Statement of Congressman John D. Dingell, Ranking Member
Committee on Energy and Commerce

DINGELL ELECTRICITY AMENDMENT

April 20, 2005

I appreciate this amendment being made in order, although it would have been far better if the rule had allowed my preferred amendment – which did not impose spending caps on transmission reliability. If ever there were a time to waive a budget point of order and work a real reform, this was it. Consumers should not have to face an increased risk of future blackouts because the cost of a bloated energy bill put pressure on essential reforms like reliability. This simply makes the case that Congress should enact transmission reliability reform – such as H.R. 878, which I introduced earlier this year – on a standalone basis.

The amendment I have been permitted to offer, however, contains many benefits for electricity consumers. It includes many of the reforms I and other Democrats proposed in past committee markups, on the House floor, and in conference during consideration of various energy bills.

First, the amendment would help prevent future Enron-like debacles, by providing the Federal Energy Regulatory Commission (FERC) broad authority to deter and punish fraudulent behavior that distorts electricity and natural gas markets. Enron’s ingenuity demonstrated how difficult it is for regulators to foresee every potential type of misconduct – and a recent FERC report concluded “Currently, the Commission has few remedies to address misconduct by market participants.”

Second, my amendment addresses a very important related electricity concern – the need to ensure FERC has authority to issue refunds for all electricity overcharges, like those west coast consumers suffered through in 2000-2001. Congress should make clear that refunds can and should be ordered from the date on which market manipulation or other chicanery began.

Third, my amendment does not repeal the Public Utility Holding Company Act of 1935, without which Enron could have purchased more utilities than it did, and sunk its tentacles even deeper into the electric industry. My amendment also requires the Securities and Exchange Commission (SEC) to toughen its administration of PUHCA. The amendment requires the SEC to review companies’ existing exemptions under the Act to make sure they do not assert false claims – as the Commission belatedly determined Enron had done.

With due respect to my colleague, Chairman Barton, I believe my amendment provides a far better alternative for consumers than the wholly inadequate provisions of H.R. 6. For example, H.R. 6 includes only limited and cosmetic changes to current federal electricity laws – it outlaws “roundtrip trading” and filing of false information, but it offers no protection against schemes like Enron’s “Death Star,” “Get Shorty,” and “Richochet.”

Moreover, H.R. 6 does not authorize FERC to grant full refunds to consumers who paid inflated electricity prices – but rather allows refunds only from the date a complaint is filed. In the case of a clever and determined actor like Enron, this could be months or years after a pyramid scheme of deception began.

Finally, H.R. 6 repeals PUHCA, leaving consumers and investors even more vulnerable to deception by Enron-type players who concoct “special purpose entities” to move money around while hiding behind a complex, opaque corporate structure. And as a recent Standard and Poor’s report stated, “Utility investment in non-core businesses has been responsible for most of the credit deterioration in the utility industry” and that, as a result, ratepayers may suffer “as higher borrowing costs eventually work their way into electricity tariffs.”

If you want to stop future Enrons, support my amendment.

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(Contact: Jodi Seth, 202-225-3641)