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SACRAMENTO, Calif. (CBS.MW) - Seventy energy traders took part in an industry wide plan to artificially drive up electricity prices during California's energy crisis of 2000-2001, state officials claimed Monday. The traders, which include all major companies doing business in California, were named in a 3,000-page filing issued to the Federal Energy Regulatory Commission. The commission ordered that California file evidence of price gouging in the state's request for a refund on its electricity contracts.
California seeks at least $9 billion in refunds from the companies involved, including such firms as Sempra Energy (SRE: news, chart, profile), Duke (DUK: news, chart, profile), Dynegy (DYN: news, chart, profile), Reliant (RRI: news, chart, profile), Mirant (MIR: news, chart, profile) and Williams (WMB: news, chart, profile).
A coalition of organizations, spearheaded by Attorney General Bill Lockyer, put together the report. The group says it is geared to get ratepayers a refund, regardless of the companies involved and their financial stature; some have filed for bankruptcy. "There's not just one smoking gun, it's an entire arsenal," Gov. Gray Davis told reporters. "I want you to think of this team as the bulldog that latched on to someone's pant leg and is not letting go."
Gary Ackerman, president of the Western Power Trading Forum, a group representing power generators, said the state's findings were a rehash of information already revealed, and refuted, by power companies. "This thing has been a shakedown from the word go," Ackerman said. "The burden of proof is on them to show something new under the sun."
State officials claim that energy providers and sellers:
* Withheld power from customers under the pretense that their plants were undergoing maintenance. Many times the generators shut down plants for "economic reasons," when the state had declared a system emergency.
Submitted bids higher than needed to stay in operation to the State Power Exchange and Independent System Operator.
* Filed false load schedules to make electricity more scarce. Bankrupt energy trader Enron (ENRNQ: news, chart, profile) called this strategy "Fat Boy." Markets players as well as several municipal utilities are accused of taking part in this scheme. Cities named include Anaheim, Glendale, Pasadena and Redding.
* "Ricocheted" energy out of and back into Calfornia in an effort to drive up prices. This process was known as "Megawatt Laundering." The Los Angeles Department of Water and Power was named as being one of the participants in this practice.
* Created fictitious congestion along energy conduits in order to clog up the system and help drive up prices. This scheme was known as "Death Star."
* Created reliability problems by double selling reserve electrical supplies as well as selling non-existent reserves.
* Shared with each other outage information not considered to be public data.
California officials are not alleging that all 70 participants worked together as one to drive up prices. Generally, the companies would work in teams of two or three, state officials said.
The full, 3,000-page report was not made public, in according with FERC rules. But the group asked that the findings be made public in a separate filing with the agency. In the past, FERC has said that California is not entitled to refunds and, in fact, owes energy providers roughly $1 billion. FERC is expected to give energy providers a chance to respond before it makes its findings.
Many in state government who have battled with both energy providers and FERC are skeptical that refunds will be forthcoming. I personally have given up hope that FERC will do anything," said State Sen. Joseph Dunn, who chairs a committee looking into energy pricing manipulation. Dunn, who calls for energy providers to cough up $30 billion to $40 billion in refunds, said the state most likely will get relief via civil court action.
SACRAMENTO, Calif. (CBS.MW) - Seventy energy traders took part in an industry wide plan to artificially drive up electricity prices during California's energy crisis of 2000-2001, state officials claimed Monday. The traders, which include all major companies doing business in California, were named in a 3,000-page filing issued to the Federal Energy Regulatory Commission. The commission ordered that California file evidence of price gouging in the state's request for a refund on its electricity contracts.
California seeks at least $9 billion in refunds from the companies involved, including such firms as Sempra Energy (SRE: news, chart, profile), Duke (DUK: news, chart, profile), Dynegy (DYN: news, chart, profile), Reliant (RRI: news, chart, profile), Mirant (MIR: news, chart, profile) and Williams (WMB: news, chart, profile).
A coalition of organizations, spearheaded by Attorney General Bill Lockyer, put together the report. The group says it is geared to get ratepayers a refund, regardless of the companies involved and their financial stature; some have filed for bankruptcy. "There's not just one smoking gun, it's an entire arsenal," Gov. Gray Davis told reporters. "I want you to think of this team as the bulldog that latched on to someone's pant leg and is not letting go."
Gary Ackerman, president of the Western Power Trading Forum, a group representing power generators, said the state's findings were a rehash of information already revealed, and refuted, by power companies. "This thing has been a shakedown from the word go," Ackerman said. "The burden of proof is on them to show something new under the sun."
State officials claim that energy providers and sellers:
* Withheld power from customers under the pretense that their plants were undergoing maintenance. Many times the generators shut down plants for "economic reasons," when the state had declared a system emergency.
Submitted bids higher than needed to stay in operation to the State Power Exchange and Independent System Operator.
* Filed false load schedules to make electricity more scarce. Bankrupt energy trader Enron (ENRNQ: news, chart, profile) called this strategy "Fat Boy." Markets players as well as several municipal utilities are accused of taking part in this scheme. Cities named include Anaheim, Glendale, Pasadena and Redding.
* "Ricocheted" energy out of and back into Calfornia in an effort to drive up prices. This process was known as "Megawatt Laundering." The Los Angeles Department of Water and Power was named as being one of the participants in this practice.
* Created fictitious congestion along energy conduits in order to clog up the system and help drive up prices. This scheme was known as "Death Star."
* Created reliability problems by double selling reserve electrical supplies as well as selling non-existent reserves.
* Shared with each other outage information not considered to be public data.
California officials are not alleging that all 70 participants worked together as one to drive up prices. Generally, the companies would work in teams of two or three, state officials said.
The full, 3,000-page report was not made public, in according with FERC rules. But the group asked that the findings be made public in a separate filing with the agency. In the past, FERC has said that California is not entitled to refunds and, in fact, owes energy providers roughly $1 billion. FERC is expected to give energy providers a chance to respond before it makes its findings.
Many in state government who have battled with both energy providers and FERC are skeptical that refunds will be forthcoming. I personally have given up hope that FERC will do anything," said State Sen. Joseph Dunn, who chairs a committee looking into energy pricing manipulation. Dunn, who calls for energy providers to cough up $30 billion to $40 billion in refunds, said the state most likely will get relief via civil court action.
