The American Spectator : Markey's Moment

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Markey's Moment

By John Carlisle on 7.6.09 @ 6:08AM

Congressman resorts to witness intimidation to silence critics of cap-and-trade bill.

Congressional advocates of the Waxman-Markey cap-and-trade bill that narrowly passed the House by a vote of 219-212 on June 26 employed bribery to build support for this legislation when they co-opted several corporations by giving them free carbon dioxide emission credits. However, many businesses still balked at lending support to a bill that will impose a crushing energy tax on the American people and cost the economy trillions of dollars. Since bribery didn't work with these recalcitrant companies, Waxman-Markey supporters tried intimidation.

On June 9, the House Subcommittee on Energy and Environment of the Energy and Commerce Committee held a hearing to hear testimony on the Waxman-Markey bill, called the American Clean Energy and Security Act, which would increase the cost of emitting carbon dioxide through an onerous cap on emissions. One of the witnesses was David Sokol, CEO of MidAmerican Energy Holdings Company. Sokol criticized the Waxman-Markey bill because it would result in higher electricity rates for his customers. At the same time the hearing was taking place, Rep. Edward Markey (D-MA), the subcommittee chairman and bill co-sponsor, sent a letter to the Federal Energy Regulatory Commission (FERC) asking the agency to investigate the business dealings of MidAmerican. Sokol and committee Republicans charged Markey with trying to intimidate him. Markey apologized for the letter and said intimidation was not his intention.

MidAmerican is a $41 billion Iowa-based holding company of seven subsidiaries that own many coal-fired power plants and a growing fleet of wind generation. Warren Buffett is a major investor. Sokol actually endorses a cap on greenhouse gas emissions to combat the unproven global warming threat. However, he opposes the Waxman-Markey bill's trading mechanism because it would impose "a huge and unacceptable double cost on customers." He said consumers first will have to pay for emission allowances, "which will not reduce greenhouse gas emissions by one ounce." Then, consumers will have to pay for new low- or zero-carbon power plants.

Under Waxman-Markey, the electricity sector will get 35 percent of the free emission allowances. Sokol says that even with those allowances, MidAmerican would still have to raise rates on customers by 12 to 28 percent for a cumulative cost of $800 million. And that is just the first year that the cap goes into effect. The caps will get increasingly stricter over time and the free emission allowances will be phased out. Sokol says the cost of compliance could possibly increase market prices by two to four times.

Prior to the hearing, Sokol also stated that a cap-and-trade system will add at least $120 per month to the average family's electric bill.

Obviously, this is not the kind of information Markey wants to hear. Halfway through the question-and-answer period of the hearing, Markey's office sent a letter to FERC Chairman Jon Wellinghoff asking FERC to investigate the business activities of MidAmerican. Specifically, the letter requested Wellinghoff to determine if MidAmerican followed up on promises to invest $15 billion in electric transmission expansion following the repeal of the Public Utility Holding Company Act (PUHCA) in 2005.

Sokol was one of the proponents of the repeal, arguing that regulations were preventing utilities from making needed investments in the power transmission infrastructure. In his letter, Markey, who opposed the repeal of PUHCA, included six general questions about how effective the repeal had been in boosting transmission investment and whether FERC was protecting consumers. In two of those questions, Markey singled out MidAmerican's investments in California and what FERC has done to protect consumers against the company's losses from non-utility investments, including MidAmerican's real estate brokerage subsidiary that was seriously impacted by the financial crisis:

The repeal of PUHCA has also freed large multi-state public utility companies to diversify into other potentially risky business, to the potential detriment of utility investors and consumers. For example, MidAmerican Holdings has acquired the second largest real estate brokerage company in the country. What protections have been put in place to prevent utility shareholders, such as those of MidAmerican Holdings' regulated utilities, to prevent them from rate increases, higher costs for borrowing, or other risks that might be associated with unsuccessful or failed diversifications?

