01.31.01

Statement by Senator Maria Cantwell Committee on Energy and Natural Resources: Oversight hearing to receive testimony on California's Electricity Crisis and Implications for the West

Thank you Mr. Chairman. I want to thank you for agreeing to have this hearing to address the larger implications of the California crisis, especially for Washington State. One significant consequence for my constituents is the loss of a paycheck as their employers are closing their doors. We hope temporarily.

These closures are not limited to our aluminum industry but include timber products, refineries, steel foundries and many other manufacturers, soon to be followed by companies that make a living supporting or using the by-products of these same companies. At the Georgia-Pacific mill in Bellingham, management made the tough decision that Christmas would feature the layoff of 850 employees. Public agencies are faced with the prospect of curtailing services to meet unexpected costs, such as the wastewater treatment facility in King County, which already needs an additional $8 million to cover energy costs.

Let me be clear that the people of the Northwest respect the long-standing power-sharing relationship with California and we support its continuation over the long term. We appreciate Senator Feinstein's and Governor Davis's letters of thanks to BPA for its role in helping to avert rolling blackouts in California and we stand ready to be partners in resolving this western crisis. However, let me be equally clear that I cannot support "solutions" -- which require more pain for Northwest consumers in order to maintain current rates or increase supply in California.

The continuation of the Secretary's order that forces the sale of excess power further erodes the financial stability of Northwest utilities. This, combined with the continued volatility of the entire western marketplace, only guarantees more drastic rate increases in order to cover costs, including the Treasury payment by BPA. While you will hear later more details of Northwest utilities' actions, BPA most recently announced a 60% rate increase over 5 years, with a 95% increase in the first year. These increases, which have been put in motion but not yet fully felt by many industrial and residential customers, will have further negative effects on our economy, and on the family paycheck.

Again, I appreciate having the Northwest's voice heard today and I look forward to working with my colleagues and our witnesses to help resolve this crisis in the West. Washington State's concerns cannot remain an afterthought. Our people, our cities, our rural communities and our industries are reeling from the impact already.

As some of you may remember from an earlier economic crisis in Washington state, the Boeing downturn of the 1970's, there was a billboard that asked, "Will the last person out of Seattle please turn off the lights?" Through dramatic rate hikes and shuttered businesses, the billboard this time may well read, "Will the last person out of Seattle please blow out the candle?"

My question for the panel focuses on the terms "dysfunctional and irrational" which have increasingly been used to describe our shared marketplace. As a result, a number of important figures in the energy industry have been calling for temporary price caps in the western market -- many of whom are incredulous that they would ever have found themselves advocating for market controls. As a further example, the Attorney General of Washington state, Christine Gregoire, yesterday announced an investigation of price manipulation and unfair business practices.

Have we reached a point in the market where some form of temporary price caps would help restore us to a rational marketplace? How is this answer affected by the requirements of the Federal Power Act that wholesale rates be just and reasonable?