Lawmakers Tout Report Faulting FERC On Market Manipulation

6-29-01- Reuters

 A pair of U.S. lawmakers on Friday said an investigation by the General Accounting Office determined the Federal Energy Regulatory Commission did not have enough evidence to support its claims energy companies were not manipulating power markets in the West.

Democratic representatives Peter DeFazio of Oregon and Jay Inslee of Washington state said GAO made it clear that federal regulators were not doing  their job in monitoring power prices, which have skyrocketed in California and  the rest of the West.

GAO's probe determined FERC "had a responsibility to fully investigate potential market power," but that "FERC's study was not thorough enough to support its overall conclusion that audited companies were not physically  withholding electricity supply to influence prices," the report said.

GAO is the investigative arm of Congress. FERC was not immediately available to comment on the report.

FERC has said it consistently monitors markets for abuses by electricity generators and marketers, notably in California where prices soared well above  $300 per megawatt hour at times this year from the normal range of $30 per  megawatt hour.

FERC-ordered negotiations are underway in Washington D.C. to try and settle claims from Western states that energy companies bilked their utilities  and states by some $15 billion over the last year.

Lawmakers have attacked FERC for not doing enough to help ease the economic losses in the West stemming from higher power rates. They specifically note the Federal Power Act gives the commission the right to correct markets to protect "just and reasonable prices."

"Despite FERC's claim to the contrary, it is clear that generating companies have not been exonerated from gaming the system," said Inslee.

"FERC likely encouraged further price gouging by allowing generators to  hide behind FERC's woefully inadequate investigation," he said.

The lawmakers want fresh congressional hearings to learn why "FERC cops  were not on the beat."

FERC commissioners have already appeared before congressional hearings numerous times in recent months to answer questions about their actions  concerning the California market crisis, and the Western region in general.

The FERC recently acted to expand a price relief plan for California to  the entire Western region, and ordered the negotiations to settle the issue of  price refunds by mid-July.