U.S. energy security a rising priority Friday September 14, 5:35 PM EDT

By Chris Baltimore

WASHINGTON, Sept 14 (Reuters) - Protecting U.S. pipelines and electric transmission lines has become an urgent priority following devastating aerial attacks in New York and Washington, lawmakers and regulators said on Friday.

The Federal Energy Regulatory Commission said its "highest priority" was to help natural gas, oil and electricity firms tighten security for pipelines and transmission lines.

In addition, a U.S. House of Representatives committee was expected to examine security issues at a hearing next week on power transmission policy.

The Energy and Commerce Committee hearing next Thursday was called to focus on electricity restructuring legislation, but a committee aide said lawmakers will likely ask FERC and Energy Department officials about security.

Protecting the United States' energy infrastructure is "clearly on the radar screen" of the committee's chairman, Republican Billy Tauzin of Louisiana, Tauzin spokesman Ken Johnson said.

FERC TO HELP FIRMS BOOST SECURITY

Utilities seeking to raise rates or implement surcharges to cover capital costs, including security investments, must first gain FERC's approval.

On Friday, the agency said it would expedite requests from utilities seeking to recover the cost of new security measures at pipelines and electric transmission lines after Tuesday's hijacked plane attacks on the World Trade Center and Pentagon.

No U.S. energy sites were reported to have been targeted, but FERC said it was acting to help companies protect the movement of crucial energy supplies.

Energy firms may need to adopt "new procedures, update existing procedure and install facilities" to safeguard their electricity transmission lines and pipelines, FERC said.

Those steps could be costly.

"The commission is aware that there may be uncertainty about companies' ability to recover the expenses necessary to further safeguard our energy infrastructure, especially if they are operating under frozen or indexed rates," FERC said in an order signed by three commissioners and new agency chairman Pat Wood.

It was not immediately clear how pipeline firms would act on FERC's directive.

El Paso Corp. (EPG), which operates the nation's largest pipeline network, said it has already taken all needed steps to protect its assets. "We're not waiting for any kind of rule changes by FERC to implement any kind of measures," an El Paso spokeswoman said.

MORE GUARDS, EMPLOYEE CONTROLS?

FERC said it would approve applications to recover "prudently incurred costs" necessary to improve security of the energy supply.

The Edison Electric Institute, the largest utility industry lobbying group, called FERC's measures "an important step" to encourage tighter security. The group said there will "probably be implementation questions" as to how FERC will define "prudent" upgrades and work out cost-recovery methods.

Possible security upgrades could include adding more security guards at pipelines and transmission lines, as well as improving technology to verify employee identities at sensitive facilities. Some companies may also want to launch studies to identify vulnerabilities at pipelines and on the electricity transmission grid, an Edison spokesman said.

On Tuesday, hijacked airplanes crashed into New York's World Trade Center and the Pentagon just outside Washington, leaving hundreds dead and almost 5,000 missing.

U.S. officials have singled out Saudi-born extremist Osama bin Laden as a chief suspect in the case. Bin Laden, who has been reported to have denied involvement, is based in Afghanistan under the protection of the radical Islamic Taliban government.

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-- Martin Thompson (mthom1927@aol.com), September 14, 2001