Greenwire

Five major power generators told the Federal Energy Regulatory Commission yesterday that their energy trading practices during the California power crisis of 2000 and 2001 were not based on controversial Enron strategies, even if some actions shared “characteristics” of those strategies.

On May 7, FERC ordered all energy trading companies to preserve documents relating to trading strategies and the California energy crisis, following the release of Enron memoranda suggesting Enron and other companies employed tactics to artificially inflate electricity prices. The Enron memos detail strategies with colorful names such as “Death Star,” “Get Shorty” and “Fat Boy” that sought to create artificial conditions in the state’s power grid that would bring more money to power traders (Greenwire, May 8).

“We believe everything we’ve done is well within the market rules and tariffs,” said Jim Donnell of Duke Energy. (Stella M. Hopkins, Charlotte Observer). However in a news release, Duke said it did engage in “other activities that have some of the characteristics described in the Enron memoranda, but are within market rules. Mirant Corp. did not release its FERC filing but said it was able to deny using eight of the 10 controversial Enron strategies.

Williams Cos. said it found no “Enron-style trading strategies” but
identified trades “that have some of the characteristics described in the Enron memo, but which were engaged in for entirely different reasons.” Williams CEO Steve Malcolm: “We are — and always have been — very different from Enron” (Nancy Rivera Brooks, Los Angeles Times).

Dynegy Corp.’s filing said the company did not engage in practices to artificially increase demand but acknowledged its written estimates to the California Independent System Operator, which manages the state’s power grid, were too high (Cummins/Benson, Wall Street Journal [subscription required]).
And Reliant Energy said there was a “possibility” the company may have infrequently used “round-trip” trading tactics. “Our practices were proper and lawful, aimed at serving the public interest while delivering shareholder value,” said Hugh Rice Kelly, Reliant general counsel.

Consumer advocates roundly criticized the energy firms’ filings and called on FERC to step up its investigation. “If the FERC wants the public to feel confident about the investigation, it will have to be more agressive than simply asking corporate lawyers to respond to an inquiry,” said Doug Heller of the Foundation for Taxpayer and Consumer Rights. “The FERC and law enforcement should be walking in these corporate offices and going through the files themselves (David Ivanovich, Houston Chronicle).

“My guess is that everybody is going to say they didn’t break rules. You can say that about almost anything,” said Kellan Fluckiger, former ISO chief executive. (Carrie Peyton Dahlberg, Sacramento Bee). “They’re saying now what Enron was saying during the crisis,” added Michael Shames, executive director of the Utility Consumers Action Network. “For them to say they didn’t know about any of these strategies — that really hurts their credibility.” (Mark Martin, San Francisco Chronicle).

Meanwhile, FERC called on energy companies yesterday to disclose whether they made false trades on the natural gas market to boost revenues during the California power crisis. Companies have until June 5 to respond (Reuters/Houston
Chronicle). (All cites May 23 unless noted.) — DHB