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Power Brokers may Face Refunds by H. Josef Hebert, Associated Press Guest column, Spokesman Review, March 17, 2001

The Federal Energy Regulatory Commission asks companies to justify
$55 million in electricity sales to California utilities

WASHINGTON -- The government Friday told six power generating companies to justify $55 million worth of wholesale electricity sales in California during February or pay refunds.

The action came a week after a similar order was issued to 13 generators who were told they may have overcharged buyers by $69 million during January.

The directives from the Federal Energy Regulatory Commission are part of an effort by the federal agency to address charges that power wholesalers have earned windfall profits in the California market this winter by charging prices beyond what can be considered reasonable.

Separately, the commission announced a conference April 6 in Boise with energy officials from 11 Western states to discuss the region's soaring electricity prices.

The power companies, which include some of the largest wholesale energy suppliers in the nation, have until Friday to defend their prices. If they do not have adequate explanations, FERC will order refunds or have the amounts applied to money owed them by California's utilities, officials said.

FERC, which regulates wholesale electricity sales, said it was seeking a refund whenever prices exceeded $430 a megawatt hour during February. It cited more than 11,000 transactions by the six companies that exceeded the threshold.

California officials have sought much higher refunds. They have claimed that wholesalers may have overcharged the state's power purchasers by as much as $550 million in December and January. No state estimates have been given for February.

FERC has not yet reviewed the December sales.

Sen. Dianne Feinstein, D-Calif., called the trigger for refunds way too high, noting that before California's energy crisis began, prices were $30 a megawatt hour -- $400 an hour less than the trigger.

"This sounds like a step backward," she said. "Something is really wrong here."

The suppliers have denied price gouging, maintaining that the high prices reflected the short supply of power and uncertain finances of the state's two major utilities, both of which have been near bankruptcy.

"We felt our transactions were justified when we made them, and we still feel they are justified now," said Scott Simms, spokesman for Portland General Electric Co. He said PGE has yet to be paid for power sales worth millions to the California utilities last year.

The Portland utility, a subsidiary of Enron Corp., has been asked to document 23 transactions with the potential for $73,600 in refunds -- by far the smallest amount under review.

PGE supplies electricity to about 725,000 retail customers in Oregon. But its wholesale business, which grew from $355 million in 1999 to $1.17 billion last year, now accounts for a majority of revenue.

The other companies asked to provide justification for their prices are Duke Energy Marketing, Dynegy Power Marketing, Reliant Energy Services, Mirant, and Williams Energy Services.

The commission based the potential refunds on charges above a just and reasonable price, FERC spokeswoman Tamara Young-Allen said.

The order covers only sales during Stage 3 alerts when the state's electric grid managers declared an emergency because of severe power shortages.