FERC recommends dropping charges;

L.A., other utilities accused of manipulating prices

The San Francisco Chronicle

The staff of the Federal Energy Regulatory Commission has recommended dismissing charges that the Los Angeles Department of Water and Power and several other public and private utilities manipulated prices during California’s energy crisis.

They were among more than 40 utilities and energy companies ordered by FERC in June to explain trading activity that might have helped raise state electricity prices to record levels.

Some companies have agreed to settlements without admitting wrongdoing. One of the largest, Reliant Resources, filed a settlement Friday under which it would pay $836,000, the amount the company said it potentially earned by double-selling power-related services that it held in reserve for emergencies.

FERC staff attorneys moved Friday to dismiss allegations against more than a dozen utilities, including city-owned power agencies in Los Angeles, Anaheim, Pasadena and Burbank. If the recommendations are approved by an administrative law judge, they will go to the five-member commission.

“I’m pleased that, after a comprehensive review of claims that LADWP engaged in illegal gaming activities during the state power crisis, FERC’s trial staff found no basis for these claims of wrongdoing,” said Los Angeles Mayor Jim Hahn.

But Tom Dresslar, spokesman for state Attorney General Bill Lockyer, said Saturday that “this so-called exoneration” should be viewed skeptically.

“FERC’s history throughout this whole debacle has been to be aggressive only when it comes to absolving energy companies of any wrongdoing, to let them off the hook or off easy,” Dresslar said.

Lockyer is investigating manipulation of state energy markets and has submitted thousands of pages of evidence to FERC in support of California’s claim for $9 billion in refunds. The state has also asked a federal appeals court to overrule two unfavorable FERC decisions.

During the 18-month FERC investigation, now-bankrupt Enron has admitted using misleading trading strategies, with nicknames like Fat Boy and Death Star, to milk the state’s energy grid for financial gain. Two former Enron executives have pleaded guilty to criminal charges.

“There’s no doubt that private power companies did by far the most damage,” said Doug Heller, of the advocacy group Foundation for Taxpayer and Consumer Rights. “But we still have some concern that public entities (like LADWP) made off with ill-gotten gains.”

In another development, a federal judge in San Diego dismissed class-action lawsuits by small businesses who accused Duke Power Co. of artificially restricting the supply of electric power to boost prices in 2000.

U.S. District Judge Robert Whaley ruled Friday that FERC has exclusive authority over the issues raised in the lawsuit and that federal law bars any challenges to utility rates that a federal agency has reviewed and approved.
Chronicle staff writer Bob Egelko contributed to this story.

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