Gregoire Calls for Broad Look at Western Power Markets

Olympia -May 7, 2001 - Federal regulators who are examining the fairness of wholesale electrical pricing in the West should look at price setting at all times, not just when reserves are small, Washington state Attorney General Christine Gregoire believes.

In papers filed today with the Federal Energy Regulatory Commission (FERC), Gregoire said she commends FERC's decision 10 days ago to launch an investigation into wholesale electrical prices throughout the West, but believes its scope is too narrow.

"High wholesale market prices are harmful to Washington's consumers and utilities, as well as to the overall economy of the state," Gregoire said. "FERC has the authority and statutory duty to ensure just and reasonable rates at all times, not just when supplies are tight."

The Attorney General said she concurred with comments filed by the state Utilities and Transportation Commission in response to FERC's decision on April 26 to implement "price mitigation" measures on power transactions in times of electrical shortages in the West. FERC asked for comments and suggestions on the scope of such measures.

The Attorney General, who has independent authority to protect competitive markets and represent consumer interests, also urged an expansion of the FERC investigation.

As proposed, FERC would look only into wholesale prices charged on the spot market during periods in which electrical power reserves drop below 7 percent. Gregoire, however,

contends that wholesale electrical prices throughout the Northwest have been persistently high, not just when system reserves drop to low levels.

Gregoire also said federal regulators should expand their investigation to look into the wholesale price of natural gas, which has a direct effect on electrical pricing since natural gas is often used to generate electricity.

Gregoire also urged that any remedies for unfair prices considered by FERC be crafted to meet differing market conditions throughout the west, since measures employed to deal with rates in the California market may not necessarily be suitable elsewhere.

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