Jeff Bingaman

Mr. BINGAMAN

Mr. BINGAMAN. Mr. President, in reference to the amendment, the underlying bill does not, as I read it, provide any subsidy or incentive for use of municipal solid waste. We do say utilities that now generate waste from that source can deduct that from the base they begin with, but we do not give them credit for that generation, and we do not give them credit for any new generation from that source in the future. So there are no incentives. There are no subsidies, as I read the bill. For that reason, I oppose the amendment by the Senator from Illinois. I move to table the amendment, and I ask for the yeas and nays.

Mr. BINGAMAN. Madam President, in response, let me say, first, I compliment the Senator from Louisiana for raising this very important issue. It is an important issue and also a very complicated issue. It is one that we have had the chance to talk about to some extent. But, clearly, we do need, in the Energy Committee, to look at this issue and allow witnesses to come in and explain it in more depth. Before we take action, that would be my preference. So I would be glad to commit that we will schedule a hearing later on, once we get back to some kind of opportunity to have hearings in the Energy Committee on issues such as this. I would be anxious to have a hearing and hear from the witnesses that the Senator from Louisiana believes are most informed on this issue. I do think it is premature--at least for me, and perhaps for many Senators--to be making a judgment on what to do at this point. But it is an important issue. Again, I commend the Senator from Louisiana for raising it, and I hope, following a hearing in the committee, we will be in a much better position to craft legislation to deal with it or determine what is the proper course.

Mr. BINGAMAN. I thank the Senator from Louisiana. I have no objection.

Mr. BINGAMAN. Madam President, what is the request?

Mr. BINGAMAN. Madam President, I move to table the amendment, and I ask for the yeas and nays.

Mr. BINGAMAN. If he wants to insert something into the Record, I am glad to have him do that.

Mr. BINGAMAN. I will yield for one additional question, if it is a question.

Mr. BINGAMAN. On that basis, I urge my colleagues to--if the Senator wants further debate, I am not trying to cut off debate, but he has concluded his debate, as I understand it.

Mr. BINGAMAN. Reclaiming my time, my colleague has had ample opportunity to argue his side of the case today and several weeks ago. We know his view on it. He is not in favor of the renewable portfolio standard. This amendment would undermine the renewable portfolio standard we have in the bill because what it would do is make it much less likely that renewables, other than wind, to be very specific, would be used to any significant degree. So those States that depend upon biomass as a renewable, those States that depend upon biothermal as a renewable, those States that depend upon solar power as a renewable might find it more difficult. We do not think the amendment makes sense. We think it will undermine the renewable portfolio standard. On that basis, I urge my colleagues-- --

Mr. BINGAMAN. Madam President, I will make a few more comments and then move to table the amendment. I think we have had a lot of debate. Everyone knows the issues. I think it is clear this is the fourth amendment we have dealt with on the Senate floor in an attempt to undermine the renewable portfolio standard we have in the bill. There are a lot of figures that have been cited, many of which have no basis in fact, as far as I can tell. One of the statements we heard was that this was going to cost--if we go ahead and keep the bill as it is currently--the ratepayers of California $243 million a year, or some such figure. The reality is, in our bill we are saying by the year 2005 each State will generate 1 percent of the power they sell--each utility will generate 1 percent of the power they sell from renewable sources. In California, 12.19 percent of the power sold today is from renewable sources.

Mr. BINGAMAN. Yes.

Mr. BINGAMAN. Mr. President, I would give to the Senator from Nevada the hour that was reserved under postcloture for Senator Akaka of Hawaii.

Mr. BINGAMAN. Yes, it includes the hydro that is given credit for in this bill.

Mr. BINGAMAN

Mr. BINGAMAN. Mr. President, let me once again try to put this in perspective for my colleagues. As I indicated, this is an effort, another effort, to weaken the renewable portfolio standards we have in the bill. We put the renewable portfolio standards in here because we believe strongly it is in our national interest that we diversify the sources from which we obtain energy and that we encourage the development and improvement of the new technologies which we know can be sources of energy as we move into the future. That is why we have a renewable portfolio standard in the bill. The requirement we have is not that onerous. When we require 1 percent of the power sold by a utility by the year 2005 to be generated from renewable sources, that is not an unduly onerous requirement. All of the numbers we have been hearing about how it will cost such enormous amounts for the utilities to comply, assuming they are going to do nothing to meet excess demand in the future--the truth is, they are going to be adding generating capacity in the future to meet increased consumer demand. That is as it should be. All we are saying is, as they make those decisions about adding new generating capacity in the future, they should be encouraged, they should be incentivized, to look at renewable energy as the source for some of that power. That is, to my mind, a responsible course to follow. We are way behind other industrial allies, the countries in Europe, in beginning to use renewable energy in our country. It is time we began to use these new technologies, began to improve these technologies. They have proven themselves to be effective. It would be extremely unfortunate, in my view, if we further weakened the renewable portfolio standard at this time.

