Statement of Senator Dianne Feinstein
on Today's FERC Order
July 17, 2002

"It was my understanding that the Federal Energy Regulatory Commission (FERC) would entirely remove the price cap on energy prices in the West that has been in place since June 2001, and I am pleased that the commission saw fit to continue the cap. I would have preferred a continuation of the current $91.87 hard cap, but that wasn't in the cards.

Under the order, FERC has essentially replaced the current hard cap with a hard cap of $250 and a soft cap of $91.87. This soft cap means that if a company offers to sell energy at a price above $91.87, they must justify their bid to FERC.

Additionally, the order retains a must-bid provision that requires energy companies operating in the region to bid all of their available energy into the Western energy market.

I believe that the current mitigation order instituted June 2001 is working to keep the lights on and energy prices low in the State, and I would have preferred a continuation of that order. However, I think that today's order is a workable solution, and it should prevent what happened in 2000 from happening again. It is certainly a much better alternative than the elimination of the price cap.

I believe the combination of these caps and a must-bid requirement will help ensure that the markets remain stable, that California has an adequate supply of energy, and that prices remain low.

It remains incumbent upon FERC to take strong regulatory action if it appears that generators are manipulating prices or gaming the market."

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