Davis demands nearly $9 billion for electricity overcharges

H. JOSEF HEBERT, Associated Press Writer

Wednesday, June 20, 2001, ©2001 Associated Press

URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/06/20/state1112EDT7054.DTL&type=news

(06-20) 08:12 PDT WASHINGTON (AP) --

California Gov. Gray Davis demanded that power generators refund nearly $9 billion in electricity overcharges and complained that federal regulators have "looked the other way while energy companies bilked our state."

Davis told a Senate hearing Wednesday that the decision by the Federal Energy Regulatory Commission to curtail price spikes in California and 10 other Western states was a step forward. "But its actions do nothing about the overcharges" over the past year, he said. The governor, a Democrat, has been criticized by Republicans, who charge he has allowed the California power crisis to get out of hand.

Davis defended his actions, saying the state has stepped up approval for new power plants and strengthened conservation programs. He also said the state has little control over price gouging by out-of-state power generators.

"The governor once said he could solve California's problems in 15 minutes. ... But it appears that California has continued to try and hide the true cost of power by having the state pay for it instead of the utilities," putting California taxpayers in jeopardy, said Sen. Frank Murkowski, R-Alaska. Murkowski said many of the alleged overcharges are by public power entities not under FERC jurisdiction

Sen. Joe Lieberman, D-Conn., chairman of the Governmental Affairs Committee, said the FERC, which regulates wholesale electricity sales, has been slow to respond and "surprisingly reluctant" to assure that electricity prices are just and reasonable, as required by the 1934 Federal Power Act.

The agency's response to the Western power problem "raises serious questions about whether (FERC) has or will oversee the newly deregulated energy markets" not only in the West but across the rest of the country.

The federal agency, whose commissioners were to testify later in the day, imposed limited, market-based price caps on Monday in California and 10 other Western states from Washington to Arizona. The agency also ordered the parties to attend a conference next week to try to work out agreements on overcharges and other issues.

Months ago, the FERC singled out $124 million in alleged overcharges by power generators. The power companies have since challenged the agency's findings and the matter remains in dispute. "To date not a single penny in refunds has been returned to California," complained Davis.

He said that between May 2000 and the beginning of this month power generators are believed to have overcharged California $8.9 billion. "They must be required to give us back our money," said Davis. "It is unconscionable that FERC looked the other way while energy companies bilked our state for up to $9 billion."

The state spent $7 billion for electricity in 1999 and $27 billion in 2000 and is projected to pay nearly $50 billion this year, said Davis. "Power generators have been able to exert extreme power over our energy market," he said.

Davis rejected Republican criticism that the state is not addressing the problem. He said newly approved power plants will provide 20,000 additional megawatts of electricity by 2003, including 4,000 megawatts by the end of this summer. "Everything that can be done to bring reliable, affordable energy to California is being done ... except wholesale price relief," he said.

"This administration has minimized this crisis (for) more months," said Sen. Patty Murray, D-Wash., alluding to President Bush's repeated refusal to urge the FERC to mitigate electricity prices. Bush has strongly opposed price controls, although he indicated support for FERC's limited price mitigation effort this week.

Murray said the government should issue a disaster declaration so that businesses can get low-income loans, and require that FERC press its investigation into price gouging and demand refunds not only in California but in the Pacific Northwest, where electricity prices have also skyrocketed.

Republicans continued their opposition to more stringent price caps based on the cost of generation at individual power plants. "Having a federal agency try to determine what is a just and reasonable price is laughable," said Sen. Fred Thompson of Tennessee, the committee's ranking Republican. Hard price caps "don't work when supply is the problem. ... They make a bad situation worse," he said.

After FERC issued its limited price control order this week, Senate Democrats on Tuesday said they would drop legislation to require more stringent cost-based price caps on Western electricity sales. Democrats in the House, however, said they would continue to pursue a bill requiring the FERC to take more aggressive action.

©2001 Associated Press

-- Swissrose (cellier3@mindspring.com), June 20, 2001

Answers

When are they going to learn? They can't legislate a solution to a supply problem from Washington under a free enterprise system. Only free markets can right the balance.

-- Wayward (wayward@webtv.net), June 20, 2001.

Yes, when ARE "they" going to learn, that for a Free Market to exist at ALL, ULTIMATE consumers have to pay the real-time cost of electricity. This means all consumers must KNOW what the real-time price is --- at ALL times, to allow informed and rational usage cost/benefit decisions.

Right now, Californians don't even know, (without a power guzzling computer that takes ten minutes to start up, log on, log off, and shut down) even whether there is a "Stage" alert or not. And even hostorical or average so-called "market" prices aren't known by electricity consumers. I.S.O. data on their website pricing page, http://www.caiso.com/prices/, was "Temporarily Suspended" as of 2001 April 11.

Yes, when will "they" learn, what it takes to create a Free Market in electricity? Neither the metering nor the universal informational infrastructure even exists now, for real-time pricing implementation.

-- Robert Riggs (rxr.999@worldnet.att.net), June 21, 2001.