[Congressional Record Volume 147, Number 83 (Thursday, June 14, 2001)]
[House]
[Pages H3183-H3184]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




       FERC LIKELY TO PUT NEW LIMITS ON CALIFORNIA ENERGY PRICES

  (Mr. McDERMOTT asked and was given permission to address the House 
for 1 minute and to revise and extend his remarks.)
  Mr. McDERMOTT. Mr. Speaker, I am very pleased to report here, on Flag 
Day, that the oil industry forces of George II are in retreat. A few 
weeks ago, the Duke of Halliburton, Mr. Cheney, met with the Oregon, 
Washington, Montana, and Idaho delegations and said there is no 
problem, we are not doing anything. Then a few days ago he met with the 
California delegation and stiffed them in the same way.
  Now it turns out in today's newspaper, which I will enter into the 
Record, an article from the Washington Post, they are in retreat. They 
are going to go down to FERC and finally ask FERC to do what the law 
says it must do, that is, cap unreasonable prices in electricity.
  The United States west of the Rockies has been ignored by this 
administration, but they are now en route. They are running for the 
hills. They have dropped their guns. They have torn off their uniforms, 
and they are running to hide down at FERC.
  They are not going to get away with putting in something down at FERC 
that just does a little something. We want real caps on those gougers. 
Vote for the Anti-Gouging Act of 2001.

               [From the Washington Post, June 14, 2001]

       FERC Likely To Put New Limits on California Energy Prices

                  (By Mike Allen and Juliet Eilperin)

       A federal agency plans to impose new limits on California 
     energy prices next week, according to senior government 
     officials, a move that would offer President Bush and 
     Republican lawmakers relief from an increasingly thorny 
     political problem in the nation's largest state.
       The Federal Energy Regulatory Commission plans to hold a 
     special meeting Monday to take up possible solutions to 
     California's power crunch. And officials said yesterday the 
     leading proposal would control the wholesale price of 
     electricity throughout the West around the clock.
       Such a measure would expand a rule that applies only to 
     California and only during the most severe power shortages. 
     Gov. Gray Davis (D) has said the current program is shot full 
     of loopholes and does not benefit consumers. Under the new 
     proposal, the government would set a target price--generous 
     enough to permit a profit for efficient producers--and 
     companies would have to justify higher prices in writing, 
     officials said.
       The move comes as concern is growing among congressional 
     Republicans that the Bush administration and its GOP allies 
     were losing the political battle over California's energy 
     crisis--and that it could affect the party's fortunes in next 
     year's elections.
       House Majority Whip Tom DeLay (R-Tex.) has assigned a team 
     of Republicans to help deflect legislative attacks on Bush's 
     energy policies, and has instructed members to deliver daily 
     floor speeches defending the administration's plans. House 
     Republicans took up Bush's broader energy bill--which focuses 
     on stepping up production--in earnest yesterday in an effort 
     to pass it by mid-summer.
       Congressional Democrats have been increasing pressure on 
     the administration to address quickly the skyrocketing 
     electricity prices and power shortages in Western states. 
     Sen. Joseph I. Lieberman (D-Conn), the new chairman of the 
     Governmental Affairs Committee, plans to hold a hearing 
     Wednesday--two days after the commission meeting--to examine 
     federal regulation of energy, and his main witness will be 
     Davis.
       House negotiations on a bipartisan emergency energy bill 
     for California broke down last week just as Democrats were 
     taking control of the Senate. In response, Rep. W. J. 
     ``Billy'' Tauzin (R-La.), chairman of the Energy and Commerce 
     Committee, and 14 other GOP lawmakers seized on a proposal by 
     Rep. Doug Ose (R-Calif.) to make FERC's rules apply around 
     the clock. Tauzin wrote FERC Chairman Curt Hebert Jr. to urge 
     its adoption.
       Hebert scheduled the unusual FERC meeting shortly 
     thereafter. ``Nobody would disagree with the urgency of the 
     situation and the need for the commission to act promptly. 
     We're working feverishly to do that,'' said Walter Ferguson, 
     Hebert's chief of staff.
       The commission, composed of three Republicans and two 
     Democrats, is independent. Members are appointed by the 
     president and confirmed by the Senate. Bush and key members 
     of the commission have said repeatedly that they have 
     ideological and practical objections to an absolute cap on

