subcommittee bill that the co-ops signed off on, and the municipals, with concerns agreed to. So, my bottom line, Mr. Chairman and members of the committee, I want to commend you, personally, for your leadership. I think you have done an outstanding job. I have talked to Senator Bingaman about these issues several times. And I know that he is very involved and very aware of what the issues are. I would really encourage you all to try to move a bill. I am encouraging Chairman Bliley to move a bill at full committee sometime next month, when we get back from the recess. The window is short, but there is certainly an opportunity to still put together a comprehensive electricity bill that would help the Nation. And finally, Secretary Richardson and others have begun to talk about some standalone bills-PUHCA repeal, standalone reliability bill. I would discourage those kinds of discussions. I think we can do the comprehensive bill. If you take away your effort from the comprehensive approach to a raffle shot approach, in my opinion, we are going to end up with nothing. With that, Mr. Chairman The CHAIRMAN. Thank you very much, Congressman. [The prepared statement of Mr. Barton follows:] PREPARED STATEMENT OF HON. JOE BARTON, U.S. REPRESENTATIVE FROM TEXAS Thank you, Mr. Chairman, and Members of the Committee, for the opportunity to testify. I applaud your interest in this important issue and your holding these hearings. I have watched with interest the work of Chairman Murkowski and have looked at his bill, S. 2098. I am Chairman of the House Commerce Subcommittee on Energy and Power. I'll report for a moment on consideration of bills that originally came out of this Committee. Senator Craig, our Subcommittee yesterday passed an amended version of S. 1236, your hydro extension legislation. Your Bonneville "Joint Operating Entities" bill was part of our general hearing, and I will work with Commerce Chairman Bliley on it. Chairman Murkowski, we expect to consider S. 422, your Alaska hydro exemption bill, in May. As you all probably know, my Energy and Power Subcommittee reported a somewhat similar electricity bill, H.R. 2944, to the full Commerce Committee on October 27 of last year. Action on that bill should occur in May, too. In the Subcommittee, we adopted a very inclusive process of many hearings, informal working groups with outside experts, and ongoing conversations among Members. After our experience and my review of S. 2098, I am confident that our two committees can at some time agree on a restructuring bill to send to the White House. More than half of the States have chosen to open their retail markets to competition. The task left to Congress is to remove barriers, improve wholesale markets, foster an effective set of transmission grids, improve reliability, and encourage, while holding harmless, all types of competitors to boldly move to the new world of competition. As more and more States open their retail markets, there is no reason for Congress to impose a date certain. Instead, Congress should complement the actions of the States and focus on core Federal issues-issues that are beyond the ability of States to address. Chairman Murkowski's bill, S. 2098, has many similarities to H.R. 2944. They both repeal PUHCA without condition, prospectively repeal the PURPA purchase and sale obligation, and leave the decision to the States about when to open retail markets. Both bills direct FERC to implement innovative transmission pricing policies, which should encourage transmission owners to increase transmission capacity, or at least try to do so. Of course, both bills also implement the consensus reliability legislation endorsed by NERC, the North American Electric Reliability Council. Neither bill has a mandate for participation in Regional Transmission Organizations (RTOS). Also, neither bill grants FERC unprecedented power to order utilities to divest generation. Interestingly, S. 2098's transmission expansion planning process allows for Federal eminent domain authority if a state has barred or delayed action, and if the plan is in the public interest. While many members of my Subcommittee recognize that improved siting is a crucial element of a better-working transmission grid, we have been unwilling as a group to grant FERC this authority. Our bill calls for regional compacts to which states voluntarily yield their siting authority. I will watch closely to see how this fares. Both bills would confirm FERC jurisdiction over the transmission component of unbundled retail sales, as well as State jurisdiction over the transmission component of bundled retail sales. As you may know, it is important that any future efforts address the concerns that industrial consumers, independent producers, and transmission-dependent utilities have about state jurisdiction. I believe concerns about State jurisdiction over the transmission used to make bundled retail sales are overstated. This is largely a transitional issue, since States require unbundling as they open retail markets. I am sure there is some creative solution that can honor the state role while ensuring equal access to the transmission grid on a nondiscriminatory basis. Another important issue is jurisdiction over the transmission facilities of munis, co-ops, and the Federal electric utilities. I encourage the Committee to look at the delicate compromise we tried in H.R. 2944. My bill does not give FERC explicit jurisdiction over them, but it does require comparable rates, terms, and conditions. Many have told me that we did strike the right balance here, and, politically, it helped me keep a coalition of