Senator Craig Rises in Support of S. 14

Mr. CRAIG. Mr. President, I thank my colleague from West Virginia, who is currently on the floor, for being willing to yield for a few moments while I discuss the bill that is currently before the Senate. I thank him for that.

This morning Senator Domenici, chairman of our Energy and Natural Resources Committee, introduced S. 14. You can tell by the size of this legislation that it is, in fact, no ordinary bill. Since the spring of 2001 when the President issued his plan for a national energy policy, I and a good number of my colleagues, including the Presiding Officer at this moment, began to work on legislation to implement the recommendations of our President's energy policy. But as important as that is, we tried to bring together in a bipartisan way all of the issues that we have been looking at for a good number of years that reflect the absence of a comprehensive national energy policy for our country.

Democrats and Republicans alike had begun to recognize—as the numbers moved to greater dependency on foreign oil, as our economy began to grow and our overall surpluses that were built into our electrical system in the decades of the sixties and the seventies were being used up—that something had to be done.

While conservation was important, while new technologies were important, we simply were not producing more energy, but we were consuming large amounts of energy.

Along comes the high-tech revolution. That was to be a revolution in which less energy would be used, and quite the opposite happened. The large computer farms that fed the networks of the new electronic revolution, telecommunications, and artificial intelligence used a lot of energy, used high-quality energy.

Do I have to enumerate what happened in California a few years ago, the painful problems it went through with brownouts and blackouts, not because somebody was gaming the system, but because there was simply no way to produce the energy necessary to feed the demand system of that supply?

Major California utilities were moving toward bankruptcy under a new deregulated energy policy, and our western energy markets that the Presiding Officer and I are in, such as the State of Idaho and the greater Pacific Northwest, recognized that California was draining us of energy, our energy costs were beginning to move up at an unprecedented rate, and the supply within the greater system simply was not there, or the system did not have the capacity to handle it if, in fact, the supply was there.

The anxiety of choking the rest of our Nation off from energy caused shock waves and panic across the country in a way we had not seen before. I recall Senators who normally shun even the thought of price caps in a market system coming to the floor and advocating such misguided measures. We saw the Governor of California, Gray Davis, in somewhat of a panic entering into long-term contracts for power at rates that he was proud of at the time, only to now come begging the federal government to break those contracts as unfair when the market changed.

A truer description of those contracts might suggest that it was unwise to enter into them, but it was not unfair at that moment. That was the market. The market was reacting to the demand, or the lack thereof. This was just a little bit over 2 years ago, not 30 years ago, not a decade ago, just a little over 2 years ago.

It was not just a fluke. Yes, the Enron episode saw the potential of people gaming a system that was badly broken, that was not feeding the market in a way the market wanted to be fed and taking an opportunity that existed. But to suggest it was a manufactured energy crisis is absolute nonsense. The marketplace being what it is, if the market is starved for the resource it demands, then the price moves up until someone cannot afford to buy and only those who can afford to buy will buy. That is the nature of the marketplace.

All of those facts were true, and then along came September 11, and our country went through another shock, and we began to look at ourselves and our abilities as a country.

Today we have before us a comprehensive piece of legislation that has been literally a year or two in the making and several iterations and with several debates on the floor, but it is a bill that was written in the traditional way that good public policy is crafted, not in the back room of the office of the majority leader of the day when he denied the committee its ability to function a year or two ago, but it was crafted in the open light of day, in a full markup session of an authorizing committee with Democrats and Republicans agreeing and disagreeing in the structuring of this legislation.

What we have before us is what I believe to be a comprehensive bill to address a crisis that is real and true in our country, and we are only getting a slight reprieve in a recessionary economy because demand for the resource is down, and we are all hoping we can return to the growth years of the mid-nineties. If we do, there is the distinct possibility that the brownouts, the blackouts, and the high prices will return.

Even in their absence, we are already beginning to see shock waves in the marketplace because we have denied the market the right to produce at a time when we are demanding even more.

