Copyright 2001 Federal News Service, Inc.  
Federal News Service
March 6, 2001, Tuesday
SECTION: CAPITOL HILL HEARING

LENGTH: 27451 words

HEADLINE: HEARING OF THE ENERGY AND AIR QUALITY SUBCOMMITTEE OF THE HOUSE ENERGY AND COMMERCE COMMITTEE
 
SUBJECT: CONGRESSIONAL PERSPECTIVES ON ELECTRICITY MARKETS IN CALIFORNIA AND THE WEST AND NATIONAL ENERGY POLICY
 
CHAIRED BY: REPRESENTATIVE JOE BARTON (R-TX)
 
LOCATION: 2123 RAYBURN HOUSE OFFICE BUILDING, WASHINGTON, D.C.

WITNESSES: PANEL I
 
REPRESENTATIVE BOB FILNER (D-CA) REPRESENTATIVE JAY INSLEE (D-CA) REPRESENTATIVE BRAD SHERMAN (D-CA) REPRESENTATIVE GEORGE RADANOVICH (R-CA) REPRESENTATIVE MARY BONO (R-CA) REPRESENTATIVE MIKE THOMPSON (D-CA) REPRESENTATIVE SUSAN A. DAVIS (D-CA) REPRESENTATIVE DARRELL E. ISSA (R-CA) REPRESENTATIVE MICHAEL M. HONDA (D-CA)
 
PANEL II
 
REPRESENTATIVE TOM DELAY (R-TX) REPRESENTATIVE DOUG BEREUTER (R-NE) REPRESENTATIVE ROSCOE BARTLETT (R-MD) REPRESENTATIVE LYNN C. WOOLSEY (D-CA) REPRESENTATIVE J.C. WATTS, JR. (R-OK) REPRESENTATIVE CHARLES W. STENHOLM (D-TX) REPRESENTATIVE KEN CALVERT (R-CA) REPRESENTATIVE GREG GANSKE (R-IA) REPRESENTATIVE JAY INSLEE (D-WA) REPRESENTATIVE SHELLY MOORE CAPITO (R-WV) REPRESENTATIVE ROBERT B. ADERHOLT (R-AL)
 


BODY:
REP. JOE BARTON (R-TX): The subcommittee could please come to order. If the audience would take your seats?

We have approximately 30 members who indicated they want to testify this afternoon, so we're going to try to expedite the hearing. Today we're going to receive testimony from members of Congress, both sides of the aisle and perhaps several senators from the other body -- the situation in California, in the West, and general energy policy.

I'm looking forward to this. It's obvious there are a lot of interest, given the number of members that asked to come before the subcommittee and testify. The subcommittee will continue to review what's happened and is happening in California and the surrounding western states. We want to learn from the lessons of California's retail restructuring attempt, its efforts in the wholesale market, and its responsibility in attempting to manage supply and demand for its state and the reactions at various times to the problems that began last summer and continue to this day.

The lessons that we can learn from what's happened out west will help other states as they decide whether or not to open their retail electricity markets.

We also want to conduct oversight over the general interstate situation in the West, both in the wholesale market and consider what legislation, if any, might be needed at the federal level in that area.

I hope that the members of the subcommittee will think not just short-term and state-specific but longer term and more generally about what's going on. The development of additional generation capacity in this country should not be discouraged; in fact, it needs to be encouraged in my opinion. People that produce power should be kept interested in selling into markets that need that power and encouraged to do so. We should also look at transmission capacity and what if anything we need to do at the federal level to expedite additional transmission capacity for our country.

Finally, some thought needs to be given to consumers, the high prices that they have to shoulder and sometimes the inability of the market to send the appropriate price signals at the appropriate time.

In our second panel we're going to look at the broader issue of national energy policy. We've got approximately 15 members that want to testify on that issue including the Republican whip and the Republican conference chairman.

We're going to hear testimony from members representing all parts of the country. This is a good thing because we do have regional energy markets, and if you have regional markets they're going to be regional differences of opinions and differences in emphasis in the various regions of our country.

The subcommittee is going to conduct a number of hearings this spring as we attempt to put together a comprehensive energy policy for this country. The ability of the members of Congress who are not on our committee to come forward and give their perspective before we put together a proposal I think is very important and is very beneficial to the subcommittee, so I appreciate all the members who've asked to testify.

With that, I would see if the full committee chairman would like to give an opening statement? We'll be honored to have Mr. Markey give us -- usually, I yield, defer to the full committee chairman, but if he wants to defer to the distinguished member from Massachusetts that's fine by me.

REP. EDWARD MARKEY (D-MA): I thank the chairman very much, both of you.

Thank you so much for having this great hearing today, hearing from our congressional colleagues.

President Bush has suggested that the solution to the California energy crisis is to drill for oil in the pristine Arctic National Wildlife Refuge. The makes this recommendation despite the fact that only 1 percent of California's electricity comes from oil power plants. In fact, 67 percent of all the oil we consume in America, 13 million barrels a day out of the 20 million barrels we consume, just goes into gasoline tanks. So I think if you're looking for the problem it's right there in every vehicle that we're driving every day, not trying to pretend that it's an electricity crisis because it is not.

The Republican leadership has introduced a bill to reduce foreign oil dependence, and they want to reduce it from 56 percent today to 50 percent 10 years from now. That's their goal, only down to 50 percent in terms of our foreign dependence -- which ultimately undermines, quite simply, the futility of taking that approach if all we do is reduce the dependence of foreign oil down to 50 percent, because we consume 25 percent of the world's oil today but we only have 3 percent of world's reserves.

76 percent of those reserves are in OPEC, and there's not a lot we can do about that unless we look at fuel economy standards. Sending in the oil rigs to scatter the caribou and shatter the Arctic wilderness is what I call the Unimog (ph) energy policy.

You might have heard about the Unimog? It is a proposed new SUV that will be 9 feet tall, 7.5 feet long, 3.5 inches wider than a Humvee, weighs 6 tons, and gets 10 miles per gallon -- or is that 10 gallons per mile? I don't know. But it's heading in the wrong direction.

That's not the big announcement that should be made by the auto industry last week, okay? A new breakthrough. They're even bigger. They're even more efficient at guzzling gas. It perpetuates a head- in-the-haze attitude towards polluting our atmosphere with greenhouse gases and continuing our reliance upon OPEC oil for the foreseeable future. That's the bad news about that announcement. It's saying, we're going to become more dependent.

Now that our energy woes have forced us to think about the interaction of energy and environmental policy, it's a good time to say no to the Unimog energy policy and yes to a policy which moves us away from gas-guzzling SUVs and automobiles to clean-burning fuels, hybrid engines, and much higher efficiency in our energy consumption.

And we can do it; if we just improve our fuel economy standards by 3 miles a gallon we'll be able to save all the oil that we produce out of the Arctic Refuge. Matter of fact, in 1987, 13 years ago, the average fuel economy in the United States was 26 miles a gallon. Today, 13 years later, it's 24 miles a gallon. In other words, in this technology-based economy, in this country that prides itself on its mastery of technology we have gone backwards by 2 miles a gallon in the last 13 years, which is the height of technology innovation in our country's history.

So just use the existing technology that's already on the shelf, we'd be able to save 3 miles a gallon and more if we made the commitment to do so.

There is 26 to 38 trillion cubic feet of natural gas at Prudhoe Bay. I support going for it. Let's get that 26 to 38 trillion feet of oil --

REP. BARTON: The gentleman's time has expired.

REP. MARKEY: The same thing is true across the board. We just need a common sense policy. I thank the chairman.

REP. BARTON: Thank the gentleman from Massachusetts.

The gentleman from Louisiana, Mr. Tauzin, for a brief opening statement.

REP. BILLY TAUZIN (R-LA): Thank you, Mr. Chairman. I want to commend you for holding this important hearing on the power situation in the western third of our country as you and the committee explore a new national energy policy for the entire country.

There was a gentleman in the Carter administration named Bob Freeman who once postulated a truth profundity. He said that energy would last us forever if we just didn't use it. And it was upon that basis that much of the energy policy of the Carter years was formulated, and I hear that again echoed today in this room, that if we simply stop using it, everything will be okay.

In California, electric generating capacity dropped 2 percent in the last 10 years. Demand went up 14 percent. Now we can stick our head in the sand and believe that demand won't go up in this country, that the high tech economy we're building doesn't require more energy. Or we can face the real truth, and that is that when consumers need energy in this economy, this nation needs to respond by making it available. Of course we ought to have conservation, and conservation ought to be part of our plans -- but recognizing growing demand, Mr. Chairman, requires us to recognize that supplies are critical and that keeping this country secure in its supplies is as important as keeping California secure in the supply of energy.

We've had a previous hearing in this subcommittee -- and I want to thank you for that one -- on the California regulatory experience. I think we understand a lot of those issues better today. You and I went to California. We had a chance to talk firsthand with the generators and the utilities and the regulators in California. And I think we also have a much better idea about what has to be done to make that market work. And frankly, I must say that having been there with you I'm very skeptical about the road that California itself is taking in trying to solve the problem for Californians. But I'm also very pleased that you're going to hear from other members of Congress today and that you're giving them a forum to voice their concerns and their opinions because I think each will bring a new perspective to our understanding of the California situation.

California, as we said earlier, is a huge part of this country, 12 percent of our GDP, and you can't have a crisis in that big a part of our country without it being a crisis for America. And we need to collectively find the answers.

We're realizing more and more that electricity problems of one state are never confined to that state's boundaries. They're regional problems, and that's why this western hearing is so important because the whole western region has been affected. We should be cautious about quick fixes in one state that can have unintended consequences for its neighbors.

But I'm confident that, given the chance, market-based approaches with an emphasis on supply are the long-term solution. Experiences of states like Pennsylvania, Texas and Ohio with electricity markets that are working should demonstrate to us that these markets can and will work. And I want to urge all of our colleagues, those who come here to testify and those who serve you on this great subcommittee, to look at the experience of the states where it's working just as you look at the state of California where it has failed and learn the differences and to help instruct the nation on making good policy that can make good energy markets work again for the country.

Joe, thank you for this hearing. I wish you well again.

REP. BARTON: Thank you, Chairman Tauzin. We appreciate your attendance.

I'm told that the gentleman from Louisiana does not wish to make an opening statement since he was here before.

The gentleman from California, Mr. Waxman, is recognized for 3 minutes for an opening statement.

REP. HENRY WAXMAN (D-CA): Thank you very much, Mr. Chairman. I'm going to be very brief because we have a very long and distinguished list of members of the House and I understand maybe even from the Senate that will come and talk to us today about this energy issue.

The energy problems in California as Chairman Tauzin noted are not going to be just a California problem. It's a problem for the West, and it's going to be a problem all around this country. If we have the expression we want market forces to work, that's what we were told in California -- market forces were going to work in California and consumers would benefit. Instead, we see that California has clearly a dysfunctional market. We in the delegation met with Federal Energy Regulatory Commission Chairman Curt Hebert. During that meeting, Mr. Hebert discussed how dysfunctional this California electricity market is and he said it was broken with regional and national ramifications.

Well, what we're waiting for is if as he said California can't put things right on its own we want to know what the policy is going to be from this administration and from the FERC. I'm interested in hearing what our colleagues have to say. I look forward to working with all of them and this new administration in dealing with this problem, but let no one think that what's happened in California will only happen in California. It's happening elsewhere, and it will continue to happen elsewhere if we have a blind faith in what's called market forces and deregulation without making sure that the market is really functioning and that there is in fact a market to function.

I yield back the balance of my time.

REP. BARTON: Thank the gentleman from California and we appreciate his interest in this issue. It's very important to his constituents, and we really are pleased that you're going to be involved in the debate.

The gentleman from Illinois, Mr. Shimkus, for a brief opening statement.

REP. JOHN SHIMKUS (R-IL): Thank you, Mr. Chairman. I'll too be brief.

I think one of the big lessons we've learned so far is that you can deregulate the industry if you are inherently an energy exporter. It's very tough to deregulate if you're an energy importer. And then you constrain yourself to other forces which then the consumer or the market has no control.

When we talk about energy, we're talking about a broad portfolio of fuels -- not really petroleum-based, mostly natural gas, coal, nuclear. Those make up the energy portfolio that creates electricity for our use. And really one of the answers on the national scale is to have a wide range of choices and, where I beg to differ with my friend from California, the market will determine the most efficient use of these fuels. Make no mistake about it.

If government intervenes and tries to have the fuel of choice -- which is what we've seen with natural gas -- then the market will be distorted. Then you'll have government interventions through legislation that distorts the market.

So I think we need to have multiple, we need to keep our clean air regulations but we need to explore a broad base of fuels and let the market make the most efficient use for consumption.

The transmission grid is another thing that we're going to be highly involved in. Even in Illinois, it should be a regional approach because even though the Illinois utilities were in a transco, many of them are leaving. We in essence may have three RTOs or transcos in the Midwest area where for more efficient operation you'll probably need to get that down to one, and we'll be looking and working with FERC to do that.

An interesting issue, very emotional. I look forward to it.

Thank you, Mr. Chairman.

REP. BARTON: Thank the gentleman from Illinois.

The gentleman from Kentucky wish to make an opening statement?

REP. EDWARD WHITFIELD (R-KY): Mr. Chairman, thank you very much.

Those of us that have listened to the testimony and have read the articles about what's going on in California, I think many of us would conclude that if California had set out to determine a way to make energy more expensive they probably could not have done a better job than what they did. And I was reading an article just recently that said neither Governor Davis nor the state legislature seem ready to do the one thing that would solve the energy problem, and that is free retail rates. In fact, Governor Davis admitted as much a few weeks ago saying, believe me, if I wanted to raise rates I could solve this problem.

So I look forward to the testimony of the representatives from California and recognize that what's happening in California does have the potential to affect our entire country on this important issue.

REP. BARTON: Does the gentleman from Oregon wish to make a brief opening statement?

REP. GREG WALDEN (D-OR): Thank you, Mr. Chairman. I do.

Mr. Chairman, the current energy crisis is not just a California problem. It is a regional problem. The Northwest is already feeling the drastic consequences of high electricity markets. We're now at the epicenter of the perfect storm of electricity, high energy prices, and low water levels behind our dams. As you know, Mr. Chairman, over 70 percent of the Pacific Northwest is powered by hydropower. That means in a bad water year like we're in right now, the Northwest has got to go to market to supplement its energy needs.

As anyone can see, given the crisis facing California this is the worst time to purchase energy from this spot market. These high energy costs are now being passed down to our farmers, small businesspeople, schools, seniors, anybody purchasing power. Some businesses have already begun to close. Farmers are now being bought out of their energy contracts for pumping. While it might help some of these farmers this year when they have low commodity prices and high energy costs, it sure raises havoc with the community in which they farm. The implement, seed, fertilizer dealers will not be able to continue without the farmers farming.

If something doesn't happen soon to calm that storm, more trouble will follow. I know that Oregon is not the only state to experience these types of problems.

Mr. Chairman, I remain concerned about the impact of some of the California utilities' inability to pay the bills for the power they have purchased from utilities in my region and the impact that may have on our rate payers.

And I look forward to hearing the comments of all the witnesses. Thank you.

REP. BARTON: Thank the gentleman from Oregon.

Does the gentleman from Oklahoma, the vice chairman, wish to make an opening statement?

REP. STEVE LARGENT (R-OK): Just a brief one, Mr. Chairman. I'd like to enter my full opening statement for the record and also commend to the panel an article that appeared in the Los Angeles Times October 10 in the year 2000 on "Transmission Grid Funding Tangled Up By Power Crisis in California." I'd like to enter that into the record.

REP. BARTON: Without objection, so ordered.

