Higher Price Cap for State’s Power on Hold

Federal regulators delayed raising California’s power price caps by a month, after state electricity officials said they needed more time to test a computer program that automatically detects price manipulation.

A price cap of $91.87 a megawatt hour, established last year to ease California’s energy crisis, was extended through Oct. 30, the Federal Energy Regulatory Commission said in an order. In July, the commission ordered the California Independent System Operator to raise the cap to $250 on Oct. 1, part of a plan to restructure the state’s wholesale power markets.

The system operator, which oversees the state’s power grid, had said it needed the delay to ensure consumers are protected from price gouging until the program was installed and tested. Mirant Corp. and Duke Energy Corp. had opposed the request.

The extension was granted because of the system operator’s “problems in testing and effectively implementing the automatic mitigation procedures,” the commission’s order said. The delay “provides adequate time for Cal-ISO to complete its testing.”

The commission set the current price cap in June 2001, after California officials pleaded for relief from what they described as gouging by generators and energy traders, including Enron Corp.

The commission’s order Thursday was “too little of the right result, and for the wrong reason,” said Gov. Gray Davis’ press secretary, Steven Maviglio. “The price caps should not be raised, period.”