Congressional Record, Volume 147 Issue 96 (Wednesday, July 11, 2001)

[Congressional Record Volume 147, Number 96 (Wednesday, July 11, 2001)]
[House]
[Pages H3933-H3939]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

AMERICA'S ENERGY POLICY

The SPEAKER pro tempore. Under the Speaker's announced policy of
January 3, 2001, the gentleman from Oregon (Mr. DeFazio) is recognized
for 60 minutes as the designee of the minority leader.
Mr. DeFAZIO. Mr. Speaker, this evening I rise, hopefully to be joined
by others, to discuss the energy situation in the United States of
America. It was James Watt, when President Bush unveiled the national
energy policy, so-called here in this blue book, who said, ``Well, they
just took out my work of 20 years ago.'' This is James Watt, mind you,
not exactly an enlightened individual when it comes to present-day
energy policy. He said, ``They just dusted off my work of 20 years ago.
It is really good work.'' A 20-year-old energy policy for the 21st
century?
Well, after I read through it, upon hearing Mr. Watt's comments, I
would observe it a little differently. I would say this is not James
Watt's energy policy of 1980, this is actually our father's energy
policy. It is much more 1950s energy policy. It is Dick Cheney's energy
policy, and it reflects a bygone era of limitless frontiers, dig,
drill, and burn. It is not and does not offer America a new sustainable
and more affordable energy path to the next century.
So we will be talking about that a bit tonight, about electricity,
electric deregulation, and other subjects. But before I go there, I
would like to recognize the gentlewoman from California who introduced
important legislation today in the area of our future energy supply to
talk a bit about her proposal.
Ms. WOOLSEY. Mr. Speaker, I want to thank my colleague from Oregon
for organizing this special order tonight because the timing is
absolutely perfect. We have just returned from the July 4 district work
period and House committees are gearing up to tackle energy policy.
Since passing the national Energy Policy Act in 1972, Congress has
generally ignored energy issues, but energy problems in California and
higher prices for natural gas and oil throughout the country have
brought energy back to the top of our Nation's agenda.

[[Page H3934]]

We are finally beginning to realize that the debate over the Nation's
energy policy will probably be, if not the, one of the most important
issues addressed in this Congress.
The energy shortage we are experiencing in California is a signal to
be heeded by the rest of the country. The signal is that the Congress
must raise the stakes in search of a sensible energy policy because,
obviously, what we are doing is not enough. I am here tonight to remind
my colleagues that as Congress and the administration work to forge a
long-term energy policy, it is absolutely imperative we make a true
commitment to renewable energy sources, to efficiency, and to
conservation in order to prevent a future energy crisis and to protect
our environment.
As the ranking Democrat on the Subcommittee on Energy of the
Committee on Science, I am working to do just that. In fact, as the
gentleman from Oregon (Mr. DeFazio) mentioned, earlier today I
introduced CREEEA, the Comprehensive Renewable Energy and Energy
Efficiency Act of 2001. It is to be used as a blueprint for renewable
energy sources and energy efficiency measures. It is to ensure that we
make renewable energies a more important part of any national energy
policy we put in place in this country.
We can no longer afford to make large investments in outdated energy
technologies, like fossil fuels, coal, and nuclear. Increasing our
reliance on 20th century technology is not in the best interest of the
21st century, and it is certainly not an answer to our energy future.
Instead, with the energy challenges we are experiencing across the
country, it is more important than ever that we take this opportunity
to craft a more responsible policy. By leveling the playing field for
renewables and efficiency measures, we can and must ensure that our
national security becomes more safe and secure through diverse energy
sources.

