NATIONAL ELECTRICITY MARKETS

WHEREAS, wholesale electric power markets in many areas of the United States, including California, the Pacific Northwest, the Midwest and Southwest have been extremely volatile, subjecting electric utilities and their customers to enormous price increases; and

WHEREAS, the fundamental causes of the Western states' energy crisis, namely, the demand for power growing faster than the development of new power supply, the inability of an aging transmission system to deliver power from existing supply to new demand, the faulty deregulation designs adopted by some states, and the undeniable market manipulation by some energy producers and marketing companies are, in part, or in whole, present in other regions of the country as well; and

WHEREAS, any worsening of the Western states' crisis, or spread of the energy crisis to other states or regions of the country, could have a devastating effect on the national economy and, thereby, severely impact municipal services and the citizens and businesses that rely upon them; and

WHEREAS, in many areas wholesale power prices have reached 100 times their normal peak cost; and

WHEREAS, these energy supply and price problems pose a profound threat to the interrelated economies of the West, and, if left unchecked, could impose significant harm to the national economy; and

WHEREAS, the Federal Power Act requires the Federal Energy Regulatory Commission (FERC) to insure that wholesale electric power rates are 'just and reasonable'; and

WHEREAS, FERC in its December 15 Order found that wholesale electric rates in some instances were not just reasonable but nonetheless declined to impose a West-wide price cap; and

WHEREAS, the California Municipal Utilities Association (CMUA) has petitioned FERC to enforce the requirements of the Federal Power Act by requiring wholesale electric power sales be at just and reasonable rates; and

WHEREAS, the American Public Power Association has joined CMUA in this petition; and

WHEREAS, the Western U.S. and Canada are experiencing drought conditions which severely constrain the amount of electricity hydroelectric dams can produce, thereby exacerbating the electricity supply problem and increasing the amount of electricity utilities must buy from the Western power market,

NOW, THEREFORE, BE IT RESOLVED that The U.S. Conference of Mayors calls upon the Federal Energy Regulatory Commission to use its statutory authority to require that wholesale electricity sales be at just and reasonable rates and that it develop and temporarily implement cost-based rates, to restore order to the western power market; and

BE IT FURTHER RESOLVED that municipalities should support efforts to improve system reliability by streamlining local regulatory requirements for constructing generation and transmission resources; and

BE IT FURTHER RESOLVED that municipalities believe consumers should be protected from the enormous volatility of the current market and that the imposition of a temporary, cost-based rate structure and the restoration of the obligation to serve are appropriate and necessary.