Mr. BINGAMAN. Mr. President, I don't know that we had a hearing on a specific level of required mandate or specific level of cost of credit. I don't believe we did.

Mr. BINGAMAN. Mr. President, we have had a hearing on the subject of renewable energy and renewable portfolio standards, not on the specific language in the bill.

Mr. BINGAMAN. I am happy to yield.

Mr. BINGAMAN. I don't believe there was a specific hearing on it, and that is why I have suggested we request the Energy Information Agency to update their studies and recommend whether they think this is the appropriate level or not. We certainly would have time to do that between now and any conference with the House of Representatives on this bill. If there is a need to make an adjustment to come in line with what the Energy Information Agency recommends, I would be glad to work with my colleagues to try to do that in the conference.

Mr. BINGAMAN. I am happy to yield.

Mr. BINGAMAN. Let me finish my comments and then I will be glad to yield for a question. We took that provision and we said, let's do the same thing at the Federal level and try to say we do not need to have a 5-cent credit; let us have a 3-cent credit, but let us also put that provision in 3 cents or 200 percent of the average price of traded credit, whichever is less. So if, in fact, the same thing happens nationally that has happened in Texas, which I think it likely would--credits would be trading for substantially less than the 3 cents--then it is very likely the credits that would be purchased from the Government, if a utility decided to go that step and purchase credits from the Government, would be substantially cheaper. All of this, to some extent, is estimating where we think things will be once this legislation becomes law, if it does become law. I am glad to join with my colleague from Oklahoma or any other Senator in urging the Energy Information Agency to update their models, update their studies, and give us good information about what the right amount of credit ought to be. I am not certain 3 cents is the right amount, but it seems like the right amount based on what we know today. Based on the review of the numbers of different economic analyses, we have determined that 5 cents is too much. We have also determined that the 1.5 cents is probably too little. So our estimate is the 3 cents is about where it ought to be. The reason we think it ought to be at 3 cents is because we believe all of the different types of renewable energy ought to be encouraged to be developed under this proposal. We have a chart, which I would like to put up, to make the point. The renewable portfolio standard requirement can be met; renewable energy can be generated from any of a variety of sources. The main ones we think about are biomass and biofuels resources, solar insulation resources, geothermal resources, and wind resources. Those are the four logical areas. The concern is that if we lower the cost of this credit too much, the price of this credit too much, that this will skew away from the use of several of these and wind up favoring one over the others. In that regard, let me cite a letter to my colleagues. This is a letter directed to all Senators, I believe. This was dated April 18 and it is from a large group of organizations. It is from the Alliance for Affordable Energy, Louisiana; American Bioenergy Association; Citizen Action Coalition of Indiana; Citizen Action/Illinois; Dakota Resource Council; Hoosier Environmental Council, Iowa Citizen Action Network; Iowa SEED Coalition; I-Renew, Iowa; Michigan Environmental Council; Minnesotans for an Energy-Efficient Economy; North Dakota SEED. There are a whole range of organizations that have signed on to this letter. Their letter says: The undersigned environmental, consumer, and industry groups urge you to oppose an amendment that would be offered by Senator Nickles to further weaken the renewable portfolio standard contained in Senate bill S. 517. The Nickels amendment is the latest in a sustained attempt by power companies to undermine efforts to diversify America's energy supply with clean renewable energy. Then they go on to say further down in the letter: Under a lower priced cap-- And that is what Senator Nickles is recommending here, 1.5 cents-- only the very lowest-cost renewable energy technologies can benefit from the RPS--primarily wind power at the very best sites. Biomass, geothermal, and solar would be at a significant disadvantage to meet this standard. That is three of the four on this chart. They say biomass would be a substantial disadvantage; solar, geothermal. The Nickles amendment would reduce benefits to Western States with good geothermal resources, to the Midwest, Southeast, and Northeast that have good biomass resources, and reduce benefits to all other States with good solar resources. I ask unanimous consent this letter be printed in the Record.

