March 13, 2003

Mr. Chairman, today we resume the subcommittee’s search for consensus on the difficult issue of electricity legislation. Once again, you have done Members a service by putting forth a draft to focus the discussion, and I appreciate your willingness to solicit views from a variety of witnesses.

Over the years, the search for the holy grail of an electricity bill has taken a number of forms. Initially, the goal was a federal mandate to require states to adopt retail competition. That did not pass. Then, the focus became more a matter of "clarifying" the line between the state and Federal jurisdiction. That did not pass. Then came efforts to prescribe how the Commission should administer regional transmission organizations, or "RTOs". That idea met the same fate.

During the last Congress, Members from both sides of the aisle of the Committee wisely decided that, in the absence of a consensus, including an electricity title could only jeopardize the rest of the bill. The wisdom of that approach was confirmed late last year, when electricity proved to be one of the most difficult issues in conference.

Nonetheless, we find ourselves on the brink of tackling this issue in a markup, perhaps as early as next week. The outlook for enacting sound electricity legislation is dim, and the pressure to act quickly is likely to preclude thoughtful consideration of the issue. FERC has not yet released the results of a staff investigation it ordered 13 months ago into manipulation of electricity and natural gas markets in California and other western states. I am hard pressed to understand how Members can decide, and why they would want to decide, what to do without the benefit of such basic information.

Turning to the particulars of your draft, I remain skeptical of the wisdom of repealing significant consumer protections in current law. Last month, the Securities and Exchange Commission (SEC) revoked Enron’s exemption under the Public Utility Holding Company Act of 1935 (PUHCA). Had the SEC attended to this matter earlier, Enron would not have been able to erect the complex, opaque corporate structure it did – to the detriment of shareholders and consumers alike. While there are arguments for modernizing PUHCA, I do not think it’s responsible for Congress to repeal the Act outright.

Similarly, I am baffled by proposals to repeal FERC’s authority to oversee utility mergers. At last week’s hearing, the DOE witness testified that the Administration supports strengthening FERC’s merger authority. Chairman Wood of FERC expressed reservations about repealing the Commission’s merger authority, and Commissioner Massey flatly opposed the idea.

I have other doubts about the electricity draft. I am concerned that the provisions on "incentive transmission rates" could unjustifiably enrich industry at the expense of consumers. I am concerned that the siting provisions will not only strip states of their legitimate authority over siting transmission lines, but also transfer to them responsibilities for federal land management that they cannot properly administer. I am concerned that the market reform provisions, though a step in the right direction, barely scratch the surface of what is needed. If we are to treat electricity as a commodity, we must ensure a properly regulated market -- as we do for other commodities, many of which are less vital to consumers and our economy.

Mr. Chairman, it might be possible for us to agree on an electricity title that protects consumers and discourages market manipulation. I plan to reintroduce legislation I sponsored in the last Congress -- along with Reps. Waxman, Markey, and Boucher -- that proposes a number of reforms you may want to consider.

If you, however, continue to press for a controversial electricity title, we may lose yet another opportunity to enact useful energy legislation that could benefit consumers. I hope you will avoid this course and return to the bipartisan approach that characterized the energy bill the Committee reported during the 107th Congress.

Finally, Mr. Chairman, as you know, any debate on a Comprehensive National Energy Policy will likely include a discussion of ethanol and MTBE-related issues. Although the final set of panelists will address the ethanol issue (and I commend the majority for working with us to select a balanced panel of witnesses on this important issue), we still have no draft or outline of the majority’s plans in this area. Before we act in this complex and important area, there should be sufficient opportunity for all interested parties to review legislation language relating to ethanol and MTBE. If the Chairman intends to make progress on this issue, he should urge Members contemplating such a major amendment to make a draft available as far in advance of the markup as possible.