Statements and Speeches

Hearing on National Electricity Policy
September 20, 2001

By Henry A. Waxman

Today, the Subcommittee hears testimony from the Department of Energy and the Commissioners of the Federal Energy Regulatory Commission regarding national electricity policy.

I am uncomfortable about turning to this issue so quickly after the tragic events of last week. Today's testimony raises a number of very controversial issues, and I would prefer to focus on actions that bring us together rather than immediately jumping into divisive policy debates.

Having said that, I can see that the Chairman is intent on moving forward. And we cannot downplay or gloss over the very significant policy disagreements that underlie electricity legislation.

First, we must ensure that we do no harm. California's electricity restructuring legislation was hurried through the state legislature and the flaws became evident only much later. Many other states have since acted with equal speed, and I am not sure that anyone fully understands how those laws will turn out.

So we must be careful. We must also learn from recent experience.

As California and other Western states struggled through their electricity crisis over the past year, the Department of Energy sat on its hands. The Secretary even embarked on a public relations campaign to convince the American people that the federal government could not meaningfully assist Western families. FERC refused to help until it was confronted with the very real possibility of congressional action. Throughout the West, we became painfully aware of how federal inaction could harm consumers and the States.

Ultimately, President Bush ended up endorsing FERC action to restrain runaway electricity prices. But for those of us from the West, this action came too late to prevent major economic hemorrhaging. And I remain concerned that FERC's actions did not go far enough.

As we now begin to discuss legislation on electricity policy, it is clear that we need to ensure that FERC is more responsive to consumers. It must become more effective at addressing market power and preventing market manipulation. We can't allow the intransigence of one Commissioner to prevent meaningful federal action when it is desperately needed.

The Western states are certainly opposed to greater authority at FERC at the expense of the states. I'd like to submit for the record two letters from the Western Governors Association dated September 6th and September 12th on this issue.

Additionally, there are a number of other critical issues that must be addressed in the context of electricity restructuring.

For example, we must take energy conservation seriously. DOE has estimated that investments in energy efficiency have generated a 30 to 1 rate of return. Efficiency and load management measures also directly improve system reliability by reducing demand and strain on our delivery systems. But with deregulation of the industry, utility investments in energy efficiency and load management programs have dropped by roughly 50% since 1993. We must reverse this trend.

We must also seek to spur investment in distributed generation and renewable generation. This approach will best protect the environment while also creating a more secure electricity infrastructure.

I look forward to hearing today's witnesses and hope that we can act in a thoughtful, bipartisan manner.