Hearing of the Senate Committee on Energy and Natural Resources on Nominations of Jeffrey Clay Sell to be Deputy Secretary .......

Hearing of the Senate Committee on Energy and Natural Resources on Nominations of Jeffrey Clay Sell to be Deputy Secretary of the Department of Energy and Patricia Lynn Scarlett to be Deputy Secretary of the Department of Interior

STATEMENT OF HON. RON WYDEN, U.S. SENATOR FROM OREGON

Senator Wyden. Thank you, Mr. Chairman. Mr. Chairman, my apologies to you. This was a crazy morning even by Senate
standards, and I want to thank you for your thoughtfulness and appreciate all the courtesies that you always extend to me.

I also want to note how extraordinarily helpful you've been to the people of our part of the country with respect to this
administration proposal to privatize our power system, the Bonneville Power Administration. There's no question in my mind
that the reason that we are well positioned legislatively to block it is we've had the good fortune of your support, and I
want to thank you for that as well.

The Chairman. You're welcome, Senator.

Senator Wyden. Mr. Chairman, I want to explore with Mr. Sell, the nominee, both his position with respect to privatization, but also the way in which he's dealt with me and my office with respect to this whole topic, because I regret to
say that I don't think in his dealings with our office that he has been completely forthright and I want to discuss my
concerns and give him a chance to respond.

Mr. Sell came----

The Chairman. Senator, let me just say from the offset, I have found him to be nothing but forthright always. And I respect the prerogative of every Senator to do what, ask what they like, but I do remind you that we all have feelings about
this man, many of us. So I would caution you to be sure you know what you're talking about with reference to him. That is
enough.

Senator Wyden. Mr. Chairman, he came to my office, and I want to go through with some specifics exactly what happened.
Frankly, I would have blocked the Sell nomination formally with a public hold, which has been my practice, other than the fact
that he is well thought of by you. I said that when I went to the floor, and the fact that you think favorably about him
carries enormous weight with me. And as I announced on the floor, I would put a formal hold on the Sell nomination already
because of my dealings if it were not for my friendship and respect for you, Mr. Chairman, and I appreciate your bringing
that up.

I want to go through with you, Mr. Sell, the events as I understand them and get your reaction to them so that the
committee is aware of my concerns. You came to my office on January 17, when Secretary Bodman came to discuss his
appointment as Secretary, and you were in the meeting when I asked Dr. Bodman on January 17 about privatization of
Bonneville and he told me he opposed privatization, and you did not say that day that the White House had a privatization proposal.

Now, the next day you worked with my staff where we extended a courtesy to the Bush administration to say we would
like to make sure that the administration understands our concerns about privatization, and my staff, after extending the
courtesy to the Bush administration, worked with you on the questions that I would ask the Secretary. And again you didn't
say that the White House had a privatization proposal, and then the Secretary came and testified to that effect on January 19.
Now, you came next to my office on February 16, to meet about your own nomination, and I asked if you knew about the
administration's budget proposal affecting Bonneville when you accompanied Energy Secretary Bodman to my office on January 17. And you admitted to me that day that you knew about the administration's proposal at that January 17 meeting.

Is that still correct? Is that still your understanding?

Mr. Sell. Senator Wyden, if I could, I would like to--your recitation of the facts is consistent with my recollection, with two points. I now understand, because you've been kind enough to meet with me three times, including the meetings that
you've just outlined, I now have a much greater appreciation for your perspective and the perspective of your constituents
on this matter.

Had I known at the time that you viewed privatization and a change in the law to charge market-based rates as the same
thing, perhaps I could have handled the situation differently. I'm sure with the knowledge I have today, had I had it then I
would have handled it in a different way.

But the administration does not view privatization, that is selling the Federal asset which is Bonneville Power to a private entity, as the same thing as our proposal. You asked Secretary Bodman that day if he was--then-nominee Bodman that
day, if he was opposed to privatization of BPA, and he responded that he was personally opposed to privatization and
he believed that was the position of the administration. And I will tell you today, Senator Wyden, that I am personally
opposed to privatization and I believe that continues to be the position of the administration.

