Northwest Newspaper Hydropower Articles

Democrats Push Power Price Caps

West Coast representatives draft a bill setting Western wholesale rates and allowing states to go to court to demand refunds

By Tom Ditzel
The Oregonian

Washington - Democrats from three West Coast states accused the Bush administration of ignoring the region's power crisis Wednesday as they unveiled another bill to clamp down on wholesale power prices.

Unlike its predecessors, however, the measure sponsored by Rep. Jay Inslee of Washington and more than three dozen Democratic colleagues would allow states to go directly to federal court to demand rate refunds.

"Those folks who are going into food banks for the first time in their lives because of the 50 and 100 percent price increases in their utility bills . . . they cannot eat the excuses they're getting from the Bush administration," Inslee said.

The bill would require the Federal Energy Regulatory Conimission to set wholesale power rates across the 11-state Westem power grid based on the cost of generationplus a reasonable profit. The rates would sunset on March 1,2003.

Just how far the bill can go is uncertain. Bush and commission Chairman Curt Hebert are philosophically opposed to price caps, as are Energy Secretary Spencer Abraham and most of the Republican majority in Congress.

One exception, however, is Sen. Gordon Smith, R-Ore., who is drafing a price-cap bill with Sen. Dianne Feinstein, D-Calif.

Smith is backing the caps mainly out of concern about the economic impact of higher power bills, a dyamic the Democrats said could build political pressure on the administration to back limits if prices start skyrocketing this summer.

Wholesale power prices are ranging between $200 and $300 per megawatt hour, or more than 10 times last year's levels. Some fear they could go far higher, given the drought conditions in the hydropower-reliant Northwest.

"The administration cannot with impunity tank the economy of the Western United States," said Rep. Peter DeFazio, D-Ore.

House Minority leader Richard Gepharrit, D-Mo., joined lawmakers from Oregon, Washington and California, the three states that have borne the brunt of the high rates, and predicted that Republicans would eventually back caps.

"This problem, in my view, is not going to get better before it gets worse," Gephardt said. "We're going to have problems in the West this summer, and I say we're probably going to have problems all over this country."

The Bush administration remains opposed to price caps, a spokesman said Wednesday, but continues to focus on a long-term energy plan being put together by vice President Dick Cheney and cabinet officials such as Abraham.

"I'm unaware of any shift in the administration's position on price caps," White House spokesman Ken Usalus said. "They will not work, and they tend to drive away investment" in new power plants that can bring prices down.

Democrats Respond

But the Democrats said that response is wearing thin in the face of complaints from ratepayers who can't afford the double-digit increases that are either proposed or have already taken effect in the last few months.

DeFazin said it's a "myth" that high prices are needed to stimulate new power plants and charged that the administration's hands-off approach allowed large energy producers to cash in by manipulating the market.

Bush "believes in faith-based regulation," DeFazio said, mocking the president's plan to boost church-based services. "You flip the switch, you pray the lights come on, and you pray you can afford the bill at the end of the month."

The Democrats teed off on FERC, the five-member panel charged by law with ensuring "fair and reasonable" rates. The commission found that rates in Callfornia last year were unfair but has dropped the ball since then, they said.

So far, the commission has ordered power generators to justify $124 million in alleged overcharges for January and February. By comparison, Califomia officials have asked for $550 million in refunds for December and January alone, part of $6.3 billlon in overcharges dating to June 2000 that have been identified by the state's energy system operator.

DeFazio said refunds could be worth "hundreds of millions" to ratepayers in the Northwest.

In addition to mandating rate caps, the Democrats' bill would allow states to sue in federal courts and ask a judge to order refunds. Under current law, such appeals must first be handled administratively through the regulatory commission.

Rep. Brian Baird, D-Wash., charged that administration inaction was hurting a key Republican constituency: small business.

"The biggest challenge to small business in the Pacific Northwest right now is in energy," he said, "and this administration has done nothing."

But Usaius said FFRC and Abraham had taken steps to help, including speeding up the permit process for new power plants and discussing ways to import energy from Mexico.

In the meantime, he said, "we're going to continue to work very aggressively to craft that long-term energy policy."

Oregonian
Portland, OR
April 5, 2001

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