Energy Secretary Abraham stated a year and a half ago that America faced a major energy supply crisis. What he said is a reflection of the market. I say that because natural gas prices, interestingly enough, that reached almost $100 per million cubic feet during the period of the California crisis eventually dropped to more acceptable levels only to start creeping up again to the price of $19 per million cubic feet in February of this year.

We have seen phenomenal fluctuation in the market, but yet we are seeing peaks now in that gas market because of a limited supply. The Clinton Administration encouraged everybody to burn gas; not only to use it for space heating but also to use it for electrical generation, even when the experts in the market said that ought not to be done. Really, a poor use for natural gas is to put it in a turbine to create new energy when it ought to be used exclusively for space heat and other forms of heat creation. But because we had denied other forms of energy the ability to generate, that was the one available and everybody rushed to it, and we saw these phenomenal peaks in the market.

While we were doing that, we were denying the right to explore and develop gas reserves. In so doing, we created the ups and downs in that market. The natural gas market is volatile and will continue to be into the future. That is the reality of not only bad policy but bad direction of a use of a natural resource and denying the marketplace the right to adjust accordingly.

I will now talk about gas and electric transmission and infrastructure. If we were to meet the gas demand to produce electricity through gas turbine generation, we would have to construct over 38,000 miles of gas transmission pipeline to get the gas to market. This bill recognizes the need for that and the need to incentivize that kind of major construction across our country; not only that, but be able to gain access to the lands on which the pipes must be laid. Of course, that has remained an issue, as we have seen government policy deny the right to do that.

Alaska's Prudhoe Bay, for example, produces about 8 billion cubic feet of natural gas a day, and that is approximately 13 percent of America's daily consumption demand. But that gas is not even available in the market today. Why? Well, it is up in Alaska. There is no easy economic way to deliver it down to the lower 48 so it is simply pumped back into the ground.

This bill recognizes it. This bill incentivizes the building of a major gas line across Alaska down through Canada to pick up the Canadian supply and to bring it into the lower 48, to meet the reality of demand, to meet the reality of the potential of a new hydrogen market for transportation that this President and others are talking about, but most importantly to recognize this Nation has phenomenal capacity to produce and to supply if we will simply provide the right incentives, instead of deny and restrict, for whatever reason, as we have over the last several decades access to the land for the purpose of production or access to the land for the purpose of laying the necessary pipelines to supply.

Over the next 20 years, the Department of Energy estimates electrical demand in the United States will increase 45 percent, based on current growth projections. One of the ways to meet that demand is to bring the gas from Canada to fuel the gas turbines to generate the electricity in a clean and appropriate way, even though I have argued that may be one of the least effective ways to use natural gas for the purposes it was intended.

Consumers are already feeling the impact of a transmission system that is being stressed by demand. Transmission bottlenecks contributed greatly to the blackouts in California, to price spikes in New York, in which the cost to consumers was estimated to be $100 million, simply because somebody denied the right to build a transmission line to access the appropriate systems.

The Department of Energy has estimated it will need to construct over the next several years an additional 255,000 miles of distribution line at an estimated cost of $120 billion to $150 billion to ensure our electrical system remains the most reliable in the world. It is a huge investment, but the marketplace is ready to do it. All we have to do is guide it and direct it, and the marketplace will adjust. The consumer is willing to pay and the provider is willing to produce, supply, and build the necessary lines. What we have done is say, no, it cannot be done here, and it will not be done there, and it should not be done over there.

We are putting at risk the most reliable electrical system in the world. How many of us have traveled to Third World countries where you can stay in a beautiful hotel and you think you are in a four-star hotel, but the power goes out consistently, or the lights dim consistently, or there is no e-mail or there is no Internet, tools we have come to depend and rely on. When we walk to the wall today and flip the switch, the light comes on, and it consistently comes on. That is not always true in Third World nations, and the reason is they do not have the transmission or the generation system to ensure reliability.

They are striving to build them today and they know they have to have them if they are going to compete as an economy in this world and be competitive with us. The supply and availability of energy to our economy and to our working men and women has made us the great Nation we are, and it will continue to allow us to be if we will not deny the marketplace the right to produce and the consumer the right of access. This legislation understands that and this legislation is working to resolve that.

