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BROADER electricity price controls expected next week

Updated:

WASHINGTON (AP) _ Federal regulators are expected next week to broaden their limited price controls on Western electricity markets, a California senator said Wednesday. The action likely will fall short of what many congressional Democrats want.

Sen. Dianne Feinstein, D-Calif., told a Senate hearing ``it now appears'' that an April order to mitigate electricity prices in California will be broadened to cover other Western states and all transactions, instead of just sales during emergency conditions.

The Federal Energy Regulatory Commission, which has been under intense pressure to take additional steps to ease Western power prices and shortages, has scheduled a meeting Monday to consider the Western power situation.

Feinstein called the expected move ``another step forward'' but said she is concerned the restrictions could be manipulated because the price cap _ as outline in FERC's April order for California _ would be tied to the costs from the least-efficient power-producing plant.

California Gov. Gray Davis has called the FERC's April action inadequate, although Republicans have attributed recent easing of electricity prices in California to the federal actions.

Feinstein spoke before the Senate Governmental Affairs Committee in the first hearing on the Western energy crisis since Democrats gained control of the Senate.

Sen. Joe Lieberman, D-Conn., the committee's new chairman, promised a series of hearings to examine the federal response to the electricity deregulation and the soaring prices and supply problems in California and other Western states.

``If we ignore these problems, we put our economy at risk,'' said Lieberman.

Feinstein and Sen. Gordon Smith, R-Ore., have proposed requiring FERC to impose temporary price caps based on the cost of power generation. Such caps would got beyond what FERC is considering and are opposed by the Bush administration and most congressional Republicans.

Normally, ``I do not believe in price controls,'' Lieberman said, but in this case ``we're looking at an energy market that is not free'' and price intervention is overdue.

While acknowledging a ``totally broken market,'' Sen. Larry Craig, R-Idaho, argued that price caps are ``not the way to fix it'' and will make the region's supply problem worse.

Still, congressional pressure is mounting _ from both parties _ on FERC to take additional steps aimed at reducing Western electricity costs, especially in California.

This year California has been paying up to 10 times what it paid for electricity in the pre-crisis period in 1999, with wholesale rates often above $300 a megawatt-hour and natural gas, which run many power plants, three times as costly as in the rest of the country.

This week electricity prices on the spot market in California fell to below $100 a megawatt-hour for the first time this year and natural gas prices also eased.

The reason is unclear, said Feinstein. ``We don't know ... (if) it is because of the April order (by FERC) or if generators now feel that heat is on.''

A megawatt is enough to serve about 600 homes for an hour.

The Bush administration, meanwhile, has reiterated its opposition to price controls.

In a meeting Tuesday with more than three dozen Republican and Democratic lawmakers from California, Vice President Dick Cheney said the administration remains opposed ``to any type of price control legislation,'' according to those present.

But it also became clear that political support was growing in Congress for a call for more aggressive actions by the five-member energy regulatory agency, which is comprised of three Republicans and two Democrats.

Sen. Jeff Bingaman, D-N.M., chairman of the Energy and Natural Resources Committee, said price limits would be brought up for a Senate vote later this month if FERC doesn't take additional steps to ensure prices are just and reasonable.

``I hope that FERC will act more aggressively,'' Bingaman said during an energy forum Tuesday, ``and we will not have to have legislation.''

Republicans also have begun pressuring FERC amid growing fear among some House GOP members about the potential political fallout in the 2002 elections if high Western electricity costs are not contained.

In a letter to FERC Chairman Curtis Hebert on Tuesday, Rep. Billy Tauzin, R-La., chairman of the House Energy and Commerce Committee, and 14 other GOP lawmakers urged FERC to expand the limited price mitigation program it approved in April.

``The commission can and should do more to mitigate wholesale electricity prices in Western markets,'' urged the GOP lawmakers.


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