[[Page H3184]]

     the wholesale price of electricity, which Davis has argued 
     is the best way to prevent electricity from becoming 
     unaffordable this summer.
       Federal officials said the commission's less-stringent 
     measure--``face-saving,'' Democrats called it--would help 
     stabilize power prices while overcoming White House and 
     commission members' objections to a cap.
       ``We aren't overly concerned that this will discourage 
     generation like real price controls would,'' a White House 
     official said. ``A hard cap would be disaster. It would cause 
     electricity generators to shut down.''
       Another White House official said that the administration 
     would not take a formal position until the commission has 
     voted and the details are clear, but added that the measure 
     sounded acceptable ``in theory.''
       ``The president has been calling on the Federal Energy 
     Regulatory Commission to be vigilant in making sure that 
     illegal price gouging does not occur in California or 
     elsewhere,'' the official said.
       A California Democratic official said, ``They realized they 
     have been taking a beating on this issue, both in California 
     and nationally. This is the equivalent of Bush saying, 
     `Uncle.' ''
       However, Davis said at a news conference in Sacramento that 
     he remains ``a doubting Thomas'' about the prospects for 
     dramatic action from the commission. ``I've been fighting 
     FERC for over a year,'' he said. ``The federal government has 
     not been doing its job. If they finally do, I'll say, `It's 
     about time, but thank you.' ''
       Sen. Dianne Feinstein (D-Calif.) said the measure being 
     considered ``would be a flexible price cap, set at the price 
     of least-efficient megawatt of the least-efficient plant.''
       ``Price mitigation appears to be a way to avoid using the 
     words `price cap' or `cost-based rate,' which some members of 
     FERC and the Bush administration find objectionable,'' 
     Feinstein said. ``I don't care what they call it, as long as 
     they get the job done.''
       In April, FERC issued a price restraint plan that 
     established cost-based price ceilings for generators selling 
     wholesale power in the state, but limited the measure to 
     power emergencies when California's available power reserves 
     drop below 7.5 percent of demand. The order is credited with 
     helping bring down California's electricity prices, which 
     dropped below $100 a megawatt hour statewide last week for 
     the first time since the crisis began last autumn. Fuel 
     conservation, milder weather and increased generating 
     capacity also have played a part.
       House Republicans, after the first hearing on Bush's energy 
     package yesterday, held a closed-door meeting with 
     administration officials and outlined an ambitious schedule 
     for enacting it. According to participants, House panels 
     would pass legislation over the next several weeks so the 
     entire chamber could vote before the August recess.
       The meeting in DeLay's office included more than a dozen 
     House members as well as Energy Secretary Spencer Abraham, 
     Interior Secretary Gail A. Norton and Environmental 
     Protection Agency Administrator Christine Todd Whitman.
       Much of the meeting focused on how the GOP could fight 
     Democratic attacks more effectively. Abraham suggested 
     Republicans could rebut the Democrats' arguments because they 
     were based on ``flimsy evidence,'' while DeLay argued his 
     colleagues could not afford to be passive, sources said.
       ``We want a proactive message,'' DeLay told the group. ``We 
     want solutions, not rationing.''
       Democrats are convinced the GOP is politically vulnerable 
     on the question of energy, and they are determined to hammer 
     away at the theme to boost their chances in next year's 
     election. ``The environment is an issue that could decide 
     many swing congressional districts in 2002,'' said Rep. 
     Edward J. Markey (D-Mass.), who questioned Abraham sharply 
     yesterday during an energy and air quality subcommittee 
     hearing.
       The party has already run a series of radio ads on the 
     energy crisis in the districts of several vulnerable members, 
     and House Democrats now regularly hold news conference 
     accusing the GOP as being beholden to special interests.
       Staff writer Peter Behr contributed to this report.

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