Onerous energy bill about to pass

Bloomberg: Industry lobbying pays off:

Energy companies spent $314.4 million to lobby Congress, the White House and federal agencies between Jan. 1, 2003, and Dec. 31, 2004, according to records filed with the Senate and compiled by PoliticalMoneyLine, a Washington-based organization that tracks lobbying expenses. During the same 24-month period, environmental groups spent $42.1 million.

In addition to their lobbying expenses, energy company political action committees and employees made $52.3 million in campaign contributions for the 2004 elections, according to the Washington-based Center for Responsive Politics, a research group that tracks campaign donations. Environmentalists gave $2.1 million.

Bob Whitson over at Howling at a Waning Moon has a handy summary of what the net-$11 billion bill will do in its final form. From requiring ``a delay of at least 141 days in a US government review of the Chinese-government owned CNOOC Ltd oil company's $18.5 billion bid for American-oil giant Unocal'' and giving the ``Federal Energy Regulatory Commission, not the states, exclusive authority to approve LNG import terminals'' to spending ``$1.3 billion for experimental Idaho reactor that would also produce hydrogen fuel'', the bill nets out at an $11 billion taxpayer-funded subsidy for big fossil-fuel companies.

Deep Blade Journal has discussed that item on nuclear hydrogen in detail, see posts here and here. Of course nuclear power is not going to solve the post-peak-oil transportation fuel problem. But that won't stop Bush, Cheney, and Idaho Republican Senator Larry Craig from sending ooodles of pork to Bechtel to build a nuclear-hydrogen monster at INEEL.

On the matter of liquefied natural gas (LNG), it looks like the cockiness recently expressed here in Maine by an Oklahoma-based company, Quoddy Bay LLC -- ``The $200 million liquefied natural gas terminal proposed on Passamaquoddy Indian land in Washington County should have its permits in less than two years and go into operation in 2009'' -- is justified as strong local opposition will be crushed by the new Energy Bill.

Stories abound about the nefarious Republican back-room dealing that has infected the entire process of this Energy Bill. For example, it was revealed by Alan Murry on CNBC in November 2003 that Representative Joe Barton (R-TX) and the secret energy bill writing committee was basically an industry-run legal shop. Murry confronted Barton on air during a segment on the now-defunct Capitol Report program, after receiving an MS-Word document containing language in the bill. The document properties revealed that authorship of the provisions originated in energy giant Southern Company's corporate suites. If anyone out there has access to LexisNexis, I'd appreciate a transcript look-up on this, as I am posting here from memory.

Enron Redux?
The really big kahuna in this bill (think Enron on steroids) as far as electric ratepayers' pocketbooks are concerned is repeal of the Public Utility Holding Company Act (PUHCA). There was a fine Mark Hertsgaard audio commentary on the public radio Marketplace program last night. Highly recommended.

So finally for today, I will include some text from a fine series of articles by Susan Milligan that appeared in The Boston Globe in October 2004. The series examined a wide range of issues concerning how big business influences lawmaking. But Milligan's reporting on how the PUHCA repeal came about is first rate. It explains the origin of the PUCHA, why it was enacted to protect electric customers, why financial elites so dearly wanted the repeal, and how they got it over the objection of consumer groups.

First on the to-do list was the elimination of a longtime regulation called the Public Utility Holding Company Act. Little known outside the energy and financial world, the regulation is a critical issue for the electrical industry, whose vast team of lobbyists persuaded negotiators in Congress to eradicate the law. In the hundreds of lobbying reports filed by those seeking to influence the energy bill, getting rid of electricity industry regulations shows up 98 times.

Electricity interests spent millions of dollars trying to kill the law. The Edison Electric Institute, which represents the electricity industry, spent $12,540,000 on a team of 35 lobbyists at its own shop and at 12 other firms to lobby Congress, the White House, and federal agencies against PUHCA and on other energy matters. Individual electricity companies and others against the landmark regulatory law dumped another $56,420,670 million on lobbying last year, according to reports filed with the clerks of the House and the Senate.

Nor has the industry been stingy in handing out campaign contributions. Electricity industry PACs and executives gave a total of $7,733,941 for the 2004 election cycle, making the industry the 19th biggest contributor, according to the Center for Responsive Politics. Tauzin, the powerful former chairman of the House Energy and Commerce Committee, was especially enriched, receiving more than $150,000 in campaign funds from the energy industry as a whole, including nearly $76,000 from the electricity sector, according to the center.

The effort was successful: Language killing the watershed regulatory law is included in all versions of the energy bill now on Capitol Hill. If the measure becomes law, both supporters and critics anticipate an explosion in energy investments.

But where financiers see investment opportunities, consumer advocates see future Enrons in the making, because the law was intended to insulate utilities from the kind of energy-trading schemes that caused the Houston-based Enron to collapse in the greatest bankruptcy in history. Get rid of the rules restricting cross-investment by utility holding companies, consumer advocates say, and the country faces an energy and stock market debacle much like the one that led to the creation of the public utilities act.

The law's roots go all the way back to the Great Depression and the stock market crash of 1929. The then-nascent electricity industry was largely owned by a small group of holding companies, which used their reliable receipts from selling electricity to invest in riskier ventures.

When those ventures faltered, the holding companies imploded, and 53 electricity companies went bankrupt; the collapse helped deepen the Great Depression. Consolidation in the industry also allowed holding companies to manipulate the market and overcharge consumers for power.

After an investigation and hearings, Congress approved the PUHCA regulations in 1935, imposing historic controls on energy holding companies. Now, however, energy industry spokesmen say the law is outdated and so onerous that investors are discouraged from putting money into electricity.

"This is a fairly capital-intensive business. The repeal of PUHCA would serve to potentially encourage capital to flow back into the energy market," said Pete Sheffield, a spokesman for Duke Energy, which once employed Andrew Lundquist, the director of Cheney's energy task force, to lobby for the elimination of the law.

The Clinton and Bush administrations have already weakened the regulations by allowing companies to be exempt from certain PUHCA rules. But eliminating the law entirely could have a catastrophic effect on both the financial markets and consumers, critics say.

"It's the only thing between us and a cartel," said Lynn Hargis, a former staff attorney with the Federal Energy Regulatory Commission who now works for the watchdog group Public Citizen.

Deleting PUHCA from the law books would put an estimated $1 trillion in energy assets in play, she said, presenting enormous implications for both the energy sector in particular and the financial markets as a whole.

Deregulation, she predicted, would allow more episodes like the Enron scandal, because holding companies could move capital around and put the health of electricity providers at risk.

Many more Enrons are in our future.