STATEMENT OF AMERICAN PUBLIC POWER ASSOCIATION

American Public Power Association, which represents more than 1,400 local publicly-owned electric utilities-mainly municipal systems-in 48 States, Puerto Rico, the Virgin Islands, and Guam, supports the enactment of S. 70 to create a Council on Energy Policy.

Attached to this statement is a copy of a resolution endorsing S. 70 approved by the APPA Legislative and Resolutions Committee at a meeting in Washington, D.C., on January 31, 1973.

S. 70 would set up a three-member Council on Energy Policy with the aim of improving energy information, coordination, and planning; impose systematic energy review procedures on programs of Federal agencies; and provide for an annual energy report by the President. APPA believes that implementation of these three purposes would be in the public interest.

While information on many aspects of energy is available in profusion from a variety of sources, there is lacking an identified impartial authority charged with government-wide responsibility for colating facts and evaluating data so that individual citizens can understand the public policy questions and size up the suggested solutions. The result is that individuals must presently piece together from the output of dozens of agencies a mosaic of energy events-colored by agency client interest and shaded by the private communications network of energy industries.

Furthermore, there remain elements of energy information which are currently outside the independent reach of the Federal government, e.g., an inventory of natural gas reserves. The Federal Power Commission has granted significant increases in the price of natural gas, relying on industry-reported figures never subjected to government audit or an evidentiary hearing. Whether or not there is a gas "shortage" is a basic question in these FPC proceedings. Yet the government is unable to supply a credible answer.

"Over half of our Nation's remaining oil and gas resources, about 40 percent of our coal and uranium, 80 percent of our oil shale, and some 60 percent of our geothermal energy sources are now located on Federal lands," President Nixon pointed out in 1971. The Federal government should clearly expand its ability to assess the character and value of these resources, which belong to all citizens, and should make such information available to the public for the purpose of allowing more rational discussion of alternate development-or non-development-approaches.

Coordination of Federal programs is also needed. For instance: The Department of the Interior observes that we must be concerned about the finite nature of fossil fuels. The Environmental Protection Agency notes the polluting effect of burning such fuels. The FPC reports that we have developed only about one-third of our total potential hydroelectric resources. Annual hydroelectric production is the equivalent of steam plants burning 354 million barrels of oil, 2,233 billion cubic feet of natural gas, and 93 million tons of coal. Yet the Water Resources Council and the National Water Commission have formulated evaluation techniques which would discourage further Federal hydroelectric development. Proper planning is a key to sound energy policy. APPA has studied the need for planning in construction and operation of power facilities, pointing out the environmental and economic desirability of joint action among utilities in sharing generation and transmission facilities. In this area, antitrust laws are important conservation tools because they work against anticompetitive actions which may force the building of more and smaller units and lines. In the area of transmission, this fact has led APPA to recommend that all lines 200 kv and above should be consistent with a comprehensive regional plan for use and development of the area's power resources for the purpose of making available an abundant, low-cost, and reliable supply of electric energy. APPA believes that, to the extent economically feasible, planning for every such facility should take into account all capacity needs within the affected areas and provisions should be made for expansion to meet future loads. APPA has urged that administrative and legal remedies be available to any utility which is unreasonably and discriminatorily treated in the planning and operation of transmission facilities, or is denied opportunity to participate in the use of capacity in an existing line upon proper payment.

Guidelines for Federal agencies to apply in analyzing and presenting energyrelated proposals are also needed. The National Environmental Policy Act has served as a means of insuring this type of review in the environmental area. S. 70s seeks to set up a somewhat similar system for the energy area. Obviously, the two subjects are interrelated, but there should be a means to insure that the equation is properly balanced. S. 70 could help on this score.

The requirement contained in S. 70 for an annual energy report by the President is one of the most useful features of the bill. President Nixon sent a message to Congress on energy in 1971, and press reports indicate that another such message will be forthcoming early this year. But there is presently no scheduled periodic summary of the situation issued by a source with a broad overview and general policy responsibilities. Instead, Congress and the public must rely on an irregular series of statements issued by separate mission-oriented government agencies; the work of government advisory committees with a mixed record on representation; newspaper, magazine, and television advertisements of major energy companies; and reports by Congressional committees with limited jurisdictional reach and constituent pressures.

As outlined in S. 70, the annual report of the President would provide a basis for public discussion of questions and answers on energy which could serve as a means of planning on a 10-year time frame-a period which is a minimum projection in view of lengthy lead time associated with plant construction and development of new technologies. The seven items of information specified for inclusion in the report help insure that the total spectrum of energy problems will be reviewed each year. The scheme will aid in avoiding the vices of sporadic crisis consideration of energy and will assist in substituting rational, long-range examination of our difficulties and implementation of satisfactory substantive solutions. Consumers spend some $70 billion a year on energy in the U.S. All users have a vital stake in not only the adequacy and reliability of supply but also the price they pay. S. David Freeman, director of the Energy Policy Project of the Ford Foundation, pointed out in a recent talk on "The Consumer's State in the Energy Crisis", before the Consumer Assembly of the Consumer Federation of America: we must not fall into the trap of believing that the way to solve the energy crisis is to soak the consumer. There is all the difference in the world between paying for what energy really costs and adopting a policy that will bring billions of dollars of windfall profits into the hands of the energy companies."

