[Congressional Record Volume 147, Number 77 (Wednesday, June 6, 2001)]
[House]
[Pages H2936-H2942]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
NATION'S ENERGY CRISIS
The SPEAKER pro tempore (Mr. Tiberi). Under the Speaker's announced
policy of January 3, 2001, the gentleman from California (Mr. Filner)
is recognized for 60 minutes as the designee of the minority leader.
Mr. FILNER. Mr. Speaker, we intend to spend the next hour of the
House's time in discussing the electricity and energy crises that are
confronting this Nation today. This has become the issue that is
paramount in the minds of families all over this Nation. Whether they
live in California, which as in many other areas has pioneered the
problem, where we have an economy that is teetering as the prices of
natural gas and electricity and gasoline hit us, hit our families, hit
our businesses, people see this crisis spreading to the other parts of
the far West, in the mountain States and now to the East.
[[Page H2937]]
As people contemplate the incredible increases in natural gas, they
wonder how they are going to heat their homes come next winter. When
American families get on the road and find out they are paying well
over $2 maybe even $3 a gallon for gasoline, every family in America,
every business in America will know that we have a crisis, and yet it
seems this Congress cannot act. It seems that this administration
cannot or will not act.
People's businesses and homes are threatened. They know that if there
were a flood or an earthquake or a tornado, the Federal Government
would be in their areas immediately with all kinds of help and all
kinds of cameras, and the President would be there and the Federal
Emergency Management Administration would be there and everybody would
be in there trying to say how do we help in this natural disaster.
Well, in California and in Oregon and in Washington, and now many other
States, we have a man-made disaster that is worse than all of those
others combined. And yet where is the Federal Government, where is the
President, where is the Secretary of Energy?
Nobody seems to want to act on a crisis that threatens the whole
national economy, and people are wondering why. When we look at poll
results today, not only is energy the highest economic issue of concern
to families all across America, but the approval ratings of officials
who are not acting are going down and down. Clearly, the American
people want action. They do not see it coming from Washington.
Just today, our Committee on Commerce decided that it would not hold
a hearing on an electricity emergency relief act. The Republican
leaders of this House apparently were afraid to bring this item to a
committee and then to a floor vote because they fear that the outcome
might not be in line with their ideology. They blame not bringing this
up on Democratic intransigence; that is that the Democrats would not
look at any bill that did not have anything to say about the prices and
price mitigation for electricity and natural gas on the west coast. And
I say to the Republican leadership, you are absolutely right. We are
not going to consider legislation without that, because it is the
prices that are killing us.
California and other States in the West are being bled dry by this
electricity crisis. The State of California is paying $3 million an
hour for electricity. We are paying $70 million sometimes up to $90
million or more a day for electricity; $2 to $3 billion a month. And
California State is paying for this electricity because the utilities
in California are bankrupt. They have not been able to buy the
electricity, so the State has stepped in.
Now, the State of California is the sixth biggest economy in the
world. But the sixth biggest economy in the world cannot sustain a $3
billion a month drain on its budget, and so the State of California's
economy is teetering. And I will tell the President of the United
States that if the California economy goes, so goes the rest of the
Nation. So it is in our national interest that the problems in
California, in Washington, in Oregon, and now in Montana and in New
Mexico and Wyoming and in New York, become the interests of all
Americans and this administration because our whole economy is at stake
here.
When we look at the prices that people are paying for electricity and
natural gas in California, what we see is an incredible disaster that
has taken place and is in motion. In San Diego County, the area I
represent, 65 percent of small businesses face bankruptcy this year.
Imagine what that means; 65 percent of our small businesses in one
county facing disaster. That wipes out all of Southern California. And
I predict the rest of the Nation will go next. We cannot sustain this
kind of situation.
School districts cannot hire teachers because they are paying for
their electricity bill. Libraries cannot buy books because they are
paying for their electricity bills. YMCA and other youth-serving
organizations have to close up part or most of a week because they
cannot afford the electricity bills. The hotels in San Diego County
have an energy surcharge on their room bills because of the cost of
electricity. Restaurants in San Diego have an energy surcharge because
the costs of energy are so high. What happens to the tourism industry
in our area if we add these surcharges to our bills? San Diego and
California, the West, and the Nation are in economic trouble.
The Republicans refused to act on their bill today. The President
issued an energy plan several weeks ago which does virtually nothing
for immediate relief for the west or for the Nation.
{time} 1600
Mr. Speaker, the President says, well, we can solve the energy
problems in California by drilling for oil in the Arctic National
Wildlife Refuge. I do not know what one has to do with the other; and
even if it did, it would be a decade before we got any oil out of that
reserve. We have so many choices, we do not have to wreck the
environment, we can do many, many other things; and we will be talking
about that during this hour.
The President and the Republican Party assume that this is a crisis
brought out by a lack of supply caused by environmental whackos in
California who overregulated and prevented supply from being brought
in. Mr. President, that is flat out wrong. This is not fundamentally a
supply and demand problem; this is a problem brought about by criminal
manipulation of the market by an energy cartel that is hell-bent on
making as much profits as they can make. They have taken $20 billion
out of the State of California in the last 10 months, and they are
going on to other States.
