Energy Firm, Utilities Clash in Antitrust Suit : Courts: Transphase Systems Inc. says the utilities’ rebate scheme is unfair competition.
A small Huntington Beach manufacturer has filed an antitrust lawsuit against Southern California Edison and San Diego Gas & Electric, accusing the utilities of illegally monopolizing the market for energy-efficiency systems.
Transphase Systems Inc. alleges in a suit filed last week in U.S. District Court in Santa Ana that rebate fees offered by the two utilities amount to unfair competition for Transphase systems in an emerging marketplace for energy sources. The suit seeks damages of $50 million. Under federal antitrust law, any damage award could be trebled.
Officials at Edison and SDG&E; said the suit is without merit.
In recent years, environmentalists and state regulators have prodded electric utilities in California and elsewhere to develop energy sources beyond conventional fossil fuels--particularly renewable sources such as wind power. They have also encouraged utilities to establish energy-conservation programs to eliminate the need to build more power plants.
Transphase, with 60 employees and 1992 sales of $5.2 million, builds and installs systems that are used to store energy during the night--when electricity rates are cheaper--by freezing huge tanks of saltwater. The tanks chill fresh water during the day, when electricity rates are higher, to run air-conditioning systems.
Transphase has installed 60 such systems, which are designed for hospitals, schools, manufacturing plants and hotels.
“There is a fundamentally inequitable, unlevel playing field,” says Transphase President Douglas A. Ames. He contends that the rebates utilities offer to help building owners buy cost-saving systems such as those his company sells are not large enough to allow him to compete in this new energy market. Ames says companies could save substantial amounts of money, and energy, if the rebates were higher.
Stephen E. Pickett, Edison assistant general counsel, says Ames is objecting to rebate rates set by the California Public Utilities Commission. The PUC, Pickett says, has placed more emphasis on technologies that reduce demand for electricity, rather than on those that simply help businesses buy the same amount of power cheaper.
“The principal product that Transphase Systems offers,” Pickett says, “shifts demand from on-peak periods to off-peak periods, and the PUC simply has not offered as much incentive for that type of system.”
Ames would like to see the utilities play no role in the energy-efficiency market. He charges that $175 million a year earmarked from Southern California ratepayers’ money for energy-efficiency programs has been “squandered” on paperwork and unnecessary studies. Ames contends that this money should go directly to companies like his.
“The way the market is now, the utilities control the money--there’s no dispute over that,” says Arthur O’Donnell, editor of California Energy Markets, a newsletter based in San Francisco. “They’re going to be spending billions of dollars in California over the next few years.” But O’Donnell notes that most energy-efficiency companies want to work in partnership with the utilities, not eliminate them.
