Frontlines

Utilities have little to show for the millions they pay in campaign contributions.

If Donald Trump could call Congress on the carpet, he would send lawmakers packing with those two now infamous words, "You're fired!"

Trump, at the conclusion of each episode of his reality TV show "The Apprentice," dumps an unlucky job candidate for failing to complete that show's business assignment to his liking.

Now think of how many times Congress has failed to pass an energy bill without incident. You certainly couldn't fit into a 15-episode reality show the number of times politicians said they'd deliver. No, if energy legislation served as TV drama, the show would stretch out over a 12-year mini-series. The only hit Congress had was way back in 1992 (the Energy Policy Act).

I may be in a nursing home before any substantive energy policy gets done on the Hill. And I think Trump would agree that, from a business perspective, the financial incentives and the will to pass an energy bill should be there.

In his show, 16 candidates go through the most grueling tasks in a cut-throat business environment, in hopes of being hired to a $250,000 job at the Trump organization. But politicians in 2003 and 2004 alone received millions from the electric utilities industry.

And they have been receiving millions more over the last few years.

According to the Center for Responsive Politics, the energy and natural resources industry has given Congress in excess of $250 million since 1992, and more than $316 million since 1990. In retrospect, and given the financial obstacles some utilities have had to endure, one might conclude that the money might have been better spent elsewhere. Unless, of course, some of those utility dollars spent were to preserve the status quo.

Follow the Money

In 2002, Sen. Pete V. Domenici, R-N.M., received $417,851 from the energy industry for his re-election campaign. In the 2004 election cycle, Rep. Joe Barton, R-Texas, raked in $323,849. President George W. Bush has been the biggest recipient of campaign donations this year and in years past. What did the industry get for its money?

Rep. Barton and Sen. Domenici are widely seen as responsible for the failure of the comprehensive energy bill last year because of their fierce defense of a provision that would protect MTBE manufacturers from lawsuits.

Most utility executives are, to this day, still incensed when MTBE comes into the conversation. To add insult to injury, Domenici was caught defending MTBE yet again in a March 25 rebuttal to a Wall Street Journal editorial criticizing the cost of the bill.

Today, we are no closer to a comprehensive energy bill. In the last few months, the bill has been whittled down to an energy tax package as part of a jobs bill. This strategy failed once before when attached to an export tax bill.

Some industry watchers are not confident of passage. The energy bill "appears lifeless with roughly 50 legislative days left," writes Morgan Stanley in a recent equity research note. "Attempts to split pieces of the bill into separate legislation would be difficult, in our view, as it has already failed and once someone wants something, another is attaching something else to it. The item with the greatest likelihood of success is reliability, however, many view that with reliability comes PUHCA repeal and transmission D&A and tax advantages-therefore, its success shrinks.

"In terms of the wind tax credit [PTC] extension, it is again unlikely that it can be successfully stripped out. One possibility is that in August or September, an 'extenders' bill is proposed-essentially extending for one year all expired tax credits from 12/21/03. This could be slightly favorable, but would not ignite new wind investment, in our view."

Meanwhile, Sen. Jeff Bingaman, N.M., and Domenici in recent days have put a strong face on this new piecemeal strategy. Bingaman on April 15 said, "To my mind, the key question in April of 2004 is, how can we move forward from where we are today? How can we get something useful done in terms of national energy legislation this year?

"I think that can happen, if we are willing to take energy legislation in more manageable bites. We just don't have the time, this year, to go through the process you would need to reconstruct a bipartisan consensus on a broad, comprehensive bill."

So byte-sized energy legislation is what the industry is offered after spending $315 million? Perhaps Trump can learn something from Congress. I'm sure most businessmen would like to learn how to milk an industry for millions of dollars without ever really delivering the goods.

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CLARIFICATION

FERC Chairman Pat Wood writes to say that he believes we misquoted him on several points in the interview we conducted with him and published in our last issue. (See, "In His Own Words: A face-to-face interview with FERC Chairman Pat Wood III," , April 2004, p. 16.)

First and foremost, on the chances that Congress might pass a comprehensive energy bill in this legislative session (p. 18, upper left col.), Wood wants readers to understand that he thought he had answered the question with the words, "Honestly, I don't know."

Second, regarding Western energy markets (p. 22, lower left col.), Wood asks readers to understand that he said "SPP" (Southwest Power Pool), in describing regions that had already gone forward in developing a process for transmission planning.

Wood also wishes to clarify certain other ambiguities:

• On the dearth of new transmission projects (p. 16, right col.), that he said he did not know whether there were many state reviews now going on;
• Regarding oversight on gas gathering activities (p. 22, upper right col.), that regulators must deal with customer reliance on the past, historic regulatory framework;
• On rules governing market behavior (p. 24, upper middle col.), that ideas such as economic and withholding are separate from the issue of testing for market power with the SMA screen [Supply Margin Assessment];
• Regarding power exports from the Midwest to the Mid-Atlantic states (p. 24, right col.), that he hears that governors in states would like to deliver cheap, coal-fired power throughout their region.
• Regarding the Clear Skies legislation (p. 52, left col.), that he prefers for the record not to show him as having taken a particular position, pro or con.

 

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