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Witness Testimony
The Honorable Lee Otis
Regional Energy Reliability and Security: DOE Authority to Energize the Cross Sound Cable
Mr. Chairman and Members of the Subcommittee, thank you for inviting me to testify concerning the Secretary of Energy's recent orders concerning the Cross-Sound Cable and the effect of the Cable's operation on reliability. On May 7, 2004, Secretary Abraham issued Order No. 202-03-4, in which he determined that the emergency giving rise to his earlier orders authorizing use of the Cable had ceased to exist, and that no other emergency had been demonstrated justifying continued authorization to use the Cable. The May 7 order briefly recounts the events leading up to it, but I will summarize them here, and also will summarize the legal authority that the Secretary used to issue his Cross-Sound Cable orders. Section 202(c) of the Federal Power Act gives the Secretary of Energy the authority to determine that an "emergency" exists, and "to require by order such temporary connection of facilities and such generation, delivery, interchange, or transmission of electric energy as in [the Secretary's] judgment will best meet the emergency and serve the public interest." It is this authority that Secretary Abraham has used when he has directed operation of the Cross-Sound Cable. By its terms, this section of the Federal Power Act is limited to situations in which the Secretary has determined an "emergency" exists. However, neither the Act nor DOE's regulations define exactly what an "emergency" is. The Act does state that an emergency can exist because of "a sudden increase in the demand for electric energy, or a shortage of electric energy or of facilities for the generation or transmission of electric energy, or of fuel or water for generating facilities, or other causes," but it leaves to the Secretary's judgment exactly what set of facts and circumstances might constitute an emergency, as well as the determination of whether to issue an order under section 202(c) and what terms of such an order might "best meet the emergency and serve the public interest." On August 14, 2003, the United States and Canada experienced the largest electric transmission grid failure and blackout that has ever occurred in North America. That same day, in order to alleviate the emergency situation presented by the blackout, the Secretary exercised his authority under Federal Power Act section 202(c) and issued Order No. 202-03-1, which authorized operation of the Cross-Sound Cable. The Secretary issued that order after DOE officials had consulted with the independent system operators in both New England and New York, as well as officials at the North American Electric Reliability Council, electric utilities in both Connecticut and New York, and the owner of the Cross-Sound Cable. The next day, President Bush and Canadian Prime Minister Chretien announced the creation of a bi-national task force to investigate the causes of the blackout and why it 2 spread, as well as to formulate recommendations about what might be done to prevent blackouts from occurring in the future. The task force immediately commenced its investigative work, but because of the immense amount of data and information that needed to be analyzed and the extensive investigative work that was necessary, it was not possible to reach an immediate conclusion as to what had caused the blackout or why it spread. Therefore, on August 28, 2003, and even though electric service had been restored in the area affected by the August 14 blackout, Secretary Abraham issued an order finding the continued existence of an emergency, and determining that operation of the Cross-Sound Cable should continue to be authorized until such time as he issued an order determining that the emergency had ended. The next day, August 29, 2003, State officials from Connecticut filed papers with DOE seeking rehearing of the August 28 order and asking that DOE stay the operation of the order pending judicial action. Several days later, the Secretary issued an order calling for the submission of briefs and information with respect both to the rehearing request and the stay request, and establishing a schedule for the submission of that information. His order identified a publicly-accessible DOE website address at which all materials submitted to DOE would be made available. In response, numerous persons, including Members of Congress, submitted letters, data and information to DOE concerning the Cross-Sound Cable and its operation. All of 3 these submissions were made publicly available, and the public was given the opportunity to comment on the submissions made by other persons. At the same time, the work of the bi-national task force investigating the August 14 blackout was proceeding. The task force issued an interim report in November 2003 that set forth tentative conclusions concerning how the blackout began and why it spread to certain parts of the United States and Canada. The interim report called for public comment concerning all aspects of the report, and public meetings were held in both the United States and Canada concerning the interim report. The task force also invited the submission of written comments and recommendations, which were made publicly available. In early April 2004, the bi-national task force issued its final report. That report identified the direct causes and contributing factors for the August 14 blackout. The report states that the blackout began in Ohio, and describes in detail the sequence of events leading up to the blackout, and that occurred as the blackout spread across an area encompassing 50 million people. The Cross-Sound Cable was not in operation on August 14, 2003, and the final report did not identify any effect that the non-operation of the Cable had either on the initiation of the blackout, or on its spread. The final report simply does not identify any particular role that the Cable would have played in preventing or stopping the spread of the outage, had it been in service on August 14, 2003. 