Sokol was not aware of the letter until a reporter asked him about it after his testimony. He calls the letter a flagrant case of witness intimidation. "Anytime a congressman sends a letter to a regulator of your company it is obviously concerning. It is hard to believe it was done for any reason other than to intimidate," said Sokol. He added that the letter did not intimidate him and will not change his negative views of the stiff energy taxes in the Waxman-Markey bill.

Republicans were furious when they learned that the letter was sent the same day that Sokol was testifying as a Republican witness before the subcommittee. Rep. Steve Buyer (R-IN) said, "There's systematic intimidation going on, and bullying of individuals by a party that preaches tolerance and it must stop."

According to GOP sources, Republicans on the Energy Committee, including ranking member Rep. Joe Barton (R-TX), confronted Markey about the letter. The results of that meeting could not be learned.

But the day after the hearing, June 10, Markey sent a second letter to Wellinghoff to "clarify questions contained in my June 9, 2009 letter." Markey wrote, "[M]y intent was for the Commission to analyze the activities of all investor-owned utilities with respect to their investments in transmission lines since PUHCA was (sic) revealed, and their investments in enterprises outside their core business." Markey said the two questions about MidAmerican were meant to be answered as it relates to the industry's transmission investments "as a whole."

Neither Republicans nor Sokol were mollified. Rep. John Shadegg (R-AZ) said, "I am deeply troubled by the message this sends, whether it was accidental or intentional. If I had gotten that letter, I would have gotten the message that it was sent to intimidate me." Rep. Barton said, "How can that not be perceived as an attempt to intimidate."

Markey called Sokol on Friday, June 12, to say he was unaware that the letter was being sent on the same day as the hearing. Sokol said Markey told him that once it was brought to his attention he "immediately recognized how inappropriate it was" and sent the clarification letter.

Sokol said that it was still disturbing because then it was a case of a committee staff member trying to intimidate a witness. Sokol said he asked for the name of the responsible staff member and if there would be consequences. Markey did not respond. Sokol says if no one is being held accountable then Markey's "apology rings hollow."

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topics:
Cap and Trade, Political Intimidation

About the Author

John Carlisle is director of policy at the National Legal and Policy Center, a nonprofit foundation based in Falls Church, Virginia.

Letter to the Editor View all comments (24) | Leave a comment

drudge ette obama| 7.6.09 @ 6:48AM

$120 a month increase in your electric bill. That will kill the bill - if people are informed about it.

That's the real message here. It's not news that politicians abuse power. Do we really expect the Democrats will sanction Markey? It's not in their self-interests.

Opponents of this bizarre tax on the lifeblood of this country's success - energy - must focus on the $120/month.

Rocco| 7.6.09 @ 6:53AM

True, Drudgette. But the question here is, where are all of the Republicans on all of this? Why are all of them so silent, and why do they roll over with this kind of intimidation going on? When all of them speak, the media is hard pressed not to ignore them.

Big J| 7.6.09 @ 7:03AM

We are being ruled by mob-like tyrants. In addition to the intimidation tactics, there are smoke-filled back room bribes going on at three o'clock in the morning. It's absolutely surreal.

These crooks need to be exposed for the bullies that they are and jailed.

drudge ette obama| 7.6.09 @ 7:08AM

Rocco, I don't know where they are. Maybe they aren't anywhere. Maybe they never were.

JP| 7.6.09 @ 7:36AM

"True, Drudgette. But the question here is, where are all of the Republicans on all of this? Why are all of them so silent, and why do they roll over with this kind of intimidation going on?"

One would have to think that many in the GOP have no problem with Waxman Markey.

BTW, the June UAH satellite derived global temps indicate that the globe was 01. deg C cooler than the 30 year (1979-2009) average. The Tropics had the most cooling, averaging a full quarter degree cooler than the 30 year running mean.