co-ops and large public power together on this issue. S. 2098 addresses reciprocity a bit differently than the House bill, allowing open states to bar retail power sales by producers from closed states. I believe it is important to have reciprocity. But I do not believe it is a good idea to hand Congress' power to regulate interstate commerce over to the States. Our Founding Fathers reserved this power to the Federal level for a good reason-States interfered with interstate commerce to protect parochial interests during the Articles of Confederation. Our bill had a Federal prohibition on those sales, with some important exemptions, but my reciprocity language was struck during the Subcommittee markup. As we continue to look for a good reciprocity provision to push states toward open markets, I will be watching debate over S. 2098. I would encourage the Committee to consider consumer protections, which are not currently in S. 2098. There must be some way to honor finely-balanced State plans, the traditional State role in electric consumer protection, but all the while establish some Federal floor for slamming, cramming, privacy and related issues. Also, I believe truly comprehensive legislation must reform the Federal utilities, including the Tennessee Valley Authority and the Bonneville Power Administration. The subtitles in H.R. 2944 are compromise measures worked on with the House delegations in those areas and merit your attention. As I look at our Subcommittee bill and the legislation introduced by Chairman Murkowski, I see a good starting point. I encourage the Energy Committee to continue its work. I expect to work with Commerce Committee Chairman Tom Bliley and Commerce Committee members on both sides of the aisle to move good electricity restructuring policy as far as possible. I offer my time and experience to any member of this committee. I believe that in due time we will be sitting in a conference committee together to reconcile differences between two very good bills. Our Nation's consumers will be the beneficiary of our combined work. Thank you, again, Mr. Chairman, for the opportunity to appear before you and your Committee. The CHAIRMAN. I am not going to question you, but I leave you with a couple of thoughts. One on eminent domain. Our concern is it works in other areas-the gas, the distribution. And the question is: How are we going to get there from here? I suppose regional compacts may offer some relief, but we would like to have the input of your committee and your members, relative to, if they do not propose or support an eminent domain concept, what might they support to get there from here? The other point you mentioned on the regional reciprocity and the constitutionality of it, I think our bill allows a State, assuming that there is no discrimination, but again, I am not going to go into the constitutionality. You bring an interesting point. And it will give the lawyers something to do. And maybe Senator Bingaman has a comment on that, or shall we go to the next one? Senator BINGAMAN. Go ahead. The CHAIRMAN. All right. Senator Jeffords, good morning. And we look forward to your- Mr. BARTON. Mr. Chairman, may I be excused? I have got-we are expecting a vote at 10 o'clock in the House. The CHAIRMAN. Sure. Thanks very much for coming over. Mr. BARTON. Thank you. The CHAIRMAN. And your words of reassurance on the five megawatt exemption did not go unnoticed. Mr. BARTON. Thank you. [Laughter.] The CHAIRMAN. Please proceed. STATEMENT OF HON. JAMES M. JEFFORDS, U.S. SENATOR FROM VERMONT Senator JEFFORDS. Thank you, Mr. Chairman. As you pointed out, I have spent an hour harmonizing with the leader in sort of a warm-up for here, because I want to talk about harmony between electrical energy production and the environment. The CHAIRMAN. Is there flexibility in that relationship with the leader, or do you have to vote with him all the time? Senator JEFFORDS. There is quite a bit of flexibility, at times. So, it is a rewarding experience. Let us leave it that way. And I certainly want to thank the chairman for your hard work and commitment to restructuring the electric energy industry. And the chairman deserves commendation for working to modernize an industry largely operating under legislation written 65 years ago. Hopefully, the committee will put together a package of legislation that will last another 65 years. Mr. Chairman, I am deeply concerned, though. In the 5 years after deregulation of the wholesale market, utility investments and renewable energy fell by 25 percent. In the same period, powerplant smog increased by an amount equivalent to that of 37 million cars. Without clear incentives, such as those in my Clean Energy Act, deregulation of the power industry will become a race to the bottom. At the bottom, cheap energy is rewarded at the cost of clean air. The most polluting energy sources, as long as they are cheap, are chosen over all others. Mr. Chairman, I envision a different world. I envision a world where value is placed on clean air and healthy citizens; where newer, cleaner, and more efficient technologies are valued more than the dirtiest technologies. I hope you agree that electricity restructuring must be a race to the top and not to the bottom. For electricity restructuring to be a race to the top, it must accomplish four things. It must give consumers cheaper electricity, cleaner air, more renewable energy, and greater choice. The success or failure of any restructuring legislation will ultimately depend on whether or not we can do four things. Electricity restructuring must result in cheaper electricity. America needs cheaper