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I compliment the Senator from Wyoming for his leadership in this regard, in pulling together provisions that he could support and that others could support. So I believe very strongly that those provisions ought to remain in the bill. Senator Craig's amendment would delete those provisions, so it is an amendment I strongly oppose.
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I yield the floor, and I know my colleague from Wyoming is here to speak on this issue.
The PRESIDING OFFICER. The Senator from Wyoming is recognized.
Mr. THOMAS. Mr. President, I appreciate the comments of the chairman of our committee. I rise also to talk about this part of our energy bill, which I think is very important. In many ways, the energy portion of it touches more people than any other part. Of course, everybody relies on electricity. That is what we are talking about here.
I appreciate the comments of my friend from Idaho, who expressed his concern. Many of the concerns he expressed, however, are the same concerns we worked together to try to remedy, and indeed we have made some changes that reflect the things about which the Senator from Idaho talked. I agree that the process is not quite the way I would have had it. I wish we would have had more time in committee. Nevertheless, we took a bill, and I think we have made it better and we have had it on the floor, and by no means is it perfect, nor does it complete all the work that needs to be done in the electrical area. But there is no way you are going to complete that now.
We need to get started and to be moving. Further improvements can be made. I oppose the motion to strike, and even though the reliability--which is important--would remain, I think it is very important that we continue to move forward with making some changes in our electric policy.
It seems to me some of the things that have been talked about here are the very things we have sought to change. For example, in one of the sections there was originally major expansion of FERC's authority over State matters, no time limit on FERC review and action. In our bill, in the solutions we made, we reduced the expansion of FERC authority, raised the threshold of FERC authority from the review of asset sales from $1 million to $10 million, and moved more of the decisionmaking closer to the people.
As to market-based rates, the concern in the original bill is it gave FERC broad authority to take any action to remedy ``unjust'' rates.
We changed that. We said FERC can only fix those rates if it is found to be unjust, and there are six specific criteria and three general criteria. Again, it puts a bridle on FERC.
There were many points the Senator from Idaho talked about that we indeed have moved toward doing, and that is moving more power and beginning to get ready for regional transmission organizations, RTOs, beginning to make the initial move toward having the necessary transmission.
One of the things that has happened, and there have been great changes, is we basically deregulated generation. In the past, if a utility served an area around western Virginia, for example, that utility did the power generation and distribution. The State took care of that. We have changed it so there are many market generators who do not distribute but make it available to distributors, and it has helped reduce the price to consumers. That is a different situation, and we have to deal with it.
Since 1978, Congress has been pursuing Federal electric policies that promote greater competition in wholesale power markets, provide open access to transmission grids, and encourage development of independent power producers that now build most of our powerplants.
These policies were developed in a bipartisan manner and embraced by both Republican and Democratic Presidents. These policies have benefited consumers. Wholesale power prices have fallen 25 percent over the last 10 years. Nothing that happened over the past year changes that. We had problems, of course. We have gotten by those problems. Nothing has changed
that.
The electric industry faces tremendous uncertainty. Investment in new transmission is lagging, and powerplant cancellations in recent months raise serious concerns about the adequacy of future electricity supplies.
This uncertainty is due largely to a prolonged transition to competitive electricity markets. This transition will not be complete until the Congress modernizes electricity laws to reflect changes in electricity markets since 1935. This is not a total remedy, of course, but this is a movement toward doing what has to be done.
The time has come to modernize our electricity laws to recognize change in the electricity markets, in much the same way Congress passed legislation to modernize financial services 2 years ago. Congress has been grappling with this legislation for 6 years. We have held more than 100 hearings, as the Senator from New Mexico has pointed out. Six years is long enough. It is time for the Congress to act.
The electricity provisions of S. 517 represent consensus. They are the product of many hours of negotiations between Senators and stakeholders. The Craig amendment would destroy this consensus and delay congressional action on this electricity legislation for years. It will take years to put it back together.
I suggest the Craig amendment is a step backwards. The amendment eliminates consensus transmission open access provisions that represent a bipartisan compromise that will prevent discrimination, promote effective competition, protect small transmission owners such as municipal utilities and cooperatives, and respect States rights.
The amendment preserves PUHCA, a law that is outdated and should be repealed. Every President since 1984 has supported PUHCA repeal. PUHCA repeal will provide FERC with ample authority to protect consumers against inappropriate mergers. State laws would also protect consumers of electricity.
