---------------------- Forwarded by Carla Hoffman/PDX/ECT on 11/28/2000 06:40 
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	From:  "Pergher, Gunther" <Gunther.Pergher@dowjones.com>                      
     11/28/2000 06:22 AM
	

To: undisclosed-recipients:;
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Subject: DJ FERC To Lower Price Cap In Calif Pwr Order-Commissioners



23:05 GMT November 27, 2000 =DJ FERC To Lower Price Cap In Calif Pwr
Order-Commissioners

   By JASON LEOPOLD
   Of DOW JONES NEWSWIRES

LOS ANGELES (Dow Jones)--The Federal Energy Regulatory Commission will
likely lower its proposed $150 per megawatt-hour "soft cap" on California's
wholesale power prices to $100/MWh in its final order to repair the state's
troubled electricity market, commissioners said Monday.
But the commissioners told Dow Jones Newswires they won't order generators
to refund billions of dollars in windfall profits earned last summer as a
result of spiking power prices in the state, despite pleas from state
lawmakers and Gov. Gray Davis, because they lack the authority to do so.
"We still believe we cannot order refunds," one FERC commissioner said. "If
there was an inch in the (Federal Power Act) that gave us the authority, we
would take it. But that would destroy the future of deregulation."
FERC released a report earlier this month that largely pinned California's
ongoing power crisis on the structure of the state's wholesale electricity
markets. The commission also issued a proposed order requiring changes
needed to make the market workably competitive.
The order found that electricity prices in the state rose to "unjust and
unreasonable" levels last summer. But FERC fell short of ordering refunds,
saying it lacked the legal authority to do so.
Instead, FERC proposed changes to the governing boards of the state's two
wholesale-market operators - the Independent System Operator and Power
Exchange - said the state's three investor-owned utilities should no longer
be required to buy a majority of their power from the CalPX, and proposed
penalties for utilities that put off buying the power they need until the
last minute.
FERC also proposed capping the price paid to all bidders in California's
power auctions at $150/MWh. Individual bidders could still get higher
prices, but would have to justify their claims to FERC.
FERC may issue its final order as early as Dec. 13, and commissioners said
California shouldn't expect it to differ from the proposed changes
recommended by FERC earlier this month.
The comment period for FERC's draft order closed Nov. 22.
(MORE) Dow Jones Newswires 27-11-00
2305GMT
Final Order Won't Order Refunds
Davis warned FERC commissioners at a public hearing in San Diego two weeks
ago that a failure to order refunds would produce a "ratepayer revolt."
"Your proposed solution to our energy crisis does nothing to lower prices
for California consumers," the Democratic governor told FERC on Nov. 13 at a
meeting in San Diego. "Quite to the contrary, it is designed to bring our
economy and our consumers to their knees."
California's power regulators and utilities also pressed for refunds.
The state's Public Utilities Commission said it has evidence of market abuse
by generators and that consumers were overcharged $4 billion last summer for
electricity.
Edison International unit (EIX) Southern California Edison, in its response
to the FERC order, attached a study by a Massachusetts Institute of
Technology economist, who found "considerable evidence" generators and power
marketers deliberately withheld supply from California from June through
September - when power usage is at its peak - to drive up wholesale prices.
But despite the allegations, FERC commissioners said they will not order
refunds, though they said the state could legally return to cost-based
rates.
One commissioner also warned a lower "soft cap" of $100/MWh would likely
deter generators from building new power plants in the state, even as it
limited price spikes.
"The truth of the matter is there is no painless or easy way for California
to change its electricity market," the FERC commissioner said.

   Consumer Groups Push Ballot Measure To Re-regulate

Davis will file the changes the state wants made to the proposed order with
FERC on Friday, but FERC commissioners said they don't expect to be swayed
by the governor's filing.
Meanwhile, Californians are steaming ahead with their own solutions.
On Tuesday, the Foundation for Taxpayer and Consumer Rights, a Southern
California consumer advocacy group, will hold a news conference announcing
its own sweeping changes to the state's power market, which it will try to
implement through a proposed ballot measure, the details of which have not
been disclosed.
Furthermore, state lawmakers plan on rewriting parts of AB1890, California's
landmark restructuring law when the state Legislature convenes next year.
There is already heated debate within the Legislature to reauthorize
utilities to build power plants and to create a public utility system like
Nebraska's, where there are no investor-owned utilities, in an effort to
control power prices.
"California lawmakers want to be re-elected in 2002," one key lawmaker close
to the electricity issue said.
And Davis is in meetings to replace the Cal-ISO and CalPX with a new entity
to manage the power grid and the state's two wholesale power markets, said
Steve Maviglio, Davis' press secretary.
-By Jason Leopold, Dow Jones Newswires; 323-658-3874;
jason.leopold@dowjones.com
-0-
Last week, FERC received hundreds of pages of comments to its proposed order
for California's power market.
(MORE) Dow Jones Newswires 27-11-00
G_nther A. Pergher
Senior Analyst
Dow Jones & Company Inc.
Tel.  609.520.7067
Fax. 609.452.3531

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