California’s Energy Crisis Continues

In the wake of California utilities’ woes, Southern California Edison and Pacific Gas & Electric have asked the Federal Energy Regulatory Commission to create a special agency to investigate wholesale electricity prices in the California market and give it authority to punish those found to be price gouging.

Power generating companies opposed the proposal, saying FERC and the Justice Department already have authority to investigate abuses.

The utilities paid $30 billion for power last year, more than four times the wholesale power costs in 1999.

According to analysts for the California Independent System Operator, if answers are not found to the power supply problems and price surges, the state’s electricity crisis will only worsen this summer, when demand is expected to be even greater.

There has also been growing pressure within California's congressional delegation for federal action to dampen wholesale power costs in California where power has spiked to more than $600 a megawatt hour, five times higher than peaks last summer.

Bush administration officials have argued that price caps would be counterproductive, prompting suppliers to send power elsewhere, deepening California's supply problem and dampening enthusiasm for new power plant construction.