Mr. Speaker, those same companies report earnings increases in their
quarterly reports of 300, 400, 500 percent, 1,000 percent. They move up
to the Fortune 500 a hundred positions out of the profits that they are
making from small businesses going bankrupt and big businesses leaving
California. The third biggest business in my district may close up this
year because they cannot deal with the uncertainty and the cost of
electricity prices.
Mr. Speaker, we have to do something about the prices, and that is to
bring in what was always the rule under a regulated situation, and that
is cost-based rates for electricity: the cost of production plus a
reasonable profit. Utilities made a fortune on that kind of pricing;
and yet the pricing we are seeing now are four, five, 10 times that, 50
times that at various times during the day.
We need cost-based pricing, and we need to have refunds of the
criminal overcharges that have taken place. Californians are demanding
cost-based prices to stabilize the wholesale market and refunds of the
criminal overcharges since last June. That is how to stabilize the
situation. The Governor of California is doing everything he can to
bring on new capacity. The State is doing everything it can for
conservation. We just met a goal of 11 percent for last month, and that
is a tremendous achievement for Californians; and I thank all
Californians for doing that.
But the people of Oregon or California or Washington can do nothing
about the wholesale prices, and that is killing us. I speak from
experience from California. I see the gentleman from Oregon (Mr.
DeFazio) with us, and I hope that he will enlighten us on the issues
that this country is facing. If this President and this Congress and
this Nation do not wake up, we are going to have economic disaster in
the summer ahead.
Mr. Speaker, I yield to the gentleman from Oregon (Mr. DeFazio).
Mr. DeFAZIO. Mr. Speaker, before the missteps of deregulation, the
United States of America throughout the 20th century, basically from
the time we regulated energy after 1932, through 1992 when Congress, in
a little-noticed action buried in a so-called energy-efficiency bill
allowed deregulation to go forward. During that time the words
blackout, brownout, price spikes, price gouging, these were not part of
our electrical energy vocabulary. Now in 8 short years, the wonders of
a so-called deregulated market have delivered that. They have delivered
that not only because the concept itself is faulty, and something that
is inherently monopolistic or oligopolistic, but also because of the
active encouragement and inattention at best by the Bush
administration.
There are still laws on the books, the gentleman would not believe
it, there
[[Page H2938]]
are laws on the books that require that the Federal Energy Regulatory
Commission determine whether prices will be based on cost or market-
based. They are not supposed to be market-based where markets do not
exist. Clearly there is no effective market in the western United
States. It is not only California that is suffering these outrages. It
is also Oregon, Washington, and other western States.
There is no effective market. The Federal Energy Regulatory
Commission, their own economists, their own staff found in December
that prices were unjust and unreasonable, but the chairman, a Mr.
Hebert from Louisiana, a former staffer to the former recently deposed
majority leader of the Senate, is refusing to do anything about it. The
mantra from the Bush administration is price caps are bad. They do not
work.
They are right, if we have a functioning market where one has the
normal laws of supply and demand, price caps are not a good idea.
Energy is unique. It requires that you have a 10-15 percent reserve
margin at all times to have reliability. There are very few sellers.
There are very limited ways of delivering that energy to your house.
Most of us only have one wire that comes into our house. Most
businesses only have one wire that comes into their business. There are
a couple of routes over higher voltage lines to get to that
neighborhood or communities. There are few options. We are not actively
buying and selling and chasing after a multiplicity of sellers. This is
clearly a manipulated market. One can look at the prices and know it is
manipulated.
Mr. Speaker, it just came out that the record, so far as we know, is
a price charged by Duke Energy Corporation of the Carolinas to
California last winter, low-demand period in California when strangely
enough about a third of the generation in the State went missing. Just
was not available. No one knows where it went because under
deregulation, a company does not have to operate their plant. They can
say, freeze in the dark, sucker; you are not paying me enough money.
That is what deregulation means. There is no longer a duty to serve.
Duke Energy, being a benevolent organization, sold energy for only
$3,880 per megawatt hour. I tried to figure that out in terms of what
it would mean for my electricity bill. I have an energy-efficient house
with a heat pump. It is an all-electric home. In my case, it would have
meant that my energy bill for 1 month would have exceeded my mortgage
by a factor of eight if I had to pay that price individually.
That is the outrageous extortionate price that Duke Power, and they
are not alone. We have Enron. We have Reliant Company, I believe they
are based in Texas, which tied their energy commodity traders, their
speculators who produce nothing except profits, to the people running a
decrepit plant that they bought in northern California; and as the
market went down, they told them to shut down the plant; and when the
market went up, they told them to crank it up. They were attempting to
directly manipulate the plant, destroying the plant, obviously not
providing reliability; but guess what, it is legal. It is legal because
the Federal Energy Regulatory Commission says that is not market
manipulation, that is not price gouging, that is just fine, according
to the Bush Federal Energy Regulatory Commission.
Mr. FILNER. Mr. Speaker, if the gentleman would yield, we were
promised under deregulation competition and lower prices. What it
sounds to me that is happening is that the so-called deregulated
market, under control of a cartel, has not only increased prices but it
has decreased the supply because they are withholding it to create a
market where they are getting higher prices.