4 After issuance of that final report, DOE considered the contents of the report as well as DOE's earlier analysis of the data and information that had been submitted in response to the Secretary's call for information concerning the operation of the Cable. DOE also made its own inquiries of the relevant Independent System Operators to assess the power supply and transmission situation in the vicinity of the Cross-Sound Cable. In light of the reasons for and the terms of the August 28 order, and the data and information submitted to and developed by DOE, the Secretary determined that the emergency identified in his August 28 order no longer existed. That order had authorized continued operation of the Cable based on the finding that an emergency continued to exist because "it has not yet been authoritatively determined what happened on August 14 to cause the transmission system to fail resulting in the power outage, or why the system was not able to stop the spread of the outage." Once those facts were determined, as they were in the task force's final report, and because that report did not point to any role the Cable did or could have played in connection with the cause or the spread of the blackout, the Secretary determined that the emergency he earlier had identified no longer existed. He furthermore concluded that the information that the public had submitted to him, as well as the investigation conducted by DOE itself, did not demonstrate the existence of any other present emergency warranting continued authorization to operate the Cable under the authority of Federal Power Act section 202(c). Therefore, he found that the emergency he had identified earlier ceased to exist, and he terminated the Federal Power Act section 202(c) authorization to operate the Cable. 5 As the Secretary stated in his May 7 order, DOE believes the Cross-Sound Cable is an important transmission asset and contributes to the reliability of the electric transmission grid in New England and New York. In fact, the Cable was mentioned in the report of the National Energy Policy Development Group, in May 2001, as an important transmission asset, the operation of which had been blocked because the State of Connecticut did not recognize the importance of the facility to the interstate grid. It is important to remember that under present law, however, section 202(c) does not authorize DOE to direct operation of a transmission facility simply because the facility is important to the grid, promotes commerce or improves reliability. Instead, the law requires the Secretary to find that "an emergency exists" before he can invoke his authority to issue a 202(c) order. Therefore, this section of the law was not intended to be a replacement for the resource adequacy and transmission facility siting responsibilities carried out by other governmental and private bodies. Because the Administration believes that existing law is not sufficient to adequately protect electric reliability and to promote the construction and operation of needed electric transmission facilities, the Administration strongly supports the electricity provisions contained in Title XII of the H.R. 6 Conference Report, which the House approved several months ago. The bi-national blackout task force stated that the single most important thing that could be done to prevent future blackouts and reduce the scope of any that do occur is for Congress to enact the reliability provisions in H.R. 6 and make 6 compliance with reliability standards mandatory and enforceable. The Administration also supports repeal of the Public Utility Holding Company Act and supports last-resort Federal siting authority for high-priority transmission lines - both of those provisions would encourage investment in needed transmission and generation facilities. Finally, I want to emphasize that although there are obvious limits to the circumstances in which the Secretary can issue an order under Federal Power Act section 202(c), Secretary Abraham has not hesitated to use that authority when presented with data and information that, in his judgment, warrant a finding that an "emergency" exists. He issued an order directing operation of the Cross-Sound Cable only hours after the August 14, 2003 blackout occurred, and continued the directive to operate the Cable until it had been determined what happened on August 14 to cause the blackout and why the system was not able to stop the spread of the outage. He also issued an order on August 16, 2002, directing operation of the Cross-Sound Cable, because it had been demonstrated that an emergency existed as a result of imminent shortages of electric energy on Long Island. The Department continues to monitor the reliability and transmission situation in the Northeast and elsewhere in the country. Any person is invited to bring to DOE's attention, at any time, data or information that the person believes demonstrates an emergency exists and that the Secretary should exercise his section 202(c) authority. The Secretary stands ready to exercise that authority, with respect to the Cross-Sound Cable or any other situation or facility, if presented with facts that demonstrate an emergency exists, and that a 202(c) order would alleviate the emergency and would be in the public interest. Thank you again for inviting me to testify today. I would be glad to answer any questions. Related Documents |
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