Out-of-state generators question power regulators’ authority

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The Associated Press

At least three major out-of-state electricity generators are challenging the authority of the California Public Utilities Commission to investigate whether they deliberately reduced power supplies to drive up prices.

The PUC has asked for power plant maintenance records as it tries to determine whether Duke Energy, Dynegy Inc., Mirant Corp. and other wholesalers have manipulated the energy market at California’s expense.

At issue is who ultimately controls oversight of in-state plants that provide most of California’s electricity. The plants, once owned by the state’s largest utilities, were sold off as part of the state’s 1996 attempt at deregulation.

PUC President Loretta Lynch said the public deserves to know whether generators have unnecessarily taken plants off-line to create artificial shortages, forcing the utilities and now state bureaucrats to buy much higher priced power on the spot energy market.

“What I do know is we have historically high levels of outages across the board,” Lynch told The Associated Press. “Dynegy and Duke have been fighting the PUC in the PUC‘s quest to obtain documents about these outages.”

The PUC has the authority to regulate facilities within its borders, she added. “It doesn’t matter where the headquarters of the company is.”

Duke, based in North Carolina, says it does matter – and that since it and other wholesalers aren’t headquartered in California, the PUC can’t require it to turn over the maintenance records.

“We have not given them proprietary information because they do not regulate us,” said Duke‘s spokesman, Tom Williams.

Dynegy did not return calls for comment Wednesday.

The PUC also faces a new challenge in the legislature. A bill sponsored by Assemblywoman Carole Migden, D-San Francisco, which would have granted the PUC greater inspection authority over out-of-state generators, was amended this month to grant the authority to Independent System Operator instead.

The ISO has managed the delivery of energy through most of the state’s power grid but historically has done little regulating and has had no policing authority.

This board, created during the state’s 1996 attempt at deregulation, was redesigned in January. Now it has a five-member board appointed by Davis, replacing a 26-member ISO board composed of utility executives, marketers, power plant owners and others.

The latest version of Migden’s bill requires wholesalers to report monthly to the ISO about any plants that are off-line or working at reduced capacity, and gives the ISO power to audit these reports.

But because the ISO board historically has made key decisions behind closed doors and is exempt from certain open-government regulations, government watchdogs are outraged by the switch.

“The PUC‘s been no friend of ratepayers, but at least under the constitution and state law they’re required to conduct their process in the open and the public can intervene,” said Harvey Rosenfield of the Foundation for Taxpayer and Consumer Rights.

Davis ordered last month that the ISO take the lead among state agencies to ensure adequate energy supplies. Alan LoFaso, an aide to Migden, said the amendment follows Davis’ lead.

Both LoFaso and the governor’s spokesman, Steve Maviglio, downplayed the change. “I don’t know if we have a preference” as to which state agency gets the authority to continue the probe, Maviglio said.

The challenge by Duke Energy, Houston-based Dynegy Inc. and Mirant Corp. of Atlanta came in filings March 12 asking for a rehearing of the PUC‘s February resolution reasserting its legal authority to “examine the books, accounts, memoranda, contracts and records” of generators selling energy to utilities already subject to PUC regulation.

Those utilities include Pacific Gas and Electric Co. and Southern California Edison Co., which have been nearly bankrupted buying power from wholesalers, as well as the financially troubled San Diego Gas and Electric.

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