Maria Cantwell

Ms. CANTWELL

Ms. CANTWELL. Five minutes.

Ms. CANTWELL. Mr. President, I yield 5 minutes to the ranking member, Senator Bingaman, who is a cosponsor of my amendment. He has worked hard in bringing attention to everyone about this issue of market manipulation.

Ms. CANTWELL. Mr. President, I know my colleagues from the other side of the aisle want a chance to use up some of their time. I do not know whether the chairman wanted to speak now. The Senator from Louisiana was going to be yielded a few minutes, also. I do not know if the chairman wanted to use time.

Ms. CANTWELL. I yield to the Senator from Louisiana 5 minutes.

Ms. CANTWELL. The Senator is yielded 10 minutes.

Ms. CANTWELL. The Senator from Oregon would like a few minutes. I am happy to yield to the Senator from Oregon 5 minutes.

Ms. CANTWELL. Mr. President, how much time is available?

Ms. CANTWELL. Does the Senator from New Mexico wish to complete his comments?

Ms. CANTWELL. Mr. President, I appreciate the chairman of the committee giving time to the Senator from California so she could explain and respond to her views on this issue. I appreciate my colleagues from the West engaging in this debate. I appreciate the Senator from Idaho coming to the floor and reiterating to this body, yes, how ratepayers in Washington, Oregon, and Idaho got stiffed. That is the right word. We got stiffed. We got stiffed with paying a bill more exorbitant than ratepayers should have to pay. The debate that has ensued in the last few minutes is whether the Domenici underlying amendment has enough protections in it to protect consumers or whether we need the Cantwell amendment. It is a clear and simple and plain statement that market manipulation should be outlawed in the Federal Power Act as not being just and reasonable. I thank the Senator from Louisiana for her comments. She supports the underlying Domenici title, but she supports my amendment as well because she knows that kind of language can be helpful and can be specific. Let me be clear. If anybody thinks that the Enron manipulation didn't have a profound and adverse impact on the marketplace and that this is all about poor management in California, I can assure you that is not the case. This is about whether this body is going to adopt tough standards against market manipulation so there is no question by the public. So the public doesn't debate, if there was a shortage of supply or manipulation going on? We know there was manipulation going on. We have proof of it. The FERC itself said: Enron and its affiliates intentionally engaged in a variety of market manipulation schemes that had profound, adverse impact on market outcome. There it is. The FERC said itself that market manipulation had profound, adverse impact on the market. So we know for a fact that market manipulation had an impact in California, it had an impact in Washington, it had an impact in Oregon, and it had an impact in Idaho. The question is whether this body is going to do enough to protect consumers in the future. So the chairman of the committee--I appreciate his earnest time on the electricity title, and I appreciate the fact that he wants to have some protection in this legislation. But these protections don't go far enough. Let me explain why. There is transparency language in the underlying Domenici title. Some of those powers are already in place with FERC. They are not doing us any good because reporting to FERC is one thing; reporting to the California ISO, the independent systems operator, who basically was the cog by which all the manipulations took place, you are not under any kind of threat or penalty for reporting falsified information to them. That is where the manipulation took place, so the Domenici title does not cover that situation. There is a lot of talk in the bill about the Commodity Futures Trading Commission, and there is a section in the bill that tries to beef up that language. That is a noble attempt. I much prefer the Feinstein amendment which has very specific language about closing a loophole. I have a letter from the National American Securities Administrators Association. They basically say the Domenici language is flawed. These are Federal regulators who are supposed to regulate this policy. They say the Domenici language is flawed because it will prohibit any Federal or State agency from obtaining information directly from a board of trade or exchange or market involving commodities, and that State and Federal agencies will be impeded from investigating violations of these wide range of commodities. I ask unanimous consent that this letter from the National American Securities Administrators Association, about how the Domenici language is trying to correct some of the problems is actually causing a new problem and is not going to protect people, be printed in the Record.

Ms. CANTWELL. Mr. President, I call up amendment No. 1419.

