Richardson is headed back to the Forrestal Building to
sign the order...

DJ US Richardson Declares Emergency Powers In Calif

Dow Jones International News Service -- December 13,
2000  [Return to Headlines]




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DJ US DOE/Calif -2: Action Targets `Unfair Profit'
WASHINGTON (Dow Jones)--Looking to avert eminent
blackouts in California, U.S. Energy Secretary Bill
Richardson asserted Wednesday his emergency authority
under the Federal Power Act to order power producers
to make electricity available to the state.

The action came as more than one dozen power producers
informed the California Independent System Operator
they wouldn't make power available unless they receive
payment guarantees.

"I can order a power plant to send power where
needed," Richardson said at a press conference in
Washington. Richardson said he would mandate the price
power producers will receive, promising "a fair
return."

Richardson said, "I won't allow (power producers) to
unfairly profit due to today's market situation."


(MORE) Dow Jones Newswires 13-12-00

2125GMT

DJ US DOE/Calif -3: FERC Pledges `Strong Action Soon'
Richardson's announcement came at a press conference
in the Washington office of Sen. Dianne Feinstein,
D-Calif., following a meeting Feinstein brokered
between Richardson, California Gov. Gray Davis, and
James Hoecker, chairman of the U.S. Federal Energy
Regulatory Commission.

The press conference came as the California grid
operator was on the brink of failing in its nearly
yearlong effort to keep the lights on in the state in
the face of chronic power shortages.

Davis and Feinstein said they asked the FERC chairman
to issue an order establishing a region-wide
electricity price cap to stop the hourly export of
between 4,000 megawatts to 5,000 MW out of the state's
troubled market. They also called for FERC to order
power producers to enter into long-term contracts with
the state's distribution utilities at reasonable
prices.

Hoecker pledged that FERC would take "strong action
soon" in response to the electricity crisis. "We
believe in competitive markets, but they have to
behave responsibly and at reasonable prices," he said.


The commission is scheduled to meet Friday morning to
issue a final order restructuring the state's
problem-plagued electricity market. A key issue in the
pending order will be the establishment of price caps.


Hoecker declined to comment on what actions the
commission will take, and on whether the commission
would act sooner than Friday.

Last Friday, the commission issued an order in
response to an emergency petition from California's
grid operator lifting a $250 a megawatt-hour hard
price cap in California's power markets. Prices soon
hit $600/MWh, and have risen above $1,000/MWh since
then, spiking at one point to $1,400/MWh.

Feinstein and Davis accused power producers of
engaging in price gouging at the expense of California
consumers and utilities in the state, which can't pass
on the high cost due to a state-mandated rate freeze.
The escalating prices in the last week have caused a
liquidity crunch for Southern California Edison Co.
(EIX) and Pacific Gas & Electric Co. (PCG), and have
pushed the companies to the brink of bankruptcy.

Davis called the crisis affecting California's
deregulated power market - the first in the nation -
"an incredibly bizarre situation" illustrating "how
markets can be manipulated." Davis expressed optimism
that Richardson's emergency actions will "stop market
abuses" and bring temporary relief.


-By Bryan Lee, Dow Jones Newswires; 202-862-6647;
bryan.lee@dowjones.com


(END) Dow Jones Newswires 13-12-00




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