THIS SEARCH     THIS DOCUMENT     THIS CR ISSUE     GO TO
Next Hit        Forward           Next Document     New CR Search
Prev Hit        Back              Prev Document     HomePage
Hit List        Best Sections     Daily Digest      Help
                Contents Display

NATIONAL LABORATORIES PARTNERSHIP IMPROVEMENT ACT OF 2001--Continued -- (Senate - March 19, 2002)

(5) Consumer Protection.

The FPSC is concerned with language in Section 256 that requires that State actions not be inconsistent with the provisions found in the bill. While the FPSC favors strong consumer protection measures, preempting States by Federally legislating retail consumer protections is not necessary. States are better positioned to combat retail abuses. States are partners with federal agencies in these efforts to ensure consumer protection.

The critical role of State Commissions in the analogous area of implementing the Federal Telecommunications Act provision against slamming (the unauthorized switch of a customer's primary telecommunications carrier) serves as a good example. The Federal Communications Commission saw the benefit of having State Commissions carry out the anti-slamming program. State Commissions are simply better situated and have a more in-depth understanding of the abuses in the consumer protection arena. As a result, Florida's slamming rules are actually more strict and provide better remedies to the consumers than the FCC rules. We would like to retain the ability to take similar steps in the energy area if warranted.

It is our understanding that there are now 100-200 amendments. We are in the process of reviewing all of them. In the meantime, please call us with questions on them. We appreciate that your staff has been in frequent contact with FPSC staff.

In conclusion, we request that you take these points into consideration as energy legislation progresses. Please do not hesitate to call if we may be of further assistance.

Sincerely,

LILA A. JABER,
Chairman.

--

STATE OF FLORIDA,

PUBLIC SERVICE COMMISSION,

Tallahassee, FL, March 18, 2002
Re Energy Legislation (Substitute Amendment 2917 to S. 517).

Hon. BOB GRAHAM,
U.S. Senator, Hart Senate Office Building, Washington, DC

DEAR SENATOR GRAHAM: The purpose of this letter is to let you know that the Florida Public Service Commission has major concerns with the 400-page Substitute Amendment currently being addressed by the Senate. It is extremely preemptive of State Commission authority. If legislation moves forward, we ask that it provide a continuing role for States in ensuring reliability of all aspects of electrical service--including generation, transmission, and power delivery services and should not authorize the FERC to preempt States authority to ensure safe and reliable service to retail customers. Also, we support the Kyl amendment on the renewal portfolio standard.

In particular, our concerns are:

(1) Electric Reliability Standards.

The substitute amendment would limit the States' authority and discretion to set more rigorous reliability standards than the Federal Energy Regulatory Commission (FERC) over transmission and distribution. In fact, the Substitute Amendment appears to provide no role for States at all on transmission reliability. Yet, the Florida Legislature has carefully set out statutory authority for the FPSC over transmission.

If legislation moves forward, Congress should expressly include in the bill a provision to protect the existing State authority to ensure reliable transmission service. We note that the Thomas amendment passed. The amendment appears to strengthen state authority. In that regard, the amendment is better than the overall bill under consideration. Our interpretation is that the amendment will not restrict state commission authority to adopt more stringent standards if necessary.

(2) Market Transparency Rules.

This section is silent on State authority to protect against market abuses, although it does require FERC to issue rules to provide information to the States. State regulators must be able to review the data necessary to ensure that abuses are not occurring in the market.

(3) Public Utilities Regulatory Policy Act (PURPA ).

The FPSC supports lifting PURPA's mandatory purchase requirement, but States should be allowed to determine appropriate measures to protect the public interest by addressing mitigation and cost recovery issues. Thus, we do not support preempting State jurisdiction by granting FERC authority to order the recovery of costs in retail rates or to otherwise limit State authority to require mitigation of PURPA contract costs. States that have already approved these contracts are better able to address this matter than the FERC.

(4) Federal Renewable Portfolio Standards.

This requires that beginning with 2003, each retail electric supplier shall submit to the Secretary of Energy renewable energy credits in an amount equal to the required annual percentage to be determined by the Secretary. For the year 2005, it will be less than 2.5 percent of the total electric energy sold by the retail electric supplier to the electric consumer in the calendar year. For each calendar year from 2006 through 2020, it shall increase by approximately .5 percent.

The Secretary will also determine the type of renewable energy resource used to produce the electricity. A credit trading system will be established. While a provision is established to allow states to adopt additional renewable programs, we continue to have concerns. Thus, we strongly support the Kyl amendment which provides some flexibility to the States.

