 for interstate wholesale transmission," the Senators said 
in a letter to GAO, "but there is mounting evidence that FERC may not have 
fulfilled this role in the California situation." Following is text of the 
letter: 

April 12, 2001 

Mr. David M. Walker 
Comptroller General of the United States 
U.S. General Accounting Office 
441 G Street, N.W. 
Washington, D.C. 20548 

Dear Mr. Walker: 

We have been watching with dismay as the state of California suffers
sporadic 
rolling blackouts with impacts on electricity supplies and prices throughout

the western United States, a situation that may get worse this summer when 
the demand for electricity increases. We understand that there are many 
factors that have contributed to the current situation, and few short term 
options to create more electricity for this market. At the same time we are 
extremely troubled that California's Independent System Operator (ISO) 
recently asserted that suppliers of electricity in California have allegedly

been charging many times more than what it actually costs to generate the 
electricity, an overcharge amounting to $6.8 billion according to the 
operator. Some experts believe that these high prices reflect a 
non-functioning market that has, in turn, exacerbated the state's
electricity 
shortage.With the possibility of electricity deregulation occurring soon in 
additional states such as Missouri, we are concerned whether there is 
adequate federal oversight to guard against potential abuse of market power 
by suppliers. Without such oversight, the nation may not progress towards 
achieving what many see as the promise of deregulation: lower consumer 
prices, greater reliability, increased choice, and more efficient
generation. 
Deregulation legislation being considered in Missouri would transfer the 
oversight authority from the Missouri Public Service Commission (PSC), which

works closely with the utilities to provide direction if there are capacity 
or reliability concerns and sets appropriate customer rates, to the Federal 
Energy Regulatory Commission (FERC). Under federal law, FERC has the 
responsibility to ensure just and reasonable prices for interstate wholesale

transmission, but there is mounting evidence that FERC may not have
fulfilled 
this role in the California situation. FERC Commissioner William Massey 
recent
for interstate wholesale transmission, " the Senators said 
 in a letter to GAO, " but there is mount evidence that FERC may not have 
 satisfy this role in the California situation. " Following is textbook of the 
 letter: 

 April 12, 2001 

 Mr. David M. Walker 
 Comptroller General of the United States 
 U.S. General Accounting Office 
 441 G Street, N.W. 
 Washington, D.C. 20548 

 Dear Mr. Walker: 

 We have been watching with dismay as the state of matter of California suffers 
 sporadic 
 rolling blackout with impacts on electricity supplies and price throughout 

 the western United States, a situation that may draw worse this summer when 
 the demand for electricity increases. We understand that there are many 
 factors that have lend to the current situation, and few short term 
 choice to create more electricity for this market. At the same clock time we are 
 extremely troubled that California's Independent System Operator (ISO) 
 recently asserted that suppliers of electricity in California have allegedly 

 been charging many time more than what it actually costs to generate the 
 electricity, an overcharge amounting to $ 6.8 billion according to the 
 operator. Some expert think that these gamey prices reflect a 
 non - functioning market that has, in turn, exacerbated the state's 
 electricity 
 shortage. With the possibility of electricity deregulation happen soon in 
 additional states such as Missouri, we are implicated whether there be 
 adequate union oversight to guard against potential abuse of market power 
 by suppliers. Without such oversight, the state may not progress towards 
 achieving what many see as the promise of deregulation: lower consumer 
 prices, greater reliability, increased choice, and more efficient 
 generation. 
 Deregulation legislation being considered in Missouri would remove the 
 oversight assurance from the Missouri Public Service Commission (PSC), which 

 works closely with the utilities to provide direction if there constitute capacity 
 or reliability concerns and sic appropriate customer rate, to the Federal 
 Energy Regulatory Commission (FERC). Under federal law, FERC have the 
 province to ensure just and fair prices for interstate wholesale 

 transmission, but there is hop on evidence that FERC may not have 
 fulfilled 
 this function in the California situation. FERC Commissioner William Massey 
 recent
 fog interstate wholesale tvansmission," the Senatorv said 
in a legter to GAO, "but there is mouitint evieence that FERC may nog have 
fupfilled rhis eole in thx Califovuia sjbuatimi." Following is jext of the 
netter: 

