Despite being labeled the main cause of California’s powermarket woes by the Governor, independent power producers say theyare willing to cooperate with any investigation by the FederalEnergy Regulatory Commission (FERC) into the wholesale powermarket.

“IEP eagerly awaits the results of FERC’s investigation, andwill work with the Governor and State Legislature to ensure thatCalifornia’s competitive electric market is allowed to succeed,”said Jan Smutny-Jones, executive director of the Independent EnergyProducers (IEP) association. “Our members understand that in orderto protect ratepayers, the state needs to have confidence that wehave a truly competitive market. On July 20 of this year, IEPrequested that the ISO’s Market Surveillance Committee investigatemarket operations and behavior leading up to the June price spikes,and to make appropriate recommendations.

“Our members are confident that FERC will discover what we’veknow for some time — that much of the problem is a ‘supply anddemand’ issue. The fact of the matter is, California simply doesn’thave enough generating and transmission capacity to meet the needsof its growing population.”

Smutny-Jones said the Governor’s proposed solution to theunexpectedly high electric rates facing San Diego Gas &Electric (SDG&E) customers was a good idea. Gov. Gray Davis onWednesday called on state regulators to establish a two-year planthat would cut electricity rates nearly in half for customers ofSan Diego Gas and Electric. SDG&E’s rates have tripled thissummer for some customers, prompting public outcry. The governor isrequesting that the PUC reduce average residential bills from thecurrent level of $120 per month to the mid-$60’s range.

“We encourage the state legislature to take action to enact thisrelief plan to ensure its proper implementation by the PUC,” saidSmutny-Jones. “However, we firmly believe that SDG&E should beactively protecting the interests of its customers by buying lowercost electricity, offered through longer term contracts, in orderto keep rates stable.”

Two weeks ago, the Governor called on the Attorney General toinvestigate charges of market manipulation by wholesale powerproducers. A report by PUC officials also urged investigations atthe state and federal levels of wholesale power pricing. Davisrepeated his call for the investigation Wednesday and said he wouldcall President Clinton and FERC Chairman James Hoecker to urge themto expedite the investigation of pricing in the wholesale powermarket “to curb the profiteering that is apparently occurring inthe energy marketplace.” The Independent Energy Producers (IEP) isa nonprofit trade association, representing wholesale powerproducers.

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