[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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