House Leaders Urge Energy Price Probe

Unable to agree on capping wholesale power prices as a solution to California’s energy crisis, Republican and Democratic lawmakers are finding middle ground on an alternative that may help keep rates in check this summer.

Leading House members of both parties are urging the Federal Energy Regulatory Commission to quickly open a broad investigation into electricity prices across the West. A more limited FERC investigation of power sales to California has already resulted in some refund orders.

If the agency acts promptly on the broader investigation, federal law would give it authority to order refunds of abusive overcharges uncovered during the summer months. If FERC delays action by more than a few weeks, however, a twist in the law could put much of the summer out of reach of refund orders.

The call for federal action took on greater urgency Friday after Pacific Gas & Electric filed for bankruptcy protection. The utility’s dramatic decision underscored the limits of California’s ability to go it alone. For months, the governor and Legislature have been laboring to keep PG&E; afloat.

Without price caps, Democrats say, the threat of mandatory refunds is the best deterrent to gouging.

“This would put the companies on notice that the FERC is reviewing carefully the rates they are charging to make sure they are just and reasonable,” said Rep. Rick Boucher of Virginia, ranking Democrat on the House energy subcommittee.

Chairman Joe Barton (R-Texas) also endorses the idea, for different reasons. Barton--who opposes price caps--said he hopes that an investigation will give all sides in the debate a common factual understanding of what is happening in Western electricity markets.

“We need to have a serious airing out to find out what the facts are,” Barton said. “We’ve got to go out and do it now.”

The House may consider legislation directing FERC to act after it returns April 24 from its Passover-Easter recess. But it remains unclear how FERC will respond to a call for a more aggressive investigation of Western power markets. Refunds ordered in the ongoing California investigation represent only a fraction of the $6.3 billion that the independent operator of the state’s power grid claims is owed.

Walter Ferguson, chief of staff to FERC Chairman Curt Hebert, said he believes the California investigation is already having an impact on the market. But he would not comment on the call for a broader probe. By law, the little-known agency has the power to ensure that rates for wholesale power sold across state lines are “just and reasonable.”

Commissioner William Massey, who has criticized his own agency for being slow to respond to California’s problems, said time is of the essence in expanding the investigation. That’s because the law gives FERC the power to order refunds of overcharges occurring only within 60 days after an investigation is formally opened. If an investigation is opened toward the end of May, for example, no overcharges during June and most of July would be covered.

Mark Stultz, a spokesman for the Electric Power Supply Assn., which represents many electricity wholesalers, said his group would not object to an inquiry.