Mr. BINGAMAN. Mr. President, I will take a few minutes to respond to the comments that have been made and to oppose the amendment that my colleague from Oklahoma has offered. First, to put this in perspective for Senators, this is the fourth amendment we have seen that is designed to either eliminate or dramatically weaken the renewable portfolio standard we have in the bill. There were three others we voted on earlier that were not successful. A majority of Senators did not favor weakening the standard, and accordingly those amendments were not successful. I think the structure we have in the bill is important if we are going to actually accomplish the purpose of bringing renewable technologies into use in this country, and that is the purpose of the renewable portfolio standard. What we are saying in the renewable portfolio standard is each utility is directed to begin, starting in the year 2005, to produce or obtain some of the power that it sells from renewable sources. They do not have to produce it from those sources, but they have to obtain it from those sources. We are saying you do not have to do anything this year, you do not have to do anything next year, you do not have to do anything the next year, but in the year 2005 you have to achieve 1 percent. One percent of the power you sell must come from renewable sources. There are obvious ways that one can go about this. First, one can add some renewable power generation capability to the mix of sources for generating power. That is one option. That is, of course, what we are intending to facilitate and to incentivize with this provision. A second thing that can be done is if one does not want to add it themselves, they can contract with someone who has that power or who is willing to provide that power from renewable sources. That is a second option. A third option, under the bill, the way we have it drafted, is one can buy a credit from somebody who does have more than the 1 percent-- and there are a lot of utilities today that are in a position, beginning in the year 2005, to try to sell their credits. That is good. We are providing for that. We are saying, OK, if a particular utility does not want to either produce the power from renewable sources or buy the power, someone who is producing it from renewable sources can then go buy a credit. The provision we have in the bill is patterned after the provision in the Texas renewable portfolio standard legislation that President Bush signed into law, and that has been acclaimed by all as a model kind of a bill. It has had great success in Texas in encouraging more use of renewables and diversifying the supplies of energy upon which they depend. What that Texas provision said was we would not charge 3 cents per credit. What we charge in Texas is 5 cents per credit. That is what President Bush signed into law, in Texas, when he was Governor of Texas. It would either be 5 cents per credit or 200 percent of the average price of traded credits, whichever is less, so that if one could not go ahead and buy the credit from someone who is producing power, who has an extra credit, then as sort of a last option, they could go to the State of Texas and say, OK, I will pay 5 cents per credit or I will pay 200 percent of the tradable price of credits at this time. What has the tradable price of credits turned out to be in Texas? It is five-tenths of 1 cent. Half of a cent is the tradable price of credits today in Texas. So essentially what the Texas provision says is that one would have to pay 200 percent of the trading price for credits, which would be a full cent, so 200 percent of the half cent would be a full cent, and that would be the price that would have to be paid to the State of Texas to get a credit; not the 5 cents but the 1 cent. That is under their provision.

Mr. BINGAMAN. Mr. President, I know the Senator from Alaska is planning to come to the floor to speak against the amendment. At this point, unless the proponents of the amendment would like to do initial debate, I suggest the absence of a quorum.

Mr. BINGAMAN

Mr. BINGAMAN. I will speak briefly in response to some of the comments made, and then I will move to table the amendment. We have had a good debate about it. I will speak about three aspects: First, the argument, the allegation, that we are, in the underlying bill before the Senate, agreed to on a bipartisan basis, lowering the legal standard. That is one of the arguments that has been made. It is simply wrong. We are not lowering the legal standard. The legal standard is, and always has been, that determinations be consistent with the public interest; that acquisitions, mergers, consolidations, be consistent with the public interest. What we are doing is saying that, for mergers, we have enhanced the authority and responsibility of the Federal Energy Regulatory Commission by saying that not only must they determine it is consistent with the public interest, which has been the standard in the past, we are requiring them to determine that consumers will not be harmed--that is, consumers, ratepayers of existing utilities, will not be harmed. We are requiring them to make a determination that regulation, either Federal or State regulation, will not in any way be impaired. And we are requiring FERC to make a determination that there will be no cross-subsidy to any other company than the company being acquired or merged. What we are doing is increasing the responsibilities we are imposing on FERC. A lot of criticism has been leveled against FERC in the way they responded on the west coast. I agree with much of that. I think they were very slow to respond to the spike in prices in California and the Northwest. I was critical at the time, and I continue to be critical that they were slow to respond. We are putting an affirmative duty on FERC to step in anytime there is evidence that a market-based rate is not just and reasonable. It is FERC's responsibility under the language we have to withdraw those market-based rates and to require just and reasonable rates. That is a new responsibility we are imposing. It is an appropriate responsibility. The argument that, because they did not move quickly enough under current law, we should now go ahead and change the law to give them this new responsibility does not make sense to me. With regard to the provisions the Senator from California was raising about the transparency of books and records, I agree entirely that the books and records of any and all of these companies that are subject to regulation should be open for inspection. The provisions we have in the bill require each of these companies to maintain and make available to FERC the books, accounts, the memoranda, the records, that the Commission deems relevant to the costs that are incurred by that public utility. Each affiliate company is also required to do the same. There is a provision saying that the right of States to request books, records, accounts, memoranda, and other records they identify in writing as needed by the State commissioner--that right for them to obtain those is also protected. We have in this underlying bill the protections that are required for consumers. I am persuaded that the enactment of this legislation, this title 2, this electricity provision, will cure many of the problems the Senators from Washington and California have been concerned with--and very rightly concerned with this last year. I think the argument that we are not dealing with these issues is wrong. I urge my colleagues to join us in tabling this amendment which would undermine the bipartisan agreement we made on this provision some weeks ago. I move to table the amendment, and I ask for the yeas and nays.