Mr. DeFAZIO. Mr. Speaker, if the gentleman would yield, the United
States had until the late 1990s, on average the lowest-cost energy in
the entire industrial world through a system of regulation.
We have quickly gone to a system which is totally unreliable, has
blackouts and brownouts, and has price spikes where prices are going up
to 100 times the so-called normal price. A 10,000 percent increase. The
gentleman referenced earlier these energy companies, these new energy
companies, many of whom are based in Texas, are making profits that are
up 400, 500, 600 percent in 1 year. You do not get those kinds of
profits in 1 year in a normal and functioning market. Something is very
wrong here, and what is wrong is the people of California have been on
the forefront of people being fleeced under this system, but now they
are sticking it to the people in the Northwest; and it will come to
other parts of the country.
Mr. Speaker, under deregulation in New England, Pacific Gas &
Electric of California, which says they are broke, sent billions of
dollars to the mother company, Pacific Gas & Electric of America,
whatever it is called, who sent the money to Pacific Gas & Electric of
New England, who now is one of the larger owners of plants in New
England. And since they deregulated New England and since Pacific Gas &
Electric bought plants in New England, the same one that says that they
are broke in California, reliability, they are having the same kind of
outage problems. The plants are not available, and the price goes up.
This is becoming a nationwide phenomenon.
Mr. FILNER. Mr. Speaker, if the gentleman would yield, we have
roughly a 45 to 50,000 megawatt capacity to produce. During the winter
months that we just experienced, the demand is roughly two-thirds,
roughly 30 to 35,000 megawatts. So there is a demand of 30,000, there
is a capacity of 50,000; and yet we had blackouts during this time. Why
did we have blackouts? We are supposed to have 20,000 megawatt surplus.
Well, somehow all of the plants at once were shut down. They had
maintenance problems or other problems. Or, and this is why I say it is
a price problem, not just a supply problem, they could not get paid by
the utilities for their electricity so they just shut down.
Mr. Speaker, this is not the promise of deregulation. This is the
fact of a manipulated market, that we have blackouts. You know what
happened in San Diego, a day's blackout, we had near fatalities
at traffic intersections because the traffic lights do not work. We had
near fatalities because elevators shut down. And the threat of
blackouts means that people cannot have any orderly budget or orderly
future, so they were thinking of leaving California. A blackout for a
few hours in certain industries means millions of lost inventory and
production. So blackouts maybe for an hour or for a day and maybe only
once or twice during the winter, but they are catastrophic; and we are
looking at the possibility of 30 or more days of blackouts in
California for the coming summer.
Mr. DeFAZIO. Mr. Speaker, this administration says if we put in a
price cap it will make things worse. Absolutely to the contrary. In
Oregon, Washington, and California, people are building and proposing
the construction of plants as quick as possible. Westinghouse is years
out on generation. We are building them. We are also having a drought.
That compounds the problem.
Mr. Speaker, actually the inverse would happen. If you had a price
cap, there would be more energy available because right now what we
have is people gaming the system to try to drive the price as high as
possible because they think if I shut down part of my generator, I can
drive the price up, only operate part of the plant and still make more
money. But if you set a cap and say you are over that cap, then
suddenly we would have more generation. We would not find the
withdrawal and the manipulation and the withholding from the market
that is causing some of these blackouts and brownouts this summer in
California.
Mr. FILNER. Mr. Speaker, let me read the press statement of the
gentleman from Texas (Mr. Barton), the chairman of the Subcommittee on
Energy and Air Quality. He issued a statement on why the Republican
leadership refused to continue consideration of what they call their
energy emergency relief act. He said, in the face of all of this
disaster that is looming, in the face of this incredible price
catastrophe for the West, he blames taking the legislation from the
table on ``the national Democratic leadership which has exhibited
unwillingness to forge ahead without a price caps measure.''
Mr. Speaker, the gentleman from Texas is absolutely right, it is the
[[Page H2939]]
prices that have got to be brought down. It is the prices that are
causing the crisis. And in fact, as has been demonstrated, a price cap
would make sure that we had reliable supplies, and not the other way
around.
Mr. DeFAZIO. Mr. Speaker, if the gentleman would yield back, they
talk about market signals. What is the market signal that Duke Energy
and its investors are getting at a price of $3,380 per megawatt hour
for electricity, electricity that 2 years ago sold for $30 a megawatt
hour. That is \1/120\ times the price. I mean, this is just
extraordinary. What is the market signal these folks are getting? How
efficient is the plant going to be that they are going to build? What
is their long-term look at the market? What about future reliability?
{time} 1615
Actually in the Northwest, we recently had a company that has what is
called a server farm, that is a headquarters for a bunch of systems and
companies and others that operate computers, computer servers, they
were told, ``Yeah, we've got to admit it's a little problem when we
crash the electricity to your server farm. We can understand you would
get upset.'' So the local company there said, ``Hey, if you only pay us
400 percent of the current price, we'll guarantee reliability.'' Is
this the new wonders of the market that the Bush administration is
talking about? If I do not want to have to reprogram everything in my
house or have the lights go out when I am not there or have a problem
with my heat pump, my defroster in the refrigerator, things melting,
the other things that happen, or senior citizens in nursing homes, if
we want reliability, by God, you have just got to pay three or four
times as much. I do not think so.
