Filner, Hon. Bob, a Representative in Congress from the State of Califor- Hapner, Dede, vice president, regulatory relations, Pacific Gas & Electric; Stephen Pickett, vice president and general counsel, Southern Califor- nia Edison; Dean Vanech, president, Delta Power Co.; and Paul Desrochers, director of fuel procurement, Thermo Ecotek Hardage, Sam, president, Woodfin Suite Hotels, LLC; Bill Horn, chair- man, San Diego County Board of Supervisors; Douglas Barnhart, presi- dent, Douglas E. Barnhart, Inc.; Richard Thomas, vice president, Al- pine Stained Glass; Mark Seetin, vice president of governmental af- fairs, New York Mercantile Exchange; and P. Gregory Conlon, former Hebert, Curt, chairman, Federal Energy Regulatory Commission Lofgren, Hon. Zoe, a Representative in Congress from the State of Cali- Madden, Kevin P., general counsel, Federal Energy Regulatory Commis- sion; Fred John, senior vice president for external affairs, Sempra Madden, Kevin P., general counsel, Federal Energy Regulatory Commis- sion; Loretta Lynch, president, California Public Utilities Commission; Terry W. Winter, president and CEO, California Independent System Operator; and Larry Makovich, senior director, Cambridge Energy Re- McDonald, J. William, Acting Commissioner, Bureau of Reclamation; Brian Jobson, principal power contract specialist, Sacramento Munici- pal Utility District; Becky Dell Sheehan, associate counsel, California Farm Bureau Federation; and Thomas Stokely, senior planner, Trinity 440 Yates, Ed, senior vice president, California League of Food Processors; 6 Hapner, Dede, vice president, regulatory relations, Pacific Gas & Electric, prepared statement of Hardage, Sam, president, Woodfin Suite Hotels, LLC, prepared statement of Hebert, Curt, chairman, Federal Energy Regulatory Commission, prepared statement of Honda, Hon. Michael, a Representative in Congress from the State of Jobson, Brian, principal power contract specialist, Sacramento Municipal Letters, statements, etc., submitted for the record by-Continued Burton, Hon. Dan, a Representative in Congress from the State of Indiana, prepared statement of Desrochers, Paul, director of fuel procurement, Thermo Ecotek, prepared statement of Page 234 332 301 384 250 246 162 John, Fred, senior vice president for external affairs, Sempra Energy, prepared statement of 443 Lee, Hon. Barbara, a Representative in Congress from the State of California, prepared statement of 244 Lofgren, Hon. Zoe, a Representative in Congress from the State of California, prepared statement of 242 Lynch, Loretta, president, California Public Utilities Commission, prepared statement of 73 Madden, Kevin P., general counsel, Federal Energy Regulatory Commission, prepared statement of . 42 Makovich, Larry, senior director, Cambridge Energy Research Associates, prepared statement of 99 Malcolm, Steve, president, Williams Energy Services, prepared statement of 485 McDonald, J. William, Acting Commissioner, Bureau of Reclamation, prepared statement of 148 Pickett, Stephen, vice president and general counsel, Southern California 311 Sheehan, Becky Dell, associate counsel, California Farm Bureau Federation, prepared statement of Seetin, Mark, vice president of governmental affairs, New York Mercantile Exchange, prepared statement of 409 169 Stokely, Thomas, senior planner, Trinity County Planning Department, prepared statement of 175 Thomas, Richard, vice president, Alpine Stained Glass, prepared statement of 401 Uhler, Lewis K.,president, the National Tax Limitation Committee, prepared statement of Winter, Terry W., president and CEO, California Independent System 84 Yates, Ed, senior vice president, California League of Food Processors, prepared statement of 8 ASSESSING THE CALIFORNIA ENERGY CRISIS: HOW DID WE GET TO THIS POINT, AND WHERE DO WE GO FROM HERE? TUESDAY, APRIL 10, 2001 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON ENERGY POLICY, NATURAL Sacramento, CA. The subcommittee met, pursuant to notice, at 11 a.m., in the Sacramento Convention Center, room 204, 1400 J Street, Sacramento, CA, Hon. Doug Ose (chairman of the subcommittee) presiding. Present: Representatives Ose, Horn and Burton. Staff present: Dan Skopec, staff director; Jonathan Tolman, professional staff member; Regina McAllister, clerk; and Elizabeth Mundinger, minority professional staff member. Mr. OSE. Good morning. A quorum being present, the subcommittee will come to order. I ask unanimous consent that all Members' and witnesses' written opening statements be included in the record. Without objection, so ordered. I ask unanimous consent