A copy of Mr. Freeman's talk, in which he also endorsed the formation of a Council on Energy Policy, is attached.

Policy recommendations advanced by major energy companies in recent months contain a common litany of reasons why these companies should be allowed more money to satisfy energy needs. While the cost and profit picture of these firms is of interest to the public as it affects their ability to produce essential products and services, the facts and figures which they use to justify their position demand rigorous and detached examination which is available only through the instrument of the Federal government. To the extent that S. 70 would strengthen the ability of the Executive Branch to perform this task, we would be a structural step ahead in our efforts to develop energy policy in the public interest.

The credibility of the analysis will be dependent on the confidence the public places in those doing the work. Past patterns are that in many cases affected industry does the work and government signs its name. Vaulting industry spokesmen into prominence as members of a Council on Energy Policy or failure to create an independent staff would undercut public confidence in the output of the council. This potential problem is continually enlarged by the increasing control of fuels exercised by oil companies which are expanding into "total energy companies". Senator Frank Moss pointed out last year: "Oil companies control more than 83 percent of natural gas production, nearly 30 percent of the Nation's coal reserves and 80 percent of the uranium reserves. Increasingly a major customer, whether he seek to purchase oil, natural gas, coal, or atomic power, must deal with the same seller." A Council on Energy Policy could be a useful "umbrella" organization but it must be sufficiently industry-proofed to prevent us all from getting soaked.

COUNCIL ON ENERGY POLICY 1

Whereas, there are over 60 Federal agencies dealing with energy issues and at least 19 of these are involved with regulating the electric utility industry; and Whereas, no single agency is responsible for coordinating, planning, and assessing programs and policies relating to energy consumption and production; and Whereas, a focal point in government is needed for the formulation of energy policies to insure the proper use of natural resources and an adequate, reliable supply of reasonably priced energy: Now, therefore, be it

1 Adopted by APPA Legislative and Resolutions Committee January 31, 1973, Washington, D.C.

Resolved, That the American Public Power Association endorses the concept of a Council on Energy Policy as proposed in S. 70 for the purpose of coordinating Federal agencies dealing with energy matters, preparing long range plans for use of resources, and advising the President and the public on energy matters.

THE CONSUMER'S STAKE IN THE ENERGY CRISIS

(Presented by S. David Freeman at the Consumer Assembly of the CONSUMER FEDERATION OF AMERICA, Jan. 25, 1973, Statler Hilton Hotel, Washington, D.C.)

That phrase "energy crisis" has pushed its way, uninvited, into the vocabulary of the media and even into some people's lives. And like "The Man Who Came to Dinner," it shows every sign of settling in for a long and exceedingly unpleasant stay.

In a way, it all began with the Big Blackout of the Northeast in 1965. I can still remember the shocking impact of that evening in November. No one really thought the lights could go out. But they did. In a sense it was a freak-a failure to readjust the trip-out devices in Canada. In reality it was a warning signal of deeper trouble.

The Big Blackout has been followed by the annual summer brownouts. The nation seems incapable of adding new electric power plants fast enough to keep up with soaring demand. In a very real sense the sales department of most utilities are beating the daylight out of their production department. Thus far, the talk about power shortages has been much more alarming than the shortages themselves. But the brownouts, too, are danger signals of deeper trouble which lies down the road.

This winter we have begun to experience the first signals of the basic dilemma. Children in Denver can't go to school because there isn't natural gas to heat their classroom. A factory in Iowa shuts down, thereby putting men and women out of work, because there isn't oil to keep it warm. It's the "energy crisis," we are

told.

Americans have become accustomed to crises on the domestic front, and I regret to say almost oblivious to them. The nation has a transportation crisis, a crisis in housing, a crisis in medical care, an education crisis, a Crisis in Black and White, which Charles Silberman so ably set forth many years ago, and many others. They have all been identified, discussed, cursed, and yet regrettably are still part of the American scene.

It is, therefore, no small wonder that when the problems associated with energy began to emerge we would quickly label them a crisis. But Webster tells us that a "crisis" is a turning point, a decisive moment when the status quo is no longer acceptable. To the average American living in a well-lit. over-heated home and able to purchase all the gasoline he needs the status quo is really not all that bad.

Yet there has been a real crisis for a number of people this winter. And the situation is apt to become gradually worse if we continue with the government policies that prevent consumers from buying fuel that is available in the world market.

