State wants power-price caps

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Washington state officials say wholesale power prices in recent months have been more than four times higher than is reasonable, and are urging federal regulators to set price caps based on producers' operating costs.

In a filing yesterday to the Federal Energy Regulatory Commission (FERC), the Washington Utilities and Transportation Committee demanded quick action to prevent further damage to the regional economy.

"Wholesale power costs throughout the West are clearly unjust and unreasonable and must be controlled by FERC," said Gov. Gary Locke, in a news release that accompanied the filing.

Power prices have been driven up by California's thirst for electricity as that state struggles through deregulation.

The markets also have reacted to a drought that has reduced supplies of Northwest hydroelectricity.

On April 26, FERC announced it would investigate wholesale power prices in the Western states in recent months.

The higher wholesale rates have forced several Western Washington utilities, including Seattle City Light, to tack on large consumer-rate increases.

The FERC investigation was part of a broader plan to try to keep California and other Western states' wholesale power prices at just and reasonable levels as required by a 1935 act of Congress.

As recently as last summer, the Northwest Power Planning Council said a new power plant could earn a reasonable rate of return by selling power for $65 per megawatt hour.

Average prices for wholesale power have consistently exceeded that level by more than 400 percent, state officials said in their federal filing.