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Enron Mail |
Much Calif Power Price Gouging Beyond FERC's Reach -ISO
By Jason Leopold Of DOW JONES NEWSWIRES 06/25/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) LOS ANGELES -(Dow Jones)- Federal energy regulators only have the authority to order refunds for about a third of the $9 billion California Gov. Gray Davis claims energy companies have overcharged the state in the 12 months to May 2001, documents from the state's wholesale market operator show. Of the total, $2.9 billion came from the May-September period the Federal Energy Regulatory Commission has said it can't act on, and $2.8 billion from the October-May period is attributable to municipal utilities over which FERC lacks jurisdiction, according to documents from the California Independent System Operator. That leaves just $3.3 billion in alleged overcharges that FERC could potentially order refunded - far less than the $9 billion Davis seeks. Talks between generators and state officials to settle billions of dollars in unpaid bills and issues of overcharging began Monday. Curtis Wagner, the FERC administrative law judge presiding over the talks, has said California will likely see refunds from generators, but far less than the $9 billion Davis expects. Davis said Sunday California is going to Washington, D.C., "with one goal, and that is to bring back $9 billion." Nearly half that amount is attributable to municipal utilities, the ISO documents show. The ISO said the Los Angeles Department of Water and Power, for example, overcharged California $75 million between May and October. David Freeman, the governor's chief energy adviser and the former general manager of the LADWP, said the agency didn't overcharge the state, but conceded it profited by selling spare power to the ISO. Davis adviser Nancy McFadden said the state needs FERC to lay the groundwork for the state to seek refunds from public utilities by ordering refunds from corporate energy suppliers. But during a conference call Sunday with reporters, McFadden and Davis press secretary Steve Maviglio couldn't explain how the governor would go about getting refunds from companies whose wholesale power prices aren't regulated by FERC. Davis testified before the U.S. Congress last week that generators overcharged the state $9 billion and that FERC should order the refunds. State Sen. Jim Brulte, R-Rancho Cucamonga, has asked for an investigation into Davis's testimony, saying the figures were based on "shaky calculations." To come up with its conclusions, the ISO compared hourly market prices received by sellers to an estimate of market prices that could have been expected under competitive market conditions. The ISO established a benchmark for what it determined was competitive - at times about $125 per megawatt-hour to $200/MWh, a fraction of actual prices in the market - based on the cost of natural gas and compliance with air-quality rules. The ISO, however, typically used the price of gas at California's northern border, according to the documents. Generators paid a higher price for the fuel in Southern California, raising the cost of making electricity. The ISO also used reports of earnings by the state's "Big Five" power suppliers during 2000 - earnings that for some quadrupled - to draw the conclusion that generators overcharged the state, according to the documents. The ISO attributed high power prices in part to the state's three largest utilities' failure to buy the power they needed in advance, leaving the grid operator to pick up the shortfall at the last minute, according to the documents. The ISO alleges the following companies overcharged the state by the listed amounts between May 2000 and February: American Electric Power Service Corp. (AEP): $22.9 million Arizona Public Service Co. (PNW): $24.6 million Aquila Power Corp. (ILA): $28 million Avista Energy Inc. (AVA): $48 million Automated Power Exchange: $16 million British Columbia Power Exchange Corp: $439 million Calpine Corp. (CPN): $236 million Constellation Power Source Inc. (CEG): $7.8 million Cargill-Alliant LLC: $1.4 million Citizens Power Sales: $557,000 Coral Power, LLC,. a unit of Shell Oil (RD): $27 million Duke Energy Corp. (DUK): $804 million Dynegy Inc. (DYN): $530 million Enron Corp. (ENE): $39 million El Paso Corp. (EPG): $29 million El Paso Power Electric Co. (EE): $24,475 Hafslund Energy Trading LLC: $712,528 Idaho Power (IDA): $28 million Koch Energy Trading: $2.5 million Los Angeles Department of Water and Power: $75 million MDSC: $24 million Mieco Inc.:$1.6 million Morgan Stanley Capital Group (MWD): $124,644 NewEnergy Inc.: $1.5 million Nevada Power Co. (SRP): $9.1 million PacifiCorp: $65 million PECO Energy Co. (EXC): $4.2 million Portland General Electric (ENE): $44 million Public Service Co. of Colorado: $14.1 million Public Service Co. of New Mexico (PNM): $15.5 million Puget Sound Energy: $24 million Reliant Energy Inc. (REI) $750 million Mirant Corp. (MIR), formerly Southern Co., $753 million *Sempra Energy Trading Corp. (SRE): $82 million (this number has been wiped out by the ISO) Sierra Pacific Power Co. (SRP): $23 million TEK: $11 million Tuscon Electric Power: $1.1 million UPA: $131,715 Winston and Strawn: $11,917 Williams Cos. (WMB) $860 million Total FERC jurisdictional sellers: $4.7 billion *Total without SETC/SDG&E: $4.6 billion Total FERC and Non-FERC sellers: $6.7 billion *Total without SETC/SDG&E: $6.6 billiion Total March-May overcharges: $2.3 billion -By Jason Leopold, Dow Jones Newswires; 323-658-3874; jason.leopold@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
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