Judge: Calif. Energy Cos. Overcharged
Dec. 12, 2002
WASHINGTON (AP) _ Energy companies overcharged California by $1.8 billion during the state's power crisis, a federal regulatory judge said Thursday. The amount is far short of what the state is seeking.
Bruce Birchman, an administrative law judge at the Federal Energy Regulatory Commission, also found California still owes the companies $3 billion in unpaid bills, meaning California will have to come up with another $1.2 billion if FERC adopts his recommendations.
California is seeking $8.9 billion in refunds for 2000 and 2001, when power prices soared and the state faced energy shortages and rolling blackouts.
The bulk of the overcharges came from the largest power generators and sellers of wholesale electricity in California, including Enron Corp., Duke Energy, Dynegy, Mirant, Reliant Energy and the Williams Cos.
The initial ruling in the California refund case comes amid mounting findings by federal and state investigators that energy producers and traders manipulated the vast California market during the state's ill-fated experiment with electricity deregulation.
Birchman's findings, based on complex formulas, cover power transactions from October 2000 to June 2001.
During the height of the power crisis in early 2001, the average daily cost of wholesale power in California topped $300 per megawatt hour, 10 times the normal of previous years. At times, wholesale prices spiked to as much as $3,800 per megawatt hour.
California paid $27 billion for electricity in 2000, the worst year in its power crisis. The 2000 bill was nearly four times as much as power cost in 1999. California is gathering evidence of price gouging, which it must submit to FERC by Feb. 28. FERC Chairman Pat Wood has said he hopes to wrap up the California case soon after that.
FERC also continues to investigate the soaring power prices of two years ago, as well as the rise in natural gas prices since gas fuels many electricity-generation plants.
The commission regulates wholesale electricity markets and interstate natural gas pipelines. Under a 1934 law, it is required to ensure prices are just and reasonable.
California is seeking to renegotiate long-term power contracts signed during the energy crisis.
A FERC report in August found evidence of price manipulation and deceit by Enron as the energy trader aggressively sought ways to profit from California's volatile power markets. In 2000 and 2001, the company had accumulated profits from Western electricity trades ``in the neighborhood of $1.8 billion,'' the report said.
It's unclear, the report said, how much of that was related to price manipulation through deceit and misinformation or through marketing and trading schemes _ with names like Fat Boy, Ricochet and Death Star.
A follow-up report is expected in February.
Eric Saltmarsh, general counsel for the California Electricity Oversight Board, said the judge could have found a maximum of $4 billion in overcharges between October 2000 and June 2001.
FERC had ruled earlier that it wouldn't consider the request for about $5 billion in refunds for sales before October 2000. The state is appealing that ruling to the 9th Circuit U.S. Court of Appeals, Saltmarsh said.
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