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ISO: Duke was just following orders

The power producer says the agency's disclosure that it ordered units ramped up and down discredits whistleblowers.

July 2, 2001

By KATE BERRY The Orange County Register

The California Independent System Operator, the agency that runs California's electric grid, said Sunday that Duke Energy was following its orders to ramp generating units up and down during a three-day period in January when the company was accused by three whistleblowers of price- manipulation.

Duke Energy said the disclosure Friday that the ISO was responsible for "ramping up" and "ramping down" its generating units would discredit the accusations of the three former plant employees.

The whistleblowers were lauded last month by Gov. Gray Davis as "heroes." They testified June 22 before a Senate committee that Duke controlled its power supplies to drive up prices.

Duke is the subject of several federal and state investigations, including a grand jury inquiry, into whether generators operated to drive up prices in California's unregulated wholesale electricity market.

Steve Maviglio, a spokesman for Davis, could not explain why the governor or the Senate committee were unaware that the ISO was responsible for having the generating units ramp up and down.

On Friday, the ISO released a memo to the state's Electricity Oversight Board stating that Duke's "peaking" unit in Chula Vista was "in accordance" with ISO regulations. The memo said Duke followed the agency's orders to increase and decrease production 38 times during a three-day period in mid-January.

Duke spokesman Tom Williams said the ISO memo refutes the testimony of the whistleblowers.

"These former employees had an incomplete picture of what was going on," he said. "They made assumptions."

Stephanie McCorkle, an ISO spokeswoman, said her agency did not rebut the testimony of the former employees because the ISO was not asked to testify, nor was it involved in the Senate committee hearings.

She said the ISO routinely tells generating units - especially peaker plants -- to ramp up and ramp down at a moment's notice to control the ebb and flow of electricity through the grid.

The plant's production was an automated dispatch system that allowed the ISO, not Duke, to control the output. The ramping up and down of units can be done for several reasons, including price, fluctuating demand, operating reserves and congestion, she said.

The ISO is still investigating Duke's bidding pattern during the period from Jan. 17 to Feb. 14, when Duke routinely charged prices as high as $3,880 a megawatt-hour. Neither the ISO nor Duke has released pricing information from their plants.

The Federal Energy Regulatory Commission ordered Duke to refund $20 million for the prices it charged in January and February, even though the company has not been paid for the power purchases.

"It's not a secret that we had high prices in this period because of credit reasons," Williams said. "The price issue has been fully fleshed out. People need to not lose sight of the fact that we haven't been paid."

Peter Navarro, an economics professor at the University of California, Irvine, said the Duke whistleblowers also testified about the broader issue of power plants being kept offline for routine maintenance - a central reason in why California faced threats of rolling blackouts in the winter.

"It would be a shame if Duke came out looking like a wronged white knight just because of the governor's overexuberance in targeting power suppliers," said Navarro, who has been highly critical of Davis' handling of the electricity crisis

-- Martin Thompson (, July 02, 2001

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