BILL ANALYSIS 1
1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
SJR 7 - Alpert Hearing
Date: March 15, 2001 S
As Introduced: March 1, 2001 Non-FISCAL J
R
7
DESCRIPTION
Under current federal law, the Federal Energy Regulatory
Commission (FERC) is authorized to order refunds for unjust
or unreasonable rates. The effective date of such refunds
may not be earlier than 60 days after a complaint is filed
or earlier than 60 days after FERC publishes a notice of
its intention to initiate a refund proceeding.
This resolution makes findings about high electric rates
charged to California consumers, notes FERC's orders
stating that current rates are unjust and unreasonable, and
FERC's refusal to order refunds.
This resolution memorializes Congress and the President to
support legislation introduced in Congress to require FERC
to 1) order refunds if rates are unjust or unreasonable,
and 2) establish regional price caps if FERC determines
rates are unjust or unreasonable.
BACKGROUND
On November 1, 2000, FERC issued a proposed order in
response to a complaint by San Diego Gas and Electric
Company (SDG&E) about high wholesale energy prices. FERC
found "the electric market structure and market rules for
wholesale sales of electric energy in California are
seriously flawed and that these structures and rules, in
conjunction with an imbalance of supply and demand in
California, have caused, and continue to have the potential
to cause, unjust and unreasonable rates for short-term
energy under certain conditions." (Docket No. EL00-95-000,
Order Proposing Remedies for California Wholesale Electric
Markets , p. 5) On December 15, 2000 FERC issued a final
order confirming that finding ( Order Directing Remedies for
California Wholesale Markets , p. 33)
COMMENTS
H.R. 268 (Filner), introduced on January 30, 2001, requires
that when FERC finds rates are unjust or unreasonable, it
must issue refunds with interest. That bill also requires
FERC to establish regional wholesale electric price caps,
based on the cost of providing electricity and a return on
investment, if FERC determines wholesale electric rates are
unjust or unreasonable. S. 26 (Feinstein), introduced on
January 22, 2001, permits either FERC or the Secretary of
Energy to impose regional wholesale electric price caps if
either determine rates are unjust or unreasonable. This
resolution is supportive of both bills.
On August 23, 2000, FERC opened proceedings to investigate
the reasonableness of wholesale electric rates in
California. On December 15, 2000, FERC issued an order
adopting specific remedies to address dysfunctions in
California's wholesale electric markets. On March 9, 2001,
FERC issued an order directing specific sellers to provide
specified refunds ($69 million worth) or to alternatively
provide justification for their charges.
The author and committee may wish to clarify that the price
cap described in the resolution is based on the cost of
service plus a reasonable rate of return on investment.
The author and committee may wish to amend the resolution
(Page 2, Lines 9-10) to reflect FERC's March 9, 2001 action
to order a specific refunds by specific power generators.
POSITIONS
Sponsor:
Author
Support:
None on file
Oppose:
None of file
Randy Chinn
SJR 7 Analysis
Hearing Date: March 15, 2001