Editorial: Regulators won’t do their jobs

Friday, June 27, 2003 | 5:40 a.m.

WEEKEND EDITION

June 28-29, 2003

Last week the Federal Energy Regulatory Commission turned down the requests of the state of California and of utilities in Nevada and Oregon to get out of the long-term electricity contracts they entered into with big power suppliers. About $12 billion in energy contracts were at stake, including about $300 million involving Nevada Power. The utilities and California wanted to void the costly contracts, agreed to in the spring of 2001 at the height of the Western energy crisis, because of market manipulation by the energy companies. These companies took advantage of California's deregulated energy market by withholding power, actions that drove up the cost of energy and allowed them to gouge the utilities and, in turn, the utilities' customers. Despite overwhelming evidence of manipulation, the commission voted 2-1 to let the contracts stand.

Commissioners Patrick Wood III and Nora Brownwell, both appointed to their jobs by President Bush, asserted that undoing the contracts wasn't warranted. Unfortunately the view of Commissioner William Massey, an appointee of President Clinton, didn't prevail. "These contracts contained absolutely unprecedented prices that were negotiated in an environment that was horribly tainted by epidemic market manipulation, and they are simply not entitled to be respected by the commission," Massey told The New York Times. Nevada Power certainly made its share of mistakes during the energy crisis when it came to purchasing power, but the company -- and its business and residential customers -- shouldn't have to honor contracts with energy companies that engaged in such deplorable behavior.