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Enron Mail |
---------------------- Forwarded by Jennifer Rudolph/HOU/EES on 05/22/2001=
=20 07:49 AM --------------------------- From: Jeff Dasovich@ENRON on 05/21/2001 07:06 PM Calif Probe Focuses On Dynegy,Mirant Plants-Commissioners =20 Updated: Monday, May 21, 2001 05:28 PM=01;ET =01;=20 =01; By Jason Leopold and Mark Golden=20 Of DOW JONES NEWSWIRES=20 LOS ANGELES (Dow Jones)--California officials are focusing an investigation= =20 into the state's wholesale electricity markets on two power plants operated= =20 by two of the state's largest merchant power companies, Mirant Corp. (MIR,= =20 news, msgs) and a joint venture between Dynegy Inc. (DYN, news, msgs) and N= RG=20 Energy (NRG, news, msgs), according to two commissioners on the California= =20 Public Utilities Commission.=20 The CPUC and the state Attorney General are investigating whether output wa= s=20 withheld in order to maintain high prices over the past seven months at=20 Mirant's Pittsburg plant in northern California and the Encina power plant,= =20 which is equally owned by Dynegy and NRG, near San Diego.=20 All power plants in the state are being examined, but investigators have=20 found that the Encina and Pittsburg plants have reduced power during supply= =20 shortages, causing market prices to rise.=20 But so far, the commissioners said, investigators have found no activity th= at=20 is clearly illegal.=20 "Is it unethical? Yes," one PUC commissioner said. "But is it illegal? No,= =20 unless there was collusion. This is the system we set up. What the generato= rs=20 are doing would be the appropriate thing to do if you are going to maximize= =20 your profit to shareholders."=20 Spokesmen for Mirant and Dynegy flatly denied the charges.=20 "What we did was both legal and ethical," said Mirant spokesman Chuck=20 Griffin. "There was a very forthright attempt to keep these plants up and= =20 running. Unequivocally, we have never held anything back."=20 Some of the turbines at the Encina plant are peaking units, which are=20 supposed to ramp up and down to meet demand, Dynegy spokesman Steve Stengel= l=20 said. The plant is operated by NRG, but Dynegy markets the power from the= =20 plant and tells NRG how much power to generate based on what has been sold.= =20 "We've done absolutely nothing to manipulate prices," Stengell said.=20 "Electricity demand increases and decreases throughout the day. Our=20 production increases and decreases to follow changing demand. Ultimately, t= he=20 ISO determines the exact amount of dispatch."=20 A spokesman for Attorney General William Lockyer declined to comment on the= =20 ongoing investigation.=20 CPUC President Loretta Lynch told California newspapers last week that her= =20 office and that of Lockyer's have enough information to take legal action= =20 against generators next month, though she declined to name the companies=20 involved and she said that the exact nature of the legal action is still=20 under review.=20 "We get really tired of these assertions with no evidence to back them up,"= =20 Griffin said. "This whole idea that any generation was held back at any tim= e=20 is completely bogus. It is pure political rhetoric."=20 Mirant's California power plants have run at full power during critical tim= es=20 except under one of two conditions, Griffin said. Either generating units= =20 were broken and had to be taken off line to be fixed, or they were beginnin= g=20 to run in a way that violated environmental restrictions and Mirant had to= =20 get permission to run at full power any longer.=20 "There are no other reasons than those two," said Griffin.=20 Nevertheless, several employees at the power plants involved have testified= =20 that generating units were ramped down even when the state's Independent=20 System Operator had warned of tight supplies, according to one commissioner= .=20 And a senior NRG employee at the Encina power plant in Carlsbad told Dow=20 Jones Newswires that he was told by Dynegy's Houston trading floor to "ramp= =20 down" the large 951-megawatt plant on at least 10 occasions when he knew=20 power supplies were tight.=20 "We would be told to ramp down the units even when we knew the state needed= =20 the megawatts," the employee said. "Then the spot price would go up, but we= =20 didn't really pay too much attention to that, because as far as we know=20 everybody was doing this. We knew how much power other plants were operatin= g=20 at, and we knew they weren't at full capacity."=20 NRG spokeswoman Meredith Moore said that the ISO gives instructions to Dyne= gy=20 and Dynegy tells NRG what to do. "And there have been conditions when the I= SO=20 told us to ramp down during Stage 2 emergencies," Moore said.=20 Also, one CPUC commissioner pointed out that the state's deregulation law= =20 doesn't require owners of power plants to bid all of their capacity into th= e=20 market.=20 The state's incumbent utilities, who were forced to sell their power plants= =20 as part of deregulation, also may have contributed to the problem, accordin= g=20 to an ISO study. By not securing nearly enough power in advance to meet the= ir=20 customers projected needs, the state's three main utilities contributed to = 36=20 Stage 1 and 2 power emergencies last summer and forced the grid operator to= =20 pay a much higher price to keep the lights on.=20 The utilities argued that they underscheduled their load so they wouldn't= =20 have to pay the generators' high bid prices. The ISO market last year had a= =20 price cap, while other markets did not.=20 Mirant's Griffin, meanwhile, said all the finger pointing isn't solving the= =20 state's problem.=20 "If they are going to get to a solution in California, they have to get=20 beyond silly political rhetoric," Griffin said. "The real solution to the= =20 problem is to get new supply, and if they are going to do that they have to= =20 make this market look attractive to the kind of people who can build power= =20 plants."=20 -By Jason Leopold, Dow Jones Newswires; 323-658-3874;=20 jason.leopold@dowjones.com=20 (Mark Golden in New York contributed to this article.)=20
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