REP. LARGENT: And just say that I look forward to the testimony of our panels that we have before us. This is an important part of the process as we move forward to doing what we can at the federal level to untangle the grid as it exists today. Thank you.

REP. BARTON: Thank you.

Seeing no other members present, the chair would ask unanimous consent that all members not present be given the requisite number of days to enter a formal opening statement in the record. Hearing no objection, so ordered.

We want to welcome our first panel. If everyone testifies who signed up we're going to have about 30 people today. So start out with some of the best and the brightest.

By seniority, Mr. Filner of California, you're recognized for five minutes. Your statement's in the record in its entirety. Welcome to the subcommittee.

REP. BOB FILNER (D-CA): Thank you, Mr. Chairman. Thank you for giving all of us the opportunity to testify before this distinguished committee, and I particularly thank you for coming to San Diego last summer. You recognized that the crisis could spread, and you brought your committee, subcommittee there, and we appreciate that very much.

I represent San Diego, California, which was ground zero in this whole tragic episode. We were the first part of California to fully deregulate. That is, our retail prices and our wholesale prices were deregulated. And within the space of one month retail prices doubled. Within the space of two months they tripled. Panic literally ensued in San Diego, and I think you witnessed part of it, Mr. Chairman. Scores of small businesses closed almost right away. There was a sense that people could not keep up, either as individual families or as businesses, with this crisis.

And I want to tell the committee that in San Diego this was not fundamentally a crisis of supply and demand. There were tight supplies, but the summer was less warm than previous. The demand had actually gone down from the previous summer, and yet the costs doubled, tripled, and were heading even higher.

There was no cost relationship to these higher prices. The natural gas price had not yet entered, the higher gas price had not yet entered the picture. In fact, at our request of the San Diego delegation FERC investigated the situation and found these prices to be unjust and unreasonable and therefore illegal. These prices, Mr. Chairman, are illegal that we are paying in California. And yet FERC took no sanctions against the perpetrators of these illegal rates, and by not taking action basically said, go in and rob the state blind and then rob the region blind and then rob the country blind.

The utilities in the northern and central part of our state which you know are facing bankruptcy, that bankruptcy comes about because of the illegal prices that they have to pay. We are paying, Mr. Chairman, at this moment, the state of California is paying for the cost of electricity $2 million an hour, $45 million a day, $1.2 billion a month for electricity. And the energy cartel which is responsible for this has taken $20 billion out of state in the last six or seven months, and we are being bled dry.

As we heard from the representative from Oregon, this has become a regional problem. Washington, Oregon, Idaho and New Mexico have now paying these higher prices. It will be a national problem shortly. The president has announced that he's going to take a hands-off policy and let the markets work as we have heard from several members today. I will tell this committee, there ain't no market in California; there ain't no market in the western region. There is a small energy cartel which controls the prices and in fact have manipulated the market to their benefit.

I do have legislation, Mr. Chairman, HR-268, which not only orders the FERC to set cost-based rates for electricity in our region but says that the excessive cost over what is found to be just and reasonable shall be refunded to the consumers of California.

I am joined in this bill by Congressman Hunter of California who unfortunately could not be with us today. It's in his district that the tragic shooting took place; I know that we all mourn for those families.

This is the only way, Mr. Chairman, that California will be made whole, to refund the money to the utilities of California and the consumers of San Diego, and I think the administration has to act to do that.

I agree with the chairman of the full committee -- we do need more generating capacity. And the governor is working on that very, very diligently. And yes we need more conservation, and yes we need to work on renewable resources. But the market is not there. The market has been manipulated. There is evidence of illegal withholding of power. There is evidence of falsifying transmission documents to raise prices. There is evidence of laundering electrons through other states when there was a cap in California.

Just a couple days ago, Mr. Chairman, a television station in San Diego ran a story which they showed that Duke Energy, one of the energy cartel that I speak about, removed its largest turbine from production in a San Diego plant 50 percent of the time during the recent Stage III alert in California. During 32 days of our Stage III alert the plant removed from service its largest turbine, taking out 222 megawatts of power. We had the power, Mr. Chairman. There was no crisis, there was no shortage. They removed it illegally.

I believe that the FERC must take action to restore a price stability for the next transition period when we have new capacity, and they must take sanctions. Just yesterday, Mr. Chairman, I filed charges against this energy cartel for grand larceny, theft, fraud, attempted murder, and violation of anti-trust violations. This cartel is stealing our economic future, they are robbing our bank accounts, they are killing off our businesses, and I think this committee ought to concentrate on bringing this energy cartel to justice.

REP. BARTON: We thank you, Congressman Filner. We'll put you down as undecided on the cause of the problem.

(Laughter.)

REP. BARTON: California?

REP. FILNER: Was that a question? Do I have another five minutes, sir?

REP. BARTON: Now I want to go to the gentlelady from California, a member of the subcommittee, Congresswoman Bono. Your statement's in the record in its entirety, and we recognize you for five minutes to summarize.

REP. MARY BONO (R-CA): Mr. Chairman, thank you for agreeing to hold this important hearing on California's continuing energy crisis. It is comforting to know that you are ready and willing to assist our state in its time of need. As you well know, over the past decade this committee and our government have been focused on the new economy. The high tech revolution has dominated our agenda while the old economy, like electricity and other energy concerns, has been put on the back burner. It is becoming abundantly clear that you need the old economy to run the new economy.

Despite numerous warnings from those in the industry, our country refused to develop a sound policy that addressed both the generation and transmission of energy. Even after the energy crisis of the 1970s, our country was focused on short-term solutions rather than long-term planning.

The state of California embarked on a deregulation plan which as we have heard often has several shortcomings. Combined with uncooperative weather and increased use in neighboring states, California was faced with the worst possible scenario. Further complicating this problem was the fact that even the basic economic laws of supply and demand were left unconsidered. Our state did not build any new substantial power plants the last decade, and just as importantly since 1975 studies indicated that annual utility investments in the U.S. power transmission system have fallen by more than half. Now due to this lack of a dependable supply, we in California are faced with the nearly inevitable situation of rolling blackouts.

In the month of July temperatures in the city of Corcella (sp) averaged 106 degrees. During the summer we even top off at 120 to 126 degrees. Make no mistake, with temperatures this high blackouts are not a question of quality of life. Rather, they can be a matter of life or death.

Therefore, we must confront two critical issues -- the price of energy and availability of energy. According to the 1990 census, the median household income for California's 44th Congressional District was $29,000. A family of four who earns about $2,500 a month before taxes cannot afford an electricity bill of over $500 to $600 a month during the summer. While we choose to live in this climate and realize the cost of cooling our homes will be higher than in other parts of the state, there comes a point when these costs become unrealistic.

As we attempt to understand what brought about these increases on the wholesale market, we must again turn towards California's flawed effort at deregulation. With the California Power Exchange offering suppliers the highest market clearing price and not the actual bid, we saddled ourselves with unnecessary costs, and despite FERC's December 15 order to change its methodology, the PX continued with its practice. Undoubtedly the law system set up by the state of California fed this vulture culture we have witnessed on the wholesale market.

But even more critical this summer will be the availability of power. While I applaud the governor's efforts to bring on generating facilities as soon as possible, I wonder whether or not these facilities will indeed be ready by this summer and whether or not the state will have the capacity to transmit this new power. And if not, I am deeply concerned as to our state of readiness to handle an emergency such as the one we might be faced with.

The transmission of power is also of major importance. In fact, two of California's recent rolling blackouts were blamed at the bottleneck at Path 15, a 90-mile transmission quarter linking the northern and southern sections of the state's power grid.

The inability to shift power within our own state is very disconcerting. We should work on finding a means to encourage capital spending on the grid. If utilities are allowed to receive a higher rate of return on transmission investments, we can make great strides in shoring up this foundation.

But while we work to rebuild our ability to generate and transmit energy, part of the short-term solution lies in our ability to conserve energy. I commend the governor for embarking on an aggressive conservation effort. California is second only to Rhode Island in per capita electricity use. Still, I think we have the ingenuity and determination to improve further on this effort. However, the full bounty of any conservation effort will not materialize unless consumers are sent nominal price signals. We cannot continue to live in a world of smoke and mirrors while shifting costs along in another manner.

Sooner or later the bills will catch up with us.

While the merits of price controls and state ownership of transmission lines are being debated, the truth remains that neither adds a single megawatt of power to the grid. Only by encouraging an increase in supply can be affordability of price and the consistency of service.

Mr. Chairman, while this hearing is focused on the electricity crisis in California, I would also like to commend you for having the foresight to conduct a hearing last week on the national shortage of natural gas. Since most new generating facilities in California are gas powered, the gas shortage is inevitably tied with our ability to power our state. It is my hope that we do not ignore the difficult choices our country must make to provide a dependable source of natural gas.

Can I have 10 additional seconds, please?

REP. BARTON: Yes. (Laughs.)

REP. BONO: It would seem them that we have many angles to address. Price, availability of electricity and natural gas, and the transmission of both these sources of energy. As we move forward to face this challenge, I'm heartened by the fact that our country and our state have consistently risen to the task. If we have the courage to make the difficult choices today, we can pave the way for a successful and prosperous future.

And now I'm going to take a breath. (Laughs.) Thank you, Mr. Chairman.

REP. BARTON: Thank you, Congresswoman.

Congressman Inslee, we had a spot for you at the dais, and since you weren't here we let Mr. Issa. So if you'll squeeze in, we'll give you a chance on this panel.

We're trying to go by seniority and by members of the committee. It's going to be confusing. I think Mr. Radanovich would be the next, and then Mr. Sherman, Mr. Inslee and then Mr. Issa.

So Mr. Radanovich, your statement's in the record in its entirety. I recognize you for five minutes.

REP. GEORGE RADANOVICH (R-CA): Thank you, Mr. Chairman. And again, thank you for holding this hearing today and for also coming out to California a couple weeks ago get apprised of our situation.

The California Central Valley district that I represent has experienced both rolling blackouts and the beginnings of rate increases which will affect us for years to come. The California electricity disaster is not behind us. The worst is yet to come. The state of California continues to hemorrhage while we are transfusing blood into the victim, but we have not yet done what is necessary to stop the bleeding at its source.

To describe this crisis simply as a rare, one-time event or a perfect storm is also to fail to recognize that California and the rest of the nation have serious and fundamental problems in our energy policy. For government officials to say that they did not or could not see this storm coming is to deny their responsibility in this disaster.

There are many warning flags in the record to show that responsible officials should have been aware of the forces of increasing demand for energy and restrictions on the supply of energy were about to clash at a price point that was insupportable. Past low natural gas prices may have postponed the day of reckoning, and recent low water years may have accelerated that day, but the day was inevitable. The California electricity disaster was preventable under a different public policy, a more rational energy policy of encouraging supplies to meet demand at low prices instead of a policy of restrictive supplies at high prices to limit demand was the answer.

The root cause of the failure was the unwillingness of government officials to admit and explain that policies have price consequences. For example, encouraging conservation requires higher and higher energy prices to encourage more and more savings. California is already the second lowest energy per capita consuming state in the nation and no doubt will be the lowest once more industry leaves the state because of high energy prices. Clean air is an important goal, but it requires investment in technologies that add to the cost of producing energy. Economics dictate that if we do not allow the construction of new facilities, the increasing competition for the existing resources makes them more valuable.

California regulators have for decades taken advantage of strategies to delay the unacceptable cost impact on consumers of these policies. These strategies have included eating into the generation reserves to satisfy demand for new capacity, gambling on the hope of low spot market prices, depending on out-of-state resources that have competing demands, and delaying rate impacts through the use of artificial consumer rates.

The most recent failed strategy was to hope that deregulation would provide lower prices forever. Deregulation is an essential tool for the eliminating and avoiding unjustified cost, but does not control the price point. Under deregulation, prices will settle high or low, depending on the policy which affects the availability of supply.

So where do we go from here? I was happy to hear the states of Pennsylvania and Ohio, that they understand that successful deregulation requires extensive citizen involvement and effective government deregulators that constantly monitor the market so that appropriate mid-course corrections are taken in a fairly timely manner. I was also happy to hear that they understand that sustainable low energy prices are a result of abundant supplies and not of deregulation itself.

In California, I hope we have also learned the very important lesson about price volatility in both the gas and electricity markets and that consumer protection from that volatility is essential. It is unacceptable to pass on all the market risks to consumers who are in no position to mitigate much of that risk.

Unfortunately, the California PUC put energy consumers in the same position as those who choose to live without health insurance -- as long as you don't get sick, it's the lowest cost approach. But when you do get sick, you face enormous bills.

Adequate consumer protection could have been provided in the deregulated model by requiring that consumers be provided with contracts at terms of either a fixed price or for some period of time or at a variable price with escalation caps as much as mortgages are purchased at fixed rates or adjustable rate mortgages -- and prior notification of price changes.

If these consumer protections had been required in California, I believe the utilities, energy marketers, and the new producers would not have accepted the flawed restructuring scheme that was put in place. These market participants also would have then been motivated to reduce their risk so as to gain market competitiveness by building new power plants, encouraging demand management and diversifying the energy mix.

Unfortunately, California seems to have fallen back on the regulated model which previously failed to protect consumers as the only way to provide consumer protection. The serious flaws of the regulated model were inefficiencies.

I am encouraged by the actions of Governor Davis and President Bush to expedite the permitting of new power generation and transmission facilities in California. This indicates that the governor also understands the true answer to the consumer's need for energy at reasonable cost lies primarily with an increasing supply. However, expedited permitting must produce results and not become a faster process for regulators to simply say no.

It is also important to understand that building a large number of gas-fired power plants will not bring down the cost of energy unless there is an ample supply of inexpensive gas to fire the plants. United States must aggressively and responsibly develop its own gas resources to assure a low-cost supply.

There is an arrogance in the view that it is acceptable to develop the gas resources off the coast of Sable Island in Canada to meet the needs of New England but that it is not acceptable to develop the same resources off our own coast. If ANWR were located in Canada, would it be equally environmentally concerned? We must develop our own resources in an environmentally responsible way and not take undue advantage of other countries to meet our domestic needs.

Thank you, Mr. Chairman, for your interest in the issue, and I look forward to this hearing. I also have a letter to Gray Davis on possible ways that the federal government might be able to help in this if he's so inclined to ask. And I'd like to submit that for the record.

REP. BARTON: Without objection.

The gentleman from California, Mr. Sherman. The statement's in the record. And you're recognized for five minutes.

REP. BRAD SHERMAN (D-CA): Thank you, Mr. Chairman, for holding these hearings. I want to commend my colleagues from California. They've presented much useful information that I will try to avoid repeating. I agree with most of what they've said on both sides of the aisle.

I would point out that this was a crisis that the smartest people in the country did not see. The smartest people on Wall Street were not selling PG&E or SoCal short, and the executives for these two large utilities were not objecting to the structure of the situation as recently as a year ago.

This caught a lot of us by surprise. This problem is perhaps greater --

REP. BARTON: Congressman Inslee. You're next. Mr. Filner's not here. You might want to go down there where that microphone is. I'm sorry, Congressman Sherman.

REP. SHERMAN: This problem is perhaps greater than we realize. It could push California into a recession. That could pull the nation into a recession. Beyond the economics, people will die in California and the West this summer. Some will die because of crime caused by rotating blackouts. Some will die in overheated apartments without air conditioning.

This problem is not only one of electrical generation; it may also be one of natural gas supply in California. I do not think that we will have a supply crisis nationwide. But in California, we use natural gas to generate electricity, and we may not have enough of it to even fire up the limited number of plants that we have.

I'm here to support one small step toward conservation which will be the least controversial thing Congress could do to help this crisis and the quickest thing that Congress can do, and that is to allow California and other Pacific time zone states to adjust daylight saving time in order to conserve energy.

