American Geological Institute

Government Affairs Program

Hearing Summary on Extending the Energy Policy and Conservation Act

House Committee on Commerce
Subcommittee on Energy and Power
September 16, 1997

Representatives Present
Chairman Dan Schaefer (R-CO)
Ranking Member Ralph M. Hall (D-TX)
Rep. Thomas J. Bliley Jr. (R-VA)
Rep. Rick White (R-WA)
Rep. Michael Bilirakis (R-FL)
Rep. James E. Rogan (R-CA)
Rep. John M. Shimkus (R-IL)
Rep. Michael Crapo (R-ID)
Rep. Charles Norwood (R-GA)
Rep. Edward J. Markey (D-CA)
Rep. Tom Coburn (R-OK)
Rep. Steve Largent (R-OK)

On September 16th, the Subcommittee on Energy and Power held a hearing and markup of H.R. 2472 , a bill to extend the Energy Policy and Conservation Act. The bill was introduced by Chairman Dan Schaefer (R-CO) on September 15, 1997 and moved quickly through the subcommittee where it was reported out to the full committee with unanimous consent.

Opening Remarks
Chairman Schaefer called the hearing a chance to see if programs authorized under the Energy Policy and Conservation Act (EPCA) were meeting their objectives. Since EPCA was first enacted, U.S. reliance on foreign oil has increased and Schaefer was interested in hearing the Department of Energy's (DOE) position with respect to the Strategic Petroleum Reserve (SPR). Ranking Member Ralph Hall (D-TX) called energy a "national asset," saying he hoped the rest of the nation would soon realize this and make use of domestic energy resources.

Panel I
The Honorable Elizabeth Anne Moler, Deputy Secretary, Department of Energy, Washington, DC

Deputy Secretary Moler testified that EPCA is a "national energy insurance policy." U.S. dependence on foreign imports is expected to rise to 60% with most of that coming from OPEC (Organization of Petroleum Exporting Countries) member nations. With such a "volatile" oil market, some form of insurance is needed. EPCA authorizes the Strategic Petroleum Reserve and U.S. participation in the International Energy Agency (IEA). The Administration and DOE are urging the International Energy Agency to move away from the traditional and complex method of multi-lateral sharing and allocation used during an energy crisis, to the preferred response, stock drawdown. Moler explained this as being a market response technique where oil is sold on the international market as a means of stabilizing the market during emergency situations.

Questioning began with Chairman Dan Schaefer (R-CO) asking about the possibility of a veto of the Interior appropriations bill which authorizes the sale of Reserve oil for maintenance and upkeep. To this point that question has not had to be answered, said Moler. Administration and DOE representatives are working with the Senate on other alternatives to selling Reserve oil. One possibility is the sale of the naval petroleum reserve, Elks Hill. [In fact, such an amendment was added to the Interior appropriations bill by Senators Bingaman (D-NM) and Murkowski (R-AK).] The impact the sale of SPR oil has on prices is small according to Moler. Previous sales have taught DOE how better to manage sales so that prices are not drastically reduced. Moler estimated the impact to be around 30 cents per barrel. The Administration is seeking only a one year extension of EPCA programs so it can complete its examination of SPR. Moler testified that the study would be completed soon and another bill would be put forth early next year.

Rep. Ralph Hall (D-TX) explained that he feels there is too much emphasis placed on international agreements and not enough on domestic oil production. As Hall said it, "there is plenty of oil here in the States," it is just a matter of concentrating on U.S. production. Rep. Steve Largent (R-OK) had similar concerns about the flagging domestic oil market. According to Moler, the SPR policy regarding oil purchase is not a matter of domestic versus overseas. SPR oil was purchased on the open market on a bid basis and Moler stated that typically, domestic producers do not participate. SPR oil is one-third "sweet" and two-thirds "sour" crude that was purchased in the late 70s during what Moler called, a "high oil price market." No oil has been purchased since and future purchases will only occur after 2002 when the budget is balanced.

