December 12, 2002 PUC: 113

Media Contact: PUC Press Office, 415.703.1366, news@cpuc.ca.gov

PUC PRESIDENT LYNCH COMMENTS ON FERC PROPOSED DECISION ON REFUND CASE

California Public Utilities Commission (PUC) President Loretta Lynch today issued the following statement in response to the Federal Energy Regulatory Commission's (FERC) proposed decision in California's Refund case:

"This proposed decision represents the culmination of a raft of pro-generator decisions FERC has issued in the past 18 months, all against California consumers and businesses. Californians are owed at least $8.9 billion for unjust charges the energy sellers extracted in 2000 and 2001. This proposed decision continues FERC's refusal to reexamine shortsighted decisions made in July 2001, before many of the admissions of wrongdoing came to light, including: FERC's refusal to count in refund calculations any overcharges suffered by the California Department of Water Resources (DWR); FERC's refusal to allow the full period of wrong doing to be considered in determining refunds owed; and FERC's continuing assumptions that excessive natural gas prices caused by now-confirmed gas price manipulation were fair and should be passed through to California businesses and families.

"FERC's awarding of $1.8 billion is merely a slap on the wrist to the energy companies that illegally lined their pockets at California ratepayers' expense. We continue to request that FERC address the evidence establishing manipulation in California's energy markets, instead of assuming the problem away. FERC must reconsider the pro-energy seller methodology it adopted that disadvantages California; and FERC must reconsider the excessive natural gas prices that the generators can now pass through to California consumers, as FERC's own staff has recommended. FERC must not approve a proposed decision that defies logic and rewards criminal behavior. FERC must get serious about investigating, uncovering and punishing market manipulation and abuses.

"FERC still has the opportunity to get it right by incorporating into its decisions the evidence that has come to light in the El Paso case; incorporating into its decision the evidence that will come to light of market manipulation; and by reconsidering the crimped methodology it used last year to short California businesses and families. If California cannot find justice at the FERC it will appeal to the appellate courts."

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