Mar 16, 2001 - 06:47 PM

Government Orders Power Companies to Explain High Prices By H. Josef Hebert Associated Press Writer

WASHINGTON (AP) - The government told six power generating companies on Friday to justify $55 million worth of wholesale electricity sales in California in 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 the agency's effort to address charges that power wholesalers have received windfall profits in the California market this winter by charging prices beyond what can be considered reasonable.

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

The power companies, which include some of the largest wholesale energy suppliers in the country, have until March 23 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 per 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 per 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.

The companies requested to provide justification for their prices were Duke Energy Marketing Inc., Dynegy Power Marketing Inc., Portland General Electric Co., Reliant Energy Services Inc., Mirant and Williams Energy Services Corp.

"We believe all of our transactions are reasonable and we will go to the FERC and attempt to demonstrate why that was so," said Chuck Griffin, spokesman for the Atlanta-based Mirant.

Reliant spokesman Richard Wheatley said that when the company submits its support for the prices, "we do believe that our practices will be justified. We have operated legally and ethically."

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 so-called Stage 3 alerts when the state's electric grid managers declared an emergency because of severe power shortages.

The agency cited Williams Energy Services with $21.5 million in potential refunds based on an examination of 7,054 transactions in which the price was more than $430 per kilowatt hour.

Dynegy was cited for 3,051 transactions worth $23.4 million.

The other companies were:

-Reliant, 770 transactions with $7.44 million in potential refunds.

-Duke Energy, 20 transactions and $3.24 million in potential refunds.

-Mirant, 286 transactions and $826,111 in potential refunds.

-Portland General Electric with 23 transactions and $73,600 in potential refunds.

--- http://ap.tbo.com/ap/breaking/MGAZ9UFKEKC.html

-- Carl Jenkins (somewherepress@aol.com), March 16, 2001

Answers

It puzzles me that the government thinks that a 1000% price increase is OK. I'd say that any charges over $90.00 per megawatt hour deserve detailed justification.

-- John Littmann (LITTMANNJOHNTL@AOL.COM), March 16, 2001.