http://www.komotv.com/news/story.asp?ID=8270

U.S. Denies Northwest Power Price Cap, Approves California Cap

December 15, 2000

By KOMO Staff

OLYMPIA - A move by federal regulators to cap rising energy prices - but in California only - could put the Northwest's economy and salmon-protection efforts at risk, state leaders said Friday.

Washington Gov. Gary Locke and U.S. Sen. Patty Murray, D-Wash., expressed disappointment after the Federal Energy Regulatory Commission declined to cap prices on the wholesale cost of electricity throughout the West.

Instead, the panel ordered an overhaul of California's deregulated electricity market and set a so-called "soft" cap on wholesale prices of $150 per megawatt-hour. Suppliers offering to sell power in California at more than that price will have to file paperwork with FERC defending the higher price.

Market prices have been hovering around $500 in recent days, with brief spikes reported as high as $5,000.

Northwest Customers 'Being Ignored'

Northwest political leaders, regulators and business executives had argued that a cap should cover the entire West, which operates as a regional power grid, with California, Oregon and Washington among the states swapping power during peak times throughout the year.

"FERC's order today is at best incomplete, at worst ineffective," Locke said in a statement issued through his press office.

"While it falls short of providing California consumers the immediate relief they need from soaring energy prices, it ignores altogether that consumers and businesses in the Pacific Northwest are also being harmed."

The governor also complained that federal regulators are allowing California to continue with its program to deregulate the Golden State's electricity market in an effort to boost competition. Northwestern leaders such as Locke, Murray and Oregon Gov. John Kitzhaber have sought to put most of the blame for the energy shortage and price spikes on California's restructuring plan.

"The commission's continued faith in allegedly competitive markets - despite clear evidence that those markets are failing - doesn't make sense," Locke said.

Earlier this week, Locke said he was concerned that power suppliers would jack up the price of electricity in Washington and other Western markets to make up for lost revenues if California's market was capped.

State and federal leaders expect to meet next week to discuss options.

-- (in@energy.news), December 16, 2000