---------------------- Forwarded by Susan J Mara/SFO/EES on 10/05/2000 03:46 
PM ---------------------------


Mary Hain@ECT
10/05/2000 05:15 PM
To: Tim Belden/HOU/ECT@ECT, James D Steffes/NA/Enron@Enron, Susan J 
Mara/SFO/EES@EES, Sarah Novosel/Corp/Enron@ENRON, Joe Hartsoe@Enron, 
mday@gmssr.com, Richard Sanders, Richard Shapiro
cc:  
Subject: Chairman Hoecker's Congressional Testimony asking for retroactive 
refund authority

In his comments, Hoecker asks Congress to give FERC retroactive refund 
authority.  By the way this article is wrong about the refund effective 
date.  The current refund effective date is 60 days from the date FERC's 
order was published in the Federal Register.  It was pushed on August 30, so 
if in a future order the Commission were to require refunds, they would be 
calculated beginning October 29th. 
---------------------- Forwarded by Mary Hain/HOU/ECT on 10/05/2000 11:43 AM 
---------------------------
   
	Enron Capital & Trade Resources Corp.
	
	From:  "Ronald Carroll" <rcarroll@bracepatt.com>                           
10/05/2000 07:51 AM
	

To: <mary.hain@enron.com>, <smara@enron.com>, 
<seabron.adamson@frontier-economics.com>, <cfi1@tca-us.com>
cc:  
Subject: Electric Power Plus Article re FERC Chairman Hoecker's Congressional 
Testimony


Law changes needed for retroactive refunds

FERC'S Hoecker Asks Congress For Broader Authority
_______________________________________________
Date: October 2, 2000 -


FERC Chairman James Hoecker (D) told a congressional panel that the 
commission needs retroactive ratemaking authority to better guard against 
market power in a competitive environment. Hoecker also urged the congressmen 
to give the commission broader authority to sufficiently oversee the utility 
industry's transition to competition.

Hoecker's plea to Congress may not be a welcomed one for California, where 
some state officials want the commission to order refunds to customers after 
prices in the wholesale market skyrocketed to unprecedented levels this 
summer. Although Hoecker has informed California that the commission will 
consider refunds as a part of its larger investigation into the state's bulk 
power markets, it is clear that currently, the commission does not have that 
authority to do so retroactively.

"The [Federal Power Act] would have to be changed," a FERC staffer says.

For its own study -- which began in August -- Hoecker claimed that the 
commission, if proven necessary, would consider ordering refunds if market 
participants were indeed price gouging. However, the Federal Power Act (FPA) 
-- the law that gives the commission much of its authority -- does not 
consider retroactive refund authority and clarification of that law is 
probably needed to see if the commission can do that.

"If we need to fix market rules or market structures within our jurisdiction, 
we will do so," Hoecker told the House Committee on Government Reform Sept. 
21. "If market power is being exercised, we will respond accordingly, by 
revoking or modifying market-based rates or reassuring the basis upon which 
we grant them. We may order refunds to the extent allowed by the FPA, if 
refunds are justified by record evidence. However, the FPA defines the 
commission's authority, and leaves responsibility for many helpful measures 
with California (and other states)."

Currently, the FPA allows the commission to issue refunds for transactions 
made 60 days after the commission initiates an investigation, which in this 
case would be Oct. 13. However, the law makes no mention of retroactive 
ratemaking, and FERC officials admit that to do so, the law needs to be 
changed.

"Based upon what I know, the authority of the commission to issue refunds for 
any period before 60 days following our [investigation] order is highly 
problematic," Commissioner William Massey (D) told Electric Power Alert. 
"There are very good arguments that if FERC would try to do that, it would be 
unlawful and we would need legislation to do that."

The Government Reform Committee, chaired by Rep. Dan Burton (R-IN), held a 
mid-afternoon Sept. 21 hearing to gauge what is being predicted to be a 
severe energy crisis this winter. The committee heard testimony from Hoecker, 
Energy Secretary Bill Richardson, and Environmental Protection Agency (EPA) 
Administrator Carol Browner.

Much of the hearing focused on natural gas and oil markets, but both 
Richardson and Hoecker used the meeting as a forum to blast Congress for 
failing to pass comprehensive restructuring legislation this year. Richardson 
expressed his "disappointment" that nothing passed, while Hoecker claimed 
that FERC needs broader authority if it is to guard against market power.

"Congress should place all electric transmission in the continental United 
States under the same rules for non-discriminatory open access and comparable 
service," Hoecker said. "The commission's open access rules are not binding 
on the part of the nation's transmission system . . . owned or controlled by 
entities other than public utilities. Open access over the facilities of 
public power and other non-public utilities would promote greater competition 
in wholesale markets, by expanding trading opportunities for wholesale buyers 
and sellers."

Hoecker pointed to FERC's investigation into bulk power markets and 
California's energy crisis and claimed that unless the commission receives 
clear legislative direction, FERC will extremely limited in what it could do 
to solve the market problems.

"Congress, too, has a role to play in ensuring that consumers are able to 
obtain the energy they need at reasonable prices," Hoecker said. "Most 
critically, events this summer demonstrate the urgency of enacting 
electricity legislation to help resolve remaining impediments to competition. 
Federal legislation can establish the ground rules that will lead to adequate 
investment in generation and transmission facilities, and higher levels of 
reliability which is crucial to the digital economy."

The chairman also urged Congress to give FERC the authority to mandate 
regional transmission organization participation and mandate reliability 
standards. Currently, the House is considering a bill that would make the 
commission a federal backstop for reliability, but most congressional sources 
do not expect the bill to pass (see related story).





_source: Electric Power Alert
_date: October 2, 2000
_issue: Vol. 10, No. 20
_title: FERC's Hoecker Asks Congress For Broader Authority
, Inside Washington Publishers