This works. It worked successfully. We became the greatest industrial
Nation on Earth under such a system. I realize people say, ``Oh, you're
a socialist, DeFazio. You want government to get into this.'' I say,
``The government was in this.'' What do you think the policy was when
the Reagan administration was in office?
Regulated utilities when the Reagan administration was in office. We
did not have these kinds of problems. This was signed by Bush the
senior back in 1992, and it only took 8 years to destroy the western
energy supply and grid under national deregulation. It is coming to the
rest of the United States soon. People know it. They want us to go back
to a system that works. This is too essential to our economy, too
essential to our senior citizens, too essential to small businesses and
residential ratepayers. We cannot have something that is unreliable and
plagued with price spikes or blackmail, where they say, ``Look, if you
don't want your lights to go out, just pay me five times your bill.''
Gee, I guess I would only have to pay up from $170, if I would be
willing to pay $850 for my electric bill in a winter month, they would
guarantee that my lights would stay on.
Is that not great? This is sure a functional market. And the Federal
Energy Regulatory Commission, the chairman appointed by George Bush,
Jr., unlike George Bush, Sr., who brought about this system, is saying
there is nothing wrong, he is not going to do anything about it. He is
defying and suppressing his staff. Hopefully the changes that have come
about on the other side of the Hill will bring some investigation and
subpoena into this where we get some of the professional staff to come
in or we get even Commissioner Massey to come in and tell us what is
really going on at FERC, which is that they are there for the profits.
As long as they can milk this for the Reliants, the Dynergys, the
Entergys, the Enrons, the Dukes and all these other predatory new
energy companies, they are going to do it because they are major
contributors to this administration and to the majority party in this
House and, by God, they are not going to do anything to hurt their
profits and Joe Barton was making sure of that and that is why he
killed that bill. They did not want a vote on price caps because they
are afraid it might win.
Mr. FILNER. I thank the gentleman from Oregon. We have, I think,
shown that there is an incredible disaster both in being and looming
further. We have shown there is a manipulated market that needs to be
brought under control, that cost-based rates ought to be brought in in
order to stem this tide while other solutions come about. And we know
that there are long-range solutions involved in all this. We know that
even though we are concentrating right now at getting the situation in
California and the West stabilized through cost-based rates, we have to
move into other directions in terms of renewable energy sources and a
much different way of approaching our energy. One of the leaders in the
Congress in making us think about these things has been the gentlewoman
from California (Ms. Woolsey). I thank her for joining us and for her
efforts on behalf of an energy future that will give us back some
control of our own life.
Ms. WOOLSEY. I thank the gentleman from California for organizing
this special order to highlight the energy crisis facing Californians
and the west coast.
Like my colleagues, I rise this afternoon in outrage, outrage that my
constituents in Marin and Sonoma County and across California are still
dealing with rolling blackouts and skyrocketing energy bills while the
power companies are raking in record profits. We need a responsible
energy policy that helps in the short term by allowing, insisting, that
FERC do its job, FERC, the Federal Energy Regulatory Commission, do its
job by imposing cost-of-service based wholesale rates, at least
temporarily, to stabilize this situation. And in the long term by
making significant investments, time, money, incentives and focus in
clean energy sources to supplement our current electric supply so that
we can ensure that we never repeat these shortages.
In the short term, the Federal Government must take action to protect
California consumers and stabilize our market. But despite repeated and
urgent requests from California Democrats and Democrats from the
Pacific Northwest, President Bush refuses to order FERC to impose
wholesale cost-based rates in California and the western region. It is
outrageous that the President dismisses this straightforward action
that would protect 34 million California consumers, consumers who are
being gouged by big energy producers. With two oilmen in the White
House, it is absolutely no surprise that this administration turns its
back on consumers and sides with big oil special interests. But that
certainly does not make it acceptable.
What is acceptable is this: recognizing that we need to increase
renewable energy resources while reducing demand for electricity. We
can do this by promoting and using more efficient energy technologies.
These are policies that will protect our environment and guarantee a
better future for our children.
Since passing the National Energy Policy Act in 1992, Congress has
generally ignored energy issues. But power problems in California and
the higher prices of natural gas and oil throughout the Nation have
brought energy back to the top of our Nation's agenda. The energy
shortage we are experiencing in California is just a signal. It is a
signal to the country that Congress must raise the stakes in search of
sensible energy policy. Obviously what we are doing is absolutely not
enough.
As Congress and this administration work to forge a long-term energy
policy, it is imperative that we make a true, honest commitment to
renewable energy sources, to energy efficiency and to conservation so
that we prevent future energy crises and we protect our environment.
When President Bush stood before Congress in this very Chamber and
told the American people in February that he would pursue
environmentally sound policies, including renewable energy sources that
would help solve our energy crisis, I thought that was too good to be
true. Unfortunately, I was right. As soon as the cameras went off, the
commitment went away.
