[Congressional Record Volume 149, Number 115 (Wednesday, July 30, 2003)]
[Senate]
[Pages S10173-S10188]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       ENERGY POLICY ACT OF 2003

  The ACTING PRESIDENT pro tempore. Under the previous order, the 
Senate will now resume consideration of S. 14, which the clerk will 
report.
  The legislative clerk read as follows:

       A bill (S. 14) to enhance the energy security of the United 
     States, and for other purposes.

  Pending:

       Campbell amendment No. 886, to replace ``tribal consortia'' 
     with ``tribal energy resource development organizations''.
       Durbin modified amendment No. 1385, to amend the Internal 
     Revenue Code of 1986 to provide additional tax incentives for 
     enhancing motor vehicle fuel efficiency.
       Domenici amendment No. 1412, to reform certain electricity 
     laws.
       Bingaman amendment No. 1413 (to amendment No. 1412), to 
     strengthen the Federal Energy Regulatory Commission's 
     authority to review public utility mergers.
       Bingaman amendment No. 1418 (to amendment No. 1412), to 
     preserve the Federal Energy Regulatory Commission's authority 
     to protect the public interest prior to July 1, 2005.

  The ACTING PRESIDENT pro tempore. Under the previous order, there 
shall be up to 2\1/2\ hours of debate on the amendment to be offered by 
the Senator from Washington, Ms. Cantwell, with 30 minutes under the 
control of the chairman, and 2 hours under the control of the Senator 
from Washington. The Senator from Washington.


                Amendment No. 1419 to Amendment No. 1412

               (Purpose: To prohibit market manipulation)

  Ms. CANTWELL. Mr. President, I call up amendment No. 1419.
  The ACTING PRESIDENT pro tempore. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Washington [Ms. Cantwell], for herself, 
     Mr. Bingaman, Mrs. Feinstein, Mr. Hollings, Mr. Wyden, Mrs. 
     Boxer, and Mrs. Murray, proposes an amendment numbered 1419 
     to amendment No. 1412:
       Strike section 1172 and insert the following:

     SEC. 1172. MARKET MANIPULATION.

       (a) Prohibition.--Part II of the Federal Power Act (as 
     amended by section 1171) is amended by adding at the end the 
     following:

     ``SEC. 219. PROHIBITION ON MARKET MANIPULATION.

       ``It shall be unlawful for any person, directly or 
     indirectly, to use or employ, in connection with the purchase 
     or sale of electric energy or the purchase or sale of 
     transmission services subject to the jurisdiction of the 
     Commission, any manipulative or deceptive device or 
     contrivance in contravention of such regulations as the 
     Commission may promulgate as appropriate in the public 
     interest or for the protection of electric ratepayers.''.
       (b) Rates Resulting From Market Manipulation.--Section 
     205(a) of the Federal Power Act (16 U.S.C. 824d(a)) is 
     amended by inserting after ``not just and reasonable'' the 
     following: ``or that result from a manipulative or deceptive 
     device or contrivance in violation of a regulation 
     promulgated under section 219''.
       (c) Additional Remedy for Market Manipulation.--Section 206 
     of the Federal Power Act (16 U.S.C. 824e) is amended by 
     adding at the end the following:
       ``(e) Remedy for Market Manipulation.--If the Commission 
     finds that a public utility has knowingly employed any 
     manipulative or deceptive device or contrivance in violation 
     of a regulation promulgated under section 219, the Commission 
     shall, in addition to any other remedy available under this 
     Act, revoke the authority of the public utility to charge 
     market-based rates.''.

  Ms. CANTWELL. Mr. President, I thank the clerk for reading this 
amendment, particularly at such an early hour of the morning. The 
reading of the amendment by the clerk shows exactly what we are up to 
this morning; that this is a simple amendment and a simple action we 
are asking the Senate to take. We are simply saying market manipulation 
under the Federal Power Act cannot be just and reasonable, and market 
manipulation should be found, under the Federal Power Act, by the 
Federal Energy Regulatory Commission, to be a wrongful act.
  It did not take long to read that amendment but, as I said to this 
body last night, the fact that such law is not currently on the books 
has caused the ratepayers in my State great harm. It has caused 
ratepayers in Snohomish County, where I happen to live, a 54-percent 
rate increase. It has caused ratepayers in King County a 61-percent 
rate increase. It has caused ratepayers in Vancouver, WA, and 
businesses in Vancouver, WA, that can easily move to other parts of the 
country, an 88-percent increase. In eastern Washington, the part of the 
State hardest hit economically, where jobs are few and farmers 
struggle, it has caused ratepayers a 71-percent rate increase.
  We are not talking about a rate increase that is just for 1 year. We 
are talking about long-term Enron contracts that were manipulated--
knowingly manipulated--and my ratepayers are stuck paying those 
contracts for the next 5, 6, and 7 years without relief.
  We are here today to say one thing and be clear about it: This kind 
of manipulation that gouges ratepayers should be prohibited. This body 
should be clear. We should be unequivocal. We should say, as other 
entities have said, that this kind of manipulation is wrong and needs 
to be corrected.
  I have a lot to say on this amendment this morning, but I know I am 
going to be joined by many of my colleagues from the West who have had 
their economies wrecked by gouging and illegal practices. I want to 
give them an opportunity to say something, too, because I think the 
face of the west coast economy and what it has meant for ratepayers 
needs to be clear.

  We are trying to say with the Cantwell-Bingaman amendment that we do 
not want to see this kind of action happen on natural gas prices in 
other parts of the country. We do not want to see this take place 4 
months from now, or 2 years from now.
  Let's be really clear. These kinds of practices that were deployed by 
Enron, the various schemes of Fat Boy, Ricochet, Megawatt Laundering, 
and Load Shift are illegal.
  I will yield 10 minutes to my colleague from Washington State, Mrs. 
Murray, who knows all too well that this crisis has caused real 
hardship in our State. She has been outspoken on this issue as well and 
sent many letters to various entities, including the Federal Regulatory 
Energy Commission, talking about how we need to make changes.
  I yield her 10 minutes this morning to talk about some of the impacts 
she has seen firsthand.
  The ACTING PRESIDENT pro tempore. The Senator from Washington, Mrs. 
Murray.
  Mrs. MURRAY. Mr. President, I rise today to support the amendment 
that has been offered by my colleague from Washington State, Ms. 
Cantwell, that will help protect our consumers from this electricity 
market manipulation.
  I begin by thanking Senator Cantwell for her tremendous work on the 
energy commitment and her long-time work on trying to make sure 
consumers in my home State of Washington finally receive the attention 
and the help they need from us at the Federal level because of the 
gouging that has gone on in this market manipulation. We have seen the 
dramatic impacts that she has so eloquently talked about.
  I thank her for speaking out on behalf of our Pacific Northwest 
consumers who are hurting. We have had the first, second, or the third 
highest unemployment rate for almost 2\1/2\ years, much of that 
precipitated by the fact of the energy spike costs that have hit the 
west coast, causing many of our cold storage companies, the aluminum 
industry, to shut down. They are laying people off. The effects of that 
reverberated throughout our economy, as other industries were hurt. 
Even our schools were hurt as they had to lay off teachers in order to 
pay energy bills.
  It has had a tremendous impact on our economy and continues to do so. 
Bringing this amendment to the Senate floor today is absolutely 
critical. If we are going to have an electricity title, and if we do 
not deal with what happened in market manipulation, we are only going 
to see this continue.

[[Page S10174]]

  We have a responsibility at the Federal level to protect our 
consumers at home. In fact, that is the responsibility of the Federal 
Regulatory Energy Commission. This amendment is so critical to making 
sure that we can go home and tell our consumers we are doing the right 
job of protecting them and the market manipulations that have occurred 
in the past will not occur again. Without this amendment, we will not 
have the ability to say that.

  As Senator Cantwell stated, all of us on the west coast remember the 
energy crisis of 2001. Our consumers and our businesses were hit with 
massive increases in the cost of energy. In California, they saw 
shortages and brownouts that were incredible. In Washington State we 
have felt the impact in every sector of our economy and in every home 
in our State. In fact, as I will talk about in a moment, we in 
Washington State are continuing to be penalized for the failures in the 
energy market and failures by our Federal energy regulators.
  There were certainly many causes for the energy crisis that hit us, 
but the most disturbing is the fact that energy companies manipulated 
the marketplace specifically to take advantage of the customers. As we 
saw throughout that crisis, the Federal Regulatory Energy Commission 
did not take aggressive action to protect consumers from market 
manipulation. The amendment that has been offered by my colleague, 
Senator Cantwell, will direct FERC, the Federal Energy Regulatory 
Commission, to revoke those market-based rate authority companies that 
have been found to knowingly engage in electricity market manipulation.
  Our experience on the west coast shows why this amendment is so 
important and why FERC needs to be better policed in the energy market. 
For more than 2 years, many of us in the northwest delegation have been 
urging FERC to better protect our consumers. In fact, way back in March 
and April of 2001 and again in May of 2002, I sent letters to FERC 
calling for relief from this energy crisis. I asked for Federal price 
caps to stabilize the market. I asked for Washington State utilities to 
receive refunds, as California utilities received, and I urged FERC to 
report criminal activity to the Department of Justice.
  Finally, on March 26 of 2003, FERC found that market manipulation 
occurred during the 2001 west coast energy crisis. Unfortunately, FERC 
indicated it was highly unlikely that Washington State ratepayers would 
be reimbursed for the harm that was caused by that market manipulation. 
That is really unfair when we look at what happened throughout that 
crisis.
  At the height of the 2001 energy crisis, when Enron and others were 
manipulating the system, FERC was urging companies to enter into long-
term contracts. Many of our utilities in the Pacific Northwest followed 
their request and entered into long-term contracts at highly inflated 
rates.
  According to the Seattle Times, during the energy crisis the 
Northwest wholesale market averaged $276 per megawatt hour. That is 16 
percent higher than the average prices in northern California, and 28 
percent higher than in southern California. So it was really disturbing 
to all of us to see FERC agree that there was manipulation but then 
leave Washington State ratepayers holding the bag with no relief for 
the harm they experienced and continue to experience because of these 
contracts.
  Clearly, FERC needs to be more aggressive in protecting our 
consumers. It needs to uncover and it needs to report market 
manipulation much earlier. It needs to have the authority to take 
action against companies that defraud the public and defraud the people 
in our States by manipulating the electricity market. The amendment 
that Senator Cantwell has offered will direct FERC to take aggressive 
action against predatory energy companies that manipulate the market, 
and I strongly urge my colleagues to support this amendment.

  This amendment will improve the underlying bill. It is extremely 
important. We need to have this kind of confidence if we want to see 
our ratepayers able to survive in the coming years.
  I do have a lot of other concerns about the Energy bill and about an 
effort by Federal energy regulators. As my colleagues know, FERC is now 
pushing what they call a standard market design which would set uniform 
national standards for operating regional transmission grids, 
transmission grids that allow energy to be passed back and forth 
between communities that are in each region and their wholesale energy 
markets. Unfortunately, what FERC does not understand, what the bill 
does not understand, is that a one-size-fits-all solution is not going 
to fit the unique needs of the Pacific Northwest.
  In New England, if they want to increase or decrease energy 
production, they burn more gas or more coal. They can regulate that 
industry. But in the Northwest, we cannot make it rain more or less 
based on some kind of profit schedule. Standard market design does not 
work in the Pacific Northwest. We cannot run our system that way 
because it is not designed to meet all of the needs we have. It means 
more opportunities for market manipulation and price gouging by big 
out-of-State energy companies.
  As we have already talked about, we know FERC has already failed to 
protect Washington ratepayers from market manipulation. Given that, I 
think it is particularly unwise to allow FERC to take authority away 
from our State regulators through this standard market design and other 
proposals that are floating around through Congress and in this bill.
  I am also very concerned that the Energy bill repeals the Public 
Utility Holding Company Act of 1935 which restricts utility ownership.
  Although Senator Domenici's substitute electricity amendment--which 
we have just gotten, we are reviewing, and is now in this bill--does 
include some remedies to protect consumers, it does not go far enough. 
Just look at the devastating effects of the 2001 energy crisis to see 
we have to do more to protect our consumers. It is our utmost 
responsibility. I am concerned the electricity title in this bill fails 
to do that.
  It is clear this Energy bill we are debating does not do enough to 
protect consumers against market manipulation and could actually 
facilitate more opportunities for manipulation. As currently written, 
it does not provide enough remedies to help our consumers who have been 
victimized by market manipulation.
  That is why I am in the Senate today to support my colleague from 
Washington State, Senator Cantwell, and the amendment she has offered. 
We have the utmost responsibility to assure market manipulation is not 
going to continue again. We know the effects in the Pacific Northwest. 
Senator Cantwell has outlined the average rate increases that have hit 
our State because of market manipulation. Energy price increases affect 
every sector of our economy. They affect every person in our State. 
They affect everything from how we can operate our schools, how many 
teachers we can have versus how many energy bills our schools have to 
pay, to whether potential new homeowners can afford a home. A 51 
percent rate increase means we have more families in the State of 
Washington who cannot afford to buy new cars, new refrigerators. That 
affects our economy in the Pacific Northwest and has a rippling effect 
to our businesses, which have laid off thousands of employees because 
they cannot afford to pay their increased electricity costs.
  The market manipulation amendment of Senator Cantwell is an 
absolutely critical amendment to assure we can protect our consumers in 
the future. Failing to pass it is a failure of the responsibility we 
have as Senators. I urge its passage.
  I thank my colleague for yielding on this critical matter.
  Ms. CANTWELL. I thank Senator Murray for her articulate capsulization 
of what this Energy bill and the Domenici title means to the Northwest.
  The Senator has hit it right on the head, in that market manipulation 
has not been adequately dealt with in this legislation. Not only has 
there been no strong stand against market manipulation, there are 
further attempts toward deregulation with standard market design and 
regional transmission organizations that we in the Northwest find 
ludicrous.
  I ask unanimous consent to have printed in the Record a Seattle Post

[[Page S10175]]

Intelligence editorial from this morning's newspaper saying that the 
dubious Energy bill might be better shelved.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

          [From the Seattle Post-Intelligencer, July 30, 2003]

                   Dubious Energy Bill Better Shelved

       Republicans hope to drive the Senate toward a new energy 
     bill this week. We all know what happens when you drive too 
     fast; caution is lost in the rush to judgment.
       For both the Northwest and the nation, the bill contains at 
     least a trio of contenders for worst idea of the year--more 
     deregulation of electricity, nuclear power subsidies and a 
     new look at offshore oil drilling.
       The West Coast is still trying to recover from cost 
     increases created by deregulation schemes and market 
     manipulation. Loan guarantees for nuclear reactors and a 
     permanent cap on liability from accidents could increase 
     radioactive waste--as if Hanford didn't have enough now. And, 
     the idea of putting oil drilling platforms on more of the 
     nation's coast was rejected decades ago.
       The plan would also tilt relicensing of hydroelectric dams 
     in favor of industry-designed environmental provisions. Don't 
     expect that to help salmon runs.
       Senators have a host of ideas for improving the bill: 
     better vehicle mileage rules, new global warming standards 
     and more incentives for renewable energy sources. The White 
     House has intervened to try to move the bill forward, but 
     senators must recognize they are starting from a tough spot. 
     The existing bill is tainted because its roots are in closed-
     door meetings between Vice President Dick Cheney and his 
     energy industry pals.
       That kind of abuse during the Clinton administration killed 
     health care reform. If senators hope to rescue the energy 
     plan from its dubious origins, they had better plan on months 
     of work.

