Here in energy country, even in the shadow of oil refineries, consumers aren’t immune to rising utility bills. Take Felton Lawrence, a local refinery worker who has seen his monthly electric bill nearly double in the past six months, soaring to about $220, thanks to a “fuel adjustment” charge.
“For a poor person on a fixed income, it’s playing hell on our pockets,” says Lawrence, currently on disability leave from his job as a maintenance man. “We live near where all this stuff is being produced. We ought to be paying cheaper.”
The resentment Lawrence voices is the consumer end of a complex and contentious debate over how best to meet America’s insatiable demand for energy. This discontent is fed by electricity shortfalls in California, wildly fluctuating prices for gasoline and natural gas, and higher heating costs last winter. The debate is further compounded by accounts of enormous corporate profits reaped “brokering” energy to strapped regions, and by politicians seeking political advantage.
The battle for Felton Lawrence’s vote — and his utility dollars — has been joined. Democrats look to use energy as a battering ram against a White House led by veterans of the oil and gas industries. Republicans reaping rich contributions from the energy lobby push an energy plan driven by new oil and gas exploration.
Lobbying vigorously for their plan, Vice President Dick Cheney and other Cabinet members kicked off a nationwide, six-city speaking tour Monday, with the vice president playing to an audience in Pennsylvania’s coal region.
The Bush plan calls for major new investments in domestic oil and gas exploration, upgrading the national electrical grid and construction of refineries and power plants, including nuclear reactors. Critics complain its modest tax incentive proposals shortchange cleaner alternative energies — wind, geothermal and solar power — in favor of “extractive” sources like coal, gas and oil. In fact, the Bush plan also calls for cutting the Department of Energy’s renewable energy resources program almost in half, from $277 million this year to $174 million.
As energy prices recede a bit, some economists and politicians question the need for a major national energy policy predicated on increasing supply. But as Monday’s town hall meeting attests, the White House continues to see it as an urgent priority. “Because there’s been downward movement today doesn’t preclude there from being upward movement tomorrow,” Ari Fleischer, the White House spokesman, told reporters Monday.
However the Bush plan fares, a fundamental hurdle to energy reform resides in Congress, which historically has not embraced major structural reforms in the energy industry. Among the reasons: Cash-rich corporate players in the nation’s $220 billion electrical industry who manipulate the more pliable state-by-state regulatory systems, and U.S. campaign finance laws that invite huge infusions of industry cash to the very lawmakers charged with policing the industry.
nearly $65 million in the 1999-2000 campaign cycle, almost half of which came in the form of unregulated soft money — the contributions made by corporations and individuals to political parties — according to a CRP analysis of Federal Election Commission filings. Electric utilities accounted for $8 million of soft money contributions in 2000, up from $3.6 million in 1996 and just $556,000 in 1992.
Oil companies such as Exxon Mobil, BP Amoco and Chevron were among the top 10 contributors, as was the National Rural Electric Cooperative Association, which represents consumer-owned cooperative electric utilities that serve rural areas.
The impact of these contributions on lawmakers?
“That is really the epitome of the wolf guarding the flock,” said an Energy Department official, who requested anonymity. “Once again, we’re asking the people who benefit most from the current system to tear it down and replace it with something more transparent. You’ll excuse me if I laugh here.”
Enter the long-running, seemingly intractable debates on campaign finance reform and deregulating the electricity industry. Congress has been debating how to deregulate the electric industry, the last of the government-sanctioned monopolies, for nearly a decade. No clear consensus has emerged on how best to do it. There are some who still regard it as an exception to the widely accepted notion that everything is better in private hands. So far, critics say, that stalemate appears to suit lawmakers just fine.
“This issue is a tremendous money-maker for (members of) Congress and for specific committees, in particular the House Energy and Commerce Committee and the Senate Energy and Natural Resources Committee,” said Sheila Krumholz, research director for the campaign finance watchdog Center for Responsive Politics. “For key members who have leadership positions, this is not a fight they are anxious to have concluded anytime soon. This is a wealthy industry and the issues are arcane. It won’t be a political liability to take the money and (keep the debate going).”
Beyond utilities, the top source of campaign funds in the last election cycle was Enron Corp., an energy producer and wholesaler whose chairman, Kenneth Lay, is a close friend of President Bush. Another big donor was Southern Company, an investor-owned utility that is competing with wholesalers like Enron for control of the nation’s electrical transmission grid.
The deregulation issue is one in which lawmakers “are more likely to take money from all sides,” Krumholz said. In the end they may “go with the side that’s the more lucrative source (of contributions), but it’s not going to be decided quickly.”
Even some industry insiders, looking for a way out of the crazy quilt of state and federal regulations, admit that the lack of progress in Congress is no accident. They say large investor-owned utilities have employed a “divide and conquer” approach — trying to prevent deregulation at the national level, where it would have uniform oversight, and instead pushing for individual states to adopt 50 different versions of deregulation.
Bill Brier of the Edison Electric Institute, denies this is a general strategy. Brier, whose firm lobbies Congress and state houses for investor-owned utilities, said, “Naturally, we are supporting members of Congress who believe there is a need for national energy legislation.” But, he said, delay is not in their interest. “What we want is to see some national energy legislation move through the Congress.”
Despite Brier’s protestations, some utilities do play a double game. According to a Washington Post report, utilities led by South Carolina Power & Light created a $17 million fund for that purpose.
“The game of the incumbent monopolies — the investor-owned utilities around the country — was to stall a federal effort and work to their strengths, which is (navigating) the patchwork of rules and regulations (in the various states) that would allow them to continue to control the market,” said Mark Palmer of Enron Corp. The Houston-based company is one of the biggest power wholesalers in the nation and bitterly resentful of the market share retained by traditional utility companies.
A spokesman for Southern Company, perhaps the most powerful of all U.S. investor-owned utilities, responded to Palmer’s charges by saying: “We have always said we think those who understand what’s best for their areas are the states.”
Whether or not the energy industry is purposely stalling deregulation at the federal level, it has been pouring money into state election contests “and watching the dominoes fall as states pass deregulation,” said CRP researcher Vikki Kratz. Between 1996 and 1999, 24 states enacted some form of energy deregulation.
The National Institute on Money in State Politics, another campaign funding watchdog group, found that almost all of the $32 million given to politicians in 1998 by the energy industry went to candidates in states where deregulation legislation was being enacted or studied.
Now, after seeing California’s attempts at deregulation result in a debacle of rolling blackouts and skyrocketing electricity prices, some states that until recently were considering deregulation — including Florida, Nevada and Oklahoma — are backpedaling.
And Congress, even if it wanted to move quickly on a national deregulation bill, won’t soon touch the subject in the wake of California’s mess. “Anybody who would try and move ahead with the kind of deregulation legislation we’ve been hearing about for the last few years is not going to get anywhere,” said veteran Congress watcher Norman Ornstein of the American Enterprise Institute.
With prices receding, the Bush energy plan, along with real reform on deregulation, may be increasingly harder sells, particularly if the lights keep burning in California for the balance of the summer. But if nothing else, for the first time in two decades, Americans have begun to focus on the long-term question of how their energy needs will be met — and at what cost.
Scott Aiges is an MSNBC contributor based in New Orleans. Additional reporting from Mike Stuckey and Michael Moran.