Sadly, the Bush administration's budget reneges on the commitments
the President made to pursue renewable energy sources. Critical R&D
programs were cut. Energy efficiency and technology deployment programs
were cut between 35 and 50 percent. That is unacceptable. And it is a
disaster for our energy future. Actions speak louder than words. That
is why I am outraged but not surprised that the administration's
commitment to environmentally friendly sources of energy
[[Page H2940]]
lasted only as long as the television cameras were rolling.
I would say to our President, if he were here, now is the time to
increase funding for national energy efficiency and renewable energy
programs. It is absolutely not the time to cut funding. Cutting funding
for vital energy efficiency and renewable energy programs is a step
backward, a step in the wrong direction, and a serious blow to our
efforts to craft a sensible national energy policy.
This is especially frustrating because we do have bipartisan support
for renewables and clean energy policy. In fact, it is pretty
overwhelming. As the lead Democrat of the Subcommittee on Energy of the
Committee on Science, I am preparing energy policy that is
environmentally sound, that will result in lower cost solar energy,
wind power, bio energy and geothermal energy. Relief for the American
people, in the short and long term, is where our Federal priorities
should be, not on increasing our dependence on fossil fuels as the
administration intends to do. This dependence on fossil fuels got us
into this situation in the first place.
Like my constituents and my colleagues, I strongly believe there is
an important role for the Federal Government to encourage sensible
short-term and long-term policy in order to solve the energy crisis. As
this Congress debates energy policy, we must broaden our horizons by
thinking out of the box. We must encourage policies for the future.
I urge the Bush administration to rethink their recent actions to
join us in this endeavor because, after all is said and done, what
happens in California, the sixth largest economy in the world, will
happen across this Nation. It is time to step up to the problem now. It
is time to make a short-term commitment to California to make sure we
stabilize this situation. And it is absolutely time to look at smart
energy policy for our future so that we will no longer have blackouts.
I very much thank the gentleman from California for doing this and
for letting me be part of it.
Mr. FILNER. We appreciate the leadership of the gentlewoman from
California on the Committee on Science and hopefully someday her
chairmanship of the subcommittee. We are looking forward to her report
on renewable energy sources.
There are supposedly several plans that have been put on the table to
look at this energy problem in its broadest sense. President Bush put
out his energy plan several weeks ago. It had 105 recommendations. Not
one of them gave any hope or any help to the western States for
immediate relief. Overall, his plan is an unbalanced one that puts big
oil and utility special interest friends of his who are already reaping
record profits ahead of the consumers, all of us as consumers and the
environment. He wants to drill in the Arctic and other pristine areas.
There is no relief for consumers facing high gas prices and high energy
costs. There is no help for the consumers out West who are being gouged
by utilities. He wants to produce some of the fossil fuels and give tax
breaks for nuclear plant construction. In fact, when his Secretary of
the Treasury, I believe, was giving testimony to a congressional
committee, he said on the safety record of nuclear energy, if you leave
out Three Mile Island and Chernobyl, there is no problem with nuclear
energy. That is coming from the Cabinet of this administration.
He does nothing for fuel efficiency in his plan. The President claims
to want to do something about it but slashes funding as we have just
heard for energy efficiency and renewable energy by more than 25
percent. He delays putting in our fuel efficiency standards. He has
rolled back such standards for air conditioners. He is using the excuse
of the California crisis to roll back all environmental regulations,
breaking his campaign promises on clean air, for example, and
undercutting all kinds of other protection. And he benefits not the
consumer or the average American but the oil and gas industry, the
utilities, the nuclear and coal producers who have contributed,
coincidentally, millions to the Bush campaign.
There is another plan on the table, a plan that was devised by the
Progressive Caucus of the Democratic Party. With us this evening is the
chairman of that Progressive Caucus, the gentleman from Ohio (Mr.
Kucinich) who will outline a plan which actually will help us in this
crisis and not hurt us as the Bush plan does.
Mr. KUCINICH. Mr. Speaker, as chairman of the Progressive Caucus, I
am proud to be here this afternoon to present our alternative. But
before I do, I would like to offer a perspective on this issue. My
father and mother, Frank and Virginia Kucinich, when they raised a
large family in Cleveland, Ohio, many years ago, I can remember vividly
the scene in the kitchen where they were counting their nickels and
their dimes at the kitchen table, you could hear the click of the coins
against the table, one of those old enamel top tables, and they were
counting their nickels and dimes so they could have enough money to pay
their utility bills. I am sure that there have been a lot of families
in this country who had to worry about those nickels and dimes in being
able to pay the utility bills because today more and more families are
finding out that the cost of electricity is beyond their meager
budgets.
{time} 1630
Families are finding out that even if they are blessed enough to have
even the tiniest bit of economic security, that they cannot keep up
with rising utility bills. Families are finding out that even if they
have a little bit of affluence, they cannot keep up with rising utility
bills. The nickels and dimes have turned to five dollar bills and ten
dollar bills, and people are counting them out and they cannot keep up
with the rising electric bills.