  Ms. CANTWELL. I thank my colleague for her diligence in expressing 
her opinion on this issue.
  The RTO and standard market design issues she mentioned this morning 
show how unsound this idea is, not only in not protecting us from 
market manipulation but saying in a conceptual scheme, let's have a 
nationwide regional energy grid and let the people who will pay the 
most; that is, the power source that is willing to pay the most to get 
on to the grid, let them decide how power will be distributed.
  For people in the Northwest, if we had power produced at cost-based 
rates; that is, cost plus what it takes to deliver to consumers--but 
all of a sudden FERC is pushing a concept of standard market design and 
saying, Enron or Reliance has more expensive power, we will shove it on 
to your grid and you pay that higher rate. As Senator Murray adequately 
pointed out, this is not a plan we endorse.
  Some of my colleagues from the South also have concerns. Not only 
does this bill not do enough in protecting manipulation, it creates the 
possibility for more loopholes, more havoc, more chaos. Frankly, this 
is exactly how California got in trouble. Regarding a lot of market-
based deregulation of the industry, everyone thought it would be 
competitive practices by which the cost of electricity would be driven 
down. This is not like something one can afford to have the price go 
up.
  One county, Snohomish County, had a 54 percent rate increase. We had 
printed in the Record yesterday an article from the New York Times that 
Snohomish County has a 44 percent increase. Consumers got disconnected 
from their electricity because they could not afford to pay. This is 
not one of these schemes when the ``free market'' does not drive down 
the price of a utility and ratepayers have something to do. They cannot 
go over to Nordstrom's and buy a cheap electricity contract and get 
electricity. They cannot go over to Wal-Mart and buy affordable 
electricity. They are stuck with these rates. They are stuck with the 
54 percent increase and they will be stuck for years ahead. We had a 44 
percent disconnect rate in that county.
  Mrs. BOXER. Will the Senator yield?
  Ms. CANTWELL. I yield.
  The PRESIDING OFFICER (Mr. Brownback). The Senator from California.
  Mrs. BOXER. I thank the Senator for her leadership on this amendment. 
I know there are several other amendments she will be offering.
  The Senator has explained very clearly what has happened to real 
people who are trying to pay their bills on something that is 
absolutely necessary for life itself.
  I ask my colleague a question on this point. In California, where we 
had this all begin, there was some ill-advised legislation signed into 
law by then-Governor Pete Wilson which brought this deregulation to my 
State. Is my colleague aware that the rates started to double, triple, 
and more, in our State, that our State government under Governor Gray 
Davis said, the people cannot afford this. He went out and said that he 
would, in fact, take care of this crisis.
  As a result, our State is in deep debt. About a third of our debt can 
be related directly to what the electricity companies did with their 
schemes that you are going to be explaining and I will be talking about 
later.
  Is my colleague aware that a third of the problem in California is 
directly related to the energy scam?
  Ms. CANTWELL. I thank the Senator from California for asking that 
question and for being a cosponsor. The Senator understands all very 
well how painful this has been to the California economy.
  I was not aware that a third of the problem could be directly 
attributable to the crisis in California. I know businesses have closed 
in Washington State. I know people have moved to other regions and made 
other investments because the rate is high in our State. I know the 
amount of money paid by higher utility costs for our west coast region 
is $6 billion. Ratepayers in the West paid a $6 billion increase in 
their electricity bills because of the market manipulation.
  When I think about the little time we have, maybe 6 hours total to 
debate this amendment, we gouged the ratepayers $1 billion and we are 
going to talk $1 billion an hour here. That is hardly the remedy for 
which I think people are looking. What they are looking for is some 
immediate action, saying these kinds of activities will not take place 
again, in the future.

  So the Senator from California, Mrs. Boxer, is correct. The impact 
has been devastating. It has been devastating to California's economy, 
and obviously we would like to see some relief. For the moment, what we 
are trying to say in the Cantwell-Bingaman-Feinstein-Boxer-Hollings-
Wyden amendment is that this kind of market manipulation ought to be 
outlawed specifically in the Power Act today so this does not happen 
again.
  As we are looking at natural gas price increases and people are 
getting anxious, why would we have an electricity title that is unclear 
as to what the penalties are? Actually, under the Oxley legislation of 
Senator Sarbanes and Congressman Oxley, on the SEC side, on the 
auditor's side, it said: We are going to get tough. These are new 
requirements. We are going to put this in the statute. Yet on the 
electricity title, we are repealing PUHCA, as my colleague from 
Washington State said, the one consumer protection law that has been on 
the books since 1935.
  Why would you change a law that has been on the books since 1935 when 
you just had the biggest pyramid scheme ever to defraud consumers, 
knowingly admitted by Enron, knowingly admitted by FERC, knowingly 
admitted by the Department of Justice, knowingly printed by every 
newspaper in the country that manipulation was going on? Why would you 
repeal the consumer protection laws on the books? You would actually 
try to enforce them.
  That is what the Cantwell amendment does today, as the clerk read 
this morning. It simply says the manipulation of those contracts cannot 
be just and reasonable and put that in the Power Act, plain and simple. 
Plain and simple, not the 43 pages we have in the title addressing this 
issue, which I am sure tries to address the issue, but it falls far 
short.
  Mrs. BOXER. Will the Senator yield for just a moment on this point? I 
am going to go into a markup and then return.
  Ms. CANTWELL. Yes.
  Mrs. BOXER. My colleague points out that what she is attempting to do 
in this amendment, of which I am so proud to be a cosponsor, is to make 
sure what happened to Washington and Oregon and California is not going 
to happen to any other State, be it Kansas, be it Illinois, be it 
anywhere else.
  For the life of me, I guess I need to say to my friend, does she 
understand why anyone in this Chamber, knowing what happened to our 
States, knowing what happened to our businesses,

[[Page S10176]]

knowing what happened to our consumers, knowing what happened, in the 
case of California, to our State budget because our Governor protected 
the consumers from these rates--can my friend understand why there 
would be one vote against her amendment, given what we know happened to 
us?
  Ms. CANTWELL. My colleague from California has asked a question that 
is very important. No, I cannot imagine why any of my colleagues would 
want to vote against this amendment that prohibits market manipulation 
and puts that in the Power Act in a very simple way.
  She mentioned something very interesting. A lot of people talk about 
this as the California energy crisis--the California energy crisis. Her 
economy has been devastated, but California actually had a retail cap, 
which meant even though those prices were being charged, and it left 
the California economy in disarray and a bill at the State legislative 
level that is exorbitant, what happened in Washington State, because we 
didn't have retail caps, is that the ratepayers actually saw the 
increase in their day-to-day electricity bills. They saw it to the tune 
of 88 percent increases, 61 percent increases, 54 percent increases. 
Those disconnect notices are real. The companies that have left or are 
leaving the State are real. The long-term impacts on our economy are 
real.

  No, I cannot imagine, if this had happened to any of my other 
colleagues from other States, that they would not be in the same 
position I am in today, or Senator Murray, saying, at a minimum, outlaw 
this market manipulation.
  So I appreciate the question the Senator from California has asked. I 
appreciate her keen attention to this issue. I know she has spoken many 
times on the floor about what has happened to our colleagues from the 
West and particularly how devastating it has been to her State. I 
appreciate that.
  Mr. DORGAN. Will the Senator from the State of Washington yield for a 
question?
  Ms. CANTWELL. Yes.
  Mr. DORGAN. Mr. President, I know she has limited time. I will be 
very brief, but I did want to ask the question.
  It seems to me this electricity title is critically important. I 
heard my colleague from California ask some questions. I chaired the 
hearings that dealt with the Enron abuses and other abuses in 
California and the west coast when I was chairing a subcommittee of the 
Commerce Committee. What happened there was egregious. It was wholesale 
stealing, and I use the word ``stealing'' in a very direct way. There 
are massive criminal investigations underway.
  We have heard the terms Get Shorty, Fat Boy, Death Star--the schemes 
we unearthed. The people, in memoranda inside the company, were saying: 
Here is the way we are going to cheat consumers. They created 
congestion, and they then got paid for removing the congestion that 
they created. They actually deliberately cheated consumers, not to the 
tune of a couple of loaves of bread but to the tune of billions and 
billions of dollars.
  It seems to me, as this energy title is written, there is not one 
person in the Senate--not one--who would stand up and say: It is fine 
for consumers to be confronted with that sort of manipulation and 
cheating or criminal behavior. Not one would say we support that kind 
of behavior.
  If that is the case, if no one is going to support that, and they 
would not, then should we not write an electricity title that 
represents the best ideas of both sides of the political aisle here; 
that says we are going to stop criminal behavior; we are going to stop 
the kind of activities that attempt to steal from consumers?

  I ask the Senator from Washington, have you had an opportunity, or 
perhaps has the ranking member of the committee had an opportunity, to 
sit down with those who wrote the electricity title, which we received 
last Friday, and talk to them about perhaps writing it together so we 
all accomplish that which we say we intend to accomplish--stopping this 
kind of manipulation and cheating? Because it did exist and it will 
again if we do not plug the hole.
  Ms. CANTWELL. I thank the Senator from North Dakota for his question. 
I know he has been diligent, being at the committee hearings during the 
time period in which the West tried to convince the Federal Energy 
Regulatory Commission--the policeman on the watch, if you will, when 
this mugging of ratepayers was happening--we tried to convince the 
Federal Energy Regulatory Commission that prices were too high, that we 
were getting gouged. The Senator was very articulate at that time and 
subsequently, on the Commerce Committee, holding hearings, 
investigating the activities of Enron.
  At that time, we were all speculating that manipulation happened. 
What has since come out is that the manipulation has been admitted to. 
It has been admitted to in the memos by the company in those various 
schemes you have talked about, and we have charts showing the names, of 
Death Star and Fat Boy and various other schemes. We have had the 
Federal Energy Regulatory Commission own up: Yes, this is market 
manipulation.
  I have a report here, that is almost too heavy to handle, that 
basically documents all the manipulation that has happened. We have a 
Department of Justice investigating and saying yes, manipulation has 
happened. Yet this electricity title is very scant on putting those 
things in place.
  The Senator is right. This new electricity title appeared last Friday 
night. I don't know what time it was, but well beyond the time, I am 
sure, that I was home in Washington State. We started in on it on 
Monday. But the bottom line is this underlying Domenici title has some 
language about: Let's make sure there is no false reporting.
  That is in the current statute. It didn't save us. It didn't have 
anybody stop this or basically put everybody in jail.
  Frankly, every time I get home, I hear from a constituent who is 
paying this high energy cost, paying this 61 percent or 88 percent rate 
increase, saying: Why isn't Ken Lay in jail? Why is it I am paying this 
rate increase and I am going to be paying it for 5 or 6 years and Ken 
Lay isn't in jail?
  The transparency clause here is already on the books, making sure 
people do not report false information to the organization known as the 
Federal Energy Regulatory Commission. That is already on the books. The 
round trip trading, yes, is eliminated. But we have other schemes in 
this bill that are not included in the electricity title and are not 
outlawed. I think it should be simple.
  The Power Act was created to protect consumers. We decided in 
interstate commerce; that is, the selling of power between States, that 
the Federal Government should play a role in protecting consumers on 
wholesale power rates.
  We gave to the States the ability through their utility commissions 
the responsibility to protect consumers' electricity that is sold 
within each State. But we said as a Federal Government we want to make 
sure consumers have oversight of electricity. We said in the Federal 
Power Act we are going to make sure that rates are ``just and 
reasonable.'' That is our job--``just and reasonable.'' We set up a 
commission to do it. Yet now we have seen that market abuse is 
continuing. And we have colleagues on the other side of the aisle who 
are proposing we repeal the only consumer protection law which has been 
on the books since 1935--the Public Utility Holding Company Act--and in 
its place put some language that basically smacks the hand of Ken Lay 
but doesn't have any teeth in it--teeth that will really bring to 
justice people who have manipulated this market.
  We may have another day when we can discuss what kind of relief might 
be given to California or Oregon or Washington. But this amendment 
today is geared toward protecting people from future abuse by simply 
saying in the Power Act that manipulated schemes are not just and 
reasonable; that they ought to be banned in the Power Act. I don't know 
what is wrong with saying that. I would like to go over the specific 
details so my colleagues understand exactly what we are trying to say 
and why the current underlying title comes up short in the sense of not 
doing enough to protect consumers.
  As I said, first of all, the Power Act put in place a broad 
prohibition on the manipulation of electricity prices. We want to 
continue that. We want to make sure that in this language we say

