APPEALS court declines to order energy price caps as California threatens to sue federal government

<br>SAN FRANCISCO (AP) _ Gov. Gray Davis threatened to sue the federal government for help in his state's power crisis after an appeals court declined to order energy regulators to cap wholesale electricity

Wednesday, May 30th 2001, 12:00 am

By: News On 6

SAN FRANCISCO (AP) _ Gov. Gray Davis threatened to sue the federal government for help in his state's power crisis after an appeals court declined to order energy regulators to cap wholesale electricity prices.

A three-judge panel of the 9th U.S. Circuit Court of Appeals issued a statement Tuesday saying last week's appeal by state Senate President John Burton and Assembly Speaker Robert Hertzberg did not warrant the court's intervention.

The lawmakers, both Democrats, were joined by the city of Oakland in their appeal to the 9th Circuit, which has jurisdiction over the Federal Energy Regulatory Commission.

``The citizens of California are suffering immediate irreparable harm as a result of FERC's abrogation of its duty to establish just and reasonable rates for electricity,'' they wrote.

Wholesale power prices have shot up over the past year. In December, prices in California reached $200 per megawatt hour. Since then, they have risen to as much as $1,900 per megawatt hour.

The court's decision was announced hours before Davis was to urge President Bush to cap wholesale power costs. Bush, as expected, rejected Davis' plea.

Davis said he would sue FERC for price relief if necessary, noting that the agency has already found that energy costs are unreasonable.

In April, FERC ordered a one-year cap on electricity sold into California during power emergencies, when power reserves fall below 7 1/2 percent. The agency did not set a price and also required the state to join a regional transmission organization, which could limit California's ability to control its own power grid.

Davis called the plan a ``Trojan horse,'' and state power regulators dismissed the cap as inadequate, saying it would profit power generators at ratepayers' expense.