[Congressional Record Volume 147, Number 22 (Thursday, February 15, 2001)]
[Senate]
[Pages S1529-S1530]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
AMENDMENTS SUBMITTED
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SMITH AMENDMENT NO. 12
Mr. SMITH of Oregon submitted an amendment intended to be proposed by
him to the bill S. 287, to direct the Federal Energy Regulatory
Commission to impose cost-of-service based rates on sales by public
utilities of electric energy at wholesale in the western energy market;
which was referred to the Committee on Energy and Natural Resources.
On page 3, strike subsection (d) and insert the following:
(d) Limitations.--
(1) In general.--A cost-of-service based rate shall not
apply to a sale of electric energy at wholesale for delivery
in a State that--
(A) prohibits public utilities from passing through to
retail consumers wholesale rates approved by the Commission;
or
(B) imposes a price limit on the sale of electric energy at
retail that--
(i) precludes a public utility from recovering costs on a
cost-of-service based rate; or
(ii) has precluded a public utility from making a payment
when due to any entity within the western energy market from
which the public utility purchased electric energy, and the
default has not been cured.
(2) No orders to sell without guarantee of payment.--
Notwithstanding any other provision of law, neither the
Secretary of Energy, the Commission, any other officer or
agency in the Executive branch, nor any court may issue an
order that requires a seller of electric energy or natural
gas to sell electric energy or natural gas to a purchaser in
a State described in paragraph (1) unless there is a
guarantee that, as determined by the Commission, is
sufficient to ensure that the seller will be paid the full
purchase price when due.
(3) Requirement to meet in-state demand.--Notwithstanding
any other provision of law, a State public utility commission
in the western energy market may prohibit a public utility in
the State from making any sale of electric energy to a
purchaser in a State described in paragraph (1) at any time
at which the public utility is not meeting the demand for
electric energy in the service area of the public utility.
(e) Report.--Not later than 120 days after the date of
enactment of this Act, the Secretary of Energy shall--
(1) conduct an investigation to determine whether any
public utility in a State described in subsection (d)(1) has
been rendered uncreditworthy or has defaulted on any payment
for electric energy as a result of a transfer of funds by the
public utility to a parent company or to a subsidiary of the
public utility (except a payment made in accordance with a
State deregulation statute); and
(2) submit to the Committee on Energy and Commerce of the
House of Representatives and the Committee on Commerce and
Committee on Energy and Natural Resources of the Senate a
report describing the results of the investigation.
(f) Duration.--A cost-of-service based electric energy rate
imposed under this Act shall remain in effect until such time
as the market for electric energy in the western energy
market reflects just and reasonable rates, as determined by
the Commission.
(g) Repeal.--This Act is repealed, and any cost-of-service
based electric energy rate imposed under this Act that is
then in effect shall no longer be effective, on the date that
is 2 years after the date of enactment of this Act.
Mr. SMITH of Oregon. Mr. President, today I am filing an amendment to
S. 287, bill to direct the Federal Energy Regulatory Commission to
impose cost-of-service based rates on sales by public utilities of
electric energy at wholesale in the western energy market.
My amendment would clarify the circumstances under which the
Commission may impose interim limitations on the cost of electric
energy, and provide a sunset date. While I applaud my colleague's
efforts to help restore stability to the wholesale electricity market
on the west coast, I believe S. 287 continues to insulate retail
customers in California from the energy crisis in a way that is
hampering conservation and investment in new generation.
By contrast, my constituents and energy-sensitive businesses in
Oregon are already feeling the effects of the price volatility in the
west. Utilities in the northwest are facing current rate increases of
eleven to fifty percent. The customers of the Bonneville Power
Administration are facing the prospect of 95 percent rate increases
beginning in October, when current contracts expire.
I know that there is significant support for short-term wholesale
price caps for the entire western market. However, that doesn't address
what is still going on in California, where retail prices are capped at
a level that is insulating consumers from the price shocks being felt
by the rest of the West. So long as these retail rates remain capped at
the current levels, there is no incentive to conserve, and no incentive
for additional generation. Both conservation and additional generation
are the keys to the long-term solution.
Much of the media attention in recent weeks has focused on efforts to
keep the lights on in California and to keep that state's two largest
utilities from going bankrupt. But the West Coast energy market extends
to eleven other western states, including Oregon, that are all
interconnected by the high-voltage transmission system.
I believe there is more that California can and must do immediately
to address this situation. I know the California legislature is
grappling with this situation, and I hope it will take the steps to
restore the creditworthiness of California's utilities.
First and foremost, it must approve further electric rate increases.
This is necessary to send the right price signals to Californians to
conserve energy. Further, price increases are necessary to help
California's investor-owned utilities--which have recently been reduced
to ``junk bond'' status--from going bankrupt.
Avoiding bankruptcy for these utilities is important for Oregon and
other western states. Since the middle of December, Northwest utilities
have been forced to sell their surplus power into California, with no
guarantee of being paid. If the California utilities subsequently seek
bankruptcy protection, it will be Oregonians who are stuck with the
bill for California's failed restructuring effort.
In fact, certain Oregon utilities are already receiving bills from
California's power exchange for funds owed to the exchange by
California utilities. In addition, the Bonneville Power Administration
is owed over 100 million dollars for power sales it made into
California in November 2000.
My amendment to the legislation offered by my colleague from
California would do the following: It limits the authorities provided
to the Federal Energy Regulatory Commission (Commission) to impose
west-wide wholesale price caps by stipulating that the wholesale price
cap cannot be imposed on sales into any state that has refused to allow
utilities to pass on Commission-approved rates, has capped retail rates
at levels that do not allow utilities to recover costs on a cost-of-
service based rate, or has capped rates at a level that results in a
default of payments for electricity.
[[Page S1530]]
Further, the amendment stipulates that the Secretary of Energy, the
Commission, or the courts may not order sales of electricity or natural
gas into any such state without guarantees of being paid. It also
allows state public utility commissions in other western states to make
sure that utility service areas are served before utilities in their
respective states can sell into what might be a higher market in
California.
It also orders the Secretary of Energy to conduct an inquiry into the
charges of shifting funds between utilities and parent holding
companies. Two weeks ago, at a hearing of the Energy Committee, I asked
three California utilities if they were seeing any decrease in demand
in response to calls for conservation. The answer was no.
I also asked several energy experts if, in their opinion, state
officials in California were taking the measures needed to fix their
broken restructuring effort. Again, the answer was either ``No'' or
``Mostly, but not completely.''
To put a human face on what is happening in my state, I would like to
discuss a letter I recently received from a rural school district in my
state. Basically, they are pleading for the energy crisis to be fixed
because, as a small school district, they are having to take resources
away from students to pay energy bills. Their local utility has just
added a 20 percent surcharge to the cost of electricity. The district
also heats a number of its school buildings with natural gas. In
November 1999, the bill was $4,383.59. By November 2000, the bill to
heat the same buildings was $11,942.
Another small school district in my state is concerned that its power
bills may go up by $100,000. For them, that means laying off two
teachers.
Oregon is doing its part to conserve, and to build new resources. My
amendment today is trying to prod California to send the right price
signals to its consumers to join us in this fight.
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