[[Page S10177]]

manipulated electricity prices are wrong. In the Domenici substitute, 
we are going to say that round-trip trading; that is, buying and 
selling of electricity at inflated rates and inflated volumes, is 
illegal. That is a good thing to do. But that is particularly focused 
on the shareholder.
  We are saying let us protect the shareholder to make sure these guys 
who are in this manipulative practice of buying and selling on the same 
day and inflating the price and inflating the volume is wrong and 
illegal. That is good in protecting shareholders. But how are 
ratepayers protected? I want to see protection for ratepayers.
  In particular, my amendment would add a new paragraph to the act 
which is based on language the Federal energy commission has had in its 
power since 1934. This language would make it illegal for any company 
to use or apply any manipulative or deceptive device to circumvent the 
Federal Energy Regulatory Commission rules and regulations on market 
manipulation.
  It is simple. Let's just say it. What is wrong with saying what Enron 
has admitted they have done? What is wrong with saying what the Federal 
Energy Regulatory Commission has put in the report? What is wrong about 
saying what DOJ has said about manipulation? Why not be really clear 
and specific? Any company that uses or applies any manipulative or 
deceptive device to circumvent Federal Energy Regulatory Commission 
rules and regulations on market manipulation should be punished.
  Second, we want to say specifically that electricity rates resulting 
from manipulative practices are not just and reasonable under the 
Federal Power Act.
  As we talked about last night and as some of my colleagues have said, 
we have the establishment of the Power Act and the protections of 
``just and reasonable,'' and it is our responsibility as a Federal 
Government to regulate wholesale energy prices between States. Why? 
Because in the 1930s, guess what happened. A bunch of companies had too 
much power and jacked up the price on consumers. They held them 
hostage. Electricity is something no one should be held hostage for, 
and certainly no one should lose their home because of a manipulated 
contract by a company that put a scheme in place.

  We had a hearing before the Energy Committee in which I asked the 
Federal Energy Regulatory Commission chairman, ``Do you think if you 
find market manipulation that it is ever going to be `just and 
reasonable,' or ever in the public interest?'' Chairman Wood told me, 
``I can't think of an instance when it would be.''
  We have the chairman of the Federal Energy Regulatory Commission 
saying I can't think this would ever be in the public interest or ever 
be just and reasonable. So why not put it in the Power Act? Guess what. 
Chairman Wood doesn't write legislation. We write legislation. We are 
the body that needs to take the responsibility. We are the body that 
needs to say to the American people we got the message that market 
manipulation has occurred.
  My amendment would clear up any confusion and specifically declare in 
the Power Act that market manipulation is unjust and unreasonable.
  Lastly, this amendment would amend the section 206 of the Federal 
Power Act requiring the Federal Energy Regulatory Commission to revoke 
the company's authority to sell at market-based rates whenever the 
commission finds it ``knowingly'' employs a strategy to manipulate the 
electricity market. It says when the Federal Energy Regulatory 
Commission finds people have manipulated a market that they revoke 
their market-based rates. Market-based rates is when the company 
decides what the rates are.
  As I said, we in the Northwest have been traditionally comfortable 
with cost-based pricing that the public Power Act provided. Why? 
Because consumers get the power at the cost it takes to produce it. As 
a former business executive, I am all for marketplace competition. But 
marketplace competition has to have some regulation or some people 
basically end up controlling the market and consumers get whacked 
whatever they want. In this case, we know manipulation happened.
  Why is this issue so important that we have to actually say to the 
Federal Energy Regulatory Commission make sure when these contracts 
have been manipulated that you revoke the market-based rate authority? 
Believe it or not, even though Enron, months and months ago, admitted 
in various memos that they manipulated the market, it wasn't until 
about 2 weeks ago that the Federal Energy Regulatory Commission 
actually revoked their market-based rate authority. Maybe it was 17 
days ago. Sometime in the last 2\1/2\ weeks, the Federal Energy 
Regulatory Commission finally took the action they should have taken 
over a year and a half ago. We have a Federal agency that has been 
laggard at addressing this issue.
  While we will have other amendments to address the Federal Energy 
Regulatory Commission and address the fact they have not stepped up to 
their appropriate role in being the policeman on the books as this 
mugging of ratepayers happens, because clearly they haven't--it took 
us, the Members of the Senate and House of Representatives pounding on 
them for months about the high cost of electricity in our region to 
finally get a mitigation plan. Over a year later it finally took the 
hearings of Senator Dorgan and many others and an investigation that we 
finally got the truth on the table that contracts were actually 
manipulated. Now it is going to take the effort and focus of this body 
to say, Let's make it simple. Let us make it really clear: Manipulation 
of contracts is unjust and unreasonable. Any company that employs such 
tactics should not have free rein of the market by having market-based 
rates allowed under the Federal Power Act and the Federal Energy 
Regulatory Commission. It is simple.

  I want to point out to my colleagues the fact that there are other 
entities that are way ahead of the game; that is, they are way ahead of 
us. They are way ahead of this body in saying that Enron manipulated 
contracts and something ought to be done about it. And that is 
bothersome. I think we are the protectors of the consumers in the 
oversight of how well an agency is doing its job and to which we have 
delegated the responsibility.
  I am sure there are people in this body who probably never heard of 
the Federal Energy Regulatory Commission until this crisis happened. I 
am not sure the agency has had the bright light of day shined on it too 
often in its Congressional history.
  In fact, the Government oversight committee, then chaired by Senator 
Lieberman during this energy crisis, had some hearings on whether the 
Federal Energy Regulatory Commission was doing its job. I thought that 
was very appropriate. It is very bothersome to me there are many 
newspaper articles and accountants of Ken Lay actually lobbying members 
of the Federal Energy Regulatory Commission on whether they should have 
a cap or a plan in trying to control or mitigate prices in the western 
energy market. He lobbied for Commissioners he thought would not put a 
cap in place. He lobbied for people he thought would continue the trend 
toward deregulation of the market.
  I do not know why we should listen to Ken Lay's energy plan and who 
he thinks should be the nominees in these instances. We even have one 
newspaper article that suggested he was for the renomination of the 
current Chairman of the FERC but only if he would continue to have a 
free market strategy and make sure these prices that basically had been 
charged were kept in place. I think that is unconscionable. We need to 
do something to make sure this agency has our trust in the Senate and 
the trust of the American people. I think that is critically important.
  Even though my colleagues have been hearing about this crisis for a 
couple years and some may think it is over, it is not over for the 
ratepayers of Washington State. It is not over for the California 
economy. We are stuck with this bill. We are stuck with the impact of 
these manipulated prices.
  But I want to be clear, there are people who knew this was going on. 
And they have admitted it--Enron itself. Enron knew we were going to 
get access to this information eventually, so basically they produced 
the smoking gun memos where the company said it engaged in practices to 
manipulate the western power market. And they knew it was wrong.

[[Page S10178]]

  In fact, even when these memos were starting to be uncovered, people 
realized these tactics had these exaggerated names that were not going 
to sound too positive, so they ended up saying: Well, let's change the 
names. I am not sure if it was Fat Boy--oh, yes, Death Star. Death Star 
was the name of a tactic used to manipulate the market, and they said: 
Well, if that comes out maybe that won't sound like such a good name. 
Let's change that to Cuddly Bear.
  So somehow we were not going to find out there was market 
manipulation in place because Death Star all of a sudden became Cuddly 
Bear. It does not matter whether you change the code name, the impact 
on my State is the same. It is wrong, and this body ought to outlaw it.
  So when FERC finally began to investigate, they realized this 
problem, as their report concludes, was significant and ``epidemic,'' 
and the epidemic market manipulation took place in the West. Their own 
report says there is overwhelming evidence that suggests ``Enron and 
its affiliates intentionally engaged in a variety of market 
manipulation schemes that had profound adverse impacts on the market 
outcomes.''
  In fact, the report goes on to say:

       Enron's corporate culture fostered a disregard for the 
     American energy customer. The success of the company's 
     trading strategies, while temporary, demonstrates the need 
     for explicit prohibition on harmful and fraudulent 
     market behavior and for aggressive market monitoring and 
     enforcement.

  That is what the Federal Energy Regulatory Commission is saying has 
transpired and what we need. It ``demonstrates the need for explicit 
prohibition on harmful and fraudulent market behavior and for 
aggressive market monitoring and enforcement.''
  It is not FERC's job to write the law. It is FERC's job to enforce it 
and interpret it. Our job is to act. They are telling us they need to 
have this market behavior monitored and enforced, and that this problem 
demonstrates the need for an explicit prohibition. Let's give them that 
explicit prohibition. Let's put into the Federal Power Act that the 
manipulation of prices cannot be just and reasonable and companies that 
participate in that practice do not deserve to have market-based rates.
  As I mentioned, FERC just came to this conclusion recently, so it is 
a little troubling that it took them so long, after so much damage has 
been done--$3-plus billion to the California economy, over $1 billion 
to the Washington economy, and billions more to Oregon and, I am sure, 
other parts of the West. So we don't want them to be confused or slow 
to pick up the regulatory framework and to use it as a hammer against 
these kinds of manipulations. So let's make it really clear.
  DOJ thinks this manipulation is wrong. The U.S. Department of Justice 
believes what Enron did was, as they said, wrong and fraudulent. The 
Department of Justice continues to conduct investigations into Enron's 
activities. It has filed criminal charges levied against 16 different 
employees, most recently resulting in one of those 16 arrested, a 
trading desk manager. Already, two Enron traders have pleaded guilty on 
charges of conspiracy to commit wire fraud. And charges are pending 
against another.
  So DOJ knows it is wrong. Yet in the electricity title we have not 
put in strict enough language to prevent it from happening again.
  One of the most recent criminal complaints filed against an Enron 
trader by the U.S. Attorney's Office says: Based on the facts, there is 
probable cause to conclude that between approximately June 1999 and 
January 2001 the Enron trader unlawfully conspired to commit and did 
commit acts in violation of the Federal law. There is probable cause to 
conclude that the trader committed the offense of wire fraud in 
violation to title 18, United States Code, and conspired to commit the 
offense of wire fraud in the northern districts of California and 
elsewhere.
  The Department of Justice knows these acts are manipulative and 
illegal. The fact that they only have two people indicted so far--and 
we still don't have justice as it relates to Ken Lay; and it was the 
diligence of those on the west coast and Members here saying 
manipulation went on--bothers me; it has taken so long. So I certainly 
want to make sure there is no question that we think these activities 
are wrong and that something should be done about it. That is why we 
need tough language.
  Now, this body did its job as it relates to the auditing of 
regulators and reform after Enron. This CRS report for Congress--
basically that is part of the report about the Sarbanes-Oxley act--
talked about how we stepped up and did our job as it related to the 
auditing and accounting practices of these organizations.
  Now, why was that important? It was important because not only did 
ratepayers get gouged, but people counted on those companies and their 
truthful reporting in their businesses. And the investors investing in 
those businesses counted on that truthful reporting. We uncovered that 
there was a lot of manipulation going on there as well. There was a lot 
of misinformation about what really was the cash and capital of these 
companies and whether the investments by investors really should have 
been made, given that the long-term outlook of the companies was not 
based on real numbers but on these manipulated schemes.
  So what did we do? We didn't repeal accounting laws that were on the 
books to protect consumers. We stepped up and said: Let's make this 
stronger. Let's get the Sarbanes-Oxley act in place. In fact, the act 
creates a new oversight board for auditors. It prohibits auditing firms 
from providing certain consulting work for auditing clients so there is 
no conflict of interest in who they work for. It requires the rotation 
of all the partners. It imposes new regulations on corporate boards and 
executives. It increases government oversight and criminal penalties. 
We took tough action as it related to the auditors. We protected the 
shareholders moving forward from having this kind of scheme from an 
auditing perspective happen again.
  If we were so ready to jump on this issue as it related to the 
auditing practices and the accounting practices of these companies, and 
we protected the shareholders and the individuals who may have had 
pension plans or investments in these companies, why aren't we now 
going to protect the ratepayers who actually got gouged with the high 
cost of these contracts? Why aren't we going to say this is so 
egregious that we should never allow it to happen again; that we, the 
Congress, believe that we are no apologists for Enron? We are not going 
to condone market manipulation. We are going to say, just as we did 
with accounting rules and auditing rules, we are going to have in the 
Power Act the same message; that manipulating contracts is unjust and 
unreasonable and anybody who participates in market manipulation does 
not get to have free market power under the Power Act. It is simple.
  Let me talk about what is in here because I believe Chairman Domenici 
and his staff probably did try to say that some manipulations happen 
and we ought to do something about it. But I don't think we have 
covered the full gamut of issues that need to be covered. The Domenici 
amendment refers to round-trip trading. Round-trip trading is 
simultaneously buying and selling electricity to stimulate both the 
amount of electricity trading that was going on and to stimulate and 
increase the price. So the Domenici amendment says round-trip trading 
is wrong. And that is good. It is good that we took one of these 
schemes and shot a hole into it and said this is wrong.
  But there are many other schemes that are not covered under the 
Domenici title: Fat Boy, also known as Icing Load, to create real-time 
power markets. According to Enron's own memos dated December 6 and 
December 8, 2000, Fat Boy was ``one of the most fundamental strategies 
used by the traders.'' According to one, ``the oldest trick in the 
book'' and ``is now being used by other market participants.''
  What Fat Boy did, when you boil it down, is Enron submitted false 
power supply schedules to the California ISO--the California 
organization in which power was bought and sold--and other market 
participants for the purpose of receiving payments when it didn't 
actually need the extra generation. So in essence Enron received untold 
millions of dollars for pretending to keep the lights on in the West 
when it really didn't need to. There is nothing in this current 
Domenici title that

[[Page S10179]]

prohibits Fat Boy from happening. Yes, you say, you can't lie to FERC. 
There is nothing in the act that says you can't lie to the California 
ISO, which is exactly what Enron did under the Fat Boy scheme.
  That was the whole point of California deregulation. That is what 
people went to the legislature and sold them, just as they are trying 
to sell us. Hey, guess what, California. If you deregulate, market 
competition is going to drive down the price. And we will create this 
mechanism, the California ISO, which stands for the independent system 
operator. We are going to make this scheme where an independent system 
operator is going to get you cheap electricity. And all those people in 
the marketplace who want to sell power and sell it at a cheap price, we 
are going to drive down the price.

