The current energy crisis in the western United States demonstrates the need for federal legislation that would encourage new generation facilities, says Secretary of Energy Bill Richardson.
WASHINGTON, DC – The electricity restructuring legislation currently before Congress “would provide much-needed rules of the road that would hopefully encourage the addition of new generation and transmission facilities as well as demand-side measures that would reduce the strain on the electric grid.” He called on Congress to adopt the law before it adjourns for this year. Richardson warned electricity generators not to drive the price for power in western states higher, and he reiterated his request that the Federal Energy Regulatory Commission (FERC) impose short-term price caps on the wholesale power sold in the region. “I am very concerned about the condition of power markets in the west,” he explained. “Electricity supplies in parts of the region are tight and the prices charged for wholesale power in the region continue to spiral out of control.” He has no specific knowledge of any generators that were acting irresponsibly, but added that “it is important that generators located throughout the region and in Canada and Mexico understand that the administration will not tolerate any actions designed to take advantage of the situation.” Cold weather and supply shortages have pushed the price of electricity in California from $30 to $950 per megawatt-hour. Many officials in the renewable energy sector have expressed concern that these price spikes and similar spikes during the summer, are deterring states from deregulating their power industry and preventing the growth of renewable energy facilities. Richardson met this week with the California Independent System Operator to discuss options for promoting a more reliable electricity grid in California and throughout the west, and the Department of Energy (DOE) has also ordered both the Bonneville Power Administration and the Western Area Power Administration to provide as much power for California as possible during supply shortages. The DOE and the General Services Administration have developed procedures for reducing electricity consumption at federal facilities, which are implemented on days when electricity supplies are tight. The procedures have been implemented in California, but now will be extended to federal facilities throughout the Pacific Northwest. Last month, Richardson asked FERC to impose short-term caps, based on marginal production costs, on the wholesale price for electricity sold in western region. He has reiterated his request, adding that recent developments make it urgent for FERC to impose some constraints on spiraling electricity prices. Richardson also criticized Kaiser Aluminum for taking advantage of high market prices for electricity in the region. The company announced its intention to shut down operations in the region and re-sell the electricity it purchases from the Bonneville Power Administration at a profit. “While Kaiser will make millions from the use of a federal resource, I am concerned that this is coming at the expense of employees that will be out of work and that may not be fully compensated,” explains Richardson. “I have instructed Bonneville to explore all necessary actions to prevent Kaiser from remarketing this power.”