Power Sellers Request Price Cap Change

Enron Corp., Puget Energy Inc. and Sierra Pacific Resources, owners of four utilities that sell power to California, want U.S. regulators to restructure price caps placed on the state’s electricity market.

The rules set by the Federal Energy Regulatory Commission in May often require the utilities to sell their excess electricity at a loss, the companies said. FERC sets prices based on the costs of the most expensive generators in California, and in June it broadened rules to include 10 other Western states.

Enron’s Portland General Electric, Puget Sound Energy, Nevada Power and Sierra Pacific Power want FERC to change the rules so the price-setting formula includes costs of all sellers, not just generators in California.

“Now, Californians can obtain power at the last minute at an artificially low price, while states that have had the foresight to purchase more secure, longer-term power are left with higher bills,” said Walt Higgins, chairman, president and chief executive of Sierra Pacific Resources.

The utilities say they sometimes sell at a loss to California because the price they pay for power is higher than the cost of the most expensive power plant in the state.

“The price controls were designed to help California, and we’re now seeing that that’s going to cost neighboring states,” said Grant Ringel, Puget Sound spokesman.

Oregon needs new power plants to meet rising demand and has lost 1,300 megawatts of planned power plants since June because of developer concerns about price caps, Ringel said. One megawatt is enough to light 750 to 1,000 average U.S. homes.

California officials had demanded the price caps after the state’s two largest utilities, PG&E; Corp.’s Pacific Gas & Electric and Edison International’s Southern California Edison, racked up more than $14 billion in power-buying losses.

The coalition of Western utilities hopes to bring others on board to help foster federal rules that account for differences in each of the states, Ringel said.