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FOR IMMEDIATE RELEASE: August 18, 2003

SCHUMER URGES FEDS TO MONITOR ENERGY PRICES FOR GOUGING LIKE THAT WHICH OCCURRED AFTER CA ENERGY SHORTAGE

In wake of power outage, energy prices are already starting to rise – Gasoline futures are trading above $1 for the first time since March

Schumer urges FTC and FERC to be vigilant against power companies and other energy suppliers who might choose to take advantage of blackout; After the California energy shortage of 2001, price gouging was rampant

US Senator Chuck Schumer today warned unscrupulous energy suppliers and power companies not to take advantage of this week's blackout and manipulate energy prices. Schumer urged the Federal Trade Commission (FTC) and Federal Energy Regulatory Commission (FERC) to closely monitor the electricity, natural gas, oil, and gasoline markets for any irregularities that may occur in the wake of this week's electrical power black outs. Schumer is a member of the Senate's Energy Committee.

"After the California energy shortage subsided, energy prices kept going up for all the wrong reasons because a few unscrupulous suppliers exploited the situation," Schumer said. "The markets are already showing an increase in energy prices which is why it's imperative for federal authorities to monitor them for any untoward activities. The shortage is going to exact a big enough toll as it is, and we need to ensure that foul play doesn't add insult to injury."

Due to last week's blackout, several refineries in the Midwest and Northeast lost power and suspended operations. As a result, reports have already begun to state that gasoline futures are trading above $1.00 a gallon for the first time since March. The price for September unleaded gasoline increased by $0.0387 to $1.015 a gallon on the New York Mercantile Exchange. September crude oil prices also increased by $0.21 to $31.30 per barrel, and the price of September heating oil is trading at $0.827 a gallon, up $0.0132.

"I feel that aggressive monitoring of electricity markets by FERC in the wake of the blackout is absolutely necessary to ensure that energy markets in New York and other effected areas are not subject to the type of market manipulation experienced in the western United States during the California energy crisis of 2000-2001," Schumer wrote in a letter to the heads of FERC and the FTC.

Schumer said he was concerned that as efforts are made to restore electrical service, uncertainty in the energy sector may create a climate that is vulnerable to market manipulation. In March of 2003, FERC determined that over 30 energy companies had taken advantage of market conditions and engaged in market manipulation and misconduct that cost the state of California billions of dollars.

"It is of critical importance to ensure that New York, which already faces significantly elevated gasoline prices, is not further burdened by artificial spikes in the price of oil products as it attempts to recover from yesterday’s blackout. Accordingly, I request that the FTC monitor oil markets in the near term in order to identify and prevent any suspicious activities," Schumer wrote.

Friday, Schumer called for Congressional hearings into the power outage that struck the Northeast and said the electricity provisions of the Energy Bill moving through Congress should be removed so lawmakers can ensure that the final version incorporates the lessons of the power outage. "We've been able to skate by as a first-rate power with a fourth-rate electricity grid for way too long. But yesterday, things caught up with us," Schumer said. "We got lucky this time in the sense that this was not a terrorist attack and nobody was seriously hurt. But if we aren't thorough in both reviewing what went wrong and fixing it, we might not be so lucky next time."

Schumer also said that the electricity provision of the comprehensive energy legislation moving through Congress should be removed until the implications and effects of yesterday’s events are considered. "The blackout faced by the Northeast underscores the profound sensitivity of our nation’s electrical distribution system, and highlights the need to proceed with extreme prudence in establishing federal electricity policy," Schumer wrote to the Chair of the Senate Energy Committee.

Finally, Schumer asked the Federal government to help New York's local governments, emergency services, businesses, and other entities cover the costs of responding to the power outage. The massive response by police, fire, paramedics and other emergency response personnel would cost millions. The NYPD normally has 2,000 officers on the street at any given time. In an effort to respond to outage, 10,000 officers were mobilized. The City expects to have the elevated mobilization in place until things normalize. Other local agencies have been similarly mobilized.

A copy of Schumer's letter to the FTC and FERC is attached.