California Subpoenas Electricity Data Firm
Opening a new front in their investigation, California officials on Wednesday subpoenaed records from a Texas market research firm suspected of helping power plant owners boost prices during the energy crisis.
State officials said Houston-based Industrial Information Resources Inc. provided data that power plant owners could have used to coordinate the shutdown of electricity-generating turbines. The 20-year-old firm provides a variety of data over the Internet on industrial companies.
The company will comply with the subpoena’s demand for customer records, said Edward Fox, director of operations for Industrial Information Resources.
He said the company is “ancillary” to California’s investigation, saying it merely provided information on out-of-service power plants to its clients, which included large power plant owners and energy traders.
“What they do with the information after the fact is up to them,” Fox said.
The subpoena was issued Tuesday by H. Peter Young, an administrative law judge with the Federal Energy Regulatory Commission, as part of a 100-day discovery period during which California officials are attempting to uncover new evidence of market manipulation to bolster the state’s case for $8.9 billion in refunds of power costs during the energy crisis of 2000-01.
According to the application to FERC for a subpoena by the California attorney general and other state agencies, Industrial Information Resources sold a daily reporting service on power plant outages to traders and generators during the crisis.
Such detailed information was not readily available publicly until January 2001, after the state Legislature ordered the California Independent System Operator to post the names of all power plants that were out of commission.
IIR’s customers included all of the major operators of power plants in the state and Enron Corp., the world’s largest energy trader before its 2001 collapse.
IIR’s outage information “was obtained from plant personnel of the companies experiencing the outages, some of which were simultaneously receiving outage information, through IIR, regarding their competitors’ outages,” the subpoena application stated. “This dissemination of outage information among competitors may have facilitated market manipulation by sellers of energy ... and the coordination of conduct among competitors.”
Tom Dresslar, spokesman for California Atty. Gen. Bill Lockyer, said IIR is under the microscope as part of the FERC refund discovery process, which ends Feb. 28, as well as the separate state inquiry into manipulation of California’s energy markets.
Other investigations into the causes of the energy crisis are being conducted by the U.S. attorney in San Francisco, the California Public Utilities Commission and a select committee of the state Legislature.
“We are reviewing IIR’s operations, services and how the market participants used those services as part of our ongoing investigation into possible anti-competitive conduct and market manipulation during the California energy crisis,” Dresslar said.
“When companies communicate with each other directly or through a conduit about current or future supply, we are very interested,” he said.
Accusations of unethical trading practices in California power markets have produced the only two convictions so far arising from the state’s energy crisis -- both plea agreements to federal wire fraud conspiracy charges by former traders at Enron.
But state energy authorities have blamed most of the energy problems on a shortage of supply caused by power plant shutdowns and other means. The crisis left California with some of the highest electricity rates in the country and saddled the investor-owned utilities with billions of dollars in debt.
Jan Smutny-Jones, executive director of the Independent Energy Producers Assn., said power shortages primarily were the result of months of hard use rather than deliberate withholding.
“I cannot speak for the hundreds of people involved in operating power plants, but I know that power plants in California ran harder in 2000 and 2001 than they ever did before,” said Smutny-Jones, who was chairman of the Cal-ISO board for a time during the crisis.