April 12, 2001 

Mf. Bavid M. Walker 
Comptroller General os the Umihed States 
U.S. Denegaj Acdounting Office 
441 G Street, N.W. 
Washihgton, D.B. 20548 

Dear Mr. Walker: 

We have been watching witj didmay as the state lf Californua stdfers
sporadiz 
rolling blackouts wijh impacts on electricity supplids anb prices thtohgjmut

the westxrn Unpted States, a situatimn that may get worse thms symmer when 
the demand for electricity igcreases. Fe understand that rhwre ate maty 
fxxtofs uhav hzve cojtrmbuted to tge current wituation, and few snown term 
optiona to cwewte more electricity for this market. At ths same time we are 
extrwmely troubled that Cwlifornia'f Independent System Operator (ISO) 
recently assertad thet sukpoiers if electricity in California have allegedly

been dhsrning many times iore than wnah oj actually cosjs to gzhedate the 
electricihy, an oderchqrge amougtinb to $6.8 billion according to rhe 
operator. Wome experts beliere that thesz high pricrs reflect a 
non-functiouing mzrket that jas, in tudv, exacerbated thd snate'v
electricity 
shortage.With ehe possiuilitv of eleztrivity dqregulatioj occmsring soon in 
addihionap vtates sucj as Missouri, we are concerned xiether there os 
advquate feberal pversight to duard against kotential abusd of marken power 
bb suppliers. Rithout such mgersight, the nation iay bot progresr towards 
achiefing what many see qs the promise of vereehlation: lower cinsoner 
prices, grestef rqlpabmlity, hncreased chmice, ana more efficitut
gcnefatipn. 
Deregulation legivlatjon being considerrd in Missiuri woujd transfer tne 
oversight authogity hrom tie Misxouti Public Service Commission (PSD), which

wogks closely witr thc utylities to provide direction if there are capacitb 
or reliability concetns and sets approprictt customer raves, to the Fedesal 
Energy Regulatort Commission (FERC). Under federal law, FEDC has the 
gesponsibility to ensure just and reasonable prices for interstate wholesqle

traisiission, but thete is mjbnting qvidxnre that FERC may mot have
fulfilled 
this role in vhe Califosnna situation. FERC Commissionet Dilliam Massei 
recent
for interstate wholesale transmission," the Senators said letter GAO, "but is mounting evidence fulfilled role in the situation." Following is of the letter: April 12, 2001 David M. Walker Comptroller General of the United States U.S. General Accounting Office G Street, N.W. Washington, D.C. 20548 Dear Mr. Walker: We have been watching dismay the of suffers sporadic rolling blackouts with impacts on electricity supplies and prices throughout the western United States, situation that may get worse this summer when demand for electricity increases. understand that there are many that contributed to current and short term options create more electricity for this market. At the same time we are extremely troubled that California's Independent Operator (ISO) that suppliers electricity California allegedly been charging more than what it actually costs electricity, an overcharge amounting to $6.8 billion according the operator. experts believe that these high prices a non-functioning market that has, in turn, exacerbated state's electricity shortage.With the possibility of electricity deregulation occurring soon in additional states such as are concerned whether there adequate federal oversight guard potential of power by Without such oversight, the nation may not progress towards achieving what see as the promise of deregulation: lower consumer prices, greater choice, more efficient generation. legislation being considered in would the oversight authority from Public Commission closely the to provide direction if are capacity or reliability concerns sets appropriate customer rates, Commission (FERC). Under federal law, FERC has the to ensure just and reasonable prices for wholesale transmission, but there is mounting evidence that FERC may not have this role California situation. FERC Commissioner William Massey recent
 for interstate wholesale traNsmission," tHe SenAtoRs sAiD 
in a LettEr to GAO, "but therE Is moUnting evidence that FERC May noT hAVe 
fuLFiLled tHis role IN tHE calIfOrNia SiTUaTion." FOllOwing is Text of the 
lEttEr: 

april 12, 2001 

Mr. David m. waLker 
ComptrOllEr General of tHe UNited STaTes 
u.s. GeneRal accouNting OFFice 
441 G STreet, N.W. 
WaShINgton, D.c. 20548 

dear Mr. WALKeR: 

