Pelosi,
Western Democrats Urge Bush to Repudiate FERC, Supply Refunds to
Energy Consumers in California, Other Western States
October 18, 2004
Washington,
D.C. -- House Democratic Leader Nancy Pelosi and 34 West Coast Democrats
sent letters to President Bush and to the Chairman of the Federal
Energy Regulatory Commission today urging the President to tell
FERC to stop abdicating its duty and take immediate action to refund
billions of dollars to energy consumers in California and other
Western states
"In short,
the [Ninth Circuit] Court found that FERC failed to enforce the
law and unfairly denied billions in potential refunds," the
lawmakers wrote to President Bush. "Today, we are urging you
to repudiate FERC's previous actions and call upon the Commission
not to appeal the Court's decision. Instead, FERC should use the
full range of its authority to ensure that consumers are made whole
for the entire period during which Enron and other energy companies
manipulated the market in the West. Consumers in California, Nevada,
Oregon, and Washington who have been harmed by the unscrupulous
activities of energy suppliers deserve the refunds that FERC has
so far denied."
In their letter
to FERC Chairman Pat Wood, California Members of Congress wrote:
"We are writing to urge FERC to stop abdicating its duty and
take immediate action to refund Californians the nearly $9 billion
in refunds they deserve... By any measure, FERC has failed to bring
justice to California and the other western states for the price
gouging and market manipulation that occurred in 2000 and 2001.
FERC now has the opportunity to redeem itself. We strongly urge
FERC to ensure that California's consumers are fully and fairly
compensated for the overcharges and market manipulation that siphoned
billions from the state."
Below are the
full texts of both letters and a list of signatories.
October
18, 2004
The Honorable
George W. Bush
The White House
1600 Pennsylvania Avenue, NW
Washington, D.C. 20500
Dear President
Bush,
Since you've
taken office, we have written to you and your appointees at the
Federal Energy Regulatory Commission (FERC) many times to ask for
assistance in protecting western consumers from the illegal activities
of Enron and other energy suppliers who drained billions of dollars
from our states' economies in 2000 and 2001. Unfortunately, neither
FERC nor your Administration has acted to bring justice and refunds
to our states.
On September
9, 2004, the U.S. Court of Appeals for the Ninth Circuit issued
a ruling (State of California v. FERC, No. 02-73093) admonishing
FERC for its failure to protect consumers and to use the tools at
its disposal to order refunds. In short, the Court found that FERC
failed to enforce the law and unfairly denied billions in potential
refunds.
Today, we are
urging you to repudiate FERC's previous actions and call upon the
Commission not to appeal the Court's decision. Instead, FERC should
use the full range of its authority to ensure that consumers are
made whole for the entire period during which Enron and other energy
companies manipulated the market in the West. Consumers in California,
Nevada, Oregon, and Washington who have been harmed by the unscrupulous
activities of energy suppliers deserve the refunds that FERC has
so far denied.
We're alarmed
that FERC has already sought to diminish the significance of the
Ninth Circuit's ruling, calling it a "clarification of the
scope of the Commission's authority." More than a clarification,
this ruling makes it clear that FERC has extensive authority to
grant refunds, authority it has failed to exercise or even acknowledge.
Without your public insistence, we fear FERC will find yet another
pretext to lessen sanctions against market manipulators.
In a speech
in October 2000, you told consumers in the West, "I believe
so strongly that part of this region is going to suffer unless you
have a President who is willing to tell the FERC to do what is right
for the consumer." Many of us reminded you of that promise
in a March 30, 2001 letter asking for you to intervene to halt the
market manipulation. Because no assistance was forthcoming then,
we are again calling on you to do what is right for consumers and
instruct the FERC to use the authority the Court has affirmed.
We would appreciate
your timely response.
Sincerely,
List of Signatories:
Nancy Pelos
Anna G. Eshoo
Henry A. Waxman
Jay Inslee
Peter DeFazio
Shelley Berkley
Zoe Lofgren
George Miller
Hilda Solis
Lois Capps
Pete Stark
Jane Harman
Dennis Cardoza
Michael M. Honda
Joe Baca
Grace Napolitano
Diane Watson
Juanita Millender-McDonald
Barbara Lee
Sam Farr
Susan A. Davis
Xavier Becerra
Linda Sanchez
Ellen O. Tauscher
Jim McDermott
Brad Sherman
Tom Lantos
Bob Filner
Robert Matsui
Lucille Roybal-Allard
Maxine Waters
Howard Berman
Lynn Woolsey
Adam Schiff
Mike Thompson
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October
18, 2004
The Honorable
Pat Wood III
Chairman
Federal Energy Regulatory Commission
888 First Street NE
Washington, DC 20426
Dear Chairman
Wood,
We are writing
to urge FERC to stop abdicating its duty and take immediate action
to refund Californians the nearly $9 billion in refunds they deserve.
