Congressional lawmakers from California and other western statesrenewed their pleas for aid from the Bush administration to end thepower crisis in their region during a House subcommittee hearinglast week.
Several called on the House subcommittee to direct FERC toinstall price caps on wholesale power in the short term — ameasure the White House opposes — while others suggestedadjusting Daylight Savings Time in the region to conserve power.
One lawmaker, Rep. Bob Filner (D-CA), said he also has asked theSan Diego District Attorney’s Office to bring criminal fraud,larceny, extortion and antitrust violation charges against a”cartel” of seven out-of-state wholesale generators for allegedlybilking the state out of billions of dollars over the past year byovercharging on electricity.
“The energy cartel has taken $20 billion [out] of our state inthe last six or seven months,” he testified at a House Energy andAir Quality Subcommittee members’ hearing last Tuesday during whichlawmakers offered their own solutions to the problems in Californiaelectricity markets.
The members of the so-called cartel include Duke Energy, Dynegy,Reliant Energy, Southern Companies and the Williams Companies andtheir affiliates, according to Filner.
The prices charged by these out-of-state companies have been”illegal,” Filner told the subcommittee, and yet FERC has taken “nosanctions against the perpetrators.” In effect, the Commission hasinvited them to “go in and rob the state blind, then rob the regionblind, and then rob the country blind.”
As for the cartel’s alleged activities, Filner said “there isevidence of illegal withholding of power; there is evidence offalsifying transmission documents to raise prices; [and] there isevidence of laundering electrons through other states when therewas a cap in California.”
Filner told NGI he used the harsh words — fraud, larceny andextortion — for emphatic reasons. “Everybody is using euphemismslike ‘gaming’ and ‘unjust and unreasonable rates.’ I want thepublic to know what’s going on.” He also wants Congress and FERC tofocus its attention on the wholesale suppliers.
This cartel of out-of-state energy suppliers “is stealing oureconomic future. They are robbing our bank accounts. They arekilling off our businesses, and I think the committee ought toconcentrate on bringing this energy cartel to justice.”
San Diego District Attorney Paul J. Pfingst is taking Filner’srequest very seriously. “I agree with you that the current energysituation is a matter of local importance and that a thoroughinvestigation must be completed to determine if Californians arebeing gouged by the energy companies,” he wrote in a March 5 letterto Filner.
But Pfingst said the energy crisis goes beyond the scope of SanDiego, affecting all of California and eventually the entirenation. Therefore, he noted he intends to meet with the state’sAttorney General and the U.S. Attorney to “develop a joint strategyto determine whether any criminal violations have taken place.”
Rep. Jay Inslee (D-WA) saved his criticism for the Bushadministration, saying while it responded quickly to the recentearthquake in his state, it has failed miserably in its response tothe energy crisis engulfing California and the western region. Thefederal government “has been a pathetic disaster [in and of itself]in refusing to come to the aid of the West.”
He noted the administration already has a “tool at its disposal”to deal with the power crisis – short-term price caps on wholesalepower sold in the western region. But “they’re concerned it willend up being a long-term rather a short-term price cap,” which heconceded was a “legitimate concern.” He believes this can be dealtwith by structuring the price cap in such a way as to ensure itwill be temporary. As for concerns that a cap would be adisincentive for new generation capacity, Inslee said that could beeasily resolved by exempting new generation from the cap.
“We need the administration to sit down in a bipartisan fashionto fashion a wholesale price cap” that addresses these issues, hetold the subcommittee. In response to critics who have said this isa California-only problem, he noted Federal Reserve Chairman AlanGreenspan last week “pinpointed energy prices as one of thegreatest danger signals to the U.S. economy.”
Subcommittee Chairman Joe Barton (R-TX) didn’t seem to thinkprice caps would have much merit. “.[O]bviously there would be someshort-term benefit or should be some short-term benefit, but Idon’t see that that helps” to resolve the market problems in thelong term, he said. By imposing a cap on wholesale power priceswithout also restructuring retail rates, “don’t you just extend theproblem around the region, around the country?” he asked.
But Barton warmed to a proposal by Rep. Brad Sherman (D-CA) toallow California and other Pacific Time Zone states to alterDaylight Savings Time in order to conserve electricity. It “lookslike an idea whose time may have come,” Barton commented.
Sherman already has proposed the action in legislation (H.R.704), and asked the subcommittee to quickly mark up the bill. Heestimates California could save 1-2% on its energy consumption bymaking the adjustment to Daylight Savings time. Sherman noted thisaction was first taken during World War I, and has been re-employedduring other times to save energy.
Several lawmakers also called for the subcommittee to supportproposals — such as drilling in the Arctic National WildlifeRefuge (ANWR)ÿ — to increase the nation’s supply of natural gas,a primary fuel for electricity generation. Without new gassupplies, they noted that the problems in the California andregional power markets will continue to persist.
“There is an arrogance in the view that it is acceptable todevelop resources off the coast of Sable Island to meet the needsof New England, but that it is not acceptable to develop the sameresources off of our own coasts. If ANWR was located in Canada,would it [the United States] be equally as environmentallyconcerned” about drilling in that region?” asked Rep. GeorgeRadanovich (R-CA).
Rep. Darrell E. Issa (R-CA) agreed that gas supply is available,but he doubts the state will pursue it. “There is sufficientnatural gas around the world if we [California] had the willingnessto bring in liquefied natural gas. California has not been willingto, and I do not expect them to.”
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