  That is not what happened. The price went up. It escalated. So they 
defrauded the California ISO. There is nothing in this underlying bill 
that protects the ratepayers from having Fat Boy happen again because 
it does nothing to prohibit lying under these kinds of schemes to the 
California ISO or any other organization like that.
  Richochet was also known as Ping Pong. The sole purpose of this 
scheme was to evade California's attempts to put price controls in 
place. Knowing that FERC wasn't really paying attention, they were 
given market-based rates. They said: Go out and see if you can drive 
down the price of electricity. And under this scheme, basically to get 
out of the price controls that California was trying to put in place 
and control, the traders, instead of trading within the State of 
California, would ship their power outside of the State and then ship 
it back in. Yes, that is right, just like the ping pong ball, back and 
forth on a ping pong table, pushing power to one side and pushing it 
back--Ricochet.
  If we push it out of California, then we are not subject to those 
State regulations, and guess what. When we ship the power back in, we 
can ship it in at the price we want. That way we avoid the caps of the 
California ISO and the power exchange that is trying to enforce them.
  So the prohibition on round-tripping in the Domenici bill does 
nothing to prohibit Ricochet or Ping Pong from happening again. This 
kind of practice of shipping out of State and shipping back in is not 
illegal under the Domenici title. But it will be under the Cantwell-
Bingaman amendment if this body will adopt it.
  Let me talk about Death Star for a second. That is the one, yes, 
renamed Cuddly Bear. I don't care what you call it, there is no way the 
American public, the public in Washington State, doesn't know that this 
wasn't a cuddly bear. This was an unbelievable scheme that has ruined 
our economy. The essential strategy of Death Star was for Enron to earn 
money by lying about its transmission needs, scheduling transmission in 
the opposite direction of the congestion. No energy, however, is 
actually put on the grid or taken off, according to the company's own 
memos.
  So wait a minute. We were saying to people this is what is going to 
be on the grid, but then we don't really put it on the grid.
  The U.S. Attorney's Office described in a June court paper that Enron 
submitted schedules to the ISO that pretended to move the electrons 
owned by Enron, but in reality it didn't. Because of this, it appeared 
to relieve congestion. So the ISO awarded Enron congestion relief 
payments. Basically by pretending it was putting power out there to 
relieve congestion, which it really didn't, the ISO gave them relief 
payments. The ISO was deceived because part of the looping scheme was 
outside of California and, therefore, it couldn't be detected, thereby 
costing more money.
  According to the Department of Justice, senior Enron traders denied 
they were doing this practice or violating any market rules. So 
basically what we are saying is that there were people at Enron who 
told other fine people who probably worked at Enron and who were trying 
to do their jobs, there is nothing wrong with this. This is totally OK 
to do.
  One of the trading managers was smart enough and said: We are worried 
that the details of the strategy would be leaked to the ISO and other 
power companies or the public. One of the consequences of his concern 
was that he was instructed to refrain from calling this Death Star. 
That is when they said: Gee, employees are getting nervous about this 
scheme; they don't think it is right. Let's change the name to Cuddly 
Bear and maybe everybody will be OK with it. Well, we are not OK with 
it.
  The underlying Domenici electricity title does not prohibit Death 
Star from happening again. Only the Cantwell-Bingaman amendment will do 
that.
  Load shifting was another ploy. To employ this tactic, Enron would 
distort its transmission schedule to create the appearance of 
congestion, or knowingly increase the congestion cost to all market 
participants. Again, more misinformation. The underlying Domenici title 
says nothing of falsified information provided to the FERC. Well, FERC 
already has language in there about reporting. It didn't get them to 
stop Enron from following these practices. It doesn't require or make 
illegal any of these practices of providing misinformation to the 
California ISO.
  Remember, the California ISO was an organization that basically was 
created after deregulation. After deregulation, people went to the 
California Legislature and said: We will create a mechanism where the 
marketplace buys and sells power at a cheap rate. We will let the 
market do it.
  Under the California ISO, the independent system operators basically 
were supposed to help control price. That is where the misinformation 
was, where the lying and fabrication of information took place. This 
underlying bill does nothing to protect or say that those kinds of 
activities to the California ISO, an independent system operator, are 
illegal. It has no teeth as it relates to that. So nothing in this 
underlying Domenici electricity title will protect us from load 
shifting. The Cantwell-Bingaman amendment will.
  Get Shorty. Like many Americans, I thought this was a title of a 
movie. I thought it was supposed to be a joke. But in my State it was 
not a joke to the ratepayers who actually had a premium price increase. 
Basically, what they did was they gambled that it would be able to find 
service at a cheaper price the next day. Enron's own memos admitted 
that ``this was obviously a sensitive issue because of reliability 
concerns.'' Indeed, the company stated that it would be ``difficult to 
justify our position if the lights go out because these services were 
not available, and the reason was because we were selling them without 
actually having them in the first place.''
  They basically were saying: We are going to have a scheme where we 
are going to say there is power available when there is not. And then 
when the lights went out, they knew they were going to have concerns. 
They knew. How they could think the west coast economy would not be 
reached by this havoc being laid upon them. I cannot understand. I 
cannot understand the corporate greed that goes into this kind of 
thinking--that somehow this kind of marketing strategy would be good 
for California, good for Washington, good for America, good for 
corporate business, good for our confidence as a country--confidence 
that we as a government are going to say this kind of manipulation is 
wrong. It has created a huge deal of unrest in the West. Nothing in the 
Domenici electricity title prevents Get Shorty from happening.

  Wheel Out. I am not sure what marketer came up with this one. Enron 
would submit schedules for a transmission on line they knew was out of 
service. In doing so, the company would earn extra payments for their 
trouble. It is not even available. It is sort of like a cab driver 
heading straight for a traffic jam in order to keep the meter running 
on an unsuspecting tourist, basically saying: I am going to get you 
into congestion and it is going to cost you a lot. The poor passenger 
in the car doesn't know there is a quicker route, a cheaper way, a more 
expedient way to control the cost. But unlike a cab ride, the costs of 
this are not in the tens of dollars but in the millions of dollars, and 
the cost to our economy has been in the billions of dollars. There is 
nothing in the Domenici underlying amendment that would prohibit the 
Wheel Out strategy from happening again.
  The Cantwell-Bingaman amendment says that the Wheel Out strategy is

[[Page S10180]]

manipulation of the market--it is manipulation. Under the Federal Power 
Act, it cannot be just and reasonable that companies that deploy these 
kinds of practices should not have market-based rates.
  I hope there are not any more schemes. I hope I don't have any more 
charts because this is enough. This is enough of the tactics that were 
deployed by a company that basically thought that making a few more 
dollars through manipulative practices was somehow OK to do.
  I read some of those quotes from employees at Enron who said: I don't 
think this is right; I think this is a concern. Yet they continued.
  So the Cantwell-Bingaman amendment, which is supported by Senators 
Hollings, Murray, Boxer, Feinstein, and others, simply says let's put 
into the Power Act that manipulation is not just and reasonable.
  We have had lots of support: The Northwest Public Power Association, 
Northwest Energy Coalition, AARP, Consumers Union, International 
Brotherhood of Electrical Workers, Consumers for Fair Competition, 
National Association of State Utility Consumer Advocates, Union of 
Concerned Scientists, U.S. Public Interest Research Group, and many 
other organizations, such as members of the AFL-CIO, and many people 
who are concerned about the economic impact of manipulation happening 
prospectively on natural gas.
  Why won't somebody just take this experiment that happened in 
California and the West and say, OK, we will--with the current Domenici 
language, Congress barely smacks the hands of those Enron traders. Gee, 
only one of them went to jail. I guess you have to be smart enough not 
to be the one who gets caught with a memo on an electronic file on your 
computer, and, guess what? You will get out of this. So let's take this 
same kind of scheme and deploy it for natural gas.
  That is what this amendment is about. This amendment is about saying 
that natural gas in the future will have better protections of 
consumers in mind regarding potential rate increases. So, if we have an 
increase in natural gas prices, maybe because of shortage of supply, 
guess what, we will really know that it is about shortage of supply. We 
will really know. We will be able to tell consumers in America that we 
really know it was about not having enough supply; it was not because 
some natural gas producer had tons of supply but manipulated the market 
through a variety of schemes and somehow gouged consumers, and that is 
why your rates are higher. Can we not give the American consumer that 
kind of confidence about our energy? I sure hope we can.

  This issue has a real impact on people, and I know my colleagues are 
in the Chamber, and they want to speak, but I wish to share one letter 
from an 11-year-old girl whom I met almost a year and a half ago. I did 
not know at the time she had sent this letter, but she lives in a 
region of the State where they have had a 71 percent rate increase--a 
huge increase.
  This 11-year-old girl sent an emotional letter about how the crisis 
was affecting her family, that her mom was living paycheck to paycheck. 
That actually the job her mom had was dependent upon affordable 
electricity. She wrote:

       This is the first time I've lived in a house. This is the 
     most important thing in my life, that we get to live in a 
     house. Please listen to what might happen to hundreds of 
     kids, including myself, when my mom might lose her job and we 
     might have to move out of our house.

  The impact is being felt by young children, not just by the parents 
who might lose their job. Not just by the Snohomish County ratepayers 
who had 44 percent disconnect notices, but by young children who are 
fearful that their families are not going to make it because these 
schemes caused these rate increases that we are stuck with for years 
and years.
  There is somebody sitting in their office somewhere in America 
saying: Gee, why don't you just sue those Enron people? Why don't you 
just sue them and tell them that under the Federal law, they cannot 
manipulate these contracts? I think people in America would be 
surprised to know that Enron is suing these utilities. Enron is turning 
around and suing these utilities and forcing them to pay these rate 
increases. They are suing the Snohomish County public utility district, 
saying: That contract--that has been manipulated--that you signed for 5 
years of power, even though it is manipulated and you are paying a 54-
percent increase, we are not letting you out of that contract; we are 
suing you.
  This is the only body that can protect people in the future. It is 
only the Senate and the Congress that can say: This manipulation is 
wrong. This manipulation, moving forward, is wrong. Then ratepayers in 
my State in the future, if this happens, might have a chance.
  We have had letters from senior citizens who are trying to live on a 
fixed income. This burden has made them make decisions about how they 
are going to live in the future. One woman from Okanogan County said: 
My friends, myself, and my neighbors cannot afford the higher rates:

       I am in a total panic because I am disabled and barely can 
     pay for heat now. With these rates going up as much, it will 
     make it a life-threatening situation. This will become a 
     public health disaster. To make matters worse, many 
     businesses are planning on shutting down here due to the 
     terrible economy and the power costs. This is putting the 
     last nail in our coffin in a dire economic situation in Omak, 
     WA.

  That is what the ratepayers in my State think. Not just: Oh, please, 
Senator Cantwell, Senator Murray, please, Members of Congress, smack 
the little hand of the Enron people and tell them that was a no-no. 
They are saying these are dire circumstances, these are life-
threatening situations, these are public health risks. We ought to 
stand up today and say this kind of market manipulation is not just, it 
is not reasonable, it is not in the public interest, and these variety 
of schemes from Ricochet to Fat Boy to Death Star are not legal, they 
are examples of manipulation, and companies that practice such 
manipulation should not be given market-based rates.

  I could go on about this issue and talk about how our Northwest 
economy has been impacted by the number of jobs lost. I know several of 
my colleagues wish to speak on this issue, and I am going to give them 
the opportunity because I know they have been engaged in such dialog 
and speaking out on this issue. I want to give them a chance to 
continue to express their opinion on this issue as well.
  I do not know if the Senator from Iowa wants to have a few minutes 
now, but I am happy to yield to him--for how much time?
  Mr. HARKIN. For 10 minutes.
  Ms. CANTWELL. For 10 minutes of the time I have remaining, Mr. 
President.
  The PRESIDING OFFICER. The Senator from Iowa is recognized.
  Mr. HARKIN. I thank the Senator from Washington for yielding to me. I 
want to help her on this amendment. I ask unanimous consent to be added 
as a cosponsor to the Cantwell amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HARKIN. Mr. President, after listening to Senator Cantwell's 
exposition of the crimes, manipulations, and the fraud perpetrated on 
the American people by the Enron Corporation, it is, again, amazing to 
this Senator that we have not done something about this situation 
before now. I am amazed this is not taken care of in the underlying 
bill.
  We know that what Enron did can happen again if we do not address it. 
If we do not ban it, as Senator Cantwell does in her amendment, it will 
keep happening over and over.
  In the 1930s, at the height of the Great Depression, Congress 
realized one of the most important factors was the collapse of the 
electric utility industry. It turned out this basic industry had been 
built on fraud after fraud, shell game upon shell game, and when 
economic troubles hit, it collapsed like a house of cards.
  Congress's attempt to prevent this from happening again was the 
Public Utility Holding Company Act of 1935, otherwise referred to 
around here as PUHCA. That was our attempt in the 1930s to prevent what 
was happening then from happening again, with all the frauds and the 
collapse of the house of cards of the electric utility companies.
  Then we go forward 60 years to about the midnineties, and we were 
told that

[[Page S10181]]

the restructured electric utility industry would be built upon markets 
and trading, that the markets would ensure the soundness of the 
industry, that the PUHCA now was just a hindrance to cheaper power, 
more available power, for all of our consumers; that PUHCA was not only 
irrelevant but probably even a hindrance.