electricity. And competition will give it to them. According to a report from the Energy Information Administration, a restructuring of the competitive electric industry and the elements of my Clean Energy Act will give Americans cheaper energy, cheaper electricity, and what is more, it will ensure that all Americans have access to affordable electricity. Electricity restructuring must lead to cleaner air. Americans need cleaner air, bluer skies, and a healthier environment. We need to preserve the health of our people, lakes and forests. We should begin by removing the loopholes in the Clean Air Act that allow dirtiest powerplants to emit freely. And we should follow-up by regulating toxic mercury emissions and reducing emissions that lead to smog and global warming. Electricity restructuring must promote renewable energy. Renewable energy is clean, inexhaustible, and made in America. It helps our farmers and rural communities. It provides good jobs and reduces our imports of foreign oil. Restructuring legislation needs to ensure that we invest more in renewable energy, not less. Utilities should generate a part of their electricity from renewable sources. We should make it cheaper and easier for consumers to install renewable energy sources on their homes, farms and small businesses. Finally, electricity restructuring must give consumers greater choice. Consumers should be given the ability to choose their electricity supplier and the information they need to do so, wisely. Consumers must be given accurate information about price, emissions and source of electricity. Mr. Chairman, my Člean Energy Act accomplishes four of these. I hope we can work together to give consumers cheaper electricity, cleaner air, more renewable energy, and greater choice. If your legislation can accomplish these things, it will not only pass into law, but will also last at least another 65 years. Thank you for this opportunity. And I look forward to watching your deliberations. The CHAIRMAN. Thank you very much, Senator Jeffords. We appreciate your statement. And that is quite an order. One of the problems we have, currently, is the definition of “renewable," as it applies to hydro. And as you know, the administration has classified it as-as a non-renewable. And some of us from the west have a little problem with that. Senator Smith has joined us this morning. Senator SMITH. Mr. Chairman, I do not want to be out of order, but I wonder if the Senator could elaborate where hydro fits in his bill, because it seems to me, no matter what energy source you choose, there are environmental trade-offs. And hydro has an impact on fish, but it produces the cheapest, most renewable, cleanest source of energy you can find. And I wonder how you would regard that. Senator JEFFORDS. I regard it as a renewable resource. Senator SMITH. Okay. Senator JEFFORDS. I think we have adequately or can adequately protect the fisheries, fish ladders, et cetera. And so, I consider it in that category. Senator SMITH. I thank you for that. The CHAIRMAN. I have no further questions, other than to wish you a good day and trust that your voice is in good shape for the balance of the day. Senator JEFFORDS. All right. Thank you. The CHAIRMAN. We are going to be joined now by the balance of our panel. And I think we have enough seats to accommodate everybody. First come, first served, however. Mr. Benjamin Montoya, president and chief executive officer of the Public Service Company of New Mexico, and chairman of the Edison Electric Institute. Good morning. Mr. MONTOYA. Good morning, Mr. Chairman. The CHAIRMAN. And he will be joined by the Honorable Clifton Below, senator from the State of New Hampshire, on behalf of the National Conference of State Legislatures. Is that pronunciation close enough? Senator BELOW. Below. The CHAIRMAN. Below. Excuse me. And Mr. Joseph Ronan, vice president of Calpine Corporation, on behalf the Electric Power Supply Association. Mr. Ron Moeller, corporate energy manager, Cargill Corporation, on behalf of the Electric Consumer Resource Council. Mr. Gary Zimmerman, executive vice president of Michigan Municipal Electric Association, on behalf of the American Power Association. Mr. Glenn English, chief executive officer of Natural Rural Electrical Cooperative Association. And finally, Mr. Alan Nogee, energy program director, Union of Concerned Scientists. How much time do you anticipate you are going to need for your presentations? Mr. MONTOYA. Five or six minutes, in my case. The CHAIRMAN. Okay. We will set the clock at six. And then you will get a warning light. And then you will get a red light. And then you will get me. [Laughter.] The CHAIRMAN. So, have we got this figured out? Okay. Does anybody have to catch a plane or have an appointment? [No response.] The CHAIRMAN. All right. Mr. Montoya, why do we not start with you? STATEMENT OF BENJAMIN MONTOYA, PRESIDENT AND CHIEF I am Ben Montoya, chairman and CEO of the Public Service Company of New Mexico, but today I am appearing on behalf of the Edison Electric Institute, an organization which I currently chair. EEI, I think, as you all are aware, strongly supports Federal electricity legislation that removes Federal barriers to competition, facilitates and supports State restructuring plans, addresses critical transmission and reliability issues, and applies the same rules to all competitors. However, we strongly oppose an electricity bill as a vehicle for micromanaging competition with punitive market restrictions. Transmission and reliability issues are undoubtedly among the most critical issues facing our industry today. And we urge the |