Though our state is not deregulated, prices in California's failed deregulated market drive prices here. And so does the weather.Less rain means more purchases from the market. The Columbia River run-off this year is near its historic low level in 1977. The combination has been
spectacular - call it the perfect storm.
What did all this cost?
Recent estimates of California's costs range from $66-$100 billion. This figure counts increased spot market purchases by the state of California when major utilities ran out of cash or went bankrupt earlier this year. It also considers the long-term contracts purchased by the state -- with terms of 5-12 years. It does not consider failed business costs and other collateral damages.
There is no similar Washington state estimate, though we know the City Light numbers by heart. We spent nearly $400 million more for power during the time the market went wild. That's almost as much as our annual revenue.
Were we overcharged? Absolutely. Subtracting any sales we made in this period, we have told the Federal Energy Regulatory Commission that we were overcharged $220 million between May of 2000 and May of 2001. This assumes that anything above $150/megawatt-hour was neither "fair nor reasonable," to the FERC standard. Various other utilities in Western Washington -- public and private -- are seeking refunds as well. The State of California is asserting claims for $9 billion.
Will we collect? Separate hearings for California and the Pacific Northwest will be scheduled soon.
There has been a great wrong done here. Non-utility power trading companies
manipulated this electricity market and created a transfer of income from ratepayers to shareholders at volumes right up there with the savings and
loan scandal. At the same time, the Federal Energy Regulatory Commission failed to uphold its obligations that require wholesale rates that are "fair and reasonable." Thousands of people are out of work and the economy has been struck a terrible blow. Our businesses and residents in Puget Sound
will pay 50% more for their electricity at the end of the year than they did at the beginning.
