Energy Committee Unanimously Approves Cantwell's Amendment to Provide FERC with Authority to Police Electricity and Natural Gas Markets
WASHINGTON, DC – As part of her ongoing efforts to ensure that the country's regulatory agencies oversee electricity and natural gas markets, today, U.S. Senator Maria Cantwell (D-WA) successfully amended an expansive energy bill to grant the Federal Energy Regulatory Commission (FERC) the authority it needs to police the electricity and natural gas markets, enforce just and reasonable rates, and prevent market manipulation. The amendment passed by voice vote in an early afternoon meeting of the Senate Energy and Natural Resources Committee.
“If there’s one lesson we’ve learned from the recent energy price rollercoaster ride, it’s that energy prices are no longer dictated by supply and demand fundamentals,” said Cantwell. “Today the Energy Committee took a big step towards getting our energy markets properly functioning again by providing regulators with the tools they need to get the job done. If FERC had this authority during the Western energy crisis, they could have saved consumers over $40 billion and stopped the skyrocketing electricity price increases caused by Enron’s manipulations before they got out of control.”
Currently, FERC does not have “cease and desist” authority over electricity markets and cannot prevent an organization that is suspected of manipulating the market from continuing their manipulative activity. However, the SEC and CFTC have this but they do not have this same authority over securities and commodities markets.
Cantwell’s amendment would provide FERC with several new anti-manipulation enforcement tools, including:
• Cease-and-desist authority over any entity FERC suspects of manipulating the markets. This allows FERC to act more like a cop catching a burglar during a bank robbery than a cop investigating the scene after-the-fact.
• Authority to freeze the assets of any entity suspected of market manipulation. Currently, FERC can charge an entity with manipulation and seek penalties. But, if that entity liquidates its assets, there’s nothing left to collect to compensate for damages or FERC’s costs of taking enforcement action. Penalties collected by FERC are either refunded to ratepayers or go to pay for FERC’s enforcement actions.
• Ability to protect electric consumers from potential abuse of market power or market manipulation by temporarily changing or suspending power rates for up to 30 days. If FERC would have had this authority during the West Coast energy crisis they could have stopped the skyrocketing electricity price increases before they got out of control.
On March 25, 2009, Senator Cantwell chaired an Energy Subcommittee hearing on the gaps in FERC’s authority. This amendment is a revision of her stand-alone bill, the Natural Gas and Electricity Review and Enforcement Act (S.672). At the Committee’s next markup, Senator Cantwell plans to offer additional language related to fixing natural gas markets.
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