Picking up from where she left off last year, Sen. Dianne Feinstein (D-CA) said she plans to introduce legislation next week to bolster the authority of federal regulators to detect and penalize companies that defraud and manipulate energy markets.

The legislation generally will mirror a 2002 measure that sought to increase the maximum criminal and civil penalties that the Federal Energy Regulatory Commission could impose on violators in the energy industry. As part of the bill, Feinstein also may try — again — to extend the Commodity Futures Trading Commission’s (CFTC) oversight authority to include over-the-counter (OTC) energy and metals derivatives traded over private electronic exchanges (see Daily GPI, July 11, 2002).

The issues were addressed in separate bills last year, but the senator may seek to combine them into one package in 2003, said Scott Gerber, the senator’s spokesman. “The final details are still being worked out,” he told Daily GPI. There will be “some modifications,” but Gerber did not give any details.

The two bills generated significant controversy last year, but they foundered in the end. Last April, Feinstein was forced to withdraw her CFTC proposal, which she sought to attach to the Senate’s omnibus energy bill, due to widespread opposition from Republicans. The chief Republican opponent to the bill was Sen. Phil Gramm of Texas, who has since retired. She later offered it as a stand-alone measure, but it still went nowhere.

If passed by the Senate this year, her legislation “will increase [FERC’s] ability to ferret out and penalize those who practice fraud and manipulation, as well as to plug a glaring loophole which permits energy trading online to be done in secret, with no audit trail and no anti-fraud and anti-manipulation oversight,” Feinstein said in a statement.

In disclosing her plans to introduce the bill, Feinstein pointed to Tuesday’s guilty plea by former Enron trader Jeffrey Richter for manipulating California’s energy markets during the 2000-2001 period (see Daily GPI, Feb. 5). “This guilty plea stands as further proof that fraudulent practices were used to manipulate energy prices” during the state’s energy crisis. Richter was the second Enron trader to plead guilty in the past four months.

She also pointed to the settlement between Reliant Energy and FERC last week, which ordered the Houston-based energy company to pay $13.8 million for intentionally withholding power from the California market on two days in June 2000.

Feinstein indicated that “several other senators” will co-sponsor the bill next week, but Gerber was unable to identify them.

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