Ms. CANTWELL. Mr. President, I thank the clerk for reading this amendment, particularly at such an early hour of the morning. The reading of the amendment by the clerk shows exactly what we are up to this morning; that this is a simple amendment and a simple action we are asking the Senate to take. We are simply saying market manipulation under the Federal Power Act cannot be just and reasonable, and market manipulation should be found, under the Federal Power Act, by the Federal Energy Regulatory Commission, to be a wrongful act. It did not take long to read that amendment but, as I said to this body last night, the fact that such law is not currently on the books has caused the ratepayers in my State great harm. It has caused ratepayers in Snohomish County, where I happen to live, a 54-percent rate increase. It has caused ratepayers in King County a 61-percent rate increase. It has caused ratepayers in Vancouver, WA, and businesses in Vancouver, WA, that can easily move to other parts of the country, an 88-percent increase. In eastern Washington, the part of the State hardest hit economically, where jobs are few and farmers struggle, it has caused ratepayers a 71-percent rate increase. We are not talking about a rate increase that is just for 1 year. We are talking about long-term Enron contracts that were manipulated-- knowingly manipulated--and my ratepayers are stuck paying those contracts for the next 5, 6, and 7 years without relief. We are here today to say one thing and be clear about it: This kind of manipulation that gouges ratepayers should be prohibited. This body should be clear. We should be unequivocal. We should say, as other entities have said, that this kind of manipulation is wrong and needs to be corrected. I have a lot to say on this amendment this morning, but I know I am going to be joined by many of my colleagues from the West who have had their economies wrecked by gouging and illegal practices. I want to give them an opportunity to say something, too, because I think the face of the west coast economy and what it has meant for ratepayers needs to be clear. We are trying to say with the Cantwell-Bingaman amendment that we do not want to see this kind of action happen on natural gas prices in other parts of the country. We do not want to see this take place 4 months from now, or 2 years from now. Let's be really clear. These kinds of practices that were deployed by Enron, the various schemes of Fat Boy, Ricochet, Megawatt Laundering, and Load Shift are illegal. I will yield 10 minutes to my colleague from Washington State, Mrs. Murray, who knows all too well that this crisis has caused real hardship in our State. She has been outspoken on this issue as well and sent many letters to various entities, including the Federal Regulatory Energy Commission, talking about how we need to make changes. I yield her 10 minutes this morning to talk about some of the impacts she has seen firsthand.

Ms. CANTWELL. I thank Senator Murray for her articulate capsulization of what this Energy bill and the Domenici title means to the Northwest. The Senator has hit it right on the head, in that market manipulation has not been adequately dealt with in this legislation. Not only has there been no strong stand against market manipulation, there are further attempts toward deregulation with standard market design and regional transmission organizations that we in the Northwest find ludicrous. I ask unanimous consent to have printed in the Record a Seattle Post Intelligence editorial from this morning's newspaper saying that the dubious Energy bill might be better shelved.

Ms. CANTWELL. I thank my colleague for her diligence in expressing her opinion on this issue. The RTO and standard market design issues she mentioned this morning show how unsound this idea is, not only in not protecting us from market manipulation but saying in a conceptual scheme, let's have a nationwide regional energy grid and let the people who will pay the most; that is, the power source that is willing to pay the most to get on to the grid, let them decide how power will be distributed. For people in the Northwest, if we had power produced at cost-based rates; that is, cost plus what it takes to deliver to consumers--but all of a sudden FERC is pushing a concept of standard market design and saying, Enron or Reliance has more expensive power, we will shove it on to your grid and you pay that higher rate. As Senator Murray adequately pointed out, this is not a plan we endorse. Some of my colleagues from the South also have concerns. Not only does this bill not do enough in protecting manipulation, it creates the possibility for more loopholes, more havoc, more chaos. Frankly, this is exactly how California got in trouble. Regarding a lot of market- based deregulation of the industry, everyone thought it would be competitive practices by which the cost of electricity would be driven down. This is not like something one can afford to have the price go up. One county, Snohomish County, had a 54 percent rate increase. We had printed in the Record yesterday an article from the New York Times that Snohomish County has a 44 percent increase. Consumers got disconnected from their electricity because they could not afford to pay. This is not one of these schemes when the ``free market'' does not drive down the price of a utility and ratepayers have something to do. They cannot go over to Nordstrom's and buy a cheap electricity contract and get electricity. They cannot go over to Wal-Mart and buy affordable electricity. They are stuck with these rates. They are stuck with the 54 percent increase and they will be stuck for years ahead. We had a 44 percent disconnect rate in that county.

