September 11, 2003
FERC head backs power settlements
By TOBY ECKERT
COPLEY NEWS SERVICE
WASHINGTON – Responding to criticism by California officials, the head of the Federal Energy Regulatory Commission yesterday defended the proposed settlement of some charges that energy companies manipulated California's power market.
State officials have complained that the tentative monetary settlements are far too lenient. But FERC Chairman Pat Wood said that "realistically, some of these activities did not ring up a whole lot of money," citing data provided by the California grid manager.
"We will assess whether settlements are appropriate compared to what we could get if we were to go to trial," Wood said. "If we can obtain via settlement an outcome comparable to what we could get in litigation, then the commission will try to do that."
He did not discuss specific cases.
Tom Dresslar, a spokesman for California Attorney General Bill Lockyer, called the proposed settlements "wholly deficient."
In recent weeks, the FERC's trial staff has filed proposed settlement agreements with more than a dozen companies that were ordered in June to prove that they did not manipulate the market during the state's 2000-2001 power crisis or be forced to surrender unfair profits.
The companies have agreed to make payments ranging from $857,089 by Morgan Stanley to $12,730 by Portland General Electric. San Diego Gas & Electric Co. would pay $27,972 while being cleared of the allegations. Charges against 17 other companies would be dismissed.
In all, 65 companies were named in the energy commission's June orders, accused of creating phony congestion on California's power grid, shipping electricity out and then back into the state to avoid price caps, and other schemes.
The proposed settlements will be scrutinized by an FERC administrative law judge before they are considered by the commission.
California officials – including Lockyer, aides to Gov. Gray Davis and utility regulators – criticized the proposals as they trickled out.
"(The) FERC continues to administer the wet noodle to companies that ripped off California for billions and billions of dollars," Dresslar said. "This was a marketwide problem. Every game affected the entire market, and they want to do this with a piecemeal approach.
"We will definitely be filing a response and objections."
The state has been seeking $9 billion in refunds from power companies, which the FERC is considering in a separate case. Other cases arising from the power crisis also are pending.
Commissioner Nora Mead Brownell echoed Wood's comments on the proposed settlements.
"You have to base it in reality," she said. "What do the numbers really say?"
Wood and Brownell, both Republicans, made their comments to reporters after an FERC meeting yesterday. Commissioner William Massey, a Democrat, was not available for comment.