Bill to Set Regional Price Caps Introduced

Sen. Dianne Feinstein (D-CA) introduced legislation on Capitol Hill last week that would give the Department of Energy (DOE) the authority to overstep FERC by setting an interim regional price cap or cost-based rates on wholesale power transactions in 11 western states.

The legislation, which is co-sponsored by Sen. Barbara Boxer (D-CA), seeks to amend the Department of Energy Authorization Act of 1997 to allow the secretary to impose a temporary regional price cap or cost-of-service rates (to cover a generator's production costs, plus a reasonable rate of return) when FERC determines the rates to be "unjust and unreasonable," but fails to remedy them.

The DOE secretary's action would remain in effect until "just and reasonable" rates are restored to a market. The governor of any state within the region would be able to opt out of the cap, according to the legislation. The measure would apply to bulk power transactions in California, Oregon, Washington, Nevada, Arizona, Idaho, Montana, New Mexico, Colorado, Utah and Wyoming.

FERC has steadfastly opposed a regional price cap, while the governors of the western states have favored it. "This bill is being introduced after [the] Federal Energy Regulatory Commission has turned down frequent requests to establish a temporary regional wholesale price cap despite finding that the electricity generators are charging 'unjust and unreasonable' rates," Feinstein said.

Susan Parker

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