[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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