Western Lawmakers Still Look to White House for Relief
Congressional lawmakers from California and other western states renewed their pleas for aid from the Bush administration to end the power crisis in their region during a House subcommittee hearing last week.
Several called on the House subcommittee to direct FERC to install price caps on wholesale power in the short term --- a measure the White House opposes --- while others suggested adjusting Daylight Savings Time in the region to conserve power.
One lawmaker, Rep. Bob Filner (D-CA), said he also has asked the San Diego District Attorney's Office to bring criminal fraud, larceny, extortion and antitrust violation charges against a "cartel" of seven out-of-state wholesale generators for allegedly bilking the state out of billions of dollars over the past year by overcharging on electricity.
"The energy cartel has taken $20 billion [out] of our state in the last six or seven months," he testified at a House Energy and Air Quality Subcommittee members' hearing last Tuesday during which lawmakers offered their own solutions to the problems in California electricity markets.
The members of the so-called cartel include Duke Energy, Dynegy, Reliant Energy, Southern Companies and the Williams Companies and their affiliates, according to Filner.
The prices charged by these out-of-state companies have been "illegal," Filner told the subcommittee, and yet FERC has taken "no sanctions against the perpetrators." In effect, the Commission has invited them to "go in and rob the state blind, then rob the region blind, and then rob the country blind."
As for the cartel's alleged activities, Filner said "there is evidence of illegal withholding of power; there is evidence of falsifying transmission documents to raise prices; [and] there is evidence of laundering electrons through other states when there was a cap in California."
Filner told NGI he used the harsh words --- fraud, larceny and extortion --- for emphatic reasons. "Everybody is using euphemisms like 'gaming' and 'unjust and unreasonable rates.' I want the public to know what's going on." He also wants Congress and FERC to focus its attention on the wholesale suppliers.
This cartel of out-of-state energy suppliers "is stealing our economic future. They are robbing our bank accounts. They are killing off our businesses, and I think the committee ought to concentrate on bringing this energy cartel to justice."
San Diego District Attorney Paul J. Pfingst is taking Filner's request very seriously. "I agree with you that the current energy situation is a matter of local importance and that a thorough investigation must be completed to determine if Californians are being gouged by the energy companies," he wrote in a March 5 letter to Filner.
But Pfingst said the energy crisis goes beyond the scope of San Diego, affecting all of California and eventually the entire nation. Therefore, he noted he intends to meet with the state's Attorney General and the U.S. Attorney to "develop a joint strategy to determine whether any criminal violations have taken place."
Rep. Jay Inslee (D-WA) saved his criticism for the Bush administration, saying while it responded quickly to the recent earthquake in his state, it has failed miserably in its response to the energy crisis engulfing California and the western region. The federal government "has been a pathetic disaster [in and of itself] in refusing to come to the aid of the West."
He noted the administration already has a "tool at its disposal" to deal with the power crisis - short-term price caps on wholesale power sold in the western region. But "they're concerned it will end up being a long-term rather a short-term price cap," which he conceded was a "legitimate concern." He believes this can be dealt with by structuring the price cap in such a way as to ensure it will be temporary. As for concerns that a cap would be a disincentive for new generation capacity, Inslee said that could be easily resolved by exempting new generation from the cap.
"We need the administration to sit down in a bipartisan fashion to fashion a wholesale price cap" that addresses these issues, he told the subcommittee. In response to critics who have said this is a California-only problem, he noted Federal Reserve Chairman Alan Greenspan last week "pinpointed energy prices as one of the greatest danger signals to the U.S. economy."
Subcommittee Chairman Joe Barton (R-TX) didn't seem to think price caps would have much merit. ".[O]bviously there would be some short-term benefit or should be some short-term benefit, but I don't see that that helps" to resolve the market problems in the long term, he said. By imposing a cap on wholesale power prices without also restructuring retail rates, "don't you just extend the problem around the region, around the country?" he asked.
But Barton warmed to a proposal by Rep. Brad Sherman (D-CA) to allow California and other Pacific Time Zone states to alter Daylight Savings Time in order to conserve electricity. It "looks like an idea whose time may have come," Barton commented.
Sherman already has proposed the action in legislation (H.R. 704), and asked the subcommittee to quickly mark up the bill. He estimates California could save 1-2% on its energy consumption by making the adjustment to Daylight Savings time. Sherman noted this action was first taken during World War I, and has been re-employed during other times to save energy.
Several lawmakers also called for the subcommittee to support proposals --- such as drilling in the Arctic National Wildlife Refuge (ANWR)ÿ --- to increase the nation's supply of natural gas, a primary fuel for electricity generation. Without new gas supplies, they noted that the problems in the California and regional power markets will continue to persist.
"There is an arrogance in the view that it is acceptable to develop resources off the coast of Sable Island to meet the needs of New England, but that it is not acceptable to develop the same resources off of our own coasts. If ANWR was located in Canada, would it [the United States] be equally as environmentally concerned" about drilling in that region?" asked Rep. George Radanovich (R-CA).
Rep. Darrell E. Issa (R-CA) agreed that gas supply is available, but he doubts the state will pursue it. "There is sufficient natural gas around the world if we [California] had the willingness to bring in liquefied natural gas. California has not been willing to, and I do not expect them to."
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