Senate Democrats Decry FERC's Actions in CA
Despite moves by the Republican-led FERC during the past week to
address potential refunds and possible price manipulation in the
California wholesale power markets, the Bush administration
continued to be the favorite whipping boy of Senate Democrats for
its unrelenting opposition to temporary price mitigation in the
Appearing at a hearing of the Senate Energy and Natural
Resources Committee last Thursday, Energy Secretary Spencer Abraham
took the brunt of the criticism from senators --- mostly Democrats
--- for the Bush White House's inaction on restraining runaway
prices in western bulk power markets.
While the administration is neither "insensitive" nor "uncaring"
to the public's concern over electricity prices, Abraham testified
repeatedly that its first priority was increasing power supply so
that the lights can stay on next summer. The hearing was called to
consider three bills by Sens. Dianne Feinstein (D-CA) and Barbara
Boxer (D-CA) to enact prices controls or mitigation in the troubled
western regional markets.
"To me, our first priority to the American people is to ensure
there's a reliable supply of energy this summer," Abraham said
under questioning from lawmakers. Price caps would only serve to
"seriously aggravate the supply situation" by discouraging
investment in new generation facilities, at a time when they're
needed the most.
"I'm surprised by the ideological hardness of your statement,"
countered Feinstein. "I agree that [California] has to fix the
brokenness [in its markets] on its own" by boosting generating
capacity within the state. But that's a long-term solution, she
noted. "My question is what do we do right now They're going to be
charging $5,000 a megawatt this summer. We're sending a signal that
it's okay" to charge that amount in California.
FERC's recent action, targeting 13 California power suppliers
for potential refunds, is evidence that this won't happen, Abraham
said. "That's the way to address prices that are unjust" and
excessive, he told Feinstein. Sen. Jeff Bingaman (D-NM) sharply
criticized the Commission's actions so far, including the refund
orders, calling them at best "half-hearted" attempts to correct the
California's Gov. Gray Davis is looking to the federal
government for help to create price stability, Feinstein pressed
further. "I'm not suggesting that high prices are a good thing,"
responded Abraham, but preventing blackouts this summer is the
White House's top priority. The Bush administration, he said,
doesn't want to have to tell the public that the good news is FERC
ordered price caps, but the bad news is "you're not going to have
power" this summer.
"I think we need to increase our [federal government's] efforts
to help" California, said Sen. Gordon Smith (R-OR), in offering
support to Feinstein. "I think we need to give you [DOE] more
authority, and you need to use it to mitigate a catastrophe."
That's what the White House is trying to do, Abraham said. Its
immediate, primary goal is to "deal with the summer crisis" so that
businesses in the West don't have to shut down due to a lack of
Despite the administration's focus on increasing power supply,
"I can't tell you.....that we're at a point where we can guarantee
there will be no blackouts" this summer, the DOE secretary told
Committee Chairman Frank Murkowski (R-AK). "I don't want to make
any assertions that there will be no rolling blackouts..."
Oregon Gov. Gary Locke included himself among the expanding
group of proponents of price caps. FERC has taken "cautious
actions" so far that have provided no relief to Northwest states,
he said, in calling for caps in the short term. "We simply need a
time out" to allow Northwest states to protect their economies and
the California market to correct itself, Locke noted.
While Locke applauded the Bush administration's efforts to
promote more energy development, he said, "we in the West cannot
wait seven years until new [energy] resources [are] discovered and
Murkowski wasted no time in voicing his opposition to the three
Feinstein-Boxer bills --- they "do not fix the supply problem in
California" --- as well as his lack of compassion for the state's
situation. The state's average monthly electric bill --- which is
$58.70 --- is lower than the bills in many other states, he said,
and the state is "dead last" in the nation in terms of generation
capacity per person.