Questioning from Rep. John Shimkus (R-IL) focused on ethanol and whether it is considered part of CORECT, the Committee on Renewable Energy Commerce and Trade, or COEECT, the Committee on Energy Efficiency Commerce and Trade. Moler stressed that the Energy Policy and Conservation Act is not limited to oil. It includes any products that have strong export marketability, which includes ethanol. Rep. Largent called COEECT and CORECT "corporate welfare," a term that Moler agreed was accurate but said the programs are "modest" with only a few million dollars in funding and in terms of benefits, they are a "bargain."

Panel II
Ms. Cheryl De Vol-Glowinski, Director, Office of Energy Policy, Indiana Department of Commerce, Indianapolis, IN
Mr. Wayne E. Curtis, Chief, Office of Human Services, Division of Economic Opportunity, Illinois Department of Commerce and Community Affairs, Springfield, IL
Mr. D. Lynn Sutcliffe, President and CEO, SYCOM Enterprises, Inc., Washington, DC
Mr. David Bradley, Executive Director, National Community Action Foundation, Washington, DC

Ms. Cheryl De Vol-Glowinski testified on behalf of the National Association of State Energy Officials (NASEO) voicing their support of S. 417 and its reauthorization of the State Energy Conservation Program (SECP). De Vol-Glowinski stated that SECP is the "only major vehicle which encourages state-federal cooperation in the development and implementation of energy programs and policies." She concluded saying that funding for the State Energy Conservation Program has decreased over the years while the importance of the program has increased. De Vol-Glowinski urged the committee members to maintain a consistent level of funding.

Mr. David Bradley a representative from the Community Action Agency, a group that installs most of the Department of Energy's weatherization improvements in low income homes, began by thanking the committee for its continuing support of the Weatherization Assistance Program. The "number one" problem of the Program, according to Bradley, is the Appropriations Committee. Funding levels for the Weatherization Assistance Program have been falling since fiscal year 1996. Bradley asked for the committee's "direct involvement" in helping to raise funding levels.

Mr. Wayne E. Curtis testified on behalf of the National Association for State Community Services Programs (NASCSP) in support of the reauthorization of the Weatherization Assistance Program. Curtis called the Program, "one of the largest energy conservation programs in the nation." The program weatherizes around 200,000 homes per year, reducing low income energy costs by as much as 33 percent. Curtis said that the Program "merges" technology and assistance to get a "practical benefit."

On behalf of the National Association of Energy Services Companies, Mr. S. Lynn Sutcliffe testified that Energy Savings Performance Contracts, private companies that are contracted to retrofit buildings with efficient equipment to reduce energy consumption and lower utility bills, save the government one billion dollars out of the four billion spent annually on utility costs. Sutcliffe was concerned about the rise in the use of sole source utility energy supply agreements, which are agreements between federal agencies and utilities for the same services offered by the Energy Services Companies. According to Sutcliffe, sole source energy agreements violate federal competition requirements. He concluded by saying that there is "no good policy reason to sole-source these services to only one segment of the market," and told the committee that the Energy Services Companies are ready to compete and should be allowed to compete with the utilities.

Chairman Dan Schaefer (R-CO) asked if Mr. Sutcliffe felt federal agencies were procuring contracts "inconsistently." Sutcliffe agreed with this description, adding that there needs to be a "clarifying" amendment such that the Energy Policy and Conservation Act does not authorize sole sourcing. In response to Chairman Schaefer's comments about the 1996 Department of Energy consolidation of State Energy Conservation Programs, Ms. De Vol-Glowinski said that while state agencies would have liked to have seen the program continue as it was, they did understand the reasons for the consolidation and had seen some benefits. Chairman Schaefer asked Mr. Curtis to comment on the need for the Weatherization Assistance Program. Curtis responded that the Program was still needed and has been effective over the years helping low-income households become more energy efficient. He continued saying that while electricity deregulation would reduce the cost of energy it would not change how much the household uses. Curtis concluded by saying that cost will be addressed by deregulation and consumption will be addressed by the Weatherization Assistance Program.

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Contributed by Catherine Runden, AGI Government Affairs Intern.
Last updated September 22, 1997

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