GAO Faults FERC Inquiry of Power Generators’
Role in California Energy Crisis
June 29, 2001

Washington, DC – The U.S. General Accounting Office today released a study faulting a Federal Energy Regulatory Commission (FERC) inquiry from February that found no evidence of power generators using plant outages to drive up prices in California.

The following is Senator Feinstein’s statement on the GAO study:

“This GAO study confirms that for far too long FERC was guilty of both inaction and incomplete attention to the energy problems in California.

Today's report, requested by Congressmen Jay Inslee and Peter DeFazio, effectively overturns the conclusion made by FERC in February that generating companies were not gaming the system in California. The GAO has now said, ‘FERC's study was not thorough enough to support its overall conclusion that audited companies were not physically withholding electricity supply to influence prices.’

Generators have often cited the February FERC report to back up their assertions that they have not withheld power to drive prices up. Today's conclusion by the GAO, however, puts allegations of price gouging front and center.

Now that the GAO has raised questions about FERC's earlier report on market power, I call on the Commission to begin a new investigation of market manipulation. I have also asked Senator Joseph Lieberman to conduct a hearing on this issue in the Government Affairs Committee. The GAO report reinforces the separate conclusions made by Stanford economist Frank Wolack and Massachusetts Institute of Technology economist Paul Joskow that high electricity prices in California were the result of market abuse.

I believe this report provides evidence that FERC must rectify the ‘unjust and unreasonable’ energy costs by providing Californians rebates for the exorbitant prices they have been subjected to over the past year.”