And I ask this committee as quickly as possible to have a mark-up on HR-704, a bill I proposed to this Congress roughly a month ago -- actually less than that -- which has cosponsorship from such diverse members as Mr. Filner and Mr. Doolittle.

What this bill would do is simply allow California to alter its daylight saving time and allow other Pacific states to do the same. This is in response to a resolution passed by the California legislature last year asking for this freedom, and I think people on both sides of the aisle will believe that we ought to at the federal government allow California to respond to this crisis.

My own suggestion to the state government is if this power is available that we should go to double daylight saving time from May 1 to Labor Day. This is a period of time when even if we were on double daylight saving time it would be light at 7:00 a.m. in the morning. It is also a period of time when children are not going to school except during May when as I say it would be light even well before 7:00 a.m. And it is the period of time when we are going to face the greatest energy crisis since the electrical availability crisis will be greatest when the days are warmest.

The other states in the Pacific time zone are given the same freedom -- first, because they also have an energy crisis that they share with us and, second, because many of these states want to remain in sync with California, and that is perhaps why the bill is cosponsored by Shelley Berkley of Nevada.

Now daylight saving time will save between 1 and 2 percent of our energy. This is as a result of a recent study done by the California Energy Commission and is consistent with quite a number of studies done by the U.S. Department of Transportation. As a matter of fact, daylight saving time was initiated for the purpose of saving energy during World War I and has been reemployed several times during other energy crises -- World War II and the 1970s.

In addition to the reduction of energy usage, that energy usage reduction will take place just at the right time -- that is to say, roughly between 5:00 and 7:00 in the evening or 5:00 and 8:00 in the evening when energy demand is at one of its peaks during the day. This is because when people go home they will not have to turn on all the lights in their home in order to make it light. They need simply raise the curtain. It is when people first begin arriving home when homes are operating and using electricity and businesses are still open using electricity as well. It is one of the times when we need to reduce energy usage.

In addition, studies show including a 1975 study from the Department of Transportation, that daylight savings time of this type would reduce crime and that it would reduce traffic accidents as well. I would hope that this committee would move forward as quickly as possible on what I, as I mentioned before, would be the one thing I think we could do that is non-controversial and that we could do quickly. Thank you.

REP. BARTON: We thank you, and we'll look into that. When Congressman Boucher, the ranking Democrat, gets here we'll check with him. Looks like an idea whose time may have come, so we'll work on that.

REP. SHERMAN: Thank you.

REP. BARTON: We'll now recognize the gentleman from Washington state, Congressman Inslee. Your statement's in the record. You're recognized for five minutes.

REP. JAY INSLEE (D-WA): Thank you, Mr. Chairman, members of the committee. Thanks for letting me join you.

I'm here to report two disasters out in the Seattle neck of the woods where I hail from. First disaster you've heard about -- 6.8 earthquake in Seattle last week. I want to report to you, the federal government's done a good job responding to that natural disaster. FEMA's there on the job trying to deal with people's problems. Things are okay with the earthquake when it comes to the federal government.

But the energy price disaster of these obscene price hikes that we've seen which are driving people to food banks, which are taking people's jobs, which have the potential to ripple through the whole U.S. economy and drive us over the brink, the cliff, potentially of a recession -- the federal government has been a pathetic disaster in itself in refusing to come to the aid of the West.

It's done so despite the fact that it's got a tool at its disposal -- short-term, wholesale, cost-based electrical western energy caps that we ought to adopt in short order in this country to prevent that disaster from occurring. To me it is remarkable the difference in the federal government that's helped so well in our earthquake and so poorly in a larger scale disaster of these electrical rates.

And it boggles my mind why that has been taken off the table, Mr. Chair, and I'll tell you why. The rate hikes that we have seen that people are experiencing are unprecedented in the U.S. economy. People are experiencing residential rate increases of 50 percent already, and they could go to 80 to 100 percent this year. I'll just give you a sample of three conversations I had last week. I went to a food bank, talked to people who are working two jobs, never been in a food bank before but by bum they're now there because of these energy prices that have spiked so high. I talked to a fellow on a ferry boat whose uncle was losing a job as a longshoreman because the aluminum industry is going to heck in a handbasket because of these enormous price hikes.

And the third and perhaps most disturbing to all of us is the words of Alan Greenspan when he testified last week in Financial Services who pinpointed these energy prices as one of the greatest danger signals to the U.S. economy. This is national problem, not just a Western United States problem.

And the federal government has failed to act.

Now what can they do? FERC at this time has a congressionally established plan already. The tool is already in the federal toolbox. The tool says that if you've got unreasonable prices, FERC can establish some meaningful, short-term wholesale price tariff so you've got a cost-plus-profit system in this country on a short-term basis. This is already law, and the administration to date has failed to even consider it.

Now how should you do it? Let me tell why the administration has been loathe to even consider this to date. They've been concerned they would end up being a long-term rather than a short-term price cap. I think that's a legitimate concern, and we can establish a price cap that is limited either as to a specific time, number one, or to a trigger mechanism which will have the cap expire when certain conditions exist.

For instance, it's been suggested that we have the cap expire when utility reserves get to a certain level. We can deal with this to make sure it's short-term.

The second criticism of this proposal has been that it will be a disincentive for the creation of the new generating capacity. That also is a legitimate issue. But we deal with that very simply by this. We exempt new generating capacity from the price cap. We exempt it. Or we exempt long-term contracts. There are many ways to deal with this price cap.

But I'll tell you what I believe we need right now. The whole U.S. economy and the people I represent are going to food banks because of their energy prices. We need the administration to sit down on a bipartisan fashion to fashion a wholesale, short-term price cap which will not be a disincentive for the creation of new generating capacity, which will have some means to make sure that it is short-term, to act as a circuit breaker to what's going on in the U.S. economy. We just need a circuit breaker, and I'm also here to tell you this is not the panacea to our energy problems.

But to relieve these small businesses that are suffering on a short-term it's necessary if you don't want to see this economy continue to go downhill I encourage us to join us. I've sent a letter today with 25 members asking the administration to discuss this with us. It does not take legislative action. It simply needs the administration to take a look at how this severe this problem in the West and get a little bit creative on how to deal with this problem.

Thank you, Mr. Chair.

REP. BARTON: Thank you, Congressman. We appreciate your input.

We'd now like to hear from Congressman Issa. I apologize for saying Issa. I'm told it's Eye-sa.

REP. DARRELL ISSA (R-CA): That's all right. Thank you, Mr. Chairman.

REP. BARTON: Your statement's in the record, and you're recognized for five minutes.

REP. ISSA: Thank you, Mr. Chairman, and for the record Rush Limbaugh is getting it wrong too. It's the nature of a name like mine.

Since you've been so kind as to put my entire statement into the record, I will not read from it nor repeat it. I would like to urge this body to think federally, to think long-term. First of all, deregulation has not been proven to be a failure because California has not had deregulation. Second of all, for deregulation or any other free market system to work, you must tear down barriers to entry. California did not do this.

It takes so long to get a permit and in fact self-help permits, what is normally called distributed power, has been all but prohibited in California. So between long times necessary and a grid which was closed to many of the potential 10 or less -- sometimes even more, 15 or 20 -- megawatt producers, by closing that they in fact closed off a huge amount of supply.

I believe that this body can easily get caught up in what is both the administration's job and in fact the state of California's governor and legislature's job. One of those jobs is in fact to deal with the production of energy and in fact to look at its own internal regulations that have been barriers to entry. California today imports electricity. Much of that electricity directly or indirectly comes from non-natural gas fossil fuel production. It comes from hydroelectric, something which California has been in fact reducing by determining that hydroelectric versus fish, the fish win. That's wrong -- not that preserving the environment isn't wrong, but buying power from other states so that in fact you shift that which you're not willing to do in your own state to other states is a mistake.

States which produce clean coal in fact are supplying electricity directly or indirectly to California, a state that essentially, other than the limited amount of nuclear and a limited amount of hydroelectric only allows natural gas.

Today with the shortage of natural gas as we bring on power we are faced with an absence of sufficient natural gas. There is sufficient natural gas around the world if we had the willingness to bring in the liquefied natural gas. California has not been willing to, and I do not expect them to.

The present natural gas generators without scrubbers typically put out about 15 parts per million of the prohibited pollution, while diesel and other liquid distillates put out about 25. In many parts of the country, those generators which are not allowed to be operated here are operating. Around the world those which are not allowed to operate, are operating. California has taken an attitude that its air must be clean while in fact it has polluted other parts of the country.

This is not to disparage my own state. I live in a wonderful state and one that shows a lot of promise for the future in leading the country. However, if you in fact were to encourage price caps to be on for a long length of time, in all fairness to my colleague it's one thing to limit the price of water right after an earthquake. But a year later if no one has dug a well, it is not fair to keep that price artificially low. California has had artificially low prices for a long time.

In fact, I would propose in addition to legislation which my office is working on to free up the ability to have distributed power, thus alleviating some of the demands on the grid. It will be easier in California.

I would suggest certain other ideas which our office has been working on. Energy self sufficiency could include federal buildings within California providing their own distributed power, something that circumvents the state's willingness to do that. Military installations which have been barred from producing their own power -- I have spoken with several of the base commanders; they are certainly willing to reduce their cost and increase their likelihood of a steady supply if this body will in fact empower them to produce their own rather than buying off the economy which has been the tradition.

Additionally, tribes such as the Pashonga (ph) Native Americans in my district are now putting in their own power generation because in fact they can do it and they can do it without the limitations the state has placed.

These and other solutions are possible, but energy self- sufficiency has to be a two-way street. I encourage this body to press the state of California to participate in these solutions.

Thank you very much, Mr. Chairman.

REP. BARTON: Thank you, Congressman Issa.

We'd now like to hear from another Californian, Congressman Mike Thompson. Your statement's in the record, and you're recognized for five minutes.

REP. MIKE THOMPSON (D-CA): Thank you, Mr. Chairman, and members. I want to thank you for allowing me to testify. I think the fact that we're having this hearing today is emblematic of the importance that we all see in solving this energy crisis that not only affects California but will affect the entire nation.

I have a statement that I'd like to submit.

REP. BARTON: Without objection.

REP. THOMPSON: Thank you. And I'd like to just make some brief remarks today.

It's important to note that this California energy crisis is not just a California crisis. It's a crisis that could affect the whole country. And failure to adequately ensure reliability of supply at affordable rates in California could have an economic ripple that goes across the entire United States and hurts where California in the past has really been the engine that's driven this economic boom that we've all benefited from.

In my district we've had tremendous impact from the energy problems, both on individuals and on businesses. I've had timber operations that have been disrupted. I've had a pulp plant that's been shut down and a particle-board plant that's been shut down. One dairy in my district had to throw away thousands of gallons of milk because the rolling blackout stopped them from being able to process this milk. I have a senior center that may have to close its doors permanently because it can't afford to pay its energy bill and the ongoing energy cost of keeping those doors open.

I have small electrical generators who have been selling power to PG&E for a number of years, and I have two in one small county in my district that together are owed $26 million from PG&E for electricity that they've generated, sold, and not been paid for. Not only does this hurt this individual business, but any of you can imagine the economic impact of taking $26 million out of a county in your district. And individuals have experienced such trouble and such costly bills, that they're just too numerous to mention.

I think it's important to note that everybody is focused on trying to solve this problem -- state level, federal level, everybody has some idea as to how it can be dealt with, everything from energy conservation to seeking out long-term contracts to the state of California buying transmission lines, to the expediting of building permits for generators.

But the fact remains, there's only the federal government can take action that will provide immediate relief. And that action would be in the area of temporary cost-based price caps. Anything else is a long-term solution. And individuals and businesses in California cannot wait for long-term solutions. We need to step up to the plate and help solve this issue.

I would encourage this committee to take swift action on the SU Hunter Bill and to encourage, to demand that FERC take swift action. They have already found that generators have been charging unjust and unreasonable prices. They have a responsibility to all consumers, be it business or individual, to take action immediately to intercede in this effort to provide some relief.

I'd like to thank the committee. I have my testimony here that I would like to submit, and I appreciate your convening this hearing.

REP. BARTON: Thank you, Congressman.

The chair would recognize himself for five minutes. We're going to have one round of five minute questions, and then we'll go to the next panel.

Which of you gentlemen could give me an indication of what the baseload generation capacity is in California and what the baseload demand? Congressman Inslee?

REP. INSLEE: These are off the top of my head, but it's about 45,000 megawatts available in the California market, and there's a real interesting fact because while there's 45,000 megawatts available, there's only been 30,000 essentially on-line at any given time. So there's been about 15,000 capacity of the California generators on any given day that has not been on-line. And we can only account for about half of that being down due to maintenance or potentially emission standard issues. So there's about anywhere on a given day from 6,000 to 8,000 megawatts of capacity that have not been on-line that are sort of AWOL. And no one has come forward --

REP. BARTON: Do you know what the baseload demand is? Is it over that?

REP. INSLEE: It's been about -- it's around 32,000. Wait a minute. You checked me on that.

REP. BARTON: I'm told that the demand is about 20 percent higher than the supply.

REP. INSLEE: Well, the demand is infinite, regardless of price. And that's an issue of course.

REP. BARTON: But I mean, average price. I'm not talking about peak demand. I'm talking just the baseload, intrastate generation capacity is less than the baseload demand.

REP. ISSA: Mr. Chairman, it's about 45 as a normal demand. If California threw everything out the window, we can produce about 52 peak, peak, peak. The congressman has a point which is that at any given time there's quite a bit down for both maintenance which is expected, remembering that some of this 52 potential includes peakers, and it includes a lot of systems which don't run efficiently if you tell them that you're going to produce in a certain amount.

REP. BARTON: My point is, if we're going to look at solutions, and I agree that we should, the chronic problem is more demand than supply intrastate. And it's exacerbated because the California law didn't have a planning mechanism for additional supply. I don't know if they just forgot about it or what. So the price cap solution, obviously there would be some short-term benefit or should be some short-term benefit to a wholesale price cap, but I don't see that that helps the long-term solution.

REP. THOMPSON I could address that if I may. Everything that we've been talking about has been long-term. There's an attempt to expedite the permits, to bring on new generators. There's new generators on-line anywhere from within the next two to four years to come on line. So the needed supply numbers are projected on being there within the next two to four years.

REP. BARTON: I understand that.

REP. THOMPSON: The price-cap point that I alluded to was in the immediate the only way to deal with the exorbitant price that's being charged is to apply on a temporary basis to correspond with the new generators coming on-line these cost-based caps.

REP. BARTON: But if we go down that trail and don't restructure the retail price, if you maintain for lack of a better definition a below-market retail price and you put in wholesale price caps on top of that, don't you just extend the problem around the region, around the country because a rate, a cost-based wholesale price cap, if somebody has power generating capacity outside the region and they can make more by selling it somewhere else, i.e. somewhere else than California, you've not done anything.

I mean, California has adopted wholesale price caps at the state level several times in the last 12 months, and it doesn't appear to have done anything. So I don't -- I kind of understand the general theory, but I don't understand the application in practice because it just simply hasn't worked.

REP. INSLEE: Mr. Chair, could I address that?

REP. BARTON: Sure.

REP. INSLEE: I think it's analogous -- it's a very important point you make that wholesale price caps are not the long-term solution either to a price or supply issue. I think it's an important point. What we are suggesting is, we adopt a short-term, well-defined system of wholesale price cost-based caps that have this very important feature -- and I hope it's not lost in this. You exempt from the cap new generating capacity so that there is no disincentive for the creation of additional generating capacity which we clearly need in addition to conservation.

It is akin to the situation where you have the India earthquake where you want people to drill new wells but you don't want people to charge $500 a quart for water. What we're suggesting is, we tell existing generators on a short-term basis you can't change $500 a quart for water during the emergency part of this economic and natural disaster -- because it's a combination of California's deregulation debacle and our water-short years in the Northwest -- but we're going to allow you to go out and encourage you to go out and build new wells, and we're going to exempt that from the price cap.

