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Murray Calls for Fair Treatment of Overcharged Washington Utilities

Mar 15 2001

Renews calls for federal price caps to stem further fallout from energy crisis

(WASHINGTON, D.C.) – In a letter to the Federal Energy Regulatory Commission (FERC), Senator Patty Murray (D-Wash.) today renewed her call for price caps on electric rates and asked that Washington state's utilities get the same refunds as California. Murray has previously called for a price cap to stem skyrocketting energy costs.

Last Friday, FERC ordered energy producers to refund as much as $69 million to California utilities to "ensure just and reasonable rates" and because they had been overcharged by the producers. While Washington state utilities have paid similar rates for electricity on the wholesale market, FERC offered no relief to Washington state.

"Families and businesses in Washington have been hit hard by these high wholesale rates," said Sen. Murray. "We are losing jobs and businesses across the state and it is time for the federal government to step up to the plate. We have an energy crisis on our hands."

In its directive, FERC designated $273 per megawatt-hour as the top price wholesalers can charge utilities. Above that amount, wholesalers must either refund the charges or justify such a high fee. During the month of January, Seattle City Light paid between $290 and $600 per megawatt-hour for electricity, yet FERC offered no relief to Washington state.

"By designating a dollar figure that is 'just and reasonable,' FERC has effectively admitted that prices above that figure are "unjust" and "unreasonable." FERC has clearly made the case for price caps, yet they resist the broad public cry for temporary price caps," said Murray.

"The impact of this crisis on our state has been devastating," Murray said. "We have already lost 1,000 jobs because of the high cost of energy. A recent report has indicated this could rise to 43,000 jobs if no action is taken. How many more jobs must be lost before FERC will do the right thing?"

Senator Murray's letter to FERC Chairman Curtis Hebert follows:

March 15, 2001

Mr. Curtis Hebert
Chairman, Federal Energy Regulatory Commission
888 First Street, NE
Washington, DC 20426

Dear Chairman Hebert:

I am writing today to express my strong concerns about the energy crisis in the Western United States, and the recent actions of the Federal Energy Regulatory Commission. In particular, I am concerned with your recent decision to direct wholesalers to refund excessive charges to utilities in California, but not in Washington state.

While I applaud your action to recognize the energy crisis and to direct wholesalers to refund power costs above $273 per megawatt hour, I must urge you to extend your order beyond California to the entire west coast.

Seattle City Light, which provides electricity to most of the Seattle metropolitan area, has purchased power on the wholesale market far in excess of $273 per megawatt hour. In the month of January, City Light paid an average of $600 per megawatt hour to Powerex, an average of $359 per megawatt hour to Enron, and an average of $290 per megawatt hour to Dynergy. Similar rates were paid by other utilities in the Northwest.

These higher wholesale prices translate into much higher rates for consumers, as evidenced by the fact that Seattle City Light has raised customer rates 10 percent in January and 18 percent on March 1. Tacoma Public Utility has raised rates, on average, of 50 percent.

The impact of this crisis on our state has been devastating. We have already lost over 1,000 jobs because of the high cost of energy. A recent report has indicated this could rise to 43,000 jobs if no action is taken to correct the energy market. Farmers, manufacturers and small business owners are struggling mightily to keep their heads above water. Yet FERC has continued to resist calls for temporary price caps.

By acknowledging that prices above $273 per megawatt hour are "unjust" and "unreasonable" you invite the obvious question of why not impose price caps to prevent wholesale producers from further gouging consumers. If prices above $273 in your judgement are so unreasonable, or above $150 according to FERC commissioner William Massey, why not temporarily cap prices at that amount?

In conclusion, I strongly urge you reconsider your decision not to cap prices and to extend the same consideration to Washington state as you have to California, and I anxiously await your response.

Sincerely,

Patty Murray
United States Senator