sections 217 and 218 define "electric plant" and "electrical corporation," respectively. Section 451 declares that a public utility's charges must be just and reasonable and that every public utility shall furnish and maintain adequate service. equipment and facilities necessary to promote the safety, health, comfort and convenience of . . . the public. ... Section 453 provides that no public utility shall . . . make or grant any preference or advantage. or subject any person to prejudice or disadvantage. Also that no public utility shall establish any unreasonable differences as to rates, charges, services, facilities or in any other respect Section 454 provides that no public utility shall raise any rate or alter any classification, contract, practice, or rule as to result in any increase. except upon a showing . . . and finding by the Commission that such increase is justified. Section 489 provides that every public utility mission. tions. shall file with the Comschedules showing all rates, tolls, rentals, charges, and classifica ... Section 491 provides that no change shall be made by any public utility in any rate or classification, or in any rule or contract except after 30 days notice to the Commission and the public. Section 581 provides for the furnishing to the Commission in such form and detail as prescribed all tabulations, computations, and all other information required by it to carry into effect any of the provisions of this part . . . Section 582 requires every public utility, when required by the Commission, to provide copies of any or all maps, profiles, contracts, agreements, franchises, reports, books, accounts, papers, and records in its possession . . . and also a complete inventory of all its property... Section 584 requires annual reports to be furnished the Commission by every public utility. It also provides for the filing of monthly reports of earnings and expenses and periodical or special reports as required. Section 701 is a broad "catch-all" provision which provides that the Commission “may supervise and regulate every public utility in the State and may do all things, whether specifically designated in this part, or in addition thereto, which are necessary and convenient in the exercise of such power and jurisdiction." Sections 761 through 773 pertain to equipment, practices, facilities and service of utilities. Section 1001 provides for the certification of specified utilities, which includes electric utilities. 2 Section 1 (c) of the Natural Gas Act. Sections 8037 and 8056 confer additional powers on the Commission with respect to surface and underground facilities for the transmission of electric energy. Under the above powers, the Commission has acted and exercised its jurisdiction with respect to electric utilities in various ways on a formal and continuing basis. As early as 1924, the Commission, on its own motion, instituted an investigation into the construction and operation of certain electric utilities and the distribution and transfer of electric energy during an emergency resulting from abnormally low precipitation. (Case No. 2013, Dec. No. 13746, 25 CPUC 104.) In the case above, the Commission appointed a power supervisor, who acted under the direction and supervision of the Commission, to supervise the distribution of power in southern California during the emergency. At the same time the Commission recognized the importance of treating transmission of power problems on an area, rather than on an individual utility basis, thus antedating the proposed federal regulation by many years. The results of the Commission's prompt action prevented any large-scale power failures and permitted, through interconnections of the various systems, an equitable distribution of power on a curtailed basis. In 1948 the Commission again invoked its powers over electric utilities. This time it promulgated a set of rules and regulations to cope with another power shortage emergency due to lack of precipitation in northern California. The emergency rules were established in order that “irreparable injury and damage to said electrical power supply and to the users thereof be avoided and prevented.” Case No. 4939, Dec. No. 41256, 47 CPUC 769. One month later, the Commission ordered the appointment of an Emergency Power Director to carry out and effectuate, during the emergency, the Commission's policy and emergency regulations. Dec. No. 41309. Since its inception in 1912, the California Commission has established rules for the construction of overhead electric transmission and distribution lines. These rules have been changed, amplified, and revised many times to reflect progress in the art and construction and development of new materials. The purpose of the present General Order No. 95 is to formulate statewide uniform requirements to insure safety of workmen and the public and to insure adequate and reliable service. Other formal actions of the Commission, involving electric utilities and relating to power transmission, have been in the form of complaints filed with the Commission. Ligda v. P.G.