From: jeff.dasovich@enron.com
To: hgovenar@govadv.com, sgovenar@govadv.com, mday@gmssr.com, richard.shapiro@enron.com, james.steffes@enron.com, harry.kingerski@enron.com, janel.guerrero@enron.com, karen.denne@enron.com, mpalmer@enron.com, skean@enron.com, linda.robertson@enron.com, tom.briggs@enron.com, joe.hartsoe@enron.com, sarah.novosel@enron.com, donna.fulton@enron.com, susan.mara@enron.com, sandra.mccubbin@enron.com, susan.landwehr@enron.com
Date: 2001-04-10 21:05:00+00:00
Subject: In Idaho, Western states press feds to act on power prices

In Idaho, Western states press feds to act on power prices 
H. JOSEF HEBERT, Associated Press Writer
Tuesday, April 10, 2001 
,2001 Associated Press 
URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/04/10/nation
al1812EDT0713.DTL 
(04-10) 18:04 PDT BOISE, Idaho (AP) -- High electricity prices pose a 
``looming disaster'' for many states in the West, a federal regulator warned 
Tuesday, as pressure grew on the government to consider temporary price 
controls on wholesale power. 
Officials from 11 Western states, including energy-ravaged California, 
engaged in sometimes passionate exchanges with three members of the Federal 
Energy Regulatory Commission over how to contain soaring power prices that 
are expected to go only higher this summer. 
``Something has to be done to tame this market,'' Geoffrey Brown, a member of 
the California Public Utilities Commission, told the three FERC 
commissioners. California anticipates paying $65 billion for electricity this 
year, almost 10 times its power bill in 1999. 
But after the daylong session, the FERC seemed to be not much closer to 
imposing price caps than before, although one commissioner, Linda Breathitt, 
said she now wants to look the issue more carefully and might be swayed. 
FERC Chairman Curtis Hebert, a strong free-market advocate, reiterated his 
fear that price regulation would drive off investors for new power 
generation. Under FERC rules, it would be Hebert's discretion when or if to 
propose a price cap for deliberation. 
Commissioner William Massey, who has been in the minority on the commission 
in recommending price controls, said the ``passion for markets must be 
tempered with common sense.'' 
``We face a looming disaster,'' he declared, if wholesale electricity markets 
are allowed to continue on a path that has wholesale power in many parts of 
the West selling for 10 times what it cost just a year ago. 
Hebert insisted that the FERC ``is doing everything it can'' to ensure just 
and reasonable prices and cited the commission's action to seek $124 million 
in refunds on California power sales. He also said the commission plans soon 
to approve a new system of tracking market abuses. 
The chairman noted that state officials at the meeting were sharply divided 
over whether the government should regulate electricity prices. Keeping tabs 
as each participant gave a presentation, he said three states were for them, 
five against and three uncertain. 
Hebert's anti-controls position drew support from Vice President Dick Cheney 
in a telephone interview with Associated Press reporter David Ammons in 
Olympia, Wash. 
``The problem with price caps,'' Cheney said, ``is that they don't solve the 
problem. Just look at California, where they had caps applied at the retail 
level that, coupled with the requirement to buy power on the spot market, has 
driven PG&E into bankruptcy.'' 
Pacific Gas & Electric, California's largest utility, said last week it had 
debts of $9 billion and filed for protection from its creditors under chapter 
11 of federal bankruptcy laws. 
California, whose electricity problems have unleashed soaring power prices 
throughout the West, urged FERC to immediately impose an 18-month cost-based 
price cap in the Western markets. 
``We have done our part. We cannot do it alone,'' said Bob Hertzberg, speaker 
of the California Assembly. He cited state actions to boost conservation, 
increase retail rates and speed up power plant construction and said there is 
``no earthly reason'' why energy prices should be 10 times what they were a 
year ago. 
Still, California officials expressed little optimism after the hearing. 
``It would take a dramatic, unprecedented change of direction'' for the FERC 
to adopt price controls, said Fred Keeley, speaker pro tem in the California 
Assembly, who was in the audience during the six-hour meeting. 
Breathitt, the FERC's third commissioner, who has not come out in favor of 
price caps, nevertheless indicated she might be inching toward some controls. 
She said she wants the commission to ``seriously discuss a price 
implementation plan.'' 
The issue may end up, however, being decided by two new commissioners 
recently nominated by President Bush -- Pat Wood, now head of the Texas 
utility commission, and Nora Brownell, a Pennsylvania regulator. 
Both are viewed as free market advocates, but pro-controls commissioner 
Massey said he believes they might be swayed to accept temporary price 
restraints if the electricity market reels further out of control. Neither 
nominee has yet been confirmed by the Senate. 
While divided on price controls, most of the state officials at the unusual 
FERC meeting expressed worries that the federal agency was doing too little 
to address problems in the power markets. 
The chairman of Montana's utility commission, Gary Feland, who opposes price 
controls, criticized FERC for lack of aggressiveness in challenging 
unreasonable prices. FERC is legally mandated to ensure ``just and 
reasonable'' wholesale power prices. 
``Montana is taking a hell of a hit'' from electricity prices, Feland said. 
``Politically we're getting beat up.'' 
Steve Ellenbecker, a utility commissioner from Wyoming, urged the federal 
regulators to come up with a ``reasonable measure'' short of a price cap to 
deal with the troubled electricity market. 
Many of the state officials said the full impact of the high wholesale power 
prices have yet to hit consumers. In many cases state officials must still 
give permission for utilities to pass them on to retail customers. 
On the Net: FERC Web site: www.ferc.fed.us/ 
,2001 Associated Press ?