Article published Tuesday, September 14, 2004

FERC gets direction

THE feckless Federal Energy Regulatory Commission, which failed to protect California from the Enron-inspired energy crisis of 2000-2001, has finally been given a swift kick in the right direction by a federal appellate court.

The Ninth U.S. Circuit Court of Appeals upheld the state of California's contention that FERC can order another $3 billion or so in refunds on expensive long-term emergency contracts signed in the midst of the phony electricity shortage, engineered by Enron and other energy pirates.

State officials were forced to agree to the excessive contracts in the midst of rolling blackouts that began in May, 2000. As it turned out, there was no shortage of electricity, only market manipulation by Enron and a long list of power wholesalers.

FERC had claimed it had no authority to allow more than $3.3 billion in refunds but the appeals court put it straight, saying the federal agency "may elect not to exercise its [authority] by requiring refunds, but it unquestionably has the power to do so."

How much of the $12 billion total in excess charges paid by Golden State utilities and their rate-payers will be refunded now is up to state officials, but the ruling is a victory on at least two other counts.

First, it lays bare the costly shenanigans that can be perpetrated against the public under the guise of electric deregulation and, second, it strips FERC and its Republican majority of excuses for not protecting consumers.

As Bill Lockyear, California's attorney general, put it, "The watchdog was sleeping during the robbery, it failed to enforce its own rules, and it unduly restricted remedies for consumers with artificial chains."

Under the decision, FERC retains the authority to oversee a market-based system for wholesale electricity, but at least the agency cannot claim it is powerless to do its job.

© 2004 The Blade