News Releases

Murray Stands Up for Washington Electricity Ratepayers in Energy Bill

Jul 30 2003

Murray pushes amendment to protect Washington families & businesses from further electricity market manipulation; Slams FERC for penalizing Washington state and imposing Standard Market Design

Video of Senator Murray's Remarks



(Washington, D.C.) – Today, U.S. Senator Patty Murray (D-Wash) spoke in favor of an amendment to punish companies that have been found to knowingly engage in electricity market manipulation, tactics used by Enron and others during the 2001 energy crisis to hurt Washington ratepayers. Murray spoke on the Senate floor in favor of an amendment offered by Senator Maria Cantwell (D-WA) to the spending Senate energy bill.



In her remarks, Murray continued her criticism of federal energy regulators for first ignoring Washington’s energy problems despite warnings from both Senators and then leaving Washington ratepayers on the hook for inflated energy contracts.



Murray also expressed her concerns with attempts by federal energy regulators to impose a Standard Market Design on the Northwest energy system which would further hurt Washington consumers.



Murray’s prepared remarks follow:



Mr. President, I rise in support of this amendment to protect consumers from electricity market manipulation. All of us from the West Coast remember the energy crisis of 2001. Consumers and businesses were hit with massive increases in the cost of energy. Many in California faced shortages and brownouts. In Washington state, we felt the impact as well.



In fact, as I’ll show in moment, we in Washington state continue to be penalized for failures in the energy market and failures by federal energy regulators. There were certainly many causes for the energy crisis, but here is the most disturbing is the fact that energy companies manipulated the marketplace to take advantage of consumers.



As we saw throughout the crisis, the Federal Energy Regulatory Commission did not take aggressive action to protect consumers from market manipulation.



This amendment will direct FERC to revoke the market-based rate authority of companies that have been found to knowingly engage in electricity market manipulation.



Our experience on the West Coast shows why this amendment is important, and why FERC needs to better police the energy market. For more than two years, many of us in the Northwest Delegation have been urging FERC to better protect consumers.



In March and April of 2001 and again in May of 2002, I sent letters to FERC calling for relief from the energy crisis. I asked for federal price caps to stabilize the market. I asked for Washington state utilities to receive refunds as California utilities received, and I urged FERC to report criminal activity to the Department of Justice.



Finally, on March 26, 2003 FERC found that market manipulation occurred during the 2001 West Coast energy crisis. Unfortunately, FERC indicated it was highly unlikely that Washington state ratepayers would be reimbursed for the harm caused by market manipulation. That’s really unfair when you look at what happened during the crisis.



At the height of the 2001 energy crisis -- when Enron and others were manipulating the system -- FERC was urging companies to enter into long-term contracts. Many utilities in the Pacific Northwest followed this request and entered into long-term contracts at highly-inflated rates.



According to the Seattle Times, during the energy crisis, the Northwest wholesale market averaged $267 per megawatt-hour. That’s 16 percent higher than the average price in Northern California, and 28 percent higher than Southern California.



So it was very disturbing for all of us to see FERC agree that there was manipulation, but then leave Washington ratepayers holding the bag – with no relief – for the harm they experienced and continue to experience through these contracts.



Mr. President, clearly FERC needs to be more aggressive in protecting consumers. It needs to uncover and report market manipulation much earlier. And it needs to have the authority to take action against companies that defraud the public by manipulating the electricity market.



This amendment would direct FERC to take aggressive action against predatory energy companies who manipulate the market, and I urge my colleagues to support this amendment.



Mr. President, this amendment seeks to improve the underlying energy bill. I do have some other concerns about the energy bill and about an effort by federal energy regulators.

Standard Market Design

As my colleagues know, FERC is pushing Standard Market Design, which would set uniform, national standards for operating regional transmission grids and wholesale energy markets.

Unfortunately, a “one-size-fits-all” solution will never really fit the unique needs of the Pacific Northwest. For example, in New England, you can increase or decrease energy production easily – just burn more gas or coal. But in the Northwest, we cannot make it rain more or less based on a profit schedule. Standard market design means we can’t run our system the way it’s designed to be run to meet all our needs. And it means more opportunities for market manipulation and price gouging by big, out-of-state energy companies.



FERC has already failed to protect Washington ratepayers from market manipulation. Given that, it’s unwise to allow FERC to take authority away from state regulators through Standard Market Design and other proposals floating around Congress.

PUHCA

I am also concerned that the Energy Bill repeals the Public Utility Holding Company Act of 1935, which restricts utility ownership. Although Senator Domenici’s substitute electricity amendment does include some remedies to protect consumers, it still does not go far enough. You just have to consider the devastating effects of the 2001 energy crisis to see that we need to do more to protect consumers.



In conclusion, it is clear that this energy bill does not do enough to protect consumers against market manipulation. It could actually facilitate more opportunities for manipulation. Further, it does not provide enough remedies to help consumers who been victimized by market manipulation. That’s why I urge my colleagues to support the Cantwell amendment which will give consumers the protection that they deserve.