Showdown over Energy Price Caps ; Today, Federal Agency Debates How Far to Go in Regulating High Power Costs in the West

By Gail Russell Chaddock writer of The Christian Science Monitor | The Christian Science Monitor, June 18, 2001 | Go to article overview
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Showdown over Energy Price Caps ; Today, Federal Agency Debates How Far to Go in Regulating High Power Costs in the West


Gail Russell Chaddock writer of The Christian Science Monitor, The Christian Science Monitor


Meetings of federal regulatory commissions don't generally fire up much public interest. But today's meeting of the Federal Energy Regulatory Commission (FERC) could prove an exception.

One reason is that the commission is taking on one of the summer's hottest issues - the high cost of electric power in the West. Another is that newly empowered Democrats in the Senate want to make sure how Republicans respond (or fail to respond) to this issue is etched in public thought. (Although FERC is an independent body, Bush recently appointed two new members.)

The commission may not go as far as Democrats want - a price cap on what wholesalers can charge for power. But even a move in that direction could signal more government involvement in controlling energy prices across the country.

Leaks of possible outcomes of the meeting have been circulating for days, but Senate staff who follow the issue insist that the outcome will not be known for sure until the five commissioners get together today.

What is sure is that they will be grilled about whatever they decide. Tomorrow, all five commissioners face questions from the full Senate Energy and Natural Resources Committee on whether they have done enough to ensure that the prices that generators charge utility companies are "just and reasonable."

For new Democratic chairmen with gavels (and subpoena power), it's a chance to signal that there's a big difference in how the two political parties deal with an issue at the top of public concerns. The White House has opposed price caps as a solution to California's energy crisis.

After taking over chairmanship of the Senate Energy and Natural Resources Committee, Sen. Jeff Bingaman (D) of New Mexico gave the FERC two weeks to deal with the California crisis "responsibly." After that, he said, the Senate would be forced to legislate the issue.

"It is our job to make sure federal agencies are doing their job to fairly and appropriately protect the interests of the American people," says Sen. Joseph Lieberman (D) of Connecticut, whose Governmental Affairs Committee takes up the same issue on Wednesday.

Market manipulation?

At the heart of such investigations is whether the sharp rise in energy prices since June 2000 is the result of genuine shortages of supply or the result of a deliberate withholding of supply by energy companies to drive up prices - a tough charge to prove.

"There have been 28 investigations of the oil and gas industry in the last 22 years for price gouging, and not one of them found anything of the kind," says Jerry Taylor, director of natural resources studies for the Cato Institute, a Washington-based libertarian think tank.

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