Today, all eyes are on California where the people of California have
been the target of a deliberate manipulation of energy supplies by
energy companies that has raised prices in that State. Blackouts in
California have been the result of a policy which has tried to strangle
the market in favor of energy companies that have done nothing but
manipulate the market and manipulate energy prices and gouge consumers.
Now, this is not just a humble Member of Congress from Cleveland,
Ohio, stating this. These conclusions have been reached by the Federal
Energy Regulatory Commission, by the California Public Utility
Commission, by the California Independent System Operator, by Credit
Suisse and by the Public Utilities Fortnightly publication.
Now, there are people around this country who say, well, it is a
California problem. Do not believe it. This is a matter that is coming
to a light switch near you in your neighborhood soon. Rolling blackouts
and outrageous prices are today strapping citizens of California
because deregulation has permitted energy companies to rig the market
and price electricity as high as the market will bear.
The Tellus Institute's report, called the Progressive Pro-Consumer
Solution to Today's Electricity Crisis: Just and Reasonable Rates show
that these events are not from a lack of supply and, Mr. and Mrs.
America, they are not unique to California. I quote from this Tellus
Institute report about the solution being just and reasonable rates,
and they say every State that chose to restructure its electric
industry and deregulate generation did so in the hope that tangible
benefits would result. The general assumption was that retail
electricity prices would decline relative to what rates had been under
regulation. As a matter of fact, everyone remembers they told the
American people, if they deregulate their rates are going to be
cheaper. That is what they told the people of California. That is what
they told the people of Ohio. That is what they are telling people all
over the United States.
In California and in many States, almost every one of these States
now faces rising electricity prices. In California, deregulation has
helped to create rolling blackouts, has caused exorbitant electricity
prices, threatening the financial health of the State. In general, the
goals of restructuring go unfulfilled. The price of electricity is
higher than before and the quality of service has declined
dramatically.
The Progressive Caucus has moved into this breach, into this massive
evidence of price gouging, to come up with a solution that I will go
over very briefly. That solution, the general approach is, it mandates
a fair electricity
[[Page H2941]]
market nationwide and mandates sustainable energy policies. We define
the problem as saying that deregulation has led to price gouging and
rolling blackouts. The solution to the high prices: Fair prices
nationwide, with federally-set cost-based rates, including refunds.
That does not mean caps, because you could create price caps, but if
the rates are already sky high, what does that do for your family's
budget? Very little.
Mr. FILNER. Mr. Speaker, I just want to show this chart, which shows
the coalition of organizations and individuals which support that
concept in the Committee on Energy and Commerce, which is called the
Price Gouging and Black-out Prevention Amendment. We can see not only
all the governors of the western States, but farmers and businesspeople
and working people and consumers, public safety people, health care
providers, all of which support the end of the price gouging that the
gentleman has advocated.
Mr. SHERMAN. Mr. Speaker, will the gentleman yield?
Mr. FILNER. I yield to the gentleman from California.
Mr. SHERMAN. Mr. Speaker, I just want to point to that chart. The
bill before this Congress to provide for rate caps or for regulation of
these wholesale energy prices is supported not only by the governor of
California, but by the governors of Oregon and Washington, and by the
American Association of Retired Persons, AARP, the Consumers Union, the
Consumer Federation of America. These are organizations that look out
for consumers and there should be no doubt as to what approach is in
the interest of consumers.
Mr. FILNER. Mr. Speaker, I thank the gentleman from California (Mr.
Sherman) for those comments.
Mr. Speaker, I would ask the gentleman from Ohio (Mr. Kucinich) to
continue the outline of the Progressive Caucus.
Mr. KUCINICH. Mr. Speaker, I thank the gentleman from Sherman Oaks,
California (Mr. Sherman) for his remarks.
Mr. Speaker, in going back to the solution to high prices: Fair
prices nationwide with federally set cost-based rates, including
refunds.
Utilities are entitled to a modest profit. Any business is. But when
one starts talking about California electricity generator profits that
for one company, Calpine, increased first quarter of 2000, 424 percent;
Dynergy, 102 percent; Williams, 100 percent, all of those figures were
increased for the first quarter of 2000 over the last year. People are
making a killing at the expense of the consumer.
So we are trying to address that in the Progressive Caucus by coming
up with a solution and a plan that provides for fair prices nationwide
with federally cost-based rates, including refunds. The solution to
rolling blackouts is to mandate generators to produce electricity. The
solution to issues relating to energy efficiency is to mandate
increased energy efficiency.
With respect to renewables, mandate increased renewable energy
production. Clean air aspects, mandate the development of clean air
technologies. Public power, provide financial incentives to encourage
public power systems and remove key barriers.
Now, what most people are not aware of across this country is there
are actually over 2,000 municipally-owned electric systems, one of them
being in Cleveland, Ohio. What most people are not aware of is that the
right of utility franchise, now listen to this, Mr. and Mrs. America,
the right of utility franchise belongs to the people. There is no
inherent right for the private sector to own a utility. Understand
that. The people have the right to a utility franchise. We give the
private sector, in theory, the right to operate a utility in exchange
for reliability of service and low cost. That is the way it is supposed
to work, but, Mr. and Mrs. America, it does not work that way.