And this is why frankly the administration has failed to even consider price caps because they haven't thought about the fact that we cannot create a disincentive if we exempt them from the cap. That's what we need this administration to consider, and I hope the committee in some way to urge them to do so.

REP. ISSA: Mr. Chairman, I think you made a very valid point and you hit it right on, which is, you know, California already with what it produces internally it can decide what it's going to allow those prices to be. When we talk about power that could come into California or go to some other state, we already have the western states paying a premium for the sins of California. If in fact the federal government just automatically says without a long-term strategy that's signed onto that's amenable to the other states and the rest of the country, if we simply say, sure, we'll protect you from your past errors for a period of one, two or three years, those years could go well beyond that, and in the meantime any sensible commodity seller is going to move their commodity to a place where they can get a better price.

And right now California's trying to get a below-market price.

REP. BARTON: My time is expired. We've been joined by two other members who wanted to give a testimony. Normally once we start questions we continue, but this is an unusual hearing in that it's a members' hearing. So we're going to go to Congresswoman Davis for her statement and then Congressman Honda, and then we'll go to Mr. Strickland for questions.

Your statement's in the record in its entirety, and you're recognized for five minutes, Congresswoman Davis.

REP. SUSAN DAVIS (D-CA): Thank you very much, Mr. Chairman, and members of the committee.

REP. BARTON: You need to make sure the microphone's on and speak into it. Yes, ma'am.

REP. DAVIS: Thank you. I appreciate this opportunity to comment on the electricity prices in California, and I appreciate, I just came in during the last questioning and I'd be happy to engage in that afterwards.

As you have heard from previous speakers, deregulation in electricity prices was intended to create competition in a free marketplace and to result in reducing the price of electricity. However, in the dysfunctional market prices were manipulated by the handful of producers, and this resulted in soaring prices unrelated to the cost of production.

Despite repeated requests and suits, the Federal Energy Regulatory Commission has refused to exercise its mandated authority to assure that power rates are just and reasonable, either by making cost-based temporary caps which has been discussed, on existing generators or by fining those companies which have egregiously manipulated the market.

The ironic consequence, I think, of this manipulation may well be an increase in municipal ownership of utilities. As members of Congress, we need to look at some actions we can take to foster environmentally and economically sound, municipally owned generators and there are four areas in which I'd like to cite for you.

The first would be to increase the tax credit incentives for renewable source generators and, secondly, to assure adequate, safe, natural gas pipeline capacity; third, to support refinery level cleansing of diesel fuel; and finally, and, in addition, to meet the personal impacts of the crisis to provide some temporary cost-of- living housing increases for our military families to cope with the escalating energy costs.

The city of San Diego and the county of San Diego Water Authority and some other municipalities are now setting options to build new facilities. In January, I initiated a meeting among city and county leaders and state and federal legislators to discuss some options. Our staffs continue to meet to share information. Either individually or through joint powers agreements, local governments can benefit from tax-free bonds to capitalize plants and potentially could receive preference for federal hydropower projects.

I'm pleased to report that the projects that have been put forward include some exciting additions to the renewable resources market, and these include a project approved by the county of San Diego to construct a (biomass ?) generator at a closed county landfill site. San Diego sewage treatment facilities already are using waste gas for generation in excess of their needs. They have plants for fuel cell and photovoltaic pilot projects to capture other sources of renewable energy.

Although the effect of each project is small, together they add to total generation and carry out our responsibility to invest in new, non-petroleum-based power generation. And in addition, the San Diego County Water Authority had already received authority to build power plants and transmission lines. We'll be able to operate hydroelectric generators using water stored behind the new (Olive Haven ?) Dam which is under construction.

Because we generally think of San Diego County as being water- poor, it is exciting to realize that even here some hydroelectric power can be produced. Because the regulations limit where the water authority can sell power, it is important that all new sources of power be enabled to sell power to the distributing agency which in that case would be San Diego Gas and Electric Company.

Renewable energy sources for generation of power such as these deserve our support with expanded tax credits for development. Several traditional projects are being considered. My colleague Duncan Hunter who unfortunately has not had a chance to address you yet today would have told you about the Marine Corps Air Station Miramar proposal which he has been pursuing. Another project has been proposed by a local energy company for a 750-megawatt natural gas powered generating plant to be sited near a city landfill.

The city of San Diego was exploring this option along with other government entities to create some publicly owned utilities to serve the entire county. In addition to these proposals, small, cogenerational plants are being built to serve the 25,000-35,000 populations of our state universities. Because these projects use petroleum resources, they require a supply of natural gas or clean diesel fuel of sufficient quantity at nationally comparable prices. Congress must be certain that natural gas pipelines are safe and that they're sufficient.

It would also serve us well to give incentives to promote cleaning diesel fuel to the lowest sulfur levels at the refinery state, thus reducing the need for adding scrubbers to newly constructed turbines. It would enable diesel refined in California to be used as available to meet responsible air quality goals, both for power plants and for use in diesel trucks. And while these proposals clearly address near and long-term goals, it's critical that we address the immediate needs --

REP. BARTON: Could you summarize, Congresswoman?

REP. DAVIS: Sure. -- of some of our most vulnerable citizens. And that's why I wanted to cite the effects of the cost of gas and electric utilities on our military families in San Diego and suggest to you perhaps that we respond to this issue by increasing housing allowances for a limited period of time for military living in the area where basic utility costs have more than doubled -- as a first step to meeting the challenge to adequately support our military personnel there in the San Diego region.

Thank you very much for your time.

REP. BARTON: Thank you.

REP. DAVIS: And I appreciate your --

REP. BARTON: Thank you for your testimony.

We now go to Congressman Honda. Your statement's in the record. We'd recognize you for five minutes.

REP. MICHAEL HONDA (D-CA): Thank you, Mr. Chairman.

Members of the committee, thank you for inviting me to testify today and for your decision to hold this hearing on California's electricity crisis. I can assure you that my constituents in California's 15th Congressional District welcome this discussion and look forward to the committee's consideration of important legislation that might provide short-term relief and long-term incentives to bolster California's electricity supply. And like all members from California, I received letters and phone calls from almost every segment of my constituency expressing concern over rising electricity prices and rolling blackouts.

Almost two weeks ago I invited a number of individuals representing various organizations, companies and communities to my office to discuss the devastating effects that California's energy crisis is having on Silicon Valley residents and businesses. The attendees included representatives from nonprofits, Chamber of Congress, high tech companies, healthcare organizations and schools, and each offered a unique perspective and eloquent case for stronger federal action.

And I'd love to detail all their stories, but for brevity's sake I'll just concentrate on two areas and that's high tech and education. You know that Silicon Valley is comprised in part of high tech companies that operate machinery and computers that are incredibly sensitive to fluctuations in electrical currents. This is especially true for semiconductor companies and collocation of facilities. And when a blackout interrupts work at a high tech company, millions of dollars in unfinished products can be lost and it can take often huge financial investments to return operations to a normal working order.

When rolling blackouts swept through San Francisco Bay area in mid-January the Silicon Valley Manufacturing Group reported that approximately 60 of its members had been directly impacted. The manufacturing group estimated that 100,000 Silicon Valley employees were unable to work, and tens of millions of dollars were lost. The Bay area is accustomed to addressing quality of life concerns, and issue of energy is no exception. Our Governor Davis announced just two days ago that California businesses and consumers cut their energy consumption by 8 percent in February. This is a dramatic cut, and I compliment Californians for their great sacrifices that they're making. But I must say that I am impressed with the resolve of high tech companies to be part of the solution. I am especially pleased to see that the significant efforts by high tech companies are aimed at reducing electricity demands.

But the high tech sector recognizes it cannot be a substitute for the role of government. The state of California and the federal government must also stand firmly on the side of sound energy policy. While the media has been giving a great deal of attention to the private sector in the crisis, the media has paid considerably less attention to the detrimental effects that higher electricity prices have had on our schools. One school district in our valley estimates that it will pay $136,000 for more electricity this fiscal year. And next year the numbers are even more startling. The school district will increase its budget for electricity by $500,000.

These dollars come out of the district's general funds, meaning that schools in this district will have fewer funds to hire teachers, pay for schoolbooks and upgrade education technology. And these numbers are even more striking when you consider that the school district has already implemented strong conservation measures. In fact, the average energy cost per square feet is almost 25 percent less than the cost per square feet at an average K-12 California school district. And to save money, some schools have even considered limiting operating hours to 8:00 a.m. to 3:00 p.m. Such a decision would preclude a school from offering after-school activities as well as suitable environment for teachers to prepare for the next day's lessons.

As a former educator, I'm disheartened that schools are forced to adopt such measures, especially when many of our schools have little money to invest in energy efficient devices. And I know that Congressman Mark Udall has shown exemplary leadership on this issue, and I hope that the committee will follow his lead and look more closely at how the federal government can further encourage school districts to deploy these technologies in their schools.

My goal today in testifying is not merely to communicate to you the challenges that are faced by my constituents. Rather, I offer you their stories to you as further evidence that the federal government must act to bring down skyrocketing electricity prices and help prevent further blackouts. We have a role. And I join my colleagues in expressing my great dismay that the Federal Energy Regulatory Commission has been so reluctant to act.

I urge this committee to consider carefully and expeditiously legislation introduced by Congresswoman Anna Eshoo and legislation offered by Congressman Filner. And the chief aim of these bills is to establish cost-to-service base rates or regional caps for wholesale electricity based on a determination that current prices are unjust and unreasonable.

REP. BARTON: Congressman, could you summarize?

REP. HONDA: Certainly. Just to close, what we're really looking at is trying to make sure that there's a short-term cost mechanism and then a long-term strategy to solve the problem that California is facing. And then finally I want to voice my support for increased funding for the emergency supplemental appropriation for LIHEAP as well as the energy and the weatherization programs.

REP. BARTON: Thank you, Congressman.

REP. HONDA: Thank you, Mr. Chairman and members.

REP. BARTON: We're now going to resume our questions.

The gentleman from Ohio, Mr. Strickland, is recognized for five minutes.

REP. TED STRICKLAND (D-OH): Thank you, Mr. Chairman. As I listened to my colleagues from the West, I could say to them that many of my constituents in Southern Ohio are facing high costs of energy, electricity, not so much electricity currently but certainly natural gas. I think we have a looming disaster facing our economy, a disaster that could drag us down into a deep recession.

What this does, I think, or it should do is impress upon this Congress that we need a national energy policy that is comprehensive and inclusive and includes all forms of energy. And I see my friend from Kentucky shaking his head. We believe in the use of coal. We believe in the use of nuclear energy. We believe in more ethanol use. We need to get on with that.

But the fact is, that would be a longer term solution, and what we face is in the immediate crisis. And Mr. Inslee, your comments indicated -- I believe you said that some of the generating capacity in California was AWOL. What are some of the plausible explanations for that?

REP. INSLEE: Well, there are many. Basically there's 45,000 megawatts available. There's only been 30,000 on any given day on- line.

REP. STRICKLAND: Why?

REP. INSLEE: Well, that's a really great question, and we've written letters to the General Accounting Office, Peter DeFazio and I, to get a report on this. But basically about half of that, there is an explanation for about half of that missing 15,000. That is, there's long-term or short-term maintenance requirements. They're down for a legitimate reason, and these generators are required to report the reasons when they're down.

That leaves about 6,000 to 8,000 megawatts that are AWOL that are missing. There's no explanation they're not on except this -- the ability to jigger and game the market to increase prices by withholding generating capacity. And there is a significant reason to believe that that has gone on. In fact, I'm certainly not the wisest head on that. There was a study done, which I'll provide to you and members of the committee, by a professor of MIT who studied the market just last year and concluded that there was a likelihood that in fact gaming had got on, that generating capacity withheld from the market to drive up these prices.

And that's obviously very disturbing.

Now one way to deal with that is a short-term wholesale price cap to deal with this. And you know, I should repeat, these are -- there's nothing wrong with profits in America. Healthy. Great. We all aspire to them. But these were extraordinary profits not taken because they've developed a new technology or that they've taken a great investment risk which is now paying off. It's simply that they were there in the midst of a natural disaster -- water short year in the Pacific Northwest and the collapse of the California market due to some political mistakes that were made.

So I have to tell you that this is disturbing. We've asked the General Accounting Office yesterday to have an investigation of this. This should be investigated. Appropriate sanctions should be taken if there's a finding there's inappropriate contact. But even if there's not, even if somehow some mysterious explanation arises, the one thing we do know abundantly clear, there are profits being taken in this industry that are beyond any imaginable returns in this industry ever for any reason.

And I got people going to food banks because of it.

REP. BARTON: Would the gentleman yield on that point?

REP. INSLEE: I would. Absolutely.

REP. BARTON: Is it not true that 30 percent of the plants in California are at least 30 years old, and over 20 percent are at least 40 years old? So the older plants might tend to have a little bit higher than normal --

REP. INSLEE: Yes. And in fact, in typical years only about 2,000 megawatts are downed at any one time. This year there is a legitimate explanation for about 7,000 to 8,000 to be down for exactly the reasons that you point out. But there's still another 6,000 to 8,000 megawatts, there's no explanation.

REP. BARTON: They've been operating. My understanding is, that California's been in a Stage I reserve, or III, for about the last six months so that as it begins to ease, some of these plants that weren't being given routine maintenance -- they might legitimately be out of service simply to catch up on deferred maintenance. I don't know that, but that's at least a plausible explanation to the gentleman from Ohio's question.

REP. STRICKLAND: Sure. And if I could just reclaim my time. The reason I asked the question is that your comment implied some possible guilt on the part of the companies to increase profits. And it seems as if the size of this crisis facing the country should encourage us to try to find an answer to that without any opinion going into the research. And I just think we need to know that.

Now, one other question, and I ask this question because many of us in the Midwest are fearful that what's happening in California -- you know, California is a trend-setter, proudly so. Cultural, arts, and so on and so forth. But we're afraid that California may be a trend-setter in terms of blackouts and high prices. And I think there has to be a national response.

Now I know that you had a chance to speak briefly with the president at the Democratic retreat. Have you spoken with other members of the administration? And if so, what has been the response?

REP. INSLEE: Well, unfortunately it's been disappointing, and let me tell you, I've been very -- before expressing disappointment in the administration, I want to express some praise. They've done a good job for their one disaster in Seattle which was the earthquake last year. We got a good response from the administration from that.

But it's very disappointing. I spoke to the president, and he came to our bipartisan, you know, retreat, or our retreat in Pennsylvania. I spoke to him about this issue. I proposed this price cap to him. He expressed a disinclination, to put it mildly, to do so. But I said, there's a way to do this, Mr. President, which will not be a disincentive for new generating capacity. He said, well, if that's true, you and your group go talk to the vice president. So for the last three weeks I have been attempting to get a meeting with the vice president's task force to discuss this, and we've been told they won't meet with us. And that's very disappointing to me in today's era of bipartisanship.

So we have written a letter today signed by 25 members up and down the West Coast, including at least one good Republican, asking for a meeting to discuss this issue. And I hope that they will avail us that opportunity because I think it's very important not to allow ideology to stand in the way of good solutions.

REP. STRICKLAND: Mr. Chairman, my time is up. I want to thank you, and I want to thank you. And I really believe that this is not an issue that we can deal with in a partisan way. This is --

REP. BARTON: I agree.

REP. STRICKLAND: This is an issue that's got to have all of us working together because it affects all of us, and I think the answer is going to take the best minds among us to figure out the best approach.

Thank you.

REP. ISSA: Mr. Chairman, could I respond quickly to that, very quickly?

