Senate Democrats Decry FERC's Actions in CA

Despite moves by the Republican-led FERC during the past week to address potential refunds and possible price manipulation in the California wholesale power markets, the Bush administration continued to be the favorite whipping boy of Senate Democrats for its unrelenting opposition to temporary price mitigation in the western region.

Appearing at a hearing of the Senate Energy and Natural Resources Committee last Thursday, Energy Secretary Spencer Abraham took the brunt of the criticism from senators --- mostly Democrats --- for the Bush White House's inaction on restraining runaway prices in western bulk power markets.

While the administration is neither "insensitive" nor "uncaring" to the public's concern over electricity prices, Abraham testified repeatedly that its first priority was increasing power supply so that the lights can stay on next summer. The hearing was called to consider three bills by Sens. Dianne Feinstein (D-CA) and Barbara Boxer (D-CA) to enact prices controls or mitigation in the troubled western regional markets.

"To me, our first priority to the American people is to ensure there's a reliable supply of energy this summer," Abraham said under questioning from lawmakers. Price caps would only serve to "seriously aggravate the supply situation" by discouraging investment in new generation facilities, at a time when they're needed the most.

"I'm surprised by the ideological hardness of your statement," countered Feinstein. "I agree that [California] has to fix the brokenness [in its markets] on its own" by boosting generating capacity within the state. But that's a long-term solution, she noted. "My question is what do we do right now They're going to be charging $5,000 a megawatt this summer. We're sending a signal that it's okay" to charge that amount in California.

FERC's recent action, targeting 13 California power suppliers for potential refunds, is evidence that this won't happen, Abraham said. "That's the way to address prices that are unjust" and excessive, he told Feinstein. Sen. Jeff Bingaman (D-NM) sharply criticized the Commission's actions so far, including the refund orders, calling them at best "half-hearted" attempts to correct the market.

California's Gov. Gray Davis is looking to the federal government for help to create price stability, Feinstein pressed further. "I'm not suggesting that high prices are a good thing," responded Abraham, but preventing blackouts this summer is the White House's top priority. The Bush administration, he said, doesn't want to have to tell the public that the good news is FERC ordered price caps, but the bad news is "you're not going to have power" this summer.

"I think we need to increase our [federal government's] efforts to help" California, said Sen. Gordon Smith (R-OR), in offering support to Feinstein. "I think we need to give you [DOE] more authority, and you need to use it to mitigate a catastrophe."

That's what the White House is trying to do, Abraham said. Its immediate, primary goal is to "deal with the summer crisis" so that businesses in the West don't have to shut down due to a lack of electricity.

Despite the administration's focus on increasing power supply, "I can't tell you.....that we're at a point where we can guarantee there will be no blackouts" this summer, the DOE secretary told Committee Chairman Frank Murkowski (R-AK). "I don't want to make any assertions that there will be no rolling blackouts..."

Oregon Gov. Gary Locke included himself among the expanding group of proponents of price caps. FERC has taken "cautious actions" so far that have provided no relief to Northwest states, he said, in calling for caps in the short term. "We simply need a time out" to allow Northwest states to protect their economies and the California market to correct itself, Locke noted.

While Locke applauded the Bush administration's efforts to promote more energy development, he said, "we in the West cannot wait seven years until new [energy] resources [are] discovered and tapped."

Murkowski wasted no time in voicing his opposition to the three Feinstein-Boxer bills --- they "do not fix the supply problem in California" --- as well as his lack of compassion for the state's situation. The state's average monthly electric bill --- which is $58.70 --- is lower than the bills in many other states, he said, and the state is "dead last" in the nation in terms of generation capacity per person.

Susan Parker

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