The amendment preserves PURPA , a law that has imposed billions of dollars of above-market costs to consumers. Repealing PURPA has been the consensus for years. We must not continue to mandate that utilities agree to high-cost power contracts. Keeping PURPA is contrary to protecting the consumers.
The amendment limits FERC authority to review mergers.
The amendment will make it harder to increase electricity supply by limiting authority to order interconnections.
The amendment eliminates reforms that will accelerate refunds to consumers.
I think it is true the electricity industry is facing more regulatory uncertainty now than ever before. Investment in new transmission is almost nonexistent, and investment in new electric power supplies has fallen sharply. For the first time last year, powerplant cancellations outpaced new starts. No one wants to invest in new transmission of powerplants until they know what the rules are going to be.
The electricity industry is at an important crossroads. A lot of critical decisions must be made.
Some of these decisions can be made by FERC; many can only be made by Congress.
If the Craig amendment is adopted and Congress does not act on the electricity legislation, the transition to competitive markets will be prolonged, investment in new transmission and electricity supplies will fall sharply, electricity prices will be higher, and reliability will be lower. The electricity
crisis in California and the West will probably recur.
The President has called for Senate passage of electricity modernization to protect consumers and ensure reliability. The President's plan to produce more reliable, affordable, and environmentally clean energy is built on three core principles:
The plan is comprehensive and forward looking.
It utilizes 21st century technology to allow us to promote conservation and diversify our energy supplies.
The plan will increase the quality of life of Americans by providing reliable energy and protecting the environment.
We have before us an opportunity to start to move in that direction. Is it the total effort? Of course not, we will have to continue to work on it. We need to do that.
We have made some forward movements. Of course, one of the major parts has been reliability. The other parts contribute a great deal to making it possible and urging people to invest in the infrastructure that has to be there, whether it be transmission or generation. I look forward to a time when we have RTOs, regional transmission organizations, that can come
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I suggest we move forward with the bill as it is and not accept the Craig amendment. Now is not the time to retreat from the advances we have made in serving the American people with electric energy.
Mr. President, I yield the floor.
The PRESIDING OFFICER (Mr. NELSON of Florida). The Senator from New Mexico.
Mr. BINGAMAN. Mr. President, I thank my colleague from Wyoming for his comments. Let me raise for the Senate's attention one other voice that has spoken out strongly in behalf of what we are trying to do in our electricity title to the bill and in opposition to the Craig amendment. It is something I seldom quote because I seldom agree with it, but this is the Wall Street Journal editorial page of March 7, 2002. It has an editorial entitled, ``Keep the Lights On.'' It starts out by saying:
It is a $225 billion industry, and it's a horrid mess. We refer to the electric power industry, but the U.S. Supreme Court just took a helpful step toward fixing the messiest part of it--transmission--and keeping your lights on.
They go on to talk about how they believe FERC needs this authority to do what it is trying to do. The Supreme Court has indicated they believe they have that authority. Our legislation, as worked out between myself and Senator Thomas, does incorporate those provisions.
The last paragraph of that editorial says:
The Bush Administration agrees with FERC, and now the Supreme Court says the agency is acting legally. Congress could also lend a hand here and, as part of its energy bill, give FERC clear jurisdiction over the transmission grid. We believe in federalism as much as anyone, but a national economy needs a better national grid.
Mr. President, I ask unanimous consent this editorial be printed in the RECORD.
There being no objection, the editorial was ordered to be printed in the RECORD, as follows:
Keep the Lights On
It is a $225 billion industry, and it's a horrid mess. We refer to the electric power industry, but the U.S. Supreme Court just took a helpful step toward fixing the messiest part of it--transmission--and keeping your lights on.
The High Court ruled unanimously this week that the Federal Energy Regulatory Commission, aka FERC, has the power to force investor-owned utilities to open up their power lines to competitors. Now maybe FERC can go ahead with building a more sensible national power grid.
The problem starts with a system of wires carrying juice that is outdated, inadequate and under increasing stress. The national delivery grid consists of three major systems--one each in the East, the West and Texas (which is another story entirely). But these grids aren't an integrated network. They connect only through tie lines where power must be converted from alternating current to direct current and back again. Until recently the grid handled 20,000 transactions a year; now it's more like 20,000 transfers in a single day during peak periods.
The result is chronic hot spots of congestion that can result in price spikes or even rolling blackouts. FERC estimates the cost of these hot spots the past two summers at $1 billion, and things will only get worse: Transmission use this decade is expected to grow 20% to 25%, but new capability will increase by only 4%.
