SCHAKOWSKY CALLS FOR COMPREHENSIVE PLAN TO ADDRESS RISING NATURAL GAS, HEATING COST AT CHICAGO HEARING; SAYS WE CANNOT LEAVE AMERICANS IN THE COLD WHILE ENERGY COMPANIES ARE LEFT WITH MONEY TO BURN

OCTOBER 11, 2005

SCHAKOWSKY CALLS FOR COMPREHENSIVE PLAN TO ADDRESS RISING NATURAL GAS, HEATING COSTS AT CHICAGO HEARING

SAYS WE CANNOT LEAVE AMERICANS IN THE COLD WHILE ENERGY COMPANIES ARE LEFT WITH MONEY TO BURN

CHICAGO, IL. -- U.S. Representatives Jan Schakowsky and Bobby Rush, members of the House Energy and Commerce Committee, today co-chaired a Chicago hearing on rising natural gas prices joined by their colleagues Representatives Danny Davis and Daniel Lipinski. The Energy Information Administration released a short-term energy outlook in September that predicted natural gas costs in the Midwest would rise 71% this winter. Chicago-area gas distributors such as Peoples and Nicor have warned consumers to anticipate higher bills this winter and applied for rate increases from the ICC. The hearing included testimony from witnesses representing the State of Illinois, the City of Chicago, the Illinois Commerce Commission, the Illinois Attorney General, Peoples Energy, Nicor Gas, the American Gas Association, and Citizens Utility Board.

Below is the text of Representative Schakowsky's opening statement:

Natural gas prices are skyrocketing, along with the costs of gasoline. And while we first need to get the word out to the public to be prepared, we need more answers about how we got to this point and what we can do to avoid it in the future. And we need to carefully scrutinize the effort our local distributors, Nicor and Peoples Energy, are exerting to get rate increases approved because that could mean the addition of a lot more salt in the economic wound their customers will suffer this winter.

We want to hear from our witnesses, local and state government representatives, regulatory officials, consumer advocates, natural gas providers and the industry about the resources available to consumers, what steps you may have taken to try to prevent these price spikes and what else you plan to do.

Unfortunately, what has occurred recently at the federal level in response to energy price spikes in general has taken us in the wrong direction. And, in terms of natural gas, we have really gone in no direction. Nothing has been done to help the American public to avoid or confront the ongoing price increases they face.

Last week, the House of Representatives narrowly passed H.R. 3893. The bill, purported to address the nation's post-Katrina energy needs, does nothing to help consumers cope with the upward swing in energy costs, costs that were already high before Katrina struck. H.R. 3893, deceptively named "the Gasoline for America's Security Act", is full of new regulatory subsidies for the oil and gas industry. It threatens our environment and public lands, costs taxpayers more money, and promises more profits for the industry while consumers face severe price spikes in nearly all aspects of their energy needs. Meanwhile, as the Department of Energy predicts natural gas bills in the Midwest to go up as high as 71% this year, the bill rushed through the House last week does nothing to address this critical issue for our region and our constituents.

The most severe energy price spikes, those in the natural gas market, are not even on the radar of the Congressional Leadership as the cold weather approaches.

In Chicago, the average heating bill is predicted to be $1475 per household this winter and to many small business owners. This will be a major, potentially insurmountable, blow to lower and middle income families. Yet instead of addressing the impending heating crisis and protecting consumers, the bill passed last week is filled with giveaways to the same energy companies that are making record profits in the aftermath of the hurricanes.

The bill does not even pretend to prevent natural gas companies from gouging consumers. Even though natural gas prices are four times what they were in 2001, there is no mention of natural gas in the price gouging section of the bill. For natural gas suppliers and distributors, passage was of the bill was a green light to jack up the prices.

And existing assistance programs, while important and useful, are inadequate. In Illinois, to qualify for LIHEAP, a family of four must earn under $29,000 a year.

Because of increased energy costs, LIHEAP has covered a smaller share of a family's average heating bill over the last four years - and that share will be significantly lower this year due to these record price spikes. This winter, millions more Americans may find that they can't pay their home heating bills - not just poor Americans. And we need to help them.

Democrats sought to give the Federal Trade Commission new authority to prevent and punish corporations that gouge consumers for the oil, gasoline, and natural gas they need to get to work, heat their homes and run their businesses, but lost on party-line votes.

Each Member here today wants the public to be aware and to be prepared. And we have some suggestions and some resources we can discuss. However, we have assembled our expert panels to help us determine what else can be done, how we got here and how we can avoid this situation in the future.

There are at least four steps that should be taken today to address these rising heating costs. First, we should further expand LIHEAP to assist the growing number of families who will be unable to pay their heating bills this winter. Second, we must ensure that no corporation or individual is reaping excessive profits at any point in the natural gas supply chain. And that also means taking a close look at proposed rate hikes sought by People's and Nicor. Third, we must prevent speculators on the New York Mercantile Exchange from driving up the actual price of natural gas; the monthly average price of natural gas futures on NYMEX has gone from $1.50 in 1999 to over $10.00 today. Finally, the federal government should issue additional grants to the states to help Americans weatherize their homes to reduce energy demand and heating costs this winter. There is more we can do and I want to work with my colleagues and our witnesses here today to do everything we can to avert a wider scale problem.

As the cold weather hits America this winter, we cannot be caught unprepared like we were with Katrina. And we cannot leave the American public in the cold this winter while energy companies are left with money to burn.