[Congressional Record Volume 149, Number 46 (Friday, March 21, 2003)]
[Senate]
[Pages S4277-S4278]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. CANTWELL (for herself and Mrs. Murray):
  S. 681. A bill to provide for the enhanced protection of electricity 
consumers under the Federal Power Act; to the Committee on Energy and 
Natural Resources.
  Ms. CANTWELL. Mr. President, I rise today to introduce the 
Electricity Market Manipulation Prevention Act--legislation I believe 
is critical in ensuring our Nation's consumers will never again have to 
suffer from the type of energy price manipulation that has so 
devastated the economy of my home State of Washington. This bill is 
simple yet powerful in concept. In essence, it requires the Federal 
Energy Regulatory Commission to do its job--protect consumers from 
energy price manipulation.
  This bill says that where FERC gives companies the authority to 
charge market-based wholesale electricity rates, the Commission must 
also actively ensure that effective competition--the only kind of 
competition that benefits consumers and businesses--actually exists. It 
says that if FERC finds that an entity has attempted to manipulate 
power markets, the Commission will revoke or modify the company's 
ability to sell power at market-based rates, and the company will be on 
the hook to pay back revenues in excess of the average regional cost of 
generating the power. And lastly, it says that FERC will not be allowed 
to change the legal standard for

[[Page S4278]]

reviewing whether consumers deserve relief from market manipulation.
  I first want to make a very important point about this legislation. 
In large part, it does not expand FERC's existing authority under the 
Federal Power Act. It simply articulates more explicitly how Congress 
intends for FERC to exercise its existing authority.
  Now why is this an important point? As many of my colleagues may 
know, FERC--under sections 205 and 206 of the Federal Power Act--is 
already given the responsibility of ensuring just and reasonable 
wholesale electricity rates, and fixing those rates when market 
activity has gone awry. So why do we need clarification? Because 
despite overwhelming and undisputed evidence that any number of energy 
companies--Enron and its ilk--engaged in activities designed to 
manipulate power markets in the west, FERC has to date failed to take 
action on behalf of consumers.
  While prices started skyrocketing out of control during the summer of 
2000, it took the Commission nearly a year to step in and reign in 
those prices throughout the west. The provisions of this legislation 
that require FERC to perform annual reviews of how well markets are 
functioning would help ensure the Commission's active oversight, and 
prevent the type of price gouging from which consumers and businesses 
in my sate continue to suffer.
  While the Commission did finally step in to cap prices--under intense 
congressional pressure, I might add--it has, almost 2 years later, 
failed to decisively act on the billions of dollars' worth of refund 
and long-term contract complaints resulting from the crisis. What's 
more, the Commission's Administrative Law Judges have taken every 
opportunity to throw additional hurdles in the path of the Northwest 
consumers, who have suffered more than any as a result of California's 
ill-fated restructuring scheme. That's why this legislation 
specifically articulates what legal standard should apply to the 
Commission's review of complaints for relief.
  Even in the face of admitted market manipulation--in the most brazen 
of cases, where Enron has described its own schemes to drive up prices 
and Reliant's transcripts quote company traders explicitly voicing 
their plans to drive up prices throughout the west by withholding 
power--FERC has, more than two years later, failed to use all the tools 
at its disposal to send a message that such activities will not be 
tolerated, levying fines that are clearly inadequate compared to the 
economic devastation these activities have caused.
  This bill makes the remedies for market manipulation far more 
transparent, doing away with the multiple years of arcane proceedings 
in which we are currently embroiled. The protracted cases resulting 
from the western energy crisis have yet to benefit anyone--certainly 
neither the industry nor consumers--except, perhaps, for energy 
attorneys.
  This legislation tells energy companies that if they are going to 
attempt to manipulate markets, there will be harsh and immediate 
consequences. It says that if the commission finds that an entity has 
attempted to gouge consumers, it will revoke or revise its market-based 
rate authority, set a just and reasonable rate going forward, and order 
the refund of revenues collected above the average wholesale generation 
cost within the relevant regional power market. Concrete, explicit 
consequences--commensurate with the level of damage caused by 
marketplace shenanigans--should provide a powerful disincentive for 
companies tempted to engage in the types of behavior that have crippled 
the economy of Washington and other western states.
  Now, I can already hear the outcry from some--but not all sectors--of 
the energy industry. They will claim that putting concrete remedies on 
the books--transparent mechanisms for consumer relief, and tangible 
penalties for companies that endeavor to gouge consumers--will breed 
too much uncertainty for participants in energy markets.
  To those who would make that argument, I would simply say, it is 
absolutely absurd to suggest that energy companies can't make money 
unless they retain their legal rights to rip off the ratepayers of this 
country. Ensuring that FERC--which is supposed to be, in Chairman Pat 
Wood's own words, ``the tough cop on the beat''--takes swift and 
decisive action when energy companies attempt to manipulate markets is 
an issue of simple fairness and common sense. Afterall, it is our 
Nation's ratepayers--residential and industrial customers alike--who 
pay the price for FERC's inaction, and FERC is the only cop on the 
beat.
  I have stood on this floor many times to speak of the economic train 
wreck created in my state by FERC's inaction in the face of the western 
energy crisis, which we now know resulted in large part from bad actors 
who decided to take advantage of a near-historic drought and tragically 
flawed market rules in California. Today, retail rates in many parts of 
my State of Washington have risen almost 50 percent, our unemployment 
is consistently among the top five in the nation, the demand for low-
income energy assistance is at record levels, we are struggling to 
stave off yet another regional rate increase, and there is no end in 
sight--unless FERC takes long-overdue action.
  This bill sends a clear signal to FERC: we expect you to right the 
wrongs from which consumers throughout the west continue to suffer, and 
we expect you to use your authority to ensure a repeat of the western 
energy crisis never occurs. There is no other competitively traded 
commodity aside from electricity--soy beans, wheat, pork bellies, 
metals--for which a prolonged price run-up can single-handedly cripple 
industries as diverse as aluminum smelting, microchip manufacturing, 
irrigated agriculture, paper production or aerospace. Clearly, the 
economic stakes are exceptionally high when it comes to electricity, 
and as such, Congress must demand a greater degree of accountability 
from both the industry itself and those who regulate it.
  With this bill, we make Congress' intent perfectly clear: FERC must 
protect consumers; there will be swift and decisive action against 
those who endeavor to manipulate markets; and the deck will not be 
stacked against the consumers and businesses who are the victim of 
Enron-like schemes.
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