Why not build more transmission lines? Well, people don't want hideous lines running through their back yards, and the 50 states, which have jurisdiction over siting, aren't eager to force lines on communities if the power those lines carry is going elsewhere. Second, new lines are expensive and firms don't want to make huge investments because of the political uncertainty of electricity deregulation. Third, utilities say the rate of return allowed on transmission lines is too low.
The current mess has also generated all sorts of anti-competitive behavior. Since local utilities have control over their transmission lines, they can favor their own generation over cheaper power coming from the outside. Plus, the very possibility of cheaper power makes it less likely that utilities will build more lines if those newer lines can be used by outsiders.
The good news is that FERC has proposed a sensible step toward straightening out this bird's nest. FERC's idea is to collect all this transmission into four big, regional areas--in the Northeast, Southeast, Midwest and West--make these regional grids independent of local utilities and give them the authority to manage electricity flow across these larger areas. Some conservatives are afraid this will result in a fiendish ``federalization'' of transmission. Nonsense. FERC's plan will make it possible to rationalize service and permit greater competition.
The Bush Administration agrees with FERC, and now the Supreme Court says the agency is acting legally. Congress could also lend a hand here and, as part of its energy bill, give FERC clear jurisdiction over the transmission grid. We believe in federalism as much as anyone, but a national economy needs a better national grid.
Mr. BINGAMAN. I yield the floor.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. MURKOWSKI. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from Alaska.
Mr. MURKOWSKI. Mr. President, I will give my colleagues a little history and background because I do not think there has been an awful lot of identification as to the credit and penalty costs associated with the renewable portfolio standard.
I commend the majority leader for his work, our staff, and the Senator from Wyoming as well. What I think we have done is, first of all, we have made some progress. We have debated an amendment that would have mandated a 20 percent renewable. I believe that was by Senator Jeffords. We have, I think, by amendment, strengthened the energy bill, and I think it is time, in view of the amendment offered by Senator Craig, to again highlight some of the specifics so each Member's office and each Member understands the significance of what this renewable portfolio means to them or their own individual constituents.
Oftentimes we get enamored with the reality that the renewable is free; it is a renewable. Therefore, it really does not cost us anything, and as a consequence we ought to get aboard and support it.
Senator Craig's amendment proposes striking the electricity title of the Daschle-Bingaman amendment, as modified by the bipartisan amendment, and replacing it with the Senate-adopted reliability provision and the consumer protections of the underlying Daschle amendment. I think a couple of comments are in order relative to the title that Senator Craig proposes to delete.
When the original Daschle amendment was introduced, I was concerned, as I indicated, about its electricity provisions. They were seriously flawed. We gave some examples of those concerns. As originally written, the Daschle amendment would have empowered the Federal regulators to micromanage the marketplace. I think most Members were fearful that was not in the best order of the marketplace nor appropriate for the Federal regulators to dwell in that area.
As originally written, the Daschle amendment would have allowed the FERC, the Federal Energy Regulatory Commission, to order electric utilities to divest assets. Further, as originally written, the Daschle amendment would have preempted the States, giving FERC the authority to regulate the many aspects of retail matters instead of State public utility commissions. So again, it would have given FERC broad authority on many aspects of retail matters, instead of the State public utility commissions. For those of us who believe local control and regulation is more responsive than one size fits all, that was troublesome.
Further, as originally written, the Daschle amendment did not deregulate and allow the market to work. Instead, it had government pick winners and government pick losers and decide what is in the consumers' best interest.
In short, as originally written, the Daschle amendment was a return to the old-fashioned Federal command and control of the market. But we have come some way since the introduction of the Daschle amendment, and what we have now is the reality that the Senate has agreed to a series of amendments authored by my good friend Senator Thomas, most of which was done by unanimous consent. I appreciate working with the majority on that.
Senator Thomas's amendments address many of the key problems with the Daschle bill, including reliability. So I think we have made progress. Had those not been adopted, I very possibly would have found it necessary to offer a motion
to strike the electric title. With these amendments, we now have a
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One might ask, with the adoption of these amendments: Are the electricity provisions perfect? Well, the answer is no. They are better, but there is a lot of work that needs to be done. Where is it going to be done? In conference or other places, or perhaps on the Senate floor. I think that is one of the reasons we should take a look at this matter one more time.
For example, the reliability still contains, in my opinion, an unrealistic renewable portfolio mandate that is going to cost consumers more than $12 billion per year and which undercuts the ability of States to craft a renewable portfolio program that protects their consumers and recognizes local needs and concerns.
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