Image: President Bush
Pending energy legislation in Congress should be reworked to address blackout problems, President Bush said this week.
By
CNBC
updated 8/19/2003 8:31:21 AM ET 2003-08-19T12:31:21

The massive power blackout impacting more than 50 million people in the United States and Canada is jump-starting congressional action on a comprehensive energy bill.

AFTER TELEPHONE CONVERSATIONS with President Bush, congressional leaders say the final version will have three elements aimed at preventing future blackouts: Mandatory reliability standards, investment incentives and reform of transmission siting rules.

“One thing is for certain — they will have mandatory reliability standards in the energy bill,” President Bush said earlier this week. “What that means is that the companies will have to have strong reliability measures in place. Otherwise, there will be consequences for them.”

For more than a year, the headline issues that have deadlocked Congress are:

Drilling for oil in the Alaska wilderness

Fuel efficiency standards for cars and trucks

Industrial pollution and global warming

Now, energy experts say the biggest blackout in U.S. history has fundamentally changed the debate.

“Last week’s blackout turns a powerful spotlight on energy legislation and something whose passage through the Congress a week ago today was uncertain,” CNBC Global Energy Expert Daniel Yergin said.

“Now, there will be great pressure to produce a bill.”

Long before the lights went out in the Northeast and the Midwest, the utilities were generating lots of campaign contributions.

In 2002, the industry contributed just under $21 million to congressional campaigns, making it the 16th largest donor out of more than 80 industries tracked by the Center for Responsible Politics.

But the utilities are divided on what the next phase of deregulation should look like.

In the South and West — where power is cheap and regional companies dominate — there is concern about outside competition.

“They don’t want to have a system where it’s easier to ship power in from other parts of the country,” said Andrew Laperriere of the International Strategy and Investment Group. “They’re monopolies — they haven’t deregulated in a lot of those areas and they want to protect what they’ve got.”

Energy experts, however, say the most pivotal issue is just how much authority the Federal Energy Regulatory Commission (FERC) will have in setting standards.

“A good part of it is federal authority vs. states rights,” Yergin said. “It’s also a regional issue with the Southeast having a different point of view than other parts of the country, and the question about how integrated our grid is going to be not only on a regional basis, but on a national basis.

The new timetable for Congress has leaders predicting a vote on a comprehensive energy bill by the last week in September.

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