Southern California Edison’s current precarious financial position would have been avoided if federal and state regulators had done their jobs, an Edison regulatory attorney told a congressional committee in San Jose on Wednesday in the second day of a three-day sweep through California. The hearings by the House Government Reform Committee conclude in San Diego today.

“Swift and effective federal action is urgent,” the Edison attorney said, noting that California’s market surveillance estimates that the state’s bulk electricity bill could balloon to $70 billion this year, compared to $7 billion in 1999, and $28 billion last year.

Building more power plants and allowing retail prices to rise are moves that could alleviate the crisis and lower demand, said Stephen Pickett, an Edison utility vice president/general counsel.

The Federal Energy Regulatory Commission failed to rein-in the generators and marketers, Pickett said, and the California Public Utilities Commission failed to allow utility forward contracting or an end to the mandated retail price freeze.

“The generators and marketers clearly have taken advantage of the dysfunctional power market and appear [as reported to FERC by the California Independent System Operator, Cal-ISO] to have engaged in both economic and physical withholding of generation capacity, thereby driving electricity prices above competitive levels,” Pickett stated in his written testimony.

Pickett suggested that FERC should revoke the authority it gave sellers to use market-based rates in the West, and impose temporary cost-of-service-based rates. He added that exempting new generation plants from the cost-based rates could eliminate the Bush administration’s opposition to using temporary price caps.

In Los Angeles, Gov. Gray Davis used the backdrop of a solar-powered vehicle recharging station to sign two new laws (SB 5X and AB 29X) passed last week by the state legislature to create an array of increased or new conservation programs with a total value of $850 million. Included are rebates and incentives for business, agriculture and residential customers; retrofits to hundreds of government and community college facilities; promotion of high-efficiency lighting; grants to low-income families; loan guarantees for the development of renewable power; and a statewide community outreach and promotion program that the governor is banking on to greatly reduce peak demand as early as this summer.

“This year, conservation must be as big a part of our summer as barbecues and baseball,” said Davis, calling the new effort “the largest ever launched by a single state.”

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