{time} 1945

Of course, we cannot expect renewable energy to meet all of our
energy needs right away. I wish we could, but we cannot. We can make it
a Federal priority to give renewables a more prominent role among
energy sources. Unfortunately, Federal investment in renewables and
energy efficiency has declined over the last 20 years. That is why
CREEA, my bill, aims not only to reverse that harmful funding trend,
but also to set a goal for our Nation that at least 20 percent of the
energy generated in the United States be produced from nonhydro
renewable energy sources by the year 2020.
CREEA calls for new investments in renewable energy and energy
efficiency research and development, as well as competitive grants to
help bring these green technologies to market. In the bill, regulatory
provisions will eliminate barriers to development to put renewables on
par with traditional energy sources.
Aside from energy efficiency provisions for schools, homes and
vehicles, CREEA also calls on the Federal Government and the Architect
of the Capitol to set an example here in Washington by adopting
renewable energy standards and improved energy efficiency measures.
After all, the Federal Government must do our part, its part, to use
more clean, renewable and efficient energy resources and technologies.
CREEA also offers tax incentives to both individuals and corporations
for increased investments in renewable technologies and for embracing
energy efficiency products, buildings and technologies. With smart,
aggressive policies, we will encourage the development of green
industries.
Mr. Speaker, putting a priority on forward-thinking domestic options
like renewable energy and energy efficiency technologies and
encouraging conservation is smart public policy, policy that will
protect our environment and provide a secure energy future for our
children, and I urge my colleagues to support this approach as we
debate the national energy policy for the future of this Nation.
Mr. Speaker, I thank the gentleman from Oregon for including me in
this special order.
Mr. DeFAZIO. Mr. Speaker, I thank the gentlewoman for her comments.
Mr. Speaker, it is important that we look toward the future and not
toward the past for the energy supply for the United States of America.
We can both have energy sources that are more gentle on the environment
and deal with the problem of global warming, and are more stable and
more affordable for the people of our Nation so we will no longer be
held hostage to OPEC and other cartels around the world who basically
blackmail us from time to time in jacking up the price of oil and
extorting from American consumers.
I think her legislation is a very, very important addition to getting
something that looks forward instead of back, and I thank the
gentlewoman for her contribution.
Mr. Speaker, today we had Secretary Norton come before the Committee
on Resources to update us on where they are on the President's national
energy policy. In reading her testimony, I was interested to see that
she said despite the statements of Vice President Cheney of about 6
weeks ago where he said conservation and renewables, that might be a
personal virtue, but it is nothing for a national energy policy to be
based upon.
Despite the fact that over the last 20 years this Nation has gained 4
times as much energy from efforts in conservation and renewables than
from new energy development based on fossil fuels, nuclear and other
traditional sources, 4 times as much, the Vice President says that
might be a personal virtue, but we cannot base policy on it.
Mr. Speaker, there seems to have been a backlash, and the
administration seems to be very quickly backpedaling on the statements
of Vice President Cheney. In fact, today Secretary Norton said,
remember, the President's energy policy, this blue book written by Vice
President Cheney, 50 percent of that is based on conservation
renewables and other sustainable energy sources. I said, Madam
Secretary, that is an extraordinary statement. I said, tell me, 50
percent of what in this book, 50 percent of the projected new energy
supply? When I look in the back, I see that they are projecting 2.8
percent of our energy over the next 50 years might come from
sustainable renewable sources and conservation, so it was not 50
percent of the new energy. They are projecting 93.2 percent will come
from conventional fossil fuels and nuclear power. I said, I am a bit
puzzled. Is it 50 percent of the investment? I said, I remember the
President's budget dramatically slashed investment in conservation
renewables and sustainable energy sources, things that could make the
United States of America energy-independent.
She said it is 50 percent of the words in this proposal were on
conservation, renewables and others. I would even challenge that, but I
have not gone back to count up to see really whether 50 percent relates
to those things.

So words are what we are getting here in this blue book and not a
forward-thinking energy policy. The administration again staunchly
defended going into ANWR, despite the fact that they admitted that no
one has come anywhere near fully exploring the potential of the
National Petroleum Reserve, which was just let out for leasing last
year by the Clinton administration just before they left office, and
the potential finds and the already discovered finds in the former
National Petroleum Reserve, it will no longer be a reserve for national
security purposes, will be diverted into the existing pipeline system
and may well exceed the capacity of that system for some time to come.
She admitted, as has every other administration witness, if there was
recoverable energy at economic values in the Alaskan National Wildlife
Refuge, they want to lease it now to be sure that it gets drilled; but
they do not expect that a drop of that oil will flow for 10 years. Not
a drop. So it is not addressing our immediate concerns.
Beyond that, I said, Madam Secretary, if it is such a crisis that we
have to go into the last pristine area in the United States of America
to explore for oil, does the administration think that oil should be
kept here at home in the United States of America, as the law provided
until 1996 when the Republicans took over Congress, and at the behest
of the oil companies lifted the ban on the export of oil from Alaska?
She said she would have to get back to me on that. She certainly
intended that the oil produced in Alaska should

[[Page H3935]]

principally benefit the people of the United States of America, but she
would not go so far to say that oil ought to be kept home, processed in
the United States and used by the citizens of our country; but she will
get back to me on that. I pointed out that President Bush could do that
tomorrow by Executive Order. There is authority in the law for
President Bush, if he believes that there is an energy crisis and a
shortage and that is what is driving up the prices, he could tomorrow
with a simple stroke of his pen rescind the authority for those oil
companies to export our oil from Alaska.
Mr. Speaker, that would be a concrete step that could be taken, and
certainly sending a message to the American people, and also sending a
message to OPEC, which is we are not going to take this. We are not
going to let them jack up prices over there and extort our consumers in
the short run while hopefully this Congress acts to adopt a more
forward-thinking energy policy for the future based on new technologies
so we can break our dependence on the oil cartels in the long term. In
the short term, we do not want to have consumers extorted and
bankrupted by them.
Let us send them a strong message. We could do that by the President
saying he is going to keep the Alaska oil home. We could do that in a
number of other ways to show that we, in fact, in the United States are
not going to be patsies, but this administration has chosen so far not
to do that.
Mr. Speaker, there are so many subjects to be covered in this area,
this is just sort of a beginning. I see the gentleman from Oregon (Mr.
Blumenauer) has joined me, and I wonder if he might like to address
some of these subjects.
Mr. BLUMENAUER. Mr. Speaker, I thank the gentleman for yielding.
I do appreciate our taking the time this evening to explore in
greater detail the other side of some of these questions because it is
indeed complex. It is indeed important.
As the gentleman pointed out, there are a wide range of interests
that are coalescing. They may not agree on a lot. Conservatives,
liberals, people from the East and the West, even some of our friends
from California step back, and they are looking at what has been
advanced by the administration with skepticism and in some cases
wonder.
I personally just returned from the Arctic Wildlife Refuge. It is an
area that I have not visited before in previous trips to Alaska, and I
have heard people on the floor make some assertions. I wanted to take
the time to see for myself, to put in context the reports that we are
given, the information that comes forward. I must say that I do not
pretend to be an expert based on less than a week of hiking, camping,
exploring the wilderness, flying over some of the vast stretches,
talking to Alaskans of a variety of different perspectives, including
spending time in the Prudhoe Bay area with representatives of the
petroleum industry.
Mr. Speaker, I must say having visited some of the BP operations,
having Fourth of July in the snow, roasting hot dogs as part of their
Fourth of July celebration on a man-made island on the Arctic Ocean,
I came away impressed with the professionalism and dedication of the
men and women working in the industry. But I also came away struck with
the rather wide range of the area that is already available for oil
exploration, the billions of cubic feet of natural gas that are being
pumped down back into the ground that are available for energy
purposes, and, if the circumstances and costs are right, that would be
available to us.

