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Fed Energy Regulators Sue Calif.

August 17, 2002

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LOS ANGELES (AP) _ Federal regulators are suing California for defying an order to dissolve the board that oversees much of the state’s electricity grid.

The lawsuit was filed Friday, nine days after Gov. Gray Davis’ appointees to the board of California’s Independent System Operator voted to ignore the Federal Energy Regulatory Commission order.

FERC, the nation’s top regulator of wholesale electricity, told the ISO to disband and create a board free of political influence, a move that Davis, a Democrat, had charged was ``nothing less than a hostile takeover of California’s electricity grid by the federal government.″

FERC is made up of a majority of Republicans appointed by President Bush.

The new legal friction is the latest in California’s power problems.

The state has accused private power sellers of rigging the market to keep prices high, and Davis blames FERC for failing to act quickly when skyrocketing prices and power shortages plagued the state’s electricity market in 2000 and 2001.

California’s electricity market had been subject to soaring prices, power shortages and possible manipulation by energy companies following deregulation in the late 1990s.

A state-designed, and FERC-approved, deregulation plan created the ISO to serve as an impartial operator of the electricity grid serving three-quarters of California. The state’s regulated utilities then yielded control of the grid.

In its lawsuit, FERC called the existing board ``insufficiently independent″ and ordered a two-tiered governing body with an independent decision-making board advised by a panel consisting of owner plant owners, consumer advocates and utility officials.

Davis’ press secretary Steven Maviglio said Friday the state had not been notified of the lawsuit. Kevin Cadden, director of external affairs for FERC, said the suit was filed in federal court in Washington.

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On the Net:

Federal Energy Regulatory Commission: http:www.ferc.gov

California ISO: http://www.caiso.com

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