Mr. BINGAMAN. Madam President, I rise to speak against the amendment that my colleague from Washington and the Senator from Minnesota have offered. This is an issue on which I think we need to refresh people's memory because it has been a few weeks since we had votes on this portion of the energy bill. But let me recall for Senators and their staffs exactly with what we are dealing. This is the electricity title of the energy bill. We have worked hard on that title, those of us who have been involved on the issue for a long time. Senator Thomas, in particular, and myself have worked hard to come up with language which we believe ensures that consumers are protected and which ensures that mergers and acquisitions are properly reviewed before they are permitted to go forward or are turned down if they do not meet strict criteria. We have put together language we believe is very favorable to consumers. Part of what we are proposing is that the Public Utility Holding Company Act be repealed. That is an issue that continues to be the subject of controversy. I understand that. And I understand the amendment, of course, that we are now presented with would try to eliminate the repeal of the Public Utility Holding Company Act and keep that current law. This is a legitimate issue. In the Energy Committee, in the most recent hearing we had on energy-related issues, we had a hearing on this issue. I am trying to get the whole list of witnesses so that I can inform people about that. But we had one of the Commissioners from the Securities and Exchange Commission, the SEC, which currently has authority and responsibility to enforce the Public Utility Holding Company Act. The testimony of that Commissioner was very clear. Their testimony was that they do not support keeping that authority at the SEC. They do not support keeping the Public Utility Holding Company Act on the books. They have taken that position for the last 20 years. They continue to take that position. That was the position under the Clinton administration and that was the position under the Bush administration. And there was unanimous testimony to our committee that, in fact, we should shift this responsibility over to the Federal Energy Regulatory Commission, as we are proposing to do in this legislation. Let me clarify that the problems the Senator from Washington refers to are very genuine problems. I am sympathetic to those problems. I do think there were some shortcomings on the part of the Federal regulators as well as others in the way the crisis on the west coast was dealt with, but I point out that all of that happened under current law. All of that happened with PUHCA in force--with the Public Utility Holding Company Act in force-- and we are proposing the repeal of that and a change in the authority so that it can be done much more effectively. Our bill does nothing to deregulate electricity markets. It recognizes that the market depends on competition. It gives the Federal Energy Regulatory Commission the tools to be sure that competition does in fact work for consumers. We have enhanced FERC's authority over mergers and market-based rates. We have required new disclosure rules. We have required the Federal Trade Commission to issue rules to protect consumers. We take authority away from the SEC, as I mentioned, because the SEC has never enforced this law. We take the authority away from them and give it to FERC, which does understand the industry. It is the agency with the appropriate expertise to actually look out for consumers in this regard. The bill we have brought to the Senate floor and on which Senator Thomas and I have worked very hard requires four things before any disposition or consolidation or acquisition of utility assets is possible. It requires, first, that the Federal Energy Regulatory Commission determine that the proposed disposition or acquisition be consistent with the public interest. That is a pretty good indication. A second would be that they make a determination it will not adversely affect the interests of consumers of the electricity utility. That again is an important safeguard. Third, it requires that any acquisition, any consolidation that is approved by FERC be determined by FERC not to impair the ability of regulators to regulate the utility. The final thing we have required FERC to determine is that any acquisition that might be approved would not lead to cross- subsidization of associated companies. We believe that is also important. If in fact we are going to permit companies to purchase utilities, to acquire utilities, to acquire utility assets, we do not want to see the ratepayers of the utility having their rates go to cross-subsidize other companies. We require that FERC make that determination. We believe the provisions we have in the bill are not only adequate but strengthening provisions. There are requirements in the amendment proposed here that go substantially further. There is a requirement that there be a determination that the transaction enhanced competition in wholesale markets. We do not believe it is an appropriate role for us to be blocking an acquisition unless it can be proven that it enhances competition. We believe a ``do no harm'' standard is the right standard for a regulatory agency. Clearly, that is where we come out. The one other provision which is in their amendment which we believe goes too far is it requires that the transaction produce significant gains in operational and economic efficiency. I hope very much that any time there is an acquisition of a utility asset or a merger or a consolidation of any kind, it does produce significant gains in operational and economic efficiency. That would be a wonderful thing. I don't think it is reasonable to say all acquisitions, consolidations, and mergers should be blocked unless they can demonstrate that they will in fact demonstrate or produce significant gains in operational and economic efficiency. We believe the provisions we have in the bill are the appropriate ones. For that reason, I will have to resist the amendment and hope Senators will oppose it. I know Senator Thomas has worked very hard on this issue as well. I know he is anxious to speak about it at some point. I yield the floor.

Mr. BINGAMAN. Madam President, I move to reconsider the vote.