Ms. CANTWELL. I yield.

Ms. CANTWELL. I thank the Senator from California for asking that question and for being a cosponsor. The Senator understands all very well how painful this has been to the California economy. I was not aware that a third of the problem could be directly attributable to the crisis in California. I know businesses have closed in Washington State. I know people have moved to other regions and made other investments because the rate is high in our State. I know the amount of money paid by higher utility costs for our west coast region is $6 billion. Ratepayers in the West paid a $6 billion increase in their electricity bills because of the market manipulation. When I think about the little time we have, maybe 6 hours total to debate this amendment, we gouged the ratepayers $1 billion and we are going to talk $1 billion an hour here. That is hardly the remedy for which I think people are looking. What they are looking for is some immediate action, saying these kinds of activities will not take place again, in the future. So the Senator from California, Mrs. Boxer, is correct. The impact has been devastating. It has been devastating to California's economy, and obviously we would like to see some relief. For the moment, what we are trying to say in the Cantwell-Bingaman-Feinstein-Boxer-Hollings- Wyden amendment is that this kind of market manipulation ought to be outlawed specifically in the Power Act today so this does not happen again. As we are looking at natural gas price increases and people are getting anxious, why would we have an electricity title that is unclear as to what the penalties are? Actually, under the Oxley legislation of Senator Sarbanes and Congressman Oxley, on the SEC side, on the auditor's side, it said: We are going to get tough. These are new requirements. We are going to put this in the statute. Yet on the electricity title, we are repealing PUHCA, as my colleague from Washington State said, the one consumer protection law that has been on the books since 1935. Why would you change a law that has been on the books since 1935 when you just had the biggest pyramid scheme ever to defraud consumers, knowingly admitted by Enron, knowingly admitted by FERC, knowingly admitted by the Department of Justice, knowingly printed by every newspaper in the country that manipulation was going on? Why would you repeal the consumer protection laws on the books? You would actually try to enforce them. That is what the Cantwell amendment does today, as the clerk read this morning. It simply says the manipulation of those contracts cannot be just and reasonable and put that in the Power Act, plain and simple. Plain and simple, not the 43 pages we have in the title addressing this issue, which I am sure tries to address the issue, but it falls far short.

Ms. CANTWELL. Mr. President, I ask unanimous consent that Senator Harkin and Senator Rockefeller be added as cosponsors to the amendment.

Ms. CANTWELL. Yes.

Ms. CANTWELL. My colleague from California has asked a question that is very important. No, I cannot imagine why any of my colleagues would want to vote against this amendment that prohibits market manipulation and puts that in the Power Act in a very simple way. She mentioned something very interesting. A lot of people talk about this as the California energy crisis--the California energy crisis. Her economy has been devastated, but California actually had a retail cap, which meant even though those prices were being charged, and it left the California economy in disarray and a bill at the State legislative level that is exorbitant, what happened in Washington State, because we didn't have retail caps, is that the ratepayers actually saw the increase in their day-to-day electricity bills. They saw it to the tune of 88 percent increases, 61 percent increases, 54 percent increases. Those disconnect notices are real. The companies that have left or are leaving the State are real. The long-term impacts on our economy are real. No, I cannot imagine, if this had happened to any of my other colleagues from other States, that they would not be in the same position I am in today, or Senator Murray, saying, at a minimum, outlaw this market manipulation. So I appreciate the question the Senator from California has asked. I appreciate her keen attention to this issue. I know she has spoken many times on the floor about what has happened to our colleagues from the West and particularly how devastating it has been to her State. I appreciate that.