REP. BARTON: Actually, you can respond in writing, but we've got a whole other panel of congressmen and congresswomen already here, so we're going to try to expedite the questions on this panel. But if you want to put it in writing, Congressman, I actually would love to have it.

Congressman Shimkus would be recognized. And I want to let Congressman Bono and Congressman Radanovich know since they testified we can't let the witnesses ask themselves questions.

(Laughter.)

You know. Thank you for the greatest testimony you ever heard. It was the greatest testimony I ever heard.

REP. HONDA: Mr. Chairman, I just want to thank you for this opportunity. I feel very comfortable with the mindset that Congressman Strickland had laid out. So I thank you for the opportunity.

REP. BARTON: Mr. Shimkus for five minutes.

REP. JOHN SHIMKUS (R-IL): Thank you, Mr. Chairman.

A couple questions, and I was going to ask Mike but he's left. So Congresswoman Davis, you are a member of the California General Assembly. Is that correct? Part of the hearing that we've had already and part of a news article that I've quoted a couple times, part of the problem has dealt with long-term -- that California did not go into long-term contracts. Some of the debate as to why California did not dealt with long-term contracts that the state went into under the PURPA, the renewable, the clean producing technologies, which created exorbitant prices for the producers because they were forced to purchase these long-term contracts. Could you -- I've heard that, you know, through articles, and there's been a hearing. In your discussions, was that part of the reason why California in their deregulation bill did not go for the retail long-term contracts?

REP. DAVIS: I think the experience was that in the long-term that it would not be helpful to consumers. But clearly I think there were so many parts to that plan that misfired or really didn't materialize in the way that people anticipated. And of course one those was that they didn't expect all of the generation to be out of state.

REP. SHIMKUS Thank you. Let's go back to the issue then, the PURPA requirement to purchase renewable, clean energy producing over a long-term contract was not advantageous to the consumers based on the electricity prices.

Is that correct to say? And that's why there was a fear of going into any long-term contracts?

REP. DAVIS: Well, at the time they really felt that it would be not necessarily better purchasing on the spot market, per se, but that there were problems in the long-term with doing that.

REP. SHIMKUS: Was there anything else that you personally as a legislator thought that was good about the plan? You supported it; is that correct?

REP. DAVIS: Right. At that time, as you know, it was unanimous.

REP. SHIMKUS: Yes. We do a lot of that stuff here too.

REP. DAVIS: Everybody was really at the table at that time, and I think that they believed that this would lower electricity rates. But again, there were so many things that changed in the interim that weren't really anticipated.

REP. SHIMKUS: Congressman Issa?

REP. ISSA: Yes. There was some dissention. It just wasn't in the legislature. The PUC had a 3 to 2 vote with the commissioner Jesse Knight (sp) and one other pushing very hard not to bar the energy companies from buying long-term. And so basically that's what created more of this problem than anything else.

One of the problems in California is, the legislature and the three members who voted to require buying on a daily market, they made the assumption that, well, you can buy cheaper. And just like anything else, if you want to get a hotel room in Las Vegas after 2:00 in the morning, if there's one available you can get it for an amazingly low price. On the other hand, if there's a convention in town, guess what? Even the penthouse at the best hotel may not be available, and if it is it's going to be $10,000 a night because it's available and nothing else is. This is exactly the problem California got into is they thought they were smart when they bought short. Now that in fact short is more expensive they have a reluctance to buy long. And even the governor's proposal to spend 10 billion-plus dollars in insuring buying, he's buying the baseload rather than saying, let the companies buy their own baseload long-term, we're going guarantee the additional purchase.

If the governor were to buy $5 billion worth of future excess capacity in addition to the 52,000 megawatts that are available, in fact he would be driving down the price, and this is exactly the opposite of what the governor is doing.

REP. SHIMKUS: And let me ask each of you, and if you can answer it briefly because my time's going to run out. This is going to be my last question. There's two parts of the equation. There's the supply and then there's the demand. If we cap wholesale rates like California capped the retail rates for individual consumers, how do you encourage conservation with the capping of rates? How do you affect the other side of the equation, not just the supply but the demand?

REP. INSLEE: I'll tell you one thing you can do is adopt variable pricing, variable pricing which has a higher cost during peak hours is one way. And we're going to have the first utility in the country doing that this year up in the Puget Sound area. And I really hope the committee will look at that issue carefully.

REP. SHIMKUS: Well, we have an energy deregulation debate. We think there's going to be metering and people are going to buy based upon peak hours. So you would say that there should be some rate changes for the consumer.

REP. INSLEE: Yes. And by the way, I believe there ought to be and need to be some price increases at the retail level in certain circumstances. But the ones we have experienced of 50 to 100 percent in a 12-month period are so shocking to the economy that it can't deal with it.

REP. DAVIS: I think one of the things that we didn't do is deal with the demand side. And that's where we can do that both on the commercial and the residential end. After this experience, people have an understanding now of how they can utilize their own utilities at home in a different way. So it's not my opinion that this is going to, if we do wholesale caps that people would start using more electricity than they need or not conserving.

The real difficulty -- and I think perhaps there was a little confusion about the wholesale versus the retail caps -- we do think that had the FERC capped the wholesale rates plus a profit, a reasonable and just profit early on, we would not have had to even step in on the retail prices. But that was the only thing we could really control in California. And San Diego of course experienced this before everybody else did, and it was difficult for us to get across the sense of panic really among residents.

REP. SHIMKUS: But your dereg though --

REP. BARTON: The gentleman's time has expired. We need to go to our next and last questioner in this round.

Congressman from Kentucky, Mr. Whitfield, for five minutes.

REP. WHITFIELD: Thank you, Mr. Chairman.

I think all the evidence indicates that most of the price spikes that have occurred within the area of natural gas, that is primarily where the price spike has occurred. It hasn't really happened that much in coal or nuclear that I know of.

Now, some of you have made some rather serious allegations in my view. I know Mr. Filner has gone, but the words have been mentioned that prices were manipulated, illegal withholding of power, falsification, and so forth. And Chairman Hecker who happened to be a Democrat over at FERC had asked for a report, an analysis of the western markets on the wholesale rates. And as you've indicated, some of you, FERC has the legal authority to put caps on interstate rates if they are found to be unreasonable. And in that report which was issued in November of 2000, they said they found no evidence of market power abuse.

So that is the agency of the federal government that has the authority to do this. So assuming that what they say is true, and they're not going to act, are you all, particularly Ms. Davis and Mr. Inslee, despite the fact that maybe there's no proof of anything, are you still advocating that there be a cap on wholesale rates?

REP. INSLEE: Mr. Whitfield, yes, I am advocating that whether or not there was withholding generated or not. And I don't know that for sure. I want to make sure you understand, we have asked the GAO to investigate this. I can't tell for sure there was or not. I think there is enough to cast some suspicion in that regard.

But I'm advocating that for this reason. The FERC also in that very same report I think you're referring to found, and I'll quote, "The commission has found in this proceeding that the existing market structure and market rules in conjunction with an imbalance of supply and demand in California has caused, and until remedied will continue to have the potential to cause, unjust and unreasonable rates for short-term energy during certain time periods," close quote.

To me it's absolutely stunning that the federal organization charged with the responsibility of assuring reasonable rates makes that finding and then does nothing, zippo, nada, to solve this particular problem.

You know, whether there was withholding generated, I don't know, but I do know people are being gauged for their electrical prices today with unreasonable prices that are not required for the cost of producing that power.

REP. ISSA: Mr. Whitfield, just to maybe shed a little light on this, the FERC commissioner or chairman met with the California delegation -- bipartisan, Republican and Democrat -- and I think he explained this very, very well. And the words that the congressman are saying are absolutely correct, but the finding is not that there was wrongdoing on behalf of industry. The finding is there was wrongdoing on behalf of the California legislature and the people of California, and they created an environment in which they bought badly. And the change that needs to happen for the most part needs to happen in California. They need to, and they are beginning to, change the rules so they buy smarter.

And for the federal government to say, you bought badly and you paid less for a time, but now when you're paying more we're going to prohibit that and claim there was some wrongdoing would be folly.

REP. WHITFIELD: Well, I mean, I personally agree with you that what California did is almost unbelievable when you look through the process. But Mr. Inslee, you made the comment which made a lot of sense that if you institute short-term caps on wholesale rates and exempt new generators, that that could help solve the problem except it's my understanding that in the state of California if you're a new generator then you're going to have to bear a part of the cost of the stranded cost of the existing utilities to come in, plus you're going to have to reduce your rates to meet their initial 10 percent reduction of their retail rates.

REP. INSLEE: Could I address this? This has to come down to I think the role of the federal government. I don't pretend with all my friends in California to say that every decision made there in retrospect was the right decision. What we are here to say though, that the federal government is the only government right now who can care for my constituents and simply sort of throwing rocks at California constantly is not going to solve this problem. We need a western statewide grid solution. Only this body and the administration has the capability in my view of providing that, and I urge you to do so.

REP. WHITFIELD: So you would be in favor of overriding that aspect of California law?

REP. INSLEE: I'll leave that up to you and California in that regard. But in one shape or another, we need a wholesale price cap that's grid system-wide in the Western United States. Short term.

REP. BARTON: The gentleman's time has expired.

Congressman Walden I'm told does not want to ask questions. Is that correct? We're going to excuse this panel. We thank you for your testimony. There may be some written questions, but we obviously appreciate the input into this problem.

We will have a specific hearing on California where we have experts come hopefully later this month.

(Panel I concludes. Panel II prepares to testify.)

REP. BARTON: We'd now like to welcome our second panel of congressmen. We're going to recognize you basically in seniority with some exceptions for committee members. And Congressman J. C. Watts who has a leadership meeting will be allowed to go first.

So J.C., if you'll come forward? If it was up to me, I'd recognize Texans first since we have Mr. Stenholm, but we're going to do this. So we're going to recognize Congressman Watts. And then we'll go to Congressman Ganske who's a member of the committee. And then we'll start by seniority, and I think it would be Mr. Bereuter and Mr. Stenholm, and then after that I'm lost, but I'm sure that you all will help me.

So gentlemen and lady, welcome to the subcommittee. Congressman Watts, your statement's in the record. You're recognized for five minutes to elaborate on it.

REP. J.C. WATTS (R-OK): Thank you, Mr. Chairman. And thank you for accommodating my schedule, and I want to thank my colleagues for allowing me to go first.

Chairman Burton and members of the subcommittee, thank you for the invitation to testify before you here today on an issue that is critical to the national security and continued prosperity of our nation. This issue I speak of is the need for a comprehensive national energy policy that will ensure that the standard of living we enjoy today in America will continue in the future for our children and for our grandchildren. The last eight years have seen a lack of such a policy, and it's now time for that to change.

The energy issue is a critical national security issue. Currently we are importing about 57 percent of the oil used in this country with 23 percent of that coming from the Persian Gulf region. Unless we take action, that number is forecast to increase to 64 percent in the year 2020. By contrast, our total imports were only 35 percent in 1973 when the Arab oil embargo created gas lines here at home. As recently as 1991 we went to war with Iraq, not only to liberate Kuwait, but also to ensure Saudi Arabia, the Persian Gulf states and our European allies that the United States was committed to the security of that region.

Unfortunately the last 8 years have seen such a weak-handed foreign policy toward Iraq that a nervous Saudi Arabia is now reaching out towards Iran. American cannot afford to be so vulnerable to the whims of the leaders of OPEC. Our reliance on imported oil weakens our national security, and it must be reduced through the implementation of a comprehensive national energy policy.

The energy issue also is an economic issue. As a former chairman of Oklahoma Oil and Gas Commission, the governing body in Oklahoma that regulates oil and gas, I am well aware of the essential role that energy plays in our economy. Without affordable, abundant and reliable energy available, the wheels of our economic machine will slow and eventually halt. We must not allow that to happen.

Some people think that our new information age economy is less reliant upon energy than our old economic based economy of manufacturing. Nothing could be further from the truth. All of these Internet computer systems, e-businesses and software firms require electricity to keep them running. The Internet and the systems associated with it consumes approximately 8 percent of the electricity used in the United States. In addition, all of those wonderful things ordered on the Internet still require transportation to reach the consumer, transportation that is 97 percent fueled by petroleum products. And yes America still does make products and factories that rely on energy to light the lights, run the conveyor belts and heat the buildings.

Energy is essential to the production side of our economy. Energy is also essential to the consumption side of our economy. There's no greater detriment to consumer confidence than not knowing what your utility bill will be at the end of the month. No working family in America is going to buy a new car, washing machine or computer when they are uncertain of the cost of their monthly utility bill.

Every person that has ever had an economics class knows the theory of supply and demand. Our energy supply is dwindling while our energy demand is growing. Total energy consumption of 32 percent by 2020, 393,000 megawatts of new electrical generation capability will be required to meet that increased demand. This is the equivalent of constructing 40 new 500 megawatt power plants per year for the next 20 years.

Our oil refinery infrastructure is in no better shape. Currently our domestic refineries are running at 95 percent capacity, and there's not been a new refinery built in the United States for the last 20 years. The nuclear industry that provides 20 percent of our electrical generation capability has been stagnant for years, but offers a potential for large amounts of emission-free electrical power. The siting and permitting process required of the nuclear industry should be streamlined. The hydroelectric plants operating today must be maintained for the future.

Clearly, the energy infrastructure in our country is in decline. The transmission lines used to transport electricity around the country are now operating at their maximum and building new ones is next to impossible due to a myriad of federal, state and local regulations. Pipeline construction is similarly difficult in the regulatory environment we see today. Without an investment in infrastructure improvement, it will not matter how much our supplies increase because it will not be able to reach the users.

Beyond our infrastructure needs, we must increase the supply of energy in this country. When I say "energy," I mean all types of energy -- oil, natural gas, coal, nuclear, hydroelectric, geothermal and renewables. No one source has the single answer. The domestic oil and natural gas industry must be kept alive and thriving.

REP. BARTON: Can you summarize.

REP. WATTS: A look at environmental responsible access to federal lands, Mr. Chairman, should be pursued.

And let me say in conclusion, we have an energy crisis bearing down on us, and it's our duty to do something about it. And I hope we can look at the Energy Department -- all of us can look at a comprehensive national energy policy that will chart a sensible course that can be followed by many for many years to come.

And with that, Mr. Chairman, I thank you.

REP. BARTON: Thank you. In your experience state level on the Oil and Gas Commission of Oklahoma will be invaluable as we put this policy together. I understand you have to go to a meeting at 3:00, so any time you need to leave you can feel free to do so.

I'll welcome a member of the subcommittee and the full committee, Congressman Ganske. Your statement's in the record. You're recognized for five minutes to elaborate.

REP. GREG GANSKE (R-IA): Thank you, Mr. Chairman.

Well, as we look at a national energy policy and as we're looking as a committee at the bill, an energy bill, it's clear that we need to get adequate supplies of natural gas and oil and to reduce our dependence on imports as my colleague J. C. Watts has just talked about. I think we also need to focus on renewable sources of energy, and that's mainly what I want to talk about and provide the committee with an example of how regulation can run amuck and can prevent us from using some of our cleanest sources.

It's no surprise that I have been strongly in favor of renewable energy sources like ethanol along with colleagues such as Mr. Shimkus on the committee. But I want to focus on a situation that really has to deal with one of the main problems the committee will be facing, and that is the NIMBY syndrome, the not in my backyard syndrome that is, I think, preventing us from developing new sources but also the sources for transportation of both natural gas and the locations of new sources.

And so I'm going to provide the members of this panel with an example from California, and I know my California colleagues may be interested in this.

