Petition for Cost-Based Power Rates Rejected

Energy regulators rejected a request by the publisher of Consumer Reports magazine that they revoke the rights of power suppliers in the western U.S. to charge market rates and require sales based on costs.

The Federal Energy Regulatory Commission said the petition by the Consumers Union of the United States, which claimed western power prices during the first half of 2001 were “far above what is reasonable” to encourage the building of new power plants, was moot.

“The issues have already been addressed” by other orders such as the price limits issued for California in April and 10 other western states in June, the commission said.

A power shortage in California sent prices soaring among all states on the western power grid during the first six months of last year. Some buyers in the Northwest sought $2 billion in refunds, saying the prices paid weren’t reasonable, as defined by the commission.

FERC also said Wednesday that regional transmission groups should operate voluntary markets for last-minute electricity sales and allow customers to sell back power they decide not to use.

The commission laid out some of the jobs that the transmission groups should be required to perform as the beginnings of a standard design for wholesale power markets. The commission said it will complete work on specific market rules by the end of the year.

The commission wants the nation’s power lines run by a small number of independent groups instead of utilities, saying bigger networks will reduce costs, increase investment and expand competition in the $226-billion U.S. power market.

Commissioners said the standards will help ensure that power flows efficiently from region to region.

An outline of issues to be included in new rules will be released by Friday, the commission said.