Republican News

Republican News

The meeting will come to order.

 

Before we get started, I want to note that in the past two days, we have adopted a number of  provisions to this comprehensive energy bill that will further our efforts to produce efficient, clean sources of energy for the future.

 

Today, we extend those efforts by streamlining electricity regulation and increasing energy efficiency. 

 

Many around here often like to say that we can’t produce our way out of an energy crisis.   Well, while there may be some truth in that, my response is that it certainly won’t do us any good to develop policies to conserve if we have no energy production to conserve in the first place. 

 

So the answer to this apparent paradox is that we have to do lots of both ---- more production, more conservation.

 

This morning we are addressing two subjects that will help us do some of both.  

 

The Energy Efficiency title has some bold provisions to conserve our resources, including the provision brought to us by Senator Landrieu that requires oil savings of a million barrels each day. 

 

 

The Efficiency title also has numerous provisions that might be characterized by some as “around the edges”, but let me tell you that, taken together, these will significantly enhance conversation of our energy resources.

 

The Electricity title addresses issues that we’ve been grappling with ever since the last energy bill in 1992.

Last Congress, we had a consensus Electricity title that many of you have suggested we should duplicate.  But the electricity world is not static, and the landscape continues to change. 

 

In 1992, we set in motion the concept of a deregulated generation market  by creating statutory exemptions for generators of electricity in the wholesale market. 

 

FERC and the states have been working their way through the notion of competition at both the wholesale and retail levels.  Numerous changes in the regulatory structure and in the marketplace have transformed the industry in ways that most of us probably did not envision in 1992. 

 

We watched as different regions of the country struggled to restructure their electricity markets, to fashion a system that would prove most efficient and economical for their ratepayers.   We read with enthusiasm the success stories of some and, sadly, the failure of others. 

 

We were dismayed by charges of unscrupulous conduct just as the wholesale markets in generation were in the nascent stage of development.

 

So as we began fashioning our electricity title this year, we took a fresh look at exactly how the industry is evolving.  As a result of that, we have made some adjustments to the approaches in our effort of two years ago to facilitate the creation and efficient functioning of those markets. 

 

While the new title continues the basic concept of removing regulatory barriers to the creation of free markets in electricity, it also recognizes the desire of some regions and electricity providers to retain some of their historic model for providing services to their retail customers.

 

I believe that we have successfully produced a title that will allow each region of the country to develop plans best suited to it.  And in the process, we have tried to incorporate protections against bad actors who would game the system to the detriment of ratepayers.

 

With that, we’ll move now to consideration of the two titles before us today.

 

 

 

 

 

ENERGY EFFICIENCY

 

 

The Energy Efficiency Title has been substantially
            expanded over that in our previous efforts.

This is an extremely important part of the bill because in it, we are taking steps that will have measurable effects on energy consumption and on consumers of energy.  Every item in this Title is aimed at more savings in energy. 
The Title covers Federal efficiency and energy assistance programs as well as State programs governing consumer and commercial energy products.  We also address reduction of oil consumption. 
I want to touch on some of the more significant portions of the Title.
First, let me say that if we expect the public to take energy efficiency seriously, we need to set an example in our federal facilities.  In line with that notion, Subtitle A mandates a 20 percent reduction in energy consumption in federal buildings by 2010.
It requires metering in federal facilities to increase energy efficiency and cost reduction.
Federal agencies are required to purchase energy efficient products as part of their normal business procedures.
And, there is a permanent authorization for the Energy Savings Performance Contract program, a popular and highly effective program to substantially improve energy and water efficiency at federal facilities.
At the State level, the Title mirrors the Federal program by establishing a grant program to assist units of local government in improving the energy efficiency of public buildings and facilities. 
We also authorize $1.3 billion in funds for weatherization assistance and $50 million annually for state programs offering rebates to consumers who purchase highly efficient Energy Star  residential products.
Numerous other grant programs are available to States to increase efficiency in buildings and consumer products.
A significant piece of this Title has a very lengthy section setting in law energy efficiency standards for consumer and commercial products.  These new standards will side step the lengthy approval process the Department of Energy must follow, and move new, more highly efficient products to market much sooner, potentially producing much greater energy savings. 
The new standards apply to battery chargers, commercial refrigerators, freezers, dishwashers, dehumidifiers, and traffic signal modules, to name only a few products on a rather long list.  All of these standards are the products of consensus negotiations between manufacturers and energy efficiency advocates.  I must mention that the Committee is very grateful to all of the parties who have assisted in the preparation of these valuable new standards and the contributions they have made in developing this portion of the energy bill.