I was struck by the magnitude of the Alaska pipeline, which is now 25
years old. I have a certain personal relationship to this. My father
worked on the pipeline until the day he died. I had some input from him
about the challenges based on his experiences there. But it is aging.
Just yesterday we saw in the Wall Street Journal a front-page article
that the State of Alaska, covering the inspections of people in this
area for this vast infrastructure which pumps more oil in 3 days than
is pumped from the entire State of Indiana in a year, and it has
approximately one-half the inspectors, only five people inspecting this
vast infrastructure which is aging and subjected, despite the
professionalism and dedication of the employees and, I think, the good
intentions of the industry, I take it at face value, but there is not
much that inspires my confidence when I think of the volume of it. Then
when I consider what was there in the Arctic Wildlife Refuge, this
amazing vista, the tussock grass, where you could literally see for
miles and hike for hours and be completely unaware of how far you had
gone, seeing hundreds of caribou in a relatively small area, and in the
course of 3 days had seen thousands of them, and had some sensitivity
to how fragile that area is and how fragile it is in terms of the
habits, in terms of the calving cycle of this vast caribou.
I did see some caribou around Prudhoe Bay that we see in some of the
pictures, but I had an appreciation for the vast fragility of the
tundra; small willows that are 10, 20, 30 years old that are only
inches high and thinking about what would happen if there were problems
there. I came away with a profound sense that the American public is
right. The Arctic Wildlife Refuge is absolutely the last place we
should be exploring for oil, not the first.

{time} 2000

The gentleman referenced the much-debated comment from our Vice
President dismissing the notion that conservation may be a virtue, but
it should not be the basis for a rational national energy policy. I
think the American public, and I certainly agree, conclude that he has
it 180 percent wrong. You cannot have a rational national energy policy
without beginning with the notion of conservation and wiser use of our
energy resources. And it does not have to drive the American public
back to the Stone Age. Our friends in Japan have been able to
manufacture a hybrid vehicle that will get 60, 70 miles per gallon.
There is a 6-month waiting list for American consumers. Yet the
American Government in the 5 years I have been in Congress, we have
been prohibited from even studying extending the vehicle miles for the
CAFE standards and having more fuel-efficient automobiles.
It has been represented to me that the difference between SUVs that
get the abysmal mileage that they get now and the potential for
bringing it up to the overall fleet average would be the difference for
the typical SUV, the gap here is the equivalent of leaving your
refrigerator running with the door open for 6 years. This is not
technology that is beyond us.
We hear people making rash claims that we have to have the
administration's proposal of building a power plant a week and the
attendant economic cost, the attendant environmental cost, and they
will throw out arguments like, Well, we haven't had a nuclear plant
licensed in this country in 20 years. Well, they are right, we have not
had a nuclear plant licensed in this country in 20 years, but what they
do not tell you is that we have not had an application for licensing in
more than 20 years. Industry has recognized that it is not a good
investment. And for the administration to put forward half-
representations, arguing for the notion that we are going to build a
plant a week and ignore simple, commonsense steps to improve energy
conservation, I think completely misses the target.
Again, two last things and I will turn this time back to the
gentleman. I know that there are others that wish to join the gentleman
from Oregon (Mr. DeFazio), and the last thing I want to do is disrupt
his train of thought too much. As dean of the Oregon delegation, I have
too much respect for his rhetorical and intellectual capacity to do
that, but if he will permit me to make two other observations.
Number one, it seems to me that we can take steps, and we may hear
from some of our friends in California who have had some energy
difficulties which they are working their way through, we may be
hearing about that this evening, but the simple, expedient step of
having roof colors, and you do not have to go all the way to having a
green roof, but just having a reflective color, can cut the energy
requirements for air conditioning one-third. Having concrete instead of
asphalt can lower the temperatures of our cities 2 degrees, the heat
island effect that we are seeing in major metropolitan areas. Not only
will those roads last longer, but that will save energy.
Last but not least, it seems to me that if in fact we have several
trillion