that all articles, exhibits, and other material referred to be included in the record. Without objection, so ordered. I ask unanimous consent that Members of Congress who are not members of the committee be allowed to participate in today's hearing. Without objection, that is agreed to. I ask unanimous consent that all questions submitted in writing to the witnesses, and their answers, be included in the hearing record. And, I ask unanimous consent that questioning in this matter proceed under clause 2(J)2 of House rule 11 and committee rule 14 in which the chairman and ranking minority member allocate time to members of the committee as they deem appropriate for extended questioning, not to exceed 60 minutes equally divided between the majority and the minority. Within objection, so ordered. I want to welcome everyone to the first of three hearings we will be holding on the California energy crisis. Judging by the turnout here today, I think we can safely say that this is a crisis that is on the mind of everyone in California and around the country. I am hopeful that these hearings will bring about an honest discussion of our problems, and produce some agreeable resolutions to this crisis. I especially want to thank Chairman Burton for allowing the committee the opportunity to conduct these hearings in California. Although Chairman Burton is from Indiana, I think we will find that resolving California's energy crisis is vital to the economic well being of the entire country. I also want to thank all of the other Members of Congress who made the journey to Sacramento, and, in particular, Chairman Horn from Long Beach. I look forward to your ideas and participation. The availability, reliability, and price of power are an integral part of our economic and social success. The converse of that statement is also true: An unavailable, unreliable, and expensive source of power will cause an economic and social crisis. And, to be sure, this is a crisis. Few public policy issues affect consumers as much as energy. Higher energy prices and the threat of blackouts affect all Californians. California consumers will be faced with higher energy prices that will cause real hardship to low income families and those living on fixed incomes. I am especially concerned about those who share a home with numerous extended family members. These families will be held to the same energy baseline use standards as a typical nuclear family, even though they could have two or three times as many people living under the same roof. Consumers will also pay more for products they purchase as businesses are forced to pass on higher energy costs to their consumers. I am deeply concerned that seniors living on fixed incomes will have to choose between air conditioning or costly medicines in the summertime, or heating in the winter. Either choice could be dead ly. In addition, as a result of the crisis, consumers will pay more in the form of squandered surpluses, resulting in higher taxes and cuts in government programs, such as education, law enforcement, health care, and tax relief. And I just want to point out, the San Francisco Chronicle this morning had an article that listed the daily expenditures for anti-smoking, for an algebra education, and for the war on amphetamine on a comparative basis to what we are spending, unanticipatedly for power. Businesses will also face increased costs as a result of this crisis. The cost of doing business in California is already very high relative to the surrounding States. I am fearful that high energy costs will drive more businesses out of California, because many of the small businesses here right now will be unable to pass on higher costs or relocate. The losses of good jobs and tax revenues because of the energy crisis are grave concerns for me. Intel Corp., for instance, has stated very clearly that it will no longer invest in California, citing an unfriendly business climate and uncertainty as to the supply of a reliable source of power. Let us also not forget that the California agricultural industry is being devastated by high natural gas prices, and must brace for massive increases in its electricity bill. As you know, most farmers operate on very tight margins. They simply will not be able to absorb the price hikes in both natural gas and electricity. Clearly, high energy prices will have a large, negative effect on the California economy, and could possibly drag the rest of the Nation into a recession. But, there is something even worse than high energy prices, and that is blackouts. Just last week, as reported by |