FERC launches investigation into electric prices in WSCC
By Ann de Rouffignac
OGJ Online
HOUSTON, May 4 -- The Federal Energy Regulatory Commission's investigation into high electricity prices outside California is too little too late, members of the Senate Committee on Energy and Natural Resources complained Thursday.
The investigation was included in FERC's Apr. 26 order instituting wholesale price controls in California but received little public attention. California officials and some western governors have clamored for FERC or, alternately, Congress to institute west-wide price caps on wholesale electricity transactions. But FERC Chairman Curtis Hebert and the Bush Administration have largely opposed caps as detrimental to developing new supplies.
The FERC investigation will determine if wholesale electricity prices within the WSCC or Western System Coordinating Council are "just and reasonable" and will seek to impose price mitigation plan similar to the one ordered in California.
The notice was published in the Federal Regiser May 3 (citation number 66FR2223), according to a FERC spokeswoman.
The investigation will look into "rates, terms, and conditions of public utility sales for resale of electric energy in interstate commerce other than sales through the California ISO [Independent System Operator] markets."
FERC is limiting its inquiry to transactions on the real-time spot market up to 24 hours in advance and during times of electric emergency or when reserves fall below 7%. The commission stated in its Apr. 26 order it believes power prices outside California are not currently just and reasonable and should be modified. But it must conduct the investigation in order to act.
The commission is already proposing all generators (public and nonpublic utilities) except hydroelectric facilities be required to sell available energy into the real-time market in any location in the West. It also asked for comment on what type of price mitigation should be applied to power sales in the West.
But the commission insisted price control measures for the West would still be limited to sales occurring when reserves fell below 7%.
During a Thursday hearing, Sen. Maria Cantwell (D-Wash.) said the investigation should have been initiated last year when wholesale prices started spiking at 10 times what they were in 1999. She questioned why FERC did not order a price mitigation plan for the entire western region when it did for California.
"It is an emergency now," Cantwell said. "FERC's responsibility under the Federal Power Act is to enforce reasonable prices. If you won't do that, Congress will act."
The commission specified that refunds, if ordered, would commence 60 days after the start of the investigation. Sen. Byron Dorgan (D-ND) said this was not enough or soon enough.
"I'm tired of regulatory agencies that don't regulate," he said. "Prices have increased 10 fold. When regulation is required step up and do it."
He complained FERC's proposed remedy fell short and price controls should be applied all day every day because fewer than 5% of the wholesale power transactions took place during Stage 1,2, or 3 emergencies.
Contact Ann de Rouffignac@[email protected]