I earlier alluded to a very significant part of this Title  related to oil consumption, championed by Senator Landrieu.   Subtitle C  directs the President to develop and implement measures to conserve petroleum in end-uses throughout the economy sufficient to reduce total demand for petroleum in the United States by 1,000,000 barrels per day from the amount projected for calendar year 2015 in the reference case contained in EIA’s “Annual Energy Outlook 2005.”
This provision was adopted on the floor during our consideration of the energy bill last Congress by a nearly unanimous vote.
You have all had ample opportunity to review this title and if any of you wish to speak to it, please feel free to do so.
If there are no other comments, I will entertain a motion to adopt this title along with the package of cleared amendments that has been circulated.


ELECTRICITY TITLE

 

The Electricity Title is a critical component of the Energy Bill.  

 

A well-functioning and secure transmission grid is essential to our energy security and economy.

 

To achieve that goal, the Electricity title includes provisions that:

 

1.      Improve transmission infrastructure;

2.      Increase regulatory certainty; and

3.      Encourage investment in the electricity industry.

 

Developing policy on electricity is one of the most challenging aspects of the entire energy bill debate. 

 

This bipartisan draft reflects the input of all of the Senators on the Committee.

Senator Wyden, for example, has long advocated the creation of an Office of Consumer Advocacy at the Department of Energy.  The title establishes that office.
Senator Cantwell has advocated adding a general ban on manipulation to the Federal Power Act.  The title includes such a ban.
Senator Burr and Senator Landrieu introduced a bill that included language prohibiting FERC from mandating participation in Regional Transmission Organizations.  The title prohibits mandatory RTOs.
Senator Bingaman offered an amendment in the last Conference to clarify the timing of FERC’s Proposed Standard Market Design.  The title makes the timing extremely clear – never.  The SMD is terminated. 
Senator Feinstein has suggested increased penalties under the Federal Power Act.  The title increases them to a million dollars.
These examples demonstrate our commitment to work together in a bipartisan fashion.  I thank all the Senators for their hard work and valuable contributions.

 

Now, I just want to describe briefly what is in the title.

 

Subtitle A – Reliability Standards

Subtitle A sets forth a new mandatory rules framework to ensure greater reliability of the transmission grid.  This is a consensus provision that has widespread support.

 

Today, transmission grid stability is maintained through voluntary compliance with reliability rules.

 

Voluntary rules are no longer sufficient to ensure the safe, reliable operation of our electricity grid.  The August 14th Blackout showed us that.  In August 2003, the United States suffered the worst blackout in its history.  Estimated costs of the blackout in the United States range between $4 and $10 billion dollars. 

 

Under the Reliability section, an Electricity Reliability Organization (ERO), approved by FERC, will have the power to establish mandatory rules for operation the transmission grid and authority to penalize anyone who violates those standards.

 

Subtitle B - Transmission Infrastructure Modernization

Subtitle B addresses one of the main obstacles to building needed transmission -- siting challenges. 

 

The United States’ transmission system is in serious need of improvement.  Congestion on transmission lines has resulted in bottlenecks that reduce reliability and increase costs to consumers and businesses. 

 

The Energy Bill would provide limited federal backstop siting authority for electric transmission lines in areas designated by the Secretary of Energy as national interest transmission corridors.  FERC could issue siting permits if a State withholds approval inappropriately.

 

The Energy Bill would also provide FERC with eminent domain authority for electric transmission infrastructure. 

 

The Siting provisions will help relieve constraints in our transmission infrastructure and ensure that we have adequate transmission in the future.

 

This subtitle addresses siting challenges with a solution that balances the concerns of States with the need to efficiently build adequate transmission.