Consumers are getting gouged by these companies that are using our
own rights; they are using the right that we give them to operate a
utility.
We have a plan here with the Progressive Caucus to take back the
right that we have through a measured approach that would mandate fair
electricity markets nationwide and mandate sustainable energy policies.
But the truth is that if these energy companies do not respond, if they
insist on price gouging, if they insist on price manipulation, then the
people have a right to take that franchise back because that is a
Democratic right. That right is vested in the people. It is in our
State constitutions and we have the right. What we give, we can take
back. If they do not want to give us decent rates, then we punch their
ticket, take their charter and reclaim our government and reclaim the
ability to save our nickels, our dimes, our $5.00, our $10.00, to save
our families, to save our way of life.
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (Mr. Rogers of Michigan). The Chair would
just remind Members to please address all remarks to the Chair.
Mr. FILNER. Mr. Speaker, I thank the gentleman from Ohio (Mr.
Kucinich), the former mayor of Cleveland, for his leadership on this
issue. We hope that the caucus program can be, in fact, on our agenda
at some point in the future.
Mr. Speaker, as California experiences this problem, the
Congressional representatives all over California have been trying to
make sure that our State and our Nation does not go under, and one of
the leaders in this effort has been the gentleman from Sherman Oaks,
California (Mr. Sherman). We thank the gentleman for his ideas and his
energy and his contributions in coming up with a solution.
Mr. Speaker, I yield to the gentleman from California (Mr. Sherman).
Mr. SHERMAN. Mr. Speaker, I want to begin by commending our
colleague, the gentleman from Ohio (Mr. Kucinich), who, in an earlier
lifetime, was mayor of Cleveland and fought against overwhelming odds
to maintain municipal ownership of the utility company there.
In my City of Los Angeles, we also have municipal ownership of our
utility system, and we do not have any of the problems that are hitting
the rest of the State, and which hit San Diego so hard.
Mr. FILNER. Any price increases?
Mr. SHERMAN. None.
Mr. FILNER. Any blackouts?
Mr. SHERMAN. No blackouts. Good service. No problems. Where we had
regulation, as we had in our State for well over 50 years, no problem;
where we have municipal ownership even today in the City of Los Angeles
and other cities in California, no problem. As I understand it, no
problem in Cleveland today.
Mr. KUCINICH. Right.
Mr. FILNER. I will tell the gentlemen, by the way, that because the
situation in San Diego has become so grave with doubling and tripling
of rates, with scores of businesses facing bankruptcy and closing their
doors, the whole community is virtually united as saying we must get
control of our future. We are going to establish in San Diego a
municipal utility district where we can begin to get some leverage on
the system. If we owned 1,000 megawatts of electricity, one-third of
our needs, we could have tremendous impact on the whole situation.
So we in San Diego, like the State of California in general, is
moving toward a municipal ownership, to get out of, really, the heel of
the cartel of energy wholesalers that is destroying our economy.
Mr. SHERMAN. I should point out that while I say Los Angeles has no
problem, we are bound together with the rest of the State, just as the
whole country is bound to California, an the economic problems facing
the other cities in the State of California affect us.
I should also point out for our colleagues, who might think well, if
Los Angeles has no problem, a huge part of California has no problem,
that the Los Angeles municipality is roughly 10 percent of the State of
California. So much of, as the gentleman knows, the Los Angeles area
lies outside the city limits and outside the protection of municipal
power. What has happened to our State is that we are being bled dry. We
paid $7 billion for the generation of electricity for our State in the
year 1999. In the year 2000, we used the same amount of electricity but
instead of paying $7 billion, we paid $32.5 billion. This year for the
same amount of electricity, we are going to pay $60 billion to $70
billion.
Now, this has fully hit home in San Diego because the utility there
had a
[[Page H2942]]
different deregulation deal than the one in the rest of Southern
California, or Northern California. So San Diego has seen the doubling
and tripling of some electric bills because the local electric utility
was not required to use up its entire net worth in order to protect
consumers from the gouging being done from those who have purchased
these electric plants.
In contrast, those in my district who live just outside the city
limits were somewhat protected, protected for months. We saw disaster
in San Diego, but we, just outside the city limits of Los Angeles, were
safe because billions of dollars of Southern California Edison's net
worth was used up, paying the gouging prices and selling to consumers
at a regulated price. Of course, that could not go on forever because
the gouging reached such a level that it bankrupted enormous utilities,
threatens to wipe out the surplus of the State. The gouging reached
levels that we never imagined as we thought that only San Diego
consumers would be faced with this problem.
The voraciousness of these companies reached an incredible level.
Mr. FILNER. Mr. Speaker, I wonder if I may bring my colleague, the
gentlewoman from San Diego (Mrs. Davis), just to share with us some of
the experiences that San Diego has had and what conclusions they lead
for us to take in this Congress.
{time} 1645
Mrs. DAVIS of California. I wanted to thank the gentleman from
California (Mr. Filner) for providing us this time today. We have been
talking about how people generally are feeling about this; and those of
us in San Diego, we were at the epicenter last year.
