Californian Decries Energy Refund Plan

Californian Decries Energy Refund Plan

Jun 21 - Tulsa World

An official says it's an insult to pay money to companies who gouged the state.

SACRAMENTO, Calif. -- As California struggled through the 2000- 2001 energy crisis, Enron Corp. traders reportedly gloated about gouging the state. Now state Attorney General Bill Lockyer says federal regulators are heaping insult upon injury by demanding that California pay Enron and other energy companies almost $270 million in refunds.

In a motion filed with the Federal Energy Regulatory Commission, Lockyer said the refunds would reward "the sellers a second time for their market manipulation activities and predatory pricing."

The refunds that California could have to pay would go to a variety of energy traders and wholesalers, including: Tulsa-based Williams Cos. Inc., $25 million; Enron, $23 million; Reliant Energy, $33.7 million; Dynegy, $16.1 million; Mirant, $26.7 million; and Duke, $33.2 million.

The order was particularly unfair considering recent evidence of market manipulation by energy generators, Lockyer said.

At issue are megawatts bought and sold through the Independent System Operator, the manager of the states power grid.

In his filing this week, Lockyer said the state's power buys -- about $2.9 billion worth -- helped the ISO secure enough energy to keep the lights on. State buyers bought power at the high market price, then resold it at the states cost "in order to protect Californias electricity grid from blackouts."

Most of the state's electricity purchases were used by Pacific Gas and Electric, Southern California Edison and San Diego Gas & Electric.

But some of the power sold into the ISO market was bought by other energy companies, such as Enron. Those are the sales subject to the refund order.

FERC spokesman Bryan Lee said he couldn't comment because the matter was pending before the commission. But in its order, FERC said the states power trades should be treated the same as other wholesalers.

Because the state bought a lot of power, it will be entitled to refunds nearly equal to what it has to pay in refunds, FERC said.

FERC is calculating how much power companies owe in overcharges from the energy crisis.

Gary Ackerman, executive director of the Western Power Trading Forum, said the state was acting as an energy company when it sold power to ISO, so it should be held to the same rules.

Because the spot market price was ruled too high, FERC set a benchmark for what power should have cost.

"Any seller who sold at prices above the benchmark will have to refund the difference," said Ackerman, whose group represents electricity sellers. "No one is exempt."

Transcripts have been released of Enron traders openly and gleefully discussing creating congestion on transmission lines, taking power plants off line to pump up electricity prices and other manipulation of the California power market.

Enron spokeswoman Karen Denne said the energy company's lawyers had not seen Lockyer's motion and any response would be filed with FERC.

In addition to his FERC filing, Lockyer has filed suit against Enron and several subsidiaries for allegedly manipulating the market during the state's energy crisis.

Lockyer said the lawsuit, filed in state court, seeks restitution and unspecified damages from Enron.

Three former Enron traders have been charged with fraud involving price manipulation in California. Two of them have pleaded guilty and a third is awaiting trial.

Among other things, Enron is accused of deliberately causing congestion along power transmission lines, then reaping extra revenue for taking action to relieve the congestion.

Each violation of the state's unfair-competition law is punishable by a fine of up to $2,500, while breaches of the state's commodities law can be punishable by up to $25,000 per incident.

California has filed 67 lawsuits against energy generators and traders claiming the state was overcharged during the power crisis. This is the first suit against Enron, which Lockyer said he delayed filing until the commodities fraud law took effect.

The state has settled disputes with El Paso Corp. for $1.7 billion, Williams for $1.6 billion and Dynegy Inc. and NRG Energy Inc. for $281 million. California is close to settlements with Sempra Energy, owner of the largest U.S. natural-gas utility, and Reliant Resources Inc., Lockyer said.

For far more extensive news on the energy/power visit: http://www.energycentral.com .