It is a pleasure to welcome you to the great state of Arizona and to the West. I want to thank the President and Vice President for their leadership in developing a National Energy Policy

I also want to thank Secretary Abraham for recognizing the need for the Department of Energy to better understand the transmission infrastructure needs in different regions of the country and for holding this meeting.

I’m pleased to welcome James Glotfelty here today, representing the Secretary and the Department.

This morning, I am wearing two hats: Governor of the State of Arizona, and Chairman of the Western Governors’ Association. I would like to comment from both perspectives.

After my brief comments, I’d like to have Jim Souby, the WGA Executive Director discuss the specifics of our work in this area.

(Western Governors’ Association perspective)

The members of the Western Governors’ Association serve states covering a vast and diverse part of North America. We are keenly aware of the unique character of the nation’s power grids, but we also hold common views on the principles that should guide grid decisions.

Last month, Western governors adopted an energy policy roadmap for the West.

This roadmap reflects the intensive work on electric power issues by Western governors over the past 10 months. The Western electricity crisis has illustrated the limitations of unilateral action by single states and by federal agencies.

The actions of Western governors are built on the premise that cooperative action by those that are affected by decisions is the most appropriate course of action. States must take the lead in shaping the region’s electricity future, and we urge the federal government to support us in this effort.

It is important for our friends from DOE to understand that they are not dealing with a blank slate in the Western Interconnection. A solid foundation for ensuring the adequacy and reliability of the Western grid is being laid. The National Grid Study should support, not undermine, those efforts.

The electricity crisis in the West should not be used as an excuse to gather powers for the federal government and effectively disenfranchise those who pay the costs and bear the consequences of grid decisions. We are very sensitive to such efforts given the wholesale power market debacle of the past year in the West.

We note that there has not been a Federal Energy Regulatory Commission (FERC) commissioner from the Western Interconnection in more than 20 years. And an agency without leadership from the Western Interconnection and offices only in Washington, D.C. will inevitably have a difficult time coping with the realities of the Western power system that spans parts of three nations.

Western governors have taken a leadership role in addressing electric power and particularly transmission issues. We have developed significant policy recommendations in meetings held across the West since last December. On May 9, Western governors brought together public and private sector leaders from around the Western Interconnection to address three key questions:

1. What transmission enhancements are needed in the Western Interconnection?

2. How can needed transmission be financed?

3. How can needed transmission be expeditiously sited and permitted?

The governors created a Working Group and charged it with developing a Conceptual Transmission Plan for the West in about 60 days. Jack Davis, the CEO of Pinnacle West, and Marsha Smith, commissioner with the Idaho PUC, chaired the Working Group and we cannot thank them enough for their hard work and the quality report they produced.

We followed up in August with the adoption of a Western Governors’ Association policy roadmap resolution. We also executed a Memorandum of Understanding with five federal agencies to provide a framework for cooperative action with the federal government on transmission and other energy issues critical to the West.

We are engaged in an effort to develop a multi-state protocol for the expeditious review of interstate transmission proposals. In these, and many other related efforts, we welcome the contribution of the National Grid Study and the Department.

Finally, I want to offer observations on some of the topics to be discussed today:

The WGA Conceptual Transmission Plans report outlined two central policy issues that need to be addressed when deciding how much transmission is needed.

· What is the value of increasing fuel diversity (away from solely natural gas) in the generation mix?

· What is the value of building transmission to mitigate the exercise of market power?

We would welcome DOE’s help in addressing these issues.

Regarding transmission siting and permitting, we are dismayed at the approach some inside the Beltway are taking. To those who want to grant FERC the power of eminent domain for transmission, we urge you to carefully examine the real hurdles to new transmission and the track record in the Western Interconnection.

In the West, it is often the federal government through its land management agencies that present the greatest challenge to the expeditious siting and permitting of new transmission. In fact, the Western states have a sterling record. No state in the Western Interconnection has ever denied a permit for an interstate transmission line.

We applaud the President’s effort through the Council on Environmental Quality to get the federal house in order. We support that effort and look forward to linking that effort with our ongoing work. We oppose as inappropriate and unwarranted federal preemption of state transmission siting decisions.

Regarding models for transmission investment and operation, we believe that the issue of how to finance new transmission is the central roadblock that needs to be addressed. The formation of RTOs may break the logjam blocking transmission investment, however, Western governors believe that action is needed before the time when RTOs become operational.

Regarding reliability management and oversight, we are deeply concerned about the "give-it-to-FERC" approach to reliability that is popular with some in Washington. We urge that federal reliability legislation delegate those responsibilities to the West. We also believe that those who pay the bill and bear the consequences of reliability decisions should oversee the process.

(Arizona perspective)

In my capacity as Governor of Arizona, I am confident saying that we are doing our part to contribute to the region’s generation, transmission and reliability needs.

Yesterday, I had the pleasure of "starting up" the Griffith Energy Plant in Kingman. It is the 4^th major new plant in Arizona this year, adding another 600 megawatts to our state energy supply. We have now added a total of 1830 megawatts in the first nine months of 2001. We’ve added more capacity than in the entire State of California, or any other Western state this year.

All of these are clean-burning, environmentally-friendly projects.

We’re increasing generation, and conserving to meet our remarkable growth needs.

At the same time, we are moving forward on a coordinated transmission plan.

We’ve been making the tough decisions and working through the public processes to ensure that we have the lines we need in Arizona to move the additional thousands of megawatts we have under construction.

I am pleased the Department is holding this meeting in the West and that the Secretary sent Mr. Glotfelty, a westerner himself, to listen to us. I urge you to focus on cooperative actions that will help address the central questions Western governors posed in May.

In this time of national crisis, each of us needs to do what we can do best. The federal government clearly needs to focus on the international energy challenges we face. The Western states are focusing on the energy needs of a robust western economy.

 

Thank you for coming here today to help us work through the Western opportunities presented by the Grid Study forum.

Page last updated 10/10/1999