Power Marketer Ordered by FERC to Refund $8 Million
In the first action of its kind during the California energy crisis, federal regulators have ordered an out-of-state electricity marketer to refund $8 million in connection with allegations that plants were improperly shut down to hike power prices.
Tulsa-based Williams Energy Marketing & Trading has agreed to pay the refund under an order issued Monday by the Federal Energy Regulatory Commission.
The firm, which admitted no wrongdoing in the settlement agreement, was probed for allegedly forcing utilities to pay higher prices by taking key generating units in Long Beach and Huntington Beach offline in April and May of last year.
Paula Hall-Collins, a Williams spokeswoman, said her company settled to end the matter. She said that the company would have been exonerated had it pursued the case.
“We decided to go ahead with the settlement in order to put it behind us and move forward to more productive matters concerning California power issues,” she said.
While federal investigations of alleged overcharges by several firms are continuing, Monday’s order marked the first time a major power merchant has been forced to pay back earnings since California forged into electricity deregulation in 1996.
Critics and the state’s independent grid operator have accused power sellers of unjustly ratcheting up electricity prices in part by taking plants offline.
In the case of Williams, the federal energy panel investigated the shutdown of power plants that were obligated to provide electricity to the state.
Desperate for power, California’s grid operator had to turn to another provider and pay as much $750 per megawatt-hour--more than 10 times the normal price. The $8-million refund will go back to the grid operator.
Williams markets power produced at California plants owned by AES Corp. of Arlington, Va.
Federal investigators probed the actions of both Williams and AES, but the refund order affects only Williams. Initially, FERC had sought a refund of about $10.8 million, but settled for $8 million in the compromise agreement.
AES spokesman Aaron Thomas said the power plants in question were shut down because of mechanical problems. He noted that his firm derived no profit from the replacement power sold by Williams.
“We literally get paid to convert Williams’ gas into Williams’ electricity, which they then sell into the marketplace,” Thomas said. “We’re not paying any fines, and we didn’t do anything wrong.”
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Times staff writers Rich Connell and Richard Simon contributed to this story.
