NGI The Weekly Gas Market Report
Sen. Dianne Feinstein (D-CA) introduced legislation on CapitolHill last week that would give the Department of Energy (DOE) theauthority to overstep FERC by setting an interim regional price capor cost-based rates on wholesale power transactions in 11 westernstates.
The legislation, which is co-sponsored by Sen. Barbara Boxer(D-CA), seeks to amend the Department of Energy Authorization Actof 1997 to allow the secretary to impose a temporary regional pricecap or cost-of-service rates (to cover a generator’s productioncosts, plus a reasonable rate of return) when FERC determines therates to be “unjust and unreasonable,” but fails to remedy them.
The DOE secretary’s action would remain in effect until “justand reasonable” rates are restored to a market. The governor of anystate within the region would be able to opt out of the cap,according to the legislation. The measure would apply to bulk powertransactions in California, Oregon, Washington, Nevada, Arizona,Idaho, Montana, New Mexico, Colorado, Utah and Wyoming.
FERC has steadfastly opposed a regional price cap, while thegovernors of the western states have favored it. “This bill isbeing introduced after [the] Federal Energy Regulatory Commissionhas turned down frequent requests to establish a temporary regionalwholesale price cap despite finding that the electricity generatorsare charging ‘unjust and unreasonable’ rates,” Feinstein said.
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