Feinstein Presses Forward for Energy Price Caps

WASHINGTON -- Sen. Dianne Feinstein has introduced legislation aimed at stabilizing wholesale energy prices with federally imposed price caps on electricity and natural gas throughout the western states.

The California Democrat is pressing forward with the legislation, along with chief Republican cosponsor, Sen. Gordon Smith of Oregon, because she believes the Federal Energy Regulatory Commission has failed to act responsibly in relieving the California's power crisis.

"This legislation is designed to force FERC to do its job so that the financial crisis does not get any worse than it already is," she told reporters during a Capitol Hill press conference.

The cost of electricity in California has increased from $7 billion in 1999 to $32 billion last year. Current estimates predict the price tag could reach $65 billion this year, Feinstein said.

Since last August, Feinstein has been demanding that FERC place price caps on wholesale electricity and natural gas throughout the west.

FERC is a quasi-independent board charged with regulating wholesale electricity rates throughout the country.

In November, the regulatory body determined that wholesale rates in California had been "unjust and unreasonable," but continued to resist price caps. The commissioners claimed that price ceilings would make it unprofitable for power companies to build new generating plants.

FERC may change its position on Wednesday when it considers mitigation measures aimed at setting price ceilings on wholesale electricity and which would require producers to sell to the state power grid during Stage 3 emergencies.

Supporters believe the measure would limit unreasonable price spikes but sustain the needed incentive to build more plants.

Critics warn that the FERC proposal would fall short of what is needed during non-emergency periods when producers have been accused of price gouging.

Feinstein's bipartisan legislation calls for FERC to establish price caps on wholesale electricity and natural gas within 60 days after it becomes law. It would remain in effect until March 1, 2003.

The bill also calls for utility companies to pass their costs on to consumers. It would not apply to wholesale power in a state that imposes a price limit on costs to consumers and it seeks to protect energy suppliers from default of payment by utility companies.