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Regulators say state power panel may conflict with federal law

SACRAMENTO (AP) – Federal energy regulators said Wednesday that some authority granted to California’s new state power agency may conflict with the Federal Power Act.

The legal opinion by the Federal Energy Regulatory Commission was requested by U.S. Rep. Doug Ose, R-Calif., and by California Secretary of State Bill Jones, a Republican candidate for governor.

FERC must approve sales of transmission lines and hydroelectric facilities, both of which the power authority has authority to purchase, lease or seize. That could put the state power authority under the jurisdiction of FERC, said Kevin P. Madden, the commission’s general counsel.



S. David Freeman, who was sworn in as the head of the new power authority on Tuesday, said the FERC letter outlined situations that might put the state under the jurisdiction of the federal agency. But it didn’t declare that the power authority violated the Federal Power Act, Freeman said.

FERC ”has really got extreme nerve to come in and dream up some situations, not where we would violate the law, but where we would be under their jurisdiction,” Freeman said.




Freeman said the state power authority would be subject to FERC rules as other municipal districts are, such as in interstate transmission issues.

”Being subject to their jurisdiction is fundamentally different than the question Mr. Jones asked, which is if California is violating the law,” he said.

Jones said he asked federal officials for an opinion on the legality of the new state agency to ensure the state didn’t ”go off and do something in secret that we would have to later recant or correct.”

The FERC letter says the state can have a power authority, ”but a lot of what the governor is proposing doing, at least initially, requires federal oversight,” Jones said. ”Let’s be clear as to what we can and can’t do.”

The new California Consumer Power and Conservation Financing Authority can issue up to $5 billion in bonds to buy, lease or build power plants to bolster electricity supplies in the state. The law creating the power authority states that electricity from those facilities must go to California consumers or sold to other states if financially advantageous to those consumers.

Madden said that provision was ”unclear, but could be construed in certain circumstances as violating FERC’s jurisdiction” because FERC can order power plants to sell power to maintain the stability of the grid or if the sale was in the public interest.

Clark Kelso, a professor at McGeorge Law School, said much depends on how the new agency uses its broad authority. The power authority will hold its first meeting on Friday.

”I don’t read the letter to say that the existence of the power authority violates the Federal Power Act,” Kelso said, ”but if the authority began to own or operate transmission or generation facilities, or take contracts and get into interstate power sales, FERC would certainly get involved there.

”It would suggest that the state isn’t entirely a master of its own destiny here,” Kelso said.


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