Waking to Power Crisis

Is the Federal Energy Regulatory Commission finally getting serious about controlling abuse in California’s runaway electric power market? We hope the commission ruling late last week that 13 private generators appeared to have overcharged California in January is a real directional change and not merely a ploy to counter the perception that it doesn’t care about California’s hardships. The proof remains to be seen.

Last week’s action was a welcome contrast to the commission’s expressions of absolute faith in the open market and the belief that California had brought its troubles on itself. Generators will be less likely to try to overcharge customers knowing that FERC finally seems willing to fulfill its responsibilities under federal law.

It’s worth noting that the $69 million cited in the ruling is a fraction of the $550 million in overcharges alleged by the state. And the commission is giving the power companies an opportunity to justify their escalated wholesale power rates. The generators claim they can demonstrate that their rates were fair considering the risk of the California market. We’ll be interested in hearing their excuses and looking to FERC to hold the power companies to a high standard in this case.

The commission has been a public embarrassment to the Bush administration, acting in contradiction to the new president’s expressions of sympathy, however limited, for Californians and their energy plight. The blunt public persona of FERC Chairman Curtis Hebert Jr., a protege of Senate Republican Leader Trent Lott of Mississippi, was about as stone-cold as one could imagine. Hebert accused California of trying to “nationalize” the state’s electricity transmission system, when in fact the state was trying to keep the big utilities solvent so they could continue to serve California consumers. Hebert, 38, a lawyer from Pascagoula, Miss., was picked by Bush to head the commission just a few weeks ago. Hebert insists, “We are turning this agency upside down to aid California.” But that has not been evident, and even the commission’s threat to force power refunds to California will be an empty one if FERC ultimately sides with the generators.

There are reports Bush might replace Hebert as chairman with Pat Wood, also 38, the head of the Texas Public Utility Commission. Like Hebert, Wood has a strong belief in the free market, but those who know him say he would be more adept at helping California navigate its way through the power crisis. The five-member panel has two vacancies. Bush can either select a new member or designate an existing one as chairman. Designation of a new chairman would help Bush if the president is interested in improving relations with the nation’s largest state.