Message-ID: <26679506.1075848181275.JavaMail.evans@thyme> Date: Thu, 3 May 2001 10:49:00 -0700 (PDT) From: john.shelk@enron.com To: steven.kean@enron.com, richard.shapiro@enron.com, james.steffes@enron.com, mark.palmer@enron.com, linda.robertson@enron.com Subject: House and Senate Energy Hearings Today on California/Western Electric Situation Cc: tom.briggs@enron.com, ray.alvarez@enron.com, joe.hartsoe@enron.com, phillip.allen@enron.com, tim.belden@enron.com, chris.long@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: tom.briggs@enron.com, ray.alvarez@enron.com, joe.hartsoe@enron.com, phillip.allen@enron.com, tim.belden@enron.com, chris.long@enron.com X-From: John Shelk X-To: Steven J Kean, Richard Shapiro, James D Steffes, Mark Palmer, Linda Robertson X-cc: Tom Briggs, Ray Alvarez, Joe Hartsoe, Phillip K Allen, Tim Belden, Chris Long X-bcc: X-Folder: \Steven_Kean_June2001_4\Notes Folders\Discussion threads X-Origin: KEAN-S X-FileName: skean.nsf I attended both the House and Senate energy committee hearings today. House hearing was in the Barton Subcommittee (Energy & Air Quality). Senate hearing was on last week's FERC order on a "soft price cap" and related issues. The House witnesses were dominated by California officials: Cal Energy Commission, Cal Air Resources Board, Chairman of Gov Davis Generation Implementation Task Force. In addition, there were witnesses from the Western Area Power Admin and Bonneville PA. The Senate witnesses were the three FERC commissioners. HIghlights Chairman Barton said it is still his intention to try to mark up the Barton bill, H.R. 1647 next week (many on and off the Subcommittee doubt this will happen; we are gathering political intelligence on those prospects and will report back with more information and conclusions once that is done); Chairman Barton also said he may go to California next week. There was considerable emphasis at both hearings about the alleged role that higher natural gas prices into California play in the electric power rate increases; several witnesses focused on difference in alleged transportation costs for similar differences between California and non-CA states; FERC at the Senate hearing said that today the commission announced a staff technical conference for later this month on all aspects of the natural gas market as it relates to California; a House member from Southern Illinois coal country attacked California for using only natural gas in its new power plants. The House witnesses, primarily BPA but also the California witnesses, attacked the negawatt provision in sec. 102 of the Barton bill; the criticism was that BPA would be forced to purchase power on the open market at a high price since it is short, sell it to the DSIs under contract; let the DSI sell it at market rates and capture the difference; BPA witness said that thus sec. 102 would make it difficult if not impossible to implement their strategy to avoid as much as a 200 percent rate increase on 10/1/01; BPA testimony will make it tough for Members of Congress from that service region to support sec. 102. Both hearings also touched on how difficult it would be to actually devise a price cap; at the House hearing, none of those advocating a price cap among the witnesses could answer excellent questions about exactly how this could be done; the witnesses just said "cost plus a reasonable profit" and said leave the details to FERC; at afternoon Senate hearing, Chairman Hebert had the staff bring in 15 boxes from one FP&L case to show how a price cap would take too long to bring any relief to California this summer; he said last week's soft price cap is much better. Also on the price cap, Rep. Walden (R-OR) got the Cal Energy Comm chair to admit that if the price caps had been in place earlier, California would NOT have taken the conservation and new generation steps that it has taken recently. The interplay among the FERC commissioners was much more contentious than it was a House hearing on Tuesday, although it could have been worse; when Senate Chairman Murkowski (R-AK) said that "help is on the way" in the form of the nominees for the two vacancies, Sen. Dorgan (D-ND) made a comment that suggested that the confirmation process will not be smooth; the same concern came from the interplay among the Senators, which was also somewhat contentious at times. Please advise if you have any questions or would like further details.