Governor Prepares Lawsuit; Attorney General Prepares Grand Jury

(KFWB) --

California Governor Gray Davis is prepared to file a lawsuit against the federal government in three weeks, unless there are more sweeping price caps on the cost of wholesale electricity from out-of-state suppliers. Meantime, California's Attorney General Bill Lockyer plans to convene a grand jury on July 1 to investigate possible price gouging by power generators.

The Federal Energy Regulatory Commission (FERC) will consider a "price mitigation" proposal next Monday, carefully avoiding the term "price caps" -- something the Bush administration has expressed opposition towards.

But the action is expected to fall short of what many congressional Democrats want and what Governor Davis has called for.

""From what we hear anything they do is an improvement, but it still falls far short," said Steve Maviglio, a press deputy in the governor's office.

The FERC proposal would expand a price mitigation plan that has been in effect since late May solely for power emergencies. It would be instituted around the clock and cover power generated in 12 Western states.

But the price limits that would be set would still be based on the least-efficient power plant. That means the price cap would be set at the highest price in the market at that time.

Davis called FERC's initial action to cap prices during emergencies inadequate and his preparation of a lawsuit indicates he may not be ready to accept the current proposal either.

Meanwhile, the state's Attorney General is preparing a grand jury investigation into the high price power generators have been charging. He will look to see if companies have cut back on production in order to cause an artificial shortage and drive up prices.

"We would look to see if there's been collusive behavior or gouging of the public in California in ways that violate the RICO statute," Lockyer said.

State lawmakers and officials have long accused power companies of conspiring to drive up prices. Power generators have strongly denied the charges.

The RICO statute is generally used by prosecutors to prosecute mobsters

-- PHO (owennos@bigfoot.com), June 13, 2001