 

Subtitle C – Transmission Operation Improvements

Subtitle C promotes fair transmission grid access and encourages voluntary RTO developments.

 

FERC Lite will improve transmission availability by allowing FERC to promote principles of fair access among all transmitting utilities -- regulated and unregulated.

 

The RTO section promotes voluntary RTO formation.  It prohibits FERC from mandating or conditioning RTO participation.  It requires Transmission Organizations, like RTOS, to justify their costs and expenditures.

Federal utilities, like BPA, are authorized to join Transmission Organizations.

 

FERC’s Proposed Rulemaking on Standard Market Design is terminated.

 

The Native Load section ensures that utilities with service obligations have transmission access to serve their customers. 

Subtitle D- Transmission Rate Reform

Subtitle D addresses transmission investment and cost allocations.

 

Subtitle D directs FERC to issue rules on transmission pricing policies that provide a return on equity that attracts capital for investment in grid improvements and advanced transmission technologies.  FERC is also directed to allow for the recovery of all prudently incurred costs necessary to comply with reliability standards and federal back-stop siting needs.

 

This subtitle includes a participant funding section.  Participant Funding is one kind of pricing mechanism used to allocate costs for upgrades to the transmission grid. 

 

The participant funding language in the Bipartisan Consensus Title is not the same language that was in the H.R. 6 Conference Report. 

 

The Participant Funding section authorizes FERC to approve a participant funding cost allocation plan, without regard to whether the applicant is in an RTO, as long as it results in just and reasonable rates.

 

Subtitle E – Amendments to PURPA

Subtitle E amends the Public Utility Regulatory Policies Act of 1978 (PURPA) in order to ensure that qualifying facilities are legitimate, commercially useful facilities and to help promote energy efficient and demand response tools.

 

The PURPA Reform section ensures that cogeneration facilities and small power producers that are qualifying facilities - “QFs” – meet specific criteria to be eligible for mandatory purchase and sale benefits and that such benefits terminate when a competitive wholesale market exists.  The section also sets forth new criteria for future QFs to ensure that they are fundamentally designed to support commercial or industrial processes.  This provision reflects the compromise efforts in 2003 by Senators Alexander, Landrieu and Nickles.

 

The PURPA Reform section also includes provisions on net metering, smart metering, and demand response programs.  The net metering provisions describe how on-site energy production should be measured and billed.  The smart metering and demand response provisions establish policies for time-based pricing that would allow electric customers to better manage energy use and costs.

 

Subtitle F – Market Transparency, Enforcement, and Consumer Protections

Subtitle F provides consumer protections through strengthened market transparency rules, increased penalties, and prohibitions on manipulative practices.

 

The Market Transparency Rules provision authorizes FERC to establish an electronic information system to provide information about the availability and price of wholesale electric energy and transmission services. 

 

The Market Manipulation provision prohibits the filing of false information regarding price of wholesale electricity and availability of transmission capacity.

 

The Market Manipulation provision also bans any manipulative or deceptive device or contrivance in violation of FERC rules.

 

 

The Enforcement provisions:

expand who can file complaints and who can be subject to FERC investigation;
increase penalties under the Federal Power Act;
amend the Federal Power Act refund effective date from 60 days after the filing of a complaint to the date of filing; and
require the Federal Trade Commission to protect consumers against slamming and cramming.
 

Subtitle G and Subtitle H

Subtitles G and H include definitions for new terms in the Federal Power Act and provide some technical and conforming changes to the Federal Power Act.

 

·        I want to note that Senator Bingaman and I have not been able to agree on language to repeal the Public Utility Holding Company Act.   I believe that this is an extremely important part of any electricity package and I’m going to continue to work with Senator Bingaman to try to reach a compromise on the merger language that he feels must be included.

I’m hopeful that we may be able to come to agreement on language early next week.
 

I know that there is a package of cleared amendments that have been circulated.  But I’m also aware that some Members wish to offer amendments, so we will proceed to those.
 

If there are no further amendments, I request a motion to adopt the Electricity Title before you, along with the package of cleared amendments.
 

That concludes our business for this morning.  On Friday, I will send out a shortlist for next week’s markups along with the joint staff drafts of the titles we will be considering.