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Northwest Senators Demand Power Rate Refunds, Too

by Charles Pope, Washington Correspondent
Seattle Post-Intelligencer, June 21, 2001

WASHINGTON -- Lawmakers from the Pacific Northwest demanded yesterday that federal regulators consider refunds to Washington and Oregon ratepayers for excessive electricity costs, setting the stage for a potential payoff of hundreds of millions of dollars.

The demand, from Washington's and Oregon's four U.S. senators as well as Washington Attorney General Christine Gregoire, came a day after an official for the Federal Energy Regulatory Commission said refunds would be limited to California utilities and ratepayers even though the entire region has been hit with soaring energy costs.

"Whether this refusal to consider consumer refunds outside California is an oversight or an accident, it is certainly the latest in a series of FERC actions that have offered too little, too late, to consumers struggling to cope with the overwhelming economic impacts of rising energy prices," Sen. Maria Cantwell, D-Wash., told the Senate Governmental Affairs Committee.

Cantwell buttressed her testimony with a letter to FERC chairman Curt Hebert that was signed by Sens. Patty Murray, D-Wash.; Ron Wyden, D-Ore.; and Gordon Smith, R-Ore.

"We believe ratepayers in the Northwest need to be treated with the same fairness and standards as California ratepayers," the letter said.

Under law, FERC is charged with ensuring that prices for electricity are "just and reasonable," a standard that has spawned dozens of definitions and interpretations in the past year as California's energy market spun into chaos.

There are no precise estimates on the scope of potential overpayments in Washington, but a FERC official said one unofficial calculation is that $15 billion in excessive costs were paid throughout the West since last year. A separate and more thorough examination by Gregoire's office is expected to the completed soon, she said.

Even if Washington and Oregon are included, analysts said there is no way to predict how any money might be distributed and to whom. Those decisions would be made by state energy officials.

The burst of action over refunds was triggered by an order FERC released Monday. That order imposed price controls on electricity sold in the West and set up a process for determining how much California was overcharged for power between December and May.

That process will begin Monday and, according to the agency's order, is to be completed in 15 days. If no agreement is reached, an administrative judge will decide the case within seven days. The order was followed by comments Tuesday from FERC Chairman Curt Hebert that refunds would only be considered for California.

Hebert's comment touched off a quick and pointed response from Northwest lawmakers, who have insisted all year that the region has been hurt by the energy crisis in California.

"With one hand, the FERC has offered long-overdue relief to Washington state consumers who are staggering under the burden of rapidly increasing energy prices," Cantwell told the committee.

"With the other hand, the commission has taken away those same consumers' right to seek refunds from energy suppliers who may have overcharged them. Both on the same day."

The financial stakes are indeed large. California Gov. Gray Davis, a Democrat, told the committee his state should be reimbursed $9 billion for excessive costs. And while Davis applauded FERC's latest order, he complained that regulators ignored a deepening energy crisis that allowed his state to be "bilked" by energy companies.

"FERC should get a clear signal from this committee that refunds are a part of its function," Davis told the committee, adding that Washington and Oregon ought to be included in any settlement.

Gregoire, who also appeared before the committee, said Seattle City Light paid $312 million for power last year that cost $50 million in a normal year. The soaring prices were caused by severe shortage in California that drove prices up across the region, and, critics contend, a heavy dose of price manipulation from some energy supplies.

Whatever the cause, ratepayers across the Northwest have felt the effect. Seattle City Light has raised rates 42 percent since January and another increase is expected in October. The Snohomish County Public Utility District, which serves Everett, boosted rates by 35 percent. And Georgia-Pacific earlier this year closed its Bellingham plant because of high energy costs, putting 420 people out of work.

"Why are Californians getting a refund while Washingtonians and Oregonians are not entitled when (prices have) clearly been unjust and unreasonable?" Gregoire said. "What's the difference between California and Washington and Oregon? None. I think refunds are in order."

Under FERC's current approach, Northwest utilities and ratepayers could file complaints about prices for sales only after July 2. Critics said that is meaningless because prices have come down and are unlikely to reach levels achieved last fall and winter.

Whoever takes part in the settlement negotiations, the sessions are likely to be tense. Power companies, while acknowledging making huge profits, have denied allegations of price gouging or market manipulation. They said the high prices are the result of tight supplies, transmission problems and the design of the California electricity markets.

"There has been no evidence to suggest that suppliers bilked anyone," said Mark Stultz, a vice president of the Electric Power Supply Association, which represents independent and merchant power companies and marketers.

FERC so far has singled out $124 million in alleged overcharges -- a small fraction of what California claims -- but most of those have been contested by the power generators.

Charles Pope, Washington Correspondent
Northwest Senators Demand Power Rate Refunds, Too
Seattle Post-Intelligencer, June 21, 2001

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