Power plays continue to cripple West

The Federal Energy Regulatory Commission's ruling last week keeping Sierra Pacific Resources on the hook for expensive, long-term contracts was patently unfair to both the company and consumers.

It also made very little sense, as has become the standard in the power markets of the Western United States.

FERC decided in Washington, D.C., that it didn't have enough evidence to override long-term contracts made by Sierra Pacific, which supplies electricity in Nevada, as well as California utilities, during the height of the energy crunch two years ago.

That left Sierra Pacific -- really us, the consumers -- holding the bag for $290 million in overpriced power. (The price tag in California is a crippling $12 billion.)

At the same time they were upholding the contracts, FERC members were scolding companies like Enron, Reliant Resources and 58 others over their shell games designed to artifically tighten the market and drive prices higher.

Nevertheless, two commissioners, Patrick H. Wood III and Nora Mead Brownell, both Republicans, said there was no evidence that market manipulation extended to the sky-high prices included in the contracts.

The dissent came from Democratic commissioner William L. Massey. "The market conditions in which these contracts were negotiated were hammering utility suppliers like completely unprecedented, absolutely extraordinary, utterly breathtaking," Massey said. He added that "it would defy logic" to conclude that such conditions did not push up the cost of long-term contracts, according to a Los Angeles Times report.

Our concern is that the FERC ruling has been caught up in the politics of California recall fever against Gov. Gray Davis. Nevada consumers will end up paying big bills, unless the decision is overturned.

The bigger problem, however, remains the drag that high utility costs have put on the Western economy for two years now. They are the single most aggravating factor holding back a recovery in the states worst hurt by the energy crunch, which has now been proven to have been largely a hoax.