Ms. CANTWELL. Mr. President, the bottom line is, in this amendment, while round-trip trading is covered and some, I am sure, well- intentioned language on reporting and falsifying information to FERC, it does not cover a myriad of other manipulative schemes that have been deployed and used by Enron. Fat Boy is not outlined under the Domenici language. Ricochet is not outlined under the Domenici language. Death Star is not outlined under the Domenici language. Load Shift, Get Shorty, and Wheel Out are not outlined under the Domenici language. I understand the chairman wants to see that the manipulation stops. In this Senator's opinion, that manipulation will stop when this body stands up and says to the American people with simple language in the Power Act: Manipulated prices are not just, they are not reasonable, and anyone who deploys them are not doing so in the public interest, and we cannot give them market-based rates. If this body will say this, then any future debate about natural gas prices will not be about whether some company manipulated them, it will be about the real issues of the supply and demand. Let's give the consumers confidence that market manipulation is prohibited in Federal law and that this body does not condone Enron's activities but is going to be aggressive in outlawing them. Mr. President, how much time do I have?

Ms. CANTWELL. For 10 minutes of the time I have remaining, Mr. President.

Ms. CANTWELL

Ms. CANTWELL. Mr. President, I ask unanimous consent the privilege of the floor be granted to Antonio Gonzales, Daniel Archuleta, Jasmine Fallstitch, Christine Nelson, Ryan Davies, James Guttierrez, Frank Murray, Tara Peterkin, and Scott Pearsall for today.

