03.15.01

Senator Cantwell’s Statement on the Northwest Energy Crisis

Senator Maria Cantwell announced today that she would support S. 287, as well as an amendment to S. 287. If passed, the bill would address the short – term problems in the western energy crisis. The Senate Committee on Energy and Natural Resources today held a hearing on three bills designed to address short-term problems in the western energy market: S. 26, S. 80, and S. 287, as well as an amendment to S. 287.

At the invitation of Senator Maria Cantwell (D-WA), Washington Governor Gary Locke testified about the impact of the California energy crisis on Washington State. The Committee also heard testimony from Energy Secretary Spencer Abraham and FERC Commissioner Curt Hebert.

"I’m pleased I was able to get the committee to include Governor Locke as one of today’s witnesses," said Cantwell. "Washington State must not be forgotten in the debate over whether California did the right thing in deregulating its electricity market. The fact is California may have deregulated, but we paid for it. This is now a regional issue and requires a regional solution," she said.

"We have a supply problem in the short term and prices have gone through the roof," added Cantwell. "While Congress and the FERC are not acting, the people of Washington are hurting."

"The federal government – and the FERC in particular – needs to step up to the plate. It’s too late to pretend that the market will just work itself out -- the administration must either reconsider its position on price caps or let the FERC do what’s necessary to manage the Western power grid," said Cantwell.

According to Cantwell, the bills before the committee today would help alleviate the short-term crisis facing Washington’s industrial and residential consumers. "We’ve got to stop the bleeding before we can cure the disease," said Cantwell, "these short-term measures will keep the people of Washington from suffering unreasonable energy prices while we explore a long term solution."

Cantwell added that "a 50% increase in average household energy costs would mean 23,000 fewer jobs would be created in Washington state in the next few years, and 20,000 jobs would be lost in energy-dependent industries such as aluminum, agriculture, and pulp and paper. That’s a potential loss of 43,000 jobs over the next few years."

"We all know we need to look at long-term solutions that address supply and conservation, but we also know we need to do something now to prevent major job loss, plant closings, farm losses, and a general economic downturn in our region. That’s why I support the bills before the Committee and pledge to work with the sponsors, as we take up the bills, to make them as responsive as possible to the needs of Washington State," said Cantwell.

S. 26 would require the Secretary of Energy to impose a price cap or cost-of service rates on FERC-jurisdictional wholesale sales if (1) the wholesale sale rate is unjust or unreasonable, or exceeds the marginal cost of production for a significant period or by a significant amount; and (2) the rate threatens public health and safety or the economy of any state or region and the FERC has otherwise failed to act.

S. 287 would require the FERC to impose cost-of-service based rates on wholesale sales in the West. Amendment 12 to S. 287 would prohibit cost-of-service rates in any state that prevents a pass–through to consumers; or where the state imposes a retail price limit that precludes a utility from recovering cost-of-service wholesale costs or has prevented a utility from making a payment for the purchase of electricity in the western energy market; and prevents the forced sale of energy without a guarantee of payment.

S. 80 would provide for retroactive refund of FERC-authorized market based rates to the extent that they were not just and reasonable. It also establishes price caps by requiring the FERC to establish the maximum price for certain wholesale sales in western states.