ELECTRIC RESTRUCTURING LEGISLATION HEARINGS BEFORE THE SUBCOMMITTEE ON ENERGY AND POWER OF THE COMMITTEE ON COMMERCE HOUSE OF REPRESENTATIVES ONE HUNDRED SIXTH CONGRESS FIRST SESSION JUNE 17, 1999ÐH.R.1828 JULY 22, 1999ÐH.R. 687, 971, 1138, 1587, 2050, and 2363 Serial No. 106±61 Printed for the use of the Committee on Commerce ( U.S. GOVERNMENT PRINTING OFFICE 57±439CC WASHINGTON : 1999 VerDate 04-JAN-2000 11:47 Jan 27, 2000 Jkt 010199 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 E:\HEARINGS\57439 txed02 PsN: txed02 COMMITTEE ON COMMERCE TOM BLILEY, Virginia, Chairman W.J. ``BILLY'' TAUZIN, Louisiana JOHN D. DINGELL, Michigan MICHAEL G. OXLEY, Ohio HENRY A. WAXMAN, California MICHAEL BILIRAKIS, Florida EDWARD J. MARKEY, Massachusetts JOE BARTON, Texas RALPH M. HALL, Texas FRED UPTON, Michigan RICK BOUCHER, Virginia CLIFF STEARNS, Florida EDOLPHUS TOWNS, New York PAUL E. GILLMOR, Ohio FRANK PALLONE, Jr., New Jersey Vice Chairman SHERROD BROWN, Ohio JAMES C. GREENWOOD, Pennsylvania BART GORDON, Tennessee CHRISTOPHER COX, California PETER DEUTSCH, Florida NATHAN DEAL, Georgia BOBBY L. RUSH, Illinois STEVE LARGENT, Oklahoma ANNA G. ESHOO, California RICHARD BURR, North Carolina RON KLINK, Pennsylvania BRIAN P. BILBRAY, California BART STUPAK, Michigan ED WHITFIELD, Kentucky ELIOT L. ENGEL, New York GREG GANSKE, Iowa THOMAS C. SAWYER, Ohio CHARLIE NORWOOD, Georgia ALBERT R. WYNN, Maryland TOM A. COBURN, Oklahoma GENE GREEN, Texas RICK LAZIO, New York KAREN MCCARTHY, Missouri BARBARA CUBIN, Wyoming TED STRICKLAND, Ohio JAMES E. ROGAN, California DIANA DEGETTE, Colorado JOHN SHIMKUS, Illinois THOMAS M. BARRETT, Wisconsin BILL LUTHER, Minnesota LOIS CAPPS, California JAMES E. DERDERIAN, Chief of Staff JAMES D. BARNETTE, General Counsel REID P.F. STUNTZ, Minority Staff Director and Chief Counsel SUBCOMMITTEE ON ENERGY AND POWER JOE BARTON, Texas, Chairman MICHAEL BILIRAKIS, Florida RALPH M. HALL, Texas CLIFF STEARNS, Florida KAREN MCCARTHY, Missouri Vice Chairman THOMAS C. SAWYER, Ohio STEVE LARGENT, Oklahoma EDWARD J. MARKEY, Massachusetts RICHARD BURR, North Carolina RICK BOUCHER, Virginia ED WHITFIELD, Kentucky FRANK PALLONE, Jr., New Jersey CHARLIE NORWOOD, Georgia SHERROD BROWN, Ohio TOM A. COBURN, Oklahoma BART GORDON, Tennessee JAMES E. ROGAN, California BOBBY L. RUSH, Illinois JOHN SHIMKUS, Illinois ALBERT R. WYNN, Maryland HEATHER WILSON, New Mexico TED STRICKLAND, Ohio JOHN B. SHADEGG, Arizona PETER DEUTSCH, Florida CHARLES W. ``CHIP'' PICKERING, RON KLINK, Pennsylvania Mississippi JOHN D. DINGELL, Michigan, VITO FOSSELLA, New York (Ex Officio) ED BRYANT, Tennessee ROBERT L. EHRLICH, Jr., Maryland TOM BLILEY, Virginia, (Ex Officio) (II) 2 VerDate 04-JAN-2000 11:47 Jan 27, 2000 Jkt 010199 PO 00000 Frm 00002 Fmt 0486 Sfmt 0486 E:\HEARINGS\57439 txed02 PsN: txed02 C O N T E N T S Page Hearings held: June 17, 1999 .................................................................................................... 1 July 22, 1999 ..................................................................................................... 47 Testimony of: Brooks, E.R. ``Dick'', Chairman and CEO, Central and Southwest Cor- poration .......................................................................................................... 149 Cavanagh, Ralph, Energy Program Co-Director, National Resources De- fense Council ................................................................................................. 103 Crisson, Mark, Chief Executive Officer, Tacoma Public Utilities ................ 161 English, Glenn, Chief Executive Officer, National Rural Electric Coopera- tive Association ............................................................................................. 98 Kanner, Marty, Coalition Coordinator, Consumers for Fair Competition ... 172 Kean, Steven J., Executive Vice President, Enron Corporation ................... 79 Owens, David, Executive Vice President, Edison Electric Institute ............ 60 Parkel, James G., Member, Board of Directors, AARP ................................. 165 Price-Davis, Jana, Assistant Vice President, Government Affairs, Heilig- Meyers Company ........................................................................................... 74 Richardson, Alan H., Executive Director, American Public Power Associa- tion ................................................................................................................. 85 Richardson, Hon. Bill, Secretary of Energy .................................................... 14 Schmidt, Fred, President, National Association of State Utility Consumer Advocates ....................................................................................................... 115 Zannes, Maria, President, Integrated Waste Services Association .............. 