At that time in January, I did not perceive privatization, as I've just described it, as the same thing that was at that
point under consideration in the White House. But as you said in your statement, I was aware that that proposal and other
general proposals related to the power marketing administrations were under consideration inside the White House
when I was in your office on January 16th.

Senator Wyden. Do you think that at the time you should have told me that there was a proposal under consideration to
move to market rates?

Mr. Sell. Once again, Senator Wyden, I do want to thank you for the courtesy that you've extended me in offering me, giving me a number of opportunities to visit with you about this. And once again, I'll say, if I fully appreciated your concerns then as I do today I believe I could have handled the matter and handled your questions in a better way.

Senator Wyden. Well, I intend to talk to the chairman about this some more. As I say, because of my enormous respect and
affection for Chairman Domenici, which goes, as he knows, beyond the question of energy to our families and our families'
history, I'm going to talk to the chairman about it some more. I would just make two points, Mr. Sell. First, if it looks
like a pig and acts like a pig, it's a pig. And certainly, in our part of the world this approach with respect to market
rates, this is seen as code for privatization, and I think that I should have been told at the time that there was an approach
being advocated at the White House as it relates to market-based rates.

You've given your response today that, had you understood my concerns, you would have indicated that, and I think that's
a step in the right direction. I want to have a chance to talk about this further with the chairman and ask--I would only ask
you one other substantive question, and the chairman has been helpful on this point as well. Do you believe that it would be
wrong to try to go to a market-based rate structure system for Bonneville and the other PMA's administratively? Because there
is great concern that, while Congress may block this legislatively--certainly there is support in this committee for doing it--that there could be an end run by the administration to do this administratively, and I hope to work with the chairman and other colleagues as we try to address that tomorrow.

But I would like to know your position substantively as to whether you would be opposed to an effort to administratively
put in place this market-based approach to setting rates.

The Chairman. Before you answer, Mr. Sell, might I just say to you, Senator Wyden, I think I'm fully aware of the issue. However, to ask a nominee for a position that is not going to be able to make the decision as to whether they go administratively or not--that's not his decision. It's not even the Secretary's decision. The President of the United States
would have to say we're going to do it administratively.

So I would think it's not relevant what he thinks personally. If you want to ask him--if you want to answer personally, I hope it's understood that whatever you say doesn't make any difference. The President of the United States
will or won't.

I'm hoping that we're finished with this issue. I've made it very clear I don't think we ought to keep sending that issue
up here. You know that.

I hope you're not part, Secretary Bodman said he's not going to be part, of--he's been telling the administration,
don't send it up again. It's just getting to the point where it's finished.

So, having said that, is that fair enough, that we understand the prerogative of his answer?

Senator Wyden. Mr. Chairman, I think your comment is a very fair one. I just am interested in getting a sense from Mr. Sell
with respect to how he would approach it, because he clearly is involved at the White House in these energy discussions. And
while I think your point, Mr. Chairman, is very fair, I would be, with your leave, interested in having Mr. Sell's thoughts
on the subject.

Mr. Sell. I'm happy to respond to your question, Senator Wyden. It is my understanding that the underlying statutes
governing the power marketing administrations and Bonneville require that the rates be based on a cost recovery methodology. That is why the administration in seeking to propose, pursue a different policy, proposed a change in the law. If that change is not made--and that is a change that would have to first begin in this committee. And if that change is not made, then we will continue to comply with the requirements of the existing law.

Senator Wyden. I will take that as an answer that you will not go the administrative route. That's constructive as well.

Mr. Chairman, you've been kind both in giving me this extra time and I just want to come back to what I have tried to say
to the administration on this point, that I'm going to do everything in my power to make sure that there is a bipartisan
coalition in this Senate to not inflict on our part of the world what amounts to economic poison. We have huge
unemployment. Our whole economic underbelly is hard-hit, and this would cause enormous harm right now.

Mr. Chairman, again I thank you both for your support in terms of the substance of this effort and your thoughtfulness
with respect to my concerns about this appointment. And it's my inclination, before taking a position on this appointment, to
have further discussions with you.

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