[[Page H3936]]

dollars that we do not need to invest in essential government services
over the next 10 years, which as we note as each day goes by it looks
as though we do not quite have the resources that were represented to
us; a better use of this, rather than some of the tax reductions for
people who need help the least, would be to provide tax credits and
incentives for our citizens, particularly low- and moderate-income
citizens, to be able to afford more fuel-efficient air conditioners,
heating, other appliances which again would save huge amounts of money
for not having to invest in energy production, would save the cost of
energy for these individuals, and would be a shot in the arm for
American industry. I think these are more appropriate approaches,
rather than discounting energy conservation and simply building an
energy plant a week.
I appreciate the opportunity to join the gentleman this evening. I
appreciate his leadership and look forward to further discussion.
Mr. DeFAZIO. Just taking up what the gentleman was talking about, tax
credits for Americans, for consumers, to help them meet their needs at
home or at work or purchase more energy-efficient transportation, to
create a market for that and help our people, that unfortunately did
not make the cut in the blue book here. But what did make the cut, for
instance, is royalty relief.
For those poor suffering oil companies, we have got to have some
royalty relief. Of course I am certain that they will pass those
lowered costs on to the consumers. The estimate is that the Bush energy
plan would lower royalties by $7.4 billion over 2 years. That is money
that should flow to the Federal Treasury for all the taxpayers in the
United States of America because of the extraction in our coastal areas
and inland areas of oil and gas, would be reduced by $7.4 billion under
the proposal of the Bush administration.

Now, of course, these are the same companies that just last year
entered into a plea bargain in a criminal case for defrauding the
taxpayers of royalty revenues and entering into an unprecedented $443
million civil settlement with the Justice Department. But, of course,
that was the Clinton Justice Department, and I do not think the Bush
Justice Department is going to be pursuing too many defrauded American
taxpayers' royalty claims. In fact, no, they are much more up-front
about it: Hey, let's just forgive the royalties altogether. This is the
basis for an energy policy.
Certainly we do not need to forgive the royalties to get these people
to explore or pump oil. Let us look at the profits. Last year,
ExxonMobil profits, $15.9 billion, a 1-year, 102 percent increase.
Chevron, $5.1 billion, a 150 percent, 1-year increase. Texaco, $2.5
billion, 116 percent, 1 year. Conoco, $1.9 billion, 155 percent.
Phillips Petroleum even better, 205 percent. And on down the list.
These people need relief? They need encouragement from the taxpayers?
They need subsidies from the taxpayers to explore for oil and gas? I do
not think so. In fact they should be giving money back to the taxpayers
because they are fleecing the taxpayers to show those sorts of profit
increases in one year.
So the gentleman is exactly right with his orientation of where we
should be investing or forgoing revenue for the Federal Government,
should be oriented toward small businesses and consumers and others who
want to invest in energy-efficient measures, not those who want to go
out and extract yet more oil and gas from sensitive areas in our
coastal plain, our national monuments and elsewhere.
From there, I believe we would be well served to get into the area of
electricity. Most recently in the western U.S., the most extraordinary
manifestation of an energy crisis that we have seen has been the
rolling blackouts and brownouts in California, the fact that the total
electricity energy bill in California went from $7 billion 2 years ago
to $27 billion last year and is projected to go to over $50 billion
this year. The fact that we have found out that even in the Pacific
Northwest, we are paying higher average wholesale prices but thankfully
thus far have been buffered by our Bonneville Power Administration and
our own energy production from having to buy too much; but next winter
we may be in the very same soup that California has seen over the last
year.
Now, the question would be, Is this a justified increase? Is this
such a shortage and such a precious commodity that you can justify
increases of up to, well, if you went from $30 an hour average megawatt
2 years ago to the high price that has been charged up over $3,000 a
megawatt, a 1,000 percent increase in 1 year in the price, there is a
real question. There is no one who is more expert on that than the
gentleman from San Diego, who comes from ground zero in terms of the
electricity energy crisis, market manipulation and price gouging in the
western United States. I yield to the gentleman to educate us a bit on
what has been going on down in his district.
Mr. FILNER. I thank the gentleman from Oregon for yielding, and I
thank him for his leadership. I recall over the last few years the
gentleman from Oregon talking about the problems with deregulation.
Very few of our colleagues listened. But now we are witnessing them,
and he was right. And California has been the greatest example of that.
He mentioned rolling blackouts. He mentioned manipulated markets.
Let me tell you what happened one day in January of this year. We
suffered several hours of rolling blackouts in San Diego. That had,
just a few hours, a tremendous impact. Companies in production lost
millions of dollars worth of production. People who could not deal with
the traffic lights off, we had near fatal accidents. People stuck in
elevators. The largest company sending people home and not getting a
paycheck. At that time, at a time of the rolling blackout, with all
these disruptions, the biggest generator in San Diego County was not in
operation. It was shut down, not due to any maintenance; it was just
taken out of service.

