Appeals court declines to order energy price caps
SAN FRANCISCO (AP) – A federal appeals court declined Tuesday to order federal energy regulators to cap wholesale electricity prices.
The decision by a three-judge panel of the 9th U.S. Circuit Court of Appeals came hours before California Gov. Gray Davis urged President Bush in a meeting to cap wholesale power costs, which have been spiraling out of control. The president refused.
The panel, in a brief statement, said last week’s appeal by state Senate President John Burton and state Assembly Speaker Robert Hertzberg does not warrant ”intervention of this court.”
The lawmakers, both Democrats, were joined by the city of Oakland in their appeal to the 9th Circuit.
”The citizens of California are suffering immediate irreparable harm as a result of FERC’s abrogation of its duty to establish just and reasonable rates for electricity,” they wrote to the 9th Circuit.
The lawmakers said California’s looming threat of continued blackouts ”are an imminent threat to the health, welfare and safety of every California citizen.”
Davis and Hertzberg said they would study the ruling with their attorneys before deciding whether to appeal the ruling to the U.S. Supreme Court.
The suit came after more than a year of wholesale power prices reaching historically high levels. In December, prices in California reached $200 per megawatt hour – and they have skyrocketed to as much as $1,900 per megawatt hour during peak times since then.
The Bush administration ardently opposes price caps and President Bush has declined Davis’ requests to urge FERC to impose strict caps.
Vice President Dick Cheney, chief architect of the administration’s energy plan, has said capping prices would not increase energy supplies or reduce demand.
”We get politicians who want to go out and blame somebody and allege there is some kind of conspiracy … instead of dealing with the real issues,” Cheney has said.
Cheney criticized Davis, a Democrat, for what he called a ”harebrained scheme” to use the state’s budget surplus to buy power because California’s two largest utilities face enormous financial problems.
For the short term, the Bush administration has approved Davis’ request to expedite permits for new power plants and has ordered federal facilities in California to reduce energy consumption 10 percent this summer.
Sacramento and the White House appear locked in a high-voltage war of rhetoric over energy policies. There is broad bipartisan dissatisfaction in Sacramento with Washington’s response to California’s energy crisis – the result of its own 1996 deregulation rules.
Last month FERC did order a one-year cap on electricity sold into California during power emergencies, when power reserves fall below 7 percent. The agency did not set a price and also required the state to join a regional transmission organization, which could limit California’s ability to control its own power grid.
Davis called the plan a ”Trojan horse,” and state power regulators dismissed the cap as inadequate, saying it would profit power generators at ratepayers’ expense.
In addition, Davis and state lawmakers sharply criticized FERC for considering requiring the state’s power grid operator to add a surcharge on power sales to pay generators the money they are owed by the state’s two large financially strapped utilities.
The case is Burton v. Federal Energy Regulatory Commission, 01-70812.
On the Net:
9th Circuit: http://www.ce9.uscourts.gov/
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