Thus far, the energy crisis is a self-inflicted wound. It is not Mother Nature but Uncle Sam that is to blame.

We haven't run out of fuel in the physical sense of the word. There's plenty of tolerably clean fuel still available in the world. Why, therefore, are there shortages in Denver and Des Moines and many other places this winter? A basic reason is that the United States Government did NOT remove the barriers which it had erected to stop the free flow of oil into our nation. Three years ago the President's own Cabinet Task Force recommended to him that he scrap the present Oil Import Quota system. This winter's so-called "energy crisis" was manufactured right here in Washington. It could have been averted with a stroke of the President's pen.

We have no energy crisis, but there are problems galore. Domestic supplies that can be obtained near existing prices are scarce and dirty. Demand is growing much faster than domestic supply. There is little doubt that if we continue to drift into the future on the present course the nation and the world will indeed face a real crisis in energy. But that is all the more reason not to "cry wolf". Instead, we must seek out the root causes and fashion a solution in the public interest.

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In the energy field the public, I believe, is concerned essentially about four basic items: (1) reasonable prices, (2) adequate supply, (3) protecting the environment, and (4) minimizing foreign policy concerns.

We have heard much discussion in recent weeks concerning the shortages that have occurred and the foreign policy and balance of payments problems involved in importing greater quantities of energy. The environmental problems have also been a matter of debate. But what has strangely been missing from the dialogue about the energy crisis is the need to protect the consumer.

The nation's energy bill is upwards of $70 million a year and growing by leaps and bounds. In a nation concerned with inflation, the fact that energy prices are now soaring, after decades of stability, should be a matter of concern. Consumer protection was always considered a principal concern of federal energy policy. Indeed, the Federal Power Act, Natural Gas Act, and many other federal programs are essentially measures to protect consumers against windfall profits in an industry where competition may be ineffective to protect the consumer. Yet, in the ever-mounting volume of "energy crisis" stories, editorials and pronouncements, the consumer is ignored, or at best, is given only a passing nod.

Why this almost deafening silence on so fundamental a subject as the consumer's stake in the energy crisis? One theory is that energy is priced too low and higher prices would be a good thing.

I am perhaps as much aware as the next person that in many respects energy has been under-priced in the past. It was really a false bargain to produce electric power cheaply for the consumer at the expense of raping the hillsides of Appalachia and destroying the lungs of the men who mine the coal. And energy is really not low priced if it doesn't include funds for research and development to provide clean energy for America's future. Yes, we have worshipped at the altar of low priced energy without recognizing that the price was really being subsidized by society as a whole.

But we are now in danger of making an even more critical error in adopting a pricing policy of "the higher the better." There is no doubt that the price of energy should reflect its true cost to society. But we must not forget that the consumer still has to pay the bill and that higher prices will impose real hardships on lower and middle income families for whom energy represents a significant part of their cash outlay. And we must not fall into the trap of believing that the way to solve the energy crisis is to soak the consumer. There is all the difference in the world between paying for what energy really costs and adopting a policy that will bring billions of dollars of windfall profits into the hands of the energy companies.

Before we push the panic button, consumers should take a hard look at the remedy to the "energy crisis" which is being put forward by some industry and government people. It is, in effect, a crash program to boost our domestic production of energy fuels, particularly oil, natural gas and coal. How do they propose accomplishing this goal? First and foremost, by maintaining our Oil Import Quota system; also, by decontrolling natural gas prices and raising oil prices, by continued and even accelerated strip mining of coal, by intensive drilling for oil off our Atlantic and Pacific Coasts, AND, in general, by giving the energy industry a "greater incentive" to explore and develop domestic resources. In other words, much higher prices-whoppingly higher prices, as a matter of fact. Recent industry estimates indicate price increases on the order of 50 per cent for crude oil and of 100 per cent for natural gas.

The program is a continuation of a "Drain America First" policy. It means multi-billion-dollar increases in fuel prices to continue full speed ahead meeting a wasteful pattern of energy consumption; and the fuel supply will be expensive and dirty-higher prices and more pollution.

Let me be more specific. Oil and gas represent 75 per cent of our nation's energy supply and at current wellhead prices they represent a cost to the consumer of some $20 billion dollars a year. Higher prices may well be required in order to find and develop new sources of oil and gas that may involve higher costs. But the oil companies are obviously not losing money on the oil and gas which is now flowing to the consumer. If the price increases are permitted on the oil and gas already discovered there is the possibility-indeed the great likelihood-of a multi-billion-dollar windfall to the petroleum industry.

I raise this issue because there has been a lot of loose talk lately about decontrolling the price of natural gas in order to encourage greater exploration for that scare and relatively clean source of energy. It is, therefore, well to remember that for two decades the petroleum industry has been attempting to obtain market prices for natural gas found largely as a by-product in the search for oil. There