  Enron was both the leading participant in and the leading advocate of 
this new scheme of electricity markets. They were not the only one, but 
they were the leading one. They were the ones that had the closest ties 
to people in Congress and to the Bush administration.
  It turned out that Enron, like the electric companies of the 1910s 
and 1920s, was also built upon frauds, shell games, and out-and-out 
criminal activity. When troubles hit, Enron, too, collapsed like a 
house of cards. Again, this is what we saw in the 1930s.
  As Senator Cantwell has brought out, we had a whole new set of terms 
of art that entered our vocabulary: Fat Boy, Get Shorty, Death Star, 
and many more. Enron had legions of employees who were paid to dream up 
ways to defraud the public and manipulate prices of electricity and 
transmission capacity. They ranged from affiliate structures, creative 
loans, trading strategies.
  We have heard about Wheel Out, about how they tried to sell 
electricity through nonexistent lines. Again, Enron was not the only 
one. FERC has found dozens of companies were involved in fraud, that 
market manipulation was epidemic.
  The whole energy industry still has not recovered. In fact, the whole 
economy is hurt by investors who have lost their trust in American 
corporate management.
  Now we see that PUHCA, the Public Utilities Holding Company Act, was, 
in fact, irrelevant to Enron schemes. Why? Because FERC had determined 
that Enron was exempt from the law. Even that was not enough for 
Enron's chairman Ken Lay, who later threatened to remove the FERC 
chairman if he did not back his beloved markets and schemes more 
strongly.
  Where is Ken Lay today? Is he in prison? Is he behind bars? Well, of 
course not. I understand he had to sell a couple of his big houses, one 
in Colorado and one someplace else, but he is out free. He may be on 
the French Riviera for all I know. I do not know where he is. He made a 
lot of money. He sacked it away and he is living a grand life.
  Now I guess a couple of his underlings went to jail because they got 
caught, but Ken Lay, the brains behind the whole scheme, the person who 
threatened to remove the FERC chairman, is scot-free. So much for 
justice in this regard.
  At this point I doubt this Justice Department is going to do anything 
to really go after Ken Lay because of his closeness to the Bush 
administration. But Enron showed more clearly than any episode since 
the Great Depression that strong Federal oversight is needed in the 
electric industry; that fraud hurts consumers, investors, and our whole 
economy.
  The Domenici substitute bans one particular trading scheme, round-
trip trading, but it leaves all the other schemes with these names we 
have heard of from Star Wars. It would still leave them there, and 
Senator Cantwell just laid all of those out for us. So it would leave 
all of those untouched.
  Why just ban one and leave all the other ones there? Well, as one 
step to restoring confidence in the energy industry and thus getting 
the economy moving again, we need to ban all such market manipulation. 
That is what the Cantwell amendment does and that is why I support it.
  The Presiding Officer is from the State of Missouri, the home State 
of one of my political heroes, Harry Truman, a great Democrat. Harry 
Truman once said when he was campaigning in 1948 in the Midwest and 
talking to a bunch of farmers who had lost a lot in the Depression and 
he was telling them that his opponent, Mr. Dewey, was going to turn the 
clock back and they were going to get rid of all of the support they 
had had for agriculture. Truman uttered one of his great lines. He 
said: How many times do you have to get hit on the head before you 
figure out what is hitting you on the head?
  Well, I would like to take Harry Truman's line and apply it to us and 
the electricity industry. How many times do we have to get burned by 
fraudulent schemes in this industry before we figure out what we ought 
to do about it and ban all of these activities? How many times do we 
have to get hit on the head before we figure out there are deep 
problems in the electricity industry and they have to be solved? 
Because if they do not, it is going to continue to hurt our economy.
  Our economy right now is in terrible shape. I will divert just a 
little bit from this bill for a few minutes if the Senator does not 
mind.
  The PRESIDING OFFICER. The time of the Senator from Iowa has expired.
  Mr. HARKIN. I ask for an additional 5 minutes.
  Ms. CANTWELL. How much time is remaining?
  The PRESIDING OFFICER. The Senator from Washington has 32 minutes 
remaining.
  Ms. CANTWELL. Five minutes.
  The PRESIDING OFFICER. The Senator from Iowa is recognized for 5 
minutes.
  Mr. HARKIN. Mr. President, in March of 2001, President Bush visited 
Western Michigan University to stump for his tax cuts. He said:

     . . . we can proceed with tax relief without fear of budget 
     deficits, even if the economy softens.

  Of course, today we know that what the President said that day was 
not true, and I think it is time now that the White House comes clean 
on this issue. We do not know whether the President was aware at the 
time he made this statement that it probably was not true, but somebody 
should have known.
  Surely, someone in this administration knew that trillions of dollars 
of tax breaks, combined with a downturn in the economy, would lead to 
massive budget deficits.
  Following that speech, this administration gave trillions in tax 
breaks to the wealthy, the economy softened, and we have gone straight 
from record projected surpluses to record projected deficits and debt. 
In fact, just 2 years later, the United States now faces massive, 
prolonged, record-setting projected deficits--over $450 billion this 
year, $475 billion next year, and trillions of dollars of deficits over 
the coming years.
  So, what the President said that day in 2001 was in fact woefully 
false.
  Now, I know the other side is going to accuse me of making a mountain 
out of a molehill on this issue. They will say I am just taking 16 
words from one speech and blowing them out of proportion in order to 
challenge the President's credibility. They will ask: How can 16 words 
in one speech be the test of a President's credibility?
  Yes, I can hear the President's defenders already. They will say: 
This speech was cleared by the Council of Economic Advisors. It is not 
the President's fault. He relies on the technical advice of experts on 
these matters.
  Maybe that is the case. Maybe the President thought he was telling 
the truth when he said we could reduce Government revenues by huge 
amounts without causing deficits. But somebody should have known it was 
not true.
  If not one in this administration knew that passing enormous tax 
breaks for the wealthy, combined with an economic downturn, might lead 
to exploding deficits, that does not exactly inspire a lot of 
confidence, either.
  The President's defenders on this issue may also say:

       Well, actually, the statement is technically accurate, and 
     did not mislead anyone. After all, it says we can proceed 
     without fear of budget deficits. It does not say we will not 
     actually experience massive budget deficits. It just says we 
     do not need to fear them.

  Unfortunately, that explanation will not work, either. As Alan 
Greenspan has reminded us repeatedly, large deficits do matter, and 
they are something to be concerned about.
  In truth, it is pretty obvious that the White House intended to 
communicate that the President's massive tax cuts would not create 
corresponding massive deficits. It is now apparent that someone misled 
the public in that speech by the President.
  ``Well, but even if what the President said was not true,'' I can 
hear his defenders say, ``it does not matter. What matters is that we 
did what we really

[[Page S10182]]

set out to do. We provided the most affluent Americans with large tax 
breaks. We rewarded our largest campaign contributors with millions.''
  Now, I hope that is not the real explanation. But that is what 
actually happened.
  These days the administration does not want us to pay too close 
attention to what the President actually says. In fact, sometimes they 
would rather we disregard it altogether, especially when it is only 16 
words. They say it does not really matter.
  In this case, as in others, what the President of the United States 
says does matter. The President needs to come clean about these 
remarks. He needs to admit his mistakes. Otherwise we are left with the 
distinct impression the President, his advisers, or both, purposefully 
misled the American people about the economy in order to get tax breaks 
for the wealthy.
  If they were a mistake, these 16 words, then the President ought to 
admit it. The resulting policy is driving our economy into the ground. 
If they would acknowledge the statement was wrong, hopefully we could 
all come together to remedy the President's economic malpractice and 
get the economy moving again.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Ms. CANTWELL. Mr. President, I yield 5 minutes to the ranking member, 
Senator Bingaman, who is a cosponsor of my amendment. He has worked 
hard in bringing attention to everyone about this issue of market 
manipulation.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. BINGAMAN. Mr. President, I thank Senator Cantwell for yielding 
time on this amendment. I am a cosponsor of the amendment. I commend 
her for offering the amendment and focusing the attention of the Senate 
on this important set of issues.
  The electricity title is perhaps the most complex part of this entire 
Energy bill. We recognize and understand there is a lot of complexity 
in writing a provision or a title that governs the regulation of 
electricity.
  However, the issue that the Cantwell amendment deals with is not 
complicated. It is extremely straightforward. Frankly, I am at a loss 
to understand why we cannot get agreement between Democrats and 
Republicans in the Senate to go ahead and close this loophole which has 
become so clear to everyone in the country who has paid any attention 
to energy prices and energy markets in recent years.
  Just a year ago, newspaper stories had almost daily headlines about 
power marketers manipulating the market in California and in the 
Northwest States, Washington and Oregon, in particular. Unfortunately, 
it seems something has been forgotten since those stories were written 
a year ago.
  Senator Cantwell has outlined very dramatically and effectively the 
parade of these schemes devised to defraud utilities--and ultimately to 
defraud consumers--that have resulted in consumers paying substantially 
more every month when they pay their utility bills. They have very 
exotic names. But the truth is, her amendment is extremely 
straightforward.

  Let me read the operative part of this amendment and ask how this can 
be objectionable to anyone.

       It shall be unlawful for any person, directly or 
     indirectly, to use or employ, in connection with the purchase 
     or sale of electric energy or the purchase or sale of 
     transmission services subject to the jurisdiction of the 
     Commission, manipulative or deceptive device or contrivance 
     in contravention of such rules and regulations as the 
     Commission may promulgate as appropriate in the public 
     interest for the protection of electric ratepayers.

  What is wrong with saying it is illegal to engage in manipulative and 
deceptive practices? I cannot understand why we are spending so much 
time debating an issue that seems so straightforward to me.
  The Domenici substitute does prohibit round-trip trades. And they 
should be prohibited. Unfortunately, it does not go the next step and 
do exactly what I just read, which the Cantwell amendment would do. We 
need to add this provision. We need to be sure the tools are there in 
the Federal Regulatory Commission to do this job in the future.
  I sympathize with the statements the Senator from Washington has made 
about the inaction of the Federal Regulatory Commission in the early 
months of the Bush administration. There was a period when prices were 
going through the ceiling, particularly on the west coast, and we were 
not seeing action out of the Federal Regulatory Commission as we should 
have. That was corrected, in my view at least. It was corrected after 
the new chairman came in, Chairman Wood, and began to assert the 
authority the Federal Regulatory Commission had and should have been 
asserting all along to go ahead and step in.
  This is an additional tool. We should give FERC this tool and make it 
clear in the law that all of these deceptive and manipulative practices 
are illegal. Once we make that clear, we are in a position to hold the 
Federal Regulatory Commission accountable if, in fact, manipulative or 
deceptive practices occur in the future.
  This is not an academic inquiry. These practices resulted in 
increased utility bills for many Americans. The Senator from Washington 
should be commended for stepping in to ensure that does not recur in 
the future.
  I yield the floor.
  The PRESIDING OFFICER. The time of the Senator from New Mexico has 
expired.
  The Senator from Idaho is recognized.
  Mr. CRAIG. I yield myself 5 minutes of our time.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CRAIG. I come to the floor this morning frustrated in part by 
some of the debate that has occurred on the floor. The Senator from 
Washington and I agree the ratepayers of the Pacific Northwest have 
been injured by a dysfunctional California market that was badly 
designed and badly conceived from the beginning. In fact, it got so bad 
and it has been so dramatically treated in the wrong political way that 
we have a gubernatorial recall going on in the State of California 
right now.
  Finally, the ratepayers of California got it figured out. The 
politics of California destroyed the market and the ratepayers of 
Washington, Oregon, and Idaho had to help pay for it.
  To come to the floor this morning and say nothing is going on and 
nobody is being prosecuted is, in fact, wrong. It is not telling the 
whole truth. The title we have in front of us, the electrical title, 
still allows thorough and aggressive prosecution of those who violate 
the law.
  Where is the regulatory gap that is being talked about this morning 
that the Senator from the State of Washington, by her amendment, might 
change? Here are the agencies involved at this moment: The President's 
Corporate Fraud Task Force, the Federal Bureau of Investigation, the 
Federal Regulatory Commission, the Securities and Exchange Commission, 
the Commodity Futures Trading Commission, the United States Postal 
Service, and numerous U.S. Attorney's Offices. Their cooperative 
enforcement activities have focused on investigations of possible 
round-trip trading, false reporting, fraud, manipulation of energy 
companies and their affiliates, employees, and their agents.
  There is a list of some of the actions taken on various Federal 
agencies. Let me run through them:
  Starting on July 16, 2003, the FERC administrative law judge 
recommended Enron be required to refund $32.5 million for violating 
section 205(c) of the Federal Power Act.
  June 25, 2003, FERC revoked the market-based rate authority of the 
Enron power marketing entity.
  June 3, 2003, John M. Forney, manager of the Enron real-time trading 
desk during 1999 and 2000, was arrested and charged with wire fraud and 
conspiracy.
  May 1, 2003, new criminal charges were filed against former Enron 
chief financial officer, Andrew Fastow, including charges of security 
fraud, insider trading, falsification of Enron accounting records, tax 
fraud, and self-dealing.
  I could go on, and I have numerous lists. But that is Enron.
  Let me go to Reliant Resources: May 12, 2003, Securities and Exchange 
Commission issued a cease and desist order against Reliant Resources 
and Reliant Energy arising from Reliant's admission in May of 2002 that 
it conducted round-trip trading for the purpose of artificially 
increasing trading volume.