The FPSC believes that States are in the best position to determine the amount, the time lines, and the types of renewable energy that would most benefit their retail ratepayers. This is particularly true in the case of States without cost-effective renewable resources. A one-size-fits-all standard will likely raise rates for most consumers.

(5) Consumer Protection.

In conclusion, we request that you take these points into consideration as energy legislation progresses. Please do not hesitate to call if we may be of further assistance.

Sincerely,

Lila A. Jaber,
Chairman.

Mr. KYL. Mr. President, what those two letters say is that the Kyl amendment should be adopted and the Bingaman amendment should lose. They are echoing the sentiments of a lot of other groups both in the private and public sectors. I have put in the RECORD some other letters from the public sector and associations that strongly support the Kyl amendment.

I wish to respond to some of the comments from colleagues that have been made in response to my presentation. My colleague from North Dakota made the point that we should have a national energy policy just like the Clean Air Act and that is why we need a national energy bill.

There is a difference between a national policy and a Federal policy. We do have national problems, but not all national problems are best solved by a Federal solution.

In this case, we have a combination because we have clearly decided that the Federal Government does need to be directly involved in the national energy policy debate, but we do not say --none of us says--the Federal Government should take it all over; it is a

[Page: S2061]  GPO's PDF

Federal problem; therefore, we have a Federal solution.

Most of what we do as a nation we do as private sector operatives, as State and local governments, and then, of course, the U.S. Government does a fair amount of directing and financing of programs, but clearly we cannot run everything from Washington, DC.

The Bingaman amendment does deviate from this otherwise pretty commonsense approach to American life by saying: This is not just a national problem; we do not need just a national solution, we need a Federal solution to the point that we are going to mandate, compel, require, under penalty of law, that you will produce 10 percent of your power through renewable sources or else.

I actually misstated that a little bit. It is not produce, it is sell. We are requiring that the retailer account for 100 percent of the power sold so that you can prove to the Department of Energy that 10 percent of that power sold came from renewable sources. You do not have to produce it yourself. You either have to buy it from somebody who produced it or you have to buy credits from somebody who produced it or you have to buy credits from the Department of Energy that does not produce anything. But if you are willing to assess your retail customers for that, then you can get away without producing it yourself.

Either way, the energy is going to cost you something; it is going to cost them something. In one case, you actually have to buy it from somebody, and, in the other case, you have to buy it from somebody or the Department of Energy. There is a big difference between having a national policy and having a Federal mandate.

There are a lot of items in this bill that are OK, and they have national scope to them. There are a lot of items in the President's plan that are national in their scope, but they do not all provide for Federal mandates, and that is a distinction we need to make.

As a matter of fact, the Senator from Washington just talked about the need for Federal encouragement. In fact, her exact statement was: We need a policy to encourage the use of renewable energy as part of a 21st century national plan. I agree we need to encourage, but there is a big difference between encourage and require.

The encourage part we already have in the law. As a matter of fact, under this bill we are actually extending and expanding the tax credit that we currently provide for renewable energy sources to encourage greater production of that renewable energy. In fact, it would not make any economic sense to produce this without the Federal Government subsidy of 1.7 cents per kilowatt hour, for example, for wind generation. One could not compete in wind generation without this Federal tax credit which provides roughly 40 percent of the cost of the production of the power.

We do encourage, in a big way. We are already doing the encouraging part. The question is whether we should have both a carrot and a stick. I am all for the carrot approach, but I do not think the Federal Government should be taking a stick to people who buy electricity and say you have to buy 10 percent renewable power or we are going to make you pay for it. That is exactly what the Bingaman amendment does.

What the Kyl-Miller amendment says is, let the States decide. If we are going to have a national policy for this national problem, then let's let all the States within the country decide what is best for them.

I am intrigued by the chart that is on the easel behind the distinguished chairman of the Energy Committee. The Senator from North Dakota used that chart to illustrate that we have potential renewable resources throughout the country.

He demonstrated that by pointing to four different kinds of renewable energy power source. Biomass and solar, I guess that is the one that is very bright red down in my part of the country. Then geothermal in the lower left, and wind power in the lower right, and certainly in the State of North Dakota there is a bright red color, the Saudi Arabia of wind power in North Dakota, and in South Dakota, it seems.

What one can see from those four charts is the renewable opportunities are very divergent around the country. They are distributed not fairly in one sense but in a very disparate way.

The distinguished Presiding Officer does not have much of a shot, it seems, for wind power or geothermal power or solar power, but there might be some good biomass opportunities. I certainly hope so, because it is going to have to be produced or credits are going to have to be bought from somebody else who can produce it.

