Burton, Hertzberg demand FERC puts price caps on electricity | TahoeDailyTribune.com

Burton, Hertzberg demand FERC puts price caps on electricity


SAN FRANCISCO (AP) – California’s legislative leaders asked a federal appeals panel Tuesday to order federal regulators to cap wholesale electricity prices.

The move by Senate President John Burton and House Speaker Robert Hertzberg came after unsuccessful lobbying by Gov. Gray Davis and other lawmakers to get the Federal Energy Regulatory Commission to impose strict price caps.

”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,” the lawmakers wrote to the 9th U.S. Circuit Court of Appeals, which has jurisdiction over FERC.

The lawmakers, joined by the city of Oakland, said California’s looming threat of continued blackouts ”are an imminent threat to the health, welfare and safety of every California citizen.”

The suit comes 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’ request to urge FERC to impose strict caps.

Vice President Dick Cheney, chief architect of the administration’s energy plan released last week, 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 said Sunday.

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 1/2 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.

Meanwhile, Hertzberg, a Van Nuys Democrat, has been working on a three-state strategy to lower both electric costs and the risk of blackouts in the drought-stricken Pacific Northwest.

His plan calls for an energy-buying cartel that would refuse to pay more than a predetermined price giving electricity generators a ”reasonable” profit.

Hertzberg is working with U.S. Sens. Patty Murray, D-Wash., and Gordon Smith, R-Ore., on the proposal, which would require FERC approval.

Smith broke last month with the Bush administration to work with Democratic congressmen and Sen. Dianne Feinstein, D-Calif., on a bill requiring FERC to cap wholesale electric prices across the West.

The case filed Tuesday is Petitioners v. Federal Energy Regulatory Commission, 01-70812.

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