Ms. CANTWELL

Ms. CANTWELL. Mr. President, what are these schemes that were perpetrated on ratepayers in the West? Get Shorty is a scheme that individuals may have read about in the paper, or maybe some individuals know from being in California or hearing parts of what happened in Washington State or Oregon. I thought it was the title of a movie. I did not know it was a clever marketing tool presented by a bunch of executives at an energy company to manipulate the prices so my ratepayers might pay more. I could not believe something like that would happen. Another scheme that was part of the process is Load Shift, another way in which the individual consumer did not understand that some trading was going on with the price, and yet prices could be inflated and because, again, we had a shortage and had to go out and buy on the spot market, we were trapped at buying at that high rate. There is another attempt to defraud consumers known as the Silver Peak Incident. Silver Peak refers to a major transmission line in California but is outlined in an internal Enron e-mail that was made public by the FERC investigation. It is also synonymous with a scheme that was concocted by the Enron chief trader of the West who has since pled guilty to charges of conspiracy to commit fraud, Mr. Tim Belden, and on May 25, 1999, Mr. Belden filed 2,900 megawatts of an offer to sell within the California PX, the transmission line that could carry only 17 megawatts of power. So the California PX and ISO did, in fact, detect that there was an anomaly. They ended up raising the price 71 percent that day, and eventually Enron and the PX reached a settlement in which the company paid a $25,000 fine. It shows the kinds of problems that are in these various schemes, Fat Boy, also known as Icing Load, basically into realtime power markets. According to a smoking gun memo that Enron had issued on December 6 and December 8, Fat Boy was one of the most fundamental strategies used by traders. According to one trader, it is one of the oldest tricks in the book. It is now being used by other market participants. I want to read to my colleagues how Enron's own attorney described Fat Boy, but first remember how the market worked. It was the job of the California system to balance the supply and demand within California's transmission, and that required market participants to submit schedules of how much power they planned ahead of time. Given that there are various fluctuations because of weather and the demand that consumers have, it was simply a fact of life that marketers and utilities were not able to forecast to the exact megawatt the precise amount that would be needed. Thus, in order to ensure that the lights stayed on, the ISO would offer payments to utilities that would increase their generation in realtime in order to make sure that supply and demand matched up. So to take advantage of the situation, Enron would anticipate when the market was going to be short on supply. It would then submit a false day-ahead schedule loading the lines with generation it knew it had no intention of really using. That way, when it accessed the portion of power it put on the realtime grid, it would receive extra payments from the ISOs in keeping the lights on. That is right. By falsifying its day-ahead schedules, Enron received untold millions for pretending to keep the lights on in the West. I can assure my colleagues that is a very cruel joke to play on consumers in the West. So what we have before us in the Domenici amendment is a failure to protect consumers in the repeal of PUHCA and in the continuation of not outlawing these very practices that Enron has deployed. What we want to do is take all these schemes and include them in an amendment that I will lay down tomorrow that basically bans market manipulation. Yes, I would like to see us adopt the Dayton amendment that keeps the 1935 law on the books. Because, yes, left alone, energy marketers have shown that even after 70-plus years, they can recreate the same types of market manipulation. So we need to have protections in place. Round-trip trading is not the only thing that needs to be addressed in this bill in addition to PUHCA. What needs to be addressed, besides protecting the Public Utility Holding Company Act and keeping that on the books, and besides saying that round-trip trading is a problem, we also need to make sure these various other schemes, the Wheel Out scheme--I do not know who the marketing person was who thought of these themes. I am amazed--the Black Widow scheme, the Cuddly Bear scheme, the Red Congo scheme--people can see we are having a tough time getting all of these charts up here because there were so many schemes of manipulation, basically undertaken by a variety of individuals who thought this was a great idea to make money--the INC-ing scheme and the Non-Firm Export scheme. The amendment I will lay down tomorrow says all of these manipulations, not just on day-trip trading but all of these practices are illegal; that the Senate will not put up with market manipulation; that the Senate has seen, not just on the Democratic side of the aisle but the Republican side of the aisle--I want my Republican colleagues to join with us tomorrow and say that market manipulation is wrong--that it is wrong and we believe we need stronger consumer protections; that we think the Federal Energy Regulatory Commission should be given the powers to make sure we are protected from these schemes; that we have done our job from the Enron crisis, where we have learned that we need to do a better job on accounting practices; that we have learned that we need to do a better job on requirements of the SEC and, yes, we in the Senate understand that energy prices can be manipulated and we are going to do a better job of making sure the tools stay in place to protect consumers. That new enhancements to those tools prohibit these kinds of schemes from ever happening again. As painful as this crisis has been for Washington State and for the West, this particular amendment I am offering is really about our next steps moving forward. It is about natural gas pricing. It is about the future manipulation that could happen if we do not