The State of my colleague, West Virginia, is a great producer of coal. Coal has historically been America's number one source of affordable electricity. It currently powers half of America's generators, and at today's recovery rates our Nation has enough coal to keep those plants running for 250 years. With rising demand, tight gas and oil supply, and an aging power infrastructure, it would be foolish to abandon our abundant coal resources.

So what do we need to meet our clean air standards? We need cleaner burning efficiencies from our coal. We need the technology that assures the clean bed of the coal-fired facility so we can use this abundant resource and supply the system that is already there and assure that as we grow other areas for producing electricity, that coal can grow right along with it.
The men and women who work in the coal fields and who live in the States that make their economy from coal production continue to recognize that. This bill recognizes it.

We do not have coal in Idaho, but we have something else that is just as valuable to the electric grid, and that is hydropower. It is one of Idaho's greatest energy resources. It is one of the Pacific Northwest's greatest energy resources. It makes up about 10 percent of the total supply of electricity in this country. Yet, over the last decade we have made it nearly impossible to relicense a hydro facility on a river. For all of the environmental reasons that almost anyone can imagine, the argument is that particular impoundment should not have been put there in the first place, or it ought to be dramatically modified to fit the environmental desires and needs of today, even at the cost of bringing its production capability down.

I recognize there are very real environmental needs and that we are working hard to return our rivers to a more natural state. At the same time, we can't just walk away from an abundant, clean form of energy that is renewable. No, we cannot. Nor should we.

The relicensing process we are dealing with needs to be fixed. Certainly, the hydro energy of today is clean. It is emission free. It is renewable. It meets all of those standards and, as a result of that, I and others have worked hard over the last 5 years to make sense out of a process that has become irrational. It can take as much as 2, 3 and 5 years' worth of bureaucratic red tape and tens of millions of dollars just to relicense, let alone retrofit and change the character of the generating facility for the purpose of making it more environmentally benign.

During the next 15 years, over half of all of the non-Federal hydro capacity, over 30,000 megawatts of power, enough to serve 15 million homes, must undergo the relicensing process. That includes about 296 dams in over 39 States. It is not just an Idaho or Oregon or Washington or California or Montana problem. It is an issue for the country. It is an issue for the Greater Colorado River system. It is an issue for the country. These great facilities ought to be relicensed and, where necessary, retrofitting them to make them more environmentally benign.

But the process ought to be flexible. Clearly the operation of these facilities ought to be flexible to allow optimum power production and to bring that into conformity with the necessary environmental needs of that particular ecosystem and that particular river.

We have grown to enjoy our water impoundments in the arid West. While we may call them reservoirs, some view them as high-quality recreation areas and high-quality fisheries, most assuredly, abundant power producing facilities.

As was true over 80 years ago when Congress passed Part 1 of the Federal Power Act, what we are striving for in this bill is to create the balance necessary to assure that all of those 296 projects, where necessary, and where they fit, can continue to operate and operate in a productive fashion for the sake of our country.

Let me talk about a couple of other items that are important. One is nuclear. For 20 years someone has said to this country that electrical generation by nuclear energy or nuclear fission was wrong, that it was dangerous. Yet the nuclear facilities we have, have gone on operating uninterruptedly. They have been retrofitted and modernized. They have continued to produce. They make up nearly 20 percent of the total electrical base of our country.

During the last period of high electrical prices, they became the least cost economic producers. They were the base load that fueled the country, that assured that we would have the high-quality power we have. All of a sudden there is a new respect for electrical energy produced by nuclear power facilities.

We had a problem with the waste stream, the fuel rods that came out of the reactors, how they got handled, how they were stored, and did they get reused. We debated for nearly a decade and we assessed, by a tax, the ratepayers of those utilities that were producing with nuclear, a tax to fund a waste system, a waste management system.

