Statement by U.S. Senator Dianne Feinstein
on the Bush Energy Plan
May 17, 2001

“For Big Oil and other suppliers, the Bush Energy Plan is a dream come true. But among those most left behind are the people and businesses of California who have been under siege by electricity and natural gas marketers bent on gouging every cent they can from a broken energy market that the Bush Administration has refused to help remedy.

This lengthy document will not provide one more kilowatt to California this summer, prevent one more minute of blackouts, or keep one less dollar from being transferred from California into the hands of the Texas-based energy producers.

In fact, it is largely a bible for long-term energy production and not even a pamphlet for the urgent short-term actions needed to help us get out of the crisis.

And while the Bush Energy Plan is focused primarily on increasing the supply of oil, gas, coal and nuclear power, it appears only belatedly to have examined the value of energy efficiency, renewable fuels and conservation.

At a time of rising gasoline prices, increasing fuel efficiency is the single most effective action we can take to limit our reliance on foreign oil, save consumers money at the pump, and reduce global warming.

Just by closing the SUV loophole, as I proposed in a bill with Senator Olympia Snowe, we could save one million barrels of oil a day, reduce oil imports by 10 percent, and prevent 240 million tons of carbon dioxide emissions from entering the atmosphere. The time for action is now, we don’t need endless studies.

But perhaps the most egregious flaw in the Cheney Task Force report is the failure to address the energy crisis on the West Coast, the worst such crisis in a generation. In California we are at the precipice. Federal help is urgently needed to ensure a reliable and stable electricity supply free of price gouging and market manipulation.

The North American Electric Reliability Council predicts 260 hours of rolling blackouts – an average of 20 hours a week – because of a power shortfall that could be as much as 5,000 megawatts during periods of peak demand.

The State has already approved 15 new power plants, including nine that are now under construction and four that will be online this summer or fall. Nearly a dozen more are in the pipeline and six new “peaker plants” will be online this summer. Over the next four years, that’s 20,000 megawatts of additional electricity, according to Governor Davis, enough for 20 million residents. But we need Federal help until these plants can begin to come online.

Already one major utility has gone bankrupt, another is at the edge. Companies are closing because of exorbitant energy costs, and the economic ramifications for the State’s and the nation’s economy are foreboding.

The wholesale cost of electricity for California has escalated dramatically from $30 a megawatt two years ago to more than $300 a megawatt this year, with price spikes climbing to $1,900 or more. And the annual cost of electricity for California has jumped from $7 billion in 1999 to $28 billion in 2000 and is estimated to cost $70 billion this year.

The two things the Federal government could do – and should do – immediately are:

• establish temporary wholesale price caps or cost-based rates in the Western region until new sources of energy can be brought online; and

• restore the price cap on the transportation cost of natural gas, which the Federal Energy Regulatory Commission lifted on a two-year experimental basis in February 2000, and has led to natural gas prices being three times higher than anywhere else in the nation.

Unfortunately, the President and his task force have been driven by ideology, ignoring the fact that the energy market is broken in California and ripe for gaming by generators and marketers. Action by the Federal government is needed now. Unfortunately, in this regard, the Bush energy plan is a failure.”