Melvin| 7.6.09 @ 7:54AM

Oi vey, It is as if we are all passengers on a runway train that is picking up speed as it sails down the track and non of our elected representatives want or have the will to apply the brake.
$120 increase of our elected bills, I have that nagging feeling that the number is extremely conservative and the increase will unfortunately be much more.
NC passed it's version of Cap and Trade in 2007 and the citizens of NC have seen our electric bills rise as the government mandates are phased in as to not cause an outcry from the masses.
This is my opinion on the situation. The powers that be in Washington D.C. fully realize that the massive spending that they have voted on, is going to take a equally massive new revenue stream to fund their lust for new government programs.
This might have something to do with the deafening Republican silence. Frankly put, the Republicans have been bought off, and unfortunately for us they have been bought off at bargain basement prices.
To conceptualize this is almost impossible. Any one of us would not in our wildest dreams even begin to think that the individuals that are sent to Washington D.C. would even begin to think of creating let alone instituting that largest tax burden in American history.
And the disheartening part to all this is... The bureacrats have only just begun.

KyMouse| 7.6.09 @ 8:12AM

An increase in utility bills of anywhere near $120 per month would be an unbearable burden for many families, but I suppose the poorest families will get government assistance to pay for it. The Democrats won't want to appear to be hard on the poor. Those of us who are middle class (or lower-middle class) will be stuck -- or shafted, I guess I should say.

I'm all for tea parties, but they seem to be mostly a way to let off steam. What can we really do to stop all of this? The 2010 elections are so far off. I write and phone my legislators and get nice letters in reply, but the juggernaut just keeps rolling along. When should I light my torch and sharpen my pitchfork?

Curly Smith| 7.6.09 @ 8:30AM

Where are the Republicans? Why they're in the Green Room with "Capn Trade" McCain:

McCain Pushes 'Cap-And-Trade' Plan to Fight Global Warming
GOP candidate promotes working with Europe on climate change, but only wants to 'encourage' involvement of 'rest of the world.'

By Dan Gainor
The Boone Pickens Free Market Fellow
Business & Media Institute
3/19/2008 1:40:08 PM

Presumptive GOP presidential nominee John McCain is using the idea of global togetherness to promote “a cap-and-trade system” to battle climate change. He said “Americans and Europeans need to get serious about substantially reducing greenhouse gas emissions in the coming years or we will hand over a much-diminished world to our grandchildren.” from: http://www.businessandmedia.org/printer/2008/20080319133739.aspx

The above is just one of multitudes of stories on McCain's idiocy. Of course, McCain opposes Obama's "Cap and Trade" scheme... or does he?

Melvin| 7.6.09 @ 8:36AM

KyMouse sharpening your pitchfork would one violate OSHA workplace safety rules and or be considered a weapon of mass destruction, and the lighting the torch would unfortunately for you a fine would be assessed for exceeding your carbon emission quota by the sake of having a torch that was fueled by a petroleum based product.
Oh, excuse me, I almost forgot you would be also assessed additional fine for not having the proper permit to attend a gathering of more than five people who intend to utilize a flame emitting device in a public forum.
Ahh, the joys of dissension as long as you pay for the proper permits.

Big J| 7.6.09 @ 8:40AM

KyMouse,

Pitchforks are for shoveling hay. I recommend a nice sub-compact KelTec 380 with power-ball hollow points.

Just sayin'.

;)

KyMouse| 7.6.09 @ 9:19AM

Cool, Big J! I enjoy target shooting, but I use a cousin's guns (he's a deputy sheriff, so he's got some nice ones). I don't one any myself, because I've had a history of sleepwalking. Bummer.

KyMouse| 7.6.09 @ 9:20AM

Make that "own" not "one"

Louis Jenkins| 7.6.09 @ 9:57AM

Wow!! Those guys in the District of Criminals. Gotta love ‘em. They know how to get things done in a hurry. Can’t waste time being on the up and up, afterall, they’ve got taxpayers to rape, wallets to filtch, and an economy that needs killin’. This cap ‘em and trade ‘em is good for the environment, so everyone, except the thieves in the District of Criminals, has to give up somethin’. You’re supposed to do like any sexual assault victim!! Relax and enjoy it! Right?

