07.24.01

Senators Cantwell, Smith, Wyden, and Murray Call on FERC to Treat Northwest Ratepayers Fairly

WASHINGTON, D.C. - U.S. Senator Maria Cantwell (D-WA) and her colleagues Senators Gordon Smith (R-OR), Ron Wyden (D-OR) and Patty Murray (D-WA) today sent a letter to the Federal Energy Regulatory Commission (FERC) asking the Commission to recognize the differences in the Northwest and California energy markets and provide the Northwest with relief from unreasonable and unjust rates.

FERC has scheduled a hearing on Wednesday, July 25 to make a preliminary decision about the Administrative Law Judge's recommendations for settlement.

The text of the letter follows:

July 24, 2001

The Honorable Curtis Hébert, Jr. Chairman Federal Energy Regulatory Commission 888 First Street, NE Washington, D.C. 20426

Dear Chairman Hébert,

We write regarding the July 12, 2001 recommendations of Chief Administrative Law Judge Curtis Wagner on the topic of refunds for Western consumers affected by unjust and unreasonable energy prices over the last year. Northwest citizens have been gravely impacted by our nation's energy crisis and we believe it is the Federal Energy Regulatory Commission's duty to ensure they are treated with the same fairness accorded California consumers. As FERC considers how to proceed on the issue of refunds we ask that you grant a rehearing of Puget Sound Energy's October 2000 complaint (EL01-10-000), pursuant to Section 206 of the Federal Power Act, which the commission dismissed in its December 15 Order.

We also ask that the Commission recognize key differences between Northwest and California markets in making a determination of unjust and unreasonable prices, allow utilities in our region to fully participate in any evidentiary hearings on this matter, and order a separate Northwest settlement conference-to run prior to or concurrently with such an evidentiary proceeding. FERC must recognize that Northwest citizens have also suffered because utilities and power marketers in our region have not been adequately compensated for sales they made in good faith to California entities. Numerous Northwest sellers are owed substantial sums from the California ISO, PX, the investor-owned utilities, and the State of California. Where energy was sold and delivered into California, FERC must address Northwest energy sellers' claims equitably and promptly.

We appreciate the Commission's order of June 22 allowing Northwest parties to participate in the refunds settlement conference that concluded July 9. We were disappointed that the proceeding ended without resolution for Northwest or California consumers and would like to express our concern that Judge Wagner was mostly silent on the topic of relief for the Pacific Northwest in his July 12 recommendation. Further, to the extent the recommendation did comment on the Northwest situation, it was factually incorrect. While the judge wrote that Northwest parties "did not have data on what they were owed, nor an amount of refunds due them," it is a matter of public record that a group of Northwest utilities-net purchasers in the West's dysfunctional power markets-submitted a claim for $680 million, as well as documentation and a proposed methodology for calculating the refunds they are due.

We believe FERC must take a few simple steps in order to ensure consumers in our states are treated fairly. Again, we in the Northwest do not have a centralized hour-ahead or day-ahead market, but instead rely heavily on bilateral forward markets-where prices have, in fact, moved in tandem with California's spot prices. Because of the difference in the California and Northwest energy markets, restricting a refund calculation solely to spot markets would not only deny the consumers of our states the relief they are due, but also significantly harm our Northwest utilities, which make forward purchases in order to meet their statutory obligations to serve load. We believe that any refund calculation must take into consideration the unique circumstances of each regional energy market in the West.

We also ask that the Commission allow Northwest entities that can, using this methodology, demonstrate a real claim for refunds to participate fully in the evidentiary hearings the Judge has recommended for California later this summer. Lastly, given that Judge Wagner himself has acknowledged that there "was little time to address the issues raised by the Pacific Northwest Parties" in the settlement proceeding that concluded July 9, we ask FERC to consider appointing an ALJ to oversee a separate Pacific Northwest settlement conference, to run prior to or concurrent with any evidentiary hearings. While we recognize that there are many daunting issues facing the Commission with regard to California, we believe it is imperative that FERC also recognize that the Northwest has suffered substantial harm as a result of our interlinked but unfortunately defective west-wide energy markets. It is the Commission's statutory duty to uphold reasonable and just rates. We believe FERC cannot, therefore, ignore the residual damage the California crisis has caused in all energy markets throughout the West. We urge you to act in a manner that will provide the citizens, businesses and communities of our states some measure of relief from the last year's skyrocketing energy costs, and give the topic of Northwest refunds the attention it deserves.

Sincerely,

MARIA CANTWELL

GORDON SMITH

RON WYDEN

PATTY MURRAY

 

cc: Commissioner Pat Wood

Commissioner Nora Mead Brownell

Commissioner William Massey

Commissioner Linda Breathitt

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