San Diego Union-Tribune

June 13, 2001

Republican urges FERC to restrain power rates

By FINLAY LEWIS AND JOE CANTLUPE
COPLEY NEWS SERVICE 

WASHINGTON -- In a move possibly reflecting Republican softening on energy price controls, a key House committee chairman yesterday urged the Federal Energy Regulatory Commission to move more aggressively to restrain electricity prices in the West.

The letter from Rep. Billy Tauzin, chairman of the House Energy and
Commerce Committee, stopped well short of embracing the demand by
California Gov. Gray Davis and other state Democrats for price caps.

Even so, the plea by the powerful Louisiana Republican appeared to be yet another sign of GOP concern that soaring electricity prices and rolling blackouts in the state could generate a political backlash.

Meanwhile, a meeting yesterday between Vice President Dick Cheney and members of California's congressional delegation had a familiar outcome: Cheney repeated his opposition to price-cap bills introduced by Sen. Dianne Feinstein, D-Calif., and Rep. Henry Waxman, D-Los Angeles.

And California Democrats promptly denounced his opposition to reporters after the meeting.

The issue of price restraints is reportedly the focus of a Monday FERC
hearing.

In his letter to Curtis Hebert, the FERC chairman, Tauzin wrote: "To ensure that prices are just and reasonable during the critical months ahead, we believe the commission can and should do more to mitigate wholesale electricity prices in Western markets."

Specifically, Tauzin urged FERC to ensure that "rates for all wholesale
electricity sales are just and reasonable in all markets throughout" the West.

A spokesman for his committee said the letter's aim is to persuade the small regulatory agency to expand an existing emergency order aimed at controlling electricity rates in California during supply shortages.

The objective would be to have the order remain in effect around the clock through the summer, a time of peak potential danger for blackouts.

Critics say the existing order does nothing to restrain prices when supplies are adequate. Still, some credit the existing order for the recent drop in wholesale prices, while others say a number of factors are involved, including cooler weather and conservation.

The bill being offered by Feinstein and Waxman would cap electricity prices by allowing generators to recoup their production costs and a reasonable rate of return.

The administration and GOP leaders in Congress, including Tauzin, oppose the legislation, saying that it would do nothing to solve California's underlying energy problem because the caps would discourage investment in developing new power supplies.

During his closed-door meeting with California lawmakers, Cheney reiterated that concern, according to his spokeswoman, Julianna Glover.

A disappointed Sen. Barbara Boxer, D-Calif. observed that the state's
lawmakers unsuccessfully "made a hard-sell plea to the vice president that we need some action against this price-gouging."

The delegation came up empty, said Boxer, who described the session as "cordial."

Rep. Bob Filner, D-San Diego, said Cheney kept referring to California's lack of capacity for electricity

. "Our governor is doing everything he can to raise capacity, and what we need is action on prices," Filner said. "Our small businesses are suffering now, and we're saying, 'Let's do it now,' but the vice president didn't understand a word we were saying."

Tauzin last week canceled a committee meeting to approve an emergency California energy bill. He said he did so because Democrats were determined to amend it to include a price-cap provision.

His letter was also signed by several California Republican House members, including Reps. Duncan Hunter of El Cajon, Randy Cunningham of Escondido and Darrell Issa of Vista.

Michael Shames, executive director of the San Diego-based Utility
Consumers' Action Network, said that Tauzin's letter "is an important sign that consumer angst about spreading electric-rate shocks is reaching the halls of Congress."