Now, we have examples of that all through the last year where
production was down, not for maintenance, not for any environmental
reason but to bolster the price, because in a controlled market, if you
withhold supply, you can increase the price. What occurred in San Diego
at what we call the South Bay Power Plant in my district operated by
the Duke Energy Corporation, they took generators out of service, not
only during the blackout but many times during the year.
We just recently had five former employees of that plant who worked
there for a total of 100 years. These are not newcomers. They know what
is going on in that plant. They testified under oath to a State Senate
committee that not only were these generators down not because there
was any real lack of need for them, we were in a rolling blackout, but
purely related to the price that could be gotten or withheld because of
an attempt to raise the price. They testified that the generator floor
was in constant contact with the marketing floor of the corporation.
And they ramped up and down their production according to the price,
not according to the need. They testified that they were asked to throw
away spare parts, so it would take longer in any maintenance situation.
That leads me to believe that this is not primarily a supply and
demand problem, although we have tight supplies and the Governor of
California is doing everything he can to increase those supplies; but
this was a crisis of a manipulated market brought on by deregulation
which the gentleman from Oregon foresaw.
Mr. DeFAZIO. I think the key point and one of my principal objections
to deregulation was that it severed the relationship between a utility
and the consumer. Historically in this country from 1932 until very
recently with deregulation, utilities had a duty to serve. Their
highest duty was to keep the lights on. They maintained a buffer over
and above their demand or their anticipated demand. They were required
to do that. They were required to, except in times of catastrophe,
provide as nearly as possible 100 percent reliability.
Mr. FILNER. And they made a healthy profit doing that.
Mr. DeFAZIO. They certainly did. They always were favored by
investors. They had no problem raising money. It was an industry that
was known as a good place to put your money for a reliable and very
healthy rate of return.
Now, what happened as the gentleman just pointed out with Duke and

[[Page H3937]]

with all the others, they are no exception, is that they no longer had
under deregulation a duty to serve their customers. Their only duty is
to serve their stockholders and the people on Wall Street. If they can
make more money by blacking you out, shutting you down, closing other
businesses for lack of power, it is their duty, their fiduciary
responsibility as their board of directors sees it to do that. That is
why they tied their floor traders to the plant operators.

{time} 2015

It is absolutely outrageous to think that that is what the system has
come to.
Mr. FILNER. They made almost a billion dollars doing that in the
course of the year. By the way, just to emphasize the gentleman's point
of the cut in relationship to the community, the five employees I
mentioned lived in our area were community members, paid taxes, had
their kids go to school. They were let go. Apparently, Duke did not
want people tied to the community working in their own plant.
There is insult to injury. I would say to the gentleman from Oregon
(Mr. DeFazio) that in this case I just told him about, the plant was
being ramped up and down for profit, which stole a billion dollars out
of our economy, is a public plant. Under the deregulation law, the San
Diego Unified Port District bought that plant and leased it to Duke and
leased it for very, very, let us say, favorable terms. The terms under
which they leased the plant they thought they would recoup their
investment in 5, 7 years. They got it back in 3 months. That shows what
the prices were that they charged.
They leased this plant from the public so they are stealing from the
people who own this plant. They have violated the lease terms that they
were under. They were supposed to operate that plant in a prudent
manner. It is a prima facie case that they had not and these employees
testified that they had not.
I think the Port District, a public agency in San Diego, ought to
break that lease, take back the plant, operate it in the public
interest. They produce power there for three or four cents a kilowatt.
As the gentleman pointed out earlier, a thousand percent increase in
the price they were charging us up to $4.00 a kilowatt. So here we have
the most obscene price gouging.
Duke, by the way, was the one that charged that $4,000 a megawatt, or
$4.00 a kilowatt, hour and they did it out of a public plant. I think
San Diego consumers ought to demand that that plant be taken back. It
is our plant. Let us show that we can produce the electricity at a
reasonable rate and still protect our environment. So this is a case
study of enormous greed, and I think San Diegans understand that they
have been gouged and they are ready, in fact, to embark with a
municipal utility district, take over plants such as the one I
mentioned, the South Bay Power Plant, and begin to get out of the
control of this energy cartel.
Let me just conclude this part by saying, the gentleman made the
point earlier about how we need renewables. He made the point earlier
about how we need conservation. Everybody in California, as I am sure
in Oregon, is doing everything that they can to do that. Only the
Federal Government can deal with the wholesale prices. Only the Federal
Government can regulate that. Our President has chosen not to be
involved. Our vice president has refused to listen. The Federal Energy
Regulatory Commission has taken some baby steps in this direction, but
the Congress should impose what is called cost-based rates on wholesale
electricity prices and refund all the criminal overcharges since last
summer when this started. Then we can begin to talk about a national
energy policy, and as the gentleman pointed out, the President's plans
say nothing about this area.
Mr. DeFAZIO. Unfortunately, the President's plans do say something
about this, but it says what we should do is spread retail deregulation
nationwide. We are going to take the model of California and we are
going to impose it on the rest of the States of the United States of
America.
Now, if there was some place we could turn to and say, well, look,
look how great deregulation has worked, well, first off the model was
Great Britain. They are still trying to fix the problems they created
with deregulation. Their prices are 70 percent higher than the average
in the United States. They suffer a much higher percentage of
blackouts, brown-outs. They have extraordinary complaints about
service. That is the model on which the 1992 deregulation was written.
Maybe we have done better in the States. Let us turn to some of the
pioneers in the United States. Montana in my region, they have seen
rates for industry, which was deregulated, as were the rates in
Montana, go up by 1,000 percent because Pennsylvania Power and Light
bought all of the generation in Montana, which is a State that can
produce 150 percent of its needs and they can make more money by
exporting that power, some of it to the gentleman, and charging
extraordinary prices for it. So that has not worked out real well in
Montana.
Rhode Island, another pioneer, prices are up 66 percent. The list
goes on and on and on. Everywhere that we have seen energy
deregulation, with the promise of competition, lower prices, better
service, we have seen higher prices, worse service and now rolling
blackouts and brownouts. Guess what? I have never had an Oregonian come
up to me and say, Congressman, I am tired of this utility that provides
me electricity day in and day out at a reasonable price; I want a
chance to choose my energy provider the way I get those phone calls at
5:00 at night from AT&T and MCI and all the others, offering me stuff
that I cannot quite fathom and does not ever really seem to work out
quite the way they promised it but every once in awhile they send me a
$15 check if I change from one to the other. No one has come to me and
said I want to impose that system on my electricity, I want to guess
whether my electricity, my lights, are going to go on or off, what my
bill is going to be. No, they do not want that. Americans want
reliable, affordable electricity and they are not getting it under this
system.

