U.S. Agency Moves to Drop DWP Charges
Lawyers for the Federal Energy Regulatory Commission are moving to clear the Los Angeles Department of Water and Power of charges that it illegally manipulated California’s electricity markets, officials said late Friday.
The utility was accused by California officials of using tricky trading tactics like those of Enron Corp. to drive up electricity costs and increase profits during the energy crisis of 2000 and 2001.
But on Friday, FERC staff lawyers filed a motion with the commission to dismiss allegations that the DWP had used four trading strategies that violated federal electricity market rules, spokesmen for the federal agency and the municipal utility said.
“FERC staff concluded that there was no basis to continue the allegations against DWP,” utility spokesman Randy Howard said. A FERC spokesman could not say late Friday why lawyers were asking to drop the charges.
California Atty. Gen. Bill Lockyer, who is investigating manipulation of state energy markets, questioned the move to dismiss the action, a spokesman said.
Lockyer’s office, along with other state agencies and utilities, submitted thousands of pieces of evidence to bolster California’s claim that it is owed $9 billion in refunds for alleged electricity overcharges during the energy crisis. “Given the evidence that we presented to FERC relative to LADWP’s involvement in the Enron gaming and the past history of FERC throughout this whole debacle, we have to have some reservations about the validity of this so-called exoneration,” Lockyer spokesman Tom Dresslar said.
“FERC trial staff seems to move aggressively only to the extent of letting companies off the hook,” Dresslar said, adding that state lawyers had not seen the motion to dismiss.
Federal regulators have been investigating possible manipulation of California’s energy markets for 18 months. During the probe, now-bankrupt Enron revealed that it had used a variety of questionable trading strategies in California with names like Fat Boy and Death Star.
In June, the commission ordered the DWP and more than 40 other energy companies and utilities to explain suspicious trading activity in California that might have helped boost electricity prices in the state to record levels. Several companies have agreed to settle the manipulation allegations without admitting guilt.
The DWP submitted tens of thousands of pages of records and participated in several hearings during the federal investigation, Howard said. Among other things, the utility was accused of causing false jams on transmission lines so that it could be paid to relieve the snarls. It was also accused of exporting electricity out of California and then selling it back to the state to avoid price caps.
California state officials also have accused the DWP of overcharging wholesale buyers for electricity. Federal regulators have not ruled on the alleged $20 million in overcharges.
Mayor James K. Hahn issued a statement that he was “pleased that, after a comprehensive review of claims that LADWP engaged in illegal gaming activities during the state power crisis, FERC’s trial staff found no basis for these claims of wrongdoing.”
“The city of Los Angeles is proud of the role our Department of Water and Power played during the state’s time of need,” Hahn said.
DWP General Manager David Wiggs said the utility had “provided much-needed assistance to the state, and did so in a legal, proper manner.”
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Times staff writer Jonathan Peterson in Washington contributed to this report.
