FERC Fails to Protect Californians; States Should Reregulate

Nov. 3, 2000

FERC Fails to Protect Californians; States Should Reregulate

Statement of Charlie Higley, Energy Research Director,
Public Citizen’s Critical Mass Energy and Environment Program

The Federal Energy Regulatory Commission (FERC) has rightly concluded that California s summer-time electricity rates were higher than they should be and that California electricity rates were not “just and reasonable,” as required by federal law. The conclusion came this week after FERC investigated whether power suppliers took advantage of California s poorly written utility deregulation law.

We are extremely disappointed that FERC, which oversees the progress of deregulation throughout the country and is supposed to ensure that electricity suppliers don t gouge consumers, couldn t figure out who was responsible for jacking up electricity prices in California to sky-high levels. In its report, FERC said time limitations and insufficient data prevented it from making this determination.

We are also disappointed that FERC has concluded that it doesn t have the statutory authority to order a refund. A refund is what people badly need, and it is only fair to California s beleaguered consumers.

In short, FERC found that California consumers were robbed of billions of dollars reportedly more than $5 billion. But the agency can t find the robber, and thus it can t protect the victims of the crime.

FERC s inability to protect consumers from unlawful price gouging reveals that state electricity deregulation has created unregulated monopolies and cartels that are free to fleece consumers for billions without fear of retribution.

Although FERC has made some cosmetic recommendations for the debacle in California, their suggestions will do little to change what is a fundamentally flawed system. It is for this reason that we urge states that have deregulated their power industries to promptly reregulate them. States considering deregulation should avoid it.

We also call on U.S. Attorney General Janet Reno to immediately launch an investigation to determine who is responsible for the unlawful abuse of California ratepayers by greedy power suppliers. These suppliers clearly violated the Federal Power Act of 1935, which says that wholesale electricity rates must be just and reasonable.

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