[[Page S10183]]

  Dynegy, another energy company, June 12, 2003; the U.S. Attorney's 
Office for the South District of Texas charged three former Dynegy 
employees with conspiracy, securities fraud, mail fraud, and wire fraud 
in connection with round-trip energy trades, and the Securities and 
Exchange Commission also filed civil securities fraud charges against 
the former employees.
  How about El Paso Corporation? May 9, 2003--in May of 2003 FERC 
deferred action in a pending proceeding stemming from allegations of 
affiliate abuse and anticompetitive impacts on the delivered price of 
gas and the wholesale electric market in California.
  It goes on and on. I have four more pages of about seven items per 
page of actions that have already been taken against these companies.
  The question is, Does the electrical title that we have before the 
Senate today create a regulatory gap? The answer is quite obviously no.
  Does it change the problem in the State of Washington? Washington got 
stiffed by the old law and the old process. Idaho's ratepayers got 
stiffed by the old law and the old process. And the citizens of 
California have finally said: We have a Governor who will not do 
anything about it. He put us in a huge deficit problem, and we are 
going to throw him out of office. And that is what that recall is 
about. It all stems from a phenomenally dysfunctional electric market 
that the people of California created, and they created it by 
deregulating wholesale and regulating retail and in came the scammers 
and the scammers are now being prosecuted as they should be.
  I do not believe the amendment is necessary. I believe the title in 
this bill on electricity appropriately addresses this. There is 
transparency. There is no regulatory gap.
  The PRESIDING OFFICER (Mr. Crapo). The Senator from Washington.
  Ms. CANTWELL. Mr. President, I know my colleagues from the other side 
of the aisle want a chance to use up some of their time. I do not know 
whether the chairman wanted to speak now. The Senator from Louisiana 
was going to be yielded a few minutes, also. I do not know if the 
chairman wanted to use time.
  Mr. DOMENICI. Mr. President, how much time does Senator Cantwell have 
left?
  The PRESIDING OFFICER. The Senator from Washington has 21 minutes 
remaining.
  Mr. DOMENICI. The Senator from New Mexico has a half hour less than 
the Senator----
  The PRESIDING OFFICER. The Senator from New Mexico has 24 minutes 
remaining.
  Mr. DOMENICI. I inquire if the Senator from Louisiana desires to 
speak?
  Ms. LANDRIEU. Yes, Mr. President, I desire to speak both in support 
of the chairman----
  Several Senators addressed the Chair.
  Ms. CANTWELL. I yield to the Senator from Louisiana 5 minutes.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. Mr. President, I will yield and speak after Senator 
Landrieu.
  The PRESIDING OFFICER. The Senator from Louisiana is recognized for 5 
minutes.
  Ms. LANDRIEU. Mr. President, I would like to ask, since it seems 
there is enough time, if I could have 10 minutes. I ask unanimous 
consent for that.
  Ms. CANTWELL. The Senator is yielded 10 minutes.
  The PRESIDING OFFICER. The Senator from Louisiana is recognized for 
10 minutes.
  Ms. LANDRIEU. Mr. President, I rise in strong support of the Domenici 
substitute electricity amendment. There have been few other parts of 
the Energy bill that have been more controversial or that have been the 
subject of more debate than the electricity provisions. The Domenici 
amendment is a well-crafted compromise that represents some of the best 
thinking on electricity deregulation. It is worthy of the support of 
all Senators because it addresses those issues that need to be 
addressed and does so in a fair and balanced way.
  The Domenici amendment deserves the bipartisan support of the Senate 
because it provides Federal agencies such as the Commodity Futures 
Trading Commission and Federal Energy Regulatory Commission with new 
tools to prevent and penalize anti-consumer and manipulative behavior, 
including false price reporting and simultaneous trading of the same 
volumes of electricity between two entities, known as round-trip 
trading. It encourages distributed and renewable generation through a 
nationwide net metering program; in other words, it allows entities 
that use solar power or small gas generators to put excess electricity 
back into the grid.
  It moves the FERC's refund authority back to the filing of a 
complaint. Currently there is a 60-day grace period before refunds can 
be issued--the proposed language removes the 60 days. It expands FERC's 
merger review authority by increasing the number of transactions that 
will be subject to FERC review and approval; in addition to utilities 
FERC now will be able to review mergers of transmission assets. This 
prohibits so-called ``slamming'' and ``cramming.'' This concept comes 
from the telecom industry. Slamming is when retail customers have their 
service switched unknowingly, for example, AT&T to Sprint. Cramming is 
when retail customers have items added on to their bills unknowingly, 
for example, call waiting.
  It requires the FTC to issue rules protecting the privacy of electric 
consumers; and the customers information cannot be shared without their 
consent. It requires FERC to issue a new policy establishing conditions 
under which public utilities may charge market-based rates. This policy 
is to consider consumer protection, market power and other factors 
deemed necessary by FERC to ensure that market based rates are just and 
reasonable. FERC cannot switch to market base rates if a monopoly exist 
or else will have to employ cost based rates.
  Let me talk a few moments about the consumer protection provisions of 
this amendment. This is an area where some of my colleagues say the 
Domenici amendment does not go far enough. I believe that the 
provisions of the Domenici amendment are a significant first step in 
the right direction. Let me tell you why. First, the Domenici amendment 
would require FERC for the first time to issue rules to establish an 
electronic information system to provide information about the price 
and availability of wholesale electric energy and transmission 
capacity. Transparency is key to well functioning and fair electricity 
markets and this amendment will significantly improve transparency. The 
amendment further seeks to ensure market transparency and integrity by 
prohibiting the filing of false information regarding the price of 
wholesale electricity and availability of transmission capacity.
  Second, the amendment would prohibit specific manipulative conduct 
and practices, including simultaneous trading of the same volumes of 
electricity between two entities--round-trip trading.
  Third, the Commodity Futures Trading Commission is given important 
new authority that will improve market transparency and further 
strengthen anti-manipulation powers. These new powers include a 
strengthening of the CFTC's authority to investigate and punish fraud 
and manipulation in the reporting of electric and natural gas prices 
and an expansion of the CFTC's general anti-fraud authority to cover 
certain on-line trading platforms, like those run by Enron.
  Fourth, the amendment substantially increases criminal penalties for 
violations of the Federal Power Act to $1,000,000 per violation and 
civil penalties are substantially increased as well.
  Finally, the refund effective date for violation of the ``just and 
reasonable'' pricing standard under the Federal Power Act is moved back 
to the date of the filing of a complaint, thus giving consumers a 
greater likelihood of receiving refunds where prices are found not to 
be ``just and reasonable.''
  In short, this is a good consumer protection package and it is one 
that is worthy of our support. The Domenici amendment also makes 
certain long-overdue reforms to our Nation's outdated electricity laws. 
For example, the amendment would carefully extend open access 
requirements to transmission systems owned by all large transmission-
owning utilities so that

[[Page S10184]]

larger, more seamless regional wholesale electricity markets can be 
created. It would establish new transmission pricing policies to help 
ensure that those benefitting most from new transmission investments 
are obligated to pay for them. It reforms PURPA while protecting 
existing investments, contracts, and expectations. Lastly, it repeals 
PUHCA, while ensuring that State and Federal regulators have access to 
the books, records and information needed to ensure informed regulatory 
action.
  Mr. President, this is a good amendment. I urge all my colleagues to 
support it.
  However, there are some improvements that should be incorporated. One 
such example would be Senator Cantwell's amendment that places a broad 
prohibition on all manipulative practices in electricity markets.
  I yield the remainder of my time.
  The ACTING PRESIDENT pro tempore. Who yields time?
  Ms. CANTWELL. The Senator from Oregon would like a few minutes. I am 
happy to yield to the Senator from Oregon 5 minutes.
  The ACTING PRESIDENT pro tempore. The Senator from Oregon is 
recognized.
  Mr. WYDEN. Mr. President, I thank the Senator from Washington, and I 
also thank the Senator from New Mexico for his courtesy.
  I rise in strong support of the Cantwell amendment. What we have seen 
in the Pacific Northwest with respect to the manipulation of our energy 
markets is that the position of the Federal Energy Regulatory 
Commission has simply been see no evil, hear no evil, and ignore evil.
  The reason I have come to that conclusion is that when the Federal 
Energy Regulatory Commission Commissioners came to the Energy Committee 
in March to discuss with us the question of manipulation of the Pacific 
Northwest market, I read excerpts point by point from the Reliant 
Energy trading transcript to the Commissioners. I read to them pretty 
much like a bedtime story. Here is the portion of the transcript that I 
read to the Commissioners. It involves the Reliant manager.
  He says:

       How did it work today?
       Reliant Trader: 129. We're talking about the power 
     exchange.
       Reliant Manager: Yeah. I saw that.
       Reliant Trader: Then we trade up to 1.31 for the third 
     quarter next year.
       Reliant Manager: Sweet.
       Reliant Trader. We even had a senior manager down here.

  Listen, if you would, Mr. President, and colleagues to this.
  The reliant trader said:

       He just wanted us to know that everybody thought it was 
     really exciting that we're gonna play some market power.

  After reading this transcript, I asked the Commissioners, How can you 
reach the conclusion after what I have read to you that overpriced 
contracts based on manipulation toward market prices should not be 
avoided or at least reformed? I pointed out it was clear just on the 
basis of that short excerpt that the traders were manipulating long-
term prices when they were talking about the third quarter next year.
  What is more, the Federal Energy Regulatory Commission staff's 
investigative report issued earlier this year found that there was a 
particularly significant correlation between spot prices and shorter 1- 
to 2-year contracts. Despite being caught in the act with a smoking 
transcript, despite having it read to them like a bedtime story, 
despite the Federal Energy Regulatory Commission's staff findings, the 
majority of the Federal Energy Regulatory Commission--specifically 
Commissioners Wood and Brownell--still cannot see the connection 
between these caught-in-the-act, smoking gun memos and transcripts and 
the higher energy prices my constituents are now paying because of the 
market manipulation detailed in these transcripts.
  I am pleased to be able to have just a couple of moments here. But it 
seems to me if the Federal Energy Regulatory Commission is unwilling or 
unable to police long-term energy markets in cases like this where 
people in the Pacific Northwest are being ripped off in broad daylight, 
it is time for the Congress to step in. That is why the Cantwell 
amendment is so important.
  I urge my colleagues to back the Cantwell amendment and outlaw the 
kind of manipulation that I have read to the Senate today and that I 
read to the Energy Committee. Unfortunately, the Federal Energy 
Regulatory Commission is unwilling or unable to address it.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. Who yields time?
  Mr. DOMENICI. Mr. President, we will soon have a unanimous consent 
request that will set up another amendment of the same class to follow 
this afternoon immediately after the vote on the judge.
  In the meantime, I have around 20 minutes to speak. I would like very 
much to be as short as I can. But first, let me say to fellow Senators 
that I am very proud of the electricity amendment, with 13 bipartisan 
cosponsors, which is pending. Does anybody think we would have worked 
on that for days on end and not have provisions in it that take care of 
the problems that Senator Cantwell is talking about? Is it conceivable 
that I would come to the Senate floor with what we perceive to be a 
great American reform of an electricity system from top to bottom and 
leave out protection for the kind of people she is speaking of? I will 
answer my own question by saying that is impossible. It is impossible 
because we wouldn't let it happen. Second, it is impossible because it 
didn't happen.
  Having said that, I understand full well--and I have explained 
privately to the very distinguished Senator, Ms. Cantwell. As I talked 
with her, I could just see how her very being was upset with what has 
happened to her constituents because of the pricing that went wild in 
the State of California for which she got the aftermath in her State. 
But it is not only her State and her constituents, it is a whole 
section of the country which, in a sense, got it in the neck because of 
California.
  While I am at it--I intended to do this later in my remarks, but let 
me do it right now--there was a lot of talk about what happened to 
bring those prices to that outrageously wild system that ended up 
falling over on to her constituents. And the word ``manipulation'' was 
used and that even FERC said, in a report, manipulation caused it.
  Let me suggest, the Senator from New Mexico has done everything he 
could to try to find out what the real experts say caused it, and none 
of them say it was manipulation that was at the heart of the problem of 
prices going outlandishly high on the west coast. As a matter of fact, 
whether you ask the Federal Reserve Board or whether you look at the 
FERC report, the root cause is found not to be--not to be--
manipulation. The meltdown was a significant supply shortage and 
fatally flawed design statutes.
  Let me repeat, the general consensus of those who have looked at it 
carefully say significant supply shortfall added to a fatally flawed 
design market and that blew up the California market and, thus, its 
surrounding States.
  On March 26, 2003, FERC issued its ``Final Report on Price 
Manipulation in Western Markets.'' Senator Cantwell believes the report 
proves there was manipulation. However, not everyone shares that view.
  As a matter of fact, the Cambridge Energy Research Associates, CERA, 
is considered one of the top, if not the top, energy market analysts in 
the world. Daniel Yergin, the chairman of CERA, is the most respected 
expert in energy policy and the author of the ``Prize,'' the Pulitzer 
Award-winning book on the global oil market.
  CERA noted that FERC ignored the natural gas and electricity supply 
shortages and assumed scarcity was attributed to manipulation. It was 
scarcity first, and then it was flawed design statutes which permitted 
the scarcity to go berserk.
  Now, that is aside from the question.
  Let's get back to the issue of the bill and whether we would bring 
before the body a bill that we would ask the entire Senate to support--
that I am very hopeful, by the time we are finished, will get in excess 
of 65, 70 votes--that does not protect the citizens from what happened 
on the west coast.
  Now, this amendment addresses the Federal Power Act and the Natural 
Gas Act in the following ways:
  No. 1, it establishes an electronic information system at FERC to 
enhance market transparency.