put protections in place. It is about saying that we want to make sure, as we continue towards a diversified energy plan for our country, getting more natural gas from Alaska with a new pipeline, looking at renewable energy, looking at conservation, looking at all sorts of alternative fuels, planning for the hydrogen fuel economy, that while we are doing all of those things, we are going to make sure market manipulation does not take place. That is what is at stake with the amendments we are going to be voting on tomorrow. Mine will not be the only amendment. As I have mentioned several times, Senator Dayton has a great amendment in which he says we should leave the Public Utility Holding Company Act in place. I am trying to stop these marketing schemes from being foiled on other States and other economies. I am trying to say the billion-plus that was lost in Washington State and the over $3 billion that was lost in California is economic havoc that should never happen again to another State in this country. To do that, we have to pass the Cantwell amendment that says these market manipulations are outlawed. That is what we are going to try to do tomorrow. I hope my colleagues will take the time tonight to understand this. I point out my colleagues have talked about this Energy bill and the various aspects of that Energy bill in a way that would leave most thinking these are simple issues and we should basically dispense with them quickly. As I said, $6 billion to the west coast economy--and that is just the costs of additional power that we have had to buy at higher rates; that is not the ancillary costs of other businesses who have had to shut down. We have had a paper company in Everett, WA, threaten if we have one additional rate increase of even a couple percentages, they will probably have to shut down that facility. We have had aluminum plants throughout the State of Washington that had to shut down for periods of time. If we have another rate increase they could be shut down permanently. We are talking thousands of jobs. We have had other industries say they do not think they could survive another rate increase. It is hard when we have challenges to not say we should have a rate increase. My response is, why can't we get out of these long-term contracts by Enron? Why can't we renegotiate what have been manipulated costs we in Washington have had to pay for? When I think of what has happened to Washington State, we are talking about more than $6 billion. We owe it to people to have a debate about these issues. I plan to offer several other amendments. It is incredible we allow big companies such as Enron to lobby for and to support the nomination of these FERC commissioners. Why should a big company like Enron get to influence the administration on who should chair a regulatory entity whose job is to regulate that very entity that is pushing their nomination? I will have an amendment about that. I think the Federal Energy Regulatory Commission which engages in 15 calls with Wall Street to tell them when and how they are going to make decisions on these contracts and whether they are just and reasonable. I don't see why we should have a Federal Energy Regulatory Commission that spends its time telling Wall Street in advance whether they should try to settle manipulated contracts out of court with clients. I don't think that is their job. We ought to have more protection on cost-based pricing than we have. We will have other amendments that try to address this issue about what we do about the fact that this voluminous report by the Federal Energy Regulatory Commission says all these contracts have been manipulated. Yet they fail to do nothing about it when the Federal Power Act says it is the commission's job to do something about unjust and unreasonable rates. That is what the Federal statute gave the authority to FERC to do, to make sure on wholesale rates the consumer was not gouged with unjust and unreasonable rates. Now we have a Federal entity saying, yes, they certainly are manipulated contracts. These schemes are unbelievable, but we are not going to do anything as regulators to help the ratepayers out of this situation. We will have an amendment addressing the failure of FERC to do anything about these manipulated contracts. Some of my other colleagues will have amendments dealing with this section. I don't know whether Senator Feinstein will offer her amendment on derivatives but, again, that is another loophole Enron walked itself through by coming to Congress and lobbying for an exemption to the Futures Commodities Trading Act. They said online trades ought to be exempt. That was very smart of them to get that loophole. Why? Because then all online trading, that some of these schemes are the names for, was completed online where prices were manipulated in trades, inflated, and consumers ended up paying the higher price. They get the derivatives loophole in the futures commodity. We say in America you can trade futures on corn and a variety of other agriculture products but you have to have open books. You have to have transparency. You have to show what you are actually doing so that if there is some sort of manipulation of the market you can come in and see what that manipulation is, a regulator can investigate. But no, this body, several years ago, probably unknowing as to the unbelievable impact, said, let's go ahead and give them this exemption. We found that a loophole big enough to drive a truck through--I should say big enough to drive billions of dollars through; that gouged consumers. I hope Senator Feinstein will offer her derivatives amendment, which I cosponsor, to close that loophole. Some of my colleagues say, we voted on that already; it failed. I ask my colleagues, we voted on that amendment before we knew of all these schemes about manipulation. Now we know these schemes and manipulation have happened and we are not going to try to do something to close those loopholes? It is something we need to bring front and center to the American people, demonstrating we here are doing our job. We are doing enough to get something done. I have letters from various constituents through the West who chronicled events