Now some people are doing very well. We have mentioned a few. The
gentleman mentioned Duke Energy. Their profits were $1.8 billion last
year. That is a 109 percent 1-year increase. That was before they got
into this really overt manipulation described by the employees to drive
the prices even higher. So we can expect that they will do even better
in the next year.
El Paso Natural Gas, of course, is now under investigation for having
withheld gas from the pipeline. Somehow gas provided in Texas shipped
to California, which is a little closer to Texas than New York City,
was sold at four times the price in California than it was sold in New
York City and somehow they did not use a very significant portion of
the pipeline capacity, which contributed to the run-up in the price.
They had a $1.2 billion profit, a 381 percent 1-year increase. Not bad,
and, of course, they share the wealth. Now do they share it with the
consumers? Well, no, not exactly. But they do share the wealth.
A number of these companies have very generously shared the wealth
with their CEOs. For instance, with Enron, who I mentioned earlier, who
had a $979 million, nearly a billion in profits last year, the CEO
netted $123 million all by himself by cashing in stock options which
the company created, both hurting other stockholders and obviously
money extracted from a whole lot of consumers. He only got $40 million
in 1999 and ten times what he got in 1998.
Mr. FILNER. It works.
Mr. DeFAZIO. Deregulation is working for a few individuals.
Mr. FILNER. When I hear those figures, I wonder how these people
sleep at night. I can again look at my own district where we have been
experiencing these problems now for a year. We have scores of small
businesspeople just had to close up. I mean, we have had people in my
office in tears that their family businesses that have been in their
family for 40, 50, 60 years, they could not sustain electricity cost
increases of first 100 and then 200 percent. There was no way. In fact,
65 percent of small businesses in San Diego County, by a recent Chamber
of Commerce report, face bankruptcy this year if these prices continue,
65 percent of small businesses.
Now, if this were an earthquake or a hurricane or a tornado, the Feds
would be in there instantly and offering loans

[[Page H3938]]

and helpful economic incentives. This is worse than 10 or 20
earthquakes and the Federal Government has not been seen. I do not care
if it was the Clinton administration or the Bush administration, the
Federal Government chose not to help out. These are incredible human
problems. It is not just statistics. When the person on a fixed income
whether, they be older or younger, who is faced with a doubling or
tripling of his or her utility bills and they have to chose now not
between just food and medicine but between food, medicine and a
comfortable sleep with air conditioning, this is ridiculous. This is
tragic. This is criminal, in my opinion. We have not acted. We have not
even had a debate on the House floor about any of the legislation that
we have proposed to try to deal with this. The leadership of this House
has chosen not to bring up any bill, any bill.
We have what is called a discharge petition. That is a mechanism that
if a majority of the Members of this body want to discuss a bill,
whether the leadership does or not, we can. We have had to go to those
lengths to try to get a discussion of a situation which can still
destroy the economy of the western States. I do not understand it. I
have been struggling to have my constituents' voices heard in
Washington, but there seems to be a deaf ear to our complaints.
When I listen to the recital of the kind of income that the CEOs have
made, I just get madder and madder. Those people ought to be in jail,
not receiving these kinds of checks.
Mr. DeFAZIO. If the gentleman would yield back, we have not had yet
the extraordinary impact that the gentleman has felt in San Diego but
it is coming. We are looking at a 47 percent rate increase this winter
with the Bonneville Power Administration because we are having a
drought. That normally would not be a big problem because we normally
would turn to our neighbors in California and say look, wintertime, you
have a lot of excess capacity, we would like to buy some electricity
from you for the winter. We have traditionally done that. In the
summertime, during the gentleman's high demand season, we have sold to
him. We cannot sell to him this year because of the drought, but we
would buy from the gentleman next winter and hopefully it will snow and
rain next winter and we will be back into that normal equilibrium.