As an example of the obstacles to new generation, is the failure to build a geothermal plant on U.S. Forest Service land at Telephone Flat in Northern California near Madison Lake. With the written consent and support of the Forest Service, the Bureau of Land Management leased these lands to private companies in 1981 pursuant to the Geothermal Steam Act of 1970 which was passed by Congress to ensure, encourage the BLM to lease federally owned geothermal resources for commercial production and use.

The proposed geothermal plant, while on federal land, is hardly in an area that hasn't seen other uses. In the immediate area are paved roads, developed campground and picnic areas, numerous privately owned cabins, a boat ramp and an active pumice mine. Motor boats are used regularly in the summer. Snowmobiling is a major activity in the winter, and substantial logging has occurred and continues to occur in that area. The Forest Service and the BLM compiled numerous documents for this project covering the range of environmental acronyms. In its first environmental assessment of 1981, the Forest Service concluded that, quote, "Geothermal exploration will not create any environmental impacts which cannot be avoided," unquote.

As a result, developers constructed numerous roads and wellpads at the site and drilled several dozen test wells to assess the commercial viability of the geothermal resource. The two federal agencies completed a supplemental environmental assessment in 1984 and approved additional leasing noting, contrary to, quote, "coal, oil, and gas-fired electric generating plants, geothermal power is one of the few alternatives remaining capable of contributing to energy demands without creating serious environmental impacts." Unquote.

When a geothermal developer proposed further exploratory drilling in 1995, the BLM and Forest Service prepared another environmental analysis and issued a finding of "no significant impact to the environment," approving the project. The company then submitted its plan of operation in 1997 to construct and operate its geothermal plant.

So the agencies prepared an environmental impact statement. The draft and final EIS adopted by the agencies approved proceeding with the project with certain mitigation measures. But both reports concluded that denying the project would conflict with the company's leasing rights.

While everything seemed on track to approve this environmentally friendly geothermal plant, then the problems began. The preferred route for the transmission line and access road were found to be unacceptable because forest land would be disturbed. The second alternative, a much longer transmission line, was also found to be unacceptable because of its possible impact on a nesting area -- although mitigation measures were readily available. And one of the three Native American tribes in the area complained that the entire project would interfere with what they described as a "sacred area of visionquest" -- although the other two tribes did not oppose the project.

After nearly four years of study, the record of decision which was finally issued last year turned down the project citing, quote, "The need to protect the visual and cultural values associated with the uniquely and highly significant historic properties of Medicine Lake," unqoute. In a prime example of bureaucratic statement of the obvious, quote, "The selection of the no-action alternative was the most effective measure to eliminate the impact on the cultural and social environment --

REP. BARTON: Would the gentleman summarize, please?

REP. GANSKE: To summarize, Mr. Chairman, after 20 years, no geothermal plant and a clear lack of a national energy policy, leaving California facing an electricity crisis. This was an opportunity to bring 50 megawatts of clean, renewable electricity to 50,000 homes in power-starved California. It didn't happen. The developer followed every rule and regulation. The judge has already told the government not to bother trying to dismiss this case, and we're left without a very clean source of energy, and it all rates to Not In My Back Yard. We need to do something to fix this.

REP. BARTON: We thank the gentleman.

If we could let the whip come forward, the Republican, Mr. DeLay, and let him go, and then we'll -- Doug, are you senior to Mr. Stenholm? Which of you all is the senior man? You came together? So we go by alphabetical order or by Texas order?

REP. CHARLES STENHOLM (D-TX): Mr. Chairman, if I might, I will just submit my statement for the record and save you five minutes because I have to be someplace at 3:00.

REP. BARTON: Well, I was actually looking forward to listening to you, but we'll go with Mr. DeLay. And then if Charlie wants to stay for five more minutes, we'll go with Mr. Stenholm.

REP. TOM DELAY (R-TX): I'll be glad to defer to him if he has to go.

REP. BARTON: Then let's let Congressman Stenholm go right now. And then we'll go to DeLay and then Bereuter. So Congressman Stenholm, you're recognized for five minutes, if you wish it.

REP. STENHOLM: This will cost me big time, Mr. Chairman. But --

REP. BARTON: Just the vote on the tax bill or something.

REP. STENHOLM: Thank you, Mr. Chairman. I will indeed summarize my comment, and I thank you for holding this hearing. I thank this committee for making an effort once again for developing a national energy policy, something that I have been interested in for 22 years. I believe this year and this Congress with this administration we're going to get it done.

You know, I represent not only the cotton patch but also the oil patch. And you know, there's an old saying in agriculture as well as the oil patch. And that is, low prices always bring high prices. And in my district, when prices were at $10 a barrel and $2 a thousand on natural gas prices, no one including my own constituency was concerned about the low prices. But my constituency is no different than California or any other state today -- the high prices that have now come have become rather disruptive to homes and agriculture, et cetera. And it's important that we begin to focus on the solution.

We know what the problem. Mr. Watts outlined the problem very, very well. Now what we need, we need improved access.

Mr. Ganske's statement a moment ago, when most of the remaining natural gas to be found in the United States lies on land owned by the United States taxpayers, it's time for us to begin having access. We know with modern technology that we can in fact develop safely environmentally sound oil and gas production, coal production, and all other sources of energy. It can be done. And it is time for the Not In My Back Yard syndrome to end. Improved technology requires research, and I hope that in our budget deliberations this year we will provide for continued research and development of finding even newer and better ways to develop sound energy.

Consumer needs must be taken into consideration, and programs like LIHEAP do need to be fully, fully funded in order to take care of the short-term problem. We as part of a national energy policy need to be looking at alternative energy sources, and I come before you today as ranking member of the House Agriculture Committee. I want to share with you the impact that it's having on agriculture. You know this. Everyone should know this. High prices for natural gas, electricity are causing many farmers to go to dry land because you cannot afford to produce food and fiber with these costs and sell it for what we're having to sell our agricultural products for.

I've been working for the last several years on developing a partnership between the oil and gas industry and agriculture because you cannot produce food and fiber without oil and gas. You cannot produce oil and gas without food and fiber. And therefore it needs to be a natural partnership. We all have our environmental concerns. We all have those who believe that somehow, some way we can produce an abundance without drilling, without building power plants, without doing any of the things that come. And I'm happy to say to you today that we're on the verge of those kind of coalitions.

I believe that it is going to be very possible this year to get the kind of bipartisan support that we do need to do all of the things necessary in developing alternative energy sources. Ethanol I support. I didn't used to support it. I've done a 180 because it was very difficult for me to convince my independent oil and gas producers that having the government subsidize their competition when they were going broke, I couldn't do that. But now we're finding a realization we need to develop all of the energy sources that we have in this country, and therefore working together we can do so.

I also encourage one thing, and that is to take another look which so far the Ways and Means Committee has not done, is using the tax code to provide incentives for our domestic oil and gas producers as well as developing alternative energy sources. That's not in the president's proposal. That's not in anybody's proposal that I'm hearing talked about that will fit within the numbers we're talking about. That's why some of us are having a little difficulty with the manner in which we're going about our budget business, and that's something that we will talk about in another day. But I thank you again. I appreciate the majority whip for his indulgence with me today. I know it will in fact cost me dearly, but it will be a price I will be more than willing to pay if he and I are working together on that which Mr. Chairman you and he and a lot of other folks in this room would like to see done. And I thank you very much.

REP. BARTON: Thank you, Congressman Stenholm.

We now go to the distinguished majority whip who is coordinating the various jurisdictional issues between the committees on energy policy, and it's a job that is going to be difficult, but I know that he's up to it.

Your statement's in the record, and you're recognized for five minutes.

REP. DELAY: Thank you, Mr. Chairman, and I am here representing the leadership, and we're here to help you. (Laughs.) Over the course of the campaign, Mr. Chairman, President Bush insisted that the country needed to make fundamental changes in our energy sector. He pointed out, and he pointed to warning signs and inefficiencies that threatened the safe and dependable energy supply our economy and national security demands. Well, subsequent events have now vindicated the president's perseverance. That's why we're here today as we all know.

We have serious problems within the American energy sector, and it's past time that we took stock of our position. We've seen things recently that offer a clear position. We've seen things that give us a clear lesson. There are artificial barriers in place that are preventing us from producing the steady, dependable energy supply that the American consumers expect. And this problem has broader consequences, because we must remember that our economic strength depends on our energy security. So it's our job as Congress to remove those barriers.

A great source of pride among the men and women that work for the companies that make up our varied energy sector is the satisfaction that they take in providing a secure, dependable energy supply to American families and businesses. Unfortunately, their inability to supply consumers with steady energy at a fair price has been compromised by a burdensome regulation and inefficient government policies.

Of course everyone also wants clean air and water, and fortunately this is not an either/or proposition. I am certain that by applying common sense standards to the restrictions hampering energy development and exploration we can create both deep and reliable sources of energy and the infrastructure to deliver that energy to our consumers.

Taken together, these improvements will once again provide the energy security Americans want and expect. But first we must face the challenges that lie ahead. The upheaval in California clearly demonstrates that energy issues aren't simply a state-by-state problem. California's troubles lay the predicate for a federal role in enhancing energy security.

A comprehensive solution can't ignore the shortcomings of either energy generation or transmission. California's supply shortcomings are harming other states, and California is damaging neighboring states in two ways. First, consumers in surrounding states are paying higher rates to subsidize the increased demand caused by California's inability to meet its own needs. And second, California's neighbors are compromising their own energy security by drawing down resources that historically provide the energy needs during periods of peak demand.

For example, states like Idaho traditionally allow their lakes and dammed rivers to rise during the winter and spring to ensure a steady supply of hydroelectric power for periods of peak demand over the summer. This year the Mountain States are being forced to squander those water resources to produce power for California instead of storing up water for the dog days of summer because when the hot weather hits, California may very well have succeeded in exporting the rolling blackouts and brownouts it brought upon itself to its neighbors.

We now have the technology and the experience to provide energy security for the American people without trading environmental degradation for efficiency. But this won't happen unless we first adopt a comprehensive plan to create a dependable energy supply.

What we need is a national energy strategy that considers all of our potential sources of supply and all the challenges that are constraining the market for energy in American today. And I have listed in my testimony, Mr. Chairman, many issues that we have to resolve. And I'll just leave that for the record.

Many of them have already been talked about such as expanding our supply of a variety of sources, increasing our refinery capacity.

And I just want to say, Mr. Chairman, we have a bill, and I represent a lot of the refining capacity -- in fact, most of the refining capacity in this country. We haven't built a new refinery in 30 years. And in 1981 we had 315 refineries. Today we have only 155, and that has to change.

And I've also listed many other issues that we have to talk about including what Mr. Stenholm was talking about -- we have to reform our tax code.

So on the speaker's direction as the leadership's energy point man, Mr. Chairman, I'm looking forward to working with you, with chairman of the full committee Mr. Tauzin --

REP. BARTON: Who was here.

REP. DELAY: He's right behind me.

REP. BARTON: He's right behind you. He's watching me.

REP. DELAY: Always behind me. And the president, Vice President Cheney, my good friend J.C. Watts and the committees of jurisdiction as we work together to develop a comprehensive energy strategy that balances regulation with the imperative for energy security. And I thank you.

REP. BARTON: I thank the distinguished whip. I knew we had good staff, but I didn't know they were that good. The committee chairman is back now.

We're now going to go to Congressman Bereuter of Nebraska. His statement's in the record in its entirety, and we'd recognize you for five minutes.

REP. DOUG BEREUTER (R-NE): Chairman Barton, Congressman Boucher, members of the subcommittee, thank you for holding the hearing on the concept of a national energy policy. I think you're trying to make that concept a reality. And of course I think almost all of us are totally supportive of that.

I want to bring to your attention just one or two of the particular problems affecting my constituents in the state and then try to move to a couple of solutions that perhaps may not be offered or given much support necessarily by other members.

I'm sure that you're aware of many of the challenges facing the country. The most immediate energy concern for most of my constituents is a dramatic increase in natural gas prices. Individuals, small businesses, nonprofits are paying hundreds of dollars more per month on natural gas then they did last year. And some of our businesses are on interruptible contracts, which means they may soon have to stop their production lines and other kinds of business activities.

The CRS report that just came out lately quoting a reputable source suggests that we have 58 years worth of technically recoverable natural gas in this country. And while the number of wells being drilled has gone up dramatically in the last half of 2000 versus the first half of 1999, we obviously have some big problems.

I have written to chairman of the Federal Trade Commission, Robert Pitofsky, twice on this subject in fact early last July and received what I consider to be only pro forma responses.

So I would like to see some attention to this issue. And Mr. Stenholm has already mentioned the particular problems in the farm sector, but it goes beyond that since most of the fertilizer used today is natural gas based and some of the firms producing it now simply have not produced what is necessary for this spring, so it's one more particular problem faced by the agricultural sector.

Now I'd like to make a couple comments about solutions. I think of course that a strong national energy policy has to include an emphasis on renewable sources such as wind. I don't say this is a major, a huge part of it, but it's an important part of it, and I want to make sure that we don't ignore some of those areas as you move ahead. One of them I want you to focus on if you will is wind as an energy source. I think it's important as a potential source. It's important to the rural communities.

The source of energy is especially important to the Great Plains region from the Dakotas, Texas, as well as parts of the American West like Wyoming and parts of California. According to the American Wind Energy Association, my state ranks sixth in potential, maybe much higher according to other sources.

Mr. Chairman, Texas ranks number two in potential source as wind for energy.

REP. BARTON: A lot of hot air down there in Texas.

REP. BEREUTER: Yes. Well --

Actually, Oklahoma has a lot too, but it's mostly in tornadoes.

Quite simply, much more needs to be done to promote the use of wind energy which I believe is vastly under-utilized in this nation but at the same time, much more likely to be soon cost-effective. One of the current incentives to promote wind energy is the use of investment in production tax credits. While I agree that this is a useful tool, I'd emphasize here that these credits unfortunately do not provide any benefit for publicly owned electrical utilities. That's certainly an important efficiency, one that's particularly important to my state since we're the only all public power state in the nation.

There are several options which could provide public power with the incentive to pursue renewable sources such as wind but others as well. I understand that Congresswoman McCarthy, a member of the subcommittee, is also interested in pursuing legislative options to provide incentives for public power entities produce more renewable sources of energy, and I'd be pleased to work with her and other members of the subcommittee.

Also there are at least several options that could be considered that would provide renewable energy incentives for public power beyond that. One possibility would be to establish a tradable investment and production tax credit program in the Internal Revenue Code for publicly owned electrical utilities that produce electricity from eligible renewable energy projects. Participants in this program could receive credits for electricity generated from wind, solar, geothermal, hydro and biomass including the conversion of landfill methane gas to energy.

As I approach the last 30 seconds of my time, I want to emphasize that I continue of course to be supportive of energy produced from biomass, especially from -- in the ethanol area. It is I think one more important way that we can supplement our energy; it will make us a little less dependent upon foreign sources. Increasing use of ethanol creates a win/win/win situation for consumers, farmers and in the environment. Analysis released last month by renowned economist John M. Urbanchuk (ph), executive vice president of AUS Consultants, found that greater ethanol use also has positive implications for our nation's economy.

And I close by saying, I endorsed Congressman Ganske's legislation which would address the MTBE problems now causing major problems in our groundwater resources.

Thank you very much for listening to my testimony.

REP. BARTON: Thank you very much. We appreciate it.

Now the chair has tried to figure out who's senior. We think it's Mr. Bartlett senior and then Congressman Calvert and Congressman Woolsey are coequally senior. If we're wrong about that, we apologize.

REP. ROSCOE BARTLETT (R-MD): We're all the same class.

REP. BARTON: Oh, you're all in the same class?

REP. BARTLETT: We are.

REP. BARTON: My gosh.

REP. BARTLETT: Go by alphabetical.

REP. LYNN WOOLSEY (D-CA): I just look younger than they do.

