Governor Presses FERC on Refunds

Times Staff Writer

Gov. Arnold Schwarzenegger called on federal energy regulators Tuesday to move forward with large electricity refunds for California, his most detailed comments yet on a controversy that dates to the energy crisis.

In a letter to Patrick Wood III, chairman of the Federal Energy Regulatory Commission, Schwarzenegger urged a settlement among warring parties who have gathered in Washington this week to hash out financial disputes tied to the market meltdown of 2000 and 2001. Energy sellers begin meeting today behind closed doors with California and federal officials.

In carefully chosen language, the governor expressed solidarity with California officials who have long pressed for billions of dollars in refunds of alleged overcharges from the summer of 2000, while at the same time seeming to adopt a tone of compromise.

“I join and support the efforts of the California parties in seeking a fair settlement of these claims, and I commend the power generators and marketers for their willingness to participate,” Schwarzenegger said in the letter, which was made public Tuesday. “Now is the time to resolve these cases and to help put California back on the path to prosperity....”


“Settlement will avoid lengthy litigation at FERC and in the courts that will only undermine and divert resources from the pressing job of getting the energy markets to serve us all better,” Schwarzenegger said.

Federal regulators have signaled the likelihood of a refund for California of about $3 billion or less. California officials, meanwhile, have demanded a total closer to $9 billion, and currently are engaged in lawsuits to achieve that goal.

Until now, Schwarzenegger has been extremely sparing in his remarks on the refund dispute, although it has been clear that he wants to sweep the problems into the past.

Though Schwarzenegger seemed to cast his vote with the California parties, his temperate language contrasted with the bitter denunciations of the industry and FERC by his predecessor, Gray Davis. Although the disputes are rooted in years past, they still hit a public nerve. The recent release of tapes in which Enron traders spoke gleefully of exploiting “Grandma Millie” and other Californians has prompted an uproar.


An industry representative Tuesday reacted with resignation to the governor’s remarks. “It’s certainly the governor’s legal right and the right of the California parties to press for refunds. But I believe nothing changes,” said Gary Ackerman, executive director of the Western Power Trading Forum in Menlo Park, Calif.

Observers of the long-running energy disputes noted that Schwarzenegger made clear in his letter that he supported efforts by California Atty. Gen. Bill Lockyer and others in the state to include the summer of 2000 in the basic refund case at FERC.

Energy officials have previously ruled that the period before October 2000 was not legally part of the refund proceeding and instead have settled dozens of cases for that earlier period at dollar amounts that critics have found inadequate. Some energy experts believe the pre-October period could account for as much as $3 billion in refunds.

“No one questions the fact that California consumers and businesses were overcharged during those summer months, and I believe they are legally entitled to refunds for that period,” Schwarzenegger said, adding that if settlements were not reached he would continue to support efforts by Californians to push for larger refunds.

FERC spokesman Bryan Lee called this week’s conference “an opportunity for a win for California and certainty for the power providers that California seeks price relief from.... The commission is optimistic that meaningful settlements can be reached.”