May 17, 2001

Bush-Cheney Energy Plan:
Plunder, Pollute, Price-Gouge and Profiteer

WASHINGTON, D.C. The Bush/Cheney energy plan released today rewards Big Oil and other large energy concerns for their campaign support of President Bush but short-changes consumers and the environment. If approved, the Bush plan would ensure an energy future marked by continued price-gouging, pollution, wasted taxpayer dollars and the continuing threat of a nuclear catastrophe.

While the plan features window-dressing that purports to promote renewable technologies and energy efficiency, the bulk of the report provides justifications for continuing and in most cases expanding reliance on dirty coal technology, unsafe nuclear power, risky oil drilling on public lands and increased federal powers over traditionally local energy infrastructure planning decisions.

The Bush/Cheney solution to the alleged energy crisis is to provide incentives for expanded fossil and nuclear fuel development and related infrastructure additions as a solution to the high prices and short supplies facing consumers in domestic energy markets and to employ an array of corporate welfare schemes to aid private business. By focusing most heavily on the supply side, the administration is missing an opportunity to build a future based on efficiency and clean technologies.

"Rather than protecting consumers and promoting clean energy, the Bush administration is blatantly pandering to the coal, oil and nuclear industries by lavishing them with billions in taxpayer subsidies and proposing new federal transmission and power plant siting rules that squelch local control," said Public Citizen President Joan Claybrook.

"Bush and Cheney want their buddies to drill in the Arctic National Wildlife Refuge and anywhere else they can fit a drill rig, but it is the consumers who are getting drilled every time they go to the pumps and every time they get their electric bills," Claybrook said. "This plan does nothing to address that."

State s Rights be Damned: Bush/Cheney Plan Runs Roughshod Over Traditional Local Authority

Claiming that price spikes across America s electricity system were caused by inadequate generation and transmission construction, the administration seeks to suspend air quality standards for new power plants and give the federal government the authority to condemn property through eminent domain for the siting of transmission lines. Never mind that state and local authorities have, for the past 100 years, done a successful job of thoughtfully planning the construction of adequate generation and transmission capacity.

In reality, electric utility deregulation has forced many states to cede regulatory control over power plants. The lack of government oversight has been replaced with uncompetitive markets controlled by a handful of energy companies. State and federal investigators have found these energy companies have deliberately price-gouged consumers by billions of dollars, and refunds have been ordered. Meanwhile, the largest energy corporations controlling electricity in California saw their after-tax profits soar 54 percent in 2000 to $7.75 billion. But the Bush plan does nothing to stop this profiteering.

"Deregulation provides incentives for energy companies to inefficiently sell power to those customers willing to pay the most for electricity wherever they may be located rather than the way it used to be when utilities were required by law to charge reasonable rates and serve local customers first because energy is an essential commodity," said Tyson Slocum, an energy policy analyst for Public Citizen s Critical Mass Energy and Environment Program. "The failed concept of deregulation has placed the strain on our nation s generation and transmission system. Therefore, deregulation should be dismantled, not local siting laws or public health and environment standards."

Nuclear We Can t Afford the Risk

Contrary to sustainable energy goals, the Bush energy task force advocates increased nuclear generation and grants generous concessions to the nuclear industry, including recommendations for less stringent regulations, increased tax subsidies and promotion of new nuclear plants.

Indeed, the report's assertion that nuclear power is a cost-effective source of electric generation is inaccurate. Factoring in capital costs, a 1998 OECD report cited the cost of nuclear power in the U.S. at $2,079 per kilowatt hour (kWe), compared to $1,200/kWe for coal-fired plants and $500/kWe for gas-fired plants. The high costs of decommissioning and waste management add to the economic inefficiencies of nuclear power. In addition, the last nuclear power plant commissioned in America took 23 years to build.

"Nuclear power has never been economically viable without taxpayer subsidies," Claybrook said. "The administration should not be wasting money on a technology that is not sustainable in either economic or environmental terms. And even if it were, it would take half a generation to build a plant which still wouldn t be safe."

In addition, the unconvincing efforts to mask the persistent problem of nuclear power's most dangerous byproduct high-level radioactive waste represent an irresponsible waste of taxpayer dollars. "Reprocessing" waste to separate its constituent parts for partial reuse is expensive and poses serious environmental and proliferation concerns, and the process itself generates substantial quantities of radioactive waste.

