Senate Hearings Into Energy Price Gouging
-5by5: June 13, 2001
About bloody time........
-Josef Hebert, Associated Press: June 13, 2001
WASHINGTON (AP) For the first time since gaining control of the Senate, congressional Democrats are challenging the government's handling of the Western power crisis as they step up pressure on regulators to take new steps to curb alleged price gouging.
The Senate Governmental Affairs Committee was to question energy economists at a hearing Wednesday as part of an investigation into whether a small group of power producers and marketers may have manipulated the electricity markets to make huge profits.
The committee's chairman, Sen. Joe Lieberman, D-Conn., said the panel also plans to examine why the Federal Energy Regulatory Commission (FERC), which has jurisdiction over wholesale electricity rates, has not moved more aggressively to monitor California's electricity deregulation plan and the wholesale power markets.
Meanwhile, congressional pressure is mounting from both Democrats and Republicans on FERC to take additional steps aimed at reducing Western electricity costs, especially in California. This year California has paid nearly $50 billion for power, compared to $7 billion during all of 1999.
This week wholesale electricity prices on the spot market in California fell to below $100 a megawatt-hour for the first time this year about a third of what they have been in recent months and natural gas prices also eased. But prices were still much higher than before the region's power problems began and there was fear they would rebound if shortages occur.
A megawatt is enough to serve about 600 homes. Two years ago the average price of power in California was $30 a megawatt-hour.
FERC, which regulates wholesale electricity transactions and natural gas transport, has stepped up its activities in recent weeks and plans a special meeting next Monday on California's power markets to decide what further steps might be needed.
In a meeting Tuesday with more than three dozen Republican and Democratic lawmakers from California, Vice President Dick Cheney said the administration remains opposed "to any type of price control legislation," according to those present.
But it also became clear that political support was growing in Congress for a call for more aggressive actions by the five-member energy regulatory agency, which is comprised of three Republicans and two Democrats.
Sen. Jeff Bingaman, D-N.M., who became chairman of the Energy and Natural Resources Committee when Democrats assumed the Senate majority, warned that price cap legislation would brought up for a Senate vote if FERC doesn't take additional steps to ensure prices are just and reasonable.
"I hope that FERC will act more aggressively," Bingaman said during an energy forum Tuesday, "and we will not have to have legislation." Still, he said, he was prepared to move a bill out of his committee before the July 4 recess to require FERC to impose electricity price caps based on cost of production and a reasonable profit.
Republicans also have begun pressuring FERC amid growing fear among some House GOP members about the potential political fallout in the 2002 elections if high Western electricity costs are not contained.
In a letter to FERC Chairman Curtis Hebert on Tuesday, Rep. Billy Tauzin, R-La., chairman of the Energy and Commerce Committee, and 14 other GOP lawmakers urged FERC to expand the limited price mitigation program it approved in April.
"The commission can and should do more to mitigate wholesale electricity prices in Western markets," urged the GOP lawmakers, calling on FERC to "ensure that rates ... are just and reasonable" throughout the 11 Western states.
In April, FERC directed that wholesale electricity prices be limited in California whenever power reserves fall below 7.5 percent, triggering an emergency. California officials have called the limits, pegged to the cost of producing power from the most inefficient plant, inadequate and full of loopholes.
The letter to FERC calls for the same mitigation program to be broadened to include all power transactions, not only those during emergencies, and for the limits to be expanded to include other Western states.
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