&E. Co., 61 CPUC 1 (1963) was a complaint which involved the proposed construction of a 220 kv transmission line in San Mateo and Santa Clara Counties. The complaint sought an order requiring the rerouting or undergrounding of the proposed line for aesthetic reasons. A temporary restraining order was issued. After a hearing the Commission determined that it had jurisdiction to consider the question of aesthetics in regulating the use of property, but that these values alone are not controlling. It was held that the complainants had failed to establish any facts which would entitle them to any relief with respect to the relocation or undergrounding of the transmission lines. City of Woodside v. P.G.&E. So., 64 CPUC 51 (1965) was a complaint which involved transmission facilities. The complainants sought an order compelling the underground rather than overhead construction of facilities for a 220 kv line to the Stanford Linear Accelerator. The complaint was denied since a federal agency over which the Commission had no jurisdiction, rather than the defendant utility, was to construct the power line. Duncan v. P.G.& E. Co., 64 CPUC 788 (1965), was another complaint involving a transmission line. Here the location of a 500 ky transmission line across the Sacramento Valley was contested. PG&E contended that California law did not require it to obtain a certificate of public convenience and necessity since the line was only an extension within the meaning of Section 1001; and further, that the Commission had no jurisdiction in the matter because of preemption by the Federal Power Commission. The Commission resolved the jurisdiction issue by finding that the complainant was properly before it and that "although the lines would be used for both intrastate and interstate transmission, even if only for the latter, such matters as the location of the lines, their electrical and structural adequacy, their safety and their meeting of the needs of the public within this State are clearly, by law, bject to the jurisdiction of this Commission." Complainants sought judicial review of the Duncan decision before the California Supreme Court, which was denied on March 16, 1966. Duncan v. P.U.C., S.F. No. 22213.) However, since complainants had invoked the jurisdiction of the Commission in the first place, they did not make it an issue before the Supreme Court. With respect to certification proceedings under Section 1001, the major California utilities have requested certification of electric plant. These applications request certification of the generating plant as well as related high voltage transmission lines from the plant to the high voltage transmission network. Significant distances of such high voltage transmission have sometimes been involved. The most recent certification proceeding, Application No. 50028 (1969) covered a second nuclear generating plant of 1060 mw in San Luis Obispo County. The proposal was reviewed extensively, during hearings with respect to load growth and resources, site selection, estimated plant costs, estimated cost of power, transmission line routing, safety, ecological effects, conservation and aesthetics. Over 200 miles of 500 kv transmission lines are involved. The staff participation in certificate applications is primarily devoted to a determination of load and resource estimates, economic feasibility and safety. The load and resource estimates are particularly significant with respect to the continuation of adequate electric service and with reliability of electrical supply. The economic aspects are significant with respect to the Commission's ratemaking authority. Safety aspects pertain both to a review of compliance with the Commission's general orders as well as a review of any unique facets of the installation which require special investigation. In its program of formal and continuing staff activities with respect to electric reliability, the California Commission keeps completely informed with respect to electric reliability. An analysis of interruptions of the major California electric utilities indicates that such interruptions aggregate from 40 to 80 customer minutes per customer per year. Of this amount only about one customer minute per customer per year can be attributable to high voltage transmission line failures. The bulk of electric system interruptions relate to failure of low voltage distribution facilities. Another part of the program of continuing review by the California Commission of the adequacy of electric service and of electric system reliability is the annual power survey. Loads and resources are reviewed statewide and the adequacy of demand and energy margins and of utility construction programs is tested. A review of operation and maintenance practices, interconnections, system protection, spinning reserve practices, and loadshedding programs are also made on a periodic basis. The California utilities under the active regulation of the California Public Utilities Commission have established large and economical generating units and appropriate extra high voltage interconnections. There has been no problem in California with which the California Commission has been unable to deal and satisfactorily resolve. In addition to heavy reliance on load center generation, the California utilities have maintained necessary high voltage transmission, interconnections, appropriate distribution of spinning reserves and automatic loadshedding programs to assure continued reliability of service. Under these programs the infrequent interruptions