California's Davis renews call for regional price caps

California Gov. Gray Davis Tuesday said the state has more than 40 long-term contracts and agreements with major power companies that will deliver 629 million Mw-hr in the next 10 years, in a letter to the Federal Energy Regulatory Commission. But despite the state's success in lining up long-term power contracts, Davis reiterated his call for FERC to impose a regional price cap on the wholesale power market.


By the OGJ Online Staff

HOUSTON, Apr. 10--California Gov. Gray Davis Tuesday said the state has more than 40 long-term contracts and agreements with major power companies that will deliver 629 million Mw-hr in the next 10 years, in a letter to the Federal Energy Regulatory Commission.

He said the contract prices are 5-10 times lower than what Californians are paying today in the day-ahead and real-time markets. But despite the state's success in lining up long-term power contracts, Davis reiterated his call for FERC to impose a regional price cap on the wholesale power market. The letter was submitted to FERC Chairman Curtis Hebert during the Western Energy Issues Conference in Boise, Ida. Hebert has repeatedly stated his opposition to price caps as ineffective.

"We believe that this plan would go a long way in protecting consumers and businesses from the unpredictable nature of the current market and almost certain disruptions this summer," Davis said. "Such regional price relief would stabilize the market, reducing uncertainty in planning for new generation development, and would not discourage the development of new generation facilities as some have stated."

Recent rate increases approved by the California Public Utilities Commission will mean Californian's will be paying some of the highest electricity rates in the nation, Davis said, despite numerous new programs to cut demand and boost supply.

"We are also moving to establish a public power authority," he said. "If the private sector fails to build all the plants California needs, the state will build them."

He said the state has streamlined the permitting process and established an interagency Clean Energy Green Team to cut through state, federal, and local red tape. In February, consumers reduced electricity use by 8%. The goal has been raised to 10%. Other programs have increased energy efficiency standards and will reward consumers for reducing demand.

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