Report: Government Utilities Allegedly Gouged California During Power Crisis

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Apr 11, 2001 - 09:19 AM

Report: Government Utilities Allegedly Gouged California During Power Crisis The Associated Press

LOS ANGELES (AP) - Private power wholesalers have been blamed for driving up California's electricity prices but even government-owned utilities allegedly manipulated the market, maximizing profits and inflaming the energy crisis, according to a confidential document obtained by the Los Angeles Times. The document shows that the power providers, including the Los Angeles Department of Water and Power, influenced the spiraling costs of wholesale electricity between May and November 2000.

The DWP was eighth on the list of alleged price gougers for seeking high prices during periods of high demand, which helped inflate costs across the entire spot market, the document said.

The document decodes the identities of unnamed power providers in a recent study by the California Independent System Operator. CISO examined thousands of hours of bidding practices for 20 large electricity providers.

DWP General Manager S. David Freeman called the findings "outrageous."

"We have consistently charged (CISO) our cost plus 15 percent," Freeman said. "It's not as though we're up there peddling a bunch of power to jam it down their throats."

In addition to the DWP, the document singles out two other government-run agencies that it said consistently inflated prices: the federally owned Bonneville Power Administration in the Pacific Northwest, and the trading arm of Canada's BC Hydro in British Columbia.

BC Hydro reaped the most in what the state's power-grid operator deemed "excess profits." The Canadian agency took in $176 million, several times the amount of allegedly excessive earnings collected by all but one private generator. Second on the list was Atlanta-based Mirant which collected nearly $97 million.

The companies cited said they broke no state rules and abided by California's 1996 deregulation law, the Times reported Wednesday.

BC Hydro officials acknowledged, however, that they anticipated periods of severe power shortages and let their reservoirs fill with water overnight, then opened them to produce cheap hydroelectric power to sell at a premium.

"It was the marketplace that determined what the price of electricity would be at any given time," BC Hydro spokesman Wayne Cousins told the Times. "We helped keep the lights on in California." http://ap.tbo.com/ap/breaking/MGADOCG3FLC.html

-- Carl Jenkins (somewherepress@aol.com), April 11, 2001


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