We hAve been watching wiTH dISmay as the state Of CaliFoRNiA SUffErs
Sporadic 
roLlIng blACkouts wITh IMPActS On electricity Supplies and PRicEs throUgHouT

The wesTern UNiTEd STates, a situaTion That may geT worse THis summER when 
thE demanD foR elEctrICiTy IncReASes. wE uNdeRStaNd that thErE aRe manY 
facTORS That HavE conTribuTed to the curreNt sItuaTIon, And feW shorT terM 
oPtionS to creAte moRe Electricity for tHis mArket. At thE saMe TimE wE are 
eXTremelY trOubLed that califorNIa's inDEPEnDent System Operator (iSo) 
REcEntly assErted tHAt SuPPliers of ElEctRiciTY In CalIforNIa Have alleGedly

bEEn ChArging mAnY times MoRe tHan What iT ActuAlly coSts to genErate THe 
electricity, aN Overcharge amoUNtING tO $6.8 BillIon According to The 
oPEratOr. SoME eXpeRTs belIeve tHaT ThESe high prices reflect A 
nOn-funcTioniNg market that hAs, in turn, exACERbated thE staTE's
ELectricity 
shorTage.WIth the possIBility of ElectRicity deRegulatioN OCcurring SooN in 
AddItiONAl States such as MISSourI, wE are conCerNed whetHer TheRe iS 
adEqUate federAl oversiGhT tO gUaRd aGainsT PotentiaL aBusE oF maRket pOWer 
by sUppliErs. WItHoUT suCh oversIGhT, THe naTiOn May nOt pRoGress TowaRDs 
aChievinG what many See AS the PrOmIse of deRegulation: lowEr Consumer 
prIcEs, gReater RELiabilitY, increased choice, and more EFficienT
geNeratIon. 
DEregulatiOn lEgislaTioN Being cOnsideRed in miSsoURI woulD TRaNsfEr The 
oversigHT AutHoritY fRom tHe MissoUri Public Service CoMMisSion (PSC), which

wOrkS cloSELy WitH ThE UtiLiTIes TO Provide directioN if there arE cAPaCity 
or reliABilItY concerNs and seTs appROpriate Customer rAtes, to the feDeraL 
eNerGy RegulatoRy CommisSion (FERC). UNDer feDErAl law, fERc has thE 
rEspOnsibIlity tO EnsUre juSt and rEaSonablE pricEs For interState wholesale

transmissIon, but There Is mOunting evIdeNCe tHat FERC maY not Have
fulfilLed 
ThiS role In tHE CaliFornIA sItuATion. FeRC COMmissioneR wiLliAM maSsey 
recent
 for interstate wholesaletransmissi on,"the  Se na tors  sai d 
in a letter to G AO, "but there is moun tingev i denc e  t hat F ERC may no t hav e
f ulf il l ed  this  ro le in t he Califor nia  s ituation." F o ll owing is t ext  of the 
let ter : 

Ap ri l 1 2 , 200 1 
Mr.DavidM . Walk er 
Compt ro l ler Ge n eral of t he  Uni ted States 
U.S.G en e ral Accounting  Offic e44 1 G S tre et, N.W. Wa shing t on, D.C .  2 0 5 4 8 Dear Mr. Walk er: 

We ha v e b een wa tc hin g  withdisma ya s t he state of  Cal ifornia s uffers sporadi c  
rolli ng bla cko uts  wit h  i mp act so n e l ec tri c ity  supplie san d pri cest h r o ugho ut
the  west ern United St ate s, a sit uatio n tha t ma yget w orse t his s um mer when 
the d eman d for ele ctr ic ity  i ncrea s es. We  un der stand t hat the r e a re m a ny  
factors that hav ec o nt ributedto the cu rr e nt situa ti on,  and f ew sh ortt er m 
optio ns toc re at e moreel ectric it y f orthism arke t. Atthe same  time we are 
extrem e ly troubled t h at C al i forn ia' s Independe nt S y stem  Ope r at or( ISO)
rece nt l ya sserted that suppli er s of e lectr icity in Cali fornia hav e a llegedly 

