Lieberman Requests Immediate, Decisive FERC Action To Reduce Energy Prices

WASHINGTON – Governmental Affairs Committee Chairman Joe Lieberman, D-Conn., called on the Federal Energy Regulatory Commission Wednesday to provide quick price relief to western energy consumers, after hearing from a panel of blue ribbon economists.

“FERC has already determined that energy rates in California are neither just nor reasonable,” Lieberman said. “So, I would say to FERC: Provide real relief to the people in the West this summer. Do it immediately and do it decisively.”

Lieberman called for 24-hour, seven-day-a-week relief throughout the entire western region that has the actual effect of reducing energy costs. “The Federal Power Act requires electric rates to be just and reasonable everywhere, all the time,” said Lieberman. Currently, FERC is providing limited price mitigation only when energy supplies fall to emergency levels and only in California.

The committee will hold a second hearing June 20, 2001, to discuss FERC?s response to the western energy crisis. All five FERC commissioners are expected as witnesses.

In his first hearing as Committee Chairman, Lieberman heard testimony from a panel of renowned economists who discussed the effects of energy industry deregulation on consumer costs of electricity and natural gas, primarily in the West.

The father of deregulation, Cornell University economics professor emeritus Dr. Alfred Kahn, who played a leading role in the deregulation of the airline, surface transportation and telecommunications industries, agreed that temporary price relief was necessary in order to respond to a dysfunctional California market. In agreement were Dr. Severin Borenstein, of the University of California, Dr. Paul Joskow of the Massachusetts Institute of Technology, Dr. Frank Wolak of Stanford University and Dr. William Hogan of Harvard.

In answer to complaints that price relief would hurt the energy industry, Lieberman said: “Price mitigation can preserve a healthy profit margin for energy producers while bringing stability and predictability to the market.

“If we ignore these problems, we put our economy at risk and leave our citizens unprotected. California accounts for 15% of the U.S. economy. If you add its western neighbors, Oregon and Washington, which are also part of this most recent crisis, we are talking about the economic health of roughly one-fifth of the economy. So, what transpires in California and the West has the capacity to affect the rest of the nation.”