[[Page S10185]]

  No. 2, it increases criminal and civil penalties under the Federal 
Power Act and the Natural Gas Act.
  No. 3, it enhances FERC's refund authority.
  No. 4, it requires FERC to issue regulations establishing conditions 
under which utilities can charge market-based rates.
  No. 5, it prohibits the filing of false information.
  And, last, it prohibits round-trip trading.
  Further, the so-called Domenici amendment--that is the master 
amendment we are operating under that I have asked parenthetically of 
myself: Would I bring it here without protecting for the future events 
that are being alluded to by the distinguished Senator who is worried 
about her State--that Domenici amendment enhances the role of the 
Commodity Futures Trading Commission to provide oversight over 
electricity and natural gas.
  The Senate, in my humble opinion, should reject amendments--all of 
them--to the electricity title of the bill that would affect FERC's and 
the CFTC's flexibility to react and deal with bad actors and upset 
further the already beleaguered utility industry's ability to respond 
to a changing market.

  Now, I do not want to take a lot of time because, frankly, I am not 
sure, when we go on forever, that anybody listens. But I want to tell 
you that even without the so-called Domenici Modernization Act, the 
markets are being forced to respond, because FERC is taking action in 
the form of initiatives to protect electricity consumers, increase 
market transparency, and strengthen the regulation of electricity 
markets at the wholesale level.
  They have proposed to identify more clearly transactions and 
practices that would be prohibited under electricity sellers' market-
based rate tariffs and gas sellers' blanket certificate authority. 
These new market behavior rules would prohibit market manipulation or 
attempts to manipulate the market through activities such as creating 
and relieving artificial congestion.
  They have proposed to require electricity sellers to operate and 
schedule generating facilities in compliance with the rules and 
regulations of the relevant power market.
  They have proposed to require sellers to provide complete, accurate, 
and factual information in all communications with FERC, RTOs, ISOs, 
market monitors, and other similar entities. They have proposed 
measures to assure the accuracy of electricity and natural gas price 
reporting.
  They have established a new Office of Market Oversight and 
Investigations as part of a stepped-up enforcement and audit program.
  And I could go on.
  Clearly, they are enforcing the law. They are taking out after those 
who are causing this market to react other than in a normal market way. 
And we will add to that authority in the bill that is before us which 
does not have to be amended.
  The Commodity Futures Trading Commission has aggressively prosecuted 
fraud and manipulation in energy markets. They have committed 25 
percent of their enforcement staff to conduct investigations into 
misconduct in energy markets.
  CFTC's existing authority empowers it to prosecute fraud and 
manipulation. Under the authority of the Commodity Futures Trading 
Commission, they have filed civil action against Enron and a former 
Enron vice president for manipulation of prices in natural gas markets. 
They have filed civil action against Enron for operating an illegal 
futures exchange. They have filed civil action against El Paso Merchant 
for false reporting and have a $20 million settlement. And they have 
filed civil action against Dynegy Marketing for false reporting and 
have a $5 million settlement. They have filed civil action against 
Encana Trading for false reporting and Williams Trading for false 
reporting, both with a $20 million settlement.
  Criminal actions have been filed, and I have a complete list of 
those. Enron's former head of CA trading pled guilty to conspiracy.
  We don't need further amendments beyond the Domenici amendment that 
is pending to be sure the constituents of the distinguished Senator 
from the State of Washington are protected. They are protected. All we 
do by adding more is making the market more difficult. We would 
accomplish little but perhaps to say to ourselves we have done much.
  The Natural Gas Supply Association, the Interstate Natural Gas 
Association, and the American Gas Association have all endorsed the 
market manipulation provisions in this amendment we call the Domenici 
amendment. I believe it is right as it is. It need not be changed.
  Mr. President, let me just generally talk about where we want to go. 
Soon we will have the unanimous consent request in writing.
  I say to the Senator, maybe we can just recite it here since you and 
I know it.
  The ACTING PRESIDENT pro tempore. The assistant majority leader.
  Mr. REID. Will the Senator yield?
  Mr. DOMENICI. Surely.
  Mr. REID. Mr. President, the next amendment we will offer is an 
amendment of the Senator from Wisconsin dealing with the electricity 
section. He has agreed his time on it will take approximately a half 
hour. Senator Feingold is usually quite concise. The problem is that if 
we lock in this time agreement, people coming and wishing to speak on 
other subjects would not be able to do so. We have no reason to think 
anybody is going to or not going to. We don't want to have those time 
constraints. We are going to offer the next amendment. It would be the 
Feingold amendment.
  Mr. DOMENICI. People might want to speak to which amendment? To the 
amendment you were referring to?
  Mr. REID. Well, to be very direct to the Senator from New Mexico, as 
I want to be, the majority leader has told us we are going to vote on 
cloture tomorrow on the attorney general of Alabama, Mr. Pryor. We have 
had no opportunity to debate this. We will have a half hour tomorrow 
under the rules. We are going to have members of the Judiciary 
Committee come this afternoon and speak to the competency and the 
professionalism of the attorney general of Alabama to be a United 
States Federal judge. People are going to take some time doing that. 
When they will come, I don't know. But we wouldn't want them to be 
prevented from doing that because we are in a time agreement on the 
Feingold amendment.
  Mr. DOMENICI. Could we agree where we are going? There is an 
amendment up shortly, is there not?
  Mrs. FEINSTEIN. Reserving the right to object.
  The ACTING PRESIDENT pro tempore. No unanimous consent has been 
propounded. The Senator from New Mexico controls the time.
  Mr. DOMENICI. Mr. President, I have not propounded a unanimous 
consent request. I just wanted to know how much time is left to Senator 
Cantwell.
  The ACTING PRESIDENT pro tempore. The Senator from Washington 
controls 7 minutes and 20 seconds. The Senator from New Mexico controls 
9\1/2\ minutes.
  Mr. REID. If the Senator will yield for a question.
  Mr. DOMENICI. Yes.
  Mr. REID. The Senator from California is here. The Senator from 
Washington has 7 minutes left. She wants to close. We have no more time 
than 7 minutes. The Senator from California wishes to speak on this 
amendment. She can only do that if unanimous consent is given to allow 
her to speak for up to 15 minutes. Otherwise, she will not be able to 
speak on the amendment. She wants to. Is that a fair description?
  Mrs. FEINSTEIN. It is a fair description. I have great respect for 
the chairman of our committee. However, he did not correctly present 
the California situation. I would like an opportunity to set the record 
straight.
  Mr. REID. I ask unanimous consent that on the Cantwell amendment, the 
Senator from California be allowed to speak for 15 additional minutes 
and that, of course, the majority, if in fact they want 15 minutes, 
would have equal time.
  The ACTING PRESIDENT pro tempore. Is there objection?
  Mr. DOMENICI. Yes, there is objection.
  The ACTING PRESIDENT pro tempore. Objection is heard.

[[Page S10186]]

  Mr. DOMENICI. Mr. President, I don't want to object to the Senator 
from California speaking. I just want to remind the Senator and the 
Senate, this amendment has been on the floor 3 hours--not 3 minutes, 
not 30 minutes, 3 hours. We are supposed to vote, generally, when 3 
hours is up. Three hours will be up in a few minutes. I would like to 
proceed and vote. I have a few minutes. I don't know that I need it. 
But I really don't think I am being unfair in suggesting to the Senator 
that perhaps, so we can vote on an amendment that has been pending for 
3 hours, if you could take half the time you requested so we can 
proceed to vote, I would have no objection.

  Mrs. FEINSTEIN. If I may respond, this is an amendment on market 
manipulation. You, Mr. Chairman, have just said there wasn't market 
manipulation.
  Mr. DOMENICI. I have not.
  Mrs. FEINSTEIN. I would like to present evidence specifically. I have 
18 to 20 disks involving 3,000 pieces of paper which is evidence 
presented to FERC of market manipulation in the California market. This 
Senator has done a great service because those of us out west know what 
happened. What happened is so egregious as to give the senior Senator 
from California an opportunity to support the amendment of her 
colleague.
  The ACTING PRESIDENT pro tempore. The Senator from New Mexico has the 
floor.
  Mr. DOMENICI. I don't think it is fair for the Senator--I am going to 
give her time, but I don't think it is fair for her to give a speech 
this way. She knows she is going to get time, and she can just be 
patient like every other Senator, if you don't mind.
  Mrs. FEINSTEIN. I have been patient.
  Mr. DOMENICI. I thank you.
  Might I say to the Senate, the Senator from New Mexico has responded 
to an amendment. Never once did I say there was no market manipulation. 
I don't intend that every time any of us gives a speech, that somebody 
come to the floor when there are time agreements and decide they would 
like to give a speech on something they heard.
  I said there are studies that say market manipulation was not the 
principal reason for what happened. If the Senator would like to speak, 
I would ask her if she would speak for a little less time so we can 
proceed, since the time is up. I can object, and we will vote. And then 
you can speak after the vote.
  Mr. CRAIG. Will the chairman yield?
  Mr. DOMENICI. I am pleased to.
  Mr. CRAIG. So you can sustain the goodwill of the rest of the 
colleagues because you are managing the bill, you should.
  The ACTING PRESIDENT pro tempore. If the Senator will suspend. The 
Senators are reminded to address one another in the third person or 
through the Chair.
  Mr. CRAIG. I simply say to the Senator that to sustain the goodwill 
that he needs to, he will work the bill, but when there are time 
agreements of 3 hours, this Senator will object to adding more time.
  Mr. DOMENICI. I wanted to ask the Senator if he wanted to object at 
this point. He is not going to object.
  How much time did the Senator ask for?
  Mrs. FEINSTEIN. I asked for 15 minutes.
  Mr. DOMENICI. I wonder if you would take 10 minutes.
  Mrs. FEINSTEIN. I will do my level best.
  Mr. DOMENICI. All right, 10 minutes, so long as we understand. I ask 
unanimous consent that she have 10 minutes, after which time we will 
finish the time allowed and then we will vote on the pending amendment.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered. The Senator from California is recognized for 10 minutes.
  Mrs. FEINSTEIN. Mr. President, I thank the chairman of the committee.
  I wanted to say a few words in support of what Senator Cantwell is 
trying to do. Perhaps those of us in the West are more disconnected 
from the Beltway than I ever believed, but let me give you a startling 
fact which will demonstrate market manipulation. The total cost of 
electricity in California in 1999 was $7 billion. It increased 400 
percent in one year to $27 billion the next year. There is no way 
supply and demand can be responsible for a 400 percent increase.
  What we now know is that power generators, traders, and marketers 
manipulated the western energy markets, and the market abuse wasn't 
simply limited to Enron. Look at these schemes. There are more than we 
ever knew: Ricochet, Death Star, Get Shorty, Fat Boy, Nonfirm Export, 
Load Shift, Wheel Out, Black Widow, Red Congo, Cuddly Bear. This was 
not limited to Enron. It was a widespread series of schemes perpetuated 
by many companies that supplied and traded in the West. I deeply 
believe this.
  The State of California, the California Attorney General's office, 
and the State's largest utilities compiled the 3,000-page report 
detailing the pervasiveness of fraud and manipulation in the western 
energy market in 2000. Then they couldn't present it to FERC. They had 
to go to a Ninth Circuit Court of Appeals to get the ability to conduct 
discovery and evidentiary hearings to be able to bring the allegations 
of fraud and manipulation to FERC. So the whole Federal system is 
stacked against allowing a State to make a presentation of fraud and 
manipulation.
  This report concluded that energy companies intentionally withheld 
power from the western market, driving prices up and creating false 
shortages. For example, from August 30 to December 3, 2000, Dynegy shut 
down one of its units for repairs, yet repairs had already been done 
prior to August 30.
  The report's conclusion: The plant was shut down to intentionally 
drive up prices.
  Another example. Following an external tube leak, Merit held one of 
its plants offline for 2 extra days, from October 20 until October 22, 
2000, denying the western energy market much needed power and driving 
prices up. The report also submitted evidence that suppliers bid higher 
after the California independent systems operator declared emergencies, 
knowing full well the State would need power and would be willing to 
pay any price to get it.
  Further, we learned that suppliers submitted false load schedules to 
increase prices. One example of this bogus load is demonstrated in an 
internal PowerX memo, which documents that PowerX entered into a 
contract with the explicit purpose of overscheduling and 
underscheduling and for congestion manipulation.
  Other games were played in the western energy market, including 
collusion among sellers, sharing of nonpublic generation outage 
information, and the manipulation of the nitrogen oxide emission 
market. Just look at one fact. One company, CMS Energy Corporation, has 
admitted conducting wash energy trades that artificially inflated its 
revenue by more than $4.4 billion. These round trips accounted for 80 
percent of that company's trading that year, in 2001. So 80 percent of 
the trading of a large company was bogus in that year. The market was 
rife with fraud and manipulation.
  Senator Cantwell's amendment attempts to strengthen the Federal Power 
Act, so that the fraudulent and manipulative behavior we witnessed in 
the western energy crisis does not go unpunished.
  The problem is that FERC could not go back. FERC would not accept 
findings from California to document the fraud and manipulation. 
California, to this day, has not received $1 of refund, despite 
settlements. So that is what is really going on out there, and that is 
a huge problem.
  To have an Energy bill that doesn't adequately deal with fraud and 
manipulation is something none of us should vote for. I will tell you 
why. Under the present regulations, it can and will happen again. These 
companies will try to do it if they possibly can. Consumers should be 
protected from fraud and manipulation perpetrated by people who are 
only motivated by profit, which we know dominated the trading scenario 
in the western energy market. I can tell you terrible things traders 
said about shutting off power for the purpose of inflating the bottom 
line of their company. That is wrong and it should be dealt with.
  The fact is that FERC has not dealt with it up to this point. So I 
very strongly support what Senator Cantwell is trying to do. I hope the 
Senate will accept it because I think the energy title is weak. I hope 
at a later time to add natural gas to some of the

