Interest in Regional Price Caps Stirs on Capitol Hill

Sen. Dianne Feinstein (D-CA) is preparing legislation that would call for a price cap to be imposed on wholesale electricity transactions in the western region during emergency situations, an aide to the senator said.

She "is working with a number of members in the Senate" on the legislation, which currently is in the "early stages of development," the aide noted. The measure probably will be introduced later this month.

"The legislation could involve giving the energy secretary...the ability to impose [such] caps under certain conditions," the aide said. Before the regional cap could be imposed, "there would have to be a number of findings met" to determine whether an emergency situation exists, he noted. The details, he stressed, "still are being worked out."

On the House side, Rep. Anna G. Eshoo (D-CA) is drafting a bill to give the Department of Energy (DOE) the authority to levy a regional cap to tame wholesale power prices. Although no specific cap figure was mentioned, she indicated it would be sufficient to cover generators' costs to produce energy, plus a limited profit margin. Also, the bill will provide for customer refunds from "unjust" and "unreasonable" rates.

The House legislation will give the "Secretary of Energy the authority to do what the FERC has thus far refused to do --- namely, to mandate reasonable wholesale prices that will benefit the consumer," she said in a prepared statement. Eshoo plans to introduce the legislation when the House reconvenes later this month, an aide said. Her bill would be a companion to Feinstein's measure.

Vocal critics of FERC's handling of the California power crisis, Feinstein's and Eshoo's proposals would be at odds with the Commission's reforms for the bulk electric market. While FERC has set a $150/MWh soft price cap in California, it has resisted growing cries for a regional cap.

California Gov. Gray Davis, as well as a number of other governors of western states, and Energy Secretary Bill Richardson have voiced their support for a regional price cap.

Susan Parker

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