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Press Release Contact:
Wednesday, May 16, 2001
Adam Goldberg
(202-462-6262)
Consumers Union Washington DC Office
Harry Snyder (415-431-6747)
Consumers Union West Coast Regional
Office
Janee Briesemeister (512-477-4431)
Consumers Union Southwest Regional
Office
CHENEY
ENERGY TASK FORCE LEAVES CONSUMERS IN DARK
Plan Does Nothing To Help Consumers This Year, Too Little To Secure America's
Energy Future
WASHINGTON - Consumers Union (CU), the nonprofit publisher of Consumer Reports, today said that the Bush Administration's upcoming proposal for a national energy policy fails to address consumers' most pressing energy concerns - high electricity, natural gas and gasoline prices. Instead, in a show of misplaced priorities, the proposal will focus on using more fossil fuels and shortchange renewable energy sources and conservation programs. The industry-dominated task force, chaired by Vice President Cheney, has met in secret for the last several months, but information about the contents of the plan has been leaking out for some time. According to CU's analysis:
The plan does nothing about the fact that the electricity market isn't working properly. Electric deregulation has made the market increasingly dysfunctional, which allows the energy industry to manipulate the supply and distribution of electricity. There are strong indications that energy companies are taking unfair advantage of the market in order to charge inflated prices and reap massive profits. The California Independent System Operator found that wholesalers had overcharged California utilities $6.3 billion. The Administration's hands-off approach to energy prices leaves consumers paying record-high bills this summer. People are justifiably concerned that energy companies are getting away with price gouging, and this plan does nothing to alleviate their concerns.
"The energy market does not reflect true competitive forces," said Adam Goldberg, a policy analyst in CU's Washington Office. "Simply adding supply to a dysfunctional market doesn't fix the market. We had hoped that the task force would address the market failures that have inflated gasoline, natural gas and electricity prices far above reasonable levels. Instead we have a proposal that protects the oil and gas industries' bloated profits, compromises the environment, and fails to encourage meaningful energy conservation," Goldberg added.
"Consumers in California and across the nation are facing a serious electricity crisis this summer," said Harry Snyder, a senior advocate with CU's West Coast Office. "Unfortunately, the Vice President's task force seems more interested in drilling and digging than dealing with our current problems. The Bush Administration must provide consumers with immediate relief by taking aggressive action to address blatant energy industry price gouging."
"Consumers believe that increased energy production is necessary," said Janee Briesemeister, a senior policy analyst with CU's Southwest Regional office, "but the emphasis should be on diversifying our energy portfolio through greater investment in renewable energy sources. Studies have shown that conservation measures, such as energy efficiency standards for autos and major appliances, have been a success. Energy efficiency has the added benefit of lowering household utility bills. That's why the Bush Administration should reverse its recent decision to back away from energy efficiency standards for air conditioners. Efficiency standards should be developed or strengthened for other products as part of a long term strategy to lower consumption."
CU has several concerns about the task force report:
· Electricity Prices. The plan will do nothing to meet the immediate concern of consumers - the high price of electricity. Neither competition nor regulatory tools are providing market discipline to prevent unwarranted price increases. The Federal Energy Regulatory Commission (FERC) - the agency charged with ensuring just and reasonable wholesale electricity prices - must crack down on price gouging to rectify the situation. If the market can't regulate prices properly, and FERC refuses to, Congress and the Executive Branch must step in to deal with this crisis. So far, neither has. This plan does not change that.
· Fossil Fuels And The Environment. The report is expected to call for more drilling in national parks and sensitive wilderness areas. While CU believes that increased domestic energy production is necessary, it would not be in consumers' best interests to compromise the nation's environmental standards to marginally increase fuel supplies.
· Production Versus Conservation. Primary reliance on increased production while downplaying conservation is a mistake. As consumers focus on energy needs and are looking for ways to save, the time is promising to promote alternative fuel sources and conservation efforts. The Department of Energy's own estimates are that energy efficiency and expanded renewable capacity could meet up to 60 percent of the nation's expected increased energy needs between now and 2020.
· Emphasis On Supply Over Demand. It is unrealistic to think the U.S. can build its way out of the energy crisis. A comprehensive strategy must focus on the long- and short-term future. Energy policy should address both supply and demand and balance production with continued environmental protection. The plan's emphasis on supply creates the false impression that environmental laws are at fault for energy price spikes. The real culprits are the very industry executives who met with Vice President Cheney behind closed doors to develop this plan. Lawsuits have been filed in California against electricity generators who allegedly manipulated the market to create artificial shortages and pad their profits.
· Building More Power Plants, Transmission Lines and Pipelines. Any effort to increase generation capacity and delivery systems should not be made at the expense of the environment. In addition, electricity transactions on the interstate transmission system need to be made transparent to prevent bottlenecks that cost consumers money.
· Renewable Energy Sources. The task force seems fixated on fossil fuels and unwilling to recognize the full potential of renewable energy sources like wind, water and solar power seriously. Recent developments have made these alternative energy sources more economically viable. Given the state of the crisis, we should be paying closer attention to these sources to avoid future shortages and price spikes.
· Nuclear Power And Coal. The proposal calls for the construction of new nuclear power plants. There are still many unanswered questions about waste disposal, safety, and the economics of building such plants to rely on new nuclear capacity in the near or medium term. Coal is inherently a dirty fuel source. Attempts to expand its use to generate electricity must be tied to efforts to improve air quality, not weaken it.
· Gasoline Prices And Energy Efficiency. While refining capacity is inadequate, it is not good enough to say that we simply need to build more refineries. The plan will apparently promote the purchase of hybrid automobiles that run on both gasoline and electricity. CU supports such a goal. But other energy efficiency measures are also needed, including promotion of more energy efficient air conditioners and an increase in automobile fuel efficiency standards.
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Consumers Union, publisher of Consumer Reports magazine, is an independent nonprofit testing, educational and information organization serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition and other consumer concerns. Since 1936, our mission has been to test products, inform the public and protect consumers.