that have happened to them, individuals who have either sent E-mails, letters or various documentations about the problems they have seen in the energy market. The various costs they have endured paying for additional electricity, which then meant they had to make other choices. I know people that not only were part of that 44 percent increase in disconnect rates. People who had to make other choices about education, about vacations, including a sad story from a woman who could not even send her daughter to the prom because she could not afford to buy a dress because that money went to their energy bill instead. What it comes down to tomorrow is whether we are going to allow this manipulation of Fat Boy, Get Shorty, Ricochet, Death Star, which the Domenici amendment is silent on. Whether we are going to take a vote to say that market manipulation is wrong. What are we going to say to ratepayers who had to pay 88 percent increases, 61 percent increases, 54 percent increases, 71 percent increases, 43 percent increases? Again, these aren't increases for 1 year, these are increases that my ratepayers are stuck with. They are stuck with them because they signed an Enron contract and because we have a Federal Energy Regulatory Commission that basically says: Yes, they have been manipulated, but we don't care, you still have to pay that rate. I do not want this to happen to other parts of the country. I don't want to see economies like the Northwest economy, or the west coast economy, which is a critical part of our Nation's economy, suffer the consequences of manipulation of energy prices. The American people, to whom I have to answer when I go home to Washington State, or in other parts of the country if I travel, say to me: How come I am stuck with an 88 percent rate increase? How come I am stuck with a 61 percent rate increase? How come I am losing my job because our company can't afford the high electricity costs? or, How come my school district is paying high electricity rates and we have to pay a higher tuition? How come our school district is asking for a levy because we have higher electricity rates? People are not even taking action on giving us relief. We will come back at this body on what we should do about past bad actions. But what we need to do tomorrow on the Cantwell market manipulation amendment is say that market manipulation of energy prices is wrong and that an energy title that fails to address these issues is not satisfactory. I could take the last few minutes I have tonight, of my 1 hour, and tell you six or seven things that are also wrong with the Domenici electricity title. There are lots of schemes in there that run towards a market-based system on regional transmission organization and standard market design that I know my colleagues from the South and parts of the West probably are not too anxious to hear about, aren't too excited that I put in play. The Domenici amendment is a step closer to that. Why do they want more of a free market? Because they want to see having that free market without the regulatory aspects of the Public Utility Holding Company Act, or having oversight of mergers, or having these kinds of hammers making sure no manipulation takes place. They want to see how much further prices can be manipulated. They want to see how they can have a free rein on what really is a needed utility for the American people. I think, regarding those RTO and standard market design schemes that are also part of the Domenici underlying amendment, it is the absolutely wrong time to be talking about moving towards more change. We have just had this crisis. My State is still paying for this crisis. We are going to still be paying for it for years. I understand the President is coming to the Northwest in August. I hope the President has an answer for why his administration, and the Federal Energy Regulatory Commission, have not dealt with this issue. I hope he has an answer, to say to ratepayers why we should continue to be gouged on this issue; why we in the West, even though contracts have been manipulated, still have to pay those prices. I would say to him: Mr. President, Washington State has a bright future. It still has a software economy. It still has an aerospace industry. Yes, it has been challenged, but it is still strong. We have a burgeoning biotech industry. We have a huge trade community. We have a vibrant, diverse agricultural economy throughout our State. But none of those can continue to exist with exorbitant energy prices that have been manipulated. I hope when he comes to Washington State, he has an answer. I can tell you right now, that answer will not be well received if it is about just creating more supply. We are all for creating more supply in Washington State, and we are all for diversifying, but we are not for market manipulation. We have to think through these other aspects of the Domenici amendment on RTOs, regional transmission organizations, standard market design and the other elements that really do call into question our ability to regulate the cost of electricity, for which the American people count on us. I hate to think, after 70 years of having a similar pyramid scheme push us into having the Public Utility Holding Company Act, that somehow this body will not get the message. Instead of just dealing with this crisis that we have dealt with in electricity--maybe not next year, maybe not in 5 years, but 7 years down the road--we end up having a similar crisis with natural gas, and, instead of just affecting the west coast and Washington ratepayers, it impacts the whole country. Fair energy prices are part of having a healthy economy. Affordable energy prices help to continue to stimulate economic growth. But manipulated energy prices are not just. They are not reasonable. They are not in the public interest. This body ought to take strong action against them. I know my colleagues all care about this issue. We wanted to do the right thing on securities law. We wanted to do the right thing on accounting law. It is time, with the Cantwell amendment tomorrow, to do the right thing on making sure that energy market manipulation is prevented and does not happen again. I yield the floor.