Just a year ago, in the Senate we finally confirmed part of the process of licensing a facility out in Nevada known as Yucca Mountain for the storage of high-level waste. The Daschle-Bingaman bill we debated this last year was a bill that called for much investment in research and development in our Nation's energy solutions but dealt very little in this area. So much of the research done over the last several years to get us to a point where we could begin to consider as a nation bringing more nuclear energy back into production has been at work, and it has been at work in a laboratory in Idaho, the Idaho National Engineering and Environmental Laboratory.

In this bill, for the first time, we speak about a new generation of nuclear generation—we call it generation 4—passive reactor systems, much safer, even than those that have been extraordinarily safe through the decades. And at a time when we agree, and I hope collectively as a nation, that we are handling the waste stream and managing it in the appropriate fashion, if we really want abundant clean air in the growth rate of that, 45 percent over decades to come, an ever increasing portion of our electrical production needs to come from nuclear generation.

We think it is now time for this country to explore the new research and development, the new reactor designs that are safer, cleaner, in the sense of their engineering, in the sense of their capacity to deal with problems that might occur, although our history with nuclear reactors in this country has been one of safeness, but one of expert management. Why? Because this Government, this Senate, years ago, created a Nuclear Regulatory Commission and managed it in a comprehensive and sensible way.

There are a good many other issues about which I can talk. My colleague from West Virginia and I teamed up some years ago, along with our colleague from Nebraska, to say that if there was going to be climate change legislation that dealt with the emission of greenhouse gases, that we and the rest of the world must come together to do it. Our country should not penalize its economy or its industries by attempting to march down that road alone. We could accomplish it and not destroy our economy if we would work innovatively to bring on the new technologies to the marketplace of power in a way that made sense.

That is what this bill, S. 14, is all about. It is all about new technologies. It is all about producing an abundance of energy for our Nation that is clean and ever increasingly cleaner than the past. It is about clean air. It is about a recognition that if there is a change in our climate, that is a product of ever-increasing greenhouse gases in the world, we want to do our part. But we are not going to deny ourselves and our economy and our workforce the ability to produce by simply shutting down; that we are smart enough through our technology and utilization of other forms of resources that we can generate an abundance of power and still be pragmatic and work through our problems with climate change.

Our country needs a national energy policy. It needs to get back into the business of producing energy. It needs to fill the market basket of energy, full of all types of energy. Wind? Yes. In this bill and its companion tax bill we incentivize wind farmers and the use of the new turbines in the production of electrical power through wind. What about photovoltaics or the sun? We incentivize that.

We have not, through this legislation, denied any element of the marketplace or any area of technology access to the production of electrical energy or the supply of energy for our country. Our country and our economy runs on energy. Every moment of the day we use more energy on a per capita basis than any other nation in the world. It is not by accident that we are the richest nation in the world. I say that with great pride. We have worked hard over the years. We have relied on the free market system. We have relied on a government that has been reasonable and moderate in its regulations and balanced in how it applies those regulations to all forms of the producing entities of our economy. And we have always based that on an adequate and abundant and a relatively inexpensive supply of energy.

When the gas prices go up 10 or 12 cents a gallon at the pump, that is several dollars, for every time the car is filled up, that is spent on energy and denied to the breakfast table of the family or to the disposable income of the family or to the college trust fund of the family or any of the things for which the American family wants to use their collective resources.

We ought to work constantly as a government and as a Senate to make sure those kinds of spikes or run-ups in price do not happen, whether it is at the pump or at the electrical meter or anywhere else in our society. We can do that with the passage of this legislation by the recognition that government can play a role in the assistance of the production of an abundant supply of energy to our country. S. 14 just has not happened. S. 14 is a demand of the marketplace of our country saying: Supply us with an abundant supply of energy, and we will produce for you and for generations to come untold wealth and the American dream.

I am proud of that. I am proud of our history. I trust this Senate, over the course of the next several weeks in debating this legislation, will in the end have one important goal in mind: That is to pass a national energy policy for our country that recognizes now and in the future that the basis of this great country's strength and its wealth is the ability to consume clean, high-quality energy at reasonable prices.

That is what S. 14 is all about. That is why we have worked as hard as we have, and I applaud Senator Domenici for his effort in the production of this legislation.

I yield the floor.