(Laughter.)

REP. BARTON: I was about to say that. (Laughs.) But given that you're of the same class, we're going to go with Mr. Bartlett, Mr. Calvert, and then Congresswoman Woolsey.

So Mr. Bartlett, you're recognized for five minutes.

REP. BARTLETT: Thank you very much. I'd like to spend just a few moments adding my voice to those who have urged the need for a national energy policy. I would like to call your attention to the World Energy Assessment by the United Nations. Although you may not agree with the conclusions they draw, I think that we can use the data that they compile. They have used a number of sources of estimates of the amount of recoverable oil which we know of. That amounts to about 1,000 billion barrels of oil.

Now you can make assumptions as to what is out there that we haven't found, and you can make assumption that are 95 percent level or 50 percent level and a 5 percent level of assurance. Even the most wildly optimistic levels do less than double that.

Now if you take that 100 billion barrels of oil and you say that we are today using about 80 million barrels a day -- and that's roughly what we use -- in a year's time --

REP. BARTON: We don't use 80 billion a day. The world --

REP. BARTLETT: 80 million.

REP. BARTON: The world using 80 million.

REP. BARTLETT: We the world.

REP. BARTON: It's just a few zeros, but --

REP. BARTLETT: That's correct. We are the world. We use about 80 million barrels a day in the world. And if you, a year is roughly 400 days long, and to keep your arithmetic simple if you multiply 80 million times 400 you get 32 billion. The 32 billion divides roughly 30 times into a thousand billion, so according to these data we have about 30 years at present use rates of known reserves of oil in the world.

I'd now like to put a couple of graphs up here that come from this same document. And these are very illustrative. About half of this is history, and the other half of it is a projection for the future. What you can see here is that we started out in 1800 --

REP. BARTON: Why don't you turn that, Congressman, so that the cameras can so it?

REP. BARTLETT: So the camera can see it? We started out in 1800 essentially using wood. We went to 1900, and in 1900 we were using essentially coal. Now there were some other things used, but that was a major source of our energy. Now in 2000 it's mostly oil, and the question mark is, what will be using a century from now?

As you can see from these graphs they make two different assumptions. One is that nuclear will play a meaningful role. The other one is that we won't use nuclear, and that's a fundamental difference between these two graphs. But as you see in the year 2100 we're going to be getting more than three-fourths of our energy from nuclear, solar, others which includes hydro and so forth, and biomass.

This speaks to an urgent need for research on renewables and alternatives. This is all that remains. It's not an infinite amount. God in His wisdom didn't know -- I'm sure He knew how profligate we would be in the use of fossil fuels, but He didn't put a limitless amount there and our only challenge is to go find it. There is a limited amount of fossil fuels in the world, so we desperately need a program which focuses on research on renewables and alternatives.

Several of those relate to agriculture, and industry in big trouble. Biomass, biodiesel, ethanol from corn, and the exciting possibility of getting it from cellulose with a new bioengineered organism. These all will really help our farmers that are in trouble.

We need to exploit geothermal in those few places where we can in this country. Hydro, wind and solar, all of these provide opportunities to produce electricity at a local level to avoid the enormous line losses that we have when you move electricity. If you move a liquid through a pipe, what comes out at the other end will be what you put in. When you put electricity into a line if you move it long enough nothing will come out the other end of the line. There are enormous losses. We have a distributed system. We can avoid many of those losses.

We need to focus on efficiency. We need to focus on conservation. I'm not talking about shivering in the dark. There are things we can do in conservation which are really meaningful which will not depreciate our lifestyle. We have 2 percent of the known reserves of oil in the world, 2 percent. We use 25 percent of the world's oil. We now import 56 or so percent of all the oil we have, we need.

I submit that when we have only 2 percent of the known reserves of oil in the world and use 25 percent, it doesn't make any sense to immediately go out and find that 2 percent we have and pump it. I know this is a rainy day, but I suspect that in the future there will be an even rainier day. And this says nothing about the enormous petrochemical industry we have, and as Charlie Stenholm mentions, all of nitrogen fertilizer comes from gas today.

I really encourage the development of a long-term energy policy which focuses on getting energy from sources other than fossil fuel to the extent that we can.

Thank you.

REP. BARTON: Thank you, Congressman Bartlett. We appreciate that input and that scientific evaluation. It's very helpful.

Congressman Calvert who I believe is a subcommittee chairman on the Resources Committee this year. We appreciate your input and you're recognized for five minutes.

REP. KEN CALVERT (R-CA): Chairman Barton, Ranking Member Boucher, thank you for holding today's hearing. I'd like to submit my full written statement for the record.

REP. BARTON: Without objection.

REP. CALVERT: America's unprecedented economic growth and prosperity of course rests on affordable energy and gasoline in my state of California is still about $2.00 a gallon and in some parts even higher. So our energy crisis continues to plague our state and certainly is well publicized throughout this country. And this Congress and this administration finally are working together and must develop a comprehensive energy plan that securely meets our growing demand based upon a sound portfolio of energy sources.

The foreseeable future will need to rely on our own domestic fuels that provide the bulk of the baseload electricity, and that is coming basically from fossil and nuclear fuels. Nuclear, which Mr. Roscoe mentioned just now, is quite frankly our most reliable and cleanest form of energy. Since nuclear energy does not burn fuel, it does not produce greenhouse gases. Also efficiency improvements in 1998 alone -- this is interesting -- add the equivalent of 6 to 7 nuclear plants to the nation's electricity grid. To put this in a perspective, the 1 percent increase in nuclear efficiency called for in Senator Murkowski's Energy Bill would be 22 times the total generation of solar and twice the total wind generation in 1999, just a 1 percent increase in efficiency on nuclear.

We need to reconsider the numerous fossil fuel plants also in the short term that have been shut down in California. Such plants are immediate sources of sorely needed electricity and may be our quickest way to provide relief to our citizens in California in the short run. I understand the environmental problems, but we need those plants back on-line as quickly as possible until alternatives are found.

America's unprecedented economic growth and prosperity rests also on an affordable supply of energy and water. As chairman of the Resources Subcommittee on Water and Power, I tend to hold hearings to examine contradictory federal regulations that prevent hydroelectric production on federal lands, not to mention gas and oil.

We'll also investigate federal/state cooperation regarding water quality and quantity. Today the water crisis in California is real, and I predict maybe more severe than the electricity crisis. And that crisis will spread also to the rest of the country.

The challenge we face in formulating a comprehensive elect energy policy is how to balance cost and benefits in order to minimize the environmental effects and yet provide the energy we need to prosper by growing the economy, creating jobs, and creating wealth.

And I know that in California we have some significant problems, and it was talked about by various of the panelists. But I'd like to point out that these problems are really systemic throughout the United States. There are 35 million people in California, and we produce a tremendous amount of electricity, but by far we're the largest economic generator in the country. About 15 percent of the GNP comes from the state of California, and the computer industry, the entertainment industry, agriculture are all number one in the country and California utilizes a tremendous amount of electricity. So I hope we think about that.

And as far as ethanol, I would also point out which is very important and I am somewhat supportive of ethanol production here in the United States, but the requirement to utilize ethanol as a replacement for its MTBE in California as an oxygenate, scientifically is not necessary. And we should, even though we may use it and utilize it, it shouldn't be required within California to use that as an oxygenate when it's technically not necessary in order for it to meet our Clean Air objectives without it because it gives us flexibility potentially to find other alternatives to ethanol.

At the same time, I think there wouldn't be enough ethanol to replace MTBE in California which is equivalent of about adding 10 percent of California's fuel supply.

But with that, I want to thank the chairman and the ranking member, and I look forward to working with all of you on these issues, and certainly renewables are important and all of the alternative energies are important, but also we need to look at nuclear as an alternative to really meet the energy demands of the future.

Thank you, Mr. Chairman.

REP. BARTON: I want to thank you, Congressman Calvert, and your leadership is going to be very important in this issue.

The chair would now recognize the gentlelady, Congressman Woolsey, and the chair wants you to know that I knew what your name was. My staff didn't know, but I knew. So I apologize for it being misspelled. So.

REP. WOOLSEY: You're not the only one that misspells it.

REP. BARTON: Well, it wasn't me. (Laughs.) Your statement's in the record, and you're recognized for five minutes to elaborate.

REP. WOOLSEY: Thank you. Thank you, Mr. Chairman. Thank you for the opportunity to testify today.

As a Californian I'm echoing my colleagues who testified earlier about our state's energy crisis. It's a very serious problem. But I'm here today wearing a new hat for me as the Science Committee's ranking member on the Energy Subcommittee where Roscoe Bartlett is the chair. And I look forward to be working with him on energy in the future.

But I want to emphasize the need for a national energy policy to include renewable energy sources, energy efficiency and conservation. Since passing the National Energy Policy Act in 1992, Congress has generally ignored energy issues. But the power problems in California as well as the increased price of natural gas and oil throughout the United States have brought energy back to our nation's, the top of our nation's agenda.

The energy shortage we're experiencing in California is proof enough however that Congress must raise the stakes in search of alternative energy sources. Obviously what we're doing isn't good enough. We can no longer ignore wind. We can no longer ignore solar, fuel cell and geothermal energy sources. At last week's Science Committee hearing on the role of renewable energy sources and energy efficiency, our witnesses, each one of them an economic and policy analyst, spoke about the increased role renewables and energy efficiency must play in meeting our nation's long-term growing energy demand.

As Congress forges a long-term energy policy, it's absolutely imperative that we make a true commitment to alternative energy sources -- to efficiency and to conservation. Otherwise, we won't prevent future energy crises.

Measures of this kind can and do work. For example, in my district which is just north of the Golden Gate Bridge north of San Francisco, several Marin County communities including Mill Valley, San Rafael, and Nevado are currently installing new energy efficient traffic lights that use 10 to 20 percent less electricity. In Sonoma County the city of Santa Rosa is working on a project to send 11 million gallons of reclaimed wastewater to the geyser's geothermal plant each day. When this project is completed, the geyser steamfields will continuously displace 85 megawatts of fossil energy. That's just by using reclaimed wastewater.

The Sonoma County Transit Department is building a landfill gas conversion facility that allows excess landfill gas to be used as an alternative fuel for their buses. Encouraging measures like these all across our country will make a huge difference in meeting our energy demands in the future.

Like my constituents and like many of my colleagues, I strongly believe there's an important role for the federal government to encourage clean, efficient and renewable technologies as part of our national energy portfolio. As this Congress embarks on developing a national energy policy, this committee, your committee Mr. Chairman, along with the Science Committee and the Ways and Means Committee, can broaden our horizons by getting out of the box, by encouraging policies for the future. I would look forward to working with this subcommittee to develop and move a comprehensive legislative agenda that prominently features renewable energy sources and energy efficiency and conservation measures as an integral part of our national energy policy.

Thank you, Mr. Chairman.

REP. BARTON: Thank you, Congresswoman.

We now want to hear from one of our newer members, Congresswoman Capito from the great state of West Virginia. Your statement's in the record, and you're recognized for five minutes.

REP. SHELLY MOORE CAPITO (D-WV): Thank you, Mr. Chairman.

REP. BARTON: Make sure that microphone is on.

REP. CAPITO: I'm new. Remember.

Thank you, Mr. Chairman, Ranking Member Boucher, and members of the subcommittee. I appreciate your holding this day of hearings, and I'm grateful for the invitation to speak.

Mr. Chairman, the signs of an impending energy crisis are no longer just on the horizon. In 1999 an OPEC-imposed reduction in oil supply forced United States consumers across the country to pay record prices at the pump. In the year 2000 restricted supplies combined with a poor distribution system resulted in staggering price increases for home heating oil in the Northeast. And during the summer of 2000 and continuing into the fall, California's electricity emergency is forcing many utilities into potential bankruptcy.

Regrettably, we do not have a workable energy policy in place to help us address our current energy crises and perhaps more importantly to help us prevent future problems. However, I do believe that help is on the way. As you know, President Bush has asked Vice President Cheney to lead the development of a national energy policy designed to help the federal, state and local governments as well as the private sector promote dependable, affordable and environmentally sound production and distribution of energy for our future.

Mr. Chairman, as you and the members of the subcommittee work with the president's task force, I would strongly encourage you to consider our 275 billion ton reserve of recoverable coal. To put this number into perspective, the reserve is one-quarter of the world's coal. It is equal to more than half of the combined energy of the world's proven reserves of oil and gas. It is 36 times as large as America's domestic reserve of natural gas and 46 times the domestic reserve of oil.

As you know, estimates of energy reserves are counted in British thermal units often known as BTUs. For further context, approximately one BTU of every six BTUs available to do the work of the world is in the U.S. coal reserve. If all of America's coal were converted to electric power at the current efficiencies of generating plants, it would deliver 495 trillion kilowatt hours of the energy which is the lifeblood of our modern economy.

In 1999 the U.S. generated 1.9 trillion kilowatt hours with coal which equates to approximately 51 percent of all power. In terms of domestic energy, coal represents 40 percent of all fossil fuel energy production and 90 to 95 percent of all fossil fuel reserve. My state of West Virginia is one of America's leading coal states, and the estimate of our recoverable coal is 20 billion tons. Further estimates reveal that West Virginia coal alone is the rough equivalent of more than twice the energy in America's recoverable gas reserves and three times the proven oil reserve.

Coal is America's low-cost fossil fuel, and is a secure energy source that can and does provide economic and energy security to all Americans, especially West Virginians. Advanced technologies for generating electrical power through coal are more efficient than the current processes. Higher efficiencies mean that more power can be generated with less coal. The 495 trillion kilowatt hour potential of the reserve will expand as new technologies are put into place.

Advanced pulverized coal generation and the generation technologies in the U.S. Coal Demonstration Program all perform significantly better than required by the most stringent clean air standards.

Therefore, with the advancement of clean coal technology and a working partnership with all parties involved, I am certain we will be able to create a national energy policy that will benefit every American. It is essential that we include coal into any policy that will determine the way we proceed down this path. I'm here today to show my support to the working men and women in the nation's coal industry.

Again, thank you, Mr. Chairman. I look forward to working with you and the subcommittee members on this issue. As we all know, energy will continue to drive our lives and coal is an essential part of that driving force.

Thank you for giving me this opportunity.

REP. BARTON: Thank you, Congresswoman.

It looks as if Congressman Markey has brought help with him. Is this the help that we keep talking about is on the way? You brought some of your constituents from the great state of Massachusetts? Welcome to the subcommittee, and you've got a distinguished alumni in Congressman Markey. He'll be on his best behavior because you're here. We appreciate you being here.

We now want to go to Congressman Aderholt. Your statement's in the record, and you're recognized for five minutes to elaborate on it. Congressman Inslee, if you want to take Congressman Woolsey's place you'll be our clean-up hitter.

REP. ROBERT ADERHOLT (R-AL): Thank you, Chairman Barton and members of the subcommittee for allowing us to testify today on behalf of our constituents and particularly thank you for allowing me to speak on behalf of my constituents in Alabama. Many of the constituents that I represent have been particularly hit hard by high natural gas prices this winter.

This testimony I hope will help to illustrate some of the impact that high natural gas prices have had recently on consumers in Alabama and throughout the nation and outline some possible solutions.

I've been concerned about the dramatic increase in the price of natural gas that has burdened Alabama consumers over the past few months. In my own home town of Haleyville (sp), my most recent winter bill gas bill was over $400 for one month. That was well over twice the amount for the same period last year. A $200 or more monthly increase is particularly a major burden for those across the nation who live on fixed incomes. This increase in prices has hit them especially hard. This price increase causes the amount of income available for other necessities such as food, medicine and other utilities to be greatly reduced. Without these life necessities, these people and their families are at risk of correlated illnesses, hunger, homelessness -- just to name a few of the potential problems.

