Ban Manipulation of Electricity Markets: Support the Cantwell Amendment
FRIENDS OF THE EARTH ∙ PUBLIC CITIZEN ∙ SIERRA CLUB ∙
U.S. PUBLIC INTEREST RESEARCH GROUP
November 5, 2003
SUPPORT THE CANTWELL AMENDMENT
We are writing to urge you to support Sen. Cantwell’s amendment to prohibit energy market manipulation, which is being offered to the Senate agriculture appropriations bill (H.R. 2673). This amendment would provide an important and necessary consumer protection in the U.S. electricity market.
Enron’s schemes to drive up electricity prices are the most widely publicized examples of energy market manipulation and have had the most serious toll on American consumers and businesses. However, numerous market participants have engaged in abuses throughout the country. In fact, the Federal Energy Regulatory Commission (FERC) has just settled with 15 companies accused of market manipulation during the 2000-2001 California energy crisis, which could result in $11 million in penalties. Even in addition to other settlements, the total will be insufficient to compensate California consumers, given that the ratepayers were overcharged by an estimated $9 billion and the settlements come years after consumers and the economy of California suffered immense harm.
Even PJM Interconnection, a regional transmission organization (RTO) in the Northeast that is considered to be the model for RTOs nationally, concluded in its 2002 State of the Market report that PJM market participants have the ability to manipulate electricity markets both internally and externally of PJM. It is clear that more than ever we need to make these types of activities illegal to prevent energy companies from manipulating prices and supply.
The Cantwell amendment would ensure the kind of rampant manipulation that contributed to the largest electricity crisis in history is never repeated. It would also help ensure fair and functional markets, which would increase the likelihood that energy companies will invest in new, innovative, and clear technologies such as solar and wind power.
Specifically, the Cantwell amendment would:
∙ Amend the Federal Power Act to put in place a broad prohibition on all manipulative practices in electricity markets.
∙ Specify that electricity rates resulting from manipulative practices are not legal under the Federal Power Act.
The Cantwell Amendment is a common-sense response to the mounting evidence of pervasive manipulation in our nation’s electricity markets. Please support this essential consumer protection to address these serious consumer concerns. If you have any questions, please contact Michele Boyd at Public Citizen (202-454-5134) or Debbie Boger at Sierra Club (202-675-6278) or Katherine Morrison at U.S. Public Interest Research Group (202-546-9707).
Director, Critical Mass Energy
and Environment Program
Deputy Legislative Director
Clean Energy Advocate
U.S. Public Interest Research Group
Mark N. Cooper
Director of Research
Consumer Federation of America
Adam J. Goldberg
Senior Energy Analyst
Friends of the Earth