California’s Attorney General Bill Lockyer last week continued his long-running campaign against the competitive energy market, issuing a report warning that market abuse remains a threat and suggesting legal and regulatory remedies to prevent it.

Lockyer’s allegations are contained in a 90-page report he submitted to Congress, offering 33 recommendations for bolstering market oversight and enforcement.

One of the recommendations asked Congress to prohibit future applications of the so-called “filed-rate doctrine” to market-based rates and to also clarify federal law to specify that market-based rates are subject to retroactive refunds. Lockyer alleged that so-called wrongdoers have been shielded and the utility ratepayers short-changed, and both areas call for “substantial reforms.”

Lockyer called for changes in FERC’s approach to regulation, and said there was a need to regulate utility holding companies to avoid what he called the “abuses” of PG&E Corp., the holding company for Pacific Gas and Electric Co.

A FERC spokesperson discounted the report in responses to national news media, calling it a “cheap political stunt,” and attributing the state’s past wholesale energy market problems to a flawed state plan for restructuring the power industry.

The report looks at the energy situation from a “law enforcement perspective,” Lockyer’s office emphasized, adding the qualification that it does not address the question of future deregulation of the state’s electricity market — “should (it) be continued or abandoned” — although it does conclude the state’s 1996 electricity restructuring law (AB 1890) “failed to fulfill its promise of cheap and reliable power.”

(It was not clear whether Gov. Arnold Schwarzenegger, a free-market advocate, but a supporter of more market enforcement against manipulation, endorsed the AG’s report. Lockyer is a Democrat and possible political rival to Republican Schwarzenegger in the next state gubernatorial election.)

A major theme of the report is that three years after the worst of the state’s wholesale energy market meltdown, California and the Federal Energy Regulatory Commission are still fighting over the issue of refunds and the wholesale energy markets are still subject to potential mischief.

While the state is still trying to determine “what went wrong,” Lockyer’s report said one conclusion is clear — “the statutory and regulatory framework that governs California’s energy market, and the agencies and entities responsible for enforcing the rules, failed in key respects.”

Called the “Attorney General’s Energy White Paper,” the report recommends changes by California’s legislature, governor and electric transmission grid operator, CAISO, in addition to appealing to Congress for help in matters related to FERC and the courts. Laws and regulations, the AG contends, “seriously undermine” California’s ability to get what Lockyer called “adequate redress for violations of market rules and laws.”

In addition to clarifying the filed-rate doctrine’s applicability to market-based rates, the attorney general highlighted six other recommendations among the 33:

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