FERC to Aim Sanctions at Small Subset of Power Firms

The Federal Energy Regulatory Commission is moving to clean up the California energy controversies, but will aim sanctions selectively against companies that abused their role in the marketplace, its chairman told a House panel Tuesday.

“It’s not a whole festering pot of garbage,” FERC Chairman Patrick H. Wood III told the House subcommittee on energy policy. “It is a few bad actors.”

FERC plans to rule at an April 30 meeting on whether dozens of power companies broke the rules in their market behavior during the state’s energy crisis of 2000 and 2001, Wood said.

Although pressure is rising for the agency to resolve billions of dollars in refund claims from California and other Western states, final decisions may still be months away, according to Rep. Doug Ose (R-Sacramento), chairman of the House energy policy subcommittee.

Ose and other lawmakers Tuesday pressed the energy agency to hasten efforts to settle the many remaining disputes related to the energy crisis. At a March 26 meeting, FERC commissioners indicated they were likely to boost California power refunds to $3.3 billion, up from the $1.8 billion proposed by a FERC administrative judge. But two of the three commissioners expressed reluctance to approve California’s bid to nullify about $20 billion in long-term energy contracts negotiated during the crisis.

And commissioners said they were continuing to analyze a mountain of evidence related to market manipulation provided by California parties, as well as contrary evidence provided by a group of energy companies.

“I encourage FERC to vigorously and promptly complete its investigation,” Ose said at Tuesday’s hearing. “California and its citizens deserve to get back every dollar that was overcharged during the energy crisis.”

A bipartisan group of senators from Washington, Oregon and Nevada also pressed FERC on Tuesday to clarify the legal standards it uses in handling refund claims. They maintained that California utilities face an easier standard in claiming refunds than their counterparts in neighboring states.

“Washington’s rates spiked and remain extremely high as a result of the same market manipulation that harmed Californians,” Sen. Maria Cantwell (D-Wash.) said. “We deserve the same relief.”

At the hearing, Wood noted that pending measures to strengthen FERC’s authority, including a proposed increase in penalties it may impose on errant firms, added up to “a much stronger tool chest” for regulators.

Witnesses before Ose’s panel also cautioned that California’s energy market structure remains insufficient for the long term.