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Enron Mail |
Calif Probe Focuses On Dynegy,Mirant Plants-Commissioners ????
Updated: Monday, May 21, 2001 05:28 PM?ET ????? ? By Jason Leopold and Mark Golden Of DOW JONES NEWSWIRES LOS ANGELES (Dow Jones)--California officials are focusing an investigation into the state's wholesale electricity markets on two power plants operated by two of the state's largest merchant power companies, Mirant Corp. (MIR, news, msgs) and a joint venture between Dynegy Inc. (DYN, news, msgs) and NRG Energy (NRG, news, msgs), according to two commissioners on the California Public Utilities Commission. The CPUC and the state Attorney General are investigating whether output was withheld in order to maintain high prices over the past seven months at Mirant's Pittsburg plant in northern California and the Encina power plant, which is equally owned by Dynegy and NRG, near San Diego. All power plants in the state are being examined, but investigators have found that the Encina and Pittsburg plants have reduced power during supply shortages, causing market prices to rise. But so far, the commissioners said, investigators have found no activity that is clearly illegal. "Is it unethical? Yes," one PUC commissioner said. "But is it illegal? No, unless there was collusion. This is the system we set up. What the generators are doing would be the appropriate thing to do if you are going to maximize your profit to shareholders." Spokesmen for Mirant and Dynegy flatly denied the charges. "What we did was both legal and ethical," said Mirant spokesman Chuck Griffin. "There was a very forthright attempt to keep these plants up and running. Unequivocally, we have never held anything back." Some of the turbines at the Encina plant are peaking units, which are supposed to ramp up and down to meet demand, Dynegy spokesman Steve Stengell said. The plant is operated by NRG, but Dynegy markets the power from the plant and tells NRG how much power to generate based on what has been sold. "We've done absolutely nothing to manipulate prices," Stengell said. "Electricity demand increases and decreases throughout the day. Our production increases and decreases to follow changing demand. Ultimately, the ISO determines the exact amount of dispatch." A spokesman for Attorney General William Lockyer declined to comment on the ongoing investigation. CPUC President Loretta Lynch told California newspapers last week that her office and that of Lockyer's have enough information to take legal action against generators next month, though she declined to name the companies involved and she said that the exact nature of the legal action is still under review. "We get really tired of these assertions with no evidence to back them up," Griffin said. "This whole idea that any generation was held back at any time is completely bogus. It is pure political rhetoric." Mirant's California power plants have run at full power during critical times except under one of two conditions, Griffin said. Either generating units were broken and had to be taken off line to be fixed, or they were beginning to run in a way that violated environmental restrictions and Mirant had to get permission to run at full power any longer. "There are no other reasons than those two," said Griffin. Nevertheless, several employees at the power plants involved have testified that generating units were ramped down even when the state's Independent System Operator had warned of tight supplies, according to one commissioner. And a senior NRG employee at the Encina power plant in Carlsbad told Dow Jones Newswires that he was told by Dynegy's Houston trading floor to "ramp down" the large 951-megawatt plant on at least 10 occasions when he knew power supplies were tight. "We would be told to ramp down the units even when we knew the state needed the megawatts," the employee said. "Then the spot price would go up, but we didn't really pay too much attention to that, because as far as we know everybody was doing this. We knew how much power other plants were operating at, and we knew they weren't at full capacity." NRG spokeswoman Meredith Moore said that the ISO gives instructions to Dynegy and Dynegy tells NRG what to do. "And there have been conditions when the ISO told us to ramp down during Stage 2 emergencies," Moore said. Also, one CPUC commissioner pointed out that the state's deregulation law doesn't require owners of power plants to bid all of their capacity into the market. The state's incumbent utilities, who were forced to sell their power plants as part of deregulation, also may have contributed to the problem, according to an ISO study. By not securing nearly enough power in advance to meet their customers projected needs, the state's three main utilities contributed to 36 Stage 1 and 2 power emergencies last summer and forced the grid operator to pay a much higher price to keep the lights on. The utilities argued that they underscheduled their load so they wouldn't have to pay the generators' high bid prices. The ISO market last year had a price cap, while other markets did not. Mirant's Griffin, meanwhile, said all the finger pointing isn't solving the state's problem. "If they are going to get to a solution in California, they have to get beyond silly political rhetoric," Griffin said. "The real solution to the problem is to get new supply, and if they are going to do that they have to make this market look attractive to the kind of people who can build power plants." -By Jason Leopold, Dow Jones Newswires; 323-658-3874; jason.leopold@dowjones.com (Mark Golden in New York contributed to this article.)
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