Confronted with these kinds of markets, our Bonneville Power
Administration has to go to extraordinary lengths to shed load for the
coming winter, closing down the aluminum industry, getting all the
other utilities to guarantee that they would reduce their consumption
by a minimum of 10 percent, and still we are going to see this 47
percent rated increase because they are going to have to buy some power
in this outrageously priced wholesale market. In anticipation of that,
some of our utilities have already raised their rate. A little tiny
municipal utility in Drain, Oregon, raised rates this winter. When I
had a town meeting there back in April I had a kid come in from the
school and say, do you know that last winter we asked if we could bring
blankets to school to wrap ourselves during class because it was so
cold in the schools? She says it was so cold in the school, they could
not afford the heat, she says that the pipes burst during a cold spell,
and we are sitting there wrapped in blankets. Yet, Ken Lay at Enron
gave himself $123 million bonus. Some of that money came from the kids'
parents in Drain, Oregon. A lot of that money came from the small
businesses in San Diego, California.
Now this same gentleman is one of the principal authors of the
national energy policy. When Vice President Cheney was asked to name
who he met, he said I met with lots of people when I developed this
document, lots of people. They said, well, name some. He said, well.
They said, Ken Lay of Enron? And they said, was that the only person?
He said, no, I met with lots of people, but he will not tell us who the
other lotses are.
He did admit that he met with Ken Lay of Enron, the same Ken Lay of
Enron who called the chair of the Federal Energy Regulatory Commission,
who is no friend of consumers, Mr. Hebert of Louisiana, who has refused
to act to rein in prices, but he even called him to say that what he
was doing was not enough for his company as chair of the Federal Energy
Regulatory Commission and if he would do what Mr. Lay wanted, well,
then they might be able to assure him that he could continue to be
chairman.
Mr. Hebert, again no friend of consumers, was outraged. He went to
the press about this and said I cannot believe that this gentleman
called me.
Well, this is who is writing the energy policy of this country.
Mr. FILNER. Some of our colleagues do watch us as we make these
statements and talk about the situation in the West, and they say stop
your whining. It is your own damn fault. If you did not have these
environmental whackos in California and Oregon who stopped the building
of power plants, you would not be in this situation.
Now I would like to hear what the gentleman says to them, but I say
that is the ridiculous argument. Number one, it was the private sector
in the West that chose not to build power plants because they had
calculated that they had a surplus. They miscalculated that, but that
was a decision made in their economic interest, they thought, not
because of any environmental regulations.
I am going to soon announce in San Diego the building of a new power
plant, hopefully about a thousand megawatts, built by a responsible
citizen of San Diego who has built power plants all over the country
and in fact has won environmental rewards for them.

{time} 2030

He is going to show that you can follow every environmental
regulation that is there to protect us, every permitting policy, build
a plant in a rather quick amount of time, and charge what would be the
price under previously regulated rates, say a nickel a kilowatt, as
opposed to the 40 cents, $1 or even $4 we have been charged. He is
going to put a lie to the notion that it was environmental wackos who
caused this.
We are going to have a plant in San Diego that is environmentally
sound and produces electricity in a reliable fashion and at moderate
price, at a price we can afford in San Diego. When we have control, I
hope the City of San Diego or the County of San Diego will own that
power plant. That will give us one-third of our needs and give us
tremendous leverage over the whole system.
But I am sick of hearing that somehow we caused this thing because we
were trying to protect the environment. I know the gentleman has heard
the same arguments. I think we have to answer those directly and show
that what we are proposing makes more sense to solve this issue.
Mr. DeFAZIO. In fact, I would quote from a spokesman for Reliant
Energy on January 25 from the Los Angeles Times. He stated that
``claims that air quality restrictions were holding back output were
absolutely false.''
Similarly, in May in the New York Times, ``Industry executives have
been pressing to get relief from environmental laws, most notably the
Clean Air Act and land use restrictions, but such regulations are
viewed by many executives as nuisances,'' of course, they do not live
there and breathe the air there, ``rather than barriers to meeting
demand. This is borne out by the ongoing surge in construction of
transmission lines and power plants that has occurred without any
easing of environmental regulations, despite the best efforts of the
Bush Administration.''
So, this is a falsehood that was initially and early widely
perpetuated across the West that this was a self-induced trauma. Of
course, that was before we had the numbers to show that all these
plants were off line and driving up the price. In fact, California was
about 30 percent below its maximum production a number of times when
the lights went out. The winter is your low demand period. That is when
you usually export energy. Yet the prices were sky high and you were
experiencing rolling blackouts and brown outs. This was not the fault
of environmental restrictions, it was the fault of greedy companies.
The interesting thing is they have been reined in a little bit. As
the gentleman and I know, we tried to get the Federal Energy Regulatory
Commission for months to act. Their own staff had found that these
prices violated the law, they were not just and reasonable. That was a
staff finding by the

[[Page H3939]]