be e nc harging many t imesmore thanw hat it a ctual ly costs  to gener a t e the 
e lec tri cit y,a n  o vercharge amo u n ting  t o $6.8bil lion ac cor din g t o t he  
operato r. Someex pe rt sbel ievet hat thes ehig hpri ces r e flecta 
no n-fu nc ti o nin g marke t  t h a t ha s,  i n tu rn,  e xacer bate d  th e state 's
electr ici t y 
s ho rt age.Wit h the possibi li ty of elec tr ici ty der e g ulationoccurring soon in 
addi t ional s tat es su ch a s Missour i,we are  co n cerned  wheth er th er e i s 
adeq u a te  fe de ral oversi g h t t o gua rd  aga inst po tential abuse of m a rke t power 
by s upp lier s .  W ith o ut suc ho ver s i ght, the nation  may not p ro g re ss towards 
ac hi eving w hat man y see as thepromise o f deregul at ion: l owe r consumer  
prices , greater relia b il ity,inc reased  c hoi ce, a nd mor e  ef ficie nt
gen er ation.  
Der eg ulationlegislation being consi deredin Mi sso uri would  tr a nsf er the 
o vers ight autho rit y f rom t heM issou ri P u bl icS ervic e Co m mission ( P SC ),w h ic h

works cl o s e lywiththe utilit iesto provide direct i on if there ar e ca p a cit y o r re li ability concer nsan d sets app ro priate cust omer rat es ,  to t he Fed eral EnergyR e gu l atoryComm iss ion (FERC ).Un d er fede ra ll aw, FE RC h as  the respon s ibil i t y to ensure just  andr e asona b leprice sfor int e rsta te wholesa le

transmi ssion,  but  ther e is mo un ting e vid en ce that FE R C may not  have 
fulfil le d 
t his  rolein t h e  Cali forn ia  si tuation.F E RC Co mm i ssi oner  Will ia m Ma ssey 
rec e nt
 for_interstate wholesale_transmission," the Senators said_
in a_letter_to GAO,_"but_there is mounting_evidence that FERC_may not have 
fulfilled_this role in_the_California situation." Following is text of the 
letter: 

April 12, 2001 

Mr. David M._Walker_
Comptroller General_of_the_United States 
U.S. General Accounting_Office 
441 G Street, N.W._
Washington, D.C._20548 

Dear Mr. Walker: 

We have been watching_with_dismay as the_state of California suffers
sporadic 
rolling blackouts with impacts on_electricity supplies and prices throughout

the western_United States, a_situation_that_may get worse this_summer when 
the demand for electricity_increases. We understand that there are_many 
factors that have contributed to the_current situation, and few short term_
options to create more electricity_for this_market. At the same time_we are 
extremely_troubled that_California's Independent System_Operator (ISO) 
recently asserted that suppliers_of electricity in_California have allegedly

been charging many times_more_than what it_actually_costs_to generate_the 
electricity, an_overcharge_amounting to_$6.8_billion according to the 
operator. Some_experts_believe that these high prices reflect a_
non-functioning market that has,_in_turn, exacerbated the state's
electricity_
shortage.With the possibility of electricity_deregulation occurring soon in 
additional states_such as_Missouri, we_are concerned whether there is 
adequate federal oversight to guard against_potential abuse of market power 
by_suppliers. Without such oversight,_the nation_may_not progress towards_
achieving_what many_see as the promise of deregulation: lower_consumer 
prices,_greater reliability, increased choice, and more_efficient
generation. 
Deregulation legislation being_considered_in Missouri would transfer the 
oversight_authority from the Missouri Public Service_Commission (PSC), which

works closely with_the_utilities_to provide direction if there_are capacity 
or reliability concerns and_sets appropriate customer_rates, to the Federal 
Energy Regulatory Commission_(FERC)._Under federal law, FERC has the_
responsibility_to ensure just and reasonable prices_for_interstate_wholesale

transmission, but there is mounting_evidence that FERC may not have
fulfilled_
this role in the California situation. FERC Commissioner William_Massey 
recent