DEPARTMENT OF ENERGY FISCAL YEAR 1979 AUTHORIZATION (Energy Conservation) FRIDAY, APRIL 21, 1978 U.S. SENATE, SUBCOMMITTEE ON ENERGY CONSERVATION AND REGULATION The subcommittee met, pursuant to notice, at 10:10 a.m. in room 357, Russell Office Building, Hon. Howard M. Metzenbaum presiding. Present: Senator Metzenbaum. Also present: Benjamin S. Cooper, professional staff member; James T. Bruce, counsel; and Charles Trabandt, deputy minority counsel. OPENING STATEMENT OF HON. HOWARD M. METZENBAUM, A U.S. SENATOR FROM THE STATE OF OHIO Senator METZENBAUM. Today we are hearing evidence having to do with the budget needs of the Energy Information Administration. During the hearing, we hope to learn either from Dr. Moses or other members of the Energy Information Administration why the Executive Office of the President saw fit to direct changes in certain economic assumptions in the PIES model, that model being the model that has provided all the basic conclusions and information which the American people and Congress have been supplied concerning the energy shortage. We want to learn why they changed those assumptions which-and I'm now quoting from the GAO on the subject-"altered not only the forecast of energy supply and demand made for the President's energy policy and planning staff, but all subsequent forecasts as well." We want to learn why 20 other changes were made between the original draft in November 1976 and the final figures used in reporting to the American people the President's energy plan in April 1977. This intervention by the policy staff of the Executive Office led to deliberate misrepresentation to the American people of the basic facts concerning the need for a national energy plan, and although I do not question our Nation's need for a national energy plan, Congress and the American people are entitled to an explanation as to why the administration saw fit to make 21 changes which resulted in an-and again I quote from that same GAO report-"increased (867) anticipated energy demand of 2.52-million barrels of oil per day by 1985 and to decrease anticipated estimated supply by 1.44-million barrels a day by 1985," a total of 3.96-million barrels of oil a day or approximately 20 to 25 percent of the total anticipated demand by 1985. This hearing today will inquire into what assurances and protection and safeguards are presently being built into the system so that future manipulations of the figures may not again be fed to the American people and Congress. Dr. Moses, I recently become aware of a report entitled "Activities of the Office of Energy Information and Analysis," which was released in December 1977. That report-I'm certain you're familiar with it-details serious difficulties within the Office of Energy Information and Analysis, the predecessor to EIA. Let me say at the outset that I am aware that EIA has been officially in existence since October 1, 1977, and that you were confirmed as Assistant Secretary in January. You were not in a position to be directly involved with OEIA's problems. However, now as you seek $63.4 million in the budget, it seems timely for you to report on the steps that have been taken to remedy the several problems outlined in the report. Specifically, the report prepared by the Professional Audit Review Team concludes the following: 1 (1) OEIA did not act strongly to assure either the accuracy or the credibility of the data it collects or to stimulate such action by other energy data collectors; (2) Little or no data verification is performed, with a result that the Federal Government relies on industry data, the reliability of which is untested; (3) OEIA was subject to intervention by the policy branch of FEA. Specifically, it is claimed that the Executive Office of the President's Energy Policy and Planning Staff was able to direct changes in certain economic assumptions in the PIES model that produced results emphasizing the need to enact the President's program; (4) No policy exists for control over model changes. No procedure was in effect to control the reason for, timing of, and nature of changes to the model or the people authorized to make them. (5) It is impossible for interested parties outside of the Department of Energy to know whether OEIA's current models have been constructed properly and used correctly; (6) No attempt was made to include the professional community nor nationally recognized experts in the evaluation of PIES. Mr. Moses, any one of the problems I've just mentioned would be cause for alarm. But for the Energy Information and Analysis Agency of the U.S. Government to suffer from them all is literally an outrage. We apparently are making energy policy in this country using unverified industry data and models that no one understands and which no one is given an opportunity to understand. Further, these models can be manipulated by those within the Government with a vested interest in the output they produce. 1 This report is reproduced in appendix V, pg. 1444. This is a heck of a way to run a railroad. And before we turn over $63.4 million to you, I would very much like some answers, not about that which has occurred in the past, although I'm perfectly happy to have you address yourself to these matters of the past, but what is being done to correct this situation and to see to it that it does not recur. STATEMENT OF HON. LINCOLN E. MOSES, ADMINISTRATOR, ENERGY INFORMATION ADMINISTRATION, DEPARTMENT OF ENERGY, ACCOMPANIED BY C. WILLIAM FISCHER, DEPUTY ADMINISTRATOR; AND DR. ELIZABETH MacRAE, DEPUTY ASSISTANT ADMINISTRATOR FOR APPLIED ANALYSIS Dr. MOSES. Senator Metzenbaum, it is a privilege to appear before this committee this morning on behalf of the Energy Information Administration and to respond to the important and fair questions that have been put to us. On my right is Mr. C. William Fischer, who is the Deputy Administrator; on my left is Dr. Elizabeth MacRae, who is Deputy Assistant Administrator for Applied Analysis. Senator METZENBAUM. MacRae? Dr. MOSES. MacRae, yes, sir. [The prepared statement of Dr. Moses follows:] STATEMENT OF LINCOLN E. MOSES ADMINISTRATOR, ENERGY INFORMATION ADMINISTRATION ON THE FY 1979 BUDGET REQUEST BEFORE THE SUBCOMMITTEE ON ENERGY CONSERVATION AND REGULATION SENATE COMMITTEE ON ENERGY AND NATURAL RESOURCES April 18, 1978 Mr. Chairman, and members of the Committee, I am pleased to be here today to testify on the FY 1979 Department of Energy Authorization Act and the budget request for the Energy Information Administration (EIA). The total FY 1979 Presidential budget request for EIA is $63.4 million, an increase of $15.3 million over FY 1978. Before I discuss this request in detail, I would like to describe the events leading up to the establishment of the EIA, our mission and goals, and how we are organized. Establishment of EIA In order for the Congress, the Executive Branch, State and local governments and the public to make informed choices about energy policies and programs, they must be able to rely on credible, accurate and comparable energy statistics and analysis. The EIA was established on October 1, 1977, specifically to establish and implement a comprehensive, unified and credible energy information and analysis program within the Executive Branch. The EIA has incorporated the energy information programs and personnel of the Federal Energy Administration (FEA), the Federal Power Commission (FPC), and the Bureau of Mines (BOM) of the Department of the Interior. The current design of the EIA has been based upon three major efforts, namely, the Department of Energy Organization Act (DOEOA), the EIA Organization Plan developed by the DOE Activation Task Force, and the Report on the Activities of the Office of Energy Information and Analysis |