.
Posted on 01/17/2003 9:28:45 AM PST by snopercod
WASHINGTON - Regulators must apply a "public interest" standard in deciding whether long-term power contracts between several major electricity suppliers and the state of California should be altered or canceled, an administrative law judge ruled.
The state had argued that the contracts – valued at tens of billions of dollars – should be overturned because they failed to meet a federal requirement for "just and reasonable" power prices.
But the FERC ruling rejects that argument and agrees with power sellers who maintain that none of the contracts allowed the state to seek unilateral changes. The suppliers had pressed regulators to review contracts in light of the public interest in preserving the integrity of business agreements.
The state has asked the U.S. Federal Energy Regulatory Commission to nullify or revise electricity supply contracts signed at the height of California's energy crisis in 2000-2001, when prices soared tenfold.
The ruling yesterday applied to California's long-term power supply contracts with Dynegy Inc., El Paso Corp., Morgan Stanley Capital Group Inc. and San Diego-based Sempra Energy. A ruling last week said the state's other long-term contracts will also be judged on the public-interest basis.
In her ruling, FERC Administrative Law Judge Bobbie McCartney said the public-interest standard "serves to protect the expectations of the contracting parties that their negotiated agreement will be respected, thus promoting stability of contracts, stability of the market as a whole, and protecting customers by encouraging the utilization of contracts to reduce reliance on the more costly and volatile spot market."
California says the contracts were signed at the height of the deregulation power crisis when suppliers manipulated the market to drive prices higher. The agreements, which extend a decade into the future, tie state residents to electricity costs that are roughly double current prices.
Commission Chairman Patrick Wood III has said he expects the commission to complete its review of the California contracts by the end of March.
Overall, FERC is reviewing contracts valued at about $40 billion with more than a dozen companies. California has asked for termination of the contracts or for costs to be cut in half.
In a related matter in San Francisco yesterday, California's disastrous experiment with energy deregulation ended quietly in a brief order issued by state utility regulators.
The five-member California Public Utilities Commission unanimously voted to cancel an order from April 20, 1994, that set the state on a course advocates said would bring cheaper electricity through free-market competition, letting homeowners and businesses choose their power provider.
Instead, prices soared, supplies tightened and blackouts resulted during 2000 and 2001.
"The commission should close this deregulation proceeding, not just because there is no continuing need for it, but also because it was a disaster for ratepayers, utilities and their employees," said Commissioner Carl Wood, a harsh critic of the failed effort.
None of the commissioners who pushed for deregulation nine years ago still sits on the CPUC. The steps toward making electricity a freely traded commodity included a unanimous 1996 vote by California lawmakers that helped craft the state's deregulation model.
Yesterday, Wood called deregulation "the most expensive public policy mistake in the history of California." The disaster was caused, he said, by the former utility commission's "almost religious belief in market forces rather than regulation."
.
As shown on another thread, CA may soon wish they hadn't attempted to overturn these contracts.
In another light, CA is NOT instilling confidence with anyone in any business capacity, that it understands what, exactly, a contract is.
As we all know, a tight lid was put on charges to retail consumers while controls were lifted at the wholesale level, thus gradually bankrupting the major utilities and costing the state and its citizens something like $40 billion to prop up a failed subsidy to the ratepayers. That's not deregulation or a free market. ===========================================================
Any conservative freeper who does not understand Dr Cicero's paragraph here, has a reality check problem. We know that the left wingers and some so called right wingers are in love with phoney deregging. Freepers should be outraged with what happened and not blame this abortion on free enterprise.
Totally correct, there, Mr. Dave. They never had "de-regulation" to begin with. They insisted on keeping control of the final retail price instead of letting it find it's natural level.
Davis is getting some heat on several local newspapers Editorial pages, this should help keep the heat going!
I'll post the editorials.
calgov2002:
 calgov2002: for old calgov2002 articles. calgov2002: for new calgov2002 articles. Other Bump Lists at: Free Republic Bump List Register |
Calpowercrisis:
| To find all articles tagged or indexed using Calpowercrisis, click below: | ||||
| click here >>> | Calpowercrisis | <<< click here | ||
| (To view all FR Bump Lists, click here) | ||||
I think I need to ping the calgov list!
Sorry about the multiple pings but this seems to be a biggie!
(FERC)Commission Chairman Patrick Wood III has said he expects the commission to complete its review of the California contracts by the end of March.
Overall, FERC is reviewing contracts valued at about $40 billion with more than a dozen companies. California has asked for termination of the contracts or for costs to be cut in half.
FERC is keeping a little wiggle room to help the State of California if they want to. I think that FERC would like to help California a little bit, expecially if they rule in the refund case that more is owed to power generators than will be paid out in refunds. The final FERC position by the Political Commissioners of FERC will likely depend on a combination of mostly the facts as determined by Administrative Law Judgets, and whether Davis and Democrats continue to hassel FERC.
Rule one in the power business has always been don't antagonize FERC! Gov Davis could have handled things alot differently than fighting and bad mouthing the Clinton FERC Commissioners, Bush's FERC Commissioners, and FERC staff.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.