Ms. CANTWELL. Mr. President, I thank my colleagues for their cooperation. We want all Members to understand the amendment I will be offering tomorrow, and we certainly want the American public to understand it. I have a few comments on the Domenici underlying amendment and on the Bingaman amendment as well. They are related to our overall effort. Let me step back for a moment. The debate we have been having involves important issues about how America moves forward on an energy bill, how we diversify our energy away from foreign dependence, and how we make the right investments. I have a lot of concerns about this bill, that it is not on target making the right investments. I am sure I will have a chance to get to that point later as this bill continues to be debated. But what I feel is most important tonight is that my colleagues and the American people understand this bill has significant changes in it as it relates to consumer protections and the failure we have had as a government in protecting consumers from the energy crisis that has damaged the west coast economy. When I think of this debate we have had for the last hour or two-- actually for the last day or so--about how much time we should give to the Energy bill, I find it amazing. Because the west coast economy got hit basically to the tune of about $6 billion. That is the cost for manipulated contracts that we in the west paid for in our economies. So when you say, let's debate these amendments and let's get them off the table, let's give 6 hours to debating these amendments, we are basically saying to the west coast ratepayers: We are giving you 1 hour for every billion dollars you were gouged by Enron and market manipulators. We can do better than that. We ought to be willing to give the American public at least an hour for every million dollars they paid in high energy costs that were part of manipulated contracts. I feel very fortunate that I have an hour tonight and that my colleagues from the west and I have 2 hours tomorrow to talk about this important issue. Frankly, the American people need to have their day in this body to debate fully whether we want to have changes to our consumer protection laws, whether this body, the Senate, is taking adequate measures to protect them from having another Enron crisis happen again, and whether our own regulators, the Federal Energy Regulatory Commission, are doing their job in protecting consumers. This debate we just had about the underlying Domenici substitute and the Bingaman amendment is about that, about whether we should allow for more of the free market or whether we should have more controls. My point to the American people is that we have a Federal Energy Regulatory Commission that has not done its job. The Federal Energy Regulatory Commission deserves an ``F'' when it comes to protecting consumers. Let me show what has happened in my home State of Washington, how consumers have been gouged by high electricity prices. Yes, we were the unfortunate State that got caught with the second worst drought on record which meant our hydro system wasn't producing as much power as we needed it to produce. Consequently, what happened? Well, we had to go out on the spot market and buy electricity. When we went out to buy that electricity, we bought it at a time when California had gone through their deregulation and there were exorbitant prices, sometimes 300 times the price of electricity. Our utilities were forced to buy that power. Our consumers were forced to pay that price. You say: Well, that is an unfortunate circumstance of that time period and the fact that your State had a drought. I can tell you it wasn't all related to our State having a drought. What we have found since this time is these contracts were manipulated. Enron has said they were manipulated. The Department of Justice has said they have been manipulated. We have a Federal Energy Regulatory Commission report--that report is so voluminous, many pages--that basically documents all the different ways in which these contracts were manipulated. What is the result? The result of that has been in my home State of Washington we have had utilities that have ended up having increases in their rates. Down in southwest Washington, in the Vancouver area, there has been an 88 percent rate increase; in parts of King County, a 61 percent rate increase; in Snohomish County, a 54 percent rate increase; over in eastern Washington, in Okanogan, one of the areas that is most economically hard pressed in our State, a 71 percent rate increase; over on the Olympic peninsula, a 43 percent rate increase. I ask my colleagues: Which States would be willing to put up with those kinds of rate increases, from an energy crisis where contracts have been manipulated, and say it is OK? The kicker in this situation is these aren't just rates for 1999. Because of this crisis and the manipulated contracts Enron has put forth, we are stuck with those high energy costs for the length of those Enron contracts. In fact, even though this report from a Federal agency says these contracts have been manipulated, and unjustly so, these utilities, particularly the one here in Snohomish County, have to pay this 54 percent rate increase for another 5 years. They are stuck paying these Enron contracts for 5 years. When the utility said: Why should we be paying this price? Why should we pay a contract that has been knowingly manipulated? Enron is suing them. Can you imagine that? Enron, who has admitted guilt in manipulating contracts, has the audacity to sue utilities in my State, forcing them to continue to pay these high rates. This debate is about whether we are going to get some relief. Somehow people think maybe there is a way this rate increase of 54 percent doesn't really impact people. If you think somehow this really isn't causing harm, I want to submit for the Record a New York Times article from December of 2002, just last December, where it showed we had more than 14,000 customers from that local utility in Snohomish County basically disconnected from their energy source because they couldn't pay. We saw a 44 percent increase in actual disconnections in Snohomish County because people could not afford to pay that 54 percent rate increase. I ask unanimous consent to print the article I referred to in the Record.

Ms. CANTWELL. Absolutely.

Ms. CANTWELL

Ms. CANTWELL. I object, Mr. President.