President Jimmy Carter issued an executive order banning the reprocessing of commercial high-level waste in 1979, and the Department of Energy in 1992 committed to phase out its reprocessing activities. "At this juncture, America needs forward-thinking policies for a sustainable energy future, not a regression to these dangerous and discredited technologies of the Cold War," Claybrook said.

Accelerator transmutation another nuclear waste technology favored in the report is unproven technology involving similar risks and would be expensive to implement. A DOE report on transmutation estimates the costs of such a program at $280 billion.

Clean Coal? Still the Dirtiest of Them All

The administration also calls for taxpayer subsidies to encourage so-called "clean coal" technology. In addition to billions in tax breaks to private owners of coal-fired plants, Bush s 2002 budget calls for an 813 percent increase in R&D funding (from $9 million to $82 million in 2002). But "clean coal" is still the dirtiest fuel around far more polluting than natural gas.

"Providing subsidies to the coal industry while slashing funding for actual clean technologies, such as renewables, will unnecessarily subject millions of Americans to unhealthy levels of smog and mercury in our air," Claybrook said.

Renewables and Energy Efficiency: Bush Ignores the Potential of Clean, Sustainable Power

The energy policy put forward by the White House is not a reasonable or legitimate solution to America's short- or long-term energy needs. After having prepared the nation for a wholesale push for more dirty and dangerous energy sources, the administration has now moderated its rhetoric slightly and is disingenuously packaging the final plan as "green" and innovative.

Perpetuating a self-fulfilling prophecy of continued fossil-fuel and nuclear reliance, the administration cynically says conservation and renewable energy sources can never become a substantial component of the country's energy mix and at the same time seeks to dramatically curtail funding for such technologies. Bush s 2002 DOE budget slashes funding for hydrogen technology by 48.3 percent. Funding for biomass was cut 6.7 percent; geothermal research cut by 48.3 percent; fuel cell research slashed by 14.3 percent; and solar research cut by 53.7 percent.

If the Bush administration were to make sustainable energy technologies a priority, existing technologies such as wind, solar and some types of biomass could become mainstream solutions to our long-term energy needs. Yet under the Bush/Cheney plan, these programs are cut, and technologies which have already proven to be dirty, dangerous and prohibitively expensive will get the lion's share of taxpayer subsidies.

Cheney says the U.S. will need to build 1,300 new power plants by the year 2020. But that figure, based on a DOE report, assumes no change in current energy demand trends. According to the 2000 Interlaboratory Working Group on Energy-Efficient and Clean-Energy Technologies a separate more recent working group reporting to the DOE implementing comprehensive energy efficiency strategies would result in a demand reduction of 24 percent from the "business-as-usual" consumption rates that would otherwise be reached by 2020. This would reduce Cheney s 1,300 number down to roughly 700.

"Fully using existing renewable energy technologies hydrogen fuel cell technology, wind turbines, photovoltaic modules, solar thermal and biomass could increase generation by these renewable sources 75 percent by 2030," Slocum said. "This combination of demand reduction and increased usage of renewables would be enough to replace nuclear power by 2030."

Stop the Price Gougers

In March 2001, the Federal Trade Commission released a report (Midwest Gasoline Price Investigation) which had been mandated by Congress in response to high gasoline prices. The FTC reached a curious conclusion: While it claimed that no collusion had taken place, it found that "conscious (but independent) choices by industry participants" to intentionally withhold supplies resulted in artificially high prices. The report, however, could not publicly name the names of the companies it alleged to have caused price spikes, since federal law considered the information proprietary.

If this nation were truly experiencing an energy crisis, then the oil and gas industry should be suffering along with consumers. But a Public Citizen analysis of the industry s profits show it just had its most profitable year in history.

The top 10 oil companies, which control 70 percent of the domestic oil refinery capacity and 88 percent of the domestic retail market, posted after-tax 2000 profits of $56.57 billion, a 104 percent increase from their previous record of nearly $28 billion in 1999. In the first three months of 2001, these same companies posted $16.8 billion in profits, a 27 percent increase from a year earlier.

"The spate of mergers Exxon-Mobil in November 1999, BP Amoco-Arco in April 2000, Chevron-Texaco in October 2000, Phillips-Tosco in February 2001, and Valero-Diamond Shamrock in May 2001 has created uncompetitive markets," said Claybrook. "Rather than reward these companies by opening up sensitive public lands to drilling, consumers would be better served with stronger anti-trust laws and policies to promote competition, not consolidation."

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