Duke Energy confirms price gouging

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Friday June 1 5:54 PM ET

Duke Energy Confirms Price Gouging

CHARLOTTE, N.C. (AP) - Duke Energy Co. confirmed Friday that it sold electricity in California for as much as $3,880 per megawatt hour - double the rate recently cited by Gov. Gray Davis as an ``obscene'' example of price gouging.

Charlotte-based Duke imposed the charges in January, when California began suffering from rolling blackouts because the state's power grid managers couldn't buy enough power to keep the lights on.

In statements Friday, Duke portrayed January's $3,880-per-megawatt-hour bill as an aberration that involved just 5,000 megawatt hours- less than 0.1 percent of the total electricity that the company sold in California during the first three months of the year.

Duke said its wholesale electricity prices in California averaged $136 per megawatt hour during that period, below the ratescharged by other merchants selling power at the minute.

Duke supplies about 5 percent of California's electricity at four power plants, including three purchased from Pacific Gas and Electric for $501 million in 1998.

Like other major power wholesalers, Duke has fought to keep its electricity sales records confidential as a range of criminal and civil investigations seek to prove that they illegally manipulated the energy market to raise prices.

The company confirmed January sales at $3,880 per megawatt hour after The Charlotte Observer dug up pricing information in quarterly reports filed with the Federal Regulatory Energy Commission, which monitors whether wholesalers provide electricity at ``just and reasonable'' prices.

``On average, Duke's prices are not `gouging prices,''' Nancy DeSchane, a vice president with Duke Energy's trading arm in Salt Lake City, told the Observer.

Duke's January price is the highest wholesale electricity rate disclosed so far in a worsening power crisis that has devastated California's utilities, increased customer rates and drained the state's finances.

Power generator Reliant Energy of Houston outraged state government officials last month when it charged California $1,900 per megawatt hour to avoid blackouts last month. Davis blasted Reliant's bill as ``obscene'' and cited it as a reason why he is considering seizing the plants owned by Reliant, Duke and other out-of-state wholesalers who won power plants in California.

Duke attributed January's high price to the financial problems of California's two largest utilities, Pacific Gas and Electric and Southern California Edison. With no assurance that it would get paid in full for its electricity, Duke decided to impose hefty ``credit surcharges'' that make up 80 percent of the $3,880 per megawatt price, the Observer reported.

In March, Duke offered to waive the surcharges if the utilities paid their bills. Shortly thereafter, Pacific Gas and Electric went bankrupt. Duke, which has set aside a $110 million reserves to cover its unpaid electricity sales in California, said neither PG&E nor Southern California Edison have made payments on that sale.

Shares of Duke fell $1.53 to $44.19 in trading Friday on the New York Stock Exchange.

On The Net:



-- Swissrose (cellier3@mindspring.com), June 01, 2001



The cash price is $136.
If you pay by credit then it's $3880!

-- (perry@ofuzzy1.com), June 01, 2001.

Get out the candles and flashlights, Californians. With your governor talking like that, nobody's going to sell to him.

-- Tillytoo (tillytoo@webstruck.net), June 02, 2001.

Duke Energy has to eat, too.

-- Buck (bigbuck@trailways.net), June 02, 2001.

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