I can tell you as we walked around the community, and the gentleman
from California (Mr. Filner) was certainly aware of this, it was almost
as if all the businesses were dying. We have not got to that point yet,
but people felt that way, that that could happen.
I see now there is new information out really across the country
about the way people are understanding what is happening. A Washington
Post-ABC poll just released Tuesday showed that 56 percent of the
people across the country understand an electricity crisis should be
cost-based. In California I would suspect that the percentage is even
higher. People are not saying there should not be some profits, but
that they should be cost-based. They should not be based on some market
in the sky that is just a dream.
But we keep hearing that the administration is saying that cost-based
prices will not increase supplies or decrease demand. That has really
been their mantra.
They are just not listening. Californians, I think, have not been
claiming that rational, cost-plus profit prices would address the
growing energy supply needs of the western states, but they are saying
that that kind of cost-based pricing is critical for today's problem,
today, considering what is going on in the economy.
Building a power plant is a financial investment decision, and
financial investment decisions that for a while people chose not to
make. For the last 20 years it was not clear that more power was even
needed, so energy companies did not make the financial decision to
build more plants throughout the West.
Now it is clear that with a 40 percent population growth just in
Nevada in the past decade, and with a 20-25 percent growth in our other
neighboring States, and 10 percent growth in California, that more
power at peak times will be needed. And, guess what, in the last year,
16 new plants in California alone have been approved, and four will be
on line this summer. Nevada businesses are considering building new
plants not only to cover the needs of their enormous growth, but also
to export to other States.
We are seeing this growth in other places as well. In Baja,
California, they are looking at the economic opportunities for selling
electricity to the United States. In addition, it is working on a joint
venture with U.S. companies to build a liquid natural gas conversion
plant and terminal to bring liquefied natural gas economically from
Australia and other areas of the world to increase our supplies. In
fact, people are responding.
Mr. FILNER. Mr. Speaker, I know the gentlewoman wants to show how we
are dealing with the supply issue. I want to have the gentleman from
California (Mr. Sherman) show through this chart that the crisis now
that we are experiencing with the price is not primarily one of supply.
We have supply.
I would ask the gentleman from California (Mr. Sherman) to explain
this chart, what these energy companies are doing to us.
Mr. SHERMAN. Well, yes. What has happened is that because we do not
regulate these wholesale costs, they have an incentive to withhold
supply and drive the price up. Instead of making a megawatt for $30 and
selling it for the regulated price of $50, they produce fewer
megawatts, drive the price up to $500, and make a killing.
What they will do when they shut down a turbine is say the turbine is
closed for maintenance. The chart in front of you there illustrates how
many megawatts were not produced on the average day in April, a couple
months ago, because turbines were closed for maintenance. As you can
see, over 15,000 megawatts were not produced on the average day. That
is the yellow line.
You might say, is that not typical? No. You look at the prior April;
and you see that blue line, roughly 3,000. You say was April just an
anomaly? You compare the yellow and the blue lines, and the pattern is
clear, 8,000 to 12,000 to 13,000 megawatts not produced on the average
day to drive up the price, not because the plants needed to be closed
for maintenance, but in addition to the regular maintenance that was
done just 12 months ago.
I might point out, that is about one-fifth of the power we need in
California. Closed for maintenance means closed to maintain an
outrageous price for every kilowatt.
Mr. FILNER. We only have a minute left. I want to share with my
colleague from San Diego a little frustration.
The President visited our city last week. We are in the middle of a
crisis. As I said earlier, if it was a tornado or earthquake, he would
have been there. He chose not even to come to meet people or the press.
He went to one of our great Marine bases, Camp Pendleton. No contact
with ordinary people. He said nothing really about the crisis and how
he was going to solve it, and people had no opportunity to deal with
the President face-to-face.
I think this was an incredible abdication of responsibility for a
major crisis, and I know those of us from San Diego were especially
aggrieved by that.
Mrs. DAVIS of California. I wish that the President would have had an
opportunity to walk into just some of the cafes, the mom and pop
restaurants in our communities, because I think it was there that
people really felt this shift a number of months ago in San Diego. When
you have sitting on those cafe tables a charge that they are asking
people to pay in addition to the cost of the lunch, of the dinner, just
explaining to people what has happened in terms of their own particular
costs, I think that is quite astounding.
The other issue is not just the mom and pop shops. Certainly our
seniors who have been so affected. But we have great concern and great
fear in the community now that in fact some of the progress that they
have been making, and I will take the biotech industry as one, that
some of that progress may go out the window because we are faced with
some of the problems that we are faced with today.
Mr. FILNER. I would say to those industries that really their
survival is at stake, and yet they see a Republican President, and they
may be Republicans, they feel they should not get into this. I will say
to the businesses of California and the West and this Nation, for your
own survival, tell the President that it is time to act. Tell the
President that the Federal Government must intervene for our economic
survival. He will listen to you more than he may listen to our Congress
people here. So I beg you to ask.
I thank our colleagues, the gentleman from California (Mr. Sherman)
and the gentlewoman from California (Mrs. Davis) on the floor with me
today. Apparently our time is up, but we will be back here every day to
talk about this crisis, until this Congress and this President act on
behalf of all of the consumers in this Nation.
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