The Federal Energy Regulatory Commission Should Enforce Existing Anti-Market Manipulation Provisions

Washington, D.C. – Today, Ranking Member of the U.S. Senate Committee on Energy and Natural Resources U.S. Senator Maria Cantwell (D-Wash.) urged the Federal Regulatory Commission (FERC) to prevent energy marketers and electric generators from taking advantage of consumers due to a natural gas shortage in Southern California associated with a major leak at the Aliso Canyon storage facility.

As we learned during the 2000-2001 energy crisis, a problem with energy markets in California can spread quickly to Washington and other Western states. I am concerned that natural gas shortages and supply disruptions in Southern California will increase electricity and natural gas prices throughout the region and enable generators and marketers to engage in Enron-like tactics to pad their profit statements at the expense of consumers,” Sen. Cantwell writes in a letter to FERC Chairman Norman C. Bay (attached).

During the leak’s four-month span, an estimated 5.4 billion cubic feet of natural gas escaped from the Aliso Canyon gas storage facility in Los Angeles County, California. Although the leak has been plugged, significant work remains before the state will certify that additional gas can be safely pumped into the facility.

Officials estimate that there could be up to 31 days this year during which gas deliveries will need to be curtailed because demand will exceed supplies, potentially causing 14 days of rolling blackouts in Southern California this summer.

Despite the potential disruptions, Sen. Cantwell applauded California officials for coalescing around a proposal designed to reduce demand and mitigate the impact on energy markets: “I am pleased that the California Energy Commission, the California Public Utilities Commission, the California ISO, and the Los Angeles Department of Water and Power have developed the ‘Aliso Canyon Action Plan’.”

However, Sen. Cantwell reiterated the need for FERC’s vigilance: “Westerners still remember 2000-2001, when the ‘perfect storm’ of a poorly designed California energy market, drought conditions that dramatically reduced hydropower generation and FERC’s inaction combined to enable unscrupulous individuals and companies to gouge consumers throughout the region for billions of dollars in unwarranted energy costs,” Sen. Cantwell wrote. “History must not be allowed to repeat itself.”

She urged the commission to use its authority stipulated in the Energy Policy Act of 2005 to enhance transparency and prevent energy markets from engaging in manipulative practices that harm consumers: “FERC should utilize this and other authority … to ensure that energy marketers and electric generators do not exploit natural gas shortages in Southern California to raise electricity and natural gas prices throughout the region.”