Bidding for contracts to supply electric
generation to public utilities, which has been opposed by Oklahoma
Corporation Commissioner James Townsend, will be discussed today in
a special meeting of the Federal Energy Regulatory Commission in
Townsend has argued the proposed bidding would endanger the
quality of service to the public, would replace the service
obligation of utilities with a contract obligation and would cause
the loss of instantaneous control over the electricity-generating
sources that electric utilities now enjoy.
Though the proposed changes and refinements of the Public
Utility Regulatory Policies Act of 1978 have not been filed with the
commission, the main points of the proposals were outlined by Martha
O. Hesse, who chairs the commission, in a statement to the Senate
Energy and Natural Resources Committee earlier this month.
Several states have already implemented bidding systems to
determine the most efficient and cost effective contract supplier of
electricity, Hesse said. For those that have not, the proposal
includes guidelines for states that voluntarily choose to use
bidding procedures for determining pricing under the 1978 act.
The bid would be selected from price and non-price factors, such
as the abilty to dispatch, interruptibility of service, plant
location, reliability and fuel mix, Hesse said. The bidding process
would begin with a utility's decision that it needs new generating
capacity, she said.
The state regulatory agency would review the projected type and
amount of capacity demanded by the utility, Hesse stated. The
bidding process is expected to shift regulatory oversight from
after-the-fact to before-the-fact reviews, she told the committee.
The utilities could participate as bidders for their own
expected capacity demand, or could be required by the state to build
a facility whenever bidding does not locate a reliable capacity
source at reasonable cost, Hesse said.
The quality of service, Townsend said, could suffer from open
access to the electricity transmission network unless the new
sources of electricity are carefully integrated into the electric
"If generation is deregulated," Townsend said, "the provider of
electricity has no obligation to continue providing power when a
contract expires, or, worse, if the bargain turns unfavorable during
the term of the agreement."
Generation of electricity is matched to the demand, he said. …