[[Page S10187]]

provisions that this bill achieves in terms of increasing penalties in 
the electricity market. Unfortunately, the bill does not harmonize 
penalties for the natural gas market, and there is ample evidence of 
fraud and manipulation as well in the national gas market, specifically 
with El Paso Natural Gas, and I hope to indicate that in an amendment I 
will do at a later time.
  I have tried to truncate my remarks to cooperate with the chairman. I 
yield the floor.
  The ACTING PRESIDENT pro tempore. Who yields time?
  Mr. DOMENICI. Mr. President, I thank the Senator for getting her 
remarks down to 10 minutes. How much time does Senator Cantwell have?
  The ACTING PRESIDENT pro tempore. She has 7 minutes 20 seconds.
  Mr. DOMENICI. Does she want to deliver her remarks?
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Washington is 
recognized.
  Ms. CANTWELL. Mr. President, how much time is available?
  The ACTING PRESIDENT pro tempore. There are 7 minutes 20 seconds 
remaining. The Senator from New Mexico has 5 minutes.
  Ms. CANTWELL. Does the Senator from New Mexico wish to complete his 
comments?
  Mr. DOMENICI. I will wait for a while.
  The ACTING PRESIDENT pro tempore. Who yields time?
  Ms. CANTWELL. Mr. President, I appreciate the chairman of the 
committee giving time to the Senator from California so she could 
explain and respond to her views on this issue. I appreciate my 
colleagues from the West engaging in this debate. I appreciate the 
Senator from Idaho coming to the floor and reiterating to this body, 
yes, how ratepayers in Washington, Oregon, and Idaho got stiffed. That 
is the right word. We got stiffed. We got stiffed with paying a bill 
more exorbitant than ratepayers should have to pay.
  The debate that has ensued in the last few minutes is whether the 
Domenici underlying amendment has enough protections in it to protect 
consumers or whether we need the Cantwell amendment. It is a clear and 
simple and plain statement that market manipulation should be outlawed 
in the Federal Power Act as not being just and reasonable.
  I thank the Senator from Louisiana for her comments. She supports the 
underlying Domenici title, but she supports my amendment as well 
because she knows that kind of language can be helpful and can be 
specific.
  Let me be clear. If anybody thinks that the Enron manipulation didn't 
have a profound and adverse impact on the marketplace and that this is 
all about poor management in California, I can assure you that is not 
the case. This is about whether this body is going to adopt tough 
standards against market manipulation so there is no question by the 
public. So the public doesn't debate, if there was a shortage of supply 
or manipulation going on?
  We know there was manipulation going on. We have proof of it. The 
FERC itself said:

       Enron and its affiliates intentionally engaged in a variety 
     of market manipulation schemes that had profound, adverse 
     impact on market outcome.

  There it is. The FERC said itself that market manipulation had 
profound, adverse impact on the market. So we know for a fact that 
market manipulation had an impact in California, it had an impact in 
Washington, it had an impact in Oregon, and it had an impact in Idaho. 
The question is whether this body is going to do enough to protect 
consumers in the future.
  So the chairman of the committee--I appreciate his earnest time on 
the electricity title, and I appreciate the fact that he wants to have 
some protection in this legislation. But these protections don't go far 
enough.
  Let me explain why. There is transparency language in the underlying 
Domenici title. Some of those powers are already in place with FERC. 
They are not doing us any good because reporting to FERC is one thing; 
reporting to the California ISO, the independent systems operator, who 
basically was the cog by which all the manipulations took place, you 
are not under any kind of threat or penalty for reporting falsified 
information to them. That is where the manipulation took place, so the 
Domenici title does not cover that situation.

  There is a lot of talk in the bill about the Commodity Futures 
Trading Commission, and there is a section in the bill that tries to 
beef up that language. That is a noble attempt. I much prefer the 
Feinstein amendment which has very specific language about closing a 
loophole.
  I have a letter from the National American Securities Administrators 
Association. They basically say the Domenici language is flawed. These 
are Federal regulators who are supposed to regulate this policy. They 
say the Domenici language is flawed because it will prohibit any 
Federal or State agency from obtaining information directly from a 
board of trade or exchange or market involving commodities, and that 
State and Federal agencies will be impeded from investigating 
violations of these wide range of commodities.
  I ask unanimous consent that this letter from the National American 
Securities Administrators Association, about how the Domenici language 
is trying to correct some of the problems is actually causing a new 
problem and is not going to protect people, be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                         North American Securities


                             Administration Association, Inc.,

                                    Washington, DC, July 29, 2003.
     Hon Pete V. Domenici,
     Chairman, Committee on Energy & Natural Resources, 
         Washington, DC.

     Hon. Jeff Bingaman,
     Ranking Minority Member, Committee on Energy & Natural 
         Resources, Washington, DC.
     Re: S. 14, the Energy Policy Act of 2003.

       Dear Chairman Domenici and Ranking Member Bingaman: The 
     North American Securities Administrators Association (NASAA) 
     is writing to express its concern over proposed language in 
     the Domenici substitute to Title XI, (the electricity title) 
     of S. 14, the Energy Policy Act of 2003.
       Proposed Sections 1171 and 1173 would require that ``any 
     request by any Federal, State or foreign government, 
     department, agency or political subdivision'' to a ``board to 
     trade, exchange, or market'' involving transactions in 
     commodities ``within the exclusive jurisdiction'' of the 
     Commodity Futures Trading Commission (CFTC) ``shall be 
     directed'' to the CFTC.
       This prohibition on federal and state information gathering 
     directly from a board of trade, exchange or market would 
     place unnecessary burdens on state securities regulators when 
     they investigate violations of laws regulating foreign 
     exchange products, energy products and financial instruments. 
     Over the years, state securities regulators have handled many 
     of the foreign exchange cases under authority contained in 
     the Model Code and state securities laws.
       This language would prohibit state securities regulators 
     from directly seeking information from a CFTC regulated 
     entity. State securities regulators do not have regulatory 
     jurisdiction over a CFTC regulated entity, but we must retain 
     our authority to subpoena documents from all relevant sources 
     as part of our enforcement cases. For example, a registered 
     representative of a securities firm could illegally take 
     investor funds and trade in commodities, and our members 
     might have to subpoena a futures exchange for trading records 
     or other information.
       The CFTC and the states have a history of coordinating 
     efforts and working successfully toward our mutual goal of 
     protecting investors by recognizing potentially fraudulent 
     activity and bringing it to the attention of the public. 
     However, mandating that regulators go through the CFTC for 
     information could be burdensome, time-consuming and inhibit 
     our ability to investigate wrongdoing in a timely and 
     efficient manner. It may also place the CFTC in a difficult 
     position of deciding whether to send a state's subpoena to 
     one of the exchanges it regulates.
       With the fallout from Enron and a variety of financial 
     scandals still in the news, now is the time to strengthen, 
     not weaken, our complementary system of state and federal 
     securities regulation. There seems to be no justification for 
     limiting the ability of state securities regulators to gather 
     information directly from a futures exchange.
       We urge you to strike Sections 1171 and 1173 from the 
     Domenici substitute. Please do not hesitate to contact me if 
     I may be of further assistance to you.
           Sincerely,

                                          Christine A. Bruenn,

                                                  NASAA President,
                                   Maine Securities Administrator.

  Ms. CANTWELL. Mr. President, the bottom line is, in this amendment, 
while round-trip trading is covered and some, I am sure, well-
intentioned language on reporting and falsifying information to FERC, 
it does not cover a myriad of other manipulative schemes

[[Page S10188]]

that have been deployed and used by Enron.
  Fat Boy is not outlined under the Domenici language. Ricochet is not 
outlined under the Domenici language. Death Star is not outlined under 
the Domenici language. Load Shift, Get Shorty, and Wheel Out are not 
outlined under the Domenici language.
  I understand the chairman wants to see that the manipulation stops. 
In this Senator's opinion, that manipulation will stop when this body 
stands up and says to the American people with simple language in the 
Power Act: Manipulated prices are not just, they are not reasonable, 
and anyone who deploys them are not doing so in the public interest, 
and we cannot give them market-based rates.
  If this body will say this, then any future debate about natural gas 
prices will not be about whether some company manipulated them, it will 
be about the real issues of the supply and demand.
  Let's give the consumers confidence that market manipulation is 
prohibited in Federal law and that this body does not condone Enron's 
activities but is going to be aggressive in outlawing them.
  Mr. President, how much time do I have?
  The ACTING PRESIDENT pro tempore. The Senator's time has expired.
  The Senator from New Mexico.
  Mr. DOMENICI. Mr. President, the bill before us does away with the 
Enron loophole, there is no question about it. If I came from 
California or Washington, I would come to the floor of the Senate and 
offer an amendment that was very precise and specific and talked about 
the problems of the people of the west coast. That is what the Senator 
is doing. But merely talking about them does not mean that the bill 
before us does not protect her people. The truth is, it does.
  The Domenici amendment protects consumers in the States of 
Washington, California, and others who were victimized by the Enron 
scandal, and many others, and market regulations in California that 
were doomed from the outset to cause the failures that occurred. To 
regulate at one level and deregulate at the other level is clearly to 
invite exactly what happened, and then the spillover falls onto the 
adjoining States, including that of the distinguished Senator from 
Washington, Ms. Cantwell.
  I commend the Senator from Washington for her genuine and abiding 
concern for her people. I commend the Senator from California for her 
studious and lengthy involvement in attempting to ascertain and 
articulate the problems. But neither of those qualities require serious 
amendment to this bill. They require just what is happening: that the 
Senators representing those problems speak to the issues. And speak 
they have--3 hours and 15 or 20 or 30 minutes on this subject--and, I 
assume, before we are finished on collateral issues even more.
  I could take out my preparatory books, where I spent hours talking to 
everyone of every ilk in every type of industrial input and involvement 
as we put this bill together, and read the language showing that what 
happened before will not happen again.

  I could tell my colleagues what has happened is being broken up by 
those in the criminal justice structure of our Government, and those 
involved with the civil part are filing their lawsuits. Neither of the 
States involved are having the same problem because there are 
protections being carried out, and there will be more when this bill is 
adopted, without adding any more burdens, additions, or specificity to 
the bill.
  It is with great regret that I suggest we keep--since it was worked 
out so delicately with so many different units, institutions, and 
groups--that we preserve the delicacy of this bill. The Senator who 
proposed this knows that the cooperatives that are very worried have 
spoken to the fact that they do not need any more protection. They have 
told her that. They have told her office that. And there are more 
associations beyond them that say their fears are alleviated by this 
bill.
  I yield the floor, and we will proceed.
  The ACTING PRESIDENT pro tempore. All time has expired.
  The question is on agreeing to the amendment.
  Ms. CANTWELL. Mr. President, I ask unanimous consent that Senator 
Harkin and Senator Rockefeller be added as cosponsors to the amendment.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. REID. I ask for the yeas and nays.
  The ACTING PRESIDENT pro tempore. Is there a sufficient second?
  There appears to be a sufficient second.
  The clerk will call the roll.
  The bill clerk called the roll.
  Mr. REID. I announce that the Senator from Massachusetts (Mr. 
Kennedy) and the Senator from Massachusetts (Mr. Kerry) are necessarily 
absent.
  I further announce that, if present and voting, the Senator from 
Massachusetts (Mr. Kerry) would vote ``yea.''
  The ACTING PRESIDENT pro tempore. Are there any other Senators in the 
Chamber desiring to vote?
  The result was announced--yeas 48, nays 50, as follows:

                      [Rollcall Vote No. 311 Leg.]

                                YEAS--48

     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Byrd
     Cantwell
     Carper
     Clinton
     Collins
     Conrad
     Corzine
     Daschle
     Dayton
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham (FL)
     Gregg
     Harkin
     Hollings
     Inouye
     Jeffords
     Johnson
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Murray
     Nelson (FL)
     Pryor
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Smith
     Specter
     Stabenow
     Wyden

                                NAYS--50

     Alexander
     Allard
     Allen
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Chambliss
     Cochran
     Coleman
     Cornyn
     Craig
     Crapo
     DeWine
     Dole
     Domenici
     Ensign
     Enzi
     Fitzgerald
     Frist
     Graham (SC)
     Grassley
     Hagel
     Hatch
     Hutchison
     Inhofe
     Kyl
     Lott
     Lugar
     McCain
     McConnell
     Miller
     Murkowski
     Nelson (NE)
     Nickles
     Roberts
     Santorum
     Sessions
     Shelby
     Snowe
     Stevens
     Sununu
     Talent
     Thomas
     Voinovich
     Warner

                             NOT VOTING--2

     Kennedy
     Kerry
       
  The amendment (No. 1419) was rejected.
  Mr. DOMENICI. Mr. President, I move to reconsider the vote.
  Mr. CRAIG. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.

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