WASHINGTON, DC - Today, U.S. Senator Maria Cantwell chaired her first U.S. Senate Energy and Natural Resources Committee Subcommittee on Energy hearing on ways to improve energy and natural gas market transparency and regulation. Cantwell has long called for more transparency over energy markets to prevent manipulation and protect consumers from out of control oil and gas prices. Yesterday, ahead of today’s hearing, she introduced legislation that would increase the Federal Energy Regulatory Commission’s (FERC) ability to police the electricity and natural gas markets. During the hearing, Cantwell and witnesses also discussed draft legislation to increase transparency and data collection in the oil markets. Robert McCullough, President of McCullough Research in Portland, OR, and Gerry Ramm, Senior Executive, Inland Oil Company of Ephrata, WA testified during the hearing.

 

“Wall Street imploded just as gas prices dropped in half; it’s clear that energy prices are dictated by more than supply and demand,” said Cantwell. “Transparency and providing regulators with the tools they need to get the job done are key to getting energy markets functioning properly again. Now is the time to learn from the lessons of the past, including Enron’s manipulation of the electricity markets that cost West Coast consumers over $40 billion, and stop bad actors before they wreak any more havoc.”

 

Robert McCullough was instrumental in exposing Enron’s manipulation of electricity markets that caused the West Coast electricity crisis. Gerry Ramm represents the more than 8,000 independent fuel marketers who belong to the Petroleum Marketers Association of America. Both testified at today’s hearing along with representatives from the Energy Information Administration and the Federal Energy Regulatory Commission.

 

“While oil is arguably the U.S. economy’s most important commodity, it is ironic that no agency of the U.S. government has been assigned the task of investigating and explaining the extraordinary price changes of last year,” said McCullough during today’s hearing. “The inability of the federal government to fully investigate oil price behavior in 2008 is fundamentally a data problem. The transparency legislation discussed today is a step in the right direction because it will expand the EIA’s ability to track oil inventories within the U.S. by owner.”

 

“PMAA and our customers need out public officials to take a stand against abusive trading practices that artificially inflate energy prices and severely damage our economy,” said Ramm. “Let’s make sure that these markets are competitively driven by supply and demand and not purely the speculative whims and greed of Wall Street.”

 

Currently, the FERC has cease and desist over electricity markets and can prevent an organization that is suspected of manipulating the market from continuing their trading activity, but they do not have this same authority over the natural gas markets. 

 

Cantwell’s legislation would provide the FERC with several new anti-manipulation enforcement tools:

 

Provide the FERC with “cease and desist” authority over any entity they suspect of manipulating the markets. This allows FERC act more like a cop catching a burglar during a bank robbery, rather than a cop investigating the scene after-the-fact.

Allows the FERC to freeze the assets of any entity suspected of market manipulation. 

 

Currently, FERC can charge an entity with manipulation and seek penalties. But, if that entity liquidates its assets, there’s nothing left to collect to compensate for damages or FERC’s costs of taking enforcement action. Penalties collected by FERC are either refunded to ratepayers or go to pay for FERC’s enforcement actions.

 

Empowers the FERC to protect electric consumers from potential abuse of market power or market manipulation by temporarily changing or suspending power rates for up to 30 days. If FERC would have had this authority during the West Coast energy crisis they could have stopped the skyrocketing electricity price increases before they got out of control.

 

Lengthens the time period for which refunds can be collected if FERC determines a natural gas pipeline owner charged unjust and unreasonable rates for transporting natural gas. Currently, FERC can only collect for damages from the date of the completion of the case. This provision would allow collection of refunds starting from the date at which FERC filed the case. 

 

A copy of Cantwell’s bill and her opening statement from the hearing are attached.

 

 

 

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