Ken Glozer, a former official at the White House Office of Management and Budget and the Department of Energy, provided the House Energy and Commerce Committee with the following information:
Dear Committee Members;
I have been involved with federal energy policies, programs and agencies since the early 1970s for thirty years as a senior career staffer at the White House, OMB then as President of OMB Professionals for over 15 years providing expert services to companies in the energy industry. Here are my suggestions:
1. One of the worst anti competitive market, anti common sense federal policies is the Renewable Fuels Standard enacted in 2005 then expanded in 2007. This federal ethanol blend mandate is as bad and counterproductive as the earlier Emergency Petroleum Allocation Act (EPAA) of 1973 imposing nationwide petroleum allocation and price controls. The Reagan Administration had the good sense and political guts to abolish the EPAA. The House should abolish the RFS. The RFS was and is a political payoff to hugely wealthy Midwest corn farmers costing consumers and the economy tens of billions annually. The RFS has politicized gasoline markets making them inefficient, costly and subject to the whims of the White House, EPA and USDA. Go back to a competitive market policy for gasoline and scrap this mess called the RFS. Refer to my book entitled “Corn Ethanol: Who Pays, who Benefits?” for a fact based assessment of the RFS.
2. FDR’s policies live on at the federal level and after 80 years have become costly counterproductive albatross’s around taxpayer and most energy consumer necks. TVA, for example, has become the high cost electricity provider in its nine state region even though it has been and continues to be deeply subsidized by US taxpayers. Sell it off into the private sector before it defaults on over $25 billion in what is (in effect) federally guaranteed debt. Refer to my TVA paper prepared for Heritage Foundation attached. Get rid of the Rural Utility Service and its $6+ billion in annual new loan authority(over $50 billion in outstanding electric loans plus $5 billion the Treasury FFB has loaned to the so called private bank owned by the electric coops called the Cooperative Finance Corporation as most so called electric cooperatives are large scale enterprises often serving metro areas such as Old Dominion Cooperative serving Northern VA. Get rid of DOE’s Power Marketing Agency and competitively auction off to the highest bidders all federal hydro power. Get rid of the federal income tax exemption for electric coops and municipal electric power providers. Make them pay federal tax just like privately owned electric utilities. Refer to my FERC filing on the adverse impacts on competitive electricity markets of the above policies.
3. Get rid of all of DOE’s loan programs. It is silly to think that somehow one of the most incompetent departments in government can make loans that will result in new technologies being commercialize successfully for the long haul. That is what private capital markets do in this country and they do it very well. DOE bureaucrats lawyers consultant and politicos will never do this well if at all. Rescind the programs and sell off the loans.
4. Get rid of all USDA programs (other than competitive R&D grants) for Biofuels. USDA’s loan program for advanced ethanol refineries is a disaster with a loan default of of over 40% and rising. These plants—mainly for cellulosic ethanol are not now market competitive nor will they ever be because the chemistry too costly to produce to little ethanol that we do not need. Stop the myth of the “billion ton of biomass” so called study. This is pure fiction for the Agriculture and Energy committees of congress and not serious energy policy.
5. Get rid of federal vehicle mileage standards (CAFÉ) and the unattainable 54.5 mpg standard for 2025. This federal mandate is costly for consumers and is resulting in ever larger pickup trucks that pose a major safety problem for smaller cars. It is pricing millions of middle class Americans out of the new vehicle market as new vehicle prices increase to pay for the expensive technology to squeeze out tiny fuel economy increases. And no—consumers do not get their huge investment in new so called fuel efficient vehicles back in gasoline savings much of the time. Let the marketplace decide what cars and trucks are needed not the White house, EPA and others who use theoretical studies often done by advocates of CAFÉ to justify the standards.
6. It is a fact that federal energy policy over the past few decades has become anti competitive market. The committee should make and major effort to get rid of these counterproductive antiquated, costly policies as its highest priority for the next few years. An added benefit would be hundreds of million in annual federal budget savings by eliminating the above programs.
See the two following documents which expand upon the aforementioned topics:
Ken G. Glozer