169 Material submitted for the record: Food Marketing Institute, letter dated July 22, 1999, to Hon. Joe Barton . 187 (III) 3 VerDate 04-JAN-2000 11:47 Jan 27, 2000 Jkt 010199 PO 00000 Frm 00003 Fmt 0486 Sfmt 0486 E:\HEARINGS\57439 txed02 PsN: txed02 ELECTRIC RESTRUCTURING LEGISLATION THURSDAY, JUNE 17, 1999 HOUSE OF REPRESENTATIVES, COMMITTEE ON COMMERCE, SUBCOMMITTEE ON ENERGY AND POWER, Washington, DC. The subcommittee met, pursuant to notice, at 10 a.m., in room 2123, Rayburn House Office Building, Hon. Joe Barton (chairman) presiding. Members present: Representatives Barton, Bilirakis, Stearns, Largent, Burr, Whitfield, Rogan, Shimkus, Shadegg, Pickering, Bryant, Ehrlich, Bliley (ex officio), Hall, McCarthy, Sawyer, Mar- key, Pallone, Gordon, Rush, Wynn, Strickland, and Dingell (ex offi- cio). Staff present: Joe Kelliher, majority counsel; Cathy VanWay, ma- jority counsel; Donn Salvosa, legislative clerk; and Sue Sheridan, minority counsel. Mr. BARTON. The subcommittee will come to order. We want to welcome the Secretary of Energy, the Honorable Wil- liam Richardson. Today we will have a hearing on electricity competition, the ad- ministration's bill, Comprehensive Electricity Competition Act of 1999. This is our seventh day of hearings on electricity restruc- turing. The question before the Congress is whether retail markets should be opened, how best to open them. Today we see a very tangible sign of momentum as we hear from the Secretary of Energy, Bill Richardson, about the Clinton Admin- istration's plan for a comprehensive electricity competition restruc- turing bill. But before we start to discuss the bill, I have some good news. The Texas legislature recently passed a restructuring bill and I talked to George W. Bush yesterday on the telephone, that he plans to sign that bill into law tomorrow in Austin, Texas. I am very pleased that the Texas legislature voted so overwhelmingly to give Texas consumers a choice in their electricity supplier. When Governor Bush signs the bill tomorrow, it will be a banner day for Texas and a major step in promoting choice for electricity con- sumers across the United States. Here in Washington, the action which just happened in Texas should be helpful, as myself and Ralph Hall, the ranking member, begin to craft a comprehensive consensus bill for the subcommittee to consider in the near future. The bill is supported by a broad coa- lition. The coalition will consist of business groups, labor unions, utilities, environmentalists and many other groups. We hope that it will show at the Federal level we can do the same things that (1) VerDate 04-JAN-2000 11:47 Jan 27, 2000 Jkt 010199 PO 00000 Frm 00004 Fmt 6633 Sfmt 6633 E:\HEARINGS\57439 txed02 PsN: txed02 2 Texas and other States have done in creating consensus at the State level. On April 15, 1999 the Clinton Administration issued its com- prehensive electricity competition plan. The plan addresses retail competition, consumer protection, transmission system reliability, promotion of public benefits, and clarification of Federal and State authority. It also examines what the scope of Federal legislation should be with respect to reliability in transmission. Many of us on the subcommittee had the pleasure of meeting with Secretary Richardson several weeks ago in the first meeting of our Tuesday working group which is being co-chaired by Con- gressman Pickering and Congressman Sawyer. At that time we were very encouraged by the administration's willingness to work together on the issue before us today. Myself and others on the subcommittee and at the staff level have had a chance to study the administration's bill closer since it was introduced. I am heartened to see that we agree on many of the same goals, although in some cases perhaps there will be some disagreement about the means of reaching those goals, especially with respect to the Renewable Port- folio Standard and the Public Benefits Fund; but there are many more issues of consensus than not, including the Federal and State jurisdiction issue, the reliability standard issue, and PUHCA and PURPA repeal, among others. Utility competition benefits all consumers and electric utility re- structuring should save American consumers up to $20 billion an- nually. It is also noteworthy that billions of dollars in savings should realize for Federal spending. Since the U.S. Government is one of the largest consumers of electricity, it would stand to reason that the Federal Government would realize enormous savings from competitive electricity markets. In 1997, the Federal Government used 53.6 billion kilowatt hours, 55 percent of which was used by the Department of Defense. At this rate for each 1 cent per kilowatt hour saved through com- petition, the government