This situation also affects businesses and their bottom line. When their costs are passed along to consumers, this in turn increases prices for everyone. As an example of these dramatic price increases, one poultry grower in my district informed me that in November and December of 1999 propane cost represented 17 percent of his gross receipts. During the same period in 2000 the same grower used 61 percent of his gross receipts for propane needs.

While it is true that this has been an unusually cold winter, the costs appear to have not been only due to an increased consumer demands. There has in fact been a shortage which has made prices higher. Evidence of this shortage is the propane is evidenced by the fact that from January of '99 to January of 2000 U.S. propane exports to Mexico increased from 50,000 barrels per day to 85,000 barrels per day. It seems very likely that these increased propane exports have driven up propane prices as the same time that increased demand for propane is occurring.

It has been brought to my attention that the U.S. Department of Energy has estimated that residential customers will pay 40 to 50 percent more for their gas service this winter. The situation is made worse by the fact that the cost of delivering propane to consumers in rural areas is higher than in urban areas. In Alabama I've discussed with the state Public Service Commission the importance of natural gas suppliers and propane dealers not cutting off any resident or business who need extra time to pay their bills. I'm especially concerned about seniors who are on fixed incomes that they do not get cut off.

Secondly, I want to applaud the efforts of our colleague from Mississippi, Congressman Chip Pickering, who serves on this subcommittee, for his bill HR-396, which would allow the Secretary of Agriculture to provide assistance to poultry and livestock producers and greenhouse operators who have incurred economic losses due to the increased energy prices in 2000 and 2001. While Representative Pickering's bill is under the jurisdiction of the Ag Committee, I certainly urge all of my House colleagues to join as a cosponsor of this important legislation.

I believe that there are several very important questions to be answered, all of which will fall under the jurisdiction of this subcommittee. With increasing reliance on natural gas by electric utilities for power generation, I urge this subcommittee to examine whether or not recent price spikes for electricity in California may have impacted the market price of natural gas supplies nationwide.

Also I urge the subcommittee to investigate the possibility of price gauging by refiners and also the impact on prices of our exports of propane to Mexico in recent years. As you know, Mr. Chairman, I've written to you and the other members of the committee in more detail regarding these questions, and I respectfully ask you to insist on the Department of Energy and others involved in this process to answer these questions.

Finally, in addition to these short-term solutions, I believe there is also a long-term problem that reveals the need for sound energy policy. And of course it goes without saying that this subcommittee is urged to work with the administration to make sure that we put a comprehensive national energy policy together so we can avoid problems like this in the future.

Thank you for allowing me to come share these thoughts with the subcommittee today, and I look forward to working with you.

REP. BARTON: Thank you, Congressman. I apologize. When you came in the room earlier, I should have asked you to come to the dais at that time. I apologize.

REP. ADERHOLT: That is fine. Thank you.

REP. BARTON: I think we've seen this witness before once today. I don't think we've ever had a witness testify on two separate panels in the same day, so this is a historic event. But Congressman, your statement's in the record in its entirety, and you're recognized for five minutes to elaborate on it.

REP. INSLEE: Thank you, Mr. Chair. My mother will note that I've created history here. It will surprise my father and please my mother.

The reason I came back is I was really talking about short-term issues before, and I'd like to make three points on a long-term energy policy for the country. And I am clean-up hitter, so I think it's incumbent on me to deliver some good news. And I've got two pieces of good news.

But before I get to that, I want to tell you the bad news that I just urged the committee to acquaint itself with one chart when you draft our energy future -- if I can just share this chart. Basically, it just shows the carbon dioxide concentrations in the atmosphere beginning with the dawn of the Industrial Age to the president and then you can see where that line is going in the future.

I really believe in drafting a national energy policy. This chart's got to play a major role in our decision-making. The reason is, is that this chart is unambiguous, certain and indisputable. All scientific folks agree with this chart that CO2 levels in the atmosphere are going up dramatically and probably unless this committee and this Congress and we act internationally it's going to double in the next century.

The result of that is a profound increase in the global tendency to trap energy in the atmosphere because of the presence of what are called global climate change gases, and CO2 is the predominate one. Energy comes in like a greenhouse on ultraviolet rays, but infrared light -- excuse me. I've got it reversed. Does not go out through the CO2. It's a blanket, and it's doubling, and it's getting thicker, and it's indisputable.

And I just think whatever we do in any discussions we have in this committee, I just hope that you'll discuss this phenomenon about what we're going to do about it because it means indisputably we're going to have some changes in our climate. And as you know, the International Panel of Scientists about a month ago came back with very disturbing news that this process is accelerating faster than most people anticipated even two or three years ago.

So I just urge the committee to think about this in our deliberations.

That's the bad news.

The good news is, there's some great things happening on the horizon. Solar power prices have come down 50 percent since 1995. Wind power prices have come down 45 percent in the last decade, and interestingly enough wind power for every doubling of amount of wind in the field the price comes down 15 percent. There's very positive technology coming on line if we can spur it through federal action to help this out.

The third piece of good news, I hope Mr. Chair you can help me pass the Home Energy Generation Act, a little act that will have a national net metering policy that I've introduced with many others which would simply require utilities to accept home generation of electricity to feed back on to the grid. And so that your meter will run backwards essentially while you're contributing energy to the grid. It's one small thing that we can do to boost renewable energy sources at the home level.

And thank you very much for this historic opportunity, Mr. Chair.

REP. BARTON: You gave us back almost two minutes, Congressman.

The chair has no questions. The chair would recognize Mr. Boucher. Questions? Mr. Largent? Mr. Barrett? Mr. Shadegg, and welcome back to the subcommittee. We appreciate your being here.

REP. JOHN SHADEGG (R-AZ): Thank you, Mr. Chairman. I will be brief. I want to begin, I could not be here earlier, but I want to begin by commending you for holding this hearing. As you know, I went to Pasadena, California with you some two weeks ago to look at the California energy crisis, and I think it is indeed an energy crisis, but it's an energy crisis which is largely of our own creation. I listened to my friend Mr. Calvert, and I notice virtually all of the witnesses except Mr. Inslee have decided to depart, so there's almost no one to question -- but we'll make comments about some of the testimony nonetheless.

Mr. Calvert noted that many of the California problems are systemic throughout the country, but I think that's not completely correct. In part, when you look at the California energy crisis that we examined, Mr. Chairman, when we were there, it is clear that some of the contributing factors to that crisis are manmade and were conscientious efforts to ignore, quite frankly, reality. The failure of California to build additional production is quite obvious. As a matter of fact, for example in the last decade the amount of electricity generated in California actually decreased from 208,350 gigawatts in 1990 to 205,246 gigawatts in 1998. That shows that that state over a 10-year period actually lost production capacity. That shouldn't come as any surprise in light of the fact that at least since the imposition of their retail price caps we have an artificial market where we had retail price caps but no wholesale price caps.

I think that kind of policy sends exactly the wrong message, and I commend you Mr. Chairman for the meetings that we conducted in California, in Pasadena, and for what I was able to learn there and for the hearing today.

I would have to say I felt that the testimony there was much more informed than some of the testimony we heard here today. Mr. Ganske I was going to comment upon the fact that is right about the Not In My Back Yard syndrome, and I wanted to bring a couple facts to the attention of the subcommittee with regard to that syndrome, the Not In My Back Yard syndrome impending directly on the California energy crisis. And these are the facts I wanted to bring forward.

A Los Angeles Times poll taken in Southern California in the LA area and released on February 18 showed that -- this is February 18 less than a month ago -- a full 57 percent of Californians do not believe that there is a shortage of electricity. They are pretty clearly, Mr. Chairman, living in La La Land.

Now perhaps we can't blame them because we have imposed artificial price caps holding down the retail price at a seriously low level; indeed, electricity prices in most of the Western United States have gone up by 20 percent over the last few years. In California they've gone up by zero percent. So perhaps we shouldn't be surprised that 57 percent of the Californians in this poll don't believe there's a shortage of electricity. But I think we have a crisis of knowledge when we have that kind of ignorance.

But I'd like to illustrate that that then has policy implications --

REP. BARTON: Is there a question in here somewhere?

REP. SHADEGG: There is no question, Mr. Chairman. I need to just get a few things into the record. I commend Mr. Inslee for coming forward, although I might -- I mean, I'd be happy to ask Mr. Inslee from his earlier testimony. He advocated price caps, and we might talk about that in just a moment.

But the consequence of the ignorance of this electricity shortage can be shown in one more symptom, and that is the LA Times in an editorial day before yesterday on Sunday said "A sense of public urgency is lacking." That might be a monumental understatement, Mr. Chairman. They go on to say, "One indicator is a municipal vote on Tuesday -- that is today -- on whether a new power plant should be built in Southgate. Polls currently show that that vote is currently at about a 50/50 level. It may or may not pass."

Now this is in a state which is literally thousands of megawatts short of electricity at peak times of being able to meet their demand. 57 percent don't believe there is a crisis, and only roughly half may vote to build this new power plant in Southgate.

There are a number of issues I think we need to address. I wanted to commend Mr. Calvert for his commentary upon ethanol.

While I think ethanol is a technology we need to pursue, we should have learned from our policy last time around. Last time we mandated oxygenates and essentially mandated MTBE. We now know that it is causing a serious problem to our water table. I hope this committee and this Congress does not make the same mistake by mandating ethanol as Mr. Calvert pointed out in his testimony, you can in fact creatively produce very clean gasoline and improve air quality without mandating a particular solution. And I would urge this committee not to do that.

I'll conclude by asking indeed one question of Mr. Inslee --

REP. BARTON: In your last 4 seconds.

REP. SHADEGG: To please you, Mr. Chairman. My concern is, and two questions. One, when --

REP. BARTON: One question.

REP. SHADEGG: One question. Two questions in one. When has any temporary rate cap imposed by the federal government in fact ever been allowed to expire? And what is it about a rate cap that you think would cause either the encouragement of additional production in the Western United States to meet the demand that we have, or the encouragement of reduced consumption and greater conservation by the people in the state of California?

REP. INSLEE: Well, the first question, there have been many times where various public entities in this country have imposed some control over prices -- many, many times. I mean, going back to President Nixon's time. Some were successful, some were not, but there have been many times where price caps have been imposed and then removed. And I think this should be one of these, and I want to reiterate I think it can and should be short-term, and we can fashion a way to do that.

Second part, as far as creation and new generation, again I would suggest we exempt new generating capacity, thereby sending price signals to new generators to make investments to indeed have higher prices for new generating capacity produced electricity. But I'll tell you, it's going to be a disincentive for creation in that new electricity if the economy goes to heck in a handbasket, and I'm really afraid that's what's going to happen if we do not act.

Thank you, Mr. Chair.

REP. BARTON: Thank you. Thank you, Congressman. Good to have you back on the subcommittee.

For the last word, Congressman Markey for five minutes.

REP. MARKEY: Thank you, Mr. Chairman, very much. Mr. Inslee, it's reported that there is going to be a 4 percent cut in the Department of Energy's budget. And since it's clear the areas they're going to protect, it's projected there will be a 30 to 35 percent cut in energy efficiency grants and 40 to 45 percent cut in renewables on research and development and a 20 percent cut in fossil fuels R&D. Do you think that would be a good idea?

REP. INSLEE: I'm a specialist in rhetorical questions, so I can handle this one. But --

REP. MARKEY: I thought at least -- I'm always glad when someone can recognize a rhetorical question.

REP. INSLEE: You know, I'm really disturbed and disappointed, and I'll tell you why, Congressman. Last week I actually heard some what I thought very encouraging signs from the administration, some of the comments from our new EPA administrator former Governor Whitman I thought were very encouraging where she recognized the necessity of dealing with global climate change issues, where she recognized the necessity I believe of working on new technologies. And that was very, very encouraging to me as a voice from the administration. But this proposed actually slashing of budgets for renewable energy to me is incredibly, manifests ignoring clear science.

Where we've got a chart like this we're looking at which is going to demand that we reduce our amount of carbon dioxide loading of the atmosphere, we're not going to have a choice. Whether you're a Democrat or a Republican, 10 years from now you're not going to have a choice but to reduce our carbon dioxide loading of the environment. So it's very disturbing.

And as you know just to maybe answer your next question --

REP. MARKEY: No, no. Let me ask the next question. The next question is, there's a certain Carnak quality to your answering my next question and I realize that, but just so we do square up before you answer it, it would be on the remarkable fact that there was actually a 60 percent increase in natural gas production on federal lands from 1992 when Bill Clinton took over to today. And that in fact, there was a 62 percent increase in offshore drilling from 1992 to 1999, and natural gas production in deep waters increased 80 percent over just the last two years.

Is it surprising to you to learn that notwithstanding all the criticism of the environmental movement of the Clinton Administration that there's been such a dramatic increase in the production of energy in public lands in just the last eight years?

REP. INSLEE: I must actually admit to my ignorance that I had not heard those numbers. I've learned something today, and it proves that it pays to come to this committee.

REP. MARKEY: Well, I thank you. Let me see if I can continue to broaden your education.

REP. BARTON: Your constituents may be so young they don't know who Carnak was. How many of you know who Carnak was? That's what I thought.

REP. MARKEY: Where is Jay Leno from? Andover. See, they know. He's from Andover High School, okay? So they know what happened when they got rid of the guy from Nebraska they got a good guy from Andover.

Now another very interesting fact that people aren't aware of is Jeb Bush's opposition to drilling 100 miles out at sea off of the Florida Coast even though there's a consensus that we should drill and that there's loads of energy off there. What do you think about Jeb Bush opposing drilling in areas where there's a consensus reached by Democrats and Republicans that we should go out there?

REP. INSLEE: I think it's most enlightened, and very encouraging. We hope that there's a familial line of communication which will extend that fire to the northwest part of our states up to the Arctic Refuge, and we hope that policy will be forthcoming. And I have to tell you --

REP. MARKEY: Do you consider it an environmentalist? Is he an extremist for taking that position because environmentalists actually support drilling in this water. In other words, this is not being opposed by environmentalists but actually supported. Do you consider him to be an environmental extremist for taking that position?

REP. INSLEE: Hardly. And I think it's consistent with what Americans think. I've got to tell you, since last week's discussion of the Arctic Refuge, I have had more and more people come up to me in the street -- you know, truck drivers, teachers just come up to me unprovoked and say, don't let them get into the Arctic Refuge. It's been actually interesting to me. I've heard more about that from my constituents than perhaps any issue in the last two months, and I think I hope America's sentiment is listened to in this regard. It's not going to be the solution. As you know, cafe standards are going to solve a lot more problems.

REP. MARKEY: I think when you use the cafe it's something that's on Highland Avenue. We'll have to explain what cafe is as well. But the final question would be on Prudhoe Bay, the fact that there is 32 to 38 trillion cubic feet of natural gas ready for development with by the way the support of the most liberal Democratic environmental members of the United States Congress, and yet there has been no progress as of yet by the oil and gas industry in drilling and bringing it down before we go to the Arctic Refuge which is a sacred untrammeled wild wilderness preserve.

What do you think about that? What recommendations could you make to the oil and gas industry about first going to the Prudhoe Bay area?

REP. INSLEE: Well, I'm going to give you a very honest answer and not a cheeky one. I really do believe that this country is not going to open up the Arctic Refuge. I believe that is very much the public sentiment. I believe the public will come to agree with us that it is not a solution to this problem long or short-term, and honestly if someone, a friend of mine in industry asked me, I would say that is not a place we're going to go. And that would be my honest, candid, frank and rightful answer.

REP. BARTON: Okay. We appreciate your honesty, candor and frankness. This subcommittee hearing on this particular issue for the members' testimony is over. We'll have future hearings in the very near future.

END

LOAD-DATE: May 8, 2001