On September
9, 2004, the United States Court of Appeals for the Ninth Circuit
ruled in State of California v. FERC that FERC "improperly
concluded that retroactive refunds were not legally available"
and remanded the case to FERC for refund proceedings. We urge FERC
to abide by this decision and exercise its authority to award retroactive
refunds.
In its ruling,
the Court stated that FERC allowed its own rules governing market-based
rates to be broken by companies selling power into California's
deregulated marketplace. Specifically, FERC did not enforce rules
requiring companies to report information about specific transactions.
In failing to insist on the observance of these rules, FERC failed
in its regulatory oversight responsibility. As the Ninth Circuit
noted in its ruling:
Despite the
promise of truly competitive market-based rates, the California
energy market was subjected to artificial manipulation on a massive
scale. With FERC abdicating its regulatory authority, California
consumers were subjected to a variety of market machinations, such
as 'round trip trades' and 'hockey-stick bidding,' coupled with
manipulative corporate strategies, such as those nicknamed 'Fatboy,'
'Get Shorty,' and 'Death Star.'
The Court found
that FERC "misapprehends its legal authority" by claiming
it cannot order retroactive refunds. Furthermore, the Court concluded
that "FERC's construed limitations on its own authority are
not supported by a careful examination of the [Federal Power Act]."
FERC's public
reaction to the judgment has been disturbing. A statement released
by FERC said, "[t]he Commission will closely examine the scope
of the Court's findings regarding violations of quarterly sales
reporting requirements, which was a problem with a number of market
participants, not all market participants."
This is not
just a matter of energy companies failing to submit paperwork; it
goes to the heart of whether or not rates were just and reasonable.
As noted in the Court's decision, FERC itself has said the information
companies withheld is the "minimum needed for market monitoring
purposes." With major power-sellers withholding basic information
about their transactions in 2000 and 2001 and with many companies
now implicated in market manipulation, FERC cannot demonstrate that
rates charged in the West in 2000 and 2001 were just and reasonable.
FERC has already
found that rates charged in the period between October 2000 and
June 2001 were not just and reasonable and has initiated a process
to refund some of the excessive rates charged during that period.
The conditions that made rates excessive during that period also
existed before October 2000. Indeed, public outcry about excessive
rates led FERC to begin a staff investigation of western bulk power
markets in the summer of 2000. FERC later chose to set a refund
effective date of October 2, 2000, arguing that this was the earliest
refund effective date permissible under the law. However, under
the Court's ruling, FERC is clearly not constrained by the October
2000 date and may set an earlier one. An earlier refund effective
date is warranted in light of the ample evidence that companies
were manipulating the market well before October 2000.
FERC should
also reexamine other areas in which its overly narrow interpretation
of its authority has unnecessarily denied refunds to consumers.
For example, FERC has cited procedural grounds to deny refunds for
purchases made by the State of California in the first half of 2001,
even though the rates charged were not just and reasonable. The
overcharges on these transactions alone amount to approximately
$2.7 billion and refunds should be ordered by the FERC.
By any measure,
FERC has failed to bring justice to California and the other western
states for the price gouging and market manipulation that occurred
in 2000 and 2001. FERC now has the opportunity to redeem itself.
We strongly urge FERC to ensure that California's consumers are
fully and fairly compensated for the overcharges and market manipulation
that siphoned billions from the state.
Thank you for
your consideration of our request and we look forward to your reply.
Sincerely,
List of Signatories:
Nancy Pelosi
Anna G. Eshoo
Henry A. Waxman
Zoe Lofgren
George Miller
Hilda Solis
Lois Capps
Pete Stark
Jane Harman
Dennis Cardoza
Michael M. Honda
Joe Baca
Grace Napolitano
Diane Watson
Juanita Millender-McDonald
Barbara Lee
Sam Farr
Susan A. Davis
Xavier Becerra
Linda Sanchez
Ellen O. Tauscher
Brad Sherman
Tom Lantos
Bob Filner
Robert Matsui
Lucille Roybal-Allard
Maxine Waters
Howard Berman
Lynn Woolsey
Adam Schiff
Mike Thompson
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