Senator Feinstein Pushes for Additional FERC Authority
to Ensure Just and Reasonable Prices

July 26, 2001

Washington, DC - U.S. Senator Dianne Feinstein (D-Calif.) today announced that she will push for legislation to grant the Federal Energy Regulatory Commission (FERC) additional authority to properly address the issue of refunds for unjust and unreasonable energy prices.

The legislation would be in line with a number of recommendations made to Senator Feinstein in a letter from FERC Commissioner William L. Massey. The letter comes in response to Senator Feinstein's recent request of all FERC Commissioners to ask their recommendations of what additional legislative tools they need to do a better job.

"I believe that Commissioner Massey's letter hits the nail on the head and forms the basis of comprehensive legislation I want to support," Senator Feinstein said. "Unfortunately, FERC is now seen by many as a somewhat 'toothless tiger' and I want to help give this important agency some additional teeth."

"I know Senator Bingaman, Chairman of the Energy and Natural Resources Committee, has looked at many of these issues. I want to work with him and the rest of the Committee to develop legislation that reflects these principles."

The following are the recommendations by Commissioner Massey which Senator Feinstein supports:

1. FERC needs additional authority to issue electricity refunds for all times, not just after the Commission has initiated an investigation under Section 206 of the Federal Power Act. FERC also needs increased authority to ensure just and reasonable prices through the ability to assess of civil penalties.

2. FERC must have increased authority to oversee natural gas markets. Today, there is little transparency for many of the transactions that occur among various players across multiple states in the natural gas market. Additionally, FERC has no authority to issue refunds for "unjust and unreasonable" transportation costs of natural gas.

3. FERC should have additional oversight authority over on-line trading firms that deal in natural gas and electricity. In many cases it is only the trading entity that knows the prices sellers are willing to bid and buyers are willing to pay for a given commodity.

4. FERC needs the direct authority to mitigate market power. This would give FERC additional authority to re-evaluate the criteria it uses to allow market rates for electricity. Right now, there is almost no way to stop a so called "bad apple" who wants to exercise market power from doing so.

5. FERC would be given sufficient authority to review mergers and acquisitions that involve generation facilities. Additionally, Senator Feinstein is also concerned that FERC does not have that needed authority to regulate transactions and agreements among holding companies and their subsidiaries or between affiliated companies.

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