“Let us [California] just do our thing and leave us alone withfederal legislation,” the state’s chief negotiator for powercontracts urged a House subcommittee yesterday.

If Congress wants to do anything for the beleaguered state,”make the FERC do its job” of reining in wholesale power costs andmonitoring the market for abuses, said S. David Freeman, whocurrently is on leave as general manager of the Los AngelesDepartment of Water and Power to head up California’s contracteffort.

The federal statute requiring FERC to ensure “just andreasonable” rates in dysfunctional bulk electric markets “has notbeen changed…..That law is on the books and is not beingenforced, and it seems to me that this Congress ought to eitherrepeal the law or see that it’s enforced,” he said Thursday duringa House Energy and Air Quality Subcommittee hearing intoCalifornia’s electric crisis.

Price caps have become a hot-button issue in Congress, but forFreeman they make sense for both the electric and natural gasmarkets. “…[W]e have to have a hybrid system in my opinion wherewe let the market fluctuate over a wide band, but have floors andceilings because the volatility is what kills us. We have to havesome presence to assure that customers can know what their pricesare going to be in the future.”

If Congress can’t or won’t nudge the Commission toward caps, “myprayer is [that] you let the governor of the state go ahead withthe various programs that he has underway” that will “contain thisproblem,” Freeman said.

In the meantime, “don’t feel sorry for California. We’re goingto come through [this] and be stronger than ever,” he assured Houselawmakers on the subcommittee. “We have underway in California areally large-scale effort to move through this crisis and come outof it with a stronger grid system, with stronger policies, andfrankly you will see us ushering in the age of [the] fuel cell andthe microturbine and a whole set of new technologies.”

In addition to leaving the state alone, “don’t try to useCalifornia as an excuse for messing [with] the Arctic [National]WildlifeRefuge,” Freeman admonished the panel.

“Leave California alone…..That might be a good motto,”responded Subcommittee Chairman Joe Barton (R-TX), who isconsidering introducing emergency legislation to help the statehead off worsening supply shortages and price spikes that arepredicted for this summer.

Barton yesterday voiced concern over the state’s projectionsthat 5,000 MWs more capacity will be available this summer to meetthe expected heavy demand. About 25% of that will come fromgeneration plants that already have been approved, he said, but theother 75% “worries me.” In fact, one close observer said thestate’s projections for new generation capacity this summer were”so rosy” that they amounted to the “most important faith-basedinitiative we’ve ever heard,” he noted.

The addition of 5,000 MW by this summer “is an aggressive goal,”conceded Chairman William Keese of the California EnergyCommission, but “we have not given up on it.”

Of the anticipated hike in generation capacity, he said 1,300MWs will come from three new baseload generation facilities thatare currently under construction and are due to be in operation byJuly.

In addition, Keese reported the agency currently is consideringprojects for 360 MWs of peaking capacity to come online in theJuly-August period. He said developers also have informed theCommission of another 1,300 MWs that could be in operation bySeptember.

If qualifying facilities (QFs) in the state were paid by theutilities, how many megawatts would that add to the state’s powersupply? asked Barton. “I heard a number as high as 3,000 MWs.However, that would not add to our supply. We are already countingon [that],” Keese told Barton.

Freeman said California has acquired “all the power that wasstill available in the marketplace for this summer,” but most ofthe contracts ($42 billion worth) won’t take effect until thebeginning of 2003.

Keese, Freeman and others who testified at the hearing agreedthat brownouts and blackouts will be a reality for California thissummer. “They may not be confined to [just] California” either,added Freeman. As a high-end estimate, “the consensus that we’reoperating under is approximately a 5,000 MW shortage on a peakdemand basis” for this summer, according to Keese. The low-endestimate would be in the range of 3,000 MWs, he said.

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