Calif. Utilties Makes Accusation

Friday May 18, 2001   1:50 pm

LOS ANGELES (AP) - There is evidence that a ``cartel'' of power companies shut down plants for unnecessary maintenance to increase energy prices, the head of the California Public Utilities Commission said. An energy official called the allegation ``idiocy.''

PUC President Loretta Lynch told the Los Angeles Times on Thursday that her agency and the state attorney general's office are probing plant outages that she said created ``artificial shortages'' that contributed to skyrocketing power prices.

``There are instances where plants could have produced, and they chose not to,'' Lynch said. ``And it is clear that there are instances that plants, when called to produce, chose not to produce.'' She said that happened even when plants were obligated to do so under special contracts with utility companies and the state.

Gary Ackerman, executive director of the Western Power Trading Forum, dismissed Lynch's allegations as ``the height of idiocy.''

Power generators have repeatedly said they have been acting within the rules of the state's deregulation system. The reason many plants have been down in recent months, Ackerman said, is that power producers must perform maintenance now in anticipation of heavy summer demand.

``My members do not make money by shutting down their plants so their competitors can make money,'' said Ackerman, who represents a trade association of large power producers.

But Lynch said the probe has produced enough information for the PUC and attorney general to take legal action next month against some power generators. She did not identify them, and the exact nature of the legal action is still under review, she said.

Investigators conducted interviews and reviewed subpoenaed records, obtained after legal battles with the power companies, to gather evidence of allegedly unnecessary plant shutdowns, Lynch said.

Power plants where unplanned shutdowns have happened also were visited to examine operations and maintenance records, Lynch said.

Power prices have gone from $200 a megawatt hour in December to as much as $1,900 last week, and plant shutdowns have been a key factor in the soaring prices.

``I would argue it's no accident,'' Lynch said. ``That in fact it's due to the coordinated behavior of a cartel.''

Lynch said one suspicious pattern has emerged: When operators of the state's electricity grid declared a Stage 1 alert, which means that electricity reserves had dipped below 7 percent, plants that didn't need repairs were suddenly pulled off-line.
 

 

   

 

-- Cherri (jessam5@home.com), May 19, 2001