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U.S. Senator Urges FERC to Prevent West Coast Heat-Related Market Gaming

FERC was urged Tuesday by U.S. Sen. Maria Cantwell (D-WA) to prevent energy marketers and power generators from ripping off consumers due to the potential for supply imbalances tied to restrictions on California's largest gas storage facility.

As the ranking Democrat on the Senate Energy and Natural Resources Committee, Cantwell reminded federal regulators in a letter that manipulation of energy markets in California, as happened in 2000-2001, can quickly spread to other western states, including her own state of Washington.

"I am concerned that natural gas shortages and supply disruptions in Southern California will increase electricity and gas prices throughout the region and enable generators and markets to engage in Enron-like tactics to pad their profit statements at the expense of consumers," Cantwell wrote to Federal Energy Regulatory Commission Chairman Norman Bay. "History must not be allowed to repeat itself.”

Until the resolution of uncertainties surrounding the future of Southern California Gas Co.'s Aliso Canyon storage field, which has been closed since a four-month well leak (see Daily GPIMay 19), there is nearly 10,000 MW of generating capacity, and individuals and businesses that have relied on gas from Aliso that are all subject to potential supply disruptions, Cantwell said.

Recalling the 2000-2001 situation that infected the West's wholesale energy markets (see Daily GPIMay 19, 2003), Cantwell urged "constant vigilance" when energy shortages exist.

A FERC spokesperson acknowledged receipt of the letter and said Bay would be responding to Cantwell, but otherwise the Commission had no comment on the matter.

Cantwell lauded California officials for their efforts to mitigate the impact from Aliso Canyon's closure this summer. "Nevertheless, the potential for gas shortages both this summer and next winter that could lead to curtailments remains very real," she said.

Citing powers given to FERC in the 2005 Energy Policy Act, Cantwell said federal regulators can mandate more "market transparency and prevent gas/electric market participants from engaging in manipulative practices that distort functioning markets and harm consumers." She urged FERC to use these powers.

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