The real story behind these four charts is not the disparity and the fact there are winners and losers and there will have to be trading among the States, but according to the EIA report dated February 2002--that is the Energy Information Agency of the Department of Energy--on page 16, and I am quoting, only wind capacity is projected to make significant change between the renewable portfolio standard and the baseline, or the status quo.

In other words, of all of these renewables--solar, geothermal, biomass, and wind--that have been examined by the Department of Energy, the only one projected to make a significant change is wind power. There are a couple of reasons for that. The amount of the subsidy that has been used to develop the wind power industry and the general efficiencies with respect to wind power make it the only one economically viable, even close to being economically viable, as a producer of mass amounts of energy of the four basic renewables.

As much as we would like to produce it from solar power in the Southwest, the economics are not there, even with the substantial Federal subsidies. The same is true with respect to geothermal and biomass. I would like to burn more biomass in the State of Arizona. It is not an efficient way to produce power. The Btu content is not there.

So of these four basic energy sources, only wind power, the Department of Energy says, can really make a significant difference. That is a fact.

What is the importance of that fact? Well, first of all, the Senator from South Dakota and the Senator from North Dakota are sitting pretty good when it comes to production of electricity from wind power, it would seem, and maybe a couple of other States which I cannot quite see on that chart. Maybe northern Idaho, it looks like, and it looks like a little piece of Oklahoma. I hear the wind blows pretty well there, and I think there is a red dot where Oklahoma is, but that is about it. The rest of us do not appear to have a great deal of capacity to generate by wind power.

What does that mean? That means a transfer of wealth from all of the other parts of the country into those regions.

I am not suggesting the proponents of the legislation all are from those particular States. That is not true. But it is true that those who would utilize that resource in those areas would stand to gain the most. That is why I ask my colleagues to consider the discrimination that exists in this legislation. If we left it to the States to decide what percentage to set and how to define the renewable so as to take advantage of what

is available in their locales, and how to set the timeframe so they could achieve some reasonable level, that would be one thing. That is what we have done. Fourteen of the States, including my State of Arizona, do have a renewable requirement. If we mandate at the Federal level, we are saying in Washington we know best for the entire country and this is a one-size-fits-all proposition now, we are going to define what counts as renewable and, by the way, hydropower does not. That is the first big difference.

We know full well going into this that only one of these sources, wind power, has a chance to really make a significant difference anytime in the foreseeable future. So the reality is we are not talking about renewables, we are talking about wind.

As I said before, I would kind of like to know who the winners and losers are if we are going to pass this bill. I do not want to buy a pig in a poke.

There was a lot of talk about Enron investing in certain kinds of energy and then trying to get the Federal Government to make everybody else trade in that particular energy or to make it easier to trade in that energy, and there were a lot of us in the Senate and elsewhere who criticized a Federal policy that would have favored a particular entity or group of entities within our economy. That should not be

[Page: S2062]  GPO's PDF

what the use of Federal power is all about.

If we are going to talk about deregulation as the goal in this legislation, why would we be imposing a brandnew kind of regulation over the market that mandates that fully 10 percent of the energy has to come from a particular source--in this case, the reality, wind? That is what the Department of Energy says is the only renewable that can make a significant difference as part of a renewable portfolio. It only exists in a few parts of the country in abundance, apparently. So who are the winners and losers? What are the people in other parts of the country going to have to pay to the producers in this limited area of the United States for the privilege of continuing to generate power from oil or gas or coal or nuclear or hydro?

What are we going to have to pay to those areas that have the benefit of a lot of wind in their State? Nobody knows for sure. The Department of Energy calculates the gross cost at about $88 billion for the first 15 years; $12 billion each year thereafter. Of what is that cost comprised? It is the equivalent of credits or penalties. In other words, one is either going to have to produce it or they are going to have to buy a credit--and they estimate what that credit will cost--or they will pay a penalty because they did not do one of those two things. They calculate the cost of that at $88 billion, plus $12 billion a year thereafter after the first 15 years, after the year 2020. That is a huge cost passed on to the retail consumer.

There is also some evidence that if that much of the market replaces other energy sources, and there is a big footnote here, the question is: Will it replace or will it be providing additional energy because the energy needs of the country will grow over time? Let us assume we remain static, stagnant, and therefore the universe is exactly what we can envision today; we actually replace some natural gas or coal. The idea is the cost of that fuel will then go down because there is not as much demand for it, and so the people who get generation from those sources will be paying less because there will be lower fuel. As a theoretical proposition, that cannot be argued.

<<< >>>

THIS SEARCH     THIS DOCUMENT     THIS CR ISSUE     GO TO
Next Hit        Forward           Next Document     New CR Search
Prev Hit        Back              Prev Document     HomePage
Hit List        Best Sections     Daily Digest      Help
                Contents Display