February 13, 2002

Mr. Chairman, I commend you for holding this hearing to help us begin to understand the impact of Enron’s bankruptcy on energy markets and, most importantly, on consumers. Today’s hearing is a good start at peeling back the layers of what looks to be a rather large and pungent onion.

I welcome the participation of the federal agencies responsible for protecting investors and consumers. I am pleased that both the Securities and Exchange Commission (SEC) and the Federal Energy Regulatory Commission (FERC) are investigating Enron’s activities, and trust that these inquiries will be conducted in a careful and thorough manner. This is necessary to provide the agencies and the Congress with the best information possible, so we can take action to ensure that working people and investors are not victimized again.

With this in mind, I must express reservations about an apparent tendency of both the SEC and FERC to reach premature conclusions about the important public policy questions posed by today’s hearing. On the one hand, each agency has begun investigations into Enron in keeping with their statutory responsibilities. On the other hand, and this is the troubling point, both agencies already seem to have concluded that Enron’s collapse raises no substantial questions about regulation of the Nation’s electricity suppliers.

Mr. Chairman, I would like to introduce into the record a response from SEC Chairman Harvey Pitt to a letter in which Representative Markey and I asked whether, in light of the Enron debacle, the Commission was reconsidering its position with respect to repeal of the Public Utility Holding Company Act (PUHCA) of 1935. The agency acknowledges that it is appropriate for Congress to await the results of various Enron investigations to address PUHCA repeal -- but in the same letter reiterates its support for PUHCA repeal "at this time." I am curious to understand why the regulatory agency charged with protecting the interests of utility investors has concluded there is nothing to learn from its own ongoing investigation into Enron’s behavior? Had PUHCA already been repealed, Enron might have bought utilities throughout the country. In that event, legions of state regulators would likely be combing the books of thousands of subsidiaries, both domestic and foreign, to determine whether affiliate abuses had occurred and what harm befell consumers. Moreover, these utilities might have met the same fate as Portland General Electric, which currently is being sold off by a cash-strapped Enron. Is this what we want for such a fundamental industry?

Likewise, I am puzzled by FERC Chairman Wood’s testimony, which concludes that Enron’s collapse "has not had any substantial spillover effects" on "energy markets." Perhaps this is a matter of terminology, but I wonder how Chairman Wood reached this conclusion when FERC still is in the early stages of a fact-finding investigation into allegations that Enron may have manipulated electric and gas markets? Chairman Wood indicates that, once the Commission receives the staff report, it will decide whether to institute formal investigations under section 206 of the Federal Power Act "into long-term power contracts whose prices may have been influenced by any inappropriate Enron activities." Perhaps I fail to grasp an implicit distinction between impacts on "energy markets" and impacts on energy consumers. I assure you, however, such distinctions will mean little to the average consumer in the West or any other region where Enron is found to have used its market power to manipulate prices -- a matter squarely within FERC’s responsibility to ensure that wholesale power prices are "just and reasonable."

In conclusion, I caution both the SEC and FERC to resist the temptation to trump their own investigations and reach premature conclusions they may later have to retract. Enron’s collapse is a very serious matter, and the public has no desire to shove the details aside and proceed as if nothing important has happened.

I thank Chairman Barton for holding this hearing and look forward to our continuing to work together on these important questions.