While the power industry has tended to be fairly civil so far in its criticism of FERC’s plan to mitigate prices on real-time transactions in California during emergencies, lawmakers representing the state are letting the Commission have it with both barrels.

Gov. Gray Davis, who has been a sharp critic of FERC’s handling of the California power crisis, called the Commission monitoring/mitigation plan a “shell game,” and said the federal regulators “blew it” in their latest order. “FERC had a chance to bring meaningful relief to California’s outrageous wholesale prices and they blew it,” he said in a prepared statement. “It makes no sense whatsoever to condition the twelve months of [price mitigation] relief…..to California’s willingness to join a regional [transmission] organization that under the best of circumstances cannot be functional for another 18 months.

“Last summer, the federal government found that wholesale prices were unjust and unreasonable. They have yet to enforce their finding.”

Sen. Dianne Feinstein (D-CA), who is pushing price-cap legislation in Congress, also held out little hope that the Commission’s price-mitigation plan would offer much relief to her home state. “The good news about the FERC decision is that it finally recognizes the problem of unjust and unreasonable rates facing the West. The bad news is that the FERC order doesn’t solve the problem.”

Rep. Bob Filner (D-CA), who has also been hypercritical of FERC’s actions in California, also was rough on the Commission. FERC’s latest mitigation effort “is a joke, but I’m not laughing and neither are the millions of Californians who will continue to suffer…”

FERC’s plan will mitigate real-time prices for “relatively few days of the year,” but “we are paying illegal prices 24 hours a day, seven days a week,” Filner noted. Moreover, he questioned how effective the mitigation would be since generators would be paid prices based on the plants that are the costliest to operate. “This action ensures that everyone gets paid the most expensive price while maintaining an incentive to run dirty, inefficient generation.”

By its latest action, the Commission “wanted to appear as though it is doing something — hoping that the appearance of action would appease us. Well, I have news for Chairman [Curt] Hebert, I’m not going to stop…until we get real relief from these criminal prices” for electricity in California, Filner said.

Meanwhile, FERC staffers are bristling because some have labeled their action a price cap. For the record and according to FERC: “a price cap is a set number that applies forward. FERC is prescribing a market methodology that mimics what a competitive market would be, using market-based variables as inputs. The inputs change daily to create a proxy price at which the most inefficient unit cleared the market. This is clearly market-oriented.”

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