Federal Energy Regulatory Commission.
But Mr. Hebert, as Chairman, refused to take action and do anything
about that, refused to do further investigations beyond one whitewash
investigation saying there was no manipulation of the market. We now
have a GAO report saying there is no way they could have reached that
conclusion. They do not have the documentation to reach that
conclusion. Yet he refused, stonewalled, stonewalled, it was called a
sit down strike at FERC. I attended one meeting where he said he would
pray for us, but that was all he could do.
Mr. FILNER. I think this administration has a faith-based energy
policy. They not only pray for us to do something, they pray to the
market where there is no market.
Mr. DeFAZIO. Well, that is exactly it, worshipping the market where
there is no market. But, finally, and strangely, after the Senate
changed hands from Republican to Democrat and two committees subpoenaed
in the Federal Energy Regulatory Commission and their staff to come in
under oath and testify about what was going on in western energy
markets, somehow 2 days before they were supposed to testify in the
United States Senate under the new Democrat control, FERC held an
emergency meeting and imposed some minimal price caps.
Now, this is something they refused steadfastly to do for the first 6
months of the Bush Administration. But, suddenly, just because of a
little tiny bit of scrutiny, let alone real scrutiny, let alone real
regulation, let alone enforcement of the law, investigation by the
Justice Department for price fixing, market manipulation, price gouging
and all of the other things we know is going on, you cannot take the
price of an essential commodity and drive it from $7 billion for the
same amount of energy to $27 billion in one year, have profits increase
by 300 percent, and then drive it the next year up by another 100
percent, without there being collusion and manipulation in that
marketplace. Yet the watchdogs, the toothless, sleeping watchdogs at
FERC, led by Mr. Hebert of Louisiana, are just like, oh, we are not
quite sure what is going on.

In fact, I had some FERC people into my office last week and we
talked about there is a new area coming. They are going to game
transmission right now. Right now they are just gaming generation, but
they figured out a new, bigger, more lucrative potential game for the
future, and it is transmission.
Mr. FILNER. The gentleman said it earlier, that Enron and the
President were trying to get a national system which this could then
more readily control. But I would like to also underline what the
gentleman just said both manipulation of the market to increase the
prices and also the incredible suffering in California and the West.
Not only does that market control give them the ability to fix the
prices, but, tragically, for the future it allows them to pick and
choose which energy sources will be studied and given development, and
they have chosen, because they cannot control it, not to allow research
and development into solar, into wind power, into geothermal and all
these other renewables, where we know a big part of the answer for our
future energy needs lies, and yet we have had no interest in them
because these companies, which control the price, control the research
and development also and have refused to allow that to occur.
So this Congress ought to be looking not only at, as the President,
new production and et cetera of the fossil fuels, but the structure,
the economic structure of the energy industry, which not only has fixed
the prices, but has foreclosed or attempted to foreclose part of our
future by not allowing the research and development that we so
desperately need in these other areas.
Mr. DeFAZIO. If the gentleman will remember back 20 years, back in
1980 the United States of America through our labs, Federal labs in
Golden, Colorado, was the world leader in photovoltaics, an endless
source of energy coming from the sun, that could replace fossil fuels,
could provide for quality electric, if we could get the price of
photovoltaics down.
The Reagan Administration sold that research and all of the
proprietary work that had been done to the ARCO Corporation, and then
the ARCO Corporation sold it to Siemens of Germany, and now the Germans
are the world leaders in photovoltaics based on research payed for by
U.S. taxpayers, and some day we will probably be buying photovoltaic
solar cells from the Germans, like we are having to buy oil from the
OPEC cartel.
These future supplies of renewable and sustainable energy are going
to be more important to us, and for the United States of America, for
the President of the United States to slash investment, which he did in
his budget, in these sorts of research, is cutting the legs out from
underneath the American consumers, the American people and American
business and industry, to make us a sustainable and affordable energy
future.
We need to be investing more in fuel cells, more in photovoltaics,
more in wind energy and tidal sources of energy being used in Europe.
All these extraordinary, absolutely benign renewable resources are
being ignored with one focus, and that focus is on fossil fuels and the
profits of that industry and perpetuating that industry.
I had a constituent testify at a hearing, and said Congressman, the
stone age did not end because they ran out of rocks. He said they
developed new technology. But this administration is attempting to
stonewall that new technology. In fact, they want to turn back to the
technology of the fifties. They want to go back to nuclear energy, let
alone the fact we have not figured out what to could with the waste we
have now and it is disbursed all around the country.
Mr. FILNER. What they have done with their tax plan is, of course,
give several trillion dollars to the wealthiest of our Nation, where if
you put tax incentives into the photovoltaic technology you mentioned,
put tax incentives into some of these renewables, we could bring down
the price and make it affordable.
We in San Diego boast of our 330 days or so of sunny weather. That
sustains solar panels, that sustains photovoltaic cells. If we could
bring down that price and put that technology into work in our homes
and businesses, we would be free of this energy cartel that we have
been talking about tonight that has so disrupted our lives and future.
So, in every way where you look, tax policy, FERC, the way the
President's energy policy is, we see a dedicated effort to deny
American citizens a future of low-cost, reliable sustainable energy. I
think that is a criminal offense, in my opinion, and this Congress
should take greater heed of what is occurring.
I thank the gentleman for educating us tonight.
Mr. DeFAZIO. Our time is about expired. I do not think really I can
end on a much more eloquent note than the gentleman just made, which is
that there is sort of two paths that can be chosen for the American
people at this point in time. One is a sustainable, reliable
inexpensive energy put future, and the other is more of what is going
on today, crisis after crisis, higher prices, price gouging,
manipulation, and being held hostage by the OPEC cartel and the other
traditional proponents of the energy industry.
I would like to choose a new path for the 21st century. So far the
administration is choosing the 1950 path.
Mr. FILNER. Amen.

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