CA Republican Lawmakers Offer Alternative to Edison Deal; Dems Sue FERC

The month of May is almost gone and support in the California legislature for the governor's deal with Southern California Edison was still missing last week, so Republican members crafted an alternative that would not involve sale of the utility's transmission assets to the state. In the meantime, Democratic state legislative leaders took aim at FERC as did most of the rest of the state government's elected and appointed officials.

The Republican proposal from its minority leaders includes provisions for merchant generators lowering their charges by as much as 30%, something one of the Sacramento-based Republican spokespeople said the generators have indicated they would consider doing. They call the proposal a "Ratepayer Protection Plan," with an underlying theme of "getting state government out of the energy business."

The three main components of the minority party's proposal are:

  • "Warrants" to ratepayers in future utility-built energy plants in exchange for a dedicated rate component within the existing California Public Utilities Commission rate structure;
  • Utility holding companies would apply tax refunds to lower utility rates; and
  • Merchant generators would help lower rates by negotiating a 30% concession with the governor.

Earlier last week California's two top legislative leaders Tuesday filed a suit against the Federal Energy Regulatory Commission in the Ninth Circuit U.S. Court of Appeals seeking the court to order the federal regulators to provide just and reasonable wholesale electricity rates, citing harm to the state public safety and welfare from the continuing high power costs.

State Senate President pro Tem John Burton and Assembly Speaker Robert M. Hertzberg reiterated an ongoing contention of California officials that FERC has abdicated its responsibility to provide just and reasonable energy prices as mandated by Section 205 of the Federal Power Act.

"This suit is an emergency response to an emergency situation that could critically impact the health and welfare of millions of Californians including seniors, children and people with disabilities," Burton said. "I am confident Californians are going to find relief in the courts that we haven't gotten from the federal government and that we certainly haven't gotten from the power pirates (merchant generators)."

"Given the crisis facing Californians, we must explore every alternative to protect the consumers of this state," Speaker Hertzberg said. "We went to Idaho. We went to Washington, DC. The only place left to go now is a federal courtroom - and that's where we are going."

The suit urges the court to block FERC from extending current authorizations for market-based rates as requested by Williams and AES, and eventually do the same to other merchant generators in the state, such as Dynegy, Duke and Reliant Energy.

In the suit filed by some California-based private attorneys for the two legislative leaders, they contend that FERC not only failed to define what rates are just and reasonable, but "what constitutes market power that makes rates unreasonable with the kind of market-based rates that FERC regulates."

The legislators acknowledge that FERC is entitled pursue a "long-term, fundamental restructuring of the market to bring about just and reasonable prices at some time in the future." However, it goes on to argue that in the meantime, it needs to take steps to assure just and reasonable rates in the present and near-term future.

Repeating the threat of "health, safety and welfare risks" to Californians, the suit says the state lawmakers could no longer "stand by and watch (the extra wholesale power charges mount) because FERC will not do the job that the law imposes on them."

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