California power supplier settles overcharge suit

Published on

The Associated Press

Consumer advocates say the $8 million refund a Tulsa-based energy company agreed to pay in a settlement with federal regulators represents the “tip of the iceberg” of what California has been overcharged for power.

Still, the fact Williams Cos. is refunding any money is a step in the right direction, advocates and one legislator said Tuesday.

Williams, a major power supplier for California, has agreed to refund $8 million to settle a federal investigation into alleged improper charges for electricity. The agreement settles the only enforcement action the Federal Energy Regulatory Commission has taken involving alleged overcharges in California’s power markets.

“The symbolism is far more important than the puny payoff that FERC allowed them to get away with,” said Harvey Rosenfield, executive director of the Foundation for Taxpayers and Consumer Rights. “They’ll make that money back in the next few days by selling power to California at extortionary prices.”

Mindy Spratt, media director of The Utility Reform Network, said the refund was “just the tip of the iceberg” of what she called rampant market abuse.

Californians, Spratt said, need more and faster investigations and more penalties to tell companies they can’t “profit by gaming the market.”

While it agreed to refund the state the $8 million, Williams admitted to no wrongdoing. The FERC investigation involved alleged overcharges in California last year.

FERC is also negotiating with a number of power suppliers for $124.5 million in refunds for overcharges, but these negotiations involve no enforcement actions.

Williams spokeswoman Paula Hall-Collins said the settlement “provided the best opportunity for Williams to move forward instead of engaging in a lengthy and costly hearing process.”

A full hearing, she said, would have cleared the company of charges by FERC investigators that Williams, along with AES Southland Corp., of Arlington, Va., had improperly manipulated power supplies in the spring of 2000 to boost prices.

FERC earlier this year cited Williams and AES Southland, owner of two California power plants, concerning sales in April and May 2000 of electricity from the two AES plants in Alamitos and Huntington Beach, Calif.

Williams was the company that marketed the electricity.

Investigators checked allegations that Williams and AES had withheld power by shutting down the two plants, forcing the state’s power grid managers to buy power from Williams at more than 10 times the normal rate.

AES, which made no extra money from the sales and is not involved in the refund agreement, has always called the plant shutdowns legitimate.

Nevertheless, FERC investigators determined that Williams received about $10.8 million in additional revenue “as a result of the unavailability” of the two plants.

Assemblyman Bill Leonard, R-Rancho Cucamonga, said he hoped the settlement indicated that FERC was getting tough on power suppliers.

“I think what Williams did isn’t all that different from other major generators and they should be investigated likewise,” he said. “While the dollars are extremely small, the fact that FERC has ordered a generator to pay back some of its excess profits is a large step in principle.”

The California Independent System Operator, manager of the state’s power grid, will receive the refund. ISO buys last-minute power needed to balance the grid. Utilities that use that power are later billed for it.

ISO spokeswoman Stephanie McCorkle said the agency’s attorneys were discussing how the refund would be distributed to its customers. The ISO is owed millions by Pacific Gas and Electric Co. and Southern California Edison.

“We haven’t reviewed all the documents, but we’re glad to see our efforts have resulted in some dollars returning to California,” she said.

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases