FERC has approved refunds of about $3.3 billion for overcharging by energy
companies after finding widespread market manipulation by bankrupt energy trader
Enron Corp. California Attorney General Bill Lockyer said there is lingering potential
for energy companies to attempt the kinds of "epidemic" market
manipulation that FERC found in its investigation.
"The incentives to game the market and create disruption appear, for the
most, to remain in place," according to a report issued by Lockyer.
The report also criticized a longstanding FERC rule that limits electricity
buyers from asking for refunds until 60 days after they file a complaint with
the agency.
That rule figured prominently in the California proceedings, when FERC
determined the state was not eligible to claim billions of dollars in refunds
for overcharges before October 2000, even though the state alleges price-gouging
as early as May 2000.
The rule creates a "huge incentive for entities to try to charge rates
that are unjust and unreasonable because they really have no potential
jeopardy," said California deputy attorney general Ken Alex.
The report called on FERC and the U.S. Congress to change the Federal Power
Act to drop the waiting period and allow FERC to consider refunds as soon as
wrongdoing is alleged.
A FERC spokesman blamed a badly-designed plan to deregulate California's
electricity market, and said "none of the manipulation would have been
possible if not for the underlying supply-demand imbalance."
FERC spokesman Bryan Lee said the new report is "a cheap political
stunt" that downplayed the state's own errors in designing its market
deregulation plan.
Below-average hydropower supplies in California that led to the state's
2000-01 shortage could again restrict supplies this summer, Lee said.
"Going into this summer, reservoir levels and snow packs are again at
alarmingly low levels because of a drought in Western states," Lee said.
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