caused by loss of large generating capacity have been controlled without widespread or longtime loss of electric service. SECTION 1 (C) OF THE NATURAL GAS ACT "(c) The provisions of this Act shall not apply to any person engaged in or legally authorized to engage in the transportation in interstate commerce or the sale in interstate commerce for resale, of natural gas received by such person from another person within or at the boundary of a State if all the natural gas so received is ultimately consumed within such State, or to any facilities used by such person for such transportation or sale, provided that the rates and service of such person and facilities be subject to regulation by a State commission. The matters exempted from the provisions of this Act by this subsection are hereby declared to be matters primarily of local concern and subject to regulation by the several states. A certification from such State commission to the Federal Power Commission that such State commission has regulatory jurisdiction over rates and service of such person and facilities and is exercising such urisdiction shall constitute conclusive evidence of such regulatory power or urisdiction." Mr. MACDONALD. I would like to insert into the record at this point a statement by Mr. Thomas G. Ayres, president of the Commonwealth Edison Co. and Mr. Ludwig F. Lischer, Engineering Vice President of Commonwealth. Their statement is being made in behalf of MidAmerica Interpool Network. (Mr. Ayres' and Mr. Lischer's statement follows:) STATEMENT OF THOMAS G. AYERS AND LUDWIG F. LISCHER ON BEHALF OF MIDAMERICA INTERPOOL NETWORK (MAIN) INTRODUCTION My name is Thomas G. Ayers. I am President of Commonwealth Edison Company, the utility serving the northern part of the State of Illinois, including the City of Chicago, and small additional areas in the central and southern parts of the state. Joining me in this presentation is Ludwig F. Lischer, Engineering Vice-President of Commonwealth. We are appearing before you as representatives of the Mid-America Interpool Network, of which Commonwealth is a member. Both Commonwealth and MAIN, as the Mid-America Interpool Network is known, appreciate this opportunity to bring to your attention our comments on the proposed legislation which is the subject of this hearing. While shortness of time has made it impossible for us to review this statement with all of the members of MAIN, we are confident that it expresses the substance of the views of MAIN's membership. The organization of MAIN reflects the continuing concern of its members to maintain and improve reliability of electric service. We fully recognize that the justification for our existence is our ability to provide reliable service. We have a great responsibility to the public, and our failure to perform could be fatal to the continuance of the industry as it is now organized. We are appearing here today because of our concern that the legislative proposals now before the Committee would make the task of insuring reliable service for the American consumer harder, not easier. Our testimony falls into two parts. First, Mr. Lischer will describe the organization and activities of MAIN. These are designed to assure the reliability of the high voltage transmission network which serves the Middle West. The operations of MAIN are, thus, directed at precisely the same objectives as the proposed electric reliability legislation. Second, I would like to discuss the impact of these proposals on reliability and why we believe enactment of the legislation would jeopardize, rather than promote reliability, and would increase the cost of electric service. Background I. COMMENTS OF MR. LISCHER Description of MAIN Since the early thirties there have been extensive interconnections between utilities in the Middle West. After World War II, these interconnections were materially expanded and the pace of coordinating activities increased. The major development of high voltage ties between systems in the Middle West began in the late 1950's. At that time, there was a large increase in the size of generating units and a contemporaneous improvement in extra-high-voltage technology. The use of high capacity ties of 345,000 volts and above could, for the first time, be justified by their usefulness in making help available from neighbors to protect systems from outages of very large units. In addition, these extra-high-voltage or EHV ties made possible economies through permitting utilities to alternate in the construction of generating stations, coordinate mainte nance programs and effect energy exchanges. In 1956, Commonwealth started construction of the first intersystem tie in the Midwest with a voltage above 138 kv. This was the 345,000 volt, double-circuit tower line interconnecting its system with that of American Electric Power to the east. This massive tie, which can carry as much as 2,000,000 kilowatts, now connects with a 345,000 volt loop running from Chicago north to Milwaukee. northwest across Wisconsin to Minneapolis, and then south across Iowa into St. Louis. The final 345,000 volt link in the loop, from St. Louis northeast into Chicago, was completed in 1968. Individual utilities and pools interconnected directly or indirectly with this 345 kv loop where the organizers of MAIN. A |