Dagny Taggert| 7.6.09 @ 10:31AM

Up here in Mass, I've been a witness to Markey's antics for years. This numb-nut can't get in front of the imaginary crisis of the day fast enough. His knee-jerk reaction to the "mutual fund day-trading scandal" was because a couple guys here in Boston were the first to be investigated for this trading loophole. Markey lead the charge (despite the net effect on the average shareholder being literally pennies for every $100 invested) as a bogus champion of the people.

What was the result of this "hard-charging" attack on the financial services industry? Brokers now have more mutual fund paperwork to fill out every time a fund is bought or swapped than ever before. Believe it or not, there is more paperwork involved in simply buying a mutual fund than there is in buying (much, much riskier) options.

Thank you Mr. "miss-the-Markey." You were able to posture yourself as a leader for a bogus reform--and the net effect was nada.

We see you up to your old tricks--posturing yourself as a bold leader in the war on climate change--a stupid law with a net effect on climate change of zero, but a much bigger price to America than some annoying paperwork.

J.C.Eaton| 7.6.09 @ 11:00AM

Reading the article and the Republicans faux furious response to Markey's shennanigans, I was reminded of those thrilling days of a long-ago yesteryear, when genuinely vexed congressmen took to their wretched opponents and put the cane to them. A series of short, hammer-like blows, delivered from varying degrees and angles, whose primary object would be to cripple and maim, not to kill, would serve right, legislative vermin like Markey, Frank, and Waxman. Sure, the striker would probably be criticised, censored, maybe even ejected from the House, but what a radiant moment.

bullwhacker| 7.6.09 @ 12:08PM

Intimidation and extortion are the main goals of cap & trade. The power to tax and spend and break your opponents knee caps. Great sport if you're a democrat.

Roy| 7.6.09 @ 1:49PM

Yeah, I don't believe any numbers about cost, either.

The Democrats' primary goal with this bill is the destruction of energy freedom. Right now in theory you have the ability to change electric companies; in practice this involves moving, but still. Electric companies cannot endlessly raise your bills without limit, because you have SOME recourse. The goal is to eliminate that. THEN they'll tighten the screws.

Even if they never planned to lower the cap at all, right off the bat this is a protection racket, granting emissions permits to existing companies and forcing potential competitors to buy from them.

Jack| 7.6.09 @ 2:30PM

Wow, $120 is only a small part of your utility bill rate increase. Consider the effect on other energy sources; gasoline, natural gas and propane will all increase. The electrically powered auto, food processing and manufacturing sector's energy prices will go up dramatically imapacting the costs of their energy cost increases.
Best estimates after considering all impacts was between $2,200-3,000 per year in early years moving up to $4-5,000 in the later years.
How will the poor pay for this? More taxes on the rich-er households making $50,000 and more.

Marc Jeric| 7.6.09 @ 7:37PM

Mistake - don't argue the cost! That is the loser when 50% of population is on the dole. Globaloney cooling scam in the 1970's; globaloney warming hoax in the 1990's; climate change flimflam in the 2000's. The science is the answer - we have to demask those monsters Waxman, Markey, Gore. Eco-nazis are the propagators of their cult of death; the world population of 6 billion must be reduced to the "sustainable" one billion.

Missy| 7.6.09 @ 10:34PM

Democrat Culture of Death strikes again.

$120.00 increase a month? BS.

Brian| 7.7.09 @ 3:49AM

I'm shocked, shocked there is intimidation going on in Washington. I thought corporations funded leftist groups out of the goodness of their hearts.

Richard Baker| 7.7.09 @ 8:30AM

Looks as if the few remaining Americans will have to use the Washington Tyrant Removal method to clean out Foggy Bottom. Can't happen soon enough, if the country is to remain.

whyyeseyec| 7.7.09 @ 5:33PM

Go ahead and increase my electric bill as much as you want. I will pay the same amount each month regardless. People will not be able to afford large bills each month anyway.
Electric bills will become like credit cards. Pay the minimum each month and let the rest ride. When the card gets maxed out ask the government for a bailout or forgiveness of the charges......